Peapack-Gladstone Financial Corporation Reports First Quarter Results

Peapack-Gladstone Financial Corporation

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

This earnings release should be read in conjunction with the Company’s Q1 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.

The Company recorded total revenue of $53.1 million, net income of $8.6 million and diluted earnings per share (“EPS”) of $0.48 for the quarter ended March 31, 2024, compared to revenue of $62.0 million, net income of $18.4 million and diluted EPS of $1.01 for the quarter ended March 31, 2023.

The Company’s return on average assets was 0.54%, return on average equity was 5.94%, and return on average tangible equity was 6.45% for the quarter ended March 31, 2024.

The net interest margin declined to 2.20% for the quarter ended March 31, 2024, compared to 2.29% for the quarter ended December 31, 2023 and 2.88% for the quarter ended March 31, 2023.

During the first quarter of 2024, deposits grew $202.6 million to $5.48 billion, loans decreased $73.7 million to $5.36 billion and overnight borrowings were reduced by $284.3 million. The Company’s liquidity position remains stable as balance sheet liquidity, as a percentage of total assets, increased to 12.1% or $776.8 million. The Company also had $2.9 billion of external borrowing capacity available, which, when combined with on balance sheet liquidity, provides us with 303% coverage of our uninsured deposits.

Douglas L. Kennedy, President and CEO said, “The first quarter continued to present headwinds for our organization with margin compression and credit quality our primary areas of concern.  As we work through this challenging economic environment, we continue to thoroughly analyze our loan portfolio for areas of potential stress. We are fortunate to be able to rely on a consistent stream of fee revenue in this difficult interest rate environment led by Wealth Management fees and other noninterest income which represented 35% of total revenue in the first quarter of 2024."

Mr. Kennedy also noted, “Despite the economic challenges facing the financial services industry, we are moving forward with our expansion into New York City. We recently announced that we have successfully recruited and hired over 10 commercial private banking teams to work alongside the existing New York City teams hired during 2023. These new teams will be led by Andrew Corrado, who is a seasoned leader with more than 35 years of experience in this space. We believe that this ongoing strategic expansion will enhance our liquidity, enable us to diversify our balance sheet, improve profitability and provide favorable operating leverage in the years to come."

The following are select highlights for the period ended March 31, 2024:

Wealth Management:

• Gross new business inflows for Q1 2024 totaled $236 million ($138 million managed).

• AUM/AUA in our Wealth Management Division totaled $11.5 billion at March 31, 2024 compared to $10.9 billion at December 31, 2023, which represents an increase of 6% on a linked quarter basis.

• Wealth Management fee income was $14.4 million in Q1 2024, which amounted to 27% of total revenue for the quarter.
  
  

Commercial Banking and Balance Sheet Management:

• Total deposits grew by $202.6 million to $5.48 billion at March 31, 2024 compared to $5.27 billion at December 31, 2023.

• Borrowings decreased $284.3 million to $119.5 million at March 31, 2024 from $403.8 million at December 31, 2023.

• Total loans declined $73.7 million to $5.36 billion for March 31, 2024 from $5.44 billion at December 31, 2023.

• Commercial and industrial lending (“C&I”) loan/lease balances represent 42% of the total loan portfolio at March 31, 2024.

• Fee income on unused commercial lines of credit totaled $827,000 for Q1 2024.

• The net interest margin ("NIM") was 2.20% in Q1 2024, a decrease from 2.29% at Q4 2023 and 2.88% at Q1 2023.

• Noninterest-bearing demand deposits amounted to 17% of total deposits as of March 31, 2024.

• Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 88% of total deposits at March 31, 2024.

Capital Management:

• Tangible book value per share remained relatively flat at $30.21 per share at March 31, 2024 compared to $30.31 at December 31, 2023.

• During the first quarter, the Company repurchased 100,000 shares of Company stock at a cost of $2.4 million. For the full year 2023, the Company repurchased 455,341 shares at a cost of $12.5 million.

• At March 31, 2024, the Tier 1 Leverage Ratio stood at 11.02% for Peapack-Gladstone Bank (the "Bank") and 9.36% for the Company. The Common Equity Tier 1 Ratio (to Risk-Weighted Assets) was 13.86% for the Bank and 11.76% for the Company at March 31, 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.

