ex99-1.htm

EX-99.1 2 ex99-1.htm EXHIBIT 99-1 ex99-1.htm

Contact:

Jeffrey J. Carfora, EVP and CFO

Peapack-Gladstone Financial Corporation

T: 908-719-4308

PEAPACK-GLADSTONE FINANCIAL CORPORATION

REPORTS THIRD QUARTER RESULTS OF OPERATIONS

BEDMINSTER, N.J.—(BUSINESS WIRE)—November 1, 2010 – Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market:PGC) (the Corporation) recorded net income of $1.9 million and diluted earnings per share of $0.18, for the quarter ended September 30, 2010. This compared to diluted earnings per share of $0.10 for the quarter ended September 30, 2009 and diluted earnings per share of $0.16 for the quarter ended June 30, 2010.

When compared to the quarter ended September 30, 2009, the September 2010 quarter included increased net interest income, increased income from the PGB Trust and Investment business, increased other income, increased net gains on sales of securities, and a reduced provision for loan losses, the effects of which were partially offset by a write-down of the Corporation’s investment in various equity securities.

Frank A. Kissel, Chairman and CEO, stated, “We are pleased to have shown earnings growth this quarter, which contributed to continued growth in capital. Building capital internally to redeem the Treasury’s Capital Purchase Program investment over time, while remaining well capitalized, continues to be an important business objective of the Corporation.”

The Corporation’s provision for loan losses for the quarter ended September 30, 2010 was $2.0 million, reflecting a lower level than each of the

past 4 quarters. Mr. Kissel noted “Reduced charge-off levels, as well as reduced non-performing loan levels in the current quarter, contributed to the reduced provision.” Mr. Kissel went on to say “We continue to be pleased with the progress we have made in resolving certain problem assets. This progress led to the decrease in non-performing loans from June 30, 2010 to September 30, 2010.”

Net Interest Income and Margin

Net interest income, on a fully tax-equivalent basis, was $12.5 million for both the third quarters of 2010 and 2009.

On a fully tax-equivalent basis, the net interest margin was 3.64 percent for the September 2010 quarter compared to 3.61 percent for the September 2009 quarter. In comparing the September 2010 quarter to the same quarter last year the growth of lower cost core deposits and the intentional run-off of higher cost certificates of deposit contributed to the improved margin. This effect was partially offset by the effect of growth in lower yielding, but less risky cash deposits and investment securities coupled with declining loan balances.

Mr. Kissel stated, “As evidenced by our relatively short duration investment portfolio, we believe we are well positioned for the future when we expect loan demand will increase and interest rates will rise.”

Loans

Average loans totaled $949.3 million for the third quarter of 2010 as compared to $1.01 billion for the same 2009 quarter, reflecting a decrease of $60.0 million or 5.9 percent.

The average residential mortgage loan portfolio declined $44.5 million or 9.4 percent to $428.4 million in the third quarter of 2010 from the same quarter of

2009. The Corporation sells the majority of its longer-term, fixed-rate loan production as a source of non-interest income and as part of its interest rate risk management strategy in the lower rate environment, and loan pay-downs have outpaced the originations retained in portfolio.

The average commercial loan portfolio declined $19.1 million or 4.0 percent from the third quarter of 2009 to $454.3 million for the same quarter in 2010. Mr. Kissel commented: “Loan demand from quality borrowers on the commercial front has been generally scarce through the first nine months of 2010. However, over the last couple of months we have seen commercial loan demand from quality borrowers pick up somewhat. The commercial loan pipeline stands at $31 million at September 30, 2010.”

The average home equity line portfolio rose $6.0 million or 16.7 percent to $42.2 million for the third quarter of 2010 compared to the same quarter in 2009. The Corporation focused on the origination of these adjustable-rate loans and loan originations outpaced principal paydowns over the year.

Mr. Kissel continued, “We have the capital and liquidity to lend to well-qualified individuals and businesses. However, we do remain committed to our conservative underwriting standards that have served us well.”

Deposits

Average total deposits (interest-bearing and noninterest-bearing) grew $8.6 million from $1.31 billion in the third quarter of 2009 to $1.32 billion in the third quarter of 2010, despite a significant reduction in certificate of deposit balances. Average certificates of deposit declined from $374.5 million in the September 2009 quarter to $251.5 million in the September 2010 quarter, a decline of $123.0 million or 32.8 percent. The Corporation allowed higher cost

certificates of deposit to run-off and replaced those funds with lower cost, more stable core deposits.

