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

Peapack-Gladstone Financial Corporation

Bedminster, NJ, July 29, 2022 (GLOBE NEWSWIRE) — via NewMediaWire -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its second quarter 2022 results.

This earnings release should be read in conjunction with the Company’s Q2 2022 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 $61.40 million, net income of $20.10 million and diluted earnings per share (“EPS”) of $1.08 for the quarter ended June 30, 2022, compared to revenue of $51.52 million, net income of $14.42 million and diluted EPS of $0.74 for the three months ended June 30, 2021.

The Company’s return on average assets, return on average equity, and return on average tangible equity totaled 1.30%, 15.43% and 17.00%, respectively, for the June 2022 quarter.

The June 2022 quarter results were driven by improvement in net interest income and net interest margin, which improved 45 basis points compared to the June 2021 quarter (and 14 basis points compared to the March 2022 quarter).

The June 2022 quarter also included increases in wealth management fee income and SBA fee income, when compared to the June 2021 quarter.

Douglas L. Kennedy, President and CEO said, “Our second quarter 2022 results reflect the asset sensitivity of our balance sheet, as loans continued to reprice upward in the rising rate environment.”

The following are select highlights:

Peapack Private Wealth Management:

• AUM/AUA in our Peapack Private Wealth Management Division totaled $9.5 billion at June 30, 2022.

• Gross new business inflows for the first six months of 2022 totaled $556 million.

• Wealth Management fee income increased 7% to $13.9 million for Q2 2022 compared to $13.0 million for Q2 2021.

• Finalizing the consolidation of three offices of previously acquired firms into existing private banking locations.

Commercial Banking and Balance Sheet Management:

• The net interest margin ("NIM") improved by 14 basis points in Q2 2022 compared to Q1 2022 and improved 45 basis points when compared to Q2 2021.

• Commercial & industrial lending (“C&I”) loan/lease balances comprised 40% of the total loan portfolio at June 30, 2022.

• Total loans grew 7% (13% annualized) to $5.17 billion at June 30, 2022 compared to $4.84 billion at December 31, 2021; and grew 13% from $4.58 billion at June 30, 2021.

• U.S. Small Business Association (“SBA”) Income continues to be a driver in fee income recording $2.7 million for the second quarter of 2022.

• Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 90% of total deposits at June 30, 2022.

Capital Management:

• Repurchased 499,878 shares of Company stock for a total cost of $17.6 million during the first six months of 2022.

• Regulatory Tier 1 Leverage Ratio stood at 10.4% for the Bank and 8.5% for the Company, at June 30, 2022. Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.1% for the Bank and 10.7% for the Company at June 30, 2022. These ratios have increased from December 31, 2021 levels and are significantly above well capitalized standards.

SUMMARY INCOME STATEMENT DETAILS:

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

June 2022 Year Compared to Prior Year

		Six Months Ended		Six Months Ended
		June 30,		June 30,			Increase/
(Dollars in millions, except per share data)		2022		2021			(Decrease)
Net interest income		$82.51		$65.64			$16.87		26%
Wealth management fee income (A)		28.72		25.17			3.55		14
Capital markets activity (B)		7.51		5.03			2.48		49
Other income (C)		(3.01)		5.30			(8.31)		(157)
Total other income		33.22		35.50			(2.28)		(6)
Operating expenses (A) (D)		66.83		62.28			4.55		7
Pretax income before provision for credit losses		48.90		38.86			10.04		26
Provision for credit losses		3.82		1.13			2.69		238
Pretax income		45.08		37.73			7.35		19
Income tax expense/(benefit)		11.54		10.13			1.41		14
Net income		$33.54		$27.60			$5.94		22%
Diluted EPS		$1.79		$1.42			$0.37		26%
Total Revenue (E)		$115.73		$101.14			$14.59		14%
Return on average assets annualized		1.09%		0.93%			0.16
Return on average equity annualized		12.59%		10.45%			2.14

A. The six months ended June 30, 2022 included wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group.
B. Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.
C. Other income for the six months ended June 30, 2022 included a $6.6 million loss on sale of securities associated with a balance sheet repositioning executed in the first quarter. The June 2021 six months included a cost of $842,000 related to the termination of interest rate swaps; a $1.4 million gain on loans; $722,000 of fee income related to the referral of Paycheck Protection Program ("PPP") loans to a third party; and $455,000 of additional Bank Owned Life Insurance ("BOLI") income related to the receipt of life insurance proceeds.
E. The six months ended June 2022 and 2021 each included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank. The six months ended June 2021 also included $648,000 of expense related to the redemption of subordinated debt.
F. Total revenue equals the sum of net interest income plus total other income.

June 2022 Quarter Compared to Prior Year Quarter

		Three Months Ended			Three Months Ended
		June 30,			June 30,		Increase/
(Dollars in millions, except per share data)		2022			2021		(Decrease)
Net interest income		$42.89			$33.85		$9.04		27%
Wealth management fee income (A)		13.89			13.03		0.86		7
Capital markets activity (B)		2.86			1.46		1.40		96
Other income (C)		1.76			3.18		(1.42)		(45)
Total other income		18.51			17.67		0.84		5
Operating expenses (A) (D)		32.66			30.68		1.98		6
Pretax income before provision for credit losses		28.74			20.84		7.90		38
Provision for credit losses		1.45			0.90		0.55		61
Pretax income		27.29			19.94		7.35		37
Income tax expense		7.19			5.52		1.67		30
Net income		$20.10			$14.42		$5.68		39%
Diluted EPS		$1.08			$0.74		$0.34		46%
Total Revenue (E)		$61.40			$51.52		$9.88		19%
Return on average assets annualized		1.30%			0.97%		0.33
Return on average equity annualized		15.43%			10.86%		4.57

A. The quarter ended June 30, 2022 included a full quarter of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group.
B. Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.
C. Other income for the June 2021 quarter included a cost of $842,000 related to the termination of interest rate swaps; a $1.1 million gain on sale of PPP loans; $722,000 of fee income related to the referral of PPP loans to a third party; and $153,000 of additional BOLI income related to the receipt of life insurance proceeds.
D. The June 2021 quarter included $648,000 of expense related to the redemption of subordinated debt.
E. Total revenue equals the sum of net interest income plus total other income.

June 2022 Quarter Compared to Linked Quarter

		Three Months Ended		Three Months Ended
		June 30,		March 31,			Increase/
(Dollars in millions, except per share data)		2022		2022			(Decrease)
Net interest income		$42.89		$39.62			$3.27		8%
Wealth management fee income		13.89		14.83			(0.94)		(6)
Capital markets activity (A)		2.86		4.65			(1.79)		(38)
Other income (B)		1.76		(4.77)			6.53		N/A
Total other income		18.51		14.71			3.80		26
Operating expenses (C)		32.66		34.17			(1.51)		(4)
Pretax income before provision for credit losses		28.74		20.16			8.58		43
Provision for credit losses		1.45		2.37			(0.92)		(39)
Pretax income		27.29		17.79			9.50		53
Income tax expense		7.19		4.35			2.84		65
Net income		$20.10		$13.44			$6.66		50%
Diluted EPS		$1.08		$0.71			$0.37		52%
Total Revenue (D)		$61.40		$54.33			$7.07		13%
Return on average assets annualized		1.30%		0.87%			0.43
Return on average equity annualized		15.43%		9.88%			5.55

A. Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.
B. Other income for the quarter ended March 31, 2022 included a $6.6 million loss on the sale of securities associated with a balance sheet repositioning executed in the quarter.
C. The March 2022 quarter included $1.5 million of severance expense related to certain staff reorganization within several areas of the Bank.
D. Total revenue equals the sum of net interest income plus total other income.

SUPPLEMENTAL QUARTERLY DETAILS:

Peapack Private Wealth Management

In the June 2022 quarter, the Bank’s wealth management business, Peapack Private Wealth Management ("PPWM"), generated $13.89 million in fee income, compared to $14.83 million for the March 31, 2022 quarter and $13.03 million for the June 2021 quarter. Continued market declines in 2022 further impacted the results in the June 2022 quarter, as the S&P was down another 16% in Q2 2022 (and YTD down 21%).

