Peapack-Gladstone Financial Corporation Reports a Strong Second Quarter and Declares Its Quarterly Cash Dividend

BEDMINSTER, NJ--(Marketwired - Jul 28, 2016) - Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the "Corporation" or the "Company") recorded record net income of $12.05 million and diluted earnings per share of $0.74 for the six months ended June 30, 2016, compared to $10.25 million and $0.67, respectively, for the same six month period last year, reflecting increases of $1.81 million or 18 percent, and $0.07 per share, or 10 percent, respectively.

For the quarter ended June 30, 2016, the Corporation recorded net income of $6.56 million and diluted earnings per share of $0.40, compared to $5.24 million and $0.34 for the same three month period last year, reflecting increases of $1.33 million, or 25 percent, and $0.06 per share, or 18 percent, respectively.

During the second quarter of 2016, similar to the first quarter of 2016, the Company recorded increased FDIC premiums and increased investment in risk management related analytics and practices. The additional FDIC premium was estimated at $950 thousand, which reduced net income by $585 thousand and diluted earnings per share by approximately $0.04 per share, for the quarter.

The following table summarizes specified financial measures for the second quarters of 2016 and 2015, respectively:

		June				June				Increase/
(Dollars in millions, except EPS)		2016 (A)				2015				(Decrease)
Net interest income		$	24.18			$	20.34			$	3.84			19	%
Provision for loan losses		$	2.20			$	2.20			$	-			-	%
Pretax income		$	10.65			$	8.38			$	2.27			27	%
Net income		$	6.56			$	5.24			$	1.32			25	%
Diluted EPS		$	0.40			$	0.34			$	0.06			18	%
Total revenue		$	31.62			$	26.84			$	4.78			18	%
Return on average assets			0.73	%			0.70	%			0.03			4	%
Return on average equity			9.06	%			8.24	%			0.82			10	%
Efficiency ratio (B)			60.36	%			61.00	%			(0.64	)		(1)	%
Book value per share		$	18.08			$	17.02			$	1.06			6	%

(A)		The quarter ended June 2016 included $950 thousand of additional charges related to increased FDIC premiums, as described on the prior page. These charges reduced pretax income by $950 thousand, net income by $585 thousand, diluted earnings per share by $0.04 per share, ROAA by 0.06%, and ROAE by 0.80%, and increased the efficiency ratio by 3.06%.
(B)		See Non-GAAP financial measures reconciliation table on page 28.

Mr. Kennedy said, "We had a very strong second quarter of 2016, as we continued to successfully execute our Plan - Expanding Our Reach. We posted record net income and near record earnings per share, despite the additional FDIC premium expense." 

Additional Q2 2016 highlights follow:

• Growth in diluted EPS for Q2 2016 when compared to Q2 2015 was $0.06 per share, or 18 percent, despite the additional expenses incurred in Q2 2016.
• At June 30, 2016, the market value of assets under administration (AUA) at the Private Wealth Management Division of Peapack-Gladstone Bank ("the Bank") stood at $3.42 billion. 
• Fee income from the Private Wealth Management Division totaled $4.9 million for the second quarter of 2016, compared to $4.5 million for the same quarter in 2015. Wealth management fee income, at approximately 15 percent of the Company's total revenue, contributed significantly to the Company's diversified revenue sources.
• Loans at June 30, 2016, including multifamily loans held for sale, totaled $3.21 billion. This reflected net growth of $143 million compared to the prior quarter (5 percent compared to the prior quarter or 19 percent on an annualized basis), and $467 million (17 percent) when compared to the $2.74 billion at June 30, 2015.
• Commercial & Industrial (C&I) loans at June 30, 2016 totaled $576 million. This reflected net growth of $21 million compared to the prior quarter (4 percent compared to the prior quarter or 15 percent on an annualized basis), and net growth of $138 million (31 percent) when compared to the $438 million at June 30, 2015.
• Multifamily whole loans sold totaled $80 million in the second quarter of 2016, which resulted in a net gain on sale of $500 thousand. 
• Total "customer" deposit balances (defined as deposits excluding brokered CDs and brokered "overnight" interest-bearing demand deposits) totaled $2.82 billion at June 30, 2016. This reflected net growth of $65 million compared to the prior quarter (2 percent compared to the prior quarter or 10 percent on an annualized basis), and $539 million (24) when compared to the $2.28 billion at June 30, 2015.
• Asset quality metrics continued to be strong at June 30, 2016. Nonperforming assets at June 30, 2016 were just $8.8 million, or 0.24 percent of total assets. Total loans past due 30 through 89 days and still accruing were $6.6 million or 0.21 percent of total loans at June 30, 2016.
• The Company's net interest income for the second quarter of 2016 was $24.2 million, reflecting growth of $766 thousand (3 percent for the quarter or 13 percent on an annualized basis) when compared to $23.4 million for the March 2016 quarter, and growth of $3.83 million (19 percent) when compared to the $20.34 million for the quarter ended June 30, 2015.
• The Company's book value per share at June 30, 2016 of $18.08 reflected improvement when compared to $17.02 at June 30, 2015. Year over year growth in book value per share totaled 6 percent.

Mr. Kennedy noted, "We were very pleased with our progress in 2015, and continue to be pleased with our progress thus far in 2016. As I described earlier this year, we did see some headwinds going into 2016. Despite those headwinds, we have delivered solid results again this quarter."

Net Interest Income / Net Interest Margin

Net interest income and net interest margin was $24.18 million and 2.79 percent for the second quarter of 2016, compared to $23.41 million and 2.82 percent for the first quarter of 2016, and compared to $20.34 million and 2.80 percent for the same quarter last year, reflecting growth in net interest income of $3.83 million or 19 percent when compared to the same prior year period. Net interest income for the second quarter of 2016 benefitted from loan growth during 2015 and the first quarter of 2016. Additionally, the June 2016 quarter included approximately $452 thousand of prepayment premiums received on the prepayment of certain multifamily loans, compared to $419 thousand for the March 2016 quarter, and compared to $86 thousand for the June 2015 quarter. The $452 thousand benefitted the net interest margin for the June 2016 quarter by 5 basis points.

