• Peapack-Gladstone Financial Corporation Reports Second Quarter Results

    Source: Nasdaq GlobeNewswire / 25 Jul 2023 15:30:01   America/Chicago

    BEDMINSTER, NJ, July 25, 2023 (GLOBE NEWSWIRE) -- via NewMediaWire - Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its second quarter 2023 results.

    This earnings release should be read in conjunction with the Company’s Q2 2023 Investor Update, a copy of which is available on our website at www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.

    The Company recorded total revenue of $57.5 million, net income of $13.1 million and diluted earnings per share (“EPS”) of $0.73 for the quarter ended June 30, 2023, compared to revenue of $61.4 million, net income of $20.1 million and diluted EPS of $1.08 for the three months ended June 30, 2022.

    The Company’s return on average assets was 0.82%, return on average equity was 9.43%, and return on average tangible equity was 10.30%, each for the quarter ended June 30, 2023. Loans grew by $70 million to $5.4 billion while deposits declined by $110 million to $5.2 billion during the second quarter. Deposits have declined minimally on a year-to-date basis by $7 million.

    The Company’s liquidity position remains strong as balance sheet liquidity (investments available for sale, interest-earning deposits and cash) was $761 million as of June 30, 2023 which is 11.74% of total assets. The Company also has $2.8 billion of external borrowing capacity, when combined with balance sheet liquidity provides us with 283% coverage of our uninsured deposits. Approximately 76% of our deposits are presently covered by FDIC insurance or are fully collateralized.

    Douglas L. Kennedy, President and CEO said, “Our second quarter results were disappointing, but reflect the challenging nature of the current interest rate environment and the persistent inversion of the treasury yield curve. These conditions have resulted in compression of our net interest margin for a second consecutive quarter and a reduction in net interest income. The margin compression was primarily driven by an increase in our cost of funds during the first six months of 2023, as wealth and commercial clients moved funds from noninterest-bearing accounts to higher-yielding deposit products and other alternative investments. During these difficult times we are fortunate to be able to rely on a stable stream of wealth-related and other noninterest income, which represented 32% of revenue during the second quarter."

    The Company recently announced its plan to expand into New York City. An application has been filed with regulatory agencies to open a location in mid-town Manhattan. The Company has hired and continues to actively recruit from the tri-state area to build a team of experienced financial service professionals to gain entry into this lucrative market.

    Mr. Kennedy noted, “With the recent changes to the New York City banking landscape and the void left by the failure of larger, niche financial institutions, we believe the current environment has created an unprecedented opportunity to introduce our brand of private banking to this market. We have the right client-centric culture to take advantage of this rare sequence of events and seize this opportunity. We recently announced that Jeanne Scungio has joined our team as the Market President of New York City. Jeanne has spent the past 20 years as a Senior Leader at First Republic Bank. Under her leadership we expect to build a formidable presence in Manhattan."

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

    Peapack Private Wealth Management:

    • AUM/AUA in our Peapack Private Wealth Management Division totaled $10.7 billion at June 30, 2023, an increase of 4% (14% annualized) over March 31, 2023.
    • Gross new business inflows for Q2 2023 totaled $274 million ($214 million managed). For the first six months of 2023, gross business inflows totaled $528 million ($451 million managed). Managed gross inflows are on a record annualized pace for our Company.
    • Wealth Management fee income of $14.3 million for Q2 2023 comprised 25% of total revenue for the quarter.

    Commercial Banking and Balance Sheet Management:

    • The net interest margin ("NIM") was 2.49% in Q2 2023, a decline of 39 basis points compared to Q1 2023 and a decline of 34 basis points when compared to Q2 2022.
    • Total deposits declined $7 million to $5.2 billion from December 31, 2022.
    • Noninterest-bearing demand deposits have declined by $222 million since December 31, 2022, but still comprised 20% of total deposits as of June 30, 2023.
    • Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 91% of total deposits at June 30, 2023.
    • Total loans were $5.4 billion at June 30, 2023 reflecting growth of $148 million when compared to $5.3 billion at December 31, 2022.
    • Commercial & industrial lending (“C&I”) loan/lease balances comprised 42% of the total loan portfolio at June 30, 2023.
    • Fee income on unused commercial lines of credit totaled $809,000 for Q2 2023.

    Capital Management:

    • During the quarter, the Company repurchased 184,000 shares of Company stock for a total cost of $4.7 million. The Company repurchased 930,977 shares of stock for a total cost of $32.7 million during the year ended December 31, 2022.
    • At June 30, 2023, the Regulatory Tier 1 Leverage Ratio stood at 10.80% for Peapack-Gladstone Bank (the "Bank") and 9.06% for the Company. The Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.68% for the Bank and 11.47% for the Company. These ratios are significantly above well capitalized standards, as capital has benefitted from strong net income generation.

    Non-Core Items:

    The June 2023 quarter included the following items, which management believes are non-core items:

    • $209,000 negative fair value adjustment on an equity security held for CRA investment.
    • $1.7 million of expense associated with the recent retirement of certain employees.
    • $318,000 of an income tax benefit for a tax reversal.
    • These items decreased total revenue by $209,000, reduced net income by $1.5 million and EPS by $0.08 for the June 2023 quarter.

    SUMMARY INCOME STATEMENT DETAILS:

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

    June 2023 Year Compared to Prior Year

      Six Months Ended  Six Months Ended        
      June 30,  June 30,   Increase/ 
    (Dollars in millions, except per share data) 2023  2022   (Decrease) 
    Net interest income $82.90  $82.51   $0.39   0%
    Wealth management fee income  28.01   28.72    (0.71)  (2)
    Capital markets activity (A)  1.83   7.51    (5.68)  (76)
    Other income (B)  6.80   (3.01)   9.81  N/A 
    Total other income  36.64   33.22    3.42   10 
    Operating expenses (C)  73.27   66.83    6.44   10 
    Pretax income before provision for credit losses  46.27   48.90    (2.63)  (5)
    Provision for credit losses  3.21   3.82    (0.61)  (16)
    Pretax income  43.06   45.08    (2.02)  (4)
    Income tax expense (D)  11.56   11.54    0.02   0 
    Net income $31.50  $33.54   $(2.04)  (6)%
    Diluted EPS $1.74  $1.79   $(0.05)  (3)%
                  
    Total Revenue (E) $119.54  $115.73   $3.81   3%
                  
    Return on average assets  0.99%  1.09%   (0.10)   
    Return on average equity  11.44%  12.59%   (1.15)   

    (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 six months ended June 30, 2022 included a $6.6 million loss on sale of securities. and a fair value adjustment on a CRA equity security of negative $1.2 million.
    (C) The six months ended June 2023 included one-time charges of $2.0 million related to the recent retirement of certain employees and $175,000 of expense associated with three retail branch closures. The six months ended June 30, 2022 included $1.5 million of severance expense related to certain staff reorganizations.
    (D) Income tax expense for the six months ended June 30, 2023 included a $318,000 tax benefit for the reversal of the New Jersey surtax, which is set to expire on December 31, 2023.
    (E) Total revenue equals the sum of net interest income plus total other income.

