PEAPACK GLADSTONE FINANCIAL CORP - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2002

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NO. 001-16197

PEAPACK-GLADSTONE FINANCIAL CORPORATION
------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

NEW JERSEY 22-3537895
- --------------------------------------- -------------------
(State or other jurisdiction of (I.R.S.
Employer incorporation or organization) Identification No.)

158 ROUTE 206 NORTH,
GLADSTONE, NEW JERSEY 07934
------------------------------------------------------------
(Address of principal executive offices, including zip code)

(908) 234-0700
----------------------------------------------------
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No .
--------- ---------

Number of shares of Common stock outstanding as of August 1, 2002:
3,343,813

1

PEAPACK-GLADSTONE FINANCIAL CORPORATION

PART 1 FINANCIAL INFORMATION

Item 1 Financial Statements:

Consolidated Statements of Condition June 30, 2002
and December 31, 2001 ......................................... Page 3

Consolidated Statements of Income for the three and
six months ended June 30, 2002 and 2001 ....................... Page 4

Consolidated Statements of Changes in Stockholders'
Equity for the six months ended June 30, 2002 and
2001 .......................................................... Page 5

Consolidated Statements of Cash Flows for the six
months ended June 30, 2002 and 2001 ........................... Page 6

Notes to the Consolidated Financial Statements .................. Page 7

Item 2 Management Discussion and Analysis of Financial
Condition and Results of Operations ........................... Page 8

Item 3 Quantitative and Qualitative Disclosures about Market Risk ...... Page 12

PART 2 OTHER INFORMATION

Item 4 Submission of Matters to a Vote of Security Holders ............. Page 13

Item 6 Exhibits and Reports on Form 8-K ................................ Page 13

2

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
(Dollars in thousands)
(Unaudited)

June 30, December 31,
2002 2001
--------- ------------

ASSETS
Cash and due from banks ............................... $ 25,040 $ 17,440
Federal funds sold .................................... 2,081 2,543
--------- ---------
Total cash and cash equivalents ..................... 27,121 19,983

Interest-earning deposits ............................. 526 15,634

Investment securities (approximate market value
$104,856 in 2002 and $50,480 in 2001) .............. 102,517 48,722

Securities available for sale (amortized cost
$200,376 in 2002 and $171,529 in 2001) ............. 204,799 172,620

Loans:
Loans secured by real estate .......................... 404,651 384,767
Other loans ........................................... 30,529 32,166
--------- ---------
Total loans ........................................ 435,180 416,933
Less: Allowance for loan losses ................. 4,421 4,023
--------- ---------
Net loans .......................................... 430,759 412,910

Premises and equipment, net ........................... 13,345 13,474
Accrued interest receivable ........................... 4,715 5,197
Cash surrender value of life insurance ................ 12,609 12,244
Other assets .......................................... 1,266 3,989
--------- ---------
TOTAL ASSETS .................................... $ 797,657 $ 704,773
========= =========

LIABILITIES
Deposits:
Noninterest-bearing demand deposits ................. $ 122,057 $ 113,011
Interest-bearing deposits:
Checking ......................................... 129,086 110,878
Savings .......................................... 90,791 82,268
Money market accounts ............................ 140,127 109,326
Certificates of deposit over $100,000 ............ 62,894 59,900
Certificates of deposit less than $100,000 ....... 165,877 155,520
--------- ---------
Total deposits ........................................ 710,832 630,903
Borrowed funds ........................................ 8,000 5,000
Accrued expenses and other liabilities ................ 8,473 5,785
--------- ---------
TOTAL LIABILITIES ................................ 727,305 641,688

STOCKHOLDERS' EQUITY
Common stock (no par value; stated value $1 2/3
per share; authorized 10,000,000 shares; issued at June
30, 2002 3,388,578 shares; issued at
December 31, 2001 3,368,127 shares.) .................. 5,642 5,608
Surplus ............................................... 38,159 37,838
Treasury Stock at cost, 45,759 shares in 2002
and 40,279 shares in 2001 ............................ (1,833) (1,588)
Retained earnings ..................................... 25,686 20,572
Accumulated other comprehensive income-net
unrealized gains on securities available for
sale (net of income taxes) .......................... 2,698 655
--------- ---------
TOTAL STOCKHOLDERS' EQUITY ...................... 70,352 63,085
--------- ---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ........ $ 797,657 $ 704,773
========= =========

See accompanying notes to consolidated financial statements.

3

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except share data)
(Unaudited)

Three months ended Six months ended
June 30, June 30,
---------------------------- ----------------------------
2002 2001 2002 2001
---------- ---------- ---------- ----------

INTEREST INCOME

Interest and fees on loans ...................... $ 7,430 $ 6,956 $ 14,750 $ 13,623
Interest on investment securities:
Taxable .................................... 965 838 1,614 1,751
Tax-exempt ................................. 91 142 183 287
Interest on securities available for sale:
Taxable .................................... 2,554 1,482 4,943 2,795
Tax-exempt ................................. 90 10 170 11
Interest-earning deposits ....................... 2 184 134 244
Interest on federal funds sold .................. 42 376 71 968
---------- ---------- ---------- ----------
Total interest income ........................... 11,174 9,988 21,865 19,679

INTEREST EXPENSE

Interest on savings account deposits ............ 1,101 1,476 2,061 3,026
Interest on certificates of deposit over $100,000 530 631 1,086 1,290
Interest on other time deposits ................. 1,344 1,857 2,753 3,607
Interest on borrowed funds ...................... 47 -- 105 --
---------- ---------- ---------- ----------
Total interest expense .......................... 3,022 3,964 6,005 7,923
---------- ---------- ---------- ----------

NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES .................. 8,152 6,024 15,860 11,756

Provision for loan losses ....................... 201 124 400 250
---------- ---------- ---------- ----------

NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES .................. 7,951 5,900 15,460 11,506
---------- ---------- ---------- ----------

OTHER INCOME

Service charges and fees for other services ..... 414 337 824 669
Trust department income ......................... 1,259 925 2,405 2,054
Securities gains ................................ 8 79 26 79
Bank owned life insurance ....................... 199 -- 396 --
Other income .................................... 203 268 400 441
---------- ---------- ---------- ----------
Total other income ......................... 2,083 1,609 4,051 3,243

OTHER EXPENSES

Salaries and employee benefits .................. 3,017 2,457 5,944 4,843
Premises and equipment .......................... 1,030 881 1,998 1,714
Other expense ................................... 1,288 898 2,523 1,893
---------- ---------- ---------- ----------
Total other expenses ............................ 5,335 4,236 10,465 8,450
---------- ---------- ---------- ----------

INCOME BEFORE INCOME TAX EXPENSE ................ 4,699 3,273 9,046 6,299
Income tax expense .............................. 1,546 1,081 2,931 2,077
---------- ---------- ---------- ----------
NET INCOME ................................. $ 3,153 $ 2,192 $ 6,115 $ 4,222
========== ========== ========== ==========
EARNINGS PER SHARE
Basic ........................................... $ 0.94 $ 0.66 $ 1.83 $ 1.27
Diluted ......................................... $ 0.92 $ 0.65 $ 1.79 $ 1.25

Average basic shares outstanding ................ 3,339,073 3,329,784 3,334,264 3,326,856
Average diluted shares outstanding .............. 3,434,763 3,390,440 3,408,874 3,387,512

See accompanying notes to consolidated financial statements.

4

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)

Six Months Ended
June 30,
----------------------
2002 2001
-------- --------
Balance, Beginning of Period ......................... $ 63,085 $ 55,156

Comprehensive income:

Net Income ...................................... 6,115 4,222
-------- --------

Unrealized holding gains on securities
arising during the period, net of tax ....... 2,060 928
Less: Reclassification adjustment for gains

included in net income, net of tax ......... (17) (52)
-------- --------

2,043 876
-------- --------

Total Comprehensive income ...................... 8,158 5,098

Common Stock Options Exercised ....................... 355 259

Purchase of Treasury Stock ........................... (245) (325)

Cash Dividends Declared .............................. (1,001) (848)
-------- --------

Balance, June 30, .................................... $ 70,352 $ 59,340
======== ========

See accompanying notes to consolidated financial statements.

5

PEAPACK-GLADSTONE FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)

Six Months Ended
June 30,
-------------------------
2002 2001
-------- --------

OPERATING ACTIVITIES:
Net Income: ............................................ $ 6,115 $ 4,222
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ........................................... 652 556
Amortization of premium and accretion of
discount on securities, net ......................... 311 93
Provision for loan losses .............................. 400 250
Gains on security sales ................................ (26) (79)
Increase in cash surrender value of life insurance ..... (365) --
Decrease/(increase) in interest receivable accrued ..... 482 (229)
Decrease in other assets ............................... 2,724 325
Increase in other liabilities .......................... 1,398 112
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES ........... 11,691 5,250
-------- --------

INVESTING ACTIVITIES:
Proceeds from maturities of investment securities ...... 3,942 3,408
Proceeds from maturities of securities available
for sale ............................................ 3,944 46,310
Proceeds from calls of investment securities ........... 1,670 7,211
Proceeds from sales and calls of securities available
for sale ............................................ 43,764 32,655
Purchase of investment securities ...................... (59,474) (916)
Purchase of securities available for sale .............. (76,773) (97,445)
Net decrease/(increase) in short-term investments ...... 15,108 (14,787)
Net increase in loans .................................. (18,249) (42,081)
Purchase of premises and equipment ..................... (523) (1,098)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES ............... (86,591) (66,743)
-------- --------

FINANCING ACTIVITIES:
Net increase in deposits ............................... 79,929 58,962
Net increase in long-term borrowings ................... 3,000 --
Dividends paid ......................................... (1,001) (848)
Exercise of stock options .............................. 355 259
Purchase of Treasury Stock ............................. (245) (325)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES ........... 82,038 58,048
-------- --------

Net increase/(decrease) in cash and cash equivalents ... 7,138 (3,445)
Cash and cash equivalents at beginning of period ....... 19,983 53,347
-------- --------
Cash and cash equivalents at end of period ............. $ 27,121 $ 49,902
======== ========

Supplemental disclosures of cash flow information:

Cash paid during the year for:
Interest ............................................ $ 5,978 $ 8,582
Income taxes ........................................ 2,829 2,177

See accompanying notes to consolidated financial statements.

6

PEAPACK-GLADSTONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. BASIS OF PRESENTATION

Certain information and footnote disclosures normally included in the unaudited
consolidated financial statements prepared in accordance with accounting
principles generally accepted in the United States of America have been
condensed or omitted pursuant to the rules and regulations of the Securities and
Exchange Commission. These unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the December 31, 2001 Annual Report on Form 10-K for
Peapack-Gladstone Financial Corporation (the "Corporation").

2. PRINCIPLES OF CONSOLIDATION

The Corporation considers that all adjustments (all of which are normal
recurring accruals) necessary for a fair presentation of the statement of the
financial position and results of operations in accordance with accounting
principals generally accepted in the United States for these periods have been
made. Results for such interim periods are not necessarily indicative of results
for a full year.

The consolidated financial statements of Peapack-Gladstone Financial Corporation
are prepared on the accrual basis and include the accounts of the Corporation
and its wholly-owned subsidiary, the Peapack-Gladstone Bank. All significant
intercompany balances and transactions have been eliminated from the
accompanying consolidated financial statements.

3. ALLOWANCE FOR LOAN LOSSES

The allowance for loan losses is maintained at a level that management considers
adequate to reflect the risk of future losses inherent in the Corporation's loan
portfolio. In its evaluation of the adequacy of the allowance for loan losses,
management considers past loan loss experience, changes in the composition of
non-performing loans, the financial condition of borrowers, the relationship of
the current level of the allowance to the credit portfolio and to non-performing
loans and existing economic conditions. The allowance is increased by provisions
charged to expense and reduced by net charge-offs.

4. EARNINGS PER COMMON SHARE - BASIC AND DILUTED

Basic earnings per share are computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding.
Diluted earnings per share include any additional common shares as if all
potentially dilutive common shares were issued (i.e., stock options). All share
and per share amounts have been restated to reflect the 10 percent stock
dividend issued November 1, 2001, and all prior stock dividends and stock
splits.

5. COMPREHENSIVE INCOME

The difference between the Corporation's net income and total comprehensive
income for the six months ended June 30, 2002 and 2001 relates to the change in
the net unrealized gains and losses on securities available for sale during the
applicable period of time less adjustments for realized gains.

6. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities." The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. The Statement is
to be applied prospectively to exit or disposal activities initiated after
December 31, 2002. The Corporation does not anticipate that SFAS No. 146 will
significantly impact the Corporation's consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections."
The Statement, among other things, rescinds SFAS No. 4, "Reporting Gains and
Losses from Extinguishments of Debt," as amended. Under SFAS No. 4, as amended
by SFAS No. 64, gains and losses from the extinguishment of debt were required
to be classified as an extraordinary

7

item, if material. Under SFAS No. 145, gains or losses from the extinguishment
of debt are to be classified as a component of operating income, rather than an
extraordinary item. SFAS No. 145 is effective for fiscal years beginning after
May 15, 2002, with early adoption of the provisions related to the rescission of
SFAS No. 4 encouraged. Upon adoption, companies must reclassify prior period
amounts previously classified as an extraordinary item. The Corporation does not
anticipate that the initial adoption of SFAS 145 will have a significant impact
on the Corporation's consolidated financial statements.

On October 3, 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
which addresses financial accounting and reporting for the impairment or
disposal of long-lived assets. While SFAS No. 144 supersedes SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", it retains many of the fundamental provisions of that
Statement. The Statement is effective for fiscal years beginning after December
15, 2001. The initial adoption of SFAS No. 144 did not have a significant impact
on the Corporation's consolidated financial statements.

In August, 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. SFAS No. 143 requires an enterprise to record the fair
value of an asset retirement obligation as a liability in the period in which it
incurs a legal obligation associated with the retirement of tangible long-lived
assets. The Corporation is required to adopt the provisions of SFAS No. 143 for
fiscal years beginning after June 15, 2002. The Corporation does not anticipate
that SFAS No. 143 will significantly impact the Corporation's consolidated
financial statements.

On July 20, 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets." SFAS No. 142 requires that goodwill and intangible assets with
indefinite useful lives no longer be amortized, but instead be tested for
impairment at least annually in accordance with the provisions of SFAS No. 142.
SFAS No. 142 also requires that intangible assets with definite useful lives be
amortized over their respective estimated useful lives to their estimated
residual values, and periodically reviewed for impairment.

The Corporation adopted the provisions of SFAS No. 142 on January 1, 2002. The
Corporation had $563 thousand in recorded goodwill at January 1, 2002, with
amortization of $100 thousand per year. The cessation of amortization upon the
adoption of SFAS No. 142 had no significant impact on report operations for the
second quarter 2002 or year to date 2002 as compared to the same periods ended
June 30, 2001. Excluding the $25 thousand of goodwill amortization recorded in
the quarter ended June 30, 2001, the basic and diluted earnings per share were
$0.67 and $0.65, respectively. Year-to-date 2001 basic and diluted earnings per
share excluding $50 thousand of year-to-date goodwill amortization were $1.28
and $1.25, respectively.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

GENERAL: The foregoing contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Such statements are not
historical facts and include expressions about management's confidence and
strategies and management's expectations about new and existing programs and
products, relationships, opportunities and market conditions. These statements
may be identified by such forward-looking terminology as "expect", "believe", or
similar statements or variations of such terms. Actual results may differ
materially from such forward-looking statements. Factors that may cause actual
results to differ materially from those contemplated by such forward-looking
statements include, among others, the following possibilities:

o Competitive pressure in the banking industry causes unanticipated
adverse changes.

o A downturn in the economy of New Jersey causes customers to default in
the payment of their loans or causes loans to become impaired.

o Loss of key managers or employees.

o Loss of major customers or failure to develop new customers.

o A decrease in loan quality and loan origination volume.

o A failure to obtain additional capital, if needed.

The Corporation assumes no responsibility to update such forward-looking
statements in the future.

8

RESULTS OF OPERATIONS: The Corporation realized earnings of $0.92 per diluted
share for the second quarter of 2002 as compared to $0.65 per diluted share for
the same quarter last year, an increase of 41.5 percent. Net income for the
quarter rose 43.8 percent to $3.2 million compared with $2.2 million for the
quarter ended June 30, 2001. Return on average assets for the quarter was 1.65
percent and return on average equity was 18.91 percent.

June 30, 2002 year to date income was $6.1 million as compared to $4.2 million
for June 30, 2001 year to date. The per diluted share earnings were $1.79 for
the six months ended June 30, 2002 as compared to $1.25 for the year to date
June 30, 2001. Return on average assets was 1.64 percent and return on average
equity was 18.62 percent for the first six months of 2002.

EARNINGS ANALYSIS

NET INTEREST INCOME: Net interest income before provision for loan losses for
the second quarter of 2002 was $8.15 million as compared to $6.02 million for
the second quarter of 2001, an increase of $2.13 million or 35.3 percent.
Significant factors in the increase in net interest income were loan and deposit
growth, the redeployment of lower yielding short-term assets into higher
yielding securities and lower cost of funds. The net interest margin on a fully
tax equivalent basis was 4.53 percent in the second quarter of 2002 as compared
to 4.07 percent for the second quarter of 2001.

Average interest earning assets increased $139.2 million or 23.9 percent for the
quarter ended June 30, 2002 as compared to the same period in 2001. This was
primarily due to the increase in average loan balances of $58.4 million, and
average investment securities balances of $119.6 million. During this time,
average federal funds sold balances declined $23.7 million and interest-earning
deposits declined $15.0 million on average.

Average interest-bearing liabilities for the second quarter of 2002 increased
$131.3 million or 29.5 percent from the second quarter of 2001. Average balances
of interest-bearing liabilities in each category increased as certificates of
deposits rose by $49.3 million; money market accounts rose by $43.6 million;
interest-bearing checking accounts rose by $21.1 million; and savings accounts
rose by $11.8 million. Federal Home Loan Bank advances averaged $5.5 million for
the quarter ended June 30, 2002 as compared to $0 for the quarter ended June 30,
2001. Average demand deposits increased $8.8 million or 8.3 percent as compared
to the first quarter of 2001.

Average interest rates earned on interest-earning assets declined 67 basis
points to 6.28 percent in the second quarter 2002 from 6.95 percent earned in
the same quarter of 2001. The average interest rates earned on loans and
investment securities decreased 58 basis points and 90 basis points,
respectively, in the second quarter of 2002 as compared with the same period in
2001. When compared to the quarter ended June 30, 2001, the average interest
rate paid on interest-bearing liabilities declined 147 basis points to 2.10
percent in 2002. The average rate paid on certificate of deposits declined 234
basis points and average rates paid on money market accounts declined 181 basis
points in the second quarter of 2002 as compared with the same period in 2001.

For the six months ended June 30, 2002 as compared to the same period in 2001,
net interest income before provision for loan losses rose 34.9 percent from
$11.8 million to $15.9 million. The net interest margin for the year to date
June 30, 2002 and 2001 was 4.58 percent and 4.11 percent, respectively.

For the six months ended, average interest-earning assets increased $133.6
million from June 30, 2001 to 2002 as both the investment and loan portfolios
experienced significant growth. Average balances on federal funds sold declined
by $29.9 million as the strategy to replace these lower-yielding balances with
higher-yielding investments was implemented. Average balances of investments and
loans increased $102.2 million or 64.8 percent and $65.5 million or 18.3
percent, respectively. Interest-bearing deposits increased 27.4 percent to
$551.1 million on average and borrowed funds increased on average to $6.8
million from zero a year ago.

For the year to date ended June 30, 2002, average interest rates earned on
federal funds sold declined 336 basis points, while interest rates on
investments and loans declined 89 basis points and 64 basis points,
respectively. Interest rates paid on interest-bearing deposits decreased 153
basis points with the largest decreases in the interest rates paid on
certificates of deposit, 232 basis points and money market accounts, 225 basis
points.

OTHER INCOME: For the quarter ended June 30, 2002, other income totaled $2.1
million as compared to $1.6 million for the prior year period, an increase of
$474 thousand or 29.5 percent. The bank's trust division, PGB Trust and
Investments, generated gross fee income of $1.3 million in the quarter ended
June 30, 2002 as compared to $925 thousand in the same quarter of 2001. Service
charges and fees increased $77 thousand or 22.8 percent for the second quarter
of 2002 as compared with the second quarter of 2001. The growth in these two
areas reflects the overall higher level of accounts and new branch locations.

9

Other income increased 24.9 percent or $808 thousand from the six months ended
June 30, 2001 to 2002. Gross fee income from PGB Trust and Investments increased
17.1 percent to $2.4 million while service charges and fees increased 23.2
percent to $824 thousand.

In the third quarter of 2001, the Corporation invested $12.0 million in Bank
Owned Life Insurance (BOLI) to assist in offsetting the rising cost of employee
benefits. Increases in cash surrender value of $199 thousand and $396 thousand
for the second quarter and year to date 2002, respectively, is included in other
income.

The following table presents the components of other income for the three and
six months ended June 30, 2002 and 2001:

Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
(In Thousands) 2002 2001 2002 2001
------ ------ ------ ------

Trust Department Fees ....................... $1,259 $ 925 $2,405 $2,054
Service Charges on Deposit Accounts ......... 414 337 824 669
Other Fee Income ............................ 91 91 183 173
Bank Owned Life Insurance ................... 199 -- 396 --
Other Non-Interest Income ................... 57 128 104 174
Safe Deposit Rental Fees .................... 55 49 113 94
------ ------ ------ ------
Other Income Before Gains on Securities ... 2,075 1,530 4,025 3,164
Securities Gains ............................ 8 79 26 79
------ ------ ------ ------
Total Other Income .. $2,083 $1,609 $4,051 $3,243
====== ====== ====== ======

OTHER EXPENSES: Other expenses increased $1.1 million to $5.3 million for the
quarter ended June 30, 2002 as compared with the same period in 2001. Salaries
and employee benefits expense totaled $3.0 million for the quarter as compared
to $2.5 million in the same quarter of 2001. This increase can be attributed to
additions to the professional staff, salary adjustments to attract and retain
highly qualified employees and the opening of another branch location. Premises
and equipment expense increased 16.9 percent or $149 thousand to $1.0 million
for the second quarter of 2002. This increase can be attributed to an overall
increase in the cost of operating bank facilities including the new branch
location.

For the six months ended June 30, 2002 and 2001, other expenses increased 23.8
percent to $10.5 million from $8.5 million. The largest component of other
expense, salaries and employee benefits, increased from $4.8 million to $5.9
million or 22.7 percent. Premises and equipment expense rose $284 thousand or
16.6 percent year over year to $2.0 million.

The following table presents the components of other expense for the three and
six months ended June 30, 2002 and 2001:

Three Months Ended Six Months Ended
June 30, June 30,
---------------------- ----------------------
(In Thousands) 2002 2001 2002 2001
------- ------- ------- -------

Salaries and Benefits ........................ $ 3,017 $ 2,457 $ 5,944 $ 4,843
Premises and Equipment ....................... 1,030 881 1,998 1,714
Advertising .................................. 166 144 339 300
Stationery and Supplies ...................... 125 110 244 214
Professional Fees ............................ 138 77 376 146
Trust Department ............................. 109 85 216 171
Telephone .................................... 114 86 173 170
Postage ...................................... 82 61 160 137
Other Expense ................................ 554 335 1,015 755
------- ------- ------- -------
Total Other Expense .. $ 5,335 $ 4,236 $10,465 $ 8,450
======= ======= ======= =======

NON-PERFORMING ASSETS: Other real estate owned (OREO), loans past due in excess
of 90 days and still accruing, and non-accrual loans are considered
non-performing assets. These assets totaled $394 thousand and $405 thousand at
June 30, 2002 and 2001, respectively. Loans past due in excess of 90 days and
still accruing are in the process of collection and are well secured.

