Peapack-Gladstone Financial Corporation Reports Strong Third Quarter Results, as Net Interest Margin Continues to Expand

The Company’s reported NII and NIM for Q3 2022 increased $2.6 million and 15 basis points, respectively, compared to the linked quarter (Q2 2022) and $10.3 million and 56 basis points compared to the prior year quarter (Q3 2021). When comparing to the prior year quarter the Bank grew its loan portfolio at rates/spreads beneficial to NIM, while reducing lower-yielding liquidity. Additionally, the Bank benefitted from the increases in LIBOR and the Prime rate during 2022.

Mr. Kennedy stated, “As noted above, we benefitted from the increases in LIBOR and Prime during 2022 and our loan portfolio is positioned to continue to benefit from a rise in interest rates. 23% of our loan portfolio reprices within one-month; 36% within three-months and 46% ($2.4 billion) within one year. Our current modeling, with an average deposit beta assumption of 45% on a go-forward basis, indicates net interest income will improve approximately 2.2% in year one and 5.8% in year two, after a 150-basis point rate shock.”

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale funding, volatility, and/or operational risk.  Total deposits increased $33 million to $5.30 billion at September 30, 2022 from $5.27 billion at December 31, 2021 and decreased $105 million from $5.40 billion at June 30, 2022. The deposit outflows for the quarter included large relationships strategically utilizing their funds, including investing into our Wealth Management business, acquisitions, further investing in their business, and purchasing real estate and other investments. As noted previously, during the third quarter of 2022, the Company successfully migrated $287 million of interest-bearing checking into noninterest-bearing demand deposits. 

Mr. Kennedy noted, “91% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 25% of our total deposits; both metrics reflect the core nature of our deposit base.”

At September 30, 2022, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $634.1 million (or 10% of assets).

The Company maintains backup liquidity of approximately $1.8 billion of secured available funding with the Federal Home Loan Bank and $1.7 billion of secured funding from the Federal Reserve Discount Window.  The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $784,000 for the September 2022 quarter compared to $2.86 million for the June 2022 quarter and $2.06 million for the September 2021 quarter. The June 2022 quarter results were driven by $2.68 million in gains on sales of SBA loans. The September 2021 quarter reflected $1.57 million in gains on the sale of SBA loans and increased mortgage banking activity due to greater refinance activity in the low-rate environment.

Other Noninterest Income (other than Wealth Management fee income and Income from Capital Markets Activities) 

Other noninterest income was $2.66 million for Q3 2022 compared to $1.76 million for Q2 2022 and $1.86 million for Q3 2021. Q3 2022 included $818,000 of unused line fees compared to $529,000 for Q2 2022 and $163,000 for Q3 2021. Additionally, Q3 2022 included $547,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees.

Operating Expenses

The Company’s total operating expenses were $33.56 million for the quarter ended September 30, 2022, compared to $32.66 million for the June 2022 quarter and $32.19 million for the September 2021 quarter. The 2022 quarters included increased costs related to health insurance and corporate insurance, as well as normal annual merit increases and year-end bonuses. The September 2021 quarter included $1.4 million related to a swap valuation allowance.

Mr. Kennedy noted, “While we continue to manage expenses closely and prudently, we have and will continue to invest in our existing people as the market demands in order to retain the talent we have acquired. We will also grow and expand our core wealth management and commercial banking businesses, including strategic hires and lift-outs, and invest in digital enhancements to further enhance the client experience.”

Income Taxes

The effective tax rate for the three months ended September 30, 2022 was 27.47%, as compared to 26.35% for the June 2022 quarter and 26.22% for the quarter ended September 30, 2021, reflecting higher pre-tax income.

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $15.8 million, or 0.26% of total assets at September 30, 2022.  Loans past due 30 to 89 days and still accruing were $7.2 million, which included a $5.1 million outstanding loan to a US governmental unit. 

Criticized and classified loans totaled $109.6 million at September 30, 2022, reflecting declines from both December 31, 2021 and June 30, 2022 levels.

The Company currently has no loans or leases on deferral and accruing. (During the COVID-19 pandemic, $914 million was on deferral status at June 30, 2020).

On January 1, 2022, the Company implemented Current Expected Credit Losses (“CECL”) methodology for calculating the Company’s Allowance for Credit Losses (“ACL”). The day one CECL adjustment totaled $5.5 million (a reduction to December 31, 2021 ACL, and benefit to Capital, net of tax effect).

For the quarter ended September 30, 2022, the Company’s provision for credit losses was $599,000 compared to $1.4 million for the June 2022 quarter and $1.6 million for the September 2021 quarter. The provision for credit losses in the September 2022 was lower, when compared to the June 2022 and September 2021 quarters, principally driven by modest loan growth when compared to prior periods.

At September 30, 2022, the ACL was $59.68 million (1.15% of total loans), compared to $59.02 million (1.14% of loans) at June 30, 2022. The ALLL at December 31, 2021 (before adoption of CECL) was $61.70 million (1.27% of loans). 

