Peapack-Gladstone Financial Corporation Reports Fourth Quarter Results

Rhea-AI Summary

Peapack-Gladstone Financial Corporation (PGC) announced its fourth quarter 2023 financial results, reporting total revenue of $54.3 million, net income of $8.6 million, and diluted EPS of $0.48. The net interest margin stabilized at 2.29%. Year-over-year deposits increased by $69.0 million to $5.3 billion, and loans grew $135.2 million to $5.4 billion. The liquidity position remains stable, with balance sheet liquidity at 12.08% of total assets. The company's return on average assets was 0.53%, return on average equity was 6.13%, and return on average tangible equity was 6.68% for the quarter ended December 31, 2023.

Positive

• Stable net interest margin at 2.29%
• Year-over-year deposit increase of $69.0 million
• Liquidity position remains stable at 12.08% of total assets
• Return on average assets of 0.53% and return on average equity of 6.13%

Negative

• Decline in total revenue by 5%
• Net income decline of 34%
• Diluted EPS decline of 32%
• Provision for credit losses increased by 161%

Insights

Financial Analyst

The financial results of Peapack-Gladstone Financial Corporation reflect a significant downturn, with a year-over-year decrease in net income of 34% and diluted EPS down by 32%. The reduced net interest income and the elevated provision for credit losses are indicative of the challenging economic environment and its impact on the banking sector. The net interest margin (NIM), which is a key indicator of a bank's profitability, stabilized quarter-over-quarter but decreased significantly compared to the previous year. This suggests that while the bank may have managed to navigate the immediate volatility, the long-term effects of interest rate hikes and economic headwinds are still being felt.

The bank's focus on wealth management appears to be a strategic move to diversify revenue streams, as evidenced by the growth in assets under management (AUM) and the steady contribution of wealth management fee income to total revenue. However, the growth in AUM may not fully offset the decline in other income, particularly from capital markets activity, which experienced a 70% decrease year-over-year. The capital preservation measures, such as stock repurchases and maintaining well-capitalized ratios, are prudent in the current climate and may reassure investors of the bank's commitment to maintaining a strong balance sheet.

Market Research Analyst

The banking industry has been facing a host of challenges, including rising interest rates and inflationary pressures. Peapack-Gladstone's report highlights these issues, with specific mention of the impact on liquidity and uninsured deposit balances. The bank's loan portfolio growth and the stabilization of net interest margin are positive signs, but the need for an elevated provision for credit losses points to potential vulnerabilities in the loan portfolio, particularly within the freight industry. The bank's liquidity position and coverage of uninsured deposits are robust, which is crucial in a time when market participants are increasingly concerned about liquidity risks.

It is also worth noting the strategic importance of noninterest income, which has become a significant part of the bank's revenue. This diversification away from traditional interest-based income is a trend that many financial institutions are pursuing to mitigate risks associated with interest rate fluctuations. The bank's ability to generate consistent noninterest income, especially from wealth management, may be a key differentiator and a potential area of growth as it navigates a challenging economic landscape.

Economist

The broader economic context in which Peapack-Gladstone operates is marked by monetary tightening policies aimed at curbing inflation. These policies have led to higher interest rates, which typically compress net interest margins for banks. Peapack-Gladstone's results reflect this, with a year-over-year decline in net interest income. The bank's reference to a 'massive downturn' in the freight industry, resulting in an elevated provision for credit losses, is a microcosm of the economic stress that certain sectors are experiencing. It underscores the importance of diversified loan portfolios and stringent underwriting standards in weathering economic turbulence.

Looking ahead, the bank's cautious approach to loan growth and underwriting in the face of economic uncertainty suggests a defensive posture that may protect its financial health but could also limit growth opportunities. The bank's liquidity and capital ratios, which remain above well-capitalized standards, provide a cushion against potential financial shocks and are indicative of the bank's risk management practices in an uncertain economic environment.

BEDMINSTER, NJ, Jan. 25, 2024 (GLOBE NEWSWIRE) -- via NewMediaWire – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter 2023 financial results.

This earnings release should be read in conjunction with the Company’s Q4 2023 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 $54.3 million, net income of $8.6 million and diluted earnings per share (“EPS”) of $0.48 for the quarter ended December 31, 2023, compared to revenue of $64.9 million, net income of $20.6 million and diluted EPS of $1.12 for the quarter ended December 31, 2022.

The net interest margin stabilized at 2.29% for the quarter ended December 31, 2023, compared to 2.28% for the quarter ended September 30, 2023 and 3.12% for the quarter ended December 31, 2022.

The Company’s return on average assets was 0.53%, return on average equity was 6.13%, and return on average tangible equity was 6.68% for the quarter ended December 31, 2023. Year over year deposits increased by $69.0 million to $5.3 billion and loans grew $135.2 million to $5.4 billion as of December 31, 2023.

The Company’s liquidity position remains stable as balance sheet liquidity (consisting of cash and cash equivalents and securities available for sale) increased to $782.4 million as of December 31, 2023, which was 12.08% of total assets.  The Company also had $2.7 billion of external borrowing capacity available, which, when combined with balance sheet liquidity provides us with 297% coverage of our uninsured deposits. Approximately 78% of our deposits are presently covered by FDIC insurance or are fully collateralized.

Douglas L. Kennedy, President and CEO said, “The fourth quarter brings an end to an incredibly challenging year for the financial services industry. A year that began with questions regarding liquidity and uninsured deposit balances combined with several interest rate increases by the Federal Reserve Bank in an effort to control inflation, which resulted in a turbulent ride from beginning to end.  Our net interest margin stabilized during the fourth quarter which provides an encouraging sign as we turn the calendar to 2024.  We continue to generate a consistent stream of noninterest income led by our Wealth Management Team.  Noninterest income represented 32% of total revenue during 2023."

Mr. Kennedy also noted, “Similar to the third quarter, fourth quarter results included an elevated provision for credit losses primarily driven by reserves required for two credits within the freight industry, which is currently facing a massive downturn due to supply and demand imbalances. We successfully liquidated one of these credits during the fourth quarter and continue to work through steps to quickly resolve the other. As we move forward through this challenging economic environment, we continue to thoroughly analyze our loan portfolio for areas of concern. We believe the diversity of our portfolio and strength of our underwriting standards will protect us in the long term. Unfortunately, we have been forced to deal with a handful of credit issues that have arisen as a result of current economic conditions."

The following are select highlights for the period ended December 31, 2023:

Wealth Management:

• Gross new business inflows for Q4 2023 totaled $260 million ($156 million managed). Full year 2023, gross business inflows totaled $948 million ($703 million managed).
• AUM/AUA in our Wealth Management Division totaled $10.9 billion at December 31, 2023 when compared to $9.9 billion at December 31, 2022, which is an increase of 10% year over year. 
• Wealth Management fee income of $13.8 million for Q4 2023 comprised 25% of total revenue for the quarter.