Average noninterest-bearing checking balances grew $12.6 million or 6.3 percent to $211.4 million in the third quarter of 2010 from the third quarter of 2009. Average interest-bearing checking balances totaled $259.8 million in the third quarter of 2010, rising $43.2 million or 19.9 percent from the same quarter in 2009. Checking growth is attributable to the Corporation’s focus on core deposit growth, particularly checking, coupled with growth in the Ultimate Checking product, which provides customers with a low-cost checking product and a higher yield for larger balances.

Average money market accounts also rose, from $445.8 million in the third quarter of 2009 to $515.7 million for the same quarter of 2010, an increase of $69.9 million or 15.7 percent. The Corporation’s reduction in certificate of deposit balances and its focus on core deposit growth, as well as certain customers tending to “park” funds in money market accounts in lower interest rate environments, accounted for this growth.

Mr. Kissel commented, “Our core deposit growth and reduced reliance on certificates of deposit has benefitted our cost of funds, as well as our franchise value.”

PGB Trust and Investments

PGB Trust and Investments generated $2.3 million in fee income in the third quarter of 2010, compared to $2.2 million in the third quarter of 2009. The market value of the assets under administration of the Trust Division increased from $1.80 billion at September 30, 2009 to $1.93 billion at September 30, 2010.

Craig C. Spengeman, President of PGB Trust & Investments commented, “We continue to see increases in our managed asset business and related recurring fee income. Further, we are pleased with the recovery and performance of our assets under administration, particularly in the latter part of this quarter. The financial markets continue to experience extreme volatility as we continue to manage through a most challenging period. Our performance reflects the sound financial management of our trust and investment professionals. Further, we continue to add new clients, as individuals continue to seek our professional advice.”

Other Income

Other income totaled $1.2 million in the September 2010 quarter compared to $1.1 million in the September 2009 quarter. Fee income earned on the sale of mortgage loans at origination increased, as there were greater mortgage originations in the September 2010 quarter and at a greater targeted premiums than in the September 2009 quarter.

Net gains on sales of securities totaled $126 thousand for the quarter ended September 30, 2010. The 2009 quarter reflected a net loss of $2 thousand.

The September 2010 quarter included a $360 thousand write-down of the Corporation’s investment in equity securities. Mr. Kissel noted “Our equity portfolio consists of high quality common stocks with a book value before write-down of $1.5 million. Unfortunately, the market value of these stocks has been depressed due to the recession. Although our quarterly review of each of the companies continues to indicate no major financial issues, since the market value of the stocks has been below our book value for an extended period, and

we do not forecast a recovery of value in the foreseeable future, we have decided to write the securities down to fair value as of September 30, 2010.”

Operating Expenses

The Corporation’s total operating expenses were $10.9 million in both the September 2010 quarter and the September 2009 quarter. The 2010 quarter included decreased FDIC insurance expense and decreased professional fees offset by increased expenses associated with a new branch office opened in September 2009 and a new corporate headquarters occupied in June 2010.

ASSET QUALITY

At September 30, 2010, nonperforming assets decreased to $19.0 million or 1.28 percent of total assets as compared to $21.3 million or 1.44 percent of total assets at June 30, 2010. As noted earlier, the progress made in resolving certain problem assets has led to a decline in non-performing assets from June 30, 2010 to September 30, 2010.

The allowance for loan losses was $14.0 million or 1.49 percent of total loans at September 30, 2010 as compared to $13.2 million or 1.34 percent of total loans at December 31, 2009.

CAPITAL

At September 30, 2010, the Corporation’s leverage ratio, tier 1 and total risk based capital ratios were 8.00 percent, 12.62 percent and 13.88 percent, respectively. All ratios reflect the $7.2 million reduction in regulatory capital due to the partial redemption in January 2010 of the preferred shares previously issued under the Treasury’s Capital Purchase Program. All are above the levels necessary to be considered well capitalized under applicable regulatory

guidelines. Additionally, the Corporation’s common equity ratio (common equity to total assets) at September 30, 2010 is 6.54 percent compared to 6.09 percent at December 31, 2009.

As previously announced, on October 21, 2010 the Board of Directors declared a regular cash dividend of $0.05 per share payable on November 19, 2010 to shareholders of record on November 4, 2010.