    June 2023 Quarter Compared to Prior Year Quarter

      Three Months Ended   Three Months Ended       
      June 30,   June 30,  Increase/ 
    (Dollars in millions, except per share data) 2023   2022  (Decrease) 
    Net interest income $38.92   $42.89  $(3.97)  (9)%
    Wealth management fee income  14.25    13.89   0.36   3 
    Capital markets activity (A)  0.87    2.86   (1.99)  (70)
    Other income (B)  3.46    1.76   1.70   97 
    Total other income  18.58    18.51   0.07   0 
    Operating expenses (C)  37.69    32.66   5.03   15 
    Pretax income before provision for credit losses  19.81    28.74   (8.93)  (31)
    Provision for credit losses  1.70    1.45   0.25   17 
    Pretax income  18.11    27.29   (9.18)  (34)
    Income tax expense (D)  4.96    7.19   (2.23)  (31)
    Net income $13.15   $20.10  $(6.95)  (35)%
    Diluted EPS $0.73   $1.08  $(0.35)  (32)%
                  
    Total Revenue (E) $57.50   $61.40  $(3.90)  (6)%
                  
    Return on average assets annualized  0.82%   1.30%  (0.48)   
    Return on average equity annualized  9.43%   15.43%  (6.00)   

    (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 June 2023 and 2022 quarters included a fair value adjustment on a CRA equity security of negative $209,000 and negative $475,000, respectively.
    (C) The June 2023 quarter included one-time charges of $1.7 million associated with the recent retirement of certain employees.
    (D) Income tax expense for quarter ended June 30, 2023 included a $318,000 tax benefit for the reversal of the New Jersey surtax, which is set to expire on December 31, 2023.
    (E) Total revenue equals the sum of net interest income plus total other income.

    June 2023 Quarter Compared to Linked Quarter

      Three Months Ended  Three Months Ended        
      June 30,  March 31,   Increase/ 
    (Dollars in millions, except per share data) 2023  2023   (Decrease) 
    Net interest income $38.92  $43.98   $(5.06)  (12)%
    Wealth management fee income  14.25   13.76    0.49   4 
    Capital markets activity (A)  0.87   0.97    (0.10)  (10)
    Other income  3.46   3.33    0.13   4 
    Total other income  18.58   18.06    0.52   3 
    Operating expenses (B)  37.69   35.57    2.12   6 
    Pretax income before provision for credit losses  19.81   26.47    (6.66)  (25)
    Provision for credit losses  1.70   1.51    0.19   13 
    Pretax income  18.11   24.96    (6.85)  (27)
    Income tax expense (C)  4.96   6.60    (1.64)  (25)
    Net income $13.15  $18.36   $(5.21)  (28)%
    Diluted EPS $0.73  $1.01   $(0.28)  (28)%
                  
    Total Revenue (D) $57.50  $62.04   $(4.54)  (7)%
                  
    Return on average assets annualized  0.82%  1.16%   (0.34)   
    Return on average equity annualized  9.43%  13.50%   (4.07)   

    (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) The June 2023 quarter included one-time charges of $1.7 million associated with the recent retirement of certain employees while the March 2023 quarter included $300,000 of expense related to accelerated vesting of restricted stock related to one executive and $175,000 of expense associated with three retail branch closures.
    (C) The three months ended June 30, 2023 included a $318,000 tax benefit for the reversal of the New Jersey surtax, which is set to expire on December 31, 2023.
    (D) Total revenue equals the sum of net interest income plus total other income.

    SUPPLEMENTAL QUARTERLY DETAILS:

    Peapack Private Wealth Management

    AUM/AUA in the Bank’s Peapack Private Wealth Management (“PPWM”) Division increased to $10.7 billion at June 30, 2023. For the June 2023 quarter, PPWM generated $14.3 million in fee income, compared to $13.8 million for the March 31, 2023 quarter and $13.9 million for the June 2022 quarter. The equity market generally improved during Q2 2023, contributing to the growth in AUM/AUA.

    John Babcock, President of Peapack Private Wealth Management noted, “In Q2 2023, total new accounts and client additions amounted to $274 million ($214 million managed), and net flows were positive. As we look ahead in 2023, our new business pipeline is healthy and we remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities and our high-touch client service model distinguishes PPWM in our market and continues to drive our growth and success.”

    Loans / Commercial Banking

    Total loans grew $148 million or 3% (6% annualized) to $5.4 billion at June 30, 2023 when compared to $5.3 billion at December 31, 2022.

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

    Mr. Kennedy noted, “Our loan growth has historically been strong, however, given economic uncertainty and rising interest rates, we believe loan demand will subside somewhat compared to recent prior years. We began tightening our underwriting in anticipation of a potential economic downturn in early 2022 and have continued this practice in 2023. Given the current environment, we believe we will achieve modest loan growth in 2023.”

    Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, and Corporate Advisory and SBA businesses. Additionally, we are encouraged by the expansion into the Life Insurance Premium Finance business and believe it will prove to be a safe and profitable business line that aligns with the Company's overall strategy.”

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

    The Company’s NII of $38.9 million and NIM of 2.49% for Q2 2023 decreased $5.1 million and 39 basis points from NII of $44.0 million and NIM of 2.88%, for the linked quarter (Q1 2023) and decreased $4.0 million and 34 basis points from NII of $42.9 million and NIM of 2.83% for the prior year quarter (Q2 2022). When comparing Q2 2023 to the linked and prior year quarter the Company has seen a rapid increase in interest expense mostly driven by higher deposit rates during 2023. Cycle to date betas are approximately 41%, which is consistent with results across the financial services industry. The intense competition for deposit balances was the primary driver for increased costs.

    Funding / Liquidity / Interest Rate Risk Management

    Total deposits decreased $6.7 million to $5.2 billion at June 30, 2023. The Company saw limited net deposit outflows during first half of 2023 with most outflow activity related to larger deposit relationships utilizing their funds for normal business purposes such as deployment of excess liquidity into the equity or treasury markets, asset acquisitions or further investments into their businesses, and tax payments. The Company has also seen clients transitioning money into interest-bearing deposit accounts from noninterest-bearing deposit accounts as a result of the rapid increases in the Fed Funds rate.

