Bedminster, NJ - (NewMediaWire) - January 26, 2023 - Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter 2022 results. 

This earnings release should be read in conjunction with the Company’s Q4 2022 Investor Update, a copy of which is available on our website at www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.  

The Company recorded total revenue of $64.85 million, net income of $20.58 million and diluted earnings per share (“EPS”) of $1.12 for the quarter ended December 31, 2022, compared to revenue of $56.17 million, net income of $14.86 million and diluted EPS of $0.78 for the three months ended December 31, 2021. 

The Company’s return on average assets, return on average equity, and return on average tangible equity totaled 1.33%, 15.73% and 17.30%, respectively, for the December 2022 quarter, reflecting significant increases from the December 2021 quarterly levels.  

The December 2022 quarter results were driven by continued improvement in net interest income and net interest margin, which improved $10.8 million and 66 basis points, when compared to the December 2021 quarter (and $2.5 million and 14 basis points when compared to the September 2022 quarter). This increase was partially offset by a decline in noninterest income, principally wealth management fee income and capital markets activity fee income, due to volatility in the markets.

Douglas L. Kennedy, President and CEO said, “Our fourth quarter results represent a fitting end to a tremendous year for our Company. The consistent improvement of net interest income throughout the year reflects the asset sensitivity of our loan portfolio, as loans continued to reprice upward in the rising rate environment. For the 2022 fiscal year, net income grew 31% and earnings per share improved by 37%. I am extremely pleased with our financial performance and look forward to the year ahead as every member of our team continues to focus on delivering the highest levels of client service and enhancing our differentiated model."

The December 2022 quarter included the following items: 1) $28,000 positive fair value adjustment on an equity security held for CRA investment purposes; 2) $275,000 gain on sale of a property; 3) $25,000 income from life insurance proceeds; 4) $200,000 expense related to accelerated restricted stock vesting related to one employee; and 5) $563,000 income tax expense (net of Federal benefit) related to the first nine months of 2022 brought about by a recent New York City nexus determination change. These items increased total revenue by $328,000, reduced net income by $469,000 and EPS by $0.03, for the December 2022 quarter.

The following are select highlights:


Peapack Private Wealth Management:


  • AUM/AUA in our Peapack Private Wealth Management Division totaled $10 billion at December 31, 2022. 
  • Gross new business inflows for Q4 2022 totaled $295 million ($236 million managed).
  • For the year ended December 31, 2022 gross new business inflows totaled $1 billion ($741 million managed). 
  • Wealth Management fee income of $13.0 million for Q4 2022 comprised 20% of total revenue for the quarter. 

Commercial Banking and Balance Sheet Management: 


  • The net interest margin ("NIM") improved by 14 basis points in Q4 2022 compared to Q3 2022 and improved 66 basis points when compared to Q4 2021.
  • Noninterest-bearing demand deposits comprised 24% of total deposits as of December 31, 2022.
  • Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 92% of total deposits at December 31, 2022.
  • Total loans were $5.30 billion at December 31, 2022 reflecting growth of $112 million (2.2% linked quarter or 8.7% annualized) when compared to $5.19 billion at September 30, 2022, and growth of $457 million (9.4%) when compared to $4.84 billion at December 31, 2021.
  • Commercial & industrial lending (“C&I”) loan/lease balances comprised 42% of the total loan portfolio at December 31, 2022.
  • Fee income on unused commercial lines of credit totaled $732,000 for Q4 2022.

Capital Management:


  • Repurchased 140,700 shares of Company stock for a total cost of $5.2 million during Q4 2022. (930,977 shares of Company stock for a total cost of $32.7 million were repurchased during 2022). 
  • At December 31, 2022, Regulatory Tier 1 Leverage Ratio stood at 10.9% for Peapack-Gladstone Bank (the "Bank") and 8.9% for the Company; and Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.5% for the Bank and 11.0% for the Company. These ratios are significantly above well capitalized standards, as capital has benefitted from strong net income generation. 

SUMMARY INCOME STATEMENT DETAILS:

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


December 2022 Year Compared to Prior Year

  Year Ended  Year Ended        
  December 31,  December 31,   Increase/ 
(Dollars in millions, except per share data) 2022  2021   (Decrease) 
Net interest income $176.08  $138.06   $38.02   28%
Wealth management fee income (A)  54.65   52.99    1.66   3 
Capital markets activity (B)  9.25   10.62    (1.37)  (13)
Other income (C)  2.52   8.64    (6.12)  (71)
Total other income  66.42   72.25    (5.83)  (8)
Operating expenses (A) (D)  133.80   126.17    7.63   6 
Pretax income before provision for credit losses  108.70   84.14    24.56   29 
Provision for credit losses  6.35   6.48    (0.13)  (2)
Pretax income  102.35   77.66    24.69   32 
Income tax expense/(benefit) (E)  28.10   21.04    7.06   34 
Net income $74.25  $56.62   $17.63   31%
Diluted EPS $4.00  $2.93   $1.07   37%
              
Total Revenue (F) $242.50  $210.31   $32.19   15%
              
Return on average assets  1.20%  0.94%   0.26    
Return on average equity  14.02%  10.56%   3.46    


(A) The twelve months ended December 31, 2022 included twelve months of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group, while the twelve months ended December 31, 2021 included six months.

(B) Capital markets activity includes fee income from loan level back-to-back swaps, the Small Business Association ("SBA") lending and sale program, corporate advisory and mortgage banking activities. 

