• Peapack-Gladstone Financial Corporation Reports Strong First Quarter Results

    المصدر: Nasdaq GlobeNewswire / 29 أبريل 2022 09:00:01   America/New_York

    Strong first quarter results driven by continued loan growth, margin improvement and increased wealth management and capital markets fees 

    Bedminster, NJ, April 29, 2022 (GLOBE NEWSWIRE) -- via NewMediaWire -- Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its first quarter 2022 results. 

    This earnings release should be read in conjunction with the Company’s Q1 2022 Investor Update, a copy of which is available on our website at www.pgbank.com and via a current report on Form 8-K on the website of the Securities and Exchange Commission at www.sec.gov.  

    The Company recorded total revenue of $54.33 million, net income of $13.44 million and diluted earnings per share (“EPS”) of $0.71 for the quarter ended March 31, 2022, compared to revenue of $49.61 million, net income of $13.18 million and diluted EPS of $0.67, respectively, for the three months ended March 31, 2021.  

    The 2022 first quarter included a $6.6 million loss on the sale of securities associated with a balance sheet repositioning executed in the quarter, fully described later in this release. The 2022 first quarter also included $1.5 million of severance expense associated with certain staff reorganizations within several areas of the Peapack-Gladstone Bank (“the Bank”) during the quarter. These two items reduced total revenue by $6.6 million, net income by $5.9 million, EPS by $0.31, ROA by 0.38%, and ROE by 4.31%, for the Q1 2022 period.

    Douglas L. Kennedy, President and CEO said, “Our first quarter results were driven by continued strong loan growth, increased net interest income and net interest margin, and solid wealth management and capital markets fee income.”

    The following are select highlights for the quarter:

    Peapack Private Wealth Management:

    • AUM/AUA in our Peapack Private Wealth Management Division totaled $10.7 billion at March 31, 2022. 
    • Gross new business inflows for Q1 2022 totaled $350 million. 
    • Wealth Management fee income increased 22% to $14.8 million for Q1 2022 compared to $12.1 million for Q1 2021. 
    • Finalizing the consolidation of three offices of previously acquired firms into existing private banking locations.

    Commercial Banking and Balance Sheet Management: 

    • Total loans grew 6% (25% annualized) to $5.15 billion at March 31, 2022 compared to $4.84 billion at December 31, 2021; and grew 21% from $4.25 billion (excluding $187 million of PPP loans) at March 31, 2021.
    • Commercial & industrial lending (“C&I”) loan/lease balances comprise 40% of the total loan portfolio at March 31, 2022.    
    • U.S. Small Business Association (“SBA”) Income ($2.8 million) and corporate advisory fees ($1.6 million) totaled $4.4 million for the first quarter of 2022.
    • Core deposits (which includes noninterest-bearing demand and interest-bearing demand, savings and money market accounts) totaled 90% of total deposits at March 31, 2022, with an average cost of 0.15%. 
    • The net interest margin (NIM) improved by 23 basis points in Q1 2022 compared to Q4 2021 and improved 41 basis points when compared to Q1 2021.  
    • The Company executed a balance sheet repositioning resulting in an estimated four basis point improvement to future NIM, with no impact to balance sheet duration, tangible capital or tangible book value per share.  

    Capital Management:

    • Repurchased approximately 300,000 shares of Company stock at an average price of $37.26 for a total cost of $11.2 million. 
    • Regulatory Tier 1 Leverage Ratio stood at 10.3% for the Bank and 8.4% for the Company, at March 31, 2022. Regulatory Common Equity Tier 1 Ratio (to Risk-Weighted Assets) stood at 12.5% for the Bank and 10.2% for the Company.  These ratios are significantly above well capitalized standards. 

    SUMMARY INCOME STATEMENT DETAILS:

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

                      March 2022 Quarter Compared to Prior Year Quarter
                      

      Three Months Ended  Three Months Ended    
      March 31,  March 31, Increase/
    (Dollars in millions, except per share data) 2022  2021 (Decrease)
    Net interest income  $39.62    $31.79   $7.83  25%
    Wealth management fee income (A)  14.83    12.13   2.70   22 
    Capital markets activity (B)  4.65    3.57   1.08   30 
    Other income (C)  (4.77)   2.12   (6.89)  (325)
    Total other income  14.71    17.82   (3.11)  (17)
    Operating expenses (A) (D)  34.17    31.59   2.58   8 
    Pretax income before provision for credit losses  20.16    18.02   2.14   12 
    Provision for credit losses  2.37    0.23   2.14   930 
    Pretax income  17.79    17.79   —   — 
    Income tax expense  4.35    4.61   (0.26)  (6)
    Net income (E)  $13.44    $13.18   $0.26  2%
    Diluted EPS (E)  $0.71    $0.67   $0.04  6%
              
    Total Revenue (F)  $54.33    $49.61   $4.72  10%
              
    Return on average assets annualized (E) 0.87%  0.89%   (0.02)  
    Return on average equity annualized (E) 9.88%  10.03%   (0.15)  
              
    1. The quarter ended March 31, 2022 included a full quarter of wealth management fee income and expense related to the July 2021 acquisition of Princeton Portfolio Strategies Group.
    2. Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities. 
    3. Other income for the quarter ended March 31, 2022 included a $6.6 million loss on sale of securities associated with a balance sheet repositioning executed in the quarter.
    4. The March 2022 and 2021 quarters each included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank.
    5. The March 31, 2022 quarter included a $6.6 million loss on sale of securities associated with a balance sheet repositioning executed in the quarter. The 2022 period also included $1.5 million of severance expense associated with certain staff reorganizations within several areas of the Bank during the quarter. These two items reduced net income by $5.9 million, EPS by $0.31, ROA by 0.38%, and ROE by 4.31%, for the Q1 2022 period.
    6. Total revenue equals the sum of net interest income plus total other income.