John Babcock, President of Peapack Private Wealth Managed noted, “Our business is sound and continues to attract new clients as well as additions from existing relationships, despite overall market declines in the first half of the year. In Q2 2022, total new accounts and client additions totaled $210 million which brings our six-month 2022 total to a record $556 million. As we enter Q3 2022, our new business pipeline is strong. Our highly skilled professionals, our fiduciary powers and expertise, our financial planning capabilities and our high-touch client service model distinguishes PPWM in our market and are the drivers behind our growth and success. Additionally, as noted last quarter, we are nearing the completion of our integration of our eight acquisitions made since 2015 into a singular organizational structure and operating platform.”

Loans / Commercial Banking

Total loans grew 7% (13% annualized) to $5.17 billion at June 30, 2022 compared to $4.84 billion at December 31, 2021, and grew 13% from $4.58 billion at June 30, 2021.

Total C&I loans and leases at June 30, 2022 were $2.05 billion or 40% of the total loan portfolio.

Mr. Kennedy noted, “Our loan growth has been strong, however, given economic uncertainty and rising interest rates, we believe loan demand will subside somewhat. Further, we have tightened our initial underwriting in anticipation of a potential economic downturn and higher rate environment. Given that, we believe we will achieve modest growth for the remainder of 2022, resulting in mid to high single digit growth for all of 2022.”

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, and Corporate Advisory and SBA businesses.”

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

	Six Months Ended				Six Months Ended
	June 30, 2022				June 30, 2021
	NII		NIM		NII		NIM
NII/NIM excluding the below	$81,804		2.76%		$63,001		2.51%
Prepayment premiums received on loan paydowns	606		0.02%		1,205		0.05%
Effect of maintaining excess interest earning cash	105		-0.02%		-300		-0.18%
Effect of PPP loans	—		0.00%		1,732		-0.06%
NII/NIM as reported	$82,515		2.76%		$65,638		2.32%
	Three Months Ended				Three Months Ended				Three Months Ended
	June 30, 2022				March 31, 2022				June 30, 2021
	NII		NIM		NII		NIM		NII		NIM
NII/NIM excluding the below	$42,526		2.83%		$39,274		2.68%		$32,446		2.56%
Prepayment premiums received on loan paydowns	255		0.02%		351		0.02%		501		0.04%
Effect of maintaining excess interest earning cash	112		-0.02%		-3		-0.01%		-115		-0.15%
Effect of PPP loans	—		0.00%		—		0.00%		1,013		-0.07%
NII/NIM as reported	$42,893		2.83%		$39,622		2.69%		$33,845		2.38%

As shown above, the Company’s reported NII and NIM for Q2 2022 increased $3.3 million and 14 basis points, respectively, compared to the linked quarter (Q1 2022) and $9.0 million and 45 basis points compared to the prior year quarter (Q2 2021). When comparing to the prior year quarter the Bank further lowered its cost of funds strategically and grew its average loan portfolio at rates/spreads beneficial to NIM, while reducing lower-yielding liquidity. Additionally, the Bank benefitted from the increases in LIBOR and Prime during 2022. Mr. Kennedy stated, “As noted above, we benefitted from the increase in LIBOR and Prime during 2022 and we are positioned to continue to benefit from a rise in interest rates. 25% of our loan portfolio reprices within one month; 37% within three months and 47% within one year. Our current modeling, with what we believe include very conservative deposit beta assumptions (average of 45%), indicates net interest income will improve approximately 3% in year one and 8% in year two, after a 200-basis point rate shock.”

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale funding, volatility, and/or operational risk. Total deposits at June 30, 2022 increased $138 million to $5.40 billion from $5.27 billion at December 31, 2021 and increased $508 million from $4.90 billion at June 30, 2021. Along with the deposit growth, the change in mix was favorable, as noninterest bearing demand deposits increased $84 million, interest-bearing demand accounts increased $478 million and savings and money market accounts increased $25 million, while higher costing CDs declined $71 million and brokered deposits declined $8 million, when comparing June 30, 2022 to June 30, 2021.

Mr. Kennedy noted, “90% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise nearly 20% of our total deposits; both metrics reflect the relationship aspect of our deposit base.”

At June 30, 2022, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $737.5 million (or 12% of assets).

The Company maintains backup liquidity of approximately $1.9 billion of secured available funding with the Federal Home Loan Bank and $1.6 billion of secured funding from the Federal Reserve Discount Window. The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $2.86 million for the June 2022 quarter compared to $4.65 million for the March 2022 quarter and $1.46 million for the June 2021 quarter. The June 2022 quarter results were driven by $2.68 million in gains on sales of SBA loans. The March 2022 quarter results were driven by $2.84 million in gains on sale of SBA loans and $1.56 million in corporate advisory fee income. The June 2021 quarter reflected $932,000 in gains on the sale of SBA loans and increased mortgage banking activity due to greater refinance activity in the low-rate environment. The June 2022, March 2022 and June 2021 quarters included no income from loan level, back-to-back swap activities, as there has been minimal activity for such.

		Six Months Ended		Six Months Ended
		June 30,		June 30,
(Dollars in thousands, except per share data)		2022		2021
Gain on loans held for sale at fair value (Mortgage banking)		$398		$1,434
Fee income related to loan level, back-to-back swaps		—		—
Gain on sale of SBA loans		5,519		2,381
Corporate advisory fee income		1,594		1,219
Total capital markets activity		$7,511		$5,034
		Three Months Ended		Three Months Ended		Three Months Ended
		June 30,		March 31,		June 30,
(Dollars in thousands, except per share data)		2022		2022		2021
Gain on loans held for sale at fair value (Mortgage banking)		$151		$247		$409
Fee income related to loan level, back-to-back swaps		—		—		—
Gain on sale of SBA loans		2,675		2,844		932
Corporate advisory fee income		33		1,561		121
Total capital markets activity		$2,859		$4,652		$1,462

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

Other noninterest income was $1.76 million for Q2 2022 compared to a $(4.77) million loss for Q1 2022 and $3.18 million for Q2 2021. Q1 2022 included a $6.6 million loss on sale of securities associated with a balance sheet repositioning. Q2 2021 included $153,000 of bank owned life insurance income due to the receipt of life insurance proceeds; a $1.13 million gain on sale of PPP loans; $722,000 of fee income related to referral of PPP loans to a third party; and a cost of $842,000 on the termination of interest rate swaps.

Operating Expenses

The Company’s total operating expenses were $32.66 million for the quarter ended June 30, 2022, compared to $34.17 million for the March 2022 quarter and $30.68 million for the June 2021 quarter. The June 2022 and March 2022 quarters included a full quarter’s worth of expense related to the acquisition of Princeton Portfolio Strategies Group (“PPSG”), which closed on July 1, 2021. The first six months of 2022 included increased costs related to health insurance and corporate insurance, as well as the normal annual merit increases and year-end bonuses. The March 2022 quarter also included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank. The June 2021 quarter included $648,000 of expense related to the redemption of subordinated debt.

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. We will also grow and expand our core wealth management and commercial banking businesses, including strategic hires and lift-outs, and invest in digital enhancements to further enhance the client experience.”

Income Taxes

The effective tax rate for the three months ended June 30, 2022 was 26.35%, as compared to 24.45% for the March 2022 quarter and 27.69% for the quarter ended June 30, 2021. The March 31, 2022 quarter benefitted from the vesting of restricted stock at prices higher than grant prices.

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) at June 30, 2022 were $15.2 million, or 0.25% of total assets. Loans past due 30 to 89 days and still accruing were $3.1 million.

Criticized and classified loans declined by $41 million from December 31, 2021 to June 30, 2022.

Loans on deferral and accruing, entered into during the COVID-19 pandemic, stand at just $13 million at June 30, 2022, down significantly from $914 million at June 30, 2020.

