Peapack-Gladstone Financial Corporation Reports Strong Fourth Quarter Results and Announces Another 5% Stock Repurchase Program

Source: Nasdaq GlobeNewswire / 28 Jan 2022 08:00:02 America/Chicago

Bedminster, NJ, Jan. 28, 2022 (GLOBE NEWSWIRE) -- via NewMediaWire -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter 2021 results.

This earnings release should be read in conjunction with the Company’s Q4 2021 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.

For the quarter ended December 31, 2021, the Company recorded total revenue of $56.17 million, net income of $14.86 million and diluted earnings per share (“EPS”) of $0.78, compared to revenue of $46.14 million, net income of $3.03 million and diluted EPS of $0.16, respectively, for the three-month period ended December 31, 2020.

For the year ended December 31, 2021, the Company recorded total revenue of $210.31 million, net income of $56.62 million and diluted earnings per share (“EPS”) of $2.93 compared to revenue of $189.36 million, net income of $26.19 million and diluted EPS of $1.37, respectively, for the year ended December 31, 2020.

Improvement in the 2021 periods was principally driven by the Company’s wealth management and commercial banking businesses. 2021 included increased wealth management income, corporate advisory fees and SBA income, as well as increased net interest income resulting from asset growth, coupled with margin improvement. The earnings for the full year of 2021 also benefitted from a significantly lower provision for loan losses.

The Q4 2021 period included a $893,000 swap valuation allowance recorded in operating expenses related to a loan placed on nonaccrual in Q3 2021. Q4 2021 also included a higher provision for loan losses due to the loan growth during the quarter.

Douglas L. Kennedy, President and CEO, said, “Our fourth quarter and full year results reflected continued solid growth in our wealth management business and commercial banking, including both corporate advisory and SBA activities. Increases in these areas year-over-year more than made up for the $7.4 million of PPP gains that the Company had recorded in 2020. As we look into the new year our pipelines for wealth management and commercial banking continue to be robust and we remain quite constructive toward 2022.”

During the fourth quarter of 2021 the Company repurchased 274,929 shares under its stock repurchase program at an average price of $33.50 for a total cost of $9.21 million. For the full year of 2021, the Company repurchased 894,744 shares at an average price of $31.99 for a total cost of $28.63 million.

On January 27, 2022, the Company authorized a new 5% stock repurchase program of up to 920,000 shares. Purchases will be conducted in accordance with the limitations set forth in the SEC’s Rule 10b-18.

Mr. Kennedy noted, “We believe that repurchasing our stock continues to be a great opportunity to take advantage of the Company’s discounted valuation relative to peers.”

EXECUTIVE SUMMARY:

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

2021 Year Compared to Prior Year

	Year Ended			Year Ended
	December 31,			December 31,			Increase/
(Dollars in millions, except per share data)	2021			2020			(Decrease)
Net interest income	$	138.06		$	127.60		$	10.46		8	%
Wealth management fee income (A)		52.99			40.86			12.13		30
Capital markets activity (B)		10.62			6.65			3.97		60
Other income (C)		8.64			14.25			(5.61	)	(39	)
Total other income		72.25			61.76			10.49		17
Operating expenses (A) (D)		126.17			124.96			1.21		1
Pretax income before provision for loan losses		84.14			64.40			19.74		31
Provision for loan and lease losses (E)		6.48			32.40			(25.92	)	(80	)
Pretax income		77.66			32.00			45.66		143
Income tax expense (F)		21.04			5.81			15.23		262
Net income	$	56.62		$	26.19		$	30.43		116	%
Diluted EPS	$	2.93		$	1.37		$	1.56		114	%

Total Revenue (G)	$	210.31		$	189.36		$	20.95		11	%

Return on average assets		0.94	%		0.45	%		0.49
Return on average equity		10.56	%		5.11	%		5.45

(A) The 2021 results included twelve months of wealth management fee income and expense related to the December 2020 hires of the teams from Lucas Capital Management (“Lucas”) and Noyes Capital Management (“Noyes”) and six months of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group.

(B) Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory activities and mortgage banking activities. The 2021 results included $3.5 million of corporate advisory fee income. There were no fees related to loan level back-to-back swap activities in the twelve months ended December 31, 2021, compared to $1.6 million for 2020.

(C) The 2021 results included a cost of $842,000 related to the termination of interest rate swaps; a $1.1 million gain on loans held at lower of cost or fair value; $722,000 of fee income related to the referral of PPP loans to a third party; and $455,000 of additional BOLI income related to receipt of life insurance proceeds. The 2020 results included a $7.4 million gain on the sale of PPP loans.

(D) The 2021 results included $1.5 million of severance expense related to certain corporate restructurings within several areas of the Bank; $648,000 of expense related to the redemption of subordinated debt; and $2.2 million related to a swap valuation allowance. The 2020 results included $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, $210,000 for the consolidation of two private banking locations, and $278,000 for the closure of a retail branch.

(E) The 2020 results included a provision for loan and lease losses of $32.4 million, primarily due to the COVID-19 pandemic.

(F) The 2020 results included a $3.2 million tax benefit related to the carryback of tax NOLs.

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

December 2021 Quarter Compared to Prior Year Quarter

	Three Months Ended			Three Months Ended
	December 31,			December 31,			Increase/
(Dollars in millions, except per share data)	2021			2020			(Decrease)
Net interest income	$	37.21		$	31.74		$	5.47		17	%
Wealth management fee income (A)		13.96			10.79			3.17		29
Capital markets activity (B)		3.52			1.89			1.63		86
Other income (C)		1.48			1.72			(0.24	)	(14	)
Total other income		18.96			14.40			4.56		32
Operating expenses (A) (D)		31.70			39.25			(7.55	)	(19	)
Pretax income before provision for loan losses		24.47			6.89			17.58		255
Provision for loan and lease losses		3.75			2.35			1.40		60
Pretax income		20.72			4.54			16.18		356
Income tax expense		5.86			1.51			4.35		288
Net income	$	14.86		$	3.03		$	11.83		390	%
Diluted EPS	$	0.78		$	0.16		$	0.62		387	%

Total Revenue (E)	$	56.17		$	46.14		$	10.03		22	%

Return on average assets annualized		0.96	%		0.21	%		0.75
Return on average equity annualized		10.94	%		2.32	%		8.62

(A) The December 2021 quarter included a full quarter of wealth management fee income and expense related to the December 2020 hires of the teams from Lucas and Noyes and the July 2021 acquisition of PPSG.

(B) Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory activities, and mortgage banking activities. The December 2021 quarter included $2.2 million of corporate advisory fee income, the majority of which related to a large investment banking advisory event.

