Peapack-Gladstone Financial Corporation Reports Third Quarter Results

BEDMINSTER, NJ, Oct. 24, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its third quarter 2023 financial results.

This earnings release should be read in conjunction with the Company’s Q3 2023 Investor Update, a copy of which is available on our website at www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.

The Company recorded total revenue of $55.9 million, net income of $8.8 million and diluted earnings per share (“EPS”) of $0.49 for the quarter ended September 30, 2023, compared to revenue of $61.9 million, net income of $20.1 million and diluted EPS of $1.09 for the quarter ended September 30, 2022.

The net interest margin declined to 2.28% for the quarter ended September 30, 2023, compared to 2.49% for the quarter ended June 30, 2023 and 2.98% for the quarter ended September 30, 2022.

The Company’s return on average assets was 0.54%, return on average equity was 6.20%, and return on average tangible equity was 6.75% for the quarter ended September 30, 2023. Loans grew by $44 million to $5.5 billion funded by deposit growth of $61 million to $5.3 billion during the third quarter.

The Company’s liquidity position remains strong as balance sheet liquidity was $756 million as of September 30, 2023, which was 11.59% of total assets. The Company also had $2.8 billion of external borrowing capacity available, when combined with balance sheet liquidity provides us with 294% coverage of our uninsured deposits. Approximately 77% of our deposits are presently covered by FDIC insurance or are fully collateralized.

Douglas L. Kennedy, President and CEO, said, “Our third quarter results were impacted by the continuing compression of our net interest margin primarily driven by the rapid rise in our cost of funds. We were however encouraged to see signs of stabilization in the margin during the quarter as we look at our results on a monthly basis. In addition, our business continues to generated a sizable and consistent stream of noninterest income led by the revenue generated by our Wealth Management business. Noninterest income represented 35% of total revenue during the third quarter."

Mr. Kennedy also noted, “The third quarter results also reflect an elevated provision for credit losses driven by two credit relationships that were transferred to non-performing status during the quarter. Both of these relationships are in the freight industry which is currently facing a massive downturn due to supply and demand imbalances. As we move forward through this challenging economic environment consisting of persistent inflation and rapidly rising interest rates, we continue to analyze our loan portfolio for areas of concern. We believe the diversity of our portfolio and strength of our underwriting standards will protect us in the long term. Unfortunately, we have been forced to deal with a handful of credit issues that have arisen as a result of current economic conditions."

As previously announced, the Company has been approved by its regulators to open a location in mid-town Manhattan in 2024 and has hired a team of experienced professionals to gain entry into this lucrative market. The team, who predominantly started during the third quarter, is performing above expectations and is building robust pipelines.

Mr. Kennedy said, "From a strategic standpoint, the Company is adopting new technology and processes to improve the client experience, which includes empowering all employees to provide innovative solutions and a white glove experience in every interaction."

The following are select highlights for the period ended September 30, 2023:

Wealth Management:

• Gross new business inflows for Q3 2023 totaled $160 million ($96 million managed). For the first nine months of 2023, gross business inflows totaled $688 million ($547 million managed).
• AUM/AUA in our Wealth Management Division totaled $10.4 billion at September 30, 2023 compared to $9.3 billion at September 30, 2022, which is an increase of 12% year over year.
• Wealth Management fee income of $14.0 million for Q3 2023 comprised 25% of total revenue for the quarter.
  

Commercial Banking and Balance Sheet Management:

• Total loans were $5.5 billion at September 30, 2023 reflecting growth of $193 million when compared to $5.3 billion at December 31, 2022.
• Commercial & industrial lending (“C&I”) loan/lease balances comprised 42% of the total loan portfolio at September 30, 2023.
• Fee income on unused commercial lines of credit totaled $794,000 for Q3 2023.
• Fee income recorded by the Equipment Finance division related to equipment transfers to lessees totaled $2.3 million for Q3 2023.
• The net interest margin ("NIM") was 2.28% in Q3 2023, a decline of 21 basis points compared to Q2 2023 and a decline of 70 basis points when compared to Q3 2022.
• Total deposits increased $54 million to $5.3 billion from December 31, 2022.
• Noninterest-bearing demand deposits have declined by $299 million since December 31, 2022.
• Noninterest-bearing demand deposits represented 18% of total deposits as of September 30, 2023.
• Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 89% of total deposits at September 30, 2023.
  

Capital Management:

• During the quarter, the Company repurchased 100,000 shares of Company stock for a cost of $2.8 million. On a year to date basis 367,014 shares have been repurchased during 2023. The Company repurchased 930,977 shares of stock for a cost of $32.7 million during the year ended December 31, 2022.
• At September 30, 2023, the Regulatory Tier 1 Leverage Ratio stood at 10.75% for Peapack-Gladstone Bank (the "Bank") and 9.05% for the Company. The Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.22% for the Bank and 11.13% for the Company at September 30, 2023. These ratios are significantly above well capitalized standards, as capital has benefited from net income generation.

Non-Core Items:

The September 2023 quarter included a:

• $404,000 negative fair value adjustment on an equity security held for CRA investment, which decreased total revenue by $404,000, reduced net income by $293,000 and EPS by $0.01 for the September 2023 quarter. Management believes this to be a non-core item.
  