Capital

The Company’s capital position during the September 2022 quarter was benefitted by net income of $20.13 million which was partially offset by the repurchase of 290,399 shares through the Company’s stock repurchase program at a total cost of $9.9 million and the quarterly dividend of $909,000. U.S. Generally Accepted Accounting Principles (“GAAP”) Capital at September 30, 2022 was also impacted by a $23.6 million increase in the unrealized loss on available-for-sale securities in the third quarter of 2022 due to the significant rise in medium-term Treasury yields.

Mr. Kennedy noted, “Despite capital spent on stock repurchases, and capital being affected by the increased unrealized loss on AFS securities, our tangible book value per share improved slightly during Q3 2022 to $26.10 at September 30, 2022.”

The Company’s and Bank’s regulatory capital ratios as of September 30, 2022 remain strong, and reflect increases from June 30, 2022 and December 31, 2021 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test (as of June 30, 2022), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period. With an additional stress overlay (impacting the industries most affected by the Pandemic more severely), the Bank still remains well capitalized over the two-year stress period.

On October 27, 2022, the Company declared a cash dividend of $0.05 per share payable on November 28, 2022, to shareholders of record on November 10, 2022.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.1 billion and assets under management/administration of $9.3 billion as of September 30, 2022.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers.  Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy.  Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service.  Visit www.pgbank.com and www.peapackprivate.com for more information.

The foregoing may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are not historical facts and include expressions about management’s confidence and strategies and management’s expectations about new and existing programs and products, investments, relationships, opportunities and market conditions.  These statements may be identified by such forward-looking terminology as “expect,” “look,” “believe,” “anticipate,” “may” or similar statements or variations of such terms.  Actual results may differ materially from such forward-looking statements.  Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to:

·       our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;

·       the impact of anticipated higher operating expenses in 2022 and beyond;

·       our ability to successfully integrate wealth management firm acquisitions;

·       our ability to manage our growth;

·       our ability to successfully integrate our expanded employee base;

·       an unexpected decline in the economy, in particular in our New Jersey and New York market areas;

·       declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;

·       declines in the value in our investment portfolio;

·       impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;

·       the continuing impact of the COVID-19 pandemic on our business and results of operation;

·       higher than expected increases in our allowance for credit losses;

·       higher than expected increases in loan and lease losses or in the level of delinquent, nonperforming, classified and criticized loans;

·       inflation and changes in interest rates, which may adversely impact or margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;

·       decline in real estate values within our market areas;

·       legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;

·       successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;

·       higher than expected FDIC insurance premiums;

·       adverse weather conditions;

·       the current or anticipated impact of military conflict, terrorism or other geopolitical events;

·       our inability to successfully generate new business in new geographic markets;

·       a reduction in our lower-cost funding sources;

·       our inability to adapt to technological changes;

·       claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;

·       our inability to retain key employees;

·       demands for loans and deposits in our market areas;

·       adverse changes in securities markets;

·       changes in accounting policies and practices; and

·       other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2021.  We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

 (Unaudited)

For the Three Months Ended  Sept 30,  June 30, March 31, Dec 31, Sept 30,  2022 2022 2022 2021 2021Income Statement Data:          Interest income  $55,013  $48,520  $44,140  $42,075  $40,067Interest expense   9,488   5,627   4,518   4,863   4,856Net interest income  45,525  42,893  39,622  37,212  35,211Wealth management fee income  12,943  13,891  14,834  13,962  13,860Service charges and fees  1,060  1,063  952  996  959Bank owned life insurance  299  310  313  308  311Gain on loans held for sale at fair value

   (Mortgage banking) (A)  60  151  247  352  408Gain/(loss) on loans held for sale at lower of cost or
   fair value  —  —  —  (265)  —Fee income related to loan level, back-to-back
   swaps (A)  —  —  —  —  —Gain on sale of SBA loans (A)  622  2,675  2,844  989  1,569Corporate advisory fee income (A)  102  33  1,561  2,180  84Other income  1,868  860  1,254  581  660Loss on securities sale, net (B)  —  —  (6,609)  —  —Fair value adjustment for CRA equity security  (571)  (475)  (682)  (139)  (70)Total other income  16,383  18,508  14,714  18,964  17,781Salaries and employee benefits (C)  22,656  21,882  22,449  20,105  19,859Premises and equipment  4,534  4,640  4,647  4,519  4,459FDIC insurance expense  510  503  471   402  555Swap valuation allowance  —  —  673  893  1,350Other expenses  5,860  5,634  5,929  5,785  5,962Total operating expenses  33,560  32,659  34,169  31,704  32,185Pretax income before provision for credit losses  28,348  28,742  20,167  24,472  20,807Provision for credit losses (D)  599  1,449  2,375  3,750  1,600Income before income taxes  27,749  27,293  17,792  20,722  19,207Income tax expense  7,623  7,193  4,351  5,867  5,036Net income  $20,126  $20,100  $13,441  $14,855  $14,171           Total revenue (E)  $61,908  $61,401  $54,336  $56,176  $52,992Per Common Share Data:          Earnings per share (basic)  $1.11  $1.10  $0.73  $0.80  $0.76Earnings per share (diluted)  1.09  1.08  0.71  0.78  0.74Weighted average number of common
   shares outstanding:          Basic  18,072,385  18,325,605  18,339,013  18,483,268  18,763,316Diluted  18,420,661  18,637,340  18,946,683  19,070,594  19,273,831Performance Ratios:          Return on average assets annualized (ROAA) 1.30% 1.30% 0.87% 0.96% 0.95%Return on average equity annualized (ROAE) 15.21% 15.43% 9.88% 10.94% 10.40%Return on average tangible common equity (ROATCE) (F) 16.73% 17.00% 10.85% 12.03% 11.43%Net interest margin (tax-equivalent basis) 2.98% 2.83% 2.69% 2.46% 2.42%GAAP efficiency ratio (G) 54.21% 53.19% 62.88% 56.44% 60.74%Operating expenses / average assets annualized 2.17% 2.11% 2.22% 2.05% 2.16%