(D) The December 2021 quarter included $893,000 related to a swap valuation allowance. The December 2020 quarter included $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, and $210,000 for the consolidation of two private banking locations

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

December 2021 Quarter Compared to Linked Quarter

	Three Months Ended			Three Months Ended
	December 31,			September 30,			Increase/
(Dollars in millions, except per share data)	2021			2021			(Decrease)
Net interest income	$	37.21		$	35.21		$	2.00		6	%
Wealth management fee income		13.96			13.86			0.10		1
Capital markets activity (A)		3.52			2.06			1.46		71
Other income (B)		1.48			1.86			(0.38	)	(20	)
Total other income		18.96			17.78			1.18		7
Operating expenses (C)		31.70			32.18			(0.48	)	(1	)
Pretax income before provision for loan losses		24.47			20.81			3.66		18
Provision for loan and lease losses		3.75			1.60			2.15		134
Pretax income		20.72			19.21			1.51		8
Income tax expense		5.86			5.04			0.82		16
Net income	$	14.86		$	14.17		$	0.69		5	%
Diluted EPS	$	0.78		$	0.74		$	0.04		5	%

Total Revenue (D)	$	56.17		$	52.99		$	3.18		6	%

Return on average assets annualized		0.96	%		0.95	%		0.01
Return on average equity annualized		10.94	%		10.40	%		0.54

(A) Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.

(B) The December 31, 2021 quarter included a $265,000 loss on sale of loans.

(C) The December 2021 quarter included $893,000 related to a swap valuation allowance. The September 2021 quarter included $1.4 million related to a swap valuation allowance.

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

Select highlights:

Peapack Private Wealth Management:

AUM/AUA in our Peapack Private Wealth Management Division grew 8% (31% annualized) to $11.1 billion at December 31, 2021 from $10.3 billion at September 30, 2021, and 26% over the $8.8 billion at December 31, 2020.
Gross new business inflows for 2021 totaled $840 million.
Wealth Management fee income increased 30% to $14.0 million for Q4 2021 compared to $10.8 million for Q4 2020.
On July 1, 2021, we closed on the acquisition of Princeton Portfolio Strategies Group (“PPSG”).

Commercial Banking and Balance Sheet Management:

At December 31, 2021, total loans (excluding $14 million of PPP loans) grew 15% to $4.83 billion compared to $4.21 billion (excluding $196 million of PPP loans) at December 31, 2020.
C&I loan/lease balances (excluding PPP loans) grew $216 million or 12% over 2020, with a large portion of that net growth occurring in Q4 2021.
SBA Income ($4.9 million) and Corporate Advisory fees ($3.5 million) totaled $8.4 million in 2021.
Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market) totaled 89% of total deposits at December 31, 2021, with an average cost of 0.17%.
The net interest margin improved by 4 basis points in Q4 2021 compared to Q3 2021 and improved 21 basis points when compared to Q4 2020.

Capital Management:

Continued to execute on the previously approved stock repurchase program – during Q4 repurchased 274,929 shares at an average price of $33.50 for a total cost of $9.2 million. (For the year ended December 31, 2021, the Company repurchased 894,744 shares).
Tangible book value per share increased 6.2% to $27.05 at December 31, 2021 from $25.47 at December 31, 2020, despite recent stock repurchase activity and a wealth acquisition. See the Non-GAAP financial measures reconciliation included in this release.

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

In the December 2021 quarter, the Bank’s wealth management business generated a record $13.96 million in fee income, compared to $13.86 million for the September 30, 2021 quarter and $10.79 million for the December 2020 quarter.

The market value of the Company’s AUM/AUA increased 26% to $11.1 billion at December 31, 2021 from $8.8 billion at December 31, 2020, due to organic new business, the PPSG acquisition, and favorable market conditions.

John P. Babcock, President of the Peapack Private Wealth Management division, said, “2021 showed continued strong business from new clients as well as additional business from existing clients. Positive net flows, combined with solid client retention and favorable market conditions, all contributed to our strong quarterly and full year results.” Mr. Babcock went on to note, “While we will continue to look at supplementing our organic growth with selective acquisitions, M&A activity in the RIA space is hyper-competitive with purchase price multiples reaching all-time highs – making it challenging for us to obtain acceptable returns on invested capital. Internally, we are focused on completing our One Team consolidation of the businesses and people we have acquired over the last several years under a single operating and technology framework, completing our migration to a single trading platform and re-organizing our wealth business under a new, streamlined organizational structure to ensure the highest level of client experience, maximum efficiency, and growth.”

Loans / Commercial Banking

At December 31, 2021, loans totaled $4.83 billion (excluding $14 million of PPP loans), compared to $4.21 billion (excluding $196 million of PPP loans) at December 31, 2020, reflecting growth of 15%. This growth was achieved despite over $900 million of net paydown/payoff activity over the twelve-month period.

Total C&I loans and leases (including the $14 million of PPP loans) at December 31, 2021 were $2.01 billion or 41% of the total loan portfolio.

Mr. Kennedy noted, “Our commercial loan pipelines continue to be strong going into the new year, standing at approximately $350 million with the likelihood of a first quarter closing. Notwithstanding significant payoff activity, we believe that we will achieve high single digit loan growth for 2022.”

Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by over $200 million of net growth in our C&I Portfolio, continued growth in Treasury Management income, and our over $3 million of corporate advisory fees by our investment banking group – this team had record earnings in 2021 and continues to have a robust pipeline of new business opportunities.”

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. Total deposits at December 31, 2021 increased $448 million to $5.27 billion from $4.82 billion at December 31, 2020. Along with the deposit growth, the change in mix was favorable, as noninterest bearing demand deposits increased $123 million, interest-bearing demand increased $439 million, while higher costing CDs declined $121 million and brokered deposits declined $25 million, when comparing December 31, 2021 to December 31, 2020.

Mr. Kennedy noted, “89% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 18% of our total deposits; both metrics reflect the relationship aspect of our deposit base.”

At December 31, 2021, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $971.2 million (or 16% of assets). This level is lower than the level at September 30, 2021 due to an increase in loan activity during Q4 2021 and more in line with historical levels.

The Company maintains backup liquidity of approximately $1.8 billion of secured funding with the Federal Home Loan Bank and $1.2 billion of secured funding from the Federal Reserve Discount Window. The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.

Mr. Kennedy noted, “We are well positioned for a rise in interest rates given that 40% of our loan portfolio reprices within three months and 52% within one year. Our current modeling, with what we believe include conservative deposit beta assumptions, indicates net interest income will improve approximately 3% in year one and 5% in year two after a 100 basis point rate shock.”