March 2024 Quarter Compared to Prior Year Quarter

		Three Months Ended					Three Months Ended
		March 31,					March 31,				Increase/
(Dollars in millions, except per share data)		2024					2023				(Decrease)
Net interest income		$	34.38				$	43.98			$	(9.60	)			(22	)%
Wealth management fee income			14.41					13.76				0.65				5
Capital markets activity			1.27					0.97				0.30				31
Other income (a)			3.02					3.33				(0.31	)			(9	)
Total other income			18.70					18.06				0.64				4
Total Revenue			53.08					62.04				(8.96	)			(14	)%
Operating expenses (b)			40.04					35.57				4.47				13
Pretax income before provision for credit losses			13.04					26.47				(13.43	)			(51	)
Provision for credit losses			0.63					1.51				(0.88	)			(58	)
Pretax income			12.41					24.96				(12.55	)			(50	)
Income tax expense			3.78					6.60				(2.82	)			(43	)
Net income		$	8.63				$	18.36			$	(9.73	)			(53	)%
Diluted EPS		$	0.48				$	1.01			$	(0.53	)			(52	)%
Return on average assets annualized			0.54	%				1.16	%			(0.62	)
Return on average equity annualized			5.94	%				13.50	%			(7.56	)

(a) Other income for the quarter ended March 31, 2024 included a negative fair value adjustment on a CRA equity security of $111,000 and $181,000 of income from life insurance proceeds. Other income for the three months ended March 31, 2023 included a positive fair value adjustment on a CRA equity security of $209,000.
(b) The quarter ended March 31, 2023 included one-time charges totaling $300,000 related to the retirement of certain employees and $175,000 of expense associated with three retail branch closures.

March 2024 Quarter Compared to Linked Quarter

		Three Months Ended				Three Months Ended
		March 31,				December 31,					Increase/
(Dollars in millions, except per share data)		2024				2023					(Decrease)
Net interest income		$	34.38			$	36.68				$	(2.30	)			(6	)%
Wealth management fee income			14.41				13.76					0.65				5
Capital markets activity			1.27				0.30					0.97				323
Other income (a)			3.02				3.53					(0.51	)			(14	)
Total other income			18.70				17.59					1.11				6
Total Revenue			53.08				54.27					(1.19	)			(2	)%
Operating expenses			40.04				37.62					2.42				6
Pretax income before provision for credit losses			13.04				16.65					(3.61	)			(22	)
Provision for credit losses			0.63				5.03					(4.40	)			(87	)
Pretax income			12.41				11.62					0.79				7
Income tax expense			3.78				3.02					0.76				25
Net income		$	8.63			$	8.60				$	0.03				0	%
Diluted EPS		$	0.48			$	0.48				$	-				0	%
Return on average assets annualized			0.54	%			0.53	%				0.01
Return on average equity annualized			5.94	%			6.13	%				(0.19	)

(a) Other income for the quarter ended March 31, 2024 included a negative fair value adjustment on a CRA equity security of $111,000 and $181,000 of income from life insurance proceeds. Other income for the three months ended December 31, 2023 included a positive fair value adjustment on a CRA equity security of $585,000.

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

AUM/AUA in the Bank’s Wealth Management Division were $11.5 billion at March 31, 2024 compared to $10.9 billion at December 31, 2023.  For the March 2024 quarter, the Wealth Management Team generated $14.4 million in fee income, compared to $13.8 million for the December 31, 2023 quarter and $13.8 million for the March 2023 quarter. The equity markets improved during Q1 2024, contributing to the increase in AUM/AUA along with gross new business inflows of $236 million.

John Babcock, President of the Bank's Wealth Management Division, noted, “2024 included total new accounts and client additions of $236 million ($138 million managed). As we look forward into 2024, our new business pipeline is healthy, and we 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 $73.7 million, or 1%, to $5.36 billion at March 31, 2024 when compared to the previous linked quarter.  Total C&I loans and leases at March 31, 2024 were $2.24 billion or 42% of the total loan portfolio.

Mr. Kennedy noted, “As previously mentioned, we have tightened our underwriting guidelines due to economic uncertainty. Originations have also slowed due to the rate environment. As a result, our outstanding loan balances declined during Q1 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 $34.4 million and NIM of 2.20% for Q1 2024 decreased $2.3 million and 9 basis point from NII of $36.7 million and NIM of 2.29% for the linked quarter (Q4 2023), respectively, and decreased $9.6 million and 68 basis points from NII of $44.0 million and NIM of 2.88% for the prior year period (Q1 2023), respectively.  When comparing Q1 2024 to the prior periods, the Company has seen a sharp increase in interest expense mostly driven by higher deposit rates during 2023 and into 2024 and a greater proportion of the portfolio in higher-costing checking accounts and certificates of deposit. Cycle to date betas are approximately 52%.  Clients continue to migrate out of noninterest bearing checking products and into higher yielding alternatives, which leads to intense competition for deposit balances from other banks. Customers are also pursuing alternative investment opportunities due to the significant rise in interest rates.