(C) Other income for the twelve months ended December 31, 2022 included a $6.6 million loss on sale of securities associated with a balance sheet repositioning executed in the first quarter of 2022, gain on sale of property of $275,000, income from life insurance proceeds of $25,000 and a $1.7 million negative fair value adjustment on a CRA equity security.  The December 2021 twelve months included a cost of $842,000 related to the termination of interest rate swaps; a $1.1 million gain on sale of Paycheck Protection Program ("PPP") loans; $722,000 of fee income related to the referral of PPP loans to a third party; $455,000 of additional Bank Owned Life Insurance ("BOLI") income related to the receipt of life insurance proceeds; and a $432,000 negative fair value adjustment on a CRA equity security.

(D) The years ended December 2022 and 2021 each included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank.  The year ended December 31, 2021 also included $648,000 of expense related to the redemption of subordinated debt; and $2.2 million related to a swap valuation allowance.

(E) The year ended December 31, 2022 included $750,000 of income tax expense (net of Federal benefit) related to recent approval of legislation that changed the nexus standard for New York City business tax.

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


December 2022 Quarter Compared to Prior Year Quarter

  Three Months Ended   Three Months Ended       
  December 31,   December 31,  Increase/ 
(Dollars in millions, except per share data) 2022   2021  (Decrease) 
Net interest income $48.04   $37.21  $10.83   29%
Wealth management fee income  12.98    13.96   (0.98)  (7)
Capital markets activity (A)  0.95    3.52   (2.57)  (73)
Other income (B)  2.88    1.48   1.40   95 
Total other income  16.81    18.96   (2.15)  (11)
Operating expenses (C)  33.41    31.70   1.71   5 
Pretax income before provision for credit losses  31.44    24.47   6.97   28 
Provision for credit losses  1.93    3.75   (1.82)  (49)
Pretax income  29.51    20.72   8.79   42 
Income tax expense (D)  8.93    5.86   3.07   52 
Net income $20.58   $14.86  $5.72   38%
Diluted EPS $1.12   $0.78  $0.34   44%
              
Total Revenue (E) $64.85   $56.17  $8.68   15%
              
Return on average assets annualized  1.33%   0.96%  0.37    
Return on average equity annualized  15.73%   10.94%  4.79    


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

(B)  Other income for the December 2022 quarter included a gain on sale of property of $275,000 and income from life insurance proceeds of $25,000. Other income for the December 2022 and 2021 quarters included a fair value adjustment on a CRA equity security of positive $28,000 and negative $139,000, respectively.

(C) The December 2022 quarter included $200,000 of expense related to accelerated vesting of restricted stock related to one employee. The December 2021 quarter included $893,000 of expense related to a swap valuation allowance.

(D) The three months ended December 31, 2022 included $750,000 of income tax expense (net of Federal benefit) related to the recent approval of legislation that changed the nexus standard for New York City business tax.   ($563,000 of that amount related to the first nine months of 2022).

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


December 2022 Quarter Compared to Linked Quarter

  Three Months Ended  Three Months Ended        
  December 31,  September 30,   Increase/ 
(Dollars in millions, except per share data) 2022  2022   (Decrease) 
Net interest income $48.04  $45.53   $2.51   6%
Wealth management fee income  12.98   12.94    0.04   0 
Capital markets activity (A)  0.95   0.78    0.17   22 
Other income (B)  2.88   2.66    0.22   8 
Total other income  16.81   16.38    0.43   3 
Operating expenses (C)  33.41   33.56    (0.15)  (0)
Pretax income before provision for credit losses  31.44   28.35    3.09   11 
Provision for credit losses  1.93   0.60    1.33   222 
Pretax income  29.51   27.75    1.76   6 
Income tax expense (D)  8.93   7.62    1.31   17 
Net income $20.58  $20.13   $0.45   2%
Diluted EPS $1.12  $1.09   $0.03   3%
              
Total Revenue (E) $64.85  $61.91   $2.94   5%
              
Return on average assets annualized  1.33%  1.30%   0.03    
Return on average equity annualized  15.73%  15.21%   0.52   


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

(B) Other income for the December 2022 quarter included gain on sale of property of $275,000 and income from life insurance proceeds of $25,000. Other income for the December 2022 and September 2022 quarters included a fair value adjustment on a CRA equity security of positive $28,000 and negative $571,000, respectively.

(C) The December 2022 quarter included $200,000 of expense related to accelerated vesting of restricted stock related to one employee.

(D) The three months ended December 31, 2022 included $750,000 of income tax expense (net of Federal benefit) related to the recent approval of legislation that changed the nexus standard for New York City business tax.   ($563,000 of that amount related to the first nine months of 2022).

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

SUPPLEMENTAL QUARTERLY DETAILS:


Peapack Private Wealth Management 

AUM/AUA in the Bank’s Peapack Private Wealth Management (“PPWM”) Division totaled $10 billion at December 31, 2022.  For the December 2022 quarter, PPWM generated $12.98 million in fee income, compared to $12.94 million for the September 30, 2022 quarter and $13.96 million for the December 2021 quarter. The equity market generally improved during Q4 2022, while on a full year basis for 2022, the equity market declined nearly 20%.

John Babcock, President of Peapack Private Wealth Management noted, “Notwithstanding broad market forces that have negatively impacted both the equity and bond markets in 2022, and with economic challenges ahead, our business remains sound and we continue to attract new clients as well as additional funds from existing relationships.  In Q4 2022, total new accounts and client additions totaled $295 million ($236 million managed), which brings our 2022 total to $1 billion ($741 million managed).  As we enter 2023, our new business pipeline is healthy and we remain focused on delivering excellent service and advice to our clients as well as continuing to integrate and advance our internal operating and technology infrastructure. Our highly skilled professionals, our fiduciary powers and expertise, our financial planning capabilities and our high-touch client service model distinguishes PPWM in our market and are the drivers behind our continued growth and success.”  

