BEDMINSTER, N.J., Jan. 29, 2020 (GLOBE NEWSWIRE) -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter and full year 2019 results, a quarterly dividend, and the status of the stock repurchase program. 

For the quarter ended December 31, 2019, the Company recorded revenue of $46.44 million, pretax income of $17.79 million, net income of $12.23 million and diluted earnings per share (“EPS”) of $0.64, compared to $40.64 million, $13.62 million, $10.73 million and $0.55, respectively, for the same three-month period last year. The 2019 quarter included increased net interest income and non-interest income, partially offset by an increased provision for loan and lease losses (due to loan growth) and increased operating expenses (due in part to the wealth management firm acquired in September 2019). In comparing the fourth quarter of 2019 to the fourth quarter of 2018, revenue increased 14% and pretax income increased 31%, reflecting favorable operating leverage during the period. For the same periods net income increased 14% and EPS increased 16%. The lower growth in net income and EPS relative to pre-tax income was due to a higher effective tax rate in 2019 caused by changes in NJ State tax law in 2018.       

For the twelve months ended December 31, 2019, the Company recorded total revenue of $174.97 million, pretax income of $66.12 million, net income of $47.43 million and diluted earnings per share of $2.44, compared to $159.36 million, $57.72 million, $44.17 million and $2.31, respectively, for the twelve months ended December 31, 2018, reflecting increases of 10% in revenue and 15% in pretax income, reflecting favorable operating leverage. Net income and EPS increased 7% and 6%, respectively, less than the increase in pretax income due to the increase in the effective tax rate in 2019. The effective tax rate was 28.26% for twelve months of 2019 compared to 23.48% for the twelve months of 2018. The increase was caused by changes in NJ State tax law in 2018.   

As previously announced, on July 25, 2019, the Company authorized the repurchase of up to 960,000 shares, or approximately 5% of its outstanding shares, through June 30, 2020. During the fourth quarter of 2019, under this program, the Company purchased 143,925 shares, at an average price of $29.78, for a total cost of $4.3 million. To date, under this program, the Company purchased 739,778 shares, at an average price of $28.39, for a total cost of $21.0 million. 220,222 shares remain to be purchased under the authorization.

Douglas L. Kennedy, President and CEO, said, “We were very pleased with our earnings this past quarter, as we continued to drive operating leverage. We acknowledge the challenges the Bank and the industry face given the recent Fed rate decreases and the shape of the yield curve. We were pleased our reported net interest margin (“NIM”) did not decrease and our NIM, adjusted for prepayment premiums and excess liquidity (see page 6), only decreased marginally in the fourth quarter, after the three rate decreases during the second half of 2019. Further, we believe our strategy (which results in a higher incidence of fee income - 33% of total revenue for the fourth quarter of 2019) will enable us to deliver higher quality earnings and increased shareholder value over time.”

EXECUTIVE SUMMARY:

The following tables summarize specified financial measures for the periods shown.

December 2019 Quarter Compared to Prior Year Quarter

		Three Months Ended					Three Months Ended
		December 31,					December 31,				Increase/
(Dollars in millions, except per share data)		2019 (A)					2018 (B)				(Decrease)
Net interest income		$	30.91				$	29.39			$	1.52				5	%
Provision for loan and lease losses			1.95					1.50				0.45				30
Net interest income after provision			28.96					27.89				1.07				4
Wealth management fee income			10.12					8.55				1.57				18
Capital markets activity			3.73					2.19				1.54				70
Other income			1.68					0.51				1.17				229
Total other income			15.53					11.25				2.74				24
Operating expenses			26.70					25.52				1.18				5
Pretax income			17.79					13.62				2.63				19
Income tax expense			5.56					2.89				2.67				92
Net income		$	12.23				$	10.73			$	(0.04	)			(0	)%
Diluted EPS		$	0.64				$	0.55			$	0.09				16	%
Total Revenue		$	46.44				$	40.64			$	5.80				14	%
Effective tax rate			31.25	%				21.22	%			10.03
Return on average assets annualized			0.98	%				0.96	%			0.02
Return on average equity annualized			9.81	%				9.32	%			0.49

(A) The December 2019 quarter included a full quarter of wealth management fee income and expense related to Point View Wealth Management, (“Point View”), which was acquired effective September 1, 2019. The December 2019 quarter included a higher effective tax rate than the prior year quarter due to changes in NJ state tax law.
(B) The December 2018 quarter included $4.39 million loss on the sale of multifamily loans; $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of MCM; and a $405,000 write-down of intangible assets related to MCM.

December 2019 Quarter Compared to Linked Quarter

		Three Months Ended				Three Months Ended
		December 31,				September 30,					Increase/
(Dollars in millions, except per share data)		2019 (A)				2019					(Decrease)
Net interest income		$	30.91			$	30.09				$	0.82				3	%
Provision for loan and lease losses			1.95				0.80					1.15				144
Net interest income after provision			28.96				29.29					(0.33	)			(1	)
Wealth management fee income			10.12				9.50					0.62				7
Capital markets activity			3.73				2.77					0.96				35
Other income			1.68				2.15					(0.47	)			(22	)
Total other income			15.53				14.42					1.11				8
Operating expenses			26.70				26.26					0.44				2
Pretax income			17.79				17.45					0.34				2
Income tax expense			5.56				5.22					0.34				7
Net income		$	12.23			$	12.23				$	0.00				0	%
Diluted EPS		$	0.64			$	0.63				$	0.01				2	%
Total Revenue		$	46.44			$	44.51				$	1.93				4	%
Effective tax rate			31.25	%			29.91	%				1.34
Return on average assets annualized			0.98	%			1.00	%				(0.02	)
Return on average equity annualized			9.81	%			9.87	%				(0.06	)

(A) The quarter ended December 31, 2019 included a full quarter of wealth management fee income and expense related to Point View, which was acquired effective September 1, 2019 compared to one month in the quarter ended September 30, 2019.