ABOUT THE CORPORATION

Peapack-Gladstone Financial Corporation is a bank holding company with total assets of $1.48 billion as of September 30, 2010. Peapack-Gladstone Bank, its wholly owned community bank, was established in 1921, and has 23 branches in Somerset, Hunterdon, Morris, Middlesex and Union Counties. The Bank’s Trust Division, PGB Trust and Investments, operates at the Bank’s new corporate offices located at 500 Hills Drive in Bedminster and at four other locations in Clinton, Morristown and Summit, New Jersey and Bethlehem, Pennsylvania. To learn more about Peapack-Gladstone Financial Corporation and its services please visit our web site at www.pgbank.com or call 908-234-0700.

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

●	a continued or unexpected decline in the economy, in particular in our New Jersey market area;
●	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;
●	inability to successfully grow our business;

●	inability to manage our growth;
●	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 and related regulations) subject us to additional regulatory oversight which may result in increased compliance costs;
●	higher than expected FDIC insurance premiums;
●	lack of liquidity to fund our various cash obligations;
●	repurchase of our preferred shares issued under the Treasury’s Capital Purchase Program which will impact net income available to our common shareholders and our earnings per share;
●	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, 2009 and our subsequent Quarterly Reports on Form 10-Q. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the Corporation’s expectations.

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

(Tables to Follow)

PEAPACK-GLADSTONE FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CONDITION

(Dollars in thousands)

(Unaudited)

	As of
	September 30, 2010		June 30, 2010		March 31, 2010		December 31, 2009		September 30, 2009
	September 30, 2010		June 30, 2010		March 31, 2010		December 31, 2009		September 30, 2009

ASSETS
Cash and due from banks	$	9,935	$	10,735	$	8,999	$	7,864	$	9,343
Federal funds sold		100		201		201		201		200
Interest-earning deposits		84,566		59,356		33,915		71,907		46,876
Total cash and cash equivalents		94,601		70,292		43,115		79,972		56,419

Securities held to maturity		102,032		101,603		105,258		89,459		86,703
Securities available for sale		246,334		252,646		278,052		272,484		252,786
FHLB and FRB Stock, at cost		4,623		4,807		5,305		5,315		5,329

Residential mortgage		425,315		430,021		443,085		452,641		466,601
Commercial mortgage		280,486		280,513		281,323		279,595		279,336
Commercial loans		128,220		133,881		133,288		120,554		129,671
Construction loans		39,989		46,286		48,044		64,816		65,760
Consumer loans		22,410		23,811		24,936		25,638		26,571
Home equity lines of credit		45,345		41,956		39,487		38,728		38,450
Other loans		2,626		2,788		902		1,565		1,592
Total loans		944,391		959,256		971,065		983,537		1,007,981
Less: Allowance for loan losses		14,025		13,856		13,720		13,192		12,947
Net loans		930,366		945,400		957,345		970,345		995,034

Premises and equipment		33,901		34,626		27,942		27,911		28,011
Other real estate owned		1,000		210		40		360		680
Accrued interest receivable		4,594		4,533		5,112		4,444		5,359
Bank owned life insurance		26,877		26,672		26,473		26,292		26,087
Deferred tax assets, net		23,903		23,438		23,999		23,522		22,154
Other assets		12,030		13,036		10,670		12,249		9,117
TOTAL ASSETS	$	1,480,261	$	1,477,263	$	1,483,311	$	1,512,353	$	1,487,679

LIABILITIES
Deposits:
Noninterest bearing
demand deposits	$	219,700	$	216,314	$	223,184	$	216,127	$	199,804
Interest-bearing deposits
Checking		255,665		249,472		241,887		255,058		212,687
Savings		78,819		76,937		77,064		73,866		73,308
Money market accounts		525,264		503,829		502,548		458,303		470,123
CD’s $100,000 and over		85,703		101,034		109,347		147,138		159,942
CD’s less than $100,000		155,268		163,769		173,219		199,177		209,994
Total deposits		1,320,419		1,311,355		1,327,249		1,349,669		1,325,858
Borrowings		24,234		28,342		36,140		36,499		36,815
Capital lease obligation		6,226		6,148		-		-		-
Other liabilities		11,903		15,435		5,998		6,676		5,862
TOTAL LIABILITIES		1,362,782		1,361,280		1,369,387		1,392,844		1,368,535
Shareholders’ Equity		117,479		115,983		113,924		119,509		119,144
TOTAL LIABILITIES AND
SHAREHOLDERS’ EQUITY	$	1,480,261	$	1,477,263	$	1,483,311	$	1,512,353	$	1,487,679

