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What changed in PEAPACK GLADSTONE FINANCIAL CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of PEAPACK GLADSTONE FINANCIAL CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+382 added−358 removedSource: 10-K (2025-03-12) vs 10-K (2024-03-12)

Top changes in PEAPACK GLADSTONE FINANCIAL CORP's 2024 10-K

382 paragraphs added · 358 removed · 303 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

48 edited+8 added−5 removed49 unchanged
Biggest changeAs a bank holding company, the Company is supervised by the FRB and is required to file reports with the FRB and provide such additional information as the FRB may require. 7 The Bank Holding Company Act prohibits the Company, with certain exceptions, from (i) acquiring direct or indirect ownership or control of more than five percent of the voting shares of any company that is not a bank and (ii) from engaging in any business other than banking, managing and controlling banks, or furnishing services to subsidiary banks, However, the Company may apply to engage in, or own shares of companies engaged in, certain businesses found by the FRB to be so closely related to banking “as to be a proper incident thereto.” The Bank Holding Company Act requires prior approval by the FRB of the acquisition by the Company of more than five percent of the voting stock of any additional bank.
Biggest changeHowever, the Company may apply to engage in, or own shares of companies engaged in, certain businesses found by the FRB to be so closely related to banking “as to be a proper incident thereto.” The Bank Holding Company Act requires prior approval by the FRB of the acquisition by the Company of more than five percent of the voting stock of any additional bank.
The terms “Peapack,” the “Company,” “we,” “our” and “us” refer to Peapack-Gladstone Financial Corporation and its wholly-owned subsidiaries unless otherwise indicated or the context requires otherwise. The Corporation Peapack-Gladstone Financial Corporation is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”).
The terms “Peapack,” the “Company,” “we,” “our” and “us” refer to Peapack-Gladstone Financial Corporation and its wholly-owned subsidiaries unless otherwise indicated or the context requires otherwise. The Corporation Peapack-Gladstone Financial Corporation (the "Company") is a bank holding company registered under the Bank Holding Company Act of 1956, as amended (the “Bank Holding Company Act”).
Wellness programs are deeply embedded in our culture and other ancillary benefits such as pet insurance, identity protection coverage and supplemental insurance are provided. 5 Community Involvement We actively reinvest in our communities with the greatest needs. We encourage volunteerism, supporting organizations valued by our employees and clients.
Wellness programs are deeply embedded in our culture and other ancillary benefits such as pet insurance, identity protection coverage and supplemental insurance are provided. Community Involvement 5 We actively reinvest in our communities with the greatest needs. We encourage volunteerism, supporting organizations valued by our employees and clients.
As a Federal Reserve-member bank, the Bank is also subject to the regulation, supervision and examination by the Federal Reserve Board (“FRB”) as its primary federal regulator.
As a Federal Reserve member bank, the Bank is also subject to regulation, supervision and examination by the Federal Reserve Board (“FRB”) as its primary federal regulator.
An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0 percent or greater, a Tier 1 risk-based capital ratio of 8.0 percent or greater, a leverage ratio of 5.0 percent or greater and a CET1 ratio of 6.5 8 percent or greater.
An institution is deemed to be “well capitalized” if it has a total risk-based capital ratio of 10.0 percent or greater, a Tier 1 risk-based capital ratio of 8.0 percent or greater, a leverage ratio of 5.0 percent or greater, and a CET1 ratio of 6.5 percent or greater.
Insurance of Deposit Accounts The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund ("DIF") of the FDIC. Deposit accounts in the Bank are insured up to $250,000 for each separately insured depositor per account ownership category. The FDIC charges insured depository institutions ("IDI") premiums to maintain the Deposit Insurance Fund.
Insurance of Deposit Accounts The Bank’s deposits are insured up to applicable limits by the Deposit Insurance Fund ("DIF") of the FDIC. Deposit accounts in the Bank are insured up to $250,000 for each separately insured depositor per account ownership category. The FDIC charges insured depository institutions ("IDI") premiums to maintain the DIF.
Almost ten years after the launch and successful execution of the “Expanding Our Reach” strategy, we recognized refinements were necessary to address several industry headwinds that assume: • margin pressure is likely to continue for the foreseeable future given the expansion of digital banks and nature of economic cycles, including the current economic climate with a continued inversion of the yield curve, elevated interest rates, and intense competition for deposits, especially locally; 6 • costs associated with compliance, risk management and cybersecurity would continue to increase significantly, and the increasing utilization of technology externally by clients and internally by banks would require significant investment to remain competitive and demand higher returns on capital; • our clients have become so accustomed to automation and technology, which only accelerated because of the COVID-19 pandemic, that there would continue to be a shift from transactions in traditional branches in favor of electronic delivery channels; and • given the technology evolution and resulting pressure from a competitive standpoint, strong and updated technology is a requirement, but our differentiation must be in the level and quality of service we provide.
Almost ten years after the launch and successful execution of the “Expanding Our Reach” strategy, we recognized refinements were necessary to address several industry headwinds that assume: • margin pressure is likely to continue for the foreseeable future given the expansion of digital banks and nature of economic cycles, including the current economic climate with a continued flattening or inversion of the yield curve, elevated interest rates, and intense competition for deposits, especially locally; • costs associated with compliance, risk management and cybersecurity would continue to increase significantly, and the increasing utilization of technology externally by clients and internally by banks would require significant investment to remain competitive and demand higher returns on capital; 6 • our clients have become so accustomed to automation and technology, which only accelerated because of the COVID-19 pandemic, that there would continue to be a shift from transactions in traditional branches in favor of electronic delivery channels; and • given the technology evolution and resulting pressure from a competitive standpoint, strong and updated technology is a requirement, but our differentiation must be in the level and quality of service we provide.
Effective January 1, 2023, assessment rates for institutions of the Bank’s size ranged from 2.5 to 32 basis points. Further, on November 16, 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closure of Silicon Valley Bank and Signature Bank.
Effective January 1, 2023, assessment rates for institutions of the Bank’s size ranged from 2.5 to 32 basis points. On November 16, 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closure of Silicon Valley Bank and Signature Bank.
Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies will evaluate large banks under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development 9 Financing Test, and the Community Development Services Test.
Under the final rule, banks with assets of at least $2 billion as of December 31 in both of the prior two calendar years will be a “large bank.” The agencies will evaluate large banks under four performance tests: the Retail Lending Test, the Retail Services and Products Test, the Community Development Financing Test, and the Community Development Services Test.
Federal law may also limit the amount of dividends that may be paid by the Bank. Under the Financial Institutions Supervisory Act, the FDIC has the authority to prohibit a state-chartered bank from engaging in conduct that, in the FDIC’s opinion, constitutes 10 an unsafe or unsound banking practice.
Federal law may also limit the amount of dividends that may be paid by the Bank. Under the Financial Institutions Supervisory Act, the FDIC has the authority to prohibit a state-chartered bank from engaging in conduct that, in the FDIC’s opinion, constitutes an unsafe or unsound banking practice.
Federal law provides that a bank holding company must act as a source of financial strength to its subsidiary bank and commit resources to support the subsidiary banks in circumstances in which it might not do so absent that law. Acquisitions through the Bank require the approval of the FRB and the NJDOBI.
Federal law provides that a bank holding company must act as a source of financial and managerial strength to its subsidiary banks and commit resources to support the subsidiary banks in circumstances in which it might not do so absent that law. Acquisitions through the Bank require the approval of the FRB and the NJDOBI.
Internet banking, including an online bill payment option and mobile phone banking, is available. Available Information Peapack-Gladstone Financial Corporation is a public company, and files interim, quarterly and annual reports with the Securities and Exchange Commission (the “SEC”).
Internet banking, including an online bill payment option and mobile phone banking, is also available. Available Information Peapack-Gladstone Financial Corporation is a public company, and files interim, quarterly and annual reports with the Securities and Exchange Commission (the “SEC”).
The FRB by supervisory letters has advised holding companies that it is has supervisory concerns when the level of dividends is too high and would seek to prevent dividends if the dividends paid by a holding company exceeded its earnings.
The FRB by supervisory letters has advised holding companies that it is has 10 supervisory concerns when the level of dividends is too high and that it would seek to prevent dividends if the dividends paid by a holding company exceeded its earnings.
Work/life balance is an important part of our culture, and in support of this we offer a broad list of benefits for eligible employees, which includes a comprehensive suite of health insurance benefits, paid time off, maternity and paternity leave, access to employee assistance programs, retirement planning and 401(k) Plan participation with a generous company match.
Work/life balance is an important part of our culture, and in support of this, we offer a broad list of benefits for eligible employees, which includes a comprehensive suite of health insurance benefits, paid time off, maternity and paternity leave, employee assistance programs, retirement planning and 401(k) Plan participation with a generous company match.
These reports and any amendments to these reports are available for free on the SEC’s website, www.sec.gov , and on our website, www.pgbank.com , as soon as reasonably practical after they have been filed with or furnished to the SEC. Information on our website should not be considered a part of this Annual Report on Form 10-K.
These reports and any amendments to these reports are available for free on the SEC’s website, www.sec.gov , and on our website, www.peapackprivate.com , as soon as reasonably practical after they have been filed with or furnished to the SEC. Information on our website should not be considered a part of this Annual Report on Form 10-K.
The CFPB also has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Banks and savings institutions with $10 billion or less in assets, such as the Bank, continue to be examined for compliance with consumer protection-related laws and regulations by their applicable federal bank regulators.
The CFPB also has examination and enforcement authority over all banks and savings institutions with more than $10 billion in assets. Banks and savings institutions with $10 billion or less in assets, such as Peapack Private, continue to be examined for compliance with consumer protection-related laws and regulations by their applicable federal bank regulators.
An insured institution’s deposit insurance may be terminated by the FDIC upon an administrative finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or regulatory condition imposed in writing.
An insured institution’s deposit insurance may be terminated by the FDIC upon an administrative finding that the institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any 9 applicable law, regulation, order or regulatory condition imposed in writing.
Bank holding companies with greater than $3 billion in total consolidated assets are subject to consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions. The Company and the Bank were in compliance with the capital requirements, including the capital conservation buffer, as of December 31, 2023.
Bank holding companies with greater than $3 billion in total consolidated assets are subject to consolidated regulatory capital requirements identical to those applicable to the subsidiary depository institutions. The Company and the Bank were in compliance with the capital requirements, including the capital conservation buffer, as of December 31, 2024.
The key elements of our business strategy include: • a robust wealth management business that provides a diversified and stable source of revenue over time, through organic growth and strategic acquisitions; • an emphasis on commercial banking with private bankers focused on providing high-touch client service through an advice-based approach encompassing corporate and industrial (“C&I”) lending (including equipment finance lending and leasing), wealth management, depository services, electronic banking, Small Business Administration (“SBA”) loans, other commercial real estate lending, and corporate advisory services; • a unified “One Company” culture heavily focused on unparalleled “white glove” customer service designed and centered around best-in-class hospitality standards and delivered by experienced industry professionals across all business lines; • highly efficient branch network and deposit gathering processes; • expanding our footprint to include areas that naturally fit with our geography and/or business model; • robust risk management processes, including, but not limited to, active loan portfolio, capital, liquidity, and interest rate risk stress testing; and • a focus on the communities which we serve with a strong commitment to community service and involvement.
The key elements of our business strategy include: • a robust wealth management business that provides a diversified and stable source of revenue over time, through organic growth and strategic acquisitions; • an emphasis on commercial banking with private bankers focused on providing high-touch client service through an advice-based approach encompassing corporate and industrial (“C&I”) lending (including equipment finance lending and leasing), wealth management, depository services, electronic banking, Small Business Administration (“SBA”) loans, other commercial real estate lending, and corporate advisory services; • a unified “One Company” culture heavily focused on unparalleled “white glove” customer service designed and centered around best-in-class hospitality standards and delivered by experienced industry professionals across all business lines; • a highly efficient branch network and deposit gathering processes; • a strong balance sheet and measured approach to prudently deploy capital; • a continued expansion of our footprint to include areas that naturally fit with our geography and/or business model; • robust risk management processes, including, but not limited to, active loan portfolio, capital, liquidity, and interest rate risk stress testing; and • a focus on the communities which we serve with a strong commitment to community service and involvement.
We have dedicated actions to drive a more diverse workforce, with focus in the areas of brand awareness and sourcing, recruiting and hiring, cultural awareness and appreciation, and furthering our development opportunities for all employees.
We have dedicated actions to cultivate a more diverse workforce, with focus in the areas of brand awareness and sourcing, recruiting and hiring, cultural awareness and appreciation, and furthering our development opportunities for all employees.
The operations of the Bank are also subject to the: • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act and Regulation E promulgated thereunder, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; • Check Clearing for the 21 st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • The Bank Secrecy Act and the USA PATRIOT Act and their implementing regulations, which require the Bank to maintain a compliance program to detect and prevent money laundering, terrorist financing, and illicit crime, to maintain a customer identification program and other internal controls, conduct customer due diligence, administer training, maintain specified records, and report suspicious activity, among other things; and • Regulations of the Office of Foreign Assets Control that enforce economic and trade sanctions programs based on United States foreign policy and national security goals.
The operations of the Bank are also subject to the: • Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; • Electronic Funds Transfer Act and Regulation E promulgated thereunder, governing automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services; • Check Clearing for the 21 st Century Act (also known as “Check 21”), which gives “substitute checks,” such as digital check images and copies made from that image, the same legal standing as the original paper check; • The Bank Secrecy Act and the USA PATRIOT Act and their implementing regulations, which require the Bank to maintain a compliance program to detect and prevent money laundering, terrorist financing, and illicit crime, to 11 maintain a customer identification program and other internal controls, conduct customer due diligence, administer training, maintain specified records, and report suspicious activity, among other things; • Regulations of the Office of Foreign Assets Control that enforce economic and trade sanctions programs based on United States foreign policy and national security goals; and • Truth in Savings Act, prescribing disclosure and advertising requirements with respect to deposit accounts.
The Bank’s operations are also subject to federal laws (and their implementing regulations) applicable to credit transactions, such as the: • Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; • Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected; and • Truth in Savings Act, prescribing disclosure and advertising requirements with respect to deposit accounts.
The Bank’s operations are also subject to federal laws (and their implementing regulations) applicable to credit transactions, such as the: • Truth in Lending Act, governing disclosures of credit terms to consumer borrowers; • Real Estate Settlement Procedures Act, requiring that borrowers for mortgage loans for one- to four-family residential real estate receive various disclosures, including good faith estimates of settlement costs, lender servicing and escrow account practices, and prohibiting certain practices that increase the cost of settlement services; • Home Mortgage Disclosure Act, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; • Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; • Fair Credit Reporting Act, governing the use and provision of information to credit reporting agencies; and • Fair Debt Collection Practices Act, governing the manner in which consumer debts may be collected.
Peapack Private is known for its integrity, client service and broad range of fiduciary, investment management and tax services, designed specifically to meet the needs of high net-worth individuals, families, foundations and endowments. Our wealth management business differentiates us from our competition and adds significant value.
The wealth management division is known for its integrity, client service and broad range of fiduciary, investment management and tax services, designed specifically to meet the needs of high net-worth individuals, families, foundations and endowments. Our wealth management business differentiates us from our competition and adds significant value.
The FRB periodically assesses the Bank’s record of performance under the CRA and issue one of the following ratings: “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance.” The most recently completed evaluation of the Bank’s performance under the CRA was conducted by the FRB in 2021 and resulted in an overall rating of “Satisfactory.” On October 24, 2023, the FDIC, the FRB, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the federal CRA regulations.
The FRB periodically assesses the Bank’s record of performance under the CRA and issues one of the following ratings: “Outstanding,” “Satisfactory,” “Needs to Improve,” or “Substantial Noncompliance.” The most recently completed evaluation of the Bank’s performance under the CRA was conducted by the FRB in 2024 and resulted in an overall rating of “Satisfactory.” On October 24, 2023, the FDIC, the FRB, and the Office of the Comptroller of the Currency issued a final rule to strengthen and modernize the federal CRA regulations.
The combination of working remotely and in the office enables employees to continue be more productive, completing tasks with less interruption when remote, while still having the opportunity to collaborate with peers in the workplace. Virtual meeting and teleconference platforms continue to be utilized to maintain a safe and productive work environment.
The combination of working remotely and in the office helps maintain a healthier workplace and enables employees to continue to be productive, completing tasks with less interruption when remote, while still having the opportunity to collaborate with peers in the workplace. Virtual meeting and teleconference platforms continue to be utilized to maintain a safe and productive work environment.
Since the principal source of income for the Company are dividends paid to the Company by the Bank, the Company’s ability to pay dividends to its shareholders will depend on whether the Bank pays dividends to it.
Since the principal source of income for the Company is dividends paid to the Company by the Bank, the Company’s ability to pay dividends to its shareholders will depend on whether the Bank pays dividends to it.
Employee Health and Safety The safety, health and well-being of our employees and customers is extremely important to us. Employees are permitted to leverage a new flexible work arrangement offered by management provided their performance remains in good standing.
Employee Health and Safety The safety, health and well-being of our employees and clients is extremely important to us. Employees are permitted a new flexible work arrangement offered by management provided their performance remains in good standing.
The Company and the Bank’s capital ratios were all above the minimum levels required for it to be considered a “well capitalized” financial institution at December 31, 2023 under the “prompt corrective action” regulations in effect as of such date.
The Bank’s capital ratios were all above the minimum levels required for it to be considered a “well capitalized” financial institution at December 31, 2024 under the “prompt corrective action” regulations in effect as of such date.
We have seven employee resource groups, focusing on areas such as wellness, the environment, core principles and diversity and inclusion. Additionally, we maintain an Anti-Discrimination and Harassment Policy as well as a workplace harassment training course which must be completed annually by all employees.
We have six employee resource groups, focusing on areas such as wellness, the environment, volunteerism, and diversity and inclusion. Additionally, we maintain an Anti-Discrimination and Harassment Policy as well as a workplace harassment training course which must be completed annually by all employees.
We conduct an annual employee engagement survey by utilizing the American Banker ‘Best Banks to Work for Survey’, a third-party survey that collects employee feedback on areas that include, but are not limited to, leadership, corporate culture and communications, training and development resources, role satisfaction, pay and benefits and overall engagement.
We conduct an annual employee engagement survey by utilizing the American Banker ‘Best Banks to Work for Survey’, a third-party survey that collects employee feedback on areas that include, but are not limited to, leadership, corporate culture and communications, training and development resources, satisfaction, pay and benefits and overall engagement. We review the detailed results to identify areas to improve.
Through its branch network in Somerset, Morris, Hunterdon and Union counties and its private banking locations in Bedminster, Morristown, Princeton and Teaneck, its private wealth management, commercial private banking, retail private banking and residential lending divisions, along with its online platforms, Peapack-Gladstone Bank is committed to offering unparalleled client service.