Year over Year Comparison            

		Year Ended				Year Ended
		December 31,				December 31,					Increase/
(Dollars in millions, except per share data)		2019 (A)				2018 (B)					(Decrease)
Net interest income		$	120.27			$	115.16				$	5.11				4	%
Provision for loan and lease losses			4.00				3.55					0.45				13
Net interest income after provision			116.27				111.61					4.66				4
Wealth management fee income			38.36				33.25					5.11				15
Capital markets activity			8.67				5.81					2.86				49
Other income			7.67				5.14					2.53				49
Total other income			54.70				44.20					10.50				24
Operating expenses			104.85				98.09					6.76				7
Pretax income			66.12				57.72					8.40				15
Income tax expense			18.69				13.55					5.14				38
Net income		$	47.43			$	44.17				$	3.26				7	%
Diluted EPS		$	2.44			$	2.31				$	0.13				6	%
Total Revenue		$	174.97			$	159.36				$	15.61				10	%
Effective tax rate			28.26	%			23.48	%				4.78
Return on average assets annualized			0.99	%			1.02	%				(0.03	)
Return on average equity annualized			9.70	%			10.13	%				(0.43	)

             

1. The year ended December 31, 2019 included a full year of wealth management fee income and expense related to Lassus Wherley, which was acquired effective September 1, 2018, and includes four months of wealth management fee income and expense related to Point View, which was acquired effective September 1, 2019. The 2019 twelve months included a higher effective tax rate than the prior year due to changes in NJ state tax law.
2. The 2018 year includes $4.39 million loss on the sale of multifamily loans; $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of MCM; and a $405,000 write-down of intangible assets related to MCM. 

Other highlights for the quarter included:

• Wealth Management remains integral to our strategy and provides a diversified, predictable, and stable source of revenue over time:
  
  
  • As previously announced, effective September 1, 2019 the Company completed its acquisition of Point View, a registered investment advisor headquartered in Summit, NJ, which added nearly $350 million of assets under management and/or administration (“AUM/AUA”).
  • At December 31, 2019, the market value of AUM/AUA at the Peapack Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) was $7.5 billion reflecting an increase of $1.7 billion from $5.8 billion at December 31, 2018, reflecting growth of 29% from the end of the prior year.
  • Wealth management fee income totaled $10.12 million and $38.36 million for the quarter and year ended December 31, 2019, reflecting an increase of $1.6 million, or 18%, from the December 2018 quarter and $5.1 million or 15% from the 2018 year. 
  • Wealth management fee income, which comprised approximately 22% of the Company’s total revenue for the quarter ended December 31, 2019, continues to contribute significantly to the Company’s diversified revenue sources.

•  Growth in Commercial Banking also continues to be integral to our strategy:
  
  
  • Total commercial and industrial (“C&I”) loans (including equipment finance leases and loans of $659 million) at December 31, 2019 were $1.78 billion. This reflected net growth of $378 million (27%) when compared to $1.40 billion at December 31, 2018 and reflected net growth of $201 million when compared to the September 30, 2019 balance (13% growth linked quarter; 51% annualized).
  • C&I momentum has continued to build and pipelines remain strong.
  • As of December 31, 2019, total C&I loans comprised 40% of the total loan portfolio, as compared to 36% at December 31, 2018. As of December 31, 2019, total multifamily loans comprised 27% of the total loan portfolio compared to 29% at December 31, 2018.
  • The Bank’s concentration in commercial real estate loans was 404% of risk-based capital at December 31, 2019 compared to 394% at December 31, 2018. The slight increase was due to management’s plan to generate volumes ahead of and at yields in excess of expected significant maturities/payoffs in 2020.

 

• Deposits, funding, and interest rate risk continue to be actively managed:
  
  
  • Deposits totaled $4.24 billion at December 31, 2019. This reflected net growth of $348 million (9%) when compared to $3.90 billion at December 31, 2018 and increased $182 million (4% growth linked quarter; 18% annualized) when compared to the September 30, 2019 balance.
  • The Company’s loan-to-deposit ratio was 104.0% at December 31, 2019, up slightly from September 30, 2019 and December 31, 2018 levels .
  • The Company continues to have access to approximately $1.3 billion of available secured funding at the Federal Home Loan Bank.
  • With the transformation to a commercial bank balance sheet and business model, the Company’s interest rate sensitivity models indicate the Company is asset sensitive as of December 31, 2019, and that net interest income would improve in a rising rate environment but decline in a falling rate environment. Over the past six months, the Company has been managing its balance sheet and deposit costs to mitigate the effects of a falling rate environment. 

• Capital and asset quality continue to be strong.
  
  
  • The Company’s and Bank’s capital ratios at December 31, 2019 remain strong, despite $21.0 million of share repurchases made during the third and fourth quarters as part of the Company’s stock repurchase program. At December 31, 2019 the Company’s tangible capital ratio stood at 9.01%. The Company believes its existing capital and capital generation from earnings will be more than adequate to support planned balance sheet growth, wealth acquisitions, and potential purchases under its stock repurchase program.
  • The Company authorized a 5% (960,000 shares) stock repurchase program on July 25, 2019 under which the Company has purchased 739,778 shares through the end of the fourth quarter.
  • The Company’s tangible book value per share at December 31, 2019 was $24.47 reflecting an increase of 8% from $22.58 at December 31, 2018.
  • Asset quality metrics continued to be strong as of December 31, 2019. Nonperforming assets at December 31, 2019 were $28.9 million, or 0.56% of total assets as compared to $25.7 million and 0.56% of total assets at December 31, 2018.
   

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management Business

In the December 2019 quarter, the Bank’s wealth management business generated $10.12 million in fee income, reflecting an increase of $1.57 million (18% growth) compared to $8.55 million for the December 2018 quarter, and reflecting an increase of $619,000 from the September 2019 quarter (7% growth linked quarter, 26% annualized). The December 2019 quarter included three months of fee income related to Point View compared to one month in the September 2019 quarter, which was acquired effective September 1, 2019, as well as increased fees from net organic growth in assets under management. 