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

	Twelve Months Ended				Twelve Months Ended
	December 31, 2021				December 31, 2020
	NII			NIM	NII			NIM

NII/NIM excluding the below	$	134,206		2.50%	$	123,099		2.58%
Prepayment premiums received on loan paydowns		2,085		0.04%		1,452		0.02%
Effect of maintaining excess interest earning cash		(420	)	-0.17%		(1,320	)	-0.21%
Effect of PPP loans		2,190		0.01%		4,371		-0.08%
NII/NIM as reported	$	138,061		2.38%	$	127,602		2.31%

	Three Months Ended				Three Months Ended				Three Months Ended
	December 31, 2021				September 30, 2021				December 31, 2020
	NII			NIM	NII			NIM	NII			NIM

NII/NIM excluding the below	$	36,564		2.60%	$	34,635		2.56%	$	30,897		2.51%
Prepayment premiums received on loan paydowns		555		0.04%		325		0.02%		413		0.02%
Effect of maintaining excess interest earning cash		(68	)	-0.18%		(46	)	-0.14%		(206	)	-0.24%
Effect of PPP loans		161		0.00%		297		-0.02%		631		-0.04%
NII/NIM as reported	$	37,212		2.46%	$	35,211		2.42%	$	31,735		2.25%

As shown above, the Company’s reported NII increased $2.0 million and NIM increased 4 basis points compared to the linked quarter. The Bank further lowered its cost of funds strategically and grew its average loan portfolio at rates/spreads beneficial to NIM.

Future net interest income and net interest margin should benefit from the following:

Robust loan pipelines to generate loan growth.
Continued downward repricing of maturing CDs.
An increase in target Fed funds (should that occur).

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $3.52 million for the December 2021 quarter compared to $2.06 million for the September 2021 quarter and $1.90 million for the December 2020 quarter. The December 2021 quarterly results were driven by $2.18 million in Corporate Advisory income. The September 2021 quarter results were driven by $1.57 million in gains on sale of SBA loans. The December 2020 quarter reflected increased mortgage banking activity due to greater refinance activity in the low-rate environment. The December 2021, September 2021 and December 2020 quarters included no income from loan level, back-to-back swap activities, as there has been, and will continue to be, minimal activity for such in the current environment.

	Three Months Ended		Three Months Ended		Three Months Ended
	December 31,		September 30,		December 31,
(Dollars in thousands, except per share data)	2021		2021		2020
Gain on loans held for sale at fair value (Mortgage banking)	$	352	$	408	$	1,470
Fee income related to loan level, back-to-back swaps		—		—		—
Gain on sale of SBA loans		989		1,569		375
Corporate advisory fee income		2,180		84		50
Total capital markets activity	$	3,521	$	2,061	$	1,895

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

Other noninterest income (as defined above) totaled $1.48 million, $1.86 million, and $1.72 million, for the December 2021, September 2021, and December 2020 quarters, respectively. The December 2021 quarter included $265,000 net loss on loans held for sale.

Operating Expenses

The Company’s total operating expenses were $31.70 million for the quarter ended December 31, 2021, compared to $32.18 million for the September 2021 quarter and $39.25 million for the December 2020 quarter. The December 2021 and September 2021 quarters included $893,000 and $1.35 million related to a swap valuation allowance, respectively. The December and September 2021 quarters also included a full quarter’s worth of expense related to the teams hired from Lucas and Noyes and the acquisition of PPSG. The December 2020 quarter included $4.8 million for the prepayment of FHLB advances, $4.4 million for a valuation allowance on a loan held for sale and $210,000 related to the consolidation of two private banking offices.

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

Income Taxes

The effective tax rate for the three months ended December 31, 2021 was 28.31%, as compared to 26.22% for the September 2021 quarter and 33.29% for the quarter ended December 31, 2020. A tax return to book adjustment recorded in the December 2020 quarter coupled with reduced pretax income in the quarter, increased the December 2020 effective tax rate by approximately 5%.

The effective annual tax rate for 2021 was 27.09% compared to 18.16% for 2020. During the first quarter of 2020, the Company recorded a $3.34 million tax benefit, principally due to a $3.2 million federal income tax benefit that resulted from a tax NOL carryback. The Company had a $23 million operating loss for tax purposes in 2018 (when the federal tax rate was 21%) resulting from accelerated tax depreciation. Under the CARES Act, the Company was allowed to carry this NOL back to a period when the federal tax rate was 35%, generating a permanent tax benefit.

Asset Quality / Provision for Loan and Lease Losses

Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) at December 31, 2021 were $15.6 million, or 0.26% of total assets, compared to $25.9 million, or 0.42% of total assets, at September 30, 2021. The $10.3 million decline was largely due to a $2 million C&I loan moved back to accrual status, and a $7 million charge-off of the specific reserve on the commercial real estate loan with a large retail component located in Manhattan, and on deferral, that was placed on nonaccrual status in the third quarter of 2021.

For the quarter ended December 31, 2021, the Company’s provision for loan and lease losses was $3.8 million compared to $1.6 million for the September 2021 quarter and $2.4 million for the December 2020 quarter. The increased provision for loan and lease losses in the December 2021 quarter, when compared to the linked quarter and the 2020 quarter, was due principally to significant loan growth during the December 2021 quarter and additional specific reserves of $4.2 million on the commercial real estate loan noted above, offset by reduced qualitative loss factors related to the unemployment rate and amount of loan deferrals and other economic qualitative factors due to the COVID-19 pandemic.

Loans on deferral, and accruing, entered into during the COVID-19 pandemic have come down significantly from $914 million at June 30, 2020 to $13 million at December 31, 2021. The Company’s provision for loan and lease losses, and its allowance for loan and lease losses (ALLL) also reflect, among other things, the Company’s assessment of asset quality metrics, net charge-offs/recoveries, and the composition of the loan portfolio.

At December 31, 2021, the allowance for loan and lease losses was $61.70 million (1.27% of total loans), compared to $65.13 million at September 30, 2021 (1.42% of loans) and $67.31 million at December 31, 2020 (1.53% of total loans).

The Company will adopt CECL during the first quarter of 2022 and does not expect a material adjustment upon adoption.

Capital

The Company’s capital position during the December 2021 quarter was benefitted by net income of $14.86 million, which was offset by the purchase of shares through the Company’s stock repurchase program and the quarterly dividend. During the fourth quarter of 2021, the Company repurchased 274,929 shares at an average price of $33.50 for a total cost of $9.2 million. GAAP Capital at December 31, 2021 was also impacted by an increase in the unrealized loss on available-for-sale securities in the fourth quarter of 2021, due to a rise in medium-term Treasury yields.

The Company’s and Bank’s capital ratios at December 31, 2021 all remain strong. Such ratios remain well above regulatory well capitalized standards.