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.

(B) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.

(C) The March 2022 quarter included $1.5 million of severance expense related to corporate restructuring.

(D) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(E) Total revenue equals the sum of net interest income plus total other income.

(F) Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income.  See Non-GAAP financial measures reconciliation included in these tables.

(G) Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)

For the Nine Months Ended      Sept 30, Change  2022 2021 $ %Income Statement Data:        Interest income  $147,673  $117,992  $29,681 25%Interest expense   19,633   17,143   2,490 15%Net interest income  128,040  100,849  27,191 27%Wealth management fee income  41,668  39,025  2,643 7%Service charges and fees  3,075  2,701  374 14%Bank owned life insurance  922  1,388  (466) -34%Gain on loans held for sale at fair value (Mortgage banking) (A)  458  1,842  (1,384) -75%Gain on loans held for sale at lower of cost or fair value (B)  —  1,407  (1,407) -100%Fee income related to loan level, back-to-back swaps (A)  —  —  — N/AGain on sale of SBA loans (A)  6,141  3,950  2,191 55%Corporate advisory fee income (A)  1,696  1,303  393 30%Loss on swap termination  —  (842)  842 -100%Other income (C)  3,982  2,798  1,184 42%Loss on securities sale, net (D)  (6,609)  —  (6,609) N/AFair value adjustment for CRA equity security  (1,728)  (293)  (1,435) 490%Total other income  49,605  53,279  (3,674) -7%Salaries and employee benefits (E)  66,987  61,759  5,228 8%Premises and equipment  13,821  12,646  1,175 9%FDIC insurance expense  1,484  1,669  (185) -11%Swap valuation allowance  673  1,350  (677) -50%Other expenses  17,423  17,039  384 2%Total operating expenses  100,388  94,463  5,925 6%Pretax income before provision for credit losses  77,257  59,665  17,592 29%Provision for credit losses (F)  4,423  2,725   1,698 62%Income before income taxes  72,834  56,940  15,894 28%Income tax expense  19,167  15,173  3,994 26%Net income  $53,667  $41,767  $11,900 28%         Total revenue (G)  $177,645  $154,128  $23,517 15%Per Common Share Data:        Earnings per share (basic)  $2.94  $2.21  $0.73 33%Earnings per share (diluted)  2.88  2.15  0.73 34%Weighted average number of common shares outstanding:        Basic  18,244,691  18,891,601  (646,910) -3%Diluted  18,652,042  19,390,522  (738,480) -4%Performance Ratios:        Return on average assets annualized (ROAA) 1.16% 0.94% 0.22% 23%Return on average equity annualized (ROAE) 13.46% 10.43% 3.03% 29%Return on average tangible common equity (ROATCE) (H) 14.81% 11.40% 3.41% 30%Net interest margin (tax-equivalent basis) 2.83% 2.35% 0.48% 21%GAAP efficiency ratio (I) 56.51% 61.29% (4.78)% -8%Operating expenses / average assets annualized 2.17% 2.12% 0.05% 2%         

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.

(B) Includes gain on sale of $57 million of PPP loans completed in the nine months ended September 30, 2021.

(C) Includes income of $722,000 from the referral of PPP loans to a third-party firm during the nine months ended September 30, 2021.

(D) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.

(E) The September 2022 and 2021 nine months ended each included $1.5 million of severance expense related to corporate restructuring.

(F) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(G) Total revenue equals the sum of net interest income plus total other income.

(H) Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income.  See Non-GAAP financial measures reconciliation included in these tables.