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

For the quarter ended June 30, 2022, the Company’s provision for credit losses was $1.4 million compared to $2.4 million for the March 2022 quarter and $900,000 for the June 2021 quarter. The increased provision for credit losses in the June 2022 and March 2022 quarters, when compared to the June 2021 quarter was due principally to loan growth during the six-month period.

At June 30, 2022, the ACL was $59.02 million (1.14% of total loans), compared to $61.70 million at December 31, 2021 (1.27% of loans) and $63.51 million at June 30, 2021 (1.39% of total loans).

Capital

The Company’s capital position during the June 2022 quarter was benefitted by net income of $20.10 million which was offset by the purchase of approximately 200,000 shares through the Company’s stock repurchase program at a total cost of $6.4 million and the quarterly dividend of $919,000. U.S. Generally Accepted Accounting Principles (“GAAP”) Capital at June 30, 2022 was also impacted by an increase in the unrealized loss on available-for-sale securities in the second quarter of 2022 due to the significant rise in medium-term Treasury yields.

Mr. Kennedy noted, “Despite capital spent on stock repurchases, and capital being affected by the increased unrealized loss on AFS securities, our tangible book value per share improved slightly during Q2 2022 to $25.96 at June 30, 2022.”

The Company’s and Bank’s capital ratios at June 30, 2022 remain strong. Such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test on March 31, 2022, under the 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 July 28, 2022, the Company declared a cash dividend of $0.05 per share payable on August 25, 2022, to shareholders of record on August 11, 2022.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.2 billion and assets under management/administration of $9.5 billion as of June 30, 2022. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers. Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy. Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service. Visit www.pgbank.com and www.peapackprivate.com for more information.

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

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

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

• our ability to successfully integrate wealth management firm acquisitions;

• our ability to manage our growth;

• our ability to successfully integrate our expanded employee base;

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

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

• declines in the value in our investment portfolio;

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

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

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

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

• decline in real estate values within our market areas;

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

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

• higher than expected FDIC insurance premiums;

• adverse weather conditions;

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

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

• a reduction in our lower-cost funding sources;

• our inability to adapt to technological changes;

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

• our inability to retain key employees;

• demands for loans and deposits in our market areas;

• adverse changes in securities markets;

• changes in accounting policies and practices; and

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

Further, given its ongoing and dynamic nature, it is difficult to predict the continued 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 credit 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;

• 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, 2021. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308

 

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

		For the Three Months Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
		2022		2022		2021		2021		2021
Income Statement Data:
Interest income		$48,520		$44,140		$42,075		$40,067		$39,686
Interest expense		5,627		4,518		4,863		4,856		5,841
Net interest income		42,893		39,622		37,212		35,211		33,845
Wealth management fee income		13,891		14,834		13,962		13,860		13,034
Service charges and fees		1,063		952		996		959		896
Bank owned life insurance		310		313		308		311		466
Gain on loans held for sale at fair value (Mortgage banking) (A)		151		247		352		408		409
Gain/(loss) on loans held for sale at lower of cost or fair value (B)		—		—		(265)		—		1,125
Fee income related to loan level, back-to-back swaps (A)		—		—		—		—		—
Gain on sale of SBA loans (A)		2,675		2,844		989		1,569		932
Corporate advisory fee income (A)		33		1,561		2,180		84		121
Loss on swap termination		—		—		—		—		(842)
Other income (C)		860		1,254		581		660		1,495
Loss on securities sale, net (D)		—		(6,609)		—		—		—
Fair value adjustment for CRA equity security		(475)		(682)		(139)		(70)		42
Total other income		18,508		14,714		18,964		17,781		17,678
Salaries and employee benefits (E)		21,882		22,449		20,105		19,859		19,910
Premises and equipment		4,640		4,647		4,519		4,459		4,074
FDIC insurance expense		503		471		402		555		529
Swap valuation allowance		—		673		893		1,350		—
Other expenses		5,634		5,929		5,785		5,962		6,171
Total operating expenses		32,659		34,169		31,704		32,185		30,684
Pretax income before provision for credit losses		28,742		20,167		24,472		20,807		20,839
Provision for credit losses (F)		1,449		2,375		3,750		1,600		900
Income before income taxes		27,293		17,792		20,722		19,207		19,939
Income tax expense		7,193		4,351		5,867		5,036		5,521
Net income		$20,100		$13,441		$14,855		$14,171		$14,418
Total revenue (G)		$61,401		$54,336		$56,176		$52,992		$51,523
Per Common Share Data:
Earnings per share (basic)		$1.10		$0.73		$0.80		$0.76		$0.76
Earnings per share (diluted)		1.08		0.71		0.78		0.74		0.74
Weighted average number of common shares outstanding:
Basic		18,325,605		18,339,013		18,483,268		18,763,316		18,963,237
Diluted		18,637,340		18,946,683		19,070,594		19,273,831		19,439,439
Performance Ratios:
Return on average assets annualized (ROAA)		1.30%		0.87%		0.96%		0.95%		0.97%
Return on average equity annualized (ROAE)		15.43%		9.88%		10.94%		10.40%		10.86%
Return on average tangible common equity (ROATCE) (H)		17.00%		10.85%		12.03%		11.43%		11.83%
Net interest margin (tax-equivalent basis)		2.83%		2.69%		2.46%		2.42%		2.38%
GAAP efficiency ratio (I)		53.19%		62.88%		56.44%		60.74%		59.55%
Operating expenses / average assets annualized		2.11%		2.22%		2.05%		2.16%		2.06%

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.
C. Includes income of $722,000 from the referral of PPP loans to a third-party firm during the June 2021 quarter.
D. Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.
E. The March 2022 and 2021 quarters each included $1.5 million of severance expense related to corporate restructuring.
F. Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.
G. Total revenue equals the sum of net interest income plus total other income.
H. Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
I. Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

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

		For the Six Months Ended
		June 30,				Change
		2022		2021		$		%
Income Statement Data:
Interest income		$92,660		$77,925		$14,735		19%
Interest expense		10,145		12,287		(2,142)		-17%
Net interest income		82,515		65,638		16,877		26%
Wealth management fee income		28,725		25,165		3,560		14%
Service charges and fees		2,015		1,742		273		16%
Bank owned life insurance		623		1,077		(454)		-42%
Gain on loans held for sale at fair value (Mortgage banking) (A)		398		1,434		(1,036)		-72%
Gain on loans held for sale at lower of cost or fair value (B)		—		1,407		(1,407)		-100%
Fee income related to loan level, back-to-back swaps (A)		—		—		—		N/A
Gain on sale of SBA loans (A)		5,519		2,381		3,138		132%
Corporate advisory fee income (A)		1,594		1,219		375		31%
Loss on swap termination		—		(842)		842		-100%
Other income (C)		2,114		2,138		(24)		-1%
Loss on securities sale, net (D)		(6,609)		—		(6,609)		N/A
Fair value adjustment for CRA equity security		(1,157)		(223)		(934)		419%
Total other income		33,222		35,498		(2,276)		-6%
Salaries and employee benefits (E)		44,331		41,900		2,431		6%
Premises and equipment		9,287		8,187		1,100		13%
FDIC insurance expense		974		1,114		(140)		-13%
Swap valuation allowance		673		—		673		N/A
Other expenses		11,563		11,077		486		4%
Total operating expenses		66,828		62,278		4,550		7%
Pretax income before provision for credit losses		48,909		38,858		10,051		26%
Provision for credit losses (F)		3,824		1,125		2,699		240%
Income before income taxes		45,085		37,733		7,352		19%
Income tax expense		11,544		10,137		1,407		14%
Net income		$33,541		$27,596		$5,945		22%
Total revenue (G)		$115,737		$101,136		$14,601		14%
Per Common Share Data:
Earnings per share (basic)		$1.83		$1.46		$0.37		25%
Earnings per share (diluted)		1.79		1.42		0.37		26%
Weighted average number of common shares outstanding:
Basic		18,332,272		18,956,807		(624,535)		-3%
Diluted		18,782,559		19,473,150		(690,591)		-4%
Performance Ratios:
Return on average assets annualized (ROAA)		1.09%		0.93%		0.16%		17%
Return on average equity annualized (ROAE)		12.59%		10.45%		2.14%		21%
Return on average tangible common equity (ROATCE) (H)		13.86%		11.39%		2.47%		22%
Net interest margin (tax-equivalent basis)		2.76%		2.32%		0.44%		19%
GAAP efficiency ratio (I)		57.74%		61.58%		(3.84)%		-6%
Operating expenses / average assets annualized		2.16%		2.10%		0.06%		3%

A. Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.
B. Includes gain on sale of $57 million of PPP loans completed in the June 2021 quarter.
C. Includes income of $722,000 from the referral of PPP loans to a third-party firm during the June 2021 quarter.
D. Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.
E. The June 2022 and 2021 six months ended each included $1.5 million of severance expense related to corporate restructuring.
F. Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.
G. Total revenue equals the sum of net interest income plus total other income.
H. Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
I. Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

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

		As of
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
		2022		2022		2021		2021		2021
ASSETS
Cash and due from banks		$6,203		$8,849		$5,929		$9,299		$12,684
Federal funds sold		—		—		—		—		—
Interest-earning deposits		147,222		105,111		140,875		606,913		190,778
Total cash and cash equivalents		153,425		113,960		146,804		616,212		203,462
Securities available for sale		556,791		601,163		796,753		843,779		823,820
Securities held to maturity		105,048		106,816		108,680		—		—
CRA equity security, at fair value		13,528		14,003		14,685		14,824		14,894
FHLB and FRB stock, at cost		13,710		18,570		12,950		12,950		12,901
Residential mortgage		512,341		513,289		501,340		510,878		504,181
Multifamily mortgage		1,876,783		1,850,097		1,595,866		1,497,683		1,420,043
Commercial mortgage		657,812		669,899		662,626		680,107		702,777
Commercial loans (A)		2,048,474		2,041,720		2,009,252		1,833,532		1,880,830
Consumer loans		37,675		35,322		33,687		30,689		31,889
Home equity lines of credit		36,023		38,604		40,803		42,512		44,062
Other loans		236		226		238		245		204
Total loans		5,169,344		5,149,157		4,843,812		4,595,646		4,583,986
Less: Allowances for credit losses (B)		59,022		58,386		61,697		65,133		63,505
Net loans		5,110,322		5,090,771		4,782,115		4,530,513		4,520,481
Premises and equipment		22,804		22,960		23,044		23,123		23,261
Other real estate owned		116		—		—		—		—
Accrued interest receivable		23,468		22,890		21,589		22,790		23,117
Bank owned life insurance		46,944		46,805		46,663		46,510		46,605
Goodwill and other intangible assets		48,082		48,471		48,902		49,333		43,156
Finance lease right-of-use assets		3,209		3,395		3,582		3,769		3,956
Operating lease right-of-use assets		14,192		14,725		9,775		10,307		9,569
Due from brokers (C)		—		120,245		—		—		—
Other assets (D)		39,528		30,890		62,451		66,175		66,466
TOTAL ASSETS		$6,151,167		$6,255,664		$6,077,993		$6,240,285		$5,791,688
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$1,043,225		$1,023,208		$956,482		$986,765		$959,494
Interest-bearing demand deposits		2,456,988		2,362,987		2,287,894		2,355,892		1,978,497
Savings		168,441		162,116		154,914		168,831		147,227
Money market accounts		1,217,516		1,304,017		1,307,051		1,287,686		1,213,992
Certificates of deposit – Retail		375,387		384,909		409,608		426,981		446,143
Certificates of deposit – Listing Service		31,348		31,348		31,382		31,382		31,631
Subtotal “customer” deposits		5,292,905		5,268,585		5,147,331		5,257,537		4,776,984
IB Demand – Brokered		85,000		85,000		85,000		85,000		85,000
Certificates of deposit – Brokered		25,963		33,831		33,818		33,804		33,791
Total deposits		5,403,868		5,387,416		5,266,149		5,376,341		4,895,775
Short-term borrowings		—		122,085		—		—		—
Paycheck Protection Program Liquidity Facility (E)		—		—		—		48,496		83,586
Finance lease liability		5,305		5,573		5,820		6,063		6,299
Operating lease liability		14,756		15,155		10,111		10,644		9,902
Subordinated debt, net		132,844		132,772		132,701		132,629		132,557
Other liabilities (D)		74,070		69,237		116,824		123,098		125,110
TOTAL LIABILITIES		5,630,843		5,732,238		5,531,605		5,697,271		5,253,229
Shareholders’ equity		520,324		523,426		546,388		543,014		538,459
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$6,151,167		$6,255,664		$6,077,993		$6,240,285		$5,791,688
Assets under management and / or administration at Peapack-Gladstone Bank’s Private Wealth Management Division (market value, not included above-dollars in billions)		$9.5		$10.7		$11.1		$10.3		$9.8

A. Includes PPP loans of $10 million at June 30, 2022; $10 million at March 31, 2022; $14 million at December 31, 2021; $49 million at September 30, 2021; and $84 million at June 30, 2021.
B. Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology.
C. Includes $120 million due from FHLB related to securities sales at March 31, 2022. The $120 million received on April 1, 2022, was used to reduce short term borrowings.
D. The change in other assets and other liabilities was primarily due to the change in the fair value of our back-to-back swap program.
E. Represents funding provided by the Federal Reserve for pledged PPP loans.

  

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

		As of
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
		2022		2022		2021		2021		2021
Asset Quality:
Loans past due over 90 days and still accruing		$—		$—		$—		$—		$—
Nonaccrual loans (A)		15,078		15,884		15,573		25,925		5,962
Other real estate owned		116		—		—		—		—
Total nonperforming assets		$15,194		$15,884		$15,573		$25,925		$5,962
Nonperforming loans to total loans		0.29%		0.31%		0.32%		0.56%		0.13%
Nonperforming assets to total assets		0.25%		0.25%		0.26%		0.42%		0.10%
Performing TDRs (B)(C)		$2,272		$2,375		$2,479		$416		$190
Loans past due 30 through 89 days and still accruing (D)		$3,126		$606		$8,606		$1,193		$1,678
Loans subject to special mention		$98,787		$110,252		$116,490		$115,935		$148,601
Classified loans		$27,167		$47,386		$50,702		$51,937		$11,178
Impaired loans		$13,227		$16,147		$18,052		$26,341		$6,498
Allowance for credit losses ("ACL"):
Beginning of period		$58,386		$61,697		$65,133		$63,505		$67,536
Day one CECL adjustment		—		(5,536)		—		—		—
Provision for credit losses (E)		646		2,489		3,750		1,600		900
(Charge-offs)/recoveries, net		(10)		(264)		(7,186)		28		(4,931)
End of period		$59,022		$58,386		$61,697		$65,133		$63,505
ACL to nonperforming loans		391.44%		367.58%		396.18%		251.24%		1065.16%
ACL to total loans		1.14%		1.13%		1.27%		1.42%		1.39%
General ACL to total loans (F)		1.09%		1.09%		1.19%		1.26%		1.38%

A. Increase at September 30, 2021 due to one large CRE loan with a retail component, located in Manhattan.
B. Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.
C. Excludes TDRs included in nonaccrual loans in the following amounts: $13.5 million at June 30, 2022; $13.6 million at March 31, 2022; $1.1 million at December 31, 2021; $4.0 million at September 30, 2021; and $3.9 million at June 30, 2021.
D. Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and the lessee/borrower at December 31, 2021. Payment was received in January 2022.
E. Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology. Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to roll forward the ACL excludes a provision of $803,000 at June 30, 2022 and a credit of $114,000 at March 31, 2022 related to off-balance sheet commitments.
F. Total ACL less specific reserves equals general ACL.

