PEAPACK GLADSTONE FINANCIAL : REPORTS STRONG FOURTH QUARTER RESULTS AND ANNOUNCES ANOTHER 5% STOCK REPURCHASE PROGRAM - Form 8-K

PEAPACK-GLADSTONE FINANCIAL CORPORATION

REPORTS STRONG FOURTH QUARTER RESULTS AND

ANNOUNCES ANOTHER 5% STOCK REPURCHASE PROGRAM

Bedminster, N.J.- January 28, 2022 - Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the "Company") announces its fourth quarter 2021 results.

This earnings release should be read in conjunction with the Company's Q4 2021 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.

For the quarter ended December 31, 2021, the Company recorded total revenue of $56.17 million, net income of $14.86 million and diluted earnings per share ("EPS") of $0.78, compared to revenue of $46.14 million, net income of $3.03 million and diluted EPS of $0.16, respectively, for the three-month period ended December 31, 2020.

For the year ended December 31, 2021, the Company recorded total revenue of $210.31 million, net income of $56.62 million and diluted earnings per share ("EPS") of $2.93 compared to revenue of $189.36 million, net income of $26.19 million and diluted EPS of $1.37, respectively, for the year ended December 31, 2020.

Improvement in the 2021 periods was principally driven by the Company's wealth management and commercial banking businesses. 2021 included increased wealth management income, corporate advisory fees and SBA income, as well as increased net interest income resulting from asset growth, coupled with margin improvement. The earnings for the full year of 2021 also benefitted from a significantly lower provision for loan losses.

The Q4 2021 period included a $893,000 swap valuation allowance recorded in operating expenses related to a loan placed on nonaccrual in Q3 2021. Q4 2021 also included a higher provision for loan losses due to the loan growth during the quarter.

Douglas L. Kennedy, President and CEO said, "Our fourth quarter and full year results reflected continued solid growth in our wealth management business and commercial banking, including both corporate advisory and SBA activities. Increases in these areas year-over-year more than made up for the $7.4 million of PPP gains that the Company had recorded in 2020. As we look into the new year our pipelines for wealth management and commercial banking continue to be robust and we remain quite constructive toward 2022."

During the fourth quarter of 2021 the Company repurchased 274,929 shares under its stock repurchase program at an average price of $33.50 for a total cost of $9.21 million. For the full year of 2021, the Company repurchased 894,744 shares at an average price of $31.99 for a total cost of $28.63 million.

On January 27, 2022, the Company authorized a new 5% stock repurchase program of up to 920,000 shares. Purchases will be conducted in accordance with the limitations set forth in the SEC's Rule 10b-18.

Mr. Kennedy noted, "We believe that repurchasing our stock continues to be a great opportunity to take advantage of the Company's discounted valuation relative to peers."

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EXECUTIVE SUMMARY:

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

2021 Year Compared to Prior Year

		Year Ended			Year Ended
		December 31,			December 31,				Increase/
(Dollars in millions, except per share data)		2021			2020				(Decrease)
Net interest income		$	138.06			$	127.60				$	10.46				8	%
Wealth management fee income (A)			52.99				40.86					12.13				30
Capital markets activity (B)			10.62				6.65					3.97				60
Other income (C)			8.64				14.25					(5.61	)			(39	)
Total other income			72.25				61.76					10.49				17
Operating expenses (A) (D)			126.17				124.96					1.21				1
Pretax income before provision for loan losses			84.14				64.40					19.74				31
Provision for loan and lease losses (E)			6.48				32.40					(25.92	)			(80	)
Pretax income			77.66				32.00					45.66				143
Income tax expense (F)			21.04				5.81					15.23				262
Net income		$	56.62			$	26.19				$	30.43				116	%
Diluted EPS		$	2.93			$	1.37				$	1.56				114	%
Total Revenue (G)		$	210.31			$	189.36				$	20.95				11	%
Return on average assets			0.94	%			0.45	%				0.49
Return on average equity			10.56	%			5.11	%				5.45

(A)

The 2021 results included twelve months of wealth management fee income and expense related to the December 2020 hires of the teams from Lucas Capital Management ("Lucas") and Noyes Capital Management ("Noyes") and six months of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group.

(B)

Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory activities and mortgage banking activities. The 2021 results included $3.5 million of corporate advisory fee income. There were no fees related to loan level back-to-back swap activities in the twelve months ended December 31, 2021, compared to $1.6 million for 2020.

(C)

The 2021 results included a cost of $842,000 related to the termination of interest rate swaps; a $1.1 million gain on loans held at lower of cost or fair value; $722,000 of fee income related to the referral of PPP loans to a third party; and $455,000 of additional BOLI income related to receipt of life insurance proceeds. The 2020 results included a $7.4 million gain on the sale of PPP loans.

(D)

The 2021 results included $1.5 million of severance expense related to certain corporate restructurings within several areas of the Bank; $648,000 of expense related to the redemption of subordinated debt; and $2.2 million related to a swap valuation allowance. The 2020 results included $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, $210,000 for the consolidation of two private banking locations, and $278,000 for the closure of a retail branch.

(E)

The 2020 results included a provision for loan and lease losses of $32.4 million, primarily due to the COVID-19 pandemic.

(F)

The 2020 results included a $3.2 million tax benefit related to the carryback of tax NOLs.

(G)

Total revenue equals the sum of net interest income plus total other income.

December 2021 Quarter Compared to Prior Year Quarter

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		Three Months Ended				Three Months Ended
		December 31,				December 31,			Increase/
(Dollars in millions, except per share data)		2021				2020			(Decrease)
Net interest income		$	37.21				$	31.74			$	5.47				17	%
Wealth management fee income (A)			13.96					10.79				3.17				29
Capital markets activity (B)			3.52					1.89				1.63				86
Other income (C)			1.48					1.72				(0.24	)			(14	)
Total other income			18.96					14.40				4.56				32
Operating expenses (A) (D)			31.70					39.25				(7.55	)			(19	)
Pretax income before provision for loan losses			24.47					6.89				17.58				255
Provision for loan and lease losses			3.75					2.35				1.40				60
Pretax income			20.72					4.54				16.18				356
Income tax expense			5.86					1.51				4.35				288
Net income		$	14.86				$	3.03			$	11.83				390	%
Diluted EPS		$	0.78				$	0.16			$	0.62				387	%
Total Revenue (E)		$	56.17				$	46.14			$	10.03				22	%
Return on average assets annualized			0.96	%				0.21	%			0.75
Return on average equity annualized			10.94	%				2.32	%			8.62

(A)

The December 2021 quarter included a full quarter of wealth management fee income and expense related to the December 2020 hires of the teams from Lucas and Noyes and the July 2021 acquisition of PPSG.

(B)

Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory activities, and mortgage banking activities. The December 2021 quarter included $2.2 million of corporate advisory fee income, the majority of which related to a large investment banking advisory event.

(C)

The December 31, 2021 quarter included a $265,000 loss on the sale of loans.