Through its branch network in Somerset, Morris, Hunterdon and Union counties and its private banking locations in Bedminster, Morristown, Princeton and Teaneck, New Jersey and in New York City and its private wealth management, commercial private banking, retail private banking and residential lending divisions, along with its online platforms, Peapack Private is committed to offering unparalleled client service.
It is headquartered in Bedminster, New Jersey with additional private banking locations throughout New Jersey in Morristown, Princeton, Red Bank, Summit and Teaneck, New Jersey, as well as at the Bank’s subsidiary, PGB Trust & Investments of Delaware, in Greenville, Delaware.
It is headquartered in Bedminster, New Jersey with additional wealth management locations throughout New Jersey in Morristown, Princeton, Red Bank, Summit and Teaneck, and in New York City, as well as at the Bank’s subsidiary, PGB Trust & Investments of Delaware, in Greenville, Delaware.
Our President and CEO hosts a monthly company update accessible to all employees. Tuition reimbursement, up to $10,000 annually, is offered to full-time employees after completion of one year of employment and successful course completion.
We maintain a mentorship program and a company-wide recognition program in which all employees can participate. Our President and CEO hosts a monthly company update accessible to all employees. Tuition reimbursement, up to $10,000 annually, is offered to full-time employees after completion of one year of employment and successful course completion.
Our employees are generous with their time in their support of local organizations. In 2023, we performed over 2,000 hours of service and provided financial support to over 271 charitable organizations. We are proud to be known and recognized locally and nationally for our community involvement.
Our employees are generous with their time in their support of local organizations. In 2024, we performed over 1,600 hours of service and provided financial support to more than 330 charitable organizations. We are proud to be known and recognized locally and nationally for our community involvement.
The regulations of the FRB and the NJDOBI impact virtually all of our activities, including the minimum levels of capital we must maintain, our ability to pay dividends, our ability to expand through new branches or acquisitions and various other matters.
The regulations of the FRB and the NJDOBI impact virtually all of our activities, including the minimum levels of capital we must maintain, our ability to pay dividends, our ability to expand through new branches or acquisitions and various other matters. 7 Holding Company Supervision The Company is a bank holding company and periodically examined within the meaning of the Bank Holding Company Act.
Peapack-Gladstone Bank’s Private Wealth Management Division (“Peapack Private”) Peapack Private is a New Jersey-chartered trust and investment business with $10.9 billion of assets under management and/or administration as of December 31, 2023.
Peapack Private Bank & Trust Wealth Management Division The Wealth Management Division is a New Jersey-chartered trust and investment business with $11.9 billion of assets under management and/or administration as of December 31, 2024.
According to estimates from the United States Census Bureau, as of 2018-2022, New Jersey had a total population exceeding 9.3 million and a median household income of $97,126, and Somerset County, where we are headquartered, is one of the wealthiest counties in New Jersey, with a median household income of $131,948; compared to a U.S. median household income of $75,149.
According to estimates from the United States Census Bureau, as of 2019-2023, New Jersey had a total population exceeding 9.5 million and a median household income of $101,050, and Somerset County, where we are headquartered, is one of the wealthiest counties in New Jersey, with a median household income of $135,960; compared to a U.S. median household income of $78,538.
The capital requirements also require the Company and the Bank to maintain a 2.5 percent “capital conservation buffer,” composed entirely of CET1, on top of the minimum risk-weighted asset ratios, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7.0 percent, (ii) Tier 1 capital to risk-weighted assets of at least 8.5 percent, and (iii) total capital to risk-weighted assets of at least 10.5 percent.
Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. 8 The capital requirements also require the Company and the Bank to maintain a 2.5 percent “capital conservation buffer,” composed entirely of CET1, on top of the minimum risk-weighted asset ratios, effectively resulting in minimum ratios of (i) CET1 to risk-weighted assets of at least 7.0 percent, (ii) Tier 1 capital to risk-weighted assets of at least 8.5 percent, and (iii) total capital to risk-weighted assets of at least 10.5 percent.
Based on our survey results, we have been awarded recognition as an American Banker ‘Best Banks to Work For’ for the previous six years (2018-2023). Diversity, Equity and Inclusion We are an employer that champions diversity, equity and inclusion in our workplace.
We invite all employees to participate and have received a high level of survey participation. Based on our survey results, we have been awarded recognition as one of American Banker's ‘Best Banks to Work For’ for the previous seven years (2018-2024). Diversity, Equity and Inclusion We are an employer that supports diversity, equity and inclusion in our workplace.
The Company was organized under New Jersey law in 1997 by the Board of Directors of Peapack-Gladstone Bank (the “Bank”), its principal subsidiary. The Bank is a state chartered commercial bank founded in 1921 under New Jersey laws. The Bank is a member of the Federal Reserve System.
The Company was organized under New Jersey law in 1997 by the Board of Directors of Peapack-Gladstone Bank, which changed its name to Peapack Private Bank & Trust effective January 1, 2025 (“Peapack Private”) The Bank is its principal subsidiary. The Bank is a state-chartered commercial bank founded in 1921 under New Jersey laws.
The regulations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to non-affiliated third parties. The privacy provisions of the Gramm-Leach-Bliley Act affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors.
The privacy provisions of the Gramm-Leach-Bliley Act affect how consumer information is transmitted through diversified financial services companies and conveyed to outside vendors.
The applicability date for the majority of the provisions in the CRA regulations is January 1, 2026, and additional requirements will be applicable on January 1, 2027. Privacy Federal banking regulators, as required under the Gramm-Leach-Bliley Act, have adopted regulations limiting the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties.
Privacy Federal banking regulators, as required under the Gramm-Leach-Bliley Act, have adopted regulations limiting the ability of banks and other financial institutions to disclose non-public information about consumers to non-affiliated third parties. The regulations require disclosure of privacy policies to consumers and, in some circumstances, allow consumers to prevent disclosure of certain personal information to non-affiliated third parties.
On the heels of several major bank failures in 2023, we believe it is more important than ever to remain grounded in our relationship-based approach while continuing to diversify our business model further, included geographic expansion.
The major bank failures in early 2023 heightened awareness around liquidity and balance sheet management, and competition for core funding. Due to this, we believe it is more important than ever to remain grounded in our relationship-based approach while continuing to diversify our business model further.
In addition to regulatory training courses, we offer ethics and subject matter training sessions regularly. On an annual basis, we offer career development, performance enhancement and leadership development opportunities. Experiential learning opportunities are also available on an individualized basis. We maintain a mentorship program and a peer recognition program in which all employees can participate.
We conduct regular talent reviews for the purpose of succession planning and developing our employees. In addition to regulatory training, we offer ethics and subject matter training regularly. On an annual basis, we offer career development, performance enhancement and leadership development opportunities. Experiential learning opportunities are also available on an individualized basis.
Most forms of commercial lending are offered, including working capital lines of credit, term loans for fixed asset acquisitions, commercial mortgages, multifamily mortgages and other forms of asset-based financing.
Our wealth management clients include individuals, families, foundations, endowments, trusts and estates. Our commercial loan clients include business owners, professionals, retailers, contractors and real estate investors. Most forms of commercial lending are offered, including working capital lines of credit, term loans for fixed asset acquisitions, commercial mortgages, multifamily mortgages and other forms of asset-based financing.
This approach has improved our brand awareness in the community and our ability to grow diverse hires. 4 Talent Development The continuous development and succession of our employees is a primary focus. We conduct regular talent reviews for the purpose of succession planning and developing our employees.
Additionally, we meet with local colleges and host career workshops for students to further develop our talent pool. This approach has improved our brand awareness in the community and our ability to diversify our employee base. 4 Talent Development Continuous development and career growth of our employees is a primary focus.
We believe that we have good relationships with our employees. Hiring and Promotion We look to hire internally for positions whenever possible. When this is not the case, we source candidates from multiple avenues, including referrals, utilizing online platforms such as LinkedIn, Indeed, Circa, the New Jersey Department of Labor website and our own corporate website.
When this is not the case, we source candidates from multiple avenues, including referrals, and utilize online platforms such as LinkedIn, Indeed, Monster, Circa, the New Jersey Department of Labor website and our own corporate website. We also post advertisements at our branch locations, participate in on-site career fairs, and reach out to local community organizations to promote open positions.
Human Capital Resources We believe our employees are our most important resource and are critical to our success and ability to provide outstanding service to our customers. As of December 31, 2023, we had 521 full-time and part-time employees, with 274 at our corporate headquarters, 92 in our branch offices and 155 in other locations.
Human Capital Resources We believe our employees are our most important resource and are critical to our success and ability to provide outstanding service to our clients.
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Additionally, the Company signed a lease for future market expansion into New York City. Our wealth management clients include individuals, families, foundations, endowments, trusts and estates. Our commercial loan clients include business owners, professionals, retailers, contractors and real estate investors.
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The Bank is a member of the Federal Reserve System.
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We also post advertisements at our branch locations, participate in on-site career fairs, and reach out to local community organizations to promote open positions. Additionally, we meet with local colleges and host career workshops for students to further develop our talent pool.
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As of December 31, 2024, we had 620 full-time and part-time employees, with 294 at our corporate headquarters, 92 in our New York office, 86 in our branch offices and 148 in other locations. We believe that we have good relationships with all of our employees. Hiring and Promotion We look to hire internally for positions whenever possible.
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We review the detailed results to identify areas of opportunity and develop steps to improve, as well as take actions in those areas. We invite all employees to participate and have received a high level of survey participation.
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In 2024, we took a significant step forward to expand throughout the metropolitan New York region. By hiring very experienced professionals in sales, client service, operations, compliance, credit and risk management, we focused on generating core deposits and saw remarkable success in 2024 production with no signs of momentum slowing as we enter into 2025.
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Holding Company Supervision The Company is a bank holding company and periodically examined within the meaning of the Bank Holding Company Act.
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These strategic decisions have positioned us well to address the headwinds noted above and continue to become the preferred alternative to the large banks in the region.
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Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt.
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As a bank holding company, the Company is supervised by the FRB and is required to file reports with the FRB and provide such additional information as the FRB may require.
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The Bank Holding Company Act prohibits the Company, with certain exceptions, from (i) acquiring direct or indirect ownership or control of more than five percent of the voting shares of any company that is not a bank and (ii) from engaging in any business other than banking, managing and controlling banks, or furnishing services to subsidiary banks.
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Under the regulations, the applicability date for the majority of the provisions is January 1, 2026, and additional requirements will be applicable under the regulations on January 1, 2027.
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On March 29, 2024, a federal court in the Northern District of Texas issued a preliminary injunction of the new CRA regulations, enjoining the federal banking agencies from enforcing the regulations against the plaintiff bank industry trade groups, and extending the regulations' implementation dates day-for-day for each day the injunction is in place.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

64 edited+22 added−11 removed74 unchanged
Biggest changeThe Dodd-Frank Act also increased regulation of derivatives and hedging transactions, which could limit our ability to enter into, or increase the costs associated with, interest rate and other hedging transactions. Government regulation significantly affects our business. The banking industry is extensively regulated. Banking regulations are intended primarily to protect depositors, and the FDIC deposit insurance fund, not our shareholders.
Biggest changeGovernment regulation significantly affects our business. The banking industry is extensively regulated. Banking regulations are intended primarily to protect depositors, and the FDIC deposit insurance fund, not our shareholders. We are subject to regulation and supervision by the New Jersey Department of Banking and Insurance and the Federal Reserve Bank.
The level of the commercial real estate loan portfolio may subject the Bank to additional regulatory scrutiny. The federal bank regulatory agencies have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.
The level of the commercial real estate loan portfolio may subject the Bank to additional regulatory scrutiny. Federal bank regulatory agencies have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on its financial performance. Accordingly, we cannot be assured of its ability to raise additional capital if needed or on terms acceptable to us.
Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside our control, and on its financial performance. Accordingly, we cannot be assured of our ability to raise additional capital if needed or on terms acceptable to us.
Disruptions or failures in the physical infrastructure or operating systems that support our businesses, customers or third parties, or cyber-attacks or security breaches of the networks, systems or devices that our customers or third parties use to access our products and services could result in customer attrition, financial losses, the inability of our customers or vendors to transact business with us, violations of applicable privacy and other laws, regulatory fines, penalties or intervention, reputational damage, reimbursement or other costs, and/or additional compliance costs, any of which could materially adversely affect our results of operations or financial condition.
Disruptions or failures in the physical infrastructure or operating systems that support our businesses, customers or third parties, or cyber-attacks or security breaches of the networks, systems or devices that our customers or third parties use to access our products and services could result in customer attrition, financial losses, the inability of our customers or vendors to transact business with us, violations of applicable privacy and other laws, regulatory 19 fines, penalties or intervention, reputational damage, reimbursement or other costs, and/or additional compliance costs, any of which could materially adversely affect our results of operations or financial condition.
Any increase in the allowance for credit losses on loans and/or off-balance sheet credit exposures will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations. 13 Our commercial real estate loan and commercial C&I portfolios expose us to greater risks than other mortgage loans.
Any increase in the allowance for credit losses on loans and/or off-balance sheet credit exposures will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our business, financial condition and results of operations. Our commercial real estate loan and commercial C&I portfolios expose us to greater risks than other mortgage loans.
The imposition of any such penalties or orders could have a material adverse effect on the wealth management segment's operating results and financial condition. We may be adversely affected as a result of new or revised legislation or regulations. Regulatory changes have imposed and may continue to impose additional costs, which could adversely impact our profitability. Item 1B.
The imposition of any such penalties or orders could have a material adverse effect on the wealth management segment's operating results and financial condition. We may be adversely affected as a result of new or revised legislation or regulations. Regulatory changes have imposed and may continue to impose additional costs, which could adversely impact our profitability. 21 Item 1B.
Many of our competitors have greater resources than we have. Our ability to successfully attract and retain wealth management clients is dependent upon our ability to compete with competitors’ investment products, 20 level of investment performance, client services and marketing and distribution capabilities. If we are not successful, our results of operations and financial condition may be negatively impacted.
Many of our competitors have greater resources than we have. Our ability to successfully attract and retain wealth management clients is dependent upon our ability to compete with competitors’ investment products, level of investment performance, client services and marketing and distribution capabilities. If we are not successful, our results of operations and financial condition may be negatively impacted.
Risks Related to Economic Matters 11 Negative developments in the financial services industry and U.S. and global credit markets and the U.S. debt obligations may adversely impact our operations and results. Our businesses and operations, which primarily consist of lending money, accepting deposits and investing in securities, are sensitive to general business and economic conditions in the United States.
Risks Related to Economic Matters Negative developments in the financial services industry and U.S. and global credit markets and the U.S. debt obligations may adversely impact our operations and results. Our businesses and operations, which primarily consist of lending money, accepting deposits and investing in securities, are sensitive to general business and economic conditions in the United States.
We are unable to predict changes in market interest rates, which are affected by many factors beyond our control, including inflation, recession, unemployment, money supply, governmental policy, domestic and international events and changes in the United States and other financial markets. In addition, changes in interest rates can affect the average life of loans and investment securities.
We are unable to predict changes in market interest rates, which are affected by many factors beyond our control, including inflation, unemployment, money supply, governmental policy, domestic and international events and changes in the United States and other financial markets. In addition, changes in interest rates can affect the average life of loans and investment securities.
Additionally, our credit risk may be impaired when collateral held by us cannot be realized or is liquidated at prices insufficient to recover the full amount of the credit or derivative exposure due us; such losses could have a material adverse effect on our financial condition and results of operations.
Additionally, our credit risk may be impaired when collateral held by us cannot be realized or is liquidated at prices insufficient to recover the full amount of the credit or derivative exposure due us. Any such losses could have a material adverse effect on our financial condition and results of operations.
Stockholders’ equity increases or decreases by the amount of the change in the unrealized gain or loss (difference between the estimated fair value and the amortized cost) of the available-for-sale debt securities portfolio, net of the related tax expense or benefit, under the category of accumulated other comprehensive income (loss).
Stockholders’ equity increases or decreases by the amount of the change in the unrealized gain or loss (the difference between the estimated fair value and the amortized cost) of the available-for-sale debt securities portfolio, net of the related tax expense 15 or benefit, under the category of accumulated other comprehensive income (loss).
Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity. Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and borrowings from the FHLB of New York.
Any changes made to the rates offered on deposits to remain competitive with other financial institutions may also adversely affect profitability and liquidity. Other primary sources of funds consist of cash flows from operations, maturities and sales of investment securities and loans and borrowings from the FHLB of New York.
The guidance focuses on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or in an abundance of caution).
The guidance focuses 14 on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or in an abundance of caution).
In June 2019, New York enacted legislation increasing the restrictions on rent increases in a rent-regulated apartment building, including, among other provisions, (i) repealing the vacancy bonus and longevity bonus, which allowed a property owner to raise rents as much as 20 percent each time a rental unit became vacant, (ii) eliminating high rent vacancy deregulation and high-income deregulation, which allowed a rental unit to be removed from rent stabilization once it crossed a statutory high-rent threshold and became vacant, or the tenant’s income exceeded the statutory amount in the preceding two years, and (iii) eliminating an exception that allowed a property owner who offered preferential rents to tenants to raise the rent to the full legal rent upon renewal.
New York enacted legislation increasing the restrictions on rent increases in a rent-regulated apartment building, including, among other provisions, (i) repealing the vacancy bonus and longevity bonus, which allowed a property owner to raise rents as much as 20 percent each time a rental unit became vacant, (ii) eliminating high rent vacancy deregulation and high-income deregulation, which allowed a rental unit to be removed from rent stabilization once it crossed a statutory high-rent threshold and became vacant, or the tenant’s income exceeded the statutory amount in the preceding two years, and (iii) eliminating an exception that allowed a property owner who offered preferential rents to tenants to raise the rent to the full legal rent upon renewal.
Under the Banking Act, the Bank may pay dividends only out of retained earnings, and out of surplus to the extent that surplus exceeds 50 percent of stated capital. The Company is also subject to Federal Reserve Board policies, which may, in certain circumstances, limit its ability to pay dividends.
Under that Act, the Bank may pay dividends only out of retained earnings, and out of surplus to the extent that surplus exceeds 50 percent of stated capital. The Company is also subject to Federal Reserve Board policies, which may, in certain circumstances, limit its ability to pay dividends.
Further, the demand for deposits may be reduced due to a variety of factors such as demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the monetary policy of the FRB or regulatory actions that decrease customer access to particular products.
Further, the demand for deposits may be reduced due to a variety of factors such as demographic patterns, changes in customer preferences, reductions in consumers’ disposable income, the 18 monetary policy of the FRB or regulatory actions that decrease customer access to particular products.
Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff, which are strongly influenced by such external factors as the direction of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments.
Deposit balances can decrease when customers perceive alternative investments as providing a better risk/return tradeoff, which are strongly influenced by such external factors as the direction and level of interest rates, local and national economic conditions and the availability and attractiveness of alternative investments.
Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments 16 of the discount rate and changes in banks’ reserve requirements against certain transaction account deposits.
Among the instruments used by the Federal Reserve Board to implement these objectives are open market purchases and sales of U.S. government securities, adjustments of the discount rate and changes in banks’ reserve requirements against certain transaction account deposits.
