/EINPresswire.com/ -- BEDMINSTER, NJ--(Marketwired - Jan 27, 2017) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Company") recorded record net income of $26.48 million and diluted earnings per share of $1.60 for the year ended December 31, 2016, compared to $19.97 million and $1.29, respectively, for the year ended December 31, 2015, reflecting increases of $6.51 million or 33 percent, and $0.31 per share or 24 percent, respectively.

For the quarter ended December 31, 2016, the Company recorded net income of $7.31 million and diluted earnings per share of $0.43, compared to $4.34 million and $0.28 for the same quarterly period last year, reflecting increases of $2.97 million, or 68 percent, and $0.15 per share, or 54 percent, respectively.

During the fourth quarter of 2015 the Company recorded $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million and diluted earnings per share by $0.10 per share, for both the 2015 year and 2015 fourth quarter.

The 2016 year and 2016 fourth quarter, when compared to the same periods in 2015, reflected improved net interest income, wealth management fee income, and other non-interest income. Expenses for 2016 included increased FDIC premiums, increased investment in risk management related analytics and practices, and increased salary and benefits associated with strategic hiring which was in line with the Company's Strategic Plan.

The following table summarizes specified financial measures for the year ended 2016 and 2015, respectively:

		Year				Year				Increase/
(Dollars in millions, except EPS)		2016				2015(A)				(Decrease)
Net interest income	$	96.44			$	84.45			$	11.99	14	%
Provision for loan losses	$	7.50			$	7.10			$	0.40	6	%
Pretax income	$	42.74			$	32.14			$	10.60	33	%
Net income	$	26.48			$	19.97			$	6.51	33	%
Diluted EPS	$	1.60			$	1.29			$	0.31	24	%
Total revenue	$	125.35			$	108.17			$	17.18	16	%
Return on average assets		0.72	%			0.64	%			0.08
Return on average equity		8.92	%			7.71	%			1.21
Efficiency ratio (B)		60.57	%			63.80	%			(3.23)
Tang book value per share (B)	$	18.91			$	17.40			$	1.51

(A)	The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B)	See Non-GAAP financial measures reconciliation table on page 26.

The following table summarizes specified financial measures for the fourth quarter of 2016 and 2015, respectively:

		Q4				Q4				Increase/
(Dollars in millions, except EPS)		2016				2015(A)				(Decrease)
Net interest income	$	24.58			$	22.82			$	1.76	8	%
Provision for loan losses	$	1.50			$	1.95			$	(0.45)	(23)	%
Pretax income	$	11.79			$	6.60			$	5.19	79	%
Net income	$	7.31			$	4.34			$	2.97	68	%
Diluted EPS	$	0.43			$	0.28			$	0.15	54	%
Total revenue	$	32.25			$	28.54			$	3.71	13	%
Return on average assets		0.75	%			0.51	%			0.24
Return on average equity		9.27	%			6.37	%			2.90
Efficiency ratio (B)		59.45	%			70.05	%			(10.60)
Tang book value per share (B)	$	18.91			$	17.40			$	1.51

(A)	The quarter ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05%, ROAE by 0.60% and increased the efficiency ratio by 8.75%.
(B)	See Non-GAAP financial measures reconciliation table on page 26.

Mr. Kennedy said, "We had a very strong 2016, as we continued to successfully execute our Plan. We posted strong results, despite the additional FDIC Insurance and risk management expenses this past year."

Additional highlights follow:

• Growth in diluted EPS for Q4 2016 when compared to Q4 2015 was $0.15 per share, or 54 percent, and for the full year of 2016 when compared to 2015 the growth was $0.31 per share, or 24 percent. At December 31, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank (the "Bank") increased to $3.67 billion from $3.32 billion at the end of 2015, reflecting growth of 11 percent.
• Fee income from the Private Wealth Management Division totaled $4.6 million for the fourth quarter of 2016, compared to $4.3 million for the same quarter in 2015, and totaled $18.2 million for the year ended 2016, growing from $17.0 million for the year ended 2015. Wealth management fee income, comprising approximately 15 percent of the Company's total revenue for the year ended December 31, 2016, contributed significantly to the Company's diversified revenue sources.
• Loans at December 31, 2016 totaled $3.31 billion. This reflected net growth of $50 million compared to the September 2016 quarter (2 percent compared to the prior quarter or 6 percent on an annualized basis), and $317 million (11 percent) when compared to the $3.00 billion at December 31, 2015.
• Commercial & Industrial (C&I) loans at December 31, 2016 totaled $637 million. This reflected net growth of $39 million compared to the September 2016 quarter (7 percent compared to the prior quarter or 26 percent on an annualized basis), and net growth of $124 million (24 percent) when compared to $513 million in loans at December 31, 2015.
• Multifamily whole loans sold totaled $53 million in the fourth quarter of 2016, which resulted in a net gain on sale of loans of $353 thousand. Multifamily whole loans sold in 2016 totaled $200 million, which resulted in a net gain on sale of loans of $1.2 million. Additionally, multifamily loan participations sold in 2016 totaled $34 million.
• Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) totaled $3.14 billion at December 31, 2016. This reflected net growth of $132 million compared to the September 2016 quarter (4 percent compared to the prior quarter or 18 percent on an annualized basis), and $496 million (19 percent) when compared to the $2.64 billion at December 31, 2015.
• Asset quality metrics continued to be strong at December 31, 2016. Nonperforming assets at December 31, 2016 were just $11.8 million, or 0.30 percent of total assets. Total loans past due 30 through 89 days and still accruing were $1.4 million or 0.04 percent of total loans at December 31, 2016.
• The Company's book value per share at December 31, 2016 of $19.10 reflected improvement when compared to $17.61 at December 31, 2015. Year over year growth in book value per share totaled 8 percent.

Mr. Kennedy noted, "We continue to be pleased with our progress since launching our Strategic Plan - Expanding our Reach - in early 2013, and we are particularly pleased with our progress in 2016. Despite the headwinds we noted going into 2016, we have delivered solid results for the year."