Commercial Banking and Balance Sheet Management:

• Total loans were $5.4 billion at December 31, 2023 reflecting growth of $135.2 million when compared to $5.3 billion at December 31, 2022.
• Commercial & industrial lending (“C&I”) loan/lease balances remained at 42% of the total loan portfolio at December 31, 2023.
• Fee income on unused commercial lines of credit totaled $750,000 for Q4 2023.
• Fee income recorded by the Equipment Finance division related to equipment transfers to lessees totaled $309,000 for Q4 2023.
• The net interest margin ("NIM") was 2.29% in Q4 2023, an increase of 1 basis point compared to Q3 2023 and a decline of 83 basis points when compared to Q4 2022.
• Total deposits increased $69.0 million to $5.3 billion from December 31, 2022.
• Noninterest-bearing demand deposits represented 18% of total deposits as of December 31, 2023.
• Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 89% of total deposits at December 31, 2023.

Capital Management:

• Tangible book value per share increased 5% on a linked quarter basis or $1.54 per share, in Q4 2023 to $30.31.
• During the quarter, the Company repurchased 88,327 shares of Company stock for a cost of $2.1 million. For 2023, the Company repurchased 455,341 shares for a cost of $12.5 million. The Company repurchased 930,977 shares of stock for a cost of $32.7 million during the year ended December 31, 2022.
• At December 31, 2023, the Tier 1 Leverage Ratio stood at 10.83% for Peapack-Gladstone Bank (the "Bank") and 9.19% for the Company. The Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 13.47% for the Bank and 11.43% for the Company at December 31, 2023. These ratios are significantly above well capitalized standards, as capital has benefited from net income generation.

Non-Core Items:

The December 2023 quarter included a:

• $585,000 positive fair value adjustment on an equity security held for CRA investment, which increased total revenue by $585,000, increased net income by $418,000 and EPS by $0.02 for the December 2023 quarter. Management believes this to be a non-core item.

SUMMARY INCOME STATEMENT DETAILS:

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

December 2023 Year Compared to Prior Year

		Year Ended				Year Ended
		December 31,				December 31,					Increase/
(Dollars in millions, except per share data)		2023				2022					(Decrease)
Net interest income		$	156.09			$	176.08				$	(19.99	)			(11	)%
Wealth management fee income			55.75				54.65					1.10				2
Capital markets activity (A)			2.74				9.25					(6.51	)			(70	)
Other income (B)			15.09				2.52					12.57				499
Total other income			73.58				66.42					7.16				11
Total Revenue			229.67				242.50					(12.83	)			(5	)%
Operating expenses (C)			148.30				133.80					14.50				11
Pretax income before provision for credit losses			81.37				108.70					(27.33	)			(25	)
Provision for credit losses			14.09				6.35					7.74				122
Pretax income			67.28				102.35					(35.07	)			(34	)
Income tax expense			18.43				28.10					(9.67	)			(34	)
Net income		$	48.85			$	74.25				$	(25.40	)			(34	)%
Diluted EPS		$	2.71			$	4.00				$	(1.29	)			(32	)%
Return on average assets			0.76	%			1.20	%				(0.44	)
Return on average equity			8.77	%			14.02	%				(5.25	)

(A)  The twelve months ended December 31, 2023 was negatively impacted by both market volatility and the higher interest rate environment resulting in lower SBA sale premiums and origination volumes.  The twelve months ended December 31, 2023 had a decline in gain on sale of SBA loans of $4.3 million to $2.4 million when compared to the same period in 2022.
(B)  Other income for the year ended December 31, 2023 included fee income from equipment finance activity of $3.0 million and a positive fair value adjustment on a CRA equity security of $181,000. Other income for the year ended December 31, 2022 included a $6.6 million loss on sale of securities, gain on sale of property of $275,000 income from life insurance proceeds of $25,000 and a negative fair value adjustment on a CRA equity security of $1.7 million.
(C)  The year ended December 31, 2023 included one-time charges of $2.0 million related to the recent retirement of certain employees and $175,000 of expense associated with three retail branch closures. The year ended December 31, 2022 included $1.5 million of severance expense related to certain staff reorganizations and $673,000 of expense related to the swap valuation allowance.

December 2023 Quarter Compared to Prior Year Quarter

		Three Months Ended					Three Months Ended
		December 31,					December 31,				Increase/
(Dollars in millions, except per share data)		2023					2022				(Decrease)
Net interest income		$	36.68				$	48.04			$	(11.36	)			(24	)%
Wealth management fee income			13.76					12.98				0.78				6
Capital markets activity			0.30					0.95				(0.65	)			(68	)
Other income (A)			3.53					2.88				0.65				23
Total other income			17.59					16.81				0.78				5
Total Revenue			54.27					64.85				(10.58	)			(16	)%
Operating expenses			37.62					33.41				4.21				13
Pretax income before provision for credit losses			16.65					31.44				(14.79	)			(47	)
Provision for credit losses			5.03					1.93				3.10				161
Pretax income			11.62					29.51				(17.89	)			(61	)
Income tax expense (B)			3.02					8.93				(5.91	)			(66	)
Net income		$	8.60				$	20.58			$	(11.98	)			(58	)%
Diluted EPS		$	0.48				$	1.12			$	(0.64	)			(57	)%
Return on average assets annualized			0.53	%				1.33	%			(0.80	)
Return on average equity annualized			6.13	%				15.73	%			(9.60	)

(A)  Other income for the December 2023 quarter included a positive fair value adjustment on a CRA equity security of $585,000.  Other income for the December 2022 quarter included a gain on sale of property of $275,000, income from life insurance proceeds of $25,000 and a positive fair value adjustment on a CRA equity security of $28,000. 
(B) The three months ended December 31, 2022 included $750,000 of income tax expense (net of Federal benefit) related to legislation that changed the nexus standard for New York City business tax. ($563,000 of that amount related to the first nine months of 2022).

December 2023 Quarter Compared to Linked Quarter

		Three Months Ended				Three Months Ended
		December 31,				September					Increase/
(Dollars in millions, except per share data)		2023				2023					(Decrease)
Net interest income		$	36.68			$	36.52				$	0.16				0	%
Wealth management fee income			13.76				13.98					(0.22	)			(2	)
Capital markets activity			0.30				0.61					(0.31	)			(51	)
Other income (A)			3.53				4.76					(1.23	)			(26	)
Total other income			17.59				19.35					(1.76	)			(9	)
Total Revenue			54.27				55.87					(1.60	)			(3	)%
Operating expenses			37.62				37.41					0.21				1
Pretax income before provision for credit losses			16.65				18.46					(1.81	)			(10	)
Provision for credit losses			5.03				5.86					(0.83	)			(14	)
Pretax income			11.62				12.60					(0.98	)			(8	)
Income tax expense			3.02				3.84					(0.82	)			(21	)
Net income		$	8.60			$	8.76				$	(0.16	)			(2	)%
Diluted EPS		$	0.48			$	0.49				$	(0.01	)			(2	)%
Return on average assets annualized			0.53	%			0.54	%				(0.01	)
Return on average equity annualized			6.13	%			6.20	%				(0.07	)

(A) Other income for the December 2023 quarter included a positive fair value adjustment on a CRA equity security of $585,000.  Other income for the September 2023 quarter included fee income from equipment finance activity of $2.3 million and a negative fair value adjustment on a CRA equity security of $404,000. 