As previously announced, in the fourth quarter of 2020, the Company successfully completed a private placement of $100 million in fixed-to floating rate subordinated notes due 2030 at a rate of 3.5%. Such funds benefitted the Company’s Regulatory Tier 2 Capital. At the time, the Company noted the proceeds raised would be used for general corporate purposes, which could include stock repurchases, the redemption of the Company’s then existing 6% subordinated debt and acquisitions of wealth management firms. Throughout the twelve months of 2021, the Company repurchased $29 million of stock. On June 30, 2021, the Company redeemed its 6% subordinated debt. On July 1, 2021, the Company closed on the acquisition of PPSG.

The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test on September 30, 2021, under severely adverse case, and no growth scenarios, the Bank remains well capitalized over a two-year stress period. With a Pandemic stress overlay, the Bank still remains well capitalized over the two-year stress period.

On January 27, 2022, the Company declared a cash dividend of $0.05 per share payable on February 25, 2022, to shareholders of record on February 10, 2022.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.1 billion and assets under management/administration of $11.1 billion as of December 31, 2021. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers. Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy. Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service. Visit www.pgbank.com and www.peapackprivate.com for more information.

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

our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
the impact of anticipated higher operating expenses in 2022 and beyond;
our ability to successfully integrate wealth management firm acquisitions;
our ability to manage our growth;
our ability to successfully integrate our expanded employee base;
an unexpected decline in the economy, in particular in our New Jersey and New York market areas;
declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
declines in the value in our investment portfolio;
impact from a pandemic event on our business, operations, customers, allowance for loan losses and capital levels;
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 delinquent, nonperforming, classified and criticized 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;
a reduction in our lower-cost funding sources;
our inability to adapt to technological changes;
claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
our inability to retain key employees;
demands for loans and deposits in our market areas;
adverse changes in securities markets;
changes in accounting policies and practices; and
other unexpected material adverse changes in our operations or earnings.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

demand for our products and services may decline, making it difficult to grow assets and income;
if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;
collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;
our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income;
the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;
a material decrease in net income or a net loss over several quarters could result in an elimination or a decrease in the rate of our quarterly cash dividend;
our wealth management revenues may decline with continuing market turmoil;
a worsening of business and economic conditions or in the financial markets could result in an impairment of certain intangible assets, such as goodwill;
the unanticipated loss or unavailability of key employees due to the outbreak, which could harm our ability to operate our business or execute our business strategy, especially as we may not be successful in finding and integrating suitable successors;
we may face litigation, regulatory enforcement and reputation risk as a result of our participation in the PPP and the risk that the SBA may not fund some or all PPP loan guaranties;
our cyber security risks are increased as the result of an increase in the number of employees working remotely; and
FDIC premiums may increase if the agency experience additional resolution costs.

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, 2020. 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

(Tables to follow)

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,
	2021			2021			2021			2021			2020
Income Statement Data:
Interest income	$	42,075		$	40,067		$	39,686		$	38,239		$	38,532
Interest expense		4,863			4,856			5,841			6,446			6,797
Net interest income		37,212			35,211			33,845			31,793			31,735
Wealth management fee income		13,962			13,860			13,034			12,131			10,791
Service charges and fees		996			959			896			846			859
Bank owned life insurance		308			311			466			611			313
Gain on loans held for sale at fair value (Mortgage banking) (A)		352			408			409			1,025			1,470
(Loss)/Gain on loans held for sale at lower of cost or fair value (B)		(265	)		—			1,125			282			—
Fee income related to loan level, back-to-back swaps (A)		—			—			—			—			—
Gain on sale of SBA loans (A)		989			1,569			932			1,449			375
Corporate advisory fee income (A)		2,180			84			121			1,098			50
Loss on swap termination		—			—			(842	)		—			—
Other income (C)		581			660			1,495			643			590
Securities (losses)/gains, net		(139	)		(70	)		42			(265	)		(42	)
Total other income		18,964			17,781			17,678			17,820			14,406
Salaries and employee benefits (D)		20,105			19,859			19,910			21,990			19,902
Premises and equipment		4,519			4,459			4,074			4,113			4,189
FDIC insurance expense		402			555			529			585			665
FHLB prepayment penalty		—			—			—			—			4,784
Valuation allowance loans held for sale		—			—			—			—			4,425
Swap valuation allowance		893			1,350			—			—			—
Other expenses		5,785			5,962			6,171			4,906			5,284
Total operating expenses		31,704			32,185			30,684			31,594			39,249
Pretax income before provision for loan losses		24,472			20,807			20,839			18,019			6,892
Provision for loan and lease losses		3,750			1,600			900			225			2,350
Income before income taxes		20,722			19,207			19,939			17,794			4,542
Income tax expense		5,867			5,036			5,521			4,616			1,512
Net income	$	14,855		$	14,171		$	14,418		$	13,178		$	3,030

Total revenue (E)	$	56,176		$	52,992		$	51,523		$	49,613		$	46,141
Per Common Share Data:
Earnings per share (basic)	$	0.80		$	0.76		$	0.76		$	0.70		$	0.16
Earnings per share (diluted)		0.78			0.74			0.74			0.67			0.16
Weighted average number of common shares outstanding:
Basic		18,483,268			18,763,316			18,963,237			18,950,305			18,947,864
Diluted		19,070,594			19,273,831			19,439,439			19,531,689			19,334,569
Performance Ratios:
Return on average assets annualized (ROAA)		0.96	%		0.95	%		0.97	%		0.89	%		0.21	%
Return on average equity annualized (ROAE)		10.94	%		10.40	%		10.86	%		10.03	%		2.32	%
Return on average tangible common equity (ROATCE) (F)		12.03	%		11.43	%		11.83	%		10.94	%		2.51	%
Net interest margin (tax-equivalent basis)		2.46	%		2.42	%		2.38	%		2.28	%		2.25	%
GAAP efficiency ratio (G)		56.44	%		60.74	%		59.55	%		63.68	%		85.06	%
Operating expenses / average assets annualized		2.05	%		2.16	%		2.06	%		2.14	%		2.66	%

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

(B) Includes a $1.1 million gain on sale of $57 million of PPP loans completed in the June 2021 quarter.

(D) The March 2021 quarter included $1.5 million of severance expense related to corporate restructuring.