    March 2022 Quarter Compared to Linked Quarter

      Three Months Ended Three Months Ended     
      March 31, December 31,  Increase/
    (Dollars in millions, except per share data) 2022 2021  (Decrease)
    Net interest income  $39.62   $37.21    $2.41  6%
    Wealth management fee income  14.83   13.96    0.87   6 
    Capital markets activity (A)  4.65   3.52    1.13   32 
    Other income (B)  (4.77)  1.48    (6.25)  (422)
    Total other income  14.71   18.96    (4.25)  (22)
    Operating expenses (C)  34.17   31.70    2.47   8 
    Pretax income before provision for credit losses  20.16   24.47    (4.31)  (18)
    Provision for credit losses  2.37   3.75    (1.38)  (37)
    Pretax income  17.79   20.72    (2.93)  (14)
    Income tax expense  4.35   5.86    (1.51)  (26)
    Net income (D)  $13.44   $14.86    $(1.42) (10)%
    Diluted EPS (D)  $0.71   $0.78    $(0.07) (9)%
              
    Total Revenue (E)  $54.33   $56.17    $(1.84) (3)%
              
    Return on average assets annualized (D) 0.87% 0.96%    (0.09)  
    Return on average equity annualized (D) 9.88% 10.94%    (1.06)  
    1. Capital markets activity includes fee income from loan level back-to-back swaps, the SBA lending and sale program, corporate advisory and mortgage banking activities. 
    2. Other income for the quarter ended March 31, 2022 included a $6.6 million loss on the sale of securities associated with a balance sheet repositioning executed in the quarter. The December 2021 quarter included a $265,000 loss on the sale of loans.
    3. The March 2022 quarter included $1.5 million of severance expense related to certain staff reorganization within several areas of the Bank.
    4. The March 31, 2022 quarter included a $6.6 million loss on sale of securities associated with a balance sheet repositioning executed in the quarter. The 2022 period also included $1.5 million of severance expense associated with certain staff reorganizations within several areas of the Bank during the quarter. These two items reduced net income by $5.9 million, EPS by $0.31, ROA by 0.38%, and ROE by 4.31%, for the Q1 2022 period.
    5. Total revenue equals the sum of net interest income plus total other income.


    SUPPLEMENTAL QUARTERLY DETAILS:

    Wealth Management 

    In the March 2022 quarter, the Bank’s wealth management business generated $14.83 million in fee income, compared to $13.96 million for the December 31, 2021 quarter and $12.13 million for the March 2021 quarter. 

    The market value of the Company’s AUM/AUAstood at $10.7 billion at March 31, 2022. Gross new business inflows for the 2022 quarter totaled $350 million. 

    John Babcock, President of the Peapack Private Wealth Management division, said “Our AUM/AUA were negatively impacted in Q1 2022 as the S&P was down 5% in Q1 2022.  Notwithstanding current volatility, economic and global uncertainties, and overall market declines, new business from existing clients as well as from new clients continue at a healthy pace.  In Q1 2022, total new accounts and client additions totaled $350 million – approximately $150 million of which was in our Delaware trust company.  Of the remaining $200 million, $160 million was new managed business and the remainder was custody. As we enter Q2 2022, our new business pipeline is strong.”  

    Additionally, we are nearing the completion of our “One Team” integration, which consolidates the operating and technology platforms of our eight acquisitions made since 2015 into a singular operating and technology platform, and also streamlines our organizational structure.  In Q1 2022, we consolidated our Princeton Portfolio Strategies team (acquired in 2021) into our existing private banking office in Princeton. In August, we will combine our former Point View and Lassus Wherley locations together in a new private banking office in Summit, NJ. 

    Loans / Commercial Banking 

    At March 31, 2022, loans totaled $5.15 billion, compared to $4.25 billion (excluding $187 million of PPP loans) at March 31, 2021, reflecting growth of 21%. 

    Total C&I loans and leases (including the $10 million of PPP loans) at March 31, 2022 were $2.04 billion or 40% of the total loan portfolio. 

    Mr. Kennedy noted, “Our commercial loan pipelines continue to be strong going into the new year, standing at approximately $300 million with the likelihood of a second quarter closing. We believe that we will achieve mid to high single digit loan growth for the remainder of 2022.”

    Mr. Kennedy also noted, “We are proud to have built a leading middle market commercial banking franchise, as evidenced by strong growth in our C&I Portfolio, continued growth in Treasury Management income, and back-to-back quarters with large corporate advisory fees by our investment banking group – this team had record earnings in 2021 and started off 2022 with another large fee event.” 

    Funding / Liquidity / Interest Rate Risk Management

    The Company actively manages its deposit base to reduce reliance on wholesale funding, volatility, and/or operational risk.  Total deposits at March 31, 2022 increased $121 million to $5.39 billion from $5.27 billion at December 31, 2021 and increased $443 million from $4.94 billion at March 31, 2021. Along with the deposit growth, the change in mix was favorable, as noninterest bearing demand deposits increased $114 million, interest-bearing demand increased $375 million, savings and money market increased $68 million, while higher costing CDs declined $90 million and brokered deposits declined $25 million, when comparing March 31, 2022 to March 31, 2021. 

    Mr. Kennedy noted, “90% of our deposits are demand, savings, or money market accounts, and our noninterest bearing deposits comprise 19% of our total deposits; both metrics reflect the relationship aspect of our deposit base.”

    At March 31, 2022, the Company’s balance sheet liquidity (investments available for sale, interest-earning deposits and cash) totaled $747.7 million (or 12% of assets). 

    The Company maintains backup liquidity of approximately $1.8 billion of secured available funding with the Federal Home Loan Bank and $1.6 billion of secured funding from the Federal Reserve Discount Window. The available funding from the Federal Home Loan Bank and the Federal Reserve are secured by the Company’s loan and investment portfolios.