John P. Babcock, President of the “Peapack Private Wealth Management” division said, “I am pleased with our results; we had approximately $750 million of new business inflows in 2019 and have a strong pipeline as we finished the year strong. We are making significant forward progress on integrating the systems, processes and people from our 2017, 2018, and 2019 acquisitions and continue to selectively look for additional acquisitions that can add talent and expertise to our wealth management organization.”

Loans / Commercial Banking

Net loans increased to $4.37 billion at December 31, 2019 from $3.89 billion at December 31, 2018, reflecting 12% annual growth. Loan/line origination levels were robust as was paydown activity. Mr. Kennedy noted, “We were pleased to have strong net loan growth, despite increased paydown activity. And, we have entered the new year with strong loan pipelines.” 

Total C&I loans (including equipment finance leases and loans of $659 million) at December 31, 2019 were $1.78 billion. This reflected net growth of $378 million (27%) when compared to $1.40 billion at December 31, 2018 and reflected net growth of $201 million when compared to the September 30, 2019 balance (13% growth linked quarter; 51% annualized).  

Mr. Kennedy said, “The loan market continues to be extremely competitive from a structure/credit and a pricing perspective. As I have noted before, we will continue to be disciplined and not compromise our credit standards, but we will compete on price, as long as returns remain reasonable as measured by our proprietary loan pricing model.”

Mr. Kennedy also said, “Our newly expanded Corporate Advisory and Structured Finance businesses give us the capability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service, giving us a competitive advantage over much of our peers.”

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale sourced deposits, volatility, and/or operational risk.

For the quarter ended December 31, 2019, the Company utilized its excess balance sheet liquidity (basically interest-earning deposits), increased client deposits and short-term borrowings to fund its loan growth.

Mr. Kennedy noted, “As a commercial bank with an asset sensitive balance sheet, as the Fed reduces rates, our loans reprice faster than our deposits. Thus, we have been and will remain keenly focused on our comprehensive deposit rate reduction program with an eye toward relationship profitability.” 

As of December 31, 2019, in addition to approximately $610 million of cash, cash equivalents and investment securities on its balance sheet, the Company also had approximately $1.55 billion of secured funding available from the Federal Home Loan Bank, of which only $233 million was drawn as of December 31, 2019.
             
Mr. Kennedy noted, “Depending on market conditions, we may utilize lower cost fixed rate wholesale borrowings and/or interest rate swaps, as opposed to retail deposits, to fund fixed rate loan production.”

Kennedy went on to note, “The northeast market continues to be extremely competitive for deposits. The Company is focused on providing high touch client service, a key element in growing its personal and commercial core deposit base. The Company is focused on multiple retail channels, as well as commercial channels, including its enhanced Treasury Management and Escrow offerings. Further, all of our Private Bankers remain keenly focused on deposit gathering.”

Net Interest Income (NII)/Net Interest Margin (NIM)

	Twelve Months Ended								Twelve Months Ended
	December 31, 2019								December 31, 2018
	NII				NIM				NII				NIM
NII/NIM excluding the below	$	119,032			2.67%				$	112,840			2.69%
Prepayment premiums received on loan paydowns		1,328			0.03%					2,002			0.05%
Effect of maintaining excess interest earning cash during 2019		(86	)		-0.07%					—				—
Material fees recognized on full paydowns of C&I loans		—				—				321			0.01%
NII/NIM as reported	$	120,274			2.63%				$	115,163			2.75%
	Three Months Ended								Three Months Ended								Three Months Ended
	December 31, 2019								September 30, 2019								December 31, 2018
	NII				NIM				NII				NIM				NII				NIM
NII/NIM excluding the below	$	30,385			2.61%				$	29,896			2.67%				$	28,899			2.70%
Prepayment premiums received on loan paydowns		414			0.03%					236			0.02%					495			0.04%
Effect of maintaining excess interest earning cash during 2019		115			-0.04%					(47	)		-0.09%					(9	)		-0.02%
Material fees recognized on full paydowns of C&I loans		—				—				—				—				—				—
NII/NIM as reported	$	30,914			2.60%				$	30,085			2.60%				$	29,385			2.72%

Net interest income and net interest margin comparisons are shown above.

Mr. Kennedy noted, “Given the yield curve as well as the recent Fed rate decreases, our reported NIM remained flat, but our core NIM declined slightly this quarter, as was expected. While our models indicate additional slight compression in Q1 2020, assuming no further Fed rate decreases, we believe our margin will gradually begin to improve after that. In addition to managing our balance sheet, asset yields and cost of deposits very closely, we will continue to focus even more on fee based activities.”    

Other Noninterest Income (other than Wealth Management fee income)

Noninterest income from Capital Markets activities (loan level back-to-back swap activities, SBA lending and sale program, and mortgage banking income) totaled $3.73 million for the December 2019 quarter compared to $2.77 million for the September 2019 quarter and $2.19 million for the December 2018 quarter. Income from these programs are not linear each quarter, as some quarters will be higher than others.

Other income totaled $504,000 for the fourth quarter of 2019, compared to $902,000 for the third quarter of 2019, and $3.6 million for the fourth quarter of 2018. The December 2018 quarter included $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of Murphy Capital Management.

The December 2018 quarter included a $4.39 million loss on the sale of $131 million of fixed rate multifamily loans, sold as part of the Company’s balance sheet management strategy.    

Operating Expenses

The Company’s total operating expenses were $26.70 million for the quarter ended December 31, 2019, compared to $26.26 million for the September 2019 quarter and $25.52 million for the December 2018 quarter. The December 2019 quarter included three months of expenses related to Point View’s operations compared to one month in the September 2019 quarter. Strategic hiring and normal salary increases also contributed to the increase for the December 2019 quarter. There was no FDIC insurance expense for the December 2019 quarter or the September 2019 quarter as the Bank utilized its small bank assessment credit from the FDIC. Mr. Kennedy said, “As we reported last quarter, the Company launched a company-wide expense review, with a goal of slowing expense growth, while continuing our investment in digital and in client acquisition initiatives. Both activities continue to be important given the current yield curve environment.”

