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Peapack-Gladstone Financial Corporation Reports Record Fourth Quarter and Full Year Results, Driven by Solid Wealth Management and Commercial Banking Activities

January 29, 2020 GMT

Bedminster, NJ - ( NewMediaWire ) - January 29, 2020 - Peapack-Gladstone Financial Corporation (NASDAQ Global Select Market: PGC) (the “Company”) announces its fourth quarter and full year 2019 results, a quarterly dividend, and the status of the stock repurchase program. 

For the quarter ended December 31, 2019, the Company recorded revenue of $46.44 million, pretax income of $17.79 million, net income of $12.23 million and diluted earnings per share (“EPS”) of $0.64, compared to $40.64 million, $13.62 million, $10.73 million and $0.55, respectively, for the same three-month period last year. The 2019 quarter included increased net interest income and non-interest income, partially offset by an increased provision for loan and lease losses (due to loan growth) and increased operating expenses (due in part to the wealth management firm acquired in September 2019). In comparing the fourth quarter of 2019 to the fourth quarter of 2018, revenue increased 14% and pretax income increased 31%, reflecting favorable operating leverage during the period. For the same periods net income increased 14% and EPS increased 16%. The lower growth in net income and EPS relative to pre-tax income was due to a higher effective tax rate in 2019 caused by changes in NJ State tax law in 2018.       

For the twelve months ended December 31, 2019, the Company recorded total revenue of $174.97 million, pretax income of $66.12 million, net income of $47.43 million and diluted earnings per share of $2.44, compared to $159.36 million, $57.72 million, $44.17 million and $2.31, respectively, for the twelve months ended December 31, 2018, reflecting increases of 10% in revenue and 15% in pretax income, reflecting favorable operating leverage. Net income and EPS increased 7% and 6%, respectively, less than the increase in pretax income due to the increase in the effective tax rate in 2019. The effective tax rate was 28.26% for twelve months of 2019 compared to 23.48% for the twelve months of 2018. The increase was caused by changes in NJ State tax law in 2018.   

As previously announced, on July 25, 2019, the Company authorized the repurchase of up to 960,000 shares, or approximately 5% of its outstanding shares, through June 30, 2020. During the fourth quarter of 2019, under this program, the Company purchased 143,925 shares, at an average price of $29.78, for a total cost of $4.3 million. To date, under this program, the Company purchased 739,778 shares, at an average price of $28.39, for a total cost of $21.0 million. 220,222 shares remain to be purchased under the authorization.

Douglas L. Kennedy, President and CEO, said, “We were very pleased with our earnings this past quarter, as we continued to drive operating leverage. We acknowledge the challenges the Bank and the industry face given the recent Fed rate decreases and the shape of the yield curve. We were pleased our reported net interest margin (“NIM”) did not decrease and our NIM, adjusted for prepayment premiums and excess liquidity (see page 6), only decreased marginally in the fourth quarter, after the three rate decreases during the second half of 2019. Further, we believe our strategy (which results in a higher incidence of fee income - 33% of total revenue for the fourth quarter of 2019) will enable us to deliver higher quality earnings and increased shareholder value over time.”

EXECUTIVE SUMMARY:

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

December 2019 Quarter Compared to Prior Year Quarter

  Three Months Ended   Three Months Ended           December 31,   December 31,  Increase/ (Dollars in millions, except per share data) 2019 (A)   2018 (B)  (Decrease) Net interest income $30.91   $29.39  $1.52   5%Provision for loan and lease losses  1.95    1.50   0.45   30 Net interest income after provision  28.96  

(A) The December 2019 quarter included a full quarter of wealth management fee income and expense related to Point View Wealth Management, (“Point View”), which was acquired effective September 1, 2019. The December 2019 quarter included a higher effective tax rate than the prior year quarter due to changes in NJ state tax law.(B) The December 2018 quarter included $4.39 million loss on the sale of multifamily loans; $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of MCM; and a $405,000 write-down of intangible assets related to MCM.

December 2019 Quarter Compared to Linked Quarter

  Three Months Ended  Three Months Ended            December 31,  September 30,   Increase/ (Dollars in millions, except per share data) 2019 (A)  2019   (Decrease) Net interest income $30.91  $30.09   $0.82   3%Provision for loan and lease losses  1.95   0.80    1.15   144 Net interest income after provision  28.96   29.29    (0.33)  (1)Wealth management fee income  10.12   9.50    0.62   7 Capital markets activity  3.73   2.77    0.96   35 Other income  1.68   2.15    (0.47)  (22)Total other income  15.53   14.42    1.11   8 Operating expenses  26.70   26.26    0.44   2 Pretax income  17.79   17.45    0.34   2 Income tax expense  5.56   5.22    0.34   7 Net income $12.23  $12.23   $0.00   0%Diluted EPS $0.64  $0.63   $0.01   2%                  Total Revenue $46.44  $44.51   $1.93   4%                  Effective tax rate  31.25%  29.91%   1.34     Return on average assets annualized  0.98%  1.00%   (0.02)    Return on average equity annualized  9.81%  9.87%   (0.06)    

(A) The quarter ended December 31, 2019 included a full quarter of wealth management fee income and expense related to Point View, which was acquired effective September 1, 2019 compared to one month in the quarter ended September 30, 2019.