10

The following table sets forth non-performing assets on the dates indicated, in
conjunction with asset quality ratios:

June 30,
-----------------------
(In thousands) 2002 2001
------- -------
Loans past due in excess of 90
days and still accruing .................... $ 308 $ 118
Non-accrual loans ............................ 86 287
------- -------
Total non-performing assets .................. $ 394 $ 405
======= =======

Non-performing loans as a % of total loans ... 0.09% 0.10%
Non-performing assets as a % of total
Loans plus other real estate owned ......... 0.09% 0.10%
Allowance as a % of loans .................... 1.02% 0.96%

PROVISION FOR LOAN LOSSES: The provision for loan losses was $201 thousand for
the three months ended June 30, 2002 as compared to $124 thousand for the three
months ended June 30, 2001. For the six months ended June 30, 2002 and 2001, the
provision for loan losses was $400 thousand and $250 thousand, respectively. The
process of determining the adequacy of the allowance is a critical accounting
policy of the Corporation and is necessarily judgmental and subject to changes
in external conditions. The amount of the loan loss provision and the level of
the allowance for possible loan losses are based upon a number of factors
including growth in the loan portfolio, Management's evaluation of potential
losses in the portfolio, after consideration of appraised collateral values,
financial condition and past credit history of the borrowers as well as
prevailing economic conditions. Net recoveries for the second quarter of 2002
were $20 thousand as compared to net recoveries of $11 thousand during the same
period of 2001. For the six months ended June 30, 2002, net charge-offs were $2
thousand compared to $14 thousand in net recoveries for the same period in 2001.

A summary of the allowance for loan losses for the six-month period ended June
30, follows:

(In thousands) 2002 2001
------- -------
Balance, January 1, .............. $ 4,023 $ 3,435
Provision charged to expense ..... 400 250
Loans charged off ................ (35) (44)
Recoveries ....................... 33 58
------- -------

Balance, June 30, ................ $ 4,421 $ 3,699
======= =======

INCOME TAXES: Income tax expense as a percentage of pre-tax income was 33
percent for the three months ended June 30, 2002 and for the three months ended
June 30, 2001. For the six months ended June 30, 2002 and 2001, the income tax
expense as a percentage of pre-tax income was 32 percent and 33 percent,
respectively. Income taxes increased 41.1 percent from $2.1 million in 2001 to
$2.9 million in 2002, reflecting higher taxable income.

The State of New Jersey recently passed legislation changing certain corporate
tax calculations. The changes are not expected to have a material effect on net
income in 2002.

CAPITAL RESOURCES: The Corporation is committed to maintaining a strong capital
position. At June 30, 2002, total shareholders' equity, including net unrealized
gains, was $70.4 million, representing an 18.6 percent increase over the same
period in 2001. The Federal Reserve Board has adopted risk-based capital
guidelines for banks. The minimum guideline for the ratio of total capital to
risk-weighted assets is 8 percent. At least half of the total capital is to be
comprised of common stock, retained earnings, minority interests in the equity
accounts of consolidated subsidiaries, non-cumulative preferred stock, less
goodwill and certain other intangibles ("Tier 1 Capital"). The remainder may
consist of other preferred stock, certain other instruments and a portion of the
loan loss allowance. At June 30, 2002, the Corporation's Tier 1 Capital and
Total Capital ratios were 19.04 percent and 20.30 percent, respectively.

In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines. These guidelines provide for a minimum ratio of Tier 1 Capital to
average total assets of 3 percent for banks that meet certain specified
criteria, including having the highest regulatory rating. All other banks are
generally required to maintain a leverage ratio of at

11

least 3 percent plus an additional 100 to 200 basis points. The Corporation's
leverage ratio at June 30, 2002, was 8.41 percent.

LIQUIDITY: Liquidity refers to an institution's ability to meet short-term
requirements in the form of loan requests, deposit withdrawals and maturing
obligations. Principal sources of liquidity include cash, temporary investments
and securities available for sale.

Management feels the Corporation's liquidity position is sufficient to meet
future needs. Cash and cash equivalents, interest earning deposits and federal
funds sold totaled $27.6 million at June 30, 2002. In addition, the Corporation
has $204.8 million in securities designated as available for sale. These
securities can be sold in response to liquidity concerns. As of June 30, 2002,
investment securities and securities available for sale maturing within one year
amounted to $14.2 million and $4.2 million, respectively.

The primary source of funds available to meet liquidity needs is the
Corporation's core deposit base, which excludes certificates of deposit greater
than $100 thousand. As of June 30, 2002, core deposits equaled $647.9 million.

Another source of liquidity is borrowing capacity. The Corporation has a variety
of sources of short-term liquidity available, including federal funds purchased
from correspondent banks, short-term and long-term borrowings from the Federal
Home Loan Bank of New York, access to the Federal Reserve Bank discount window
and loan participations or sales of loans. The Corporation also generates
liquidity from the regular principal payments made on its mortgage-backed
security and loan portfolios.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Corporation currently does not enter into derivative financial instruments
such as futures, forwards, swaps or options. However, the Corporation is party
to financial instruments with off-balance sheet risk in the normal course of
business to meet the financing needs of the customers of the Corporation. These
financial instruments include commitments to extend credit and standby letters
of credit. These instruments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the consolidated
statements of condition. Commitments to extend credit are agreements to lend to
a customer as long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates and may require
collateral from the borrower if deemed necessary by the Corporation. Standby
letters of credit are conditional commitments issued by the Corporation to
guarantee the performance of a customer to a third party up to a stipulated
amount and with specified terms and conditions. Commitments to extend credit and
standby letters of credit are not recorded as an asset or liability by the
Corporation until the instrument is exercised.

The Corporation's exposure to market risk is reviewed on a regular basis by the
Asset/Liability Committee. Interest rate risk is the potential of economic
losses due to future interest rate changes. These economic losses can be
reflected as a loss of future net interest income and/or a loss of current fair
market values. The objective is to measure the effect on net interest income and
to adjust the statement of condition to minimize the inherent risk while at the
same time maximize income. Management realizes certain risks are inherent and
that the goal is to identify and minimize the risks. Tools used by Management
include the standard GAP report and interest rate shock simulation report. The
Corporation has no market risk sensitive instruments held for trading purposes.
Management believes the Corporation's market risk is reasonable at June 30,
2002.

12

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of shareholders held on April 23, 2002, in
Peapack-Gladstone, New Jersey, the following matters were discussed and voted
upon: (1) The following persons were elected as directors of Peapack-Gladstone
Financial Corporation for a term of one year:

BROKER
DIRECTORS FOR WITHHELD ABSTAINED NON-VOTE TOTAL
--------- --- -------- --------- --------------

Anthony J. Consi II ........ 2,621,732 56,104 0 0
Pamela Hill ................ 2,599,935 77,901 0 0
T. Leonard Hill ............ 2,589,096 88,740 0 0
Frank A. Kissel ............ 2,573,214 104,622 0 0
John D. Kissel ............. 2,592,749 85,087 0 0
James R. Lamb .............. 2,622,393 55,443 0 0
George R. Layton ........... 2,621,155 56,681 0 0
Edward A. Merton ........... 2,619,589 58,247 0 0
F. Duffield Meyercord ...... 2,619,756 58,080 0 0
John R. Mulcahy ............ 2,621,423 56,413 0 0
Robert M. Rogers ........... 2,622,283 55,553 0 0
Philip W. Smith III ........ 2,619,615 58,221 0 0
Craig C. Spengeman ......... 2,620,917 56,919 0 0
Jack D. Stine .............. 2,619,055 58,781 0 0

(2) The approval of the Peapack-Gladstone Financial Corporation 2002 Long-Term
Stock Incentive Plan.
FOR: 2,451,632 AGAINST: 163,796 ABSTAIN: 31,187
BROKER NON-VOTE TOTAL: 31,221

(3) The approval of the Peapack-Gladstone Financial Corporation 2002 Stock
Option Plan for Outside Directors.
FOR: 2,422,262 AGAINST: 189,959 ABSTAIN: 34,394
BROKER NON-VOTE TOTAL: 31,221

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

(10) Material Contracts

A. Employment Agreement dated May 13, 2002 by and among
Peapack-Gladstone Financial Corporation, Peapack-Gladstone Bank,
and Frank A. Kissel.

B. Employment Agreement dated May 13, 2002 by and among
Peapack-Gladstone Financial Corporation, Peapack-Gladstone Bank,
and Craig C. Spengeman.

C. Employment Agreement dated May 13, 2002 by and among
Peapack-Gladstone Financial Corporation, Peapack-Gladstone Bank,
and Robert M. Rogers.

D. Employment Agreement dated May 13, 2002 by and among
Peapack-Gladstone Financial Corporation, Peapack-Gladstone Bank,
and Arthur F. Birmingham.

(99) Additional Exhibits

99.1 Certification of Chief Executive Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

99.2 Certification of Chief Financial Officer pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.

(b) Reports on Form 8-K

A. Filed April 9, 2002 to report the correction of the Performance Graph
on page 13 of Peapack-Gladstone Financial Corporation's 2002 Proxy
Statement filed on March 23, 2002.

13

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, on the 8th day of August 2002.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
(Registrant)

BY
----------------------------------------
(FRANK A. KISSEL, CHAIRMAN
AND CHIEF EXECUTIVE OFFICER)

----------------------------------------
(ARTHUR F. BIRMINGHAM, EXECUTIVE
VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER)

14

PEAPACK-GLADSTONE EMPLOYMENT AGREEMENT
OF FRANK A. KISSEL

This EMPLOYMENT AGREEMENT (this "Agreement") dated May 13, 2002, by and
between Peapack-Gladstone Financial Corporation ("PGFC") and Peapack-Gladstone
Bank (the "Bank") (PGFC and the Bank are collectively referred to herein as the
"Company"), and Frank A. Kissel (the "Executive"), whose home address is 875
Lamington Road, Bedminster, New Jersey 07821.

WITNESSETH:

WHEREAS, the Executive is willing to continue to serve as the Chairman and
Chief Executive Officer of the Company and the Company desires to retain the
Executive in that capacity on the terms and conditions herein set forth; and

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:

SECTION 1. TERM OF EMPLOYMENT. This Agreement shall be effective as of the
date hereof and, subject to earlier termination as specified herein, shall
continue until December 31, 2004.

SECTION 2. POSITION AND DUTIES. During the Term, the Executive shall serve
as the Chairman and Chief Executive Officer of the Company. The Executive shall
have such powers and duties as are commensurate with such position and as may be
conferred upon him by the Board of Directors of the Company (the "Board").
During the Term, the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Company and its
subsidiaries. Notwithstanding the foregoing, the Executive may engage in
charitable, educational, religious, civic and similar types of activities,
speaking engagements, membership on the board of directors of other
organizations, and similar activities to the extent that such activities do not
inhibit the performance of his duties hereunder or conflict in any material way
with the business of the Company and its subsidiaries.

SECTION 3. COMPENSATION. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive officer, director, or member of any committee of the
Company or any of its subsidiaries, the Executive shall be compensated as
follows:

(a) The Company shall pay the Executive a fixed salary at a rate per annum
equal to $275,000 ("Base Salary"). The Base Salary shall be increased by 3% per
year to $283,250 for the calendar year 2003 and $291,747.50 for the calendar
year 2004. Base Salary shall be payable bi-weekly.

(b) The Company shall pay the Executive a bonus with respect to each
calendar year for which he is employed under this Agreement determined as
follows: bonus equal to 10% of Base Salary if 90% of Company's budget is
achieved and 20% of Base Salary if 100% of Company's budget is achieved. The
bonus shall be paid when other employee bonuses are paid or such later date as
is mutually agreed to by the Company and the Executive.

(c) The Executive shall be entitled to five weeks of vacation in each
calendar year during the Term. The Executive shall not be entitled to carryover
vacation from one year to another or to any payment in respect of any unused
vacation.

(d) The Executive shall be entitled to participate in all compensation and
employee benefit plans for which any salaried employees of the Company are
eligible. Notwithstanding the foregoing, nothing in this Agreement shall
preclude the amendment or termination of any such plan or program.

SECTION 4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable entertainment, travel or other expenses incurred by
the Executive in connection with the performance of his duties under this
Agreement, subject to the Executive's presentation of appropriate documentation
in accordance with such procedures as the Company may from time to time
establish.

SECTION 5. TERMINATION OF EMPLOYMENT.

(a) The Company shall have the right, upon delivery of written notice to
the Executive, to terminate the Executive's employment hereunder prior to the
expiration of the Term:

(i) pursuant to a Termination for Cause, or

(ii) upon the Executive's Permanent Disability, or

(iii) pursuant to a Without Cause Termination.

15

(b) The Executive shall have the right, upon delivery of written notice to
the Company 30 days in advance of the proposed termination date, to terminate
the Executive's employment hereunder prior to the expiration of the Term in the
Executive's sole discretion.

