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Peapack-Gladstone Financial Corporation Reports Third Quarter Results

BEDMINSTER, N.J. - (NewMediaWire) - October 22, 2024 - Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the "Company") announces its third quarter 2024 financial results.

This earnings release should be read in conjunction with the Company’s Q3 2024 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.

During the third quarter of 2024, deposits grew $279 million, to $5.9 billion, which represents an annualized growth rate of 20%. Nearly half of the deposit growth during the quarter was attributed to an increase in noninterest-bearing demand deposit balances which grew $130 million to $1.1 billion. Strong core relationship growth throughout 2024 has allowed the Company to repay all outstanding short-term borrowings and strengthen its liquidity position.  The Company also saw an increase in loan demand during the third quarter. Outstanding loan balances increased by $51 million to $5.3 billion as of September 30, 2024.

The Company recorded net income of $7.6 million and diluted earnings per share (“EPS”) of $0.43 for the quarter ended September 30, 2024 compared to net income of $7.5 million and EPS of $0.42 for the quarter ended June 30, 2024.

Net interest income increased $2.6 million, or 8%, on a linked quarter basis to $37.7 million during the third quarter of 2024 compared to $35.0 million in the second quarter.  The growth in net interest income was driven by continued improvement in the net interest margin. The net interest margin increased to 2.34% for the quarter ended September 30, 2024 compared to 2.25% for the quarter ended June 30, 2024 and 2.20% for the quarter ended March 31, 2024.

Douglas L. Kennedy, President and CEO said, “Our expansion into the metro New York market, leading with our ‘Single Point of Contact’ private banking strategy, continues to deliver results ahead of plan. Our third quarter results reflect this success through strong core deposit growth, continued improvement in net interest income and enhanced liquidity profile. Our New York Commercial Private Banking initiative is currently managing over $730 million in customer relationship deposits, which includes 31% in noninterest-bearing demand deposits. We expect that our expansion will become accretive to earnings in early 2025."

Mr. Kennedy also noted, “During the third quarter of 2024, Moody's reaffirmed our investment grade ratings with a stable outlook after a thorough analysis of our business model and balance sheet. We are fully aware of the headwinds created by the current interest rate environment, and we are confident in our ability to manage through any of these issues that may arise as we execute our private banking strategy, which over time will deliver shareholder value."

The following are select highlights for the period ended September 30, 2024:

Wealth Management:

  • AUM/AUA in our Wealth Management Division totaled a record $12.1 billion at September 30, 2024 compared to $10.9 billion at December 31, 2023.
  • Gross new business inflows for Q3 2024 totaled $140 million ($130 million managed).
  • Wealth Management fee income was $15.2 million in Q3 2024, which amounted to 27% of total revenue for the quarter.
     

Commercial Banking and Balance Sheet Management:

  • Year-to-date total deposits have increased by $661 million, to $5.9 billion at September 30, 2024 compared to $5.3 billion at December 31, 2023. The Company intentionally allowed $121 million in high cost, non-core relationship deposits to roll off during the first nine months of 2024. Excluding this deposit run-off, core relationship deposits have grown by $782 million during 2024.
  • The Company has repaid $404 million in short-term borrowings as of September 30, 2024.
  • Total loans declined $116 million to $5.3 billion at September 30, 2024 from $5.4 billion at December 31, 2023. However, outstanding loans increased by $51 million during the three-month period ended September 30, 2024 after experiencing contraction during the first six months of 2024.
  • Commercial and industrial lending (“C&I”) drove a majority of the growth during the third quarter. C&I balances represent 42% of the total loan portfolio at September 30, 2024. A strong pipeline of new business has been built heading into Q4.
  • Fee income on unused commercial lines of credit totaled $845,000 for Q3 2024.
  • The net interest margin ("NIM") was 2.34% in Q3 2024, an increase of 9 basis points compared to 2.25% at Q2 2024.
  • Noninterest-bearing demand deposits increased by $130 million during the third quarter of 2024 and represented 18% of total deposits as of September 30, 2024.
     

Capital Management:

  • Tangible book value per share increased 6% to $32.00 per share at September 30, 2024 compared to $30.31 at December 31, 2023. Book value per share increased 5% to $34.57 per share at September 30, 2024 compared to $32.90 at December 31, 2023.
  • During the third quarter, the Company repurchased 100,000 shares of common stock at a total cost of $2.6 million, or an average cost of $25.92 per share. During the first nine months of 2024, the Company repurchased 300,000 shares of common stock at a cost of $7.2 million. For the full year 2023, the Company repurchased 455,341 shares at a cost of $12.5 million.
  • At September 30, 2024, the Tier 1 Leverage Ratio stood at 10.99% for Peapack-Gladstone Bank (the "Bank") and 9.33% for the Company. The Common Equity Tier 1 Ratio (to Risk-Weighted Assets) was 13.75% for the Bank and 11.67% for the Company at September 30, 2024. These ratios remain significantly above well capitalized standards, as capital continues to benefit from net income generation.
     

SUMMARY INCOME STATEMENT DETAILS:

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

Nine Months Ended September 30, 2024 Year Compared to Nine Months Ended September 30, 2023

    Nine Months Ended     Nine Months Ended                
    September 30,     September 30,       Increase/  
(Dollars in millions, except per share data) (unaudited)   2024     2023       (Decrease)  
Net interest income   $ 107.10     $ 119.41       $ (12.31 )     (10 )%
Wealth management fee income     45.98       41.99         3.99       10  
Capital markets activity     2.30       2.45         (0.15 )     (6 )
Other income     10.91       11.55         (0.64 )     (6 )
Total other income     59.19       55.99         3.20       6  
                           
Total Revenue     166.29       175.40         (9.11 )     (5 )%
                           
Operating expenses     127.82       110.68         17.14       15  
Pretax income before provision for credit losses     38.47       64.72         (26.25 )     (41 )
Provision for credit losses     5.76       9.06         (3.30 )     (36 )
Pretax income     32.71       55.66         (22.95 )     (41 )
Income tax expense     8.96       15.40         (6.44 )     (42 )
Net income   $ 23.75     $ 40.26       $ (16.51 )     (41 )%
Diluted EPS   $ 1.34     $ 2.23       $ (0.89 )     (40 )%
                           