Net interest income for the second quarter of 2016 improved considerably compared to the same quarter in 2015, and net interest margin remained relatively flat at 2.79 percent for the 2016 quarter compared to 2.80 percent for the 2015 quarter. The net interest margin continues to be impacted by the effect of the low interest rate environment throughout 2015 and 2016, as well as competitive pressures in attracting new loans and deposits.

The net interest margin is also affected by the maintenance of liquid assets on the Company's balance sheet. Mr. Kennedy said, "In addition to $288 million of cash, cash equivalents and investment securities on our balance sheet, we also have over $1 billion of secured funding available from the Federal Home Loan Bank, of which we only have $113 million drawn as of June 30, 2016."

Wealth Management Business

In the June 2016 quarter, Peapack-Gladstone Bank's wealth management business generated $4.90 million in fee income compared to $4.30 million for the March 2016 quarter, and $4.53 million for the June 2015 quarter.  

Fee income for the June 2016 quarter was $604 thousand higher than the March 2016 quarter. The second quarter (June quarter) of each year historically reflects a high level of tax preparation income related to the Bank's wealth management clients. Additionally, the June 2016 quarter benefitted from continued new business, as well as positive market action relative to March 2016 quarter levels.

Fee income for the June 2016 quarter was $367 thousand, or approximately 8 percent greater than the June 2015 quarter. Growth in fee income was due to several factors including: the acquisition of Wealth Management Consultants, LLC ("WMC") which closed in May 2015; continued healthy new business results; and higher yields on new business as compared to lost/closed business. These contributions to increased revenue were partially offset by the broader market declines in the second half of 2015, as well as the first quarter of 2016, which negatively impacted investment fee revenue. 

The market value of the assets under administration (AUA) of the wealth management division was $3.42 billion at June 30, 2016, increasing by $111 million, or 3 percent (13 percent on an annualized basis), from March 31, 2016 and decreasing $27 million, or less than one percent, from $3.45 billion at June 30, 2015, principally due to the broader market declines noted above.

Mr. John Babcock, President of Private Wealth Management, said, "We continue to incorporate wealth into every conversation we have with all of the Company's clients, across all business lines. We will continue to grow our professional team as well as expand our products, services, and the advice we deliver to our clients, through strategic hires, wealth management acquisitions, and organically." Mr. Babcock went on to note, "While the broader market declines in the second half of 2015 and the beginning of 2016 impacted fee revenue, we were still able to generate fee income in the June quarter greater than the June quarter of 2015 due to new business and positive net flows. We are cautiously optimistic about the market in the medium-to-longer term, we have a healthy new business pipeline and we continue to attract new clients every month. Notwithstanding market fluctuation, our business continues to grow and will be a significant driver to enhancing shareholder value as we move ahead."

Loan Originations / Loans

At June 30, 2016, loans, including multifamily loans held for sale, totaled $3.21 billion compared to $3.07 billion three months ago at March 31, 2016 and compared to $2.74 billion one year ago at June 30, 2015, representing net increases of $143 million compared to the prior quarter (5 percent compared to the prior quarter or 19 percent on an annualized basis), and $467 million (17 percent) compared to the prior year June 30^th period. Mr. Kennedy noted, "We believe we have a very high quality loan portfolio, as evidenced by having no construction loans, and very strong asset quality metrics."

For the quarter ended June 30, 2016, residential mortgage originations totaled $53 million. In 2015, we successfully repositioned our residential mortgage business to serve as a lead product supporting new wealth business, as well as other banking relationships. We believe that residential mortgage volumes will increase through the remainder of 2016.

For the June 2016 quarter, commercial real estate originations (not including multifamily loans) totaled $37 million. When comparing June 30, 2016 to June 30, 2015, commercial real estate mortgage loans (not including multifamily loans) grew $84 million, or 22 percent, to $460 million at June 30, 2016 from $375 million one year ago at June 30, 2015.

The June 2016 quarter included $151 million of multifamily loan originations, slightly higher than the previous quarter, but down significantly from the same 2015 quarter.

At June 30, 2016, the multifamily loan portfolio, including multifamily loans held for sale, totaled $1.56 billion (or 48.7 percent of total loans) compared to $1.53 billion (or 49.8 percent of total loans) three months ago at March 31, 2016 and compared to $1.50 billion (or 50.0 percent of total loans) at December 31, 2015. The increases were net of whole loans sold and participations, including $80 million of whole loans sold in the June 2016 quarter bringing the total whole loans sold or participated for 2016 to $138 million. These loan sales and participations were part of the Company's balance sheet management strategy and will likely continue in 2016.

Mr. Kennedy said, "As I explained over the last several quarters, we anticipated multifamily loan originations and growth would be less than prior years, as we manage our balance sheet such that multifamily loans decline as a percentage of the overall loan portfolio and C&I loans become a larger percentage of the overall loan portfolio. We made progress on this front late in 2015, and we are pleased this has continued into 2016." "Mr. Kennedy further noted that, "This balance sheet management will likely not be linear each quarter, but will rather be apparent over periods of time."

For the quarter ended June 30, 2016 the Company closed $61 million of commercial loans. When comparing June 30, 2016 to June 30, 2015, commercial loans grew $138 million, or 31 percent, to $576 million at June 30, 2016 from $438 million one year ago at June 30, 2015. At June 30, 2016 the commercial loan portfolio comprised 18 percent of the overall loan portfolio, up from 16 percent one year ago at June 30, 2015. 

Mr. Kennedy said, "As a result of our continued investment in and commitment to C&I banking, including the addition in 2015 and 2016, as well as future planned additions, of highly regarded bankers with industry and capital markets expertise, and the addition of Eric H. Waser, Head of Commercial Banking in 2015, we have seen, and believe will continue to see, our C&I client base and corresponding loan portfolio grow."

Mr. Kennedy went on to say, "Our private banking business model of addressing the sophisticated needs and expectations of successful business owners and entrepreneurs is being well received. The ability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enables us to provide a unique boutique level of service to business owners and middle market clients." 

Deposits / Funding / Balance Sheet Management

In June 2016, the Company issued $50 million of subordinated debt ($48.7 million net of underwriting fees and expenses) bearing interest at an annual rate of 6 percent for the first five years, and thereafter at an adjustable rate and until maturity in June 2026 or earlier redemption.  