Loans / Commercial Banking 

Total loans were $5.30 billion at December 31, 2022, reflecting growth of $112 million (2.2% linked quarter or 8.7% annualized) when compared to $5.19 billion at September 30, 2022, and growth of $457 million (9.4%) when compared to $4.84 billion at December 31, 2021.

Total C&I loans and leases at December 31, 2022 were $2.21 billion or 42% of the total loan portfolio. 

Mr. Kennedy noted, “Our loan growth has historically been strong, however, given economic uncertainty and rising interest rates, we believe loan demand will subside somewhat as we look ahead to 2023. Further, we have tightened our initial underwriting given the higher rate environment and in anticipation of a potential economic downturn. Given that, we believe we will achieve modest loan growth in 2023, resulting in mid-single digit loan growth for the coming year.”

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

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

 

The Company’s NII of $48.0 million and NIM of 3.12% for Q4 2022 increased $2.5 million and 14 basis points from NII of $45.5 million and NIM of 2.98%, for the linked quarter (Q3 2022) and increased $10.8 million and 66 basis points from NII of $37.2 million and NIM of 2.46% for the prior year quarter (Q4 2021). When comparing Q4 2022 to Q4 2021, the Bank benefitted from the increases in LIBOR and the Prime rate during 2022. Additionally, the Bank grew its loan portfolio at rates/spreads beneficial to NIM, while reducing lower-yielding liquidity.

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale funding, volatility, and/or operational risk.  Total deposits decreased $61 million to $5.21 billion at December 31, 2022 from $5.27 billion at December 31, 2021. The deposit outflows for the quarter and year included large relationships strategically utilizing their funds, including investing into our Wealth Management business, acquisitions, further investing in their business, and purchasing real estate and other investments. As noted previously, during the third quarter of 2022, the Company successfully migrated $287 million of interest-bearing checking into noninterest-bearing demand deposits.  

Mr. Kennedy noted, “92% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 24% of our total deposits; both metrics reflect the core nature of our deposit base.”

At December 31, 2022, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $788.4 million (or 12% of assets). 

The Company maintains backup liquidity of approximately $1.5 billion of secured available funding with the Federal Home Loan Bank and $1.8 billion of secured funding from the Federal Reserve Discount Window.  The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.

Income from Capital Markets Activities 

Noninterest income from Capital Markets activities (detailed below) totaled $950,000 for the December 2022 quarter compared to $784,000 for the September 2022 quarter and $3.52 million for the December 2021 quarter. The December 2021 quarter results were driven by $2.18 million in Corporate Advisory income.

  Year Ended  Year Ended    
  December 31,  December 31,    
(Dollars in thousands, except per share data) 2022  2021    
Gain on loans held for sale at fair value (Mortgage banking) $483  $2,194    
Fee income related to loan level, back-to-back swaps  293       
Gain on sale of SBA loans  6,765   4,939    
Corporate advisory fee income  1,704   3,483    
Total capital markets activity $9,245  $10,616    
          
  Three Months Ended  Three Months Ended  Three Months Ended 
  December 31,  September 30,  December 31, 
(Dollars in thousands, except per share data) 2022  2022  2021 
Gain on loans held for sale at fair value (Mortgage banking) $25  $60  $352 
Fee income related to loan level, back-to-back swaps  293       
Gain on sale of SBA loans  624   622   989 
Corporate advisory fee income  8   102   2,180 
Total capital markets activity $950  $784  $3,521 

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

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

Other noninterest income was $2.88 million for Q4 2022 compared to $2.66 million for Q3 2022 and $1.48 million for Q4 2021. Q4 2022 included $732,000 of unused line fees compared to $818,000 for Q3 2022 and $179,000 for Q4 2021. Q4 2022 included a gain on sale of property of $275,000. Additionally, Q4 2022 included $294,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees while Q3 2022 included $547,000 of such income.

Operating Expenses

The Company’s total operating expenses were $33.41 million for the quarter ended December 31, 2022, compared to $33.56 million for the September 2022 quarter and $31.70 million for the December 2021 quarter. The 2022 quarters included increased costs related to employee health insurance and corporate insurance, as well as normal annual merit increases and year-end bonuses. The December 2021 quarter included $893,000 related to a swap valuation allowance. 

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

Income Taxes


The effective tax rate for the three months ended December 31, 2022 was 30.26%, as compared to 27.47% for the September 2022 quarter and 28.31% for the quarter ended December 31, 2021.  The three months ended December 31, 2022 includes $750,000 of income tax expense (net of Federal benefit) related to the recent approval of legislation that changed the nexus standard for New York City business tax.  ($563,000 of that amount related to the first nine months of 2022).


Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $19.1 million, or 0.30% of total assets at December 31, 2022.  Loans past due 30 to 89 days and still accruing were $7.6 million, which included a $4.5 million outstanding loan to US governmental entities.  

Criticized and classified loans totaled $107.8 million at December 31, 2022, reflecting declines from both December 31, 2021 and September 30, 2022 levels. The Company currently has no loans or leases on deferral and accruing.  

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

For the quarter ended December 31, 2022, the Company’s provision for credit losses was $1.9 million compared to $599,000 for the September 2022 quarter and $3.8 million for the December 2021 quarter. The provision for credit losses in the December 2022 quarter was driven principally by loan growth.  

At December 31, 2022, the ACL was $60.83 million (1.15% of total loans), compared to $59.68 million (1.15% of loans) at September 30, 2022. The ALLL at December 31, 2021 (before adoption of CECL) was $61.70 million (1.27% of loans).  