(c) The Executive's employment hereunder shall terminate automatically
without action by any party hereto upon the Executive's death.

(d) For purposes of this Agreement, the following terms have the following
meanings:

"Termination for Cause" means a termination of the Executive's
employment by the Company because the Executive has (a) materially failed
to perform the duties assigned to him hereunder or imposed upon him by
applicable law, and such failure to perform constitutes self-dealing,
willful misconduct or recklessness, (b) committed an act of dishonesty in
the performance of his duties hereunder or engaged in conduct materially
detrimental to the business of the Company, (c) been convicted of a felony
or a misdemeanor involving moral turpitude, (d) materially failed to
perform his duties hereunder, which breach or failure the Executive shall
fail to remedy within 30 days after written demand from the Company, (e)
knowingly failed to follow lawful, written directives of the Board, or (f)
engaged in any material employment act or practice, including but not
limited to sexual harassment, forbidden by the Company in its employment
manual as revised from time to time.

"Without Cause Termination" means a termination of the Executive's
employment by the Company other than due to Permanent Disability,
retirement or expiration of the Term and other than a Termination for
Cause.

"Permanent Disability" means permanently disabled so as to qualify for
full benefits under the Company's then-existing disability insurance
policy. If the Company does not maintain any such policy on the date of
termination, "Permanent Disability" shall mean the inability of the
Executive to work for a period of four full calendar months during any
eight consecutive calendar months due to illness or injury of a physical or
mental nature, supported by the completion by the Executive's attending
physician of a medical certification form outlining the disability and
treatment.

SECTION 6. BENEFITS UPON TERMINATION.

(a) In lieu of any severance that may otherwise be payable to the Executive
pursuant to any policies of the Company, whether existing on the date hereof or
in effect from time to time hereafter, in the event that the Company terminates
the Executive's employment pursuant to a Without Cause Termination, the Company
shall continue to pay the Executive's Base Salary for a period (the "Severance
Period") equal to the longer of (A) the remainder of the Term, or (B) one year
from the effective date of such termination. The Executive also shall be
entitled to any earned but unpaid Base Salary as of the effective date of
termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement except as otherwise required by
law or the Company's benefit plans.

(b) In the event that the Company terminates the Executive's employment
pursuant to a Permanent Disability, the Company shall pay the Executive any
earned but unpaid Base Salary as of the date of termination of employment. No
other payments shall be made, or benefits provided, by the Company under this
Agreement except as otherwise required by law or the Company's benefit plans.

(c) In the event that the Company terminates the Executive's employment
pursuant to a Termination for Cause or the Executive terminates his employment
with the Company (including, without limitation, pursuant to any retirement),
the Company shall pay the Executive any earned but unpaid Base Salary as of the
date of termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement or otherwise except to the extent
required by law or the Company's benefit plans.

(d) In the event that the Executive's employment hereunder is terminated
due to the Executive's death, the Company shall pay the Executive's executor or
other legal representative (the "Representative") any earned but unpaid Base
Salary as of the date of termination of employment. No other payments shall be
made, or benefits provided, by the Company whether under this Agreement or
otherwise except to the extent required by law or the Company's benefit plans.

(e) Any payments to be made or benefits to be provided by the Company
pursuant to this Section 6 (other than in the event of the Executive's death or
Permanent Disability) are subject to the receipt by the Company of an effective
general release and agreement not to sue, in a form reasonably satisfactory to
the Company and the Executive (the "Release") pursuant to which the Executive
agrees (i) to release all claims against the Company and certain related parties
(excluding claims for (x) indemnification under the Company's Certificate of
Incorporation or by-laws or (y) any severance benefits payable hereunder), (ii)
not to maintain any action, suit, claim or proceeding against the Company, its
subsidiaries and affiliates and certain related parties, and (iii) to be bound
by certain confidentiality and mutual non-disparagement covenants specified
therein. Notwithstanding the due date of any post-employment payment, the
Company shall not be obligated to make any payments under this Section 6 until
after the expiration of any revocation period applicable to the Release.

(f) The Executive shall not be required to mitigate the severance payments
to be made to him hereunder and if the Executive obtains other employment while
receiving severance payments hereunder he shall continue to be entitled to the
benefits of this Agreement.

16

SECTION 7. CONFIDENTIAL INFORMATION. The Executive and the Company agree
that all information pertaining to the affairs, business, clients, or customers
of the Company or any of its subsidiaries, other than information that the
Company has previously made publicly available, is confidential information
belonging to the Company and is a unique and valuable asset of the Company. Both
during the Term hereof and thereafter, the Executive shall not, except to the
extent reasonably necessary in the performance of his duties for the Company
during the Term, disclose any information concerning the affairs, businesses,
clients, or customers of the Company or its subsidiaries, or make use of any
such information for his own purposes or for the benefit of any other person,
firm, or corporation. All records, memoranda, letters, books, papers, reports,
or other data, and other records and documents relating to the Company or its
subsidiaries, whether made by the Executive or otherwise coming into his
possession, shall remain the property of the Company, no copies thereof shall be
made which are not retained by the Company, and the Executive agrees, on
termination of his employment not to retain any copies and deliver all such
confidential information in his possession to the Company.

SECTION 8. NON-COMPETE; NON-SOLICITATION.

(a) During the period (the "Restricted Period") commencing on the
termination of his employment for any reason whatsoever during the Term and
ending two years thereafter, the Executive shall not, without express prior
written consent of the Company, directly or indirectly, own or hold any
proprietary interest in, or be employed by or receive remuneration from, any
corporation, partnership, sole proprietorship or other entity (collectively, an
"entity") "engaged in competition" (as defined below) with the Company or any of
its subsidiaries (a "Competitor"). For purposes of the preceding sentence, (i)
the term "proprietary interest" means direct or indirect ownership of an equity
interest in an entity other than ownership of less than 2 percent of any class
stock in a publicly-held entity, and (ii) an entity shall be considered to be
"engaged in competition" if such entity is, or is a holding company for or a
subsidiary of an entity which is engaged in the business of (A) providing
banking, trust services, asset management advice, or similar financial services
to consumers, businesses individuals or other entities, and (B) the entity,
holding company or subsidiary maintains any physical offices for the transaction
of such business located within 50 miles of the main office of the Company.

(b) During the Restricted Period, the Executive shall not, without express
prior written consent of the Company, solicit or assist any other person in
soliciting for the account of any Competitor, any customer or client of the
Company or any of its subsidiaries.

(c) During the Restricted Period, the Executive shall not, without the
express prior written consent of the Company, directly or indirectly, (i)
solicit or assist any third party in soliciting for employment any person
employed by the Company or any of its subsidiaries at the time of the
termination of the Executive's employment (collectively, "Employees"), (ii)
employ, attempt to employ or materially assist any third party in employing or
attempting to employ any Employee, or (iii) otherwise act on behalf of any
Competitor to interfere with the relationship between the Company or any of its
subsidiaries and their respective Employees.

(d) The Executive acknowledges that the restrictions contained in this
Section 8 are reasonable and necessary to protect the legitimate interests of
the Company and that any breach by the Executive of any provision contained in
this Section 8 will result in irreparable injury to the Company for which a
remedy at law would be inadequate. Accordingly, the Executive acknowledges that
the Company shall be entitled to temporary, preliminary and permanent injunctive
relief against the Executive in the event of any breach or threatened breach by
the Executive of the provisions of this Section 8, in addition to any other
remedy that may be available to the Company whether at law or in equity. With
respect to any provision of this Section 8 finally determined by a court of
competent jurisdiction to be unenforceable, such court shall be authorized to
reform this Agreement or any provision hereof so that it is enforceable to the
maximum extent permitted by law. If the covenants of Section 8 are determined to
be wholly or partially unenforceable in any jurisdiction, such determination
shall not be a bar to or in any way diminish the Company's right to enforce such
covenants in any other jurisdiction and shall not bar or limit the
enforceability of any other provisions.

(e) The provisions of this Section 8 shall survive the termination of the
Executive's employment with the Company for any reason whatsoever so long as the
termination of employment occurs during the Term. If there is no termination of
Executive's employment during the Term, the provisions of this Section 8 shall
expire and be of no further force and effect after the Term. The Company shall
not be required to post any bond or other security in connection with any
proceeding to enforce the provisions of this Section 8.

SECTION 9. WITHHOLDINGS. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, State, City or other
taxes and all other deductions as shall be required pursuant to any law or
regulation or pursuant to any contributory benefit plan maintained by or on
behalf of the Company.

SECTION 10. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
by same day or overnight mail (i) if to the Executive, at the address set forth
above, or (ii) if to the Company, as follows:

Chairman of the Compensation Committee
Peapack-Gladstone Bank
158 Route 206 North
Gladstone, NJ 07934

17

or to such other address as either party shall have previously specified in
writing to the other.

SECTION 11. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of, the Executive and the Company and its
successors and permitted assigns. This Agreement is personal to the Executive
and may not be assigned by him. The Company may assign its rights and
obligations under this Agreement in connection with a sale of all or
substantially all of the business of PGFC or the Bank. Any successor to the
Company by merger or consolidation shall be entitled to the benefits of this
Agreement.

SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.

SECTION 13. DISPUTE RESOLUTION. At the option of either the Company or the
Executive, any dispute, controversy or question arising under, out of or
relating to this Agreement, the Executive's employment or termination of
employment, including but not limited to any and all statutory claims involving
workplace discrimination or wrongful discharge, but excluding claims pursuant to
Sections 7 or 8 hereof, shall be referred for decision by arbitration in the
State of New Jersey by a neutral arbitrator mutually selected by the parties
hereto. Any arbitration proceeding shall be governed by the Rules of the
American Arbitration Association then in effect or such last in effect (in the
event such Association is no longer in existence). If the parties are unable to
agree upon such a neutral arbitrator within 21 days after either party has given
the other written notice of the desire to submit the dispute, controversy or
question for decision as aforesaid, then either party may apply to the American
Arbitration Association for a final and binding appointment of a neutral
arbitrator; however, if such Association is not then in existence or does not
act in the matter within 45 days of any such application, either party may apply
to a judge of the local court where the Bank is headquartered for an appointment
of a neutral arbitrator to hear the parties and such judge is hereby authorized
to make such appointment. In the event that either party exercises the right to
submit a dispute, controversy or question arising hereunder to arbitration, the
decision of the neutral arbitrator shall be final, conclusive and binding on all
interested persons and no action at law or in equity shall be instituted or, if
instituted, further prosecuted by either party other than to enforce the award
of the neutral arbitrator. The award of the neutral arbitrator may be entered in
any court that has jurisdiction. The Executive and the Company shall each bear
all their own costs (including the fees and disbursements of counsel) incurred
in connection with any such arbitration and shall each pay one-half of the costs
of any arbitrator.

SECTION 14. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties with respect to the matters covered hereby and shall
supersede all previous written, oral or implied understandings among them with
respect to such matters.

SECTION 15. AMENDMENTS. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 15
may only be amended or otherwise modified by such a writing.

SECTION 16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall together be deemed to constitute one and the same instrument.

SECTION 17. EFFECT ON CHANGE-IN-CONTROL AGREEMENT. Notwithstanding anything
else to the contrary in this Agreement, if the Change-in-Control Agreement
between the Company and the Executive, dated as of January 1, 1998, becomes
effective under Section 13b thereof due to a Change-in-Control of the Company
(as defined therein), while the Executive remains employed by the Company, this
Agreement, including, without limitation, Sections 7 and 8 hereof, shall no
longer be effective in any respect but instead the relationship between the
Executive and the Company shall be governed by the Change-in-Control Agreement.
If the Executive is terminated prior to a Change-in-Control of the Company, then
Sections 7 and 8 hereof shall survive the Change-in-Control in accordance with
the terms of Sections 7 and 8 hereof.

IN WITNESS WHEREOF, PGFC and the Bank have caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.

WITNESS PEAPACK-GLADSTONE FINANCIAL CORPORATION
- -------

____________________________ By: ___________________________
Secretary

PEAPACK-GLADSTONE BANK

____________________________ By: ___________________________
Secretary

- ---------------------------- --------------------------------
EXECUTIVE

18

PEAPACK-GLADSTONE EMPLOYMENT AGREEMENT
OF CRAIG C. SPENGEMAN

This EMPLOYMENT AGREEMENT (this "Agreement") dated May 13, 2002, by and
between Peapack-Gladstone Financial Corporation ("PGFC") and Peapack-Gladstone
Bank (the "Bank") (PGFC and the Bank are collectively referred to herein as the
"Company"), and Craig C. Spengeman (the "Executive"), whose home address is 117
Apgar Way, Asbury, New Jersey 08802.

