BEDMINSTER, N.J., July 26, 2019 (GLOBE NEWSWIRE) -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its second quarter 2019 results, a quarterly dividend, and a stock repurchase program. 

The Company recorded total revenue of $84.03 million, pretax income of $30.89 million, net income of $22.98 million and diluted earnings per share of $1.18 for the six months ended June 30, 2019, compared to $79.59 million, $29.76 million, $22.72 million and $1.20, respectively, for the six months ended June 30, 2018, reflecting increases of 6% in revenue and 4% in pretax income, but only 1% in net income, due to the increase in the effective tax rate in 2019. The Company’s 2019 six-month period included increases in net interest income and non-interest income of $4.44 million, partially offset by increased operating expenses of $3.61 million. The effective tax rate was 25.63% for 2019 compared to 23.68% for 2018; the increase was caused by changes in NJ State tax law.

For the quarter ended June 30, 2019, the Company recorded revenue of $42.29 million, pretax income of $14.97 million, net income of $11.55 million and diluted earnings per share of $0.59, compared to $40.98 million, $15.74 million, $11.91 million and $0.62 for the same three-month period last year. The 2019 quarter included increased non-interest income, which was offset by an increased provision for loan losses (due to loan growth late in the 2019 quarter) and increased operating expenses.  

On July 25, 2019, the Company authorized the repurchase of up to 960,000 shares, or approximately 5% of its outstanding shares, over a time-period through and including June 30, 2020. Purchases will be conducted in accordance with the limitations set forth in the SEC’s Rule 10b-18.  

Douglas L. Kennedy, President and CEO, said, “We believe our existing capital is strong and believe that purchasing our Company’s stock is an opportunity for us to effectively manage our excess capital.”

EXECUTIVE SUMMARY:

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

Year over Year Comparison

		Six Months Ended				Six Months Ended
		June 30,				June 30,					Increase/
(Dollars in millions, except per share data)		2019 (A)				2018					(Decrease)
Net interest income		$	59.28			$	57.64				$	1.64				3	%
Provision for loan and lease losses			1.25				1.55					(0.30	)			(19	)
Net interest income after provision			58.03				56.09					1.94				3
Wealth management fee income			18.74				16.49					2.25				14
Other income			6.02				5.47					0.55				10
Total other income			24.76				21.96					2.80				13
Operating expenses			51.89				48.28					3.61				7
Pretax income			30.90				29.77					1.13				4
Income tax expense			7.92				7.05					0.87				12
Net income		$	22.98			$	22.72				$	0.26				1	%
Diluted EPS		$	1.18			$	1.20				$	(0.02	)			(2	)%
Effective tax rate			25.63	%			23.68	%				1.95
Return on average assets annualized			0.99	%			1.06	%				(0.07	)
Return on average equity annualized			9.57	%			10.83	%				(1.26	)

1. The six months ended June 30, 2019 included a full six months of wealth management fee income and expense related to Lassus Wherley, which was acquired effective September 1, 2018.

June 2019 Quarter Compared to Prior Year Quarter            

		Three Months Ended					Three Months Ended
		June 30,					June 30,				Increase/
(Dollars in millions, except per share data)		2019 (A)					2018				(Decrease)
Net interest income		$	29.27				$	29.24			$	0.03				0	%
Provision for loan and lease losses			1.15					0.30				0.85				283
Net interest income after provision			28.12					28.94				(0.82	)			(3	)
Wealth management fee income			9.57					8.13				1.44				18
Other income			3.45					3.61				(0.16	)			(4	)
Total other income			13.02					11.74				1.28				11
Operating expenses			26.17					24.94				1.23				5
Pretax income			14.97					15.74				(0.77	)			(5	)
Income tax expense			3.42					3.83				(0.41	)			(11	)
Net income		$	11.55				$	11.91			$	(0.36	)			(3	)%
Diluted EPS		$	0.59				$	0.62			$	(0.03	)			(5	)%
Effective tax rate			22.85	%				24.33	%			(1.48	)
Return on average assets annualized			0.99	%				1.11	%			(0.12	)
Return on average equity annualized			9.49	%				11.11	%			(1.62	)

1. The June 2019 quarter included a full quarter of wealth management fee income and expense related to Lassus Wherley, which was acquired effective September 1, 2018.

             

June 2019 Quarter Compared to Linked Quarter

		Three Months Ended				Three Months Ended
		June 30,				March 31,					Increase/
(Dollars in millions, except per share data)		2019				2019					(Decrease)
Net interest income		$	29.27			$	30.01				$	(0.74	)			(2	)%
Provision for loan and lease losses			1.15				0.10					1.05				1,050
Net interest income after provision			28.12				29.91					(1.79	)			(6	)
Wealth management fee income			9.57				9.17					0.40				4
Other income			3.45				2.56					0.89				35
Total other income			13.02				11.73					1.29				11
Operating expenses			26.17				25.72					0.45				2
Pretax income			14.97				15.92					(0.95	)			(6	)
Income tax expense			3.42				4.49					(1.07	)			(24	)
Net income		$	11.55			$	11.43				$	0.12				1	%
Diluted EPS		$	0.59			$	0.58				$	0.01				2	%
Effective tax rate			22.85	%			28.20	%				(5.35	)
Return on average assets annualized			0.99	%			0.98	%				0.01
Return on average equity annualized			9.49	%			9.65	%				(0.16	)

Mr. Kennedy said, “Our results were impacted by the shape of the yield curve, competitive pressures in our markets, and the fact that our loan growth came near the end of the quarter. The current shape of the yield curve has caused market yields on assets to fall while the cost of deposits has not yet followed course. In light of this, our team has taken a number of steps to address current conditions, as noted throughout this release.”

