Peapack-Gladstone Financial Corporation Reports Another Strong Quarter and Year of Record Results

BEDMINSTER, NJ--(Marketwired - Feb 1, 2016) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded record net income of $19.97 million and diluted earnings per share of $1.29 for the year ended December 31, 2015, compared to $14.89 million and $1.22, respectively, for the same twelve month period last year, reflecting increases of $5.08 million or 34 percent and $0.07 per share or 6 percent, respectively. 

For the quarter ended December 31, 2015, the Corporation recorded net income of $4.34 million and diluted earnings per share of $0.28, compared to $4.21 million and diluted earnings per share of $0.32 for the same three month period last year.

During the fourth quarter of 2015 the Company recorded $2.5 million of charges related to the closure of two branch offices, as previously announced. These charges reduced pretax income by $2.5 million, net income by $1.6 million, and earnings per share by approximately $0.10 per share, for both the year and the quarter. Doug Kennedy, President and CEO, said, "We anticipate that we will retain the majority of deposits associated with these two branches and we expect expense saves that will recoup the $2.5 million charge in approximately three years."

The following table summarizes specified financial measures for the year ended:

(Dollars in millions, except EPS)		December 2015 (A)				December 2014				Increase/ (Decrease)
Net interest income		$	84.45			$	67.89			$	16.56			24	%
Provision for loan losses		$	7.10			$	4.88			$	2.23			46	%
Pretax income		$	32.14			$	24.29			$	7.85			32	%
Net income		$	19.97			$	14.89			$	5.08			34	%
Diluted EPS		$	1.29			$	1.22			$	0.07			6	%
Total revenue		$	108.17			$	88.70			$	19.47			22	%
Return on average assets			0.64	%			0.63	%			0.01
Return on average equity			7.71	%			7.96	%			(0.25	)
Efficiency ratio (B)			63.80	%			67.45	%			(3.65	)
Book value per share		$	17.61			$	16.36			$	1.25			8	%

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

Mr. Kennedy said, "We had a very strong 2015, as we continued to successfully execute on our Growth Strategy - Expanding Our Reach."

2015 highlights follow:

• Earnings for 2015 reflected improvement when compared to 2014's results (as reflected just above). Year over year growth in diluted EPS was 6 percent, despite 2.776 million common shares issued in the December 2014 capital raise and incurring $2.5 million ($0.10 per share) of operating expense related to branch closures. Excluding the branch closure expenses, EPS would have increased 14 percent.
• At December 31, 2015, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank ("the Bank") was $3.32 billion, including the acquisition of Wealth Management Consultants, which occurred in May 2015. Year over year growth in AUA totaled 11 percent for 2015.
• Fee income from the Private Wealth Management Division totaled $17.0 million for 2015, growing from $15.2 million for 2014. Year over year growth in wealth management fee income was 12 percent, despite a relatively flat stock market in 2015.
• Loans at December 31, 2015 totaled $3.0 billion. This reflected growth of $745 million, net of participations sold, when compared to $2.3 billion at December 31, 2014. Year over year net loan growth was 33 percent.
• Multifamily loan participations sold in 2015 totaled approximately $200 million. 
• Commercial & Industrial (C&I) loans at December 31, 2015 totaled $513 million. This reflected growth of $204 million when compared to the $309 million at December 31, 2014. Year over year C&I loan growth was 66 percent.
• Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) grew $663 million to $2.64 billion at December 31, 2015 from $1.98 billion at December 31, 2014. Year over year customer deposit growth totaled 33 percent.
• Asset quality metrics continued to be strong at December 31, 2015. Nonperforming assets at December 31, 2015 were just $7.3 million or 0.22 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $2.1 million at December 31, 2015.
• The Company's net interest income for 2015 was $84.5 million. This reflected improvement when compared to $67.9 million for 2014. Year over year growth in net interest income was 24 percent.
• The Company continued to leverage the capital raised in the fourth quarter of 2014. The Company believes it has sufficient common equity to support its continued growth and expansion for the immediate future.
• The book value per share at December 31, 2015 of $17.61 reflected improvement when compared to $16.36 at December 31, 2014. Year over year growth in book value per share totaled 8 percent.
  
  

Mr. Kennedy noted, "We are very pleased with our accomplishments in 2015, and we remain on track with our strategy. We do, however, see some headwinds in the near term, which is more fully described under 'Wealth Management Business' and 'Operating Expenses' later in this release. Despite these headwinds, we remain confident that our strategy will continue to deliver solid gains in shareholder value."

Net Interest Income / Net Interest Margin

Net interest income and net interest margin was $22.82 million and 2.79 percent for the fourth quarter of 2015, compared to $21.71 million and 2.75 percent for the third quarter of 2015, and compared to $18.35 million and 2.89 percent for the same quarter last year, reflecting growth in net interest income of $4.47 million or 24 percent when compared to the prior year period. Net interest income for the fourth quarter of 2015 benefitted from significant loan growth during the twelve months of 2015. Additionally, the 2015 quarter included approximately $321 thousand of prepayment premiums received on the prepayment of certain multifamily loans. This income benefitted the net interest margin for the quarter by 4 basis points.

While net interest income for the fourth quarter of 2015 improved considerably compared to the same quarter in 2014, the net interest margin declined to 2.79 percent for the 2015 quarter from 2.89 percent for the 2014 quarter. Net interest margin continued to be impacted by the effect of the low interest rate environment throughout 2015, as well as competitive pressures in attracting new loans and deposits.