(D)

The December 2021 quarter included $893,000 related to a swap valuation allowance. The December 2020 quarter included $4.8 million for the prepayment of FHLB advances, $4.4 million for the valuation allowance for a loan held for sale, and $210,000 for the consolidation of two private banking locations

(E)

Total revenue equals the sum of net interest income plus total other income.

December 2021 Quarter Compared to Linked Quarter

		Three Months Ended			Three Months Ended
		December 31,			September 30,				Increase/
(Dollars in millions, except per share data)		2021			2021				(Decrease)
Net interest income		$	37.21			$	35.21				$	2.00				6	%
Wealth management fee income			13.96				13.86					0.10				1
Capital markets activity (A)			3.52				2.06					1.46				71
Other income (B)			1.48				1.86					(0.38	)			(20	)
Total other income			18.96				17.78					1.18				7
Operating expenses (C)			31.70				32.18					(0.48	)			(1	)
Pretax income before provision for loan losses			24.47				20.81					3.66				18
Provision for loan and lease losses			3.75				1.60					2.15				134
Pretax income			20.72				19.21					1.51				8
Income tax expense			5.86				5.04					0.82				16
Net income		$	14.86			$	14.17				$	0.69				5	%
Diluted EPS		$	0.78			$	0.74				$	0.04				5	%
Total Revenue (D)		$	56.17			$	52.99				$	3.18				6	%
Return on average assets annualized			0.96	%			0.95	%				0.01
Return on average equity annualized			10.94	%			10.40	%				0.54

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(A)

Capital markets activity included fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities.

(B)

The December 31, 2021 quarter included a $265,000 loss on sale of loans.

(C)

The December 2021 quarter included $893,000 related to a swap valuation allowance. The September 2021 quarter included $1.4 million related to a swap valuation allowance.

(D)

Total revenue equals the sum of net interest income plus total other income.

Select highlights:

Peapack Private Wealth Management:

•

AUM/AUA in our Peapack Private Wealth Management Division grew 8% (31% annualized) to $11.1 billion at December 31, 2021 from $10.3 billion at September 30, 2021, and 26% over the $8.8 billion at December 31, 2020.

•

Gross new business inflows for 2021 totaled $840 million.

•

Wealth Management fee income increased 30% to $14.0 million for Q4 2021 compared to $10.8 million for Q4 2020.

•

On July 1, 2021, we closed on the acquisition of Princeton Portfolio Strategies Group ("PPSG").

Commercial Banking and Balance Sheet Management:

•

At December 31, 2021, total loans (excluding $14 million of PPP loans) grew 15% to $4.83 billion compared to $4.21 billion (excluding $196 million of PPP loans) at December 31, 2020.

•

C&I loan/lease balances (excluding PPP loans) grew $216 million or 12% over 2020, with a large portion of that net growth occurring in Q4 2021.

•

SBA Income ($4.9 million) and Corporate Advisory fees ($3.5 million) totaled $8.4 million in 2021.

•

Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market) totaled 89% of total deposits at December 31, 2021, with an average cost of 0.17%.

•

The net interest margin improved by 4 basis points in Q4 2021 compared to Q3 2021 and improved 21 basis points when compared to Q4 2020.

Capital Management:

•

Continued to execute on the previously approved stock repurchase program - during Q4 repurchased 274,929 shares at an average price of $33.50 for a total cost of $9.2 million. (For the year ended December 31, 2021, the Company repurchased 894,744 shares).

•

Tangible book value per share increased 6.2% to $27.05 at December 31, 2021 from $25.47 at December 31, 2020, despite recent stock repurchase activity and a wealth acquisition. See the Non-GAAP financial measures reconciliation included in this release.

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

In the December 2021 quarter, the Bank's wealth management business generated a record $13.96 million in fee income, compared to $13.86 million for the September 30, 2021 quarter and $10.79 million for the December 2020 quarter.

The market value of the Company's AUM/AUA increased 26% to $11.1 billion at December 31, 2021 from $8.8 billion at December 31, 2020, due to organic new business, the PPSG acquisition, and favorable market conditions.

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John P. Babcock, President of the Peapack Private Wealth Management division, said, "2021 showed continued strong business from new clients as well as additional business from existing clients. Positive net flows, combined with solid client retention and favorable market conditions, all contributed to our strong quarterly and full year results." Mr. Babcock went on to note, "While we will continue to look at supplementing our organic growth with selective acquisitions, M&A activity in the RIA space is hyper-competitive with purchase price multiples reaching all-time highs - making it challenging for us to obtain acceptable returns on invested capital. Internally, we are focused on completing our One Team consolidation of the businesses and people we have acquired over the last several years under a single operating and technology framework, completing our migration to a single trading platform and re-organizing our wealth business under a new, streamlined organizational structure to ensure the highest level of client experience, maximum efficiency, and growth."

Loans / Commercial Banking

At December 31, 2021, loans totaled $4.83 billion (excluding $14 million of PPP loans), compared to $4.21 billion (excluding $196 million of PPP loans) at December 31, 2020, reflecting growth of 15%. This growth was achieved despite over $900 million of net paydown/payoff activity over the twelve-month period.

Total C&I loans and leases (including the $14 million of PPP loans) at December 31, 2021 were $2.01 billion or 41% of the total loan portfolio.

Mr. Kennedy noted, "Our commercial loan pipelines continue to be strong going into the new year, standing at approximately $350 million with the likelihood of a first quarter closing. Notwithstanding significant payoff activity, we believe that we will achieve high single digit loan growth for 2022."

Mr. Kennedy also noted, "We are proud to have built a leading middle market commercial banking franchise, as evidenced by over $200 million of net growth in our C&I Portfolio, continued growth in Treasury Management income, and our over $3 million of corporate advisory fees by our investment banking group - this team had record earnings in 2021 and continues to have a robust pipeline of new business opportunities."

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale sourced deposits, volatility, and/or operational risk. Total deposits at December 31, 2021 increased $448 million to $5.27 billion from $4.82 billion at December 31, 2020. Along with the deposit growth, the change in mix was favorable, as noninterest bearing demand deposits increased $123 million, interest-bearing demand increased $439 million, while higher costing CDs declined $121 million and brokered deposits declined $25 million, when comparing December 31, 2021 to December 31, 2020.

Mr. Kennedy noted, "89% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 18% of our total deposits; both metrics reflect the relationship aspect of our deposit base."

At December 31, 2021, the Company's balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $971.2 million (or 16% of assets). This level is lower than the level at September 30, 2021 due to an increase in loan activity during Q4 2021 and more in line with historical levels.

The Company maintains backup liquidity of approximately $1.8 billion of secured funding with the Federal Home Loan Bank and $1.2 billion of secured funding from 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.

Mr. Kennedy noted, "We are well positioned for a rise in interest rates given that 40% of our loan portfolio reprices within three months and 52% within one-year. Our current modeling, with what we believe include conservative deposit beta assumptions, indicates net interest income will improve approximately 3% in year one and 5% in year two after a 100 basis point rate shock."