Other highlights for the quarter included:

• Wealth Management remains integral to our strategy and provides a diversified, predictable, and stable source of revenue over time:
  • On July 3, 2019, the Company announced its agreement to acquire Point View Wealth Management, Inc. (“Point View”), a registered investment advisor headquartered in Summit, NJ, which is expected to add approximately $300 million of assets under management and/or administration (“AUM/AUA”).
  • At June 30, 2019, the market value of AUM/AUA at the Peapack Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) was $6.6 billion reflecting an increase of $228 million from $6.3 billion at March 31, 2019, and $874 million from $5.7 billion at June 30, 2018, reflecting growth of 15%.
  • Wealth management fee income totaled $9.57 million for the quarter ended June 30, 2019, reflecting an increase of $394,000, or 4%, from the March 2019 quarter, and an increase of $1.4 million, or 18%, from the June 2018 quarter. 
  • Wealth management fee income, which comprised approximately 23% of the Company’s total revenue for the quarter ended June 30, 2019, continues to contribute significantly to the Company’s diversified revenue sources.
• The loan portfolio continues to shift from lower yielding multifamily to higher yielding commercial and industrial (C&I) lending (including equipment finance):
  • Total C&I loans (including equipment finance leases and loans of $504 million) at June 30, 2019 were $1.52 billion.  This reflected net growth of $449 million (42%) when compared to $1.07 billion at June 30, 2018 and reflected net growth of $108 million when compared to the March 31, 2019 balance (8% growth linked quarter; 31% annualized). 
  • As of June 30, 2019, total C&I loans comprised 38% of the total loan portfolio, as compared to 36% at March 31, 2019 and 29% at June 30, 2018. As of June 30, 2019, total multifamily loans comprised 28% of the total loan portfolio relatively flat when compared to March 31, 2019 and lower as compared to 35% a year earlier at June 30, 2018.
  • The Bank’s concentration in commercial real estate loans declined to 375% of risk-based capital at June 30, 2019 from 379% at March 31, 2019 and 425% at June 30, 2018.
• Deposits, funding, and interest rate risk continue to be actively managed:
  • Deposits totaled $4.10 billion at June 30, 2019. This reflected net growth of $573 million (16%) when compared to $3.52 billion at June 30, 2018 and reflected net growth of $176 million when compared to the March 31, 2019 balance (5% growth linked quarter; 18% annualized). 
  • The Company’s loan-to-deposit ratio improved to 98.5% at June 30, 2019, from 99.5% at March 31, 2019, and 105.8% at June 30, 2018.   
  • The Company continues to have access to $1.4 billion of available secured funding at the Federal Home Loan Bank.
  • At June 30, 2019, the Company’s interest rate sensitivity models indicate the Company is slightly asset sensitive, and that net interest income would improve slightly in a rising rate environment but decline slightly in a falling rate environment. The Company is managing its balance sheet to be less asset sensitive and closer to interest rate neutral.
• Capital and asset quality continue to be strong.
  • The Company’s and Bank’s capital ratios at June 30, 2019 remain strong. The Company believes its existing capital and capital generation from earnings will be more than adequate to support planned balance sheet growth and wealth acquisitions.
  • The Company authorized a 5% stock repurchase program on July 25, 2019.  
  • Despite a new nonaccrual relationship totaling $6.6 million in the quarter, asset quality metrics continued to be strong as of June 30, 2019. Nonperforming assets at June 30, 2019 were $31.2 million, or 0.64% of total assets. Total loans past due 30 through 89 days and still accruing were $432,000, or 0.01% of total loans, at June 30, 2019.

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management Business

In the June 2019 quarter, the Bank’s wealth management business generated $9.57 million in fee income, an increase of $394,000 compared to $9.17 million for the March 2019 quarter, and an increase of $1.44 million compared to $8.13 million for the June 2018 quarter. 

When compared to the June 2018 quarter, the June 2019 quarter included three months of fee income related to Lassus Wherley ($1.1 million), which was acquired effective September 1, 2018, as well as increased fees from net organic growth in assets under management.

John P. Babcock, President of the newly-branded, “Peapack Private Wealth Management Division”, said, “I am pleased with our results; we had $485 million of new business inflows in the first half of 2019 and have a strong pipeline as we look ahead over the next two quarters. We are making significant forward progress on integrating the systems, processes and people from our 2017 and 2018 acquisitions and continue to selectively look for additional acquisitions that can add talent and expertise to our wealth management organization.”

Loans / Commercial Banking

Net loans increased by $131 million from $3.86 billion at March 31, 2019 to $3.99 billion at June 30, 2019 (3% growth linked quarter, 13% annualized). Loan/line origination levels continued to be strong ($284 million for the June 30, 2019 quarter) but were partially offset by paydown activity. Mr. Kennedy noted, “Despite our robust loan originations, our average loan balances for the quarter actually declined relative to the first quarter’s average balance, as the majority of our loan volume closed near the end of the second quarter. We will see the benefit of our second quarter loan production in the third quarter. Additionally, we have entered the third quarter with very strong loan pipelines.” Net new loan growth during the second quarter was funded by net new deposit growth.

Total commercial and industrial loans (including equipment finance leases and loans) grew $108 million (8% growth linked quarter, 31% annualized) to $1.52 billion at the end of the second quarter of 2019, compared to $1.41 billion at the end of the first quarter of 2019.

Mr. Kennedy said, “The loan market continues to be extremely competitive from a structure/credit and a pricing perspective. As I have noted before, we will continue to be disciplined and not compromise our credit standards, but we will compete on price, as long as returns remain reasonable as measured by our proprietary loan pricing model.”

Mr. Kennedy also said, “Our newly expanded Corporate Advisory and Structured Finance businesses give us the capability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service, giving us a competitive advantage over much of our peers.”

Kennedy went on to say, “As previously announced, Greg Smith joined us from Capital One on April 1^st as EVP, Head of Commercial Banking. Greg is an accomplished commercial banking professional, whom I have known for many years.”