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management

AUM/AUA in the Bank’s Wealth Management Division were $10.9 billion at December 31, 2023.  For the December 2023 quarter, the Wealth Management Team generated $13.8 million in fee income, compared to $14.0 million for the September 30, 2023 quarter and $13.0 million for the December 2022 quarter. The equity market increased during Q4 2023, contributing to the increase in AUM/AUA from $10.4 billion at September 30, 2023.

John Babcock, President of the Bank's Wealth Management Division, noted, “2023 included total new accounts and client additions of $948 million ($703 million managed). As we prepare for 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 and our high-touch client service model distinguishes us in our market and continues to drive our growth and success.” 

Loans / Commercial Banking

Total loans grew $135.2 million, or 3% to $5.4 billion at December 31, 2023 when compared to $5.3 billion at December 31, 2022.

Total C&I loans and leases at December 31, 2023 were $2.3 billion or 42% of the total loan portfolio.

Mr. Kennedy noted, “As previously mentioned, we have tightened our underwriting guidelines due to economic uncertainty. As a result, we achieved modest loan growth in 2023 compared to prior years. 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.”

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

The Company’s NII of $36.7 million and NIM of 2.29% for Q4 2023 increased $160,000 and 1 basis point from NII of $36.5 million and NIM of 2.28% for the linked quarter (Q3 2023), respectively, and decreased $11.4 million and 83 basis points from NII of $48.0 million and NIM of 3.12% for the prior year (Q4 2022), respectively.  When comparing Q4 2023 to the prior year quarter, the Company has seen a sharp increase in interest expense mostly driven by higher deposit rates during 2023. Cycle to date betas are approximately 48%.  Clients continue to migrate out of noninterest bearing checking products and into higher costing alternatives, which leads to intense competition for deposit balances from other banks and alternative investment opportunities due to the significant rise in interest rates.

Funding / Liquidity / Interest Rate Risk Management

Total deposits increased $69.0 million to $5.3 billion at December 31, 2023 from $5.2 billion at December 31, 2022.  The Company saw limited deposit increases in 2023 as the ongoing acquisition of new relationships driven by our private banking strategy was offset by larger deposit relationships using funds for purposes such as deployment of excess liquidity into higher-yielding treasuries or the equity market, tax payments, or asset acquisitions or investments.  The Company has also seen clients transition money from noninterest bearing deposit accounts to higher yielding deposit accounts as a result of increases in the Fed Funds rate.

At December 31, 2023, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $782.4 million, or 12% of assets.

The Company maintains additional liquidity resources of approximately $2.7 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. In addition, the Company also has access to the Bank Term Funding Program offered by the Federal Reserve Bank if needed.

The Company's total on and off-balance sheet liquidity totaled $3.5 billion, which is 297% of the total uninsured/uncollateralized deposits on the Company's balance sheet.

Income from Capital Markets Activities

Noninterest income from Capital Markets activities (detailed below) totaled $296,000 for the December 2023 quarter compared to $613,000 for the September 2023 quarter and $950,000 for the December 2022 quarter. The gain on sale of SBA loans was lower in Q4 2023 due to less activity in the higher interest rate environment and tighter margins.

		Three Months Ended				Three Months Ended				Three Months Ended
		December 31,				September 30,				December 31,
(Dollars in thousands, except per share data)		2023				2023				2022
Gain on loans held for sale at fair value (Mortgage banking)		$	18			$	37			$	25
Fee income related to loan level, back-to-back swaps			—				—				293
Gain on sale of SBA loans			239				491				624
Corporate advisory fee income			39				85				8
Total capital markets activity		$	296			$	613			$	950

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

Other noninterest income was $3.5 million for Q4 2023 compared to $4.8 million for Q3 2023 and $2.9 million for Q4 2022. Q4 2023 included $309,000 of income recorded by the Equipment Finance Division related to equipment transfers to lessees upon the termination of leases while Q3 2023 included $2.3 million and Q4 2022 included $294,000 respectively. Additionally, Q4 2023 included $750,000 of unused line fees compared to $794,000 for Q3 2023 and $732,000 for Q4 2022.

Operating Expenses

The Company’s total operating expenses were $37.6 million for the fourth quarter of 2023, compared to $37.4 million for the September 2023 quarter and $33.4 million for the December 2022 quarter. The December 2023 and September 2023 quarters included expenses associated with the expansion of the Company into New York City.

Mr. Kennedy noted, “While we have made a strategic decision to expand into a new market which results in additional costs, we are pleased with our ability to manage expenses across the Company. We will continue to look for opportunities to create efficiencies while investing in digital and other software tools to further enhance the client experience.”

Income Taxes

The effective tax rate for the three months ended December 31, 2023 was 26.0%, as compared to 30.5% for the September 2023 quarter and 30.3% for the quarter ended December 31, 2022.  The higher tax rate for the September 2023 quarter was primarily due to the impact of certain non-deductible expenses related to compensation and benefits and the higher tax rate for the December 2022 quarter included income tax expense related to legislation that changed the nexus standard for New York City business tax.

Asset Quality / Provision for Credit Losses

Nonperforming assets (which does not include modified loans that are performing in accordance with their terms) were $61.3 million, or 0.95% of total assets at December 31, 2023, as compared to $70.8 million, or 1.09% of total assets at September 30, 2023. The third quarter was impacted by two freight related clients totaling $33.4 million that were transferred to nonaccrual status during the third quarter. One credit, totaling $9.9 million, was successfully liquidated during the fourth quarter and management is working diligently to resolve the remaining matter as quickly and efficiently as possible. Loans past due 30 to 89 days and still accruing were $34.6 million, or 0.64% of total loans at December 31, 2023 compared to $9.8 million, or 0.18% of total loans at September 30, 2023. The Q4 2023 loans past due 30 to 89 days and still accruing included $16.5 million to US governmental entities and $11.8 million to one multifamily sponsor.

Criticized and classified loans totaled $155.8 million at December 31, 2023, reflecting an increase from September 30, 2023 and December 31, 2022 levels. The Company currently has no loans or leases on deferral and accruing.  