WITNESSETH:

WHEREAS, the Executive is willing to continue to serve as the President of
PGB Trust and Investments, a division of the Bank, and Chief Investment Officer
of the Company and the Company desires to retain the Executive in that capacity
on the terms and conditions herein set forth; and

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:

SECTION 1. TERM OF EMPLOYMENT. This Agreement shall be effective as of the
date hereof and, subject to earlier termination as specified herein, shall
continue until December 31, 2004.

SECTION 2. POSITION AND DUTIES. During the Term, the Executive shall serve
as the President of PGB Trust and Investments and Chief Investment Officer of
the Company. The Executive shall have such powers and duties as are commensurate
with such position and as may be conferred upon him by the Board of Directors of
the Company (the "Board"). During the Term, the Executive shall devote all of
his business time, attention, skill and efforts exclusively to the business and
affairs of the Company and its subsidiaries. Notwithstanding the foregoing, the
Executive may engage in charitable, educational, religious, civic and similar
types of activities, speaking engagements, membership on the board of directors
of other organizations, and similar activities to the extent that such
activities do not inhibit the performance of his duties hereunder or conflict in
any material way with the business of the Company and its subsidiaries.

SECTION 3. COMPENSATION. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive officer, director, or member of any committee of the
Company or any of its subsidiaries, the Executive shall be compensated as
follows:

(a) The Company shall pay the Executive a fixed salary at a rate per annum
equal to $200,000 ("Base Salary"). The Base Salary shall be increased by 3% per
year to $206,000 for the calendar year 2003 and $212,180 for the calendar year
2004. Base Salary shall be payable bi-weekly.

(b) The Company shall pay the Executive a bonus with respect to each
calendar year for which he is employed under this Agreement determined as
follows: bonus equal to 6% of Base Salary if 90% of Company's budget is achieved
and 12% of Base Salary if 100% of Company's budget is achieved, plus 4% of Base
Salary if 90% of Trust and Investment budgeted income is achieved and 8% of Base
Salary if 100% of Trust and Investment budgeted income is achieved. The bonus
shall be paid when other employee bonuses are paid or such later date as is
mutually agreed to by the Company and the Executive.

(c) The Executive shall be entitled to five weeks of vacation in each
calendar year during the Term. The Executive shall not be entitled to carryover
vacation from one year to another or to any payment in respect of any unused
vacation.

(d) The Executive shall be entitled to participate in all compensation and
employee benefit plans for which any salaried employees of the Company are
eligible. Notwithstanding the foregoing, nothing in this Agreement shall
preclude the amendment or termination of any such plan or program.

SECTION 4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable entertainment, travel or other expenses incurred by
the Executive in connection with the performance of his duties under this
Agreement, subject to the Executive's presentation of appropriate documentation
in accordance with such procedures as the Company may from time to time
establish.

SECTION 5. TERMINATION OF EMPLOYMENT.

(a) The Company shall have the right, upon delivery of written notice to
the Executive, to terminate the Executive's employment hereunder prior to the
expiration of the Term:

(i) pursuant to a Termination for Cause, or

(ii) upon the Executive's Permanent Disability, or

(iii) pursuant to a Without Cause Termination.

19

(b) The Executive shall have the right, upon delivery of written notice to
the Company 30 days in advance of the proposed termination date, to terminate
the Executive's employment hereunder prior to the expiration of the Term in the
Executive's sole discretion.

(c) The Executive's employment hereunder shall terminate automatically
without action by any party hereto upon the Executive's death.

(d) For purposes of this Agreement, the following terms have the following
meanings:

"Termination for Cause" means a termination of the Executive's
employment by the Company because the Executive has (a) materially failed
to perform the duties assigned to him hereunder or imposed upon him by
applicable law, and such failure to perform constitutes self-dealing,
willful misconduct or recklessness, (b) committed an act of dishonesty in
the performance of his duties hereunder or engaged in conduct materially
detrimental to the business of the Company, (c) been convicted of a felony
or a misdemeanor involving moral turpitude, (d) materially failed to
perform his duties hereunder, which breach or failure the Executive shall
fail to remedy within 30 days after written demand from the Company, (e)
knowingly failed to follow lawful, written directives of the Board, or (f)
engaged in any material employment act or practice, including but not
limited to sexual harassment, forbidden by the Company in its employment
manual as revised from time to time.

"Without Cause Termination" means a termination of the Executive's
employment by the Company other than due to Permanent Disability,
retirement or expiration of the Term and other than a Termination for
Cause.

"Permanent Disability" means permanently disabled so as to qualify for
full benefits under the Company's then-existing disability insurance
policy. If the Company does not maintain any such policy on the date of
termination, "Permanent Disability" shall mean the inability of the
Executive to work for a period of four full calendar months during any
eight consecutive calendar months due to illness or injury of a physical or
mental nature, supported by the completion by the Executive's attending
physician of a medical certification form outlining the disability and
treatment.

SECTION 6. BENEFITS UPON TERMINATION.

(a) In lieu of any severance that may otherwise be payable to the Executive
pursuant to any policies of the Company, whether existing on the date hereof or
in effect from time to time hereafter, in the event that the Company terminates
the Executive's employment pursuant to a Without Cause Termination, the Company
shall continue to pay the Executive's Base Salary for a period (the "Severance
Period") equal to the longer of (A) the remainder of the Term, or (B) one year
from the effective date of such termination. The Executive also shall be
entitled to any earned but unpaid Base Salary as of the effective date of
termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement except as otherwise required by
law or the Company's benefit plans.

(b) In the event that the Company terminates the Executive's employment
pursuant to a Permanent Disability, the Company shall pay the Executive any
earned but unpaid Base Salary as of the date of termination of employment. No
other payments shall be made, or benefits provided, by the Company under this
Agreement except as otherwise required by law or the Company's benefit plans.

(c) In the event that the Company terminates the Executive's employment
pursuant to a Termination for Cause or the Executive terminates his employment
with the Company (including, without limitation, pursuant to any retirement),
the Company shall pay the Executive any earned but unpaid Base Salary as of the
date of termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement or otherwise except to the extent
required by law or the Company's benefit plans.

(d) In the event that the Executive's employment hereunder is terminated
due to the Executive's death, the Company shall pay the Executive's executor or
other legal representative (the "Representative") any earned but unpaid Base
Salary as of the date of termination of employment. No other payments shall be
made, or benefits provided, by the Company whether under this Agreement or
otherwise except to the extent required by law or the Company's benefit plans.

(e) Any payments to be made or benefits to be provided by the Company
pursuant to this Section 6 (other than in the event of the Executive's death or
Permanent Disability) are subject to the receipt by the Company of an effective
general release and agreement not to sue, in a form reasonably satisfactory to
the Company and the Executive (the "Release") pursuant to which the Executive
agrees (i) to release all claims against the Company and certain related parties
(excluding claims for (x) indemnification under the Company's Certificate of
Incorporation or by-laws or (y) any severance benefits payable hereunder), (ii)
not to maintain any action, suit, claim or proceeding against the Company, its
subsidiaries and affiliates and certain related parties, and (iii) to be bound
by certain confidentiality and mutual non-disparagement covenants specified
therein. Notwithstanding the due date of any post-employment payment, the
Company shall not be obligated to make any payments under this Section 6 until
after the expiration of any revocation period applicable to the Release.

20

(f) The Executive shall not be required to mitigate the severance payments
to be made to him hereunder and if the Executive obtains other employment while
receiving severance payments hereunder he shall continue to be entitled to the
benefits of this Agreement.

SECTION 7. CONFIDENTIAL INFORMATION. The Executive and the Company agree
that all information pertaining to the affairs, business, clients, or customers
of the Company or any of its subsidiaries, other than information that the
Company has previously made publicly available, is confidential information
belonging to the Company and is a unique and valuable asset of the Company. Both
during the Term hereof and thereafter, the Executive shall not, except to the
extent reasonably necessary in the performance of his duties for the Company
during the Term, disclose any information concerning the affairs, businesses,
clients, or customers of the Company or its subsidiaries, or make use of any
such information for his own purposes or for the benefit of any other person,
firm, or corporation. All records, memoranda, letters, books, papers, reports,
or other data, and other records and documents relating to the Company or its
subsidiaries, whether made by the Executive or otherwise coming into his
possession, shall remain the property of the Company, no copies thereof shall be
made which are not retained by the Company, and the Executive agrees, on
termination of his employment not to retain any copies and deliver all such
confidential information in his possession to the Company.

SECTION 8. NON-COMPETE; NON-SOLICITATION.

(a) During the period (the "Restricted Period") commencing on the
termination of his employment for any reason whatsoever during the Term and
ending two years thereafter, the Executive shall not, without express prior
written consent of the Company, directly or indirectly, own or hold any
proprietary interest in, or be employed by or receive remuneration from, any
corporation, partnership, sole proprietorship or other entity (collectively, an
"entity") "engaged in competition" (as defined below) with the Company or any of
its subsidiaries (a "Competitor"). For purposes of the preceding sentence, (i)
the term "proprietary interest" means direct or indirect ownership of an equity
interest in an entity other than ownership of less than 2 percent of any class
stock in a publicly-held entity, and (ii) an entity shall be considered to be
"engaged in competition" if such entity is, or is a holding company for or a
subsidiary of an entity which is engaged in the business of (A) providing
banking, trust services, asset management advice, or similar financial services
to consumers, businesses individuals or other entities, and (B) the entity,
holding company or subsidiary maintains any physical offices for the transaction
of such business located within 50 miles of the main office of the Company.

(b) During the Restricted Period, the Executive shall not, without express
prior written consent of the Company, solicit or assist any other person in
soliciting for the account of any Competitor, any customer or client of the
Company or any of its subsidiaries.

(c) During the Restricted Period, the Executive shall not, without the
express prior written consent of the Company, directly or indirectly, (i)
solicit or assist any third party in soliciting for employment any person
employed by the Company or any of its subsidiaries at the time of the
termination of the Executive's employment (collectively, "Employees"), (ii)
employ, attempt to employ or materially assist any third party in employing or
attempting to employ any Employee, or (iii) otherwise act on behalf of any
Competitor to interfere with the relationship between the Company or any of its
subsidiaries and their respective Employees.

(d) The Executive acknowledges that the restrictions contained in this
Section 8 are reasonable and necessary to protect the legitimate interests of
the Company and that any breach by the Executive of any provision contained in
this Section 8 will result in irreparable injury to the Company for which a
remedy at law would be inadequate. Accordingly, the Executive acknowledges that
the Company shall be entitled to temporary, preliminary and permanent injunctive
relief against the Executive in the event of any breach or threatened breach by
the Executive of the provisions of this Section 8, in addition to any other
remedy that may be available to the Company whether at law or in equity. With
respect to any provision of this Section 8 finally determined by a court of
competent jurisdiction to be unenforceable, such court shall be authorized to
reform this Agreement or any provision hereof so that it is enforceable to the
maximum extent permitted by law. If the covenants of Section 8 are determined to
be wholly or partially unenforceable in any jurisdiction, such determination
shall not be a bar to or in any way diminish the Company's right to enforce such
covenants in any other jurisdiction and shall not bar or limit the
enforceability of any other provisions.

(e) The provisions of this Section 8 shall survive the termination of the
Executive's employment with the Company for any reason whatsoever so long as the
termination of employment occurs during the Term. If there is no termination of
Executive's employment during the Term, the provisions of this Section 8 shall
expire and be of no further force and effect after the Term. The Company shall
not be required to post any bond or other security in connection with any
proceeding to enforce the provisions of this Section 8.

SECTION 9. WITHHOLDINGS. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, State, City or other
taxes and all other deductions as shall be required pursuant to any law or
regulation or pursuant to any contributory benefit plan maintained by or on
behalf of the Company.

SECTION 10. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
by same day or overnight mail (i) if to the Executive, at the address set forth
above, or (ii) if to the Company, as follows:

Frank A. Kissel, Chairman & CEO
Peapack-Gladstone Bank
158 Route 206 North
Gladstone, NJ 07934

21

or to such other address as either party shall have previously specified in
writing to the other.