Net Interest Income / Net Interest Margin
Net interest income and net interest margin was $24.58 million and 2.63 percent for the fourth quarter of 2016, compared to $24.27 million and 2.74 percent for the third quarter of 2016, and compared to $22.82 million and 2.79 percent for the same quarter last year, reflecting growth in net interest income of $1.76 million or 8 percent when compared to the same prior year period. Net interest income for the fourth quarter of 2016 benefitted from loan growth during 2016. The December 2016 quarter included approximately $464 thousand of prepayment premiums received on the prepayment of certain multifamily loans, a slight decrease from $507 thousand for the September 2016 quarter, but a slight increase when compared to $326 thousand for the December 2015 quarter. Given the size of the Company's multifamily loan portfolio, prepayment premiums on such loans have become a part of recurring net interest income. 

Net interest margin for the fourth quarter of 2016 was negatively impacted by 7 basis points when compared to the third quarter of 2016 and the fourth quarter of 2015 due to an increase in our interest earning cash balances during the 2016 quarter. This extra liquidity was generated by deposit growth, as well as continued multifamily loan sales, during the fourth quarter of 2016.

Net interest income and net interest margin for the fourth quarter of 2016 when compared to the fourth quarter of 2015 was also negatively impacted by the effect of the $50 million subordinated debt issue in June 2016. 

Net interest income for the fourth quarter of 2016 improved compared to the same quarter in 2015, and net interest margin declined to 2.63 percent for the 2016 quarter compared to 2.79 percent for the 2015 quarter. Besides the 7 basis impact from higher liquidity in the 2016 quarter, the net interest margin also continued to be negatively impacted by the effect of the low interest rate environment throughout 2016, as well as competitive pressures in attracting new loans and deposits. 

As noted above, the net interest margin is also affected by the maintenance of liquid assets on the Company's balance sheet. Mr. Kennedy said, "In addition to $468 million of cash, cash equivalents and investment securities on our balance sheet, we also have over $1.1 billion of secured funding available from the Federal Home Loan Bank, of which we only have $62 million drawn as of December 31, 2016."

The Company's interest rate sensitivity models indicate that the Company's net interest income and margin would improve in a rising interest rate environment.

Wealth Management Business
In the December 2016 quarter, Peapack-Gladstone Bank's wealth management business generated $4.61 million in fee income compared to $4.44 million for the September 2016 quarter, and $4.31 million for the December 2015 quarter. 

Fee income for the December 2016 quarter increased by $303 thousand, or approximately 7 percent, from the December 2015 quarter. Growth in fee income was due to several factors including continued healthy new business results and a positive market environment, partially offset by normal levels of disbursements and outflows. 

The market value of the AUA of the wealth management division was $3.67 billion at December 31, 2016, increasing by $178 million, or 5 percent (20 percent on an annualized basis), from September 30, 2016 and increasing $352 million, or11 percent from $3.32 billion at December 31, 2015.

John P. Babcock, President of PGB Private Wealth Management, said, "We continue to execute on our advice-led strategy, incorporating a wealth management conversation into every relationship we have with clients, across all business lines. We continue to add talented new professionals to our wealth management team and expand the products, services, and the advice we deliver to our clients. Our continued growth will be driven by organic new business, the expansion of existing relationships and potentially, strategic acquisitions of wealth management firms in the Tri-State area over the medium term." Mr. Babcock went on to note, "Quarter-over-quarter and year-over-year revenue gains and positive net AUA flows continue on an upward trajectory and we enter 2017 with a robust new business pipeline. While the post-election market lift also contributed to our positive quarter and year-end results, it is too soon to predict the near-term impact on the broader financial markets. Yet, we remain cautiously optimistic that much-discussed tax reform, infrastructure spending and anticipated pro-growth fiscal policies will provide the foundation for a healthy equity market in 2017. Notwithstanding potential market fluctuations, our business continues to grow and will be a significant driver of enhanced shareholder value as we move forward."

Loan Originations / Loans
At December 31, 2016, loans totaled $3.31 billion compared to $3.26 billion three months ago at September 30, 2016 and compared to $3.00 billion one year ago at December 31, 2015, representing net increases of $50 million compared to the prior quarter (2 percent compared to the prior quarter or 6 percent on an annualized basis), and $317 million (11 percent) compared to the prior year December 31 period. Mr. Kennedy noted, "We continue to believe we have a very high quality loan portfolio, as evidenced by very strong asset quality metrics."

For the quarter ended December 31, 2016, residential mortgage originations totaled $65 million. Residential mortgage loans grew $57 million, or 12 percent, to $527 million at December 31, 2016 from $471 million one year ago at December 31, 2015. 

For the December 2016 quarter, commercial real estate originations (not including multifamily loans) totaled $57 million. Commercial real estate mortgage loans (not including multifamily loans) grew $138 million, or 33 percent, to $551 million at December 31, 2016 from $413 million one year ago at December 31, 2015.

The December 2016 quarter included $26 million of multifamily loan originations, down significantly from the previous quarters. At December 31, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.46 billion (or 44.1 percent of total loans) compared to $1.54 billion (or 47.1 percent of total loans) three months ago at September 30, 2016 and compared to $1.50 billion (or 50 percent of total loans) at December 31, 2015. The reductions included whole loans sold and participations sold, including $53 million of whole loans sold in the December 2016 quarter, bringing the total whole loans sold and participations sold for 2016 to $235 million. These loan sales and participations were part of the Company's balance sheet management strategy and will likely continue in 2017.

Mr. Kennedy said, "As I explained previously, we anticipated multifamily loan originations and growth would be less than prior years, as we manage our balance sheet such that multifamily loans decline as a percentage of the overall loan portfolio and C&I loans become a larger percentage of the overall loan portfolio. We made progress on this front late in 2015, and we are pleased this has continued into 2016." Mr. Kennedy further noted that, "This balance sheet management will likely not be linear each quarter, but will rather be apparent over periods of time."