Income Taxes

The effective tax rate for the December 2019 quarter was 31.2%, compared to 29.9% for the September 2019 quarter, and 21.2% for the December 2018 quarter. The effective tax rate for the year ended December 31, 2019 was 28.3% compared to 23.5% for the year ended December 31, 2018. The 2019 periods included higher NJ State Income Tax due to the change in NJ Tax law.

Asset Quality / Provision for Loan and Lease Losses

Nonperforming assets at December 31, 2019 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $28.9 million, or 0.56% of total assets, compared to $29.7 million, or 0.60% of total assets, at September 30, 2019 and $25.7 million, or 0.56% of total assets, at December 31, 2018. Total loans past due 30 through 89 days and still accruing were $1.9 million at December 31, 2019, compared to $6.3 million at September 30, 2019 and $3.5 million at December 31, 2018.    

For the quarter ended December 31, 2019, the Company’s provision for loan and lease losses was $2.0 million compared to $800,000 for the September 2019 quarter and $1.5 million for the December 2018 quarter. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) reflect, among other things, the Company’s asset quality metrics, net loan growth, net charge-offs/recoveries, and the composition of the loan portfolio.

At December 31, 2019, the allowance for loan and lease losses was $43.68 million (151% of nonperforming loans and 0.99% of total loans), compared to $41.58 million at September 30, 2019 (142% of nonperforming loans and 1.00% of total loans), and $38.50 million (150% of nonperforming loans and 0.98% of total loans) at December 31, 2018. 

Capital / Dividend / Stock Repurchase Program

The Company’s capital position during the December 2019 quarter was benefitted by net income partially offset by the purchase of shares through the Company’s stock repurchase program. During the quarter, the Company purchased 143,925 shares, at an average price of $29.78, for a total cost of $4.3 million.

The Company’s and Bank’s capital ratios at December 31, 2019 all remain strong. Such ratios remain well above regulatory well capitalized standards.

On January 28, 2020, the Company declared a cash dividend of $0.05 per share payable on February 26, 2020 to shareholders of record on February 11, 2020.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $5.2 billion and AUM/AUA of $7.5 billion as of December 31, 2019. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its Private Wealth Management Division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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 inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
• the impact of anticipated higher operating expenses in 2019 and beyond;
• our inability to successfully integrate wealth management firm acquisitions;
• our inability to manage our growth;
• our inability 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 value in our investment portfolio;
• higher than expected increases in our allowance for loan and lease losses;
• higher than expected increases in loan and lease losses or in the level of nonperforming loans;
• changes in interest rates;
• 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;
• our inability to successfully generate new business in new geographic markets;
• our inability to execute upon new business initiatives;
• our lack of liquidity to fund our various cash obligations;
• 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;
• effects related to a prolonged shutdown of the federal government which could impact SBA and other government lending programs; 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, 2018. 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
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2019				2019				2019				2019				2018
Income Statement Data:
Interest income		$	45,556			$	45,948			$	44,603			$	44,563			$	42,781
Interest expense			14,642				15,863				15,335				14,556				13,396
Net interest income			30,914				30,085				29,268				30,007				29,385
Provision for loan and lease losses			1,950				800				1,150				100				1,500
Net interest income after provision for loan and   lease losses			28,964				29,285				28,118				29,907				27,885
Wealth management fee income			10,120				9,501				9,568				9,174				8,552
Service charges and fees			893				882				897				816				938
Bank owned life insurance			325				332				326				338				351
Gain on loans held for sale at fair value   (Mortgage banking) (A)			344				198				132				47				74
Loss on loans held for sale at lower of cost or   fair value			(4	)			(6	)			—				—				(4,392	)
Fee income related to loan level, back-to-back   swaps (A)			2,459				2,349				721				270				1,838
Gain on sale of SBA loans (A)			929				224				573				419				277
Other income (B)			504				902				740				606				3,571
Securities gains/(losses), net			(45	)			34				69				59				46
Total other income			15,525				14,416				13,026				11,729				11,255
Salaries and employee benefits			17,954				17,476				17,543				17,156				16,372
Premises and equipment			3,898				3,849				3,600				3,388				3,422
FDIC insurance expense			—				(277	)			277				277				645
Other expenses			4,849				5,211				4,753				4,894				5,085
Total operating expenses			26,701				26,259				26,173				25,715				25,524
Income before income taxes			17,788				17,442				14,971				15,921				13,616
Income tax expense			5,555				5,216				3,421				4,496				2,887
Net income		$	12,233			$	12,226			$	11,550			$	11,425			$	10,729
Total revenue (C)		$	46,439			$	44,501			$	42,294			$	41,736			$	40,640
Per Common Share Data:
Earnings per share (basic)		$	0.64			$	0.63			$	0.59			$	0.59			$	0.56
Earnings per share (diluted)			0.64				0.63				0.59				0.58				0.55
Weighted average number of common   shares outstanding:
Basic			18,966,917				19,314,666				19,447,155				19,350,452				19,260,033
Diluted			19,207,738				19,484,905				19,568,371				19,658,006				19,424,906
Performance Ratios:
Return on average assets annualized (ROAA)			0.98	%			1.00	%			0.99	%			0.98	%			0.96	%
Return on average equity annualized (ROAE)			9.81	%			9.87	%			9.49	%			9.65	%			9.32	%
Net interest margin (tax- equivalent basis)			2.60	%			2.60	%			2.64	%			2.70	%			2.72	%
GAAP efficiency ratio (D)			57.50	%			59.01	%			61.88	%			61.61	%			62.81	%
Operating expenses / average assets annualized			2.13	%			2.16	%			2.25	%			2.21	%			2.28	%