  

SUMMARY INCOME STATEMENT DETAILS:

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

September 2023 Year Compared to Prior Year

		Nine Months Ended				Nine Months Ended
		September 30,				September 30,					Increase/
(Dollars in millions, except per share data)		2023				2022					(Decrease)
Net interest income		$	119.41			$	128.04				$	(8.63	)			(7	)%
Wealth management fee income			41.99				41.67					0.32				1
Capital markets activity			2.45				8.30					(5.85	)			(70	)
Other income (A)			11.55				(0.36	)				11.91			N/A
Total other income			55.99				49.61					6.38				13
Total Revenue			175.40				177.65					(2.25	)			(1	)%
Operating expenses (B)			110.68				100.39					10.29				10
Pretax income before provision for credit losses			64.72				77.26					(12.54	)			(16	)
Provision for credit losses			9.06				4.42					4.64				105
Pretax income			55.66				72.84					(17.18	)			(24	)
Income tax expense			15.40				19.17					(3.77	)			(20	)
Net income		$	40.26			$	53.67				$	(13.41	)			(25	)%
Diluted EPS		$	2.23			$	2.88				$	(0.65	)			(23	)%
Return on average assets			0.84	%			1.16	%				(0.32	)
Return on average equity			9.66	%			13.46	%				(3.80	)

(A) Other income for the nine months ended September 30, 2023 included fee income from equipment finance activity of $2.7 million and a fair value adjustment on a CRA equity security of negative $404,000. Other income for the nine months ended September 30, 2022 included a $6.6 million loss on sale of securities and a fair value adjustment on a CRA equity security of negative $1.7 million.
(B) The nine months ended September 2023 included one-time charges of $2.0 million related to the recent retirement of certain employees and $175,000 of expense associated with three retail branch closures. The nine months ended September 30, 2022 included $1.5 million of severance expense related to certain staff reorganizations.

September 2023 Quarter Compared to Prior Year Quarter

		Three Months Ended					Three Months Ended
		September 30,					September 30,				Increase/
(Dollars in millions, except per share data)		2023					2022				(Decrease)
Net interest income		$	36.52				$	45.53			$	(9.01	)			(20	)%
Wealth management fee income			13.98					12.94				1.04				8
Capital markets activity			0.61					0.78				(0.17	)			(22	)
Other income (A)			4.76					2.66				2.10				79
Total other income			19.35					16.38				2.97				18
Total Revenue			55.87					61.91				(6.04	)			(10	)%
Operating expenses			37.41					33.56				3.85				11
Pretax income before provision for credit losses			18.46					28.35				(9.89	)			(35	)
Provision for credit losses			5.86					0.60				5.26				877
Pretax income			12.60					27.75				(15.15	)			(55	)
Income tax expense			3.84					7.62				(3.78	)			(50	)
Net income		$	8.76				$	20.13			$	(11.37	)			(56	)%
Diluted EPS		$	0.49				$	1.09			$	(0.60	)			(55	)%
Return on average assets annualized			0.54	%				1.30	%			(0.76	)
Return on average equity annualized			6.20	%				15.21	%			(9.01	)

(A) Other income for the September 2023 quarter included fee income from equipment finance activity of $2.3 million and a fair value adjustment on a CRA equity security of negative $404,000. Other income for the September 2022 quarter included a fair value adjustment on a CRA equity security of negative $571,000.

September 2023 Quarter Compared to Linked Quarter

		Three Months Ended				Three Months Ended
		September 30,				June 30,					Increase/
(Dollars in millions, except per share data)		2023				2023					(Decrease)
Net interest income		$	36.52			$	38.92				$	(2.40	)			(6	)%
Wealth management fee income			13.98				14.25					(0.27	)			(2	)
Capital markets activity			0.61				0.87					(0.26	)			(30	)
Other income (A)			4.76				3.46					1.30				38
Total other income			19.35				18.58					0.77				4
Total Revenue			55.87				57.50					(1.63	)			(3	)%
Operating expenses (B)			37.41				37.69					(0.28	)			(1	)
Pretax income before provision for credit losses			18.46				19.81					(1.35	)			(7	)
Provision for credit losses			5.86				1.70					4.16				245
Pretax income			12.60				18.11					(5.51	)			(30	)
Income tax expense (C)			3.84				4.96					(1.12	)			(23	)
Net income		$	8.76			$	13.15				$	(4.39	)			(33	)%
Diluted EPS		$	0.49			$	0.73				$	(0.24	)			(33	)%
Return on average assets annualized			0.54	%			0.82	%				(0.28	)
Return on average equity annualized			6.20	%			9.43	%				(3.23	)

(A) Other income for the September 2023 quarter included fee income from equipment finance activity of $2.3 million and a fair value adjustment on a CRA equity security of negative $404,000. Other income for the June 2023 quarter included a fair value adjustment on a CRA equity security of negative $209,000.
(B) The June 2023 quarter included one-time charges of $1.7 million associated with the recent retirement of certain employees.
(C) The three months ended June 30, 2023 included a $318,000 tax benefit for the reversal of the New Jersey surtax, which is set to expire on December 31, 2023.

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

AUM/AUA in the Bank’s Wealth Management Division were $10.4 billion at September 30, 2023. For the September 2023 quarter, the Wealth Management Team generated $14.0 million in fee income, compared to $14.3 million for the June 30, 2023 quarter and $12.9 million for the September 2022 quarter. The equity market declined slightly during Q3 2023, contributing to the decrease in AUM/AUA on a linked quarter basis.

John Babcock, President of the Bank's Wealth Management Division, noted, “In Q3 2023, total new accounts and client additions amounted to $160 million ($96 million managed). As we look ahead to the fourth quarter of 2023 and beyond, our new business pipeline is healthy and we remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities and our high-touch client service model distinguishes us in our market and continues to drive our growth and success.”

Loans / Commercial Banking

Total loans grew $193 million or 4% (5% annualized) to $5.5 billion at September 30, 2023 when compared to $5.3 billion at December 31, 2022.

Total C&I loans and leases at September 30, 2023 were $2.3 billion or 42% of the total loan portfolio.

Mr. Kennedy noted, “Given economic uncertainty and rising interest rates, we believe loan demand will be muted somewhat compared to recent prior years. Given the current environment, we believe we will achieve modest loan growth in 2023.”

Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, Corporate Advisory and SBA businesses. We believe these business lines fit perfectly with our private banking business model.”

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

The Company’s NII of $36.5 million and NIM of 2.28% for Q3 2023 decreased $2.4 million and 21 basis points from NII of $38.9 million and NIM of 2.49% for the linked quarter (Q2 2023) and decreased $9.0 million and 70 basis points from NII of $45.5 million and NIM of 2.98% for the prior year (Q3 2022). When comparing Q3 2023 to the linked and prior year quarter, the Company has seen a sharp increase in interest expense mostly driven by higher deposit rates during 2023. Cycle to date betas are approximately 44%. The intense competition for deposit balances from other banks and alternative investment opportunities due to the significant rise in interest rates at such a rapid pace were the primary drivers for increased deposit costs.