Trust division assets under
management (market value,
not included above)	$	1,929,565	$	1,830,944	$	1,894,971	$	1,856,229	$	1,803,862

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED BALANCE SHEET DATA

(Dollars in thousands)

(Unaudited)

	As of
	September 30, 2010			June 30, 2010			March 31, 2010			December 31, 2009			September 30, 2009
	September 30, 2010			June 30, 2010			March 31, 2010			December 31, 2009			September 30, 2009

Asset Quality:
Loans past due over 90 days
and still accruing	$	442		$	736		$	638		$	496		$	1,118
Nonaccrual loans		17,535			20,361			12,200			11,256			13,082
Other real estate owned		1,000			210			40			360			680
Total nonperforming assets	$	18,977		$	21,307		$	12,878		$	12,112		$	14,880


Nonperforming loans to
total loans		1.90	%		2.20	%		1.32	%		1.19	%		1.41	%
Nonperforming assets to
total assets		1.28	%		1.44	%		0.87	%		0.80	%		1.00	%

Troubled debt restructured loans	$	10,639		$	10,613		$	11,817		$	11,123		$	18,671

Loans past due 30 through 89
days and still accruing	$	9,487		$	9,444		$	10,056		$	6,015		$	7,362

Allowance for loan losses:
Beginning of period	$	13,856		$	13,720		$	13,192		$	12,947		$	11,054
Provision for loan losses		2,000			2,750			2,400			2,950			2,750
Charge-offs, net		(1,831	)		(2,614	)		(1,872	)		(2,705	)		(857	)
End of period	$	14,025		$	13,856		$	13,720		$	13,192		$	12,947

ALLL to nonperforming loans		78.02	%		65.68	%		106.87	%		112.25	%		91.18	%
ALLL to total loans		1.49	%		1.44	%		1.41	%		1.34	%		1.28	%


Capital Adequacy:
Tier I leverage
(5% minimum to be
considered well
capitalized)		8.00	%		7.85	%		7.80	%		7.93	%		8.17	%
Tier I capital to risk-
weighted assets
(6% minimum to be
considered well
capitalized)		12.62	%		12.28	%		12.01	%		12.45	%		12.23	%
Tier I & II capital to
risk-weighted assets
(10% minimum to be
considered well
capitalized)		13.88	%		13.53	%		13.27	%		13.71	%		13.48	%

Common equity to
Total assets		6.54	%		6.45	%		6.29	%		6.09	%		6.17	%

Book value per
Common share	$	11.01		$	10.85		$	10.70		$	10.57		$	10.54

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in thousands, except share data)

(Unaudited)

	For The Three Months Ended
	September 30, 2010			June 30, 2010			March 31, 2010			December 31, 2009			September 30, 2009
	September 30, 2010			June 30, 2010			March 31, 2010			December 31, 2009			September 30, 2009
Income Statement Data:
Interest income	$	14,974		$	15,450		$	15,791		$	16,123		$	16,379
Interest expense		2,612			2,963			3,243			4,000			4,129
Net interest income		12,362			12,487			12,548			12,123			12,250
Provision for loan losses		2,000			2,750			2,400			2,950			2,750
Net interest income after
provision for loan losses		10,362			9,737			10,148			9,173			9,500
Trust fees		2,254			2,686			2,364			2,346			2,200
Other income		1,203			1,098			1,108			1,067			1,137
Securities gains/(losses), net		126			2			-			(42	)		(2	)
Other-than-temporary impairment
charge, equity securities		(360	)		-			-			-			-
Salaries and employee benefits		5,647			5,704			5,709			5,291			5,622
Premises and equipment		2,416			2,588			2,372			2,358			2,185
FDIC insurance expense		586			552			586			834			724
Other expenses		2,237			2,161			1,863			2,124			2,409
Income before income taxes		2,699			2,518			3,090			1,937			1,895
Income tax expense		793			762			965			536			583
Net income		1,906			1,756			2,125			1,401			1,312
Dividends and accretion
on preferred stock		326			324			710			430			430
Net income available to
Common shareholders	$	1,580		$	1,432		$	1,415		$	971		$	882

Per Common Share Data:
Earnings per share (basic)	$	0.18		$	0.16		$	0.16		$	0.11		$	0.10
Earnings per share (diluted)		0.18			0.16			0.16			0.11			0.10


Performance Ratios:
Return on Average Assets		0.52	%		0.47	%		0.58	%		0.37	%		0.36	%
Return on Average Common
Equity		6.55	%		6.06	%		6.10	%		4.18	%		3.89	%