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

     Three Months Ended Three Months Ended Three Months Ended
     March 31, 2022 December 31, 2021 March 31, 2021
     NII NIM NII NIM NII NIM
                
    NII/NIM excluding the below $39,274  2.68%  $36,564  2.60%  $30,565  2.49%
    Prepayment premiums received on loan paydowns351 0.02% 555 0.04% 704 0.05%
    Effect of maintaining excess interest earning cash-3 -0.01% -68 -0.18% -195 -0.21%
    Effect of PPP loans0 0.00% 161 0.00%  719  -0.05%
    NII/NIM as reported $39,622  2.69%  $37,212  2.46%  $31,793  2.28%
                

    As shown above, the Company’s reported NII and NIM for Q1 2022 increased $2.4 million and 23 basis points, respectively, compared to the linked quarter (Q4 2021) and $7.8 million and 41 basis points compared to the prior year quarter (Q1 2021). The Bank further lowered its cost of funds strategically and grew its average loan portfolio at rates/spreads beneficial to NIM, while reducing lower-yielding liquidity. Additionally, the Bank benefitted from the increase in LIBOR during Q1.

    Mr. Kennedy stated, “As noted above, we benefitted from the increase in LIBOR during Q1 and we are positioned to continue to benefit from a rise in interest rates. 38% of our loan portfolio reprices within three months and 50% within one year. Our current modeling, with what we believe include very conservative deposit beta assumptions (average of 45%), indicates net interest income will improve approximately 2% in year one and 8.5% in year two after a 200 basis point rate shock.”

    Mr. Kennedy went on to note, “During Q1, 2022 we executed a balance sheet repositioning whereby we added $250 million of multifamily loans, funded by the sale of $125 million of lower-yielding, like duration securities, and deposits. To manage a neutral overall duration effect on the balance sheet, thereby protecting the balance sheet against the impact of rising rates, we executed an additional $100 million of forward starting five-year pay fixed swaps.  The repositioning resulted in an attractive earn-back period on the loss on sale of securities, with future net interest margin improving by four basis points, and no impact to tangible capital or tangible book value per share.  The on-balance sheet and off-balance sheet liquidity profile of the Bank remain strong.”

    Income from Capital Markets Activities

    Noninterest income from Capital Markets activities (detailed below) totaled $4.65 million for the March 2022 quarter compared to $3.52 million for the December 2021 quarter and $3.57 million for the March 2021 quarter. The March 2022 quarter results were driven by $2.84 million in gains on sales of SBA loans. The December 2021 quarter results were driven by $2.18 million in corporate advisory fee income although all three periods recorded over $1 million in fees.  The March 2021 quarter reflected increased mortgage banking activity due to greater refinance activity in the low-rate environment. The March 2022, December 2021 and March 2021 quarters included no income from loan level, back-to-back swap activities, as there has been minimal activity for such in the current environment. 

      Three Months Ended Three Months Ended Three Months Ended
      March 31, December 31, March 31,
    (Dollars in thousands, except per share data) 2022 2021 2021
    Gain on loans held for sale at fair value (Mortgage banking)  $247   $352   $1,025 
    Fee income related to loan level, back-to-back swaps  —   —   — 
    Gain on sale of SBA loans  2,844   989   1,449 
    Corporate advisory fee income  1,561   2,180   1,098 
    Total capital markets activity  $4,652   $3,521   $3,572 
           

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

    Other noninterest income (as defined above) included a $6.6 million loss on sale of securities, associated with the balance sheet repositioning executed in Q1 2022, described above. When excluding this loss, other noninterest income was $1.84 million for Q1 2022, compared to $1.48 million, and $2.12 million for the December 2021 and March 2021 quarters, respectively. The December 2021 quarter included a net loss of $265,000 on loans held for sale. 

    Operating Expenses

    The Company’s total operating expenses were $34.17 million for the quarter ended March 31, 2022, compared to $31.70 million for the December 2021 quarter and $31.59 million for the March 2021 quarter. Both the March 2022 and March 2021 quarters included $1.5 million of severance expense related to certain staff reorganizations within several areas of the Bank.  The March 2022 and December 2021 quarters also included a full quarter’s worth of expense related to the acquisition of Princeton Portfolio Strategies Group (“PPSG”) which closed on July 1, 2021. Further, the March 2022 quarter included increased costs related to health insurance and corporate insurance, as well as the normal annual merit increases and year-end bonuses.   

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

    Income Taxes

    The effective tax rate for the three months ended March 31, 2022 was 24.45%, as compared to 28.31% for the December 2021 quarter and 25.94% for the quarter ended March 31, 2021. The March 31, 2022 and 2021 quarters benefitted from the vesting of restricted stock at prices higher than grant prices.

    Asset Quality / Provision for Credit Losses

    Nonperforming assets (which does not include troubled debt restructured loans that are performing in accordance with their terms) at March 31, 2022 were $15.9 million, or 0.25% of total assets. Loans past due 30 to 89 days and still accruing were $606,000.  

    Loans on deferral and accruing, entered into during the COVID-19 pandemic have come down significantly from $914 million at June 30, 2020 to $13 million at March 31, 2022. 

    On January 1, 2022, the Company implemented Current Expected Credit Losses (“CECL”) methodology for calculating the Company’s Allowance for Credit Losses (“ACL”). The day one CECL adjustment totaled $5.5 million (reduction to 12/31/2021 ACL, and benefit to Capital, net of tax effect). 

    For the quarter ended March 31, 2022, the Company’s provision for credit losses was $2.4 million compared to $3.8 million for the December 2021 quarter and $225,000 for the March 2021 quarter. The increased provision for credit losses in the March 2022 and December 2021 quarters, when compared to the March 2021 quarter was due principally to significant loan growth during the March 2022 and December 2021 quarters, offset by improvement in macro-economic conditions and strong and stable asset quality metrics.

    At March 31, 2022, the ACL was $58.39 million (1.13% of total loans), compared to $61.70 million at December 31, 2021 (1.27% of loans) and $67.54 million at March 31, 2021 (1.52% of total loans).  

    Capital 

    The Company’s capital position during the March 2022 quarter was benefitted by net income of $13.44 million and the CECL day one adjustment of $3.9 million, net of tax, which was offset by the purchase of approximately 300,000 shares through the Company’s stock repurchase program ($11.2 million) and the quarterly dividend ($920,000). U.S. Generally Accepted Accounting Principles (“GAAP”) Capital at March 31, 2022 was also impacted by an increase in the unrealized loss on available-for-sale securities in the first quarter of 2022 due to the significant rise in medium-term Treasury yields. 

