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Peapack-Gladstone Financial Corporation Reports Another Solid Quarter


October 22, 2014 - Bedminster, NJ

Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded net income of $10.68 million and diluted earnings per share of $0.90 for the nine months ended September 30, 2014. This compared to $6.87 million and $0.76, respectively for the same nine month period last year.

For the quarter ended September 30, 2014, the Corporation recorded net income of $3.86 million and diluted earnings per share of $0.32. This compared to $1.96 million and $0.22, respectively, for the same quarter last year.

The following table summarizes earnings for the quarters ended:



Sept June Sept
2014 2014 2013
(Dollars in millions, except EPS) (1) (1)(2) (3)
--------- --------- ----------
Pretax income $ 6.26 $ 6.32 $ 3.24
Net income $ 3.86 $ 3.78 $ 1.96
Diluted EPS $ 0.32 $ 0.32 $ 0.22
Return on average assets 0.63% 0.67% 0.45%
Return on average equity 8.35% 8.44% 6.28%
Efficiency ratio 66.60% 67.43% 78.84%
Total revenue $ 22.10 $ 22.40 $ 18.16

(1) The September 2014 and June 2014 quarterly earnings per share
calculations include all of the 2.47 million shares issued in the
December 12, 2013 capital raise.

(2) The June 2014 quarter included a $176 thousand gain on sale of
residential first mortgage loans sold, as a component of balance sheet
management.

(3) The September 2013 quarter included $933 thousand of compensation
expense accruals related to the retirement of two senior officers.

Doug Kennedy, President and CEO, said, "We continue to focus on executing our Strategic Plan -- 'Expanding Our Reach.' This Plan focuses on the client experience and aggressively building and maintaining our private banking platform. Our growth and overall results reflect our continued success."

Q3 2014 highlights follow:

  • As reflected in the table above, earnings and performance ratios for the September 2014 quarter reflected improvement when compared to the same quarter last year. The June 2014 quarter includes the $176 thousand gain on sale of residential first mortgage loans sold ($105 thousand after tax or a penny per share).
  • Total loan balances at September 30, 2014 exceeded $2 billion and reached another record level for the Company at $2.04 billion. This level reflected growth when compared to $1.57 billion at December 31, 2013, and $1.40 billion one year ago at September 30, 2013. Year over year loan growth was 46 percent.
  • During the September 2014 quarter, Commercial & Industrial (C&I) loan originations totaled $74 million -- a record quarter for the Company.
  • During the period June through September 2014, three new seasoned commercial bankers joined the Company.
  • Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) grew to a record $1.93 billion at September 30, 2014, from $1.63 billion at December 31, 2013 and $1.57 billion at September 30, 2013. Year over year customer deposit growth totaled 23 percent.
  • The Company's net interest income for the September 2014 quarter reached another quarterly record level at $17.05 million. This level reflected improvement when compared to $16.92 million for the June 2014 quarter, and when compared to $13.37 million for the same quarter last year.
  • At September 30, 2014, the market value of assets under administration at the Private Wealth Management Division of Peapack-Gladstone Bank ("The Bank") was $2.86 billion, also another record for the Company.
  • Fee income from the Private Wealth Management Division totaled $3.66 million for the September 2014 quarter growing from $3.30 million for the same quarter last year. The June 2014 quarter totaled $4.01 million as fee income for the second quarter of each calendar year is benefitted by tax return preparation fee income.
  • Asset quality metrics continue to be strong at September 30, 2014. Nonperforming assets at September 30, 2014 were just $9.7 million or 0.39 percent of total assets. The metrics improved in early October when a $1.5 million commercial loan on nonaccrual at September 30, 2014 paid off in full on October 8, 2014.
  • The book value per share at September 30, 2014 of $15.80 reflected improvement when compared to $14.79 at December 31, 2013 and $14.12 at September 30, 2013. Year-over-year growth in book value per share totaled 12 percent.

Net Interest Income / Net Interest Margin

Net interest income was $17.05 million for the third quarter of 2014, compared to $16.92 million for the June 2014 quarter and $13.37 million for the same quarter last year, reflecting growth of $3.68 million or 27 percent when compared to the prior year period. Net interest income for the third quarter of 2014 benefitted from significant loan growth during the first nine months of 2014 as well as the last quarter of 2013, principally multifamily and commercial mortgages.

While net interest income for the third quarter of 2014 improved compared to these prior periods, the net interest margin, on a fully tax-equivalent basis, was 2.89 percent for the September 2014 quarter compared to 3.14 percent for the June 2014 quarter and 3.28 percent for the September 2013 quarter. The bulk of the decline in margin for the September 2014 quarter was due to the maintenance of much larger average interest earning deposit/cash balances -- $197.7 million average for the September 2014 quarter, compared to $51.2 million for the June 2014 quarter and $35.2 million for the September 2013 quarter. Mr. Kennedy said, "Given our rapid growth, we have decided to maintain greater liquidity on our balance sheet."

In general, in addition to the maintenance of larger interest bearing deposit/cash balances noted above, net interest margin also continues to be affected by the continued effect of low market yields, as well as competitive pressures in attracting new loans and deposits.

