Peapack-Gladstone Financial Corporation Reports Another Solid Quarter

BEDMINSTER, NJ--(Marketwired - Oct 22, 2014) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded net income of $10.68 million and diluted earnings per share of $0.90 for the nine months ended September 30, 2014. This compared to $6.87 million and $0.76, respectively for the same nine month period last year.

For the quarter ended September 30, 2014, the Corporation recorded net income of $3.86 million and diluted earnings per share of $0.32. This compared to $1.96 million and $0.22, respectively, for the same quarter last year.

The following table summarizes earnings for the quarters ended:

			Sept				June				Sept
			2014				2014				2013
(Dollars in millions, except EPS)			(1)				(1)(2)				(3)
Pretax income		$	6.26			$	6.32			$	3.24
Net income		$	3.86			$	3.78			$	1.96
Diluted EPS		$	0.32			$	0.32			$	0.22
Return on average assets			0.63	%			0.67	%			0.45	%
Return on average equity			8.35	%			8.44	%			6.28	%
Efficiency ratio			66.60	%			67.43	%			78.84	%
Total revenue		$	22.10			$	22.40			$	18.16

(1)		The September 2014 and June 2014 quarterly earnings per share calculations include all of the 2.47 million shares issued in the December 12, 2013 capital raise.
(2)		The June 2014 quarter included a $176 thousand gain on sale of residential first mortgage loans sold, as a component of balance sheet management.
(3)		The September 2013 quarter included $933 thousand of compensation expense accruals related to the retirement of two senior officers.

Doug Kennedy, President and CEO, said, "We continue to focus on executing our Strategic Plan -- 'Expanding Our Reach.' This Plan focuses on the client experience and aggressively building and maintaining our private banking platform. Our growth and overall results reflect our continued success." 

Q3 2014 highlights follow:

• As reflected in the table above, earnings and performance ratios for the September 2014 quarter reflected improvement when compared to the same quarter last year. The June 2014 quarter includes the $176 thousand gain on sale of residential first mortgage loans sold ($105 thousand after tax or a penny per share). 
• Total loan balances at September 30, 2014 exceeded $2 billion and reached another record level for the Company at $2.04 billion. This level reflected growth when compared to $1.57 billion at December 31, 2013, and $1.40 billion one year ago at September 30, 2013. Year over year loan growth was 46 percent.
• During the September 2014 quarter, Commercial & Industrial (C&I) loan originations totaled $74 million -- a record quarter for the Company.
• During the period June through September 2014, three new seasoned commercial bankers joined the Company. 
• Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) grew to a record $1.93 billion at September 30, 2014, from $1.63 billion at December 31, 2013 and $1.57 billion at September 30, 2013. Year over year customer deposit growth totaled 23 percent.
• The Company's net interest income for the September 2014 quarter reached another quarterly record level at $17.05 million. This level reflected improvement when compared to $16.92 million for the June 2014 quarter, and when compared to $13.37 million for the same quarter last year.
• At September 30, 2014, the market value of assets under administration at the Private Wealth Management Division of Peapack-Gladstone Bank ("The Bank") was $2.86 billion, also another record for the Company.
• Fee income from the Private Wealth Management Division totaled $3.66 million for the September 2014 quarter growing from $3.30 million for the same quarter last year. The June 2014 quarter totaled $4.01 million as fee income for the second quarter of each calendar year is benefitted by tax return preparation fee income.
• Asset quality metrics continue to be strong at September 30, 2014. Nonperforming assets at September 30, 2014 were just $9.7 million or 0.39 percent of total assets. The metrics improved in early October when a $1.5 million commercial loan on nonaccrual at September 30, 2014 paid off in full on October 8, 2014. 
• The book value per share at September 30, 2014 of $15.80 reflected improvement when compared to $14.79 at December 31, 2013 and $14.12 at September 30, 2013. Year-over-year growth in book value per share totaled 12 percent.
  
  

Net Interest Income / Net Interest Margin

Net interest income was $17.05 million for the third quarter of 2014, compared to $16.92 million for the June 2014 quarter and $13.37 million for the same quarter last year, reflecting growth of $3.68 million or 27 percent when compared to the prior year period. Net interest income for the third quarter of 2014 benefitted from significant loan growth during the first nine months of 2014 as well as the last quarter of 2013, principally multifamily and commercial mortgages.

While net interest income for the third quarter of 2014 improved compared to these prior periods, the net interest margin, on a fully tax-equivalent basis, was 2.89 percent for the September 2014 quarter compared to 3.14 percent for the June 2014 quarter and 3.28 percent for the September 2013 quarter. The bulk of the decline in margin for the September 2014 quarter was due to the maintenance of much larger average interest earning deposit/cash balances -- $197.7 million average for the September 2014 quarter, compared to $51.2 million for the June 2014 quarter and $35.2 million for the September 2013 quarter. Mr. Kennedy said, "Given our rapid growth, we have decided to maintain greater liquidity on our balance sheet."