    Mr. Kennedy noted, “Despite capital spent on stock repurchases, and capital being affected by the increased unrealized loss on AFS securities, our tangible book value per share only declined 4%, from $27.05 at December 31, 2021 to $25.85 at March 31, 2022.” 

    The Company’s and Bank’s capital ratios at March 31, 2022 remain strong.  Such ratios remain well above regulatory well capitalized standards.

    As previously announced, in the fourth quarter of 2020, the Company successfully completed a private placement of $100 million in fixed-to floating rate subordinated notes due 2030 at a rate of 3.5%. Such funds benefitted the Company’s Regulatory Tier 2 Capital. At the time, the Company noted the proceeds raised would be used for general corporate purposes, which could include stock repurchases, the redemption of the Company’s then existing 6% subordinated debt and acquisitions of wealth management firms. Throughout the twelve months of 2021, the Company repurchased $29 million of stock, and repurchased an additional $11 million during Q1 2022.  On June 30, 2021, the Company redeemed its 6% subordinated debt. On July 1, 2021, the Company closed on the acquisition of PPSG. 

    The Company employs quarterly capital stress testing – adverse case and severely adverse case. In the most recent completed stress test on December 31, 2021, under severely adverse case, and no growth scenarios, the Bank remains well capitalized over a two-year stress period.With a Pandemic stress overlay, the Bank still remains well capitalized over the two-year stress period.

    On April 28, 2022, the Company declared a cash dividend of $0.05 per share payable on May 26, 2022, to shareholders of record on May 12, 2022.

    ABOUT THE COMPANY

    Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $6.3 billion and assets under management/administration of $10.7 billion as of March 31, 2022.  Founded in 1921, Peapack-Gladstone Bank is a commercial bank that provides innovative wealth management, commercial and retail solutions, including residential lending and online platforms, to businesses and consumers.  Peapack Private, the bank’s wealth management division, offers comprehensive financial, tax, fiduciary and investment advice and solutions to individuals, families, privately-held businesses, family offices and not-for-profit organizations, which help them to establish, maintain and expand their legacy.  Together, Peapack-Gladstone Bank and Peapack Private offer an unparalleled commitment to client service.  Visit www.pgbank.com and www.peapackprivate.com for more information.

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

    •  our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan;
    •  the impact of anticipated higher operating expenses in 2022 and beyond;
    •  our ability to successfully integrate wealth management firm acquisitions;
    •  our ability to manage our growth;
    •  our ability to successfully integrate our expanded employee base;
    •  an unexpected decline in the economy, in particular in our New Jersey and New York market areas;
    •  declines in our net interest margin caused by the interest rate environment and/or our highly competitive market;
    •  declines in the value in our investment portfolio;
    • impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels;
    •  higher than expected increases in our allowance for credit losses;
    •  higher than expected increases in loan and lease losses or in the level of delinquent, nonperforming, classified and criticized loans;
    •  inflation and changes in interest rates, which may adversely impact or margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs;
    •  decline in real estate values within our market areas;
    •  legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs;
    •  successful cyberattacks against our IT infrastructure and that of our IT and third-party providers;
    •  higher than expected FDIC insurance premiums;
    •  adverse weather conditions;
    •  the current or anticipated impact of military conflict, terrorism or other geopolitical events;
    •  our inability to successfully generate new business in new geographic markets;
    •  a reduction in our lower-cost funding sources;
    •  our inability to adapt to technological changes; 
    •  claims and litigation pertaining to fiduciary responsibility, environmental laws and other matters;
    •  our inability to retain key employees;
    •  demands for loans and deposits in our market areas;
    •  adverse changes in securities markets;
    •  changes in accounting policies and practices; and
    •  other unexpected material adverse changes in our operations or earnings.

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

    •  demand for our products and services may decline, making it difficult to grow assets and income; 
    •  if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; 
    •  collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; 
    •  our allowance for credit losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; 
    •  the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; 
    •  a material decrease in net income or a net loss over several quarters could result in an elimination or a decrease in the rate of our quarterly cash dividend; 
    •  our wealth management revenues may decline with continuing market turmoil; 
    •  a worsening of business and economic conditions or in the financial markets could result in an impairment of certain intangible assets, such as goodwill;
    •  the unanticipated loss or unavailability of key employees due to the outbreak, which could harm our ability to operate our business or execute our business strategy, especially as we may not be successful in finding and integrating suitable successors;
    •  our cyber security risks are increased as the result of an increase in the number of employees working remotely; and 
    •  FDIC premiums may increase if the agency experience additional resolution costs.

    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, 2021.  We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company’s expectations.

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

    Contact:

    Jeffrey J. Carfora, SEVP and CFO

    Peapack-Gladstone Financial Corporation

    T: 908-719-4308

     (Tables to follow)

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

      For the Three Months Ended
      March 31, Dec 31, Sept 30, June 30, March 31,
      2022 2021 2021 2021 2021
    Income Statement Data:          
    Interest income  $44,140   $42,075   $40,067   $39,686   $38,239 
    Interest expense   4,518    4,863    4,856    5,841    6,446 
    Net interest income  39,622   37,212   35,211   33,845   31,793 
    Wealth management fee income  14,834   13,962   13,860   13,034   12,131 
    Service charges and fees  952   996   959   896   846 
    Bank owned life insurance  313   308   311   466   611 
    Gain on loans held for sale at fair value
       (Mortgage banking) (A)
      247   352   408   409   1,025 
    Gain/(loss) on loans held for sale at lower of cost or
       fair value (B)
      —   (265)  —   1,125   282 
    Fee income related to loan level, back-to-back
       swaps (A)
      —   —   —   —   — 
    Gain on sale of SBA loans (A)  2,844   989   1,569   932   1,449 
    Corporate advisory fee income (A)  1,561   2,180   84   121   1,098 
    Loss on swap termination  —   —   —   (842)  — 
    Other income (C)  1,254   581   660   1,495   643 
    Loss on securities sale, net (D)  (6,609)  —   —   —   — 
    Fair value adjustment for CRA equity security  (682)  (139)  (70)  42   (265)
    Total other income  14,714   18,964   17,781   17,678   17,820 
    Salaries and employee benefits (E)  22,449   20,105   19,859   19,910   21,990 
    Premises and equipment  4,647   4,519   4,459   4,074   4,113 
    FDIC insurance expense  471   402   555    529   585 
    Swap valuation allowance  673   893   1,350   —   — 
    Other expenses  5,929   5,785   5,962   6,171   4,906 
    Total operating expenses  34,169   31,704   32,185   30,684   31,594 
    Pretax income before provision for credit losses  20,167   24,472   20,807   20,839   18,019 
    Provision for credit losses (F)  2,375   3,750   1,600   900   225 
    Income before income taxes  17,792   20,722   19,207   19,939   17,794 
    Income tax expense  4,351   5,867   5,036   5,521   4,616 
    Net income  $13,441   $14,855   $14,171   $14,418   $13,178 
               
