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Peapack-Gladstone Financial Corporation Reports Second Quarter Results

PGC

BEDMINSTER, NJ, July 23, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its second quarter 2024 financial results.

This earnings release should be read in conjunction with the Company’s Q2 2024 Investor Update, a copy of which is available on our website at www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.

During the second quarter of 2024, core relationship deposits grew $354 million to $4.6 billion which represents an annualized rate of 33%. During the first six months of the year core relationship deposits have grown by $524 million. Strong growth in core relationship deposit balances have enabled the Company to repay $119.5 million of all outstanding short-term borrowings as of June 30, 2024.

The improvement in the Company’s liquidity profile also resulted in an increase in the net interest margin compared to the previous quarter. The net interest margin increased to 2.25% for the quarter ended June 30, 2024, compared to 2.20% for the quarter ended March 31, 2024.

The Company recorded total revenue of $56.6 million, net income of $7.5 million and diluted earnings per share (“EPS”) of $0.42 for the quarter ended June 30, 2024, compared to revenue of $57.5 million, net income of $13.1 million and diluted EPS of $0.73 for the quarter ended June 30, 2023. Return on average assets was 0.47%, return on average equity was 5.22%, and return on average tangible equity was 5.67% for the quarter ended June 30, 2024.

Douglas L. Kennedy, President and CEO said, “One year ago we announced our strategic decision to expand our footprint into New York City with the addition of a team of experienced banking professionals and a new office on Park Avenue. During the second quarter of this year, we have taken another step to enhance our expansion effort with the addition of thirteen (13) commercial private banking teams that bring with them decades of experience and deep client relationships in the metro New York market. Our second quarter results demonstrate the progress and momentum we are building toward a successful destination. Growth in customer deposits in an extremely competitive environment, improvement in our net interest margin, along with an enhanced liquidity profile are evidence of the positive results we are striving to achieve."

Mr. Kennedy also noted, “We continue to expand our unique private banking model that offers a ‘Single Point of Contact’ to deliver a white glove experience for all of our product offerings. We are being extremely well received by all those that we have had the opportunity to interact with and are very pleased with the results to date. While we are aware of the potential headwinds in front of us related to credit quality concerns and a challenging interest rate environment, we remain focused executing our strategy which we believe will deliver a successful outcome."

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

Wealth Management:

  • Gross new business inflows for Q2 2024 totaled $171 million ($139 million managed).
  • AUM/AUA in our Wealth Management Division totaled $11.5 billion at June 30, 2024 compared to $10.9 billion at December 31, 2023.
  • Wealth Management fee income was $16.4 million in Q2 2024, which amounted to 29% of total revenue for the quarter.

Commercial Banking and Balance Sheet Management:

  • Total deposits grew by $382 million, to $5.7 billion at June 30, 2024 compared to $5.3 billion at December 31, 2023. The Company intentionally allowed $142 million in high cost, non-core relationship deposits to roll off during the first six months of the year. Excluding this deposit run-off, core relationship deposits have grown by $524 million during 2024.
  • The Company has repaid all short-term borrowings as of June 30, 2024 compared to $404 million outstanding at December 31, 2023.
  • Total loans declined $167 million to $5.3 billion at June 30, 2024 from $5.4 billion at December 31, 2023.
  • Commercial and industrial lending (“C&I”) loan/lease balances represent 42% of the total loan portfolio at June 30, 2024.
  • Fee income on unused commercial lines of credit totaled $786,000 for Q2 2024.
  • The net interest margin ("NIM") was 2.25% in Q2 2024, an increase of 5 basis points compared to 2.20% at Q1 2024.
  • Noninterest-bearing demand deposits increased by $35 million during the second quarter of 2024 and represented 17% of total deposits as of June 30, 2024.

Capital Management:

  • Tangible book value per share increased slightly to $30.73 per share at June 30, 2024 compared to $30.31 at December 31, 2023.
  • During the second quarter, the Company repurchased 100,000 shares of common stock at a cost of $2.2 million. During the first six months of 2024, the Company repurchased 200,000 shares of common stock at a cost of $4.6 million. For the full year 2023, the Company repurchased 455,341 shares at a cost of $12.5 million.
  • At June 30, 2024, the Tier 1 Leverage Ratio stood at 11.14% for Peapack-Gladstone Bank (the "Bank") and 9.45% for the Company. The Common Equity Tier 1 Ratio (to Risk-Weighted Assets) was 14.05% for the Bank and 11.92% for the Company at June 30, 2024. These ratios remain significantly above well capitalized standards, as capital continues to benefit from net income generation.

SUMMARY INCOME STATEMENT DETAILS:

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

June 2024 Year Compared to Prior Year

Six Months Ended Six Months Ended
June 30, June 30, Increase/
(Dollars in millions, except per share data) 2024 2023 (Decrease)
Net interest income $ 69.42 $ 82.90 $ (13.48 ) (16 )%
Wealth management fee income 30.83 28.01 2.82 10
Capital markets activity 1.86 1.83 0.03 2
Other income 7.57 6.80 0.77 11
Total other income 40.26 36.64 3.62 10
Total Revenue 109.68 119.54 (9.86 ) (8 )%
Operating expenses 83.17 73.27 9.90 14
Pretax income before provision for credit losses 26.51 46.27 (19.76 ) (43 )
Provision for credit losses 4.54 3.21 1.33 41
Pretax income 21.97 43.06 (21.09 ) (49 )
Income tax expense 5.81 11.56 (5.75 ) (50 )
Net income $ 16.16 $ 31.50 $ (15.34 ) (49 )%
Diluted EPS $ 0.91 $ 1.74 $ (0.83 ) (48 )%
Return on average assets 0.51 % 0.99 % (0.48 )
Return on average equity 5.58 % 11.44 % (5.86 )