In general, in addition to the maintenance of larger interest bearing deposit/cash balances noted above, net interest margin also continues to be affected by the continued effect of low market yields, as well as competitive pressures in attracting new loans and deposits. 

Loan Originations / Loans

Total loan originations were $772 million for the nine months ended September 30, 2014. At September 30, 2014, loans totaled $2.04 billion as compared to $1.40 billion one year ago at September 30, 2013, representing an increase of $644 million or 46 percent. The multifamily and commercial mortgage loan portfolio grew $580 million or 85 percent when comparing the September 2014 balance to the September 2013 balance. The increase was attributable to the addition of seasoned banking professionals over the course of 2013; a more concerted focus on the client service aspect of the lending process; more of a focus on New Jersey markets; and a focus on New York City multifamily markets beginning in mid-2013. The increase was also due to demand from borrowers looking to refinance multifamily and other commercial mortgages held by other institutions.

Mr. Kennedy said, "As we have noted previously, our analysis showed that multifamily lending could be grown quickly, had strong credit metrics and that this type of lending provided solid risk-adjusted returns. Originations of this asset class has been a major focus as we build our C&I (Commercial & Industrial) lending capabilities, as part of our Strategic Plan launched in March 2013. Going forward, multifamily lending will remain a focus of the Company, but with the C&I lending program becoming more seasoned, including the addition of three seasoned C&I bankers since June 2014, we anticipate that C&I loan production will continue to improve as we move forward."

The Company closed $105 million of C&I loans in 2013, and an additional $153 million for the nine months ended September 30, 2014. At September 30, 2014, C & I loans totaled $226 million, more than double the $111 million one year ago at September 30, 2013.

Deposits / Funding / Balance Sheet Management 

Loan growth of $166 million and investment security growth of $43 million in the September 2014 quarter was funded by a reduction of $96 million in interest earning deposit/cash balances, as well as growth of $101 million in customer deposits. Also, Capital growth of $5.7 million for the September 2014 quarter provided additional funding.

Brokered interest-bearing demand deposits continue to be maintained as an additional source of liquidity. At a cost of less than a 25 basis points, such deposits are a more cost effective alternative than overnight wholesale borrowings, and do not require pledging of collateral. These deposits have been maintained at $138 million thus far throughout 2014 and, as a part of its liquidity management, the Company may maintain higher levels in future periods. The Company does ensure ample available collateralized liquidity as a backup to these short term brokered deposits.

Brokered certificates of deposit have also been utilized throughout 2014. The majority of these deposits have been longer term and have generally been transacted as a part of the Company's interest rate risk management. These certificates of deposit are also a more cost effective alternative than medium/longer term wholesale borrowings, and also do not require pledging of collateral. 

Mr. Kennedy noted that "The June 2014 quarter included sales of $67 million of longer duration, lower coupon residential first mortgage loans, as well as $61 million of multifamily loan participations, as part of the Company's overall balance sheet management strategy. These transactions contributed to the Company's increased interest earning deposits/cash held as of the beginning of the September 2014 quarter." Mr. Kennedy went on to say, "The Company will continue to place intense focus on providing high touch client service and growing its core deposit base. Its full array of treasury management products will help support both core deposit growth and commercial lending opportunities. Private bankers, commercial bankers, relationship bankers and the treasury management team have robust pipelines of client deposits."

Wealth Management Business

In the September 2014 quarter, Peapack-Gladstone Bank's Wealth Management business generated $3.66 million in fee income compared to $3.30 million for the September 2013 quarter. The market value of the assets under administration (AUA) of the wealth management division was $2.86 billion at September 30, 2014, up from $2.58 billion at September 30, 2013. The growth in fee income and AUA was due to a combination of new business and market value improvement.

John P. Babcock, President of Private Wealth Management, noted, "Incorporating wealth into every conversation we have with all of our Company's clients, across all business lines, is integral to our strategy. As noted last quarter, over the course of 2014, three seasoned wealth advisors joined the Company from larger wealth management companies, and a seasoned two person team -- a Portfolio Manager and a Trust Officer -- from a larger wealth management company joined our Princeton Private Banking Team. These individuals complemented our existing high-caliber team. We will continue to build-out and grow our Wealth Management team, and expand the products, service, and advice we deliver to our clients."

Other Noninterest Income

The September 2014 quarter included $87 thousand of income from the sale of newly originated residential mortgage loans, down from $277 thousand in the same 2013 quarter. As noted in prior quarters, the rise in mortgage rates caused a decrease in residential mortgage loan originations and resultant mortgage banking income. Mr. Kennedy noted, "Reduced levels of mortgage banking income was expected and planned for, and reduced levels of mortgage banking income are expected to be ongoing. Fortunately, mortgage banking income is not a significant portion of our revenue."