Net interest margin is also affected by the maintenance of larger average interest earning deposit/cash balances. The Company has maintained greater liquidity on its balance sheet to support its expansive loan program. Mr. Kennedy said, "As I have said before, given our rapid growth, we had decided to maintain and will continue to maintain higher liquidity on our balance sheet than typically needed for operations." Mr. Kennedy went on to note, "In addition to liquidity from cash equivalents and investment securities on our balance sheet, we also have close to $1 billion of net secured funding available from the Federal Home Loan Bank, of which we only have $124 million drawn as of December 31, 2015."

Wealth Management Business

In the December 2015 quarter, Peapack-Gladstone Bank's wealth management business generated $4.31 million in fee income compared to $4.17 million for the September 2015 quarter, and $3.82 million for the December 2014 quarter.  

For the year ended December 31, 2015, Peapack-Gladstone Bank's wealth management business generated $17.04 million in fee income compared to $15.24 million for the year ended December 31, 2014, reflecting an increase of $1.80 million or 12 percent.

Growth in fee income was due to many factors including: the acquisition of Wealth Management Consultants, LLC ("WMC") which closed in May 2015, which contributed approximately half of the year-over-year fee increase; continued healthy new business results; higher yields on new business as compared to lost/closed business; and the conversion of lower fee custody relationships to higher fee advisory relationships. These contributions to increased revenue were partially offset by the broader market declines in the second half of 2015, which negatively impacted investment fee revenue. The market value of the assets under administration (AUA) of the wealth management division was $3.32 billion at December 31, 2015, compared to $3.25 billion at September 30, 2015 and up $335 million or 11 percent from $2.99 billion at December 31, 2014.

Mr. Babcock, President of Private Wealth Management, said, "We continue to incorporate wealth into every conversation we have with all of the Company's clients, across all business lines. We have expanded our wealth management team and will continue to grow our team and expand the products, services, and advice we deliver to our clients." Mr. Babcock went on to note, "We believe the headwinds created by the recent and continuing correction in the financial markets will impact revenue in the near term. However, we continue to remain optimistic about the market in the medium-to-longer term and we believe this, coupled with our continued strong new business and new client acquisitions, will lead to improved results over time and will be a significant driver to enhancing shareholder value as our business continues to grow."

Loan Originations / Loans

At December 31, 2015, loans totaled $3.00 billion compared to $2.86 billion three months ago at September 30, 2015 and compared to $2.25 billion one year ago at December 31, 2014, representing net increases of $140 million or 5 percent sequentially and $745 million or 33 percent, year over year.

Total loan originations were $1.35 billion for the year ended December 31, 2015, up $273 million or 25 percent when compared to $1.07 billion for the same twelve month period in 2014. For the fourth quarter ended December 31, 2015 loan originations were $292 million, about flat to the September 2015 quarter, and down slightly from $302 million for the December 2014 quarter.

For the quarter ended December 31, 2015, residential mortgage originations totaled $26 million. In 2015 we successfully repositioned our residential mortgage business to serve as a lead product for new wealth business, as well as support for other relationships. We believe that volumes will increase going forward.

The December 2015 quarter included $108 million of multifamily loan originations, down from $150 million in the September 2015 quarter, and down significantly from the quarters prior to September 2015. The December 2015 quarter also included C&I loan originations of $75 million, in line with the average of the prior four quarters.

At December 31, 2015, the multifamily loan portfolio totaled $1.50 billion compared to $1.44 billion three months ago at September 30, 2015 and compared to $1.08 billion one year ago at December 31, 2014, representing net increases of $55 million or 4 percent sequentially and $419 million or 39 percent, year over year. The increases were net of participations sold, including approximately $70 million of participations sold in the current December 2015 quarter, and approximately $200 million for the twelve months ended December 31, 2015. These participations were part of the Company's balance sheet management strategy and will likely continue in 2016 and beyond.

The commercial mortgage loan portfolio grew by $14 million from September 30, 2015 to December 31, 2015, reflecting linked quarter growth of 3 percent, and grew by $105 million from December 31, 2014 to December 31, 2015, reflecting year over year growth of 34 percent.

The net increases in both the multifamily and commercial mortgage portfolios were attributable to: the addition of seasoned banking professionals; continued attention to the client service aspect of the lending process; an expansion of New Jersey and Pennsylvania-based real estate marketing activities; and a focus on the Boroughs of 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 I explained over the last two quarters, we anticipated multifamily loan originations and growth would be less than past quarters, as we manage our balance sheet such that the C&I loan portfolio becomes a larger percentage of our overall loan portfolio. Our C&I pipeline remains robust and we believe we will continue to deliver strong growth."

For the year ended December 31, 2015 the Company closed $289 million of commercial loans. When comparing December 31, 2015 to December 31, 2014, commercial loans grew $204 million or 66 percent, to $513 million at December 31, 2015 from $309 million one year ago at December 31, 2014. At December 31, 2015 the commercial loan portfolio comprised 17 percent of the overall loan portfolio, up from 14 percent one year ago at December 31, 2014.

Mr. Kennedy said, "As a result of our investment in and commitment to C&I banking, including the addition in 2014 and 2015 of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in February 2015, we have seen, and believe will continue to see, our C&I client base and corresponding loan portfolio grow and consume a larger percentage of our overall loan portfolio. However, due to the nature of this business, this growth will likely not be linear each quarter, but rather will be apparent over longer periods of time."

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

Deposits / Funding / Balance Sheet Management

Net asset growth of $96 million and decreased brokered (overnight) interest-bearing deposits of $43 million in the December 2015 quarter were principally funded by customer deposit growth of $91 million, increased overnight borrowings of $41 million, and increased capital of $9 million.