During the June 2016 quarter, customer deposit growth of $65 million (principally noninterest-bearing and money market), the subordinated debt issuance of $49 million (net), and increased capital of $12 million, basically funded net asset growth of $139 million.

Brokered interest-bearing demand ("overnight") deposits continued to be managed flat at $200 million at June 30, 2016. The interest rate paid on these deposits allowed the Bank to fund at attractive rates and engage in interest rate swaps as part of its asset-liability interest rate risk management. The Company ensures ample available collateralized liquidity as a backup to these short term brokered deposits.

From a liquidity/funding perspective, such brokered deposits, at a direct cost of approximately 55 basis points (excluding costs of hedging), are generally a more cost effective alternative than borrowings which require pledged collateral when drawn, as secured wholesale borrowings do. From a balance sheet management perspective, the rate paid on these short term brokered deposits enables their use in swap transactions for an efficient hedging/interest rate risk management program. As of June 30, 2016, the Company had transacted pay fixed, receive floating interest rate swaps totaling $180 million notional amount.

Mr. Kennedy noted, "The Company will continue to place an intense focus on providing high touch client service and growing its core deposit base. Our full array of treasury management solutions will help support both core deposit growth and commercial lending opportunities."

Other Noninterest Income

Service charges and fees for the June 2016 quarter were $818 thousand, compared to $807 thousand for the March 2016 quarter and $837 thousand for the June 2015 quarter. Several categories have reflected improvement, including income from debit card usage as well as account analysis fees, however, overdraft/NSF fees have declined considerably.

The June 2016 quarter included $309 thousand of income from the sale of newly originated residential mortgage loans (mortgage banking), compared to $121 thousand for the March 2016 quarter, and $161 thousand in the June 2015 quarter. Originations of residential mortgage loans for sale were much higher in the June 2016 quarter, compared to the other noted periods.

There were $18 thousand of securities gains for the June 2016 quarter compared to $101 thousand for the March 2016 quarter, and $176 thousand for the June 2015 quarter. Sales of securities have been generally employed to benefit interest rate risk, prepayment risk, and/or liquidity risk. Given the shorter duration of our investment portfolio and the interest rate environment, as well as the future outlook, we anticipate such sales will continue to be a very small component of the Company's operations.

Gain on sale of multifamily loans held for sale at lower of cost or fair value was $500 thousand for the June 2016 quarter, compared to $124 thousand for the March 2016 quarter. There were no such gains in the June 2015 quarter. During the first quarter of 2016 the Company began selling whole multifamily loans, in addition to participations. The Company anticipates that it will continue to employ both of these strategies throughout 2016, and potentially beyond.

Other income was $559 thousand for the June 2016 quarter compared to $473 thousand for the March 2016 quarter, and $545 thousand for the June 2015 quarter. The second quarter of 2016 included $212 thousand of income related to the Company's SBA lending and sale program, compared to $47 thousand generated in the March 2016 quarter. The SBA program was implemented in the March 2016 quarter, and the Company anticipates it will be a part of its normal ongoing operations. The June 2015 quarter included $373 thousand of loan level, back-to-back swap income. This program is also a part of the Company's normal ongoing operations. Due to the nature of this program, it is difficult to predict timing and amount of future income.

Other improvements in other income in the June 2016 quarter included greater loan servicing fees due principally to continued multifamily loan participations, and higher unused line of credit fees associated with the C&I lending business.  

Operating Expenses

The Company's total operating expenses were $18.78 million for the quarter ended June 30, 2016, compared to $19.21 million for the March 2016 quarter and $16.27 million for the same quarter in 2015. During the second quarter of 2016, similar to the first quarter of 2016, the Company recorded increased FDIC premiums of approximately $950 thousand.  

Salary and benefits expenses for the June 2016 quarter were $11.10 million compared to $10.91 million for the March 2016 quarter, and $9.87 million for the June 2015 quarter. Strategic hiring that was in line with the Company's Plan, the acquisition of WMC, normal salary increases and increased bonus/incentive accruals associated with the Company's growth, all contributed to the increase from the June 2015 quarter to the June 2016 quarter. 

Premises and equipment expense totaled $2.74 million for the quarter ended June 30, 2016, compared to $2.86 million for the March 2016 quarter, and $2.78 million for the same quarter last year. 

FDIC insurance expense for the June 2016 quarter was $1.58 million, compared to $1.56 million for the March 2016 quarter, and $431 thousand for the June 2015 quarter. As noted previously, the June 2016 and March 2016 quarters were impacted by the increased FDIC premiums. Mr. Kennedy noted, "I said at the beginning of this year that we generally expected an approximate $950 thousand increase in our quarterly FDIC premium going forward (approximately $3.8 million for 2016). The increased expense recognized for the second and first quarters of 2016 were in line with that guidance. While we believe this increased cost will be temporary, we cannot predict when the additional FDIC premium will be eliminated."

Other expenses for the June 2016 quarter were $3.35 million, compared to $3.88 million for the March 2016 quarter and $3.19 million for the June 2015 quarter. 

Mr. Kennedy noted, "Total expenses for our second quarter of 2016 came in under budget, as we worked to manage our expenses closely." Mr. Kennedy went on to note, "At the beginning of this year I said that given our significant growth and high concentration in multifamily lending, Management had decided to accelerate approximately $2.0 million of costs over the next 3 to 12 months to ensure we adhere to best in class risk management practices. I also said that, we had originally planned for such expenditures over the next 24 to 30 months, but we felt it prudent to pull them forward."  

Provision for Loan Losses / Asset Quality

For the quarter ended June 30, 2016, the Company's provision for loan losses was $2.20 million, which is greater than the March 2016 quarter, and flat to the June 2015 quarter. Charge-offs, net of recoveries, for the second quarter of 2016 were only $302 thousand. The larger provision in the June 2016 quarter compared to the March 2016 quarter was due to loan growth, as well as greater qualitative factor allocations of the allowance, principally to C&I and Commercial Real Estate loans.

At June 30, 2016 the allowance for loan losses was $29.22 million, 363 percent of nonperforming loans and 0.93 percent of total loans, compared to $27.32 million, 375 percent of nonperforming loans and 0.90 percent of total loans at March 31, 2016, and $22.97 million, 323 percent of nonperforming loans and 0.84 percent of total loans one year prior, at June 30, 2015.