June 2024 Quarter Compared to Prior Year Quarter

Three Months Ended Three Months Ended
June 30, June 30, Increase/
(Dollars in millions, except per share data) 2024 2023 (Decrease)
Net interest income $ 35.04 $ 38.92 $ (3.88 ) (10 )%
Wealth management fee income 16.42 14.25 2.17 15
Capital markets activity 0.59 0.87 (0.28 ) (32 )
Other income 4.55 3.46 1.09 32
Total other income 21.56 18.58 2.98 16
Total Revenue 56.60 57.50 (0.90 ) (2 )%
Operating expenses 43.13 37.69 5.44 14
Pretax income before provision for credit losses 13.47 19.81 (6.34 ) (32 )
Provision for credit losses 3.91 1.70 2.21 130
Pretax income 9.56 18.11 (8.55 ) (47 )
Income tax expense 2.03 4.96 (2.93 ) (59 )
Net income $ 7.53 $ 13.15 $ (5.62 ) (43 )%
Diluted EPS $ 0.42 $ 0.73 $ (0.31 ) (42 )%
Return on average assets annualized 0.47 % 0.82 % (0.35 )
Return on average equity annualized 5.22 % 9.43 % (4.21 )

June 2024 Quarter Compared to Linked Quarter

Three Months Ended Three Months Ended
June 30, March 31, Increase/
(Dollars in millions, except per share data) 2024 2024 (Decrease)
Net interest income $ 35.04 $ 34.38 $ 0.66 2 %
Wealth management fee income 16.42 14.41 2.01 14
Capital markets activity 0.59 1.27 (0.68 ) (54 )
Other income 4.55 3.02 1.53 51
Total other income 21.56 18.70 2.86 15
Total Revenue 56.60 53.08 3.52 7 %
Operating expenses 43.13 40.04 3.09 8
Pretax income before provision for credit losses 13.47 13.04 0.43 3
Provision for credit losses 3.91 0.63 3.28 521
Pretax income 9.56 12.41 (2.85 ) (23 )
Income tax expense 2.03 3.78 (1.75 ) (46 )
Net income $ 7.53 $ 8.63 $ (1.10 ) (13 )%
Diluted EPS $ 0.42 $ 0.48 $ (0.06 ) (13 )%
Return on average assets annualized 0.47 % 0.54 % (0.07 )
Return on average equity annualized 5.22 % 5.94 % (0.72 )

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

AUM/AUA in the Bank’s Wealth Management Division were $11.5 billion at June 30, 2024 compared to $10.9 billion at December 31, 2023. For the June 2024 quarter, the Wealth Management Team generated $16.4 million in fee income, compared to $14.4 million for the March 31, 2024 quarter and $14.3 million for the June 2023 quarter. The equity markets improved during the first half of 2024, contributing to the increase in AUM/AUA along with gross new business inflows of $171 million.

John Babcock, President of the Bank's Wealth Management Division, noted, “Q2 2024 continued strong client inflows totaling new accounts and client additions of $171 million ($139 million managed). Our 2024 new business pipeline is healthy, and we continue to remain focused on delivering excellent service and advice to our clients. Our highly skilled wealth management professionals, our fiduciary powers and expertise, our financial planning capabilities combined with our high-touch client service model distinguishes us in our market and continues to drive our growth and success.”

Loans / Commercial Banking

Total loans declined $167 million, or 3%, to $5.3 billion at June 30, 2024 when compared to December 31, 2023, primarily driven by repayments, maturities and tighter lending standards. Nearly half of the decline in outstanding loans was related to reductions in multifamily and commercial real estate balances. Total C&I loans and leases at June 30, 2024 were $2.2 billion or 42% of the total loan portfolio.

Mr. Kennedy noted, “As previously mentioned, we have tightened our underwriting guidelines due to economic uncertainty, successfully excited some problem credits, and originations have also slowed due to the rate environment. As a result, our outstanding loan balances have declined during 2024. Recently, we have been building a pipeline of C&I loans and believe that we will make up the decline in loans experienced during the first half of 2024. We are proud to have built a leading middle market commercial banking franchise, as evidenced by our C&I Portfolio, Treasury Management services, Corporate Advisory and SBA businesses. We believe these business lines fit perfectly with our private banking business model and will generate solid production going forward.”

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

The Company’s NII of $35.0 million and NIM of 2.25% for Q2 2024 increased $667,000 and 5 basis points from NII of $34.4 million and NIM of 2.20% for the linked quarter (Q1 2024), and decreased $3.9 million and 24 basis points from NII of $38.9 million and NIM of 2.49% compared to the prior year period (Q2 2023). During Q2 2024, the Company has seen NIM expansion partially due the paydown of overnight borrowings which were replaced by lower cost deposit balances. Prior to Q2 2024, the Company had seen a sharp increase in interest expense mostly driven by higher deposit rates during 2023. Noninterest-bearing checking deposits increased by $35 million during the second quarter of 2024, which also benefited NIM. Cycle to date betas are approximately 53%.

Funding / Liquidity / Interest Rate Risk Management

Total deposits increased $382 million to $5.7 billion at June 30, 2024 from $5.3 billion at December 31, 2023. The change in deposit balances included a decline in brokered deposits of $95 million. The overall growth in deposits was used to pay down all overnight borrowings as of June 30, 2024, as well as providing additional balance sheet liquidity. Outstanding overnight borrowings were $404 million at December 31, 2023.

At June 30, 2024, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $933 million, or 14% of assets. The Company maintains additional liquidity resources of approximately $2.9 billion through secured available funding with the Federal Home Loan Bank and the Federal Reserve Discount Window. The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.

The Company's total on and off-balance sheet liquidity totaled $3.9 billion, which amounts to 304% of the total uninsured/uncollateralized deposits currently on the Company’s balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $586,000 for the June 2024 quarter compared to $1.3 million for the March 2024 quarter and $868,000 for the June 2023 quarter. The March 2024 quarter included $818,000 of corporate advisory fee income.