    Mr. Kennedy noted, "Although we did see minimal outflows associated with clients concerned about deposit insurance, our team actively engaged with many of our deposit customers during the first half of 2023 to discuss any concerns and provide assurance regarding the safety and soundness of our institution. Additionally, we migrated $344 million of uninsured deposits this year into fully-insured FDIC products for those customers that desired that type of protection."

    Mr. Kennedy also noted, “91% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 20% of our total deposits. 85% of deposits are held by clients with relationships greater than three years old and 66% of deposits are held by clients with relationships greater than five years old. These metrics reflect the core nature of the majority of our deposit base.”

    At June 30, 2023, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $761 million (or 12% of assets).

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

    The Company's total on and off-balance sheet liquidity totaled $3.6 billion, which is 283% of the total uninsured deposits on the Company's balance sheet.

    Income from Capital Markets Activities

    Noninterest income from Capital Markets activities (detailed below) totaled $868,000 for the June 2023 quarter compared to $966,000 for the March 2023 quarter and $2.9 million for the June 2022 quarter.

      Three Months Ended  Three Months Ended  Three Months Ended 
      June 30,  March 31,  June 30, 
    (Dollars in thousands, except per share data) 2023  2023  2022 
    Gain on loans held for sale at fair value (Mortgage banking) $15  $21  $151 
    Fee income related to loan level, back-to-back swaps  —   —   — 
    Gain on sale of SBA loans  838   865   2,675 
    Corporate advisory fee income  15   80   33 
    Total capital markets activity $868  $966  $2,859 

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

    Other noninterest income was $3.5 million for Q2 2023 compared to $3.3 million for Q1 2023 and $1.8 million for Q2 2022. Q2 2023 included $809,000 of unused line fees compared to $852,000 for Q1 2023 and $529,000 for Q2 2022. Additionally, Q2 2023 included $221,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees while Q1 2023 included $145,000. The gain on sale of SBA loans for the first and second quarters of 2023 have been impacted by market volatility resulting in lower sale premiums and origination volumes.

    Operating Expenses

    The Company’s total operating expenses were $37.7 million for the second quarter of 2023, compared to $35.6 million for the March 2023 quarter and $32.7 million for the June 2022 quarter. The June 2023 quarter included $1.7 million of expense associated with the recent retirement of certain employees. The March 2023 quarter included $300,000 of restricted stock expense associated with an executive retiring and $175,000 of expense associated with the closure of three retail branch locations. The June 2023 quarter also included increases associated with compensation related to the addition of full-time equivalent employees, which grew to 520 at June 30, 2023 compared to 512 at March 31, 2023 and 472 at June 30, 2022, as well as normal annual merit increases.

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

    Income Taxes

    The effective tax rate for the three months ended June 30, 2023 was 27.4%, as compared to 26.4% for the March 2023 quarter and 26.4% for the quarter ended June 30, 2022. The June 30, 2023 quarter benefitted from a $318,000 reversal of a previously recorded New Jersey surtax. The March 31, 2023 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 modified loans that are performing in accordance with their terms) were $34.5 million, or 0.53% of total assets at June 30, 2023, as compared to $28.8 million, or 0.44% of total assets at March 31, 2023. The increase during the second quarter was primarily due to one multifamily relationship totaling $7.6 million that transferred to a nonaccrual status during the quarter. Loans past due 30 to 89 days and still accruing were $14.5 million, or 0.27% of total loans.

    Criticized and classified loans totaled $112.3 million at June 30, 2023, reflecting an increase from March 31, 2023 and a decline from June 30, 2022 levels. The Company currently has no loans or leases on deferral and accruing.

    For the quarter ended June 30, 2023, the Company’s provision for credit losses was $1.7 million compared to $1.5 million for the March 2023 quarter and $646,000 for the June 2022 quarter. The provision for credit losses in the June 2023 quarter was driven by loan growth, in addition to Allowance for Credit Losses ("ACL") to individually evaluated loans related to one loan totaling $7.6 million that was transferred to nonaccrual status.

    At June 30, 2023, the allowance for credit losses was $62.7 million (1.15% of total loans), compared to $62.3 million (1.16% of loans) at March 31, 2023, and $59.0 million (1.14% of loans) at June 30, 2022.

    Capital

    The Company’s capital position during the June 2023 quarter increased as a result of net income of $13.1 million, which was partially offset by the repurchase of 184,000 shares of common stock through the Company’s stock repurchase program at a total cost of $4.7 million and the quarterly cash dividend of $890,000. Additionally, during the second quarter of 2023 the Company recorded a net loss in accumulated other comprehensive income of $522,000 ($3.8 million loss related to the available for sale portfolio partially offset by a $3.2 million gain on cash flow hedges) increasing the total accumulated other comprehensive loss amount to $68.0 million as of June 30, 2023 ($76.0 million loss related to the available for sale portfolio partially offset by a $8.0 million gain on the cash flow hedges).

    Tangible book value per share improved during Q2 2023 to $28.98 at June 30, 2023 from $28.20 at March 31, 2023. Tangible book value per share is a non-GAAP financial measure. See the reconciliation tables included in this release. The Company’s and Bank’s regulatory capital ratios as of June 30, 2023 remain strong, and generally reflect increases from March 31, 2023 and June 30, 2022 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

    The Company employs quarterly capital stress testing modelling an adverse case and severely adverse case. In the most recently completed stress test (as of March 31, 2023), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period. With an additional stress overlay impacting the industries most affected by the Pandemic more severely, the Bank still remains well capitalized over the two-year stress period.

    On June 22, 2023, the Company declared a cash dividend of $0.05 per share payable on August 24, 2023 to shareholders of record on August 10, 2023.

    ABOUT THE COMPANY

    Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.5 billion and assets under management/administration of $10.7 billion as of June 30, 2023. 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 2023 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, including potential recessionary conditions;
    • declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
    • declines in the value in our investment portfolio;
    • impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;
    • the continuing impact of the COVID-19 pandemic on our business and results of operation;
    • higher than expected increases in our allowance for credit losses;
    • higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans;
    • inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
    • decline in real estate values within our market areas;
    • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
    • successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;
    • higher than expected FDIC insurance premiums;
    • adverse weather conditions;
    • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
    • our inability to successfully generate new business in new geographic markets, including our expansion into New York City;
    • a reduction in our lower-cost funding sources;
    • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
    • our inability to adapt to technological changes;
    • claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
    • our inability to retain key employees;
    • demands for loans and deposits in our market areas;
    • adverse changes in securities markets;
    • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
    • changes in accounting policies and practices; and
    • other unexpected material adverse changes in our operations or earnings.