Net Interest Margin
(Taxable Equivalent Basis)		3.64	%		3.64	%		3.67	%		3.44	%		3.61	%

PEAPACK-GLADSTONE FINANCIAL CORPORATION

SELECTED CONSOLIDATED FINANCIAL DATA

(Dollars in thousands, except share data)

(Unaudited)

	For The Nine Months Ended September 30,


	2010			2009
Income Statement Data:
Interest income	$	46,215		$	49,883
Interest expense		8,818			13,659
Net interest income		37,397			36,224
Provision for loan losses		7,150			6,750
Net interest income after
provision for loan losses		30,247			29,474
Trust fees		7,303			7,082
Other income		3,410			3,234
Securities gains, net		128			111
Other-than-temporary impairment
charge, equity securities		(360	)		-
Salaries and employee benefits		17,060			16,585
Premises and equipment		7,376			6,445
FDIC insurance expense		1,724			2,475
Other expenses		6,261			6,153
Income before income taxes		8,307			8,243
Income tax expense		2,520			2,519
Net income		5,787			5,724
Dividends and accretion
on preferred stock		1,360			1,063
Net income available to
Common shareholders	$	4,427		$	4,661

Per Common Share Data:
Earnings per share (basic)	$	0.50		$	0.53
Earnings per share (diluted)		0.50			0.53


Performance Ratios:
Return on Average Assets		0.52	%		0.53	%
Return on Average Common
Equity		6.24	%		6.98	%

Net Interest Margin
(Taxable Equivalent Basis)		3.65	%		3.64	%

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

	September 30, 2010								September 30, 2009
	Average Balance			Income/ Expense					Average Balance			Income/ Expense
	Average Balance			Income/ Expense		Yield			Average Balance			Income/ Expense		Yield
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1)	$	314,213		$	2,230		2.84	%	$	275,325		$	2,462		3.58	%
Tax-Exempt (1) (2)		32,545			384		4.72			51,853			626		4.84
Loans (2) (3)		949,301			12,473		5.26			1,009,348			13,521		5.36
Federal Funds Sold		193			-		0.22			201			-		0.20
Interest-Earning Deposits		78,501			50		0.26			49,639			25		0.20
Total Interest-Earning
Assets		1,374,753		$	15,137		4.40	%		1,386,366		$	16,634		4.80	%
Noninterest-Earning Assets:
Cash and Due from Banks		8,314								8,301
Allowance for Loan
Losses		(14,180	)							(11,140	)
Premises and Equipment		34,589								27,705
Other Assets		70,056								58,157
Total Noninterest-Earning
Assets		98,779								83,023
Total Assets	$	1,473,532							$	1,469,389

LIABILITIES:
Interest-Bearing Deposits
Checking	$	259,816		$	409		0.63	%	$	216,646		$	405		0.75	%
Money Markets		515,734			839		0.65			445,839			1,108		0.99
Savings		78,058			78		0.40			72,126			85		0.47
Certificates of Deposit		251,511			986		1.57			374,548			2,195		2.34
Total Interest-Bearing
Deposits		1,105,119			2,312		0.84			1,109,159			3,793		1.37
Borrowings		25,532			223		3.51			36,923			336		3.64
Capital Lease Obligation		6,177			77		4.98			-			-		-
Total Interest-Bearing
Liabilities		1,136,828			2,612		0.92			1,146,082			4,129		1.44
Noninterest Bearing
Liabilities
Demand Deposits		211,390								198,800
Accrued Expenses and
Other Liabilities		8,216								6,579
Total Noninterest-Bearing
Liabilities		219,606								205,379
Shareholders’ Equity		117,098								117,928
Total Liabilities and
Shareholders’ Equity	$	1,473,532							$	1,469,389
Net Interest Income				$	12,525							$	12,505
Net Interest Spread							3.48	%							3.36	%
Net Interest Margin (4)							3.64	%							3.61	%