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

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

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

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

	For the Twelve Months Ended
	December 31,						Change
	2021			2020			$			%
Income Statement Data:
Interest income	$	160,067		$	165,750		$	(5,683	)		-3	%
Interest expense		22,006			38,148			(16,142	)		-42	%
Net interest income		138,061			127,602			10,459			8	%
Wealth management fee income		52,987			40,861			12,126			30	%
Service charges and fees		3,697			3,155			542			17	%
Bank owned life insurance		1,696			1,273			423			33	%
Gain on loans held for sale at fair value (Mortgage banking) (A)		2,194			3,266			(1,072	)		-33	%
Gain on loans held for sale at lower of cost or fair value (B)		1,142			7,426			(6,284	)		-85	%
Fee income related to loan level, back-to-back swaps (A)		—			1,620			(1,620	)		-100	%
Gain on sale of SBA loans (A)		4,939			1,766			3,173			180	%
Corporate advisory fee income (A)		3,483			265			3,218			1214	%
Loss on swap termination		(842	)		—			(842	)	N/A
Other income (C)		3,379			1,847			1,532			83	%
Securities (losses)/gains, net		(432	)		281			(713	)		-254	%
Total other income		72,243			61,760			10,483			17	%
Salaries and employee benefits (D)		81,864			77,516			4,348			6	%
Premises and equipment		17,165			16,377			788			5	%
FDIC insurance expense		2,071			1,975			96			5	%
FHLB prepayment penalty		—			4,784			(4,784	)		-100	%
Valuation allowance loans held for sale		—			4,425			(4,425	)		-100	%
Swap valuation allowance		2,243			—			2,243		N/A
Other expenses		22,824			19,882			2,942			15	%
Total operating expenses		126,167			124,959			1,208			1	%
Pretax income before provision for loan losses		84,137			64,403			19,734			31	%
Provision for loan and lease losses (E)		6,475			32,400			(25,925	)		-80	%
Income before income taxes		77,662			32,003			45,659			143	%
Income tax expense (F)		21,040			5,811			15,229			262	%
Net income	$	56,622		$	26,192		$	30,430			116	%

Total revenue (G)	$	210,304		$	189,362		$	20,942			11	%
Per Common Share Data:
Earnings per share (basic)	$	3.01		$	1.39		$	1.62			117	%
Earnings per share (diluted)		2.93			1.37			1.56			114	%
Weighted average number of common shares outstanding:
Basic		18,788,679			18,896,825			(108,146	)		-1	%
Diluted		19,292,602			19,081,187			211,415			1	%
Performance Ratios:
Return on average assets (ROAA)		0.94	%		0.45	%		0.49	%		110	%
Return on average equity (ROAE)		10.56	%		5.11	%		5.45	%		107	%
Return on average tangible common equity (ROATCE) (H)		11.56	%		5.55	%		6.01	%		108	%
Net interest margin (tax-equivalent basis)		2.38	%		2.31	%		0.07	%		3	%
GAAP efficiency ratio (I)		59.99	%		65.99	%		(6.00	)%		-9	%
Operating expenses / average assets		2.10	%		2.16	%		(0.06	)%		-3	%

(B) Includes $1.1 million (2021) and $7.4 million (2020) of gains on sale of PPP loans of $57 million and $355 million completed in the twelve months ended December 31, 2021 and 2020, respectively.

(C) Includes income of $722,000 from the referral of PPP loans to a third-party firm during the twelve months ended December 31, 2021.

(D) 2021 included $1.5 million of severance expense related to corporate restructuring.

(E) 2020 included a higher provision for loan and lease losses primarily due to the COVID-19 pandemic.

(F) 2020 included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the federal tax rate was 14% higher.

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

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

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

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

	As of
	Dec 31,		Sept 30,		June 30,		March 31,		Dec 31,
	2021		2021		2021		2021		2020
ASSETS
Cash and due from banks	$	5,929	$	9,299	$	12,684	$	8,159	$	10,629
Federal funds sold		—		—		—		102		102
Interest-earning deposits		140,875		606,913		190,778		468,276		642,591
Total cash and cash equivalents		146,804		616,212		203,462		476,537		653,322
Securities held to maturity		108,680		—		—		—		—
Securities available for sale		796,753		843,779		823,820		875,301		622,689
Equity security		14,685		14,824		14,894		14,852		15,117
FHLB and FRB stock, at cost		12,950		12,950		12,901		13,699		13,709
Residential mortgage		501,340		510,878		504,181		498,884		520,188
Multifamily mortgage		1,595,866		1,497,683		1,420,043		1,178,940		1,127,198
Commercial mortgage		662,626		680,107		702,777		697,599		694,034
Commercial loans (A)		2,009,252		1,833,532		1,880,830		1,982,570		1,975,337
Consumer loans		33,687		30,689		31,889		36,519		37,016
Home equity lines of credit		40,803		42,512		44,062		45,624		50,547
Other loans		238		245		204		199		225
Total loans		4,843,812		4,595,646		4,583,986		4,440,335		4,404,545
Less: Allowances for loan and lease losses		61,697		65,133		63,505		67,536		67,309
Net loans		4,782,115		4,530,513		4,520,481		4,372,799		4,337,236
Premises and equipment		23,044		23,123		23,261		23,260		21,609
Other real estate owned		—		—		—		50		50
Accrued interest receivable		21,589		22,790		23,117		23,916		22,495
Bank owned life insurance		46,663		46,510		46,605		46,448		46,809
Goodwill and other intangible assets		48,902		49,333		43,156		43,524		43,891
Finance lease right-of-use assets		3,582		3,769		3,956		4,143		4,330
Operating lease right-of-use assets		9,775		10,307		9,569		10,186		9,421
Other assets (B)		62,451		66,175		66,466		64,912		99,764
TOTAL ASSETS	$	6,077,993	$	6,240,285	$	5,791,688	$	5,969,627	$	5,890,442

LIABILITIES
Deposits:
Noninterest-bearing demand deposits	$	956,482	$	986,765	$	959,494	$	908,922	$	833,500
Interest-bearing demand deposits		2,287,894		2,355,892		1,978,497		1,987,567		1,849,254
Savings		154,914		168,831		147,227		141,743		130,731
Money market accounts		1,307,051		1,287,686		1,213,992		1,256,605		1,298,885
Certificates of deposit – Retail		409,608		426,981		446,143		474,668		530,222
Certificates of deposit – Listing Service		31,382		31,382		31,631		31,631		32,128
Subtotal “customer” deposits		5,147,331		5,257,537		4,776,984		4,801,136		4,674,720
IB Demand – Brokered		85,000		85,000		85,000		110,000		110,000
Certificates of deposit – Brokered		33,818		33,804		33,791		33,777		33,764
Total deposits		5,266,149		5,376,341		4,895,775		4,944,913		4,818,484
Short-term borrowings		—		—		—		15,000		15,000
FHLB advances		—		—		—		—		—
Paycheck Protection Program Liquidity Facility (C)		—		48,496		83,586		168,180		177,086
Finance lease liability		5,820		6,063		6,299		6,528		6,753
Operating lease liability		10,111		10,644		9,902		10,509		9,737
Subordinated debt, net (D)		132,701		132,629		132,557		181,837		181,794
Other liabilities (B)		116,824		123,098		125,110		120,219		154,466
TOTAL LIABILITIES		5,531,605		5,697,271		5,253,229		5,447,186		5,363,320
Shareholders’ equity		546,388		543,014		538,459		522,441		527,122
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY	$	6,077,993	$	6,240,285	$	5,791,688	$	5,969,627	$	5,890,442
Assets under management and / or administration at Peapack-Gladstone Bank’s Private Wealth Management Division (market value, not included above-dollars in billions)	$	11.1	$	10.3	$	9.8	$	9.4	$	8.8

(A) Includes PPP loans of $14 million at December 31, 2021; $49 million at September 30, 2021; $84 million at June 30, 2021; $233 million at March 31, 2021; and $196 million at December 31, 2020.