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

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	Twelve Months Ended			Twelve Months Ended
	December 31, 2021			December 31, 2020
	NII			NIM			NII			NIM
NII/NIM excluding the below	$	134,206			2.50%			$	123,099			2.58%
Prepayment premiums received on loan paydowns		2,085			0.04%				1,452			0.02%
Effect of maintaining excess interest earning cash		(420	)		-0.17%				(1,320	)		-0.21%
Effect of PPP loans		2,190			0.01%				4,371			-0.08%
NII/NIM as reported	$	138,061			2.38%			$	127,602			2.31%
	Three Months Ended			Three Months Ended			Three Months Ended
	December 31, 2021			September 30, 2021			December 31, 2020
	NII			NIM			NII			NIM			NII			NIM
NII/NIM excluding the below	$	36,564			2.60%			$	34,635			2.56%			$	30,897			2.51%
Prepayment premiums received on loan paydowns		555			0.04%				325			0.02%				413			0.02%
Effect of maintaining excess interest earning cash		(68	)		-0.18%				(46	)		-0.14%				(206	)		-0.24%
Effect of PPP loans		161			0.00%				297			-0.02%				631			-0.04%
NII/NIM as reported	$	37,212			2.46%			$	35,211			2.42%			$	31,735			2.25%

As shown above, the Company's reported NII increased $2.0 million and NIM increased 4 basis points compared to the linked quarter. The Bank further lowered its cost of funds strategically and grew its average loan portfolio at rates/spreads beneficial to NIM.

Future net interest income and net interest margin should benefit from the following:

➣

Robust loan pipelines to generate loan growth.

➣

Continued downward repricing of maturing CDs.

➣

An increase in target Fed funds (should that occur).

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $3.52 million for the December 2021 quarter compared to $2.06 million for the September 2021 quarter and $1.90 million for the December 2020 quarter. The December 2021 quarterly results were driven by $2.18 million in Corporate Advisory income. The September 2021 quarter results were driven by $1.57 million in gains on sale of SBA loans. The December 2020 quarter reflected increased mortgage banking activity due to greater refinance activity in the low-rate environment. The December 2021, September 2021 and December 2020 quarters included no income from loan level, back-to-back swap activities, as there has been, and will continue to be, minimal activity for such in the current environment.

		Three Months Ended			Three Months Ended			Three Months Ended
		December 31,			September 30,			December 31,
(Dollars in thousands, except per share data)		2021			2021			2020
Gain on loans held for sale at fair value (Mortgage banking)		$	352			$	408			$	1,470
Fee income related to loan level, back-to-back swaps			-				-				-
Gain on sale of SBA loans			989				1,569				375
Corporate advisory fee income			2,180				84				50
Total capital markets activity		$	3,521			$	2,061			$	1,895

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

Other noninterest income (as defined above) totaled $1.48 million, $1.86 million, and $1.72 million, for the December 2021, September 2021, and December 2020 quarters, respectively. The December 2021 quarter included $265,000 net loss on loans held for sale.

Operating Expenses

The Company's total operating expenses were $31.70 million for the quarter ended December 31, 2021, compared to $32.18 million for the September 2021 quarter and $39.25 million for the December 2020 quarter. The December 2021 and September 2021 quarters included $893,000 and $1.35 million related to a swap valuation allowance, respectively. The December and September 2021 quarters also included a full quarter's worth of expense related to the teams hired from Lucas and Noyes and the acquisition of PPSG. The December 2020 quarter included $4.8 million for the prepayment of FHLB advances, $4.4 million for a valuation allowance on a loan held for sale and $210,000 related to the consolidation of two private banking offices.

Mr. Kennedy noted, "While we continue to manage expenses closely and prudently, we will invest in our existing people as the market demands in order to retain the talent we have acquired, grow and expand our core wealth management and commercial banking businesses, including lift-outs, strategic hires, and wealth M&A, and invest in digital enhancements to further enhance the client experience."

Income Taxes

The effective tax rate for the three months ended December 31, 2021 was 28.31%, as compared to 26.22% for the September 2021 quarter and 33.29% for the quarter ended December 31, 2020. A tax return to book adjustment recorded in the December 2020 quarter coupled with reduced pretax income in the quarter, increased the December 2020 effective tax rate by approximately 5%.

The effective annual tax rate for 2021 was 27.09% compared to 18.16% for 2020. During the first quarter of 2020, the Company recorded a $3.34 million tax benefit, principally due to a $3.2 million federal income tax benefit that resulted from a tax NOL carryback. The Company had a $23 million operating loss for tax purposes in 2018 (when the federal tax rate was 21%) resulting from accelerated tax depreciation. Under the CARES Act, the Company was allowed to carry this NOL back to a period when the federal tax rate was 35%, generating a permanent tax benefit.

Asset Quality / Provision for Loan and Lease Losses

Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) at December 31, 2021 were $15.6 million, or 0.26% of total assets, compared to $25.9 million, or 0.42% of total assets, at September 30, 2021. The $10.3 million decline was largely due to a $2 million C&I loan moved back to accrual status, and a $7 million charge-off of the specific reserve on the commercial real estate loan with a large retail component located in Manhattan, and on deferral, that was placed on nonaccrual status in the third quarter of 2021.

For the quarter ended December 31, 2021, the Company's provision for loan and lease losses was $3.8 million compared to $1.6 million for the September 2021 quarter and $2.4 million for the December 2020 quarter. The increased provision for loan and lease losses in the December 2021 quarter, when compared to the linked quarter and the 2020 quarter, was due principally to significant loan growth during the December 2021 quarter and additional specific reserves of $4.2 million on the commercial real estate loan noted above, offset by reduced qualitative loss factors related to the unemployment rate and amount of loan deferrals and other economic qualitative factors due to the COVID-19 pandemic.

Loans on deferral, and accruing, entered into during the COVID-19 pandemic have come down significantly from $914 million at June 30, 2020 to $13 million at December 31, 2021. The Company's provision for loan and lease losses, and its allowance for loan and lease losses (ALLL) also reflect, among other things, the Company's assessment of asset quality metrics, net charge-offs/recoveries, and the composition of the loan portfolio.

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At December 31, 2021, the allowance for loan and lease losses was $61.70 million (1.27% of total loans), compared to $65.13 million at September 30, 2021 (1.42% of loans) and $67.31 million at December 31, 2020 (1.53% of total loans).

The Company will adopt CECL during the first quarter of 2022 and does not expect a material adjustment upon adoption.

Capital

The Company's capital position during the December 2021 quarter was benefitted by net income of $14.86 million, which was offset by the purchase of shares through the Company's stock repurchase program and the quarterly dividend. During the fourth quarter of 2021, the Company repurchased 274,929 shares at an average price of $33.50 for a total cost of $9.2 million. GAAP Capital at December 31, 2021 was also impacted by an increase in the unrealized loss on available-for-sale securities in the fourth quarter of 2021, due to a rise in medium-term Treasury yields.

The Company's and Bank's capital ratios at December 31, 2021 all remain strong. Such ratios remain well above regulatory well capitalized standards.