Return on average assets     0.49 %     0.84 %       (0.35 )      
Return on average equity     5.42 %     9.66 %       (4.24 )      

September 2024 Quarter Compared to Prior Year Quarter

    Three Months Ended       Three Months Ended              
    September 30,       September 30,     Increase/  
(Dollars in millions, except per share data) (unaudited)   2024       2023     (Decrease)  
Net interest income   $ 37.68       $ 36.52     $ 1.16       3 %
Wealth management fee income     15.15         13.98       1.17       8  
Capital markets activity     0.44         0.61       (0.17 )     (28 )
Other income     3.35         4.76       (1.41 )     (30 )
Total other income     18.94         19.35       (0.41 )     (2 )
                           
Total Revenue     56.62         55.87       0.75       1 %
                           
Operating expenses     44.65         37.41       7.24       19  
Pretax income before provision for credit losses     11.97         18.46       (6.49 )     (35 )
Provision for credit losses     1.22         5.86       (4.64 )     (79 )
Pretax income     10.75         12.60       (1.85 )     (15 )
Income tax expense     3.16         3.84       (0.68 )     (18 )
Net income   $ 7.59       $ 8.76     $ (1.17 )     (13 )%
Diluted EPS   $ 0.43       $ 0.49     $ (0.06 )     (12 )%
                           
Return on average assets annualized     0.46 %       0.54 %     (0.08 )      
Return on average equity annualized     5.12 %       6.20 %     (1.08 )      

September 2024 Quarter Compared to Linked Quarter

    Three Months Ended     Three Months Ended                
    September 30,     June 30,       Increase/  
(Dollars in millions, except per share data) (unaudited)   2024     2024       (Decrease)  
Net interest income   $ 37.68     $ 35.04       $ 2.64       8 %
Wealth management fee income     15.15       16.42         (1.27 )     (8 )
Capital markets activity     0.44       0.59         (0.15 )     (25 )
Other income     3.35       4.55         (1.20 )     (26 )
Total other income     18.94       21.56         (2.62 )     (12 )
                           
Total Revenue     56.62       56.60         0.02       0 %
                           
Operating expenses     44.65       43.13         1.52       4  
Pretax income before provision for credit losses     11.97       13.47         (1.50 )     (11 )
Provision for credit losses     1.22       3.91         (2.69 )     (69 )
Pretax income     10.75       9.56         1.19       12  
Income tax expense     3.16       2.03         1.13       56  
Net income   $ 7.59     $ 7.53       $ 0.06       1 %
Diluted EPS   $ 0.43     $ 0.42       $ 0.01       2 %
                           
Return on average assets annualized     0.46 %     0.47 %       (0.01 )      
Return on average equity annualized     5.12 %     5.22 %       (0.10 )      

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

AUM/AUA in the Bank’s Wealth Management Division reached a record high of $12.1 billion at September 30, 2024 compared to $10.9 billion at December 31, 2023.  For the September 2024 quarter, the Wealth Management Team generated $15.2 million in fee income, compared to $16.4 million for the June 30, 2024 quarter and $14.0 million for the September 2023 quarter. The equity markets continued to improve during 2024, contributing to the increase in AUM/AUA along with gross new business inflows of $547 million.

John Babcock, President of the Bank's Wealth Management Division, noted, “Q3 2024 saw continued strong client inflows totaling new accounts and client additions of $140 million ($130 million managed). Our new business pipeline is healthy, and we continue to remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities combined with our high-touch client service model distinguishes us in our market and continues to drive our growth and success.”

Loans / Commercial Banking

Total loans declined $116 million, or 2%, to $5.3 billion at September 30, 2024 compared to December 31, 2023, primarily driven by repayments, maturities and tighter lending standards. Most of the decline in outstanding loans during the first nine months of 2024 was related to reductions in multifamily and commercial real estate balances. Total C&I loans and leases at September 30, 2024 were $2.2 billion or 42% of the total loan portfolio.

Mr. Kennedy noted, “Based on a more constructive economic backdrop, we recently began building our pipeline of C&I loans and leases and believe that loan demand will continue to show improvement as we look forward to coming periods ahead. We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, Corporate Advisory and SBA businesses. We anticipate these business lines fit perfectly with our private banking business model and will generate solid production going forward. During the quarter we originated loans that carried an average spread of more than 4% above our cost of funds.  Having this capability will help us in the near term as the real estate market adjusts to changing market conditions.”

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

The Company’s NII of $37.7 million and NIM of 2.34% for Q3 2024 increased $2.6 million and 9 basis points from NII of $35.0 million and NIM of 2.25% for the linked quarter (Q2 2024), and increased $1.2 million and 6 basis points from NII of $36.5 million and NIM of 2.28% compared to the prior year period (Q3 2023). Our single point of contact private banking strategy continues to deliver lower cost core deposit relationships. Noninterest-bearing checking deposits increased by $130 million during the third quarter of 2024, which also drove the improvement in NIM.

Funding / Liquidity / Interest Rate Risk Management

Total deposits increased $661 million to $5.9 billion at September 30, 2024 from $5.3 billion at December 31, 2023.  The change in deposit balances included a decline in brokered deposits and non-core deposit relationships.  The overall growth in deposits has strengthened balance sheet liquidity and reduced reliance on outside borrowings and other non-core funding sources. There were no outstanding overnight borrowings at September 30, 2024, compared to $404 million at December 31, 2023.

At September 30, 2024, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $1.2 billion, or 18% of assets. The Company maintains additional liquidity resources of approximately $3.0 billion through secured available borrowing facilities with the Federal Home Loan Bank and 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. The Company's total on and off-balance sheet liquidity totaled $4.2 billion, which amounts to 293% of the total uninsured/uncollateralized deposits currently on the Company’s balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $435,000 for the September 2024 quarter compared to $586,000 for the June 2024 quarter and $613,000 for the September 2023 quarter.