Loan Originations / Loans

Total loan originations were $772 million for the nine months ended September 30, 2014. At September 30, 2014, loans totaled $2.04 billion as compared to $1.40 billion one year ago at September 30, 2013, representing an increase of $644 million or 46 percent. The multifamily and commercial mortgage loan portfolio grew $580 million or 85 percent when comparing the September 2014 balance to the September 2013 balance. The increase was attributable to the addition of seasoned banking professionals over the course of 2013; a more concerted focus on the client service aspect of the lending process; more of a focus on New Jersey markets; and a focus on New York City multifamily markets beginning in mid-2013. The increase was also due to demand from borrowers looking to refinance multifamily and other commercial mortgages held by other institutions.

Mr. Kennedy said, "As we have noted previously, our analysis showed that multifamily lending could be grown quickly, had strong credit metrics and that this type of lending provided solid risk-adjusted returns. Originations of this asset class has been a major focus as we build our C&I (Commercial & Industrial) lending capabilities, as part of our Strategic Plan launched in March 2013. Going forward, multifamily lending will remain a focus of the Company, but with the C&I lending program becoming more seasoned, including the addition of three seasoned C&I bankers since June 2014, we anticipate that C&I loan production will continue to improve as we move forward."

The Company closed $105 million of C&I loans in 2013, and an additional $153 million for the nine months ended September 30, 2014. At September 30, 2014, C & I loans totaled $226 million, more than double the $111 million one year ago at September 30, 2013.

Deposits / Funding / Balance Sheet Management

Loan growth of $166 million and investment security growth of $43 million in the September 2014 quarter was funded by a reduction of $96 million in interest earning deposit/cash balances, as well as growth of $101 million in customer deposits. Also, Capital growth of $5.7 million for the September 2014 quarter provided additional funding.

Brokered interest-bearing demand deposits continue to be maintained as an additional source of liquidity. At a cost of less than a 25 basis points, such deposits are a more cost effective alternative than overnight wholesale borrowings, and do not require pledging of collateral. These deposits have been maintained at $138 million thus far throughout 2014 and, as a part of its liquidity management, the Company may maintain higher levels in future periods. The Company does ensure ample available collateralized liquidity as a backup to these short term brokered deposits.

Brokered certificates of deposit have also been utilized throughout 2014. The majority of these deposits have been longer term and have generally been transacted as a part of the Company's interest rate risk management. These certificates of deposit are also a more cost effective alternative than medium/longer term wholesale borrowings, and also do not require pledging of collateral.

Mr. Kennedy noted that "The June 2014 quarter included sales of $67 million of longer duration, lower coupon residential first mortgage loans, as well as $61 million of multifamily loan participations, as part of the Company's overall balance sheet management strategy. These transactions contributed to the Company's increased interest earning deposits/cash held as of the beginning of the September 2014 quarter." Mr. Kennedy went on to say, "The Company will continue to place intense focus on providing high touch client service and growing its core deposit base. Its full array of treasury management products will help support both core deposit growth and commercial lending opportunities. Private bankers, commercial bankers, relationship bankers and the treasury management team have robust pipelines of client deposits."

Wealth Management Business

In the September 2014 quarter, Peapack-Gladstone Bank's Wealth Management business generated $3.66 million in fee income compared to $3.30 million for the September 2013 quarter. The market value of the assets under administration (AUA) of the wealth management division was $2.86 billion at September 30, 2014, up from $2.58 billion at September 30, 2013. The growth in fee income and AUA was due to a combination of new business and market value improvement.

John P. Babcock, President of Private Wealth Management, noted, "Incorporating wealth into every conversation we have with all of our Company's clients, across all business lines, is integral to our strategy. As noted last quarter, over the course of 2014, three seasoned wealth advisors joined the Company from larger wealth management companies, and a seasoned two person team -- a Portfolio Manager and a Trust Officer -- from a larger wealth management company joined our Princeton Private Banking Team. These individuals complemented our existing high-caliber team. We will continue to build-out and grow our Wealth Management team, and expand the products, service, and advice we deliver to our clients."

Other Noninterest Income

The September 2014 quarter included $87 thousand of income from the sale of newly originated residential mortgage loans, down from $277 thousand in the same 2013 quarter. As noted in prior quarters, the rise in mortgage rates caused a decrease in residential mortgage loan originations and resultant mortgage banking income. Mr. Kennedy noted, "Reduced levels of mortgage banking income was expected and planned for, and reduced levels of mortgage banking income are expected to be ongoing. Fortunately, mortgage banking income is not a significant portion of our revenue."

Securities gains were $39 thousand for the September 2014 quarter compared to $188 thousand for the September 2013 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the short duration of the securities portfolio, sales have been employed much less often in recent periods.

Other income of $1.27 million for the September 2014 quarter was $250 thousand higher than the September 2013 quarter. Several categories reflected slight improvement in the quarter including, increased income associated with a new set of checking products put in place during the summer months.

Operating Expenses

The Company's total operating expenses were $14.69 million for the quarter ended September 30, 2014 compared to $14.17 million in the same 2013 quarter, reflecting a net increase of $528 thousand.

Salary and benefits expense increased due to strategic hiring in line with the Company's Strategic Plan, including private bankers, relationship bankers, commercial bankers, wealth advisors, risk management professionals and various support staff, including support staff associated with the commercial lending process. Additionally, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, contributed to the increase. The September 2013 quarter included approximately $933 thousand of compensation expense accruals related to the retirement of two senior officers.