The Bank is also subject to a number of federal laws, which, among other things, require it to lend to various sectors of the economy and population, and establish and maintain comprehensive programs relating to anti-money laundering and customer identification.
The Bank is also subject to a number of federal laws, which, among other things, require it to lend to various sectors of the economy and population, and establish and maintain comprehensive programs relating to anti-money laundering and 16 customer identification.
Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately adapt to changes in economic or any other conditions affecting clients and the quality of the loan portfolio.
Our risk management practices, such as monitoring the concentration of our loans within specific industries and our credit approval practices, may not adequately reduce credit risk, and our credit administration personnel, policies and procedures may not adequately adapt to changes in economic, interest rate or any other conditions affecting clients and the quality of the loan portfolio.
Risks Related to Capital We may need to raise additional capital in the future, which may not be available when needed or available on acceptable terms. We are required by federal regulatory authorities to maintain adequate levels of capital to support its operations. We may at some point need to raise additional capital to support continued growth.
Risks Related to Capital We may need to raise additional capital in the future, which may not be available when needed or available on acceptable terms. We are required by federal regulatory authorities to maintain adequate levels of capital to support our operations. We may at some point need to raise additional capital to support continued growth.
As a result, the determination of the appropriate level of allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates related to current and expected future credit risks and trends, all of which may undergo material changes.
The determination of the appropriate level of allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates related to current and expected future credit risks and trends, all of which may undergo material changes.
Furthermore, our customers are also affected by inflation, rising interest rates, and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.
Furthermore, our customers are also affected by inflation and the rising costs of goods and services used in their households and businesses, which could have a negative impact on their ability to repay their loans with us.
If we foreclose on these loans, our holding period for the collateral typically is longer than for a single or multifamily residential property because there are fewer potential purchasers of the collateral. Additionally, non-owner-occupied commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers.
If we foreclose on these loans, our holding period for the collateral typically is longer than for a single or multifamily residential property because there are fewer potential purchasers of the collateral. Additionally, commercial real estate loans generally involve relatively large balances to single borrowers or related groups of borrowers.
When interest-bearing liabilities mature or reprice more quickly than interest-earning assets, an increase in market rates of interest could reduce our net interest income. Likewise, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce our net interest income.
When interest-bearing liabilities mature or reprice more quickly than interest-earning assets, an increase in market rates of interest could reduce our net interest income. Conversely, when interest-earning assets mature or reprice more quickly than interest-bearing liabilities, falling interest rates could reduce our net interest income.
At December 31, 2023, our total multifamily rent regulated exposure in New York was approximately $941 million, or 17 percent, of the total loan portfolio. If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings would decrease. We maintain allowances for credit losses on loans and off-balance sheet credit exposures.
At December 31, 2024, our total multifamily rent regulated exposure in New York was approximately $939 million, or 17 percent, of the total loan portfolio. If our allowance for credit losses is not sufficient to cover actual loan losses, our earnings would decrease. We maintain allowances for credit losses on loans and off-balance sheet credit exposures.
Due to strong competition, our wealth management business may not be able to attract and retain clients. Competition is strong because there are numerous well-established and successful investment management and wealth advisory firms including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms, and other financial companies.
Due to strong competition, our wealth management business may not be able to attract and retain clients. Competition is strong because there are numerous well-established and successful investment management and wealth advisory firms with which we compete, including commercial banks and trust companies, investment advisory firms, mutual fund companies, stock brokerage firms, and other financial companies.
Accordingly, charge-offs on non-owner-occupied commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios.
Accordingly, charge-offs on commercial real estate loans may be larger on a per loan basis than those incurred with our residential or consumer loan portfolios.
The application of more stringent capital requirements could, among other things, result in lower returns on equity, require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements.
The application of more stringent capital requirements could, among other things, require us to maintain higher capital resulting in lower returns on equity and could require the raising of additional capital, and result in regulatory actions if we were to be unable to comply with such requirements.
As a public company, we are also subject to the corporate governance standards set forth in the Sarbanes-Oxley Act, as well as any rules or regulations promulgated by the SEC and the NASDAQ Stock Market. Monetary policies and regulations of the Federal Reserve Board could adversely affect the Company’s business, financial condition, and results of operations.
As a public company, we are also subject to the corporate governance standards set forth in the Sarbanes-Oxley Act, as well as any rules or regulations promulgated by the SEC and the NASDAQ Stock Market. The fiscal, monetary and regulatory policies of the federal government and its agencies could adversely affect the Company’s business, financial condition, and results of operations.
Since the principal source of income for the Company is dividends paid to the Company by the Bank, the Company’s ability to pay dividends to its shareholders will depend on whether the Bank pays dividends to it.
Our ability to pay dividends to our common shareholders is limited by law. Since the principal source of income for the Company is dividends paid to the Company by the Bank, the Company’s ability to pay dividends to its shareholders will depend on whether the Bank pays dividends to it.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. In response to a pronounced rise in inflation the Federal Reserve Board raised certain benchmark interest rates.
Inflation risk is the risk that the value of assets or income from investments will be worth less in the future as inflation decreases the value of money. The Federal Reserve Board raised certain benchmark interest rates to combat inflation.
The Company’s earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the money supply and credit conditions.
In addition to being affected by general economic conditions, the Company’s earnings and growth are affected by the policies of the Federal Reserve Board. An important function of the Federal Reserve Board is to regulate the money supply and credit conditions.
We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities. That means either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa.
Different types of assets and liabilities may react differently, and at different times, to changes in market interest rates. We expect that we will periodically experience “gaps” in the interest rate sensitivities of our assets and liabilities. That means either our interest-bearing liabilities will be more sensitive to changes in market interest rates than our interest-earning assets, or vice versa.
The Company also engages outside consultants to support its cybersecurity efforts. Our directors do not have significant experience in cybersecurity risk management in other business entities comparable to the Company and rely on the Chief Information Officer and other consultants for cybersecurity guidance. We are subject to operational risk.
Our other directors do not have significant experience in cybersecurity risk management in other business entities comparable to the Company and rely on the Chief Information Officer and other consultants for cybersecurity guidance. 20 We are subject to operational risk.
A sharp downturn in real estate values in our market area could leave our loans under-secured, which could adversely affect our earnings. Inflation and increase in market interest rates and potential effects from a recession can have an adverse impact on our business and on our customers.
A sharp downturn in real estate values in our market area could leave our loans under-secured, which could adversely affect our earnings. Inflation can have an adverse impact on our business and on our customers.
At December 31, 2023, the Company maintained a debt securities portfolio of $658.4 million, of which $550.6 million was classified as available-for-sale. The estimated fair value of the available-for-sale debt securities portfolio may change depending on the credit quality of the underlying issuer, market liquidity, changes in interest rates and other factors.
At December 31, 2024, the Company maintained a debt securities portfolio of $886.2 million, of which $784.5 million was classified as available-for-sale. The estimated fair value of the available-for-sale debt securities portfolio may change depending on the credit quality of the underlying issuer, market liquidity, changes in interest rates and other factors.
Based on these factors, the Bank has a concentration in commercial real estate lending, as such loans represented 375 percent of total bank capital as of December 31, 2023.
Based on these factors, the Bank had a concentration in commercial real estate lending, as such loans represented 347 percent of total bank capital as of December 31, 2024.
Continuing deterioration in economic conditions, including the possibility of a recession, affecting borrowers and securities issuers; inflation; rising interest rates; new information regarding existing loans, credit commitments and securities holdings; and identification of additional problem loans ratings downgrades and other factors; both within and outside of our control, may require an increase in the allowances for credit losses on loans and off-balance sheet credit exposures.
Continuing deterioration in economic conditions affecting borrowers and securities issuers; inflation; changes in interest rates; new information regarding existing loans, credit commitments and securities holdings; identification of additional problem loans ratings and downgrades, and other factors, may require an increase in the allowances for credit losses on loans and off-balance sheet credit exposures.
Any of the above could have a material adverse effect on our financial condition and/or results of operations. Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, including escalating military tension between Russia and Ukraine, terrorism or other geopolitical events. 15 The soundness of other financial institutions could adversely affect us.
Any of the above could have a material adverse effect on our financial condition and/or results of operations. Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict. The soundness of other financial institutions could adversely affect us.
The occurrence of any system failures, interruptions, or breaches in security could expose us to reputation risk, litigation, regulatory scrutiny and possible financial liability that could have a material adverse effect on our financial condition and results of operations. 19 Our failure to successfully keep pace with technological changes could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
The occurrence of any system failures, interruptions, or breaches in security could expose us to reputation risk, litigation, regulatory scrutiny and possible financial liability that could have a material adverse effect on our financial condition and results of operations.
Our loan portfolio includes non-owner-occupied commercial real estate loans for individuals and businesses for various purposes. The repayment of these loans typically depends upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service.
Our loan portfolio includes commercial real estate loans for individuals and businesses for various purposes. The repayment of these loans typically depends upon income generated, or expected to be generated, by the property securing the loan in amounts sufficient to cover operating expenses and debt service. This may be adversely affected by changes in the economy or local market conditions.
Any decline in available funding could adversely impact the Company’s ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as repaying borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition and results of operations. 18 Risks Related to Competition Competition from other financial institutions in originating loans and attracting deposits may adversely affect our profitability.
Any decline in available funding could adversely impact the Company’s ability to originate loans, invest in securities, meet expenses, or to fulfill obligations such as repaying borrowings or meeting deposit withdrawal demands, any of which could have a material adverse impact on its liquidity, business, financial condition and results of operations.
We are subject to regulation and supervision by the New Jersey Department of Banking and Insurance and the Federal Reserve Bank. Such regulation and supervision governs the activities in which an institution and its holding company may engage. The bank regulatory agencies possess broad authority to prevent or remedy unsafe or unsound practices or violations of law.
Such regulation and supervision governs the activities in which an institution and its holding company may engage. The bank regulatory agencies possess broad authority to prevent or remedy unsafe or unsound practices or violations of law.
Checking, savings, and money market deposit account balances and other forms of client deposits can decrease when clients perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff.
Checking, savings, and money market deposit account balances and other forms of client deposits can decrease when clients perceive alternative investments, such as the stock market, as providing a better risk/return tradeoff. The competition for customers is strong and customers are increasingly seeking investments with higher rates.
In attracting deposits, we face substantial competition from other insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds. Many of our competitors enjoy advantages, including greater financial resources, more aggressive marketing campaigns, better brand recognition and more branch locations.
Many of our competitors enjoy advantages, including greater financial resources and higher lending limits, a wider geographic presence, and more accessible branch office locations. In attracting deposits, we face substantial competition from other insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds.
Some of our non-bank competitors are not subject to the same extensive regulations that govern our operations. As a result, such non-bank competitors may have advantages over us in providing certain products and services. This competition may reduce or limit our margins on banking services, reduce our market share and adversely affect our earnings and financial condition.
As a result, such non-bank competitors may have advantages over us in providing certain products and services. This competition may reduce or limit our margins on banking services, reduce our market share and adversely affect our earnings and financial condition.
Our concentrations of loans in certain industries could have adverse effects on credit quality. As of December 31, 2023, the Company’s loan portfolio included loans to: (i) lessors of office buildings of $107.0 million, or 2.0 percent of total loans; and (ii) borrowers in the retail industry of $229.4 million, or 4.2 percent of total loans.
Our concentrations of loans in certain industries could have adverse effects on credit quality. As of December 31, 2024, the Company’s loan portfolio included loans to: (i) lessors of office buildings of $95.3 million, or 1.7 percent of total loans; and (ii) borrowers in the retail industry of $210.6 million, or 3.8 percent of total loans.
In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property.
In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties based on damages and costs resulting from environmental contamination emanating from the property. Any significant environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations and prospects.
Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets. See Part I, Item1, “Business - Capital Requirements.” Our ability to pay dividends to our common shareholders is limited by law.
Furthermore, the imposition of liquidity requirements in connection with the implementation of Basel III could result in our having to lengthen the term of our funding, restructure our business models, and/or increase our holdings of liquid assets. See Part I, Item1, “Business - Capital Requirements.” Potential acquisitions may disrupt our business and dilute shareholder value.
This may be adversely affected by changes in the economy or local market conditions. These loans expose us to greater credit risk than loans secured by residential real estate because the collateral securing these loans typically cannot be liquidated as easily as residential real estate.
These loans expose us to greater credit risk than loans secured by residential real estate because the collateral securing these loans typically cannot be liquidated as easily as residential real estate.
Moreover, the Dodd-Frank Act permits states to adopt stricter consumer protection laws and state attorney generals may enforce consumer protection rules issued by the CFPB. These changes have increased, and may continue to increase, our regulatory compliance burden and costs and may restrict the financial products and services we offer to our clients.
The Dodd-Frank Act has and may continue to increase our regulatory compliance burden. The Dodd-Frank Act permits states to adopt stricter consumer protection laws and state attorney generals may enforce consumer protection rules issued by the CFPB.
Our board of directors relies on management and outside consultants in overseeing cybersecurity risk management. The Company has a standing Information Technology Committee. The Chief Information Officer is the primary management liaison to the committee. The committee meets quarterly, or more frequently if needed, and reports to the board of directors after each meeting through committee minutes.
The Chief Information Officer is the primary management liaison to the committee. The committee meets quarterly, or more frequently if needed, and reports to the board of directors after each meeting through committee minutes. The Company also engages outside consultants to support its cybersecurity efforts. One of our directors has significant experience in cybersecurity, security engineering and compliance.
As inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, would decrease further. In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses.
In addition, inflation generally increases the cost of goods and services we use in our business operations, such as electricity and other utilities, which increases our noninterest expenses.
Our future success depends, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements.
The effective use of technology increases efficiency and enables financial institutions to better serve clients and to reduce costs. Our future success depends, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands, as well as to create additional efficiencies in our operations.
We may not be able to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients. Failure to successfully keep pace with technological change affecting the financial services industry could have a material adverse impact on our business and, in turn, our financial condition and results of operations.
Our failure to successfully keep pace with technological changes could have a material adverse impact on our business and, in turn, our financial condition and results of operations. The financial services industry is continually undergoing rapid technological change with frequent introductions of new technology-driven products and services.
The Federal Reserve Board would most likely seek to prohibit any dividend payment that would reduce a holding company's capital below these minimum amounts. 17 Risks Related to Liquidity Limits on our ability to use brokered deposits as part of our funding strategy may adversely affect our ability to grow.
The Federal Reserve Board would most likely seek to prohibit any dividend payment that would reduce a holding company's capital below these minimum amounts. Risks Related to Liquidity We may lose lower-cost funding sources, which may affect our profitability.
Financial services institutions are interconnected as a result of trading, clearing, counterparty, or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, investment banks, commercial banks, and other institutional clients.
We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, investment banks, commercial banks, and other institutional clients. Some of these transactions expose us to credit risk if there is a default by our client or counterparty.
These competitors may offer higher interest rates than we do, which could decrease the deposits that we attract or require us to increase our rates to retain existing deposits or attract new deposits. We also compete with non-bank providers of financial services, such as brokerage firms, consumer finance companies, insurance companies and governmental organizations, which may offer more favorable terms.
We also compete with non-bank providers of financial services, such as brokerage firms, consumer finance companies, insurance companies and governmental organizations, which may offer more favorable terms. Some of our non-bank competitors are not subject to the same extensive regulations that govern our operations.
Net interest income is the difference between interest income earned on loans, investments and other interest-earning assets and the interest expense incurred on deposits and borrowed funds. Different types of assets and liabilities may react differently, and at different times, to changes in market interest rates.
Risks Related to Interest Rates Changes in interest rates may adversely affect our earnings and financial condition. Our net income depends primarily upon our net interest income, which is the difference between interest income earned on loans, investments and other interest-earning assets and the interest expense incurred on deposits and borrowed funds.
This legislation generally limits a landlord’s ability to increase rents on rent-regulated apartments and makes it more difficult to convert rent regulated apartments to market rate apartments. As a result, the value of the collateral located in New York securing our multifamily loans or the future net operating income of such properties could potentially become impaired.
This legislation generally limits a landlord’s ability to increase rents on rent-regulated apartments and makes it more difficult to convert rent regulated apartments to market rate apartments.
These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits. The monetary policies and regulations of the Federal Reserve Board have a significant effect on the overall economy and the operating results of financial institutions.
These instruments are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits.
We face substantial competition in originating loans from other banks, savings institutions, credit unions, mortgage banking companies and other lenders. Many of our competitors enjoy advantages, including greater financial resources and higher lending limits, a wider geographic presence, and more accessible branch office locations.
Risks Related to Competition Competition from other financial institutions in originating loans and attracting deposits may adversely affect our profitability. We face substantial competition in originating loans from other banks, savings institutions, credit unions, mortgage banking companies and other lenders.
Further, continued high market interest rates may reduce our loan origination volume, particularly refinance volume, and/or reduce our interest rate spread, which could have an adverse effect on our profitability and results of operations. 12 Risks Related to Lending Matters Our exposure to credit risk could adversely affect our earnings and financial condition.
Additionally, changes in distribution of federal funds or freezing of federal funds, including reductions in federal workforce causing unemployment, could have an adverse effect on the ability of consumers and businesses to pay debts and/or affect the demand for loans and deposits. Risks Related to Lending Matters Our exposure to credit risk could adversely affect our earnings and financial condition.
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Sustained higher interest rates by the Federal Reserve Board to tame persistent inflationary price pressures could also push down asset prices and weaken economic activity.
Added
However, in September, the FRB reduced rates by 50 basis points and by an additional 25 basis points in November and 12 December. As inflation increases and market interest rates rise the value of our investment securities, particularly those with longer maturities, would decrease, although this effect can be more pronounced for floating rate instruments.
Removed
Any significant environmental liabilities could cause a material adverse effect on our business, financial condition, results of operations and prospects. 14 Risks Related to Interest Rates Changes in interest rates may adversely affect our earnings and financial condition. Our net income depends primarily upon our net interest income.
Added
Interruption of our customer's supply chains and federal funding could negatively impact their business and operations and impact their ability to repay their loans.
Removed
Some of these transactions expose us to credit risk if there is a default by our client or counterparty.
Added
Any material interruption in our customers' supply chains, such as a material interruption of the resources required to conduct their business, such as those resulting from interruptions in service by third-party providers, trade restrictions, such as increase tariffs or quotas, embargoes or customs restrictions, reductions in federal subsidies or grants, social or labor unrest, natural disasters, epidemics or pandemics or political disputes and military conflicts, that cause a material disruption in our customers' supply changes, could have a negative impact on their business and ability to repay their borrowings with us. in the event of disruptions in our customers' supply chains, the labor and materials they rely on in the ordinary course of business may not be available at reasonable rates or at all.
Removed
In early 2023, the failures of Silicon Valley Bank, First Republic Bank, and Signature Bank resulted in decreased confidence in banks among depositors, other counterparties and investors.