    A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2022. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

    Contact:

    Frank A. Cavallaro, SEVP and CFO

    Peapack-Gladstone Financial Corporation

    T: 908-306-8933

    (Tables to follow)

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

      For the Three Months Ended 
      June 30,  March 31,  Dec 31,  Sept 30,  June 30, 
      2023  2023  2022  2022  2022 
    Income Statement Data:               
    Interest income $74,852  $70,491  $64,202  $55,013  $48,520 
    Interest expense  35,931   26,513   16,162   9,488   5,627 
    Net interest income  38,921   43,978   48,040   45,525   42,893 
    Wealth management fee income  14,252   13,762   12,983   12,943   13,891 
    Service charges and fees  1,320   1,258   1,150   1,060   1,063 
    Bank owned life insurance  305   297   321   299   310 
    Gain on loans held for sale at fair value
    (Mortgage banking) (A)    		  15   21   25   60   151 
    Gain/(loss) on loans held for sale at lower of cost or
    fair value    		  —   —   —   —   — 
    Fee income related to loan level, back-to-back
    swaps (A)    		  —   —   293   —   — 
    Gain on sale of SBA loans (A)  838   865   624   622   2,675 
    Corporate advisory fee income (A)  15   80   8   102   33 
    Other income  2,039   1,567   1,380   1,868   860 
    Fair value adjustment for CRA equity security  (209)  209   28   (571)  (475)
    Total other income  18,575   18,059   16,812   16,383   18,508 
    Salaries and employee benefits (B)  26,354   24,586   22,489   22,656   21,882 
    Premises and equipment  4,729   4,374   4,898   4,534   4,640 
    FDIC insurance expense  729   711   455   510   503 
    Other expenses  5,880   5,903   5,570   5,860   5,634 
    Total operating expenses  37,692   35,574   33,412   33,560   32,659 
    Pretax income before provision for credit losses  19,804   26,463   31,440   28,348   28,742 
    Provision for credit losses  1,696   1,513   1,930   599   1,449 
    Income before income taxes  18,108   24,950   29,510   27,749   27,293 
    Income tax expense (C)  4,963   6,595   8,931   7,623   7,193 
    Net income $13,145  $18,355  $20,579  $20,126  $20,100 
                    
    Total revenue (D) $57,496  $62,037  $64,852  $61,908  $61,401 
    Per Common Share Data:               
    Earnings per share (basic) $0.73  $1.03  $1.15  $1.11  $1.10 
    Earnings per share (diluted)  0.73   1.01   1.12   1.09   1.08 
    Weighted average number of common
    shares outstanding:    		               
    Basic  17,930,611   17,841,203   17,915,058   18,072,385   18,325,605 
    Diluted  18,078,848   18,263,310   18,382,193   18,420,661   18,637,340 
    Performance Ratios:               
    Return on average assets annualized (ROAA)  0.82%  1.16%  1.33%  1.30%  1.30%
    Return on average equity annualized (ROAE)  9.43%  13.50%  15.73%  15.21%  15.43%
    Return on average tangible common equity annualized (ROATCE) (E)  10.30%  14.78%  17.30%  16.73%  17.00%
    Net interest margin (tax-equivalent basis)  2.49%  2.88%  3.12%  2.98%  2.83%
    GAAP efficiency ratio (F)  65.56%  57.34%  51.52%  54.21%  53.19%
    Operating expenses / average assets annualized  2.36%  2.26%  2.15%  2.17%  2.11%

    (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) The June 2023 quarter included $1.7 million of expense associated with the recent retirement of certain employees.
    (C) The three months ended December 31, 2022 included $750,000 income tax expense (net federal benefit) related to a recent New York City nexus determination change which included $563,000 from prior quarters.
    (D) Total revenue equals the sum of net interest income plus total other income.
    (E) 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.
    (F) 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 
      2023  2022  $  % 
    Income Statement Data:            
    Interest income $145,343  $92,660  $52,683   57%
    Interest expense  62,444   10,145   52,299   516%
    Net interest income  82,899   82,515   384   0%
    Wealth management fee income  28,014   28,725   (711)  -2%
    Service charges and fees  2,578   2,015   563   28%
    Bank owned life insurance  602   623   (21)  -3%
    Gain on loans held for sale at fair value (Mortgage banking) (A)  36   398   (362)  -91%
    Gain on loans held for sale at lower of cost or fair value  —   —   —  N/A 
    Fee income related to loan level, back-to-back swaps (A)  —   —   —  N/A 
    Gain on sale of SBA loans (A)  1,703   5,519   (3,816)  -69%
    Corporate advisory fee income (A)  95   1,594   (1,499)  -94%
    Other income  3,606   2,114   1,492   71%
    Loss on securities sale, net (B)  —   (6,609)  6,609   -100%
    Fair value adjustment for CRA equity security  —   (1,157)  1,157   -100%
    Total other income  36,634   33,222   3,412   10%
    Salaries and employee benefits (C)  50,940   44,331   6,609   15%
    Premises and equipment  9,103   9,287   (184)  -2%
    FDIC insurance expense  1,440   974   466   48%
    Swap valuation allowance  —   673   (673)  -100%
    Other expenses  11,783   11,563   220   2%
    Total operating expenses  73,266   66,828   6,438   10%
    Pretax income before provision for credit losses  46,267   48,909   (2,642)  -5%
    Provision for credit losses  3,209   3,824   (615)  -16%
    Income before income taxes  43,058   45,085   (2,027)  -4%
    Income tax expense  11,558   11,544   14   0%
    Net income $31,500  $33,541  $(2,041)  -6%
                 
    Total revenue (D) $119,533  $115,737  $3,796   3%
    Per Common Share Data:            
    Earnings per share (basic) $1.76  $1.83  $(0.07)  -4%
    Earnings per share (diluted)  1.74   1.79   (0.05)  -3%
    Weighted average number of common shares outstanding:            
    Basic  17,886,154   18,332,272   (446,118)  -2%
    Diluted  18,153,267   18,782,559   (629,292)  -3%
    Performance Ratios:            
    Return on average assets (ROAA)  0.99%  1.09%  (0.10)%  -9%
    Return on average equity (ROAE)  11.44%  12.59%  (1.15)%  -9%
    Return on average tangible common equity (ROATCE) (E)  12.51%  13.86%  (1.35)%  -10%
    Net interest margin (tax-equivalent basis)  2.68%  2.76%  (0.08)%  -3%
    GAAP efficiency ratio (F)  61.29%  57.74%  3.55%  6%
    Operating expenses / average assets  2.31%  2.16%  0.15%  7%