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.
(B) The December 31, 2018 quarter includes death benefit from life insurance policy of $3.0 million related to the December 31, 2018 passing of the founder and managing principal of MCM.
(C) Total revenue includes net interest income plus total other income.
(D) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see 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 Twelve Months Ended
		Dec 31,								Change
		2019				2018				$				%
Income Statement Data:
Interest income		$	180,670			$	159,686			$	20,984				13	%
Interest expense			60,396				44,523				15,873				36	%
Net interest income			120,274				115,163				5,111				4	%
Provision for loan and lease losses			4,000				3,550				450				13	%
Net interest income after provision for loan and   lease losses			116,274				111,613				4,661				4	%
Wealth management fee income			38,363				33,245				5,118				15	%
Service charges and fees			3,488				3,502				(14	)			0	%
Bank owned life insurance			1,321				1,381				(60	)			-4	%
Gain on loans held for sale at fair value (Mortgage banking) (A)			721				334				387				116	%
Loss on loans held for sale at lower of cost or fair value			(10	)			(4,392	)			4,382				-100	%
Fee income related to loan level, back-to-back swaps (A)			5,799				3,844				1,955				51	%
Gain on sale of SBA loans (A)			2,145				1,636				509				31	%
Other income (B)			2,752				5,036				(2,284	)			-45	%
Securities gains/(losses), net			117				(393	)			510				-130	%
Total other income			54,696				44,193				10,503				24	%
Salaries and employee benefits			70,129				62,802				7,327				12	%
Premises and equipment			14,735				13,497				1,238				9	%
FDIC insurance expense			277				2,443				(2,166	)			-89	%
Other expenses			19,707				19,344				363				2	%
Total operating expenses			104,848				98,086				6,762				7	%
Income before income taxes			66,122				57,720				8,402				15	%
Income tax expense			18,688				13,550				5,138				38	%
Net income		$	47,434			$	44,170			$	3,264				7	%
Total revenue (C)		$	174,970			$	159,356			$	15,614				10	%
Per Common Share Data:
Earnings per share (basic)		$	2.46			$	2.33			$	0.13				6	%
Earnings per share (diluted)			2.44				2.31				0.13				6	%
Weighted average number of common shares outstanding:
Basic			19,268,870				18,965,305				303,565				2	%
Diluted			19,411,448				19,148,645				262,803				1	%
Performance Ratios:
Return on average assets annualized (ROAA)			0.99	%			1.02	%			(0.03	)%
Return on average equity annualized (ROAE)			9.70	%			10.13	%			(0.43	)%
Net interest margin (tax- equivalent basis)			2.63	%			2.75	%			(0.12	)%
GAAP efficiency ratio (D)			59.92	%			61.55	%			(1.63	)%
Operating expenses / average assets annualized			2.19	%			2.25	%			(0.06	)%

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.
(B) The December 31, 2018 quarter includes death benefit from life insurance policy of $3.0 million related to the December 31, 2018 passing of the founder and managing principal of MCM.
(C) Total revenue includes net interest income plus total other income.
(D) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.

.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)

		As of
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2019 (A)				2019				2019				2019				2018
ASSETS
Cash and due from banks		$	6,591			$	5,770			$	5,351			$	4,726			$	5,914
Federal funds sold			102				101				101				101				101
Interest-earning deposits			201,492				221,242				298,575				235,487				154,758
Total cash and cash equivalents			208,185				227,113				304,027				240,314				160,773
Securities available for sale			390,755				349,989				378,839				384,400				377,936
Equity security			10,836				7,881				4,847				4,778				4,719
FHLB and FRB stock, at cost			24,068				21,403				18,338				18,460				18,533
Residential mortgage			552,019				561,543				572,926				569,304				573,146
Multifamily mortgage			1,210,003				1,197,093				1,129,476				1,104,406				1,138,190
Commercial mortgage			761,244				721,261				694,674				705,221				702,165
Commercial loans			1,776,450				1,575,076				1,518,591				1,410,146				1,398,214
Consumer loans			54,372				53,829				53,995				54,276				58,678
Home equity lines of credit			57,248				58,423				62,522				57,639				62,191
Other loans			349				380				424				355				465
Total loans			4,411,685				4,167,605				4,032,608				3,901,347				3,933,049
Less: Allowances for loan and lease losses			43,676				41,580				39,791				38,653				38,504
Net loans			4,368,009				4,126,025				3,992,817				3,862,694				3,894,545
Premises and equipment			20,913				20,898				20,987				21,201				27,408
Other real estate owned			50				336				—				—				—
Accrued interest receivable			10,494				11,759				11,594				11,688				10,814
Bank owned life insurance			46,128				45,940				45,744				45,554				45,353
Goodwill and other intangible assets (A)			40,588				41,111				31,941				32,170				32,399
Finance lease right-of-use assets (B)			5,078				5,265				5,452				5,639				—
Operating lease right-of-use assets (B)			12,132				10,328				11,017				7,541				—
Other assets			45,643				57,361				45,631				27,867				45,378
TOTAL ASSETS		$	5,182,879			$	4,925,409			$	4,871,234			$	4,662,306			$	4,617,858
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	529,281			$	544,464			$	544,431			$	476,013			$	463,926
Interest-bearing demand deposits			1,510,363				1,352,471				1,388,821				1,268,823				1,247,305
Savings			112,652				115,448				112,438				114,865				114,674
Money market accounts			1,196,313				1,196,188				1,207,358				1,209,835				1,243,369
Certificates of deposit – Retail			633,763				583,425				570,384				545,450				510,724
Certificates of deposit – Listing Service			47,430				55,664				58,541				68,055				79,195
Subtotal “customer” deposits			4,029,802				3,847,660				3,881,973				3,683,041				3,659,193
IB Demand – Brokered			180,000				180,000				180,000				180,000				180,000
Certificates of deposit – Brokered			33,709				33,696				33,682				56,165				56,147
Total deposits			4,243,511				4,061,356				4,095,655				3,919,206				3,895,340
Short-term borrowings			128,100				67,000				—				—				—
FHLB advances			105,000				105,000				105,000				105,000				108,000
Finance lease liability			7,598				7,793				7,985				8,175				8,362
Operating lease liability (B)			12,423				10,619				11,269				7,683				—
Subordinated debt, net			83,417				83,361				83,305				83,249				83,193
Other liabilities			91,227				94,930				74,132				57,521				53,950
Due to brokers, securities settlements			7,951				—				—				—				—
TOTAL LIABILITIES			4,679,227				4,430,059				4,377,346				4,180,834				4,148,845
Shareholders’ equity			503,652				495,350				493,888				481,472				469,013
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	5,182,879			$	4,925,409			$	4,871,234			$	4,662,306			$	4,617,858
Assets under management and / or administration at   Peapack-Gladstone Bank’s Private Wealth Management   Division (market value, not included above-dollars in billions)		$	7.5			$	7.0			$	6.6			$	6.3			$	5.8