Securities gains were $39 thousand for the September 2014 quarter compared to $188 thousand for the September 2013 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the short duration of the securities portfolio, sales have been employed much less often in recent periods.

Other income of $1.27 million for the September 2014 quarter was $250 thousand higher than the September 2013 quarter. Several categories reflected slight improvement in the quarter including, increased income associated with a new set of checking products put in place during the summer months.

Operating Expenses

The Company's total operating expenses were $14.69 million for the quarter ended September 30, 2014 compared to $14.17 million in the same 2013 quarter, reflecting a net increase of $528 thousand.

Salary and benefits expense increased due to strategic hiring in line with the Company's Strategic Plan, including private bankers, relationship bankers, commercial bankers, wealth advisors, risk management professionals and various support staff, including support staff associated with the commercial lending process. Additionally, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, contributed to the increase. The September 2013 quarter included approximately $933 thousand of compensation expense accruals related to the retirement of two senior officers.

Also, when comparing the September 2014 expense levels to those in September 2013, the September 2014 quarter included increased occupancy costs associated with the new Princeton and Teaneck Private Banking offices. 

Mr. Kennedy noted, "Expense increases that were contemplated with our strategy, Expanding Our Reach, are tracking consistent with projections. We expect that the trend of higher operating expenses will continue as we close out 2014 and go into 2015, as we bring on high caliber revenue producers, and continue to invest in our infrastructure in line with our Strategic Plan. Further, we generally expect revenue and profitability related to new personnel to lag those expenses by several quarters. It is important to note, however, that we have seen an improvement in quarterly revenue since we launched our Plan, particularly in the recent quarters, as our Plan began to gain momentum. This revenue growth, which has outpaced expense growth considerably, has caused our Efficiency Ratio to decline to just below 67 percent for the current quarter."

Provision for Loan Losses / Asset Quality

For the quarter ended September 2014, the Company's provision for loan losses was $1.15 million, the same as the June 2014 provision, and up $400 thousand when compared to the $750 thousand provision for the September 2013 quarter. Charge-offs, net of recoveries, for the September 2014 quarter were only $55 thousand. 

At September 30, 2014 the allowance for loan losses was 208 percent of nonperforming loans and 0.90 percent of total loans.

The Company's provision for loan losses and net increase in its allowance for loan losses continue to track well with the Company's net loan growth.

Nonperforming assets totaled $9.7 million or 0.39 percent of total assets at September 30, 2014. Mr. Kennedy noted, "Those metrics improved in early October when a $1.5 million commercial loan on nonaccrual at September 30, 2014 paid off in full on October 8, 2014." 

Capital / Dividends

Capital in the September 2014 quarter was benefitted by net income and by just over $2 million of voluntary share purchases in the Dividend Reinvestment Plan.

During the September 2014 quarter, the Company continued to employ the capital raised in December 2013 by continuing to grow loans. At September 30, 2014, the Company's leverage ratio, tier 1 and total risk based capital ratios were 7.57 percent, 12.16 percent and 13.36 percent, respectively. The Company's ratios are all above the levels required to be considered well capitalized under regulatory guidelines applicable to banks.

As previously announced, on October 15, 2014 the Board of Directors declared a regular cash dividend of $0.05 per share payable on November 14, 2014 to shareholders of record on October 30, 2014.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $2.51 billion as of September 30, 2014. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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

• inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
• inability to manage our growth;
• a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas;
• declines in our net interest margin caused by the low interest rate and highly competitive market;
• declines in value in our investment portfolio;
• higher than expected increases in our allowance for loan losses;
• higher than expected increases in loan losses or in the level of nonperforming loans;
• unexpected changes in interest rates;
• a continued or unexpected decline in real estate values within our market areas;
• legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;
• successful cyber attacks against our IT infrastructure and that of our IT providers;
• higher than expected FDIC insurance premiums;
• lack of liquidity to fund our various cash obligations;
• reduction in our lower-cost funding sources;
• our inability to adapt to technological changes;
• claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters; and
• other unexpected material adverse changes in our operations or earnings.
  