For the quarter ended December 31, 2016 the Company closed $78 million of commercial loans. Commercial loans grew $124 million, or 24 percent, to $637 million at December 31, 2016 from $513 million one year ago at December 31, 2015. At December 31, 2016 the commercial loan portfolio comprised 19.2 percent of the overall loan portfolio up from the 18.3 percent at September 30, 2016, and up from 17.1 percent one year ago at December 31, 2015.

Mr. Kennedy said, "As a result of our continued investment in and commitment to C&I banking, we have seen, and believe we will continue to see, our C&I client base and corresponding loan portfolio grow."

Mr. Kennedy went on to say, "Our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received. The ability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enables us to provide a unique boutique level of service to business owners and middle market clients."

Eric H. Waser, Head of Commercial Banking noted, "We are extremely pleased with how our "Advice Led" approach is capturing the attention of the business community."

Deposits / Funding / Balance Sheet Management
As noted previously, in June 2016, the Company issued $50 million of subordinated debt ($48.7 million net of underwriting fees and expenses) bearing interest at an annual rate of 6 percent for the first five years, and thereafter at an adjustable rate until maturity in June 2026 or earlier redemption.

During the December 2016 quarter, customer deposit growth of $132 million (principally interest-bearing checking and money market) and increased capital of $15 million, primarily funded a $10 million maturity of FHLB Advances, an increase in loans of $50 million, and an increase in investment securities of $56 million.

Brokered interest-bearing demand ("overnight") deposits declined $20 million to $180 million at December 31, 2016 compared to $200 million at December 31, 2015. The interest rate paid on these deposits allowed the Bank to fund at attractive rates and engage in interest rate swaps as part of its asset-liability interest rate risk management. As of December 31, 2016, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

Mr. Kennedy noted, "The Company will continue to place an intense focus on providing high touch client service and growing its core deposit base. Our full array of treasury management solutions will help support both core deposit growth and commercial lending opportunities."

Other Noninterest Income
The Company's total noninterest income for the December 2016 quarter totaled $7.67 million or nearly 24 percent of total revenue.

The December 2016 quarter included $197 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $383 thousand for the September 2016 quarter, and $117 thousand for the December 2015 quarter. Originations of residential mortgage loans for sale were higher in the September 2016 quarter, compared to the other noted periods.

Gain on sale of multifamily loans held for sale at the lower of cost or fair value was $353 thousand for the December 2016 quarter, compared to $256 thousand for the September 2016 quarter. There were no such gains in the December 2015 quarter. During the first quarter of 2016 the Company began selling whole multifamily loans, in addition to participations. The Company anticipates that it will continue to employ both of these strategies into 2017, and beyond.

The fourth quarter of 2016 included $121 thousand of income related to the Company's SBA lending and sale program, compared to $243 thousand generated in the September 2016 quarter, and $7 thousand in the December 2015 quarter. The SBA program was fully implemented in the March 2016 quarter, and it is part of the Company's normal ongoing operations.

The December 2016 quarter included $874 thousand of loan level, back-to-back swap income compared to $670 thousand in the September 2016 quarter. There was no such income in the December 2015 quarter. This program is also a part of the Company's normal ongoing operations. 

Other income for the December 2016 quarter totaled $322 thousand, compared to $395 thousand for the September 2016 quarter and to $191 thousand for the December 2015 quarter. The September 2016 quarter included somewhat higher loan fees than the December 2016 quarter. The December 2016 quarter, when compared to the same quarter in 2015, includes increased loan servicing fees and increased unused line of credit fees.

Operating Expenses
The Company's total operating expenses were $18.97 million for the quarter ended December 31, 2016, compared to $18.17 million for the September 2016 quarter and $19.99 million for the same quarter in 2015.

While the fourth quarter 2016 FDIC premium was relatively flat to the third quarter of 2016, and the fourth quarter of 2015, it was down significantly from the first and second quarters of 2016. Beginning July 1, 2016 the FDIC assessment system was revised. Revisions for "small institutions" (under $10 billion in assets) resulted in, among other things, the elimination of risk categories and utilization of a financial ratios method to determine assessment rates. The changes reduced the Company's assessment rate by nearly 50% in the third and fourth quarters of 2016, when compared to the first and second quarters 2016 assessment rate.

Salary and benefits expenses for the December 2016 quarter were $11.48 million compared to $11.52 million for the September 2016 quarter, and $10.66 million for the December 2015 quarter. Strategic hiring that was in line with the Company's Plan, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increase from the December 2015 quarter to the December 2016 quarter.

Premises and equipment expenses for the December 2016 quarter were $2.90 million compared to $2.74 million for the September 2016 quarter, and $3.39 million for the December 2015 quarter. The December 2015 quarter included approximately $700 thousand of premises and equipment expenses related to the closure of two branch offices in that quarter. 

Other expenses for the December 2016 quarter were $3.78 million compared to $3.10 million for the September 2016 quarter, and $5.12 million for the December 2015 quarter. The December 2016 quarter included increased marketing expenses associated with a targeted marketing campaign run throughout the quarter. The December 2015 quarter included approximately $1.75 million of other expenses related to the closure of two branch offices in that quarter. 

Mr. Kennedy noted, "Total expenses for 2016 came in under budget, as we worked to manage our expenses closely."

Provision for Loan Losses / Asset Quality
For the quarter ended December 31, 2016, the Company's provision for loan losses was $1.50 million, which was slightly lower than the September 2016 provision of $2.10 million and the December 2015 provision of $1.95 million. The Company had $92 thousand of net recoveries in the December 2016 quarter, compared to $703 thousand and $468 thousand of net charge-offs in the September 2016 and December 2015 quarters, respectively. 

At December 31, 2016 the allowance for loan losses was $32.21 million, which was 286 percent of nonperforming loans and 0.97 percent of total loans, compared to $30.62 million, which was 282 percent of nonperforming loans and 0.95 percent of total loans at September 30, 2016, and $25.86 million, which was 383 percent of nonperforming loans and 0.89 percent of total loans one year prior, at December 31, 2015.