(I) Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)

(Unaudited)

As of  Sept 30, June 30, March 31, Dec 31, Sept 30,  2022 2022 2022 2021 2021ASSETS          Cash and due from banks  $5,066  $6,203  $8,849  $5,929  $9,299Federal funds sold   —   —   —   —   —Interest-earning deposits  103,214  147,222  105,111  140,875  606,913Total cash and cash equivalents  108,280  153,425  113,960  146,804  616,212Securities available for sale  497,880  556,791  601,163  796,753  843,779Securities held to maturity  103,551  105,048   106,816   108,680   —CRA equity security, at fair value  12,957  13,528  14,003  14,685  14,824FHLB and FRB stock, at cost (A)  14,986  13,710  18,570  12,950  12,950           Residential mortgage  519,088  512,341  513,289  501,340  510,878Multifamily mortgage  1,856,675  1,876,783  1,850,097  1,595,866  1,497,683Commercial mortgage  638,903  657,812  669,899  662,626  680,107Commercial and industrial loans  2,099,917  2,048,474  2,041,720  2,009,252  1,833,532Consumer loans  37,412  37,675  35,322  33,687  30,689Home equity lines of credit  36,375  36,023  38,604  40,803  42,512Other loans  259  236  226  238  245Total loans  5,188,629  5,169,344  5,149,157  4,843,812  4,595,646Less: Allowances for credit losses (B)  59,683  59,022  58,386  61,697  65,133Net loans  5,128,946  5,110,322  5,090,771  4,782,115  4,530,513           Premises and equipment  23,781  22,804  22,960  23,044  23,123Other real estate owned   116   116   —   —   —Accrued interest receivable  17,816  23,468  22,890  21,589  22,790Bank owned life insurance  47,072  46,944  46,805  46,663  46,510Goodwill and other intangible assets  47,698  48,082  48,471  48,902  49,333Finance lease right-of-use assets  3,021   3,209   3,395   3,582   3,769Operating lease right-of-use assets  13,404   14,192   14,725   9,775   10,307Due from brokers (C)   —   —   120,245   —   —Other assets (D)  67,753  39,528  30,890  62,451  66,175TOTAL ASSETS  $6,087,261  $6,151,167  $6,255,664  $6,077,993  $6,240,285           LIABILITIES          Deposits:          Noninterest-bearing demand deposits  $1,317,954  $1,043,225  $1,023,208  $956,482  $986,765Interest-bearing demand deposits  2,149,629  2,456,988  2,362,987  2,287,894  2,355,892Savings  166,821  168,441  162,116  154,914  168,831Money market accounts  1,178,112  1,217,516  1,304,017  1,307,051  1,287,686Certificates of deposit – Retail  345,047  375,387  384,909  409,608  426,981Certificates of deposit – Listing Service  30,647  31,348  31,348  31,382  31,382Subtotal “customer” deposits  5,188,210  5,292,905  5,268,585  5,147,331  5,257,537IB Demand – Brokered  85,000  85,000  85,000  85,000  85,000Certificates of deposit – Brokered  25,974  25,963  33,831  33,818  33,804Total deposits  5,299,184  5,403,868  5,387,416  5,266,149  5,376,341Short-term borrowings   32,369   —   122,085   —  —Paycheck Protection Program Liquidity Facility (E)   —   —   —   —   48,496Finance lease liability  5,003  5,305  5,573  5,820  6,063Operating lease liability  14,101  14,756  15,155  10,111  10,644Subordinated debt, net   132,916  132,844  132,772  132,701  132,629Other liabilities (D)  88,174  74,070  69,237  116,824  123,098TOTAL LIABILITIES  5,571,747  5,630,843  5,732,238  5,531,605  5,697,271Shareholders’ equity  515,514  520,324  523,426  546,388  543,014TOTAL LIABILITIES AND          SHAREHOLDERS’ EQUITY  $6,087,261  $6,151,167  $6,255,664  $6,077,993  $6,240,285Assets under management and / or administration at
   Peapack-Gladstone Bank’s Private Wealth Management
   Division (market value, not included above-dollars in billions)  $9.3  $9.5  $10.7  $11.1  $10.3           

(A) FHLB means "Federal Home Loan Bank" and FRB means "Federal Reserve Bank."

(B) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(C) Includes $120 million due from FHLB related to securities sales at March 31, 2022.  The $120 million received on April 1, 2022, was used to reduce short term borrowings.

(D) The change in other assets and other liabilities was primarily due to the change in the fair value of our back-to-back swap program.

(E) Represents funding provided by the Federal Reserve for pledged PPP loans.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

As of  Sept 30, June 30, March 31, Dec 31, Sept 30,  2022 2022 2022 2021 2021Asset Quality:          Loans past due over 90 days and still accruing  $—  $—  $—  $—  $—Nonaccrual loans  15,724  15,078  15,884  15,573  25,925Other real estate owned   116   116   —   —   —Total nonperforming assets  $15,840  $15,194  $15,884  $15,573  $25,925           Nonperforming loans to total loans 0.30% 0.29% 0.31% 0.32% 0.56%Nonperforming assets to total assets 0.26% 0.25% 0.25% 0.26% 0.42%           Performing TDRs (A)(B)  $2,761  $2,272  $2,375  $2,479  $416           Loans past due 30 through 89 days and still accruing (C)  $7,248  $3,126  $606  $8,606  $1,193           Loans subject to special mention  $82,107  $98,787  $110,252  $116,490  $115,935           Classified loans  $27,507  $27,167  $47,386  $50,702  $51,937           Impaired loans  $13,047  $13,227  $16,147  $18,052  $26,341           Allowance for credit losses ("ACL"):          Beginning of quarter  $59,022  $58,386  $61,697  $65,133  $63,505Day one CECL adjustment   —   —   (5,536)   —   —Provision for credit losses (D)   665   646   2,489   3,750   1,600(Charge-offs)/recoveries, net   (4)   (10)   (264)   (7,186)   28End of quarter  $59,683  $59,022  $58,386  $61,697  $65,133           ACL to nonperforming loans 379.57% 391.44% 367.58% 396.18% 251.24%ACL to total loans 1.15% 1.14% 1.13% 1.27% 1.42%General ACL to total loans (E) 1.10% 1.09% 1.09% 1.19% 1.26%