Added
For example, the New York City Rent Guidelines Board established that on certain apartments, for a one-year lease beginning on or after September 30, 2024, the maximum rent increase is 3.0%, even though the overall inflation rate increased at a higher rate.
Removed
Such events and developments could materially and adversely affect our business or financial condition, including through declines in deposits, increased costs of funds, potential liquidity pressures, increased regulation, and declines and volatility in the price of our common stock.
Added
As a result, the value of the 13 collateral located in New York securing our multifamily loans or the future net operating income of such properties could potentially become impaired. Moreover, following Covid, New York City rent regulated buildings have had an increased level of non-paying tenants with a very protracted eviction process, which has negatively impacted rent collections.
Removed
The Dodd-Frank Act has and may continue to increase our regulatory compliance burden. Among the Dodd-Frank Act’s significant regulatory changes, it created the CFPB, which is empowered to promulgate new consumer protection regulations and revise existing regulations in many areas of consumer protection.
Added
Our ability to engage in routine transactions could be adversely affected by the actions and commercial soundness of other financial institutions. Financial services institutions are interconnected as a result of trading, clearing, counterparty, or other relationships.
Removed
A “brokered deposit” is any deposit that is obtained from or through the mediation or assistance of a deposit broker, which includes larger correspondent banks and securities brokerage firms. These deposit brokers attract deposits from individuals and companies throughout the country and internationally whose deposit decisions are based almost exclusively on obtaining the highest interest rates.
Added
These changes have increased, and may continue to increase, our regulatory compliance burden and costs and may restrict the financial products and services we offer to our clients. The Dodd-Frank Act also increased regulation of derivatives and hedging transactions, which could limit our ability to enter into, or increase the costs associated with, interest rate and other hedging transactions.
Removed
At December 31, 2023, brokered deposits represented approximately 2.5 percent of our total deposits and equaled $130.5 million, comprised of the following: interest-bearing demand-brokered of $10.0 million, and brokered certificates of deposits of $120.5 million. To continue to maintain our level of brokered deposits, we may be forced to pay higher interest rates than contemplated by our asset-liability pricing strategy.
Added
The FRB's policies determine in large part the cost of funds for lending and investing and the return earned on those loans and investments, both of which affect our net interest margin. its policies can also adversely affect borrowers, potentially increasing the risk that they may fail to repay their loans.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeWe leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to Peapack-Gladstone Bank’s information security program, to assess their design and operating effectiveness and make recommendations to strengthen the Bank’s risk management program. 21 We maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the Bank’s Information Technology Steering Committee as well as the board of directors.
Biggest changeWe maintain an Incident Response Plan that provides a documented framework for responding to actual or potential cybersecurity incidents, including timely notification of and escalation to the Bank’s Information Technology Steering Committee as well as the board of directors.
The information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We employ an in-depth, layered, defensive strategy that embraces a “trust by design” philosophy when designing new products, services, and technology. We leverage people, processes, and technology as part of Peapack-Gladstone Bank’s efforts to manage and maintain cybersecurity controls.
The information security program is periodically reviewed by such personnel with the goal of addressing changing threats and conditions. We employ an in-depth, layered, defensive strategy that embraces a “trust by design” philosophy when designing new products, services, and technology. We leverage people, processes, and technology as part of the Bank’s efforts to manage and maintain cybersecurity controls.
The Incident Response Plan is coordinated through the Information Security Officer and key members of management are embedded into the Plan by its design. The Incident Response Plan facilitates coordination across multiple parts of Peapack-Gladstone Bank’s organization and is evaluated at least annually. Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe.
The Incident Response Plan is coordinated through the Information Security Officer and key members of management are embedded into the Plan by its design. The Incident Response Plan facilitates coordination across multiple parts of the Bank’s organization and is evaluated at least annually. Notwithstanding our defensive measures and processes, the threat posed by cyber-attacks is severe.
Peapack-Gladstone Bank’s internal systems,processes, and controls are designed to mitigate loss from cyber-attacks and, while we have experienced cybersecurity incidents in the past, to date, risks from cybersecurity threats have not materially affected the Company, including its business strategy, results of operations, or financial condition.
The Bank’s internal systems, processes, and controls are designed to mitigate loss from cyber-attacks and, while we have experienced cybersecurity incidents in the past, to date, risks from cybersecurity threats have not materially affected the Company, including its business strategy, results of operations, or financial condition.
Peapack-Gladstone Bank’s Information Security Officer and Chief Information Officer, who reports directly to the Chief Operating Officer, along with other key members of their teams, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
The Bank’s Information Security Officer and Chief Information Officer, who reports directly to the Chief Operating Officer, along with other key members of their teams, regularly collaborate with peer banks, industry groups, and policymakers to discuss cybersecurity trends and issues and identify best practices.
Included in the responsibilities of this management team is the oversight and the administration of the cybersecurity risk assessment, defense operations, incident response, vulnerability assessment, threat intelligence, identity access governance, third-party risk management, and business resilience. Peapack-Gladstone Bank’s board of directors has approved management committees including the Information Technology Steering Committee, which focuses on technology and cyber related business impact.
Included in the responsibilities of this management team is the oversight and the administration of the cybersecurity risk assessment, defense operations, incident 22 response, vulnerability assessment, threat intelligence, identity access governance, third-party risk management, and business resilience. The Bank’s board of directors has approved management committees including the Information Technology Steering Committee, which focuses on technology and cyber-related business impact.
The Bank’s board of directors are responsible for overseeing Peapack-Gladstone Bank’s information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
The Bank’s board of directors are responsible for overseeing Peapack Private’s information security and technology programs, including management’s actions to identify, assess, mitigate, and remediate or prevent material cybersecurity issues and risks.
Our objective for managing cybersecurity risk is to avoid or minimize the impact of external threat events or other efforts to penetrate, disrupt or misuse Peapack-Gladstone Bank systems or information. The structure of our information security program is designed around the National Institute of Standards and Technology Cybersecurity Framework, regulatory guidance, and other industry standards.
Our objective for managing cybersecurity risk is to avoid or minimize the impact of external threat events or other efforts to penetrate, disrupt or misuse Peapack Private systems or information. The structure of our information security program is designed around the National Institute of Standards and Technology Cybersecurity Framework, regulatory guidance, and other industry standards.
In addition, we leverage certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
In addition, we leverage information from certain industry and government associations, third-party benchmarking, audits, and threat intelligence feeds to facilitate and promote program effectiveness.
Peapack-Gladstone Bank’s Information Security Officer is primarily responsible for cybersecurity and is a key member of the risk management organization, reporting directly to the Chief Risk Officer and as discussed below, periodically to the Information Technology Steering Committee and Peapack-Gladstone Bank’s board of directors.
Peapack Private's Information Security Officer is primarily responsible for cybersecurity and is a key member of the risk management organization, reporting directly to the Chief Risk Officer and as discussed below, periodically to the Information Technology Steering Committee and Peapack Private’s board of directors.
Peapack-Gladstone Bank’s Information Security Officer, Chief Information Officer, and Chief Technology Officer provide reports to the Bank’s board of directors regarding the information security program, technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes. The board of directors reviews and approves Peapack-Gladstone Bank’s information security program, technology budgets, and strategies annually.
The Bank’s Information Security Officer, Chief Information Officer, and Chief Technology Officer provide reports to the Bank’s board of directors regarding the information security program, technology program, key enterprise cybersecurity initiatives, and other matters relating to cybersecurity processes. The board of directors reviews and approves our information security program, technology budgets, and strategies annually.
We also actively monitor our email gateways for malicious phishing e-mail campaigns and monitor remote connections as a significant portion of Peapack-Gladstone Bank’s workforce has the option to work remotely.
We also actively monitor our email gateways for malicious phishing e-mail campaigns and monitor remote connections as a significant portion of our workforce has the option to work remotely.
Governance Peapack-Gladstone Bank’s Chief Information Officer, Chief Technology Officer, and Information Security Officer are accountable for managing and ensuring compliance with the Bank’s information security program.
Governance Peapack Private’s Chief Information Officer, Chief Technology Officer, and Information Security Officer are accountable for managing and ensuring compliance with the Bank’s information security program.
We engage in regular assessments of Peapack-Gladstone Bank infrastructure, software systems, and network architecture, using internal cybersecurity experts and third-party specialists. We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers and Peapack-Gladstone Bank’s supply chain.
We engage in regular assessments of our infrastructure, software systems, and network architecture, using internal cybersecurity experts and third-party specialists. We also maintain a third-party risk management program designed to identify, assess, and manage risks, including cybersecurity risks, associated with external service providers and the Bank’s supply chain .
Item 1C. CYBER SECURITY Risk Management and Strategy Peapack-Gladstone Bank’s risk management program is designed to identify, assess, and mitigate risks across various aspects of the Company, including financial, operational, regulatory, reputational, and legal. Cybersecurity is a critical component of this program, given the increasing reliance on technology and potential of cyber threats.
Item 1C. CYBER SECURITY Risk Management and Strategy Peapack Private Bank & Trust's risk management program is designed to identify, assess, and mitigate risks across various aspects of the Company, including financial, operational, regulatory, reputational, and legal.
Added
Cybersecurity is a critical component of this program, given the increasing reliance on technology, our expansion of Internet and mobile banking tools, an increased level of employees working remotely and the potential of cyber threats.
Added
We leverage internal and external auditors and independent external partners to periodically review our processes, systems, and controls, including with respect to the Bank’s information security program, to assess their design and operating effectiveness and make recommendations to strengthen the Bank’s risk management program .

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PR OPERTIES The Company owns eight branches and leases eight branches. The Company leases an administrative and operations office building in Bedminster, New Jersey, private banking offices in Princeton and Teaneck, New Jersey and wealth offices in Greenville, Delaware, Morristown, New Providence, Red Bank and Summit, New Jersey and Bonita Springs, Florida .
Biggest changeItem 2. PR OPERTIES The Company owns eight branches and leases eight branches. The Company also leases an administrative and operations office building in Bedminster, New Jersey, private banking offices in Princeton and Teaneck, New Jersey and New York City and wealth offices in Greenville, Delaware, Morristown, New Providence, Red Bank and Summit, New Jersey and Bonita Springs, Florida.
Removed
The Company has signed a lease for future market expansion in New York City. We consider our present facilities to be sufficient for our current operations.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeMINE SAF ETY DISCLOSURE Not applicable. 22 PART II
Biggest changeMINE SAF ETY DISCLOSURE Not applicable. 23 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(Note that banks that have since been acquired or did not file their required reports on a timely basis have been excluded.) The Peer Group consists of: Arrow Financial Corporation, Cambridge Bancorp, Customers Bancorp, Inc., Dime Community Bancshares, Inc., Eagle Bancorp, Inc., Enterprise Bancorp, Inc., Lakeland Bancorp, Inc., OceanFirst Financial Corp., Orrstown Financial Services, Inc., Peoples Financial Services Corp., Provident Financial Services, Inc., Sandy Spring Bancorp, Inc., The First of Long Island Corporation, Tompkins Financial Corporation, Univest Financial Corporation, and Washington Trust Bancorp, Inc.
Biggest change(Note that banks that have since been acquired or did not file their required reports on a timely basis have been excluded.) The Peer Group consists of: Arrow Financial Corporation, Cambridge Bancorp, Customers Bancorp, Inc., Dime Community Bancshares, Inc., Eagle Bancorp, Inc., Enterprise Bancorp, Inc., Lakeland Bancorp, Inc.
On August 8, 2023, the Company issued 19,197 shares of Company common stock to the Point View shareholder pursuant to the agreement. These Company shares were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on Section 4(a)(2) of the Securities Act. Item 6. [RES ERVED]
On August 8, 2023, the Company issued 19,197 shares of Company common stock to the Point View shareholder. These Company shares were issued without registration under the Securities Act of 1933, as amended (the “Securities Act”) in reliance on Section 4(a)(2) of the Securities Act. Item 6. [RES ERVED]
Stock Performance Graph The following graph compares the cumulative total return on a hypothetical $100 investment made on December 31, 2018 (Five Year Total Return Performance), in (a) the Company’s common stock; (b) the KBW NASDAQ Regional Banking Index (top 50 U.S. banks); and (c) the Proxy Peer Group.
Stock Performance Graph The following graph compares the cumulative total return on a hypothetical $100 investment made on December 31, 2019 (Five Year Total Return Performance), in (a) the Company’s common stock; (b) the KBW NASDAQ Regional Banking Index (top 50 U.S. banks); and (c) the Proxy Peer Group.
Item 5. MARKET FOR REGIST RANT'S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common stock of the Company is traded on the NASDAQ Global Select Market under the symbol “PGC”. On March 1, 2024, there were approximately 1,240 registered shareholders of record.
Item 5. MARKET FOR REGIST RANT'S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES The common stock of the Company is traded on the NASDAQ Global Select Market under the symbol “PGC”. On March 3, 2025, there were approximately 1,206 registered shareholders of record.
The contingent payments, to the extent earned, are payable on or about September 15 of 2020, 2021, 2022 and 2023. The Company issued 14,220 shares of Company common stock to the Point View shareholder pursuant to an agreement on each of September 17, 2021, and September 19, 2022.
The contingent payments, to the extent earned, were payable on or about September 15 of 2020, 2021, 2022 and 2023. The Company issued 14,220 shares of Company common stock to the Point View shareholder on each of September 17, 2021, and September 19, 2022.
Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Total Number of Shares Withheld (1) Average Price Paid Per Share Maximum Number of Shares That May Yet Be Purchased Under the Plans Or Programs (2) October 1, 2023 - October 31, 2023 36,886 — $ 22.76 529,114 November 1, 2023 - November 30, 2023 48,916 — 24.28 480,198 December 1, 2023 - December 31, 2023 2,525 585 25.68 477,673 Total 88,327 585 $ 23.86 (1) Represents shares withheld to satisfy tax withholding obligations upon the exercise of stock options and vesting of restricted stock awards.
Total Number of Shares Purchased As Part of Publicly Announced Plans or Programs Total Number of Shares Withheld (1) Average Price Paid Per Share Maximum Number of Shares That May Yet Be Purchased Under the Plans Or Programs (2) October 1, 2024 - October 31, 2024 — — $ — 177,673 November 1, 2024 - November 30, 2024 — — — 177,673 December 1, 2024 - December 31, 2024 — 451 35.37 177,673 Total 0 451 $ 35.37 (1) Represents shares withheld to satisfy tax withholding obligations upon the exercise of stock options and vesting of restricted stock awards.
The Company believes each of these indexes/groups are more closely aligned with the operations of the Company. 23 Period Ended Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Peapack-Gladstone Financial Corporation $ 100.00 $ 123.59 $ 91.97 $ 143.95 $ 152.22 $ 122.82 KBW NASDAQ Regional Banking Index 100.00 123.81 113.03 154.45 143.75 143.17 Peer Group 100.00 117.14 95.47 144.45 120.71 111.93 Stock Repurchases The following table sets forth information for the quarter ended December 31, 2023 with respect to common shares repurchased and common shares withheld to satisfy withholding obligations upon the exercise of stock options and vesting of restricted stock awards/units.
The Company believes each of these indexes/groups are more closely aligned with the operations of the Company. 24 Period Ended Index 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 12/31/24 Peapack-Gladstone Financial Corporation $ 100.00 $ 74.42 $ 116.48 $ 123.17 $ 99.38 $ 107.60 KBW NASDAQ Regional Banking Index 100.00 91.29 124.74 116.10 115.64 130.90 Peer Group 100.00 81.50 123.32 103.05 95.55 103.79 Stock Repurchases The following table sets forth information for the quarter ended December 31, 2024 with respect to common shares repurchased and common shares withheld to satisfy withholding obligations upon the exercise of stock options and vesting of restricted stock awards/units.
These shares are repurchased pursuant to the terms of the applicable plan and not under the Company's stock repurchase plan. (2) On January 26, 2023, the Company’s Board of Directors approved a plan to repurchase up to 890,000 shares, which was approximately 5 percent of the outstanding shares as of that date, through December 31, 2024.
These shares are repurchased pursuant to the terms of the applicable plan and not under the Company's stock repurchase plan. (2) The Company's 2023 Stock Repurchase Plan expired on December 31, 2024.
Removed
The timing and amount of shares repurchased will depend on certain factors, including but not limited to, market conditions and prices, the Company’s liquidity and capital requirements and alternative uses of capital.
Added
(included through 5/15/2024 when it was acquired by Provident Financial Services), OceanFirst Financial Corp., Orrstown Financial Services, Inc., Peoples Financial Services Corp., Provident Financial Services, Inc., Sandy Spring Bancorp, Inc., The First of Long Island Corporation, Tompkins Financial Corporation, Univest Financial Corporation, and Washington Trust Bancorp, Inc.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

154 edited+46 added−37 removed50 unchanged
Biggest changeAt or for the Years Ended December 31, Change (Dollars in thousands, except share and per share data) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Results of Operations: Interest income $ 304,010 $ 211,875 $ 160,067 $ 92,135 $ 51,808 Interest expense 147,921 35,795 22,006 112,126 13,789 Net interest income 156,089 176,080 138,061 (19,991 ) 38,019 Provision for loan losses 14,091 6,353 6,475 7,738 (122 ) Net interest income after provision for loan losses 141,998 169,727 131,586 (27,729 ) 38,141 Wealth management fee income 55,747 54,651 52,987 1,096 1,664 Other income 17,831 11,766 19,256 6,065 (7,490 ) Total operating expense 148,295 133,800 126,167 14,495 7,633 Income before income tax expense 67,281 102,344 77,662 (35,063 ) 24,682 Income tax expense 18,427 28,098 21,040 (9,671 ) 7,058 Net income $ 48,854 $ 74,246 $ 56,622 $ (25,392 ) $ 17,624 Per Share Data: Basic earnings per common share $ 2.74 $ 4.09 $ 3.01 $ (1.35 ) $ 1.08 Diluted earnings per common share 2.71 4.00 2.93 (1.29 ) 1.07 Cash dividends declared 0.20 0.20 0.20 — — Book value end-of-period 32.90 29.92 29.70 2.98 0.22 Average common shares outstanding 17,849,558 18,161,605 18,788,679 (312,047 ) (627,074 ) Common stock equivalents (dilutive) 199,494 406,493 503,923 (206,999 ) (97,430 ) Diluted average common shares outstanding 18,049,052 18,568,098 19,292,602 (519,046 ) (724,504 ) Average equity to average assets 8.70 % 8.56 % 8.93 % 0.14 % (0.37 )% Return on average assets 0.76 1.20 0.94 (0.44 ) 0.26 Return on average equity 8.77 14.02 10.56 (5.25 ) 3.46 Dividend payout ratio 7.28 4.91 6.67 2.37 (1.76 ) Net interest margin 2.48 2.91 2.38 (0.43 ) 0.53 Noninterest expenses to average assets 2.32 2.16 2.10 0.16 0.06 Noninterest income to average assets 1.15 1.07 1.20 0.08 (0.13 ) Balance sheet data (at period end): Total assets $ 6,476,857 $ 6,353,593 $ 6,077,993 $ 123,264 $ 275,600 Securities held to maturity 107,755 102,291 108,680 5,464 (6,389 ) Securities available to sale 550,617 554,648 796,753 (4,031 ) (242,105 ) CRA equity security, at fair value 13,166 12,985 14,685 181 (1,700 ) FHLB and FRB stock, at cost 31,044 30,672 12,950 372 17,722 Total loans 5,429,325 5,285,246 4,806,721 144,079 478,525 Allowance for loan losses 65,888 60,829 61,697 5,059 (868 ) Total deposits 5,274,114 5,205,164 5,266,149 68,950 (60,985 ) Total shareholders’ equity 583,681 532,980 546,388 50,701 (13,408 ) Cash dividends: Common 3,558 3,645 3,775 (87 ) (130 ) Assets under management and/or administration at Wealth Management Division (market value) $ 10.9 billion $ 9.9 billion $ 11.1 billion $ 1.0 billion $ (1.2) billion 27 At or for the Years Ended December 31, Change (Dollars in thousands, except share and per share data) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Asset quality ratios (at period end): Nonperforming loans to total loans 1.13 % 0.36 % 0.32 % 0.77 % 0.04 % Nonperforming assets to total assets 0.95 0.30 0.26 0.65 0.04 Allowance for loan losses to nonperforming loans 107.44 320.59 396.18 (213.15 ) (75.59 ) Allowance for loan losses to total loans 1.21 1.15 1.28 0.06 (0.13 ) Net charge-offs/(recoveries) to average loans plus other real estate owned 0.17 0.02 0.27 0.15 (0.25 ) Liquidity and capital ratios: Average loans to average deposits 102.29 % 94.97 % 89.17 % 7.32 % 5.80 % Total shareholders’ equity to total assets 9.01 8.39 8.99 0.62 (0.60 ) Selected Balance Sheet Ratios of the Company: Regulatory total capital to risk-weighted assets 14.95 % 14.73 % 14.64 % 0.22 % 0.09 % Regulatory leverage ratio 9.19 8.90 8.29 0.29 0.61 Noninterest bearing deposits to total deposits 18.16 23.94 18.16 (5.78 ) 5.78 Time deposits to total deposits 10.85 7.11 9.02 3.74 (1.91 ) 2023 compared to 2022 The Company recorded net income of $48.85 million and diluted earnings per share of $2.71 for the year ended December 31, 2023, compared to net income of $74.25 million and diluted earnings per share of $4.00 for the year ended December 31, 2022.