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

(D) The decrease was due to the redemption of a $50 million subordinated debt on June 30, 2021.

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

	As of
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
	2021			2021			2021			2021			2020
Asset Quality:
Loans past due over 90 days and still accruing	$	—		$	—		$	—		$	—		$	—
Nonaccrual loans (A)		15,573			25,925			5,962			11,767			11,410
Other real estate owned		—			—			—			50			50
Total nonperforming assets	$	15,573		$	25,925		$	5,962		$	11,817		$	11,460

Nonperforming loans to total loans		0.32	%		0.56	%		0.13	%		0.27	%		0.26	%
Nonperforming assets to total assets		0.26	%		0.42	%		0.10	%		0.20	%		0.19	%

Performing TDRs (B)(C)	$	2,479		$	416		$	190		$	197		$	201

Loans past due 30 through 89 days and still accruing (D)(E)	$	8,606		$	1,193		$	1,678		$	1,622		$	5,053

Loans subject to special mention	$	116,490		$	115,935		$	148,601		$	166,013		$	162,103

Classified loans	$	50,702		$	51,937		$	11,178		$	25,714		$	37,771

Impaired loans	$	18,052		$	26,341		$	6,498		$	11,964		$	16,204

Allowance for loan and lease losses:
Beginning of period	$	65,133		$	63,505		$	67,536		$	67,309		$	66,145
Provision for loan and lease losses		3,750			1,600			900			225			2,350
(Charge-offs)/recoveries, net		(7,186	)		28			(4,931	)		2			(1,186	)
End of period	$	61,697		$	65,133		$	63,505		$	67,536		$	67,309

ALLL to nonperforming loans		396.18	%		251.24	%		1065.16	%		573.94	%		589.91	%
ALLL to total loans		1.27	%		1.42	%		1.39	%		1.52	%		1.53	%
General ALLL to total loans (F)		1.19	%		1.26	%		1.38	%		1.45	%		1.47	%

(A) Increase at September 30, 2021 due to one large CRE loan with a retail component, located in Manhattan.

(B) Amounts reflect TDRs that are paying according to restructured terms.

(C) Amount excludes $1.1 million at December 31, 2021, $4.0 million at September 30, 2021, $3.9 million at June 30, 2021, $3.9 million at March 31, 2021 and $4.0 million at December 31, 2020 of TDRs included in nonaccrual loans.

(D) Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and at the lessee/borrower at December 31, 2021. Payment was received in January.

(E) December 31, 2020 includes $1.3 million of residential loans that are classified as delinquent due to an escrow payment shortage due to a recent change in escrow payment requirement.

(F) 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,
	2021				2021				2020
Capital Adequacy
Equity to total assets (A)			8.99	%			8.70	%			8.95	%
Tangible Equity to tangible assets (B)			8.25	%			7.97	%			8.27	%
Book value per share (C)		$	29.70			$	29.15			$	27.78
Tangible Book Value per share (D)		$	27.05			$	26.50			$	25.47

	December 31,				September 30,			December 31,
	2021				2021			2020
Regulatory Capital – Holding Company
Tier I leverage	$	508,231	8.29%		$	501,188	8.56%	$	483,535	8.53%
Tier I capital to risk-weighted assets		508,231		10.62		501,188	10.97		483,535	11.93
Common equity tier I capital ratio to risk-weighted assets		508,207		10.62		501,159	10.97		483,500	11.93
Tier I & II capital to risk-weighted assets		700,790		14.64		691,044	15.12		716,210	17.67

Regulatory Capital – Bank
Tier I leverage (E)	$	612,762	9.99%		$	594,610	10.15%	$	549,575	9.71%
Tier I capital to risk-weighted assets (F)		612,762		12.80		594,610	13.01		549,575	13.55
Common equity tier I capital ratio to risk-weighted assets (G)		612,738		12.80		594,581	13.01		549,540	13.55
Tier I & II capital to risk-weighted assets (H)		672,614		14.05		651,841	14.26		600,478	14.81

(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.

(D) Tangible book value per share 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% ($307 million)

(F) Regulatory well capitalized standard = 8.00% ($383 million)

(G) Regulatory well capitalized standard = 6.50% ($311 million)

(H) Regulatory well capitalized standard = 10.00% ($479 million)

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

	For the Quarters Ended
	Dec 31,		Sept 30,		June 30,		March 31,		Dec 31,
	2021		2021		2021		2021		2020
Residential loans retained	$	22,953	$	36,845	$	37,083	$	15,814	$	22,316
Residential loans sold		20,694		24,041		25,432		45,873		64,630
Total residential loans		43,647		60,886		62,515		61,687		86,946
Commercial real estate		16,134		14,944		12,243		38,363		—
Multifamily		162,740		120,716		255,820		85,009		1,184
Commercial (C&I) loans (A) (B)		341,886		143,121		141,285		129,141		218,235
SBA (C)		27,630		11,570		15,976		58,730		8,355
Wealth lines of credit (A)		7,500		10,020		3,200		2,475		3,925
Total commercial loans		555,890		300,371		428,524		313,718		231,699
Installment loans		94		178		25		63		690
Home equity lines of credit (A)		5,359		2,535		4,140		1,899		2,330
Total loans closed	$	604,990	$	363,970	$	495,204	$	377,367	$	321,665

	For the Twelve Months Ended
	Dec 31,		Dec 31,
	2021		2020
Residential loans retained	$	112,695	$	88,373
Residential loans sold		116,040		175,603
Total residential loans		228,735		263,976
Commercial real estate		81,684		11,219
Multifamily		624,285		76,642
Commercial (C&I) loans (A) (B)		755,433		478,485
SBA (C)		113,906		622,798
Wealth lines of credit (A)		23,195		9,675
Total commercial loans		1,598,503		1,198,819
Installment loans		360		2,149
Home equity lines of credit (A)		13,933		15,001
Total loans closed	$	1,841,531	$	1,479,945

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

(B) Includes equipment finance.

(C) Includes PPP loans of $9 million for the quarter ended June 30, 2021, $47 million for the quarter ended March 31, 2021 and $596 million for the twelve months ended December 31, 2020.