    Three Months Ended     Three Months Ended     Three Months Ended  
    September 30,     June 30,     September 30,  
(Dollars in thousands, except per share data) (unaudited)   2024     2024     2023  
Gain on loans held for sale at fair value (Mortgage banking)   $ 15     $ 34     $ 37  
Gain on sale of SBA loans     365       449       491  
Corporate advisory fee income     55       103       85  
Total capital markets activity   $ 435     $ 586     $ 613  

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

Other noninterest income was $3.4 million for Q3 2024 compared to $4.6 million for Q2 2024 and $4.8 million for Q3 2023. Q3 2024 included $225,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases, compared to $1.6 million in Q2 2024 and $2.3 million in Q3 2023, respectively. Additionally, Q3 2024 included $845,000 of unused line fees compared to $786,000 for Q2 2024 and $794,000 for Q3 2023.

Operating Expenses

The Company’s total operating expenses were $44.6 million for the third quarter of 2024, compared to $43.1 million for the second quarter of 2024 and $37.4 million for the quarter ended September 2023. The third quarter of 2024 reflects the full run rate of expenses associated with the Company’s expansion into New York City.

Mr. Kennedy noted, “We continue to make investments related to our strategic decision to expand into New York City and are confident that these investments will position us for future growth and profitability, which will ultimately translate to increased shareholder value.  We continue to look for opportunities to create efficiencies and manage expenses throughout the Company while investing in enhancements to the client experience."

Income Taxes

The effective tax rate for the three months ended September 30, 2024 was 29.4%, as compared to 21.2% for the June 2024 quarter and 30.5% for the quarter ended September 30, 2023.  The June 2024 quarter included a one-time benefit related to the Company’s deferred tax assets associated with a surtax imposed by the State of New Jersey in June 2024. Excluding such benefit, the effective tax rate for the June 2024 quarter would have been approximately 29.0%.

Asset Quality / Provision for Credit Losses

Nonperforming assets remained elevated at $80.5 million, or 1.18% of total assets, at September 30, 2024, as compared to $82.1 million, or 1.26% of total assets, at June 30, 2024. Loans past due 30 to 89 days and still accruing were $31.4 million, or 0.59% of total loans, at September 30, 2024 compared to $34.7 million, or 0.66% of total loans, at June 30, 2024. Criticized and classified loans totaled $261.1 million at September 30, 2024, reflecting a decrease of $8.0 million as compared to $269.1 million at June 30, 2024. The Company currently has no loans or leases on deferral and still accruing.

For the quarter ended September 30, 2024, the Company’s provision for credit losses was $1.2 million compared to $3.9 million for the June 2024 quarter and $5.9 million for the September 2023 quarter. The provision for credit losses in the third quarter of 2024 was driven by overall slower loan growth along with additional specific reserves related to certain isolated credits, of $1.8 million partially offset by a recovery of approximately $2.1 million. The higher provision for the second quarter of 2024 was primarily driven by charge-offs related to the sale of two problem loans, which were approaching foreclosure and transferred to other real estate owned.

At September 30, 2024, the allowance for credit losses was $71.3 million (1.34% of total loans), compared to $68.0 million (1.29% of total loans) at June 30, 2024, and $68.6 million (1.25% of total loans) at September 30, 2023.

Mr. Kennedy noted, “We are starting to see some of our asset quality metrics improve, which supports our position that most of our credit issues are isolated to a small number of specific borrowers and sponsors. We continue to work through each credit one at a time while building up reserve coverage. All of the multifamily loans that matured or repriced in 2024 have continued to make their scheduled payments despite the higher rate environment."

Capital

The Company’s capital position increased during the third quarter of 2024 due to net income of $7.6 million, which was partially offset by the repurchase of 100,000 shares through the Company's repurchase program at a total cost of $2.6 million and the quarterly dividend payment totaling $882,000. Additionally, during the third quarter of 2024, capital benefited from a reduction in accumulated other comprehensive losses of $13.5 million, net of tax. The total accumulated other comprehensive loss declined to $54.8 million as of September 30, 2024 ($57.6 million loss related to the available for sale securities portfolio partially offset by a $2.8 million gain on the cash flow hedges). 

Tangible book value per share increased 6% to $32.00 at September 30, 2024 from $30.31 at December 31, 2023. Tangible book value per share is a non-GAAP financial measure. See the reconciliation tables included in this release for further detail. Book value per share increased 5% to $34.57 per share at September 30, 2024 compared to $32.90 at December 31, 2023. The Company’s and Bank’s regulatory capital ratios as of September 30, 2024 remain strong and reflect increases from December 31, 2023 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of June 30, 2024), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

On September 25, 2024, the Company declared a cash dividend of $0.05 per share payable on November 22, 2024 to shareholders of record on November 7, 2024.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey based bank holding company with total assets of $6.8 billion and assets under management/administration of $12.1 billion as of September 30, 2024.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides Private Banking customized solutions through its wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses, not for profits 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.

FORWARD-LOOKING STATEMENTS

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 2024 and beyond;
  • our ability to successfully integrate wealth management firm and team acquisitions;
  • 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;
  • higher than expected increases in our allowance for credit losses;
  • higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans or charge-offs;
  • inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
  • decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
  • successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;
  • higher than expected FDIC insurance premiums;
  • adverse weather conditions;
  • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
  • our inability to successfully generate new business in new geographic markets, including our expansion into New York City;
  • a reduction in our lower-cost funding sources;
  • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
  • our inability to adapt to technological changes;
  • claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
  • our inability to retain key employees;
  • demands for loans and deposits in our market areas;
  • adverse changes in securities markets;
  • changes in New York City rent regulation law;
  • 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/or
  • other unexpected material adverse changes in our financial condition, 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, 2023. Except as may be required by the applicable law or regulation, we undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

Contact:
Frank A. Cavallaro, SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-306-8933

(Tables to follow)

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

    For the Three Months Ended  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    2024     2024     2024     2023     2023  
Income Statement Data:                              
Interest income   $ 83,203     $ 79,238     $ 79,194     $ 80,178     $ 78,489  
Interest expense     45,522       44,196       44,819       43,503       41,974  
Net interest income     37,681       35,042       34,375       36,675       36,515  
Wealth management fee income     15,150       16,419       14,407       13,758       13,975  
Service charges and fees     1,327       1,345       1,322       1,255       1,319  
Bank owned life insurance     390       328       503       357       310  
Gain on loans held for sale at fair value
(Mortgage banking)
    15       34       56       18       37  
Gain on loans held for sale at lower
of cost or fair value
          23                    
Gain on sale of SBA loans     365       449       400       239       491  
Corporate advisory fee income     55       103       818       39       85  
Other income     1,162       2,938       1,306       1,339       3,541  
Fair value adjustment for CRA equity security     474       (84 )     (111 )     585       (404 )
Total other income     18,938       21,555       18,701       17,590       19,354  
                               