Funding / Liquidity / Interest Rate Risk Management

As noted in prior quarters, the Company has actively managed its deposit base to reduce reliance on wholesale sourced deposits and/or reduce volatility or operational risk.

For the quarter ended June 30, 2019, the Company utilized its increased capital and deposit growth to fund its loan growth and increase its on balance sheet liquidity (interest-earning deposits and investment securities). 

In addition to approximately $688 million of cash, cash equivalents and investment securities on its balance sheet, the Company also had approximately $1.4 billion of secured funding available from the Federal Home Loan Bank, of which only $105 million was drawn as of June 30, 2019.
             
Mr. Kennedy noted, “We have discontinued our promotional CD programs, and we may utilize lower cost fixed rate wholesale borrowings and/or interest rate swaps, as opposed to retail deposits, to fund fixed rate loan production.”

Mr. Kennedy also noted, “As previously announced, Rick DeBel joined us from Wells Fargo on May 6^th as EVP, Deposit Solutions, a newly created position. Rick’s first task was to work with our Senior Leadership Team to construct a comprehensive deposit rate reduction program, with an eye toward relationship profitability. Rate reduction targets have been established and will be phased in over time. We have actively managed our loan to deposit ratio down to approximately 98%, and our cash and cash equivalents to exceed $300 million. This provides flexibility to manage deposit rates down in the coming months.”

Kennedy went on to note, “The northeast market continues to be extremely competitive for deposits. The Company is focused on providing high touch client service, a key element in growing its personal and commercial core deposit base. The Company is focused on multiple retail channels, as well as commercial channels, including its enhanced Treasury Management and Escrow offerings. Further, all of our Private Bankers remain keenly focused on deposit gathering, including our new Professional Services Group, led by a seasoned commercial banker who joined us recently.”

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

	Six Months Ended								Six Months Ended
	June 30, 2019								June 30, 2018
	NII				NIM				NII				NIM
NII/NIM excluding the below	$	58,467			2.73%				$	56,146			2.73%
Prepayment premiums received on loan paydowns		678			0.02%					1,169			0.05%
Effect of maintaining excess interest earning cash during 2019		130			-0.08%					0			0.00%
Material fees recognized on full paydowns of C&I loans		0			0.00%					321			0.01%
NII/NIM as reported	$	59,275			2.67%				$	57,636			2.79%
	Three Months Ended								Three Months Ended								Three Months Ended
	June 30, 2019								March 31, 2019								June 30, 2018
	NII				NIM				NII				NIM				NII				NIM
NII/NIM excluding the below	$	28,938			2.69%				$	29,432			2.72%				$	28,186			2.72%
Prepayment premiums received on loan paydowns		246			0.02%					432			0.04%					736			0.07%
Effect of maintaining excess interest earning cash during 2019		84			-0.07%					143			-0.06%					0			0.00%
Material fees recognized on full paydowns of C&I loans		0			0.00%					0			0.00%					321			0.03%
NII/NIM as reported	$	29,268			2.64%				$	30,007			2.70%				$	29,243			2.82%

 Net interest income and net interest margin comparisons are shown above.

Mr. Kennedy noted, “Last quarter we said that our forecasting models indicated a net interest margin in the 2.95% to 3.00% range by the end of 2020. We also said, while we still believe our margin will improve over that same time frame, the target may be difficult to attain if the shape of the current yield curve remains for an extended period. Given the current market, we now believe the 2.95% to 3.00% target will not be achieved until the end of 2021.”    

Other Noninterest Income (other than Wealth Management fee income)

The second quarter of 2019 included $573,000 of income related to the Company’s SBA lending and sale program, compared to $419,000 generated in the March 2019 quarter, and $814,000 in the June 2018 quarter.

The second quarter of 2019 included $721,000 of loan level, back-to-back swap income compared to $270,000 in the March 2019 quarter and $900,000 in the June 2018 quarter. This program provides a borrower with a degree of interest rate protection on a variable rate loan, while still providing an adjustable rate to the Company, thus helping to manage the Company’s interest rate risk, while contributing to income.

Income from both of these programs are not linear each quarter, as some quarters will be higher than others.

Other income totaled $740,000 for the second quarter of 2019, compared to $606,000 for the first quarter of 2019, and $639,000 for the second quarter of 2018. The increase in the June 2019 quarter was due to increased commercial banking fees, particularly unused line of credit fees and letter of credit fees.

Operating Expenses

The Company’s total operating expenses were $26.17 million for the quarter ended June 30, 2019, compared to $25.72 million for the March 2019 quarter and $24.94 million for the June 2018 quarter. The June 2019 and the March 2019 quarters each included three months of expense related to Lassus Wherley (which closed in September 2018). Strategic hiring and normal salary increases also contributed to the increase for the June 2019 quarter. FDIC insurance expense for the June 2019 quarter decreased when compared to prior year (June 2018) quarter. Mr. Kennedy said, “The Company has launched a company-wide expense review, with a goal of slowing expense growth, while continuing our investment in digital and in client acquisition initiatives.”

Income Taxes

The effective tax rate for the June 2019 quarter was 22.9%, compared to 28.2% for the March 2019 quarter, and 24.3% for the June 2018 quarter. The March 2019 quarter included higher NJ State Income Tax due to the change in NJ Tax law. A portion of the additional NJ State tax accrued in the first quarter was reversed in the second quarter, when the State published certain clarifications during the second quarter. The effective tax rate for the six months ended June 30, 2019 was 25.6% compared to 23.7% for the six months ended June 30, 2018.   