Also, when comparing the September 2014 expense levels to those in September 2013, the September 2014 quarter included increased occupancy costs associated with the new Princeton and Teaneck Private Banking offices.

Mr. Kennedy noted, "Expense increases that were contemplated with our strategy, Expanding Our Reach, are tracking consistent with projections. We expect that the trend of higher operating expenses will continue as we close out 2014 and go into 2015, as we bring on high caliber revenue producers, and continue to invest in our infrastructure in line with our Strategic Plan. Further, we generally expect revenue and profitability related to new personnel to lag those expenses by several quarters. It is important to note, however, that we have seen an improvement in quarterly revenue since we launched our Plan, particularly in the recent quarters, as our Plan began to gain momentum. This revenue growth, which has outpaced expense growth considerably, has caused our Efficiency Ratio to decline to just below 67 percent for the current quarter."

Provision for Loan Losses / Asset Quality

For the quarter ended September 2014, the Company's provision for loan losses was $1.15 million, the same as the June 2014 provision, and up $400 thousand when compared to the $750 thousand provision for the September 2013 quarter. Charge-offs, net of recoveries, for the September 2014 quarter were only $55 thousand.

At September 30, 2014 the allowance for loan losses was 208 percent of nonperforming loans and 0.90 percent of total loans.

The Company's provision for loan losses and net increase in its allowance for loan losses continue to track well with the Company's net loan growth.

Nonperforming assets totaled $9.7 million or 0.39 percent of total assets at September 30, 2014. Mr. Kennedy noted, "Those metrics improved in early October when a $1.5 million commercial loan on nonaccrual at September 30, 2014 paid off in full on October 8, 2014."

Capital / Dividends

Capital in the September 2014 quarter was benefitted by net income and by just over $2 million of voluntary share purchases in the Dividend Reinvestment Plan.

During the September 2014 quarter, the Company continued to employ the capital raised in December 2013 by continuing to grow loans. At September 30, 2014, the Company's leverage ratio, tier 1 and total risk based capital ratios were 7.57 percent, 12.16 percent and 13.36 percent, respectively. The Company's ratios are all above the levels required to be considered well capitalized under regulatory guidelines applicable to banks.

As previously announced, on October 15, 2014 the Board of Directors declared a regular cash dividend of $0.05 per share payable on November 14, 2014 to shareholders of record on October 30, 2014.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $2.51 billion as of September 30, 2014. Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative private banking services to businesses, non-profits and consumers which help them to establish, maintain and expand their legacy. Through its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its wealth management division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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

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

A discussion of these and other factors that could affect our results is included in our SEC filings, including our Annual Report on form 10-K for the year ended December 31, 2013. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation's expectations.

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

(Tables to follow)