The Company's provision for loan losses and its allowance for loan losses continue to track consistently with the Company's net loan growth and asset quality metrics.

Nonperforming assets at December 31, 2016 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were just $11.8 million or 0.30 percent of total assets, compared to $11.4 million or 0.30 percent of total assets at September 30, 2016 and $7.3 million or 0.22 percent of total assets at December 31, 2015. Total loans past due 30 through 89 days and still accruing were $1.4 million at December 31, 2016, compared to $8.2 million at September 30, 2016 and $2.1 million at December 31, 2015. There were no multifamily loans past due at December 31, 2016.

Capital / Dividends
The Company's capital position in the December 2016 quarter was benefitted by net income of $7.3 million and $6.9 million of voluntary share purchases under the Dividend Reinvestment Plan, which continues to be a source of capital for the Company.

At December 31, 2016, the Company's GAAP capital as a percent of total assets was 8.36 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.35 percent, 10.60 percent, 10.60 percent and 13.25 percent, respectively. The Bank's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.31 percent, 11.82 percent, 11.82 percent and 12.87 percent, respectively. The Bank's regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

On January 26, 2017, the Company's Board of Directors declared a regular cash dividend of $0.05 per share payable on February 23, 2017 to shareholders of record on February 9, 2017.

Mr. Kennedy said, "We continue to believe we have sufficient common equity to support our planned growth and expansion for the immediate future."

ABOUT THE COMPANY
Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.88 billion as of December 31, 2016. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

The foregoing contains 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

• inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
• the impact of anticipated higher operating expenses in 2017 and beyond;
• inability to manage our growth;
• inability to successfully integrate our expanded employee base;
• a continued or 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 low interest rate environment and highly competitive market;
• declines in value in our investment portfolio;
• higher than expected increases in our allowance for loan losses;
• higher than expected increases in loan losses or in the level of nonperforming loans;
• unexpected changes in interest rates;
• a continued or unexpected 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) subject us to additional regulatory oversight which may result in increased compliance costs;
• successful cyberattacks against our IT infrastructure and that of our IT providers;
• higher than expected FDIC insurance premiums;
• adverse weather conditions;
• inability to successfully generate new business in new geographic markets;
• inability to execute upon new business initiatives;
• lack of liquidity to fund our various cash obligations;
• reduction in our lower-cost funding sources;
• our inability to adapt to technological changes;
• claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters; 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, 2015. 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.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
			For the Three Months Ended
				Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
				2016			2016 (A)			2016			2016			2015 (B)
Income Statement Data:
Interest income			$	30,271		$	29,844		$	29,035		$	27,898		$	27,123
Interest Expense				5,691			5,575			4,859			4,488			4,304
	Net interest income			24,580			24,269			24,176			23,410			22,819
Provision for loan losses				1,500			2,100			2,200			1,700			1,950
	Net interest income after provision for loan losses			23,080			22,169			21,976			21,710			20,869
Wealth management fee income				4,610			4,436			4,899			4,295			4,307
Service charges and fees				815			812			818			807			849
Bank owned life insurance				380			340			345			342			252
Gain on loans held for sale at fair value (Mortgage banking)				197			383			309			121			117
Gain on loans held for sale at lower of cost or fair value				353			256			500			124			-
Fee income related to loan level, back-to-back swaps				874			670			-			94			-
Gain on sale of SBA loans				121			243			212			47			7
Other income				322			395			347			332			191
Securities gains, net				-			-			18			101			-
	Total other income			7,672			7,535			7,448			6,263			5,723
Compensation and employee benefits				11,480			11,515			11,100			10,908			10,659
Premises and equipment				2,903			2,736			2,742			2,864			3,390
FDIC insurance expense				804			814			1,581			1,559			825
Other expenses				3,778			3,101			3,352			3,875			5,119
	Total operating expenses			18,965			18,166			18,775			19,206			19,993
Income before income taxes				11,787			11,538			10,649			8,767			6,599
Income tax expense				4,479			4,422			4,085			3,278			2,256
Net income			$	7,308		$	7,116		$	6,564		$	5,489		$	4,343
Total revenue			$	32,252		$	31,804		$	31,624		$	29,673		$	28,542
Per Common Share Data:
Earnings per share (basic)			$	0.44		$	0.43		$	0.41		$	0.35		$	0.28
Earnings per share (diluted)				0.43			0.43			0.40			0.34			0.28
Weighted average number of common shares outstanding:
Basic				16,770,725			16,467,654			16,172,223			15,858,278			15,498,119
Diluted				17,070,473			16,673,596			16,341,975			16,016,972			15,721,876
Performance Ratios:
Return on average assets annualized (ROAA)				0.75%			0.77%			0.73%			0.64%			0.51%
Return on average equity annualized (ROAE)				9.27%			9.44%			9.06%			7.83%			6.37%
Net interest margin (taxable equivalent basis)				2.63%			2.74%			2.79%			2.82%			2.79%
Efficiency ratio (D)				59.45%			57.58%			60.36%			65.22%			70.05%
Operating expenses / average assets annualized				1.96%			1.98%			2.08%			2.22%			2.36%