Three Months Ended Three Months Ended Three Months Ended
June 30, March 31, June 30,
(Dollars in thousands, except per share data) 2024 2024 2023
Gain on loans held for sale at fair value (Mortgage banking) $ 34 $ 56 $ 15
Gain on sale of SBA loans 449 400 838
Corporate advisory fee income 103 818 15
Total capital markets activity $ 586 $ 1,274 $ 868

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

Other noninterest income was $4.6 million for Q2 2024 compared to $3.0 million for Q1 2024 and $3.5 million for Q2 2023. Q2 2024 included $1.6 million of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases, while Q1 2024 included $141,000 and Q2 2023 included $221,000 respectively. Additionally, Q2 2024 included $786,000 of unused line fees compared to $827,000 for Q1 2024 and $809,000 for Q2 2023.

Operating Expenses

The Company’s total operating expenses were $43.1 million for the second quarter of 2024, compared to $40.0 million for the first quarter of 2024 and $37.7 million for the quarter ended June 2023. Both 2024 quarters included expenses associated with the Company’s expansion into New York City. The June 2024 quarter also included normal annual merit increases.

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

Income Taxes

The effective tax rate for the three months ended June 30, 2024 was 21.2%, as compared to 30.4% for the March 2024 quarter and 27.4% for the quarter ended June 30, 2023. The June 2024 quarter included a benefit related to the Company’s deferred tax assets associated with a surtax imposed by the State of New Jersey in June 2024. Excluding such benefit, the effective tax rate for the June 2024 quarter would have been approximately 29.0%. The higher tax rate for the March 2024 quarter was primarily due to the impact of vesting of the restricted stock at prices lower than original grant prices.

Asset Quality / Provision for Credit Losses

Nonperforming assets were $82.1 million, or 1.26% of total assets at June 30, 2024, as compared to $69.8 million, or 1.09% of total assets at March 31, 2024. Loans past due 30 to 89 days and still accruing were $34.7 million, or 0.66% of total loans at June 30, 2024 compared to $73.7 million, or 1.37% of total loans at March 31, 2024.

Criticized and classified loans totaled $269.1 million at June 30, 2024, reflecting an increase from the March 31, 2024 and June 30, 2023 levels. The Company currently has no loans or leases on deferral and still accruing.

For the quarter ended June 30, 2024, the Company’s provision for credit losses was $3.9 million compared to $615,000 for the March 2024 quarter and $1.7 million for the June 2023 quarter. The provision for credit losses in the second quarter of 2024 was primarily driven by charge-offs related to the sale of two problem loans, which were approaching foreclosure and transfer to other real estate owned.

At June 30, 2024, the allowance for credit losses was $68.0 million (1.29% of total loans), compared to $66.3 million (1.24% of total loans) at March 31, 2024, and $62.7 million (1.15% of total loans) at June 30, 2023.

Mr. Kennedy noted, “As evidenced by our asset quality metrics, we have seen some credit issues surface, but we believe these are presently isolated to a small number of specific multifamily sponsors and will work through each credit one at a time. All of the multifamily loans that matured or repriced in 2024 have continued to make their scheduled payments despite the higher rate environment."

Capital

The Company’s capital position increased during the second quarter of 2024 due to net income of $7.5 million, which was partially offset by the repurchase of 100,000 shares through the Company's repurchase program at a total cost of $2.2 million and the quarterly dividend of $887,000. Additionally, during the second quarter of 2024, the Company recorded a deterioration in accumulated other comprehensive losses of $582,000, net of tax. The total accumulated other comprehensive loss declined to $68.3 million as of June 30, 2024 ($75.1 million loss related to the available for sale securities portfolio partially offset by a $6.8 million gain on the cash flow hedges).

Tangible book value per share increased during the second quarter to $30.73 at June 30, 2024 from $30.31 at December 31, 2023. Tangible book value per share is a non-GAAP financial measure. See the reconciliation tables included in this release for further detail. The Company’s and Bank’s regulatory capital ratios as of June 30, 2024 remain strong and reflect increases from March 31, 2024 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of March 31, 2024), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

On June 27, 2024, the Company declared a cash dividend of $0.05 per share payable on August 22, 2024 to shareholders of record on August 8, 2024.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.5 billion and assets under management/administration of $11.5 billion as of June 30, 2024. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides Private Banking customized solutions through its wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers. Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy. Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service. Visit www.pgbank.com and www.peapackprivate.com for more information.

FORWARD-LOOKING STATEMENTS

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

  • our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
  • the impact of anticipated higher operating expenses in 2024 and beyond;
  • our ability to successfully integrate wealth management firm and team acquisitions;
  • our ability to successfully integrate our expanded employee base;
  • an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions;
  • declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
  • declines in the value in our investment portfolio;
  • impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;
  • the continuing impact of the COVID-19 pandemic on our business and results of operation;
  • higher than expected increases in our allowance for credit losses;
  • higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans or charge-offs;
  • inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
  • decline in real estate values within our market areas;
  • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
  • successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;
  • higher than expected FDIC insurance premiums;
  • adverse weather conditions;
  • the current or anticipated impact of military conflict, terrorism or other geopolitical events;
  • our inability to successfully generate new business in new geographic markets, including our expansion into New York City;
  • a reduction in our lower-cost funding sources;
  • changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio;
  • our inability to adapt to technological changes;
  • claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
  • our inability to retain key employees;
  • demands for loans and deposits in our market areas;
  • adverse changes in securities markets;
  • changes in New York City rent regulation law;
  • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;
  • changes in accounting policies and practices; and/or
  • other unexpected material adverse changes in our operations or earnings.