    (A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.
    (B) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.
    (C) The six months ended June 30, 2023 included $2.0 million of expense associated with the recent retirement of certain employees. The six months ended June 30, 2022 quarter included $1.5 million of severance expense related to corporate restructuring.
    (D) Total revenue equals the sum of net interest income plus total other income.
    (E) 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.
    (F) 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, 
      2023  2023  2022  2022  2022 
    ASSETS               
    Cash and due from banks $4,859  $6,514  $5,937  $5,066  $6,203 
    Federal funds sold  —   —   —   —   — 
    Interest-earning deposits  166,769   244,779   184,138   103,214   147,222 
    Total cash and cash equivalents  171,628   251,293   190,075   108,280   153,425 
    Securities available for sale  540,519   556,266   554,648   497,880   556,791 
    Securities held to maturity  110,438   111,609   102,291   103,551   105,048 
    CRA equity security, at fair value  12,985   13,194   12,985   12,957   13,528 
    FHLB and FRB stock, at cost (A)  35,402   30,338   30,672   14,986   13,710 
                    
    Residential mortgage  575,238   544,655   525,756   519,088   512,341 
    Multifamily mortgage  1,884,369   1,871,387   1,863,915   1,856,675   1,876,783 
    Commercial mortgage  624,710   613,911   624,625   638,903   657,812 
    Commercial and industrial loans  2,278,133   2,266,837   2,213,762   2,099,917   2,048,474 
    Consumer loans  52,098   49,002   38,014   37,412   37,675 
    Home equity lines of credit  34,397   33,294   34,496   36,375   36,023 
    Other loans  269   443   304   259   236 
    Total loans  5,449,214   5,379,529   5,300,872   5,188,629   5,169,344 
    Less: Allowance for credit losses  62,704   62,250   60,829   59,683   59,022 
    Net loans  5,386,510   5,317,279   5,240,043   5,128,946   5,110,322 
                    
    Premises and equipment  23,814   23,782   23,831   23,781   22,804 
    Other real estate owned  —   116   116   116   116 
    Accrued interest receivable  20,865   19,143   25,157   17,816   23,468 
    Bank owned life insurance  47,382   47,261   47,147   47,072   46,944 
    Goodwill and other intangible assets  46,624   46,979   47,333   47,698   48,082 
    Finance lease right-of-use assets  2,461   2,648   2,835   3,021   3,209 
    Operating lease right-of-use assets  13,500   12,262   12,873   13,404   14,192 
    Other assets (B)  67,572   47,848   63,587   67,753   39,528 
    TOTAL ASSETS $6,479,700  $6,480,018  $6,353,593  $6,087,261  $6,151,167 
                    
    LIABILITIES               
    Deposits:               
    Noninterest-bearing demand deposits $1,024,105  $1,096,549  $1,246,066  $1,317,954  $1,043,225 
    Interest-bearing demand deposits  2,816,913   2,797,493   2,143,611   2,149,629   2,456,988 
    Savings  120,082   132,523   157,338   166,821   168,441 
    Money market accounts  763,026   873,329   1,228,234   1,178,112   1,217,516 
    Certificates of deposit – Retail  384,106   357,131   318,573   345,047   375,387 
    Certificates of deposit – Listing Service  10,822   15,922   25,358   30,647   31,348 
    Subtotal “customer” deposits  5,119,054   5,272,947   5,119,180   5,188,210   5,292,905 
    IB Demand – Brokered  10,000   10,000   60,000   85,000   85,000 
    Certificates of deposit – Brokered  69,443   25,895   25,984   25,974   25,963 
    Total deposits  5,198,497   5,308,842   5,205,164   5,299,184   5,403,868 
    Short-term borrowings  485,360   378,800   379,530   32,369   — 
    Finance lease liability  4,071   4,385   4,696   5,003   5,305 
    Operating lease liability  14,308   13,082   13,704   14,101   14,756 
    Subordinated debt, net  133,131   133,059   132,987   132,916   132,844 
    Due to brokers  —   8,308   —   —   — 
    Other liabilities (B)  79,264   78,584   84,532   88,174   74,070 
    TOTAL LIABILITIES  5,914,631   5,925,060   5,820,613   5,571,747   5,630,843 
    Shareholders’ equity  565,069   554,958   532,980   515,514   520,324 
    TOTAL LIABILITIES AND               
    SHAREHOLDERS’ EQUITY $6,479,700  $6,480,018  $6,353,593  $6,087,261  $6,151,167 
    Assets under management and / or administration at
    Peapack-Gladstone Bank’s Private Wealth Management
    Division (market value, not included above-dollars in billions)    		 $10.7  $10.4  $9.9  $9.3  $9.5 

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

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

      As of 
      June 30,  March 31,  Dec 31,  Sept 30,  June 30, 
      2023  2023  2022  2022  2022 
    Asset Quality:               
    Loans past due over 90 days and still accruing $—  $—  $—  $—  $— 
    Nonaccrual loans  34,505   28,659   18,974   15,724   15,078 
    Other real estate owned  —   116   116   116   116 
    Total nonperforming assets $34,505  $28,775  $19,090  $15,840  $15,194 
                    
    Nonperforming loans to total loans  0.63%  0.53%  0.36%  0.30%  0.29%
    Nonperforming assets to total assets  0.53%  0.44%  0.30%  0.26%  0.25%
                    
    Performing modifications (A)(B) $248  $248  $—  $—  $— 
                    
    Performing TDRs (C)(D) $—  $—  $965  $2,761  $2,272 
                    
    Loans past due 30 through 89 days and still accruing $14,524  $2,762  $7,592  $7,248  $3,126 
                    
    Loans subject to special mention $53,606  $46,566  $64,842  $82,107  $98,787 
                    
    Classified loans $58,655  $58,010  $42,985  $27,507  $27,167 
                    
    Individually evaluated loans $33,867  $27,736  $16,732  $13,047  $13,227 
                    
    Allowance for credit losses ("ACL"):               
    Beginning of quarter $62,250  $60,829  $59,683  $59,022  $58,386 
    Day one CECL adjustment  —   —   —   —   — 
    Provision for credit losses (E)  1,666   1,464   2,103   665   646 
    (Charge-offs)/recoveries, net (F)  (1,212)  (43)  (957)  (4)  (10)
    End of quarter $62,704  $62,250  $60,829  $59,683  $59,022 
                    
    ACL to nonperforming loans  181.72%  217.21%  320.59%  379.57%  391.44%
    ACL to total loans  1.15%  1.16%  1.15%  1.15%  1.14%
    Collectively evaluated ACL to total loans (G)  1.11%  1.11%  1.12%  1.10%  1.09%

    (A) Amounts reflect modifications that are paying according to modified terms.
    (B) Excludes modifications included in nonaccrual loans of $777,000 at June 30, 2023.
    (C) Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.
    (D) Excludes TDRs included in nonaccrual loans in the following amounts: $13.4 million at December 31, 2022; $12.9 million at September 30, 2022 and $13.5 million at June 30, 2022. On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.
    (E) Provision to roll forward the ACL excludes a provision of $30,000 at June 30, 2023, $49,000 at March 31, 2023, a credit of $173,000 at December 31, 2022, a credit of $66,000 at September 30, 2022 and a provision of $803,000 at June 30, 2022 related to off-balance sheet commitments.
    (F) Net charge-offs for the quarters ended June 30, 2023 and December 31, 2022 included a charge-off of $1.2 million of a previously established reserve to loans individually evaluated on one commercial real estate loan.
    (G) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.

