Contact:
Arthur F. Birmingham
Peapack-Gladstone Financial Corporation
T: 908-719-4308
PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS THIRD QUARTER RESULTS
GLADSTONE, N.J.--(BUSINESS WIRE)--November 3, 2003 - Peapack-Gladstone Financial
Corporation (AMEX:PGC) reported net income of $2.9 million for the quarter ended
September 30, 2003, as compared to $3.1 million in the quarter ended September
30, 2002, a decline of $179 thousand or 5.8 percent. Net income per diluted
share was $0.38 for the third quarter of 2003 compared to $0.40 for the third
quarter of 2002, a decline of 5.0 percent. All per share data have been restated
for the 10.0 percent stock dividend declared September 30, 2003. Annualized
return on average assets ("ROA") was 1.21 percent and annualized return on
average equity ("ROE") was 14.08 percent for the third quarter of 2003.
Net income was $9.4 million for the nine months ended September 30, 2003;
an increase of 2.7 percent over the $9.2 million reported for the nine months
ended September 30, 2002. The per diluted share earnings were $1.24 for the nine
months ended September 30, 2003, as compared to $1.22 for the year to date
September 30, 2002, an increase of 1.6 percent. Annualized return on average
assets was 1.38 percent and annualized return on average equity was 15.63
percent for the first nine months of 2003.
Frank A. Kissel, Chairman and CEO, stated, "High levels of prepayments on
mortgage-backed securities and mortgages and an increase in rate modifications
on mortgage and commercial loans resulted in lower interest income in the third
quarter of 2003. However, prepayment and modification activity is slowing and
our loan pipeline is strong. We anticipate that our loan balances will increase
as will our interest income in future periods. Average deposits continued to
grow this quarter, rising 14.9 percent over last year and the market value of
trust assets under management by PGB Trust and Investments grew to $1.3 billion,
an increase of 18.3 percent over the levels at September 30, 2002. We remain
committed to building strong customer relationships through our loan, deposit
and trust and investment products."
EARNINGS
Net Interest Income
Third quarter 2003 net interest income was $7.3 million, with a net
interest margin of 3.32 percent as compared to third quarter 2002 net interest
income of $8.2 million with a net interest margin of 4.33 percent. The decline
in net interest income during the third quarter of 2003 was primarily a result
of declining interest rates on loans and investments due to refinancing and
reinvestment activity. Deposit and borrowing rates declined as well, but at a
slower pace than the rates on loans and investments.
While earning assets increased to $896.4 million on average, or 19.7
percent, from the third quarter of 2002, the yield on interest earnings assets
declined 151 basis points to 4.52 percent in the third quarter of 2003 from 6.03
percent in the third quarter of 2002.
The growth in earnings assets during the third quarter of 2003 was
primarily in the investment securities portfolio. Average investment securities
rose $173.8 million or 56.1 percent, offset in part by lower average loans,
which declined $22.4 million on average. This decline in average loan balances
was primarily due to residential mortgage pay-offs, which resulted from the
historically low interest rate environment.
Total average deposits for the third quarter of 2003 grew $105.2 million or
14.9 percent to $810.3 million from $705.1 million for the third quarter of
2002. Total average borrowings increased from $11.8 million in the third quarter
of 2002 to $53.3 million in the third quarter this year.
The Corporation has positioned some of its borrowings to try to take
advantage of the low long-term interest rate environment that presently exists.
This strategy of extending the maturities of borrowings and matching with lower
yielding fixed rate loans is intended to reduce interest rate risk if interest
rates begin to rise.
The cost of funds fell to 1.19 percent in the third quarter of 2003 as
compared to 1.69 percent in the third quarter of 2002.
Other Income
Other income before gains on securities sales and trust fee income was $825
thousand for the third quarter of 2003 as compared to $821 thousand for the
third quarter of 2002. For the quarter ended September 30, 2003, the Corporation
recorded net gains on securities sold of $400 thousand as compared to net losses
of $7 thousand for the third quarter of 2002.
Trust fee income generated by PGB Trust and Investments rose $186 thousand
or 15.9 percent to $1.4 million for the quarter ended September 30, 2003 as
compared to $1.2 million for the same period in 2002.
Other Expense
Other expenses totaled $5.6 million for the third quarter of 2003, an
increase of $200 thousand or 3.7 percent over the $5.4 million reported for the
same quarter of 2002. This increase is due to higher salaries and benefits and
premises and equipment costs partially offset by lower professional fee and
advertising expenses. Higher salaries and benefits expenses can be attributed to
additions to the professional staff, including several business development
officers, upward salary adjustments to attract and retain highly qualified
employees and higher health insurance and pension costs. Higher premises and
equipment costs relate to a new branch location and a new operations center that
are under construction. The efficiency ratio was 58.64 percent for the quarter
ended September 30, 2003 as compared to 52.90 percent for the same period in
2002. The Corporation calculates the efficiency by dividing total other expense
by the total of net interest income and total other income excluding security
gains and losses. The formula used is a common formula for banks, which allows
for comparison to other banks. The formula may not be the same as that used by
other companies.