The Company's provision for loan losses and its allowance for loan losses continue to track consistently with the Company's net loan growth and asset quality metrics.

Nonperforming assets at June 30, 2016 (which does not include TDR loans that are performing in accordance with their terms) were just $8.8 million or 0.24 percent of total assets, compared to $8.1 million at both March 31, 2016 and June 30, 2015. Total loans past due 30 through 89 days and still accruing were $6.6 million at June 30, 2016, compared to $1.4 million at March 31, 2016 and $1.7 million at June 30, 2015. There were no multifamily loans past due at quarter end. The increase in past due loans in the June 2016 quarter was due to one commercial real estate loan and one jumbo residential mortgage loan, with a combined total of $4.7 million, both of which became 30 days past due. The Company believes that there is adequate collateral coverage on both loans.

Capital / Dividends

The Company's capital position in the June 2016 quarter was benefitted by net income of $6.6 million and also by $5.7 million of voluntary share purchases in the Dividend Reinvestment Plan, which continue to be a source of capital for the Company.

At June 30, 2016, the Company's GAAP capital as a percent of total assets was 8.20 percent. The Company's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 8.19 percent, 10.28 percent, 10.28 percent and 12.99 percent, respectively. The Bank's regulatory leverage, common equity tier 1, tier 1 and total risk based capital ratios were 9.21 percent, 11.56 percent, 11.56 percent and 12.58 percent, respectively. The Bank's regulatory capital ratios are all above the ratios to be considered well capitalized under regulatory guidance.

The Company's regulatory total risk based capital ratio at June 30, 2016 was benefitted by the $49 million (net) subordinated debt issuance that closed in June 2016. The Company down-streamed approximately $40 million of those proceeds to the Bank as capital, benefitting all the Bank's regulatory capital ratios.

On July 28, 2016, the Company's Board of Directors declared a regular cash dividend of $0.05 per share payable on August 25, 2016 to shareholders of record on August 11, 2016.

Mr. Kennedy said, "We continue to believe we have sufficient common equity to support our planned growth and expansion for the immediate future."

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $3.60 billion as of June 30, 2016. 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;
• the impact of anticipated higher operating expenses in 2016 and beyond;
• inability to manage our growth;
• inability to successfully integrate our expanded employee base;
• 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 environment 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 cyberattacks against our IT infrastructure and that of our IT providers;
• higher than expected FDIC insurance premiums;
• adverse weather conditions;
• inability to successfully generate new business in new geographic markets;
• inability to execute upon new business initiatives;
• 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, 2015. 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
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
			For the Three Months Ended
			June 30,				March 31,				Dec 31,				Sept 30,				June 30,
			2016 (A)				2016 (B)				2015 (C)				2015				2015
Income Statement Data:
Interest income			$	29,035			$	27,898			$	27,123			$	25,806			$	23,852
Interest expense				4,859				4,488				4,304				4,100				3,508
	Net interest income			24,176				23,410				22,819				21,706				20,344
Provision for loan losses				2,200				1,700				1,950				1,600				2,200
	Net interest income after provision for loan losses			21,976				21,710				20,869				20,106				18,144
Wealth management fee income				4,899				4,295				4,307				4,169				4,532
Service charges and fees				818				807				849				832				837
Bank owned life insurance				345				342				252				260				248
Gain on loans held for sale at fair value (Mortgage banking)				309				121				117				102				161
Gain on loans held for sale at lower of cost or fair value				500				124				-				-				-
Other income				559				473				198				164				545
Securities gains, net				18				101				-				83				176
	Total other income			7,448				6,263				5,723				5,610				6,499
Salaries and employee benefits				11,100				10,908				10,659				10,322				9,872
Premises and equipment				2,742				2,864				3,390				2,785				2,778
FDIC insurance expense				1,581				1,559				825				416				431
Other expenses				3,352				3,875				5,119				3,376				3,185
Total operating expenses				18,775				19,206				19,993				16,899				16,266
Income before income taxes				10,649				8,767				6,599				8,817				8,377
Income tax expense				4,085				3,278				2,256				3,434				3,139
Net income			$	6,564			$	5,489			$	4,343			$	5,383			$	5,238
Total revenue (See footnote (D) below)			$	31,624			$	29,673			$	28,542			$	27,316			$	26,843
Per Common Share Data:
Earnings per share (basic)			$	0.41			$	0.35			$	0.28			$	0.35			$	0.34
Earnings per share (diluted)				0.40				0.34				0.28				0.35				0.34
Weighted average number of common shares outstanding:
Basic				16,172,223				15,858,278				15,498,119				15,253,009				15,082,516
Diluted				16,341,975				16,016,972				15,721,876				15,435,939				15,233,151
Performance Ratios:
Return on average assets Annualized (ROAA)				0.73	%			0.64	%			0.51	%			0.66	%			0.70	%
Return on average equity annualized (ROAE)				9.06	%			7.83	%			6.37	%			8.19	%			8.24	%
Net interest margin (taxable equivalent basis)				2.79	%			2.82	%			2.79	%			2.75	%			2.80	%
Efficiency ratio (E)				60.36	%			65.22	%			70.05	%			61.14	%			61.00	%
Operating expenses / average assets annualized				2.08	%			2.22	%			2.36	%			2.07	%			2.16	%

(A)		The quarter ended June 2016 included $950 thousand of additional charges related to increased FDIC premiums. These charges reduced pretax income by $950 thousand, net income by $585 thousand, diluted earnings per share by $0.04 per share, ROAA by 0.06%, and ROAE by 0.80%, and increased the efficiency ratio by 3.06%.
(B)		The quarter ended March 31, 2016 included $950 thousand of additional charges related to increased FDIC premiums. These charges reduced pretax income by $950 thousand, net income by $595 thousand, diluted earnings per share by $0.03 per share, ROAA by 0.06%, and ROAE by 0.85%, and increased the efficiency ratio by 3.23%.
(C)		The quarter ended December 31, 2015 included $2.5 million of charges related to the closure of two branch offices. These charges reduced pretax income by $2.5 million, net income by $1.6 million, earnings per share by $0.10 per share, ROAA by 0.05%, and ROAE by 0.60%, and increased the efficiency ratio by 2.09%.
(D)		Total revenue includes a $500 thousand gain (for 2016) from sale of loans held for sale at lower of cost or fair value.
(E)		Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.

SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in Thousands, except share data)
(Unaudited)
			For the
			Six Months Ended
			June 30,								Change
Income Statement Data:			2016 (A)				2015				$				%
Interest income			$	56,933			$	46,213			$	10,720			23	%
Interest expense				9,347				6,286				3,061			49	%
	Net interest income			47,586				39,927				7,659			19	%
Provision for loan losses				3,900				3,550				350			10	%
	Net interest income after provision for loan losses			43,686				36,377				7,309			20	%
Wealth management fee income				9,194				8,563				631			7	%
Service charges and fees				1,625				1,642				(17	)		-1	%
Bank owned life insurance				687				785				(98	)		-12	%
Gain on loans held for sale at fair
	Value (Mortgage banking)			430				309				121			39	%
Gains on loans held for sale at lower of cost or fair value				624				-				624			N/A
Other income				1,032				638				394			62	%
Securities gains, net				119				444				(325	)		-73	%
	Total other income			13,711				12,381				1,330			11	%
Salaries and employee benefits				22,008				19,297				2,711			14	%
Premises and equipment				5,606				5,394				212			4	%
FDIC insurance expense				3,140				913				2,227			244	%
Other expenses				7,227				6,430				797			12	%
	Total operating expenses			37,981				32,034				5,947			19	%
Income before income taxes				19,416				16,724				2,692			16	%
Income tax expense				7,363				6,478				885			14	%
Net income			$	12,053			$	10,246				1,807			18	%
Total revenue (See footnote (B) below)			$	61,297			$	52,308				8,989			17	%
Per Common Share Data:
Earnings per share (basic)			$	0.75			$	0.68			$	.07			10	%
Earnings per share (diluted)				0.74				0.67				.07			10	%
Weighted average number of common shares outstanding:
Basic				16,015,251				14,996,596				1,025,859			7	%
Diluted				16,179,700				15,189,781				997,123			7	%
Performance Ratios:
Return on average assets annualized				0.68	%			0.70	%			-0.02	%		-3	%
Return on average common equity annualized				8.45	%			8.19	%			0.26	%		3	%
Net interest margin (taxable equivalent basis)				2.80	%			2.84	%			-0.04	%		-1	%
Efficiency ratio (C)				62.72	%			61.77	%			0.95	%		2	%
Operating expenses / averageassets annualized				2.15	%			2.20	%			-0.05	%		-2	%

(A)		The six months ended June 2016 included $1.90 million of additional charges related to increased FDIC premiums. These charges reduced pretax income by $1.90 million, net income by $1.18 million, diluted earnings per share by $0.08 per share, ROAA by 0.07%, and ROAE by 0.83%, and increased the efficiency ratio by 3.14%.
(B)		Total revenue includes a $624 thousand gain (for 2016) from sale of loans held for sale at lower of cost or fair value.
(C)		Calculated as (total operating expenses, excluding provision for losses on REO) as a percentage of (net interest income plus noninterest income less gain on securities and loss or gain on loans held for sale at lower of cost or fair value). See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in Thousands)
(Unaudited)
				As of
				June 30,			March 31,			Dec 31,			Sept 30,			June 30,
				2016			2016			2015			2015			2015
ASSETS
Cash and due from banks				$	18,261		$	15,872		$	11,550		$	10,695		$	6,205
Federal funds sold					101			101			101			101			101
Interest-earning deposits					62,968			61,946			58,509			65,402			32,382
	Total cash and cash equivalents				81,330			77,919			70,160			76,198			38,688
Securities available for sale					206,216			214,050			195,630			220,930			245,897
FHLB and FRB stock, at cost					14,623			13,254			13,984			11,737			15,590
Loans held for sale					4,133			3,537			1,558			27,524			745
Multifamily loans held for sale, at lower ofcost or fair value					60,291			38,066			82,200			-			-
Residential mortgage					479,839			469,084			470,869			469,865			470,863
Multifamily mortgage					1,501,915			1,489,708			1,416,775			1,444,334			1,371,139
Commercial mortgage					459,744			414,677			413,118			399,592			375,440
Commercial loans					576,169			554,871			512,886			456,611			438,461
Construction loans					-			1,392			1,401			1,409			1,417
Consumer loans					67,614			44,198			45,044			32,563			29,996
Home equity lines of credit					63,188			53,328			52,649			50,370			51,675
Other loans					430			443			500			483			2,947
	Total loans				3,148,899			3,027,701			2,913,242			2,855,227			2,741,938
	Less: Allowances for loan losses				29,219			27,321			25,856			24,374			22,969
	Net loans				3,119,680			3,000,380			2,887,386			2,830,853			2,718,969
Premises and equipment					29,199			29,609			30,246			31,310			31,637
Other real estate owned					767			861			563			330			956
Accrued interest receivable					7,733			7,497			6,820			6,839			6,451
Bank owned life insurance					43,325			43,101			42,885			32,727			32,565
Deferred tax assets, net					18,190			17,952			15,582			14,613			12,673
Other assets					19,216			19,771			17,645			15,902			13,999
	TOTAL ASSETS			$	3,604,703		$	3,465,997		$	3,364,659		$	3,268,963		$	3,118,170
LIABILITIES
Deposits:
	Noninterest-bearing demand deposits			$	469,809		$	457,730		$	419,887		$	399,200		$	386,588
	Interest-bearing demand deposits				897,210			905,479			861,697			829,970			667,847
	Savings				120,617			119,149			115,007			117,665			120,606
	Money market accounts				861,664			820,757			810,709			792,685			717,246
	Certificates of deposit - Retail				466,079			446,833			434,450			411,335			384,235
Subtotal "customer" deposits					2,815,379			2,749,948			2,641,750			2,550,855			2,276,522
	IB Demand - Brokered				200,000			200,000			200,000			243,000			293,000
	Certificates of deposit - Brokered				93,660			93,630			93,720			93,690			94,224
Total deposits					3,109,039			3,043,578			2,935,470			2,887,545			2,663,746
Overnight borrowings					29,450			21,100			40,700			-			87,500
Federal home loan bank advances					83,692			83,692			83,692			83,692			83,692
Capital lease obligation					9,961			10,092			10,222			10,350			10,475
Subordinated debt, net					48,698			-			-			-			-
Other liabilities					28,330			24,030			18,899			19,448			14,881
Due to brokers, securities settlements					-			-			-			1,528			-
		TOTAL LIABILITIES			3,309,170			3,182,492			3,088,983			3,002,563			2,860,294
	Shareholders' equity				295,533			283,505			275,676			266,400			257,876
		TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	3,604,703		$	3,465,997		$	3,364,659		$	3,268,963		$	3,118,170
Assets under administration at Peapack-Gladstone Bank's Wealth Management Division (market value, not included above)				$	3,418,566		$	3,307,799		$	3,321,624		$	3,250,835		$	3,445,939