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

	December 31, 2021								December 31, 2020
	Average			Income/					Average			Income/
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	885,390		$	3,104		1.40	%	$	636,417		$	2,033		1.28	%
Tax-exempt (A) (B)		5,443			54		3.97			8,137			101		4.96

Loans (B) (C):
Mortgages		510,562			3,799		2.98			520,123			4,372		3.36
Commercial mortgages		2,209,160			17,708		3.21			1,865,953			14,796		3.17
Commercial		1,826,640			16,660		3.65			1,943,855			16,587		3.41
Commercial construction		20,426			176		3.45			10,376			108		4.16
Installment		33,400			253		3.03			44,581			320		2.87
Home equity		41,955			346		3.30			51,545			429		3.33
Other		270			6		8.89			281			6		8.54
Total loans		4,642,413			38,948		3.36			4,436,714			36,618		3.30
Federal funds sold		—			—		—			102			—		0.25
Interest-earning deposits		513,650			178		0.14			614,024			148		0.10
Total interest-earning assets		6,046,896			42,284		2.80	%		5,695,394			38,900		2.73	%
Noninterest-earning assets:
Cash and due from banks		11,517								9,632
Allowance for loan and lease losses		(65,542	)							(68,862	)
Premises and equipment		23,117								21,698
Other assets		182,154								238,856
Total noninterest-earning assets		151,246								201,324
Total assets	$	6,198,142							$	5,896,718

LIABILITIES:
Interest-bearing deposits:
Checking	$	2,321,970		$	1,327		0.23	%	$	1,850,917		$	1,059		0.23	%
Money markets		1,290,334			678		0.21			1,273,681			811		0.25
Savings		152,570			20		0.05			128,195			17		0.05
Certificates of deposit – retail		453,127			725		0.64			602,068			2,106		1.40
Subtotal interest-bearing deposits		4,218,001			2,750		0.26			3,854,861			3,993		0.41
Interest-bearing demand – brokered		85,000			387		1.82			113,696			514		1.81
Certificates of deposit – brokered		33,810			267		3.16			33,756			267		3.16
Total interest-bearing deposits		4,336,811			3,404		0.31			4,002,313			4,774		0.48
Borrowings		25,890			25		0.39			244,753			616		1.01
Capital lease obligation		5,913			71		4.80			6,832			82		4.80
Subordinated debt		132,659			1,363		4.11			94,437			1,325		5.61
Total interest-bearing liabilities		4,501,273			4,863		0.43	%		4,348,335			6,797		0.63	%
Noninterest-bearing liabilities:
Demand deposits		1,042,477								858,004
Accrued expenses and other liabilities		111,357								166,933
Total noninterest-bearing liabilities		1,153,834								1,024,937
Shareholders’ equity		543,035								523,446
Total liabilities and shareholders’ equity	$	6,198,142							$	5,896,718
Net interest income				$	37,421							$	32,103
Net interest spread							2.37	%							2.10	%
Net interest margin (D)							2.46	%							2.25	%

(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.

(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, 2021								September 30, 2021
	Average			Income/					Average			Income/
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	885,390		$	3,104		1.40	%	$	820,574		$	2,824		1.38	%
Tax-exempt (A) (B)		5,443			54		3.97			6,035			64		4.24

Loans (B) (C):
Mortgages		510,562			3,799		2.98			503,621			3,779		3.00
Commercial mortgages		2,209,160			17,708		3.21			2,133,259			16,114		3.02
Commercial		1,826,640			16,660		3.65			1,826,368			16,553		3.63
Commercial construction		20,426			176		3.45			24,596			198		3.22
Installment		33,400			253		3.03			32,219			245		3.04
Home equity		41,955			346		3.30			43,182			357		3.31
Other		270			6		8.89			252			5		7.94
Total loans		4,642,413			38,948		3.36			4,563,497			37,251		3.27
Federal funds sold		—			—		—			—			—		—
Interest-earning deposits		513,650			178		0.14			413,623			142		0.14
Total interest-earning assets		6,046,896			42,284		2.80	%		5,803,729			40,281		2.78	%
Noninterest-earning assets:
Cash and due from banks		11,517								8,592
Allowance for loan and lease losses		(65,542	)							(64,100	)
Premises and equipment		23,117								23,311
Other assets		182,154								201,287
Total noninterest-earning assets		151,246								169,090
Total assets	$	6,198,142							$	5,972,819

LIABILITIES:
Interest-bearing deposits:
Checking	$	2,321,970		$	1,327		0.23	%	$	2,098,827		$	1,177		0.22	%
Money markets		1,290,334			678		0.21			1,257,760			683		0.22
Savings		152,570			20		0.05			152,759			20		0.05
Certificates of deposit – retail		453,127			725		0.64			461,917			836		0.72
Subtotal interest-bearing deposits		4,218,001			2,750		0.26			3,971,263			2,716		0.27
Interest-bearing demand – brokered		85,000			387		1.82			85,000			385		1.81
Certificates of deposit – brokered		33,810			267		3.16			33,796			266		3.15
Total interest-bearing deposits		4,336,811			3,404		0.31			4,090,059			3,367		0.33
Borrowings		25,890			25		0.39			64,332			57		0.35
Capital lease obligation		5,913			71		4.80			6,147			74		4.82
Subordinated debt		132,659			1,363		4.11			132,588			1,358		4.10
Total interest-bearing liabilities		4,501,273			4,863		0.43	%		4,293,126			4,856		0.45	%
Noninterest-bearing liabilities:
Demand deposits		1,042,477								997,450
Accrued expenses and other liabilities		111,357								137,387
Total noninterest-bearing liabilities		1,153,834								1,134,837
Shareholders’ equity		543,035								544,856
Total liabilities and shareholders’ equity	$	6,198,142							$	5,972,819
Net interest income				$	37,421							$	35,425
Net interest spread							2.37	%							2.33	%
Net interest margin (D)							2.46	%							2.42	%

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

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

(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, 2021								December 31, 2020
	Average			Income/					Average			Income/
	Balance			Expense		Yield			Balance			Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)	$	838,174		$	11,577		1.38	%	$	510,245		$	8,782		1.72	%
Tax-exempt (A) (B)		6,579			296		4.50			9,479			477		5.03