  

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on form 10-K for the year ended December 31, 2013. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation'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
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
			As of
				Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
				2014			2014			2014			2013			2013
ASSETS
Cash and due from banks			$	6,596		$	5,757		$	6,373		$	6,534		$	5,886
Federal funds sold				101			101			101			101			101
Interest-earning deposits				114,124			209,768			95,059			28,512			33,528
	Total cash and cash equivalents			120,821			215,626			101,533			35,147			39,515
Securities available for sale				269,550			225,270			248,070			268,447			273,952
FHLB and FRB Stock, at cost				9,121			9,946			12,765			10,032			7,707
Loans held for sale, at fair value				351			2,650			1,769			2,001			724
Loans held for sale, at lower of cost or fair value				-			-			51,184			-			-
Residential mortgage				470,030			469,648			481,850			532,911			527,927
Commercial mortgage				1,260,561			1,166,747			1,063,470			831,997			680,762
Commercial loans				225,814			158,103			143,389			131,795			110,843
Construction loans				6,025			6,033			6,075			5,893			8,390
Consumer loans				27,597			23,414			20,945			21,852			19,932
Home equity lines of credit				48,200			48,740			45,820			47,905			47,020
Other loans				2,560			2,255			1,851			1,848			2,075
	Total loans			2,040,787			1,874,940			1,763,400			1,574,201			1,396,949
	Less: Allowances for loan losses			18,299			17,204			16,587			15,373			14,056
	Net loans			2,022,488			1,857,736			1,746,813			1,558,828			1,382,893
Premises and equipment				30,825			31,095			31,087			28,990			29,022
Other real estate owned				949			1,036			2,062			1,941			2,759
Accrued interest receivable				5,126			4,858			4,788			4,086			4,017
Bank owned life insurance				32,448			32,258			32,065			31,882			31,691
Deferred tax assets, net				11,661			9,433			9,366			9,762			7,951
Other assets				11,181			11,063			9,983			15,832			17,473
	TOTAL ASSETS		$	2,514,521		$	2,400,971		$	2,251,485		$	1,966,948		$	1,797,704
LIABILITIES
Deposits:
	Noninterest-bearing demand deposits		$	383,268		$	410,609		$	350,987		$	356,119		$	345,736
	Interest-bearing demand deposits			558,537			474,945			407,127			378,340			338,626
	Savings			111,897			116,172			119,750			115,785			115,571
	Money market accounts			713,383			673,375			660,691			630,173			611,498
	Certificates of deposit - Retail			165,834			157,067			151,730			151,833			156,132
Subtotal "customer" deposits				1,932,919			1,832,168			1,690,285			1,632,250			1,567,563
	IB Demand - Brokered			138,000			138,000			138,011			10,000			-
	Certificates of deposit - Brokered			132,500			145,000			65,000			5,000			5,000
Total deposits				2,203,419			2,115,168			1,893,296			1,647,250			1,572,563
Overnight borrowings				-			-			79,400			54,900			30,361
Federal home loan bank advances				83,692			83,692			83,692			74,692			47,692
Capital lease obligation				9,734			9,836			9,917			8,754			8,809
Other liabilities				12,646			9,942			9,308			10,695			11,861
Due to brokers, securities settlements				16,960			-			-			-			-
	TOTAL LIABILITIES			2,326,451			2,218,638			2,075,613			1,796,291			1,671,286
Shareholders' equity				188,070			182,333			175,872			170,657			126,418
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	2,514,521		$	2,400,971		$	2,251,485		$	1,966,948		$	1,797,704
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division(market value, not included above)			$	2,857,727		$	2,843,310		$	2,745,955		$	2,690,601		$	2,581,813

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
			As of
				Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
				2014			2014			2014			2013			2013
Asset Quality:
Loans past due over 90 days and still accruing			$	-		$	-		$	-		$	-		$	-
Nonaccrual loans (A)				8,790			6,536			7,473			6,630			6,891
Other real estate owned				949			1,036			2,062			1,941			2,759
	Total nonperforming assets (A)		$	9,739		$	7,572		$	9,535		$	8,571		$	9,650
Nonperforming loans to total loans (A)				0.43%			0.35%			0.42%			0.42%			0.49%
Nonperforming assets to total assets (A)				0.39%			0.32%			0.42%			0.44%			0.54%
Accruing TDR's (B)			$	13,045		$	12,730		$	12,340		$	11,114		$	6,133
Loans past due 30 through 89 days and still accruing			$	2,278		$	1,536		$	5,027		$	2,953		$	2,039
Classified loans (A)			$	34,752		$	34,929		$	35,075		$	33,828		$	32,430
Impaired loans (A)			$	21,834		$	19,813		$	19,814		$	17,744		$	16,794
Allowance for loan losses:
	Beginning of period		$	17,204		$	16,587		$	15,373		$	14,056		$	13,438
	Provision for loan losses			1,150			1,150			1,325			1,325			750
	Charge-offs, net			(55)			(533)			(111)			(8)			(132)
	End of period			18,299			17,204			16,587			15,373			14,056
ALLL to nonperforming loans				208.18%			263.22%			221.96%			231.87%			203.98%
ALLL to total loans				0.90%			0.92%			0.94%			0.98%			1.01%
Capital Adequacy
Tier 1 leverage				7.57%			8.01%			8.48%			9.00%			7.20%
Tier I capital to risk weighted assets				12.16%			13.05%			13.09%			14.07%			11.30%
Tier I & II capital to risk-weighted assets				13.36%			14.30%			14.34%			15.33%			12.55%
Common equity to total Assets				7.48%			7.59%			7.81%			8.68%			7.03%
(End of period)
Book value per share (C) (D)			$	15.80		$	15.48		$	15.08		$	14.79		$	14.12