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
			As of
			June 30,				March 31,				Dec 31,				Sept 30,				June 30,
			2016				2016				2015				2015				2015
Asset Quality:
Loans past due over 90 days and still accruing			$	-			$	-			$	-			$	-			$	-
Nonaccrual loans				8,049				7,278				6,747				7,615				7,111
Other real estate owned				767				861				563				330				956
	Total nonperforming assets		$	8,816			$	8,139			$	7,310			$	7,945			$	8,067
Nonperforming loans to total loans				0.26	%			0.24	%			0.23	%			0.27	%			0.26	%
Nonperforming assets to total assets				0.24	%			0.23	%			0.22	%			0.24	%			0.26	%
Performing TDRs (A)(B)			$	18,570			$	16,033			$	16,231			$	14,609			$	13,695
Loans past due 30 through 89 days and still accruing			$	6,576			$	1,393			$	2,143			$	2,748			$	1,744
Classified loans			$	51,084			$	48,817			$	42,777			$	41,985			$	38,676
Impaired loans			$	26,643			$	23,335			$	23,107			$	22,224			$	20,806
Allowance for loan losses:
	Beginning of period		$	27,321			$	25,856			$	24,374			$	22,969			$	20,816
	Provision for loan losses			2,200				1,700				1,950				1,600				2,200
	Charge-offs, net			(302	)			(235	)			(468	)			(195	)			(47	)
	End of period		$	29,219			$	27,321			$	25,856			$	24,374			$	22,969
ALLL to nonperforming loans				363.01	%			375.39	%			383.22	%			320.08	%			323.01	%
ALLL to total loans				0.93	%			0.90	%			0.89	%			0.85	%			0.84	%

(A)		Amounts reflect TDR's that are paying according to restructured terms.
(B)		Amount does not include $4.2 million at June 30, 2016, $3.4 million at March 31, 2016, $2.6 million at December 31, 2015, $2.8 million at September 30, 2015, and $2.2 million at June 30, 2015 of TDRs included in nonaccrual loans.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED BALANCE SHEET DATA
(Dollars in Thousands)
(Unaudited)
		June 30,				Dec 31,				June 30,
		2016				2015				2015
Capital Adequacy
Equity to total assets (A)			8.20	%			8.19	%			8.27	%
Tangible Equity to tangible assets (B)			8.12	%			8.10	%			8.17	%
Book value per share (C)		$	18.08			$	17.61			$	17.02
Tangible Book Value per share (D)		$	17.88			$	17.40			$	16.80

		June 30,						Dec 31,						June 30,
		2016						2015						2015
Regulatory Capital - Holding Company
Tier I leverage		$	295,443		8.19	%		$	273,738		8.10	%		$	254,737		8.48	%
Tier I capital to risk weighted assets			295,443		10.28				273,738		10.42				254,737		10.78
Common equity tier I capital ratio to risk-weighted assets			295,440		10.28				273,738		10.42				254,737		10.78
Tier I & II capital to risk-weighted assets			373,360		12.99				299,593		11.40				277,706		11.75
Regulatory Capital - Bank
Tier I leverage		$	332,115		9.21	%		$	271,641		8.04	%		$	242,811		8.08	%
Tier I capital to risk weighted assets			332,115		11.56				271,641		10.34				242,811		10.28
Common equity tier I capital ratio to risk-weighted assets			332,112		11.56				271,641		10.34				242,811		10.28
Tier I & II capital to risk-weighted assets			361,334		12.58				297,497		11.32				265,780		11.25

(A)		Equity to total assets is calculated as total shareholders' equity as a percentage of total assets at period end.
(B)		Tangible equity and tangible assets are calculated by excluding the balance of intangible assets from shareholders' equity and total assets, respectively.  Tangible equity as a percentage of tangible assets at period end is calculated by dividing tangible equity by tangible assets at period end. See Non-GAAP financial measures reconciliation included in these tables.
(C)		Book value per common share is calculated by dividing shareholders' equity by period end common shares outstanding less restricted shares not yet vested.
(D)		Tangible book value per share is different than book value per share because it excludes intangible assets.  Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding less restricted shares not yet vested.  See Non-GAAP financial measures reconciliation included in these tables.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
LOANS CLOSED
(Dollars in Thousands)
(Unaudited)
		For the Quarters Ended
		June 30,			March 31,			Dec 31,			Sept 30,			June 30,
		2016			2016			2015			2015			2015
Residential loans retained		$	32,513		$	17,747		$	18,847		$	20,623		$	23,117
Residential loans sold			20,221			8,062			7,183			6,078			10,978
Total residential loans			52,734			25,809			26,030			26,701			34,095
CRE (includes Community banking)			36,554			9,339			41,015			47,450			29,561
Multifamily (includes Community banking)			150,709			108,035			107,605			149,763			206,803
Commercial loans (includes Community banking) (A)			61,309			67,488			74,749			37,361			136,483
SBA			2,285			1,055			-			-			-
Wealth lines of credit (A)			785			1,800			35,550			24,000			6,150
Total commercial loans			251,642			187,717			258,919			258,574			378,997
Installment loans			1,077			486			1,052			933			1,128
Home equity lines of credit (A)			14,435			3,604			5,902			3,775			3,225
Total loans closed		$	319,888		$	217,616		$	291,903		$	289,983		$	417,445