Asset Quality / Provision for Loan and Lease Losses

Nonperforming assets at June 30, 2019 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $31.2 million, or 0.64% of total assets, compared to $24.9 million, or 0.53% of total assets, at March 31, 2019 and $13.6 million, or 0.32% of total assets, at June 30, 2018. Total loans past due 30 through 89 days and still accruing were $432,000 at June 30, 2019, compared to $2.5 million at March 31, 2019 and $3.5 million at June 30, 2018. The increase in the June 2019 quarter was due to one $6.6 million casual dining commercial banking relationship, which also continues to pay as agreed. A specific allowance for loan losses of $1.0 million was recorded on this loan in the June 2019 quarter. 

For the quarter ended June 30, 2019, the Company’s provision for loan and lease losses was $1.2 million compared to $100,000 for the March 2019 quarter and $300,000 for the June 2018 quarter. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) reflect, among other things, the Company’s asset quality metrics, net loan growth, net charge-offs, and the composition of the loan portfolio. The increased provision for the June 2019 quarter resulted from an increase in the loan portfolio, as well as the specific reserve noted above.

At June 30, 2019, the allowance for loan and lease losses of $39.79 million (128% of nonperforming loans and 0.99% of total loans), compared to $38.65 million at March 31, 2019 (155% of nonperforming loans and 0.99% of total loans), and $38.07 million (317% of nonperforming loans and 1.02% of total loans) at June 30, 2018. 

Capital / Dividend / Stock Repurchase Program

The Company’s capital position in the June 2019 quarter was benefitted by net income of $11.55 million. The Company’s and Bank’s capital ratios at June 30, 2019 all remain strong.  Such ratios remain well above regulatory well capitalized standards.

On July 25, 2019, the Company authorized a 5% stock repurchase program (up to 960,000 shares) and declared a cash dividend of $0.05 per share payable on August 22, 2019 to shareholders of record on August 8, 2019.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $4.87 billion and wealth management assets under management and/or administration (AUM/AUA) of $6.6 billion as of June 30, 2019. 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 Private Wealth Management Division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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 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 2019 and beyond;
• our inability to successfully integrate wealth management firm acquisitions;
• our inability to manage our growth;
• our inability to successfully integrate our expanded employee base;
• an unexpected decline in the economy, in particular in our New Jersey and New York market areas;
• declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
• declines in value in our investment portfolio;
• higher than expected increases in our allowance for loan and lease losses;
• higher than expected increases in loan and lease losses or in the level of nonperforming loans;
• changes in interest rates;
• decline in real estate values within our market areas;
• legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
• successful cyberattacks against our IT infrastructure and that of our IT and third party providers;
• higher than expected FDIC insurance premiums;
• adverse weather conditions;
• our inability to successfully generate new business in new geographic markets;
• our inability to execute upon new business initiatives;
• our 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;
• our ability to retain key employees;
• demands for loans and deposits in our market areas;
• adverse changes in securities markets;
• changes in accounting policies and practices;
• effects related to a prolonged shutdown of the federal government which could impact SBA and other government lending programs; 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, 2018. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

Contact:

Jeffrey J. Carfora, SEVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308

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

		For the Three Months Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
		2019				2019				2018				2018				2018
Income Statement Data:
Interest income		$	44,603			$	44,563			$	42,781			$	40,163			$	39,674
Interest expense			15,335				14,556				13,396				12,021				10,431
Net interest income			29,268				30,007				29,385				28,142				29,243
Provision for loan and lease losses			1,150				100				1,500				500				300
Net interest income after provision for loan and   lease losses			28,118				29,907				27,885				27,642				28,943
Wealth management fee income			9,568				9,174				8,552				8,200				8,126
Service charges and fees			897				816				938				860				873
Bank owned life insurance			326				338				351				349				345
Gain on loans held for sale at fair value   (Mortgage banking)			132				47				74				87				79
Loss on loans held for sale at lower of cost or   fair value			—				—				(4,392	)			—				—
Fee income related to loan level, back-to-back   swaps			721				270				1,838				854				900
Gain on sale of SBA loans			573				419				277				514				814
Other income (A)			740				606				3,571				444				639
Securities gains/(losses), net			69				59				46				(325	)			(36	)
Total other income			13,026				11,729				11,255				10,983				11,740
Salaries and employee benefits			17,543				17,156				16,372				16,025				15,826
Premises and equipment			3,600				3,388				3,422				3,399				3,406
FDIC insurance expense			277				277				645				593				625
Other expenses			4,753				4,894				5,085				4,267				5,084
Total operating expenses			26,173				25,715				25,524				24,284				24,941
Income before income taxes			14,971				15,921				13,616				14,341				15,742
Income tax expense			3,421				4,496				2,887				3,617				3,832
Net income		$	11,550			$	11,425			$	10,729			$	10,724			$	11,910
Total revenue (B)		$	42,294			$	41,736			$	40,640			$	39,125			$	40,983
Per Common Share Data:
Earnings per share (basic)		$	0.59			$	0.59			$	0.56			$	0.56			$	0.63
Earnings per share (diluted)			0.59				0.58				0.55				0.56				0.62
Weighted average number of common   shares outstanding:
Basic			19,447,155				19,350,452				19,260,033				19,053,849				18,930,893
Diluted			19,568,371				19,658,006				19,424,906				19,240,098				19,098,838
Performance Ratios:
Return on average assets annualized (ROAA)			0.99	%			0.98	%			0.96	%			0.99	%			1.11	%
Return on average equity annualized (ROAE)			9.49	%			9.65	%			9.32	%			9.68	%			11.11	%
Net interest margin (tax- equivalent basis)			2.64	%			2.70	%			2.72	%			2.69	%			2.82	%
GAAP efficiency ratio (C)			61.88	%			61.61	%			62.81	%			62.07	%			60.86	%
Operating expenses / average assets annualized			2.25	%			2.21	%			2.28	%			2.24	%			2.32	%