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2023. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

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

(Tables to follow)

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

For the Three Months Ended
June 30, March 31, Dec 31, Sept 30, June 30,
2024 2024 2023 2023 2023
Income Statement Data:
Interest income $ 79,238 $ 79,194 $ 80,178 $ 78,489 $ 74,852
Interest expense 44,196 44,819 43,503 41,974 35,931
Net interest income 35,042 34,375 36,675 36,515 38,921
Wealth management fee income 16,419 14,407 13,758 13,975 14,252
Service charges and fees 1,345 1,322 1,255 1,319 1,320
Bank owned life insurance 328 503 357 310 305
Gain on loans held for sale at fair value
(Mortgage banking)
34 56 18 37 15
Gain on loans held for sale at lower
of cost or fair value
23
Gain on sale of SBA loans 449 400 239 491 838
Corporate advisory fee income 103 818 39 85 15
Other income (A) 2,938 1,306 1,339 3,541 2,039
Fair value adjustment for CRA equity security (84 ) (111 ) 585 (404 ) (209 )
Total other income 21,555 18,701 17,590 19,354 18,575
Total revenue 56,597 53,076 54,265 55,869 57,496
Salaries and employee benefits 29,884 28,476 24,320 25,264 26,354
Premises and equipment 5,776 5,081 5,416 5,214 4,729
FDIC insurance expense 870 945 765 741 729
Other expenses 6,596 5,539 7,115 6,194 5,880
Total operating expenses 43,126 40,041 37,616 37,413 37,692
Pretax income before provision for credit losses 13,471 13,035 16,649 18,456 19,804
Provision for credit losses 3,911 627 5,026 5,856 1,696
Income before income taxes 9,560 12,408 11,623 12,600 18,108
Income tax expense 2,030 3,777 3,024 3,845 4,963
Net income $ 7,530 $ 8,631 $ 8,599 $ 8,755 $ 13,145
Per Common Share Data:
Earnings per share (basic) $ 0.42 $ 0.49 $ 0.48 $ 0.49 $ 0.73
Earnings per share (diluted) 0.42 0.48 0.48 0.49 0.73
Weighted average number of common
shares outstanding:
Basic 17,747,070 17,711,639 17,770,158 17,856,961 17,930,611
Diluted 17,792,296 17,805,347 17,961,400 18,010,127 18,078,848
Performance Ratios:
Return on average assets annualized (ROAA) 0.47 % 0.54 % 0.53 % 0.54 % 0.82 %
Return on average equity annualized (ROAE) 5.22 % 5.94 % 6.13 % 6.20 % 9.43 %
Return on average tangible equity annualized (ROATCE) (B) 5.67 % 6.45 % 6.68 % 6.75 % 10.30 %
Net interest margin (tax-equivalent basis) 2.25 % 2.20 % 2.29 % 2.28 % 2.49 %
GAAP efficiency ratio (C) 76.20 % 75.44 % 69.32 % 66.97 % 65.56 %
Operating expenses / average assets annualized 2.70 % 2.51 % 2.33 % 2.31 % 2.36 %

(A) The September 2023 quarter included $2.3 million of fee income from equipment finance activity.
(B) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
(C) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

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

For the Six Months Ended
June 30, Change
2024 2023 $ %
Income Statement Data:
Interest income $ 158,432 $ 145,343 $ 13,089 9 %
Interest expense 89,015 62,444 26,571 43 %
Net interest income 69,417 82,899 (13,482 ) -16 %
Wealth management fee income 30,826 28,014 2,812 10 %
Service charges and fees 2,667 2,578 89 3 %
Bank owned life insurance 831 602 229 38 %
Gain on loans held for sale at fair value (Mortgage banking) 90 36 54 150 %
Gain on loans held for sale at lower of cost or fair value 23 23 N/A
Gain on sale of SBA loans 849 1,703 (854 ) -50 %
Corporate advisory fee income 921 95 826 869 %
Other income 4,244 3,606 638 18 %
Fair value adjustment for CRA equity security (195 ) (195 ) N/A
Total other income 40,256 36,634 3,622 10 %
Total revenue 109,673 119,533 (9,860 ) -8 %
Salaries and employee benefits 58,360 50,940 7,420 15 %
Premises and equipment 10,857 9,103 1,754 19 %
FDIC insurance expense 1,815 1,440 375 26 %
Other expenses 12,135 11,783 352 3 %
Total operating expenses 83,167 73,266 9,901 14 %
Pretax income before provision for credit losses 26,506 46,267 (19,761 ) -43 %
Provision for credit losses 4,538 3,209 1,329 41 %
Income before income taxes 21,968 43,058 (21,090 ) -49 %
Income tax expense 5,807 11,558 (5,751 ) -50 %
Net income $ 16,161 $ 31,500 $ (15,339 ) -49 %
Per Common Share Data:
Earnings per share (basic) $ 0.91 $ 1.76 $ (0.85 ) -48 %
Earnings per share (diluted) 0.91 1.74 (0.83 ) -48 %
Weighted average number of common shares outstanding:
Basic 17,729,355 17,886,154 (156,799 ) -1 %
Diluted 17,811,895 18,153,267 (341,372 ) -2 %
Performance Ratios:
Return on average assets (ROAA) 0.51 % 0.99 % (0.48 )% -49 %
Return on average equity (ROAE) 5.58 % 11.44 % (5.86 )% -51 %
Return on average tangible equity (ROATCE) (A) 6.06 % 12.51 % (6.45 )% -52 %
Net interest margin (tax-equivalent basis) 2.22 % 2.68 % (0.46 )% -17 %
GAAP efficiency ratio (B) 75.83 % 61.29 % 14.54 % 24 %
Operating expenses / average assets 2.60 % 2.31 % 0.29 % 13 %

(A) Return on average tangible equity is calculated by dividing tangible equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.
(B) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