Funding / Liquidity / Interest Rate Risk Management

Total deposits increased $202.6 million to $5.48 billion at March 31, 2024 from $5.27 billion at December 31, 2023.  The increase in deposits was used to lower the amount of overnight borrowings from $403.8 million at December 31, 2023 to $119.5 million at March 31, 2024.

At March 31, 2024, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $776.8 million, or 12% 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 $3.7 billion, which is 303% of the total uninsured/uncollateralized deposits on the Company balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $1.3 million for the March 2024 quarter compared to $296,000 for the December 2023 quarter and $966,000 for the March 2023 quarter. The March 2024 quarter included $818,000 of Corporate Advisory fee income.

		Three Months Ended				Three Months Ended				Three Months Ended
		March 31,				December 31,				March 31,
(Dollars in thousands, except per share data)		2024				2023				2023
Gain on loans held for sale at fair value (Mortgage banking)		$	56			$	18			$	21
Gain on sale of SBA loans			400				239				865
Corporate advisory fee income			818				39				80
Total capital markets activity		$	1,274			$	296			$	966

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

Other noninterest income was $3.0 million for Q1 2024 compared to $3.5 million for Q4 2023 and $3.3 million for Q1 2023. Q1 2024 included $141,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases while Q4 2023 included $309,000 and Q1 2023 included $145,000 respectively. Additionally, Q1 2024 included $827,000 of unused line fees compared to $750,000 for Q4 2023 and $852,000 for Q1 2023.

Operating Expenses

The Company’s total operating expenses were $40.0 million for the first quarter of 2024, compared to $37.6 million for the December 2023 quarter and $35.6 million for the March 2023 quarter. The March 2024 and December 2023 quarters included expenses associated with the Company’s expansion into New York City.

Mr. Kennedy noted, “We continue to make investments related to our strategic decision to expand into New York City as evidenced by the hiring of a senior leader and 10+ commercial private banking teams during the first quarter of 2024.  We will continue to manage expenses throughout the Company and continue to look for opportunities to create efficiencies while also investing in digital and other software tools to further enhance the client experience.”

Income Taxes

The effective tax rate for the three months ended March 31, 2024 was 30.4%, as compared to 26.0% for the December 2023 quarter and 26.4% for the quarter ended March 31, 2023. The higher tax rate for the March 2024 quarter was primarily due to the impact of vesting of restricted stock at prices lower than original grant prices.

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include modified loans that are performing in accordance with their terms) were $69.8 million, or 1.09% of total assets at March 31, 2024, as compared to $61.3 million, or 0.95% of total assets at December 31, 2023. Loans past due 30 to 89 days and still accruing were $73.7 million, or 1.37% of total loans at March 31, 2024 compared to $34.6 million, or 0.64% of total loans at December 31, 2023. The Q1 2024 loans past due 30 to 89 days and still accruing included $25.2 million to federal and state governmental entities, $15.0 million to a single equipment finance customer and $28.9 million to two multifamily sponsors.

Criticized and classified loans totaled $177.3 million at March 31, 2024, reflecting an increase from December 31, 2023 and March 31, 2023 levels. The Company currently has no loans or leases on deferral and accruing.

For the quarter ended March 31, 2024, the Company’s provision for credit losses was $615,000 compared to $5.0 million for the December 2023 quarter and $1.5 million for the March 2023 quarter. The provision for credit losses in the first quarter of 2024 was positive despite a decline in loans and improved GDP forecasts, as the Company experienced an increase in past due and criticized and classified loans.

At March 31, 2024, the allowance for credit losses was $66.3 million (1.24% of total loans), compared to $65.9 million (1.21% of loans) at December 31, 2023, and $62.3 million (1.16% of loans) at March 31, 2023.

Capital

The Company’s capital position declined during the first quarter of 2024 due to the repurchase of 100,000 shares through the Company's stock repurchase program at a total cost of $2.4 million and payment of a quarterly dividend of $887,000.  Additionally, during the first quarter of 2024, the Company recorded deterioration in accumulated other comprehensive losses of $2.9 million, net of tax. This amount was driven by a $5.0 million decrease in the value of the available for sale securities portfolio partially offset by a $2.1 million gain on cash flow hedges. The total accumulated other comprehensive loss declined to $67.8 million as of March 31, 2024 ($74.8 million loss related to the available for sale securities portfolio partially offset by a $7.0 million gain on the cash flow hedges).  These changes were partially offset by net income of $8.6 million.