Total revenue     56,619       56,597       53,076       54,265       55,869  
                               
Salaries and employee benefits     31,050       29,884       28,476       24,320       25,264  
Premises and equipment     5,633       5,776       5,081       5,416       5,214  
FDIC insurance expense     870       870       945       765       741  
Other expenses     7,096       6,596       5,539       7,115       6,194  
Total operating expenses     44,649       43,126       40,041       37,616       37,413  
Pretax income before provision for credit losses     11,970       13,471       13,035       16,649       18,456  
Provision for credit losses     1,224       3,911       627       5,026       5,856  
Income before income taxes     10,746       9,560       12,408       11,623       12,600  
Income tax expense     3,159       2,030       3,777       3,024       3,845  
Net income   $ 7,587     $ 7,530     $ 8,631     $ 8,599     $ 8,755  
                               
Per Common Share Data:                              
Earnings per share (basic)   $ 0.43     $ 0.42     $ 0.49     $ 0.48     $ 0.49  
Earnings per share (diluted)     0.43       0.42       0.48       0.48       0.49  
Weighted average number of common
shares outstanding:
                             
Basic     17,616,046       17,747,070       17,711,639       17,770,158       17,856,961  
Diluted     17,700,042       17,792,296       17,805,347       17,961,400       18,010,127  
Performance Ratios:                              
Return on average assets annualized (ROAA)     0.46 %     0.47 %     0.54 %     0.53 %     0.54 %
Return on average equity annualized (ROAE)     5.12 %     5.22 %     5.94 %     6.13 %     6.20 %
Return on average tangible equity annualized (ROATCE) (A)     5.54 %     5.67 %     6.45 %     6.68 %     6.75 %
Net interest margin (tax-equivalent basis)     2.34 %     2.25 %     2.20 %     2.29 %     2.28 %
GAAP efficiency ratio (B)     78.86 %     76.20 %     75.44 %     69.32 %     66.97 %
Operating expenses / average assets annualized     2.73 %     2.70 %     2.51 %     2.33 %     2.31 %

(A) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
(B) 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 per share data)
(Unaudited)

    For the Nine Months Ended              
    September 30,     Change  
    2024     2023     $     %  
Income Statement Data:                        
Interest income   $ 241,635     $ 223,832     $ 17,803       8 %
Interest expense     134,537       104,418       30,119       29 %
Net interest income     107,098       119,414       (12,316 )     -10 %
Wealth management fee income     45,976       41,989       3,987       9 %
Service charges and fees     3,994       3,897       97       2 %
Bank owned life insurance     1,221       912       309       34 %
Gain on loans held for sale at fair value (Mortgage banking)     105       73       32       44 %
Gain on loans held for sale at lower of cost or fair value     23             23     N/A  
Gain on sale of SBA loans     1,214       2,194       (980 )     -45 %
Corporate advisory fee income     976       180       796       442 %
Other income     5,406       7,147       (1,741 )     -24 %
Fair value adjustment for CRA equity security     279       (404 )     683       -169 %
Total other income     59,194       55,988       3,206       6 %
                         
Total revenue     166,292       175,402       (9,110 )     -5 %
                         
Salaries and employee benefits     89,410       76,204       13,206       17 %
Premises and equipment     16,490       14,317       2,173       15 %
FDIC insurance expense     2,685       2,181       504       23 %
Other expenses     19,231       17,977       1,254       7 %
Total operating expenses     127,816       110,679       17,137       15 %
Pretax income before provision for credit losses     38,476       64,723       (26,247 )     -41 %
Provision for credit losses     5,762       9,065       (3,303 )     -36 %
Income before income taxes     32,714       55,658       (22,944 )     -41 %
Income tax expense     8,966       15,403       (6,437 )     -42 %
Net income   $ 23,748     $ 40,255     $ (16,507 )     -41 %
                         
                         
Per Common Share Data:                        
Earnings per share (basic)   $ 1.34     $ 2.25     $ (0.91 )     -40 %
Earnings per share (diluted)     1.34       2.23       (0.89 )     -40 %
Weighted average number of common shares outstanding:                        
Basic     17,691,309       17,876,316       (185,007 )     -1 %
Diluted     17,746,560       18,091,524       (344,964 )     -2 %
Performance Ratios:                        
Return on average assets (ROAA)     0.49 %     0.84 %     (0.35 )%     -41 %
Return on average equity (ROAE)     5.42 %     9.66 %     (4.24 )%     -44 %
Return on average tangible equity (ROATCE) (A)     5.88 %     10.55 %     (4.67 )%     -44 %
Net interest margin (tax-equivalent basis)     2.26 %     2.54 %     (0.28 )%     -11 %
GAAP efficiency ratio (B)     76.86 %     63.10 %     13.76 %     22 %
Operating expenses / average assets     2.65 %     2.31 %     0.34 %     15 %

(A) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
(B) 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  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    2024     2024     2024     2023     2023  
ASSETS                              
Cash and due from banks   $ 8,129     $ 5,586     $ 5,769     $ 5,887     $ 7,400  
Federal funds sold                              
Interest-earning deposits     484,529       310,143       189,069       181,784       180,469  
Total cash and cash equivalents     492,658       315,729       194,838       187,671       187,869  
Securities available for sale     682,713       591,884       550,870       550,617       521,005  
Securities held to maturity     103,158       105,013       106,498       107,755       108,940  
CRA equity security, at fair value     13,445       12,971       13,055       13,166       12,581  
FHLB and FRB stock, at cost (A)     12,459       12,478       18,079       31,044       34,158  
                               