Capital 

The Company’s capital position during the December 2022 quarter was benefitted by net income of $20.58 million which was partially offset by the repurchase of 140,700 shares through the Company’s stock repurchase program at a total cost of $5.2 million and the quarterly dividend of $896,000. 

Mr. Kennedy noted, “Our tangible book value per share improved during Q4 2022 to $27.26 at December 31, 2022 from $26.10 at September 30, 2022.” 

The Company’s and Bank’s regulatory capital ratios as of December 31, 2022 remain strong, and generally reflect increases from September 30, 2022 and December 31, 2021 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test (as of September 30, 2022), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period. With an additional stress overlay (impacting the industries most affected by the Pandemic more severely), the Bank still remains well capitalized over the two-year stress period. 

On January 26, 2023, the Company declared a cash dividend of $0.05 per share payable on February 23, 2023 to shareholders of record on February 9, 2023.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.4 billion and assets under management/administration of $10 billion as of December 31, 2022.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers.  Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy.  Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service.  Visit www.pgbank.com and www.peapackprivate.com for more information.

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

  • our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
  • the impact of anticipated higher operating expenses in 2023 and beyond;
  • our ability to successfully integrate wealth management firm acquisitions;
  • our ability to manage our growth;
  • our ability to successfully integrate our expanded employee base;
  • an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions;
  • declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
  • declines in the value in our investment portfolio;
  • impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;
  • the continuing impact of the COVID-19 pandemic on our business and results of operation;
  • higher than expected increases in our allowance for credit losses;
  • higher than expected increases in loan and lease losses or in the level of delinquent, nonperforming, classified and criticized loans;
  • inflation and changes in interest rates, which may adversely impact or margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
  • decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
  • successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;
  • higher than expected FDIC insurance premiums;
  • adverse weather conditions;
  • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
  • our inability to successfully generate new business in new geographic markets;
  • a reduction in our lower-cost funding sources;
  • our inability to adapt to technological changes; 
  • claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
  • our inability to retain key employees;
  • demands for loans and deposits in our market areas;
  • adverse changes in securities markets;
  • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
  • changes in accounting policies and practices; and
  • other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2021.  We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

 (Tables to follow)

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

  For the Three Months Ended 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2022  2022  2022  2022  2021 
Income Statement Data:               
Interest income $64,202  $55,013  $48,520  $44,140  $42,075 
Interest expense  16,162   9,488   5,627   4,518   4,863 
Net interest income  48,040   45,525   42,893   39,622   37,212 
Wealth management fee income  12,983   12,943   13,891   14,834   13,962 
Service charges and fees  1,150   1,060   1,063   952   996 
Bank owned life insurance  321   299   310   313   308 
Gain on loans held for sale at fair value
   (Mortgage banking) (A)
  25   60   151   247   352 
Gain/(loss) on loans held for sale at lower of cost or
   fair value
              (265)
Fee income related to loan level, back-to-back
   swaps (A)
  293             
Gain on sale of SBA loans (A)  624   622   2,675   2,844   989 
Corporate advisory fee income (A)  8   102   33   1,561   2,180 
Other income  1,380   1,868   860   1,254   581 
Loss on securities sale, net (B)           (6,609)   
Fair value adjustment for CRA equity security  28   (571)  (475)  (682)  (139)
Total other income  16,812   16,383   18,508   14,714   18,964 
Salaries and employee benefits (C)  22,489   22,656   21,882   22,449   20,105 
Premises and equipment  4,898   4,534   4,640   4,647   4,519 
FDIC insurance expense  455   510   503   471   402 
Swap valuation allowance           673   893 
Other expenses  5,570   5,860   5,634   5,929   5,785 
Total operating expenses  33,412   33,560   32,659   34,169   31,704 
Pretax income before provision for credit losses  31,440   28,348   28,742   20,167   24,472 
Provision for credit losses (D)  1,930   599   1,449   2,375   3,750 
Income before income taxes  29,510   27,749   27,293   17,792   20,722 
Income tax expense (E)  8,931   7,623   7,193   4,351   5,867 
Net income $20,579  $20,126  $20,100  $13,441  $14,855 
                
Total revenue (F) $64,852  $61,908  $61,401  $54,336  $56,176 
Per Common Share Data:               
Earnings per share (basic) $1.15  $1.11  $1.10  $0.73  $0.80 
Earnings per share (diluted)  1.12   1.09   1.08   0.71   0.78 
Weighted average number of common
   shares outstanding:
               
Basic  17,915,058   18,072,385   18,325,605   18,339,013   18,483,268 
Diluted  18,382,193   18,420,661   18,637,340   18,946,683   19,070,594 
Performance Ratios:               
Return on average assets annualized (ROAA)  1.33%  1.30%  1.30%  0.87%  0.96%
Return on average equity annualized (ROAE)  15.73%  15.21%  15.43%  9.88%  10.94%
Return on average tangible common equity annualized (ROATCE) (G)  17.30%  16.73%  17.00%  10.85%  12.03%
Net interest margin (tax-equivalent basis)  3.12%  2.98%  2.83%  2.69%  2.46%
GAAP efficiency ratio (H)  51.52%  54.21%  53.19%  62.88%  56.44%
Operating expenses / average assets annualized  2.15%  2.17%  2.11%  2.22%  2.05%


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

(B) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.

(C) The March 2022 quarter included $1.5 million of severance expense related to corporate restructuring.

(D) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(E) The three months ended December 31, 2022 included $750,000 income tax expense (net federal benefit) related to the twelve months of 2022 brought about by a recent New York City nexus determination change which included $563,000 from prior quarters.