Tangible book value per share decreased during Q1 2024 to $30.21 at March 31, 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 March 31, 2024 remain strong, and reflect increases from December 31, 2023 levels. Where applicable, such ratios remain well above regulatory well capitalized standards.

The Company employs quarterly capital stress testing modeling of an adverse case and severely adverse case. In the most recently completed stress test (as of December 31, 2023), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

On March 28, 2024, the Company declared a cash dividend of $0.05 per share payable on May 23, 2024 to shareholders of record on May 9, 2024.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.4 billion and assets under management/administration of $11.5 billion as of March 31, 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
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
		2024				2023				2023				2023				2023
Income Statement Data:
Interest income		$	79,194			$	80,178			$	78,489			$	74,852			$	70,491
Interest expense			44,819				43,503				41,974				35,931				26,513
Net interest income			34,375				36,675				36,515				38,921				43,978
Wealth management fee income			14,407				13,758				13,975				14,252				13,762
Service charges and fees			1,322				1,255				1,319				1,320				1,258
Bank owned life insurance			503				357				310				305				297
Gain on loans held for sale at fair value (Mortgage banking)			56				18				37				15				21
Gain on sale of SBA loans			400				239				491				838				865
Corporate advisory fee income			818				39				85				15				80
Other income (A)			1,306				1,339				3,541				2,039				1,567
Fair value adjustment for CRA equity security			(111	)			585				(404	)			(209	)			209
Total other income			18,701				17,590				19,354				18,575				18,059
Total revenue			53,076				54,265				55,869				57,496				62,037
Salaries and employee benefits (B)			28,476				24,320				25,264				26,354				24,586
Premises and equipment			5,081				5,416				5,214				4,729				4,374
FDIC insurance expense			945				765				741				729				711
Other expenses			5,539				7,115				6,194				5,880				5,903
Total operating expenses			40,041				37,616				37,413				37,692				35,574
Pretax income before provision for credit losses			13,035				16,649				18,456				19,804				26,463
Provision for credit losses			627				5,026				5,856				1,696				1,513
Income before income taxes			12,408				11,623				12,600				18,108				24,950
Income tax expense			3,777				3,024				3,845				4,963				6,595
Net income		$	8,631			$	8,599			$	8,755			$	13,145			$	18,355
Per Common Share Data:
Earnings per share (basic)		$	0.49			$	0.48			$	0.49			$	0.73			$	1.03
Earnings per share (diluted)			0.48				0.48				0.49				0.73				1.01
Weighted average number of common shares outstanding:
Basic			17,711,639				17,770,158				17,856,961				17,930,611				17,841,203
Diluted			17,805,347				17,961,400				18,010,127				18,078,848				18,263,310
Performance Ratios:
Return on average assets annualized (ROAA)			0.54	%			0.53	%			0.54	%			0.82	%			1.16	%
Return on average equity annualized (ROAE)			5.94	%			6.13	%			6.20	%			9.43	%			13.50	%
Return on average tangible equity annualized (ROATCE) (C)			6.45	%			6.68	%			6.75	%			10.30	%			14.78	%
Net interest margin (tax-equivalent basis)			2.20	%			2.29	%			2.28	%			2.49	%			2.88	%
GAAP efficiency ratio (D)			75.44	%			69.32	%			66.97	%			65.56	%			57.34	%
Operating expenses / average assets annualized			2.51	%			2.33	%			2.31	%			2.36	%			2.26	%