Residential mortgage     591,374       579,057       581,426       578,427       585,295  
Multifamily mortgage     1,784,861       1,796,687       1,827,165       1,836,390       1,871,853  
Commercial mortgage     578,559       600,859       615,964       637,625       622,469  
Commercial and industrial loans     2,247,853       2,185,827       2,235,342       2,284,940       2,321,917  
Consumer loans     78,160       69,579       66,827       62,036       57,227  
Home equity lines of credit     38,971       37,117       35,542       36,464       34,411  
Other loans     389       172       184       238       265  
Total loans     5,320,167       5,269,298       5,362,450       5,436,120       5,493,437  
Less: Allowance for credit losses     71,283       67,984       66,251       65,888       68,592  
Net loans     5,248,884       5,201,314       5,296,199       5,370,232       5,424,845  
                               
Premises and equipment     25,716       24,932       24,494       24,166       23,969  
Accrued interest receivable     31,973       33,534       32,672       30,676       22,889  
Bank owned life insurance     47,837       47,716       47,580       47,581       47,509  
Goodwill and other intangible assets     45,198       45,470       45,742       46,014       46,286  
Finance lease right-of-use assets     1,020       1,055       1,900       2,087       2,274  
Operating lease right-of-use assets     41,650       38,683       16,035       12,096       12,800  
Due from brokers           3,184                    
Other assets     47,081       71,387       60,591       53,752       76,456  
TOTAL ASSETS   $ 6,793,792     $ 6,505,350     $ 6,408,553     $ 6,476,857     $ 6,521,581  
                               
LIABILITIES                              
Deposits:                              
Noninterest-bearing demand deposits   $ 1,079,877     $ 950,368     $ 914,893     $ 957,687     $ 947,405  
Interest-bearing demand deposits     3,316,217       3,229,814       3,029,119       2,882,193       2,871,359  
Savings     103,979       105,602       108,305       111,573       117,905  
Money market accounts     902,562       824,158       775,132       740,559       761,833  
Certificates of deposit – Retail     515,297       502,810       486,079       443,791       422,291  
Certificates of deposit – Listing Service     7,454       7,454       7,704       7,804       9,103  
Subtotal “customer” deposits     5,925,386       5,620,206       5,321,232       5,143,607       5,129,896  
IB Demand – Brokered     10,000       10,000       10,000       10,000       10,000  
Certificates of deposit – Brokered           26,000       145,480       120,507       119,463  
Total deposits     5,935,386       5,656,206       5,476,712       5,274,114       5,259,359  
Short-term borrowings                 119,490       403,814       470,576  
Finance lease liability     1,388       1,427       3,104       3,430       3,752  
Operating lease liability     44,775       41,347       17,630       12,876       13,595  
Subordinated debt, net     133,489       133,417       133,346       133,274       133,203  
Due to brokers           9,981                    
Other liabilities     71,140       74,650       75,892       65,668       82,140  
TOTAL LIABILITIES     6,186,178       5,917,028       5,826,174       5,893,176       5,962,625  
Shareholders’ equity     607,614       588,322       582,379       583,681       558,956  
TOTAL LIABILITIES AND                              
SHAREHOLDERS’ EQUITY   $ 6,793,792     $ 6,505,350     $ 6,408,553     $ 6,476,857     $ 6,521,581  
Assets under management and / or administration at
Peapack-Gladstone Bank’s Private Wealth Management
Division (market value, not included above-dollars in billions)
  $ 12.1     $ 11.5     $ 11.5     $ 10.9     $ 10.4  

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

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

    As of  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    2024     2024     2024     2023     2023  
Asset Quality:                              
Loans past due over 90 days and still accruing   $     $     $ 35     $     $  
Nonaccrual loans     80,453       82,075       69,811       61,324       70,809  
Other real estate owned                              
Total nonperforming assets   $ 80,453     $ 82,075     $ 69,846     $ 61,324     $ 70,809  
                               
Nonperforming loans to total loans     1.51 %     1.56 %     1.30 %     1.13 %     1.29 %
Nonperforming assets to total assets     1.18 %     1.26 %     1.09 %     0.95 %     1.09 %
                               
Performing modifications (A)(B)   $ 51,796     $ 26,788     $ 12,311     $ 248     $ 248  
                               
Loans past due 30 through 89 days and still accruing   $ 31,446     $ 34,714     $ 73,699     $ 34,589     $ 9,780  
                               
Loans subject to special mention   $ 113,655     $ 140,791     $ 59,450     $ 71,397     $ 53,328  
                               
Classified loans   $ 147,422     $ 128,311     $ 117,869     $ 84,372     $ 94,866  
                               
Individually evaluated loans   $ 79,972     $ 81,802     $ 69,530     $ 60,710     $ 70,184  
                               
Allowance for credit losses ("ACL"):                              
Beginning of quarter   $ 67,984     $ 66,251     $ 65,888     $ 68,592     $ 62,704  
Provision for credit losses (C)     1,227       3,901       615       5,082       5,944  
(Charge-offs)/recoveries, net (D)     2,072       (2,168 )     (252 )     (7,786 )     (56 )
End of quarter   $ 71,283     $ 67,984     $ 66,251     $ 65,888     $ 68,592  
                               
ACL to nonperforming loans     88.60 %     82.83 %     94.85 %     107.44 %     96.87 %
ACL to total loans     1.34 %     1.29 %     1.24 %     1.21 %     1.25 %
Collectively evaluated ACL to total loans (E)     1.16 %     1.14 %     1.15 %     1.13 %     1.10 %

(A) Amounts reflect modifications that are paying according to modified terms.
(B) Excludes modifications included in nonaccrual loans of $3.7 million at September 30, 2024, $3.2 million at June 30, 2024, $3.2 million at March 31, 2024, $3.0 million at December 31, 2023 and $3.1 million at September 30, 2023.
(C) Excludes a credit of $3,000 at September 30, 2024, a provision of $10,000 at June 30, 2024, a provision of $12,000 at March 31, 2024, a credit of $55,000 at December 31, 2023 and a credit of $88,000 at September 30, 2023 related to off-balance sheet commitments.
(D) Net charge-offs for the quarter ended December 31, 2023 included charge-offs of $2.2 million of a previously established reserve to loans individually evaluated on one multifamily loan and $5.6 million on one equipment finance relationship.
(E) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.