Year over Year Comparison            

  Year Ended  Year Ended            December 31,  December 31,   Increase/ (Dollars in millions, except per share data) 2019 (A)  2018 (B)   (Decrease) Net interest income $120.27  $115.16   $5.11   4%Provision for loan and lease losses  4.00   3.55    0.45   13 Net interest income after provision  116.27   111.61    4.66   4 Wealth management fee income  38.36   33.25    5.11   15 Capital markets activity  8.67   5.81    2.86   49 Other income  7.67   5.14    2.53   49 Total other income  54.70   44.20    10.50   24 Operating expenses  104.85   98.09    6.76   7 Pretax income  66.12   57.72    8.40   15 Income tax expense  18.69   13.55    5.14   38 Net income $47.43  $44.17   $3.26   7%Diluted EPS $2.44  $2.31   $0.13   6%                  Total Revenue $174.97  $159.36   $15.61   10%                  Effective tax rate  28.26%  23.48%   4.78     Return on average assets annualized  0.99%  1.02%   (0.03)    Return on average equity annualized  9.70%  10.13%   (0.43)    

The year ended December 31, 2019 included a full year of wealth management fee income and expense related to Lassus Wherley, which was acquired effective September 1, 2018, and includes four months of wealth management fee income and expense related to Point View, which was acquired effective September 1, 2019. The 2019 twelve months included a higher effective tax rate than the prior year due to changes in NJ state tax law.

The 2018 year includes $4.39 million loss on the sale of multifamily loans; $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of MCM; and a $405,000 write-down of intangible assets related to MCM. 

Other highlights for the quarter included:

Wealth Management remains integral to our strategy and provides a diversified, predictable, and stable source of revenue over time: As previously announced, effective September 1, 2019 the Company completed its acquisition of Point View, a registered investment advisor headquartered in Summit, NJ, which added nearly $350 million of assets under management and/or administration (“AUM/AUA”).At December 31, 2019, the market value of AUM/AUA at the Peapack Private Wealth Management Division of Peapack-Gladstone Bank (the “Bank”) was $7.5 billion reflecting an increase of $1.7 billion from $5.8 billion at December 31, 2018, reflecting growth of 29% from the end of the prior year.Wealth management fee income totaled $10.12 million and $38.36 million for the quarter and year ended December 31, 2019, reflecting an increase of $1.6 million, or 18%, from the December 2018 quarter and $5.1 million or 15% from the 2018 year. Wealth management fee income, which comprised approximately 22% of the Company’s total revenue for the quarter ended December 31, 2019, continues to contribute significantly to the Company’s diversified revenue sources.

 Growth in Commercial Banking also continues to be integral to our strategy: Total commercial and industrial (“C&I”) loans (including equipment finance leases and loans of $659 million) at December 31, 2019 were $1.78 billion. This reflected net growth of $378 million (27%) when compared to $1.40 billion at December 31, 2018 and reflected net growth of $201 million when compared to the September 30, 2019 balance (13% growth linked quarter; 51% annualized).C&I momentum has continued to build and pipelines remain strong.As of December 31, 2019, total C&I loans comprised 40% of the total loan portfolio, as compared to 36% at December 31, 2018. As of December 31, 2019, total multifamily loans comprised 27% of the total loan portfolio compared to 29% at December 31, 2018.The Bank’s concentration in commercial real estate loans was 404% of risk-based capital at December 31, 2019 compared to 394% at December 31, 2018. The slight increase was due to management’s plan to generate volumes ahead of and at yields in excess of expected significant maturities/payoffs in 2020.

Deposits, funding, and interest rate risk continue to be actively managed: Deposits totaled $4.24 billion at December 31, 2019. This reflected net growth of $348 million (9%) when compared to $3.90 billion at December 31, 2018 and increased $182 million (4% growth linked quarter; 18% annualized) when compared to the September 30, 2019 balance.The Company’s loan-to-deposit ratio was 104.0% at December 31, 2019, up slightly from September 30, 2019 and December 31, 2018 levels .The Company continues to have access to approximately $1.3 billion of available secured funding at the Federal Home Loan Bank.With the transformation to a commercial bank balance sheet and business model, the Company’s interest rate sensitivity models indicate the Company is asset sensitive as of December 31, 2019, and that net interest income would improve in a rising rate environment but decline in a falling rate environment. Over the past six months, the Company has been managing its balance sheet and deposit costs to mitigate the effects of a falling rate environment. 

Capital and asset quality continue to be strong. The Company’s and Bank’s capital ratios at December 31, 2019 remain strong, despite $21.0 million of share repurchases made during the third and fourth quarters as part of the Company’s stock repurchase program. At December 31, 2019 the Company’s tangible capital ratio stood at 9.01%. The Company believes its existing capital and capital generation from earnings will be more than adequate to support planned balance sheet growth, wealth acquisitions, and potential purchases under its stock repurchase program.The Company authorized a 5% (960,000 shares) stock repurchase program on July 25, 2019 under which the Company has purchased 739,778 shares through the end of the fourth quarter.The Company’s tangible book value per share at December 31, 2019 was $24.47 reflecting an increase of 8% from $22.58 at December 31, 2018.Asset quality metrics continued to be strong as of December 31, 2019. Nonperforming assets at December 31, 2019 were $28.9 million, or 0.56% of total assets as compared to $25.7 million and 0.56% of total assets at December 31, 2018.  

SUPPLEMENTAL QUARTERLY DETAILS:

Wealth Management Business

In the December 2019 quarter, the Bank’s wealth management business generated $10.12 million in fee income, reflecting an increase of $1.57 million (18% growth) compared to $8.55 million for the December 2018 quarter, and reflecting an increase of $619,000 from the September 2019 quarter (7% growth linked quarter, 26% annualized). The December 2019 quarter included three months of fee income related to Point View compared to one month in the September 2019 quarter, which was acquired effective September 1, 2019, as well as increased fees from net organic growth in assets under management. 

John P. Babcock, President of the “Peapack Private Wealth Management” division said, “I am pleased with our results; we had approximately $750 million of new business inflows in 2019 and have a strong pipeline as we finished the year strong. We are making significant forward progress on integrating the systems, processes and people from our 2017, 2018, and 2019 acquisitions and continue to selectively look for additional acquisitions that can add talent and expertise to our wealth management organization.”

Loans / Commercial Banking 

Net loans increased to $4.37 billion at December 31, 2019 from $3.89 billion at December 31, 2018, reflecting 12% annual growth. Loan/line origination levels were robust as was paydown activity. Mr. Kennedy noted, “We were pleased to have strong net loan growth, despite increased paydown activity. And, we have entered the new year with strong loan pipelines.” 