Although brokered interest-bearing demand ("overnight") deposits decreased $43 million to $200 million at December 31, 2015, these deposits continue to be maintained as an additional source of liquidity. The interest rate paid on these deposits allows the Bank to fund at attractive rates and engage in interest rate swaps to hedge its asset-liability interest rate risk. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

From a liquidity/funding perspective, such brokered deposits, at a direct cost of approximately 51 basis points (excluding costs of hedging), are generally a more cost effective alternative than borrowings which require pledged collateral when drawn, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits enables their use in swap transactions for an efficient hedging/interest rate risk management program. As of December 31, 2015, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount.

Certificates of deposit have also been utilized more extensively in 2015. The majority of these deposits have been longer term and have generally been transacted as part of the Company's interest rate risk management. These certificates of deposit are also a more cost effective alternative than wholesale borrowings of similar duration. 

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

Other Noninterest Income

Service charges and fees for the December 2015 quarter were $849 thousand, compared to $832 thousand for the September 2015 quarter and $880 thousand for the December 2014 quarter. Several categories have reflected improvement, including income from debit card usage as well as account analysis fees, however, overdraft/NSF fees have declined considerably.

The December 2015 quarter included $117 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $102 thousand for the September 2015 quarter, and $128 thousand in the 2014 quarter. 

There were no securities gains for the December 2015 quarter compared to $83 thousand for the September 2015 quarter, and $44 thousand for the December 2014 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the duration of our investment portfolio and the interest rate environment, as well as the future outlook, we anticipate such sales will continue to be a very small component of the Company's operations.

Other income of $198 thousand for the December 2015 quarter compared to $164 thousand for the September quarter, and $142 thousand for the December 2014 quarter. The improvement in the current quarter is principally due to improved loan servicing fees related to continued multifamily loan participations, as well as higher unused line of credit fees associated with the C&I lending business.  

Operating Expenses 
The Company's total operating expenses were $19.99 million for the quarter ended December 31, 2015. During the quarter the Company recorded $2.5 million of charges related to the closure of two branch offices. Excluding these expenses total expenses for the December 2015 quarter would have been $17.50 million, compared to $16.90 million for the September 2015 quarter, and $15.58 million in the same 2014 quarter. The increased total operating expenses were generally in line with the Company's Strategic Plan.

Salary and benefits expense for the December 2015 quarter were $10.66 million compared to $10.32 million for the September 2015 quarter, and $9.19 million for the same quarter last year. Strategic hiring that was in line with the Company's Plan, the acquisition of WMC, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increase from the December 2014 quarter to the December 2015 quarter. Premises and equipment expense totaled $3.39 million for the quarter ended December 31, 2015, compared to $2.79 million for the September 2015 quarter, and $2.63 million for the same quarter last year. The December 2015 quarter included $722 thousand related to the branch closures.

Other expenses for the December 2015 quarter were $5.12 million, compared to $3.38 million for the September quarter and $3.31 million for the December 2014 quarter. The December 2015 quarter included $1.73 million related to the branch closures.

Mr. Kennedy noted, "Expenses over the past year have continued to track to our Plan." Mr. Kennedy went on to note, "Given our significant growth and high concentration in multifamily lending, Management has decided to accelerate approximately $2.0 million of infrastructure investment over the next 3 to 12 months to ensure we adhere to best in class risk management practices. We had originally planned for such expenditures over the next 24 to 30 months, but we feel it is prudent to pull them forward. Further we generally expect an approximate $950 thousand increase in our quarterly FDIC premium going forward (approximately $3.8 million for 2016). While we believe approximately $5.0 million of our increased costs in 2016 will be temporary, we cannot predict when the additional FDIC premium will be eliminated."

INCOME TAX EXPENSE

The effective tax rate (income taxes divided by pretax income) for the fourth quarter of 2015 was lower than prior quarterly periods. The effective tax rate for the year ended December 31, 2015 was 37.86 percent compared to 38.69 percent for the year ended December 31, 2014. During the fourth quarter of 2015, several new subsidiaries of the bank became active reducing the effective State tax rate.

Provision for Loan Losses / Asset Quality

For the quarter ended December 31, 2015, the Company's provision for loan losses was $1.95 million, compared to $1.25 million for the December 2014 quarter. Charge-offs, net of recoveries, for the fourth quarter of 2015 was only $468 thousand. The larger provision in 2015 was due to loan growth, as well as greater qualitative factor allocations of the allowance to C&I and Commercial Real Estate loans.

At December 31, 2015 the allowance for loan losses was $25.86 million, 383 percent of nonperforming loans and 0.86 percent of total loans, compared to $24.37 million, 320 percent of nonperforming loans, and 0.85 percent of total loans at September 30, 2015, and $19.48 million, 284 percent of nonperforming loans and 0.87 percent of total loans one year prior, at December 31, 2014.

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

Nonperforming assets at December 31, 2015 were just $7.3 million or 0.22 percent of total assets. Total loans past due 30 through 89 days and still accruing were only $2.1 million at December 31, 2015. There were no multifamily loans past due at year end.

Capital / Dividends

The Company's capital position in the December 2015 quarter was benefitted by net income of $4.3 million and also by $5.5 million of voluntary share purchases in the Dividend Reinvestment Plan, which continue to be a source of capital for the company.