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

    As of  
    September 30,     December 31,     September 30,  
    2024     2023     2023  
Capital Adequacy                              
Equity to total assets (A)         8.94 %         9.01 %         8.57 %
Tangible equity to tangible assets (B)         8.33 %         8.36 %         7.92 %
Book value per share (C)       $ 34.57         $ 32.90         $ 31.37  
Tangible book value per share (D)       $ 32.00         $ 30.31         $ 28.77  
                               
Tangible equity to tangible assets excluding other comprehensive loss*         9.07 %         9.28 %         9.06 %
Tangible book value per share excluding other comprehensive loss*       $ 35.11         $ 33.97         $ 33.36  

*Excludes other comprehensive loss of $54.8 million for the quarter ended September 30, 2024, $64.9 million for the quarter ended December 31, 2023, and $81.7 million for the quarter ended September 30, 2023. See Non-GAAP financial measures reconciliation included in these tables.

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

    As of
    September 30,   December 31,   September 30,
    2024     2023     2023  
Regulatory Capital – Holding Company                              
Tier I leverage   $ 615,486     9.33 %   $ 600,444     9.19 %   $ 592,061     9.05 %
Tier I capital to risk-weighted assets     615,486     11.67       600,444     11.43       592,061     11.13  
Common equity tier I capital ratio
to risk-weighted assets
    615,474     11.67       600,432     11.43       592,043     11.13  
Tier I & II capital to risk-weighted assets     800,961     15.19       785,413     14.95       784,777     14.76  
                               
Regulatory Capital – Bank                              
Tier I leverage (E)   $ 724,038     10.99 %   $ 707,446     10.83 %   $ 702,517     10.75 %
Tier I capital to risk-weighted assets (F)     724,038     13.75       707,446     13.48       702,517     13.22  
Common equity tier I capital ratio
to risk-weighted assets (G)
    724,026     13.75       707,434     13.47       702,499     13.22  
Tier I & II capital to risk-weighted assets (H)     789,954     15.00       773,083     14.73       768,979     14.47  

(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($264 million)
(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($448 million)
(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($369 million)
(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($553 million)

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

    For the Quarters Ended  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
    2024     2024     2024     2023     2023  
Residential loans retained   $ 26,955     $ 16,087     $ 11,661     $ 5,895     $ 21,310  
Residential loans sold     1,853       2,361       4,025       1,449       2,503  
Total residential loans     28,808       18,448       15,686       7,344       23,813  
Commercial real estate     4,300       2,600       11,500       21,375       3,900  
Multifamily     11,295       4,330       1,900       5,725       3,000  
Commercial (C&I) loans (A) (B)     242,829       103,065       145,803       145,397       176,845  
SBA     9,106       8,200       2,790       7,326       300  
Wealth lines of credit (A)     11,675       10,950       3,850       350       6,875  
Total commercial loans     279,205       129,145       165,843       180,173       190,920  
Installment loans     8,137       1,664       6,868       2,946       6,999  
Home equity lines of credit (A)     10,421       4,787       2,103       4,174       6,275  
Total loans closed   $ 326,571     $ 154,044     $ 190,500     $ 194,637     $ 228,007  

 

    For the Nine Months Ended  
    Sept 30,     Sept 30,  
    2024     2023  
Residential loans retained   $ 54,703     $ 90,971  
Residential loans sold     8,239       5,052  
Total residential loans     62,942       96,023  
Commercial real estate     18,400       66,125  
Multifamily     17,525       59,812  
Commercial (C&I) loans (A) (B)     491,697       543,631  
SBA     20,096       23,963  
Wealth lines of credit (A)     26,475       34,050  
Total commercial loans     574,193       727,581  
Installment loans     16,669       23,672  
Home equity lines of credit (A)     17,311       15,303  
Total loans closed   $ 671,115     $ 862,579  

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

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

    For the Three Months Ended  
    September 30, 2024     September 30, 2023  
    Average     Income/     Annualized     Average     Income/     Annualized  
    Balance     Expense     Yield     Balance     Expense     Yield  
ASSETS:                                    
Interest-earning assets:                                    
Investments:                                    
Taxable (A)   $ 865,892     $ 6,107       2.82 %   $ 806,861     $ 5,170       2.56 %
Tax-exempt (A) (B)                       1,198       11       3.67  
                                     
Loans (B) (C):                                    
Mortgages     579,949       5,834       4.02       580,951       5,208       3.59  
Commercial mortgages     2,381,771       27,362       4.60       2,502,351       27,746       4.44  
Commercial     2,159,648       37,588       6.96       2,298,723       37,357       6.50  
Commercial construction     22,371       507       9.07       12,346       282       9.14  
Installment     73,440       1,267       6.90       56,248       967       6.88  
Home equity     38,768       814       8.40       34,250       680       7.94  
Other     239       6       10.04       234       7       11.97  
Total loans     5,256,186       73,378       5.58       5,485,103       72,247       5.27  
Federal funds sold                                    
Interest-earning deposits     326,707       3,982       4.88       136,315       1,463       4.29  
Total interest-earning assets     6,448,785       83,467       5.18 %     6,429,477       78,891       4.91 %
Noninterest-earning assets:                                    
Cash and due from banks     7,521                   6,954              
Allowance for credit losses     (70,317 )                 (63,625 )            
Premises and equipment     25,530                   23,880              
Other assets     139,042                   85,582              
Total noninterest-earning assets     101,776                   52,791              
Total assets   $ 6,550,561                 $ 6,482,268              
                                     