 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CONDITION (Dollars in Thousands) (Unaudited) As of ------------------------------------------------------ Sept 30, June 30, March 31, Dec 31, Sept 30, 2014 2014 2014 2013 2013 --------- --------- --------- --------- ---------ASSETSCash and due from banks $ 6,596 $ 5,757 $ 6,373 $ 6,534 $ 5,886Federal funds sold 101 101 101 101 101Interest-earning deposits 114,124 209,768 95,059 28,512 33,528 --------- --------- --------- --------- --------- Total cash and cash equivalents 120,821 215,626 101,533 35,147 39,515 Securities available for sale 269,550 225,270 248,070 268,447 273,952FHLB and FRB Stock, at cost 9,121 9,946 12,765 10,032 7,707 Loans held for sale, at fair value 351 2,650 1,769 2,001 724Loans held for sale, at lower of cost or fair value - - 51,184 - - Residential mortgage 470,030 469,648 481,850 532,911 527,927Commercial mortgage 1,260,561 1,166,747 1,063,470 831,997 680,762Commercial loans 225,814 158,103 143,389 131,795 110,843Construction loans 6,025 6,033 6,075 5,893 8,390Consumer loans 27,597 23,414 20,945 21,852 19,932Home equity lines of credit 48,200 48,740 45,820 47,905 47,020Other loans 2,560 2,255 1,851 1,848 2,075 --------- --------- --------- --------- --------- Total loans 2,040,787 1,874,940 1,763,400 1,574,201 1,396,949 Less: Allowances for loan losses 18,299 17,204 16,587 15,373 14,056 --------- --------- --------- --------- --------- Net loans 2,022,488 1,857,736 1,746,813 1,558,828 1,382,893 Premises and equipment 30,825 31,095 31,087 28,990 29,022Other real estate owned 949 1,036 2,062 1,941 2,759Accrued interest receivable 5,126 4,858 4,788 4,086 4,017Bank owned life insurance 32,448 32,258 32,065 31,882 31,691Deferred tax assets, net 11,661 9,433 9,366 9,762 7,951Other assets 11,181 11,063 9,983 15,832 17,473 --------- --------- --------- --------- --------- TOTAL ASSETS $2,514,521 $2,400,971 $2,251,485 $1,966,948 $1,797,704 ========= ========= ========= ========= ========= LIABILITIESDeposits: Noninterest-bearing demand deposits $ 383,268 $ 410,609 $ 350,987 $ 356,119 $ 345,736 Interest-bearing demand deposits 558,537 474,945 407,127 378,340 338,626 Savings 111,897 116,172 119,750 115,785 115,571 Money market accounts 713,383 673,375 660,691 630,173 611,498 Certificates of deposit - Retail 165,834 157,067 151,730 151,833 156,132 --------- --------- --------- --------- ---------Subtotal "customer" deposits 1,932,919 1,832,168 1,690,285 1,632,250 1,567,563 IB Demand - Brokered 138,000 138,000 138,011 10,000 - Certificates of deposit - Brokered 132,500 145,000 65,000 5,000 5,000 --------- --------- --------- --------- ---------Total deposits 2,203,419 2,115,168 1,893,296 1,647,250 1,572,563 Overnight borrowings - - 79,400 54,900 30,361Federal home loan bank advances 83,692 83,692 83,692 74,692 47,692Capital lease obligation 9,734 9,836 9,917 8,754 8,809Other liabilities 12,646 9,942 9,308 10,695 11,861Due to brokers, securities settlements 16,960 - - - - --------- --------- --------- --------- --------- TOTAL LIABILITIES 2,326,451 2,218,638 2,075,613 1,796,291 1,671,286Shareholders' equity 188,070 182,333 175,872 170,657 126,418 --------- --------- --------- --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $2,514,521 $2,400,971 $2,251,485 $1,966,948 $1,797,704 ========= ========= ========= ========= ========= Assets under administration at Peapack-Gladstone Bank's Wealth Management Division(market value, not included above) $2,857,727 $2,843,310 $2,745,955 $2,690,601 $2,581,813 ========= ========= ========= ========= ========= PEAPACK-GLADSTONE FINANCIAL CORPORATION SELECTED BALANCE SHEET DATA (Dollars in Thousands) (Unaudited) As of -------------------------------------------------- Sept 30, June 30, March 31, Dec 31, Sept 30, 2014 2014 2014 2013 2013 -------- -------- --------- -------- --------Asset Quality:Loans past due over 90 days and still accruing $ - $ - $ - $ - $ -Nonaccrual loans (A) 8,790 6,536 7,473 6,630 6,891Other real estate owned 949 1,036 2,062 1,941 2,759 -------- -------- --------- -------- -------- Total nonperforming assets (A) $ 9,739 $ 7,572 $ 9,535 $ 8,571 $ 9,650 ======== ======== ========= ======== ======== Nonperforming loans to total loans (A) 0.43% 0.35% 0.42% 0.42% 0.49%Nonperforming assets to total assets (A) 0.39% 0.32% 0.42% 0.44% 0.54% Accruing TDR's (B) $ 13,045 $ 12,730 $ 12,340 $ 11,114 $ 6,133 Loans past due 30 through 89 days and still accruing $ 2,278 $ 1,536 $ 5,027 $ 2,953 $ 2,039 Classified loans (A) $ 34,752 $ 34,929 $ 35,075 $ 33,828 $ 32,430 Impaired loans (A) $ 21,834 $ 19,813 $ 19,814 $ 17,744 $ 16,794 Allowance for loan losses: Beginning of period $ 17,204 $ 16,587 $ 15,373 $ 14,056 $ 13,438 Provision for loan losses 1,150 1,150 1,325 1,325 750 Charge-offs, net (55) (533) (111) (8) (132) -------- -------- --------- -------- -------- End of period 18,299 17,204 16,587 15,373 14,056 ======== ======== ========= ======== ======== ALLL to nonperforming loans 208.18% 263.22% 221.96% 231.87% 203.98%ALLL to total loans 0.90% 0.92% 0.94% 0.98% 1.01% Capital AdequacyTier 1 leverage 7.57% 8.01% 8.48% 9.00% 7.20% Tier I capital to risk weighted assets 12.16% 13.05% 13.09% 14.07% 11.30% Tier I & II capital to risk-weighted assets 13.36% 14.30% 14.34% 15.33% 12.55% Common equity to total Assets 7.48% 7.59% 7.81% 8.68% 7.03%(End of period) Book value per share (C) (D) $ 15.80 $ 15.48 $ 15.08 $ 14.79 $ 14.12 (A) September 30, 2014 amount includes a $1.5 million commercial nonaccrual loan that was paid in full on October 8, 2014. (B) Does not include $2.4 million at September 30, 2014, $2.5 million at June 30, 2014, $3.0 million at March 31, 2014, $2.9 million at December 31, 2013, and $3.3 million at September 30, 2013 of TDR's included in nonaccrual loans. (C) Shares included in the book value per share calculation are shares outstanding at period end less the restricted shares that have not yet vested. (D) Tangible book value per share was $15.75 at September 30, 2014, $15.43 at June 30, 2014, $15.03 at March 31, 2014, $14.75 at December 31, 2013, and $14.02 at September 30, 2013. Tangible book value per share is different than book