Total C&I loans (including equipment finance leases and loans of $659 million) at December 31, 2019 were $1.78 billion. This reflected net growth of $378 million (27%) when compared to $1.40 billion at December 31, 2018 and reflected net growth of $201 million when compared to the September 30, 2019 balance (13% growth linked quarter; 51% annualized).  

Mr. Kennedy said, “The loan market continues to be extremely competitive from a structure/credit and a pricing perspective. As I have noted before, we will continue to be disciplined and not compromise our credit standards, but we will compete on price, as long as returns remain reasonable as measured by our proprietary loan pricing model.”

Mr. Kennedy also said, “Our newly expanded Corporate Advisory and Structured Finance businesses give us the capability to engage in high level strategic debt, capital and valuation analysis coupled with succession, estate and wealth planning strategies, enabling us to provide a unique boutique level of service, giving us a competitive advantage over much of our peers.”

Funding / Liquidity / Interest Rate Risk Management

The Company actively manages its deposit base to reduce reliance on wholesale sourced deposits, volatility, and/or operational risk.

For the quarter ended December 31, 2019, the Company utilized its excess balance sheet liquidity (basically interest-earning deposits), increased client deposits and short-term borrowings to fund its loan growth.

Mr. Kennedy noted, “As a commercial bank with an asset sensitive balance sheet, as the Fed reduces rates, our loans reprice faster than our deposits. Thus, we have been and will remain keenly focused on our comprehensive deposit rate reduction program with an eye toward relationship profitability.” 

As of December 31, 2019, in addition to approximately $610 million of cash, cash equivalents and investment securities on its balance sheet, the Company also had approximately $1.55 billion of secured funding available from the Federal Home Loan Bank, of which only $233 million was drawn as of December 31, 2019.             Mr. Kennedy noted, “Depending on market conditions, we may utilize lower cost fixed rate wholesale borrowings and/or interest rate swaps, as opposed to retail deposits, to fund fixed rate loan production.”

Kennedy went on to note, “The northeast market continues to be extremely competitive for deposits. The Company is focused on providing high touch client service, a key element in growing its personal and commercial core deposit base. The Company is focused on multiple retail channels, as well as commercial channels, including its enhanced Treasury Management and Escrow offerings. Further, all of our Private Bankers remain keenly focused on deposit gathering.”

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

 Twelve Months Ended  Twelve Months Ended          December 31, 2019  December 31, 2018          NII  NIM  NII  NIM                                 NII/NIM excluding the below$119,032  2.67%  $112,840  2.69%         Prepayment premiums received on loan paydowns 1,328  0.03%   2,002  0.05%         Effect of maintaining excess interest earning cash during 2019 (86) -0.07%   —   —         Material fees recognized on full paydowns of C&I loans —   —   321  0.01%         NII/NIM as reported$120,274  2.63%  $115,163  2.75%                                  Three Months Ended  Three Months Ended  Three Months Ended  December 31, 2019  September 30, 2019  December 31, 2018  NII  NIM  NII  NIM  NII  NIM                         NII/NIM excluding the below$30,385  2.61%  $29,896  2.67%  $28,899  2.70% Prepayment premiums received on loan paydowns 414  0.03%   236  0.02%   495  0.04% Effect of maintaining excess interest earning cash during 2019 115  -0.04%   (47) -0.09%   (9) -0.02% Material fees recognized on full paydowns of C&I loans —   —   —   —   —   — NII/NIM as reported$30,914  2.60%  $30,085  2.60%  $29,385  2.72% 

Net interest income and net interest margin comparisons are shown above.

Mr. Kennedy noted, “Given the yield curve as well as the recent Fed rate decreases, our reported NIM remained flat, but our core NIM declined slightly this quarter, as was expected. While our models indicate additional slight compression in Q1 2020, assuming no further Fed rate decreases, we believe our margin will gradually begin to improve after that. In addition to managing our balance sheet, asset yields and cost of deposits very closely, we will continue to focus even more on fee based activities.”    

Other Noninterest Income (other than Wealth Management fee income)

Noninterest income from Capital Markets activities (loan level back-to-back swap activities, SBA lending and sale program, and mortgage banking income) totaled $3.73 million for the December 2019 quarter compared to $2.77 million for the September 2019 quarter and $2.19 million for the December 2018 quarter. Income from these programs are not linear each quarter, as some quarters will be higher than others.

Other income totaled $504,000 for the fourth quarter of 2019, compared to $902,000 for the third quarter of 2019, and $3.6 million for the fourth quarter of 2018. The December 2018 quarter included $3.00 million of life insurance proceeds related to the December 31, 2018 passing of the founder and managing principal of Murphy Capital Management.

The December 2018 quarter included a $4.39 million loss on the sale of $131 million of fixed rate multifamily loans, sold as part of the Company’s balance sheet management strategy.    

Operating Expenses

The Company’s total operating expenses were $26.70 million for the quarter ended December 31, 2019, compared to $26.26 million for the September 2019 quarter and $25.52 million for the December 2018 quarter. The December 2019 quarter included three months of expenses related to Point View’s operations compared to one month in the September 2019 quarter. Strategic hiring and normal salary increases also contributed to the increase for the December 2019 quarter. There was no FDIC insurance expense for the December 2019 quarter or the September 2019 quarter as the Bank utilized its small bank assessment credit from the FDIC. Mr. Kennedy said, “As we reported last quarter, the Company launched a company-wide expense review, with a goal of slowing expense growth, while continuing our investment in digital and in client acquisition initiatives. Both activities continue to be important given the current yield curve environment.”

Income Taxes

The effective tax rate for the December 2019 quarter was 31.2%, compared to 29.9% for the September 2019 quarter, and 21.2% for the December 2018 quarter. The effective tax rate for the year ended December 31, 2019 was 28.3% compared to 23.5% for the year ended December 31, 2018. The 2019 periods included higher NJ State Income Tax due to the change in NJ Tax law.