As previously announced, in the fourth quarter of 2020, the Company successfully completed a private placement of $100 million in fixed-to floating rate subordinated notes due 2030 at a rate of 3.5%. Such funds benefitted the Company's Regulatory Tier 2 Capital. At the time, the Company noted the proceeds raised would be used for general corporate purposes, which could include stock repurchases, the redemption of the Company's then existing 6% subordinated debt and acquisitions of wealth management firms. Throughout the twelve months of 2021, the Company repurchased $29 million of stock. On June 30, 2021, the Company redeemed its 6% subordinated debt. On July 1, 2021, the Company closed on the acquisition of PPSG.

The Company employs quarterly capital stress testing - adverse case and severely adverse case. In the most recent completed stress test on September 30, 2021, under severely adverse case, and no growth scenarios, the Bank remains well capitalized over a two-year stress period.With a Pandemic stress overlay, the Bank still remains well capitalized over the two-year stress period.

On January 27, 2022, the Company declared a cash dividend of $0.05 per share payable on February 25, 2022, to shareholders of record on February 10, 2022.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.1 billion and assets under management/administration of $11.1 billion as of December 31, 2021. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative 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.

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 2022 and beyond;

•

our ability to successfully integrate wealth management firm acquisitions;

•

our ability to manage our growth;

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•

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;

•

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 loan losses and capital levels;

•

higher than expected increases in our allowance for loan and lease losses;

•

higher than expected increases in loan and lease losses or in the level of delinquent, nonperforming, classified and criticized loans;

•

changes in interest rates;

•

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;

•

our inability to successfully generate new business in new geographic markets;

•

a reduction in our lower-cost funding sources;

•

our inability to adapt to technological changes;

•

claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;

•

our inability to retain key employees;

•

demands for loans and deposits in our market areas;

•

adverse changes in securities markets;

•

changes in accounting policies and practices; and

•

other unexpected material adverse changes in our operations or earnings.

Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 pandemic on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations:

•

demand for our products and services may decline, making it difficult to grow assets and income;

•

if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income;

•

collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase;

•

our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income;

•

the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us;

•

a material decrease in net income or a net loss over several quarters could result in an elimination or a decrease in the rate of our quarterly cash dividend;

•

our wealth management revenues may decline with continuing market turmoil;

•

a worsening of business and economic conditions or in the financial markets could result in an impairment of certain intangible assets, such as goodwill;

•

the unanticipated loss or unavailability of key employees due to the outbreak, which could harm our ability to operate our business or execute our business strategy, especially as we may not be successful in finding and integrating suitable successors;

•

we may face litigation, regulatory enforcement and reputation risk as a result of our participation in the PPP and the risk that the SBA may not fund some or all PPP loan guaranties;

•

our cyber security risks are increased as the result of an increase in the number of employees working remotely; and

•

FDIC premiums may increase if the agency experience additional resolution costs.

9

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, 2020. 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.

(Tables to follow)

10

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)

		For the Three Months Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
		2021			2021			2021			2021			2020
Income Statement Data:
Interest income		$	42,075			$	40,067			$	39,686			$	38,239			$	38,532
Interest expense			4,863				4,856				5,841				6,446				6,797
Net interest income			37,212				35,211				33,845				31,793				31,735
Wealth management fee income			13,962				13,860				13,034				12,131				10,791
Service charges and fees			996				959				896				846				859
Bank owned life insurance			308				311				466				611				313
Gain on loans held for sale at fair value (Mortgage banking) (A)			352				408				409				1,025				1,470
(Loss)/Gain on loans held for sale at lower of cost or fair value (B)			(265	)			-				1,125				282				-
Fee income related to loan level, back-to-back swaps (A)			-				-				-				-				-
Gain on sale of SBA loans (A)			989				1,569				932				1,449				375
Corporate advisory fee income (A)			2,180				84				121				1,098				50
Loss on swap termination			-				-				(842	)			-				-
Other income (C)			581				660				1,495				643				590
Securities (losses)/gains, net			(139	)			(70	)			42				(265	)			(42	)
Total other income			18,964				17,781				17,678				17,820				14,406
Salaries and employee benefits (D)			20,105				19,859				19,910				21,990				19,902
Premises and equipment			4,519				4,459				4,074				4,113				4,189
FDIC insurance expense			402				555				529				585				665
FHLB prepayment penalty			-				-				-				-				4,784
Valuation allowance loans held for sale			-				-				-				-				4,425
Swap valuation allowance			893				1,350				-				-				-
Other expenses			5,785				5,962				6,171				4,906				5,284
Total operating expenses			31,704				32,185				30,684				31,594				39,249
Pretax income before provision for loan losses			24,472				20,807				20,839				18,019				6,892
Provision for loan and lease losses			3,750				1,600				900				225				2,350
Income before income taxes			20,722				19,207				19,939				17,794				4,542
Income tax expense			5,867				5,036				5,521				4,616				1,512
Net income		$	14,855			$	14,171			$	14,418			$	13,178			$	3,030
Total revenue (E)		$	56,176			$	52,992			$	51,523			$	49,613			$	46,141
Per Common Share Data:
Earnings per share (basic)		$	0.80			$	0.76			$	0.76			$	0.70			$	0.16
Earnings per share (diluted)			0.78				0.74				0.74				0.67				0.16
Weighted average number of common shares outstanding:
Basic			18,483,268				18,763,316				18,963,237				18,950,305				18,947,864
Diluted			19,070,594				19,273,831				19,439,439				19,531,689				19,334,569
Performance Ratios:
Return on average assets annualized (ROAA)			0.96	%			0.95	%			0.97	%			0.89	%			0.21	%
Return on average equity annualized (ROAE)			10.94	%			10.40	%			10.86	%			10.03	%			2.32	%
Return on average tangible common equity (ROATCE) (F)			12.03	%			11.43	%			11.83	%			10.94	%			2.51	%
Net interest margin (tax-equivalent basis)			2.46	%			2.42	%			2.38	%			2.28	%			2.25	%
GAAP efficiency ratio (G)			56.44	%			60.74	%			59.55	%			63.68	%			85.06	%
Operating expenses / average assets annualized			2.05	%			2.16	%			2.06	%			2.14	%			2.66	%

11

(A)

Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in "capital markets activity" as referred to within the earnings release.

(B)

Includes a $1.1 million gain on sale of $57 million of PPP loans completed in the June 2021 quarter.

(C)

Includes income of $722,000 from the referral of PPP loans to a third-party firm during the June 2021 quarter.

(D)

The March 2021 quarter included $1.5 million of severance expense related to corporate restructuring.

(E)

Total revenue equals the sum of net interest income plus total other income.

(F)

Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income. See Non-GAAP financial measures reconciliation included in these tables.

(G)

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.