Funding / Liquidity / Interest Rate Risk Management

Total deposits increased $54.2 million to $5.3 billion at September 30, 2023 from December 31, 2022. Deposit inflows were benefitted by net growth in brokered/listing service certificates of deposit of $77.2 million partially offset by a decline in brokered interest-bearing deposits of $50.0 million. The Company saw limited net deposit outflows in 2023 mostly including larger deposit relationships using their funds for normal business purposes such as deployment of excess liquidity into higher yielding treasuries or the equity market, tax payments, or asset acquisitions or investment into their business. The Company has also seen clients transition money from noninterest-bearing deposit accounts to higher yielding deposit accounts as a result of increases in the Fed Funds rate.

At September 30, 2023, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $756 million, or 12% of assets.

The Company maintains additional liquidity resources of approximately $2.8 billion through secured available funding with the Federal Home Loan Bank and 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. In addition, the Company also has access to the Bank Term Funding Program offered by the Federal Reserve Bank if needed.

The Company's total on and off-balance sheet liquidity totaled $3.6 billion, which is 294% of the total uninsured/uncollateralized deposits on the Company's balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $613,000 for the September 2023 quarter compared to $868,000 for the June 2023 quarter and $784,000 for the September 2022 quarter. The gain on sale of SBA loans was lower in Q3 2023 due to less activity in the higher interest rate environment and tighter margins.

		Three Months Ended				Three Months Ended				Three Months Ended
		September 30,				June 30,				September 30,
(Dollars in thousands, except per share data)		2023				2023				2022
Gain on loans held for sale at fair value (Mortgage banking)		$	37			$	15			$	60
Fee income related to loan level, back-to-back swaps			—				—				—
Gain on sale of SBA loans			491				838				622
Corporate advisory fee income			85				15				102
Total capital markets activity		$	613			$	868			$	784

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

Other noninterest income was $4.8 million for Q3 2023 compared to $3.5 million for Q2 2023 and $2.7 million for Q3 2022. Q3 2023 included $2.3 million of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases while Q2 2023 included $221,000 and Q3 2022 included $547,000 respectively. Additionally, Q3 2023 included $794,000 of unused line fees compared to $809,000 for Q2 2023 and $818,000 for Q3 2022.

Operating Expenses

The Company’s total operating expenses were $37.4 million for the third quarter of 2023, compared to $37.7 million for the June 2023 quarter and $33.6 million for the September 2022 quarter. The September 2023 quarter included expenses associated with the previously announced New York City expansion. The June 2023 quarter included one-time charge of $1.7 million associated with the recent retirement of certain employees.

Mr. Kennedy noted, “The Company is committed to be in a position of strength when industry headwinds recede as evidenced by the recent announcement of its decision to expand into New York City and the opening of a retail bank location in mid-town Manhattan. We will manage expenses closely and prudently, but will continue to invest to retain talent. We also plan to grow and expand our core wealth management and commercial banking businesses, including strategic hires and lift-outs if opportunities arise, and invest in digital and other software tools to further enhance the client experience.”

Income Taxes

The effective tax rate for the three months ended September 30, 2023 was 30.5%, as compared to 27.4% for the June 2023 quarter and 27.5% for the quarter ended September 30, 2022. The higher tax rate for the September 30 quarter was primarily due to the impact of certain non-deductible expenses related to compensation and benefits.

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include modified loans that are performing in accordance with their terms) were $70.8 million, or 1.09% of total assets at September 30, 2023, as compared to $34.5 million, or 0.53% of total assets at June 30, 2023. The increase during the third quarter was primarily due to two freight related clients totaling $33.4 million that were transferred to nonaccrual status during the quarter. Management is working diligently to resolve both matters as quickly and efficiently as possible. Loans past due 30 to 89 days and still accruing were $9.8 million, or 0.18% of total loans at September 30, 2023 compared to $14.5 million, or 0.27% of total loans at June 30, 2023.

Criticized and classified loans totaled $148.2 million at September 30, 2023, reflecting an increase from June 30, 2023 and September 30, 2022 levels. The Company currently has no loans or leases on deferral and accruing.

For the quarter ended September 30, 2023, the Company’s provision for credit losses was $5.9 million compared to $1.7 million for the June 2023 quarter and $665,000 for the September 2022 quarter. The increased provision for credit losses in the September 2023 quarter was primarily driven by specific provisions related to the two freight credits that were transferred to nonaccrual status during the quarter as described above.

At September 30, 2023, the allowance for credit losses was $68.6 million (1.25% of total loans), compared to $62.7 million (1.15% of loans) at June 30, 2023, and $59.7 million (1.15% of loans) at September 30, 2022.

Capital

The Company’s capital position declined by $6.1 million during the September 2023 quarter as the Company repurchased 100,000 shares of common stock through the Company’s stock repurchase program at a cost of $2.8 million and paid a quarterly cash dividend of $893,000. Additionally, during the third quarter of 2023, the Company recorded a net loss in accumulated other comprehensive income of $13.7 million, net of tax. This amount was driven by a $15.0 million decline in the value of the available for sale securities portfolio partially offset by a $1.3 million gain on cash flow hedges. The total accumulated other comprehensive loss grew to $81.7 million as of September 30, 2023, ($91.0 million loss related to the available for sale securities portfolio partially offset by a $9.3 million gain on the cash flow hedges). These were partially offset by net income of $8.8 million.