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

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

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


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

  For the Twelve Months Ended       
  December 31,  Change 
  2022  2021  $  % 
Income Statement Data:            
Interest income $211,875  $160,067  $51,808   32%
Interest expense  35,795   22,006   13,789   63%
Net interest income  176,080   138,061   38,019   28%
Wealth management fee income  54,651   52,987   1,664   3%
Service charges and fees  4,225   3,697   528   14%
Bank owned life insurance  1,243   1,696   (453)  -27%
Gain on loans held for sale at fair value (Mortgage banking) (A)  483   2,194   (1,711)  -78%
Gain on loans held for sale at lower of cost or fair value (B)     1,142   (1,142)  -100%
Fee income related to loan level, back-to-back swaps (A)  293      293  N/A 
Gain on sale of SBA loans (A)  6,765   4,939   1,826   37%
Corporate advisory fee income (A)  1,704   3,483   (1,779)  -51%
Loss on swap termination     (842)  842   -100%
Other income  5,362   3,379   1,983   59%
Loss on securities sale, net (C)  (6,609)     (6,609) N/A 
Fair value adjustment for CRA equity security  (1,700)  (432)  (1,268)  294%
Total other income  66,417   72,243   (5,826)  -8%
Salaries and employee benefits (D)  89,476   81,864   7,612   9%
Premises and equipment  18,719   17,165   1,554   9%
FDIC insurance expense  1,939   2,071   (132)  -6%
Swap valuation allowance  673   2,243   (1,570)  -70%
Other expenses  22,993   22,824   169   1%
Total operating expenses  133,800   126,167   7,633   6%
Pretax income before provision for credit losses  108,697   84,137   24,560   29%
Provision for credit losses (E)  6,353   6,475   (122)  -2%
Income before income taxes  102,344   77,662   24,682   32%
Income tax expense (F)  28,098   21,040   7,058   34%
Net income $74,246  $56,622  $17,624   31%
             
Total revenue (G) $242,497  $210,304  $32,193   15%
Per Common Share Data:            
Earnings per share (basic) $4.09  $3.01  $1.08   36%
Earnings per share (diluted)  4.00   2.93   1.07   37%
Weighted average number of common shares outstanding:            
Basic  18,161,605   18,788,679   (627,074)  -3%
Diluted  18,568,098   19,292,602   (724,504)  -4%
Performance Ratios:            
Return on average assets (ROAA)  1.20%  0.94%  0.26%  28%
Return on average equity (ROAE)  14.02%  10.56%  3.46%  33%
Return on average tangible common equity (ROATCE) (H)  15.43%  11.56%  3.87%  33%
Net interest margin (tax-equivalent basis)  2.91%  2.38%  0.53%  22%
GAAP efficiency ratio (I)  55.18%  59.99%  (4.81)%  -8%
Operating expenses / average assets  2.16%  2.10%  0.06%  3%


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

(B) Includes gain on sale of $57 million of PPP loans completed in the twelve months ended December 31, 2021.

(C) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.

(D) The twelve months ended December 31, 2022 and 2021 each included $1.5 million of severance expense related to corporate restructuring.

(E) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(F)The twelve months ended December 31, 2022 included $750,000 income tax expense (net federal benefit) brought about by a recent New York City nexus determination.

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

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

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


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


  As of 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2022  2022  2022  2022  2021 
ASSETS               
Cash and due from banks $5,937  $5,066  $6,203  $8,849  $5,929 
Federal funds sold               
Interest-earning deposits  184,138   103,214   147,222   105,111   140,875 
Total cash and cash equivalents  190,075   108,280   153,425   113,960   146,804 
Securities available for sale  554,648   497,880   556,791   601,163   796,753 
Securities held to maturity  102,291   103,551   105,048   106,816   108,680 
CRA equity security, at fair value  12,985   12,957   13,528   14,003   14,685 
FHLB and FRB stock, at cost (A)  30,672   14,986   13,710   18,570   12,950 
                
Residential mortgage  525,756   519,088   512,341   513,289   501,340 
Multifamily mortgage  1,863,915   1,856,675   1,876,783   1,850,097   1,595,866 
Commercial mortgage  624,625   638,903   657,812   669,899   662,626 
Commercial and industrial loans  2,213,762   2,099,917   2,048,474   2,041,720   2,009,252 
Consumer loans  38,014   37,412   37,675   35,322   33,687 
Home equity lines of credit  34,496   36,375   36,023   38,604   40,803 
Other loans  304   259   236   226   238 
Total loans  5,300,872   5,188,629   5,169,344   5,149,157   4,843,812 
Less: Allowances for credit losses (B)  60,829   59,683   59,022   58,386   61,697 
Net loans  5,240,043   5,128,946   5,110,322   5,090,771   4,782,115 
                
Premises and equipment  23,831   23,781   22,804   22,960   23,044 
Other real estate owned  116   116   116       
Accrued interest receivable  25,157   17,816   23,468   22,890   21,589 
Bank owned life insurance  47,147   47,072   46,944   46,805   46,663 
Goodwill and other intangible assets  47,333   47,698   48,082   48,471   48,902 
Finance lease right-of-use assets  2,835   3,021   3,209   3,395   3,582 
Operating lease right-of-use assets  12,873   13,404   14,192   14,725   9,775 
Due from brokers (C)           120,245    
Other assets (D)  63,587   67,753   39,528   30,890   62,451 
TOTAL ASSETS $6,353,593  $6,087,261  $6,151,167  $6,255,664  $6,077,993 
                