value per share because it excludes intangible assets. See Non-GAAP financial measures reconciliation included in these tables. PEAPACK-GLADSTONE FINANCIAL CORPORATION LOANS CLOSED (Dollars in Thousands) (Unaudited) For the Quarters Ended ------------------------------------------------- Sept 30, June 30, March 31, Dec 31, Sept 30, 2014 2014 2014 2013 2013 -------- -------- --------- -------- -------- Residential loans retained $ 20,540 $ 17,245 $ 11,653 $ 20,135 $ 31,517Residential loans sold 5,561 7,344 7,011 11,743 13,516 -------- -------- --------- -------- --------Total residential loans 26,101 24,589 18,664 31,878 45,033 CRE 3,208 20,175 15,841 11,972 20,357Multifamily 105,584 149,937 225,143 152,456 143,727Commercial loans (includes Community banking) 74,029 62,668 15,957 39,534 40,654 -------- -------- --------- -------- --------Total commercial loans 182,821 232,780 256,941 203,962 204,738 Installment loans 9,410 5,184 1,877 3,081 2,489 Home equity lines of credit 2,550 6,709 4,668 3,746 3,982 -------- -------- --------- -------- --------Total loan originations $ 220,882 $ 269,262 $ 282,150 $ 242,667 $ 256,242 ======== ======== ========= ======== ======== For the Nine Months Ended Sept 30, Sept 30, 2014 2013 ---------- ----------Residential loans retained $ 49,438 $ 100,299Residential loans sold 19,916 65,569 ---------- ----------Total residential loans 69,354 165,868 CRE 39,224 46,927Multifamily 480,664 242,252Commercial loans (includes Community banking) 152,654 65,400Total commercial loans 672,542 354,579 Installment loans 16,471 4,915 Home equity lines of credit 13,927 11,053 ---------- ----------Total loan originations $ 772,294 $ 536,415 ---------- ---------- PEAPACK-GLADSTONE FINANCIAL CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in Thousands, except share data) (Unaudited) For the Three Months Ended -------------------------------------------------------------- Sept 30, June 30, March 31, Dec 31, Sept 30, 2014 2014 2014 2013 2013 ---------- ---------- ---------- --------- ---------Income Statement Data:Interest income $ 19,210 $ 18,630 $ 16,949 $ 15,738 $ 14,423Interest expense 2,162 1,707 1,378 1,210 1,050 ---------- ---------- ---------- --------- --------- Net interest income 17,048 16,923 15,571 14,528 13,373Provision for loan losses 1,150 1,150 1,325 1,325 750 ---------- ---------- ---------- --------- --------- Net interest income after provision for loan losses 15,898 15,773 14,246 13,203 12,623Wealth management fee income 3,661 4,005 3,754 3,547 3,295Gain on loans held for sale at fair value (Mortgage banking) 87 112 112 171 277(Loss)/Gain on loans held for sale at lower of cost or fair value (7) 176 - - -Other income 1,272 1,101 1,031 1,130 1,022Securities gains, net 39 79 98 125 188 ---------- ---------- ---------- --------- --------- Total other income 5,052 5,473 4,995 4,973 4,782 ---------- ---------- ---------- --------- ---------Salaries and employee benefits 9,116 9,089 8,848 8,308 8,927Premises and equipment 2,564 2,334 2,438 2,947 2,325FDIC insurance expense 350 303 275 286 275Other expenses 2,663 3,204 2,778 3,105 2,638 ---------- ---------- ---------- --------- --------- Total operating expenses 14,693 14,930 14,339 14,646 14,165 ---------- ---------- ---------- --------- ---------Income before income taxes 6,257 6,316 4,902 3,530 3,240Income tax expense 2,393 2,533 1,871 1,135 1,276 ---------- ---------- ---------- --------- ---------Net income $ 3,864 $ 3,783 $ 3,031 $ 2,395 $ 1,964 ========== ========== ========== ========= ========= Total revenue $ 22,100 $ 22,396 $ 20,566 $ 19,501 $ 18,155 ========== ========== ========== ========= ========= Per Common Share Data: Earnings per share (basic) $ 0.33 $ 0.32 $ 0.26 $ 0.25 $ 0.22Earnings per share (diluted) 0.32 0.32 0.26 0.25 0.22 Weighted average number of Common shares outstanding:Basic 11,841,777 11,720,329 11,606,933 9,638,913 8,950,931Diluted 11,956,356 11,845,148 11,710,940 9,746,550 9,013,419 Performance Ratios: Return on average assets annualized 0.63% 0.67% 0.59% 0.51% 0.45%Return on average common equity annualized 8.35% 8.44% 7.01% 7.42% 6.28% Net interest margin (Taxable equivalent basis) 2.89% 3.14% 3.18% 3.26% 3.28% Efficiency ratio (A) 66.58% 67.43% 70.06% 75.59% 78.84% Operating expenses / average assets annualized 2.39% 2.65% 2.78% 3.10% 3.26% (A) Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities). See Non-GAAP financial measures reconciliation included in these tables. PEAPACK-GLADSTONE FINANCIAL CORPORATION SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in Thousands, except share data) (Unaudited) For the Nine Months Ended Sept 30,Income Statement Data: 2014 2013 ---------- ----------Interest income $ 54,789 $ 41,315Interest expense 5,247 3,067 ---------- ---------- Net interest income 49,542 38,248Provision for loan losses 3,625 2,100 ---------- ---------- Net interest income after provision for loan losses 45,917 36,148Wealth management fee income 11,420 10,291Gain on loans held for sale at fair value (Mortgage banking) 310 1,138Gain on loans held for sale at lower of cost or fair value 169 522Other income 3,405 2,956Securities gains, net 216 715 ---------- ---------- Total other income 15,520 15,622 ---------- ----------Salaries and employee benefits 27,053 23,941Premises and equipment 7,336 6,967FDIC insurance expense 928 835Other expenses 8,645 8,794 ---------- ---------- Total operating expenses 43,962 40,537 ---------- ----------Income before income taxes 17,475 11,233Income tax expense 6,797 4,367 ---------- ----------Net income $ 10,678 $ 6,866 ========== ========== Total revenue (See footnote (A) below) $ 65,062 $ 53,870 ========== ========== Per Common Share Data: Earnings per share (basic) $ 0.91 $ 0.77Earnings per share (diluted) 0.90 0.76 Weighted average number of Common Shares outstandingBasic 11,723,873 8,910,514Diluted 11,833,507 8,976,905 Performance Ratios: Return on average assets annualized 0.63% 0.55%Return on average common equity annualized 7.95% 7.35% Net interest margin (Taxable equivalent basis) 3.06% 3.26% Efficiency ratio (B) 67.97% 76.26% Operating expenses / average assets annualized 2.60% 3.22% 