SECTION 11. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of, the Executive and the Company and its
successors and permitted assigns. This Agreement is personal to the Executive
and may not be assigned by him. The Company may assign its rights and
obligations under this Agreement in connection with a sale of all or
substantially all of the business of PGFC or the Bank. Any successor to the
Company by merger or consolidation shall be entitled to the benefits of this
Agreement.

SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.

SECTION 13. DISPUTE RESOLUTION. At the option of either the Company or the
Executive, any dispute, controversy or question arising under, out of or
relating to this Agreement, the Executive's employment or termination of
employment, including but not limited to any and all statutory claims involving
workplace discrimination or wrongful discharge, but excluding claims pursuant to
Sections 7 or 8 hereof, shall be referred for decision by arbitration in the
State of New Jersey by a neutral arbitrator mutually selected by the parties
hereto. Any arbitration proceeding shall be governed by the Rules of the
American Arbitration Association then in effect or such last in effect (in the
event such Association is no longer in existence). If the parties are unable to
agree upon such a neutral arbitrator within 21 days after either party has given
the other written notice of the desire to submit the dispute, controversy or
question for decision as aforesaid, then either party may apply to the American
Arbitration Association for a final and binding appointment of a neutral
arbitrator; however, if such Association is not then in existence or does not
act in the matter within 45 days of any such application, either party may apply
to a judge of the local court where the Bank is headquartered for an appointment
of a neutral arbitrator to hear the parties and such judge is hereby authorized
to make such appointment. In the event that either party exercises the right to
submit a dispute, controversy or question arising hereunder to arbitration, the
decision of the neutral arbitrator shall be final, conclusive and binding on all
interested persons and no action at law or in equity shall be instituted or, if
instituted, further prosecuted by either party other than to enforce the award
of the neutral arbitrator. The award of the neutral arbitrator may be entered in
any court that has jurisdiction. The Executive and the Company shall each bear
all their own costs (including the fees and disbursements of counsel) incurred
in connection with any such arbitration and shall each pay one-half of the costs
of any arbitrator.

SECTION 14. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties with respect to the matters covered hereby and shall
supersede all previous written, oral or implied understandings among them with
respect to such matters.

SECTION 15. AMENDMENTS. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 15
may only be amended or otherwise modified by such a writing.

SECTION 16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall together be deemed to constitute one and the same instrument.

SECTION 17. EFFECT ON CHANGE-IN-CONTROL AGREEMENT. Notwithstanding anything
else to the contrary in this Agreement, if the Change-in-Control Agreement
between the Company and the Executive, dated as of January 1, 1998, becomes
effective under Section 13b thereof due to a Change-in-Control of the Company
(as defined therein), while the Executive remains employed by the Company, this
Agreement, including, without limitation, Sections 7 and 8 hereof, shall no
longer be effective in any respect but instead the relationship between the
Executive and the Company shall be governed by the Change-in-Control Agreement.
If the Executive is terminated prior to a Change-in-Control of the Company, then
Sections 7 and 8 hereof shall survive the Change-in-Control in accordance with
the terms of Sections 7 and 8 hereof.

IN WITNESS WHEREOF, PGFC and the Bank have caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.

WITNESS PEAPACK-GLADSTONE FINANCIAL CORPORATION
- -------

____________________________ By: ___________________________
Secretary

PEAPACK-GLADSTONE BANK

____________________________ By: ___________________________
Secretary

- ---------------------------- --------------------------------
EXECUTIVE

22

PEAPACK-GLADSTONE EMPLOYMENT AGREEMENT
OF ROBERT M. ROGERS

This EMPLOYMENT AGREEMENT (this "Agreement") dated May 13, 2002, by and
between Peapack-Gladstone Financial Corporation ("PGFC") and Peapack-Gladstone
Bank (the "Bank") (PGFC and the Bank are collectively referred to herein as the
"Company"), and Robert M. Rogers (the "Executive"), whose home address is 29
Maines Road, Blairstown, New Jersey 07825.

WITNESSETH:

WHEREAS, the Executive is willing to continue to serve as the President and
Chief Operating Officer of the Company and the Company desires to retain the
Executive in that capacity on the terms and conditions herein set forth; and

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:

SECTION 1. TERM OF EMPLOYMENT. This Agreement shall be effective as of the
date hereof and, subject to earlier termination as specified herein, shall
continue until December 31, 2004.

SECTION 2. POSITION AND DUTIES. During the Term, the Executive shall serve
as the President and Chief Operating Officer of the Company. The Executive shall
have such powers and duties as are commensurate with such position and as may be
conferred upon him by the Board of Directors of the Company (the "Board").
During the Term, the Executive shall devote all of his business time, attention,
skill and efforts exclusively to the business and affairs of the Company and its
subsidiaries. Notwithstanding the foregoing, the Executive may engage in
charitable, educational, religious, civic and similar types of activities,
speaking engagements, membership on the board of directors of other
organizations, and similar activities to the extent that such activities do not
inhibit or prohibit the performance of his duties hereunder or inhibit or
conflict in any material way with the business of the Company and its
subsidiaries.

SECTION 3. COMPENSATION. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive officer, director, or member of any committee of the
Company or any of its subsidiaries, the Executive shall be compensated as
follows:

(a) The Company shall pay the Executive a fixed salary at a rate per annum
equal to $175,000.00 ("Base Salary"). The Base Salary shall be increased by 3%
per year to $180,250.00 for the calendar year 2003 and $185,657.50 for the
calendar year 2004. Base Salary shall be payable bi-weekly.

(b) The Company shall pay the Executive a bonus with respect to each
calendar year for which he is employed under this Agreement determined as
follows: bonus equal to 10% of Base Salary if 90% of Company's budget is
achieved and 20% of Base Salary if 100% of Company's budget is achieved. The
bonus shall be paid when other employee bonuses are paid or such later date as
is mutually agreed to by the Company and the Executive.

(c) The Executive shall be entitled to five weeks of vacation in each
calendar year during the Term. The Executive shall not be entitled to carryover
vacation from one year to another or to any payment in respect of any unused
vacation.

(d) The Executive shall be entitled to participate in all compensation and
employee benefit plans for which any salaried employees of the Company are
eligible. Notwithstanding the foregoing, nothing in this Agreement shall
preclude the amendment or termination of any such plan or program.

SECTION 4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable entertainment, travel or other expenses incurred by
the Executive in connection with the performance of his duties under this
Agreement, subject to the Executive's presentation of appropriate documentation
in accordance with such procedures as the Company may from time to time
establish.

SECTION 5. TERMINATION OF EMPLOYMENT.

(a) The Company shall have the right, upon delivery of written notice to
the Executive, to terminate the Executive's employment hereunder prior to the
expiration of the Term:

(i) pursuant to a Termination for Cause, or

(ii) upon the Executive's Permanent Disability, or

(iii) pursuant to a Without Cause Termination.

23

(b) The Executive shall have the right, upon delivery of written notice to
the Company 30 days in advance of the proposed termination date, to terminate
the Executive's employment hereunder prior to the expiration of the Term in the
Executive's sole discretion.

(c) The Executive's employment hereunder shall terminate automatically
without action by any party hereto upon the Executive's death.

(d) For purposes of this Agreement, the following terms have the following
meanings:

"Termination for Cause" means a termination of the Executive's employment
by the Company because the Executive has (a) materially failed to perform the
duties assigned to him hereunder or imposed upon him by applicable law, and such
failure to perform constitutes self-dealing, willful misconduct or recklessness,
(b) committed an act of dishonesty in the performance of his duties hereunder or
engaged in conduct materially detrimental to the business of the Company, (c)
been convicted of a felony or a misdemeanor involving moral turpitude, (d)
materially failed to perform his duties hereunder, which breach or failure the
Executive shall fail to remedy within 30 days after written demand from the
Company, (e) knowingly failed to follow lawful, written directives of the Board,
or (f) engaged in any material employment act or practice, including but not
limited to sexual harassment, forbidden by the Company in its employment manual
as revised from time to time.

"Without Cause Termination" means a termination of the Executive's
employment by the Company other than due to Permanent Disability, retirement or
expiration of the Term and other than a Termination for Cause.

"Permanent Disability" means permanently disabled so as to qualify for full
benefits under the Company's then-existing disability insurance policy. If the
Company does not maintain any such policy on the date of termination, "Permanent
Disability" shall mean the inability of the Executive to work for a period of
four full calendar months during any eight consecutive calendar months due to
illness or injury of a physical or mental nature, supported by the completion by
the Executive's attending physician of a medical certification form outlining
the disability and treatment.

SECTION 6. OTHER DUTIES OF EXECUTIVE DURING AND AFTER TERM.

(a) In lieu of any severance that may otherwise be payable to the Executive
pursuant to any policies of the Company, whether existing on the date hereof or
in effect from time to time hereafter, in the event that the Company terminates
the Executive's employment pursuant to a Without Cause Termination, the Company
shall continue to pay the Executive's Base Salary for a period (the "Severance
Period") equal to the longer of (A) the remainder of the Term, or (B) one year
from the effective date of such termination. The Executive also shall be
entitled to any earned but unpaid Base Salary as of the effective date of
termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement except as otherwise required by
law or the Company's benefit plans.

(b) In the event that the Company terminates the Executive's employment
pursuant to a Permanent Disability, the Company shall pay the Executive any
earned but unpaid Base Salary as of the date of termination of employment. No
other payments shall be made, or benefits provided, by the Company under this
Agreement except as otherwise required by law or the Company's benefit plans.

(c) In the event that the Company terminates the Executive's employment
pursuant to a Termination for Cause or the Executive terminates his employment
with the Company (including, without limitation, pursuant to any retirement),
the Company shall pay the Executive any earned but unpaid Base Salary as of the
date of termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement or otherwise except to the extent
required by law or the Company's benefit plans.

(d) In the event that the Executive's employment hereunder is terminated
due to the Executive's death, the Company shall pay the Executive's executor or
other legal representative (the "Representative") any earned but unpaid Base
Salary as of the date of termination of employment. No other payments shall be
made, or benefits provided, by the Company whether under this Agreement or
otherwise except to the extent required by law or the Company's benefit plans.

(e) Any payments to be made or benefits to be provided by the Company
pursuant to this Section 6 (other than in the event of the Executive's death or
Permanent Disability) are subject to the receipt by the Company of an effective
general release and agreement not to sue, in a form reasonably satisfactory to
the Company and the Executive (the "Release") pursuant to which the Executive
agrees (i) to release all claims against the Company and certain related parties
(excluding claims for (x) indemnification under the Company's Certificate of
Incorporation or by-laws or (y) any severance benefits payable hereunder), (ii)
not to maintain any action, suit, claim or proceeding against the Company, its
subsidiaries and affiliates and certain related parties, and (iii) to be bound
by certain confidentiality and mutual non-disparagement covenants specified
therein. Notwithstanding the due date of any post-employment payment, the
Company shall not be obligated to make any payments under this Section 6 until
after the expiration of any revocation period applicable to the Release.

(f) The Executive shall not be required to mitigate the severance payments
to be made to him hereunder and if the Executive obtains other employment while
receiving severance payments hereunder he shall continue to be entitled to the
benefits of this Agreement.

24

SECTION 7. CONFIDENTIAL INFORMATION. The Executive and the Company agree
that all information pertaining to the affairs, business, clients, or customers
of the Company or any of its subsidiaries, other than information that the
Company has previously made publicly available, is confidential information
belonging to the Company and is a unique and valuable asset of the Company. Both
during the Term hereof and thereafter, the Executive shall not, except to the
extent reasonably necessary in the performance of his duties for the Company
during the Term, disclose any information concerning the affairs, businesses,
clients, or customers of the Company or its subsidiaries, or make use of any
such information for his own purposes or for the benefit of any other person,
firm, or corporation. All records, memoranda, letters, books, papers, reports,
or other data, and other records and documents relating to the Company or its
subsidiaries, whether made by the Executive or otherwise coming into his
possession, shall remain the property of the Company, no copies thereof shall be
made which are not retained by the Company, and the Executive agrees, on
termination of his employment not to retain any copies and deliver all such
confidential information in his possession to the Company.

SECTION 8. NON-COMPETE; NON-SOLICITATION.