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

		June 30,				December 31,				June 30,
		2022				2021				2021
Capital Adequacy
Equity to total assets (A)				8.46%				8.99%				9.30%
Tangible Equity to tangible assets (B)				7.74%				8.25%				8.62%
Book value per share (C)				$28.60				$29.70				$28.60
Tangible Book Value per share (D)				$25.96				$27.05				$26.30

		June 30,				December 31,				June 30,
		2022				2021				2021
Regulatory Capital – Holding Company
Tier I leverage		$528,646		8.51%		$508,231		8.29%		$499,344		8.67%
Tier I capital to risk-weighted assets		528,646		10.70		508,231		10.62		499,344		11.45
Common equity tier I capital ratio to risk-weighted assets		528,622		10.70		508,207		10.62		499,315		11.45
Tier I & II capital to risk-weighted assets		721,503		14.60		700,790		14.64		686,543		15.74
Regulatory Capital – Bank
Tier I leverage (E)		$646,884		10.42%		$612,762		9.99%		$583,208		10.13%
Tier I capital to risk-weighted assets (F)		646,884		13.10		612,762		12.80		583,208		13.37
Common equity tier I capital ratio to risk-weighted assets (G)		646,860		13.10		612,738		12.80		583,179		13.37
Tier I & II capital to risk-weighted assets (H)		706,897		14.31		672,614		14.05		637,858		14.62

A. Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.
B. Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
C. Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding.
D. Tangible book value per 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% ($310 million)
F. Regulatory well capitalized standard = 8.00% ($395 million)
G. Regulatory well capitalized standard = 6.50% ($321 million)
H. Regulatory well capitalized standard = 10.00% ($494 million)

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

		For the Quarters Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
		2022		2022		2021		2021		2021
Residential loans retained		$35,172		$41,547		$22,953		$36,845		$37,083
Residential loans sold		9,886		15,669		20,694		24,041		25,432
Total residential loans		45,058		57,216		43,647		60,886		62,515
Commercial real estate		13,960		25,575		16,134		14,944		12,243
Multifamily		74,564		265,650		162,740		120,716		255,820
Commercial (C&I) loans/leases (A) (B)		332,801		143,029		341,886		143,121		141,285
SBA (C)		10,534		26,093		27,630		11,570		15,976
Wealth lines of credit (A)		12,575		9,400		7,500		10,020		3,200
Total commercial loans		444,434		469,747		555,890		300,371		428,524
Installment loans		100		131		94		178		25
Home equity lines of credit (A)		3,897		1,341		5,359		2,535		4,140
Total loans closed		$493,489		$528,435		$604,990		$363,970		$495,204

		For the Six Months Ended
		June 30,		June 30,
		2022		2021
Residential loans retained		$76,719		$52,897
Residential loans sold		25,555		71,305
Total residential loans		102,274		124,202
Commercial real estate		39,535		50,606
Multifamily		340,214		340,829
Commercial (C&I) loans (A) (B)		475,830		270,426
SBA (C)		36,627		74,706
Wealth lines of credit (A)		21,975		5,675
Total commercial loans		914,181		742,242
Installment loans		231		88
Home equity lines of credit (A)		5,238		6,039
Total loans closed		$1,021,924		$872,571

A. Includes loans and lines of credit that closed in the period but not necessarily funded.
B. Includes equipment finance.
C. Includes PPP loans of $56 million for the six months ended June 30, 2021.

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

		June 30, 2022						June 30, 2021
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$774,145		$3,535		1.83%		$884,374		$3,020		1.37%
Tax-exempt (A) (B)		4,193		40		3.82		6,891		81		4.70
Loans (B) (C):
Mortgages		513,666		3,630		2.83		498,594		3,826		3.07
Commercial mortgages		2,552,128		21,185		3.32		1,941,330		15,056		3.10
Commercial		2,024,457		19,348		3.82		1,942,802		16,984		3.50
Commercial construction		16,186		162		4.00		20,952		180		3.44
Installment		37,235		297		3.19		34,319		255		2.97
Home equity		38,061		331		3.48		45,042		377		3.35
Other		258		6		9.30		219		5		9.13
Total loans		5,181,991		44,959		3.47		4,483,258		36,683		3.27
Federal funds sold		—		—		—		91		—		0.00
Interest-earning deposits		164,066		314		0.77		428,464		97		0.09
Total interest-earning assets		6,124,395		48,848		3.19%		5,803,078		39,881		2.75%
Noninterest-earning assets:
Cash and due from banks		9,715						10,360
Allowance for credit losses		(59,629)						(67,593)
Premises and equipment		22,952						23,307
Other assets		96,232						182,421
Total noninterest-earning assets		69,270						148,495
Total assets		$6,193,665						$5,951,573
LIABILITIES:
Interest-bearing deposits:
Checking		$2,493,668		$2,330		0.37%		$1,980,688		$944		0.19%
Money markets		1,234,564		579		0.19		1,235,464		727		0.24
Savings		163,062		5		0.01		144,044		18		0.05
Certificates of deposit – retail		411,202		651		0.63		488,148		1,027		0.84
Subtotal interest-bearing deposits		4,302,496		3,565		0.33		3,848,344		2,716		0.28
Interest-bearing demand – brokered		85,000		364		1.71		105,604		456		1.73
Certificates of deposit – brokered		33,470		261		3.12		33,783		264		3.13
Total interest-bearing deposits		4,420,966		4,190		0.38		3,987,731		3,436		0.34
Borrowings		3,873		10		1.03		166,343		182		0.44
Capital lease obligation		5,406		64		4.74		6,380		76		4.76
Subordinated debt		132,803		1,363		4.11		181,317		2,147		4.74
Total interest-bearing liabilities		4,563,048		5,627		0.49%		4,341,771		5,841		0.54%
Noninterest-bearing liabilities:
Demand deposits		1,029,538						948,851
Accrued expenses and other liabilities		79,882						129,980
Total noninterest-bearing liabilities		1,109,420						1,078,831
Shareholders’ equity		521,197						530,971
Total liabilities and shareholders’ equity		$6,193,665						$5,951,573
Net interest income				$43,221						$34,040
Net interest spread						2.70%						2.21%
Net interest margin (D)						2.83%						2.38%

A. Average balances for available for sale securities are based on amortized cost.
B. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
C. Loans are stated net of unearned income and include nonaccrual loans.
D. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

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

		June 30, 2022						March 31, 2022
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$774,145		$3,535		1.83%		$928,828		$3,606		1.55%
Tax-exempt (A) (B)		4,193		40		3.82		4,701		48		4.08
Loans (B) (C):
Mortgages		513,666		3,630		2.83		508,408		3,656		2.88
Commercial mortgages		2,552,128		21,185		3.32		2,353,032		18,175		3.09
Commercial		2,024,457		19,348		3.82		2,008,464		18,203		3.63
Commercial construction		16,186		162		4.00		18,087		160		3.54
Installment		37,235		297		3.19		34,475		254		2.95
Home equity		38,061		331		3.48		40,245		324		3.22
Other		258		6		9.30		283		6		8.48
Total loans		5,181,991		44,959		3.47		4,962,994		40,778		3.29
Federal funds sold		—		—		—		—		—		—
Interest-earning deposits		164,066		314		0.77		127,121		29		0.09
Total interest-earning assets		6,124,395		48,848		3.19%		6,023,644		44,461		2.95%
Noninterest-earning assets:
Cash and due from banks		9,715						7,455
Allowance for credit losses		(59,629)						(61,001)
Premises and equipment		22,952						23,022
Other assets		96,232						168,239
Total noninterest-earning assets		69,270						137,715
Total assets		$6,193,665						$6,161,359
LIABILITIES:
Interest-bearing deposits:
Checking		$2,493,668		$2,330		0.37%		$2,330,340		$1,238		0.21%
Money markets		1,234,564		579		0.19		1,294,100		539		0.17
Savings		163,062		5		0.01		156,554		5		0.01
Certificates of deposit – retail		411,202		651		0.63		426,166		606		0.57
Subtotal interest-bearing deposits		4,302,496		3,565		0.33		4,207,160		2,388		0.23
Interest-bearing demand – brokered		85,000		364		1.71		85,000		373		1.76
Certificates of deposit – brokered		33,470		261		3.12		33,823		261		3.09
Total interest-bearing deposits		4,420,966		4,190		0.38		4,325,983		3,022		0.28
Borrowings		3,873		10		1.03		55,513		64		0.46
Capital lease obligation		5,406		64		4.74		5,662		68		4.80
Subordinated debt		132,803		1,363		4.11		132,731		1,364		4.11
Total interest-bearing liabilities		4,563,048		5,627		0.49%		4,519,889		4,518		0.40%
Noninterest-bearing liabilities:
Demand deposits		1,029,538						978,288
Accrued expenses and other liabilities		79,882						119,003
Total noninterest-bearing liabilities		1,109,420						1,097,291
Shareholders’ equity		521,197						544,179
Total liabilities and shareholders’ equity		$6,193,665						$6,161,359
Net interest income				$43,221						$39,943
Net interest spread						2.70%						2.55%
Net interest margin (D)						2.83%						2.69%