At December 31, 2015, the Company's GAAP capital as a percent of total assets was 8.19 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.10 percent, 10.42 percent, 10.42 percent and 11.40 percent, respectively. The Company's regulatory capital ratios are all above the respective 5 percent, 6.5 percent, 8 percent, and 10 percent levels required to be considered well capitalized under regulatory guidelines applicable to banks.

As previously announced on January 28, 2016, the Board of Directors declared a regular cash dividend of $0.05 per share payable on February 25, 2016 to shareholders of record on February 11, 2016.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.36 billion as of December 31, 2015. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers, which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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

• inability to successfully grow our business and implement our strategic plan, including an inability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
• the impact of anticipated higher operating expenses in 2016 and beyond;
• inability to manage our growth;
• inability to successfully integrate our expanded employee base;
• a continued or unexpected decline in the economy, in particular in our New Jersey and New York market areas;
• declines in our net interest margin caused by the low interest rate environment and highly competitive market;
• declines in value in our investment portfolio
• higher than expected increases in our allowance for loan losses;
• higher than expected increases in loan losses or in the level of nonperforming loans;
• unexpected changes in interest rates;
• a continued or unexpected decline in real estate values within our market areas;
• legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;
• successful cyberattacks against our IT infrastructure and that of our IT providers;
• higher than expected FDIC insurance premiums;
• adverse weather conditions;
• inability to successfully generate new business in new geographic markets;
• inability to execute upon new business initiatives;
• lack of liquidity to fund our various cash obligations;
• reduction in our lower-cost funding sources;
• our inability to adapt to technological changes;
• claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters; and
• other unexpected material adverse changes in our operations or earnings.
  
  

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2014. 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
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
		For the Three Months Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
		2015 (A)			2015			2015			2015			2014
Income Statement Data:
Interest income		$	27,123		$	25,806		$	23,852		$	22,361		$	20,786
Interest expense			4,304			4,100			3,508			2,778			2,434
	Net interest income		22,819			21,706			20,344			19,583			18,352
Provision for loan losses			1,950			1,600			2,200			1,350			1,250
	Net interest income after provision for loan losses		20,869			20,106			18,144			18,233			17,102
Wealth management fee income			4,307			4,169			4,532			4,031			3,822
Service charges and fees			849			832			837			805			880
Bank owned life insurance			252			260			248			537			274
Gain on loans held for sale at fair value (Mortgage banking)			117			102			161			148			128
(Loss)/gain on loans held for sale at lower of cost or fair value			-			-			-			-			(3)
Other income			198			164			545			93			142
Securities gains, net			-			83			176			268			44
	Total other income		5,723			5,610			6,499			5,882			5,287
Salaries and employee benefits			10,659			10,322			9,872			9,425			9,188
Premises and equipment			3,390			2,785			2,778			2,616			2,627
FDIC insurance expense			825			416			431			482			453
Other expenses			5,119			3,376			3,185			3,245			3,310
	Total operating expenses		19,993			16,899			16,266			15,768			15,578
Income before income taxes			6,599			8,817			8,377			8,347			6,811
Income tax expense			2,256			3,434			3,139			3,339			2,599
Net income		$	4,343		$	5,383		$	5,238		$	5,008		$	4,212
Total revenue		$	28,542		$	27,316		$	26,843		$	25,465		$	23,639
Per Common Share Data:
Earnings per share (basic)		$	0.28		$	0.35		$	0.34		$	0.34		$	0.32
Earnings per share (diluted)			0.28			0.35			0.34			0.33			0.32
Weighted average number of common shares outstanding:
Basic			15,498,119			15,253,009			15,082,516			14,909,722			13,037,947
Diluted			15,721,876			15,435,939			15,233,151			15,070,352			13,163,877
Performance Ratios:
Return on average assets annualized			0.51%			0.66%			0.70%			0.71%			0.64%
Return on average common equity annualized			6.37%			8.19%			8.24%			8.13%			8.01%
Net interest margin (taxable equivalent basis)			2.79%			2.75%			2.80%			2.88%			2.89%
Efficiency ratio (A)			70.05%			61.14%			61.00%			62.58%			66.01%
Operating expenses / average assets annualized			2.36%			2.07%			2.16%			2.24%			2.36%

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
		For the
		Twelve Months Ended
		December 31,								Change
Income Statement Data:		2015 (A)				2014				$				%
Interest income		$	99,142			$	75,575			$	23,567			31	%
Interest expense			14,690				7,681				7,009			91	%
	Net interest income		84,452				67,894				16,558			24	%
Provision for loan losses			7,100				4,875				2,225			46	%
	Net interest income after provision for loan losses		77,352				63,019				14,333			23	%
Wealth management fee income			17,039				15,242				1,797			12	%
Service charges and fees			3,323				3,111				212			7	%
Bank owned life insurance			1,297				1,092				205			19	%
Gain on loans held for sale at fair
	Value (Mortgage banking)		528				439				89			20	%
(Loss)/gain on loans held for sale at lower of cost or fair value			-				166				(166	)		-100	%
Other income			1,000				497				503			101	%
Securities gains, net			527				260				267			103	%
	Total other income		23,714				20,807				2,907			14	%
Salaries and employee benefits			40,278				36,241				4,037			11	%
Premises and equipment			11,569				9,963				1,606			16	%
FDIC insurance expense			2,154				1,381				773			56	%
Other expenses			14,925				11,955				2,970			25	%
	Total operating expenses		68,926				59,540				9,386			16	%
Income before income taxes			32,140				24,286				7,854			32	%
Income tax expense			12,168				9,396				2,772			30	%
Net income		$	19,972			$	14,890				5,082			34	%
Total revenue (See footnote (A) below)		$	108,166			$	88,701				19,465			22	%
Per Common Share Data:
Earnings per share (basic)		$	1.31			$	1.23			$	.08			7	%
Earnings per share (diluted)			1.29				1.22				.07			6	%
Weighted average number of common shares outstanding:
Basic			15,187,637				12,065,615				3,122,022			26	%
Diluted			15,434,996				12,172,107				3,262,889			27	%
Performance Ratios:
Return on average assets annualized			0.64	%			0.63	%			0.01	%		2	%
Return on average common equity annualized			7.71	%			7.96	%			-0.25	%		-3	%
Net interest margin (taxable equivalent basis)			2.80	%			3.01	%			-0.21	%		-7	%
Efficiency ratio (B)			63.80	%			67.45	%			-3.65	%		-5	%
Operating expenses / average assets annualized			2.21	%			2.53	%			-0.32	%		13	%