(A) The September 2023 quarter included $2.3 million of fee income from equipment finance activity.
(B) The June 2023 quarter included $1.7 million of expense associated with the retirement of certain employees.
(C) 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.
(D) 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
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
		2024				2023				2023				2023				2023
ASSETS
Cash and due from banks		$	5,769			$	5,887			$	7,400			$	4,859			$	6,514
Federal funds sold			—				—				—				—				—
Interest-earning deposits			189,069				181,784				180,469				166,769				244,779
Total cash and cash equivalents			194,838				187,671				187,869				171,628				251,293
Securities available for sale			550,870				550,617				521,005				540,519				556,266
Securities held to maturity			106,498				107,755				108,940				110,438				111,609
CRA equity security, at fair value			13,055				13,166				12,581				12,985				13,194
FHLB and FRB stock, at cost (A)			18,079				31,044				34,158				35,402				30,338
Residential mortgage			581,426				578,427				585,295				575,238				544,655
Multifamily mortgage			1,827,165				1,836,390				1,871,853				1,884,369				1,871,387
Commercial mortgage			615,964				637,625				622,469				624,710				613,911
Commercial and industrial loans			2,235,342				2,284,940				2,321,917				2,278,133				2,266,837
Consumer loans			66,827				62,036				57,227				52,098				49,002
Home equity lines of credit			35,542				36,464				34,411				34,397				33,294
Other loans			184				238				265				269				443
Total loans			5,362,450				5,436,120				5,493,437				5,449,214				5,379,529
Less: Allowance for credit losses			66,251				65,888				68,592				62,704				62,250
Net loans			5,296,199				5,370,232				5,424,845				5,386,510				5,317,279
Premises and equipment			24,494				24,166				23,969				23,814				23,782
Other real estate owned			—				—				—				—				116
Accrued interest receivable			32,672				30,676				22,889				20,865				19,143
Bank owned life insurance			47,580				47,581				47,509				47,382				47,261
Goodwill and other intangible assets			45,742				46,014				46,286				46,624				46,979
Finance lease right-of-use assets			1,900				2,087				2,274				2,461				2,648
Operating lease right-of-use assets			16,035				12,096				12,800				13,500				12,262
Other assets			60,591				53,752				76,456				67,572				47,848
TOTAL ASSETS		$	6,408,553			$	6,476,857			$	6,521,581			$	6,479,700			$	6,480,018
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	914,893			$	957,687			$	947,405			$	1,024,105			$	1,096,549
Interest-bearing demand deposits			3,029,119				2,882,193				2,871,359				2,816,913				2,797,493
Savings			108,305				111,573				117,905				120,082				132,523
Money market accounts			775,132				740,559				761,833				763,026				873,329
Certificates of deposit – Retail			486,079				443,791				422,291				384,106				357,131
Certificates of deposit – Listing Service			7,704				7,804				9,103				10,822				15,922
Subtotal “customer” deposits			5,321,232				5,143,607				5,129,896				5,119,054				5,272,947
IB Demand – Brokered			10,000				10,000				10,000				10,000				10,000
Certificates of deposit – Brokered			145,480				120,507				119,463				69,443				25,895
Total deposits			5,476,712				5,274,114				5,259,359				5,198,497				5,308,842
Short-term borrowings			119,490				403,814				470,576				485,360				378,800
Finance lease liability			3,104				3,430				3,752				4,071				4,385
Operating lease liability			17,630				12,876				13,595				14,308				13,082
Subordinated debt, net			133,346				133,274				133,203				133,131				133,059
Due to brokers			—				—				—				—				8,308
Other liabilities			75,892				65,668				82,140				79,264				78,584
TOTAL LIABILITIES			5,826,174				5,893,176				5,962,625				5,914,631				5,925,060
Shareholders’ equity			582,379				583,681				558,956				565,069				554,958
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	6,408,553			$	6,476,857			$	6,521,581			$	6,479,700			$	6,480,018
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			$	10.9			$	10.4			$	10.7			$	10.4

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

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

		As of
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
		2024				2023				2023				2023				2023
Asset Quality:
Loans past due over 90 days and still accruing		$	35			$	—			$	—			$	—			$	—
Nonaccrual loans (A)			69,811				61,324				70,809				34,505				28,659
Other real estate owned			—				—				—				—				116
Total nonperforming assets		$	69,846			$	61,324			$	70,809			$	34,505			$	28,775
Nonperforming loans to total loans			1.30	%			1.13	%			1.29	%			0.63	%			0.53	%
Nonperforming assets to total assets			1.09	%			0.95	%			1.09	%			0.53	%			0.44	%
Performing modifications (B)(C)		$	12,311			$	248			$	248			$	248			$	248
Loans past due 30 through 89 days and still accruing (D)		$	73,699			$	34,589			$	9,780			$	14,524			$	2,762
Loans subject to special mention		$	59,450			$	71,397			$	53,328			$	53,606			$	46,566
Classified loans		$	117,869			$	84,372			$	94,866			$	58,655			$	58,010
Individually evaluated loans		$	69,530			$	60,710			$	70,184			$	33,867			$	27,736
Allowance for credit losses ("ACL"):
Beginning of quarter		$	65,888			$	68,592			$	62,704			$	62,250			$	60,829
Provision for credit losses (E)			615				5,082				5,944				1,666				1,464
(Charge-offs)/recoveries, net (F)			(252	)			(7,786	)			(56	)			(1,212	)			(43	)
End of quarter		$	66,251			$	65,888			$	68,592			$	62,704			$	62,250
ACL to nonperforming loans			94.85	%			107.44	%			96.87	%			181.72	%			217.21	%
ACL to total loans			1.24	%			1.21	%			1.25	%			1.15	%			1.16	%
Collectively evaluated ACL to total loans (G)			1.15	%			1.13	%			1.10	%			1.11	%			1.11	%