    Total revenue (G)  $54,336   $56,176   $52,992   $51,523   $49,613 
    Per Common Share Data:          
    Earnings per share (basic)  $0.73   $0.80   $0.76   $0.76   $0.70 
    Earnings per share (diluted)  0.71   0.78   0.74   0.74   0.67 
    Weighted average number of common
       shares outstanding:
              
    Basic  18,339,013   18,483,268   18,763,316   18,963,237   18,950,305 
    Diluted  18,946,683   19,070,594   19,273,831   19,439,439   19,531,689 
    Performance Ratios:          
    Return on average assets annualized (ROAA) 0.87% 0.96% 0.95% 0.97% 0.89%
    Return on average equity annualized (ROAE) 9.88% 10.94% 10.40% 10.86% 10.03%
    Return on average tangible common equity (ROATCE) (H) 10.85% 12.03% 11.43% 11.83% 10.94%
    Net interest margin (tax-equivalent basis) 2.69% 2.46% 2.42% 2.38% 2.28%
    GAAP efficiency ratio (I) 62.88% 56.44% 60.74% 59.55% 63.68%
    Operating expenses / average assets annualized 2.22% 2.05% 2.16% 2.06% 2.14%
    1.  Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps, gain on sale of SBA loans and corporate advisory fee income are all included in “capital markets activity” as referred to within the earnings release.
    2.  Includes a $1.1 million gain on sale of $57 million of PPP loans completed in the June 2021 quarter.
    3.  Includes income of $722,000 from the referral of PPP loans to a third-party firm during the June 2021 quarter.
    4.  Loss on sale of securities was a result of a balance sheet repositioning employed in the March  2022 quarter.
    5.  The March 2022 and 2021 quarters each included $1.5 million of severance expense related to corporate restructuring.
    6. Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.
    7.  Total revenue equals the sum of net interest income plus total other income.
    8. Return on average tangible common equity is calculated by dividing tangible common equity by annualized net income.  See Non-GAAP financial measures reconciliation included in these tables.
    9. Calculated as total operating expenses as a percentage of total revenue.  For Non-GAAP efficiency ratio, see the Non-GAAP financial measures reconciliation included in these tables.


    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    CONSOLIDATED STATEMENTS OF CONDITION

    (Dollars in Thousands)
    (Unaudited)

      As of
      March 31, Dec 31, Sept 30, June 30, March 31,
      2022 2021 2021 2021 2021
    ASSETS          
    Cash and due from banks  $8,849   $5,929   $9,299   $12,684   $8,159 
    Federal funds sold   —    —    —    —   102 
    Interest-earning deposits  105,111   140,875   606,913   190,778   468,276 
    Total cash and cash equivalents  113,960   146,804   616,212   203,462   476,537 
    Securities available for sale  601,163   796,753   843,779   823,820   875,301 
    Securities held to maturity  106,816   108,680    —    —    — 
    CRA equity security, at fair value  14,003   14,685   14,824   14,894   14,852 
    FHLB and FRB stock, at cost  18,570   12,950   12,950   12,901   13,699 
               
    Residential mortgage  513,289   501,340   510,878   504,181   498,884 
    Multifamily mortgage  1,850,097   1,595,866   1,497,683   1,420,043   1,178,940 
    Commercial mortgage  669,899   662,626   680,107   702,777   697,599 
    Commercial loans (A)  2,041,720   2,009,252   1,833,532   1,880,830   1,982,570 
    Consumer loans  35,322   33,687   30,689   31,889   36,519 
    Home equity lines of credit  38,604   40,803   42,512   44,062   45,624 
    Other loans  226   238   245   204   199 
    Total loans  5,149,157   4,843,812   4,595,646   4,583,986   4,440,335 
    Less: Allowances for credit losses (B)  58,386   61,697   65,133   63,505   67,536 
    Net loans  5,090,771   4,782,115   4,530,513   4,520,481   4,372,799 
               
    Premises and equipment  22,960   23,044   23,123   23,261   23,260 
    Other real estate owned   —    —    —    —    50 
    Accrued interest receivable  22,890   21,589   22,790   23,117   23,916 
    Bank owned life insurance  46,805   46,663   46,510   46,605   46,448 
    Goodwill and other intangible assets  48,471   48,902   49,333   43,156   43,524 
    Finance lease right-of-use assets  3,395    3,582    3,769    3,956    4,143 
    Operating lease right-of-use assets  14,725    9,775    10,307    9,569    10,186 
    Due from brokers (C)  120,245    —    —    —    — 
    Other assets (D)  30,890   62,451   66,175   66,466   64,912 
    TOTAL ASSETS  $6,255,664   $6,077,993   $6,240,285   $5,791,688   $5,969,627 
               