(A)		September 30, 2014 amount includes a $1.5 million commercial nonaccrual loan that was paid in full on October 8, 2014.
(B)		Does not include $2.4 million at September 30, 2014, $2.5 million at June 30, 2014, $3.0 million at March 31, 2014, $2.9 million at December 31, 2013, and $3.3 million at September 30, 2013 of TDR's included in nonaccrual loans.
(C)		Shares included in the book value per share calculation are shares outstanding at period end less the restricted shares that have not yet vested.
(D)		Tangible book value per share was $15.75 at September 30, 2014, $15.43 at June 30, 2014, $15.03 at March 31, 2014, $14.75 at December 31, 2013, and $14.02 at September 30, 2013. Tangible book value per share is different than book value per share because it excludes intangible assets. See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
			For the Quarters Ended
			Sept 30,			June 30,			March 31,			Dec 31,			Sept 30,
			2014			2014			2014			2013			2013
Residential loans retained		$	20,540		$	17,245		$	11,653		$	20,135		$	31,517
Residential loans sold			5,561			7,344			7,011			11,743			13,516
Total residential loans			26,101			24,589			18,664			31,878			45,033
CRE			3,208			20,175			15,841			11,972			20,357
Multifamily			105,584			149,937			225,143			152,456			143,727
Commercial loans (includes Community banking)			74,029			62,668			15,957			39,534			40,654
Total commercial loans			182,821			232,780			256,941			203,962			204,738
Installment loans			9,410			5,184			1,877			3,081			2,489
Home equity lines of credit			2,550			6,709			4,668			3,746			3,982
Total loan originations		$	220,882		$	269,262		$	282,150		$	242,667		$	256,242

		For the Nine Months Ended
			Sept 30,			Sept 30,
			2014			2013
Residential loans retained		$	49,438		$	100,299
Residential loans sold			19,916			65,569
Total residential loans			69,354			165,868
CRE			39,224			46,927
Multifamily			480,664			242,252
Commercial loans (includes Community banking)			152,654			65,400
Total commercial loans			672,542			354,579
Installment loans			16,471			4,915
Home equity lines of credit			13,927			11,053
Total loan originations		$	772,294		$	536,415

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
			For the Three Months Ended
				Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
				2014				2014				2014				2013				2013
Income Statement Data:
Interest income			$	19,210			$	18,630			$	16,949			$	15,738			$	14,423
Interest expense				2,162				1,707				1,378				1,210				1,050
	Net interest income			17,048				16,923				15,571				14,528				13,373
Provision for loan losses				1,150				1,150				1,325				1,325				750
	Net interest income after provision for loan losses			15,898				15,773				14,246				13,203				12,623
Wealth management fee income				3,661				4,005				3,754				3,547				3,295
Gain on loans held for sale at fair value (Mortgage banking)				87				112				112				171				277
(Loss)/Gain on loans held for sale at lower of cost or fair value				(7	)			176				-				-				-
Other income				1,272				1,101				1,031				1,130				1,022
Securities gains, net				39				79				98				125				188
	Total other income			5,052				5,473				4,995				4,973				4,782
Salaries and employee benefits				9,116				9,089				8,848				8,308				8,927
Premises and equipment				2,564				2,334				2,438				2,947				2,325
FDIC insurance expense				350				303				275				286				275
Other expenses				2,663				3,204				2,778				3,105				2,638
	Total operating expenses			14,693				14,930				14,339				14,646				14,165
Income before income taxes				6,257				6,316				4,902				3,530				3,240
Income tax expense				2,393				2,533				1,871				1,135				1,276
Net income			$	3,864			$	3,783			$	3,031			$	2,395			$	1,964
Total revenue			$	22,100			$	22,396			$	20,566			$	19,501			$	18,155
Per Common Share Data:
Earnings per share (basic)			$	0.33			$	0.32			$	0.26			$	0.25			$	0.22
Earnings per share (diluted)				0.32				0.32				0.26				0.25				0.22
Weighted average number of Common shares outstanding:
Basic				11,841,777				11,720,329				11,606,933				9,638,913				8,950,931
Diluted				11,956,356				11,845,148				11,710,940				9,746,550				9,013,419
Performance Ratios:
Return on average assets annualized				0.63	%			0.67	%			0.59	%			0.51	%			0.45	%
Return on average common equity annualized				8.35	%			8.44	%			7.01	%			7.42	%			6.28	%
Net interest margin (Taxable equivalent basis)				2.89	%			3.14	%			3.18	%			3.26	%			3.28	%
Efficiency ratio (A)				66.58	%			67.43	%			70.06	%			75.59	%			78.84	%
Operating expenses / average assets annualized				2.39	%			2.65	%			2.78	%			3.10	%			3.26	%