Biggest changeAt or for the Years Ended December 31, Change (Dollars in thousands, except share and per share data) 2024 2023 2022 2024 vs 2023 2023 vs 2022 Results of Operations: Interest income $ 327,801 $ 304,010 $ 211,875 $ 23,791 $ 92,135 Interest expense 178,795 147,921 35,795 30,874 112,126 Net interest income 149,006 156,089 176,080 (7,083 ) (19,991 ) Provision for credit losses 7,500 14,091 6,353 (6,591 ) 7,738 Net interest income after provision for credit losses 141,506 141,998 169,727 (492 ) (27,729 ) Wealth management fee income 61,458 55,747 54,651 5,711 1,096 Other income 17,664 17,831 11,766 (167 ) 6,065 Total operating expense 175,676 148,295 133,800 27,381 14,495 Income before income tax expense 44,952 67,281 102,344 (22,329 ) (35,063 ) Income tax expense 11,964 18,427 28,098 (6,463 ) (9,671 ) Net income $ 32,988 $ 48,854 $ 74,246 $ (15,866 ) $ (25,392 ) Per Share Data: Basic earnings per common share $ 1.87 $ 2.74 $ 4.09 $ (0.87 ) $ (1.35 ) Diluted earnings per common share 1.85 2.71 4.00 (0.86 ) (1.29 ) Cash dividends declared 0.20 0.20 0.20 — — Book value end-of-period 34.45 32.90 29.92 1.55 2.98 Average common shares outstanding 17,664,640 17,849,558 18,161,605 (184,918 ) (312,047 ) Common stock equivalents (dilutive) 175,121 199,494 406,493 (24,373 ) (206,999 ) Diluted average common shares outstanding 17,839,761 18,049,052 18,568,098 (209,291 ) (519,046 ) Average equity to average assets 8.97 % 8.70 % 8.56 % 0.27 % 0.14 % Return on average assets 0.50 0.76 1.20 (0.26 ) (0.44 ) Return on average equity 5.61 8.77 14.02 (3.16 ) (5.25 ) Dividend payout ratio (A) 10.70 7.28 4.91 3.42 2.37 Net interest margin (B) 2.32 2.48 2.91 (0.16 ) (0.43 ) Noninterest expenses to average assets 2.68 2.32 2.16 0.36 0.16 Noninterest income to average assets 1.21 1.15 1.07 0.06 0.08 Balance sheet data (at period end): Total assets $ 7,011,238 $ 6,476,857 $ 6,353,593 $ 534,381 $ 123,264 Securities held to maturity 101,635 107,755 102,291 (6,120 ) 5,464 Securities available to sale 784,544 550,617 554,648 233,927 (4,031 ) Total loans 5,512,326 5,429,325 5,285,246 83,001 144,079 Allowance for credit losses 72,992 65,888 60,829 7,104 5,059 Total deposits 6,129,022 5,274,114 5,205,164 854,908 68,950 Total shareholders’ equity 605,849 583,681 532,980 22,168 50,701 Cash dividends: Common 3,530 3,558 3,645 (28 ) (87 ) Assets under management and/or administration (market value) $ 11.9 billion $ 10.9 billion $ 9.9 billion $ 1.0 billion $ 1.0 billion 29 At or for the Years Ended December 31, Change 2024 2023 2022 2024 vs 2023 2023 vs 2022 Asset quality ratios (at period end): Nonperforming loans to total loans 1.82 % 1.13 % 0.36 % 0.69 % 0.77 % Nonperforming assets to total assets 1.43 0.95 0.30 0.48 0.65 Allowance for credit losses to nonperforming loans 72.87 107.44 320.59 (34.57 ) (213.15 ) Allowance for credit losses to total loans 1.32 1.21 1.15 0.11 0.06 Net charge-offs to average loans plus other real estate owned 0.01 0.17 0.02 (0.16 ) 0.15 Liquidity and capital ratios: Average loans to average deposits 94.14 % 102.29 % 94.97 % (8.15 )% 7.32 % Total shareholders’ equity to total assets 8.64 9.01 8.39 (0.37 ) 0.62 Selected Balance Sheet Ratios of the Company: Regulatory total capital to risk-weighted assets 14.84 % 14.95 % 14.73 % (0.11 )% 0.22 % Regulatory leverage ratio 9.01 9.19 8.90 (0.18 ) 0.29 Noninterest bearing deposits to total deposits 18.16 18.16 23.94 (0.00 ) (5.78 ) Time deposits to total deposits 8.01 10.85 7.11 (2.84 ) 3.74 (A) Dividend payout ratio is calculated by dividing cash dividends by net income.
Factors may include, among others, changes in lending policies and procedures, size and composition of the portfolio, experience and depth of Management and the effect of external factors such as competition, legal and regulatory requirements. The allowance is available for any loan that, in Management’s judgment, should be charged off.
Factors may include, among others, changes in lending policies and procedures, size and composition of the portfolio, experience and depth of Management and the effect of external factors such as competition and legal and regulatory requirements, among others. The allowance is available for any loan that, in Management’s judgment, should be charged off.
The leases generally have escalation terms based upon certain defined indexes. Common area maintenance charges may also apply and are adjusted annually based on the terms of the lease agreements. The Company adopted the guidance 46 in Topic 842 Leases effective January 1, 2019. See Note 1 to Notes to Consolidated Financial Statements for further discussion.
The leases generally have escalation terms based upon certain defined indexes. Common area maintenance charges may also apply and are adjusted annually based on the terms of the lease agreements. The Company adopted the guidance in Topic 842 Leases effective January 1, 2019. See Note 1 to Notes to Consolidated Financial Statements for further discussion.
The Company accounts for its debt securities in accordance with ASC 320, “Investments - Debt Securities” and its equity security in accordance with ASC 321, “Investments – Equity Securities”. All securities classified as available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income/(loss), net of tax.
The Company accounts for its debt securities in accordance with ASC 320, “Investments - Debt Securities” and equity securities in accordance with ASC 321, “Investments – Equity Securities”. All securities classified as available for sale are carried at fair value, with unrealized holding gains and losses reported in other comprehensive income/(loss), net of tax.
Investment securities available for sale are purchased, sold and/or maintained as a part of the Company’s overall balance sheet, liquidity and interest rate risk management strategies, and in response to changes in interest rates, liquidity needs, prepayment speeds and/or other factors.
Investment securities classified as available for sale are purchased, sold and/or maintained as a part of the Company’s overall balance sheet, liquidity and interest rate risk management strategies, and in response to changes in interest rates, liquidity needs, prepayment speeds and/or other factors.
Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential exposure for the Bank. 40 b) Junior Lien Loan on Residence (which include home equity lines of credit) .
Further, real estate values could drop significantly and cause the value of the property to fall below the loan amount, creating additional potential exposure for the Bank. b) Junior Lien Loan on Residence (which include home equity lines of credit) .
Credit losses can impact multiple parts of the 42 income statement including an increase in the provision for credit losses, loss of interest/lease/rental income and/or via higher costs and expenses related to the repossession, refurbishment, re-marketing and or re-leasing of assets. h ) Construction. The Bank provides commercial construction loans for properties located in the Tri-state area.
Credit losses can impact multiple parts of the income statement including an increase in the provision for credit losses, loss of interest/lease/rental income and/or via higher costs and expenses related to the repossession, refurbishment, re-marketing and or re-leasing of assets. h ) Construction. The Bank selectively provides commercial construction loans for properties located in the Tri-state area.
Increases in vacancy rates, interest rates or other changes in general economic conditions can have an impact on the borrower and their ability to repay the loan. Certain markets, such as the Boroughs of New York City, are rent regulated, and as such, feature rents that are considered to be below market rates.
Increases in vacancy rates, interest rates or other changes in general economic conditions can have an impact on the borrower and their ability to repay the loan. Certain markets, such as the Boroughs of New York City, are rent regulated, and as such, feature rents that are below market rates.
Banking institutions with a ratio of (i) CET1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall.
Banking institutions with a ratio of (i) CET1 to risk-weighted assets, (ii) Tier 1 capital to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer face constraints on dividends, stock repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall.
PCC provides term loans and leases secured by assets financed for U.S. based mid-size and large companies. Facilities tend to be fully drawn under fixed-rate terms. PCC serves a broad range of industries including transportation, manufacturing, heavy construction and utilities.
PCC provides term loans and leases secured by assets financed for mid-size and large companies based in the U.S. Facilities tend to be fully drawn under fixed-rate terms. PCC serves a broad range of industries including transportation, manufacturing, heavy construction and utilities.
Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and at the lessee/borrower at December 31, 2021. (2) On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.
Includes $6.9 million for one equipment lease principally due to administrative issues with the servicer and at the lessee/borrower at December 31, 2021. (B) On January 1, 2023, the Company adopted Accounting Standards Update 2022-02, which replaced the accounting and recognition of TDRs.
Except as disclosed, the Company did not have any potential problem loans at December 31, 2023 or December 31, 2022 that caused Management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans.
Except as disclosed, the Company did not have any potential problem loans at December 31, 2024 or December 31, 2023 that caused Management to have serious doubts as to the ability of such borrowers to comply with the present loan repayment terms and which may result in disclosure of such loans.
Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to roll forward the ACL excludes a credit of $65,000 and a provision of $450,000 at December 31, 2023 and 2022, respectively, related to off-balance sheet commitments.
Prior to January 1, 2022, the calculation was based on the incurred loss methodology. Provision to roll forward the ACL excludes a provision of $4,000, a credit of $65,000 and a provision of $450,000 at December 31, 2024, 2023 and 2022, respectively, related to off-balance sheet commitments.
Net interest income on an FTE basis as a percentage of total average interest-earning assets. 29 Year Ended December 31, 2022 Average Income/Expense Yield (Dollars in thousands) Balance (FTE) (FTE) Assets: Interest-earnings assets: Investments: Taxable (1) $ 803,982 $ 13,854 1.72 % Tax-exempt (1)(2) 3,521 137 3.89 Loans (2)(3): Mortgages 513,189 15,165 2.96 Commercial mortgages 2,478,891 87,488 3.53 Commercial 2,046,735 90,225 4.41 Commercial construction 12,600 533 4.23 Installment 36,685 1,447 3.94 Home Equity 37,755 1,656 4.39 Other 274 26 9.49 Total loans 5,126,129 196,540 3.83 Federal funds sold — — — Interest-earning deposits 171,491 2,763 1.61 Total interest-earning assets 6,105,123 213,294 3.49 % Noninterest-earning assets: Cash and due from banks 8,046 Allowance for loan losses (60,037 ) Premises and equipment 23,312 Other assets 111,893 Total noninterest-earning assets 83,214 Total assets $ 6,188,337 Liabilities and shareholders’ equity: Interest-bearing deposits: Checking $ 2,363,412 $ 17,861 0.76 % Money markets 1,253,032 6,113 0.49 Savings 162,396 26 0.02 Certificates of deposit - retail and listing service 397,128 2,971 0.75 Subtotal interest-bearing deposits 4,175,968 26,971 0.65 Interest-bearing demand - brokered 84,178 1,579 1.88 Certificates of deposit - brokered 29,778 942 3.16 Total interest-bearing deposits 4,289,924 29,492 0.69 Borrowed funds 26,631 600 2.25 Finance lease liability 5,241 250 4.77 Subordinated debt 132,839 5,453 4.10 Total interest-bearing liabilities 4,454,635 35,795 0.80 % Noninterest-bearing liabilities: Demand deposits 1,107,943 Accrued expenses and other liabilities 96,331 Total noninterest-bearing liabilities 1,204,274 Shareholders’ equity 529,428 Total liabilities and shareholders’ equity $ 6,188,337 Net interest income $ 177,499 Net interest spread 2.69 % Net interest margin (4) 2.91 % 1.
(D) Net interest income on an FTE basis as a percentage of total average interest-earning assets. 32 Year Ended December 31, 2022 Average Income/Expense Yield (Dollars in thousands) Balance (FTE) (FTE) Assets: Interest-earnings assets: Investments: Taxable (A) $ 803,982 $ 13,854 1.72 % Tax-exempt (A)(B) 3,521 137 3.89 Loans (B)(C): Mortgages 513,189 15,165 2.96 Commercial mortgages 2,478,891 87,488 3.53 Commercial 2,046,735 90,225 4.41 Commercial construction 12,600 533 4.23 Installment 36,685 1,447 3.94 Home Equity 37,755 1,656 4.39 Other 274 26 9.49 Total loans 5,126,129 196,540 3.83 Federal funds sold — — — Interest-earning deposits 171,491 2,763 1.61 Total interest-earning assets 6,105,123 $ 213,294 3.49 % Noninterest-earning assets: Cash and due from banks 8,046 Allowance for loan losses (60,037 ) Premises and equipment 23,312 Other assets 111,893 Total noninterest-earning assets 83,214 Total assets $ 6,188,337 Liabilities and shareholders’ equity: Interest-bearing deposits: Checking $ 2,363,412 $ 17,861 0.76 % Money markets 1,253,032 6,113 0.49 Savings 162,396 26 0.02 Certificates of deposit - retail and listing service 397,128 2,971 0.75 Subtotal interest-bearing deposits 4,175,968 26,971 0.65 Interest-bearing demand – brokered 84,178 1,579 1.88 Certificates of deposit – brokered 29,778 942 3.16 Total interest-bearing deposits 4,289,924 29,492 0.69 Borrowed funds 26,631 600 2.25 Finance lease liability 5,241 250 4.77 Subordinated debt 132,839 5,453 4.10 Total interest-bearing liabilities 4,454,635 35,795 0.80 % Noninterest-bearing liabilities: Demand deposits 1,107,943 Accrued expenses and other liabilities 96,331 Total noninterest-bearing liabilities 1,204,274 Shareholders’ equity 529,428 Total liabilities and shareholders’ equity $ 6,188,337 Net interest income $ 177,499 Net interest spread 2.69 % Net interest margin (D) 2.91 % (A) Average balances for available for sale securities are based on amortized cost.
In the most recent completed stress test on September 30, 2023, under severely adverse case, no growth scenarios, the Bank remains well capitalized over a two-year stress period. The Company strives to maintain capital levels in excess of internal “triggers” and in excess of those considered to be well capitalized under regulatory guidelines applicable to banks and bank holding companies.
In the most recent completed stress test on September 30, 2024, under severely adverse case, no growth scenarios, the Bank remains well capitalized over the two-year stress period. The Company strives to maintain capital levels in excess of internal “triggers” and in excess of those considered to be well capitalized under regulatory guidelines applicable to banks and bank holding companies.
The Company had one equity security (a CRA investment security) with a fair value of $13.2 million and $13.0 million at December 31, 2023 and 2022, respectively, with changes in fair value recognized in the Consolidated Statements of Income.
The Company had one equity security (a CRA investment security) with a fair value of $13.0 million and $13.2 million at December 31, 2024 and 2023, respectively, with changes in fair value recognized in the Consolidated Statements of Income.
As a result, interest rates have a more significant impact on a financial institution’s performance than do general levels of inflation. PEAPACK PRIVATE: This division includes: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian, and other financial planning, tax preparation and advisory services.
As a result, interest rates have a more significant impact on a financial institution’s performance than do general levels of inflation. WEALTH MANAGEMENT DIVISION: This division includes: investment management services provided for individuals and institutions; personal trust services, including services as executor, trustee, administrator, custodian and guardian, and other financial planning, tax preparation and advisory services.
Such agencies may require the Company to make additional provisions for credit losses based upon information available to them at the time of their examination. Furthermore, the majority of the Company’s loans are secured by real estate in New Jersey and, to a lesser extent, the boroughs of New York City.
Such agencies may require the Company to make additional provisions for credit losses based upon information available to them at the time of their examination. Furthermore, the majority of the Company’s loans are secured by real estate in New Jersey and the boroughs of New York City.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS : This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS O F FINANCIAL CONDITION AND RESULTS OF OPERATIONS CAUTIONARY STATEMENT CONCERNING FORWARD LOOKING STATEMENTS : This Annual Report on Form 10-K may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Loans greater than $5 million will also be considered based on the strength of the overall credit profile of the borrower. Underwriting guidelines include (i) minimum credit report scores of 700 and (ii) a maximum debt to income ratio of 45 percent.
Loans greater than $7.5 million will also be considered based on the strength of the overall credit profile of the borrower. Underwriting guidelines include (i) minimum credit report scores of 680 and (ii) a maximum debt to income ratio of 45 percent.
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,” 24 or similar statements or variations of such terms.