12

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in Thousands, except share data)

(Unaudited)

		For the Twelve Months Ended
		December 31,			Change
		2021			2020			$			%
Income Statement Data:
Interest income		$	160,067			$	165,750			$	(5,683	)			-3	%
Interest expense			22,006				38,148				(16,142	)			-42	%
Net interest income			138,061				127,602				10,459				8	%
Wealth management fee income			52,987				40,861				12,126				30	%
Service charges and fees			3,697				3,155				542				17	%
Bank owned life insurance			1,696				1,273				423				33	%
Gain on loans held for sale at fair value (Mortgage banking) (A)			2,194				3,266				(1,072	)			-33	%
Gain on loans held for sale at lower of cost or fair value (B)			1,142				7,426				(6,284	)			-85	%
Fee income related to loan level, back-to-back swaps (A)			-				1,620				(1,620	)			-100	%
Gain on sale of SBA loans (A)			4,939				1,766				3,173				180	%
Corporate advisory fee income (A)			3,483				265				3,218				1214	%
Loss on swap termination			(842	)			-				(842	)		N/A
Other income (C)			3,379				1,847				1,532				83	%
Securities (losses)/gains, net			(432	)			281				(713	)			-254	%
Total other income			72,243				61,760				10,483				17	%
Salaries and employee benefits (D)			81,864				77,516				4,348				6	%
Premises and equipment			17,165				16,377				788				5	%
FDIC insurance expense			2,071				1,975				96				5	%
FHLB prepayment penalty			-				4,784				(4,784	)			-100	%
Valuation allowance loans held for sale			-				4,425				(4,425	)			-100	%
Swap valuation allowance			2,243				-				2,243			N/A
Other expenses			22,824				19,882				2,942				15	%
Total operating expenses			126,167				124,959				1,208				1	%
Pretax income before provision for loan losses			84,137				64,403				19,734				31	%
Provision for loan and lease losses (E)			6,475				32,400				(25,925	)			-80	%
Income before income taxes			77,662				32,003				45,659				143	%
Income tax expense (F)			21,040				5,811				15,229				262	%
Net income		$	56,622			$	26,192			$	30,430				116	%
Total revenue (G)		$	210,304			$	189,362			$	20,942				11	%
Per Common Share Data:
Earnings per share (basic)		$	3.01			$	1.39			$	1.62				117	%
Earnings per share (diluted)			2.93				1.37				1.56				114	%
Weighted average number of common shares outstanding:
Basic			18,788,679				18,896,825				(108,146	)			-1	%
Diluted			19,292,602				19,081,187				211,415				1	%
Performance Ratios:
Return on average assets (ROAA)			0.94	%			0.45	%			0.49	%			110	%
Return on average equity (ROAE)			10.56	%			5.11	%			5.45	%			107	%
Return on average tangible common equity (ROATCE) (H)			11.56	%			5.55	%			6.01	%			108	%
Net interest margin (tax-equivalent basis)			2.38	%			2.31	%			0.07	%			3	%
GAAP efficiency ratio (I)			59.99	%			65.99	%			(6.00	)%			-9	%
Operating expenses / average assets			2.10	%			2.16	%			(0.06	)%			-3	%

13

(A)

Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in "capital markets activity" as referred to within the earnings release.

(B)

Includes $1.1 million (2021) and $7.4 million (2020) of gains on sale of PPP loans of $57 million and $355 million completed in the twelve months ended December 31, 2021 and 2020, respectively.

(C)

Includes income of $722,000 from the referral of PPP loans to a third-party firm during the twelve months ended December 31, 2021.

(D)

2021 included $1.5 million of severance expense related to corporate restructuring.

(E)

2020 included a higher provision for loan and lease losses primarily due to the COVID-19 pandemic.

(F)

2020 included a $3.2 million tax benefit related to the carryback of tax NOLs to prior years when the federal tax rate was 14% higher.

(G)

Total revenue equals the sum of net interest income plus total other income.

(H)

Return on average tangible common equity is calculated by dividing tangible common equity by net income. See Non-GAAP financial measures reconciliation included in these tables.

(I)

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.

14

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in Thousands)

(Unaudited)

		As of
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
		2021			2021			2021			2021			2020
ASSETS
Cash and due from banks		$	5,929			$	9,299			$	12,684			$	8,159			$	10,629
Federal funds sold			-				-				-				102				102
Interest-earning deposits			140,875				606,913				190,778				468,276				642,591
Total cash and cash equivalents			146,804				616,212				203,462				476,537				653,322
Securities held to maturity			108,680				-				-				-				-
Securities available for sale			796,753				843,779				823,820				875,301				622,689
Equity security			14,685				14,824				14,894				14,852				15,117
FHLB and FRB stock, at cost			12,950				12,950				12,901				13,699				13,709
Residential mortgage			501,340				510,878				504,181				498,884				520,188
Multifamily mortgage			1,595,866				1,497,683				1,420,043				1,178,940				1,127,198
Commercial mortgage			662,626				680,107				702,777				697,599				694,034
Commercial loans (A)			2,009,252				1,833,532				1,880,830				1,982,570				1,975,337
Consumer loans			33,687				30,689				31,889				36,519				37,016
Home equity lines of credit			40,803				42,512				44,062				45,624				50,547
Other loans			238				245				204				199				225
Total loans			4,843,812				4,595,646				4,583,986				4,440,335				4,404,545
Less: Allowances for loan and lease losses			61,697				65,133				63,505				67,536				67,309
Net loans			4,782,115				4,530,513				4,520,481				4,372,799				4,337,236
Premises and equipment			23,044				23,123				23,261				23,260				21,609
Other real estate owned			-				-				-				50				50
Accrued interest receivable			21,589				22,790				23,117				23,916				22,495
Bank owned life insurance			46,663				46,510				46,605				46,448				46,809
Goodwill and other intangible assets			48,902				49,333				43,156				43,524				43,891
Finance lease right-of-use assets			3,582				3,769				3,956				4,143				4,330
Operating lease right-of-use assets			9,775				10,307				9,569				10,186				9,421
Other assets (B)			62,451				66,175				66,466				64,912				99,764
TOTAL ASSETS		$	6,077,993			$	6,240,285			$	5,791,688			$	5,969,627			$	5,890,442
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	956,482			$	986,765			$	959,494			$	908,922			$	833,500
Interest-bearing demand deposits			2,287,894				2,355,892				1,978,497				1,987,567				1,849,254
Savings			154,914				168,831				147,227				141,743				130,731
Money market accounts			1,307,051				1,287,686				1,213,992				1,256,605				1,298,885
Certificates of deposit - Retail			409,608				426,981				446,143				474,668				530,222
Certificates of deposit - Listing Service			31,382				31,382				31,631				31,631				32,128
Subtotal "customer" deposits			5,147,331				5,257,537				4,776,984				4,801,136				4,674,720
IB Demand - Brokered			85,000				85,000				85,000				110,000				110,000
Certificates of deposit - Brokered			33,818				33,804				33,791				33,777				33,764
Total deposits			5,266,149				5,376,341				4,895,775				4,944,913				4,818,484
Short-term borrowings			-				-				-				15,000				15,000
FHLB advances			-				-				-				-				-
Paycheck Protection Program Liquidity Facility (C)			-				48,496				83,586				168,180				177,086
Finance lease liability			5,820				6,063				6,299				6,528				6,753
Operating lease liability			10,111				10,644				9,902				10,509				9,737
Subordinated debt, net (D)			132,701				132,629				132,557				181,837				181,794
Other liabilities (B)			116,824				123,098				125,110				120,219				154,466
TOTAL LIABILITIES			5,531,605				5,697,271				5,253,229				5,447,186				5,363,320
Shareholders' equity			546,388				543,014				538,459				522,441				527,122
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY		$	6,077,993			$	6,240,285			$	5,791,688			$	5,969,627			$	5,890,442
Assets under management and / or administration at Peapack-Gladstone Bank's Private Wealth Management Division (market value, not included above-dollars in billions)		$	11.1			$	10.3			$	9.8			$	9.4			$	8.8

(A)

Includes PPP loans of $14 million at December 31, 2021; $49 million at September 30, 2021; $84 million at June 30, 2021; $233 million at March 31, 2021; and $196 million at December 31, 2020.