(A)  The December 31, 2018 quarter includes death benefit from life insurance policy of $3.0 million related to the December 31, 2018 passing of the founder and managing principal of MCM.
(B)  Total revenue includes net interest income plus total other income.
(C)  Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, 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 Six Months Ended
		June 30,								Change
		2019				2018				$				%
Income Statement Data:
Interest income		$	89,166			$	76,742			$	12,424				16	%
Interest expense			29,891				19,106				10,785				56	%
Net interest income			59,275				57,636				1,639				3	%
Provision for loan and lease losses			1,250				1,550				(300	)			-19	%
Net interest income after provision for loan and   lease losses			58,025				56,086				1,939				3	%
Wealth management fee income			18,742				16,493				2,249				14	%
Service charges and fees			1,713				1,704				9				1	%
Bank owned life insurance			664				681				(17	)			-2	%
Gain on loans held for sale at fair value (Mortgage banking)			179				173				6				3	%
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			991				1,152				(161	)			-14	%
Gain on sale of SBA loans			992				845				147				17	%
Other income			1,346				1,021				325				32	%
Securities gains/(losses), net			128				(114	)			242				-212	%
Total other income			24,755				21,955				2,800				13	%
Salaries and employee benefits			34,699				30,405				4,294				14	%
Premises and equipment			6,988				6,676				312				5	%
FDIC insurance expense			554				1,205				(651	)			-54	%
Other expenses			9,647				9,992				(345	)			-3	%
Total operating expenses			51,888				48,278				3,610				7	%
Income before income taxes			30,892				29,763				1,129				4	%
Income tax expense			7,917				7,046				871				12	%
Net income		$	22,975			$	22,717			$	258				1	%
Total revenue (A)		$	84,030			$	79,591			$	4,439				6	%
Per Common Share Data:
Earnings per share (basic)		$	1.18			$	1.21			$	(0.03	)			-2	%
Earnings per share (diluted)			1.18				1.20				(0.02	)			-2	%
Weighted average number of common shares outstanding:
Basic			19,399,071				18,770,492				628,579				3	%
Diluted			19,528,536				18,996,979				531,557				3	%
Performance Ratios:
Return on average assets annualized (ROAA)			0.99	%			1.06	%			(0.07	)%			-7	%
Return on average equity annualized (ROAE)			9.57	%			10.83	%			(1.26	)%			-12	%
Net interest margin (tax- equivalent basis)			2.67	%			2.79	%			(0.12	)%			-4	%
GAAP efficiency ratio (B)			61.75	%			60.66	%			1.09	%			2	%
Operating expenses / average assets annualized			2.23	%			2.25	%			(0.02	)%			-1	%

(A)  Total revenue includes net interest income plus total other income.
(B)  Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see 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,
		2019				2019				2018				2018				2018
ASSETS
Cash and due from banks		$	5,351			$	4,726			$	5,914			$	4,792			$	4,458
Federal funds sold			101				101				101				101				101
Interest-earning deposits			298,575				235,487				154,758				118,111				62,231
Total cash and cash equivalents			304,027				240,314				160,773				123,004				66,790
Securities available for sale			378,839				384,400				377,936				368,554				346,790
Equity security			4,847				4,778				4,719				4,673				4,710
FHLB and FRB stock, at cost			18,338				18,460				18,533				21,561				21,533
Residential mortgage			572,926				569,304				573,146				562,930				567,459
Multifamily mortgage			1,129,476				1,104,406				1,138,190				1,289,458				1,320,251
Commercial mortgage			694,674				705,221				702,165				644,900				637,705
Commercial loans			1,518,591				1,410,146				1,398,214				1,180,774				1,069,526
Consumer loans			53,995				54,276				58,678				64,478				76,509
Home equity lines of credit			62,522				57,639				62,191				59,930				55,020
Other loans			424				355				465				432				431
Total loans			4,032,608				3,901,347				3,933,049				3,802,902				3,726,901
Less: Allowances for loan and lease losses			39,791				38,653				38,504				37,293				38,066
Net loans			3,992,817				3,862,694				3,894,545				3,765,609				3,688,835
Premises and equipment			20,987				21,201				27,408				27,874				28,404
Other real estate owned			—				—				—				96				1,608
Accrued interest receivable			11,594				11,688				10,814				10,849				7,202
Bank owned life insurance			45,744				45,554				45,353				45,181				44,980
Goodwill and other intangible assets (A)			31,941				32,170				32,399				34,297				23,477
Finance lease right-of-use assets (B)			5,452				5,639				—				—				—
Operating lease right-of-use assets (B)			11,017				7,541				—				—				—
Other assets			45,631				27,867				45,378				34,011				30,845
TOTAL ASSETS		$	4,871,234			$	4,662,306			$	4,617,858			$	4,435,709			$	4,265,174
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	544,431			$	476,013			$	463,926			$	503,388			$	527,453
Interest-bearing demand deposits			1,388,821				1,268,823				1,247,305				1,148,660				1,053,004
Savings			112,438				114,865				114,674				116,391				120,986
Money market accounts			1,207,358				1,209,835				1,243,369				1,097,630				1,051,893
Certificates of deposit – Retail			570,384				545,450				510,724				466,791				431,679
Certificates of deposit – Listing Service			58,541				68,055				79,195				85,241				96,644
Subtotal “customer” deposits			3,881,973				3,683,041				3,659,193				3,418,101				3,281,659
IB Demand – Brokered			180,000				180,000				180,000				180,000				180,000
Certificates of deposit – Brokered			33,682				56,165				56,147				61,193				61,254
Total deposits			4,095,655				3,919,206				3,895,340				3,659,294				3,522,913
Overnight borrowings			—				—				—				95,190				127,350
Federal home loan bank advances			105,000				105,000				108,000				84,000				52,898
Finance lease liability (B)			7,985				8,175				8,362				8,548				8,728
Operating lease liability (B)			11,269				7,683				—				—				—
Subordinated debt, net			83,305				83,249				83,193				83,138				83,133
Other liabilities			74,132				57,521				53,950				51,106				33,133
TOTAL LIABILITIES			4,377,346				4,180,834				4,148,845				3,981,276				3,828,155
Shareholders’ equity			493,888				481,472				469,013				454,433				437,019
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	4,871,234			$	4,662,306			$	4,617,858			$	4,435,709			$	4,265,174
Assets under management and / or administration at   Peapack-Gladstone Bank’s Private Wealth Management   Division (market value, not included above-dollars in billions)		$	6.6			$	6.3			$	5.8			$	6.4			$	5.7