LIABILITIES               
Deposits:               
Noninterest-bearing demand deposits $1,246,066  $1,317,954  $1,043,225  $1,023,208  $956,482 
Interest-bearing demand deposits  2,143,611   2,149,629   2,456,988   2,362,987   2,287,894 
Savings  157,338   166,821   168,441   162,116   154,914 
Money market accounts  1,228,234   1,178,112   1,217,516   1,304,017   1,307,051 
Certificates of deposit – Retail  318,573   345,047   375,387   384,909   409,608 
Certificates of deposit – Listing Service  25,358   30,647   31,348   31,348   31,382 
Subtotal “customer” deposits  5,119,180   5,188,210   5,292,905   5,268,585   5,147,331 
IB Demand – Brokered  60,000   85,000   85,000   85,000   85,000 
Certificates of deposit – Brokered  25,984   25,974   25,963   33,831   33,818 
Total deposits  5,205,164   5,299,184   5,403,868   5,387,416   5,266,149 
Short-term borrowings  379,530   32,369      122,085    
Finance lease liability  4,696   5,003   5,305   5,573   5,820 
Operating lease liability  13,704   14,101   14,756   15,155   10,111 
Subordinated debt, net  132,987   132,916   132,844   132,772   132,701 
Other liabilities (D)  84,532   88,174   74,070   69,237   116,824 
TOTAL LIABILITIES  5,820,613   5,571,747   5,630,843   5,732,238   5,531,605 
Shareholders’ equity  532,980   515,514   520,324   523,426   546,388 
TOTAL LIABILITIES AND               
SHAREHOLDERS’ EQUITY $6,353,593  $6,087,261  $6,151,167  $6,255,664  $6,077,993 
Assets under management and / or administration at
   Peapack-Gladstone Bank’s Private Wealth Management
   Division (market value, not included above-dollars in billions)
 $9.9  $9.3  $9.5  $10.7


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

(B) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.

(C) Includes $120 million due from FHLB related to securities sales at March 31, 2022.  The $120 million received on April 1, 2022, was used to reduce short term borrowings.

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

  

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

  As of 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2022  2022  2022  2022  2021 
Asset Quality:               
Loans past due over 90 days and still accruing $  $  $  $  $ 
Nonaccrual loans  18,974   15,724   15,078   15,884   15,573 
Other real estate owned  116   116   116       
Total nonperforming assets $19,090  $15,840  $15,194  $15,884  $15,573 
                
Nonperforming loans to total loans  0.36%  0.30%  0.29%  0.31%  0.32%
Nonperforming assets to total assets  0.30%  0.26%  0.25%  0.25%  0.26%
                
Performing TDRs (A)(B) $965  $2,761  $2,272  $2,375  $2,479 
                
Loans past due 30 through 89 days and still accruing (C) $7,592  $7,248  $3,126  $606  $8,606 
                
Loans subject to special mention $64,842  $82,107  $98,787  $110,252  $116,490 
                
Classified loans $42,985  $27,507  $27,167  $47,386  $50,702 
                
Impaired loans $16,486  $13,047  $13,227  $16,147  $18,052 
                
Allowance for credit losses ("ACL"):               
Beginning of quarter $59,683  $59,022  $58,386  $61,697  $65,133 
Day one CECL adjustment           (5,536)   
Provision for credit losses (D)  2,103   665   646   2,489   3,750 
(Charge-offs)/recoveries, net (E)  (957)  (4)  (10)  (264)  (7,186)
End of quarter $60,829  $59,683  $59,022  $58,386  $61,697 
                
ACL to nonperforming loans  320.59%  379.57%  391.44%  367.58%  396.18%
ACL to total loans  1.15%  1.15%  1.14%  1.13%  1.27%
General ACL to total loans (F)  1.12%  1.10%  1.09%  1.09%  1.19%


(A) Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.

(B) Excludes TDRs included in nonaccrual loans in the following amounts:  $13.4 million at December 31, 2022; $12.9 million at September 30, 2022; $13.5 million at June 30, 2022; $13.6 million at March 31, 2022; and $1.1 million at December 31, 2021. 

(C) Includes $4.5 million outstanding to U.S. governmental entities at December 31, 2022.

(D) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to roll forward the ACL excludes a credit of $173,000 at December 31, 2022, a credit of $66,000 at September 30, 2022, a provision of $803,000 at June 30, 2022 and a credit of $114,000 at March 31, 2022 related to off-balance sheet commitments.

(E) Net charge-offs for the quarter ended December 31, 2022 included a charge-off of $1.2 million of a previously established specific reserve on one commercial real estate loan.

(F) Total ACL less specific reserves equals general ACL.


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

  As of 
  December 31,  September 30,  December 31, 
  2022  2022  2021 
Capital Adequacy               
Equity to total assets (A)    8.39%    8.47%    8.99%
Tangible equity to tangible assets (B)    7.70%    7.75%    8.25%
Book value per share (C)   $29.92    $28.77    $29.70 
Tangible book value per share (D)   $27.26    $26.10    $27.05 
                
Tangible equity to tangible assets excluding other comprehensive loss*    8.77%    8.88%    8.44%
Tangible book value per share excluding other comprehensive loss*   $31.43    $30.29    $27.72 

*Excludes other comprehensive loss of $74.2 million for the quarter ended December 31, 2022, $75.0 million for the quarter ended September 30, 2022, and $12.4 million for the quarter ended December 31, 2021.  See Non-GAAP financial measures reconciliation included in these tables.