(B)

The change in other assets and other liabilities was primarily due to the change in the fair value of our back-to-back swap program.

15

(C)

Represents funding provided by the Federal Reserve for pledged PPP loans.

(D)

The decrease was due to the redemption of a $50 million subordinated debt on June 30, 2021.

16

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

		As of
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
		2021			2021			2021			2021			2020
Asset Quality:
Loans past due over 90 days and still accruing		$	-			$	-			$	-			$	-			$	-
Nonaccrual loans (A)			15,573				25,925				5,962				11,767				11,410
Other real estate owned			-				-				-				50				50
Total nonperforming assets		$	15,573			$	25,925			$	5,962			$	11,817			$	11,460
Nonperforming loans to total loans			0.32	%			0.56	%			0.13	%			0.27	%			0.26	%
Nonperforming assets to total assets			0.26	%			0.42	%			0.10	%			0.20	%			0.19	%
Performing TDRs (B)(C)		$	2,479			$	416			$	190			$	197			$	201
Loans past due 30 through 89 days and still accruing (D)(E)		$	8,606			$	1,193			$	1,678			$	1,622			$	5,053
Loans subject to special mention		$	116,490			$	115,935			$	148,601			$	166,013			$	162,103
Classified loans		$	50,702			$	51,937			$	11,178			$	25,714			$	37,771
Impaired loans		$	18,052			$	26,341			$	6,498			$	11,964			$	16,204
Allowance for loan and lease losses:
Beginning of period		$	65,133			$	63,505			$	67,536			$	67,309			$	66,145
Provision for loan and lease losses			3,750				1,600				900				225				2,350
(Charge-offs)/recoveries, net			(7,186	)			28				(4,931	)			2				(1,186	)
End of period		$	61,697			$	65,133			$	63,505			$	67,536			$	67,309
ALLL to nonperforming loans			396.18	%			251.24	%			1065.16	%			573.94	%			589.91	%
ALLL to total loans			1.27	%			1.42	%			1.39	%			1.52	%			1.53	%
General ALLL to total loans (F)			1.19	%			1.26	%			1.38	%			1.45	%			1.47	%

(A)

Increase at September 30, 2021 due to one large CRE loan with a retail component, located in Manhattan.

(B)

Amounts reflect TDRs that are paying according to restructured terms.

(C)

Amount excludes $1.1 million at December 31, 2021, $4.0 million at September 30, 2021, $3.9 million at June 30, 2021, $3.9 million at March 31, 2021 and $4.0 million at December 31, 2020 of TDRs included in nonaccrual loans.

(D)

Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and at the lessee/borrower at December 31, 2021. Payment was received in January.

(E)

December 31, 2020 includes $1.3 million of residential loans that are classified as delinquent due to an escrow payment shortage due to a recent change in escrow payment requirement.

(F)

Total ALLL less specific reserves equals general ALLL.

17

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in Thousands)

(Unaudited)

		December 31,			September 30,			December 31,
		2021			2021			2020
Capital Adequacy
Equity to total assets (A)					8.99	%					8.70	%					8.95	%
Tangible Equity to tangible assets (B)					8.25	%					7.97	%					8.27	%
Book value per share (C)				$	29.70					$	29.15					$	27.78
Tangible Book Value per share (D)				$	27.05					$	26.50					$	25.47

		December 31,			September 30,			December 31,
		2021			2021			2020
Regulatory Capital - Holding Company
Tier I leverage		$	508,231			8.29%			$	501,188			8.56%			$	483,535			8.53%
Tier I capital to risk-weighted assets			508,231				10.62				501,188			10.97				483,535			11.93
Common equity tier I capital ratio to risk-weighted assets			508,207				10.62				501,159			10.97				483,500			11.93
Tier I & II capital to risk-weighted assets			700,790				14.64				691,044			15.12				716,210			17.67
Regulatory Capital - Bank
Tier I leverage (E)		$	612,762			9.99%			$	594,610			10.15%			$	549,575			9.71%
Tier I capital to risk-weighted assets (F)			612,762				12.80				594,610			13.01				549,575				13.55
Common equity tier I capital ratio to risk-weighted assets (G)			612,738				12.80				594,581			13.01				549,540				13.55
Tier I & II capital to risk-weighted assets (H)			672,614				14.05				651,841			14.26				600,478			14.81

(A)

Equity to total assets is calculated as total shareholders' equity as a percentage of total assets at period 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 period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.

(C)

Book value per common share is calculated by dividing shareholders' equity by period 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 period end common shares outstanding. See Non-GAAP financial measures reconciliation tables.

(E)

Regulatory well capitalized standard = 5.00% ($307 million)

(F)

Regulatory well capitalized standard = 8.00% ($383 million)

(G)

Regulatory well capitalized standard = 6.50% ($311 million)

(H)

Regulatory well capitalized standard = 10.00% ($479 million)

18

PEAPACK-GLADSTONE FINANCIAL CORPORATION

LOANS CLOSED

(Dollars in Thousands)

(Unaudited)

		For the Quarters Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
		2021			2021			2021			2021			2020
Residential loans retained		$	22,953			$	36,845			$	37,083			$	15,814			$	22,316
Residential loans sold			20,694				24,041				25,432				45,873				64,630
Total residential loans			43,647				60,886				62,515				61,687				86,946
Commercial real estate			16,134				14,944				12,243				38,363				-
Multifamily			162,740				120,716				255,820				85,009				1,184
Commercial (C&I) loans (A) (B)			341,886				143,121				141,285				129,141				218,235
SBA (C)			27,630				11,570				15,976				58,730				8,355
Wealth lines of credit (A)			7,500				10,020				3,200				2,475				3,925
Total commercial loans			555,890				300,371				428,524				313,718				231,699
Installment loans			94				178				25				63				690
Home equity lines of credit (A)			5,359				2,535				4,140				1,899				2,330
Total loans closed		$	604,990			$	363,970			$	495,204			$	377,367			$	321,665

		For the Twelve Months Ended
		Dec 31,			Dec 31,
		2021			2020
Residential loans retained		$	112,695			$	88,373
Residential loans sold			116,040				175,603
Total residential loans			228,735				263,976
Commercial real estate			81,684				11,219
Multifamily			624,285				76,642
Commercial (C&I) loans (A) (B)			755,433				478,485
SBA (C)			113,906				622,798
Wealth lines of credit (A)			23,195				9,675
Total commercial loans			1,598,503				1,198,819
Installment loans			360				2,149
Home equity lines of credit (A)			13,933				15,001
Total loans closed		$	1,841,531			$	1,479,945

(A)

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

(B)

Includes equipment finance.