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

As of
June 30, March 31, Dec 31, Sept 30, June 30,
2024 2024 2023 2023 2023
ASSETS
Cash and due from banks $ 5,586 $ 5,769 $ 5,887 $ 7,400 $ 4,859
Federal funds sold
Interest-earning deposits 310,143 189,069 181,784 180,469 166,769
Total cash and cash equivalents 315,729 194,838 187,671 187,869 171,628
Securities available for sale 591,884 550,870 550,617 521,005 540,519
Securities held to maturity 105,013 106,498 107,755 108,940 110,438
CRA equity security, at fair value 12,971 13,055 13,166 12,581 12,985
FHLB and FRB stock, at cost (A) 12,478 18,079 31,044 34,158 35,402
Residential mortgage 579,057 581,426 578,427 585,295 575,238
Multifamily mortgage 1,796,687 1,827,165 1,836,390 1,871,853 1,884,369
Commercial mortgage 600,859 615,964 637,625 622,469 624,710
Commercial and industrial loans 2,185,827 2,235,342 2,284,940 2,321,917 2,278,133
Consumer loans 69,579 66,827 62,036 57,227 52,098
Home equity lines of credit 37,117 35,542 36,464 34,411 34,397
Other loans 172 184 238 265 269
Total loans 5,269,298 5,362,450 5,436,120 5,493,437 5,449,214
Less: Allowance for credit losses 67,984 66,251 65,888 68,592 62,704
Net loans 5,201,314 5,296,199 5,370,232 5,424,845 5,386,510
Premises and equipment 24,932 24,494 24,166 23,969 23,814
Accrued interest receivable 33,534 32,672 30,676 22,889 20,865
Bank owned life insurance 47,716 47,580 47,581 47,509 47,382
Goodwill and other intangible assets 45,470 45,742 46,014 46,286 46,624
Finance lease right-of-use assets 1,055 1,900 2,087 2,274 2,461
Operating lease right-of-use assets 38,683 16,035 12,096 12,800 13,500
Due from brokers 3,184
Other assets 71,387 60,591 53,752 76,456 67,572
TOTAL ASSETS $ 6,505,350 $ 6,408,553 $ 6,476,857 $ 6,521,581 $ 6,479,700
LIABILITIES
Deposits:
Noninterest-bearing demand deposits $ 950,368 $ 914,893 $ 957,687 $ 947,405 $ 1,024,105
Interest-bearing demand deposits 3,229,814 3,029,119 2,882,193 2,871,359 2,816,913
Savings 105,602 108,305 111,573 117,905 120,082
Money market accounts 824,158 775,132 740,559 761,833 763,026
Certificates of deposit – Retail 502,810 486,079 443,791 422,291 384,106
Certificates of deposit – Listing Service 7,454 7,704 7,804 9,103 10,822
Subtotal “customer” deposits 5,620,206 5,321,232 5,143,607 5,129,896 5,119,054
IB Demand – Brokered 10,000 10,000 10,000 10,000 10,000
Certificates of deposit – Brokered 26,000 145,480 120,507 119,463 69,443
Total deposits 5,656,206 5,476,712 5,274,114 5,259,359 5,198,497
Short-term borrowings 119,490 403,814 470,576 485,360
Finance lease liability 1,427 3,104 3,430 3,752 4,071
Operating lease liability 41,347 17,630 12,876 13,595 14,308
Subordinated debt, net 133,417 133,346 133,274 133,203 133,131
Due to brokers 9,981
Other liabilities 74,650 75,892 65,668 82,140 79,264
TOTAL LIABILITIES 5,917,028 5,826,174 5,893,176 5,962,625 5,914,631
Shareholders’ equity 588,322 582,379 583,681 558,956 565,069
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY $ 6,505,350 $ 6,408,553 $ 6,476,857 $ 6,521,581 $ 6,479,700
Assets under management and / or administration at
Peapack-Gladstone Bank’s Private Wealth Management
Division (market value, not included above-dollars in billions)
$ 11.5 $ 11.5 $ 10.9 $ 10.4 $ 10.7

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

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

As of
June 30, March 31, Dec 31, Sept 30, June 30,
2024 2024 2023 2023 2023
Asset Quality:
Loans past due over 90 days and still accruing $ $ 35 $ $ $
Nonaccrual loans 82,075 69,811 61,324 70,809 34,505
Other real estate owned
Total nonperforming assets $ 82,075 $ 69,846 $ 61,324 $ 70,809 $ 34,505
Nonperforming loans to total loans 1.56 % 1.30 % 1.13 % 1.29 % 0.63 %
Nonperforming assets to total assets 1.26 % 1.09 % 0.95 % 1.09 % 0.53 %
Performing modifications (A)(B) $ 26,788 $ 12,311 $ 248 $ 248 $ 248
Loans past due 30 through 89 days and still accruing $ 34,714 $ 73,699 $ 34,589 $ 9,780 $ 14,524
Loans subject to special mention $ 140,791 $ 59,450 $ 71,397 $ 53,328 $ 53,606
Classified loans $ 128,311 $ 117,869 $ 84,372 $ 94,866 $ 58,655
Individually evaluated loans $ 81,802 $ 69,530 $ 60,710 $ 70,184 $ 33,867
Allowance for credit losses ("ACL"):
Beginning of quarter $ 66,251 $ 65,888 $ 68,592 $ 62,704 $ 62,250
Provision for credit losses (C) 3,901 615 5,082 5,944 1,666
(Charge-offs)/recoveries, net (D) (2,168 ) (252 ) (7,786 ) (56 ) (1,212 )
End of quarter $ 67,984 $ 66,251 $ 65,888 $ 68,592 $ 62,704
ACL to nonperforming loans 82.83 % 94.85 % 107.44 % 96.87 % 181.72 %
ACL to total loans 1.29 % 1.24 % 1.21 % 1.25 % 1.15 %
Collectively evaluated ACL to total loans (E) 1.14 % 1.15 % 1.13 % 1.10 % 1.11 %

(A) Amounts reflect modifications that are paying according to modified terms.
(B) Excludes modifications included in nonaccrual loans of $3.2 million at June 30, 2024, $3.2 million at March 31, 2024, $3.0 million at December 31, 2023, $3.1 million at September 30, 2023 and $777,000 at June 30, 2023.
(C) Excludes a provision of $10,000 at June 30, 2024, a provision of $12,000 at March 31, 2024, a credit of $55,000 at December 31, 2023, a credit of $88,000 at September 30, 2023 and a provision of $30,000 at June 30, 2023 related to off-balance sheet commitments.
(D) Net charge-offs for the quarter ended December 31, 2023 included charge-offs of $2.2 million of a previously established reserve to loans individually evaluated on one multifamily loan and $5.6 million on one equipment finance relationship. Net charge-offs for the quarter ended June 30, 2023 included a charge-off of $1.2 million of a previously established reserve to loans individually evaluated on one commercial real estate loan.
(E) Total ACL less reserves to loans individually evaluated equals collectively evaluated ACL.