Tangible book value per share declined during Q3 2023 to $28.77 at September 30, 2023 from $28.98 at June 30, 2023. Tangible book value per share is a non-GAAP financial measure. See the reconciliation tables included in this release. The Company’s and Bank’s regulatory capital ratios as of September 30, 2023 remain strong, and generally reflect increases from September 30, 2022 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of June 30, 2023), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

On September 27, 2023, the Company declared a cash dividend of $0.05 per share payable on November 27, 2023 to shareholders of record on November 9, 2023.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.5 billion and assets under management/administration of $10.4 billion as of September 30, 2023. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides Private Banking customized solutions through its 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 2023 and beyond;
• our ability to successfully integrate wealth management firm acquisitions;
• 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, including potential recessionary conditions;
• 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 credit losses or in the level of delinquent, nonperforming, classified and criticized loans;
• inflation and changes in interest rates, which may adversely impact our 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;
• a potential government shutdown;
• 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, including our expansion into New York City;
• a reduction in our lower-cost funding sources;
• changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
• 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 governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
• changes in accounting policies and practices; and/or
• 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, 2022. 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:

Frank A. Cavallaro, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-306-8933

(Tables to follow)

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except per share data)
(Unaudited)

		For the Three Months Ended
		Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
		2023				2023				2023				2022				2022
Income Statement Data:
Interest income		$	78,489			$	74,852			$	70,491			$	64,202			$	55,013
Interest expense			41,974				35,931				26,513				16,162				9,488
Net interest income			36,515				38,921				43,978				48,040				45,525
Wealth management fee income			13,975				14,252				13,762				12,983				12,943
Service charges and fees			1,319				1,320				1,258				1,150				1,060
Bank owned life insurance			310				305				297				321				299
Gain on loans held for sale at fair value (Mortgage banking)			37				15				21				25				60
Fee income related to loan level, back-to-back swaps			—				—				—				293				—
Gain on sale of SBA loans			491				838				865				624				622
Corporate advisory fee income			85				15				80				8				102
Other income (A)			3,541				2,039				1,567				1,380				1,868
Fair value adjustment for CRA equity security			(404	)			(209	)			209				28				(571	)
Total other income			19,354				18,575				18,059				16,812				16,383
Total revenue			55,869				57,496				62,037				64,852				61,908
Salaries and employee benefits (B)			25,264				26,354				24,586				22,489				22,656
Premises and equipment			5,214				4,729				4,374				4,898				4,534
FDIC insurance expense			741				729				711				455				510
Other expenses			6,194				5,880				5,903				5,570				5,860
Total operating expenses			37,413				37,692				35,574				33,412				33,560
Pretax income before provision for credit losses			18,456				19,804				26,463				31,440				28,348
Provision for credit losses			5,856				1,696				1,513				1,930				599
Income before income taxes			12,600				18,108				24,950				29,510				27,749
Income tax expense (C)			3,845				4,963				6,595				8,931				7,623
Net income		$	8,755			$	13,145			$	18,355			$	20,579			$	20,126
Per Common Share Data:
Earnings per share (basic)		$	0.49			$	0.73			$	1.03			$	1.15			$	1.11
Earnings per share (diluted)			0.49				0.73				1.01				1.12				1.09
Weighted average number of common shares outstanding:
Basic			17,856,961				17,930,611				17,841,203				17,915,058				18,072,385
Diluted			18,010,127				18,078,848				18,263,310				18,382,193				18,420,661
Performance Ratios:
Return on average assets annualized (ROAA)			0.54	%			0.82	%			1.16	%			1.33	%			1.30	%
Return on average equity annualized (ROAE)			6.20	%			9.43	%			13.50	%			15.73	%			15.21	%
Return on average tangible common equity annualized (ROATCE) (D)			6.75	%			10.30	%			14.78	%			17.30	%			16.73	%
Net interest margin (tax-equivalent basis)			2.28	%			2.49	%			2.88	%			3.12	%			2.98	%
GAAP efficiency ratio (E)			66.97	%			65.56	%			57.34	%			51.52	%			54.21	%
Operating expenses / average assets annualized			2.31	%			2.36	%			2.26	%			2.15	%			2.17	%

(A) The September 2023 quarter included $2.3 million of fee income from equipment finance activity.
(B) The June 2023 quarter included $1.7 million of expense associated with the recent retirement of certain employees.
(C) The three months ended December 31, 2022 included $750,000 income tax expense (net federal benefit) related to a recent New York City nexus determination change which included $563,000 from prior quarters.
(D) 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.
(E) 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
		September 30,								Change
		2023				2022				$				%
Income Statement Data:
Interest income		$	223,832			$	147,673			$	76,159				52	%
Interest expense			104,418				19,633				84,785				432	%
Net interest income			119,414				128,040				(8,626	)			-7	%
Wealth management fee income			41,989				41,668				321				1	%
Service charges and fees			3,897				3,075				822				27	%
Bank owned life insurance			912				922				(10	)			-1	%
Gain on loans held for sale at fair value (Mortgage banking)			73				458				(385	)			-84	%
Fee income related to loan level, back-to-back swaps			—				—				—			N/A
Gain on sale of SBA loans			2,194				6,141				(3,947	)			-64	%
Corporate advisory fee income			180				1,696				(1,516	)			-89	%
Other income (A)			7,147				3,982				3,165				79	%
Loss on securities sale, net (B)			—				(6,609	)			6,609				-100	%
Fair value adjustment for CRA equity security			(404	)			(1,728	)			1,324				-77	%
Total other income			55,988				49,605				6,383				13	%
Total revenue			175,402				177,645				(2,243	)			-1	%
Salaries and employee benefits (C)			76,204				66,987				9,217				14	%
Premises and equipment			14,317				13,821				496				4	%
FDIC insurance expense			2,181				1,484				697				47	%
Swap valuation allowance			—				673				(673	)			-100	%
Other expenses			17,977				17,423				554				3	%
Total operating expenses			110,679				100,388				10,291				10	%
Pretax income before provision for credit losses			64,723				77,257				(12,534	)			-16	%
Provision for credit losses			9,065				4,423				4,642				105	%
Income before income taxes			55,658				72,834				(17,176	)			-24	%
Income tax expense			15,403				19,167				(3,764	)			-20	%
Net income		$	40,255			$	53,667			$	(13,412	)			-25	%
Per Common Share Data:
Earnings per share (basic)		$	2.25			$	2.94			$	(0.69	)			-23	%
Earnings per share (diluted)			2.23				2.88				(0.65	)			-23	%
Weighted average number of common shares outstanding:
Basic			17,876,316				18,244,691				(368,375	)			-2	%
Diluted			18,091,524				18,652,042				(560,518	)			-3	%
Performance Ratios:
Return on average assets (ROAA)			0.84	%			1.16	%			(0.32	)%			-28	%
Return on average equity (ROAE)			9.66	%			13.46	%			(3.80	)%			-28	%
Return on average tangible common equity (ROATCE) (D)			10.55	%			14.81	%			(4.26	)%			-29	%
Net interest margin (tax-equivalent basis)			2.54	%			2.83	%			(0.29	)%			-10	%
GAAP efficiency ratio (E)			63.10	%			56.51	%			6.59	%			12	%
Operating expenses / average assets			2.31	%			2.17	%			0.14	%			6	%