For the quarter ended December 31, 2023, the Company’s provision for credit losses was $5.1 million compared to $5.9 million for the September 2023 quarter and $2.1 million for the December 2022 quarter. The elevated level of provision for credit losses in both the December and September 2023 quarters was primarily driven by specific provisions related to the two freight credits that were transferred to nonaccrual status during the third quarter of 2023 as described above.  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. 

At December 31, 2023, the allowance for credit losses was $65.9 million (1.21% of total loans), compared to $68.6 million (1.25% of loans) at September 30, 2023, and $60.8 million (1.15% of loans) at December 31, 2022.

Capital

The Company’s capital position benefited by net income of $8.6 million during the December 2023 quarter, which was partially offset by the repurchase of 88,327 shares through the Company's stock repurchase program at a total cost of $2.1 million and the quarterly dividend of $891,000. Additionally, during the fourth quarter of 2023, the Company recorded a net gain in accumulated other comprehensive loss of $16.8 million, net of tax. This amount was driven by a $21.2 million increase in the value of the available for sale securities portfolio partially offset by a $4.4 million loss on cash flow hedges. The total accumulated other comprehensive loss declined to $64.9 million as of December 31, 2023, ($69.8 million loss related to the available for sale securities portfolio partially offset by a $4.9 million gain on the cash flow hedges)

Tangible book value per share increased during Q4 2023 to $30.31 at December 31, 2023 from $28.77 at September 30, 2023. Tangible book value per share is a non-GAAP financial measure.  See the reconciliation tables included in this release. The Company’s and Bank’s regulatory capital ratios as of December 31, 2023 remain strong, and generally reflect increases from December 31, 2022 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 September 30, 2023), under the severely adverse case, and no growth scenario, the Bank remains well capitalized over a two-year stress period.

On December 19, 2023, the Company declared a cash dividend of $0.05 per share payable on February 23, 2024 to shareholders of record on February 8, 2024.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.5 billion and assets under management/administration of $10.9 billion as of December 31, 2023.  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 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;
• 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;
• a potential government shutdown;
• 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 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, 2022.  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
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2023				2023				2023				2023				2022
Income Statement Data:
Interest income		$	80,178			$	78,489			$	74,852			$	70,491			$	64,202
Interest expense			43,503				41,974				35,931				26,513				16,162
Net interest income			36,675				36,515				38,921				43,978				48,040
Wealth management fee income			13,758				13,975				14,252				13,762				12,983
Service charges and fees			1,255				1,319				1,320				1,258				1,150
Bank owned life insurance			357				310				305				297				321
Gain on loans held for sale at fair value    (Mortgage banking)			18				37				15				21				25
Fee income related to loan level, back-to-back    swaps			—				—				—				—				293
Gain on sale of SBA loans			239				491				838				865				624
Corporate advisory fee income			39				85				15				80				8
Other income (A)			1,339				3,541				2,039				1,567				1,380
Fair value adjustment for CRA equity security			585				(404	)			(209	)			209				28
Total other income			17,590				19,354				18,575				18,059				16,812
Total revenue			54,265				55,869				57,496				62,037				64,852
Salaries and employee benefits (B)			24,320				25,264				26,354				24,586				22,489
Premises and equipment			5,416				5,214				4,729				4,374				4,898
FDIC insurance expense			765				741				729				711				455
Other expenses			7,115				6,194				5,880				5,903				5,570
Total operating expenses			37,616				37,413				37,692				35,574				33,412
Pretax income before provision for credit losses			16,649				18,456				19,804				26,463				31,440
Provision for credit losses			5,026				5,856				1,696				1,513				1,930
Income before income taxes			11,623				12,600				18,108				24,950				29,510
Income tax expense (C)			3,024				3,845				4,963				6,595				8,931
Net income		$	8,599			$	8,755			$	13,145			$	18,355			$	20,579
Per Common Share Data:
Earnings per share (basic)		$	0.48			$	0.49			$	0.73			$	1.03			$	1.15
Earnings per share (diluted)			0.48				0.49				0.73				1.01				1.12
Weighted average number of common    shares outstanding:
Basic			17,770,158				17,856,961				17,930,611				17,841,203				17,915,058
Diluted			17,961,400				18,010,127				18,078,848				18,263,310				18,382,193
Performance Ratios:
Return on average assets annualized (ROAA)			0.53	%			0.54	%			0.82	%			1.16	%			1.33	%
Return on average equity annualized (ROAE)			6.13	%			6.20	%			9.43	%			13.50	%			15.73	%
Return on average tangible equity annualized (ROATCE) (D)			6.68	%			6.75	%			10.30	%			14.78	%			17.30	%
Net interest margin (tax-equivalent basis)			2.29	%			2.28	%			2.49	%			2.88	%			3.12	%
GAAP efficiency ratio (E)			69.32	%			66.97	%			65.56	%			57.34	%			51.52	%
Operating expenses / average assets annualized			2.33	%			2.31	%			2.36	%			2.26	%			2.15	%

(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 recent retirement of certain employees.
(C) The three months ended December 31, 2022 included $750,000 of income tax expense (net federal benefit) related to a recent New York City nexus determination change which included $563,000 from prior quarters.
(D) 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.
(E) Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.

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

		For the Twelve Months Ended
		December 31,								Change
		2023				2022				$				%
Income Statement Data:
Interest income		$	304,010			$	211,875			$	92,135				43	%
Interest expense			147,921				35,795				112,126				313	%
Net interest income			156,089				176,080				(19,991	)			-11	%
Wealth management fee income			55,747				54,651				1,096				2	%
Service charges and fees			5,152				4,225				927				22	%
Bank owned life insurance			1,269				1,243				26				2	%
Gain on loans held for sale at fair value (Mortgage banking)			91				483				(392	)			-81	%
Fee income related to loan level, back-to-back swaps			—				293				(293	)			-100	%
Gain on sale of SBA loans			2,433				6,765				(4,332	)			-64	%
Corporate advisory fee income			219				1,704				(1,485	)			-87	%
Other income (A)			8,486				5,362				3,124				58	%
Loss on securities sale, net (B)			—				(6,609	)			6,609				-100	%
Fair value adjustment for CRA equity security			181				(1,700	)			1,881				-111	%
Total other income			73,578				66,417				7,161				11	%
Total revenue			229,667				242,497				(12,830	)			-5	%
Salaries and employee benefits (C)			100,524				89,476				11,048				12	%
Premises and equipment			19,733				18,719				1,014				5	%
FDIC insurance expense			2,946				1,939				1,007				52	%
Swap valuation allowance			—				673				(673	)			-100	%
Other expenses			25,092				22,993				2,099				9	%
Total operating expenses			148,295				133,800				14,495				11	%
Pretax income before provision for credit losses			81,372				108,697				(27,325	)			-25	%
Provision for credit losses			14,091				6,353				7,738				122	%
Income before income taxes			67,281				102,344				(35,063	)			-34	%
Income tax expense			18,427				28,098				(9,671	)			-34	%
Net income		$	48,854			$	74,246			$	(25,392	)			-34	%
Per Common Share Data:
Earnings per share (basic)		$	2.74			$	4.09			$	(1.35	)			-33	%
Earnings per share (diluted)			2.71				4.00				(1.29	)			-32	%
Weighted average number of common shares outstanding:
Basic			17,849,558				18,161,605				(312,047	)			-2	%
Diluted			18,049,052				18,568,098				(519,046	)			-3	%
Performance Ratios:
Return on average assets (ROAA)			0.76	%			1.20	%			(0.44	)%			-36	%
Return on average equity (ROAE)			8.77	%			14.02	%			(5.25	)%			-37	%
Return on average tangible equity (ROATCE) (D)			9.57	%			15.43	%			(5.86	)%			-38	%
Net interest margin (tax-equivalent basis)			2.48	%			2.91	%			(0.43	)%			-15	%
GAAP efficiency ratio (E)			64.57	%			55.18	%			9.39	%			17	%
Operating expenses / average assets			2.32	%			2.16	%			0.16	%			7	%