Such statements are not historical facts and include expressions about Management’s confidence, strategies and expectations about new and existing programs and products, investments, relationships, financial results and operations, 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.
The Company’s liquidity risk management is intended to ensure the Company has adequate funding and liquidity to support its assets across a range of market environments and conditions, including stressed conditions. Principal sources of liquidity include cash, temporary investments, securities available for sale, customer deposit inflows, loan repayments and secured borrowings. Other liquidity sources include loan sales and loan participations.
The Company’s liquidity risk management is intended to ensure the Company has adequate funding and liquidity to support its assets across a range of market environments and conditions, including stressed conditions. Principal sources of liquidity 52 include cash, temporary investments, securities available for sale, customer deposit inflows, loan repayments and secured borrowings.
Within the multifamily sector, the Bank’s primary focus is to lend against larger non-luxury apartment buildings and rent regulated properties with at least 30 units that are owned and managed by experienced sponsors. As of December 31, 2023, the average property size in the portfolio was 47 units.
Within the multifamily sector, the Bank’s primary focus is to lend against larger non-luxury apartment buildings and rent regulated properties with at least 30 units that are owned and managed by experienced sponsors. As of December 31, 2024, the average property size in the portfolio was 46 units.
Actual results may differ materially from such forward-looking statements.
Actual results may differ materially from such 25 forward-looking statements.
The Company charged off $9.0 million on loans identified as collateral-dependent individually evaluated loans during 2023, which included $3.2 million in charge-offs of the specific reserve on the previously mentioned freight-related credit and multifamily property. The Company charged off $1.5 million on loans identified as collateral-dependent impaired loans during 2022.
The Company charged off $5.4 million on loans identified as collateral-dependent individually evaluated loans during 2024. The Company charged off $9.0 million on loans identified as collateral-dependent impaired loans during 2023, which included $3.2 million in charge-offs of the specific reserve on the previously mentioned freight-related credit and multifamily property.
At December 31, 2023, the allowance for credit losses as a percentage of total loans outstanding was 1.21 percent compared to 1.15 percent at December 31, 2022. The Company believes that the allowance for credit losses as of December 31, 2023, represents a reasonable estimate for probable incurred losses in the portfolio at that date.
At December 31, 2024, the allowance for credit losses as a percentage of total loans outstanding was 1.32 percent compared to 1.21 percent at December 31, 2023. The Company believes that the allowance for credit losses as of December 31, 2024 represents a reasonable estimate for probable incurred losses in the portfolio at that date.
The 2017 Notes have a stated maturity of December 15, 2027, and an interest rate that resets quarterly to a level equal to the then current three-month LIBOR rate plus 254 basis points, payable quarterly in arrears (which was 8.21 percent at December 31, 2023). Debt issuance costs incurred totaled $875,000 and are being amortized to maturity.
The 2017 Notes have a stated maturity of December 15, 2027, and an interest rate that resets quarterly to a level equal to the then current three-month LIBOR rate plus 254 basis points, payable quarterly in arrears (which was 7.75 percent at December 31, 2024). Debt issuance costs incurred totaled $875,000 and are being amortized to maturity.
At December 31, 2023, unused short-term or overnight borrowing commitments totaled $1.4 billion from the FHLB, $22.0 million from correspondent banks and $1.7 billion from the Federal Reserve Bank. SUBORDINATED DEBT: In December 2017, the Company issued $35.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “2017 Notes”) to certain institutional investors.
At December 31, 2024, unused short-term or overnight borrowing commitments totaled $1.8 billion from the FHLB, $22.0 million from correspondent banks and $2.0 billion from the Federal Reserve Bank. SUBORDINATED DEBT: In December 2017, the Company issued $35.0 million in aggregate principal amount of fixed-to-floating subordinated notes (the “2017 Notes”) to certain institutional investors.
As of December 31, 2023, the Company had approximately $2.7 billion of external borrowing capacity available on a same day basis (subject to any practical constraints affecting the FHLB or FRB), which when combined with balance sheet liquidity provided the Company with 297 percent coverage of our uninsured/unprotected deposits.
As of December 31, 2024, the Company had approximately $3.2 billion of external borrowing capacity available on a same day basis (subject to any practical constraints affecting the FHLB or FRB), which when combined with balance sheet liquidity provided the Company with 282 percent coverage of our uninsured/unprotected deposits.
The Company is a limited partner in a Small Business Investment Company (“SBIC”). As of December 31, 2023, the Company had unfunded commitments of $10.3 million for its investment in SBIC qualified funds. OFF-BALANCE SHEET ARRANGEMENTS : The following table shows the amounts and expected maturities of significant commitments, consisting primarily of letters of credit, as of December 31, 2023.
The Company is a limited partner in a Small Business Investment Company (“SBIC”). As of December 31, 2024, the Company had unfunded commitments of $9.4 million for its investment in SBIC qualified funds. OFF-BALANCE SHEET ARRANGEMENTS : The following table shows the amounts and expected maturities of significant commitments, consisting primarily of letters of credit, as of December 31, 2024.
The ongoing Federal Reserve monetary policy tightening intended to slow inflation has led to a significant increase in interest rates, particularly rates impacting short-term investments and deposits. This has resulted in an inversion of the U.S. Treasury yield curve driving an increase in deposit and borrowing costs at a faster rate than the yields on interest earning assets.
The Federal Reserve monetary policy intended to slow inflation led to a significant increase in interest rates, particularly rates impacting short term investments and deposits. This resulted in an inversion of the U.S. Treasury yield curve for an extended period of time, driving an increase in deposit and borrowing costs at a faster rate than the yields on interest-earning assets.
The following table presents such concentration levels at December 31, 2023 and 2022: As of December 31, 2023 2022 Multifamily mortgage loans as a percent of total regulatory capital of the Bank 238 % 251 % Non-owner occupied commercial real estate loans as a percent of total regulatory capital of the Bank 137 141 Total CRE concentration 375 % 392 % The Bank believes it addresses the key elements in the risk management framework laid out by its regulators for the effective management of CRE concentration risks.
The following table presents such concentration levels at December 31, 2024 and 2023: As of December 31, 2024 2023 Multifamily mortgage loans as a percent of total regulatory capital of the Bank 225 % 238 % Non-owner occupied commercial real estate loans as a percent of total regulatory capital of the Bank 122 137 Total CRE concentration 347 % 375 % The Bank believes it addresses the key elements in the risk management framework laid out by its regulators for the effective management of CRE concentration risks.
Officers from Peapack Private are available to provide wealth management, trust and investment services at the Bank’s headquarters in Bedminster, New Jersey at private banking locations in 52 Morristown, Princeton, Red Bank, Summit and Teaneck, New Jersey and at the Bank’s subsidiary, PGB Trust & Investments of Delaware in Greenville, Delaware.
Officers from the wealth management division are available to provide wealth management, trust and investment services at the Bank’s headquarters in Bedminster, New Jersey at private 53 banking locations in Morristown, Princeton, Red Bank, Summit and Teaneck, New Jersey, in New York City and at the Bank’s subsidiary, PGB Trust & Investments of Delaware in Greenville, Delaware.
The Company originates loans that are partially guaranteed by the SBA, for the purposes of providing working capital and/or, financing the purchase of equipment, inventory or commercial real estate and that could be used for start-up and smaller businesses. All SBA loans are underwritten and documented as prescribed by the SBA.
The Company originates loans that are partially guaranteed by the SBA, to provide working capital and/or, finance the purchase of equipment, inventory or commercial real estate and that could be used for start-up and smaller businesses. All SBA loans are underwritten and documented as prescribed by the SBA.
Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to: • our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan; • the impact of anticipated higher operating expenses in 2024 and beyond; • our ability to successfully integrate wealth management firm acquisitions; • our ability to successfully integrate our expanded employee base; • an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions; • declines in our net interest margin caused by the interest rate environment and/or our highly competitive market; • declines in the value in our investment portfolio; • higher than expected increases in our allowance for credit losses; • higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans; • inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs; • decline in real estate values within our market areas; • legislative and regulatory actions that may result in increased compliance costs; • a potential government shutdown; • successful cyberattacks against our IT infrastructure and that of our IT and third-party providers; • the current or anticipated impact of military conflict, terrorism or other geopolitical events or natural disasters; • our inability to successfully generate new business in new geographic markets, including our expansion into New York City; • a reduction in our lower-cost funding sources; • changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; • 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; • demand for loans and deposits in our market areas; • adverse changes in securities markets; • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S.
Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to: • our ability to successfully grow our business and implement our strategic plan, including our ability to generate revenues to offset the increased personnel and other costs related to the strategic plan; • the impact of anticipated higher operating expenses in 2025 and beyond; • our ability to successfully integrate wealth management firm and team acquisitions; • our ability to successfully integrate our expanded employee base; • an unexpected decline in the economy, in particular in our New Jersey and New York market areas, including potential recessionary conditions; • declines in our net interest margin caused by the interest rate environment and/or our highly competitive market; • declines in the value in our investment portfolio; • impact from a pandemic event on our business, operations, customers, allowance for credit losses and capital levels; • higher than expected increases in our allowance for credit losses; • higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans; • inflation and changes in interest rates, which may adversely impact our margins and yields, reduce the fair value of our financial instruments, reduce our loan originations and lead to higher operating costs; • decline in real estate values within our market areas; • legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs; • the imposition of tariffs or other domestic or international governmental policies; • successful cyberattacks against our IT infrastructure and that of our IT and third-party providers; • higher than expected FDIC insurance premiums; • adverse weather conditions; • the current or anticipated impact of military conflict, terrorism or other geopolitical events; • our inability to successfully generate new business and brand recognition in new geographic markets, including our expansion into New York City; • a reduction in our lower-cost funding sources; • changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio; • 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; • demand for loans and deposits in our market areas; • adverse changes in securities markets; • changes in new York City rent regulation law; • changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S.
Voluntary share purchases in the “Reinvestment Plan” can be filled from the Company’s authorized but unissued shares and/or in the open market, at the discretion of the Company. All shares purchased through the Plan in both 2023 and 2022 were purchased in the open market. Management believes the Company’s capital position and capital ratios are adequate.
Voluntary share purchases in the Reinvestment Plan can be filled from the Company’s authorized but unissued shares and/or in the open market, at the discretion of the Company. All shares purchased through the Plan in both 2024 and 2023 were purchased in the open market. Management believes the Company’s capital position and capital ratios are adequate at December 31, 2024.
The Company’s net interest income, spread and margin are affected by regulatory, economic and competitive factors that influence interest rates, loan demand and deposit flows and general levels of nonperforming assets. 28 The following table compares the average balance sheets, interest rate spreads and net interest margins for the years ended December 31, 2023, 2022 and 2021 (on a fully tax-equivalent basis "FTE"): Year Ended December 31, 2023 Average Income/Expense Yield (Dollars in thousands) Balance (FTE) (FTE) Assets: Interest-earnings assets: Investments: Taxable (1) $ 800,811 $ 19,743 2.47 % Tax-exempt (1)(2) 1,251 50 4.00 Loans (2)(3): Mortgages 562,488 19,733 3.51 Commercial mortgages 2,494,427 108,819 4.36 Commercial 2,254,617 144,141 6.39 Commercial construction 10,115 918 9.08 Installment 51,929 3,454 6.65 Home Equity 34,332 2,624 7.64 Other 257 29 11.28 Total loans 5,408,165 279,718 5.17 Federal funds sold — — — Interest-earning deposits 146,977 6,075 4.13 Total interest-earning assets 6,357,204 305,586 4.81 % Noninterest-earning assets: Cash and due from banks 8,973 Allowance for loan losses (64,149 ) Premises and equipment 23,986 Other assets 79,192 Total noninterest-earning assets 48,002 Total assets $ 6,405,206 Liabilities and shareholders’ equity: Interest-bearing deposits: Checking $ 2,777,390 $ 88,829 3.20 % Money markets 862,686 18,432 2.14 Savings 124,538 229 0.18 Certificates of deposit - retail and listing service 400,155 11,736 2.93 Subtotal interest-bearing deposits 4,164,769 119,226 2.86 Interest-bearing demand - brokered 13,973 611 4.37 Certificates of deposit - brokered 67,998 3,038 4.47 Total interest-bearing deposits 4,246,740 122,875 2.89 Borrowed funds 337,777 18,204 5.39 Finance lease liability 4,018 191 4.75 Subordinated debt 133,127 6,651 5.00 Total interest-bearing liabilities 4,721,662 147,921 3.13 % Noninterest-bearing liabilities: Demand deposits 1,040,403 Accrued expenses and other liabilities 86,193 Total noninterest-bearing liabilities 1,126,596 Shareholders’ equity 556,948 Total liabilities and shareholders’ equity $ 6,405,206 Net interest income $ 157,665 Net interest spread 1.68 % Net interest margin (4) 2.48 % 1.
(D) Net interest income on an FTE basis as a percentage of total average interest-earning assets. 31 Year Ended December 31, 2023 Average Income/Expense Yield (Dollars in thousands) Balance (FTE) (FTE) Assets: Interest-earnings assets: Investments: Taxable (A) $ 800,811 $ 19,743 2.47 % Tax-exempt (A)(B) 1,251 50 4.00 Loans (B)(C): Mortgages 562,488 19,733 3.51 Commercial mortgages 2,494,427 108,819 4.36 Commercial 2,254,617 144,141 6.39 Commercial construction 10,115 918 9.08 Installment 51,929 3,454 6.65 Home Equity 34,332 2,624 7.64 Other 257 29 11.28 Total loans 5,408,165 279,718 5.17 Federal funds sold — — — Interest-earning deposits 146,977 6,075 4.13 Total interest-earning assets 6,357,204 305,586 4.81 % Noninterest-earning assets: Cash and due from banks 8,973 Allowance for loan losses (64,149 ) Premises and equipment 23,986 Other assets 79,192 Total noninterest-earning assets 48,002 Total assets $ 6,405,206 Liabilities and shareholders’ equity: Interest-bearing deposits: Checking $ 2,777,390 $ 88,829 3.20 % Money markets 862,686 18,432 2.14 Savings 124,538 229 0.18 Certificates of deposit - retail and listing service 400,155 11,736 2.93 Subtotal interest-bearing deposits 4,164,769 119,226 2.86 Interest-bearing demand - brokered 13,973 611 4.37 Certificates of deposit - brokered 67,998 3,038 4.47 Total interest-bearing deposits 4,246,740 122,875 2.89 Borrowed funds 337,777 18,204 5.39 Finance lease liability 4,018 191 4.75 Subordinated debt 133,127 6,651 5.00 Total interest-bearing liabilities 4,721,662 147,921 3.13 % Noninterest-bearing liabilities: Demand deposits 1,040,403 Accrued expenses and other liabilities 86,193 Total noninterest-bearing liabilities 1,126,596 Shareholders’ equity 556,948 Total liabilities and shareholders’ equity $ 6,405,206 Net interest income $ 157,665 Net interest spread 1.68 % Net interest margin (D) 2.48 % (A) Average balances for available for sale securities are based on amortized cost.
At December 31, 2023, the Company had transacted pay fixed, receive floating interest rate swaps totaling $310.0 million in notional amount.
At December 31, 2024, the Company had transacted pay fixed, receive floating interest rate swaps totaling $360.0 million in notional amount.
The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion of SBA loans held in the loan portfolio. Gain on sale of SBA loans for 2023 decreased by $4.3 million to $2.4 million for 2023 compared to $6.8 million in 2022.
The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion of SBA loans held in the loan portfolio. Gain on sale of SBA loans for 2024 decreased by $1.2 million to $1.2 million for 2024 compared to $2.4 million in 2023.
The Bank provides junior lien loans (“JLL”) and revolving home equity lines of credit against one-to-four-family properties in the Tri-State area. Junior lien loans can be either an amortizing fixed rate home equity loan or a revolving home equity line of credit. These loans are subordinate to a first mortgage which may be from another lending institution.
The Bank provides junior lien loans (“JLL”) and revolving home equity lines of credit against one to four-family properties in the Tri-State area. Junior lien loans are a revolving home equity line of credit. These loans are subordinate to a first mortgage which may be from another lending institution.
The growth in new client relationships was driven by several factors including an increase in retail deposits from our branch network; a focus on providing high-touch client service; and a full array of treasury management products that support core deposit growth.
The growth in new client relationships was mainly driven by the expansion into New York City, an increase in retail deposits from our branch network; a focus on providing high-touch client service; and a full array of treasury management products that support core deposit growth.
The Bank may consider an exception to any guideline if there are strong compensating factors that mitigate any risk. Generally, the Bank retains in its portfolio residential mortgage loans with fixed rate maturities of no greater than ten years, which then convert to annually adjusted floating rates.
The Bank may consider an exception to any guideline if there are strong compensating factors that mitigate any risk. Generally, the Bank retains in its portfolio residential mortgage loans with fixed-rate maturities of no greater than ten years, which then convert to annually adjusted floating rates. Community Development loans granted under the Affordable Housing Program are offered with 30-year maturities.
Accordingly, the CECL model quantitatively accounts for some of the qualitative factors utilized in the incurred loss methodology. 43 The following table presents the credit loss experience, by loan type, during the years ended December 31: (Dollars in thousands) 2023 2022 2021 2020 2019 Average loans outstanding $ 5,396,212 $ 5,105,200 $ 4,494,473 $ 4,552,358 $ 4,035,603 Allowance for credit losses at beginning of year (A) $ 60,829 $ 61,697 $ 67,309 $ 43,676 $ 38,504 Day one CECL adjustment — (5,536 ) — — — Loans charged-off during the period: Residential mortgage — — 12 559 80 Commercial mortgage 3,422 1,450 7,137 1,485 — Commercial 5,594 — 5,019 7,132 — Home equity lines of credit — 3 — — — Consumer and other 139 53 80 27 55 Total loans charged-off 9,155 1,506 12,248 9,203 135 Recoveries during the period: Residential mortgage 52 15 — 373 205 Commercial mortgage — — — 31 996 Commercial — 254 66 17 92 Home equity lines of credit — — 85 11 10 Consumer and other 6 2 10 4 4 Total recoveries 58 271 161 436 1,307 Net charge-offs/(recoveries) 9,097 1,235 12,087 8,767 (1,172 ) Provision charge to expense 14,156 5,903 6,475 32,400 4,000 Allowance for credit losses at end of year $ 65,888 $ 60,829 $ 61,697 $ 67,309 $ 43,676 Ratios: Allowance for credit losses/total loans (B) 1.21 % 1.15 % 1.28 % 1.54 % 0.99 % Allowance for loans collectively evaluated/total loans (B) 1.13 % 1.12 % 1.20 % 1.48 % 0.93 % Nonaccrual loans/total loans (B) 1.13 % 0.36 % 0.32 % 0.26 % 0.66 % Allowance for credit losses/ total nonperforming loans 107.44 % 320.59 % 396.18 % 589.91 % 151.23 % Net charge offs/average loans: Residential mortgage 0.00 % 0.00 % 0.00 % 0.00 % -0.01 % Commercial mortgage 0.06 % 0.03 % 0.16 % 0.03 % -0.02 % Commercial 0.10 % 0.00 % 0.11 % 0.16 % 0.00 % Home equity lines of credit 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Consumer and other 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Total net charge offs/average loans 0.17 % 0.02 % 0.27 % 0.19 % -0.03 % (A) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.