A. Average balances for available for sale securities are based on amortized cost.
B. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
C. Loans are stated net of unearned income and include nonaccrual loans.
D. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

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

		June 30, 2022						June 30, 2021
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$851,059		$7,142		1.68%		$823,120		$5,649		1.37%
Tax-exempt (A) (B)		4,446		88		3.96		7,433		179		4.82
Loans (B) (C):
Mortgages		511,051		7,286		2.85		500,084		7,780		3.11
Commercial mortgages		2,453,130		39,360		3.21		1,891,125		29,476		3.12
Commercial		2,016,504		37,550		3.72		1,937,776		33,439		3.45
Commercial construction		17,131		322		3.76		18,294		319		3.49
Installment		35,863		552		3.08		35,997		531		2.95
Home equity		39,147		655		3.35		46,937		776		3.31
Other		271		11		8.12		233		10		8.58
Total loans		5,073,097		85,736		3.38		4,430,446		72,331		3.27
Federal funds sold		—		—		—		96		—		0.25
Interest-earning deposits		145,696		343		0.47		491,547		225		0.09
Total interest-earning assets		6,074,298		93,309		3.07%		5,752,642		78,384		2.73%
Noninterest-earning assets:
Cash and due from banks		8,591						10,743
Allowance for credit losses		(60,311)						(69,367)
Premises and equipment		22,987						22,972
Other assets		132,266						204,390
Total noninterest-earning assets		103,533						168,738
Total assets		$6,177,831						$5,921,380
LIABILITIES:
Interest-bearing deposits:
Checking		$2,412,456		$3,568		0.30%		$1,944,734		$1,922		0.20%
Money markets		1,264,167		1,118		0.18		1,247,464		1,521		0.24
Savings		159,826		10		0.01		139,648		35		0.05
Certificates of deposit – retail		418,642		1,257		0.60		510,693		2,497		0.98
Subtotal interest-bearing deposits		4,255,091		5,953		0.28		3,842,539		5,975		0.31
Interest-bearing demand – brokered		85,000		737		1.73		107,790		949		1.76
Certificates of deposit – brokered		33,646		522		3.10		33,776		525		3.11
Total interest-bearing deposits		4,373,737		7,212		0.33		3,984,105		7,449		0.37
Borrowings		29,550		74		0.50		176,120		391		0.44
Capital lease obligation		5,533		132		4.77		6,493		155		4.77
Subordinated debt		132,767		2,727		4.11		181,555		4,292		4.73
Total interest-bearing liabilities		4,541,587		10,145		0.45%		4,348,273		12,287		0.57%
Noninterest-bearing liabilities:
Demand deposits		1,004,055						898,866
Accrued expenses and other liabilities		99,565						145,919
Total noninterest-bearing liabilities		1,103,620						1,044,785
Shareholders’ equity		532,624						528,322
Total liabilities and shareholders’ equity		$6,177,831						$5,921,380
Net interest income				$83,164						$66,097
Net interest spread						2.62%						2.16%
Net interest margin (D)						2.76%						2.32%

A. Average balances for available for sale securities are based on amortized cost.
B. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
C. Loans are stated net of unearned income and include nonaccrual loans.
D. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

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

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

(Dollars in thousands, except share data)

		Three Months Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
Tangible Book Value Per Share		2022		2022		2021		2021		2021
Shareholders’ equity		$520,324		$523,426		$546,388		$543,014		$538,459
Less: Intangible assets, net		48,082		48,471		48,902		49,333		43,156
Tangible equity		$472,242		$474,955		$497,486		$493,681		$495,303
Period end shares outstanding		18,190,009		18,370,312		18,393,888		18,627,910		18,829,877
Tangible book value per share		$25.96		$25.85		$27.05		$26.50		$26.30
Book value per share		28.60		28.49		29.70		29.15		28.60
Tangible Equity to Tangible Assets
Total assets		$6,151,167		$6,255,664		$6,077,993		$6,240,285		$5,791,688
Less: Intangible assets, net		48,082		48,471		48,902		49,333		43,156
Tangible assets		$6,103,085		$6,207,193		$6,029,091		$6,190,952		$5,748,532
Tangible equity to tangible assets		7.74%		7.65%		8.25%		7.97%		8.62%
Equity to assets		8.46%		8.37%		8.99%		8.70%		9.30%

		Three Months Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
Return on Average Tangible Equity		2022		2022		2021		2021		2021
Net income		$20,100		$13,441		$14,855		$14,171		$14,418
Average shareholders’ equity		$521,197		$544,179		$543,035		$544,856		$530,971
Less: Average intangible assets, net		48,291		48,717		49,151		48,757		43,366
Average tangible equity		$472,906		$495,462		$493,884		$496,099		$487,605
Return on average tangible common equity		17.00%		10.85%		12.03%		11.43%		11.83%

		For the Six Months Ended
		June 30,		June 30,
Return on Average Tangible Equity		2022		2021
Net income		$33,541		$27,596
Average shareholders’ equity		$532,624		$528,322
Less: Average intangible assets, net		48,503		43,553
Average tangible equity		484,121		484,769
Return on average tangible common equity		13.86%		11.39%

		Three Months Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
Efficiency Ratio		2022		2022		2021		2021		2021
Net interest income		$42,893		$39,622		$37,212		$35,211		$33,845
Total other income		18,508		14,714		18,964		17,781		17,678
Add:
Fair value adjustment for CRA equity security		475		682		139		70		(42)
Less:
Loss/(gain) on loans held for sale
at lower of cost or fair value		—		—		265		—		(1,125)
Income from life insurance proceeds		—		—		—		—		(153)
Loss on securities sale, net		—		6,609		—		—		—
Loss on swap termination		—		—		—		—		842
Total recurring revenue		61,876		61,627		56,580		53,062		51,045
Operating expenses		32,659		34,169		31,704		32,185		30,684
Less:
Write-off of subordinated debt costs		—		—		—		—		648
Swap valuation allowance		—		673		893		1,350		—
Severance expense		—		1,476		—		—		—
Total operating expense		32,659		32,020		30,811		30,835		30,036
Efficiency ratio		52.78%		51.96%		54.46%		58.11%		58.84%

		For the Six Months Ended
		June 30,		June 30,
Efficiency Ratio		2022		2021
Net interest income		$82,515		$65,638
Total other income		33,222		35,498
Add:
Fair value adjustment for CRA equity security		1,157		223
Less:
Loss on swap termination		—		842
Income from life insurance proceeds		—		(455)
Loss/(gain) on loans held for sale
at lower of cost or fair value		—		(1,407)
Loss on securities sale, net		6,609		—
Total recurring revenue		123,503		100,339
Operating expenses		66,828		62,278
Less:
Write-off of subordinated debt costs		—		648
Swap valuation allowance		673		—
Severance expense		1,476		1,532
Total operating expense		64,679		60,098
Efficiency ratio		52.37%		59.89%

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

		June 30,				December 31,				June 30,
		2022				2021				2021
Capital Adequacy
Equity to total assets (A)				8.46%				8.99%				9.30%
Tangible Equity to tangible assets (B)				7.74%				8.25%				8.62%
Book value per share (C)				$28.60				$29.70				$28.60
Tangible Book Value per share (D)				$25.96				$27.05				$26.30

