Message to
Shareholders

Douglas L. Kennedy
President and Chief Executive Officer

On behalf of the entire hardworking team at Peapack Private, I am happy to report that despite headwinds created by the unprecedented increase in interest rates that began in late 2022 and continued through much of 2024, we earned $33 million in net income for the year. As I mentioned in my letter last year, we continued to invest in and expand into Manhattan and Westchester in 2024, seizing what we believe is an unprecedented opportunity to expand our private banking, single point of contact business model into these lucrative markets.

METRO NEW YORK'S
BOUTIQUE PRIVATE BANK

Our expansion strategy is delivering promising results. In 2024, we grew core relationship deposits by $1.2 billion or 30% over year-end 2023. In the fourth quarter alone, core deposits grew by $438 million or 36% annualized. The opportunity we saw was attributed to the void created by the failure of several highly regarded private banks. While these institutions all had well-established reputations for delivering a great client experience, each institution fell victim to the rapid run-up in interest rates, their balance sheet funding composition, and the panic that followed. Conversely, our diversified clientele and a prudent approach to managing our balance sheet with significant levels of backup liquidity carried us through this difficult time, placing us in a unique position to capitalize on the market disruption, as these highly regarded institutions were acquired and could no longer deliver a world-class client experience.

In 2024, we were presented with a compelling environment in which to expand, and we are comfortable sacrificing short-term profitability to provide what we believe will rapidly become the most differentiated bank model within the metropolitan New York market area. Our decision to invest while others were pulling back has, not surprisingly, had a negative impact on current earnings. While we have chosen to invest in top-level talent and new geographies that impact our current expense line, we are building a foundation for accelerated future growth and earnings as we continue to attract moderate-cost deposits and lend at current market rates and spreads, all while many of our fixed-rate loans reprice over the coming years.

OUR NEW YORK EXPANSION HAS EXCEEDED EXPECTATIONS

As we moved into the NY market, we initially projected new deposits to reach $450 million by year-end; however, we ended the year with $948 million in deposits attributable to the NY market. These balances comprise more than 550 new relationships, with 28% of the deposits in noninterest-bearing checking accounts. The overall blended interest rate associated with these deposits is a very reasonable 2.70% at the present time. As mentioned, we made the decision to take advantage of a major market disruption, knowing that our historical track record of successfully competing against much larger banks in neighboring New Jersey could be replicated in the larger NY-Metro region. We made a measured first step by hiring two NY-based teams in mid-2023. Based on the positive momentum we experienced, we welcomed an additional 13 teams in 2024. In a short period of time, we have created considerable brand recognition and energy.

Given the substantial number of newly acquired relationships and the volumes we were experiencing, we surveyed our NYC client base for feedback on our onboarding process. Utilizing Net Promoter Score (NPS) parameters, we were rated with a best-in-class score of 81, which puts us on par with world-class companies like the Ritz-Carlton and Nordstrom. Through this survey, we received favorable feedback regarding our online platforms, with many clients noting that our systems were better than what they utilized at their previous institutions. We believe this demonstrates how Peapack Private's exceptional client service, innovative products, leading-edge technologies and platforms, and customized solutions can compete and win in the largest market in the world.

Based on our experience to date and sizable pipeline for new business headed into 2025, we expect to selectively add additional teams to position Peapack Private as the alternative to the large, impersonal banks located throughout the New York metropolitan area. Our comprehensive suite of solutions, delivered through a single point of contact and supported by a team of subject-matter experts, enables us to remove the complexity of navigating the requirements demanded by larger banks.

OUR CORE NEW JERSEY BUSINESS HAD A STRONG YEAR

In early 2024, our team focused heavily on deposit generation. We began the year with more than $400 million in Federal Home Loan Bank (FHLB) borrowings. The flat yield curve (short-term overnight interest rates compared to longer-term rates) made it difficult to grow and earn enough to cover overhead and risk. Therefore, we pulled back on lending to new clients and focused entirely on supporting our existing client relationships. As rates began to decline, and as we became more confident in the broader economic environment, we chose to reignite our lending business. This renewed focus in the fourth quarter produced $528 million in loan originations, 83% of which were commercial and industrial loans. The spread between the new deposits we brought in during the fourth quarter and loans was greater than 4%. Our team has done an excellent job of sourcing new relationships — of note, our New Jersey teams accounted for approximately 50% of the $438 million in core relationship deposits generated in the fourth quarter, with the vast majority of these deposits coming from large bank competitors.