    LIABILITIES          
    Deposits:          
    Noninterest-bearing demand deposits  $1,023,208   $956,482   $986,765   $959,494   $908,922 
    Interest-bearing demand deposits  2,362,987   2,287,894   2,355,892   1,978,497   1,987,567 
    Savings  162,116   154,914   168,831   147,227   141,743 
    Money market accounts  1,304,017   1,307,051   1,287,686   1,213,992   1,256,605 
    Certificates of deposit – Retail  384,909   409,608   426,981   446,143   474,668 
    Certificates of deposit – Listing Service  31,348   31,382   31,382   31,631   31,631 
    Subtotal “customer” deposits  5,268,585   5,147,331   5,257,537   4,776,984   4,801,136 
    IB Demand – Brokered  85,000   85,000   85,000   85,000   110,000 
    Certificates of deposit – Brokered  33,831   33,818   33,804   33,791   33,777 
    Total deposits  5,387,416   5,266,149   5,376,341   4,895,775   4,944,913 
    Short-term borrowings   122,085    —    —    —   15,000 
    Paycheck Protection Program Liquidity Facility (E)   —    —    48,496    83,586    168,180 
    Finance lease liability  5,573   5,820   6,063   6,299   6,528 
    Operating lease liability  15,155   10,111   10,644   9,902   10,509 
    Subordinated debt, net (F)  132,772   132,701   132,629   132,557   181,837 
    Other liabilities (D)  69,237   116,824   123,098   125,110   120,219 
    TOTAL LIABILITIES  5,732,238   5,531,605   5,697,271   5,253,229   5,447,186 
    Shareholders’ equity  523,426   546,388   543,014   538,459   522,441 
    TOTAL LIABILITIES AND          
    SHAREHOLDERS’ EQUITY  $6,255,664   $6,077,993   $6,240,285   $5,791,688   $5,969,627 
    Assets under management and / or administration at
       Peapack-Gladstone Bank’s Private Wealth Management
       Division (market value, not included above-dollars in billions)
      $10.7   $11.1   $10.3   $9.8   $9.4 
    1. Includes PPP loans of $10 million at March 31, 2022; $14 million at December 31, 2021; $49 million at September 30, 2021; $84 million at June 30, 2021; and $187 million at March 31, 2021.
    2. Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology.
    3. Includes $120 million due from FHLB related to securities sales at March 31, 2022.  The $120 million received on April 1, 2022, was used to reduce short term borrowings.
    4. The change in other assets and other liabilities was primarily due to the change in the fair value of our back-to-back swap program.
    5. Represents funding provided by the Federal Reserve for pledged PPP loans.
    6. The decrease was due to the redemption of a $50 million subordinated debt on June 30, 2021.  


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

      As of
      March 31, Dec 31, Sept 30, June 30, March 31,
      2022 2021 2021 2021 2021
    Asset Quality:          
    Loans past due over 90 days and still accruing  $—   $—   $—   $—   $— 
    Nonaccrual loans (A)  15,884   15,573   25,925   5,962   11,767 
    Other real estate owned   —    —    —    —    50 
    Total nonperforming assets  $15,884   $15,573   $25,925   $5,962   $11,817 
               
    Nonperforming loans to total loans 0.31% 0.32% 0.56% 0.13% 0.27%
    Nonperforming assets to total assets 0.25% 0.26% 0.42% 0.10% 0.20%
               
    Performing TDRs (B)(C)  $2,375   $2,479   $416   $190   $197 
               
    Loans past due 30 through 89 days and still accruing (D)  $606   $8,606   $1,193   $1,678   $1,622 
               
    Loans subject to special mention  $110,252   $116,490   $115,935   $148,601   $166,013 
               
    Classified loans  $47,386   $50,702   $51,937   $11,178   $25,714 
               
    Impaired loans  $16,147   $18,052   $26,341   $6,498   $11,964 
               
    Allowance for credit losses ("ACL"):          
    Beginning of period  $61,697   $65,133   $63,505   $67,536   $67,309 
    Day one CECL adjustment   (5,536)   —    —    —    — 
    Provision for credit losses (E)   2,489    3,750    1,600    900    225 
    (Charge-offs)/recoveries, net   (264)   (7,186)   28    (4,931)   2 
    End of period  $58,386   $61,697   $65,133   $63,505   $67,536 
               
    ACL to nonperforming loans 367.58% 396.18% 251.24% 1065.16% 573.94%
    ACL to total loans 1.13% 1.27% 1.42% 1.39% 1.52%
    General ACL to total loans (F) 1.09% 1.19% 1.26% 1.38% 1.45%
    1. Increase at September 30, 2021 due to one large CRE loan with a retail component, located in Manhattan. 
    2. Amounts reflect troubled debt restructurings (“TDRs”) that are paying according to restructured terms.
    3. Excludes TDRs included in nonaccrual loans in the following amounts: $13.6 million at March 31, 2022; $1.1 million at December 31, 2021; $4.0 million at September 30, 2021; $3.9 million at June 30, 2021; and $3.9 million at March 31, 2021. 
    4. Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and the lessee/borrower at December 31, 2021. Payment was received in January 2022.
    5. Commencing on January 1, 2022, the allowance calculation is based on the current expected credit loss methodology.  Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to rollforward the ACL excludes a credit of $114,000 related to the off-balance sheet commitments.
    6. Total ACL less specific reserves equals general ACL.


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

      March 31, December 31, March 31,
      2022 2021 2021
    Capital Adequacy            
    Equity to total assets (A)   8.37%   8.99%   8.75%
    Tangible Equity to tangible assets (B)   7.65%   8.25%   8.08%
    Book value per share (C)    $28.49     $29.70     $27.45 
    Tangible Book Value per share (D)    $25.85     $27.05     $25.16 


      March 31, December 31, March 31,
      2022 2021 2021
    Regulatory Capital – Holding Company            
    Tier I leverage  $513,838  8.37%  $508,231  8.29%  $491,384  8.66%
    Tier I capital to risk-weighted assets  513,838  10.16  508,231  10.62  491,384  12.00
    Common equity tier I capital ratio
       to risk-weighted assets
      513,814  10.16  508,207  10.62  491,355  12.00
    Tier I & II capital to risk-weighted assets  705,184  13.94  700,790  14.64  724,599  17.70
                 
    Regulatory Capital – Bank            
    Tier I leverage (E)  $631,522  10.29%  $612,762  9.99%  $564,533  9.95%
    Tier I capital to risk-weighted assets (F)  631,522  12.49  612,762  12.80  564,533  13.79
    Common equity tier I capital ratio
       to risk-weighted assets (G)
      631,498  12.49  612,738  12.80  564,504  13.78
    Tier I & II capital to risk-weighted assets (H)  690,096  13.65  672,614  14.05  615,925  15.04