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

      As of 
      June 30,  December 31,  June 30, 
      2023  2022  2022 
    Capital Adequacy               
    Equity to total assets (A)    8.72%    8.39%    8.46%
    Tangible equity to tangible assets (B)    8.06%    7.70%    7.74%
    Book value per share (C)   $31.59    $29.92    $28.60 
    Tangible book value per share (D)   $28.98    $27.26    $25.96 
                    
    Tangible equity to tangible assets excluding other comprehensive loss*    9.02%    8.77%    8.62%
    Tangible book value per share excluding other comprehensive loss*   $32.78    $31.43    $29.19 

    *Excludes other comprehensive loss of $68.0 million for the quarter ended June 30, 2023, $74.2 million for the quarter ended December 31, 2022, and $58.7 million for the quarter ended June 30, 2022. See Non-GAAP financial measures reconciliation included in these tables.

    (A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at quarter end.
    (B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at quarter end is calculated by dividing tangible equity by tangible assets at quarter end. See Non-GAAP financial measures reconciliation included in these tables.
    (C) Book value per common share is calculated by dividing shareholders’ equity by quarter end common shares outstanding.
    (D) Tangible book value per share excludes intangible assets. Tangible book value per share is calculated by dividing tangible equity by quarter end common shares outstanding. See Non-GAAP financial measures reconciliation tables.

      As of
      June 30, December 31, June 30,
      2023  2022  2022 
    Regulatory Capital – Holding Company               
    Tier I leverage $584,140  9.06% $557,627  8.90% $528,646  8.51%
    Tier I capital to risk-weighted assets  584,140  11.47   557,627  11.02   528,646  10.70 
    Common equity tier I capital ratio
    to risk-weighted assets    		  584,122  11.47   557,609  11.02   528,622  10.70 
    Tier I & II capital to risk-weighted assets  773,808  15.20   745,197  14.73   721,503  14.60 
                    
    Regulatory Capital – Bank               
    Tier I leverage (E) $696,399  10.80% $680,137  10.85% $646,884  10.42%
    Tier I capital to risk-weighted assets (F)  696,399  13.69   680,137  13.45   646,884  13.10 
    Common equity tier I capital ratio
    to risk-weighted assets (G)    		  696,381  13.68   680,119  13.45   646,860  13.10 
    Tier I & II capital to risk-weighted assets (H)  759,935  14.93   741,719  14.67   706,897  14.31 

    (E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($258 million)
    (F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($433 million)
    (G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($356 million)
    (H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($534 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, 
      2023  2023  2022  2022  2022 
    Residential loans retained $39,358  $30,303  $28,051  $17,885  $35,172 
    Residential loans sold  1,072   1,477   1,840   4,898   9,886 
    Total residential loans  40,430   31,780   29,891   22,783   45,058 
    Commercial real estate  43,235   18,990   6,747   7,320   13,960 
    Multifamily  26,662   30,150   37,500   4,000   74,564 
    Commercial (C&I) loans/leases (A) (B)  158,972   207,814   238,568   251,249   332,801 
    SBA  13,713   9,950   17,431   5,682   10,534 
    Wealth lines of credit (A)  3,950   23,225   7,700   4,450   12,575 
    Total commercial loans  246,532   290,129   307,946   272,701   444,434 
    Installment loans  4,587   12,086   1,845   1,253   100 
    Home equity lines of credit (A)  6,107   2,921   3,815   5,614   3,897 
    Total loans closed $297,656  $336,916  $343,497  $302,351  $493,489 


      For the Six Months Ended 
      June 30,  June 30, 
      2023  2022 
    Residential loans retained $69,661  $76,719 
    Residential loans sold  2,549   25,555 
    Total residential loans  72,210   102,274 
    Commercial real estate  62,225   39,535 
    Multifamily  56,812   340,214 
    Commercial (C&I) loans (A) (B)  366,786   475,830 
    SBA  23,663   36,627 
    Wealth lines of credit (A)  27,175   21,975 
    Total commercial loans  536,661   914,181 
    Installment loans  16,673   231 
    Home equity lines of credit (A)  9,028   5,238 
    Total loans closed $634,572  $1,021,924 

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

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    AVERAGE BALANCE SHEET
    (Tax-Equivalent Basis, Dollars in Thousands)
    (Unaudited)

      For the Three Months Ended 
      June 30, 2023  June 30, 2022 
      Average  Income/     Average  Income/    
      Balance  Expense  Yield  Balance  Expense  Yield 
    ASSETS:                  
    Interest-earning assets:                  
    Investments:                  
    Taxable (A) $806,447  $4,900   2.43% $774,145  $3,535   1.83%
    Tax-exempt (A) (B)  1,858   20   4.31   4,193   40   3.82 
                       
    Loans (B) (C):                  
    Mortgages  557,575   4,942   3.55   513,666   3,630   2.83 
    Commercial mortgages  2,504,268   26,839   4.29   2,552,128   21,185   3.32 
    Commercial  2,241,817   35,457   6.33   2,024,457   19,348   3.82 
    Commercial construction  6,977   165   9.46   16,186   162   4.00 
    Installment  51,269   841   6.56   37,235   297   3.19 
    Home equity  33,650   633   7.52   38,061   331   3.48 
    Other  271   7   10.33   258   6   9.30 
    Total loans  5,395,827   68,884   5.11   5,181,991   44,959   3.47 
    Federal funds sold  —   —   —   —   —   — 
    Interest-earning deposits  141,968   1,451   4.09   164,066   314   0.77 
    Total interest-earning assets  6,346,100   75,255   4.74%  6,124,395   48,848   3.19%
    Noninterest-earning assets:                  
    Cash and due from banks  7,800         9,715       
    Allowance for credit losses  (63,045)        (59,629)      
    Premises and equipment  23,745         22,952       
    Other assets  85,969         96,232       
    Total noninterest-earning assets  54,469         69,270       
    Total assets $6,400,569        $6,193,665       
                       