(A)		Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities). See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
				For the
				Nine Months Ended
				Sept 30,
Income Statement Data:				2014				2013
Interest income			$	54,789			$	41,315
Interest expense				5,247				3,067
	Net interest income			49,542				38,248
Provision for loan losses				3,625				2,100
	Net interest income after provision for loan losses			45,917				36,148
Wealth management fee income				11,420				10,291
Gain on loans held for sale at fair value (Mortgage banking)				310				1,138
Gain on loans held for sale at lower of cost or fair value				169				522
Other income				3,405				2,956
Securities gains, net				216				715
	Total other income			15,520				15,622
Salaries and employee benefits				27,053				23,941
Premises and equipment				7,336				6,967
FDIC insurance expense				928				835
Other expenses				8,645				8,794
	Total operating expenses			43,962				40,537
Income before income taxes				17,475				11,233
Income tax expense				6,797				4,367
Net income			$	10,678			$	6,866
Total revenue (See footnote (A) below)			$	65,062			$	53,870
Per Common Share Data:
Earnings per share (basic)			$	0.91			$	0.77
Earnings per share (diluted)				0.90				0.76
Weighted average number of Common Shares outstanding
Basic				11,723,873				8,910,514
Diluted				11,833,507				8,976,905
Performance Ratios:
Return on average assets annualized				0.63	%			0.55	%
Return on average common equity annualized				7.95	%			7.35	%
Net interest margin (Taxable equivalent basis)				3.06	%			3.26	%
Efficiency ratio (B)				67.97	%			76.26	%
Operating expenses / average assets annualized				2.60	%			3.22	%

(A)		Total revenue includes a $176 thousand gain (for 2014) and a $522 thousand gain (for 2013) from sale of loans held for sale at lower of cost or fair value. Excluding these gains, total revenue was $64,886 (for 2014) and $53,348 (for 2013).
(B)		Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities). See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
				September 30, 2014									September 30, 2013
					Average			Income/						Average			Income/
					Balance			Expense		Yield				Balance			Expense		Yield
ASSETS:
Interest-Earning Assets:
	Investments:
		Taxable (1)		$	192,207		$	960		2.00	%		$	237,559		$	1,141		1.92	%
		Tax-exempt (1) (2)			47,701			268		2.25				54,465			328		2.41
	Loans held for sale				1,026			10		3.90				1,617			21		5.27
	Loans (2) (3):
		Mortgages			464,227			3,879		3.34				543,722			4,611		3.39
		Commercial mortgages			1,231,798			11,790		3.83				595,073			6,453		4.34
		Commercial			166,092			1,597		3.85				108,042			1,264		4.68
		Commercial construction			6,029			65		4.31				8,173			105		5.14
		Installment			24,965			249		3.99				19,672			216		4.39
		Home equity			48,371			394		3.26				47,562			401		3.37
		Other			563			13		9.24				598			15		10.03
		Total loans			1,942,045			17,987		3.70				1,322,842			13,065		3.95
	Federal funds sold				101			-		0.10				101			-		0.10
	Interest-earning deposits				197,705			109		0.22				35,168			21		0.24
		Total interest-earning assets			2,380,785			19,334		3.25	%			1,651,752			14,576		3.53	%
Noninterest-Earning Assets:
	Cash and due from banks				6,262									5,962
	Allowance for loan losses				(17,720)									(13,615)
	Premises and equipment				30,985									28,984
	Other assets				60,717									65,163
		Total noninterest-earning assets			80,244									86,494
Total assets				$	2,461,029								$	1,738,246
LIABILITIES:
Interest-Bearing deposits:
	Checking			$	541,920		$	232		0.17	%		$	349,392		$	73		0.08	%
	Money markets				689,721			430		0.25				580,819			275		0.19
	Savings				113,802			15		0.05				115,711			15		0.05
	Certificates of deposit - retail				158,472			357		0.90				160,347			429		1.07
	Subtotal interest-bearing deposits				1,503,915			1,034		0.28				1,206,269			792		0.26
	Interest-bearing demand - brokered				138,000			84		0.24				-			-		-
	Certificates of deposit - brokered				144,872			550		1.52				5,000			15		1.20
	Total interest-bearing deposits				1,786,787			1,668		0.37				1,211,269			807		0.27
	Borrowings				83,692			377		1.80				45,149			138		1.22
	Capital lease obligation				9,770			117		4.79				8,828			105		4.76
	Total interest-bearing liabilities				1,880,249			2,162		0.46				1,265,246			1,050		0.33
Noninterest -bearing liabilities
	Demand deposits				383,423									337,684
	Accrued expenses and other liabilities				12,165									10,241
	Total noninterest-bearing liabilities				395,588									347,925
Shareholders' equity					185,192									125,075
	Total liabilities and shareholders' equity			$	2,461,029								$	1,738,246
Net interest income							$	17,172								$	13,526
	Net interest spread									2.79	%								3.20	%
	Net interest margin (4)									2.89	%								3.28	%