 (A) Total revenue includes a $176 thousand gain (for 2014) and a $522 thousand gain (for 2013) from sale of loans held for sale at lower of cost or fair value. Excluding these gains, total revenue was $64,886 (for 2014) and $53,348 (for 2013). (B) Calculated as (total operating expenses) as a percentage of (net interest income plus noninterest income less gain on securities). See Non-GAAP financial measures reconciliation included in these tables. PEAPACK-GLADSTONE FINANCIAL CORPORATION AVERAGE BALANCE SHEET UNAUDITED THREE MONTHS ENDED (Tax-Equivalent Basis, Dollars in Thousands) September 30, 2014 September 30, 2013 ------------------------- ------------------------- Average Income/ Average Income/ Balance Expense Yield Balance Expense Yield --------- ------- ----- --------- ------- -----ASSETS:Interest-Earning Assets: Investments: Taxable (1) $ 192,207 $ 960 2.00% $ 237,559 $ 1,141 1.92% Tax-exempt (1) (2) 47,701 268 2.25 54,465 328 2.41 Loans held for sale 1,026 10 3.90 1,617 21 5.27 Loans (2) (3): Mortgages 464,227 3,879 3.34 543,722 4,611 3.39 Commercial mortgages 1,231,798 11,790 3.83 595,073 6,453 4.34 Commercial 166,092 1,597 3.85 108,042 1,264 4.68 Commercial construction 6,029 65 4.31 8,173 105 5.14 Installment 24,965 249 3.99 19,672 216 4.39 Home equity 48,371 394 3.26 47,562 401 3.37 Other 563 13 9.24 598 15 10.03 --------- ------- ----- --------- ------- ----- Total loans 1,942,045 17,987 3.70 1,322,842 13,065 3.95 --------- ------- ----- --------- ------- ----- Federal funds sold 101 - 0.10 101 - 0.10 Interest-earning deposits 197,705 109 0.22 35,168 21 0.24 --------- ------- ----- --------- ------- ----- Total interest- earning assets 2,380,785 19,334 3.25% 1,651,752 14,576 3.53% --------- ------- ----- --------- ------- -----Noninterest-Earning Assets: Cash and due from banks 6,262 5,962 Allowance for loan losses (17,720) (13,615) Premises and equipment 30,985 28,984 Other assets 60,717 65,163 --------- --------- Total noninterest- earning assets 80,244 86,494 --------- ---------Total assets $2,461,029 $1,738,246 ========= ========= LIABILITIES:Interest-Bearing deposits: Checking $ 541,920 $ 232 0.17% $ 349,392 $ 73 0.08% Money markets 689,721 430 0.25 580,819 275 0.19 Savings 113,802 15 0.05 115,711 15 0.05 Certificates of deposit - retail 158,472 357 0.90 160,347 429 1.07 --------- ------- ----- --------- ------- ----- Subtotal interest- bearing deposits 1,503,915 1,034 0.28 1,206,269 792 0.26 Interest-bearing demand - brokered 138,000 84 0.24 - - - Certificates of deposit - brokered 144,872 550 1.52 5,000 15 1.20 --------- ------- ----- --------- ------- ----- Total interest- bearing deposits 1,786,787 1,668 0.37 1,211,269 807 0.27 --------- ------- ----- --------- ------- ----- Borrowings 83,692 377 1.80 45,149 138 1.22 Capital lease obligation 9,770 117 4.79 8,828 105 4.76 --------- ------- ----- --------- ------- ----- Total interest- bearing liabilities 1,880,249 2,162 0.46 1,265,246 1,050 0.33 --------- ------- ----- --------- ------- -----Noninterest -bearing liabilities Demand deposits 383,423 337,684 Accrued expenses and other liabilities 12,165 10,241 --------- --------- Total noninterest- bearing liabilities 395,588 347,925Shareholders' equity 185,192 125,075 --------- --------- Total liabilities and shareholders' equity $2,461,029 $1,738,246 ========= =========Net interest income $ 17,172 $ 13,526 ======= ======= Net interest spread 2.79% 3.20% ===== ===== Net interest margin (4) 2.89% 3.28% ===== ===== (1) Average balances for available for sale securities are based on amortized cost. (2) Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. (3) Loans are stated net of unearned income and include nonaccrual loans. (4) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. PEAPACK-GLADSTONE FINANCIAL CORPORATION AVERAGE BALANCE SHEET UNAUDITED THREE MONTHS ENDED (Tax-Equivalent Basis, Dollars in Thousands) September 30, 2014 June 30, 2014 -------------------------- -------------------------- Average Income/ Average Income/ Balance Expense Yield Balance Expense Yield --------- ------- ----- --------- ------- -----ASSETS:Interest-Earning Assets: Investments: Taxable (1) $ 192,207 $ 960 2.00% $ 189,254 $ 977 2.06% Tax-exempt (1) (2) 47,701 268 2.25 57,847 312 2.16 Loans held for sale 1,026 10 3.90 1,026 15 5.89 Loans (2) (3): Mortgages 464,227 3,879 3.34 496,232 4,203 3.39 Commercial mortgages 1,231,798 11,790 3.83 1,155,360 11,108 3.85 Commercial 166,092 1,597 3.85 143,988 1,443 4.01 Commercial construction 6,029 65 4.31 6,065 65 4.29 Installment 24,965 249 3.99 22,154 233 4.21 Home equity 48,371 394 3.26 47,489 382 3.22 Other 563 13 9.24 558 13 9.32 --------- ------- ----- --------- ------- ----- Total loans 1,942,045 17,987 3.70 1,871,846 17,447 3.73 --------- ------- ----- --------- ------- ----- Federal funds sold 101 - 0.10 101 - 0.10 Interest-earning deposits 197,705 109 0.22 51,177 21 0.17 --------- ------- ----- --------- ------- ----- Total interest- earning assets 2,380,785 19,334 3.25% 2,171,251 18,772 3.46% --------- ------- ----- --------- ------- -----Noninterest-Earning Assets: Cash and due