(A) Includes one freight credit totaling $22.2 million at March 31, 2024, one freight credit totaling $23.5 million at December 31, 2023 and two freight credits totaling $33.4 million at September 30, 2023. Excludes $1.6 million in held for sale at September 30, 2023.
(B) Amounts reflect modifications that are paying according to modified terms.
(C) Excludes modifications included in nonaccrual loans of $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.
(D) Includes $25.2 million to U.S. and state governmental entities, $15.0 million for one equipment finance deal and $28.9 million to two multifamily sponsors at March 31, 2024, $16.5 million outstanding to U.S. governmental entities at December 31, 2023 and $8.2 million of outstanding multifamily loans to one sponsor.
(E) Excludes 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, a provision of $30,000 at June 30, 2023 and a provision of $49,000 at March 31, 2023 related to off-balance sheet commitments.
(F) 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.
(G) 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
		March 31,						December 31,						March 31,
		2024						2023						2023
Capital Adequacy
Equity to total assets (A)					9.09	%					9.01	%					8.56	%
Tangible equity to tangible assets (B)					8.43	%					8.36	%					7.90	%
Book value per share (C)				$	32.79					$	32.90					$	30.81
Tangible book value per share (D)				$	30.21					$	30.31					$	28.20
Tangible equity to tangible assets excluding other comprehensive loss*					9.40	%					9.28	%					8.85	%
Tangible book value per share excluding other comprehensive loss*				$	34.03					$	33.97					$	31.94

*Excludes other comprehensive loss of $67.8 million for the quarter ended March 31, 2024, $64.9 million for the quarter ended December 31, 2023, and $67.4 million for the quarter ended March 31, 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
		March 31,							December 31,							March 31,
		2024							2023							2023
Regulatory Capital – Holding Company
Tier I leverage		$	602,493			9.36	%		$	600,444			9.19	%		$	573,154			9.02	%
Tier I capital to risk-weighted assets			602,493			11.76				600,444			11.43				573,154			11.39
Common equity tier I capital ratio to risk-weighted assets			602,481			11.76				600,432			11.43				573,136			11.39
Tier I & II capital to risk-weighted assets			785,909			15.34				785,413			14.95				762,095			15.15
Regulatory Capital – Bank
Tier I leverage (E)		$	709,744			11.02	%		$	707,446			10.83	%		$	700,858			11.03	%
Tier I capital to risk-weighted assets (F)			709,744			13.86				707,446			13.48				700,858			13.93
Common equity tier I capital ratio to risk-weighted assets (G)			709,732			13.86				707,434			13.47				700,840			13.93
Tier I & II capital to risk-weighted assets (H)			773,781			15.11				773,083			14.73				763,732			15.18

(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($258 million)
(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($435 million)
(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($358 million)
(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($538 million)

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

		For the Quarters Ended
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
		2024				2023				2023				2023				2023
Residential loans retained		$	11,661			$	5,895			$	21,310			$	39,358			$	30,303
Residential loans sold			4,025				1,449				2,503				1,072				1,477
Total residential loans			15,686				7,344				23,813				40,430				31,780
Commercial real estate			11,500				21,375				3,900				43,235				18,990
Multifamily			1,900				5,725				3,000				26,662				30,150
Commercial (C&I) loans (A) (B)			145,803				145,397				176,845				158,972				207,814
SBA			2,790				7,326				300				13,713				9,950
Wealth lines of credit (A)			3,850				350				6,875				3,950				23,225
Total commercial loans			165,843				180,173				190,920				246,532				290,129
Installment loans			6,868				2,946				6,999				4,587				12,086
Home equity lines of credit (A)			2,103				4,174				6,275				6,107				2,921
Total loans closed		$	190,500			$	194,637			$	228,007			$	297,656			$	336,916