(A) Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.

(B) Excludes TDRs included in nonaccrual loans in the following amounts:  $12.9 million at September 30, 2022; $13.5 million at June 30, 2022; $13.6 million at March 31, 2022; $1.1 million at December 31, 2021 and $4.0 million at September 30, 2021.

(C) Includes $5.1 million outstanding to a U.S. governmental unit at September 30, 2022; and $6.9 million for one equipment lease principally due to administrative issues with the servicer and the lessee/borrower at December 31, 2021.

(D) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to roll forward the ACL excludes a credit of $66,000 at September 30, 2022, a provision of $803,000 at June 30, 2022 and a credit of $114,000 at March 31, 2022 related to off-balance sheet commitments.

(E) Total ACL less specific reserves equals general ACL.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

September 30, December 31, September 30,  2022 2021 2021Capital Adequacy         Equity to total assets (A)  8.47%  8.99%  8.70%Tangible equity to tangible assets (B)  7.75%  8.25%  7.97%Book value per share (C)   $28.77   $29.70   $29.15Tangible book value per share (D)   $26.10   $27.05   $26.50          Tangible equity to tangible assets excluding other comprehensive loss*  8.88%  8.44%  8.11%Tangible book value per share excluding other comprehensive loss*   $30.29   $27.72   $26.99

*Excludes other comprehensive loss of $75.0 million for the quarter ended September 30, 2022, $12.4 million for the quarter ended December 31, 2021, and $9.0 million for the quarter ended September 30, 2021.

As of  September 30, December 31, September 30,  2022 2021 2021Regulatory Capital – Holding Company            Tier I leverage  $540,464 8.70%  $508,231 8.29%  $501,188 8.56%Tier I capital to risk-weighted assets  540,464 10.86  508,231 10.62  501,188 10.97Common equity tier I capital ratio
   to risk-weighted assets  540,440 10.86  508,207 10.62  501,159 10.97Tier I & II capital to risk-weighted assets  733,988 14.74  700,790 14.64  691,044 15.12             Regulatory Capital – Bank            Tier I leverage (E)  $670,717 10.79%  $612,762 9.99%  $594,610 10.15%Tier I capital to risk-weighted assets (F)  670,717 13.48  612,762 12.80  594,610 13.01Common equity tier I capital ratio
   to risk-weighted assets (G)  670,693 13.48  612,738 12.80  594,581 13.01Tier I & II capital to risk-weighted assets (H)  731,325 14.69  672,614 14.05  651,841 14.26

(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at quarter end.

(B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at quarter end is calculated by dividing tangible equity by tangible assets at quarter end.  See Non-GAAP financial measures reconciliation included in these tables.

(C) Book value per common share is calculated by dividing shareholders’ equity by quarter end common shares outstanding.

(D) Tangible book value per share excludes intangible assets.  Tangible book value per share is calculated by dividing tangible equity by quarter end common shares outstanding.  See Non-GAAP financial measures reconciliation tables.

(E) Regulatory well capitalized standard = 5.00% ($311 million)

(F) Regulatory well capitalized standard = 8.00% ($398 million)

(G) Regulatory well capitalized standard = 6.50% ($324 million)

(H) Regulatory well capitalized standard = 10.00% ($498 million)

PEAPACK-GLADSTONE FINANCIAL CORPORATION

LOANS CLOSED

(Dollars in Thousands)

(Unaudited)

For the Quarters Ended  Sept 30, June 30, March 31, Dec 31, Sept 30,  2022 2022 2022 2021 2021Residential loans retained  $17,885  $35,172  $41,547  $22,953  $36,845Residential loans sold  4,898  9,886  15,669  20,694  24,041Total residential loans  22,783  45,058  57,216  43,647  60,886Commercial real estate  7,320  13,960  25,575  16,134  14,944Multifamily  4,000  74,564  265,650  162,740  120,716Commercial (C&I) loans/leases (A) (B)  251,249  332,801  143,029  341,886  143,121SBA  5,682  10,534  26,093  27,630  11,570Wealth lines of credit (A)  4,450  12,575  9,400  7,500  10,020Total commercial loans  272,701  444,434  469,747  555,890  300,371Installment loans  1,253  100  131  94  178Home equity lines of credit (A)  5,614  3,897  1,341  5,359  2,535Total loans closed  $302,351  $493,489  $528,435  $604,990  $363,970           