(A)	The quarter ended December 31, 2016 and September 30, 2016 included a reduction in FDIC premium. The reduction was a result of an amendment to small institution pricing for deposit insurance by the FDIC effective the quarter after the FDIC reserve ratio reaches 1.15%. The reserve ratio reached 1.15% effective as of the quarter ended June 30, 2016.
(B)	The quarter ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05%and ROAE by 0.60%, and increased the efficiency ratio by 8.75%.
(C)	Total revenue includes gain from sale of loans held for sale at lower of cost or fair value.
(D)	Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
				For the
				Twelve Months Ended
				December 31,						Change
Income Statement Data:				2016			2015 (A)			$		%
Interest income			$	117,048		$	99,142		$	17,906		18%
Interest expense				20,613			14,690			5,923		40%
	Net interest income			96,435			84,452			11,983		14%
Provision for loan losses				7,500			7,100			400		6%
	Net interest income after provision for loan losses			88,935			77,352			11,583		15%
Wealth management fee income				18,240			17,039			1,201		7%
Service charges and fees				3,252			3,323			(71)		-2%
Bank owned life insurance				1,407			1,297			110		8%
Gain on loans held for sale at fair value (Mortgage banking)				1,010			528			482		91%
Gains on loans held for sale at lower of cost or fair value				1,233			-			1,233		N/A
Fee income related to loan level, back-to-back swaps				1,638			373			1,265		339%
Gain on sale of SBA loans				623			7			616		8,800%
Other income				1,396			620			776		125%
Securities gains, net				119			527			(408)		-77%
	Total other income			28,918			23,714			5,204		22%
Compensation and employee benefits				45,003			40,278			4,725		12%
Premises and equipment				11,245			11,569			(324)		-3%
FDIC insurance expense				4,758			2,154			2,604		121%
Other expenses				14,106			14,925			(819)		-5%
	Total operating expenses			75,112			68,926			6,186		9%
Income before income taxes				42,741			32,140			10,601		33%
Income tax expense				16,264			12,168			4,096		34%
Net income			$	26,477		$	19,972		$	6,505		33%
Total revenue			$	125,353		$	108,166		$	17,187		16%
Per Common Share Data:
Earnings per share (basic)			$	1.62		$	1.31		$	0.31		24%
Earnings per share (diluted)				1.60			1.29			0.31		24%
Weighted average number of
common shares outstanding:
Basic				16,318,868			15,187,637			1,131,231		7%
Diluted				16,514,998			15,434,996			1,080,002		7%
Performance Ratios:
Return on average assets				0.72%			0.64%			0.08		13%
Return on average common equity				8.92%			7.71%			1.21		16%
Net interest margin (taxable equivalent basis)				2.74%			2.80%			(0.06)		-2%
Efficiency ratio (C)				60.57%			63.80%			(3.23)		-5%
Operating expenses / average
assets				2.06%			2.21%			(0.15)		-7%

(A)	The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, diluted earnings per share by $0.10, ROAA by 0.05% and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B)	Total revenue includes gains from sale of loans held for sale at lower of cost or fair value.
(C)	Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.

 

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
			As of
				Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
				2016			2016			2016			2016			2015
ASSETS
Cash and due from banks			$	24,580		$	17,861		$	18,261		$	15,872		$	11,550
Federal funds sold				101			101			101			101			101
Interest-earning deposits				138,010			141,593			62,968			61,946			58,509
	Total cash and cash equivalents			162,691			159,555			81,330			77,919			70,160
Securities available for sale				305,388			249,616			206,216			214,050			195,630
FHLB and FRB stock, at cost				13,813			14,093			14,623			13,254			13,984
Loans held for sale, residential				1,200			3,013			4,133			3,537			1,558
SBA loans held for sale, at lower of cost or fair value				388			-			-			-			-
Residential mortgage				527,370			496,735			479,839			469,084			470,869
Multifamily mortgage				1,459,594			1,537,834			1,562,206			1,527,774			1,498,975
Commercial mortgage				551,233			497,267			459,744			414,677			413,118
Commercial loans				636,714			598,078			576,169			554,871			512,886
Construction loans				1,405			430			-			1,392			1,401
Consumer loans				69,654			69,222			67,614			44,198			45,044
Home equity lines of credit				65,682			62,872			63,188			53,328			52,649
Other loans				492			449			430			443			500
	Total loans			3,312,144			3,262,887			3,209,190			3,065,767			2,995,442
	Less: Allowance for loan losses			32,208			30,616			29,219			27,321			25,856
	Net loans			3,279,936			3,232,271			3,179,971			3,038,446			2,969,586
Premises and equipment				30,371			30,223			29,199			29,609			30,246
Other real estate owned				534			534			767			861			563
Accrued interest receivable				8,153			6,383			7,733			7,497			6,820
Bank owned life insurance				43,806			43,541			43,325			43,101			42,885
Deferred tax assets, net				15,320			14,765			18,190			17,952			15,582
Other assets				17,033			20,389			19,216			19,771			17,645
	TOTAL ASSETS		$	3,878,633		$	3,774,383		$	3,604,703		$	3,465,997		$	3,364,659
LIABILITIES
Deposits:
	Noninterest-bearing demand deposits		$	489,485		$	494,204		$	469,809		$	457,730		$	419,887
	Interest-bearing demand deposits			1,023,081			928,941			897,210			905,479			861,697
	Savings			120,056			119,650			120,617			119,149			115,007
	Money market accounts			1,048,494			997,572			861,664			820,757			810,709
	Certificates of deposit - Retail			457,000			466,003			466,079			446,833			434,450
Subtotal "customer" deposits				3,138,116			3,006,370			2,815,379			2,749,948			2,641,750
	IB Demand - Brokered			180,000			200,000			200,000			200,000			200,000
	Certificates of deposit - Brokered			93,721			93,690			93,660			93,630			93,720
Total deposits				3,411,837			3,300,060			3,109,039			3,043,578			2,935,470
Overnight borrowings				-			-			29,450			21,100			40,700
Federal home loan bank advances				61,795			71,795			83,692			83,692			83,692
Capital lease obligation				9,693			9,828			9,961			10,092			10,222
Subordinated debt, net				48,764			48,731			48,698			-			-
Other liabilities				22,334			27,934			28,330			24,030			18,899
Due to brokers, securities settlements				-			7,003			-			-			-
	TOTAL LIABILITIES			3,554,423			3,465,351			3,309,170			3,182,492			3,088,983
Shareholders' equity				324,210			309,032			295,533			283,505			275,676
	TOTAL LIABILITIES AND
	SHAREHOLDERS' EQUITY		$	3,878,633		$	3,774,383		$	3,604,703		$	3,465,997		$	3,364,659
Assets under administration at
	Peapack-Gladstone Bank's
	Wealth Management Division
	(market value, not included above)		$	3,673,609		$	3,495,206		$	3,418,566		$	3,307,799		$	3,321,624