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
				September 30, 2014										June 30, 2014
					Average				Income/						Average				Income/
					Balance				Expense		Yield				Balance				Expense		Yield
ASSETS:
Interest-Earning Assets:
	Investments:
		Taxable (1)		$	192,207			$	960		2.00	%		$	189,254			$	977		2.06	%
		Tax-exempt (1) (2)			47,701				268		2.25				57,847				312		2.16
	Loans held for sale				1,026				10		3.90				1,026				15		5.89
	Loans (2) (3):
		Mortgages			464,227				3,879		3.34				496,232				4,203		3.39
		Commercial mortgages			1,231,798				11,790		3.83				1,155,360				11,108		3.85
		Commercial			166,092				1,597		3.85				143,988				1,443		4.01
		Commercial construction			6,029				65		4.31				6,065				65		4.29
		Installment			24,965				249		3.99				22,154				233		4.21
		Home equity			48,371				394		3.26				47,489				382		3.22
		Other			563				13		9.24				558				13		9.32
		Total loans			1,942,045				17,987		3.70				1,871,846				17,447		3.73
	Federal funds sold				101				-		0.10				101				-		0.10
	Interest-earning deposits				197,705				109		0.22				51,177				21		0.17
		Total interest-earning assets			2,380,785				19,334		3.25	%			2,171,251				18,772		3.46	%
Noninterest-Earning Assets:
	Cash and due from banks				6,262										6,990
	Allowance for loan losses				(17,720	)									(17,310	)
	Premises and equipment				30,985										31,161
	Other assets				60,717										58,926
		Total noninterest-earning assets			80,244										79,767
Total assets				$	2,461,029									$	2,251,018
LIABILITIES:
Interest-Bearing deposits:
	Checking			$	541,920			$	232		0.17	%			431,656			$	115		0.11	%
	Money markets				689,721				430		0.25				657,216				374		0.23
	Savings				113,802				15		0.05				116,946				15		0.05
	Certificates of deposit - retail				158,472				357		0.90				154,245				369		0.96
		Subtotal interest-bearing deposits			1,503,915				1,034		0.28				1,360,063				873		0.26
		Interest-bearing demand - brokered			138,000				84		0.24				138,000				70		0.20
	Certificates of deposit - brokered				144,872				550		1.52				100,934				264		1.05
		Total interest-bearing deposits			1,786,787				1,668		0.37				1,598,997				1,207		0.30
	Borrowings				83,692				377		1.80				93,152				382		1.64
	Capital lease obligation				9,770				117		4.79				9,867				118		4.78
	Total interest-bearing liabilities				1,880,249				2,162		0.46				1,702,016				1,707		0.40
Noninterest -bearing liabilities
	Demand deposits				383,423										360,096
	Accrued expenses and other liabilities				12,165										9,606
	Total noninterest-bearing liabilities				395,588										369,702
Shareholders' equity					185,192										179,300
	Total liabilities and shareholders' equity			$	2,461,029									$	2,251,018
Net interest income								$	17,172									$	17,065
	Net interest spread										2.79	%									3.06	%
	Net interest margin (4)										2.89	%									3.14	%