		June 30,				December 31,				June 30,
		2022				2021				2021
Regulatory Capital – Holding Company
Tier I leverage		$528,646		8.51%		$508,231		8.29%		$499,344		8.67%
Tier I capital to risk-weighted assets		528,646		10.70		508,231		10.62		499,344		11.45
Common equity tier I capital ratio to risk-weighted assets		528,622		10.70		508,207		10.62		499,315		11.45
Tier I & II capital to risk-weighted assets		721,503		14.60		700,790		14.64		686,543		15.74
Regulatory Capital – Bank
Tier I leverage (E)		$646,884		10.42%		$612,762		9.99%		$583,208		10.13%
Tier I capital to risk-weighted assets (F)		646,884		13.10		612,762		12.80		583,208		13.37
Common equity tier I capital ratio to risk-weighted assets (G)		646,860		13.10		612,738		12.80		583,179		13.37
Tier I & II capital to risk-weighted assets (H)		706,897		14.31		672,614		14.05		637,858		14.62

A. Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.
B. Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
C. Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding.
D. Tangible book value per 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% ($310 million)
F. Regulatory well capitalized standard = 8.00% ($395 million)
G. Regulatory well capitalized standard = 6.50% ($321 million)
H. Regulatory well capitalized standard = 10.00% ($494 million)

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

		For the Quarters Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
		2022		2022		2021		2021		2021
Residential loans retained		$35,172		$41,547		$22,953		$36,845		$37,083
Residential loans sold		9,886		15,669		20,694		24,041		25,432
Total residential loans		45,058		57,216		43,647		60,886		62,515
Commercial real estate		13,960		25,575		16,134		14,944		12,243
Multifamily		74,564		265,650		162,740		120,716		255,820
Commercial (C&I) loans/leases (A) (B)		332,801		143,029		341,886		143,121		141,285
SBA (C)		10,534		26,093		27,630		11,570		15,976
Wealth lines of credit (A)		12,575		9,400		7,500		10,020		3,200
Total commercial loans		444,434		469,747		555,890		300,371		428,524
Installment loans		100		131		94		178		25
Home equity lines of credit (A)		3,897		1,341		5,359		2,535		4,140
Total loans closed		$493,489		$528,435		$604,990		$363,970		$495,204

		For the Six Months Ended
		June 30,		June 30,
		2022		2021
Residential loans retained		$76,719		$52,897
Residential loans sold		25,555		71,305
Total residential loans		102,274		124,202
Commercial real estate		39,535		50,606
Multifamily		340,214		340,829
Commercial (C&I) loans (A) (B)		475,830		270,426
SBA (C)		36,627		74,706
Wealth lines of credit (A)		21,975		5,675
Total commercial loans		914,181		742,242
Installment loans		231		88
Home equity lines of credit (A)		5,238		6,039
Total loans closed		$1,021,924		$872,571

A. Includes loans and lines of credit that closed in the period but not necessarily funded.
B. Includes equipment finance.
C. Includes PPP loans of $56 million for the six months ended June 30, 2021.

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

		June 30, 2022						June 30, 2021
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$774,145		$3,535		1.83%		$884,374		$3,020		1.37%
Tax-exempt (A) (B)		4,193		40		3.82		6,891		81		4.70
Loans (B) (C):
Mortgages		513,666		3,630		2.83		498,594		3,826		3.07
Commercial mortgages		2,552,128		21,185		3.32		1,941,330		15,056		3.10
Commercial		2,024,457		19,348		3.82		1,942,802		16,984		3.50
Commercial construction		16,186		162		4.00		20,952		180		3.44
Installment		37,235		297		3.19		34,319		255		2.97
Home equity		38,061		331		3.48		45,042		377		3.35
Other		258		6		9.30		219		5		9.13
Total loans		5,181,991		44,959		3.47		4,483,258		36,683		3.27
Federal funds sold		—		—		—		91		—		0.00
Interest-earning deposits		164,066		314		0.77		428,464		97		0.09
Total interest-earning assets		6,124,395		48,848		3.19%		5,803,078		39,881		2.75%
Noninterest-earning assets:
Cash and due from banks		9,715						10,360
Allowance for credit losses		(59,629)						(67,593)
Premises and equipment		22,952						23,307
Other assets		96,232						182,421
Total noninterest-earning assets		69,270						148,495
Total assets		$6,193,665						$5,951,573
LIABILITIES:
Interest-bearing deposits:
Checking		$2,493,668		$2,330		0.37%		$1,980,688		$944		0.19%
Money markets		1,234,564		579		0.19		1,235,464		727		0.24
Savings		163,062		5		0.01		144,044		18		0.05
Certificates of deposit – retail		411,202		651		0.63		488,148		1,027		0.84
Subtotal interest-bearing deposits		4,302,496		3,565		0.33		3,848,344		2,716		0.28
Interest-bearing demand – brokered		85,000		364		1.71		105,604		456		1.73
Certificates of deposit – brokered		33,470		261		3.12		33,783		264		3.13
Total interest-bearing deposits		4,420,966		4,190		0.38		3,987,731		3,436		0.34
Borrowings		3,873		10		1.03		166,343		182		0.44
Capital lease obligation		5,406		64		4.74		6,380		76		4.76
Subordinated debt		132,803		1,363		4.11		181,317		2,147		4.74
Total interest-bearing liabilities		4,563,048		5,627		0.49%		4,341,771		5,841		0.54%
Noninterest-bearing liabilities:
Demand deposits		1,029,538						948,851
Accrued expenses and other liabilities		79,882						129,980
Total noninterest-bearing liabilities		1,109,420						1,078,831
Shareholders’ equity		521,197						530,971
Total liabilities and shareholders’ equity		$6,193,665						$5,951,573
Net interest income				$43,221						$34,040
Net interest spread						2.70%						2.21%
Net interest margin (D)						2.83%						2.38%

A. Average balances for available for sale securities are based on amortized cost.
B. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
C. Loans are stated net of unearned income and include nonaccrual loans.
D. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

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

		June 30, 2022						March 31, 2022
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$774,145		$3,535		1.83%		$928,828		$3,606		1.55%
Tax-exempt (A) (B)		4,193		40		3.82		4,701		48		4.08
Loans (B) (C):
Mortgages		513,666		3,630		2.83		508,408		3,656		2.88
Commercial mortgages		2,552,128		21,185		3.32		2,353,032		18,175		3.09
Commercial		2,024,457		19,348		3.82		2,008,464		18,203		3.63
Commercial construction		16,186		162		4.00		18,087		160		3.54
Installment		37,235		297		3.19		34,475		254		2.95
Home equity		38,061		331		3.48		40,245		324		3.22
Other		258		6		9.30		283		6		8.48
Total loans		5,181,991		44,959		3.47		4,962,994		40,778		3.29
Federal funds sold		—		—		—		—		—		—
Interest-earning deposits		164,066		314		0.77		127,121		29		0.09
Total interest-earning assets		6,124,395		48,848		3.19%		6,023,644		44,461		2.95%
Noninterest-earning assets:
Cash and due from banks		9,715						7,455
Allowance for credit losses		(59,629)						(61,001)
Premises and equipment		22,952						23,022
Other assets		96,232						168,239
Total noninterest-earning assets		69,270						137,715
Total assets		$6,193,665						$6,161,359
LIABILITIES:
Interest-bearing deposits:
Checking		$2,493,668		$2,330		0.37%		$2,330,340		$1,238		0.21%
Money markets		1,234,564		579		0.19		1,294,100		539		0.17
Savings		163,062		5		0.01		156,554		5		0.01
Certificates of deposit – retail		411,202		651		0.63		426,166		606		0.57
Subtotal interest-bearing deposits		4,302,496		3,565		0.33		4,207,160		2,388		0.23
Interest-bearing demand – brokered		85,000		364		1.71		85,000		373		1.76
Certificates of deposit – brokered		33,470		261		3.12		33,823		261		3.09
Total interest-bearing deposits		4,420,966		4,190		0.38		4,325,983		3,022		0.28
Borrowings		3,873		10		1.03		55,513		64		0.46
Capital lease obligation		5,406		64		4.74		5,662		68		4.80
Subordinated debt		132,803		1,363		4.11		132,731		1,364		4.11
Total interest-bearing liabilities		4,563,048		5,627		0.49%		4,519,889		4,518		0.40%
Noninterest-bearing liabilities:
Demand deposits		1,029,538						978,288
Accrued expenses and other liabilities		79,882						119,003
Total noninterest-bearing liabilities		1,109,420						1,097,291
Shareholders’ equity		521,197						544,179
Total liabilities and shareholders’ equity		$6,193,665						$6,161,359
Net interest income				$43,221						$39,943
Net interest spread						2.70%						2.55%
Net interest margin (D)						2.83%						2.69%