LIABILITIES:                                    
Interest-bearing deposits:                                    
Checking   $ 3,214,186     $ 31,506       3.92 %   $ 2,813,080     $ 24,318       3.46 %
Money markets     833,325       6,419       3.08       771,781       4,458       2.31  
Savings     104,293       117       0.45       118,718       75       0.25  
Certificates of deposit – retail     512,794       5,540       4.32       415,665       3,459       3.33  
Subtotal interest-bearing deposits     4,664,598       43,582       3.74       4,119,244       32,310       3.14  
Interest-bearing demand – brokered     10,000       134       5.36       10,000       136       5.44  
Certificates of deposit – brokered     7,913       106       5.36       102,777       1,183       4.60  
Total interest-bearing deposits     4,682,511       43,822       3.74       4,232,021       33,629       3.18  
Borrowings                       470,616       6,569       5.58  
Capital lease obligation     1,401       15       4.28       3,863       46       4.76  
Subordinated debt     133,449       1,685       5.05       133,163       1,730       5.20  
Total interest-bearing liabilities     4,817,361       45,522       3.78 %     4,839,663       41,974       3.47 %
Noninterest-bearing liabilities:                                    
Demand deposits     1,016,014                   990,854              
Accrued expenses and other liabilities     124,399                   86,598              
Total noninterest-bearing liabilities     1,140,413                   1,077,452              
Shareholders’ equity     592,787                   565,153              
Total liabilities and shareholders’ equity   $ 6,550,561                 $ 6,482,268              
Net interest income         $ 37,945                 $ 36,917        
Net interest spread                 1.40 %                 1.44 %
Net interest margin (D)                 2.34 %                 2.28 %

(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  
    September 30, 2024     June 30, 2024  
    Average     Income/     Annualized     Average     Income/     Annualized  
    Balance     Expense     Yield     Balance     Expense     Yield  
ASSETS:                                    
Interest-earning assets:                                    
Investments:                                    
Taxable (A)   $ 865,892     $ 6,107       2.82 %   $ 801,715     $ 5,168       2.58 %
Tax-exempt (A) (B)                                    
                                     
Loans (B) (C):                                    
Mortgages     579,949       5,834       4.02       576,944       5,582       3.87  
Commercial mortgages     2,381,771       27,362       4.60       2,420,570       26,881       4.44  
Commercial     2,159,648       37,588       6.96       2,191,370       37,067       6.77  
Commercial construction     22,371       507       9.07       21,628       489       9.04  
Installment     73,440       1,267       6.90       67,034       1,143       6.82  
Home equity     38,768       814       8.40       36,576       748       8.18  
Other     239       6       10.04       200       6       12.00  
Total loans     5,256,186       73,378       5.58       5,314,322       71,916       5.41  
Federal funds sold                                    
Interest-earning deposits     326,707       3,982       4.88       207,287       2,418       4.67  
Total interest-earning assets     6,448,785       83,467       5.18 %     6,323,324       79,502       5.03 %
Noninterest-earning assets:                                    
Cash and due from banks     7,521                   7,537              
Allowance for credit losses     (70,317 )                 (67,568 )            
Premises and equipment     25,530                   24,820              
Other assets     139,042                   99,838              
Total noninterest-earning assets     101,776                   64,627              
Total assets   $ 6,550,561                 $ 6,387,951              
                                     
LIABILITIES:                                    
Interest-bearing deposits:                                    
Checking   $ 3,214,186     $ 31,506       3.92 %   $ 3,094,386     $ 29,252       3.78 %
Money markets     833,325       6,419       3.08       791,385       6,016       3.04  
Savings     104,293       117       0.45       105,825       96       0.36  
Certificates of deposit – retail     512,794       5,540       4.32       504,313       5,367       4.26  
Subtotal interest-bearing deposits     4,664,598       43,582       3.74       4,495,909       40,731       3.62  
Interest-bearing demand – brokered     10,000       134       5.36       10,000       134       5.36  
Certificates of deposit – brokered     7,913       106       5.36       98,642       1,242       5.04  
Total interest-bearing deposits     4,682,511       43,822       3.74       4,604,551       42,107       3.66  
Borrowings                       27,247       381       5.59  
Capital lease obligation     1,401       15       4.28       2,869       22       3.07  
Subordinated debt     133,449       1,685       5.05       133,377       1,686       5.06  
Total interest-bearing liabilities     4,817,361       45,522       3.78 %     4,768,044       44,196       3.71 %
Noninterest-bearing liabilities:                                    
Demand deposits     1,016,014                   945,231              
Accrued expenses and other liabilities     124,399                   97,470              
Total noninterest-bearing liabilities     1,140,413                   1,042,701              
Shareholders’ equity     592,787                   577,206              
Total liabilities and shareholders’ equity   $ 6,550,561                 $ 6,387,951              
Net interest income         $ 37,945                 $ 35,306        
Net interest spread                 1.40 %                 1.32 %
Net interest margin (D)                 2.34 %                 2.25 %

(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 Nine Months Ended  
    September 30, 2024     September 30, 2023  
    Average     Income/           Average     Income/        
    Balance     Expense     Yield     Balance     Expense     Yield  
ASSETS:                                    
Interest-earning assets:                                    
Investments:                                    
Taxable (A)   $ 820,594     $ 16,411       2.67 %   $ 801,535     $ 14,541       2.42 %
Tax-exempt (A) (B)                       1,637       49       3.99  
                                     
Loans (B) (C):                                    
Mortgages     578,187       16,836       3.88       556,220       14,433       3.46  
Commercial mortgages     2,420,772       81,783       4.50       2,495,175       80,503       4.30  
Commercial     2,196,921       112,214       6.81       2,247,803       106,182       6.30  
Commercial construction     20,981       1,425       9.06       7,903       536       9.04  
Installment     68,605       3,524       6.85       49,214       2,416       6.55  
Home equity     37,255       2,298       8.22       33,914       1,903       7.48  
Other     218       19       11.62       260       22       11.28  
Total loans     5,322,939       218,099       5.46       5,390,489       205,995       5.10  
Federal funds sold                                    
Interest-earning deposits     225,070       7,922       4.69       147,071       4,452       4.04  
Total interest-earning assets     6,368,603       242,432       5.08 %     6,340,732       225,037       4.73 %
Noninterest-earning assets:                                    
Cash and due from banks     8,384                   8,388              
Allowance for credit losses     (68,337 )                 (62,753 )            
Premises and equipment     24,917                   23,850              
Other assets     109,152                   76,992              
Total noninterest-earning assets     74,116                   46,477              
Total assets   $ 6,442,719                 $ 6,387,209              
                                     