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

As of
June 30, December 31, June 30,
2024 2023 2023
Capital Adequacy
Equity to total assets (A) 9.04 % 9.01 % 8.72 %
Tangible equity to tangible assets (B) 8.40 % 8.36 % 8.06 %
Book value per share (C) $ 33.30 $ 32.90 $ 31.59
Tangible book value per share (D) $ 30.73 $ 30.31 $ 28.98
Tangible equity to tangible assets excluding other comprehensive loss* 9.36 % 9.28 % 9.02 %
Tangible book value per share excluding other comprehensive loss* $ 34.60 $ 33.97 $ 32.78

*Excludes other comprehensive loss of $68.3 million for the quarter ended June 30, 2024, $64.9 million for the quarter ended December 31, 2023, and $68.0 million for the quarter ended June 30, 2023. See Non-GAAP financial measures reconciliation included in these tables.

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

As of
June 30, December 31, June 30,
2024 2023 2023
Regulatory Capital – Holding Company
Tier I leverage $ 609,299 9.45 % $ 600,444 9.19 % $ 584,140 9.06 %
Tier I capital to risk-weighted assets 609,299 11.92 600,444 11.43 584,140 11.47
Common equity tier I capital ratio
to risk-weighted assets
609,287 11.92 600,432 11.43 584,122 11.47
Tier I & II capital to risk-weighted assets 792,684 15.50 785,413 14.95 773,808 15.20
Regulatory Capital – Bank
Tier I leverage (E) $ 717,557 11.14 % $ 707,446 10.83 % $ 696,399 10.80 %
Tier I capital to risk-weighted assets (F) 717,557 14.05 707,446 13.48 696,399 13.69
Common equity tier I capital ratio
to risk-weighted assets (G)
717,545 14.05 707,434 13.47 696,381 13.68
Tier I & II capital to risk-weighted assets (H) 781,448 15.30 773,083 14.73 759,935 14.93

(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($258 million)
(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($434 million)
(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($357 million)
(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($536 million)

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

For the Quarters Ended
June 30, March 31, Dec 31, Sept 30, June 30,
2024 2024 2023 2023 2023
Residential loans retained $ 16,087 $ 11,661 $ 5,895 $ 21,310 $ 39,358
Residential loans sold 2,361 4,025 1,449 2,503 1,072
Total residential loans 18,448 15,686 7,344 23,813 40,430
Commercial real estate 2,600 11,500 21,375 3,900 43,235
Multifamily 4,330 1,900 5,725 3,000 26,662
Commercial (C&I) loans (A) (B) 103,065 145,803 145,397 176,845 158,972
SBA 8,200 2,790 7,326 300 13,713
Wealth lines of credit (A) 10,950 3,850 350 6,875 3,950
Total commercial loans 129,145 165,843 180,173 190,920 246,532
Installment loans 1,664 6,868 2,946 6,999 4,587
Home equity lines of credit (A) 4,787 2,103 4,174 6,275 6,107
Total loans closed $ 154,044 $ 190,500 $ 194,637 $ 228,007 $ 297,656


For the Six Months Ended
June 30, June 30,
2024 2023
Residential loans retained $ 27,748 $ 69,661
Residential loans sold 6,386 2,549
Total residential loans 34,134 72,210
Commercial real estate 14,100 62,225
Multifamily 6,230 56,812
Commercial (C&I) loans (A) (B) 248,868 366,786
SBA 10,990 23,663
Wealth lines of credit (A) 14,800 27,175
Total commercial loans 294,988 536,661
Installment loans 8,532 16,673
Home equity lines of credit (A) 6,890 9,028
Total loans closed $ 344,544 $ 634,572

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

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

For the Three Months Ended
June 30, 2024 June 30, 2023
Average Income/ Annualized Average Income/ Annualized
Balance Expense Yield Balance Expense Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A) $ 801,715 $ 5,168 2.58 % $ 806,447 $ 4,900 2.43 %
Tax-exempt (A) (B) 1,858 20 4.31
Loans (B) (C):
Mortgages 576,944 5,582 3.87 557,575 4,942 3.55
Commercial mortgages 2,420,570 26,881 4.44 2,504,268 26,839 4.29
Commercial 2,191,370 37,067 6.77 2,241,817 35,457 6.33
Commercial construction 21,628 489 9.04 6,977 165 9.46
Installment 67,034 1,143 6.82 51,269 841 6.56
Home equity 36,576 748 8.18 33,650 633 7.52
Other 200 6 12.00 271 7 10.33
Total loans 5,314,322 71,916 5.41 5,395,827 68,884 5.11
Federal funds sold
Interest-earning deposits 207,287 2,418 4.67 141,968 1,451 4.09
Total interest-earning assets 6,323,324 79,502 5.03 % 6,346,100 75,255 4.74 %
Noninterest-earning assets:
Cash and due from banks 7,537 7,800
Allowance for credit losses (67,568 ) (63,045 )
Premises and equipment 24,820 23,745
Other assets 99,838 85,969
Total noninterest-earning assets 64,627 54,469
Total assets $ 6,387,951 $ 6,400,569
LIABILITIES:
Interest-bearing deposits:
Checking $ 3,094,386 $ 29,252 3.78 % $ 2,834,140 $ 22,219 3.14 %
Money markets 791,385 6,016 3.04 788,745 3,853 1.95
Savings 105,825 96 0.36 125,555 45 0.14
Certificates of deposit – retail 504,313 5,367 4.26 385,211 2,462 2.56
Subtotal interest-bearing deposits 4,495,909 40,731 3.62 4,133,651 28,579 2.77
Interest-bearing demand – brokered 10,000 134 5.36 10,000 125 5.00
Certificates of deposit – brokered 98,642 1,242 5.04 26,165 196 3.00
Total interest-bearing deposits 4,604,551 42,107 3.66 4,169,816 28,900 2.77
Borrowings 27,247 381 5.59 413,961 5,384 5.20
Capital lease obligation 2,869 22 3.07 4,187 50 4.78
Subordinated debt 133,377 1,686 5.06 133,090 1,597 4.80
Total interest-bearing liabilities 4,768,044 44,196 3.71 % 4,721,054 35,931 3.04 %
Noninterest-bearing liabilities:
Demand deposits 945,231 1,033,176
Accrued expenses and other liabilities 97,470 88,911
Total noninterest-bearing liabilities 1,042,701 1,122,087
Shareholders’ equity 577,206 557,428
Total liabilities and shareholders’ equity $ 6,387,951 $ 6,400,569
Net interest income $ 35,306 $ 39,324
Net interest spread 1.32 % 1.70 %
Net interest margin (D) 2.25 % 2.49 %