(A)  Includes goodwill and intangibles from the Murphy Capital Management, Quadrant Capital Management and Lassus Wherley and Associates acquisitions completed in August 2017, November 2017 and September 2018, respectively.
(B)  Resulted from the adoption of ASU No. 2016-02, “Leases (Topic 842)”.

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

		As of
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
		2019				2019				2018				2018				2018
Asset Quality:
Loans past due over 90 days and still accruing		$	—			$	—			$	—			$	—			$	—
Nonaccrual loans (A)			31,150				24,892				25,715				10,722				12,025
Other real estate owned			—				—				—				96				1,608
Total nonperforming assets		$	31,150			$	24,892			$	25,715			$	10,818			$	13,633
Nonperforming loans to total loans			0.77	%			0.64	%			0.65	%			0.28	%			0.32	%
Nonperforming assets to total assets			0.64	%			0.53	%			0.56	%			0.24	%			0.32	%
Performing TDRs (B)(C)		$	3,772			$	4,274			$	4,303			$	19,334			$	18,665
Loans past due 30 through 89 days and still accruing		$	432			$	2,492			$	3,484			$	2,528			$	3,539
Classified loans		$	56,135			$	51,306			$	58,265			$	51,783			$	51,216
Impaired loans		$	34,941			$	29,185			$	31,300			$	31,345			$	30,711
Allowance for loan and lease losses:
Beginning of period		$	38,653			$	38,504			$	37,293			$	38,066			$	37,696
Provision for loan and lease losses			1,150				100				1,500				500				300
Charge-offs, net			(12	)			49				(289	)			(1,273	)			70
End of period		$	39,791			$	38,653			$	38,504			$	37,293			$	38,066
ALLL to nonperforming loans			127.74	%			155.28	%			149.73	%			347.82	%			316.56	%
ALLL to total loans			0.987	%			0.991	%			0.979	%			0.981	%			1.021	%
General ALLL to total loans (D)			0.956	%			0.984	%			0.972	%			0.961	%			0.978	%

(A) Amount includes one commercial real estate loan with a loan balance of $14.6 million at June 30, 2019, $14.8 million at March 31, 2019 and $15.2 million at December 31, 2018 which continues to pay as agreed, and which the Company believes to be well secured. In addition, one hospitality relationship with a balance of $6.6 million went on nonaccrual at June 30, 2019.
(B)  Amounts reflect TDRs that are paying according to restructured terms.
(C)  Amount does not include $19.8 million at June 30, 2019, $20.0 million at March 31, 2019, $20.5 million at December 31, 2018, $5.5 million at September 30, 2018, and $6.9 million at June 30, 2018 of TDRs included in nonaccrual loans.
(D) Total ALLL less specific reserves equals general ALLL.

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

		June 30,						December 31,						June 30,
		2019						2018						2018
Capital Adequacy
Equity to total assets (A)					10.14	%					10.16	%					10.25	%
Tangible Equity to tangible assets (B)					9.55	%					9.52	%					9.75	%
Book value per share (C)				$	25.38					$	24.25					$	22.99
Tangible Book Value per share (D)				$	23.74					$	22.58					$	21.76

		June 30,								December 31,								June 30,
		2019								2018								2018
Regulatory Capital – Holding Company
Tier I leverage		$	462,675			10.01%				$	438,240			9.82%				$	416,123			9.71%
Tier I capital to risk-weighted assets			462,675			11.96					438,240			11.76					416,123			12.16
Common equity tier I capital ratio   to risk-weighted assets			462,673			11.96					438,238			11.76					416,121			12.16
Tier I & II capital to risk-weighted assets			585,771			15.14					559,937			15.03					537,322			15.71
Regulatory Capital – Bank
Tier I leverage		$	533,043			11.54%				$	504,504			11.32%				$	482,545			11.27%
Tier I capital to risk-weighted assets			533,043			13.79					504,504			13.56					482,545			14.12
Common equity tier I capital ratio   to risk-weighted assets			533,041			13.79					504,502			13.56					482,543			14.12
Tier I & II capital to risk-weighted assets			572,834			14.82					543,008			14.59					520,611			15.23

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

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

		For the Quarters Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
		2019				2019				2018				2018				2018
Residential loans retained		$	21,998			$	10,839			$	24,937			$	14,412			$	22,217
Residential loans sold			9,785				3,090				4,686				6,717				6,488
Total residential loans			31,783				13,929				29,623				21,129				28,705
Commercial real estate			34,204				21,025				63,486				23,950				20,780
Multifamily			58,604				21,122				58,175				12,328				4,743
Commercial (C&I) loans (A) (B)			143,944				141,128				285,950				133,973				137,805
SBA			3,740				9,050				5,695				4,800				10,740
Wealth lines of credit (A)			6,725				7,380				5,850				6,100				11,560
Total commercial loans			247,217				199,705				419,156				181,151				185,628
Installment loans			1,497				558				649				1,634				1,036
Home equity lines of credit (A)			3,626				1,607				3,625				10,273				5,091
Total loans closed		$	284,123			$	215,799			$	453,053			$	214,187			$	220,460