For the Nine Months Ended  Sept 30, Sept 30,  2022 2021Residential loans retained  $94,604  $89,742Residential loans sold  30,453  95,346Total residential loans  125,057  185,088Commercial real estate  46,855  65,550Multifamily  344,214  461,545Commercial (C&I) loans (A) (B)  727,079  413,547SBA (C)  42,309  86,276Wealth lines of credit (A)  26,425  15,695Total commercial loans  1,186,882  1,042,613Installment loans  1,484  266Home equity lines of credit (A)  10,852  8,574Total loans closed  $1,324,275  $1,236,541     

(A) Includes loans and lines of credit that closed in the period but not necessarily funded.

(B) Includes equipment finance.

(C) Includes PPP loans of $56 million for the nine months ended September 30, 2021.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

(Tax-Equivalent Basis, Dollars in Thousands)

(Unaudited)

For the Three Months Ended  September 30, 2022 September 30, 2021  Average Income/   Average Income/    Balance Expense Yield Balance Expense YieldASSETS:            Interest-earning assets:            Investments:            Taxable (A)  $754,180  $2,853 1.51%  $820,574  $2,824 1.38%Tax-exempt (A) (B)  3,226  30  3.72  6,035  64  4.24             Loans (B) (C):            Mortgages  513,864  3,861  3.01  503,621  3,779  3.00Commercial mortgages  2,510,616  23,121  3.68  2,133,259  16,114  3.02Commercial  2,016,590  23,362  4.63  1,826,368  16,553  3.63Commercial construction  12,073  143  4.74   24,596   198   3.22Installment  38,338  399  4.16  32,219  245  3.04Home equity  36,706  451  4.91  43,182  357  3.31Other  263  7  10.65  252  5  7.94Total loans  5,128,450  51,344  4.00  4,563,497  37,251  3.27Federal funds sold  —  —  —  —  —  —Interest-earning deposits  232,158  1,162  2.00  413,623  142  0.14Total interest-earning assets   6,118,014   55,389 3.62%   5,803,729   40,281 2.78%Noninterest-earning assets:            Cash and due from banks  8,296      8,592    Allowance for credit losses  (59,464)      (64,100)    Premises and equipment  23,580      23,311    Other assets  97,583      201,287    Total noninterest-earning assets  69,995      169,090    Total assets  $6,188,009      $5,972,819                 LIABILITIES:            Interest-bearing deposits:            Checking  $2,408,206  $5,127 0.85%  $2,098,827  $1,177 0.22%Money markets  1,237,975  1,557  0.50  1,257,760  683  0.22Savings  168,281  5  0.01  152,759  20  0.05Certificates of deposit – retail  391,340  791  0.81  461,917  836  0.72Subtotal interest-bearing deposits  4,205,802  7,480  0.71  3,971,263  2,716  0.27Interest-bearing demand – brokered  85,000  345  1.62  85,000  385  1.81Certificates of deposit – brokered  25,968  210  3.23  33,796  266  3.15Total interest-bearing deposits  4,316,770  8,035  0.74  4,090,059  3,367  0.33Borrowings  3,810  29  3.04  64,332  57  0.35Capital lease obligation  5,106  61  4.78  6,147  74  4.82Subordinated debt  132,874  1,363  4.10  132,588  1,358  4.10Total interest-bearing liabilities  4,458,560  9,488 0.85%  4,293,126  4,856 0.45%Noninterest-bearing liabilities:            Demand deposits  1,116,843      997,450    Accrued expenses and other liabilities  83,446      137,387    Total noninterest-bearing liabilities  1,200,289      1,134,837    Shareholders’ equity  529,160      544,856    Total liabilities and shareholders’ equity  $6,188,009      $5,972,819    Net interest income    $45,901      $35,425  Net interest spread     2.77%     2.33%Net interest margin (D)     2.98%     2.42%             

(A) Average balances for available for sale securities are based on amortized cost.

(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(C) Loans are stated net of unearned income and include nonaccrual loans.

(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

(Tax-Equivalent Basis, Dollars in Thousands)

(Unaudited)