from banks 6,262 6,990 Allowance for loan losses (17,720) (17,310) Premises and equipment 30,985 31,161 Other assets 60,717 58,926 --------- --------- Total noninterest- earning assets 80,244 79,767 --------- ---------Total assets $2,461,029 $2,251,018 ========= ========= LIABILITIES:Interest-Bearing deposits: Checking $ 541,920 $ 232 0.17% 431,656 $ 115 0.11% Money markets 689,721 430 0.25 657,216 374 0.23 Savings 113,802 15 0.05 116,946 15 0.05 Certificates of deposit - retail 158,472 357 0.90 154,245 369 0.96 --------- ------- ----- --------- ------- ----- Subtotal interest- bearing deposits 1,503,915 1,034 0.28 1,360,063 873 0.26 Interest-bearing demand - brokered 138,000 84 0.24 138,000 70 0.20 Certificates of deposit - brokered 144,872 550 1.52 100,934 264 1.05 --------- ------- ----- --------- ------- ----- Total interest- bearing deposits 1,786,787 1,668 0.37 1,598,997 1,207 0.30 --------- ------- ----- --------- ------- ----- Borrowings 83,692 377 1.80 93,152 382 1.64 Capital lease obligation 9,770 117 4.79 9,867 118 4.78 --------- ------- ----- --------- ------- ----- Total interest- bearing liabilities 1,880,249 2,162 0.46 1,702,016 1,707 0.40 --------- ------- ----- --------- ------- -----Noninterest -bearing liabilities Demand deposits 383,423 360,096 Accrued expenses and other liabilities 12,165 9,606 --------- --------- Total noninterest- bearing liabilities 395,588 369,702Shareholders' equity 185,192 179,300 --------- --------- Total liabilities and shareholders' equity $2,461,029 $2,251,018 ========= =========Net interest income $ 17,172 $ 17,065 ======= ======= Net interest spread 2.79% 3.06% ===== ===== Net interest margin (4) 2.89% 3.14% ===== ===== PEAPACK-GLADSTONE FINANCIAL CORPORATION AVERAGE BALANCE SHEET UNAUDITED NINE MONTHS ENDED (Tax-Equivalent Basis, Dollars in Thousands) September 30, 2014 September 30, 2013 -------------------------- -------------------------- Average Income/ Average Income/ Balance Expense Yield Balance Expense Yield --------- ------- ----- --------- ------- -----ASSETS:Interest-Earning Assets: Investments: Taxable (1) $ 196,313 $ 2,998 2.04% $ 235,677 $ 3,503 1.98% Tax-exempt (1) (2) 55,209 917 2.21 51,582 974 2.52 Loans held for sale 1,124 35 4.17 6,950 268 5.14 Loans (2) (3): Mortgages 497,692 12,635 3.38 533,697 14,065 3.51 Commercial mortgages 1,108,732 31,943 3.84 504,444 16,888 4.46 Commercial 147,666 4,442 4.01 107,095 3,752 4.67 Commercial construction 5,989 197 4.39 8,853 317 4.77 Installment 22,906 710 4.13 20,228 670 4.42 Home equity 47,569 1,149 3.22 47,447 1,153 3.24 Other 562 39 9.25 605 44 9.70 --------- ------- ----- --------- ------- ----- Total loans 1,831,116 51,115 3.72 1,222,369 36,889 4.02 --------- ------- ----- --------- ------- ----- Federal funds sold 101 - 0.10 101 - 0.10 Interest-earning deposits 94,120 142 0.20 68,211 135 0.26 --------- ------- ----- --------- ------- ----- Total interest- earning assets 2,177,983 55,207 3.38% 1,584,890 41,769 3.51% --------- ------- ----- --------- ------- ----- Noninterest-Earning Assets: Cash and due from banks 6,548 5,887 Allowance for loan losses (17,012) (13,406) Premises and equipment 30,966 29,344 Other assets 60,216 70,674 --------- --------- Total noninterest- earning assets 80,718 92,499 --------- ---------Total assets $2,258,701 $1,677,389 ========= ========= LIABILITIES:Interest-Bearing deposits: Checking $ 458,811 $ 438 0.13% $ 351,975 $ 225 0.09% Money markets 666,986 1,137 0.23 561,713 729 0.17 Savings 115,746 45 0.05 113,486 44 0.05 Certificates of deposit - retail 154,091 1,081 0.94 166,235 1,385 1.11 --------- ------- ----- --------- ------- ----- Subtotal interest- bearing deposits 1,395,634 2,701 0.26 1,193,409 2,383 0.27 Interest-bearing demand - brokered 117,348 198 0.22 - - - Certificates of deposit - brokered 86,986 845 1.30 5,000 45 1.20 --------- ------- ----- --------- ------- ----- Total interest- bearing deposits 1,599,968 3,744 0.31 1,198,409 2,428 0.27 --------- ------- ----- --------- ------- ----- Borrowings 97,359 1,149 1.57 23,226 322 1.85 Capital lease obligation 9,861 354 4.79 8,882 317 4.76 --------- ------- ----- --------- ------- ----- Total interest- bearing liabilities 1,707,188 5,247 0.41 1,230,517 3,067 0.33 --------- ------- ----- --------- ------- ----- Noninterest-bearing liabilities Demand deposits 361,726 313,420 Accrued expenses and other liabilities 10,597 8,887 --------- --------- Total noninterest- bearing liabilities 372,323 322,307 Shareholders' equity 179,190 124,565 --------- --------- Total liabilities and shareholders' equity $2,258,701 $1,677,389 ========= ========= Net interest income $ 49,960 $ 38,702 ======= ======= Net interest spread 2.97% 3.18% ===== ===== Net interest margin (4) 3.06% 3.26% ===== ===== (1) Average balances for available for sale securities are based on amortized cost. (2) Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. (3) Loans are stated net of unearned income and include nonaccrual loans. (4) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. PEAPACK-GLADSTONE FINANCIAL CORPORATION NON-GAAP FINANCIAL MEASURES RECONCILIATION 