		For the Six Months Ended
		June 30,				June 30,
		2019				2018
Residential loans retained		$	32,837			$	33,859
Residential loans sold			12,875				14,160
Total residential loans			45,712				48,019
Commercial real estate			55,229				55,165
Multifamily			79,726				25,743
Commercial (C&I) loans (A) (B)			285,072				256,230
SBA			12,790				15,010
Wealth lines of credit (A)			14,105				30,798
Total commercial loans			446,922				382,946
Installment loans			2,055				2,386
Home equity lines of credit (A)			5,233				7,588
Total loans closed		$	499,922			$	440,939

(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
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

		June 30, 2019												June 30, 2018
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	392,079			$	2,639				2.69	%		$	361,537			$	2,072				2.29	%
Tax-exempt (A) (B)			16,913				206				4.87				20,647				181				3.51
Loans (B) (C):
Mortgages			568,020				4,835				3.40				562,460				4,708				3.35
Commercial mortgages			1,786,086				17,581				3.94				1,986,138				18,972				3.82
Commercial			1,417,112				17,303				4.88				1,047,299				12,397				4.73
Installment			54,565				585				4.29				71,933				635				3.53
Home equity			63,112				818				5.18				62,731				685				4.37
Other			375				10				10.67				450				11				9.78
Total loans			3,889,270				41,132				4.23				3,731,011				37,408				4.01
Federal funds sold			101				—				0.25				101				—				0.25
Interest-earning deposits			241,129				1,265				2.10				94,770				395				1.67
Total interest-earning assets			4,539,492				45,242				3.99	%			4,208,066				40,056				3.81	%
Noninterest-earning assets:
Cash and due from banks			5,280												4,660
Allowance for loan and lease losses			(39,138	)											(38,278	)
Premises and equipment			21,176												28,704
Other assets			127,798												100,385
Total noninterest-earning assets			115,116												95,471
Total assets		$	4,654,608											$	4,303,537
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,266,909			$	4,123				1.30	%		$	1,073,108			$	1,967				0.73	%
Money markets			1,197,998				4,415				1.47				1,000,320				2,432				0.97
Savings			112,693				16				0.06				123,490				17				0.06
Certificates of deposit – retail			610,493				3,461				2.27				555,935				2,330				1.68
Subtotal interest-bearing deposits			3,188,093				12,015				1.51				2,752,853				6,746				0.98
Interest-bearing demand – brokered			180,000				836				1.86				180,000				804				1.79
Certificates of deposit – brokered			46,639				326				2.80				63,364				399				2.52
Total interest-bearing deposits			3,414,732				13,177				1.54				2,996,217				7,949				1.06
Borrowings			105,000				838				3.19				221,340				1,155				2.09
Capital lease obligation			8,052				97				4.82				8,794				106				4.82
Subordinated debt			83,272				1,223				5.87				83,099				1,221				5.88
Total interest-bearing liabilities			3,611,056				15,335				1.70	%			3,309,450				10,431				1.26	%
Noninterest-bearing liabilities:
Demand deposits			497,853												536,306
Accrued expenses and other liabilities			58,721												29,035
Total noninterest-bearing liabilities			556,574												565,341
Shareholders’ equity			486,978												428,746
Total liabilities and shareholders’ equity		$	4,654,608											$	4,303,537
Net interest income						$	29,907											$	29,625
Net interest spread											2.29	%											2.55	%
Net interest margin (D)											2.64	%											2.82	%

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

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

		June 30, 2019												March 31, 2019
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	392,079			$	2,639				2.69	%		$	387,566			$	2,684				2.77	%
Tax-exempt (A) (B)			16,913				206				4.87				17,345				210				4.84
Loans (B) (C):
Mortgages			568,020				4,835				3.40				571,637				4,895				3.43
Commercial mortgages			1,786,086				17,581				3.94				1,824,371				18,021				3.95
Commercial			1,417,112				17,303				4.88				1,379,585				16,750				4.86
Installment			54,565				585				4.29				55,215				577				4.18
Home equity			63,112				818				5.18				60,421				766				5.07
Other			375				10				10.67				412				11				10.68
Total loans			3,889,270				41,132				4.23				3,891,641				41,020				4.22
Federal funds sold			101				—				0.25				101				—				0.25
Interest-earning deposits			241,129				1,265				2.10				237,251				1,270				2.14
Total interest-earning assets			4,539,492				45,242				3.99	%			4,533,904				45,184				3.99	%
Noninterest-earning assets:
Cash and due from banks			5,280												5,398
Allowance for loan and lease losses			(39,138	)											(38,948	)
Premises and equipment			21,176												21,467
Other assets			127,798												122,102
Total noninterest-earning assets			115,116												110,019
Total assets		$	4,654,608											$	4,643,923
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,266,909			$	4,123				1.30	%		$	1,284,611			$	3,710				1.16	%
Money markets			1,197,998				4,415				1.47				1,208,004				4,335				1.44
Savings			112,693				16				0.06				114,003				16				0.06
Certificates of deposit – retail			610,493				3,461				2.27				607,178				3,234				2.13
Subtotal interest-bearing deposits			3,188,093				12,015				1.51				3,213,796				11,295				1.41
Interest-bearing demand – brokered			180,000				836				1.86				180,000				739				1.64
Certificates of deposit – brokered			46,639				326				2.80				56,154				365				2.60
Total interest-bearing deposits			3,414,732				13,177				1.54				3,449,950				12,399				1.44
Borrowings			105,000				838				3.19				105,900				834				3.15
Capital lease obligation			8,052				97				4.82				8,244				99				4.80
Subordinated debt			83,272				1,223				5.87				83,213				1,224				5.88
Total interest-bearing liabilities			3,611,056				15,335				1.70	%			3,647,307				14,556				1.60	%
Noninterest-bearing liabilities:
Demand deposits			497,853												471,265
Accrued expenses and other liabilities			58,721												51,791
Total noninterest-bearing liabilities			556,574												523,056
Shareholders’ equity			486,978												473,560
Total liabilities and shareholders’ equity		$	4,654,608											$	4,643,923
Net interest income						$	29,907											$	30,628
Net interest spread											2.29	%											2.39	%
Net interest margin (D)											2.64	%											2.70	%