(A) The twelve months ended December 2023 included $3.0 million of fee income from equipment finance activity.
(B) Loss on sale of securities was a result of a balance sheet repositioning employed in the March 2022 quarter.
(C) The twelve months ended December 31, 2023 included $2.0 million of expense associated with the recent retirement of certain employees, increased corporate and health insurance costs and expenses associated with the previously announced expansion into New York City. The twelve months ended December 31, 2022 quarter included $1.5 million of severance expense related to corporate restructuring.
(D) 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.
(E) 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
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2023				2023				2023				2023				2022
ASSETS
Cash and due from banks		$	5,887			$	7,400			$	4,859			$	6,514			$	5,937
Federal funds sold			—				—				—				—				—
Interest-earning deposits			181,784				180,469				166,769				244,779				184,138
Total cash and cash equivalents			187,671				187,869				171,628				251,293				190,075
Securities available for sale			550,617				521,005				540,519				556,266				554,648
Securities held to maturity			107,755				108,940				110,438				111,609				102,291
CRA equity security, at fair value			13,166				12,581				12,985				13,194				12,985
FHLB and FRB stock, at cost (A)			31,044				34,158				35,402				30,338				30,672
Residential mortgage			578,427				585,295				575,238				544,655				525,756
Multifamily mortgage			1,836,390				1,871,853				1,884,369				1,871,387				1,863,915
Commercial mortgage			637,625				622,469				624,710				613,911				624,625
Commercial and industrial loans			2,284,940				2,321,917				2,278,133				2,266,837				2,213,762
Consumer loans			62,036				57,227				52,098				49,002				38,014
Home equity lines of credit			36,464				34,411				34,397				33,294				34,496
Other loans			238				265				269				443				304
Total loans			5,436,120				5,493,437				5,449,214				5,379,529				5,300,872
Less: Allowance for credit losses			65,888				68,592				62,704				62,250				60,829
Net loans			5,370,232				5,424,845				5,386,510				5,317,279				5,240,043
Premises and equipment			24,166				23,969				23,814				23,782				23,831
Other real estate owned			—				—				—				116				116
Accrued interest receivable			30,676				22,889				20,865				19,143				25,157
Bank owned life insurance			47,581				47,509				47,382				47,261				47,147
Goodwill and other intangible assets			46,014				46,286				46,624				46,979				47,333
Finance lease right-of-use assets			2,087				2,274				2,461				2,648				2,835
Operating lease right-of-use assets			12,096				12,800				13,500				12,262				12,873
Other assets			53,752				76,456				67,572				47,848				63,587
TOTAL ASSETS		$	6,476,857			$	6,521,581			$	6,479,700			$	6,480,018			$	6,353,593
LIABILITIES
Deposits:
Noninterest-bearing demand deposits		$	957,687			$	947,405			$	1,024,105			$	1,096,549			$	1,246,066
Interest-bearing demand deposits			2,882,193				2,871,359				2,816,913				2,797,493				2,143,611
Savings			111,573				117,905				120,082				132,523				157,338
Money market accounts			740,559				761,833				763,026				873,329				1,228,234
Certificates of deposit – Retail			443,791				422,291				384,106				357,131				318,573
Certificates of deposit – Listing Service			7,804				9,103				10,822				15,922				25,358
Subtotal “customer” deposits			5,143,607				5,129,896				5,119,054				5,272,947				5,119,180
IB Demand – Brokered			10,000				10,000				10,000				10,000				60,000
Certificates of deposit – Brokered			120,507				119,463				69,443				25,895				25,984
Total deposits			5,274,114				5,259,359				5,198,497				5,308,842				5,205,164
Short-term borrowings			403,814				470,576				485,360				378,800				379,530
Finance lease liability			3,430				3,752				4,071				4,385				4,696
Operating lease liability			12,876				13,595				14,308				13,082				13,704
Subordinated debt, net			133,274				133,203				133,131				133,059				132,987
Due to brokers			—				—				—				8,308				—
Other liabilities			65,668				82,140				79,264				78,584				84,532
TOTAL LIABILITIES			5,893,176				5,962,625				5,914,631				5,925,060				5,820,613
Shareholders’ equity			583,681				558,956				565,069				554,958				532,980
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY		$	6,476,857			$	6,521,581			$	6,479,700			$	6,480,018			$	6,353,593
Assets under management and / or administration at    Peapack-Gladstone Bank’s Private Wealth Management    Division (market value, not included above-dollars in billions)		$	10.9			$	10.4			$	10.7			$	10.4			$	9.9