		For the Six Months Ended
		June 30,			June 30,
		2016			2015
Residential loans retained		$	50,260		$	40,103
Residential loans sold			28,283			19,916
Total residential loans			78,543			60,019
CRE (includes
Community banking)			45,893			87,348
Multifamily (includes
Community banking)			258,744			415,837
Commercial loans (includes
Community banking) (A)			128,797			177,179
SBA			3,340			-
Wealth lines of credit (A)			2,585			16,410
Total commercial loans			439,359			696,774
Installment loans			1,563			1,472
Home equity lines of credit (A)			18,039			6,602
Total loans closed		$	537,504		$	764,867

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

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
THREE MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
					June 30, 2016										June 30, 2015
					Average				Income/						Average				Income/
					Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)			$	200,804			$	914		1.82	%		$	244,087			$	1,037		1.70	%
		Tax-exempt (1) (2)				27,127				211		3.11				30,941				210		2.71
	Loans (2) (3):
	Mortgages					473,293				3,927		3.32				468,082				3,824		3.27
		Commercial mortgages				2,047,112				17,830		3.48				1,663,150				14,767		3.55
		Commercial				552,955				5,392		3.90				360,517				3,347		3.71
		Commercial construction				1,305				13		3.98				5,713				61		4.27
		Installment				63,158				420		2.66				29,169				256		3.51
		Home equity				58,146				475		3.27				51,710				417		3.23
		Other				462				11		9.52				527				12		9.11
		Total loans				3,196,431				28,068		3.51				2,578,868				22,684		3.52
	Federal funds sold					101				-		0.25				101				-		0.10
	Interest-earning deposits					79,264				76		0.39				69,780				39		0.22
			Total interest-earning assets			3,503,727				29,269		3.34	%			2,923,777				23,970		3.28	%
Noninterest-Earning Assets:
	Cash and due from banks					16,122										6,385
	Allowance for loan losses					(28,056	)									(21,493	)
	Premises and equipment					29,452										31,983
	Other assets					88,907										66,131
		Total noninterest-earning assets				106,425										83,006
Total assets					$	3,610,152									$	3,006,783
LIABILITIES:
Interest-bearing deposits:
	Checking				$	906,611			$	607		0.27	%		$	670,473			$	359		0.21	%
	Money markets					818,453				602		0.29				703,236				461		0.26
	Savings					120,094				17		0.06				117,411				16		0.05
	Certificates of deposit - retail					450,675				1,545		1.37				343,781				1,051		1.22
		Subtotal interest-bearing deposits				2,295,833				2,771		0.48				1,834,901				1,887		0.41
	Interest-bearing demand - brokered					200,000				760		1.52				265,802				563		0.85
	Certificates of deposit - brokered					93,642				496		2.12				98,191				504		2.05
		Total interest-bearing deposits				2,589,475				4,027		0.62				2,198,894				2,954		0.54
	Borrowings					222,667				573		1.03				146,441				428		1.17
	Capital lease obligation					10,007				120		4.80				10,515				126		4.79
	Subordinated debt					8,777				139		6.33				-				-		-
	Total interest-bearing liabilities					2,830,926				4,859		0.69				2,355,850				3,508		0.60
Noninterest-bearing liabilities:
	Demand deposits					464,074										384,604
	Accrued expenses and other liabilities					25,247										12,133
	Total noninterest-bearing liabilities					489,321										396,737
Shareholders' equity						289,905										254,196
	Total liabilities and shareholders' equity				$	3,610,152									$	3,006,783
	Net interest income								$	24,410									$	20,462
	Net interest spread											2.65	%									2.68	%
	Net interest margin (4)											2.79	%									2.80	%

(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)
					June 30, 2016										March 31, 2016
					Average				Income/						Average				Income/
					Balance				Expense			Yield			Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)			$	200,804			$	914		1.82	%		$	199,579			$	926		1.86	%
		Tax-exempt (1) (2)				27,127				211		3.11				24,044				200		3.33
	Loans (2) (3):
		Mortgages				473,293				3,927		3.32				466,497				3,818		3.27
		Commercial mortgages				2,047,112				17,830		3.48				1,960,127				17,170		3.50
		Commercial				552,955				5,392		3.90				525,896				5,100		3.88
		Commercial construction				1,305				13		3.98				1,395				14		4.01
		Installment				63,158				420		2.66				44,906				335		2.98
		Home equity				58,146				475		3.27				53,056				440		3.32
		Other				462				11		9.52				486				12		9.88
		Total loans				3,196,431				28,068		3.51				3,052,363				26,889		3.52
	Federal funds sold					101				-		0.25				101				-		0.23
	Interest-earning deposits					79,264				76		0.39				77,903				87		0.45
			Total interest-earning assets			3,503,727				29,269		3.34	%			3,353,989				28,102		3.35	%
Noninterest-Earning Assets:
	Cash and due from banks					16,122										15,603
	Allowance for loan losses					(28,056	)									(26,582	)
	Premises and equipment					29,452										30,000
	Other assets					88,907										83,632
		Total noninterest-earning assets				106,425										102,653
Total assets					$	3,610,152									$	3,456,642
LIABILITIES:
Interest-bearing deposits:
	Checking				$	906,611			$	607		0.27	%		$	882,497			$	571		0.26	%
	Money markets					818,453				602		0.29				819,818				573		0.28
	Savings					120,094				17		0.06				116,560				16		0.05
	Certificates of deposit - retail					450,675				1,545		1.37				442,563				1,489		1.35
		Subtotal interest-bearing deposits				2,295,833				2,771		0.48				2,261,438				2,649		0.47
	Interest-bearing demand - brokered					200,000				760		1.52				200,000				741		1.48
	Certificates of deposit - brokered					93,642				496		2.12				93,674				497		2.12
		Total interest-bearing deposits				2,589,475				4,027		0.62				2,555,112				3,887		0.61
	Borrowings					222,667				573		1.03				155,274				479		1.23
	Capital lease obligation					10,007				120		4.80				10,140				122		4.81
	Subordinated debt					8,777				139		6.33				-				-		-
	Total interest-bearing liabilities					2,830,926				4,859		0.69				2,720,526				4,488		0.66
Noninterest-bearing liabilities:
	Demand deposits					464,074										435,770
	Accrued expenses and other liabilities					25,247										19,898
	Total noninterest-bearing liabilities					489,321										455,668
Shareholders' equity						289,905										280,448
	Total liabilities and shareholders' equity				$	3,610,152									$	3,456,642
	Net interest income								$	24,410									$	23,614
		Net interest spread										2.65	%									2.69	%
		Net interest margin (4)										2.79	%									2.82	%