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
NINE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
				September 30, 2014										September 30, 2013
					Average				Income/						Average				Income/
					Balance				Expense		Yield				Balance				Expense		Yield
ASSETS:
Interest-Earning Assets:
	Investments:
		Taxable (1)		$	196,313			$	2,998		2.04	%		$	235,677			$	3,503		1.98	%
		Tax-exempt (1) (2)			55,209				917		2.21				51,582				974		2.52
	Loans held for sale				1,124				35		4.17				6,950				268		5.14
	Loans (2) (3):
		Mortgages			497,692				12,635		3.38				533,697				14,065		3.51
		Commercial mortgages			1,108,732				31,943		3.84				504,444				16,888		4.46
		Commercial			147,666				4,442		4.01				107,095				3,752		4.67
		Commercial construction			5,989				197		4.39				8,853				317		4.77
		Installment			22,906				710		4.13				20,228				670		4.42
		Home equity			47,569				1,149		3.22				47,447				1,153		3.24
		Other			562				39		9.25				605				44		9.70
		Total loans			1,831,116				51,115		3.72				1,222,369				36,889		4.02
	Federal funds sold				101				-		0.10				101				-		0.10
	Interest-earning deposits				94,120				142		0.20				68,211				135		0.26
		Total interest-earning assets			2,177,983				55,207		3.38	%			1,584,890				41,769		3.51	%
	Noninterest-Earning Assets:
		Cash and due from banks			6,548										5,887
		Allowance for loan losses			(17,012	)									(13,406	)
		Premises and equipment			30,966										29,344
		Other assets			60,216										70,674
		Total noninterest-earning assets			80,718										92,499
Total assets				$	2,258,701									$	1,677,389
LIABILITIES:
Interest-Bearing deposits:
	Checking			$	458,811			$	438		0.13	%		$	351,975			$	225		0.09	%
	Money markets				666,986				1,137		0.23				561,713				729		0.17
	Savings				115,746				45		0.05				113,486				44		0.05
	Certificates of deposit - retail				154,091				1,081		0.94				166,235				1,385		1.11
		Subtotal interest-bearing deposits			1,395,634				2,701		0.26				1,193,409				2,383		0.27
	Interest-bearing demand - brokered				117,348				198		0.22				-				-		-
	Certificates of deposit - brokered				86,986				845		1.30				5,000				45		1.20
		Total interest-bearing deposits			1,599,968				3,744		0.31				1,198,409				2,428		0.27
	Borrowings				97,359				1,149		1.57				23,226				322		1.85
	Capital lease obligation				9,861				354		4.79				8,882				317		4.76
	Total interest-bearing liabilities				1,707,188				5,247		0.41				1,230,517				3,067		0.33
	Noninterest-bearing liabilities
		Demand deposits			361,726										313,420
		Accrued expenses and other liabilities			10,597										8,887
		Total noninterest-bearing liabilities			372,323										322,307
	Shareholders' equity				179,190										124,565
	Total liabilities and shareholders' equity			$	2,258,701									$	1,677,389
	Net interest income							$	49,960									$	38,702
		Net interest spread									2.97	%									3.18	%
		Net interest margin (4)									3.06	%									3.26	%

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested, as compared to book value per common share, which we calculate by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

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

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

Non-GAAP Financial Reconciliation
(Dollars in thousands)
				Three Months Ended
Tangible Book Value Per Share					Sept 30, 2014				June 30, 2014				March 31, 2014				Dec 31, 2013				Sept 30, 2013
Shareholders' equity				$	188,070			$	182,333			$	175,872			$	170,657			$	126,418
Less: Intangible assets					563				563				563				563				563
	Tangible equity				187,507				181,770				175,309				170,094				125,855
Period end shares outstanding					12,286,821				12,154,150				12,032,913				11,788,517				9,078,236
Less: Restricted shares not yet vested					382,252				376,134				368,608				253,540				103,156
Total outstanding shares					11,904,569				11,778,016				11,664,305				11,534,977				8,975,080
Tangible book value per share					15.75				15.43				15.03				14.75				14.02
Book value per share					15.80				15.48				15.08				14.79				14.12
Tangible Equity to Tangible Assets
	Total Assets				2,514,521				2,400,971				2,251,485				1,966,948				1,797,704
	Less: Intangible assets				563				563				563				563				563
		Tangible assets			2,513,958				2,400,408				2,250,922				1,966,385				1,797,141
	Tangible equity to tangible assets				7.46	%			7.57	%			7.79	%			8.65	%			7.00	%
	Equity to assets				7.48	%			7.59	%			7.81	%			8.68	%			7.03	%

		Three Months Ended
			Sept 30,				June 30,				March 31,				Dec 31,				Sept 30,
Efficiency Ratio			2014				2014				2014				2013				2013
Net interest income		$	17,048			$	16,923			$	15,571			$	14,528			$	13,373
Total other income			5,052				5,473				4,995				4,973				4,782
Less: (Loss)/gain on loans held for sale at lower of cost or fair value			(7	)			176				-				-				-
Less: Securities gains, net			39				79				98				125				188
Total recurring revenue			22,068				22,141				20,468				19,376				17,967
Total operating expenses			14,693				14,930				14,339				14,646				14,165
Efficiency ratio			66.58	%			67.43	%			70.06	%			75.59	%			78.84	%

		Nine Months Ended
			Sept 30,				Sept 30,
Efficiency Ratio			2014				2013
Net interest income		$	49,542			$	38,248
Total other income			15,520				15,622
Less: (Loss)/gain on loans held for sale at lower of cost or fair value			169				-
Less: Securities gains, net			216				715
Total recurring revenue			64,677				53,155
Total operating expenses			43,962				40,537
Efficiency ratio			67.97	%			76.26	%