Asset Quality / Provision for Loan and Lease Losses 

Nonperforming assets at December 31, 2019 (which does not include troubled debt restructured loans that are performing in accordance with their terms) were $28.9 million, or 0.56% of total assets, compared to $29.7 million, or 0.60% of total assets, at September 30, 2019 and $25.7 million, or 0.56% of total assets, at December 31, 2018. Total loans past due 30 through 89 days and still accruing were $1.9 million at December 31, 2019, compared to $6.3 million at September 30, 2019 and $3.5 million at December 31, 2018.    

For the quarter ended December 31, 2019, the Company’s provision for loan and lease losses was $2.0 million compared to $800,000 for the September 2019 quarter and $1.5 million for the December 2018 quarter. The Company’s provision for loan and lease losses (and its allowance for loan and lease losses) reflect, among other things, the Company’s asset quality metrics, net loan growth, net charge-offs/recoveries, and the composition of the loan portfolio.

At December 31, 2019, the allowance for loan and lease losses was $43.68 million (151% of nonperforming loans and 0.99% of total loans), compared to $41.58 million at September 30, 2019 (142% of nonperforming loans and 1.00% of total loans), and $38.50 million (150% of nonperforming loans and 0.98% of total loans) at December 31, 2018. 

Capital / Dividend / Stock Repurchase Program

The Company’s capital position during the December 2019 quarter was benefitted by net income partially offset by the purchase of shares through the Company’s stock repurchase program. During the quarter, the Company purchased 143,925 shares, at an average price of $29.78, for a total cost of $4.3 million.

The Company’s and Bank’s capital ratios at December 31, 2019 all remain strong. Such ratios remain well above regulatory well capitalized standards.

On January 28, 2020, the Company declared a cash dividend of $0.05 per share payable on February 26, 2020 to shareholders of record on February 11, 2020.

ABOUT THE COMPANY

Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with total assets of $5.2 billion and AUM/AUA of $7.5 billion as of December 31, 2019. 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 Private Wealth Management Division, and its branch network and online platforms, Peapack-Gladstone Bank offers an unparalleled commitment to client service.

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 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 2019 and beyond;

our inability to successfully integrate wealth management firm acquisitions;

our inability to manage our growth;

our inability 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 value in our investment portfolio;

higher than expected increases in our allowance for loan and lease losses;

higher than expected increases in loan and lease losses or in the level of nonperforming loans;

changes in interest rates;

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;

our inability to successfully generate new business in new geographic markets;

our inability to execute upon new business initiatives;

our 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;

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;

effects related to a prolonged shutdown of the federal government which could impact SBA and other government lending programs; 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, 2018. 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

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

  For the Three Months Ended   Dec 31,  Sept 30,  June 30,  March 31,  Dec 31,   2019  2019  2019  2019  2018 Income Statement Data:                    Interest income $45,556  $45,948  $44,603  $44,563  $42,781 Interest expense  14,642   15,863   15,335   14,556   13,396 Net interest income  30,914   30,085   29,268   30,007   29,385 Provision for loan and lease losses  1,950   800   1,150   100   1,500 Net interest income after provision for loan and  lease losses  28,964   29,285   28,118   29,907   27,885 Wealth management fee income  10,120   9,501   9,568   9,174   8,552 Service charges and fees  893   882   897   816   938 Bank owned life insurance  325   332   326   338   351 Gain on loans held for sale at fair value  (Mortgage banking) (A)  344   198   132   47   74 Loss on loans held for sale at lower of cost or  fair value  (4)  (6)  —   —   (4,392)Fee income related to loan level, back-to-back  swaps (A)  2,459   2,349   721   270   1,838 Gain on sale of SBA loans (A)  929   224   573   419   277 Other income (B)  504   902   740   606   3,571 Securities gains/(losses), net  (45)  34   69   59   46 Total other income  15,525   14,416   13,026   11,729   11,255 Salaries and employee benefits  17,954   17,476   17,543   17,156   16,372 Premises and equipment  3,898   3,849   3,600   3,388   3,422 FDIC insurance expense  —   (277)  277   277   645 Other expenses  4,849   5,211   4,753   4,894   5,085 Total operating expenses  26,701   26,259   26,173   25,715   25,524 Income before income taxes  17,788   17,442   14,971   15,921   13,616 Income tax expense  5,555   5,216   3,421   4,496   2,887 Net income $12,233  $12,226  $11,550  $11,425  $10,729                      Total revenue (C) $46,439  $44,501  $42,294  $41,736  $40,640 Per Common Share Data:                    Earnings per share (basic) $0.64  $0.63  $0.59  $0.59  $0.56 Earnings per share (diluted)  0.64   0.63   0.59   0.58   0.55 Weighted average number of common  shares outstanding:                    Basic  18,966,917   19,314,666   19,447,155   19,350,452   19,260,033 Diluted  19,207,738   19,484,905   19,568,371   19,658,006   19,424,906 Performance Ratios:                    Return on average assets annualized (ROAA)  0.98%  1.00%  0.99%  0.98%  0.96%Return on average equity annualized (ROAE)  9.81%  9.87%  9.49%  9.65%  9.32%Net interest margin (tax- equivalent basis)  2.60%  2.60%  2.64%  2.70%  2.72%GAAP efficiency ratio (D)  57.50%  59.01%  61.88%  61.61%  62.81%Operating expenses / average assets annualized  2.13%  2.16%  2.25%  2.21%  2.28%

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.(B) The December 31, 2018 quarter includes death benefit from life insurance policy of $3.0 million related to the December 31, 2018 passing of the founder and managing principal of MCM.(C) Total revenue includes net interest income plus total other income.(D) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.