(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
SIX MONTHS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
					June 30, 2016											June 30, 2015
					Average				Income/							Average				Income/
					Balance				Expense			Yield				Balance				Expense			Yield
ASSETS:
Interest-earning assets:
	Investments:
		Taxable (1)			$	200,192			$	1,840		1.84	%			$	258,934			$	2,219		1.71	%
		Tax-exempt (1) (2)				25,586				411		3.21					34,268				441		2.57
	Loans (2) (3):
		Mortgages				469,895				7,745		3.30					467,293				7,619		3.26
		Commercial mortgages				2,003,619				35,000		3.49					1,562,073				28,356		3.63
		Commercial				539,426				10,492		3.89					338,435				6,244		3.69
		Commercial construction				1,350				27		4.00					5,821				123		4.23
		Installment				54,032				755		2.79					28,484				508		3.57
		Home equity				55,601				915		3.29					51,188				822		3.21
		Other				474				23		9.70					528				25		9.47
		Total loans				3,124,397				54,957		3.52					2,453,822				43,697		3.56
	Federal funds sold					101				-		0.24					101				-		0.10
	Interest-earning deposits					78,583				163		0.42					80,658				82		0.20
			Total interest-earning assets			3,428,859				57,371		3.35	%				2,827,783				46,439		3.28	%
Noninterest-Earning Assets:
	Cash and due from banks					15,862											6,594
	Allowance for loan losses					(27,319	)										(20,778	)
	Premises and equipment					29,726											32,118
	Other assets					86,070											65,006
		Total noninterest-earning assets				104,339											82,940
Total assets					$	3,533,198										$	2,910,723
LIABILITIES:
Interest-bearing deposits:
	Checking				$	894,554			$	1,178		0.26	%			$	650,909			$	673		0.21	%
	Money markets					819,135				1,175		0.29					706,893				924		0.26
	Savings					118,327				33		0.06					115,434				30		0.05
	Certificates of deposit - retail					446,619				3,034		1.36					296,085				1,714		1.16
		Subtotal interest-bearing deposits				2,278,635				5,420		0.48					1,769,321				3,341		0.38
	Interest-bearing demand - brokered					200,000				1,501		1.50					253,221				843		0.67
	Certificates of deposit - brokered					93,658				993		2.12					112,219				1,028		1.83
		Total interest-bearing deposits				2,572,293				7,914		0.62					2,134,761				5,212		0.49
	Borrowings					188,971				1,052		1.11					128,142				820		1.28
	Capital lease obligation					10,074				242		4.80					10,575				254		4.80
	Subordinated debt					4,388				139		6.34					-				-		-
	Total interest-bearing liabilities					2,775,726				9,347		0.67					2,273,478				6,286		0.55
Noninterest-bearing liabilities:
	Demand deposits					449,922											375,527
	Accrued expenses and other liabilities					22,373											11,446
	Total noninterest-bearing liabilities					472,295											386,973
Shareholders' equity						285,177											250,272
	Total liabilities and
	shareholders' equity				$	3,533,198										$	2,910,723
	Net interest income								$	48,024										$	40,153
		Net interest spread										2.68	%										2.73	%
		Net interest margin (4)										2.80	%										2.84	%

(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, excluding ORE 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 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 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.

Non-GAAP Financial Reconciliation
(Dollars in thousands, except share data)
			Three Months Ended
			June 30,				March 31,				Dec 31,				Sept 30,				June 30,
Tangible Book Value Per Share			2016				2016				2015				2015				2015
Shareholders' equity			$	295,533			$	283,505			$	275,676			$	266,400			$	257,876
Less: Intangible assets				3,277				3,264				3,281				3,311				3,342
	Tangible equity			292,256				280,241				272,395				263,089				254,534
Period end shares outstanding				16,657,403				16,326,840				16,068,119				15,805,815				15,592,168
Less: Restricted shares not yet vested				309,920				321,580				414,188				435,312				436,908
Total outstanding shares				16,347,483				16,005,260				15,653,931				15,370,503				15,155,260
Tangible book value per share				17.88				17.51				17.40				17.12				16.80
Book value per share				18.08				17.71				17.61				17.33				17.02
Tangible Equity to Tangible Assets
Total Assets				3,604,703				3,465,997				3,364,659				3,268,963				3,118,170
Less: Intangible assets				3,277				3,264				3,281				3,311				3,342
	Tangible assets			3,601,426				3,462,733				3,361,378				3,265,652				3,114,828
Tangible equity to tangible assets				8.12	%			8.09	%			8.10	%			8.06	%			8.17	%
Equity to assets				8.20	%			8.18	%			8.19	%			8.15	%			8.27	%

		Three Months Ended
		June 30,				March 31,				Dec 31,				Sept 30,				June 30,
Efficiency Ratio		2016				2016				2015				2015				2015
Net interest income		$	24,176			$	23,410			$	22,819			$	21,706			$	20,344
Total other income			7,448				6,263				5,723				5,610				6,499
Less: Gain on loans held for sale at lower of cost or fair value			500				124				-				-				-
Less: Securities gains, net			18				101				-				83				176
Total recurring revenue			31,106				29,448				28,542				27,233				26,667
Operating expenses			18,775				19,206				19,993				16,899				16,266
Less: ORE provision			-				-				-				250				-
Total operating expenses			18,775				19,206				19,993				16,649				16,266
Efficiency ratio			60.36	%			65.22	%			70.05	%			61.14	%			61.00	%
Efficiency ratio, excluding $2.5 million of charges relating to the closure of two branch offices			-				-				61.30	%			-				-

		Six Months Ended
		June 30,				June 30,
Efficiency Ratio		2016				2015
Net interest income		$	47,586			$	39,927
Total other income			13,711				12,381
Less: Gain on loans held for sale at lower of cost or fair value			624				-
Less: Securities gains, net			119				444
Total recurring revenue			60,554				51,864
Operating expenses			37,981				32,034
Less: ORE provision			-				-
Total operating expenses			37,981				32,034
Efficiency ratio			62.72	%			61.77	%