(A) The nine months ended September 2023 included $2.7 million of fee income from equipment finance activity.
(B) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.
(C) The nine months ended September 30, 2023 included $2.0 million of expense associated with the recent retirement of certain employees. The nine months ended September 30, 2022 quarter included $1.5 million of severance expense related to corporate restructuring.
(D) 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.
(E) 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,
		2023				2023				2023				2022				2022
ASSETS
Cash and due from banks		$	7,400			$	4,859			$	6,514			$	5,937			$	5,066
Federal funds sold			—				—				—				—				—
Interest-earning deposits			180,469				166,769				244,779				184,138				103,214
Total cash and cash equivalents			187,869				171,628				251,293				190,075				108,280
Securities available for sale			521,005				540,519				556,266				554,648				497,880
Securities held to maturity			108,940				110,438				111,609				102,291				103,551
CRA equity security, at fair value			12,581				12,985				13,194				12,985				12,957
FHLB and FRB stock, at cost (A)			34,158				35,402				30,338				30,672				14,986
Residential mortgage			585,295				575,238				544,655				525,756				519,088
Multifamily mortgage			1,871,853				1,884,369				1,871,387				1,863,915				1,856,675
Commercial mortgage			622,469				624,710				613,911				624,625				638,903
Commercial and industrial loans			2,321,917				2,278,133				2,266,837				2,213,762				2,099,917
Consumer loans			57,227				52,098				49,002				38,014				37,412
Home equity lines of credit			34,411				34,397				33,294				34,496				36,375
Other loans			265				269				443				304				259
Total loans			5,493,437				5,449,214				5,379,529				5,300,872				5,188,629
Less: Allowance for credit losses			68,592				62,704				62,250				60,829				59,683
Net loans			5,424,845				5,386,510				5,317,279				5,240,043				5,128,946
Premises and equipment			23,969				23,814				23,782				23,831				23,781
Other real estate owned			—				—				116				116				116
Accrued interest receivable			22,889				20,865				19,143				25,157				17,816
Bank owned life insurance			47,509				47,382				47,261				47,147				47,072
Goodwill and other intangible assets			46,286				46,624				46,979				47,333				47,698
Finance lease right-of-use assets			2,274				2,461				2,648				2,835				3,021
Operating lease right-of-use assets			12,800				13,500				12,262				12,873				13,404
Other assets			76,456				67,572				47,848				63,587				67,753
TOTAL ASSETS		$	6,521,581			$	6,479,700			$	6,480,018			$	6,353,593			$	6,087,261
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	947,405			$	1,024,105			$	1,096,549			$	1,246,066			$	1,317,954
Interest-bearing demand deposits			2,871,359				2,816,913				2,797,493				2,143,611				2,149,629
Savings			117,905				120,082				132,523				157,338				166,821
Money market accounts			761,833				763,026				873,329				1,228,234				1,178,112
Certificates of deposit – Retail			422,291				384,106				357,131				318,573				345,047
Certificates of deposit – Listing Service			9,103				10,822				15,922				25,358				30,647
Subtotal “customer” deposits			5,129,896				5,119,054				5,272,947				5,119,180				5,188,210
IB Demand – Brokered			10,000				10,000				10,000				60,000				85,000
Certificates of deposit – Brokered			119,463				69,443				25,895				25,984				25,974
Total deposits			5,259,359				5,198,497				5,308,842				5,205,164				5,299,184
Short-term borrowings			470,576				485,360				378,800				379,530				32,369
Finance lease liability			3,752				4,071				4,385				4,696				5,003
Operating lease liability			13,595				14,308				13,082				13,704				14,101
Subordinated debt, net			133,203				133,131				133,059				132,987				132,916
Due to brokers			—				—				8,308				—				—
Other liabilities			82,140				79,264				78,584				84,532				88,174
TOTAL LIABILITIES			5,962,625				5,914,631				5,925,060				5,820,613				5,571,747
Shareholders’ equity			558,956				565,069				554,958				532,980				515,514
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	6,521,581			$	6,479,700			$	6,480,018			$	6,353,593			$	6,087,261
Assets under management and / or administration at Peapack-Gladstone Bank’s Private Wealth Management Division (market value, not included above-dollars in billions)		$	10.4			$	10.7			$	10.4			$	9.9			$	9.3

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

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

		As of
		Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
		2023				2023				2023				2022				2022
Asset Quality:
Loans past due over 90 days and still accruing		$	—			$	—			$	—			$	—			$	—
Nonaccrual loans (A)			70,809				34,505				28,659				18,974				15,724
Other real estate owned			—				—				116				116				116
Total nonperforming assets		$	70,809			$	34,505			$	28,775			$	19,090			$	15,840
Nonperforming loans to total loans			1.29	%			0.63	%			0.53	%			0.36	%			0.30	%
Nonperforming assets to total assets			1.09	%			0.53	%			0.44	%			0.30	%			0.26	%
Performing modifications (B)(C)		$	248			$	248			$	248			$	—			$	—
Performing TDRs (D)(E)		$	—			$	—			$	—			$	965			$	2,761
Loans past due 30 through 89 days and still accruing		$	9,780			$	14,524			$	2,762			$	7,592			$	7,248
Loans subject to special mention		$	53,328			$	53,606			$	46,566			$	64,842			$	82,107
Classified loans		$	94,866			$	58,655			$	58,010			$	42,985			$	27,507
Individually evaluated loans		$	70,184			$	33,867			$	27,736			$	16,732			$	13,047
Allowance for credit losses ("ACL"):
Beginning of quarter		$	62,704			$	62,250			$	60,829			$	59,683			$	59,022
Provision for credit losses (F)			5,944				1,666				1,464				2,103				665
(Charge-offs)/recoveries, net (G)			(56	)			(1,212	)			(43	)			(957	)			(4	)
End of quarter		$	68,592			$	62,704			$	62,250			$	60,829			$	59,683
ACL to nonperforming loans			96.87	%			181.72	%			217.21	%			320.59	%			379.57	%
ACL to total loans			1.25	%			1.15	%			1.16	%			1.15	%			1.15	%
Collectively evaluated ACL to total loans (H)			1.10	%			1.11	%			1.11	%			1.12	%			1.10	%