    LIABILITIES:                  
    Interest-bearing deposits:                  
    Checking $2,834,140  $22,219   3.14% $2,493,668  $2,330   0.37%
    Money markets  788,745   3,853   1.95   1,234,564   579   0.19 
    Savings  125,555   45   0.14   163,062   5   0.01 
    Certificates of deposit – retail  385,211   2,462   2.56   411,202   651   0.63 
    Subtotal interest-bearing deposits  4,133,651   28,579   2.77   4,302,496   3,565   0.33 
    Interest-bearing demand – brokered  10,000   125   5.00   85,000   364   1.71 
    Certificates of deposit – brokered  26,165   196   3.00   33,470   261   3.12 
    Total interest-bearing deposits  4,169,816   28,900   2.77   4,420,966   4,190   0.38 
    Borrowings  413,961   5,384   5.20   3,873   10   1.03 
    Capital lease obligation  4,187   50   4.78   5,406   64   4.74 
    Subordinated debt  133,090   1,597   4.80   132,803   1,363   4.11 
    Total interest-bearing liabilities  4,721,054   35,931   3.04%  4,563,048   5,627   0.49%
    Noninterest-bearing liabilities:                  
    Demand deposits  1,033,176         1,029,538       
    Accrued expenses and other liabilities  88,911         79,882       
    Total noninterest-bearing liabilities  1,122,087         1,109,420       
    Shareholders’ equity  557,428         521,197       
    Total liabilities and shareholders’ equity $6,400,569        $6,193,665       
    Net interest income    $39,324        $43,221    
    Net interest spread        1.70%        2.70%
    Net interest margin (D)        2.49%        2.83%

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

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    AVERAGE BALANCE SHEET
    (Tax-Equivalent Basis, Dollars in Thousands)
    (Unaudited)

      For the Three Months Ended 
      June 30, 2023  March 31, 2023 
      Average  Income/     Average  Income/    
      Balance  Expense  Yield  Balance  Expense  Yield 
    ASSETS:                  
    Interest-earning assets:                  
    Investments:                  
    Taxable (A) $806,447  $4,900   2.43% $791,125  $4,471   2.26%
    Tax-exempt (A) (B)  1,858   20   4.31   1,864   19   4.08 
                       
    Loans (B) (C):                  
    Mortgages  557,575   4,942   3.55   529,570   4,283   3.24 
    Commercial mortgages  2,504,268   26,839   4.29   2,478,645   25,917   4.18 
    Commercial  2,241,817   35,457   6.33   2,201,801   33,369   6.06 
    Commercial construction  6,977   165   9.46   4,296   88   8.19 
    Installment  51,269   841   6.56   39,945   609   6.10 
    Home equity  33,650   633   7.52   33,839   591   6.99 
    Other  271   7   10.33   276   7   10.14 
    Total loans  5,395,827   68,884   5.11   5,288,372   64,864   4.91 
    Federal funds sold  —   —   —   —   —   — 
    Interest-earning deposits  141,968   1,451   4.09   163,225   1,538   3.77 
    Total interest-earning assets  6,346,100   75,255   4.74%  6,244,586   70,892   4.54%
    Noninterest-earning assets:                  
    Cash and due from banks  7,800         10,449       
    Allowance for credit losses  (63,045)        (61,567)      
    Premises and equipment  23,745         23,927       
    Other assets  85,969         84,800       
    Total noninterest-earning assets  54,469         57,609       
    Total assets $6,400,569        $6,302,195       
                       
    LIABILITIES:                  
    Interest-bearing deposits:                  
    Checking $2,834,140  $22,219   3.14% $2,567,426  $16,481   2.57%
    Money markets  788,745   3,853   1.95   1,124,047   4,874   1.73 
    Savings  125,555   45   0.14   141,285   28   0.08 
    Certificates of deposit – retail  385,211   2,462   2.56   357,953   1,729   1.93 
    Subtotal interest-bearing deposits  4,133,651   28,579   2.77   4,190,711   23,112   2.21 
    Interest-bearing demand – brokered  10,000   125   5.00   26,111   208   3.19 
    Certificates of deposit – brokered  26,165   196   3.00   25,961   205   3.16 
    Total interest-bearing deposits  4,169,816   28,900   2.77   4,242,783   23,525   2.22 
    Borrowings  413,961   5,384   5.20   104,915   1,296   4.94 
    Capital lease obligation  4,187   50   4.78   4,493   53   4.72 
    Subordinated debt  133,090   1,597   4.80   133,017   1,639   4.93 
    Total interest-bearing liabilities  4,721,054   35,931   3.04%  4,485,208   26,513   2.36%
    Noninterest-bearing liabilities:                  
    Demand deposits  1,033,176         1,176,495       
    Accrued expenses and other liabilities  88,911         96,631       
    Total noninterest-bearing liabilities  1,122,087         1,273,126       
    Shareholders’ equity  557,428         543,861       
    Total liabilities and shareholders’ equity $6,400,569        $6,302,195       
    Net interest income    $39,324        $44,379    
    Net interest spread        1.70%        2.18%
    Net interest margin (D)        2.49%        2.88%

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

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    AVERAGE BALANCE SHEET
    (Tax-Equivalent Basis, Dollars in Thousands)
    (Unaudited)

      For the Six Months Ended 
      June 30, 2023  June 30, 2022 
      Average  Income/     Average  Income/    
      Balance  Expense  Yield  Balance  Expense  Yield 
    ASSETS:                  
    Interest-earning assets:                  
    Investments:                  
    Taxable (A) $798,828  $9,371   2.35% $851,059  $7,142   1.68%
    Tax-exempt (A) (B)  1,861   38   4.08   4,446   88   3.96 
                       
    Loans (B) (C):                  
    Mortgages  543,650   9,225   3.39   511,051   7,286   2.85 
    Commercial mortgages  2,491,527   52,756   4.23   2,453,130   39,360   3.21 
    Commercial  2,221,921   68,827   6.20   2,016,504   37,550   3.72 
    Commercial construction  5,644   253   8.97   17,131   322   3.76 
    Installment  45,638   1,450   6.35   35,863   552   3.08 
    Home equity  33,744   1,223   7.25   39,147   655   3.35 
    Other  273   14   10.26   271   11   8.12 
    Total loans  5,342,397   133,748   5.01   5,073,097   85,736   3.38 
    Federal funds sold  —   —   —   0   —   - 
    Interest-earning deposits  152,538   2,989   3.92   145,696   343   0.47 
    Total interest-earning assets  6,295,624   146,146   4.64%  6,074,298   93,309   3.07%
    Noninterest-earning assets:                  
    Cash and due from banks  9,117         8,591       
    Allowance for credit losses  (62,310)        (60,311)      
    Premises and equipment  23,835         22,987       
    Other assets  86,288         132,266       
    Total noninterest-earning assets  56,930         103,533       
    Total assets $6,352,554        $6,177,831       
                       