LIABILITIES:                                    
Interest-bearing deposits:                                    
Checking   $ 3,088,218     $ 88,192       3.81 %   $ 2,739,115     $ 63,018       3.07 %
Money markets     794,297       17,959       3.01       893,567       13,185       1.97  
Savings     106,200       302       0.38       128,437       148       0.15  
Certificates of deposit – retail     498,353       15,762       4.22       386,488       7,650       2.64  
Subtotal interest-bearing deposits     4,487,068       122,215       3.63       4,147,607       84,001       2.70  
Interest-bearing demand – brokered     10,000       394       5.25       15,311       469       4.08  
Certificates of deposit – brokered     78,042       2,950       5.04       51,916       1,584       4.07  
Total interest-bearing deposits     4,575,110       125,559       3.66       4,214,834       86,054       2.72  
Borrowings     87,224       3,848       5.88       331,170       13,249       5.33  
Capital lease obligation     2,491       75       4.01       4,179       149       4.75  
Subordinated debt     133,377       5,055       5.05       133,090       4,966       4.98  
Total interest-bearing liabilities     4,798,202       134,537       3.74 %     4,683,273       104,418       2.97 %
Noninterest-bearing liabilities:                                    
Demand deposits     959,571                   1,066,162              
Accrued expenses and other liabilities     101,247                   82,215              
Total noninterest-bearing liabilities     1,060,818                   1,148,377              
Shareholders’ equity     583,699                   555,559              
Total liabilities and shareholders’ equity   $ 6,442,719                 $ 6,387,209              
Net interest income         $ 107,895                 $ 120,619        
Net interest spread                 1.34 %                 1.76 %
Net interest margin (D)                 2.26 %                 2.54 %

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

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

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

(Dollars in thousands, except per share data)

    Three Months Ended  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
Tangible Book Value Per Share   2024     2024     2024     2023     2023  
Shareholders’ equity   $ 607,614     $ 588,322     $ 582,379     $ 583,681     $ 558,956  
Less: Intangible assets, net     45,198       45,470       45,742       46,014       46,286  
Tangible equity   $ 562,416     $ 542,852     $ 536,637     $ 537,667     $ 512,670  
Less: other comprehensive loss     (54,820 )     (68,342 )     (67,760 )     (64,878 )     (81,653 )
Tangible equity excluding other comprehensive loss   $ 617,236     $ 611,194     $ 604,397     $ 602,545     $ 594,323  
                               
Period end shares outstanding     17,577,747       17,666,490       17,761,538       17,739,677       17,816,922  
Tangible book value per share   $ 32.00     $ 30.73     $ 30.21     $ 30.31     $ 28.77  
Tangible book value per share excluding other comprehensive loss   $ 35.11     $ 34.60     $ 34.03     $ 33.97     $ 33.36  
Book value per share     34.57       33.30       32.79       32.90       31.37  
                               
Tangible Equity to Tangible Assets                              
Total assets   $ 6,793,792     $ 6,505,350     $ 6,408,553     $ 6,476,857     $ 6,521,581  
Less: Intangible assets, net     45,198       45,470       45,742       46,014       46,286  
Tangible assets   $ 6,748,594     $ 6,459,880     $ 6,362,811     $ 6,430,843     $ 6,475,295  
Less: other comprehensive loss     (54,820 )     (68,342 )     (67,760 )     (64,878 )     (81,653 )
Tangible assets excluding other comprehensive loss   $ 6,803,414     $ 6,528,222     $ 6,430,571     $ 6,495,721     $ 6,556,948  
                               
Tangible equity to tangible assets     8.33 %     8.40 %     8.43 %     8.36 %     7.92 %
Tangible equity to tangible assets excluding other comprehensive loss     9.07 %     9.36 %     9.40 %     9.28 %     9.06 %
Equity to assets     8.94 %     9.04 %     9.09 %     9.01 %     8.57 %

(Dollars in thousands)

    Three Months Ended  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
Return on Average Tangible Equity   2024     2024     2024     2023     2023  
Net income   $ 7,587     $ 7,530     $ 8,631     $ 8,599     $ 8,755  
                               
Average shareholders’ equity   $ 592,787     $ 577,206     $ 581,003     $ 561,055     $ 565,153  
Less: Average intangible assets, net     45,350       45,624       45,903       46,167       46,468  
Average tangible equity   $ 547,437     $ 531,582     $ 535,100     $ 514,888     $ 518,685  
                               
Return on average tangible common equity     5.54 %     5.67 %     6.45 %     6.68 %     6.75 %

 

    For the Nine Months Ended  
    Sept 30,     Sept 30,  
Return on Average Tangible Equity   2024     2023  
Net income   $ 23,748     $ 40,255  
             
Average shareholders’ equity   $ 583,699     $ 555,559  
Less: Average intangible assets, net     45,625       46,825  
Average tangible equity     538,074       508,734  
             
Return on average tangible common equity     5.88 %     10.55 %

(Dollars in thousands)

    Three Months Ended  
    Sept 30,     June 30,     March 31,     Dec 31,     Sept 30,  
Efficiency Ratio   2024     2024     2024     2023     2023  
Net interest income   $ 37,681     $ 35,042     $ 34,375     $ 36,675     $ 36,515  
Total other income     18,938       21,555       18,701       17,590       19,354  
Add:                              
Fair value adjustment for CRA equity security     (474 )     84       111       (585 )     404  
Less:                              
Gain on loans held for sale at lower of cost or fair value           (23 )                  
Income from life insurance proceeds     (55 )           (181 )            
Total recurring revenue     56,090       56,658       53,006       53,680       56,273  
                               
Operating expenses     44,649       43,126       40,041       37,616       37,413  
Total operating expense     44,649       43,126       40,041       37,616       37,413  
                               
Efficiency ratio     79.60 %     76.12 %     75.54 %     70.07 %     66.48 %

(Dollars in thousands)

    For the Nine Months Ended  
    Sept 30,     Sept 30,  
Efficiency Ratio   2024     2023  
Net interest income   $ 107,098     $ 119,414  
Total other income     59,194       55,988  
Add:            
Fair value adjustment for CRA equity security     (279 )     404  
Less:            
Gain on loans held for sale at lower of cost or fair value     (23 )      
Income from life insurance proceeds     (236 )      
Total recurring revenue     165,754       175,806  
             
Operating expenses     127,816       110,679  
Less:            
Accelerated Expense for Retirement           1,965  
Branch Closure Expense           175  
Total operating expense     127,816       108,539  
             
Efficiency ratio     77.11 %     61.74 %