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

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

		June 30, 2019												June 30, 2018
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	389,835			$	5,323				2.73	%		$	350,608			$	3,997				2.28	%
Tax-exempt (A) (B)			17,128				416				4.86				22,465				379				3.37
Loans (B) (C):
Mortgages			569,818				9,730				3.42				568,397				9,439				3.32
Commercial mortgages			1,805,123				35,603				3.94				1,999,558				37,379				3.74
Commercial			1,398,452				34,053				4.87				1,008,613				22,884				4.54
Installment			54,889				1,162				4.23				76,820				1,305				3.40
Home equity			61,773				1,583				5.13				63,938				1,346				4.21
Other			394				21				10.66				453				22				9.71
Total loans			3,890,449				82,152				4.22				3,717,779				72,375				3.89
Federal funds sold			101				—				0.25				101				—				0.25
Interest-earning deposits			239,201				2,535				2.12				97,107				752				1.55
Total interest-earning assets			4,536,714				90,426				3.99	%			4,188,060				77,503				3.70	%
Noninterest-earning assets:
Cash and due from banks			5,339												4,673
Allowance for loan and lease losses			(39,044	)											(37,680	)
Premises and equipment			21,321												28,979
Other assets			124,965												99,567
Total noninterest-earning assets			112,581												95,539
Total assets		$	4,649,295											$	4,283,599
LIABILITIES:
Interest-bearing deposits:
Checking		$	1,275,711			$	7,833				1.23	%		$	1,107,936			$	3,724				0.67	%
Money markets			1,202,973				8,750				1.45				1,017,036				4,378				0.86
Savings			113,345				32				0.06				122,284				33				0.05
Certificates of deposit – retail			608,845				6,695				2.20				555,751				4,479				1.61
Subtotal interest-bearing deposits			3,200,874				23,310				1.46				2,803,007				12,614				0.90
Interest-bearing demand – brokered			180,000				1,575				1.75				180,000				1,484				1.65
Certificates of deposit – brokered			51,371				691				2.69				67,957				828				2.44
Total interest-bearing deposits			3,432,245				25,576				1.49				3,050,964				14,926				0.98
Borrowings			105,448				1,672				3.17				154,271				1,525				1.98
Capital lease obligation			8,147				196				4.81				8,878				213				4.80
Subordinated debt			83,243				2,447				5.88				83,071				2,442				5.88
Total interest-bearing liabilities			3,629,083				29,891				1.65	%			3,297,184				19,106				1.16	%
Noninterest-bearing liabilities:
Demand deposits			484,632												538,084
Accrued expenses and other liabilities			55,274												28,799
Total noninterest-bearing liabilities			539,906												566,883
Shareholders’ equity			480,306												419,532
Total liabilities and shareholders’ equity		$	4,649,295											$	4,283,599
Net interest income						$	60,535											$	58,397
Net interest spread											2.34	%											2.54	%
Net interest margin (D)											2.67	%											2.79	%

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

The efficiency ratio is a non-GAAP measure of expense control relative to recurring revenue. We calculate the efficiency ratio by dividing total noninterest expenses, excluding 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
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
Tangible Book Value Per Share		2019				2019				2018				2018				2018
Shareholders’ equity		$	493,888			$	481,472			$	469,013			$	454,433			$	437,019
Less:  Intangible assets, net			31,941				32,170				32,399				34,297				23,477
Tangible equity			461,947				449,302				436,614				420,136				413,542
Period end shares outstanding			19,456,312				19,445,363				19,337,662				19,203,727				19,007,312
Tangible book value per share		$	23.74			$	23.11			$	22.58			$	21.88			$	21.76
Book value per share			25.38				24.76				24.25				23.66				22.99
Tangible Equity to Tangible Assets
Total assets		$	4,871,234			$	4,662,306			$	4,617,858			$	4,435,709			$	4,265,174
Less: Intangible assets, net			31,941				32,170				32,399				34,297				23,477
Tangible assets			4,839,293				4,630,136				4,585,459				4,401,412				4,241,697
Tangible equity to tangible assets			9.55	%			9.70	%			9.52	%			9.55	%			9.75	%
Equity to assets			10.14	%			10.33	%			10.16	%			10.24	%			10.25	%

 

		Three Months Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
Efficiency Ratio		2019				2019				2018				2018				2018
Net interest income		$	29,268			$	30,007			$	29,385			$	28,142			$	29,243
Total other income			13,026				11,729				11,255				10,983				11,740
Less:  Loss/(gain) on loans held for sale
at lower of cost or fair value			—				—				4,392				—				—
Less:  Income from life insurance proceeds			—				—				(3,000	)			—				—
Add:  Securities (gains)/losses, net			(69	)			(59	)			(46	)			325				36
Total recurring revenue			42,225				41,677				41,986				39,450				41,019
Operating expenses			26,173				25,715				25,524				24,284				24,941
Less: ORE provision			—				—				—				28				204
Total operating expense			26,173				25,715				25,524				24,256				24,737
Efficiency ratio			61.98	%			61.70	%			60.79	%			61.49	%			60.31	%

 

		For the Six Months Ended
		June 30,				June 30,
Efficiency Ratio		2019				2018
Net interest income		$	59,275			$	57,636
Total other income			24,755				21,955
Add:  Securities (gains)/losses, net			(128	)			114
Total recurring revenue			83,902				79,705
Operating expenses			51,888				48,278
Less: ORE provision			—				204
Total operating expense			51,888				48,074
Efficiency ratio			61.84	%			60.31	%

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