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

THREE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

	September 30, 2010								June 30, 2010
	Average Balance			Income/ Expense					Average Balance			Income/ Expense
	Average Balance			Income/ Expense		Yield			Average Balance			Income/ Expense		Yield
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1)	$	314,213		$	2,230		2.84	%	$	321,887		$	2,404		2.99	%
Tax-Exempt (1) (2)		32,545			384		4.72			35,111			420		4.78
Loans (2) (3)		949,301			12,473		5.26			964,070			12,774		5.30
Federal Funds Sold		193			-		0.22			201			-		0.22
Interest-Earning Deposits		78,501			50		0.26			69,245			28		0.16
Total Interest-Earning
Assets		1,374,753		$	15,137		4.40	%		1,390,514		$	15,626		4.50	%
Noninterest-Earning Assets:
Cash and Due from Banks		8,314								8,478
Allowance for Loan
Losses		(14,180	)							(14,075	)
Premises and Equipment		34,589								30,675
Other Assets		70,056								68,786
Total Noninterest-Earning
Assets		98,779								93,964
Total Assets	$	1,473,532							$	1,484,378

LIABILITIES:
Interest-Bearing Deposits
Checking	$	259,816		$	409		0.63	%	$	254,018		$	420		0.66	%
Money Markets		515,734			839		0.65			510,589			1,019		0.80
Savings		78,058			78		0.40			76,092			79		0.42
Certificates of Deposit		251,511			986		1.57			274,240			1,103		1.61
Total Interest-Bearing
Deposits		1,105,119			2,312		0.84			1,114,939			2,621		0.94
Borrowings		25,532			223		3.51			32,403			291		3.59
Capital Lease Obligation		6,177			77		4.98			2,019			51		10.09
Total Interest-Bearing
Liabilities		1,136,828			2,612		0.92			1,149,361			2,963		1.03
Noninterest Bearing
Liabilities
Demand Deposits		211,390								214,198
Accrued Expenses and
Other Liabilities		8,216								5,667
Total Noninterest-Bearing
Liabilities		219,606								219,865
Shareholders’ Equity		117,098								115,152
Total Liabilities and
Shareholders’ Equity	$	1,473,532							$	1,484,378
Net Interest Income				$	12,525							$	12,663
Net Interest Spread							3.48	%							3.47	%
Net Interest Margin (4)							3.64	%							3.64	%

PEAPACK-GLADSTONE FINANCIAL CORPORATION

AVERAGE BALANCE SHEET

UNAUDITED

NINE MONTHS ENDED

(Tax-Equivalent Basis, Dollars in Thousands)

	September 30, 2010								September 30, 2009
	Average Balance			Income/ Expense					Average Balance			Income/ Expense
	Average Balance			Income/ Expense		Yield			Average Balance			Income/ Expense		Yield
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1)	$	320,452		$	7,145		2.97	%	$	228,359		$	6,887		4.02	%
Tax-Exempt (1) (2)		35,133			1,253		4.76			50,293			1,898		5.03
Loans (2) (3)		963,840			38,242		5.29			1,029,833			41,825		5.42
Federal Funds Sold		198			-		0.21			200			-		0.20
Interest-Earning Deposits		64,237			102		0.21			47,479			43		0.12
Total Interest-Earning
Assets		1,383,860		$	46,742		4.50	%		1,356,164		$	50,653		4.98	%
Noninterest-Earning Assets:
Cash and Due from Banks		8,375								7,441
Allowance for Loan
Losses		(14,011	)							(10,207	)
Premises and Equipment		31,110								27,153
Other Assets		69,234								56,173
Total Noninterest-Earning
Assets		94,708								80,560
Total Assets	$	1,478,568							$	1,436,724

LIABILITIES:
Interest-Bearing Deposits
Checking	$	250,785		$	1,234		0.66	%	$	192,822		$	1,050		0.73	%
Money Markets		507,075			2,977		0.78			414,054			3,407		1.10
Savings		76,456			235		0.41			70,353			244		0.46
Certificates of Deposit		276,937			3,406		1.64			402,500			7,923		2.62
Total Interest-Bearing
Deposits		1,111,253			7,852		0.94			1,079,729			12,624		1.56
Borrowings		31,369			838		3.56			39,147			1,035		3.52
Capital Lease Obligation		2,754			128		6.18			-			-
Total Interest-Bearing
Liabilities		1,145,376			8,818		1.03			1,118,876			13,659		1.63
Noninterest Bearing
Liabilities
Demand Deposits		211,223								196,201
Accrued Expenses and
Other Liabilities		6,665								6,310
Total Noninterest-Bearing
Liabilities		217,888								202,511
Shareholders’ Equity		115,304								115,337
Total Liabilities and
Shareholders’ Equity	$	1,478,568							$	1,436,724
Net Interest Income				$	37,924							$	36,994
Net Interest Spread							3.47	%							3.35	%
Net Interest Margin (4)							3.65	%							3.64	%

(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.