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
			As of
				Dec 31,			Sept 30,			June 30,			Mar 31,			Dec 31,
				2016			2016			2016			2016			2015
Asset Quality:
Loans past due over 90 days and still accruing			$	-		$	-		$	-		$	-		$	-
Nonaccrual loans				11,264			10,840			8,049			7,278			6,747
Other real estate owned				534			534			767			861			563
	Total nonperforming assets		$	11,798		$	11,374		$	8,816		$	8,139		$	7,310
Nonperforming loans to total loans				0.34%			0.34%			0.26%			0.24%			0.23%
Nonperforming assets to total assets				0.30%			0.30%			0.24%			0.23%			0.22%
Performing TDRs (A)(B)			$	17,784		$	18,078		$	18,570		$	16,033		$	16,231
Loans past due 30 through 89 days and still accruing (C)			$	1,356		$	8,238		$	6,576		$	1,393		$	2,143
Classified loans			$	45,798		$	49,627		$	51,084		$	48,817		$	42,777
Impaired loans			$	29,071		$	28,951		$	26,643		$	23,335		$	23,107
Allowance for loan losses:
	Beginning of period		$	30,616		$	29,219		$	27,321		$	25,856		$	24,374
	Provision for loan losses			1,500			2,100			2,200			1,700			1,950
	Charge-offs, net			92			(703)			(302)			(235)			(468)
	End of period		$	32,208		$	30,616		$	29,219		$	27,321		$	25,856
ALLL to nonperforming loans				285.94%			282.44%			363.01%			375.39%			383.22%
ALLL to total loans				0.97%			0.95%			0.93%			0.90%			0.89%

(A)	Amounts reflect TDR's that are paying according to restructured terms.
(B)	Amount does not include $4.5 million at December 31, 2016, $4.4 million at September 30, 2016, $4.2 million at June 30, 2016, $3.4 million at March 31, 2016 and $2.6 million at December 31, 2015 of TDRs included in nonaccrual loans.
(C)	September 30, 2016 includes one commercial loan secured by real estate totaling $5.0 million that was 30 days past due at September 30, 2016 but brought current on October 4, 2016.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands, Except Share Data)
(Unaudited)
		Dec 31,						Sept 30,					Dec 31,
		2016						2016					2015
Capital Adequacy
Equity to total assets (A)			8.36		%				8.19	%				8.19		%
Tangible equity to tangible assets (B)			8.28		%				8.11	%				8.10		%
Book value per share (C)	$		19.10				$		18.57			$		17.61
Tangible book value per share (D)	$		18.91				$		18.38			$		17.40
		Dec 31,						Sept 30,					Dec 31,
		2016						2016					2015
Regulatory Capital - Holding Company
Tier I leverage	$	323,045	8.35		%		$	308,250	8.39	%		$	273,738	8.10		%
Tier I capital to risk weighted assets		323,045	10.60					308,250	10.47				273,738	10.42
Common equity tier I capital ratio to risk-weighted assets		323,042	10.60					308,247	10.47				273,738	10.42
Tier I & II capital to risk-weighted assets		404,017	13.25					387,597	13.17				299,593	11.40
Regulatory Capital - Bank
Tier I leverage	$	360,097	9.31		%		$	345,604	9.41	%		$	271,641	8.04		%
Tier I capital to risk weighted assets		360,097	11.82					345,604	11.74				271,641	10.34
Common equity tier I capital ratio to risk-weighted assets		360,094	11.82					345,601	11.74				271,641	10.34
Tier I & II capital to risk-weighted assets		392,305	12.87					376,220	12.78				297,497	11.32

(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 less restricted shares not yet vested.
(D)	Tangible book value per share is different than book value per share because it excludes intangible assets. Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested. See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
		For the Quarters Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
		2016			2016			2016			2016			2015
Residential loans retained	$	53,324		$	43,284		$	32,513		$	17,747		$	18,847
Residential loans sold		11,429			25,128			20,221			8,062			7,183
Total residential loans		64,753			68,412			52,734			25,809			26,030
CRE (includes Community banking)		56,793			56,799			36,554			9,339			41,015
Multifamily (includes Community banking)		26,300			74,450			150,709			108,035			107,605
Commercial loans (includes Community banking) (A)		78,038			59,698			61,309			67,488			74,749
SBA		2,050			3,025			2,285			1,055			-
Wealth lines of credit (A)		2,400			1,200			785			1,800			35,550
Total commercial loans		165,581			195,172			251,642			187,717			258,919
Installment loans		1,826			1,591			1,077			486			1,052
Home equity lines of credit (A)		5,878			7,064			14,435			3,604			5,902
Total loans closed	$	238,038		$	272,239		$	319,888		$	217,616		$	291,903

	For the Twelve Months Ended
		Dec 31,			Dec 31,
		2016			2015
Residential loans retained	$	146,868		$	79,573
Residential loans sold		64,840			33,177
Total residential loans		211,708			112,750
CRE (includes Community banking)		159,485			175,813
Multifamily (includes Community banking)		359,494			673,205
Commercial loans (includes Community banking) (A)		266,533			289,289
SBA		8,415			-
Wealth lines of credit (A)		6,185			75,960
Total commercial loans		800,112			1,214,267
Installment loans		4,980			3,457
Home equity lines of credit (A)		30,981			16,279
Total loans closed	$	1,047,781		$	1,346,753