(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
		March 31, 2024												March 31, 2023
		Average				Income/				Annualized				Average				Income/				Annualized
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	793,675			$	5,136				2.59	%		$	791,125			$	4,471				2.26	%
Tax-exempt (A) (B)			—				—				—				1,864				19				4.08
Loans (B) (C):
Mortgages			577,648				5,420				3.75				529,570				4,283				3.24
Commercial mortgages			2,460,403				27,541				4.48				2,478,645				25,917				4.18
Commercial			2,240,161				37,559				6.71				2,201,801				33,369				6.06
Commercial construction			18,927				428				9.05				4,296				88				8.19
Installment			65,287				1,113				6.82				39,945				609				6.10
Home equity			36,406				737				8.10				33,839				591				6.99
Other			214				7				13.08				276				7				10.14
Total loans			5,399,046				72,805				5.39				5,288,372				64,864				4.91
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			140,097				1,522				4.35				163,225				1,538				3.77
Total interest-earning assets			6,332,818				79,463				5.02	%			6,244,586				70,892				4.54	%
Noninterest-earning assets:
Cash and due from banks			10,105												10,449
Allowance for credit losses			(67,105	)											(61,567	)
Premises and equipment			24,393												23,927
Other assets			87,129												84,800
Total noninterest-earning assets			54,522												57,609
Total assets		$	6,387,340											$	6,302,195
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,954,698			$	27,433				3.71	%		$	2,567,426			$	16,481				2.57	%
Money markets			757,753				5,525				2.92				1,124,047				4,874				1.73
Savings			108,503				89				0.33				141,285				28				0.08
Certificates of deposit – retail			477,793				4,855				4.06				357,953				1,729				1.93
Subtotal interest-bearing deposits			4,298,747				37,902				3.53				4,190,711				23,112				2.21
Interest-bearing demand – brokered			10,000				126				5.04				26,111				208				3.19
Certificates of deposit – brokered			128,341				1,602				4.99				25,961				205				3.16
Total interest-bearing deposits			4,437,088				39,630				3.57				4,242,783				23,525				2.22
Borrowings			235,384				3,467				5.89				104,915				1,296				4.94
Capital lease obligation			3,215				38				4.73				4,493				53				4.72
Subordinated debt			133,303				1,684				5.05				133,017				1,639				4.93
Total interest-bearing liabilities			4,808,990				44,819				3.73	%			4,485,208				26,513				2.36	%
Noninterest-bearing liabilities:
Demand deposits			916,848												1,176,495
Accrued expenses and other liabilities			80,499												96,631
Total noninterest-bearing liabilities			997,347												1,273,126
Shareholders’ equity			581,003												543,861
Total liabilities and shareholders’ equity		$	6,387,340											$	6,302,195
Net interest income						$	34,644											$	44,379
Net interest spread											1.29	%											2.18	%
Net interest margin (D)											2.20	%											2.88	%

(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
		March 31, 2024												December 31, 2023
		Average				Income/				Annualized				Average				Income/				Annualized
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	793,675			$	5,136				2.59	%		$	798,661			$	5,202				2.61	%
Tax-exempt (A) (B)			—				—				—				106				—				—
Loans (B) (C):
Mortgages			577,648				5,420				3.75				581,088				5,300				3.65
Commercial mortgages			2,460,403				27,541				4.48				2,492,204				28,318				4.55
Commercial			2,240,161				37,559				6.71				2,274,841				37,958				6.67
Commercial construction			18,927				428				9.05				16,680				382				9.16
Installment			65,287				1,113				6.82				59,988				1,037				6.91
Home equity			36,406				737				8.10				35,570				721				8.11
Other			214				7				13.08				246				8				13.01
Total loans			5,399,046				72,805				5.39				5,460,617				73,724				5.40
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			140,097				1,522				4.35				146,699				1,623				4.43
Total interest-earning assets			6,332,818				79,463				5.02	%			6,406,083				80,549				5.03	%
Noninterest-earning assets:
Cash and due from banks			10,105												10,709
Allowance for credit losses			(67,105	)											(68,289	)
Premises and equipment			24,393												24,387
Other assets			87,129												85,720
Total noninterest-earning assets			54,522												52,527
Total assets		$	6,387,340											$	6,458,610
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,954,698			$	27,433				3.71	%		$	2,890,964			$	25,811				3.57	%
Money markets			757,753				5,525				2.92				771,051				5,247				2.72
Savings			108,503				89				0.33				112,969				81				0.29
Certificates of deposit – retail			477,793				4,855				4.06				440,712				4,086				3.71
Subtotal interest-bearing deposits			4,298,747				37,902				3.53				4,215,696				35,225				3.34
Interest-bearing demand – brokered			10,000				126				5.04				10,000				142				5.68
Certificates of deposit – brokered			128,341				1,602				4.99				115,722				1,454				5.03
Total interest-bearing deposits			4,437,088				39,630				3.57				4,341,418				36,821				3.39
Borrowings			235,384				3,467				5.89				357,384				4,955				5.55
Capital lease obligation			3,215				38				4.73				3,539				42				4.75
Subordinated debt			133,303				1,684				5.05				133,234				1,685				5.06
Total interest-bearing liabilities			4,808,990				44,819				3.73	%			4,835,575				43,503				3.60	%
Noninterest-bearing liabilities:
Demand deposits			916,848												963,968
Accrued expenses and other liabilities			80,499												98,012
Total noninterest-bearing liabilities			997,347												1,061,980
Shareholders’ equity			581,003												561,055
Total liabilities and shareholders’ equity		$	6,387,340											$	6,458,610
Net interest income						$	34,644											$	37,046
Net interest spread											1.29	%											1.43	%
Net interest margin (D)											2.20	%											2.29	%