    1.  Equity to total assets is calculated as total shareholders’ equity as a percentage of total assets at period end.
    2.  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.
    3.  Book value per common share is calculated by dividing shareholders’ equity by period end common shares outstanding
    4.  Tangible book value per share excludes intangible assets.  Tangible book value per share is calculated by dividing tangible equity by period end common shares outstanding.  See Non-GAAP financial measures reconciliation tables.
    5.  Regulatory well capitalized standard = 5.00% ($307 million)
    6.  Regulatory well capitalized standard = 8.00% ($405 million)
    7.  Regulatory well capitalized standard = 6.50% ($329 million)
    8.  Regulatory well capitalized standard = 10.00% ($506 million)


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

      For the Quarters Ended
      March 31, Dec 31, Sept 30, June 30, March 31,
      2022 2021 2021 2021 2021
    Residential loans retained  $41,547   $22,953   $36,845   $37,083   $15,814 
    Residential loans sold  15,669   20,694   24,041   25,432   45,873 
    Total residential loans  57,216   43,647   60,886   62,515   61,687 
    Commercial real estate  25,575   16,134   14,944   12,243   38,363 
    Multifamily  265,650   162,740   120,716   255,820   85,009 
    Commercial (C&I) loans/leases (A) (B)  143,029   341,886   143,121   141,285   129,141 
    SBA (C)  26,093   27,630   11,570   15,976   58,730 
    Wealth lines of credit (A)  9,400   7,500   10,020   3,200   2,475 
    Total commercial loans  469,747   555,890   300,371   428,524   313,718 
    Installment loans  131   94   178   25   63 
    Home equity lines of credit (A)  1,341   5,359   2,535   4,140   1,899 
    Total loans closed  $528,435   $604,990   $363,970   $495,204   $377,367 
               
    1. Includes loans and lines of credit that closed in the period but not necessarily funded.
    2. Includes equipment finance.
    3. Includes PPP loans of $9 million for the quarter ended June 30, 2021 and $47 million for the quarter ended March 31, 2021.


    PEAPACK-GLADSTONE FINANCIAL CORPORATION
    AVERAGE BALANCE SHEET
    UNAUDITED
    THREE MONTHS ENDED
    (Tax-Equivalent Basis, Dollars in Thousands)

      March 31, 2022 March 31, 2021
      Average Income/   Average Income/  
      Balance Expense Yield Balance Expense Yield
    ASSETS:            
    Interest-earning assets:            
    Investments:            
    Taxable (A)  $928,828   $3,606  1.55%  $761,187   $2,629  1.38%
    Tax-exempt (A) (B)  4,701   48   4.08   7,980   98   4.91 
                 
    Loans (B) (C):            
    Mortgages  508,408   3,656   2.88   501,590   3,954   3.15 
    Commercial mortgages  2,353,032   18,175   3.09   1,840,363   14,420   3.13 
    Commercial  2,008,464   18,203   3.63   1,932,692   16,455   3.41 
    Commercial construction  18,087   160   3.54    15,606    139    3.56 
    Installment  34,475   254   2.95   37,695   276   2.93 
    Home equity  40,245   324   3.22   48,853   399   3.27 
    Other  283   6   8.48   246   5   8.13 
    Total loans  4,962,994   40,778   3.29   4,377,045   35,648   3.26 
    Federal funds sold  —   —   —   102   —   0.00 
    Interest-earning deposits  127,121   29   0.09   555,331   128   0.09 
    Total interest-earning assets   6,023,644    44,461  2.95%   5,701,645    38,503  2.70%
    Noninterest-earning assets:            
    Cash and due from banks  7,455       11,129     
    Allowance for credit losses  (61,001)      (71,160)    
    Premises and equipment  23,022       22,634     
    Other assets  168,239       228,134     
    Total noninterest-earning assets  137,715       190,737     
    Total assets  $6,161,359       $5,892,382     
                 
    LIABILITIES:            
    Interest-bearing deposits:            
    Checking  $2,330,340   $1,238  0.21%  $1,908,380   $978  0.20%
    Money markets  1,294,100   539   0.17   1,259,597   794   0.25 
    Savings  156,554   5   0.01   135,202   17   0.05 
    Certificates of deposit – retail  426,166   606   0.57   533,488   1,470   1.10 
    Subtotal interest-bearing deposits  4,207,160   2,388   0.23   3,836,667   3,259   0.34 
    Interest-bearing demand – brokered  85,000   373   1.76   110,000   493   1.79 
    Certificates of deposit – brokered  33,823   261   3.09   33,769   261   3.09 
    Total interest-bearing deposits  4,325,983   3,022   0.28   3,980,436   4,013   0.40 
    Borrowings  55,513   64   0.46   186,006   209   0.45 
    Capital lease obligation  5,662   68   4.80   6,608   79   4.78 
    Subordinated debt  132,731   1,364   4.11   181,795   2,145   4.72 
    Total interest-bearing liabilities  4,519,889   4,518  0.40%  4,354,845   6,446  0.59%
    Noninterest-bearing liabilities:            
    Demand deposits  978,288       848,325     
    Accrued expenses and other liabilities  119,003       163,569     
    Total noninterest-bearing liabilities  1,097,291       1,011,894     
    Shareholders’ equity  544,179       525,643     
    Total liabilities and shareholders’ equity  $6,161,359       $5,892,382     
    Net interest income    $39,943       $32,057   
    Net interest spread     2.55%     2.11%
    Net interest margin (D)     2.69%     2.28%
    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 21% 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)

      March 31, 2022 December 31, 2021
      Average Income/   Average Income/  
      Balance Expense Yield Balance Expense Yield
    ASSETS:            
    Interest-earning assets:            
    Investments:            
    Taxable (A)  $928,828   $3,606  1.55%  $885,390   $3,104  1.40%
    Tax-exempt (A) (B)   4,701    48    4.08    5,443    54    3.97 
                 