(A)		The year ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices, as previously announced. These charges reduced pretax income by $2.5 million, net income by $1.6 million, earnings per share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(B)		Total revenue includes a $169 thousand gain (for 2014) from sale of loans held for sale at lower of cost or fair value. Excluding this gain, total revenue was $64,893 (for 2014).
(C)		Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
		As of
		Dec 31,				Sept 30,			June 30,			March 31,			Dec 31,
		2015				2015			2015			2015			2014
ASSETS
Cash and due from banks		$	11,550			$	10,695		$	6,205		$	7,439		$	6,621
Federal funds sold			101				101			101			101			101
Interest-earning deposits			58,509				65,402			32,382			65,283			24,485
	Total cash and cash equivalents		70,160				76,198			38,688			72,823			31,207
Securities available for sale			195,630				220,930			245,897			276,119			332,652
FHLB and FRB stock, at cost			13,984				11,737			15,590			10,598			11,593
Loans held for sale			1,558				27,524			745			4,245			839
Residential mortgage			470,869				469,865			470,863			466,333			466,760
Multifamily mortgage			1,498,975				1,444,334			1,371,139			1,214,714			1,080,256
Commercial mortgage			413,118				399,592			375,440			339,037			308,491
Commercial loans			512,886				456,611			438,461			336,079			308,743
Construction loans			1,401				1,409			1,417			5,777			5,998
Consumer loans			45,044				32,563			29,996			28,206			28,040
Home equity lines of credit			52,649				50,370			51,675			50,399			50,141
Other loans			500				483			2,947			1,755			1,838
	Total loans		2,995,442				2,855,227			2,741,938			2,442,300			2,250,267
	Less: Allowances for loan losses		(25,856	)			24,374			22,969			20,816			19,480
	Net loans		2,969,586				2,830,853			2,718,969			2,421,484			2,230,787
Premises and equipment			30,246				31,310			31,637			32,068			32,258
Other real estate owned			563				330			956			1,103			1,324
Accrued interest receivable			6,820				6,839			6,451			5,943			5,371
Bank owned life insurance			42,885				32,727			32,565			32,404			32,634
Deferred tax assets, net			16,341				14,613			12,673			10,458			10,491
Other assets			16,886				15,902			13,999			12,212			13,241
	TOTAL ASSETS	$	3,364,659			$	3,268,963		$	3,118,170		$	2,879,457		$	2,702,397
LIABILITIES
Deposits:
	Noninterest-bearing demand deposits	$	419,887			$	399,200		$	386,588		$	377,399		$	366,371
	Interest-bearing demand deposits		861,697				829,970			667,847			634,580			600,889
	Savings		115,007				117,665			120,606			115,515			112,878
	Money market accounts		810,709				792,685			717,246			714,466			700,069
	Certificates of deposit - Retail		434,450				411,335			384,235			310,678			198,819
Subtotal "customer" deposits			2,641,750				2,550,855			2,276,522			2,152,638			1,979,026
	IB Demand - Brokered		200,000				243,000			293,000			263,000			188,000
	Certificates of deposit - Brokered		93,720				93,690			94,224			106,694			131,667
Total deposits			2,935,470				2,887,545			2,663,746			2,522,332			2,298,693
Overnight borrowings			40,700				-			87,500			-			54,600
Federal home loan bank advances			83,692				83,692			83,692			83,692			83,692
Capital lease obligation			10,222				10,350			10,475			10,594			10,712
Other liabilities			18,899				19,448			14,881			13,486			12,433
Due to brokers, securities settlements			-				1,528			-			-			-
	TOTAL LIABILITIES		3,088,983				3,002,563			2,860,294			2,630,104			2,460,130
Shareholders' equity			275,676				266,400			257,876			249,353			242,267
	TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	3,364,659			$	3,268,963		$	3,118,170		$	2,879,457		$	2,702,397
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division (market value, not included above)		$	3,321,624			$	3,250,835		$	3,445,939		$	3,053,110		$	2,986,623