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

  For the Twelve Months Ended           Dec 31,  Change   2019  2018  $  % Income Statement Data:                Interest income $180,670  $159,686  $20,984   13%Interest expense  60,396   44,523   15,873   36%Net interest income  120,274   115,163 

(A) Gain on loans held for sale at fair value (mortgage banking), fee income related to loan level, back-to-back swaps and gain on sale of SBA loans are all included in “capital markets activity” as referred to within the earnings release.(B) The December 31, 2018 quarter includes death benefit from life insurance policy of $3.0 million related to the December 31, 2018 passing of the founder and managing principal of MCM.(C) Total revenue includes net interest income plus total other income.(D) Calculated as total operating expenses as a percentage of total revenue. For Non-GAAP efficiency ratio, see Non-GAAP financial measures reconciliation included in these tables.

.PEAPACK-GLADSTONE FINANCIAL CORPORATIONCONSOLIDATED STATEMENTS OF CONDITION(Dollars in Thousands)(Unaudited)

  As of   Dec 31,  Sept 30,  June 30,  March 31,  Dec 31,   2019 (A)  2019  2019  2019  2018 ASSETS                    Cash and due from banks $6,591  $5,770  $5,351  $4,726  $5,914 Federal funds sold  102   101   101   101   101 Interest-earning deposits  201,492   221,242   298,575   235,487   154,758 Total cash and cash equivalents  208,185   227,113   304,027   240,314   160,773 Securities available for sale  390,755   349,989   378,839   384,400   377,936 Equity security  10,836   7,881   4,847   4,778   4,719 FHLB and FRB stock, at cost  24,068   21,403   18,338   18,460   18,533 Residential mortgage  552,019   561,543   572,926   569,304   573,146 Multifamily mortgage  1,210,003   1,197,093   1,129,476   1,104,406   1,138,190 Commercial mortgage  761,244   721,261   694,674   705,221   702,165 Commercial loans  1,776,450   1,575,076   1,518,591   1,410,146   1,398,214 Consumer loans  54,372   53,829   53,995   54,276   58,678 Home equity lines of credit  57,248   58,423   62,522   57,639   62,191 Other loans  349   380   424   355   465 Total loans  4,411,685   4,167,605   4,032,608   3,901,347   3,933,049 Less: Allowances for loan and lease losses  43,676   41,580   39,791   38,653   38,504 Net loans  4,368,009   4,126,025   3,992,817   3,862,694   3,894,545 Premises and equipment  20,913   20,898   20,987   21,201   27,408 Other real estate owned  50   336   —   —   — Accrued interest receivable  10,494   11,759   11,594   11,688   10,814 Bank owned life insurance  46,128   45,940   45,744   45,554   45,353 Goodwill and other intangible assets (A)  40,588   41,111   31,941   32,170   32,399 Finance lease right-of-use assets (B)  5,078   5,265   5,452   5,639   — Operating lease right-of-use assets (B)  12,132   10,328   11,017   7,541   — Other assets  45,643   57,361   45,631   27,867   45,378 TOTAL ASSETS $5,182,879  $4,925,409  $4,871,234  $4,662,306  $4,617,858                      LIABILITIES                    Deposits:                    Noninterest-bearing demand deposits $529,281  $544,464  $544,431  $476,013  $463,926 Interest-bearing demand deposits  1,510,363   1,352,471   1,388,821   1,268,823   1,247,305 Savings  112,652   115,448   112,438   114,865   114,674 Money market accounts  1,196,313   1,196,188   1,207,358   1,209,835   1,243,369 Certificates of deposit – Retail  633,763   583,425   570,384   545,450   510,724 Certificates of deposit – Listing Service  47,430   55,664   58,541   68,055   79,195 Subtotal “customer” deposits  4,029,802   3,847,660   3,881,973   3,683,041   3,659,193 IB Demand – Brokered  180,000   180,000   180,000   180,000   180,000 Certificates of deposit – Brokered  33,709   33,696   33,682   56,165   56,147 Total deposits  4,243,511   4,061,356   4,095,655   3,919,206   3,895,340 Short-term borrowings  128,100   67,000   —   —   — FHLB advances  105,000   105,000   105,000   105,000   108,000 Finance lease liability  7,598   7,793   7,985   8,175   8,362 Operating lease liability (B)  12,423   10,619   11,269   7,683   — Subordinated debt, net  83,417   83,361   83,305   83,249   83,193 Other liabilities  91,227   94,930   74,132   57,521   53,950 Due to brokers, securities settlements  7,951   —   —   —   — TOTAL LIABILITIES  4,679,227   4,430,059   4,377,346   4,180,834   4,148,845 Shareholders’ equity  503,652   495,350   493,888   481,472   469,013 TOTAL LIABILITIES AND                    SHAREHOLDERS’ EQUITY $5,182,879  $4,925,409  $4,871,234  $4,662,306  $4,617,858 Assets under management and / or administration at  Peapack-Gladstone Bank’s Private Wealth Management  Division (market value, not included above-dollars in billions) $7.5  $7.0  $6.6  $6.3  $5.8 

(A) Includes goodwill and intangibles from the Murphy Capital Management, Quadrant Capital Management, Lassus Wherley and Associates and Point View Wealth Management acquisitions completed in August 2017, November 2017, September 2018 and September 2019, respectively.(B) Resulted from the January 1, 2019 adoption of ASU No. 2016-02, “Leases (Topic 842)”.