A. Average balances for available for sale securities are based on amortized cost.
B. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
C. Loans are stated net of unearned income and include nonaccrual loans.
D. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

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

		June 30, 2022						June 30, 2021
		Average		Income/				Average		Income/
		Balance		Expense		Yield		Balance		Expense		Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$851,059		$7,142		1.68%		$823,120		$5,649		1.37%
Tax-exempt (A) (B)		4,446		88		3.96		7,433		179		4.82
Loans (B) (C):
Mortgages		511,051		7,286		2.85		500,084		7,780		3.11
Commercial mortgages		2,453,130		39,360		3.21		1,891,125		29,476		3.12
Commercial		2,016,504		37,550		3.72		1,937,776		33,439		3.45
Commercial construction		17,131		322		3.76		18,294		319		3.49
Installment		35,863		552		3.08		35,997		531		2.95
Home equity		39,147		655		3.35		46,937		776		3.31
Other		271		11		8.12		233		10		8.58
Total loans		5,073,097		85,736		3.38		4,430,446		72,331		3.27
Federal funds sold		—		—		—		96		—		0.25
Interest-earning deposits		145,696		343		0.47		491,547		225		0.09
Total interest-earning assets		6,074,298		93,309		3.07%		5,752,642		78,384		2.73%
Noninterest-earning assets:
Cash and due from banks		8,591						10,743
Allowance for credit losses		(60,311)						(69,367)
Premises and equipment		22,987						22,972
Other assets		132,266						204,390
Total noninterest-earning assets		103,533						168,738
Total assets		$6,177,831						$5,921,380
LIABILITIES:
Interest-bearing deposits:
Checking		$2,412,456		$3,568		0.30%		$1,944,734		$1,922		0.20%
Money markets		1,264,167		1,118		0.18		1,247,464		1,521		0.24
Savings		159,826		10		0.01		139,648		35		0.05
Certificates of deposit – retail		418,642		1,257		0.60		510,693		2,497		0.98
Subtotal interest-bearing deposits		4,255,091		5,953		0.28		3,842,539		5,975		0.31
Interest-bearing demand – brokered		85,000		737		1.73		107,790		949		1.76
Certificates of deposit – brokered		33,646		522		3.10		33,776		525		3.11
Total interest-bearing deposits		4,373,737		7,212		0.33		3,984,105		7,449		0.37
Borrowings		29,550		74		0.50		176,120		391		0.44
Capital lease obligation		5,533		132		4.77		6,493		155		4.77
Subordinated debt		132,767		2,727		4.11		181,555		4,292		4.73
Total interest-bearing liabilities		4,541,587		10,145		0.45%		4,348,273		12,287		0.57%
Noninterest-bearing liabilities:
Demand deposits		1,004,055						898,866
Accrued expenses and other liabilities		99,565						145,919
Total noninterest-bearing liabilities		1,103,620						1,044,785
Shareholders’ equity		532,624						528,322
Total liabilities and shareholders’ equity		$6,177,831						$5,921,380
Net interest income				$83,164						$66,097
Net interest spread						2.62%						2.16%
Net interest margin (D)						2.76%						2.32%

A. Average balances for available for sale securities are based on amortized cost.
B. Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.
C. Loans are stated net of unearned income and include nonaccrual loans.
D. Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

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

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

(Dollars in thousands, except share data)

		Three Months Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
Tangible Book Value Per Share		2022		2022		2021		2021		2021
Shareholders’ equity		$520,324		$523,426		$546,388		$543,014		$538,459
Less: Intangible assets, net		48,082		48,471		48,902		49,333		43,156
Tangible equity		$472,242		$474,955		$497,486		$493,681		$495,303
Period end shares outstanding		18,190,009		18,370,312		18,393,888		18,627,910		18,829,877
Tangible book value per share		$25.96		$25.85		$27.05		$26.50		$26.30
Book value per share		28.60		28.49		29.70		29.15		28.60
Tangible Equity to Tangible Assets
Total assets		$6,151,167		$6,255,664		$6,077,993		$6,240,285		$5,791,688
Less: Intangible assets, net		48,082		48,471		48,902		49,333		43,156
Tangible assets		$6,103,085		$6,207,193		$6,029,091		$6,190,952		$5,748,532
Tangible equity to tangible assets		7.74%		7.65%		8.25%		7.97%		8.62%
Equity to assets		8.46%		8.37%		8.99%		8.70%		9.30%

		Three Months Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
Return on Average Tangible Equity		2022		2022		2021		2021		2021
Net income		$20,100		$13,441		$14,855		$14,171		$14,418
Average shareholders’ equity		$521,197		$544,179		$543,035		$544,856		$530,971
Less: Average intangible assets, net		48,291		48,717		49,151		48,757		43,366
Average tangible equity		$472,906		$495,462		$493,884		$496,099		$487,605
Return on average tangible common equity		17.00%		10.85%		12.03%		11.43%		11.83%

		For the Six Months Ended
		June 30,		June 30,
Return on Average Tangible Equity		2022		2021
Net income		$33,541		$27,596
Average shareholders’ equity		$532,624		$528,322
Less: Average intangible assets, net		48,503		43,553
Average tangible equity		484,121		484,769
Return on average tangible common equity		13.86%		11.39%

		Three Months Ended
		June 30,		March 31,		Dec 31,		Sept 30,		June 30,
Efficiency Ratio		2022		2022		2021		2021		2021
Net interest income		$42,893		$39,622		$37,212		$35,211		$33,845
Total other income		18,508		14,714		18,964		17,781		17,678
Add:
Fair value adjustment for CRA equity security		475		682		139		70		(42)
Less:
Loss/(gain) on loans held for sale
at lower of cost or fair value		—		—		265		—		(1,125)
Income from life insurance proceeds		—		—		—		—		(153)
Loss on securities sale, net		—		6,609		—		—		—
Loss on swap termination		—		—		—		—		842
Total recurring revenue		61,876		61,627		56,580		53,062		51,045
Operating expenses		32,659		34,169		31,704		32,185		30,684
Less:
Write-off of subordinated debt costs		—		—		—		—		648
Swap valuation allowance		—		673		893		1,350		—
Severance expense		—		1,476		—		—		—
Total operating expense		32,659		32,020		30,811		30,835		30,036
Efficiency ratio		52.78%		51.96%		54.46%		58.11%		58.84%

		For the Six Months Ended
		June 30,		June 30,
Efficiency Ratio		2022		2021
Net interest income		$82,515		$65,638
Total other income		33,222		35,498
Add:
Fair value adjustment for CRA equity security		1,157		223
Less:
Loss on swap termination		—		842
Income from life insurance proceeds		—		(455)
Loss/(gain) on loans held for sale
at lower of cost or fair value		—		(1,407)
Loss on securities sale, net		6,609		—
Total recurring revenue		123,503		100,339
Operating expenses		66,828		62,278
Less:
Write-off of subordinated debt costs		—		648
Swap valuation allowance		673		—
Severance expense		1,476		1,532
Total operating expense		64,679		60,098
Efficiency ratio		52.37%		59.89%