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
		As of
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2015				2015				2015				2015				2014
Asset Quality:
Loans past due over 90 days and still accruing		$	-			$	-			$	-			$	-			$	-
Nonaccrual loans			6,747				7,615				7,111				6,335				6,850
Other real estate owned			563				330				956				1,103				1,324
	Total nonperforming assets	$	7,310			$	7,945			$	8,067			$	7,438			$	8,174
Nonperforming loans to total loans			0.23	%			0.27	%			0.26	%			0.26	%			0.30	%
Nonperforming assets to total assets			0.22	%			0.24	%			0.26	%			0.26	%			0.30	%
Accruing TDRs (A)		$	16,045			$	14,609			$	13,695			$	13,561			$	13,601
Loans past due 30 through 89 days and still accruing		$	2,143			$	2,748			$	1,744			$	2,481			$	1,755
Classified loans		$	42,777			$	41,985			$	38,676			$	38,450			$	35,809
Impaired loans		$	23,107			$	22,224			$	20,806			$	19,896			$	20,451
Allowance for loan losses:
	Beginning of period	$	24,374			$	22,969			$	20,816			$	19,480			$	18,299
	Provision for loan losses		1,950				1,600				2,200				1,350				1,250
	Charge-offs, net		(468	)			(195	)			(47	)			(14	)			(69	)
	End of period	$	25,856			$	24,374			$	22,969			$	20,816			$	19,480
ALLL to nonperforming loans			383.22	%			320.08	%			323.01	%			328.59	%			284.38	%
ALLL to total loans			0.86	%			0.85	%			0.84	%			0.85	%			0.87	%

(A)		Does not include $2.6 million at December 31, 2015, $2.8 million at September 30, 2015, $2.2 million at June 30, 2015, $1.4 million at March 31, 2015, and $1.4 million at December 31, 2014 of TDRs included in nonaccrual loans.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
	Dec 31,				Sept 30,				Dec 31,
	2015				2015				2014
Capital Adequacy
Equity to total assets (end of period) (A) (B)		8.19	%			8.15	%			8.96	%
Book value per share (C) (D)	$	17.61			$	17.33			$	16.36

	Dec 31,						Sept 30,						Dec 31,
	2015						2015						2014
Regulatory Capital - Holding Company
Tier I leverage	$	273,738		8.10	%		$	264,570		8.10	%		$	240,439		9.11	%
Tier I capital to risk weighted assets (F)		273,738		10.28				264,570		10.35				240,439		14.38
Common equity tier I capital ratio to risk-weighted assets (E) (F)		273,738		10.28				264,570		10.35				N/A		N/A
Tier I & II capital to risk-weighted assets (F)		299,593		11.25				288,944		11.30				259,918		15.55
Regulatory Capital - Bank
Tier I leverage	$	271,641		8.04	%		$	262,196		8.02	%		$	230,632		8.74	%
Tier I capital to risk weighted assets (F)		271,641		10.20				262,196		10.26				230,632		13.80
Common equity tier I capital ratio to risk-weighted assets (E) (F)		271,641		10.20				262,196		10.26				N/A		N/A
Tier I & II capital to risk-weighted assets (F)		297,497		11.18				286,570		11.21				250,112		14.96

(A)		Total shareholders' equity as a percentage of total assets at period end.
(B)		Tangible equity to tangible assets was $8.10 at December 31, 2015, $8.06 at September 30, 2015, $8.17 at June 30, 2015, $8.64 at March 31, 2015, and $8.95 at December 31, 2014. Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. Tangible book value per share is calculated 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 is calculated by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested. Tangible equity is calculated as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
(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 $17.40 at December 31, 2015, $17.12 at September 30, 2015, $16.80 at June 30, 2015, $16.57 at March 31, 2015, and $16.32 at December 31, 2014. 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.
(E)		New capital ratio required under Basel III effective January 1, 2015.
(F)		September 30, 2015 risk based capital ratios are as amended on January 29, 2016.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
	For the Quarters Ended
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
	2015			2015			2015			2015			2014
Residential loans retained	$	18,847		$	20,623		$	23,117		$	16,986		$	10,661
Residential loans sold		7,183			6,078			10,978			8,938			8,230
Total residential loans		26,030			26,701			34,095			25,924			18,891
CRE (includes Community banking)		41,015			47,450			29,561			57,787			14,953
Multifamily (includes Community banking)		107,605			149,763			206,803			209,034			172,021
Commercial loans (includes Community banking)		74,749			37,361			136,483			40,696			89,905
Wealth lines of credit		35,550			24,000			6,150			10,260			-
Total commercial loans		258,919			258,574			378,997			317,777			276,879
Installment loans		1,052			933			1,128			344			2,015
Home equity lines of credit		5,902			3,775			3,225			3,377			4,140
Total loans closed	$	291,903		$	289,983		$	417,445		$	347,422		$	301,925

	For the Twelve Months Ended
	Dec 31,			Dec 31,
	2015			2014
Residential loans retained	$	79,573		$	60,099
Residential loans sold		33,177			28,146
Total residential loans		112,750			88,245
CRE (includes Community banking)		175,813			54,177
Multifamily (includes Community banking)		673,205			652,685
Commercial loans (includes Community banking)		289,289			242,559
Wealth lines of credit		75,960			-
Total commercial loans		1,214,267			949,421
Installment loans		3,457			18,486
Home equity lines of credit		16,279			18,067
Total loans closed	$	1,346,753		$	1,074,219