(A) Includes goodwill and intangibles from the Murphy Capital Management, Quadrant Capital Management, Lassus Wherley and Associates and Point View Wealth Management acquisitions completed in August 2017, November 2017, September 2018 and September 2019, respectively.
(B) Resulted from the January 1, 2019 adoption of ASU No. 2016-02, “Leases (Topic 842)”.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)

		As of
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2019				2019				2019				2019				2018
Asset Quality:
Loans past due over 90 days and still accruing		$	—			$	—			$	—			$	—			$	—
Nonaccrual loans (A)			28,881				29,383				31,150				24,892				25,715
Other real estate owned			50				336				—				—				—
Total nonperforming assets		$	28,931			$	29,719			$	31,150			$	24,892			$	25,715
Nonperforming loans to total loans			0.65	%			0.71	%			0.77	%			0.64	%			0.65	%
Nonperforming assets to total assets			0.56	%			0.60	%			0.64	%			0.53	%			0.56	%
Performing TDRs (B)(C)		$	2,357			$	2,527			$	3,772			$	4,274			$	4,303
Loans past due 30 through 89 days and still accruing (D)		$	1,910			$	6,333			$	432			$	2,492			$	3,484
Classified loans		$	58,908			$	53,882			$	56,135			$	51,306			$	58,265
Impaired loans		$	35,924			$	36,627			$	34,941			$	29,185			$	31,300
Allowance for loan and lease losses:
Beginning of period		$	41,580			$	39,791			$	38,653			$	38,504			$	37,293
Provision for loan and lease losses			1,950				800				1,150				100				1,500
Recoveries (charge-offs), net			146				989				(12	)			49				(289	)
End of period		$	43,676			$	41,580			$	39,791			$	38,653			$	38,504
ALLL to nonperforming loans			151.23	%			141.51	%			127.74	%			155.28	%			149.73	%
ALLL to total loans			0.990	%			0.998	%			0.987	%			0.991	%			0.979	%
General ALLL to total loans (E)			0.927	%			0.932	%			0.956	%			0.984	%			0.972	%

(A) Amount includes one healthcare real estate secured loan with a loan balance of $14.5 million at December 31, 2019, that went on nonaccrual at December 31, 2018. In addition, one casual dining commercial banking relationship, with a balance of $5.9 million at December 31, 2019, that went on nonaccrual at June 30, 2019.
(B)  Amounts reflect TDRs that are paying according to restructured terms.
(C) Amount does not include $25.8 million at December 31, 2019, $19.7 million at September 30, 2019, $19.8 million at June 30, 2019, $20.0 million at March 31, 2019 and $20.5 million at December 31, 2018, of TDRs included in nonaccrual loans.
(D) The $6.3 million at September 30, 2019 included one $4.3 million commercial real estate loan that was in process of a rate modification (not a TDR modification). The loan was brought fully current in early October 2019.
(E) Total ALLL less specific reserves equals general ALLL.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)

		December 31,						September 30,						December 31,
		2019						2019						2018
Capital Adequacy
Equity to total assets (A)					9.72	%					10.06	%					10.16	%
Tangible Equity to tangible assets (B)					9.01	%					9.30	%					9.52	%
Book value per share (C)				$	26.61					$	26.07					$	24.25
Tangible Book Value per share (D)				$	24.47					$	23.91					$	22.58

		December 31,								September 30,								December 31,
		2019								2019								2018
Regulatory Capital – Holding Company
Tier I leverage		$	463,521			9.33%				$	455,179			9.43%				$	438,240			9.82%
Tier I capital to risk-weighted assets			463,521			11.14					455,179			11.23					438,240			11.76
Common equity tier I capital ratio   to risk-weighted assets			463,520			11.14					455,177			11.23					438,238			11.76
Tier I & II capital to risk-weighted assets			590,614			14.20					580,120			14.31					559,937			15.03
Regulatory Capital – Bank
Tier I leverage (E)		$	527,833			10.63%				$	534,351			11.08%				$	504,504			11.32%
Tier I capital to risk-weighted assets (F)			527,833			12.70					534,351			13.20					504,504			13.56
Common equity tier I capital ratio   to risk-weighted assets (G)			527,832			12.70					534,349			13.20					504,502			13.56
Tier I & II capital to risk-weighted assets (H)			571,509			13.76					575,931			14.23					543,008			14.59

(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period 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 period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
(C) Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding.
(D) Tangible book value per excludes intangible assets. Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding. See Non-GAAP financial measures reconciliation tables.
(E) Regulatory well capitalized standard = 5.00%
(F) Regulatory well capitalized standard = 6.50%
(G) Regulatory well capitalized standard = 8.00%
(H) Regulatory well capitalized standard = 10.00%

PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)

		For the Quarters Ended
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2019				2019				2019				2019				2018
Residential loans retained		$	17,115			$	19,073			$	21,998			$	10,839			$	24,937
Residential loans sold			21,255				15,846				9,785				3,090				4,686
Total residential loans			38,370				34,919				31,783				13,929				29,623
Commercial real estate			52,630				43,414				34,204				21,025				63,486
Multifamily			63,627				77,138				58,604				21,122				58,175
Commercial (C&I) loans (A) (B)			174,946				228,903				143,944				141,128				285,950
SBA			19,195				3,510				3,740				9,050				5,695
Wealth lines of credit (A)			42,575				6,980				6,725				7,380				5,850
Total commercial loans			352,973				359,945				247,217				199,705				419,156
Installment loans			984				362				1,497				558				649
Home equity lines of credit (A)			2,414				5,631				3,626				1,607				3,625
Total loans closed		$	394,741			$	400,857			$	284,123			$	215,799			$	453,053

 