(a) During the period (the "Restricted Period") commencing on the
termination of his employment for any reason whatsoever during the Term and
ending two years thereafter, the Executive shall not, without express prior
written consent of the Company, directly or indirectly, own or hold any
proprietary interest in, or be employed by or receive remuneration from, any
corporation, partnership, sole proprietorship or other entity (collectively, an
"entity") "engaged in competition" (as defined below) with the Company or any of
its subsidiaries (a "Competitor"). For purposes of the preceding sentence, (i)
the term "proprietary interest" means direct or indirect ownership of an equity
interest in an entity other than ownership of less than 2 percent of any class
stock in a publicly-held entity, and (ii) an entity shall be considered to be
"engaged in competition" if such entity is, or is a holding company for or a
subsidiary of an entity which is engaged in the business of (A) providing
banking, trust services, asset management advice, or similar financial services
to consumers, businesses individuals or other entities, and (B) the entity,
holding company or subsidiary maintains any physical offices for the transaction
of such business located within 50 miles of the main office of the Company.

(b) During the Restricted Period, the Executive shall not, without express
prior written consent of the Company, solicit or assist any other person in
soliciting for the account of any Competitor, any customer or client of the
Company or any of its subsidiaries.

(c) During the Restricted Period, the Executive shall not, without the
express prior written consent of the Company, directly or indirectly, (i)
solicit or assist any third party in soliciting for employment any person
employed by the Company or any of its subsidiaries at the time of the
termination of the Executive's employment (collectively, "Employees"), (ii)
employ, attempt to employ or materially assist any third party in employing or
attempting to employ any Employee, or (iii) otherwise act on behalf of any
Competitor to interfere with the relationship between the Company or any of its
subsidiaries and their respective Employees.

(d) The Executive acknowledges that the restrictions contained in this
Section 8 are reasonable and necessary to protect the legitimate interests of
the Company and that any breach by the Executive of any provision contained in
this Section 8 will result in irreparable injury to the Company for which a
remedy at law would be inadequate. Accordingly, the Executive acknowledges that
the Company shall be entitled to temporary, preliminary and permanent injunctive
relief against the Executive in the event of any breach or threatened breach by
the Executive of the provisions of this Section 8, in addition to any other
remedy that may be available to the Company whether at law or in equity. With
respect to any provision of this Section 8 finally determined by a court of
competent jurisdiction to be unenforceable, such court shall be authorized to
reform this Agreement or any provision hereof so that it is enforceable to the
maximum extent permitted by law. If the covenants of Section 8 are determined to
be wholly or partially unenforceable in any jurisdiction, such determination
shall not be a bar to or in any way diminish the Company's right to enforce such
covenants in any other jurisdiction and shall not bar or limit the
enforceability of any other provisions.

(e) The provisions of this Section 8 shall survive the termination of the
Executive's employment with the Company for any reason whatsoever so long as the
termination of employment occurs during the Term. If there is no termination of
Executive's employment during the Term, the provisions of this Section 8 shall
expire and be of no further force and effect after the Term. The Company shall
not be required to post any bond or other security in connection with any
proceeding to enforce the provisions of this Section 8.

SECTION 9. WITHHOLDINGS. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, State, City or other
taxes and all other deductions as shall be required pursuant to any law or
regulation or pursuant to any contributory benefit plan maintained by or on
behalf of the Company.

SECTION 10. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
by same day or overnight mail (i) if to the Executive, at the address set forth
above, or (ii) if to the Company, as follows:

Frank A. Kissel, Chairman & CEO
Peapack-Gladstone Bank
158 Route 206 North
Gladstone, NJ 07934

25

or to such other address as either party shall have previously specified in
writing to the other.

SECTION 11. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of, the Executive and the Company and its
successors and permitted assigns. This Agreement is personal to the Executive
and may not be assigned by him. The Company may assign its rights and
obligations under this Agreement in connection with a sale of all or
substantially all of the business of PGFC or the Bank. Any successor to the
Company by merger or consolidation shall be entitled to the benefits of this
Agreement.

SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.

SECTION 13. DISPUTE RESOLUTION. At the option of either the Company or the
Executive, any dispute, controversy or question arising under, out of or
relating to this Agreement, the Executive's employment or termination of
employment, including but not limited to any and all statutory claims involving
workplace discrimination or wrongful discharge, but excluding claims pursuant to
Sections 7 or 8 hereof, shall be referred for decision by arbitration in the
State of New Jersey by a neutral arbitrator mutually selected by the parties
hereto. Any arbitration proceeding shall be governed by the Rules of the
American Arbitration Association then in effect or such last in effect (in the
event such Association is no longer in existence). If the parties are unable to
agree upon such a neutral arbitrator within 21 days after either party has given
the other written notice of the desire to submit the dispute, controversy or
question for decision as aforesaid, then either party may apply to the American
Arbitration Association for a final and binding appointment of a neutral
arbitrator; however, if such Association is not then in existence or does not
act in the matter within 45 days of any such application, either party may apply
to a judge of the local court where the Bank is headquartered for an appointment
of a neutral arbitrator to hear the parties and such judge is hereby authorized
to make such appointment. In the event that either party exercises the right to
submit a dispute, controversy or question arising hereunder to arbitration, the
decision of the neutral arbitrator shall be final, conclusive and binding on all
interested persons and no action at law or in equity shall be instituted or, if
instituted, further prosecuted by either party other than to enforce the award
of the neutral arbitrator. The award of the neutral arbitrator may be entered in
any court that has jurisdiction. The Executive and the Company shall each bear
all their own costs (including the fees and disbursements of counsel) incurred
in connection with any such arbitration and shall each pay one-half of the costs
of any arbitrator.

SECTION 14. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties with respect to the matters covered hereby and shall
supersede all previous written, oral or implied understandings among them with
respect to such matters.

SECTION 15. AMENDMENTS. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 15
may only be amended or otherwise modified by such a writing.

SECTION 16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall together be deemed to constitute one and the same instrument.

SECTION 17. EFFECT ON CHANGE-IN-CONTROL AGREEMENT. Notwithstanding anything
else to the contrary in this Agreement, if the Change-in-Control Agreement
between the Company and the Executive, dated as of January 1, 1998, becomes
effective under Section 13b thereof due to a Change-in-Control of the Company
(as defined therein), while the Executive remains employed by the Company, this
Agreement, including, without limitation, Sections 7 and 8 hereof, shall no
longer be effective in any respect but instead the relationship between the
Executive and the Company shall be governed by the Change-in-Control Agreement.
If the Executive is terminated prior to a Change-in-Control of the Company, then
Sections 7 and 8 hereof shall survive the Change-in-Control in accordance with
the terms of Sections 7 and 8 hereof.

IN WITNESS WHEREOF, PGFC and the Bank have caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.

WITNESS PEAPACK-GLADSTONE FINANCIAL CORPORATION
- -------

____________________________ By: ___________________________
Secretary

PEAPACK-GLADSTONE BANK

____________________________ By: ___________________________
Secretary

- ---------------------------- --------------------------------
EXECUTIVE

26

PEAPACK-GLADSTONE EMPLOYMENT AGREEMENT
OF ARTHUR F. BIRMINGHAM

This EMPLOYMENT AGREEMENT (this "Agreement") dated May 13, 2002, by and
between Peapack-Gladstone Financial Corporation ("PGFC") and Peapack-Gladstone
Bank (the "Bank") (PGFC and the Bank are collectively referred to herein as the
"Company"), and Arthur F. Birmingham (the "Executive"), whose home address is 14
Apgar Avenue, Gladstone, New Jersey.

WITNESSETH:

WHEREAS, the Executive is willing to continue to serve as the Executive
Vice President and Chief Financial Officer of the Company and the Company
desires to retain the Executive in that capacity on the terms and conditions
herein set forth; and

NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties agree as follows:

SECTION 1. TERM OF EMPLOYMENT. This Agreement shall be effective as of the
date hereof and, subject to earlier termination as specified herein, shall
continue until December 31, 2004.

SECTION 2. POSITION AND DUTIES. During the Term, the Executive shall serve
as the Executive Vice President and Chief Financial Officer of the Company. The
Executive shall have such powers and duties as are commensurate with such
position and as may be conferred upon him by the Board of Directors of the
Company (the "Board"). During the Term, the Executive shall devote all of his
business time, attention, skill and efforts exclusively to the business and
affairs of the Company and its subsidiaries. Notwithstanding the foregoing, the
Executive may engage in charitable, educational, religious, civic and similar
types of activities, speaking engagements, membership on the board of directors
of other organizations, and similar activities to the extent that such
activities do not inhibit the performance of his duties hereunder or conflict in
any material way with the business of the Company and its subsidiaries.

SECTION 3. COMPENSATION. For all services rendered by the Executive in any
capacity required hereunder during the Term, including, without limitation,
services as an executive officer, director, or member of any committee of the
Company or any of its subsidiaries, the Executive shall be compensated as
follows:

(a) The Company shall pay the Executive a fixed salary at a rate per annum
equal to $150,000.00 ("Base Salary"). The Base Salary shall be increased by 3%
per year to $154,500.00 for the calendar year 2003 and $159,135.00 for the
calendar year 2004. Base Salary shall be payable bi-weekly.

(b) The Company shall pay the Executive a bonus with respect to each
calendar year for which he is employed under this Agreement determined as
follows: bonus equal to 10% of Base Salary if 90% of Company's budget is
achieved and 20% of Base Salary if 100% of Company's budget is achieved. The
bonus shall be paid when other employee bonuses are paid or such later date as
is mutually agreed to by the Company and the Executive.

(c) The Executive shall be entitled to five weeks of vacation in each
calendar year during the Term. The Executive shall not be entitled to carryover
vacation from one year to another or to any payment in respect of any unused
vacation.

(d) The Executive shall be entitled to participate in all compensation and
employee benefit plans for which any salaried employees of the Company are
eligible. Notwithstanding the foregoing, nothing in this Agreement shall
preclude the amendment or termination of any such plan or program.

SECTION 4. BUSINESS EXPENSES. The Company shall pay or reimburse the
Executive for all reasonable entertainment, travel or other expenses incurred by
the Executive in connection with the performance of his duties under this
Agreement, subject to the Executive's presentation of appropriate documentation
in accordance with such procedures as the Company may from time to time
establish.

SECTION 5. TERMINATION OF EMPLOYMENT.

(a) The Company shall have the right, upon delivery of written notice to
the Executive, to terminate the Executive's employment hereunder prior to the
expiration of the Term:

(i) pursuant to a Termination for Cause, or

(ii) upon the Executive's Permanent Disability, or

(iii) pursuant to a Without Cause Termination.

27

(b) The Executive shall have the right, upon delivery of written notice to
the Company 30 days in advance of the proposed termination date, to terminate
the Executive's employment hereunder prior to the expiration of the Term in the
Executive's sole discretion.

(c) The Executive's employment hereunder shall terminate automatically
without action by any party hereto upon the Executive's death.

(d) For purposes of this Agreement, the following terms have the following
meanings:

"Termination for Cause" means a termination of the Executive's
employment by the Company because the Executive has (a) materially failed
to perform the duties assigned to him hereunder or imposed upon him by
applicable law, and such failure to perform constitutes self-dealing,
willful misconduct or recklessness, (b) committed an act of dishonesty in
the performance of his duties hereunder or engaged in conduct materially
detrimental to the business of the Company, (c) been convicted of a felony
or a misdemeanor involving moral turpitude, (d) materially failed to
perform his duties hereunder, which breach or failure the Executive shall
fail to remedy within 30 days after written demand from the Company, (e)
knowingly failed to follow lawful, written directives of the Board, or (f)
engaged in any material employment act or practice, including but not
limited to sexual harassment, forbidden by the Company in its employment
manual as revised from time to time.

"Without Cause Termination" means a termination of the Executive's
employment by the Company other than due to Permanent Disability,
retirement or expiration of the Term and other than a Termination for
Cause.

"Permanent Disability" means permanently disabled so as to qualify for
full benefits under the Company's then-existing disability insurance
policy. If the Company does not maintain any such policy on the date of
termination, "Permanent Disability" shall mean the inability of the
Executive to work for a period of four full calendar months during any
eight consecutive calendar months due to illness or injury of a physical or
mental nature, supported by the completion by the Executive's attending
physician of a medical certification form outlining the disability and
treatment.

SECTION 6. BENEFITS UPON TERMINATION.