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

  As of   Dec 31,  Sept 30,  June 30,  March 31,  Dec 31,   2019  2019  2019  2019  2018 Asset Quality:                    Loans past due over 90 days and still accruing $—  $—  $—  $—  $— Nonaccrual loans (A)  28,881   29,383   31,150   24,892   25,715 Other real estate owned  50   336   —   —   — Total nonperforming assets $28,931  $29,719  $31,150  $24,892  $25,715                      Nonperforming loans to total loans  0.65%  0.71%  0.77%  0.64%  0.65%Nonperforming assets to total assets  0.56%  0.60%  0.64%  0.53%  0.56%                     Performing TDRs (B)(C) $2,357  $2,527  $3,772  $4,274  $4,303                      Loans past due 30 through 89 days and still accruing (D) $1,910  $6,333  $432  $2,492  $3,484                      Classified loans $58,908  $53,882  $56,135  $51,306  $58,265                      Impaired loans $35,924  $36,627  $34,941  $29,185  $31,300                      Allowance for loan and lease losses:                    Beginning of period $41,580  $39,791  $38,653  $38,504  $37,293 Provision for loan and lease losses  1,950   800   1,150   100   1,500 Recoveries (charge-offs), net  146   989   (12)  49   (289)End of period $43,676  $41,580  $39,791  $38,653  $38,504                      ALLL to nonperforming loans  151.23%  141.51%  127.74%  155.28%  149.73%ALLL to total loans  0.990%  0.998%  0.987%  0.991%  0.979%General ALLL to total loans (E)  0.927%  0.932%  0.956%  0.984%  0.972%

(A) Amount includes one healthcare real estate secured loan with a loan balance of $14.5 million at December 31, 2019, that went on nonaccrual at December 31, 2018. In addition, one casual dining commercial banking relationship, with a balance of $5.9 million at December 31, 2019, that went on nonaccrual at June 30, 2019.(B)  Amounts reflect TDRs that are paying according to restructured terms.(C) Amount does not include $25.8 million at December 31, 2019, $19.7 million at September 30, 2019, $19.8 million at June 30, 2019, $20.0 million at March 31, 2019 and $20.5 million at December 31, 2018, of TDRs included in nonaccrual loans.(D) The $6.3 million at September 30, 2019 included one $4.3 million commercial real estate loan that was in process of a rate modification (not a TDR modification). The loan was brought fully current in early October 2019.(E) Total ALLL less specific reserves equals general ALLL.

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

  December 31,  September 30,  December 31,   2019  2019  2018 Capital Adequacy                  Equity to total assets (A)    9.72%    10.06%    10.16%Tangible Equity to tangible assets (B)    9.01%    9.30%    9.52%Book value per share (C)   $26.61    $26.07    $24.25 Tangible Book Value per share (D)   $24.47    $23.91    $22.58             December 31,  September 30,  December 31,   2019  2019  2018 Regulatory Capital – Holding Company                        Tier I leverage $463,521  9.33%  $455,179  9.43%  $438,240  9.82% Tier I capital to risk-weighted assets  463,521  11.14   455,179  11.23   438,240  11.76 Common equity tier I capital ratio  to risk-weighted assets  463,520  11.14   455,177  11.23   438,238  11.76 Tier I & II capital to risk-weighted assets  590,614  14.20   580,120  14.31   559,937  15.03                          Regulatory Capital – Bank                        Tier I leverage (E) $527,833  10.63%  $534,351  11.08%  $504,504  11.32% Tier I capital to risk-weighted assets (F)  527,833  12.70   534,351  13.20   504,504  13.56 Common equity tier I capital ratio  to risk-weighted assets (G)  527,832  12.70   534,349  13.20   504,502  13.56 Tier I & II capital to risk-weighted assets (H)  571,509  13.76   575,931  14.23   543,008  14.59 

(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.(D) Tangible book value per 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.(E) Regulatory well capitalized standard = 5.00%(F) Regulatory well capitalized standard = 6.50%(G) Regulatory well capitalized standard = 8.00%(H) Regulatory well capitalized standard = 10.00%

PEAPACK-GLADSTONE FINANCIAL CORPORATIONLOANS CLOSED(Dollars in Thousands)(Unaudited)

  For the Quarters Ended   Dec 31,  Sept 30,  June 30,  March 31,  Dec 31,   2019  2019  2019  2019  2018 Residential loans retained $17,115  $19,073  $21,998  $10,839  $24,937 Residential loans sold  21,255   15,846   9,785   3,090   4,686 Total residential loans  38,370   34,919   31,783   13,929   29,623 Commercial real estate  52,630   43,414   34,204   21,025   63,486 Multifamily  63,627   77,138   58,604   21,122   58,175 Commercial (C&I) loans (A) (B)  174,946   228,903   143,944   141,128   285,950 SBA  19,195   3,510   3,740   9,050   5,695 Wealth lines of credit (A)  42,575   6,980   6,725   7,380   5,850 Total commercial loans  352,973   359,945   247,217   199,705   419,156 Installment loans  984   362   1,497   558   649 Home equity lines of credit (A)  2,414   5,631   3,626   1,607   3,625 Total loans closed $394,741  $400,857  $284,123  $215,799  $453,053   For the Twelve Months Ended   Dec 31,  Dec 31,   2019  2018 Residential loans retained $69,025  $73,208 Residential loans sold  49,976   25,563 Total residential loans  119,001   98,771 Commercial real estate  151,273   142,601 Multifamily  220,491   96,246 Commercial (C&I) loans (A) (B)  688,921   676,153 SBA  35,495   25,505 Wealth lines of credit (A)  63,660   42,748 Total commercial loans  1,159,840   983,253 Installment loans  3,401   4,669 Home equity lines of credit (A)  13,278   21,486 Total loans closed $1,295,520  $1,108,179 

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

PEAPACK-GLADSTONE FINANCIAL CORPORATIONAVERAGE BALANCE SHEETUNAUDITEDTHREE MONTHS ENDED(Tax-Equivalent Basis, Dollars in Thousands)