		For the Twelve Months Ended
		Dec 31,				Dec 31,
		2019				2018
Residential loans retained		$	69,025			$	73,208
Residential loans sold			49,976				25,563
Total residential loans			119,001				98,771
Commercial real estate			151,273				142,601
Multifamily			220,491				96,246
Commercial (C&I) loans (A) (B)			688,921				676,153
SBA			35,495				25,505
Wealth lines of credit (A)			63,660				42,748
Total commercial loans			1,159,840				983,253
Installment loans			3,401				4,669
Home equity lines of credit (A)			13,278				21,486
Total loans closed		$	1,295,520			$	1,108,179

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

		December 31, 2019												December 31, 2018
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	393,549			$	2,428				2.47	%		$	383,455			$	2,521				2.63	%
Tax-exempt (A) (B)			12,037				147				4.88				17,887				173				3.87
Loans (B) (C):
Mortgages			557,132				4,780				3.43				562,284				4,732				3.37
Commercial mortgages			1,959,902				18,588				3.79				1,947,674				18,825				3.87
Commercial			1,662,026				18,413				4.43				1,221,111				14,915				4.89
Commercial construction			4,842				81				6.69				—				—				—
Installment			54,562				524				3.84				60,855				624				4.10
Home equity			58,082				662				4.56				61,423				759				4.94
Other			379				10				10.55				461				11				9.54
Total loans			4,296,925				43,058				4.01				3,853,808				39,866				4.14
Federal funds sold			102				—				0.25				101				—				0.25
Interest-earning deposits			159,759				560				1.40				122,813				636				2.07
Total interest-earning assets			4,862,372				46,193				3.80	%			4,378,064				43,196				3.95	%
Noninterest-earning assets:
Cash and due from banks			5,600												6,876
Allowance for loan and lease losses			(42,374	)											(37,774	)
Premises and equipment			20,946												27,749
Other assets			166,868												112,348
Total noninterest-earning assets			151,040												109,199
Total assets		$	5,013,412											$	4,487,263
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,407,151			$	3,489				0.99	%		$	1,208,604			$	3,174				1.05	%
Money markets			1,169,413				3,456				1.18				1,124,780				3,684				1.31
Savings			112,597				16				0.06				115,316				16				0.06
Certificates of deposit – retail and listing service			660,159				3,734				2.26				569,151				2,914				2.05
Subtotal interest-bearing deposits			3,349,320				10,695				1.28				3,017,851				9,788				1.30
Interest-bearing demand – brokered			180,000				981				2.18				180,000				855				1.90
Certificates of deposit – brokered			33,702				267				3.17				59,061				386				2.61
Total interest-bearing deposits			3,563,022				11,943				1.34				3,256,912				11,029				1.35
Borrowings			221,462				1,383				2.50				143,348				1,043				2.91
Capital lease obligation			7,669				92				4.80				8,428				102				4.84
Subordinated debt			83,385				1,224				5.87				83,157				1,222				5.88
Total interest-bearing liabilities			3,875,538				14,642				1.51	%			3,491,845				13,396				1.53	%
Noninterest-bearing liabilities:
Demand deposits			539,501												496,238
Accrued expenses and other liabilities			99,702												38,498
Total noninterest-bearing liabilities			639,203												534,736
Shareholders’ equity			498,671												460,682
Total liabilities and shareholders’ equity		$	5,013,412											$	4,487,263
Net interest income						$	31,551											$	29,800
Net interest spread											2.29	%											2.42	%
Net interest margin (D)											2.60	%											2.72	%

(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
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

		December 31, 2019												September 30, 2019
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	393,549			$	2,428				2.47	%		$	393,386			$	2,477				2.52	%
Tax-exempt (A) (B)			12,037				147				4.88				13,497				165				4.89
Loans (B) (C):
Mortgages			557,132				4,780				3.43				567,097				4,811				3.39
Commercial mortgages			1,959,902				18,588				3.79				1,856,216				17,870				3.85
Commercial			1,662,026				18,413				4.43				1,530,131				18,605				4.86
Commercial construction			4,842				81				6.69				2,619				51				7.79
Installment			54,562				524				3.84				53,891				560				4.16
Home equity			58,082				662				4.56				58,573				736				5.03
Other			379				10				10.55				396				11				11.11
Total loans			4,296,925				43,058				4.01				4,068,923				42,644				4.19
Federal funds sold			102				—				0.25				101				—				0.25
Interest-earning deposits			159,759				560				1.40				256,865				1,362				2.12
Total interest-earning assets			4,862,372				46,193				3.80	%			4,732,772				46,648				3.94	%
Noninterest-earning assets:
Cash and due from banks			5,600												5,628
Allowance for loan and lease losses			(42,374	)											(40,806	)
Premises and equipment			20,946												21,121
Other assets			166,868												151,265
Total noninterest-earning assets			151,040												137,208
Total assets		$	5,013,412											$	4,869,980
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,407,151			$	3,489				0.99	%		$	1,410,837			$	4,467				1.27	%
Money markets			1,169,413				3,456				1.18				1,184,589				4,227				1.43
Savings			112,597				16				0.06				113,961				16				0.06
Certificates of deposit – retail and listing service			660,159				3,734				2.26				649,393				3,781				2.33
Subtotal interest-bearing deposits			3,349,320				10,695				1.28				3,358,780				12,491				1.49
Interest-bearing demand – brokered			180,000				981				2.18				180,000				901				2.00
Certificates of deposit – brokered			33,702				267				3.17				33,688				267				3.17
Total interest-bearing deposits			3,563,022				11,943				1.34				3,572,468				13,659				1.53
Borrowings			221,462				1,383				2.50				114,584				886				3.09
Capital lease obligation			7,669				92				4.80				7,866				94				4.78
Subordinated debt			83,385				1,224				5.87				83,329				1,224				5.88
Total interest-bearing liabilities			3,875,538				14,642				1.51	%			3,778,247				15,863				1.68	%
Noninterest-bearing liabilities:
Demand deposits			539,501												512,497
Accrued expenses and other liabilities			99,702												83,554
Total noninterest-bearing liabilities			639,203												596,051
Shareholders’ equity			498,671												495,682
Total liabilities and shareholders’ equity		$	5,013,412											$	4,869,980
Net interest income						$	31,551											$	30,785
Net interest spread											2.29	%											2.26	%
Net interest margin (D)											2.60	%											2.60	%