WE TRANSFORMED OUR BALANCE SHEET IN 2024

As previously stated, our team grew core client deposits by $1.2 billion or 30% for the year. Balances in noninterest-bearing checking accounts grew by 16% or $155 million during 2024. At year-end, our on-balance sheet liquidity ratio was 17%, and total available direct and indirect liquidity grew to $4.4 billion. From a risk management perspective, total available liquidity compares favorably to uninsured deposits of $1.6 billion at year-end, providing two and a half times the coverage.

The following table illustrates the positive balance sheet transformation we achieved in 2024.

Ultimately, affordable core deposits are what determine a bank's ability to grow, and we are now well positioned for growth. As we look forward to 2025 and beyond, we expect to hire more lenders, identify other attractive NY metro area geographies to potentially establish a presence, expand into attractive new lending verticals, and explore other opportunities that complement our Strategic Plan. The combination of lower funding costs and accelerated growth and scale has the potential to make 1+1=3. The positive change in our liquidity profile undoubtedly creates opportunities for us to deliver strong growth in earnings and shareholder value.

OUR WEALTH MANAGEMENT DIVISION IS A DIFFERENTIATOR AND CONTINUES TO DELIVER STRONG RESULTS

At nearly $12 billion of assets under management/administration (AUM/AUA), we have built a sizable and differentiated wealth management offering. For the year, we grew AUM/AUA by $1 billion and revenues by 10%. Our wealth management business is the cornerstone of our Company; it is extremely rare for a bank our size to have this capability. Our expansion into the NY metropolitan market presents a tremendous opportunity for our wealth team. We have had a number of early and encouraging wins sourced by our new NY colleagues, and we expect many more in 2025 and beyond. We also expect to add several new wealth professionals in early 2025 to capitalize on the substantial number of new banking and lending clients who have joined us as a result of our NY expansion.

The following chart illustrates the historical growth of our wealth and fiduciary business.

ASSET QUALITY ISSUES ARE WELL CONTAINED

With the rapid run-up in rates in 2023, we initially saw some signs of stress in our lending portfolio in early 2024, as borrowers were impacted by higher interest rates and elevated operating costs brought on by inflation. The credit issues we saw were limited to a handful of borrowers. We observed weakness in trucking and rent-stabilized multifamily relationships. We are approaching these situations individually and with purpose. Rent-regulated multifamily, particularly in NYC, will take time to fully recover as the city restricts rent increases in any given year. Operating costs have begun to stabilize, and rents will ultimately catch up. What is clear is that affordable workforce housing is essential, but it will take time to get rent rolls and revenue streams to an acceptable level. Our plan is to support full-relationship clients and exit others over time.

At year-end, we had just $5 million in delinquent loans in the 30- to 89-day category (0.09% of total loans, a very low percentage compared to peers). While we expect additional credit challenges as we move forward, we will continue to be deliberate, constructive, and cautious toward credit exposure.

DURING THE YEAR, WE MERGED OUR BANK AND WEALTH BRANDS INTO ONE

Our expansion plans and the momentum generated outside of New Jersey propelled us to combine our Bank and wealth brands. After careful study and testing, we renamed the Bank "Peapack Private Bank & Trust." This refreshed brand captures our elevated service model and highlights our wealth management and fiduciary capabilities. We have retained and will continue to use our trademarked tagline, "All Banking Should be Private Banking," which captures our commitment to offering exceptional service, regardless of a client's size. We pride ourselves on supporting individuals and business owners throughout their life cycle, and we will continue to offer CRA-qualified residential loans, along with small-business and investment solutions for those in the initial stages of accumulating wealth. This will be a primary and Bank-defining focus as we grow.

A FINAL WORD ON 2024

Our Company has embarked on an exciting expansion that is designed to deliver attractive returns through growth and positive operating leverage. We are opportunistically taking advantage of the market disruption from the past year. This is a thrilling chapter for Peapack Private, one that will undoubtedly evolve over time. In the short run, adding new client teams and support staff to execute our strategy may depress earnings somewhat; however, we see the breakeven timeline on our investments of approximately one year, which is incredibly attractive. The motivation our team has toward executing on the vision for our Company is inspiring. It is my hope that you, our shareholders, share the same level of enthusiasm.

Finally, many thanks to our Chairman and Board of Directors for their perspective and contribution to our success. The experience that each Director brings to the table is invaluable.

Respectfully,

Douglas L. Kennedy President and Chief Executive Officer