    Loans (B) (C):            
    Mortgages   508,408    3,656    2.88    510,562    3,799    2.98 
    Commercial mortgages   2,353,032    18,175    3.09    2,209,160    17,708    3.21 
    Commercial   2,008,464    18,203    3.63    1,826,640    16,660    3.65 
    Commercial construction   18,087    160    3.54    20,426    176    3.45 
    Installment   34,475    254    2.95    33,400    253    3.03 
    Home equity   40,245    324    3.22    41,955    346    3.30 
    Other   283    6    8.48    270    6    8.89 
    Total loans   4,962,994    40,778    3.29    4,642,413    38,948    3.36 
    Federal funds sold   —    —    —    —    —    — 
    Interest-earning deposits   127,121    29   0.09    513,650    178   0.14 
    Total interest-earning assets   6,023,644    44,461  2.95%   6,046,896    42,284  2.80%
    Noninterest-earning assets:            
    Cash and due from banks   7,455        11,517     
    Allowance for credit losses   (61,001)       (65,542)    
    Premises and equipment   23,022        23,117     
    Other assets   168,239        182,154     
    Total noninterest-earning assets   137,715        151,246     
    Total assets  $6,161,359       $6,198,142     
                 
    LIABILITIES:            
    Interest-bearing deposits:            
    Checking  $2,330,340   $1,238  0.21%  $2,321,970   $1,327  0.23%
    Money markets  1,294,100   539   0.17   1,290,334   678   0.21 
    Savings  156,554   5   0.01   152,570   20   0.05 
    Certificates of deposit – retail  426,166   606   0.57   453,127   725   0.64 
    Subtotal interest-bearing deposits  4,207,160   2,388   0.23   4,218,001   2,750   0.26 
    Interest-bearing demand – brokered  85,000   373   1.76   85,000   387   1.82 
    Certificates of deposit – brokered  33,823   261   3.09   33,810   267   3.16 
    Total interest-bearing deposits  4,325,983   3,022   0.28   4,336,811   3,404   0.31 
    Borrowings  55,513   64   0.46   25,890   25   0.39 
    Capital lease obligation  5,662   68   4.80   5,913   71   4.80 
    Subordinated debt  132,731   1,364   4.11   132,659   1,363   4.11 
    Total interest-bearing liabilities  4,519,889   4,518  0.40%  4,501,273   4,863  0.43%
    Noninterest-bearing liabilities:            
    Demand deposits  978,288       1,042,477     
    Accrued expenses and other liabilities  119,003       111,357     
    Total noninterest-bearing liabilities  1,097,291       1,153,834     
    Shareholders’ equity  544,179       543,035     
    Total liabilities and shareholders’ equity  $6,161,359       $6,198,142     
    Net interest income    $39,943       $37,421   
    Net interest spread     2.55%     2.37%
    Net interest margin (D)     2.69%     2.46%
    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 21% 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, as compared to book value per common share, which we calculate by dividing shareholders’ equity by period end common shares outstanding.  We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end.  We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios.

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

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

    (Dollars in thousands, except share data)

      Three Months Ended
      March 31, Dec 31, Sept 30, June 30, March 31,
    Tangible Book Value Per Share 2022 2021 2021 2020 2021
    Shareholders’ equity  $523,426   $546,388   $543,014   $538,459   $522,441 
    Less:  Intangible assets, net  48,471   48,902   49,333   43,156   43,524 
    Tangible equity  $474,955   $497,486   $493,681   $495,303   $478,917 
               
    Period end shares outstanding  18,370,312   18,393,888   18,627,910   18,829,877   19,034,870 
    Tangible book value per share  $25.85   $27.05   $26.50   $26.30   $25.16 
    Book value per share  28.49   29.70   29.15   28.60   27.45 
               
    Tangible Equity to Tangible Assets          
    Total assets  $6,255,664   $6,077,993   $6,240,285   $5,791,688   $5,969,627 
    Less: Intangible assets, net  48,471   48,902   49,333   43,156   43,524 
    Tangible assets  $6,207,193   $6,029,091   $6,190,952   $5,748,532   $5,926,103 
    Tangible equity to tangible assets 7.65% 8.25% 7.97% 8.62% 8.08%
    Equity to assets 8.37% 8.99% 8.70% 9.30% 8.75%


      Three Months Ended
      March 31, Dec 31, Sept 30, June 30, March 31,
    Return on Average Tangible Equity 2022 2021 2021 2021 2021
    Net income  $13,441   $14,855   $14,171   $14,418   $13,178 
               
    Average shareholders’ equity  $544,179   $543,035   $544,856   $530,971   $525,643 
    Less:  Average intangible assets, net  48,717   49,151   48,757   43,366   43,742 
    Average tangible equity  $495,462   $493,884   $496,099   $487,605   $481,901 
               
    Return on average tangible common equity  10.85% 12.03% 11.43% 11.83% 10.94%


      Three Months Ended
      March 31, Dec 31, Sept 30, June 30, March 31,
    Efficiency Ratio 2022 2021 2021 2021 2021
    Net interest income  $39,622   $37,212   $35,211   $33,845   $31,793 
    Total other income  14,714   18,964   17,781   17,678   17,820 
    Add:          
       Fair value adjustment for CRA equity security  682   139   70   (42)  265 
    Less:          
       Loss/(gain) on loans held for sale          
       at lower of cost or fair value  —   265   —   (1,125)  (282)
       Income from life insurance proceeds  —   —   —   (153)  (302)
       Loss on securities sale, net  6,609   —   —   —   — 
       Loss/(gain) on swap termination  —   —   —   842   — 
    Total recurring revenue  61,627   56,580   53,062   51,045   49,294 
               
    Operating expenses  34,169   31,704   32,185   30,684   31,594 
    Less:           
       Write-off of subordinated debt costs  —   —   —   648   — 
       Swap valuation allowance  673   893   1,350   —   — 
       Severance expense  1,476   —   —   —   1,532 
    Total operating expense  32,020   30,811   30,835   30,036   30,062 
               
    Efficiency ratio 51.96% 54.46% 58.11% 58.84% 60.99%


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