For the Three Months Ended  September 30, 2022 June 30, 2022  Average Income/   Average Income/    Balance Expense Yield Balance Expense YieldASSETS:            Interest-earning assets:            Investments:            Taxable (A)  $754,180  $2,853 1.51%  $774,145  $3,535 1.83%Tax-exempt (A) (B)   3,226   30   3.72   4,193   40   3.82             Loans (B) (C):            Mortgages   513,864   3,861   3.01   513,666   3,630   2.83Commercial mortgages   2,510,616   23,121   3.68   2,552,128   21,185   3.32Commercial   2,016,590   23,362   4.63   2,024,457   19,348   3.82Commercial construction   12,073   143   4.74   16,186   162   4.00Installment   38,338   399   4.16   37,235   297   3.19Home equity   36,706   451   4.91   38,061   331   3.48Other   263   7   10.65   258   6   9.30Total loans   5,128,450   51,344   4.00   5,181,991   44,959   3.47Federal funds sold   —   —   —   —   —   —Interest-earning deposits   232,158   1,162  2.00   164,066   314  0.77Total interest-earning assets   6,118,014   55,389 3.62%   6,124,395   48,848 3.19%Noninterest-earning assets:            Cash and due from banks   8,296       9,715    Allowance for credit losses   (59,464)       (59,629)    Premises and equipment   23,580       22,952    Other assets   97,583       96,232    Total noninterest-earning assets   69,995       69,270    Total assets  $6,188,009      $6,193,665                 LIABILITIES:            Interest-bearing deposits:            Checking  $2,408,206  $5,127 0.85%  $2,493,668  $2,330 0.37%Money markets  1,237,975  1,557  0.50  1,234,564  579  0.19Savings  168,281  5  0.01  163,062  5  0.01Certificates of deposit – retail  391,340  791  0.81  411,202  651  0.63Subtotal interest-bearing deposits  4,205,802  7,480  0.71  4,302,496  3,565  0.33Interest-bearing demand – brokered  85,000  345  1.62  85,000  364  1.71Certificates of deposit – brokered  25,968  210  3.23  33,470  261  3.12Total interest-bearing deposits  4,316,770  8,035  0.74  4,420,966  4,190  0.38Borrowings  3,810  29  3.04  3,873  10  1.03Capital lease obligation  5,106  61  4.78  5,406  64  4.74Subordinated debt  132,874  1,363  4.10  132,803  1,363  4.11Total interest-bearing liabilities  4,458,560  9,488 0.85%  4,563,048  5,627 0.49%Noninterest-bearing liabilities:            Demand deposits  1,116,843      1,029,538    Accrued expenses and other liabilities  83,446      79,882    Total noninterest-bearing liabilities  1,200,289      1,109,420    Shareholders’ equity  529,160      521,197    Total liabilities and shareholders’ equity  $6,188,009      $6,193,665    Net interest income    $45,901      $43,221  Net interest spread     2.77%     2.70%Net interest margin (D)     2.98%     2.83%             

(A) Average balances for available for sale securities are based on amortized cost.

(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(C) Loans are stated net of unearned income and include nonaccrual loans.

(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

(Tax-Equivalent Basis, Dollars in Thousands)

(Unaudited)

For the Nine Months Ended  September 30, 2022 September 30, 2021  Average Income/   Average Income/    Balance Expense Yield Balance Expense YieldASSETS:            Interest-earning assets:            Investments:            Taxable (A)  $818,411  $9,995 1.63%  $822,262  $8,473 1.37%Tax-exempt (A) (B)   4,035   117  3.87   6,961   243  4.65             Loans (B) (C):            Mortgages   511,999   11,148  2.90   501,276   11,559  3.07Commercial mortgages   2,472,503   62,481  3.37   1,972,723   45,590  3.08Commercial   2,016,533   60,911  4.03   1,900,231   49,992  3.51Commercial construction   15,427   465  4.02   20,418   516  3.37Installment   36,697   951  3.46   34,724   777  2.98Home equity   38,324   1,106  3.85   45,672   1,133  3.31Other   268   18  8.96   239   15  8.37Total loans   5,091,751   137,080  3.59   4,475,283   109,582  3.26Federal funds sold   —   —   —   64   —  0.13Interest-earning deposits   174,833   1,505  1.15   465,287   367  0.11Total interest-earning assets   6,089,030   148,697 3.26%   5,769,857   118,665 2.74%Noninterest-earning assets:            Cash and due from banks   8,491       10,018    Allowance for credit losses   (60,026)       (67,592)    Premises and equipment   23,187       23,087    Other assets   119,908       203,344    Total noninterest-earning assets   91,560       168,857    Total assets  $6,180,590      $5,938,714                 LIABILITIES:            Interest-bearing deposits:            Checking  $2,411,023  $8,695 0.48%  $1,996,663  $3,099 0.21%Money markets  1,255,341  2,675  0.28  1,250,933  2,204  0.23Savings  162,675  15  0.01  140,066  55  0.05Certificates of deposit – retail  409,442  2,048  0.67  494,255  3,333  0.90Subtotal interest-bearing deposits  4,238,481  13,433  0.42  3,881,917  8,691  0.30Interest-bearing demand – brokered  85,000  1,082  1.70  100,110  1,334  1.78Certificates of deposit – brokered  31,058  732  3.14  33,783  791  3.12Total interest-bearing deposits  4,354,539  15,247  0.47  4,015,810  10,816  0.36Borrowings  20,876  103  0.66  138,448  448  0.43Capital lease obligation  5,389  193  4.78  6,376  229  4.79Subordinated debt  132,803  4,090  4.11  165,053  5,650  4.56Total interest-bearing liabilities  4,513,607  19,633 0.58%  4,325,687  17,143 0.53%Noninterest-bearing liabilities:            Demand deposits  1,042,064      932,088    Accrued expenses and other liabilities  93,462      143,045    Total noninterest-bearing liabilities  1,135,526      1,075,133    Shareholders’ equity  531,457      533,894    Total liabilities and shareholders’ equity  $6,180,590      $5,934,714    Net interest income    $129,064      $101,522  Net interest spread     2.68%     2.21%Net interest margin (D)     2.83%     2.35%             

(A) Average balances for available for sale securities are based on amortized cost.