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

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

For the Three Months Ended
June 30, 2024 March 31, 2024
Average Income/ Annualized Average Income/ Annualized
Balance Expense Yield Balance Expense Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A) $ 801,715 $ 5,168 2.58 % $ 793,675 $ 5,136 2.59 %
Tax-exempt (A) (B)
Loans (B) (C):
Mortgages 576,944 5,582 3.87 577,648 5,420 3.75
Commercial mortgages 2,420,570 26,881 4.44 2,460,403 27,541 4.48
Commercial 2,191,370 37,067 6.77 2,240,161 37,559 6.71
Commercial construction 21,628 489 9.04 18,927 428 9.05
Installment 67,034 1,143 6.82 65,287 1,113 6.82
Home equity 36,576 748 8.18 36,406 737 8.10
Other 200 6 12.00 214 7 13.08
Total loans 5,314,322 71,916 5.41 5,399,046 72,805 5.39
Federal funds sold
Interest-earning deposits 207,287 2,418 4.67 140,097 1,522 4.35
Total interest-earning assets 6,323,324 79,502 5.03 % 6,332,818 79,463 5.02 %
Noninterest-earning assets:
Cash and due from banks 7,537 10,105
Allowance for credit losses (67,568 ) (67,105 )
Premises and equipment 24,820 24,393
Other assets 99,838 87,129
Total noninterest-earning assets 64,627 54,522
Total assets $ 6,387,951 $ 6,387,340
LIABILITIES:
Interest-bearing deposits:
Checking $ 3,094,386 $ 29,252 3.78 % $ 2,954,698 $ 27,433 3.71 %
Money markets 791,385 6,016 3.04 757,753 5,525 2.92
Savings 105,825 96 0.36 108,503 89 0.33
Certificates of deposit – retail 504,313 5,367 4.26 477,793 4,855 4.06
Subtotal interest-bearing deposits 4,495,909 40,731 3.62 4,298,747 37,902 3.53
Interest-bearing demand – brokered 10,000 134 5.36 10,000 126 5.04
Certificates of deposit – brokered 98,642 1,242 5.04 128,341 1,602 4.99
Total interest-bearing deposits 4,604,551 42,107 3.66 4,437,088 39,630 3.57
Borrowings 27,247 381 5.59 235,384 3,467 5.89
Capital lease obligation 2,869 22 3.07 3,215 38 4.73
Subordinated debt 133,377 1,686 5.06 133,303 1,684 5.05
Total interest-bearing liabilities 4,768,044 44,196 3.71 % 4,808,990 44,819 3.73 %
Noninterest-bearing liabilities:
Demand deposits 945,231 916,848
Accrued expenses and other liabilities 97,470 80,499
Total noninterest-bearing liabilities 1,042,701 997,347
Shareholders’ equity 577,206 581,003
Total liabilities and shareholders’ equity $ 6,387,951 $ 6,387,340
Net interest income $ 35,306 $ 34,644
Net interest spread 1.32 % 1.29 %
Net interest margin (D) 2.25 % 2.20 %

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

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

For the Six Months Ended
June 30, 2024 June 30, 2023
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A) $ 797,695 $ 10,304 2.58 % $ 798,828 $ 9,371 2.35 %
Tax-exempt (A) (B) 1,861 38 4.08
Loans (B) (C):
Mortgages 577,296 11,001 3.81 543,650 9,225 3.39
Commercial mortgages 2,440,487 54,422 4.46 2,491,527 52,756 4.23
Commercial 2,215,762 74,626 6.74 2,221,921 68,827 6.20
Commercial construction 20,278 917 9.04 5,644 253 8.97
Installment 66,161 2,257 6.82 45,638 1,450 6.35
Home equity 36,491 1,485 8.14 33,744 1,223 7.25
Other 207 13 12.56 273 14 10.26
Total loans 5,356,682 144,721 5.40 5,342,397 133,748 5.01
Federal funds sold
Interest-earning deposits 173,692 3,940 4.54 152,538 2,989 3.92
Total interest-earning assets 6,328,069 158,965 5.02 % 6,295,624 146,146 4.64 %
Noninterest-earning assets:
Cash and due from banks 8,821 9,117
Allowance for credit losses (67,336 ) (62,310 )
Premises and equipment 24,607 23,835
Other assets 94,044 86,288
Total noninterest-earning assets 60,136 56,930
Total assets $ 6,388,205 $ 6,352,554
LIABILITIES:
Interest-bearing deposits:
Checking $ 3,024,541 $ 56,686 3.75 % $ 2,701,519 $ 38,700 2.87 %
Money markets 774,569 11,540 2.98 955,470 8,726 1.83
Savings 107,164 185 0.35 133,377 74 0.11
Certificates of deposit – retail 491,053 10,223 4.16 371,657 4,191 2.26
Subtotal interest-bearing deposits 4,397,327 78,634 3.58 4,162,023 51,691 2.48
Interest-bearing demand – brokered 10,000 259 5.18 18,011 333 3.70
Certificates of deposit – brokered 113,492 2,844 5.01 26,064 401 3.08
Total interest-bearing deposits 4,520,819 81,737 3.62 4,206,098 52,425 2.49
Borrowings 131,315 3,848 5.86 260,292 6,680 5.13
Capital lease obligation 3,042 60 3.94 4,339 103 4.75
Subordinated debt 133,340 3,370 5.05 133,053 3,236 4.86
Total interest-bearing liabilities 4,788,516 89,015 3.72 % 4,603,782 62,444 2.71 %
Noninterest-bearing liabilities:
Demand deposits 931,040 1,104,440
Accrued expenses and other liabilities 89,545 93,650
Total noninterest-bearing liabilities 1,020,585 1,198,090
Shareholders’ equity 579,104 550,682
Total liabilities and shareholders’ equity $ 6,388,205 $ 6,352,554
Net interest income $ 69,950 $ 83,702
Net interest spread 1.30 % 1.93 %
Net interest margin (D) 2.22 % 2.68 %