  December 31, 2019  December 31, 2018   Average  Income/      Average  Income/       Balance  Expense  Yield  Balance  Expense  Yield ASSETS:                        Interest-earning assets:                        Investments:                        Taxable (A) $393,549  $2,428   2.47% $383,455  $2,521   2.63%Tax-exempt (A) (B)  12,037   147   4.88   17,887   173   3.87                          Loans (B) (C):                        Mortgages  557,132   4,780   3.43   562,284   4,732   3.37 Commercial mortgages  1,959,902   18,588   3.79   1,947,674   18,825   3.87 Commercial  1,662,026   18,413   4.43   1,221,111   14,915   4.89 Commercial construction  4,842   81   6.69   —   —   — Installment  54,562   524   3.84   60,855   624   4.10 Home equity  58,082   662   4.56   61,423   759   4.94 Other  379   10   10.55   461   11   9.54 Total loans  4,296,925   43,058   4.01   3,853,808   39,866   4.14 Federal funds sold  102   —   0.25   101   —   0.25 Interest-earning deposits  159,759   560   1.40   122,813   636   2.07 Total interest-earning assets  4,862,372   46,193   3.80%  4,378,064   43,196   3.95%Noninterest-earning assets:                        Cash and due from banks  5,600           6,876         Allowance for loan and lease losses  (42,374)          (37,774)        Premises and equipment  20,946           27,749         Other assets  166,868           112,348         Total noninterest-earning assets  151,040           109,199         Total assets $5,013,412          $4,487,263                                  LIABILITIES:                        Interest-bearing deposits:                        Checking $1,407,151  $3,489   0.99% $1,208,604  $3,174   1.05%Money markets  1,169,413   3,456   1.18   1,124,780   3,684   1.31 Savings  112,597   16   0.06   115,316   16   0.06 Certificates of deposit – retail and listing service  660,159   3,734   2.26   569,151   2,914   2.05 Subtotal interest-bearing deposits  3,349,320   10,695   1.28   3,017,851   9,788   1.30 Interest-bearing demand – brokered  180,000   981   2.18   180,000   855   1.90 Certificates of deposit – brokered  33,702   267   3.17   59,061   386   2.61 Total interest-bearing deposits  3,563,022   11,943   1.34   3,256,912   11,029   1.35 Borrowings  221,462   1,383   2.50   143,348   1,043   2.91 Capital lease obligation  7,669   92   4.80   8,428   102   4.84 Subordinated debt  83,385   1,224   5.87   83,157   1,222   5.88 Total interest-bearing liabilities  3,875,538   14,642   1.51%  3,491,845   13,396   1.53%Noninterest-bearing liabilities:                        Demand deposits  539,501           496,238         Accrued expenses and other liabilities  99,702           38,498         Total noninterest-bearing liabilities  639,203           534,736         Shareholders’ equity  498,671           460,682         Total liabilities and shareholders’ equity $5,013,412          $4,487,263         Net interest income     $31,551          $29,800     Net interest spread          2.29%          2.42%Net interest margin (D)          2.60%          2.72%

(A) Average balances for available for sale securities are based on amortized cost.(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate.(C) Loans are stated net of unearned income and include nonaccrual loans.(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATIONAVERAGE BALANCE SHEETUNAUDITEDTHREE MONTHS ENDED(Tax-Equivalent Basis, Dollars in Thousands)

  December 31, 2019  September 30, 2019   Average  Income/      Average  Income/       Balance  Expense  Yield  Balance  Expense  Yield ASSETS:                        Interest-earning assets:                        Investments:                        Taxable (A) $393,549  $2,428   2.47% $393,386  $2,477   2.52%Tax-exempt (A) (B)  12,037   147   4.88   13,497   165   4.89                          Loans (B) (C):                        Mortgages  557,132   4,780   3.43   567,097   4,811   3.39 Commercial mortgages  1,959,902   18,588   3.79   1,856,216   17,870   3.85 Commercial  1,662,026   18,413   4.43   1,530,131   18,605   4.86 Commercial construction  4,842   81   6.69   2,619   51   7.79 Installment  54,562   524   3.84   53,891   560   4.16 Home equity  58,082   662   4.56   58,573   736   5.03 Other  379   10   10.55   396   11   11.11 Total loans  4,296,925   43,058   4.01   4,068,923   42,644   4.19 Federal funds sold  102   —   0.25   101   —   0.25 Interest-earning deposits  159,759   560   1.40   256,865   1,362   2.12 Total interest-earning assets  4,862,372   46,193   3.80%  4,732,772   46,648   3.94%Noninterest-earning assets:                        Cash and due from banks  5,600           5,628         Allowance for loan and lease losses  (42,374)          (40,806)        Premises and equipment  20,946           21,121         Other assets  166,868           151,265         Total noninterest-earning assets  151,040           137,208         Total assets $5,013,412          $4,869,980                                  LIABILITIES:                        Interest-bearing deposits:                        Checking $1,407,151  $3,489   0.99% $1,410,837  $4,467   1.27%Money markets  1,169,413   3,456   1.18   1,184,589   4,227   1.43 Savings  112,597   16   0.06   113,961   16   0.06 Certificates of deposit – retail and listing service  660,159   3,734   2.26   649,393   3,781   2.33 Subtotal interest-bearing deposits  3,349,320   10,695   1.28   3,358,780   12,491   1.49 Interest-bearing demand – brokered  180,000   981   2.18   180,000   901   2.00 Certificates of deposit – brokered  33,702   267   3.17   33,688   267   3.17 Total interest-bearing deposits  3,563,022   11,943   1.34   3,572,468   13,659   1.53 Borrowings  221,462   1,383   2.50   114,584   886   3.09 Capital lease obligation  7,669   92   4.80   7,866   94   4.78 Subordinated debt  83,385   1,224   5.87   83,329   1,224   5.88 Total interest-bearing liabilities  3,875,538   14,642   1.51%  3,778,247   15,863   1.68%Noninterest-bearing liabilities:                        Demand deposits  539,501           512,497         Accrued expenses and other liabilities  99,702           83,554         Total noninterest-bearing liabilities  639,203           596,051         Shareholders’ equity  498,671           495,682         Total liabilities and shareholders’ equity $5,013,412          $4,869,980         Net interest income     $31,551          $30,785     Net interest spread          2.29%          2.26%Net interest margin (D)          2.60%          2.60%

(A) Average balances for available for sale securities are based on amortized cost.(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate. (C) Loans are stated net of unearned income and include nonaccrual loans.(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATIONAVERAGE BALANCE SHEETUNAUDITEDTWELVE MONTHS ENDED Tax-Equivalent Basis, Dollars in Thousands