(C)

Includes PPP loans of $9 million for the quarter ended June 30, 2021, $47 million for the quarter ended March 31, 2021 and $596 million for the twelve months ended December 31, 2020.

19

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

		December 31, 2021			December 31, 2020
		Average			Income/							Average			Income/
		Balance			Expense			Yield			Balance			Expense			Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	885,390			$	3,104				1.40	%		$	636,417			$	2,033				1.28	%
Tax-exempt (A) (B)			5,443				54				3.97				8,137				101				4.96
Loans (B) (C):
Mortgages			510,562				3,799				2.98				520,123				4,372				3.36
Commercial mortgages			2,209,160				17,708				3.21				1,865,953				14,796				3.17
Commercial			1,826,640				16,660				3.65				1,943,855				16,587				3.41
Commercial construction			20,426				176				3.45				10,376				108				4.16
Installment			33,400				253				3.03				44,581				320				2.87
Home equity			41,955				346				3.30				51,545				429				3.33
Other			270				6				8.89				281				6				8.54
Total loans			4,642,413				38,948				3.36				4,436,714				36,618				3.30
Federal funds sold			-				-				-				102				-				0.25
Interest-earning deposits			513,650				178				0.14				614,024				148				0.10
Total interest-earning assets			6,046,896				42,284				2.80	%			5,695,394				38,900				2.73	%
Noninterest-earning assets:
Cash and due from banks			11,517												9,632
Allowance for loan and lease losses			(65,542	)											(68,862	)
Premises and equipment			23,117												21,698
Other assets			182,154												238,856
Total noninterest-earning assets			151,246												201,324
Total assets		$	6,198,142											$	5,896,718
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,321,970			$	1,327				0.23	%		$	1,850,917			$	1,059				0.23	%
Money markets			1,290,334				678				0.21				1,273,681				811				0.25
Savings			152,570				20				0.05				128,195				17				0.05
Certificates of deposit - retail			453,127				725				0.64				602,068				2,106				1.40
Subtotal interest-bearing deposits			4,218,001				2,750				0.26				3,854,861				3,993				0.41
Interest-bearing demand - brokered			85,000				387				1.82				113,696				514				1.81
Certificates of deposit - brokered			33,810				267				3.16				33,756				267				3.16
Total interest-bearing deposits			4,336,811				3,404				0.31				4,002,313				4,774				0.48
Borrowings			25,890				25				0.39				244,753				616				1.01
Capital lease obligation			5,913				71				4.80				6,832				82				4.80
Subordinated debt			132,659				1,363				4.11				94,437				1,325				5.61
Total interest-bearing liabilities			4,501,273				4,863				0.43	%			4,348,335				6,797				0.63	%
Noninterest-bearing liabilities:
Demand deposits			1,042,477												858,004
Accrued expenses and other liabilities			111,357												166,933
Total noninterest-bearing liabilities			1,153,834												1,024,937
Shareholders' equity			543,035												523,446
Total liabilities and shareholders' equity		$	6,198,142											$	5,896,718
Net interest income						$	37,421											$	32,103
Net interest spread											2.37	%											2.10	%
Net interest margin (D)											2.46	%											2.25	%

(A)

Average balances for available for sale securities are based on amortized cost.

(B)

Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.

(C)

Loans are stated net of unearned income and include nonaccrual loans.

(D)

Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

20

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

		December 31, 2021			September 30, 2021
		Average			Income/							Average			Income/
		Balance			Expense			Yield			Balance			Expense			Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	885,390			$	3,104				1.40	%		$	820,574			$	2,824				1.38	%
Tax-exempt (A) (B)			5,443				54				3.97				6,035				64				4.24
Loans (B) (C):
Mortgages			510,562				3,799				2.98				503,621				3,779				3.00
Commercial mortgages			2,209,160				17,708				3.21				2,133,259				16,114				3.02
Commercial			1,826,640				16,660				3.65				1,826,368				16,553				3.63
Commercial construction			20,426				176				3.45				24,596				198				3.22
Installment			33,400				253				3.03				32,219				245				3.04
Home equity			41,955				346				3.30				43,182				357				3.31
Other			270				6				8.89				252				5				7.94
Total loans			4,642,413				38,948				3.36				4,563,497				37,251				3.27
Federal funds sold			-				-				-				-				-				-
Interest-earning deposits			513,650				178				0.14				413,623				142				0.14
Total interest-earning assets			6,046,896				42,284				2.80	%			5,803,729				40,281				2.78	%
Noninterest-earning assets:
Cash and due from banks			11,517												8,592
Allowance for loan and lease losses			(65,542	)											(64,100	)
Premises and equipment			23,117												23,311
Other assets			182,154												201,287
Total noninterest-earning assets			151,246												169,090
Total assets		$	6,198,142											$	5,972,819
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,321,970			$	1,327				0.23	%		$	2,098,827			$	1,177				0.22	%
Money markets			1,290,334				678				0.21				1,257,760				683				0.22
Savings			152,570				20				0.05				152,759				20				0.05
Certificates of deposit - retail			453,127				725				0.64				461,917				836				0.72
Subtotal interest-bearing deposits			4,218,001				2,750				0.26				3,971,263				2,716				0.27
Interest-bearing demand - brokered			85,000				387				1.82				85,000				385				1.81
Certificates of deposit - brokered			33,810				267				3.16				33,796				266				3.15
Total interest-bearing deposits			4,336,811				3,404				0.31				4,090,059				3,367				0.33
Borrowings			25,890				25				0.39				64,332				57				0.35
Capital lease obligation			5,913				71				4.80				6,147				74				4.82
Subordinated debt			132,659				1,363				4.11				132,588				1,358				4.10
Total interest-bearing liabilities			4,501,273				4,863				0.43	%			4,293,126				4,856				0.45	%
Noninterest-bearing liabilities:
Demand deposits			1,042,477												997,450
Accrued expenses and other liabilities			111,357												137,387
Total noninterest-bearing liabilities			1,153,834												1,134,837
Shareholders' equity			543,035												544,856
Total liabilities and shareholders' equity		$	6,198,142											$	5,972,819
Net interest income						$	37,421											$	35,425
Net interest spread											2.37	%											2.33	%
Net interest margin (D)											2.46	%											2.42	%

(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.