(a) In lieu of any severance that may otherwise be payable to the Executive
pursuant to any policies of the Company, whether existing on the date hereof or
in effect from time to time hereafter, in the event that the Company terminates
the Executive's employment pursuant to a Without Cause Termination, the Company
shall continue to pay the Executive's Base Salary for a period (the "Severance
Period") equal to the longer of (A) the remainder of the Term, or (B) one year
from the effective date of such termination. The Executive also shall be
entitled to any earned but unpaid Base Salary as of the effective date of
termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement except as otherwise required by
law or the Company's benefit plans.

(b) In the event that the Company terminates the Executive's employment
pursuant to a Permanent Disability, the Company shall pay the Executive any
earned but unpaid Base Salary as of the date of termination of employment. No
other payments shall be made, or benefits provided, by the Company under this
Agreement except as otherwise required by law or the Company's benefit plans.

(c) In the event that the Company terminates the Executive's employment
pursuant to a Termination for Cause or the Executive terminates his employment
with the Company (including, without limitation, pursuant to any retirement),
the Company shall pay the Executive any earned but unpaid Base Salary as of the
date of termination of employment. No other payments shall be made, or benefits
provided, by the Company under this Agreement or otherwise except to the extent
required by law or the Company's benefit plans.

(d) In the event that the Executive's employment hereunder is terminated
due to the Executive's death, the Company shall pay the Executive's executor or
other legal representative (the "Representative") any earned but unpaid Base
Salary as of the date of termination of employment. No other payments shall be
made, or benefits provided, by the Company whether under this Agreement or
otherwise except to the extent required by law or the Company's benefit plans.

(e) Any payments to be made or benefits to be provided by the Company
pursuant to this Section 6 (other than in the event of the Executive's death or
Permanent Disability) are subject to the receipt by the Company of an effective
general release and agreement not to sue, in a form reasonably satisfactory to
the Company and the Executive (the "Release") pursuant to which the Executive
agrees (i) to release all claims against the Company and certain related parties
(excluding claims for (x) indemnification under the Company's Certificate of
Incorporation or by-laws or (y) any severance benefits payable hereunder), (ii)
not to maintain any action, suit, claim or proceeding against the Company, its
subsidiaries and affiliates and certain related parties, and (iii) to be bound
by certain confidentiality and mutual non-disparagement covenants specified
therein. Notwithstanding the due date of any post-employment payment, the
Company shall not be obligated to make any payments under this Section 6 until
after the expiration of any revocation period applicable to the Release.

(f) The Executive shall not be required to mitigate the severance payments
to be made to him hereunder and if the Executive obtains other employment while
receiving severance payments hereunder he shall continue to be entitled to the
benefits of this Agreement.

28

SECTION 7. CONFIDENTIAL INFORMATION. The Executive and the Company agree
that all information pertaining to the affairs, business, clients, or customers
of the Company or any of its subsidiaries, other than information that the
Company has previously made publicly available, is confidential information
belonging to the Company and is a unique and valuable asset of the Company. Both
during the Term hereof and thereafter, the Executive shall not, except to the
extent reasonably necessary in the performance of his duties for the Company
during the Term, disclose any information concerning the affairs, businesses,
clients, or customers of the Company or its subsidiaries, or make use of any
such information for his own purposes or for the benefit of any other person,
firm, or corporation. All records, memoranda, letters, books, papers, reports,
or other data, and other records and documents relating to the Company or its
subsidiaries, whether made by the Executive or otherwise coming into his
possession, shall remain the property of the Company, no copies thereof shall be
made which are not retained by the Company, and the Executive agrees, on
termination of his employment not to retain any copies and deliver all such
confidential information in his possession to the Company.

SECTION 8. NON-COMPETE; NON-SOLICITATION.

(a) During the period (the "Restricted Period") commencing on the
termination of his employment for any reason whatsoever during the Term and
ending two years thereafter, the Executive shall not, without express prior
written consent of the Company, directly or indirectly, own or hold any
proprietary interest in, or be employed by or receive remuneration from, any
corporation, partnership, sole proprietorship or other entity (collectively, an
"entity") "engaged in competition" (as defined below) with the Company or any of
its subsidiaries (a "Competitor"). For purposes of the preceding sentence, (i)
the term "proprietary interest" means direct or indirect ownership of an equity
interest in an entity other than ownership of less than 2 percent of any class
stock in a publicly-held entity, and (ii) an entity shall be considered to be
"engaged in competition" if such entity is, or is a holding company for or a
subsidiary of an entity which is engaged in the business of (A) providing
banking, trust services, asset management advice, or similar financial services
to consumers, businesses individuals or other entities, and (B) the entity,
holding company or subsidiary maintains any physical offices for the transaction
of such business located within 50 miles of the main office of the Company.

(b) During the Restricted Period, the Executive shall not, without express
prior written consent of the Company, solicit or assist any other person in
soliciting for the account of any Competitor, any customer or client of the
Company or any of its subsidiaries.

(c) During the Restricted Period, the Executive shall not, without the
express prior written consent of the Company, directly or indirectly, (i)
solicit or assist any third party in soliciting for employment any person
employed by the Company or any of its subsidiaries at the time of the
termination of the Executive's employment (collectively, "Employees"), (ii)
employ, attempt to employ or materially assist any third party in employing or
attempting to employ any Employee, or (iii) otherwise act on behalf of any
Competitor to interfere with the relationship between the Company or any of its
subsidiaries and their respective Employees.

(d) The Executive acknowledges that the restrictions contained in this
Section 8 are reasonable and necessary to protect the legitimate interests of
the Company and that any breach by the Executive of any provision contained in
this Section 8 will result in irreparable injury to the Company for which a
remedy at law would be inadequate. Accordingly, the Executive acknowledges that
the Company shall be entitled to temporary, preliminary and permanent injunctive
relief against the Executive in the event of any breach or threatened breach by
the Executive of the provisions of this Section 8, in addition to any other
remedy that may be available to the Company whether at law or in equity. With
respect to any provision of this Section 8 finally determined by a court of
competent jurisdiction to be unenforceable, such court shall be authorized to
reform this Agreement or any provision hereof so that it is enforceable to the
maximum extent permitted by law. If the covenants of Section 8 are determined to
be wholly or partially unenforceable in any jurisdiction, such determination
shall not be a bar to or in any way diminish the Company's right to enforce such
covenants in any other jurisdiction and shall not bar or limit the
enforceability of any other provisions.

(e) The provisions of this Section 8 shall survive the termination of the
Executive's employment with the Company for any reason whatsoever so long as the
termination of employment occurs during the Term. If there is no termination of
Executive's employment during the Term, the provisions of this Section 8 shall
expire and be of no further force and effect after the Term. The Company shall
not be required to post any bond or other security in connection with any
proceeding to enforce the provisions of this Section 8.

SECTION 9. WITHHOLDINGS. The Company may directly or indirectly withhold
from any payments made under this Agreement all Federal, State, City or other
taxes and all other deductions as shall be required pursuant to any law or
regulation or pursuant to any contributory benefit plan maintained by or on
behalf of the Company.

SECTION 10. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be given in writing and
shall be deemed to have been duly given if delivered or mailed, postage prepaid,
by same day or overnight mail (i) if to the Executive, at the address set forth
above, or (ii) if to the Company, as follows:

Frank A. Kissel, Chairman & CEO
Peapack-Gladstone Bank
158 Route 206 North
Gladstone, NJ 07934

29

or to such other address as either party shall have previously specified in
writing to the other.

SECTION 11. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of, the Executive and the Company and its
successors and permitted assigns. This Agreement is personal to the Executive
and may not be assigned by him. The Company may assign its rights and
obligations under this Agreement in connection with a sale of all or
substantially all of the business of PGFC or the Bank. Any successor to the
Company by merger or consolidation shall be entitled to the benefits of this
Agreement.

SECTION 12. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New Jersey,
without reference to the choice of law principles thereof.

SECTION 13. DISPUTE RESOLUTION. At the option of either the Company or the
Executive, any dispute, controversy or question arising under, out of or
relating to this Agreement, the Executive's employment or termination of
employment, including but not limited to any and all statutory claims involving
workplace discrimination or wrongful discharge, but excluding claims pursuant to
Sections 7 or 8 hereof, shall be referred for decision by arbitration in the
State of New Jersey by a neutral arbitrator mutually selected by the parties
hereto. Any arbitration proceeding shall be governed by the Rules of the
American Arbitration Association then in effect or such last in effect (in the
event such Association is no longer in existence). If the parties are unable to
agree upon such a neutral arbitrator within 21 days after either party has given
the other written notice of the desire to submit the dispute, controversy or
question for decision as aforesaid, then either party may apply to the American
Arbitration Association for a final and binding appointment of a neutral
arbitrator; however, if such Association is not then in existence or does not
act in the matter within 45 days of any such application, either party may apply
to a judge of the local court where the Bank is headquartered for an appointment
of a neutral arbitrator to hear the parties and such judge is hereby authorized
to make such appointment. In the event that either party exercises the right to
submit a dispute, controversy or question arising hereunder to arbitration, the
decision of the neutral arbitrator shall be final, conclusive and binding on all
interested persons and no action at law or in equity shall be instituted or, if
instituted, further prosecuted by either party other than to enforce the award
of the neutral arbitrator. The award of the neutral arbitrator may be entered in
any court that has jurisdiction. The Executive and the Company shall each bear
all their own costs (including the fees and disbursements of counsel) incurred
in connection with any such arbitration and shall each pay one-half of the costs
of any arbitrator.

SECTION 14. ENTIRE AGREEMENT. This Agreement shall constitute the entire
agreement among the parties with respect to the matters covered hereby and shall
supersede all previous written, oral or implied understandings among them with
respect to such matters.

SECTION 15. AMENDMENTS. This Agreement may only be amended or otherwise
modified, and compliance with any provision hereof may only be waived, by a
writing executed by all of the parties hereto. The provisions of this Section 15
may only be amended or otherwise modified by such a writing.

SECTION 16. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
shall together be deemed to constitute one and the same instrument.

SECTION 17. EFFECT ON CHANGE-IN-CONTROL AGREEMENT. Notwithstanding anything
else to the contrary in this Agreement, if the Change-in-Control Agreement
between the Company and the Executive, dated as of January 1, 1998, becomes
effective under Section 13b thereof due to a Change-in-Control of the Company
(as defined therein), while the Executive remains employed by the Company, this
Agreement, including, without limitation, Sections 7 and 8 hereof, shall no
longer be effective in any respect but instead the relationship between the
Executive and the Company shall be governed by the Change-in-Control Agreement.
If the Executive is terminated prior to a Change-in-Control of the Company, then
Sections 7 and 8 hereof shall survive the Change-in-Control in accordance with
the terms of Sections 7 and 8 hereof.

IN WITNESS WHEREOF, PGFC and the Bank have caused this Agreement to be duly
executed by the undersigned, thereunto duly authorized, and the Executive has
signed this Agreement, all as of the date first written above.

WITNESS PEAPACK-GLADSTONE FINANCIAL CORPORATION
- -------

____________________________ By: ___________________________
Secretary

PEAPACK-GLADSTONE BANK

____________________________ By: ___________________________
Secretary

- ---------------------------- --------------------------------
EXECUTIVE

30

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This Certification is to accompany the Quarterly Report of
Peapack-Gladstone Financial Corporation (the "Company") on Form 10-Q for the
period ending June 30, 2002 as filed with the Securities and Exchange Commission
(the "Report").

I, Frank A. Kissel, Chairman of the Board and Chief Executive Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

(2) Information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

- ---------------------------------------------------
FRANK A. KISSEL
Chairman of the Board and Chief Executive Officer,
Peapack-Gladstone Financial Corporation
August 8, 2002

31

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AND CONSOLIDATED SUBSIDIARIES

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

This Certification is to accompany the Quarterly Report of
Peapack-Gladstone Financial Corporation (the "Company") on Form 10-Q for the
period ending June 30, 2002 as filed with the Securities and Exchange Commission
(the "Report").

I, Arthur F. Birmingham, Executive Vice President and Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or
15(d) of the Securities Exchange Act of 1934; and

2) Information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Company.

- ----------------------------------------------------
ARTHUR F. BIRMINGHAM
Executive Vice President and Chief Financial Officer,
Peapack-Gladstone Financial Corporation
August 8, 2002

32