(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(C) Loans are stated net of unearned income and include nonaccrual loans.

(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts.  We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively.  We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding.  We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end.  We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue.  We calculate the efficiency ratio by dividing total noninterest expenses, excluding other real estate owned provision, as determined under GAAP, by net interest income and total noninterest income as determined under GAAP, but excluding net gains/(losses) on loans held for sale at lower of cost or fair value and excluding net gains on securities from this calculation, which we refer to below as recurring revenue.  We believe that this provides a reasonable measure of core expenses relative to core revenue.

We believe these non-GAAP financial measures provide information that is important to investors and useful in understanding our financial position, results and ratios because our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and are not a substitute for an analysis based on GAAP measures.  As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titles measures reported by other companies.  A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share and efficiency ratio to the underlying GAAP numbers is set forth below.

(Dollars in thousands, except share data)

Three Months Ended  Sept 30, June 30, March 31, Dec 31, Sept 30,Tangible Book Value Per Share 2022 2022 2022 2021 2021Shareholders’ equity  $515,514  $520,324  $523,426  $546,388  $543,014Less:  Intangible assets, net  47,698  48,082  48,471  48,902  49,333Tangible equity  $467,816  $472,242  $474,955  $497,486  $493,681Less: other comprehensive loss  (74,983)  (58,727)  (40,938)  (12,374)  (9,035)Tangible equity excluding other comprehensive loss  $542,799  $530,969  $515,893  $509,860  $502,716           Period end shares outstanding  17,920,571  18,190,009  18,370,312  18,393,888  18,627,910Tangible book value per share  $26.10  $25.96  $25.85  $27.05  $26.50Tangible book value per share excluding other comprehensive loss  $30.29  $29.19  $28.08  $27.72  $26.99Book value per share  28.77  28.60  28.49  29.70  29.15           Tangible Equity to Tangible Assets          Total assets  $6,087,261  $6,151,167  $6,255,664  $6,077,993  $6,240,285Less: Intangible assets, net  47,698  48,082  48,471  48,902  49,333Tangible assets  $6,039,563  $6,103,085  $6,207,193  $6,029,091  $6,190,952Less: other comprehensive loss  (74,983)  (58,727)  (40,938)  (12,374)  (9,035)Tangible assets excluding other comprehensive loss  $6,114,546  $6,161,812  $6,248,131  $6,041,465  $6,199,987           Tangible equity to tangible assets 7.75% 7.74% 7.65% 8.25% 7.97%Tangible equity to tangible assets excluding other comprehensive loss 8.88% 8.62% 8.26% 8.44% 8.11%Equity to assets 8.47% 8.46% 8.37% 8.99% 8.70%           

Three Months Ended  Sept 30, June 30, March 31, Dec 31, Sept 30,Return on Average Tangible Equity 2022 2022 2022 2021 2021Net income  $20,126  $20,100  $13,441  $14,855  $14,171           Average shareholders’ equity  $529,160  $521,197  $544,179  $543,035  $544,856Less:  Average intangible assets, net  47,922  48,291  48,717  49,151  48,757Average tangible equity  $481,238  $472,906  $495,462  $493,884  $496,099           Return on average tangible common equity  16.73% 17.00% 10.85% 12.03% 11.43%           

For the Nine Months Ended  Sept 30, Sept 30,Return on Average Tangible Equity 2022 2021Net income  $53,667  $41,767     Average shareholders’ equity  $531,457  $533,894Less:  Average intangible assets, net  48,307  45,306Average tangible equity  483,150  488,588     Return on average tangible common equity  14.81% 11.40%     

Three Months Ended  Sept 30, June 30, March 31, Dec 31, Sept 30,Efficiency Ratio 2022 2022 2022 2021 2021Net interest income  $45,525  $42,893  $39,622  $37,212  $35,211Total other income  16,383  18,508  14,714  18,964  17,781Add:             Fair value adjustment for CRA equity security  571  475  682  139  70Less:             Loss/(gain) on loans held for sale             at lower of cost or fair value  —  —  —  265  —   Loss on securities sale, net  —  —  6,609  —  —Total recurring revenue  62,479  61,876  61,627  56,580  53,062           Operating expenses  33,560  32,659  34,169  31,704  32,185Less:              Swap valuation allowance  —  —  673  893  1,350   Severance expense  —  —  1,476  —  —Total operating expense  33,560  32,659  32,020  30,811  30,835           Efficiency ratio 53.71% 52.78% 51.96% 54.46% 58.11%