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
				December 31, 2015										December 31, 2014
				Average				Income/						Average				Income/
				Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)		$	192,678			$	901		1.87	%		$	258,699			$	1,158		1.79	%
		Tax-exempt (1) (2)			25,516				206		3.23				42,539				244		2.29
	Loans held for sale				681				11		6.61				747				13		6.85
	Loans (2) (3):
		Mortgages			465,855				3,809		3.27				466,943				3,889		3.33
		Commercial mortgages			1,903,842				16,811		3.53				1,297,727				12,376		3.81
		Commercial			486,353				4,725		3.89				243,024				2,375		3.91
		Commercial construction			1,404				14		3.99				6,017				65		4.32
		Installment			42,629				320		3.00				28,129				259		3.68
		Home equity			51,516				420		3.26				49,495				402		3.25
		Other			507				12		9.47				599				13		8.68
		Total loans			2,952,106				26,111		3.54				2,091,934				19,379		3.71
	Federal funds sold				101				-		0.10				101				-		0.10
	Interest-earning deposits				123,045				76		0.25				163,287				106		0.26
			Total interest-earning assets		3,294,127				27,305		3.32	%			2,557,307				20,900		3.27	%
Noninterest-Earning Assets:
	Cash and due from banks				9,133										6,257
	Allowance for loan losses				(24,858	)									(18,796	)
	Premises and equipment				31,285										31,975
	Other assets				73,483										62,424
		Total noninterest-earning assets			89,043										81,860
Total assets				$	3,383,170									$	2,639,167
LIABILITIES:
Interest-bearing deposits:
	Checking			$	849,929			$	466		0.22	%		$	615,907			$	343		0.22	%
	Money markets				813,112				577		0.28				721,634				474		0.26
	Savings				115,930				17		0.06				111,604				15		0.05
	Certificates of deposit - retail				420,831				1,401		1.33				187,126				440		0.94
		Subtotal interest-bearing deposits			2,199,802				2,461		0.45				1,636,271				1,272		0.31
	Interest-bearing demand - brokered				274,261				834		1.22				163,000				109		0.27
	Certificates of deposit - brokered				93,704				502		2.14				131,649				540		1.64
		Total interest-bearing deposits			2,567,767				3,797		0.59				1,930,920				1,921		0.40
	Borrowings				88,548				383		1.73				90,828				384		1.69
	Capital lease obligation				10,266				124		4.83				10,752				129		4.80
	Total interest-bearing liabilities				2,666,581				4,304		0.65				2,032,500				2,434		0.48
Noninterest-bearing liabilities:
	Demand deposits				428,412										380,362
	Accrued expenses and other liabilities				15,541										16,005
	Total noninterest-bearing liabilities				443,953										396,367
Shareholders' equity					272,636										210,300
	Total liabilities and shareholders' equity			$	3,383,170									$	2,639,167
	Net interest income							$	23,801									$	18,466
	Net interest spread										2.67	%									2.79	%
		Net interest margin (4)									2.79	%									2.89	%

(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)
				December 31, 2015										September 30, 2015
				Average				Income/						Average				Income/
				Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)		$	192,678			$	901		1.87	%		$	214,967			$	959		1.78	%
		Tax-exempt (1) (2)			25,516				206		3.23				30,682				211		2.76
	Loans held for sale				681				11		6.61				1,075				10		3.76
	Loans (2) (3):
		Mortgages			465,855				3,809		3.27				465,603				3,796		3.26
		Commercial mortgages			1,903,842				16,811		3.53				1,839,312				16,119		3.51
		Commercial			486,353				4,725		3.89				454,239				4,132		3.64
		Commercial construction			1,404				14		3.99				1,742				18		4.13
		Installment			42,629				320		3.00				31,361				268		3.42
		Home equity			51,516				420		3.26				51,012				415		3.25
		Other			507				12		9.47				510				12		9.41
		Total loans			2,952,106				26,111		3.54				2,843,779				24,760		3.48
	Federal funds sold				101				-		0.10				101				-		0.10
	Interest-earning deposits				123,045				76		0.25				96,308				46		0.19
			Total interest-earning assets		3,294,127				27,305		3.32	%			3,186,912				25,986		3.26	%
Noninterest-Earning Assets:
	Cash and due from banks				9,133										7,434
	Allowance for loan losses				(24,858	)									(23,726	)
	Premises and equipment				31,285										31,574
	Other assets				73,483										68,067
		Total noninterest-earning assets			89,043										83,349
Total assets				$	3,383,170									$	3,270,261
LIABILITIES:
Interest-bearing deposits:
	Checking			$	849,929			$	466		0.22	%		$	810,106			$	356		0.18	%
	Money markets				813,112				577		0.28				757,135				546		0.29
	Savings				115,930				17		0.06				118,329				17		0.06
	Certificates of deposit - retail				420,831				1,401		1.33				403,593				1,296		1.28
		Subtotal interest-bearing deposits			2,199,802				2,461		0.45				2,089,163				2,215		0.42
	Interest-bearing demand - brokered				274,261				834		1.22				292,456				857		1.17
	Certificates of deposit - brokered				93,704				502		2.14				93,907				504		2.15
		Total interest-bearing deposits			2,567,767				3,797		0.59				2,475,526				3,576		0.58
	Borrowings				88,548				383		1.73				107,770				399		1.48
	Capital lease obligation				10,266				124		4.83				10,394				125		4.81
	Total interest-bearing liabilities				2,666,581				4,304		0.65				2,593,690				4,100		0.63
Noninterest-bearing liabilities:
	Demand deposits				428,412										398,181
	Accrued expenses and other liabilities				15,541										15,619
	Total noninterest-bearing liabilities				443,953										413,800
Shareholders' equity					272,636										262,771
	Total liabilities and shareholders' equity			$	3,383,170									$	3,270,261
	Net interest income							$	23,801									$	21,886
		Net interest spread									2.67	%									2.63	%
		Net interest margin (4)									2.79	%									2.75	%