Tangible book value per share and tangible equity as a percentage of tangible assets at period end are non-GAAP financial measures derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders' equity and total assets, respectively. We calculate tangible book value per share by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested, as compared to book value per common share, which we calculate by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

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

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

 Non-GAAP Financial Reconciliation (Dollars in thousands) Three Months Ended Tangible Book Value Sept 30, June 30, March 31, Dec 31, Sept 30, Per Share 2014 2014 2014 2013 2013 ---------- ---------- ---------- ---------- ---------Shareholders' equity $ 188,070 $ 182,333 $ 175,872 $ 170,657 $ 126,418Less: Intangible assets 563 563 563 563 563 ---------- ---------- ---------- ---------- --------- Tangible equity 187,507 181,770 175,309 170,094 125,855 Period end shares outstanding 12,286,821 12,154,150 12,032,913 11,788,517 9,078,236Less: Restricted shares not yet vested 382,252 376,134 368,608 253,540 103,156 ---------- ---------- ---------- ---------- ---------Total outstanding shares 11,904,569 11,778,016 11,664,305 11,534,977 8,975,080Tangible book value per share 15.75 15.43 15.03 14.75 14.02Book value per share 15.80 15.48 15.08 14.79 14.12 Tangible Equity to Tangible Assets Total Assets 2,514,521 2,400,971 2,251,485 1,966,948 1,797,704 Less: Intangible assets 563 563 563 563 563 ---------- ---------- ---------- ---------- --------- Tangible assets 2,513,958 2,400,408 2,250,922 1,966,385 1,797,141 Tangible equity to tangible assets 7.46% 7.57% 7.79% 8.65% 7.00% Equity to assets 7.48% 7.59% 7.81% 8.68% 7.03% Three Months Ended Sept June March Dec Sept 30, 30, 31, 31, 30,Efficiency Ratio 2014 2014 2014 2013 2013 ------ ------ ------- ------ ------ Net interest income $17,048 $16,923 $ 15,571 $14,528 $13,373Total other income 5,052 5,473 4,995 4,973 4,782Less: (Loss)/gain on loans held for sale at lower of cost or fair value (7) 176 - - -Less: Securities gains, net 39 79 98 125 188 ------ ------ ------- ------ ------Total recurring revenue 22,068 22,141 20,468 19,376 17,967 ------ ------ ------- ------ ------ ------ ------ ------- ------ ------Total operating expenses 14,693 14,930 14,339 14,646 14,165 ------ ------ ------- ------ ------ Efficiency ratio 66.58% 67.43% 70.06% 75.59% 78.84% Nine Months Ended Sept 30, Sept 30,Efficiency Ratio 2014 2013 --------- --------- Net interest income $ 49,542 $ 38,248Total other income 15,520 15,622Less: (Loss)/gain on loans held for sale at lower of cost or fair value 169 -Less: Securities gains, net 216 715 --------- ---------Total recurring revenue 64,677 53,155 --------- --------- --------- ---------Total operating expenses 43,962 40,537 --------- --------- Efficiency ratio 67.97% 76.26% 

Contact:
Jeffrey J. Carfora
SEVP and CFO
Peapack-Gladstone Financial Corporation
T: 908-719-4308

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