21

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

TWELVE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

		December 31, 2021			December 31, 2020
		Average			Income/							Average			Income/
		Balance			Expense			Yield			Balance			Expense			Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	838,174			$	11,577				1.38	%		$	510,245			$	8,782				1.72	%
Tax-exempt (A) (B)			6,579				296				4.50				9,479				477				5.03
Loans (B) (C):
Mortgages			503,616				15,359				3.05				528,687				17,882				3.38
Commercial mortgages			2,032,318				63,298				3.11				1,958,262				64,541				3.30
Commercial			1,881,683				66,652				3.54				1,969,115				71,037				3.61
Commercial construction			20,420				692				3.39				5,932				295				4.97
Installment			34,390				1,030				3.00				51,007				1,532				3.00
Home equity			44,735				1,479				3.31				53,853				1,940				3.60
Other			247				21				8.50				311				29				9.32
Total loans			4,517,409				148,531				3.29				4,567,167				157,256				3.44
Federal funds sold			48				-				0.13				102				-				0.25
Interest-earning deposits			477,477				545				0.11				504,753				968				0.19
Total interest-earning assets			5,839,687				160,949				2.76	%			5,591,746				167,483				3.00	%
Noninterest-earning assets:
Cash and due from banks			10,396												7,025
Allowance for loan and lease losses			(67,075	)											(61,401	)
Premises and equipment			23,094												21,455
Other assets			197,893												219,287
Total noninterest-earning assets			164,308												186,366
Total assets		$	6,003,995											$	5,778,112
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,078,658			$	4,426				0.21	%		$	1,742,846			$	7,279				0.42	%
Money markets			1,260,865				2,882				0.23				1,227,295				6,185				0.50
Savings			146,210				75				0.05				120,780				63				0.05
Certificates of deposit - retail			483,889				4,058				0.84				654,652				11,476				1.75
Subtotal interest-bearing deposits			3,969,622				11,441				0.29				3,745,573				25,003				0.67
Interest-bearing demand - brokered			96,301				1,721				1.79				143,388				2,773				1.93
Certificates of deposit - brokered			33,790				1,058				3.13				33,735				1,061				3.15
Total interest-bearing deposits			4,099,713				14,220				0.35				3,922,696				28,837				0.74
Borrowings			110,077				473				0.43				308,814				3,976				1.29
Capital lease obligation			6,260				300				4.79				7,157				343				4.79
Subordinated debt			156,888				7,013				4.47				86,246				4,992				5.79
Total interest-bearing liabilities			4,372,938				22,006				0.50	%			4,324,913				38,148				0.88	%
Noninterest-bearing liabilities:
Demand deposits			959,912												787,191
Accrued expenses and other liabilities			134,948												153,648
Total noninterest-bearing liabilities			1,094,860												940,839
Shareholders' equity			536,197												512,360
Total liabilities and shareholders' equity		$	6,003,995											$	5,778,112
Net interest income						$	138,943											$	129,335
Net interest spread											2.26	%											2.12	%
Net interest margin (D)											2.38	%											2.31	%

(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.

22

PEAPACK-GLADSTONE FINANCIAL CORPORATION

NON-GAAP FINANCIAL MEASURES RECONCILIATION

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding, as compared to book value per common share, which we calculate by dividing shareholders' equity by period end common shares outstanding. 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 share data)

		Three Months Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Tangible Book Value Per Share		2021			2021			2021			2021			2020
Shareholders' equity		$	546,388			$	543,014			$	538,459			$	522,441			$	527,122
Less: Intangible assets, net			48,902				49,333				43,156				43,524				43,891
Tangible equity		$	497,486			$	493,681			$	495,303			$	478,917			$	483,231
Period end shares outstanding			18,393,888				18,627,910				18,829,877				19,034,870				18,974,703
Tangible book value per share		$	27.05			$	26.50			$	26.30			$	25.16			$	25.47
Book value per share			29.70				29.15				28.60				27.45				27.78
Tangible Equity to Tangible Assets
Total assets		$	6,077,993			$	6,240,285			$	5,791,688			$	5,969,627			$	5,890,442
Less: Intangible assets, net			48,902				49,333				43,156				43,524				43,891
Tangible assets		$	6,029,091			$	6,190,952			$	5,748,532			$	5,926,103			$	5,846,551
Tangible equity to tangible assets			8.25	%			7.97	%			8.62	%			8.08	%			8.27	%
Equity to assets			8.99	%			8.70	%			9.30	%			8.75	%			8.95	%

		Three Months Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Return on Average Tangible Equity		2021			2021			2021			2021			2020
Net income		$	14,855			$	14,171			$	14,418			$	13,178			$	3,030
Average shareholders' equity		$	543,035			$	544,856			$	530,971			$	525,643			$	523,446
Less: Average intangible assets, net			49,151				48,757				43,366				43,742				40,336
Average tangible equity		$	493,884			$	496,099			$	487,605			$	481,901			$	483,110
Return on average tangible common equity			12.03	%			11.43	%			11.83	%			10.94	%			2.51	%

23

		For the Twelve Months Ended
		Dec 31,			Dec 31,
Return on Average Tangible Equity		2021			2020
Net income		$	56,622			$	26,192
Average shareholders' equity		$	536,197			$	512,360
Less: Average intangible assets, net			46,275				40,186
Average tangible equity		$	489,922			$	472,174
Return on average tangible common equity			11.56	%			5.55	%

		Three Months Ended
		Dec 31,			Sept 30,			June 30,			March 31,			Dec 31,
Efficiency Ratio		2021			2021			2021			2021			2020
Net interest income		$	37,212			$	35,211			$	33,845			$	31,793			$	31,735
Total other income			18,964				17,781				17,678				17,820				14,406
Add:
Securities losses/(gains), net			139				70				(42	)			265				42
Less:
Loss/(gain) on loans held for sale
at lower of cost or fair value			265				-				(1,125	)			(282	)			-
Income from life insurance proceeds			-				-				(153	)			(302	)			-
Loss on swap termination			-				-				842				-				-
Total recurring revenue		$	56,580			$	53,062			$	51,045			$	49,294			$	46,183
Operating expenses		$	31,704			$	32,185			$	30,684			$	31,594			$	39,249
Less:
FHLB prepayment penalty			-				-				-				-				4,784
Valuation allowance loans held for sale			-				-				-				-				4,425
Write-off of subordinated debt costs			-				-				648				-				-
Swap valuation allowance			893				1,350				-				-				-
Severance expense			-				-				-				1,532				-
Total operating expenses		$	30,811			$	30,835			$	30,036			$	30,062			$	30,040
Efficiency ratio			54.46	%			58.11	%			58.84	%			60.99	%			65.05	%

24

		For the Twelve Months Ended
		Dec 31,			Dec 31,
Efficiency Ratio		2021			2020
Net interest income		$	138,061			$	127,602
Total other income			72,243				61,760
Add:
Securities losses/(gains), net			432				(281	)
Less:
Loss/ on swap termination			842				-
Income from life insurance proceeds			(455	)			-
(Gain) on loans held for sale
at lower of cost or fair value			(1,142	)			(7,426	)
Total recurring revenue		$	209,981			$	181,655
Operating expenses		$	126,167			$	124,959
Less:
FHLB prepayment penalty			-				4,784
Valuation allowance loans held for sale			-				4,425
Write-off of subordinated debt costs			648				-
Swap valuation allowance			2,243				-
Severance expense			1,532				-
Total operating expenses		$	121,744			$	115,750
Efficiency ratio			57.98	%			63.72	%

25