(A) Excludes $1.6 million in held for sale at September 30, 2023. Includes two freight credits totaling $33.4 million at September 30, 2023.
(B) Amounts reflect modifications that are paying according to modified terms.
(C) Excludes modifications included in nonaccrual loans of $3.1 million at September 30, 2023 and $777,000 at June 30, 2023.
(D) Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.
(E) Excludes TDRs included in nonaccrual loans in the following amounts: $13.4 million at December 31, 2022 and $12.9 million at September 30, 2022. On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.
(F) Provision to roll forward the ACL excludes a credit of $88,000 at September 30, 2023, a provision of $30,000 at June 30, 2023, a provision of $49,000 at March 31, 2023, a credit of $173,000 at December 31, 2022 and a credit of $66,000 at September 30, 2022 related to off-balance sheet commitments.
(G) Net charge-offs for the quarters ended June 30, 2023 and December 31, 2022 included a charge-off of $1.2 million of a previously established reserve to loans individually evaluated on one commercial real estate loan.
(H) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.

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

		As of
		September 30,						December 31,						September 30,
		2023						2022						2022
Capital Adequacy
Equity to total assets (A)					8.57	%					8.39	%					8.47	%
Tangible equity to tangible assets (B)					7.92	%					7.70	%					7.75	%
Book value per share (C)				$	31.37					$	29.92					$	28.77
Tangible book value per share (D)				$	28.77					$	27.26					$	26.10
Tangible equity to tangible assets excluding other comprehensive loss*					9.06	%					8.77	%					8.88	%
Tangible book value per share excluding other comprehensive loss*				$	33.36					$	31.43					$	30.29

*Excludes other comprehensive loss of $81.7 million for the quarter ended September 30, 2023, $74.2 million for the quarter ended December 31, 2022, and $75.0 million for the quarter ended September 30, 2022. See Non-GAAP financial measures reconciliation included in these tables.

(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.

		As of
		September 30,							December 31,							September 30,
		2023							2022							2022
Regulatory Capital – Holding Company
Tier I leverage		$	592,061			9.05	%		$	557,627			8.90	%		$	540,464			8.70	%
Tier I capital to risk-weighted assets			592,061			11.13				557,627			11.02				540,464			10.86
Common equity tier I capital ratio to risk-weighted assets			592,043			11.13				557,609			11.02				540,440			10.86
Tier I & II capital to risk-weighted assets			784,777			14.76				745,197			14.73				733,988			14.74
Regulatory Capital – Bank
Tier I leverage (E)		$	702,517			10.75	%		$	680,137			10.85	%		$	670,717			10.79	%
Tier I capital to risk-weighted assets (F)			702,517			13.22				680,137			13.45				670,717			13.48
Common equity tier I capital ratio to risk-weighted assets (G)			702,499			13.22				680,119			13.45				670,693			13.48
Tier I & II capital to risk-weighted assets (H)			768,979			14.47				741,719			14.67				731,325			14.69

(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($261 million)
(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($452 million)
(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($372 million)
(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($558 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,
		2023				2023				2023				2022				2022
Residential loans retained		$	21,310			$	39,358			$	30,303			$	28,051			$	17,885
Residential loans sold			2,503				1,072				1,477				1,840				4,898
Total residential loans			23,813				40,430				31,780				29,891				22,783
Commercial real estate			3,900				43,235				18,990				6,747				7,320
Multifamily			3,000				26,662				30,150				37,500				4,000
Commercial (C&I) loans/leases (A) (B)			176,845				158,972				207,814				238,568				251,249
SBA			300				13,713				9,950				17,431				5,682
Wealth lines of credit (A)			6,875				3,950				23,225				7,700				4,450
Total commercial loans			190,920				246,532				290,129				307,946				272,701
Installment loans			6,999				4,587				12,086				1,845				1,253
Home equity lines of credit (A)			6,275				6,107				2,921				3,815				5,614
Total loans closed		$	228,007			$	297,656			$	336,916			$	343,497			$	302,351

		For the Nine Months Ended
		Sept 30,				Sept 30,
		2023				2022
Residential loans retained		$	90,971			$	94,604
Residential loans sold			5,052				30,453
Total residential loans			96,023				125,057
Commercial real estate			66,125				46,855
Multifamily			59,812				344,214
Commercial (C&I) loans (A) (B)			543,631				727,079
SBA			23,963				42,309
Wealth lines of credit (A)			34,050				26,425
Total commercial loans			727,581				1,186,882
Installment loans			23,672				1,484
Home equity lines of credit (A)			15,303				10,852
Total loans closed		$	862,579			$	1,324,275

(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
(Tax-Equivalent Basis, Dollars in Thousands)
(Unaudited)