(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
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2023				2023				2023				2023				2022
Asset Quality:
Loans past due over 90 days and still accruing		$	—			$	—			$	—			$	—			$	—
Nonaccrual loans (A)			61,324				70,809				34,505				28,659				18,974
Other real estate owned			—				—				—				116				116
Total nonperforming assets		$	61,324			$	70,809			$	34,505			$	28,775			$	19,090
Nonperforming loans to total loans			1.13	%			1.29	%			0.63	%			0.53	%			0.36	%
Nonperforming assets to total assets			0.95	%			1.09	%			0.53	%			0.44	%			0.30	%
Performing modifications (B)(C)		$	248			$	248			$	248			$	248			$	—
Performing TDRs (D)(E)		$	—			$	—			$	—			$	—			$	965
Loans past due 30 through 89 days and still accruing (F)		$	34,589			$	9,780			$	14,524			$	2,762			$	7,592
Loans subject to special mention		$	71,397			$	53,328			$	53,606			$	46,566			$	64,842
Classified loans		$	84,372			$	94,866			$	58,655			$	58,010			$	42,985
Individually evaluated loans		$	60,710			$	70,184			$	33,867			$	27,736			$	16,732
Allowance for credit losses ("ACL"):
Beginning of quarter		$	68,592			$	62,704			$	62,250			$	60,829			$	59,683
Provision for credit losses (G)			5,082				5,944				1,666				1,464				2,103
(Charge-offs)/recoveries, net (H)			(7,786	)			(56	)			(1,212	)			(43	)			(957	)
End of quarter		$	65,888			$	68,592			$	62,704			$	62,250			$	60,829
ACL to nonperforming loans			107.44	%			96.87	%			181.72	%			217.21	%			320.59	%
ACL to total loans			1.21	%			1.25	%			1.15	%			1.16	%			1.15	%
Collectively evaluated ACL to total loans (I)			1.13	%			1.10	%			1.11	%			1.11	%			1.12	%

(A) Includes 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 $3.0 million at December 31, 2023, $3.1 million at September 30, 2023 and $777,000 at June 30, 2023.
(D) Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.
(E) Excludes TDRs included in nonaccrual loans of $13.4 million at December 31, 2022. On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.
(F) Includes $16.5 million outstanding to U.S. governmental entities at December 31, 2023 and $8.2 million of outstanding multifamily loans to one sponsor. December 31, 2022 includes $4.5 million outstanding to U.S. governmental entities.
(G) Provision to roll forward the ACL excludes 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, a provision of $49,000 at March 31, 2023 and a credit of $173,000 at December 31, 2022 related to off-balance sheet commitments.
(H) 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 quarters ended June 30, 2023 and December 31, 2022 included a charge-off of $1.2 million of a previously established reserve to loans individually evaluated on one commercial real estate loan.
(I) 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
		December 31,						September 30,						December 31,
		2023						2023						2022
Capital Adequacy
Equity to total assets (A)					9.01	%					8.57	%					8.39	%
Tangible equity to tangible assets (B)					8.36	%					7.92	%					7.70	%
Book value per share (C)				$	32.90					$	31.37					$	29.92
Tangible book value per share (D)				$	30.31					$	28.77					$	27.26
Tangible equity to tangible assets excluding other comprehensive loss*					9.28	%					9.06	%					8.77	%
Tangible book value per share excluding other comprehensive loss*				$	33.97					$	33.36					$	31.43

*Excludes other comprehensive loss of $64.9 million for the quarter ended December 31, 2023, $81.7 million for the quarter ended September 30, 2023, and $74.2 million for the quarter ended December 31, 2022.  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
		December 31,						September 30,						December 31,
		2023						2023						2022
Regulatory Capital – Holding Company
Tier I leverage		$	600,444			9.19%		$	592,061			9.05%		$	557,627			8.90%
Tier I capital to risk-weighted assets			600,444			11.43			592,061			11.13			557,627			11.02
Common equity tier I capital ratio    to risk-weighted assets			600,432			11.43			592,043			11.13			557,609			11.02
Tier I & II capital to risk-weighted assets			785,413			14.95			784,777			14.76			745,197			14.73
Regulatory Capital – Bank
Tier I leverage (E)		$	707,446			10.83%		$	702,517			10.75%		$	680,137			10.85%
Tier I capital to risk-weighted assets (F)			707,446			13.48			702,517			13.22			680,137			13.45
Common equity tier I capital ratio    to risk-weighted assets (G)			707,434			13.47			702,499			13.22			680,119			13.45
Tier I & II capital to risk-weighted assets (H)			773,083			14.73			768,979			14.47			741,719			14.67

(E) Regulatory well capitalized standard (including capital conservation buffer) = 4.00% ($261 million)
(F) Regulatory well capitalized standard (including capital conservation buffer) = 8.50% ($446 million)
(G) Regulatory well capitalized standard (including capital conservation buffer) = 7.00% ($368 million)
(H) Regulatory well capitalized standard (including capital conservation buffer) = 10.50% ($551 million)

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

		For the Quarters Ended
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
		2023				2023				2023				2023				2022
Residential loans retained		$	5,895			$	21,310			$	39,358			$	30,303			$	28,051
Residential loans sold			1,449				2,503				1,072				1,477				1,840
Total residential loans			7,344				23,813				40,430				31,780				29,891
Commercial real estate			21,375				3,900				43,235				18,990				6,747
Multifamily			5,725				3,000				26,662				30,150				37,500
Commercial (C&I) loans/leases (A) (B)			145,397				176,845				158,972				207,814				238,568
SBA			7,326				300				13,713				9,950				17,431
Wealth lines of credit (A)			350				6,875				3,950				23,225				7,700
Total commercial loans			180,173				190,920				246,532				290,129				307,946
Installment loans			2,946				6,999				4,587				12,086				1,845
Home equity lines of credit (A)			4,174				6,275				6,107				2,921				3,815
Total loans closed		$	194,637			$	228,007			$	297,656			$	336,916			$	343,497

		For the Twelve Months Ended
		Dec 31,				Dec 31,
		2023				2022
Residential loans retained		$	96,866			$	122,655
Residential loans sold			6,501				32,293
Total residential loans			103,367				154,948
Commercial real estate			87,500				53,602
Multifamily			65,537				381,714
Commercial (C&I) loans (A) (B)			689,028				965,647
SBA			31,289				59,740
Wealth lines of credit (A)			34,400				34,125
Total commercial loans			907,754				1,494,828
Installment loans			26,618				3,329
Home equity lines of credit (A)			19,477				14,667
Total loans closed		$	1,057,216			$	1,667,772