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
TWELVE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
				December 31, 2015										December 31, 2014
				Average				Income/						Average				Income/
				Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)		$	231,152			$	4,079		1.76	%		$	212,038			$	4,156		1.96	%
		Tax-exempt (1) (2)			31,158				858		2.75				52,015				1,160		2.23
	Loans held for sale				1,144				55		4.81				1,029				48		4.66
	Loans (2) (3):
		Mortgages			465,803				15,189		3.26				489,941				16,524		3.37
		Commercial mortgages			1,718,097				61,286		3.57				1,156,369				44,319		3.83
		Commercial			404,908				15,101		3.73				171,701				6,818		3.97
		Commercial construction			3,679				156		4.24				5,996				262		4.37
		Installment			32,774				1,096		3.34				24,223				969		4.00
		Home equity			51,227				1,657		3.23				48,055				1,550		3.23
		Other			518				48		9.27				571				53		9.28
		Total loans			2,677,006				94,533		3.53				1,896,856				70,495		3.72
	Federal funds sold				101				-		0.10				101				-		0.10
	Interest-earning deposits				95,287				204		0.21				111,554				248		0.22
			Total interest-earning assets		3,035,848				99,729		3.29	%			2,273,593				76,107		3.35	%
Noninterest-Earning Assets:
	Cash and due from banks				7,445										6,475
	Allowance for loan losses				(22,550	)									(17,462	)
	Premises and equipment				31,771										31,220
	Other assets				67,915										60,474
		Total noninterest-earning assets			84,581										80,707
Total assets				$	3,120,429									$	2,354,300
LIABILITIES:
Interest-bearing deposits:
	Checking			$	741,199			$	1,495		0.20	%		$	498,408			$	782		0.16	%
	Money markets				746,329				2,047		0.27				680,760				1,612		0.24
	Savings				116,289				64		0.06				114,702				59		0.05
	Certificates of deposit - retail				354,626				4,411		1.24				162,418				1,522		0.94
		Subtotal interest-bearing deposits			1,958,443				8,017		0.41				1,456,288				3,975		0.27
	Interest-bearing demand - brokered				268,414				2,534		0.94				128,855				306		0.24
	Certificates of deposit - brokered				102,937				2,034		1.98				97,944				1,384		1.41
		Total interest-bearing deposits			2,329,794				12,585		0.54				1,683,087				5,665		0.34
	Borrowings				113,027				1,602		1.42				95,713				1,533		1.60
	Capital lease obligation				10,452				503		4.81				10,085				483		4.79
	Total interest-bearing liabilities				2,453,273				14,690		0.60				1,788,885				7,681		0.43
	Noninterest-bearing liabilities:
	Demand deposits				394,567										366,424
	Accrued expenses and other liabilities				13,530										11,960
	Total noninterest-bearing liabilities				408,097										378,384
Shareholders' equity					259,059										187,031
	Total liabilities and shareholders' equity			$	3,120,429									$	2,354,300
Net interest income								$	85,039									$	68,426
	Net interest spread										2.69	%									2.92	%
	Net interest margin (4)										2.80	%									3.01	%

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

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

Non-GAAP Financial Reconciliation

(Dollars in thousands, except share data)

		Three Months Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Tangible Book Value Per Share		2015			2015			2015			2015			2014
Shareholders' equity		$	275,676		$	266,400		$	257,876		$	249,353		$	242,267
Less: Intangible assets			3,281			3,311			3,342			563			563
	Tangible equity		272,395			263,089			254,534			248,790			241,704
Period end shares outstanding			16,068,119			15,805,815			15,592,168			15,440,430			15,155,717
Less: Restricted shares not yet vested			414,188			435,312			436,908			429,642			345,095
Total outstanding shares			15,653,931			15,370,503			15,155,260			15,010,788			14,810,622
Tangible book value per share			17.40			17.12			16.80			16.57			16.32
Book value per share			17.61			17.33			17.02			16.61			16.36
Tangible Equity to Tangible Assets
Total Assets			3,364,659			3,268,963			3,118,170			2,879,457			2,702,397
Less: Intangible assets			3,281			3,311			3,342			563			563
	Tangible assets		3,361,378			3,265,652			3,114,828			2,878,894			2,701,834
Tangible equity to tangible assets			8.10%			8.06%			8.17%			8.64%			8.95%
Equity to assets			8.19%			8.15%			8.27%			8.66%			8.96%

	Three Months Ended
	Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Efficiency Ratio	2015			2015			2015			2015			2014
Net interest income	$22,819			$21,706			$20,344			$19,583			$18,352
Total other income	5,723			5,610			6,499			5,882			5,287
Less: (Loss)/gain on loans held for sale at lower of cost or fair value	-			-			-			-			(3	)
Less: Securities gains, net	-			83			176			268			44
Total recurring revenue	28,542			27,233			26,667			25,197			23,598
Operating expenses	19,993			16,899			16,266			15,768			15,578
Less: ORE provision	-			250			-			-			-
Total operating expenses	19,993			16,649			16,266			15,768			15,578
Efficiency ratio	70.05	%		61.14	%		61.00	%		62.58	%		66.01	%
Efficiency ratio, excluding $2.5 million of charges relating to the closure of two branch offices	61.30	%

	Twelve Months Ended
	Dec 31,				Dec 31,
Efficiency Ratio	2015				2014
Net interest income	$	84,452			$	67,894
Total other income		23,714				20,807
Less: Gain on loans held for sale at lower of cost or fair value		-				166
Less: Securities gains, net		527				260
Total recurring revenue		107,639				88,275
Operating expenses		68,926				59,540
Less: ORE provision		250				-
Total operating expenses		68,676				59,540
Efficiency ratio		63.80	%			67.45	%
Efficiency ratio, excluding $2.5 million of charges relating to the closure of two branch offices		61.71	%