(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
UNAUDITED
TWELVE MONTHS ENDED
Tax-Equivalent Basis, Dollars in Thousands

		December 31, 2019												December 31, 2018
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	391,666			$	10,228				2.61	%		$	363,259			$	8,903				2.45	%
Tax-exempt (A) (B)			14,930				728				4.88				20,489				731				3.57
Loans (B) (C):
Mortgages			565,935				19,321				3.41				565,513				18,842				3.33
Commercial mortgages			1,857,014				72,061				3.88				1,976,712				74,693				3.78
Commercial			1,498,077				71,071				4.74				1,087,600				50,854				4.68
Commercial construction			1,881				132				7.02				—				—				—
Installment			54,555				2,246				4.12				71,643				2,603				3.63
Home equity			60,036				2,981				4.97				61,828				2,786				4.51
Other			391				42				10.74				451				45				9.98
Total loans			4,037,889				167,854				4.16				3,763,747				149,823				3.98
Federal funds sold			102				—				0.25				101				—				0.25
Interest-earning deposits			223,629				4,457				1.99				103,059				1,806				1.75
Total interest-earning assets			4,668,216				183,267				3.93	%			4,250,655				161,263				3.79	%
Noninterest-earning assets:
Cash and due from banks			5,477												5,346
Allowance for loan and lease losses			(40,328	)											(37,904	)
Premises and equipment			21,176												28,477
Other assets			142,156												103,761
Total noninterest-earning assets			128,481												99,680
Total assets		$	4,796,697											$	4,350,335
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,342,901			$	15,789				1.18	%		$	1,143,640			$	9,543				0.83	%
Money markets			1,189,880				16,434				1.38				1,056,368				11,322				1.07
Savings			113,312				63				0.06				119,699				66				0.06
Certificates of deposit – retail and listing service			631,999				14,210				2.25				554,903				9,938				1.79
Subtotal interest-bearing deposits			3,278,092				46,496				1.42				2,874,610				30,869				1.07
Interest-bearing demand – brokered			180,000				3,457				1.92				180,000				3,135				1.74
Certificates of deposit – brokered			42,460				1,225				2.89				64,009				1,608				2.51
Total interest-bearing deposits			3,500,552				51,178				1.46				3,118,619				35,612				1.14
Borrowings			136,992				3,941				2.88				154,765				3,606				2.33
Capital lease obligation			7,956				382				4.80				8,698				418				4.81
Subordinated debt			83,300				4,895				5.88				83,104				4,887				5.88
Total interest-bearing liabilities			3,728,800				60,396				1.62	%			3,365,186				44,523				1.32	%
Noninterest-bearing liabilities:
Demand deposits			505,486												516,718
Accrued expenses and other liabilities			73,601												32,541
Total noninterest-bearing liabilities			579,087												549,259
Shareholders’ equity			488,810												435,890
Total liabilities and shareholders’ equity		$	4,796,697											$	4,350,335
Net interest income						$	122,871											$	116,740
Net interest spread											2.31	%											2.47	%
Net interest margin (D)											2.63	%											2.75	%

(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 ORE 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 one reasonable measure of core expenses relative to core revenue.

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial position, results and ratios. 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.

Non-GAAP Financial Reconciliation

(Dollars in thousands, except share data)

		Three Months Ended
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
Tangible Book Value Per Share		2019				2019				2019				2019				2018
Shareholders’ equity		$	503,652			$	495,350			$	493,888			$	481,472			$	469,013
Less:  Intangible assets, net			40,588				41,111				31,941				32,170				32,399
Tangible equity			463,064				454,239				461,947				449,302				436,614
Period end shares outstanding			18,926,810				18,999,241				19,456,312				19,445,363				19,337,662
Tangible book value per share		$	24.47			$	23.91			$	23.74			$	23.11			$	22.58
Book value per share			26.61				26.07				25.38				24.76				24.25
Tangible Equity to Tangible Assets
Total assets		$	5,182,879			$	4,925,409			$	4,871,234			$	4,662,306			$	4,617,858
Less: Intangible assets, net			40,588				41,111				31,941				32,170				32,399
Tangible assets			5,142,291				4,884,298				4,839,293				4,630,136				4,585,459
Tangible equity to tangible assets			9.01	%			9.30	%			9.55	%			9.70	%			9.52	%
Equity to assets			9.72	%			10.06	%			10.14	%			10.33	%			10.16	%

		Three Months Ended
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
Efficiency Ratio		2019				2019				2019				2019				2018
Net interest income		$	30,914			$	30,085			$	29,268			$	30,007			$	29,385
Total other income			15,525				14,416				13,026				11,729				11,255
Less:  Loss/(gain) on loans held for sale
at lower of cost or fair value			4				6				—				—				4,392
Less:  Income from life insurance proceeds			—				—				—				—				(3,000	)
Add:  Securities (gains)/losses, net			45				(34	)			(69	)			(59	)			(46	)
Total recurring revenue			46,488				44,473				42,225				41,677				41,986
Operating expenses			26,701				26,259				26,173				25,715				25,524
Less: ORE provision			—				—				—				—				—
Total operating expense			26,701				26,259				26,173				25,715				25,524
Efficiency ratio			57.44	%			59.04	%			61.98	%			61.70	%			60.79	%

		For the Twelve Months Ended
		Dec 31,				Dec 31,
Efficiency Ratio		2019				2018
Net interest income		$	120,274			$	115,163
Total other income			54,696				44,193
Add:  Securities (gains)/losses, net			(117	)			393
Less:  Loss/(gain) on loans held for sale
at lower of cost or fair value			10				4,392
Less:  Income from life insurance proceeds			—				(3,000	)
Total recurring revenue			174,863				161,141
Operating expenses			104,848				98,086
Less: ORE provision			—				232
Total operating expense			104,848				97,854
Efficiency ratio			59.96	%			60.73	%

 

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