Providing a Clear Way
Forward.

On behalf of the talented and hard-working team at Peapack-Gladstone Bank, I am pleased to report that in 2021 we again delivered record profitability and operating results. During our 100th anniversary year, we navigated through challenging times: the continued and ever-changing Covid-19 environment; new work-from-home protocols; a difficult labor market, and uncertain market conditions. Notwithstanding, we continued to provide exceptional service and support to our clients, the communities we serve and most importantly, to each other.

Total revenues for the year increased 11% or $21 million over 2020, our pre-tax income before provision for loan losses improved 31% and net income was up 116%. The Bank’s diluted earnings per share grew $1.56 or 114% in 2021 and were up $0.49 or 20% over 2019, our previous (pre-Covid-19) record. This improved profitability was due to strong loan production and growth, healthy gains in fee income, and controlling costs. Bottom line: our team delivered exceptional results in the face of considerable uncertainty.

In 2021, we celebrated our 100th anniversary, a noteworthy achievement. Less than one-half of one percent of all U.S. companies make it to 100 years, and less than 1,000 companies nationally have celebrated this significant milestone. Our core principles – Professionalism, Clients First, Compete to Win, Invested in Our Community and One Team – are tried and true, and have guided us through several economic cycles and change over the years. The past two years have been no exception.

During the pandemic, we provided over $750 million in much needed capital to local businesses through the federally-sponsored Paycheck Protection Program (PPP) and helped save over 65,000 jobs. Despite Covid-19 and the aforementioned conditions that existed in 2021, we increased our overall charitable giving, and our employees continued to volunteer at dozens of needy and worthy organizations.

I’m proud that in 2021 Peapack-Gladstone Bank was again named one of the “Best Banks to Work For” by American Banker, for the 4th year in a row. This is notable recognition given annually to less than 100 banks in the U.S. out of hundreds considered.

Investing in Technology and Digital Capabilities

The pace of technological innovation will continue. Our clients demand it and from a cybersecurity standpoint, we will need to continually invest to protect them.

Prior to 2021, we developed a three-year roadmap to upgrade our digital capabilities. As the Covid-19 pandemic forced all businesses to operate differently, we were well-prepared and accelerated our digital and technology investments. Over this past year, we rolled out a new mobile and online banking platform, upgraded all our Automated Teller Machines (ATMs), implemented Zelle®, the leading U.S.-based digital payments network, migrated to a new residential loan platform and invested in our cybersecurity defenses.

Our ultimate goal is to combine both our banking (loans and deposits) and wealth management online solutions, under a single sign-on, “integrated” platform, that will enable our clients to do business whenever and wherever they need to.

Peapack Private Wealth Management

In 2021, Peapack Private Wealth Management’s fee income reached $53 million, up $12 million or 30% over the prior year, and 38% over 2019. As Peapack Private contributes 25% of the Bank’s total revenue, we have an enviable business that provides us with a diversified and stable source of earnings.

Record new business from existing and new wealth clients totaled over $800 million of Assets Under Management/Assets Under Administration (AUMs/AUAs). These inflows, coupled with the mid-year acquisition of Princeton Portfolio Strategies Group (PPSG) and strong market action, lifted our AUMs/AUAs to $11.1 billion at year-end. Peapack Private, managing over 2,700 wealth relationships with an average relationship size exceeding $4 million, is the largest NJ-headquartered, bank-owned trust company in the state. Our size, people, experience, and unwavering dedication to providing the highest level of advice and service to our clients have all been important components of our growth and success over the past several years.

In July 2021, we welcomed Princeton Portfolio Strategies Group to our team. PPSG has been a tremendous addition to our business, and we expect that our combined forces will broaden our reach in the greater Princeton area. We are currently co-locating our teams to increase momentum in this desirable market.

Finally, through Peapack Private Investment Banking and our corporate advisory services team, we successfully executed on several private middle-market sale engagements which generated $3.5 million in fee income for the Company.

Commercial Banking

When I joined the bank in 2012, we crafted a vision for building a differentiated middle-market commercial banking business. Our Commercial and Industrial (C&I) loan portfolio business has grown from $138 million at year-end 2013 to $2.0 billion at year-end 2021—a compounded growth rate of 40% over this eight-year period. In 2021 we grew commercial loans/leases, excluding PPP loans, by 12% to $2.0 billion as our commercial teams on-boarded over 100 new relationships.

Our Commercial Real Estate (CRE) and Multi-Family teams closed $706 million in new loans during the year bringing our total to $2.3 billion at year-end.

Total loans, excluding PPP loans, grew 15% during the year to $4.8 billion.

Our continued, above-peer group loan growth has not come at the expense of asset quality. Across our entire Company, asset quality levels have remained strong.

As we look forward, we expect the economy to remain strong through 2023, however; geopolitical risks and the Federal Reserve System’s reversal of its monetary support over the last several years presents some risk and uncertainty. Clearly, we will be following events closely.

Personal Banking

From the onset of Covid-19, our personal banking team continued to amaze with their dedication and support for our clients. We operated for an extended period with our branch lobbies closed—servicing our clients through the drive-up windows, digitally, by Zoom video conferencing, and by scheduled in-person appointments. Despite these challenges, deposits increased $448 million to $5.27 billion and by $1.0 billion since December 31, 2019. Over this same two-year period, “core deposits” (noninterest bearing demand, interest-bearing checking, money market, and savings), have grown substantially to 89% of total deposits.

Looking Ahead

The past five years have clearly been transformational for our Company. The vision and strategy that we crafted several years ago to build a highly regarded boutique bank—focused on wealth management, commercial banking and exceptional client advice and service—has been substantially achieved. Today we operate as a full-service commercial bank capable of competing and winning against the large regional and national banks. On the wealth management front, we have built a superior firm that can stand up and deliver against private banks, brokerages, Registered Investment Advisers (RIA), and trust company competitors.

Across our entire company, the quality and experience of our people, combined with our competitive product offerings, and a nimble, client-centric approach is providing us with a robust pipeline of new business. We believe our balance sheet and loan portfolio composition are well-positioned to benefit from expected future rate increases in 2022 and 2023.

With economic conditions remaining stable, we foresee continued growth and profitability.

Conclusion

While the past two years have certainly tested our team, our core principles have been our guiding navigational force—Professionalism, Clients First, Compete to Win, Invested in Our Communities and One Team. We delivered exceptional results in 2021, a testament to our team, our strategy, and our ability to adapt during ever-changing conditions. We enter 2022 stronger than we have ever been and look forward to exceeding the expectations of our clients, our shareholders, and our employees.

In October of 2022, I will celebrate my 10th anniversary as CEO. Over this time, our team and strategy have delivered consistently strong shareholder value with a compounded annual growth in our share price of approximately 11%.

In navigating our company through these turbulent times, our entire team is thankful for the guidance and support from our Board of Directors, especially our Chairman, Duff Meyercord. Our entire Board has given management the benefit of their collective experience, which has helped us build a well-regarded financial institution.

Finally, a special thanks to all of you, our shareholders, for your continued confidence in our company.

Respectfully yours,