(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
		December 31, 2023												December 31, 2022
		Average				Income/				Annualized				Average				Income/				Annualized
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	798,661			$	5,202				2.61	%		$	761,164			$	3,859				2.03	%
Tax-exempt (A) (B)			106				—				—				1,999				20				4.00
Loans (B) (C):
Mortgages			581,088				5,300				3.65				516,721				4,017				3.11
Commercial mortgages			2,492,204				28,318				4.55				2,497,847				25,007				4.00
Commercial			2,274,841				37,958				6.67				2,136,355				29,314				5.49
Commercial construction			16,680				382				9.16				4,213				68				6.46
Installment			59,988				1,037				6.91				36,648				496				5.41
Home equity			35,570				721				8.11				36,067				550				6.10
Other			246				8				13.01				292				8				10.96
Total loans			5,460,617				73,724				5.40				5,228,143				59,460				4.55
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			146,699				1,623				4.43				161,573				1,258				3.11
Total interest-earning assets			6,406,083				80,549				5.03	%			6,152,879				64,597				4.20	%
Noninterest-earning assets:
Cash and due from banks			10,709												6,723
Allowance for credit losses			(68,289	)											(60,070	)
Premises and equipment			24,387												23,682
Other assets			85,720												83,641
Total noninterest-earning assets			52,527												53,976
Total assets		$	6,458,610											$	6,206,855
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,890,964			$	25,811				3.57	%		$	2,222,130			$	9,165				1.65	%
Money markets			771,051				5,247				2.72				1,246,179				3,438				1.10
Savings			112,969				81				0.29				161,569				12				0.03
Certificates of deposit – retail			440,712				4,086				3.71				360,589				922				1.02
Subtotal interest-bearing deposits			4,215,696				35,225				3.34				3,990,467				13,537				1.36
Interest-bearing demand – brokered			10,000				142				5.68				81,739				497				2.43
Certificates of deposit – brokered			115,722				1,454				5.03				25,979				210				3.23
Total interest-bearing deposits			4,341,418				36,821				3.39				4,098,185				14,244				1.39
Borrowings			357,384				4,955				5.55				43,710				497				4.55
Capital lease obligation			3,539				42				4.75				4,803				58				4.83
Subordinated debt			133,234				1,685				5.06				132,947				1,363				4.10
Total interest-bearing liabilities			4,835,575				43,503				3.60	%			4,279,645				16,162				1.51	%
Noninterest-bearing liabilities:
Demand deposits			963,968												1,303,432
Accrued expenses and other liabilities			98,012												100,372
Total noninterest-bearing liabilities			1,061,980												1,403,804
Shareholders’ equity			561,055												523,406
Total liabilities and shareholders’ equity		$	6,458,610											$	6,206,855
Net interest income						$	37,046											$	48,435
Net interest spread											1.43	%											2.69	%
Net interest margin (D)											2.29	%											3.12	%

(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
		December 31, 2023												September 30, 2023
		Average				Income/				Annualized				Average				Income/				Annualized
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	798,661			$	5,202				2.61	%		$	806,861			$	5,170				2.56	%
Tax-exempt (A) (B)			106				—				—				1,198				11				3.67
Loans (B) (C):
Mortgages			581,088				5,300				3.65				580,951				5,208				3.59
Commercial mortgages			2,492,204				28,318				4.55				2,502,351				27,746				4.44
Commercial			2,274,841				37,958				6.67				2,298,723				37,357				6.50
Commercial construction			16,680				382				9.16				12,346				282				9.14
Installment			59,988				1,037				6.91				56,248				967				6.88
Home equity			35,570				721				8.11				34,250				680				7.94
Other			246				8				13.01				234				7				11.97
Total loans			5,460,617				73,724				5.40				5,485,103				72,247				5.27
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			146,699				1,623				4.43				136,315				1,463				4.29
Total interest-earning assets			6,406,083				80,549				5.03	%			6,429,477				78,891				4.91	%
Noninterest-earning assets:
Cash and due from banks			10,709												6,954
Allowance for credit losses			(68,289	)											(63,625	)
Premises and equipment			24,387												23,880
Other assets			85,720												85,582
Total noninterest-earning assets			52,527												52,791
Total assets		$	6,458,610											$	6,482,268
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,890,964			$	25,811				3.57	%		$	2,813,080			$	24,318				3.46	%
Money markets			771,051				5,247				2.72				771,781				4,458				2.31
Savings			112,969				81				0.29				118,718				75				0.25
Certificates of deposit – retail			440,712				4,086				3.71				415,665				3,459				3.33
Subtotal interest-bearing deposits			4,215,696				35,225				3.34				4,119,244				32,310				3.14
Interest-bearing demand – brokered			10,000				142				5.68				10,000				136				5.44
Certificates of deposit – brokered			115,722				1,454				5.03				102,777				1,183				4.60
Total interest-bearing deposits			4,341,418				36,821				3.39				4,232,021				33,629				3.18
Borrowings			357,384				4,955				5.55				470,616				6,569				5.58
Capital lease obligation			3,539				42				4.75				3,863				46				4.76
Subordinated debt			133,234				1,685				5.06				133,163				1,730				5.20
Total interest-bearing liabilities			4,835,575				43,503				3.60	%			4,839,663				41,974				3.47	%
Noninterest-bearing liabilities:
Demand deposits			963,968												990,854
Accrued expenses and other liabilities			98,012												86,598
Total noninterest-bearing liabilities			1,061,980												1,077,452
Shareholders’ equity			561,055												565,153
Total liabilities and shareholders’ equity		$	6,458,610											$	6,482,268
Net interest income						$	37,046											$	36,917
Net interest spread											1.43	%											1.44	%
Net interest margin (D)											2.29	%											2.28	%

(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 Twelve Months Ended
		December 31, 2023												December 31, 2022
		Average				Income/								Average				Income/
		Balance				Expense				Yield				Balance				Expense				Yield
ASSETS:
Interest-earning assets:
Investments:
Taxable (A)		$	800,811			$	19,743				2.47	%		$	803,982			$	13,854				1.72	%
Tax-exempt (A) (B)			1,251				50				4.00				3,521				137				3.89
Loans (B) (C):
Mortgages			562,488				19,733				3.51				513,189				15,165				2.96
Commercial mortgages			2,494,427				108,819				4.36				2,478,891				87,488				3.53
Commercial			2,254,617				144,141				6.39				2,046,735				90,225				4.41
Commercial construction			10,115				918				9.08				12,600				533				4.23
Installment			51,929				3,454				6.65				36,685				1,447				3.94
Home equity			34,332				2,624				7.64				37,755				1,656				4.39
Other			257				29				11.28				274				26				9.49
Total loans			5,408,165				279,718				5.17				5,126,129				196,540				3.83
Federal funds sold			—				—				—				—				—				—
Interest-earning deposits			146,977				6,075				4.13				171,491				2,763				1.61
Total interest-earning assets			6,357,204				305,586				4.81	%			6,105,123				213,294				3.49	%
Noninterest-earning assets:
Cash and due from banks			8,973												8,046
Allowance for credit losses			(64,149	)											(60,037	)
Premises and equipment			23,986												23,312
Other assets			79,192												111,893
Total noninterest-earning assets			48,002												83,214
Total assets		$	6,405,206											$	6,188,337
LIABILITIES:
Interest-bearing deposits:
Checking		$	2,777,390			$	88,829				3.20	%		$	2,363,412			$	17,861				0.76	%
Money markets			862,686				18,432				2.14				1,253,032				6,113				0.49
Savings			124,538				229				0.18				162,396				26				0.02
Certificates of deposit – retail			400,155				11,736				2.93				397,128				2,971				0.75
Subtotal interest-bearing deposits			4,164,769				119,226				2.86				4,175,968				26,971				0.65
Interest-bearing demand – brokered			13,973				611				4.37				84,178				1,579				1.88
Certificates of deposit – brokered			67,998				3,038				4.47				29,778				942				3.16
Total interest-bearing deposits			4,246,740				122,875				2.89				4,289,924				29,492				0.69
Borrowings			337,777				18,204				5.39				26,631				600				2.25
Capital lease obligation			4,018				191				4.75				5,241				250				4.77
Subordinated debt			133,127				6,651				5.00				132,839				5,453				4.10
Total interest-bearing liabilities			4,721,662				147,921				3.13	%			4,454,635				35,795				0.80	%
Noninterest-bearing liabilities:
Demand deposits			1,040,403												1,107,943
Accrued expenses and other liabilities			86,193												96,331
Total noninterest-bearing liabilities			1,126,596												1,204,274
Shareholders’ equity			556,948												529,428
Total liabilities and shareholders’ equity		$	6,405,206											$	6,188,337
Net interest income						$	157,665											$	177,499
Net interest spread											1.68	%											2.69	%
Net interest margin (D)											2.48	%											2.91	%