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
					Dec 31, 2016										Dec 31, 2015
					Average				Income/						Average				Income/
					Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)			$	241,443			$	1,202		1.99	%		$	192,678			$	901		1.87	%
		Tax-exempt (1) (2)				30,179				216		2.86				25,516				206		3.23
	Loans (2) (3):
		Mortgages				505,366				4,062		3.22				466,536				3,820		3.28
		Commercial mortgages				2,035,193				17,798		3.50				1,903,842				16,811		3.53
		Commercial				605,781				5,888		3.89				486,353				4,725		3.89
		Commercial construction				832				9		4.33				1,404				14		3.99
		Installment				70,051				539		3.08				42,629				320		3.00
		Home equity				64,371				530		3.29				51,516				420		3.26
		Other				485				12		9.90				507				12		9.47
		Total loans				3,282,079				28,838		3.51				2,952,787				26,122		3.54
	Federal funds sold					101				-		0.25				101				-		0.10
	Interest-earning deposits					223,188				257		0.46				123,045				76		0.25
			Total interest-earning assets			3,776,990				30,513		3.23				3,294,127				27,305		3.32
Noninterest-Earning Assets:
	Cash and due from banks					10,747										9,133
	Allowance for loan losses					(31,575	)									(24,858	)
	Premises and equipment					30,441										31,285
	Other assets					85,224										73,483
			Total noninterest-earning assets			94,837										89,043
Total assets					$	3,871,827									$	3,383,170
LIABILITIES:
Interest-bearing deposits:
	Checking				$	992,075			$	724		0.29	%		$	849,929			$	466		0.22	%
	Money markets					1,021,819				864		0.34				813,112				577		0.28
	Savings					119,518				17		0.06				115,930				17		0.06
	Certificates of deposit - retail					463,377				1,621		1.40				420,831				1,401		1.33
		Subtotal interest-bearing deposits				2,596,789				3,226		0.50				2,199,802				2,461		0.45
	Interest-bearing demand - brokered					196,848				757		1.54				274,261				834		1.22
	Certificates of deposit - brokered					93,704				501		2.14				93,704				502		2.14
		Total interest-bearing deposits				2,887,341				4,484		0.62				2,567,767				3,797		0.59
	Borrowings					67,958				332		1.95				88,548				383		1.73
	Capital lease obligation					9,741				117		4.80				10,266				124		4.83
	Subordinated debt					48,743				758		6.22				-				-		N/A
	Total interest-bearing liabilities					3,013,783				5,691		0.76				2,666,581				4,304		0.65
Noninterest-bearing liabilities:
	Demand deposits					514,130										428,412
	Accrued expenses and
	other liabilities					28,406										15,541
	Total noninterest-bearing liabilities					542,536										443,953
Shareholders' equity						315,508										272,636
	Total liabilities and
		Shareholders' equity			$	3,871,827									$	3,383,170
	Net interest income								$	24,822									$	23,001
		Net interest spread										2.47	%									2.67	%
		Net interest margin (4)										2.63	%									2.79	%

(1)		Average balances for available for sale securities are based on amortized cost.
(2)		Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)		Loans are stated net of unearned income and include nonaccrual loans.
(4)		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)
					Dec 31, 2016										Sept 30, 2016
					Average				Income/						Average				Income/
					Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)			$	241,443			$	1,202		1.99	%		$	193,902			$	976		2.01	%
		Tax-exempt (1) (2)				30,179				216		2.86				27,516				212		3.08
	Loans (2) (3):
	Mortgages					505,366				4,062		3.22				486,909				3,983		3.27
		Commercial mortgages				2,035,193				17,798		3.50				2,048,877				17,977		3.51
		Commercial				605,781				5,888		3.89				573,211				5,826		4.07
		Commercial construction				832				9		4.33				454				5		4.41
		Installment				70,051				539		3.08				67,175				443		2.64
		Home equity				64,371				530		3.29				62,560				519		3.32
		Other				485				12		9.90				465				13		11.18
		Total loans				3,282,079				28,838		3.51				3,239,651				28,766		3.55
	Federal funds sold					101				-		0.25				101				-		0.25
	Interest-earning deposits					223,188				257		0.46				111,204				131		0.47
			Total interest-earning assets			3,776,990				30,513		3.23	%			3,572,374				30,085		3.37	%
Noninterest-Earning Assets:
	Cash and due from banks					10,747										17,292
	Allowance for loan losses					(31,575	)									(30,022	)
	Premises and equipment					30,441										29,460
	Other assets					85,224										88,721
			Total noninterest-earning assets			94,837										105,451
Total assets					$	3,871,827									$	3,677,825
LIABILITIES:
Interest-bearing deposits:
	Checking				$	992,075			$	724		0.29	%		$	924,970			$	645		0.28	%
	Money markets					1,021,819				864		0.34				915,139				737		0.32
	Savings					119,518				17		0.06				119,986				17		0.06
	Certificates of deposit - retail					463,377				1,621		1.40				466,967				1,615		1.38
		Subtotal interest-bearing deposits				2,596,789				3,226		0.50				2,427,062				3,014		0.50
	Interest-bearing demand - brokered					196,848				757		1.54				200,000				762		1.52
	Certificates of deposit - brokered					93,704				501		2.14				93,674				501		2.14
		Total interest-bearing deposits				2,887,341				4,484		0.62				2,720,736				4,277		0.63
	Borrowings					67,958				332		1.95				87,258				380		1.74
	Capital lease obligation					9,741				117		4.80				9,874				119		4.82
	Subordinated debt					48,743				758		6.22				48,711				799		6.56
	Total interest-bearing liabilities					3,013,783				5,691		0.76				2,866,579				5,575		0.78
Noninterest-bearing liabilities:
	Demand deposits					514,130										479,659
	Accrued expenses and
	other liabilities					28,406										30,070
	Total noninterest-bearing liabilities					542,536										509,729
Shareholders' equity						315,508										301,517
	Total liabilities and
		Shareholders' equity			$	3,871,827									$	3,677,825
	Net interest income								$	24,822									$	24,510
		Net interest spread										2.47	%									2.59	%
		Net interest margin (4)										2.63	%									2.74	%