  As of
  December 31,  September 30, December 31,
  2022  2022 2021
Regulatory Capital – Holding Company                
Tier I leverage $557,627  8.90%  $540,464  8.70% $508,231  8.29%
Tier I capital to risk-weighted assets  557,627  11.02   540,464  10.86  508,231  10.62
Common equity tier I capital ratio
   to risk-weighted assets
  557,609  11.02   540,440  10.86  508,207  10.62
Tier I & II capital to risk-weighted assets  745,197  14.73   733,988  14.74  700,790  14.64
                 
Regulatory Capital – Bank                
Tier I leverage (E) $680,138  10.85%  $670,717  10.79% $612,762  9.99%
Tier I capital to risk-weighted assets (F)  680,137  13.45   670,717  13.48  612,762  12.80
Common equity tier I capital ratio
   to risk-weighted assets (G)
  680,119  13.45   670,693  13.48  612,738  12.80
Tier I & II capital to risk-weighted assets (H)  741,719  14.67   731,325  14.69  672,614  14.05
                         

(A) Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at quarter end.
(B) Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. Tangible equity as a percentage of tangible assets at quarter end is calculated by dividing tangible equity by tangible assets at quarter end.  See Non-GAAP financial measures reconciliation included in these tables.
(C) Book value per common share is calculated by dividing shareholders’ equity by quarter end common shares outstanding.
(D) Tangible book value per share excludes intangible assets.  Tangible book value per share is calculated by dividing tangible equity by quarter end common shares outstanding.  See Non-GAAP financial measures reconciliation tables.
(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($251 million)
(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($430 million)
(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($354 million)
(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($531 million)

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

  For the Quarters Ended 
  Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, 
  2022  2022  2022  2022  2021 
Residential loans retained $28,051  $17,885  $35,172  $41,547  $22,953 
Residential loans sold  1,840   4,898   9,886   15,669   20,694 
Total residential loans  29,891   22,783   45,058   57,216   43,647 
Commercial real estate  6,747   7,320   13,960   25,575   16,134 
Multifamily  37,500   4,000   74,564   265,650   162,740 
Commercial (C&I) loans/leases (A) (B)  238,568   251,249   332,801   143,029   341,886 
SBA  17,431   5,682   10,534   26,093   27,630 
Wealth lines of credit (A)  7,700   4,450   12,575   9,400   7,500 
Total commercial loans  307,946   272,701   444,434   469,747   555,890 
Installment loans  1,845   1,253   100   131   94 
Home equity lines of credit (A)  3,815   5,614   3,897   1,341   5,359 
Total loans closed $343,497  $302,351  $493,489  $528,435  $604,990 


  For the Twelve Months Ended 
  Dec 31,  Dec 31, 
  2022  2021 
Residential loans retained $122,655  $112,695 
Residential loans sold  32,293   116,040 
Total residential loans  154,948   228,735 
Commercial real estate  53,602   81,684 
Multifamily  381,714   624,285 
Commercial (C&I) loans (A) (B)  965,647   755,433 
SBA (C)  59,740   113,906 
Wealth lines of credit (A)  34,125   23,195 
Total commercial loans  1,494,828   1,598,503 
Installment loans  3,329   360 
Home equity lines of credit (A)  14,667   13,933 
Total loans closed $1,667,772  $1,841,531 

(A) Includes loans and lines of credit that closed in the period but not necessarily funded.
(B) Includes equipment finance.
(C) Includes PPP loans of $56 million for the twelve months ended December 31, 2021.

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

  For the Three Months Ended 
  December 31, 2022  December 31, 2021 
  Average  Income/     Average  Income/    
  Balance  Expense  Yield  Balance  Expense  Yield 
ASSETS:                  
Interest-earning assets:                  
Investments:                  
Taxable (A) $761,164  $3,859   2.03% $885,390  $3,104   1.40%
Tax-exempt (A) (B)  1,999   20   4.00   5,443   54   3.97 
                   
Loans (B) (C):                  
Mortgages  516,721   4,017   3.11   510,562   3,799   2.98 
Commercial mortgages  2,497,847   25,007   4.00   2,209,160   17,708   3.21 
Commercial  2,136,355   29,314   5.49   1,826,640   16,660   3.65 
Commercial construction  4,213   68   6.46   20,426   176   3.45 
Installment  36,648   496   5.41   33,400   253   3.03 
Home equity  36,067   550   6.10   41,955   346   3.30 
Other  292   8   10.96   270   6   8.89 
Total loans  5,228,143   59,460   4.55   4,642,413   38,948   3.36 
Federal funds sold                  
Interest-earning deposits  161,573   1,258   3.11   513,650   178   0.14 
Total interest-earning assets  6,152,879   64,597   4.20%  6,046,896   42,284   2.80%
Noninterest-earning assets:                  
Cash and due from banks  6,723         11,517       
Allowance for credit losses  (60,070)        (65,542)      
Premises and equipment  23,682         23,117       
Other assets  83,641         182,154       
Total noninterest-earning assets  53,976         151,246       
Total assets $6,206,855        $6,198,142       
                   