Loans (B) (C):
Mortgages		503,616			15,359		3.05			528,687			17,882		3.38
Commercial mortgages		2,032,318			63,298		3.11			1,958,262			64,541		3.30
Commercial		1,881,683			66,652		3.54			1,969,115			71,037		3.61
Commercial construction		20,420			692		3.39			5,932			295		4.97
Installment		34,390			1,030		3.00			51,007			1,532		3.00
Home equity		44,735			1,479		3.31			53,853			1,940		3.60
Other		247			21		8.50			311			29		9.32
Total loans		4,517,409			148,531		3.29			4,567,167			157,256		3.44
Federal funds sold		48			—		0.13			102			—		0.25
Interest-earning deposits		477,477			545		0.11			504,753			968		0.19
Total interest-earning assets		5,839,687			160,949		2.76	%		5,591,746			167,483		3.00	%
Noninterest-earning assets:
Cash and due from banks		10,396								7,025
Allowance for loan and lease losses		(67,075	)							(61,401	)
Premises and equipment		23,094								21,455
Other assets		197,893								219,287
Total noninterest-earning assets		164,308								186,366
Total assets	$	6,003,995							$	5,778,112

LIABILITIES:
Interest-bearing deposits:
Checking	$	2,078,658		$	4,426		0.21	%	$	1,742,846		$	7,279		0.42	%
Money markets		1,260,865			2,882		0.23			1,227,295			6,185		0.50
Savings		146,210			75		0.05			120,780			63		0.05
Certificates of deposit – retail		483,889			4,058		0.84			654,652			11,476		1.75
Subtotal interest-bearing deposits		3,969,622			11,441		0.29			3,745,573			25,003		0.67
Interest-bearing demand – brokered		96,301			1,721		1.79			143,388			2,773		1.93
Certificates of deposit – brokered		33,790			1,058		3.13			33,735			1,061		3.15
Total interest-bearing deposits		4,099,713			14,220		0.35			3,922,696			28,837		0.74
Borrowings		110,077			473		0.43			308,814			3,976		1.29
Capital lease obligation		6,260			300		4.79			7,157			343		4.79
Subordinated debt		156,888			7,013		4.47			86,246			4,992		5.79
Total interest-bearing liabilities		4,372,938			22,006		0.50	%		4,324,913			38,148		0.88	%
Noninterest-bearing liabilities:
Demand deposits		959,912								787,191
Accrued expenses and other liabilities		134,948								153,648
Total noninterest-bearing liabilities		1,094,860								940,839
Shareholders’ equity		536,197								512,360
Total liabilities and shareholders’ equity	$	6,003,995							$	5,778,112
Net interest income				$	138,943							$	129,335
Net interest spread							2.26	%							2.12	%
Net interest margin (D)							2.38	%							2.31	%

(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.

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

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

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

(Dollars in thousands, except share data)

	Three Months Ended
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Tangible Book Value Per Share	2021			2021			2021			2021			2020
Shareholders’ equity	$	546,388		$	543,014		$	538,459		$	522,441		$	527,122
Less: Intangible assets, net		48,902			49,333			43,156			43,524			43,891
Tangible equity	$	497,486		$	493,681		$	495,303		$	478,917		$	483,231

Period end shares outstanding		18,393,888			18,627,910			18,829,877			19,034,870			18,974,703
Tangible book value per share	$	27.05		$	26.50		$	26.30		$	25.16		$	25.47
Book value per share		29.70			29.15			28.60			27.45			27.78

Tangible Equity to Tangible Assets
Total assets	$	6,077,993		$	6,240,285		$	5,791,688		$	5,969,627		$	5,890,442
Less: Intangible assets, net		48,902			49,333			43,156			43,524			43,891
Tangible assets	$	6,029,091		$	6,190,952		$	5,748,532		$	5,926,103		$	5,846,551
Tangible equity to tangible assets		8.25	%		7.97	%		8.62	%		8.08	%		8.27	%
Equity to assets		8.99	%		8.70	%		9.30	%		8.75	%		8.95	%

	Three Months Ended
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Return on Average Tangible Equity	2021			2021			2021			2021			2020
Net income	$	14,855		$	14,171		$	14,418		$	13,178		$	3,030

Average shareholders’ equity	$	543,035		$	544,856		$	530,971		$	525,643		$	523,446
Less: Average intangible assets, net		49,151			48,757			43,366			43,742			40,336
Average tangible equity	$	493,884		$	496,099		$	487,605		$	481,901		$	483,110

Return on average tangible common equity		12.03	%		11.43	%		11.83	%		10.94	%		2.51	%

	For the Twelve Months Ended
	Dec 31,			Dec 31,
Return on Average Tangible Equity	2021			2020
Net income	$	56,622		$	26,192

Average shareholders’ equity	$	536,197		$	512,360
Less: Average intangible assets, net		46,275			40,186
Average tangible equity	$	489,922		$	472,174

Return on average tangible common equity		11.56	%		5.55	%

	Three Months Ended
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Efficiency Ratio	2021			2021			2021			2021			2020
Net interest income	$	37,212		$	35,211		$	33,845		$	31,793		$	31,735
Total other income		18,964			17,781			17,678			17,820			14,406
Add:
Securities losses/(gains), net		139			70			(42	)		265			42
Less:
Loss/(gain) on loans held for sale
at lower of cost or fair value		265			—			(1,125	)		(282	)		—
Income from life insurance proceeds		—			—			(153	)		(302	)		—
Loss on swap termination		—			—			842			—			—
Total recurring revenue	$	56,580		$	53,062		$	51,045		$	49,294		$	46,183

Operating expenses	$	31,704		$	32,185		$	30,684		$	31,594		$	39,249
Less:
FHLB prepayment penalty		—			—			—			—			4,784
Valuation allowance loans held for sale		—			—			—			—			4,425
Write-off of subordinated debt costs		—			—			648			—			—
Swap valuation allowance		893			1,350			—			—			—
Severance expense		—			—			—			1,532			—
Total operating expenses	$	30,811		$	30,835		$	30,036		$	30,062		$	30,040

Efficiency ratio		54.46	%		58.11	%		58.84	%		60.99	%		65.05	%

	For the Twelve Months Ended
	Dec 31,			Dec 31,
Efficiency Ratio	2021			2020
Net interest income	$	138,061		$	127,602
Total other income		72,243			61,760
Add:
Securities losses/(gains), net		432			(281	)
Less:
Loss/ on swap termination		842			—
Income from life insurance proceeds		(455	)		—
(Gain) on loans held for sale
at lower of cost or fair value		(1,142	)		(7,426	)
Total recurring revenue	$	209,981		$	181,655

Operating expenses	$	126,167		$	124,959
Less:
FHLB prepayment penalty		—			4,784
Valuation allowance loans held for sale		—			4,425
Write-off of subordinated debt costs		648			—
Swap valuation allowance		2,243			—
Severance expense		1,532			—
Total operating expenses	$	121,744		$	115,750

Efficiency ratio		57.98	%		63.72	%

Peapack-Gladstone Financial Corporation Reports Strong Fourth Quarter Results and Announces Another 5% Stock Repurchase Program

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