ASSET QUALITY
Non-performing loans totaled $228 thousand or 0.06 percent of total loans
at September 30, 2003 as compared to $279 thousand or 0.06 percent at September
30, 2002. The allowance for loan losses was $5.3 million or 1.30 percent of
total loans at September 30, 2003 as compared to $4.6 million or 1.07 percent of
total loans at September 30, 2002. Net recoveries were $2 thousand for the third
quarter of 2003 as compared to net charge-offs of $25 thousand during the third
quarter of 2002.
CAPITAL
Shareholders' equity totaled $82.7 million at September 30, 2003, an
increase of $7.9 million or 10.5 percent over the $74.8 million reported at
September 30, 2002. The Corporation's leverage ratio, tier 1 and total risk
based capital ratios at September 30, 2003 were 8.74 percent, 20.62 percent and
21.99 percent, respectively. Peapack-Gladstone Financial Corporation,
headquartered in Peapack-Gladstone, New Jersey, and listed on the American Stock
Exchange under the symbol "PGC", is the holding company for the
Peapack-Gladstone Bank.
Peapack-Gladstone Bank, a community bank, was established in 1921, and has
17 branches in Somerset, Hunterdon and Morris Counties. Its Trust Division, PGB
Trust and Investments, with $1.3 billion in assets at market value under
management at September 30, 2003, operates at the Bank's main office located at
190 Main Street in Gladstone, New Jersey. To learn more about Peapack-Gladstone
Financial Corporation and its services please visit our web site at
www.pgbank.com or call 908-234-0700.
- --------------
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 view of future
interest income and net loans, 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", "look", "believe",
"anticipate", "may", "will", or similar statements or variations of such terms.
Actual results may differ materially from such forward-looking statements.
Factors that may cause results to differ materially from such forward-looking
statements include, but are not limited to, unexpected decline in the direction
of the economy in New Jersey, an unexpected decline or no increase in interest
rates, continued unexpected loan prepayment volume and a decline in levels of
loan quality and origination volume. Peapack-Gladstone assumes no obligation for
updating any such forward-looking statements at any time.
(Tables to Follow)
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
At or For The At or For The
Three Months Ended Nine Months Ended
September 30, September 30,
2003 2002 2003 2002
----------------------- -----------------------
Income Statement Data:
Interest income $ 9,947 $ 11,255 $ 30,979 $ 33,119
Interest expense 2,598 3,059 7,948 9,063
Net interest income 7,349 8,196 23,031 24,056
Provision for loan losses 150 199 450 599
Net interest income after
provision for loan losses 7,199 7,997 22,581 23,457
Other income 825 821 2,501 2,443
Securities Gains 400 (7) 1,227 19
Trust Fees 1,358 1,172 4,422 3,577
Other expense 5,590 5,390 16,821 15,857
Income before income taxes 4,192 4,593 13,910 13,639
Income tax expense 1,308 1,530 4,483 4,460
Net income $ 2,884 $ 3,063 $ 9,427 $ 9,179
Balance Sheet Data:
Total assets $ 953,936 $ 816,570
Federal funds sold 1,951 2,689
Short-term investments 503 523
Securities held to maturity 106,972 129,460
Securities available for sale 381,756 203,117
Loans 406,424 430,139
Allowance for Loan Losses 5,277 4,594
Deposits 815,430 707,429
Borrowings 47,934 23,500
Shareholders' equity 82,691 74,815
Trust Department Assets (book value, not included above) 1,081,159 $ 943,612
Average Balance Sheet Data:
Total Assets $ 952,922 $ 798,098 $ 909,298 $ 761,865
Earning Assets 901,474 754,727 859,017 717,893
Loans, net 404,735 427,896 399,131 422,370
Interest-Bearing Deposits 664,889 591,328 653,794 564,643
Demand Deposits 145,377 113,622 136,494 113,216
Borrowings 53,255 11,816 30,831 8,478
Shareholders' equity 81,955 72,395 80,414 67,941
Performance Ratios:
Return on average assets 1.21% 1.54% 1.38% 1.61%
Return on average equity 14.08 16.92 15.63 18.01
Efficiency Ratio 58.64% 52.90% 56.16% 52.72%
Net Interest Margin
(Taxable Equivalent Basis) 3.32% 4.33% 3.65% 4.49%
At or For The At or For The
Three Months Ended Three Months Ended
September 30, September 30,
2003 2002 2003 2002
----------------------- -----------------------
Asset Quality:
Loans past due over 90 days and still accruing $ 65 $ 94
Non-accrual loans 163 185
Net recoveries/(charge-offs) 2 (25) 29 (28)
Allowance for loan losses
to total loans 1.30% 1.07%
Per Share Data: (1)
Earnings per share (Basic) $ 0.39 $ 0.42 $ 1.28 $ 1.25
Earnings per share (Diluted) 0.38 0.40 1.24 1.22
Book Value per share 11.20 10.16
Capital Adequacy:
Tier I Leverage 8.74% 9.13%
Tier I Capital to Risk-Weighted Assets 20.62 19.60
Tier I & Tier II Capital to Risk-Weighted Assets 21.99 20.90
(1) Restated for the 2 for 1 stock split declared September 12, 2002 and the
10% stock dividend declared September 12, 2003.