LIABILITIES:                  
Interest-bearing deposits:                  
Checking $2,222,130  $9,165   1.65% $2,321,970  $1,327   0.23%
Money markets  1,246,179   3,438   1.10   1,290,334   678   0.21 
Savings  161,569   12   0.03   152,570   20   0.05 
Certificates of deposit – retail  360,589   922   1.02   453,127   725   0.64 
Subtotal interest-bearing deposits  3,990,467   13,537   1.36   4,218,001   2,750   0.26 
Interest-bearing demand – brokered  81,739   497   2.43   85,000   387   1.82 
Certificates of deposit – brokered  25,979   210   3.23   33,810   267   3.16 
Total interest-bearing deposits  4,098,185   14,244   1.39   4,336,811   3,404   0.31 
Borrowings  43,710   497   4.55   25,890   25   0.39 
Capital lease obligation  4,803   58   4.83   5,913   71   4.80 
Subordinated debt  132,947   1,363   4.10   132,659   1,363   4.11 
Total interest-bearing liabilities  4,279,645   16,162   1.51%  4,501,273   4,863   0.43%
Noninterest-bearing liabilities:                  
Demand deposits  1,303,432         1,042,477       
Accrued expenses and other liabilities  100,372         111,357       
Total noninterest-bearing liabilities  1,403,804         1,153,834       
Shareholders’ equity  523,406         543,035       
Total liabilities and shareholders’ equity $6,206,855        $6,198,142       
Net interest income    $48,435        $37,421    
Net interest spread        2.69%        2.37%
Net interest margin (D)        3.12%        2.46%

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

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

  For the Three Months Ended 
  December 31, 2022  September 30, 2022 
  Average  Income/     Average  Income/    
  Balance  Expense  Yield  Balance  Expense  Yield 
ASSETS:                  
Interest-earning assets:                  
Investments:                  
Taxable (A) $761,164  $3,859   2.03% $754,180  $2,853   1.51%
Tax-exempt (A) (B)  1,999   20   4.00   3,226   30   3.72 
                   
Loans (B) (C):                  
Mortgages  516,721   4,017   3.11   513,864   3,861   3.01 
Commercial mortgages  2,497,847   25,007   4.00   2,510,616   23,121   3.68 
Commercial  2,136,355   29,314   5.49   2,016,590   23,362   4.63 
Commercial construction  4,213   68   6.46   12,073   143   4.74 
Installment  36,648   496   5.41   38,338   399   4.16 
Home equity  36,067   550   6.10   36,706   451   4.91 
Other  292   8   10.96   263   7   10.65 
Total loans  5,228,143   59,460   4.55   5,128,450   51,344   4.00 
Federal funds sold                  
Interest-earning deposits  161,573   1,258   3.11   232,158   1,162   2.00 
Total interest-earning assets  6,152,879   64,597   4.20%  6,118,014   55,389   3.62%
Noninterest-earning assets:                  
Cash and due from banks  6,723         8,296       
Allowance for credit losses  (60,070)        (59,464)      
Premises and equipment  23,682         23,580       
Other assets  83,641         97,583       
Total noninterest-earning assets  53,976         69,995       
Total assets $6,206,855        $6,188,009       
                   
LIABILITIES:                  
Interest-bearing deposits:                  
Checking $2,222,130  $9,165   1.65% $2,408,206  $5,127   0.85%
Money markets  1,246,179   3,438   1.10   1,237,975   1,557   0.50 
Savings  161,569   12   0.03   168,281   5   0.01 
Certificates of deposit – retail  360,589   922   1.02   391,340   791   0.81 
Subtotal interest-bearing deposits  3,990,467   13,537   1.36   4,205,802   7,480   0.71 
Interest-bearing demand – brokered  81,739   497   2.43   85,000   345   1.62 
Certificates of deposit – brokered  25,979   210   3.23   25,968   210   3.23 
Total interest-bearing deposits  4,098,185   14,244   1.39   4,316,770   8,035   0.74 
Borrowings  43,710   497   4.55   3,810   29   3.04 
Capital lease obligation  4,803   58   4.83   5,106   61   4.78 
Subordinated debt  132,947   1,363   4.10   132,874   1,363   4.10 
Total interest-bearing liabilities  4,279,645   16,162   1.51%  4,458,560   9,488   0.85%
Noninterest-bearing liabilities:                  
Demand deposits  1,303,432         1,116,843       
Accrued expenses and other liabilities  100,372         83,446       
Total noninterest-bearing liabilities  1,403,804         1,200,289       
Shareholders’ equity  523,406         529,160       
Total liabilities and shareholders’ equity $6,206,855        $6,188,009       
Net interest income    $48,435        $45,901    
Net interest spread        2.69%        2.77%
Net interest margin (D)        3.12%        2.98%

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

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

  For the Twelve Months Ended 
  December 31, 2022  December 31, 2021 
  Average  Income/     Average  Income/    
  Balance  Expense  Yield  Balance  Expense  Yield 
ASSETS:                  
Interest-earning assets:                  
Investments:                  
Taxable (A) $803,982  $13,854   1.72% $838,174  $11,577   1.38%
Tax-exempt (A) (B)  3,521   137   3.89   6,579   296   4.50 
                   
Loans (B) (C):                  
Mortgages  513,189   15,165   2.96   503,616   15,359   3.05 
Commercial mortgages  2,478,891   87,488   3.53   2,032,318   63,298   3.11 
Commercial  2,046,735   90,225   4.41   1,881,683   66,652   3.54 
Commercial construction  12,600   533   4.23   20,420   692   3.39 
Installment  36,685   1,447   3.94   34,390   1,030   3.00 
Home equity  37,755   1,656   4.39   44,735   1,479   3.31 
Other  274   26   9.49   247   21   8.50 
Total loans  5,126,129   196,540   3.83   4,517,409   148,531   3.29 
Federal funds sold           48      0.13 
Interest-earning deposits  171,491   2,763   1.61   477,477   545   0.11 
Total interest-earning assets  6,105,123   213,294   3.49%  5,839,687   160,949   2.76%
Noninterest-earning assets:                  
Cash and due from banks  8,046         10,396       
Allowance for credit losses  (60,037)        (67,075)      
Premises and equipment  23,312         23,094       
Other assets  111,893         197,893