  December 31, 2019  December 31, 2018   Average  Income/      Average  Income/       Balance  Expense  Yield  Balance  Expense  Yield ASSETS:                        Interest-earning assets:                        Investments:                        Taxable (A) $391,666  $10,228   2.61% $363,259  $8,903   2.45%Tax-exempt (A) (B)  14,930   728   4.88   20,489   731   3.57                          Loans (B) (C):                        Mortgages  565,935   19,321   3.41   565,513   18,842   3.33 Commercial mortgages  1,857,014   72,061   3.88   1,976,712   74,693   3.78 Commercial  1,498,077   71,071   4.74   1,087,600   50,854   4.68 Commercial construction  1,881   132   7.02   —   —   — Installment  54,555   2,246   4.12   71,643   2,603   3.63 Home equity  60,036   2,981   4.97   61,828   2,786   4.51 Other  391   42   10.74   451   45   9.98 Total loans  4,037,889   167,854   4.16   3,763,747   149,823   3.98 Federal funds sold  102   —   0.25   101   —   0.25 Interest-earning deposits  223,629   4,457   1.99   103,059   1,806   1.75 Total interest-earning assets  4,668,216   183,267   3.93%  4,250,655   161,263   3.79%Noninterest-earning assets:                        Cash and due from banks  5,477           5,346         Allowance for loan and lease losses  (40,328)          (37,904)        Premises and equipment  21,176           28,477         Other assets  142,156           103,761         Total noninterest-earning assets  128,481           99,680         Total assets $4,796,697          $4,350,335                                  LIABILITIES:                        Interest-bearing deposits:                        Checking $1,342,901  $15,789   1.18% $1,143,640  $9,543   0.83%Money markets  1,189,880   16,434   1.38   1,056,368   11,322   1.07 Savings  113,312   63   0.06   119,699   66   0.06 Certificates of deposit – retail and listing service  631,999   14,210   2.25   554,903   9,938   1.79 Subtotal interest-bearing deposits  3,278,092   46,496   1.42   2,874,610   30,869   1.07 Interest-bearing demand – brokered  180,000   3,457   1.92   180,000   3,135   1.74 Certificates of deposit – brokered  42,460   1,225   2.89   64,009   1,608   2.51 Total interest-bearing deposits  3,500,552   51,178   1.46   3,118,619   35,612   1.14 Borrowings  136,992   3,941   2.88   154,765   3,606   2.33 Capital lease obligation  7,956   382   4.80   8,698   418   4.81 Subordinated debt  83,300   4,895   5.88   83,104   4,887   5.88 Total interest-bearing liabilities  3,728,800   60,396   1.62%  3,365,186   44,523   1.32%Noninterest-bearing liabilities:                        Demand deposits  505,486           516,718         Accrued expenses and other liabilities  73,601           32,541         Total noninterest-bearing liabilities  579,087           549,259         Shareholders’ equity  488,810           435,890         Total liabilities and shareholders’ equity $4,796,697          $4,350,335         Net interest income     $122,871          $116,740     Net interest spread          2.31%          2.47%Net interest margin (D)          2.63%          2.75%

(A) Average balances for available for sale securities are based on amortized cost.(B) Interest income is presented on a tax-equivalent basis using a 21% federal tax rate. (C) Loans are stated net of unearned income and include nonaccrual loans.(D) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets.

PEAPACK-GLADSTONE FINANCIAL CORPORATIONNON-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 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   Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, Tangible Book Value Per Share 2019  2019  2019  2019  2018 Shareholders’ equity $503,652  $495,350  $493,888  $481,472  $469,013 Less:  Intangible assets, net  40,588   41,111   31,941   32,170   32,399 Tangible equity  463,064   454,239   461,947   449,302   436,614                      Period end shares outstanding  18,926,810   18,999,241   19,456,312   19,445,363   19,337,662 Tangible book value per share $24.47  $23.91  $23.74  $23.11  $22.58 Book value per share  26.61   26.07   25.38   24.76   24.25                      Tangible Equity to Tangible Assets                    Total assets $5,182,879  $4,925,409  $4,871,234  $4,662,306  $4,617,858 Less: Intangible assets, net  40,588   41,111   31,941   32,170   32,399 Tangible assets  5,142,291   4,884,298   4,839,293   4,630,136   4,585,459 Tangible equity to tangible assets  9.01%  9.30%  9.55%  9.70%  9.52%Equity to assets  9.72%  10.06%  10.14%  10.33%  10.16%  Three Months Ended   Dec 31,  Sept 30,  June 30,  March 31,  Dec 31, Efficiency Ratio 2019  2019  2019  2019  2018 Net interest income $30,914  $30,085  $29,268  $30,007  $29,385 Total other income  15,525   14,416   13,026   11,729   11,255 Less:  Loss/(gain) on loans held for sale                    at lower of cost or fair value  4   6   —   —   4,392 Less:  Income from life insurance proceeds  —   —   —   —   (3,000)Add:  Securities (gains)/losses, net  45   (34)  (69)  (59)  (46)Total recurring revenue  46,488   44,473   42,225   41,677   41,986                      Operating expenses  26,701   26,259   26,173   25,715   25,524 Less: ORE provision  —   —   —   —   — Total operating expense  26,701   26,259   26,173   25,715   25,524                      Efficiency ratio  57.44%  59.04%  61.98%  61.70%  60.79%  For the Twelve Months Ended   Dec 31,  Dec 31, Efficiency Ratio 2019  2018 Net interest income $120,274  $115,163 Total other income  54,696   44,193 Add:  Securities (gains)/losses, net  (117)  393 Less:  Loss/(gain) on loans held for sale        at lower of cost or fair value  10   4,392 Less:  Income from life insurance proceeds  —   (3,000)Total recurring revenue  174,863   161,141          Operating expenses  104,848   98,086 Less: ORE provision  —   232 Total operating expense  104,848   97,854          Efficiency ratio  59.96%  60.73%