(1)		Average balances for available for sale securities are based on amortized cost.
(2)		Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)		Loans are stated net of unearned income and include nonaccrual loans.
(4)		Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
TWELVE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
					Dec 31, 2016										Dec 31, 2015
					Average				Income/						Average				Income/
					Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)			$	208,980			$	4,018		1.92	%		$	231,152			$	4,079		1.76	%
		Tax-exempt (1) (2)				27,225				840		3.09				31,158				858		2.75
	Loans (2) (3):
		Mortgages				483,088				15,790		3.27				466,873				15,244		3.27
		Commercial mortgages				2,022,936				70,775		3.50				1,718,171				61,286		3.57
		Commercial				564,598				22,206		3.93				404,908				15,101		3.73
		Commercial construction				991				41		4.14				3,679				156		4.24
		Installment				61,362				1,737		2.83				32,774				1,096		3.34
		Home equity				59,555				1,964		3.30				51,227				1,657		3.23
		Other				474				47		9.92				518				48		9.27
		Total loans				3,193,044				112,560		3.53				2,678,150				94,588		3.53
	Federal funds sold					101				-		0.24				101				-		0.10
	Interest-earning deposits					128,488				551		0.43				95,287				204		0.21
			Total interest-earning assets			3,557,798				117,969		3.32				3,035,848				99,729		3.29
Noninterest-Earning Assets:
	Cash and due from banks					9,580										7,445
	Allowance for loan losses					(29,068	)									(22,550	)
	Premises and equipment					29,839										31,771
	Other assets					86,228										67,915
			Total noninterest-earning assets			96,579										84,581
Total assets					$	3,654,377									$	3,120,429
LIABILITIES:
Interest-bearing deposits:
	Checking				$	926,713			$	2,547		0.27	%		$	741,199			$	1,495		0.20	%
	Money markets					894,215				2,775		0.31				746,329				2,047		0.27
	Savings					119,043				68		0.06				116,289				64		0.06
	Certificates of deposit - retail					455,946				6,270		1.38				354,626				4,411		1.24
		Subtotal interest-bearing deposits				2,395,917				11,660		0.49				1,958,443				8,017		0.41
	Interest-bearing demand - brokered					199,208				3,020		1.52				268,414				2,534		0.94
	Certificates of deposit - brokered					93,674				1,995		2.13				102,937				2,034		1.98
		Total interest-bearing deposits				2,688,799				16,675		0.62				2,329,794				12,585		0.54
	Borrowings					132,985				1,764		1.33				113,027				1,602		1.42
	Capital lease obligation					9,940				478		4.81				10,452				503		4.81
	Subordinated debt					26,679				1,696		6.36				-				-		N/A
	Total interest-bearing liabilities					2,858,403				20,613		0.72				2,453,273				14,690		0.60
Noninterest-bearing liabilities:
	Demand deposits					473,536										394,567
	Accrued expenses and
	other liabilities					25,528										13,530
	Total noninterest-bearing liabilities					499,064										408,097
Shareholders' equity						296,908										259,059
	Total liabilities and
		Shareholders' equity			$	3,654,375									$	3,120,429
	Net interest income								$	97,356									$	85,039
		Net interest spread										2.60	%									2.69	%
		Net interest margin (4)										2.74	%									2.80	%

(1)		Average balances for available for sale securities are based on amortized cost.
(2)		Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate.
(3)		Loans are stated net of unearned income and include nonaccrual loans.
(4)		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 calculated 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 less restricted shares not yet vested, as compared to book value per common share, which we calculated by dividing shareholders' equity by period end common shares outstanding less restricted shares no yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

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

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

Non-GAAP Financial Reconciliation

(Dollars in thousands, except share data)

			Three Months Ended
			Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Tangible Book Value Per Share			2016			2016			2016			2016			2015
Shareholders' equity			$	324,210		$	309,032		$	295,533		$	283,505		$	275,676
Less: Intangible assets				3,157			3,188			3,277			3,264			3,281
	Tangible equity			321,053			305,844			292,256			280,241			272,395
Period end shares outstanding				17,257,995			16,944,738			16,657,403			16,326,840			16,068,119
Less: Restricted awards not yet vested				283,712			302,799			309,920			321,580			414,188
Total outstanding shares				16,974,283			16,641,939			16,347,483			16,005,260			15,653,931
Tangible book value per share				18.91			18.38			17.88			17.51			17.40
Book value per share				19.10			18.57			18.08			17.71			17.61
Tangible Equity to Tangible Assets
Total Assets			$	3,878,633		$	3,774,383		$	3,604,703		$	3,465,997		$	3,364,659
Less: Intangible assets				3,157			3,188			3,277			3,264			3,281
	Tangible assets			3,875,476			3,771,195			3,601,426			3,462,733			3,361,378
Tangible equity to tangible assets				8.28	%		8.11	%		8.12	%		8.09	%		8.10	%
Equity to assets				8.36	%		8.19	%		8.20	%		8.18	%		8.19	%

			Three Months Ended
			Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
Efficiency Ratio			2016				2016				2016				2016				2015
Net interest income			$	24,580			$	24,269			$	24,176			$	23,410			$	22,819
Total other income				7,672				7,535				7,448				6,263				5,723
Less: Gain on loans
	held for sale at lower of cost
	or fair value			353				256				500				124				-
Less: Securities gains, net				-				-				18				101				-
Total recurring revenue				31,899				31,548				31,106				29,448				28,542
Operating expenses				18,965				18,166				18,775				19,206				19,993
Total operating expense				18,965				18,166				18,775				19,206				19,993
Efficiency ratio				59.45	%			57.58	%			60.36	%			65.22	%			70.05	%
Efficiency ratio, excluding $2.5
	million of charges relating
	to the closure of two
	branch offices			-				-				-				-				61.30	%

			Twelve Months Ended
			Dec 31,				Dec 31,
Efficiency Ratio			2016				2015
Net interest income			$	96,435			$	84,452
Total other income				28,918				23,714
Less: Gain on loans
	held for sale at lower of cost
	or fair value			1,233				-
Less: Securities gains, net				119				527
Total recurring revenue				124,001				107,639
Operating expenses				75,112				68,926
Less: ORE provision				-				250
Total operating expenses				75,112				68,676
Efficiency ratio				60.57	%			63.80	%
Efficiency ratio, excluding $2.5
	million of charges relating
	to the closure of two
	branch offices			-				61.71	%