(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
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
Tangible Book Value Per Share		2023				2023				2023				2023				2022
Shareholders’ equity		$	583,681			$	558,956			$	565,069			$	554,958			$	532,980
Less:  Intangible assets, net			46,014				46,286				46,624				46,979				47,333
Tangible equity		$	537,667			$	512,670			$	518,445			$	507,979			$	485,647
Less: other comprehensive loss			(64,878	)			(81,653	)			(67,997	)			(67,445	)			(74,211	)
Tangible equity excluding other comprehensive loss		$	602,545			$	594,323			$	586,442			$	575,424			$	559,858
Period end shares outstanding			17,739,677				17,816,922				17,887,895				18,014,757				17,813,451
Tangible book value per share		$	30.31			$	28.77			$	28.98			$	28.20			$	27.26
Tangible book value per share excluding other comprehensive loss		$	33.97			$	33.36			$	32.78			$	31.94			$	31.43
Book value per share			32.90				31.37				31.59				30.81				29.92
Tangible Equity to Tangible Assets
Total assets		$	6,476,857			$	6,521,581			$	6,479,700			$	6,480,018			$	6,353,593
Less: Intangible assets, net			46,014				46,286				46,624				46,979				47,333
Tangible assets		$	6,430,843			$	6,475,295			$	6,433,076			$	6,433,039			$	6,306,260
Less: other comprehensive loss			(64,878	)			(81,653	)			(67,997	)			(67,445	)			(74,211	)
Tangible assets excluding other comprehensive loss		$	6,495,721			$	6,556,948			$	6,501,073			$	6,500,484			$	6,380,471
Tangible equity to tangible assets			8.36	%			7.92	%			8.06	%			7.90	%			7.70	%
Tangible equity to tangible assets excluding other comprehensive loss			9.28	%			9.06	%			9.02	%			8.85	%			8.77	%
Equity to assets			9.01	%			8.57	%			8.72	%			8.56	%			8.39	%

(Dollars in thousands, except per share data)

		Three Months Ended
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
Return on Average Tangible Equity		2023				2023				2023				2023				2022
Net income		$	8,599			$	8,755			$	13,145			$	18,355			$	20,579
Average shareholders’ equity		$	561,055			$	565,153			$	557,428			$	543,861			$	523,406
Less:  Average intangible assets, net			46,167				46,468				46,828				47,189				47,531
Average tangible equity		$	514,888			$	518,685			$	510,600			$	496,672			$	475,875
Return on average tangible common equity			6.68	%			6.75	%			10.30	%			14.78	%			17.30	%

		For the Twelve Months Ended
		Dec 31,				Dec 31,
Return on Average Tangible Equity		2023				2022
Net income		$	48,854			$	74,246
Average shareholders’ equity		$	556,948			$	529,428
Less:  Average intangible assets, net			46,659				48,111
Average tangible equity			510,289				481,317
Return on average tangible common equity			9.57	%			15.43	%

(Dollars in thousands, except per share data)

		Three Months Ended
		Dec 31,				Sept 30,				June 30,				March 31,				Dec 31,
Efficiency Ratio		2023				2023				2023				2023				2022
Net interest income		$	36,675			$	36,515			$	38,921			$	43,978			$	48,040
Total other income			17,590				19,354				18,575				18,059				16,812
Add:
Fair value adjustment for CRA equity security			(585	)			404				209				(209	)			(28	)
Less:
Gain on sale of property			—				—				—				—				(275	)
Income from life insurance proceeds			—				—				—				—				(25	)
Total recurring revenue			53,680				56,273				57,705				61,828				64,524
Operating expenses			37,616				37,413				37,692				35,574				33,412
Less:
Accelerated Expense for Retirement			—				—				1,665				300				—
Branch Closure Expense			—				—				—				175				—
Total operating expense			37,616				37,413				36,027				35,099				33,412
Efficiency ratio			70.07	%			66.48	%			62.43	%			56.77	%			51.78	%

		For the Twelve Months Ended
		Dec 31,				Dec 31,
Efficiency Ratio		2023				2022
Net interest income		$	156,089			$	176,080
Total other income			73,578				66,417
Add:
Fair value adjustment for CRA equity security			(181	)			1,700
Less:
Loss on securities sale, net			—				6,609
Gain on sale of property			—				(275	)
Income from life insurance proceeds			—				(25	)
Total recurring revenue			229,486				250,506
Operating expenses			148,295				133,800
Less:
Swap valuation allowance			—				673
Accelerated Expense for Retirement			1,965				—
Branch Closure Expense			175				—
Severance expense			—				1,476
Total operating expense			146,155				131,651
Efficiency ratio			63.69	%			52.55	%

FAQ

What were Peapack-Gladstone Financial Corporation's (PGC) total revenue, net income, and diluted EPS for the fourth quarter of 2023?

The company reported total revenue of $54.3 million, net income of $8.6 million, and diluted EPS of $0.48 for the fourth quarter of 2023.

What was the net interest margin for Peapack-Gladstone Financial Corporation (PGC) in the fourth quarter of 2023?

The net interest margin stabilized at 2.29% for the fourth quarter of 2023.

How much did deposits and loans grow year-over-year for Peapack-Gladstone Financial Corporation (PGC)?

Year-over-year deposits increased by $69.0 million to $5.3 billion, and loans grew $135.2 million to $5.4 billion.

What was the liquidity position of Peapack-Gladstone Financial Corporation (PGC) at the end of December 31, 2023?

The liquidity position remains stable, with balance sheet liquidity at 12.08% of total assets.

What were the returns on average assets and equity for Peapack-Gladstone Financial Corporation (PGC) for the fourth quarter of 2023?

The company's return on average assets was 0.53%, and return on average equity was 6.13% for the fourth quarter of 2023.