		For the Three Months Ended
		September 30, 2023												September 30, 2022
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	806,861			$	5,170				2.56	%		$	754,180			$	2,853				1.51	%
Tax-exempt (A) (B)			1,198				11				3.67				3,226				30				3.72
Loans (B) (C):
Mortgages			580,951				5,208				3.59				513,864				3,861				3.01
Commercial mortgages			2,502,351				27,746				4.44				2,510,616				23,121				3.68
Commercial			2,298,723				37,357				6.50				2,016,590				23,362				4.63
Commercial construction			12,346				282				9.14				12,073				143				4.74
Installment			56,248				967				6.88				38,338				399				4.16
Home equity			34,250				680				7.94				36,706				451				4.91
Other			234				7				11.97				263				7				10.65
Total loans			5,485,103				72,247				5.27				5,128,450				51,344				4.00
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			136,315				1,463				4.29				232,158				1,162				2.00
Total interest-earning assets			6,429,477				78,891				4.91	%			6,118,014				55,389				3.62	%
Noninterest-earning assets:
Cash and due from banks			6,954												8,296
Allowance for credit losses			(63,625	)											(59,464	)
Premises and equipment			23,880												23,580
Other assets			85,582												97,583
Total noninterest-earning assets			52,791												69,995
Total assets		$	6,482,268											$	6,188,009
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,813,080			$	24,318				3.46	%		$	2,408,206			$	5,127				0.85	%
Money markets			771,781				4,458				2.31				1,237,975				1,557				0.50
Savings			118,718				75				0.25				168,281				5				0.01
Certificates of deposit – retail			415,665				3,459				3.33				391,340				791				0.81
Subtotal interest-bearing deposits			4,119,244				32,310				3.14				4,205,802				7,480				0.71
Interest-bearing demand – brokered			10,000				136				5.44				85,000				345				1.62
Certificates of deposit – brokered			102,777				1,183				4.60				25,968				210				3.23
Total interest-bearing deposits			4,232,021				33,629				3.18				4,316,770				8,035				0.74
Borrowings			470,616				6,569				5.58				3,810				29				3.04
Capital lease obligation			3,863				46				4.76				5,106				61				4.78
Subordinated debt			133,163				1,730				5.20				132,874				1,363				4.10
Total interest-bearing liabilities			4,839,663				41,974				3.47	%			4,458,560				9,488				0.85	%
Noninterest-bearing liabilities:
Demand deposits			990,854												1,116,843
Accrued expenses and other liabilities			86,598												83,446
Total noninterest-bearing liabilities			1,077,452												1,200,289
Shareholders’ equity			565,153												529,160
Total liabilities and shareholders’ equity		$	6,482,268											$	6,188,009
Net interest income						$	36,917											$	45,901
Net interest spread											1.44	%											2.77	%
Net interest margin (D)											2.28	%											2.98	%

(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, 2023												June 30, 2023
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	806,861			$	5,170				2.56	%		$	806,447			$	4,900				2.43	%
Tax-exempt (A) (B)			1,198				11				3.67				1,858				20				4.31
Loans (B) (C):
Mortgages			580,951				5,208				3.59				557,575				4,942				3.55
Commercial mortgages			2,502,351				27,746				4.44				2,504,268				26,839				4.29
Commercial			2,298,723				37,357				6.50				2,241,817				35,457				6.33
Commercial construction			12,346				282				9.14				6,977				165				9.46
Installment			56,248				967				6.88				51,269				841				6.56
Home equity			34,250				680				7.94				33,650				633				7.52
Other			234				7				11.97				271				7				10.33
Total loans			5,485,103				72,247				5.27				5,395,827				68,884				5.11
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			136,315				1,463				4.29				141,968				1,451				4.09
Total interest-earning assets			6,429,477				78,891				4.91	%			6,346,100				75,255				4.74	%
Noninterest-earning assets:
Cash and due from banks			6,954												7,800
Allowance for credit losses			(63,625	)											(63,045	)
Premises and equipment			23,880												23,745
Other assets			85,582												85,969
Total noninterest-earning assets			52,791												54,469
Total assets		$	6,482,268											$	6,400,569
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,813,080			$	24,318				3.46	%		$	2,834,140			$	22,219				3.14	%
Money markets			771,781				4,458				2.31				788,745				3,853				1.95
Savings			118,718				75				0.25				125,555				45				0.14
Certificates of deposit – retail			415,665				3,459				3.33				385,211				2,462				2.56
Subtotal interest-bearing deposits			4,119,244				32,310				3.14				4,133,651				28,579				2.77
Interest-bearing demand – brokered			10,000				136				5.44				10,000				125				5.00
Certificates of deposit – brokered			102,777				1,183				4.60				26,165				196				3.00
Total interest-bearing deposits			4,232,021				33,629				3.18				4,169,816				28,900				2.77
Borrowings			470,616				6,569				5.58				413,961				5,384				5.20
Capital lease obligation			3,863				46				4.76				4,187				50				4.78
Subordinated debt			133,163				1,730				5.20				133,090				1,597				4.80
Total interest-bearing liabilities			4,839,663				41,974				3.47	%			4,721,054				35,931				3.04	%
Noninterest-bearing liabilities:
Demand deposits			990,854												1,033,176
Accrued expenses and other liabilities			86,598												88,911
Total noninterest-bearing liabilities			1,077,452												1,122,087
Shareholders’ equity			565,153												557,428
Total liabilities and shareholders’ equity		$	6,482,268											$	6,400,569
Net interest income						$	36,917											$	39,324
Net interest spread											1.44	%											1.70	%
Net interest margin (D)											2.28	%											2.49	%