The following table presents the credit loss experience, by loan type, during the years ended December 31: (Dollars in thousands) 2024 2023 2022 2021 2020 Average loans outstanding $ 5,327,594 $ 5,396,212 $ 5,105,200 $ 4,494,473 $ 4,552,358 Allowance for credit losses at beginning of year (A) $ 65,888 $ 60,829 $ 61,697 $ 67,309 $ 43,676 Day one CECL adjustment — — (5,536 ) — — Loans charged-off during the period: Residential mortgage 43 — — 12 559 Commercial mortgage 5,379 3,422 1,450 7,137 1,485 Commercial 345 5,594 — 5,019 7,132 Home equity lines of credit — — 3 — — Consumer and other 39 139 53 80 27 Total loans charged-off 5,806 9,155 1,506 12,248 9,203 Recoveries during the period: Residential mortgage — 52 15 — 373 Commercial mortgage — — — — 31 Commercial 5,409 — 254 66 17 Home equity lines of credit — — — 85 11 Consumer and other 5 6 2 10 4 Total recoveries 5,414 58 271 161 436 Net charge-offs/(recoveries) 392 9,097 1,235 12,087 8,767 Provision charge to expense 7,496 14,156 5,903 6,475 32,400 Allowance for credit losses at end of year $ 72,992 $ 65,888 $ 60,829 $ 61,697 $ 67,309 Ratios: Allowance for credit losses/total loans (B) 1.32 % 1.21 % 1.15 % 1.28 % 1.54 % Allowance for loans collectively evaluated/total loans (B) 1.09 % 1.13 % 1.12 % 1.20 % 1.48 % Nonaccrual loans/total loans (B) 1.82 % 1.13 % 0.36 % 0.32 % 0.26 % Allowance for credit losses/ total nonperforming loans 72.87 % 107.44 % 320.59 % 396.18 % 589.91 % Net charge offs/average loans: Residential mortgage 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Commercial mortgage 0.10 % 0.06 % 0.03 % 0.16 % 0.03 % Commercial -0.10 % 0.10 % 0.00 % 0.11 % 0.16 % Home equity lines of credit 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Consumer and other 0.00 % 0.00 % 0.00 % 0.00 % 0.00 % Total net charge offs/average loans 0.01 % 0.17 % 0.02 % 0.27 % 0.19 % (A) Commencing on January 1, 2022, the allowance calculation is based on the CECL methodology.
December 31, (Dollars in thousands) 2023 2022 2021 2020 2019 Loans past due 30-89 days (1) $ 34,589 $ 7,592 $ 8,606 $ 5,053 $ 1,910 Modifications $ 3,254 $ — $ — $ — $ — Troubled debt restructured loans (2) $ — $ 14,318 $ 3,575 $ 4,247 $ 28,178 Loans past due 90 days or more and still accruing interest $ — $ — $ — $ — $ — Nonaccrual loans (3) 61,324 18,974 15,573 11,410 28,881 Total nonperforming loans 61,324 18,974 15,573 11,410 28,881 Other real estate owned — 116 — 50 50 Total nonperforming assets $ 61,324 $ 19,090 $ 15,573 $ 11,460 $ 28,931 Ratios: Total nonperforming loans/total loans 1.13 % 0.36 % 0.32 % 0.26 % 0.66 % Total nonperforming loans/total assets 0.95 0.30 0.26 0.19 0.56 Total nonperforming assets/total assets 0.95 0.30 0.26 0.19 0.56 (1) Includes $16.5 million and $4.5 million outstanding to U.S. governmental entities at December 31, 2023 and December 31, 2022, respectively.
December 31, (Dollars in thousands) 2024 2023 2022 2021 2020 Loans past due 30-89 days (A) $ 4,870 $ 34,589 $ 7,592 $ 8,606 $ 5,053 Modifications $ 49,479 $ 3,254 $ — $ — $ — Troubled debt restructured loans (B) $ — $ — $ 14,318 $ 3,575 $ 4,247 Loans past due 90 days or more and still accruing interest $ — $ — $ — $ — $ — Nonaccrual loans (C) 100,168 61,324 18,974 15,573 11,410 Total nonperforming loans 100,168 61,324 18,974 15,573 11,410 Other real estate owned — — 116 — 50 Total nonperforming assets $ 100,168 $ 61,324 $ 19,090 $ 15,573 $ 11,460 Ratios: Total nonperforming loans/total loans 1.82 % 1.13 % 0.36 % 0.32 % 0.26 % Total nonperforming loans/total assets 1.43 0.95 0.30 0.26 0.19 Total nonperforming assets/total assets 1.43 0.95 0.30 0.26 0.19 46 (A) Includes $16.5 million and $4.5 million outstanding to U.S. governmental entities at December 31, 2023 and December 31, 2022, respectively.
On primary residences and second home properties, LTVs range from a maximum of 80 percent for loan amounts to $1 million to 50 percent for loan amounts to $5 million. For investment properties, LTVs range from a maximum of 65 percent for loan amounts to $1 million to 50 percent for loan amounts to $3 million.
On primary residences and second home properties, LTVs range from a maximum of 80 percent for loan amounts to $2 million to 65 percent for loan amounts to $7.5 million. For investment properties, LTVs range from a maximum of 80 percent for loan amounts to $2 million to 70 percent for loan amounts to $5 million.
Years Ended December 31, Change (In thousands) 2023 2022 2021 2023 vs 2022 2022 vs 2021 Total fee income $ 55,747 $ 54,651 $ 52,987 $ 1,096 $ 1,664 Compensation and benefits (included in Operating Expenses section above) 29,425 27,501 24,894 1,924 2,607 Other operating expense (included in Operating Expenses section above) 11,876 13,021 13,020 (1,145 ) 1 Assets under management and/or administration (AUM) (market value) 10.9 billion 9.9 billion 11.1 billion 2023 compared to 2022 The market value of assets under management and/or administration (“AUM”) at December 31, 2023 and 2022 was $10.9 billion and $9.9 billion, respectively, an increase of 10 percent, primarily due to an improved equity market and net business inflows.
Years Ended December 31, Change (In thousands) 2024 2023 2022 2024 vs 2023 2023 vs 2022 Total fee income $ 61,458 $ 55,747 $ 54,651 $ 5,711 $ 1,096 Compensation and benefits (included in Operating Expenses section above) 29,859 29,425 27,501 434 1,924 Other operating expense (included in Operating Expenses section above) 11,570 11,876 13,021 (306 ) (1,145 ) Assets under management and/or administration (AUM) (market value) 11.9 billion 10.9 billion 9.9 billion 2024 compared to 2023 The market value of assets under management and/or administration (“AUM”) at December 31, 2024 and 2023 was $11.9 billion and $10.9 billion, respectively, an increase of 9 percent, primarily due to an improved equity market and net business inflows.
The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion held in the loan portfolio. During 2023, the Bank sold $32.4 million of the guaranteed portion of SBA loans into the secondary market.
The Company generally sells the guaranteed portion of the SBA loans in the secondary market, with the non-guaranteed portion held in the loan portfolio. During 2024, the Bank sold $15.0 million of the guaranteed portion of SBA loans into the secondary market.
A net unrealized loss (net of income tax) of $69.2 million and a net unrealized loss (net of income tax) of $81.0 million were included in shareholders’ equity at December 31, 2023 and 2022, respectively.
A net unrealized loss (net of income tax) of $72.1 million and a net unrealized loss (net of income tax) of $69.2 million were included in shareholders’ equity at December 31, 2024 and 2023, respectively.
The Company recorded an unrealized gain of $181,000 for the year ended December 31, 2023, as compared to a $1.7 million unrealized loss for the year ended December 31, 2022.
The Company recorded an unrealized loss of $125,000 for the year ended December 31, 2024, as compared to a $181,000 unrealized gain for the year ended December 31, 2023.
The 2023 period was negatively affected by both market volatility and the higher interest rate environment, which has resulted in lower sale premiums combined with lower origination volumes. 47 The Company recorded corporate advisory fee income of $219,000 for 2023 compared to $1.7 million for 2022. 2022 included one major corporate advisory/investment banking acquisition transaction.
The 2024 period was negatively affected by both market volatility and the higher interest rate environment, which has resulted in lower sale premiums and lower origination volumes. The Company recorded corporate advisory fee income of $1.0 million for 2024 compared to $219,000 for 2023. 2024 included a corporate advisory/investment banking acquisition transaction completed in the first quarter of 2024.
The net interest margin was 2.48 percent and 2.91 percent for the years ended December 31, 2023 and 2022, respectively, a decrease of 43 basis points year over year.
The net interest margin ("NIM") was 2.32 percent and 2.48 percent for the years ended December 31, 2024 and 2023, respectively, a decrease of 16 basis points year over year.
With all commercial real estate loans, the Bank’s standard practice is to require a depository relationship. e) Investment Commercial Real Estate Loans. The Bank provides mortgage loans for properties managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania.
The Bank requires an independent appraisal, an assessment of the property’s condition, and appropriate environmental due diligence. With all commercial real estate loans, the Bank’s standard practice is to require a depository relationship. e) Investment Commercial Real Estate Loans. The Bank provides mortgage loans for properties managed as an investment property (non-owner-occupied) in the Tri-State area and Pennsylvania.
The following table shows the allocation of the allowance for credit losses and the percentage of each loan category, by collateral type, to total loans as of December 31, of the years indicated: % of % of % of % of % of Loan Loan Loan Loan Loan Category Category Category Category Category To Total To Total To Total To Total To Total (Dollars in thousands) 2023 Loans 2022 Loans 2021 Loans 2020 Loans 2019 Loans Residential $ 4,108 11.5 $ 3,048 10.7 $ 1,520 11.3 $ 3,138 13.0 $ 2,231 14.6 Commercial and other 60,911 87.3 57,244 88.5 59,962 87.8 63,892 86.0 41,149 84.1 Consumer and other 869 1.2 537 0.8 215 0.9 279 1.0 296 1.3 Total $ 65,888 100.0 $ 60,829 100.0 $ 61,697 100.0 $ 67,309 100.0 $ 43,676 100.0 The portion of the allowance for credit losses allocated to loans collectively evaluated for impairment, commonly referred to as general reserves, were $61.3 million at December 31, 2023 and $59.3 million at December 31, 2022.
(B) The December 31, 2024, 2023, 2022 and 2021 ACL coverage ratios include PPP loans of $297,000, $1.0 million, $1.7 million and $13.8 million, respectively. 45 The following table shows the allocation of the allowance for credit losses and the percentage of each loan category, by collateral type, to total loans as of December 31, of the years indicated: % of % of % of % of % of Loan Loan Loan Loan Loan Category Category Category Category Category To Total To Total To Total To Total To Total (Dollars in thousands) 2024 Loans 2023 Loans 2022 Loans 2021 Loans 2020 Loans Residential $ 4,578 11.9 $ 4,108 11.5 $ 3,048 10.7 $ 1,520 11.3 $ 3,138 13.0 Commercial and other 67,230 86.7 60,911 87.3 57,244 88.5 59,962 87.8 63,892 86.0 Consumer and other 1,184 1.4 869 1.2 537 0.8 215 0.9 279 1.0 Total $ 72,992 100.0 $ 65,888 100.0 $ 60,829 100.0 $ 61,697 100.0 $ 67,309 100.0 The portion of the allowance for credit losses allocated to loans collectively evaluated for impairment, commonly referred to as general reserves, was $60.3 million at December 31, 2024 and $61.3 million at December 31, 2023.
The following table presents individually evaluated loans, by collateral type, at December 31, 2023 and 2022: December 31, Number of December 31, Number of (Dollars in thousands) 2023 Relationships 2022 Relationships Primary residential mortgage $ 652 5 $ 374 3 Junior lien loan on residence 100 2 — — Multifamily property 16,645 3 — — Investment commercial real estate 9,881 1 11,208 1 Commercial and industrial 31,430 13 3,385 7 Lease financing 2,002 5 1,765 4 Total $ 60,710 29 $ 16,732 15 Specific reserves, included in the allowance for loan losses $ 4,538 $ 1,507 CONTRACTUAL OBLIGATIONS : Leases represent obligations entered into by the Company for the use of land and premises.
The following table presents individually evaluated loans, by collateral type, at December 31, 2024 and 2023: December 31, Number of December 31, Number of (Dollars in thousands) 2024 Relationships 2023 Relationships Primary residential mortgage $ 2,779 10 $ 652 5 Junior lien loan on residence 92 2 100 2 Multifamily property 53,105 10 16,645 3 Investment commercial real estate 11,684 2 9,881 1 Commercial and industrial 30,881 21 31,430 13 Lease financing 1,234 4 2,002 5 Total $ 99,775 49 $ 60,710 29 Specific reserves, included in the allowance for loan losses $ 12,683 $ 4,538 CONTRACTUAL OBLIGATIONS : Leases represent obligations entered into by the Company for the use of land and premises.
At December 31, 2023 and 2022, the Company reported total deposits of $5.27 billion and $5.21 billion, an increase of $69.0 million, or 1 percent, year over year. The Company’s strategy is to fund a majority of its loan growth with core deposits, which is an important factor in the generation of net interest income.
At December 31, 2024 and 2023, the Company reported total deposits of $6.1 billion and $5.3 billion, an increase of $854.9 million, or 16 percent. The Company’s strategy is to fund a majority of its loan growth with core deposits, which is an important factor in the generation of net interest income.
The CECL methodology utilizes less qualitative factors as it uses economic factors and considers relevant available information from internal and external sources related to past events and calculates losses based on discounted cash flows on an individual loan basis.
The CECL methodology utilizes less qualitative factors as it uses economic factors and considers relevant available information from internal and external sources related to past events 44 and calculates losses based on discounted cash flows on an individual loan basis. Accordingly, the CECL model quantitatively accounts for some of the qualitative factors utilized in the incurred loss methodology.
At December 31, 2023, we had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. 38 The following table shows the maturity for certificates of deposit of $250,000 or more as of December 31, 2023 (in thousands): Three months or less $ 10,691 Over three months through six months 5,508 Over six months through year 73,641 Over year 16,108 Total $ 105,948 FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS: As part of our overall funding and liquidity management program, from time to time we borrow from the Federal Home Loan Bank (the "FHLB").
At December 31, 2024, we had no deposits that were uninsured for any reason other than being in excess of the maximum amount for federal deposit insurance. 40 The following table shows the maturity for certificates of deposit of $250,000 or more as of December 31, 2024 (in thousands): Three months or less $ 41,728 Over three months through six months 16,583 Over six months through year 63,362 Over year 15,616 Total $ 137,289 FEDERAL HOME LOAN BANK ADVANCES AND OTHER BORROWINGS: As part of our overall funding and liquidity management program, from time to time we borrow from the Federal Home Loan Bank (the "FHLB").
At December 31, 2023, the Company had investment securities held to maturity with a carrying cost of $107.8 million and an estimated fair value of $94.4 million compared with a carrying cost of $102.3 million and an estimated fair value of $87.2 million at December 31, 2022.
At December 31, 2024, the Company had investment securities held to maturity with a carrying cost of $101.6 million and an estimated fair value of $88.7 million compared with a carrying cost of $107.8 million and an estimated fair value of $94.4 million at December 31, 2023.
As a result of the enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion.
At December 31, 2024, the Company’s and the Bank’s regulatory capital ratios were all above the ratios to be considered well capitalized under regulatory guidance. 50 As a result of the enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies were required to develop a “Community Bank Leverage Ratio” (the ratio of a bank’s tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion.
The Bank requires an independent appraisal, an assessment of the property’s condition, and appropriate environmental due diligence. With all commercial real estate loans, the Bank’s standard practice is to require a depository relationship. f) Commercial and Industrial Loans . The Bank provides lines of credit and term loans to operating companies for business purposes.
With all commercial real estate loans, the Bank’s standard practice is to require a depository relationship. f) Commercial and Industrial Loans . The Bank provides lines of credit and term loans to operating companies for business purposes.
This includes assets held at the Bank at December 31, 2023 and 2022 of $291.7 million and $372.5 million, respectively. Peapack Private management fees increased $1.1 million, or 2 percent, to $55.7 million for the year ended December 31, 2023 from $54.7 million in 2022.
This includes assets held at the Bank at December 31, 2024 and 2023 of $227.2 million and $291.7 million, respectively. Wealth management fees increased $5.7 million, or 10 percent, to $61.5 million for the year ended December 31, 2024 from $55.7 million in 2023.
Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. Also included in the allowance for credit losses are qualitative reserves that are expected, but, in the Management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above.
Also included in the allowance for credit losses are qualitative reserves that are expected, but, in the Management’s assessment, may not be adequately represented in the quantitative analysis or the forecasts described above.
Residential loans increased $52.6 million to $578.3 million at December 31, 2023 from $525.8 million at December 31, 2022. Multifamily mortgage loans were $1.84 billion at December 31, 2023, a decrease of $27.5 million, or 1 percent, when compared to $1.86 billion at December 31, 2022.
Residential loans increased $36.5 million to $614.8 million at December 31, 2024 from $578.3 million at December 31, 2023. Multifamily mortgage loans were $1.8 billion at December 31, 2024, a decrease of $36.6 million, or 2 percent, when compared to $1.8 billion at December 31, 2023.
Maintaining an adequate capital position supports the Company’s goal of providing shareholders an attractive and stable long-term return on investment. The Company’s capital position during 2023 was benefited by net income of $48.9 million which was partially offset by the purchase of $12.5 million of common shares under the Company’s stock repurchase program.
Maintaining an adequate capital position supports the Company’s goal of providing shareholders an attractive and stable long-term return on investment. The Company’s capital position during 2024 was enhanced by net income of $33.0 million which was partially offset by the repurchase of $7.2 million of common shares under the Company’s stock repurchase program.
If the cash flows from the property are reduced (for example, if leases are not obtained or renewed, or a bankruptcy court modifies a lease term), the borrower’s ability to repay the loan may be impaired. d) Owner-Occupied Commercial Real Estate Loans . The Bank provides mortgage loans for owner-occupied commercial real estate properties in the Tri-State area and Pennsylvania.
If the cash flows from the property are reduced (for example, if tenants stop paying rent, leases are not obtained or renewed, or a bankruptcy court modifies a lease term), the borrower’s ability to repay the loan may be impaired. d) Owner-Occupied Commercial Real Estate Loans .