(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
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
Tangible Book Value Per Share		2024				2023				2023				2023				2023
Shareholders’ equity		$	582,379			$	583,681			$	558,956			$	565,069			$	554,958
Less: Intangible assets, net			45,742				46,014				46,286				46,624				46,979
Tangible equity		$	536,637			$	537,667			$	512,670			$	518,445			$	507,979
Less: other comprehensive loss			(67,760	)			(64,878	)			(81,653	)			(67,997	)			(67,445	)
Tangible equity excluding other comprehensive loss		$	604,397			$	602,545			$	594,323			$	586,442			$	575,424
Period end shares outstanding			17,761,538				17,739,677				17,816,922				17,887,895				18,014,757
Tangible book value per share		$	30.21			$	30.31			$	28.77			$	28.98			$	28.20
Tangible book value per share excluding other comprehensive loss		$	34.03			$	33.97			$	33.36			$	32.78			$	31.94
Book value per share			32.79				32.90				31.37				31.59				30.81
Tangible Equity to Tangible Assets
Total assets		$	6,408,553			$	6,476,857			$	6,521,581			$	6,479,700			$	6,480,018
Less: Intangible assets, net			45,742				46,014				46,286				46,624				46,979
Tangible assets		$	6,362,811			$	6,430,843			$	6,475,295			$	6,433,076			$	6,433,039
Less: other comprehensive loss			(67,760	)			(64,878	)			(81,653	)			(67,997	)			(67,445	)
Tangible assets excluding other comprehensive loss		$	6,430,571			$	6,495,721			$	6,556,948			$	6,501,073			$	6,500,484
Tangible equity to tangible assets			8.43	%			8.36	%			7.92	%			8.06	%			7.90	%
Tangible equity to tangible assets excluding other comprehensive loss			9.40	%			9.28	%			9.06	%			9.02	%			8.85	%
Equity to assets			9.09	%			9.01	%			8.57	%			8.72	%			8.56	%

(Dollars in thousands, except per share data)

		Three Months Ended
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
Return on Average Tangible Equity		2024				2023				2023				2023				2023
Net income		$	8,631			$	8,599			$	8,755			$	13,145			$	18,355
Average shareholders’ equity		$	581,003			$	561,055			$	565,153			$	557,428			$	543,861
Less: Average intangible assets, net			45,903				46,167				46,468				46,828				47,189
Average tangible equity		$	535,100			$	514,888			$	518,685			$	510,600			$	496,672
Return on average tangible common equity			6.45	%			6.68	%			6.75	%			10.30	%			14.78	%

(Dollars in thousands, except per share data)

		Three Months Ended
		March 31,				Dec 31,				Sept 30,				June 30,				March 31,
Efficiency Ratio		2024				2023				2023				2023				2023
Net interest income		$	34,375			$	36,675			$	36,515			$	38,921			$	43,978
Total other income			18,701				17,590				19,354				18,575				18,059
Add:
Fair value adjustment for CRA equity security			111				(585	)			404				209				(209	)
Less:
Income from life insurance proceeds			(181	)			—				—				—				—
Total recurring revenue			53,006				53,680				56,273				57,705				61,828
Operating expenses			40,041				37,616				37,413				37,692				35,574
Less:
Accelerated Expense for Retirement			—				—				—				1,665				300
Branch Closure Expense			—				—				—				—				175
Total operating expense			40,041				37,616				37,413				36,027				35,099
Efficiency ratio			75.54	%			70.07	%			66.48	%			62.43	%			56.77	%