(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, 2023												September 30, 2022
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	801,535			$	14,541				2.42	%		$	818,411			$	9,995				1.63	%
Tax-exempt (A) (B)			1,637				49				3.99				4,035				117				3.87
Loans (B) (C):
Mortgages			556,220				14,433				3.46				511,999				11,148				2.90
Commercial mortgages			2,495,175				80,503				4.30				2,472,503				62,481				3.37
Commercial			2,247,803				106,182				6.30				2,016,533				60,911				4.03
Commercial construction			7,903				536				9.04				15,427				465				4.02
Installment			49,214				2,416				6.55				36,697				951				3.46
Home equity			33,914				1,903				7.48				38,324				1,106				3.85
Other			260				22				11.28				268				18				8.96
Total loans			5,390,489				205,995				5.10				5,091,751				137,080				3.59
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			147,071				4,452				4.04				174,833				1,505				1.15
Total interest-earning assets			6,340,732				225,037				4.73	%			6,089,030				148,697				3.26	%
Noninterest-earning assets:
Cash and due from banks			8,388												8,491
Allowance for credit losses			(62,753	)											(60,026	)
Premises and equipment			23,850												23,187
Other assets			76,992												119,908
Total noninterest-earning assets			46,477												91,560
Total assets		$	6,387,209											$	6,180,590
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,739,115			$	63,018				3.07	%		$	2,411,023			$	8,695				0.48	%
Money markets			893,567				13,185				1.97				1,255,341				2,675				0.28
Savings			128,437				148				0.15				162,675				15				0.01
Certificates of deposit – retail			386,488				7,650				2.64				409,442				2,048				0.67
Subtotal interest-bearing deposits			4,147,607				84,001				2.70				4,238,481				13,433				0.42
Interest-bearing demand – brokered			15,311				469				4.08				85,000				1,082				1.70
Certificates of deposit – brokered			51,916				1,584				4.07				31,058				732				3.14
Total interest-bearing deposits			4,214,834				86,054				2.72				4,354,539				15,247				0.47
Borrowings			331,170				13,249				5.33				20,876				103				0.66
Capital lease obligation			4,179				149				4.75				5,389				193				4.78
Subordinated debt			133,090				4,966				4.98				132,803				4,090				4.11
Total interest-bearing liabilities			4,683,273				104,418				2.97	%			4,513,607				19,633				0.58	%
Noninterest-bearing liabilities:
Demand deposits			1,066,162												1,042,064
Accrued expenses and other liabilities			82,215												93,462
Total noninterest-bearing liabilities			1,148,377												1,135,526
Shareholders’ equity			555,559												531,457
Total liabilities and shareholders’ equity		$	6,387,209											$	6,180,590
Net interest income						$	120,619											$	129,064
Net interest spread											1.76	%											2.68	%
Net interest margin (D)											2.54	%											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
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 common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders’ equity by common shares outstanding at period end. 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 per share data)

		Three Months Ended
		Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
Tangible Book Value Per Share		2023				2023				2023				2022				2022
Shareholders’ equity		$	558,956			$	565,069			$	554,958			$	532,980			$	515,514
Less: Intangible assets, net			46,286				46,624				46,979				47,333				47,698
Tangible equity		$	512,670			$	518,445			$	507,979			$	485,647			$	467,816
Less: other comprehensive loss			(81,653	)			(67,997	)			(67,445	)			(74,211	)			(74,983	)
Tangible equity excluding other comprehensive loss		$	594,323			$	586,442			$	575,424			$	559,858			$	542,799
Period end shares outstanding			17,816,922				17,887,895				18,014,757				17,813,451				17,920,571
Tangible book value per share		$	28.77			$	28.98			$	28.20			$	27.26			$	26.10
Tangible book value per share excluding other comprehensive loss		$	33.36			$	32.78			$	31.94			$	31.43			$	30.29
Book value per share			31.37				31.59				30.81				29.92				28.77
Tangible Equity to Tangible Assets
Total assets		$	6,521,581			$	6,479,700			$	6,480,018			$	6,353,593			$	6,087,261
Less: Intangible assets, net			46,286				46,624				46,979				47,333				47,698
Tangible assets		$	6,475,295			$	6,433,076			$	6,433,039			$	6,306,260			$	6,039,563
Less: other comprehensive loss			(81,653	)			(67,997	)			(67,445	)			(74,211	)			(74,983	)
Tangible assets excluding other comprehensive loss		$	6,556,948			$	6,501,073			$	6,500,484			$	6,380,471			$	6,114,546
Tangible equity to tangible assets			7.92	%			8.06	%			7.90	%			7.70	%			7.75	%
Tangible equity to tangible assets excluding other comprehensive loss			9.06	%			9.02	%			8.85	%			8.77	%			8.88	%
Equity to assets			8.57	%			8.72	%			8.56	%			8.39	%			8.47	%

(Dollars in thousands, except per share data)

		Three Months Ended
		Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
Return on Average Tangible Equity		2023				2023				2023				2022				2022
Net income		$	8,755			$	13,145			$	18,355			$	20,579			$	20,126
Average shareholders’ equity		$	565,153			$	557,428			$	543,861			$	523,406			$	529,160
Less: Average intangible assets, net			46,468				46,828				47,189				47,531				47,922
Average tangible equity		$	518,685			$	510,600			$	496,672			$	475,875			$	481,238
Return on average tangible common equity			6.75	%			10.30	%			14.78	%			17.30	%			16.73	%

		For the Nine Months Ended
		Sept 30,				Sept 30,
Return on Average Tangible Equity		2023				2022
Net income		$	40,255			$	53,667
Average shareholders’ equity		$	555,559			$	531,457
Less: Average intangible assets, net			46,825				48,307
Average tangible equity			508,734				483,150
Return on average tangible common equity			10.55	%			14.81	%

(Dollars in thousands, except per share data)

		Three Months Ended
		Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
Efficiency Ratio		2023				2023				2023				2022				2022
Net interest income		$	36,515			$	38,921			$	43,978			$	48,040			$	45,525
Total other income			19,354				18,575				18,059				16,812				16,383
Add:
Fair value adjustment for CRA equity security			404				209				(209	)			(28	)			571
Less:
Gain on sale of property			—				—				—				(275	)			—
Income from life insurance proceeds			—				—				—				(25	)			—
Total recurring revenue			56,273				57,705				61,828				64,524				62,479
Operating expenses			37,413				37,692				35,574				33,412				33,560
Less:
Accelerated Expense for Retirement			—				1,665				300				—				—
Branch Closure Expense			—				—				175				—				—
Total operating expense			37,413				36,027				35,099				33,412				33,560
Efficiency ratio			66.48	%			62.43	%			56.77	%			51.78	%			53.71	%

		For the Nine Months Ended
		Sept 30,				Sept 30,
Efficiency Ratio		2023				2022
Net interest income		$	119,414			$	128,040
Total other income			55,988				49,605
Add:
Fair value adjustment for CRA equity security			404				1,728
Less:
Loss on securities sale, net			—				6,609
Total recurring revenue			175,806				185,982
Operating expenses			110,679				100,388
Less:
Swap valuation allowance			—				673
Accelerated Expense for Retirement			1,965				—
Branch Closure Expense			175				—
Severance expense			—				1,476
Total operating expense			108,539				98,239
Efficiency ratio			61.74	%			52.82	%