The following table sets forth information concerning the composition of the Company’s average balance of deposits and average interest rates paid for the following years: (Dollars in thousands) 2023 2022 2021 Noninterest-bearing demand $ 1,040,403 — % $ 1,107,943 — % $ 959,912 — % Checking 2,777,390 3.20 2,363,412 0.76 2,078,658 0.21 Savings 124,538 0.18 162,396 0.02 146,210 0.05 Money markets 862,686 2.14 1,253,032 0.49 1,260,865 0.23 Certificates of deposit - retail and listing service 400,155 2.93 397,128 0.75 483,889 0.84 Interest-bearing Demand - brokered 13,973 4.37 84,178 1.88 96,301 1.79 Certificates of deposit - brokered 67,998 4.47 29,778 3.16 33,790 3.13 Total deposits $ 5,287,143 2.32 % $ 5,397,867 0.55 % $ 5,059,625 0.28 % At December 31, 2023, the Company carried deposits that exceed the FDIC insurance limit of $250,000.
The following table sets forth information concerning the composition of the Company’s average balance of deposits and average interest rates paid for the following years: (Dollars in thousands) 2024 2023 2022 Noninterest-bearing demand $ 998,497 — % $ 1,040,403 — % $ 1,107,943 — % Checking 3,149,550 3.76 2,777,390 3.20 2,363,412 0.76 Savings 105,351 0.39 124,538 0.18 162,396 0.02 Money markets 842,606 2.95 862,686 2.14 1,253,032 0.49 Certificates of deposit - retail and listing service 500,842 4.19 400,155 2.93 397,128 0.75 Interest-bearing Demand - brokered 10,000 5.22 13,973 4.37 84,178 1.88 Certificates of deposit - brokered 58,425 5.05 67,998 4.47 29,778 3.16 Total deposits $ 5,665,271 2.97 % $ 5,287,143 2.32 % $ 5,397,867 0.55 % At December 31, 2024, the Company carried deposits that exceed the FDIC insurance limit of $250,000.
Community Development loans granted under the Affordable Housing Program are offered with 30-year maturities. Loans with longer maturities or lower credit scores are sold to secondary market investors. The Bank does not originate, purchase or carry any sub-prime mortgage loans.
Loans with longer maturities or lower credit scores are sold to secondary market investors. The Bank does not originate, purchase or carry any sub-prime mortgage loans.
The provision for credit losses was $14.1 million for 2023, $6.4 million for 2022 and $6.5 million for 2021. The increase in the provision for credit losses for 2023 was primarily due to elevated levels of net charge-offs of $9.1 million, as compared to $1.2 million for 2022.
The provision for credit losses was $7.5 million for 2024, $14.1 million for 2023 and $6.4 million for 2022. The decrease in the provision for credit losses for 2024 was primarily due to decreased levels of net charge-offs of $392,000, as compared to 41 $9.1 million for 2023.
The following table presents certain key aspects of Peapack Private’s performance for the years ended December 31, 2023, 2022 and 2021.
The following table presents certain key aspects of the Wealth Management Division's performance for the years ended December 31, 2024, 2023 and 2022.
In underwriting an investment commercial real estate loan, the Bank evaluates the property’s historical operating income as well as its projected sustainable cash flows and generally requires a minimum debt service coverage ratio that provides for an adequate cushion for unexpected or uncertain events and changes in market conditions.
In underwriting an investment commercial real estate loan, the Bank evaluates the property’s historical operating income as well as its projected sustainable cash flows and generally requires a minimum debt service coverage ratio that provides for an adequate cushion for unexpected or uncertain events and changes in market conditions. 43 Commercial mortgage loans are generally made with an initial fixed rate with periodic rate resets every five or seven years over an underlying market index.
For the year ended December 31, 2023, the Company recorded net income of $48.9 million, and diluted earnings per share of $2.71, compared to $74.2 million and $4.00, respectively, for 2022, reflecting decreases of $25.4 million, or 34 percent, and $1.29 per share, or 32 percent, respectively.
For the year ended December 31, 2024, the Company recorded net income of $33.0 million, and diluted earnings per share of $1.85, compared to $48.9 million and $2.71, respectively, for 2023, reflecting decreases of $15.9 million, or 32 percent, and $0.86 per share, or 32 percent, respectively.
As of December 31, 2023, 42 percent of the total loan portfolio consisted of C&I loans (including equipment financing), 34 percent of multifamily loans and 12 percent of commercial mortgages. Total loans were $5.43 billion and $5.29 billion at December 31, 2023 and 2022, respectively, an increase of $144.1 million, over the previous year.
As of December 31, 2024, 43 percent of the total loan portfolio consisted of C&I loans (including equipment financing), 33 percent of multifamily loans, 11 percent of commercial mortgages and 11 percent of residential mortgages. Total loans were $5.5 billion and $5.4 billion at December 31, 2024 and 2023, respectively, an increase of $83.0 million, over the previous year.
However, only $47.9 million of pledged securities are encumbered. In addition, the Company generates significant liquidity from scheduled and unscheduled principal repayments of loans and mortgage-backed securities.
In addition, the Company generates significant liquidity from scheduled and unscheduled principal repayments of loans and mortgage-backed securities.
These results produced a return on average assets of 0.76 percent and 1.20 percent for 2023 and 2022, respectively, and a return on average shareholders’ equity of 8.77 percent and 14.02 percent for 2023 and 2022, respectively.
These results produced a return on average assets of 0.50 percent and 0.76 percent for 2024 and 2023, respectively, and a return on average shareholders’ equity of 5.61 percent and 8.77 percent for 2024 and 2023, respectively.
GOODWILL: At both December 31, 2023 and 2022, goodwill was $36.2 million. The Bank intends to continue to grow its wealth management business through growth in existing relationships, attraction of new clients and acquisitions.
GOODWILL: At both December 31, 2024 and 2023, goodwill was $36.2 million, primarily as a result of the acquisition of registered investment advisors related to the Company's Wealth Management Division. The Bank currently intends to continue to grow its wealth management business through growth in existing relationships, attraction of new clients and acquisitions.
As of December 31, (Dollars in thousands) 2023 2022 2021 Amount outstanding at end of the year $ 403,814 $ 379,530 $ — Weighted average interest rate end of the year 5.62 % 4.61 % — % Average daily balance during the year $ 337,777 $ 26,631 $ 110,077 Weighted average interest rate during the year 5.39 % 2.25 % 0.43 % Maximum month-end balance during the year $ 541,796 $ 379,530 $ 186,115 At December 31, 2023, the Company had $403.8 million of overnight borrowings at the FHLB at a rate of 5.62 percent compared to $379.5 million of overnight borrowings at the FHLB at a rate of 4.61 percent at December 31, 2022 and no overnight borrowings at December 31, 2021.
As of December 31, (Dollars in thousands) 2024 2023 2022 Amount outstanding at end of the year $ — $ 403,814 $ 379,530 Weighted average interest rate end of the year — % 5.62 % 4.61 % Average daily balance during the year $ 65,299 $ 337,777 $ 26,631 Weighted average interest rate during the year 5.89 % 5.39 % 2.25 % Maximum month-end balance during the year $ 401,655 $ 541,796 $ 379,530 At December 31, 2024, the Company had no overnight borrowings.
The increase for the year ended December 31, 2023 when compared to the prior period was driven by an increase in the yield on commercial loans of 198 basis points to 6.39 percent for 2023, due to an increase in target Federal Funds rate of 525 basis points which had a greater impact on these loans, which are typically floating rates with short repricing periods.
The average yield on commercial loans increased for 2024 due to an increase in the target Federal Funds rate, which had a greater impact on these loans, that are typically floating rates with short repricing periods. The average yield on commercial mortgages increased 11 basis points to 4.47 percent for the year ended December 31, 2024, when compared to 2023.
The increase was driven by an increase in the average cost of interest-bearing deposits of 220 basis points to 2.89 percent for 2023. The increase in deposit and borrowing rates was due to the Federal Reserve raising the target Federal Funds rate by 525 basis points since March 2022 and a change in the composition of the deposit portfolio.
The increase in deposit and borrowing rates was due to the Federal Reserve raising the target Federal Funds rate by 525 basis points since March 2022 and a change in the composition of the deposit portfolio.
Management estimates the allowance balance via a quantitative analysis which considers available information from internal and external sources related to past loan loss and prepayment experience and current conditions, as well as the incorporation of reasonable and supportable forecasts. Management evaluates a variety of factors including available published economic information in arriving at its forecasts.
Subsequent recoveries, if any, are credited to the allowance. Management estimates the allowance balance via a quantitative analysis, which considers available information from internal and external sources related to past loan loss and prepayment experience and current conditions, as well as the incorporation of reasonable and supportable forecasts.
The amortized cost and fair value of investment securities held to maturity and available for sale at December 31, 2023, 2022 and 2021 are shown below: 2023 2022 2021 (In thousands) Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Investment securities - held to maturity: U.S. government-sponsored agencies $ 40,000 $ 36,631 $ 40,000 $ 35,437 $ 40,000 $ 39,982 Mortgage-backed securities-residential (principally U.S. government-sponsored entities) 67,755 57,784 62,291 51,750 68,680 68,478 Total investment securities - held to maturity $ 107,755 $ 94,415 $ 102,291 $ 87,187 $ 108,680 $ 108,460 Investment securities - available for sale: U.S. government-sponsored agencies $ 244,794 $ 197,691 $ 244,774 $ 190,542 $ 280,045 $ 272,221 Mortgage-backed securities-residential (principally U.S. government-sponsored entities) 363,893 320,796 372,471 325,738 481,062 476,974 SBA pool securities 27,148 23,404 31,934 27,427 40,649 39,561 State and political subdivision — — 1,866 1,849 5,431 5,476 Corporate bond 10,000 8,726 10,000 9,092 2,500 2,521 Total investment securities - available for sale $ 645,835 $ 550,617 $ 661,045 $ 554,648 $ 809,687 $ 796,753 Total investment securities $ 753,590 $ 645,032 $ 763,336 $ 641,835 $ 918,367 $ 905,213 34 The following table presents the contractual maturities and yields of debt securities held to maturity and available for sale as of December 31, 2023.
The amortized cost and fair value of investment securities held to maturity and available for sale at December 31, 2024, 2023 and 2022 are shown below: 2024 2023 2022 (In thousands) Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Investment securities - held to maturity: U.S. government-sponsored agencies $ 40,000 $ 37,334 $ 40,000 $ 36,631 $ 40,000 $ 35,437 Mortgage-backed securities-residential (principally U.S. government-sponsored entities) 61,635 51,316 67,755 57,784 62,291 51,750 Total investment securities - held to maturity $ 101,635 $ 88,650 $ 107,755 $ 94,415 $ 102,291 $ 87,187 Investment securities - available for sale: U.S. government-sponsored agencies $ 244,813 $ 196,914 $ 244,794 $ 197,691 $ 244,774 $ 190,542 Mortgage-backed securities-residential (principally U.S. government-sponsored entities) 595,789 548,612 363,893 320,796 372,471 325,738 SBA pool securities 27,772 24,482 27,148 23,404 31,934 27,427 State and political subdivision — — — — 1,866 1,849 Corporate bond 15,500 14,536 10,000 8,726 10,000 9,092 Total investment securities - available for sale $ 883,874 $ 784,544 $ 645,835 $ 550,617 $ 661,045 $ 554,648 Total investment securities $ 985,509 $ 873,194 $ 753,590 $ 645,032 $ 763,336 $ 641,835 36 The following table presents the contractual maturities and yields of debt securities held to maturity and available for sale as of December 31, 2024.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeEstimated Increase/ EVPE as a Percentage of (Dollars in thousands) Decrease in EVPE Present Value of Assets (2) Change In Interest Rates Estimated EVPE Increase/(Decrease) (Basis Points) EVPE (1) Amount Percent Ratio (3) (basis points) +200 $ 563,671 $ (69,269 ) (10.94 )% 9.50 % (72 ) +100 595,247 (37,693 ) (5.96 ) 9.83 (39 ) Flat interest rates 632,940 — — 10.22 — -100 685,760 52,820 8.35 10.80 58 -200 689,888 56,948 9.00 10.67 45 (1) EVPE is the discounted present value of expected cash flows from assets and liabilities.
Biggest change(Dollars in thousands) Change In Estimated Increase/ EVPE as a Percentage of Interest Decrease in EVPE Present Value of Assets (B) Rates Estimated EVPE Increase/(Decrease) (Basis Points) EVPE (A) Amount Percent Ratio (C) (basis points) +200 $ 724,821 $ (43,201 ) (5.62 )% 11.10 % (20 ) +100 743,929 (24,093 ) (3.14 ) 11.17 (13 ) Flat interest rates 768,022 — — 11.30 — -100 802,569 34,547 4.50 11.54 24 -200 781,951 13,929 1.81 11.08 (22 ) (A) EVPE is the discounted present value of expected cash flows from assets and liabilities.
ALCO engages in interest rate swaps as a means of extending the duration of shorter-term liabilities. 53 The following strategies are among those used to manage interest rate risk: • Actively market C&I loans, which tend to have adjustable-rate features, and which generate customer relationships that can result in higher core deposit accounts; • Actively market equipment finance leases and loans, which tend to have shorter terms and higher interest rates than real estate loans; • Limit residential mortgage portfolio originations to adjustable-rate and/or shorter-term and/or “relationship” loans that result in core deposit and/or wealth management relationships; • Actively market core deposit relationships, which are generally longer duration liabilities; • Utilize medium-to-longer term certificates of deposit and/or wholesale borrowings to extend liability duration; • Utilize interest rate swaps to extend liability duration; • Utilize a loan level / back-to-back interest rate swap program, which converts a borrower’s fixed rate loan to adjustable rate for the Company; • Closely monitor and actively manage the investment portfolio, including management of duration, prepayment and interest rate risk; • Maintain adequate levels of capital; and • Utilize loan sales.
ALCO engages in interest rate swaps as a means of extending the duration of shorter-term liabilities. 54 The following strategies are among those used to manage interest rate risk: • Actively market C&I loans, which tend to have adjustable-rate features, and which generate customer relationships that can result in higher core deposit accounts; • Actively market equipment finance leases and loans, which tend to have shorter terms and higher interest rates than real estate loans; • Limit residential mortgage portfolio originations to adjustable-rate and/or shorter-term and/or “relationship” loans that result in core deposit and/or wealth management relationships; • Actively market core deposit relationships, which are generally longer duration liabilities; • Utilize medium-to-longer term certificates of deposit and/or wholesale borrowings to extend liability duration; • Utilize interest rate swaps to extend liability duration; • Utilize a loan level / back-to-back interest rate swap program, which converts a borrower’s fixed rate loan to adjustable rate for the Company; • Closely monitor and actively manage the investment portfolio, including management of duration, prepayment and interest rate risk; • Maintain adequate levels of capital; and • Utilize loan sales.
Accordingly, although the information provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results. 55
Accordingly, although the information provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and will differ from actual results. 56
The models are based on the actual maturity and repricing characteristics of rate sensitive assets and liabilities. The models incorporate certain prepayment and interest rate assumptions, which management believes to be reasonable as of December 31, 2023. The models assume changes in interest rates without any proactive change in the balance sheet by management.
The models are based on the actual maturity and repricing characteristics of rate sensitive assets and liabilities. The models incorporate certain prepayment and interest rate assumptions, which management believes to be reasonable as of December 31, 2024. The models assume changes in interest rates without any proactive change in the balance sheet by management.
In the models, the forecasted shape of the yield curve remained static as of December 31, 2023. In an immediate and sustained 100 basis point increase in market rates at December 31, 2023, net interest income would decrease approximately 2.1 percent for year 1 and increase 0.2 percent for year 2, compared to a flat interest rate scenario.
In the models, the forecasted shape of the yield curve remained static as of December 31, 2024. In an immediate and sustained 100 basis point increase in market rates at December 31, 2024, net interest income would decrease approximately 0.5 percent for year 1 and increase 1.6 percent for year 2, compared to a flat interest rate scenario.
In these swaps, the Company is receiving floating and paying fixed interest rates with total notional value of $310.0 million as of December 31, 2023. In addition, the Company initiated a loan level / back-to-back swap program in support of its commercial lending business.
In these swaps, the Company is receiving floating and paying fixed interest rates with total notional value of $360.0 million as of December 31, 2024. In addition, the Company initiated a loan level / back-to-back swap program in support of its commercial lending business.
The Company's interest rate sensitivity models indicate the Company is liability sensitive as of December 31, 2023 and that net interest income would improve in a falling rate environment, but decline in a rising rate environment. 54 The table below shows the estimated changes in the Company’s economic value of portfolio equity (“EVPE”) that would result from an immediate parallel change in the market interest rates at December 31, 2023.
The Company's interest rate sensitivity models indicate the Company is asset sensitive as of December 31, 2024 and that net interest income would improve in a rising rate environment, but decline in a falling rate environment. 55 The table below shows the estimated changes in the Company’s economic value of portfolio equity (“EVPE”) that would result from an immediate parallel change in the market interest rates at December 31, 2024.
(2) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets. (3) EVPE ratio represents EVPE divided by the present value of assets. Certain shortcomings are inherent in the methodologies used in determining interest rate risk.
(B) Present value of assets represents the discounted present value of incoming cash flows on interest-earning assets. (C) EVPE ratio represents EVPE divided by the present value of assets. Certain shortcomings are inherent in the methodologies used in determining interest rate risk.
In an immediate and sustained 200 basis point increase in market rates at December 31, 2023, net interest income would decrease approximately 3.9 percent for year 1 and increase 0.3 percent for year 2, compared to a flat interest rate scenario.
In an immediate and sustained 200 basis point increase in market rates at December 31, 2024, net interest income would decrease approximately 0.6 percent for year 1 and increase 3.5 percent for year 2, compared to a flat interest rate scenario.
In an immediate and sustained 200 basis point decrease in market rates at December 31, 2023, net interest income for year 1 would increase approximately 3.3 percent, when compared to a flat interest rate scenario. In year 2, net interest income would decrease 2.6 percent, when compared to a flat interest rate scenario.
In an immediate and sustained 200 basis point decrease in market rates at December 31, 2023, net interest income for year 1 would decrease approximately 0.7 percent, when compared to a flat interest rate scenario. In year 2, net interest income would decrease 6.9 percent, when compared to a flat interest rate scenario.
As of December 31, 2023, $546.0 million of notional value in swaps were executed and outstanding with borrowers under this program. As noted above, ALCO uses simulation modeling to analyze the Company’s net interest income sensitivity, as well as the Company’s economic value of portfolio equity under various interest rate scenarios.
As of December 31, 2024, $430.8 million of notional value in swaps were executed and outstanding with borrowers under this program. As noted above, ALCO uses simulation modeling to analyze the Company’s net interest income sensitivity, as well as the Company’s economic value of portfolio equity under various interest rate scenarios.
In an immediate and sustained 100 basis point decrease in market rates at December 31, 2023, net interest income would increase approximately 2.2 percent for year 1 and decrease 1.4 percent for year 2, compared to a flat interest rate scenario.
In an immediate and sustained 100 basis point decrease in market rates at December 31, 2024, net interest income would increase approximately 0.1 percent for year 1 and decrease 2.9 percent for year 2, compared to a flat interest rate scenario.

Other PGC 10-K year-over-year comparisons