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NON-GAAP FINANCIAL MEASURES RECONCILIATION

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

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

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

(Dollars in thousands, except per share data)

Three Months Ended
June 30, March 31, Dec 31, Sept 30, June 30,
Tangible Book Value Per Share 2024 2024 2023 2023 2023
Shareholders’ equity $ 588,322 $ 582,379 $ 583,681 $ 558,956 $ 565,069
Less: Intangible assets, net 45,470 45,742 46,014 46,286 46,624
Tangible equity $ 542,852 $ 536,637 $ 537,667 $ 512,670 $ 518,445
Less: other comprehensive loss (68,342 ) (67,760 ) (64,878 ) (81,653 ) (67,997 )
Tangible equity excluding other comprehensive loss $ 611,194 $ 604,397 $ 602,545 $ 594,323 $ 586,442
Period end shares outstanding 17,666,490 17,761,538 17,739,677 17,816,922 17,887,895
Tangible book value per share $ 30.73 $ 30.21 $ 30.31 $ 28.77 $ 28.98
Tangible book value per share excluding other comprehensive loss $ 34.60 $ 34.03 $ 33.97 $ 33.36 $ 32.78
Book value per share 33.30 32.79 32.90 31.37 31.59
Tangible Equity to Tangible Assets
Total assets $ 6,505,350 $ 6,408,553 $ 6,476,857 $ 6,521,581 $ 6,479,700
Less: Intangible assets, net 45,470 45,742 46,014 46,286 46,624
Tangible assets $ 6,459,880 $ 6,362,811 $ 6,430,843 $ 6,475,295 $ 6,433,076
Less: other comprehensive loss (68,342 ) (67,760 ) (64,878 ) (81,653 ) (67,997 )
Tangible assets excluding other comprehensive loss $ 6,528,222 $ 6,430,571 $ 6,495,721 $ 6,556,948 $ 6,501,073
Tangible equity to tangible assets 8.40 % 8.43 % 8.36 % 7.92 % 8.06 %
Tangible equity to tangible assets excluding other comprehensive loss 9.36 % 9.40 % 9.28 % 9.06 % 9.02 %
Equity to assets 9.04 % 9.09 % 9.01 % 8.57 % 8.72 %

(Dollars in thousands)

Three Months Ended
June 30, March 31, Dec 31, Sept 30, June 30,
Return on Average Tangible Equity 2024 2024 2023 2023 2023
Net income $ 7,530 $ 8,631 $ 8,599 $ 8,755 $ 13,145
Average shareholders’ equity $ 577,206 $ 581,003 $ 561,055 $ 565,153 $ 557,428
Less: Average intangible assets, net 45,624 45,903 46,167 46,468 46,828
Average tangible equity $ 531,582 $ 535,100 $ 514,888 $ 518,685 $ 510,600
Return on average tangible common equity 5.67 % 6.45 % 6.68 % 6.75 % 10.30 %


For the Six Months Ended
June 30, June 30,
Return on Average Tangible Equity 2024 2023
Net income $ 16,161 $ 31,500
Average shareholders’ equity $ 579,104 $ 550,682
Less: Average intangible assets, net 45,764 47,007
Average tangible equity 533,340 503,675
Return on average tangible common equity 6.06 % 12.51 %

(Dollars in thousands)

Three Months Ended
June 30, March 31, Dec 31, Sept 30, June 30,
Efficiency Ratio 2024 2024 2023 2023 2023
Net interest income $ 35,042 $ 34,375 $ 36,675 $ 36,515 $ 38,921
Total other income 21,555 18,701 17,590 19,354 18,575
Add:
Fair value adjustment for CRA equity security 84 111 (585 ) 404 209
Less:
Gain on loans held for sale at lower of cost or fair value (23 )
Income from life insurance proceeds (181 )
Total recurring revenue 56,658 53,006 53,680 56,273 57,705
Operating expenses 43,126 40,041 37,616 37,413 37,692
Less:
Accelerated Expense for Retirement 1,665
Total operating expense 43,126 40,041 37,616 37,413 36,027
Efficiency ratio 76.12 % 75.54 % 70.07 % 66.48 % 62.43 %

(Dollars in thousands)

For the Six Months Ended
June 30, June 30,
Efficiency Ratio 2024 2023
Net interest income $ 69,417 $ 82,899
Total other income 40,256 36,634
Add:
Fair value adjustment for CRA equity security 195
Less:
Gain on loans held for sale at lower of cost or fair value (23 )
Income from life insurance proceeds (181 )
Total recurring revenue 109,664 119,533
Operating expenses 83,167 73,266
Less:
Accelerated Expense for Retirement 1,965
Branch Closure Expense 175
Total operating expense 83,167 71,126
Efficiency ratio 75.84 % 59.50 %

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