    LIABILITIES:                  
    Interest-bearing deposits:                  
    Checking $2,701,519  $38,700   2.87% $2,412,456  $3,568   0.30%
    Money markets  955,470   8,726   1.83   1,264,167   1,118   0.18 
    Savings  133,377   74   0.11   159,826   10   0.01 
    Certificates of deposit – retail  371,657   4,191   2.26   418,642   1,257   0.60 
    Subtotal interest-bearing deposits  4,162,023   51,691   2.48   4,255,091   5,953   0.28 
    Interest-bearing demand – brokered  18,011   333   3.70   85,000   737   1.73 
    Certificates of deposit – brokered  26,064   401   3.08   33,646   522   3.10 
    Total interest-bearing deposits  4,206,098   52,425   2.49   4,373,737   7,212   0.33 
    Borrowings  260,292   6,680   5.13   29,550   74   0.50 
    Capital lease obligation  4,339   103   4.75   5,533   132   4.77 
    Subordinated debt  133,053   3,236   4.86   132,767   2,727   4.11 
    Total interest-bearing liabilities  4,603,782   62,444   2.71%  4,541,587   10,145   0.45%
    Noninterest-bearing liabilities:                  
    Demand deposits  1,104,440         1,004,055       
    Accrued expenses and other liabilities  93,650         99,565       
    Total noninterest-bearing liabilities  1,198,090         1,103,620       
    Shareholders’ equity  550,682         532,624       
    Total liabilities and shareholders’ equity $6,352,554        $6,177,831       
    Net interest income    $83,702        $83,164    
    Net interest spread        1.93%        2.62%
    Net interest margin (D)        2.68%        2.76%

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

    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

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

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

    (Dollars in thousands, except per share data)

      Three Months Ended 
      June 30,  March 31,  Dec 31,  Sept 30,  June 30, 
    Tangible Book Value Per Share 2023  2023  2022  2022  2022 
    Shareholders’ equity $565,069  $554,958  $532,980  $515,514  $520,324 
    Less: Intangible assets, net  46,624   46,979   47,333   47,698   48,082 
    Tangible equity $518,445  $507,979  $485,647  $467,816  $472,242 
    Less: other comprehensive loss  (67,997)  (67,445)  (74,211)  (74,983)  (58,727)
    Tangible equity excluding other comprehensive loss $586,442  $575,424  $559,858  $542,799  $530,969 
                    
    Period end shares outstanding  17,887,895   18,014,757   17,813,451   17,920,571   18,190,009 
    Tangible book value per share $28.98  $28.20  $27.26  $26.10  $25.96 
    Tangible book value per share excluding other comprehensive loss $32.78  $31.94  $31.43  $30.29  $29.19 
    Book value per share  31.59   30.81   29.92   28.77   28.60 
                    
    Tangible Equity to Tangible Assets               
    Total assets $6,479,700  $6,480,018  $6,353,593  $6,087,261  $6,151,167 
    Less: Intangible assets, net  46,624   46,979   47,333   47,698   48,082 
    Tangible assets $6,433,076  $6,433,039  $6,306,260  $6,039,563  $6,103,085 
    Less: other comprehensive loss  (67,997)  (67,445)  (74,211)  (74,983)  (58,727)
    Tangible assets excluding other comprehensive loss $6,501,073  $6,500,484  $6,380,471  $6,114,546  $6,161,812 
                    
    Tangible equity to tangible assets  8.06%  7.90%  7.70%  7.75%  7.74%
    Tangible equity to tangible assets excluding other comprehensive loss  9.02%  8.85%  8.77%  8.88%  8.62%
    Equity to assets  8.72%  8.56%  8.39%  8.47%  8.46%

    (Dollars in thousands, except per share data)

      Three Months Ended 
      June 30,  March 31,  Dec 31,  Sept 30,  June 30, 
    Return on Average Tangible Equity 2023  2023  2022  2022  2022 
    Net income $13,145  $18,355  $20,579  $20,126  $20,100 
                    
    Average shareholders’ equity $557,428  $543,861  $523,406  $529,160  $521,197 
    Less: Average intangible assets, net  46,828   47,189   47,531   47,922   48,291 
    Average tangible equity $510,600  $496,672  $475,875  $481,238  $472,906 
                    
    Return on average tangible common equity  10.30%  14.78%  17.30%  16.73%  17.00%


      For the Six Months Ended 
      June 30,  June 30, 
    Return on Average Tangible Equity 2023  2022 
    Net income $31,500  $33,541 
           
    Average shareholders’ equity $550,682  $532,624 
    Less: Average intangible assets, net  47,007   48,503 
    Average tangible equity  503,675   484,121 
           
    Return on average tangible common equity  12.51%  13.86%

    (Dollars in thousands, except per share data)

      Three Months Ended 
      June 30,  March 31,  Dec 31,  Sept 30,  June 30, 
    Efficiency Ratio 2023  2023  2022  2022  2022 
    Net interest income $38,921  $43,978  $48,040  $45,525  $42,893 
    Total other income  18,575   18,059   16,812   16,383   18,508 
    Add:               
    Fair value adjustment for CRA equity security  209   (209)  (28)  571   475 
    Less:               
    Gain on sale of property  —   —   (275)  —   — 
    Income from life insurance proceeds  —   —   (25)  —   — 
    Total recurring revenue  57,705   61,828   64,524   62,479   61,876 
                    
    Operating expenses  37,692   35,574   33,412   33,560   32,659 
    Less:               
    Accelerated Expense for Retirement  1,665   300   —   —   — 
    Branch Closure Expense  —   175   —   —   — 
    Total operating expense  36,027   35,099   33,412   33,560   32,659 
                    
    Efficiency ratio  62.43%  56.77%  51.78%  53.71%  52.78%


      For the Six Months Ended 
      June 30,  June 30, 
    Efficiency Ratio 2023  2022 
    Net interest income $82,899  $82,515 
    Total other income  36,634   33,222 
    Add:      
    Fair value adjustment for CRA equity security  —   1,157 
    Less:      
    Loss on securities sale, net  —   6,609 
    Total recurring revenue  119,533   123,503 
           
    Operating expenses  73,266   66,828 
    Less:      
    Swap valuation allowance  —   673 
    Accelerated Expense for Retirement  1,965   — 
    Branch Closure Expense  175   — 
    Severance expense  —   1,476 
    Total operating expense  71,126   64,679 
           
    Efficiency ratio  59.50%  52.37%


    Primary Logo

Share on,