Contact:
Arthur F. Birmingham
Peapack-Gladstone Financial Corporation
T: 908-719-4308
PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS FOURTH QUARTER AND FULL YEAR RESULTS
CREDIT QUALITY REMAINS EXEMPLARY
GLADSTONE, N.J.--(BUSINESS WIRE)--February 2, 2004 - Peapack-Gladstone Financial
Corporation (AMEX:PGC) reported net income of $2.9 million for the quarter ended
December 31, 2003, as compared to $2.7 million in the quarter ended December 31,
2002, an increase of $125 thousand or 4.5 percent. Net income per diluted share
increased 5.6 percent to $0.38 for the fourth quarter of 2003 as compared to
$0.36 for the fourth quarter of 2002. Annualized return on average assets
("ROA") was 1.21 percent and annualized return on average equity ("ROE") was
13.74 percent for the fourth quarter of 2003.
For the twelve months ended December 31, 2003, net income was $12.3
million, an increase of 3.1 percent over the $11.9 million reported for the year
ended December 31, 2002. The per diluted share earnings were $1.62 for the year
ended December 31, 2003, as compared to $1.59 for the year ended December 31,
2002, an increase of 1.9 percent. For the year ended December 31, 2003, the
Corporation achieved a return on average assets ("ROA") of 1.34 percent and a
return on average equity ("ROE") of 15.14 percent.
Frank A. Kissel, Chairman and CEO, stated, "The continuing low interest
rate environment has challenged the banking industry this year and our net
interest income has reflected these historically low levels of interest rates.
We remain optimistic that by keeping to our business plan and managing interest
rate risk, our interest income will continue to increase in future periods. Loan
demand has improved and prepayments on mortgage-related earning assets slowed
this quarter, as did rate modifications on mortgage and commercial loans." Mr.
Kissel continued, "Deposit growth was strong again this quarter, rising 8.3
percent over last year's levels. The market value of trust assets under
management by PGB Trust and Investments grew to $1.4 billion, an increase of
14.2 percent over the levels at December 31, 2002. In 2004, we anticipate
continued growth in our loan, deposit and trust businesses with the addition of
branches in Oldwick and Morristown."
EARNINGS
Net Interest Income
Net interest income in the fourth quarter of 2003 was $8.1 million, an
increase of $298 thousand or 3.8 percent over the fourth quarter of last year
and an increase of $784 thousand or 10.7 percent over the third quarter of 2003.
The fourth quarter net interest margin was 3.49 percent as compared to 3.97
percent for the same quarter last year and 3.32 percent in the third quarter of
2003.
On average, earning assets in the fourth quarter of 2003 increased 13.5
percent to $896.6 million from $790.1 million in the fourth quarter of 2002. The
yield on interest earnings assets declined 99 basis points to 4.56 percent in
the fourth quarter of 2003 from 5.55 percent in the fourth quarter of 2002.
The growth in earnings assets during the fourth quarter of 2003 was
primarily in the investment securities portfolio. Average investment securities
rose $118.1 million or 33.5 percent, offset in part by lower average loans,
which declined $2.3 million on average and lower average federal funds sold,
which declined $7.1 million. The decline in average loan balances this quarter
was primarily due to loan pay-offs, which resulted from the historically low
interest rate environment.
Total average deposits for the fourth quarter of 2003 grew $62.3 million or
8.3 percent to $808.6 million from $746.4 million for the fourth quarter of
2002. Total average borrowings increased from $5.8 million in the fourth quarter
of 2002 to $48.4 million in the fourth quarter 2003 as the Corporation extended
the maturities of borrowings and matched them with lower yielding fixed rate
loans to attempt to reduce interest rate risk if interest rates begin to rise.
The cost of funds fell to 1.07 percent in the fourth quarter of 2003 as compared
to 1.58 percent in the fourth quarter of 2002.
For the year ended December 31, 2003, net interest income was $31.2
million, a decline of $728 thousand or 2.3 percent from last year's results. The
net interest margin for the year was 3.47 percent as compared to 4.35 percent
for last year.
The average securities portfolio of the Corporation grew $152.3 million or
51.5 percent to $448.0 million for the year ended December 31, 2003 as compared
to last year. Average loan balances declined during the same time period by
$17.4 million to $407.3 million. The decline was primarily due to the
high levels of prepayments on residential mortgages and pay-offs of installment
loans. Consumers took advantage of the low interest rate environment by
refinancing their mortgage loans and reducing installment debt. Average total
earning assets for the year reached $868.5 million as compared to $736.1 million
in 2002, an increase of $132.4 million or 18.0 percent.
For the year ended December 31, 2003, average deposits were $794.9 million
as compared to $695.1 million for the year ended December 31, 2002, an increase
of $99.8 million or 14.4 percent. Average borrowings grew $27.4 million to $35.2
million. During 2003, the cost of funds fell to 1.24 percent from 1.71 percent a
year ago.
Other Income
For the quarter ended December 31, 2003, total other income was $2.2
million as compared to $2.0 million for the quarter ended December 31, 2002, an
increase of $206 thousand or 10.6 percent. Net gains on the sales of securities
were $57 thousand in the fourth quarter of 2003 as compared to $34 thousand in
the fourth quarter of 2002. PGB Trust and Investments generated trust fee income
in the last quarter of 2003 of $1.3 million, an increase of $236 thousand or
21.4 percent, over the $1.1 million recorded for the quarter ended December 31,
2002.
Total other income for the year ended December 31, 2003 was $10.3 million
as compared to $8.0 million for the year ended December 31, 2002, an increase of
$2.3 million or 29.1 percent. Net gains on the sales of securities increased
from $52 thousand in 2002 to $1.3 million in 2003. Trust fee income
increased $1.1 million or 23.1 percent to $5.8 million for the year ended
December 31, 2003. Other income excluding gains on securities sales and trust
income remained constant at $3.3 million.
Other Expense
Other expenses totaled $6.0 million for the fourth quarter of 2003, an
increase of $466 thousand or 8.5 percent over the $5.5 million reported for the
same quarter of 2002. This increase is due to higher salaries and benefits and
premises and equipment costs. Increased salaries and benefits expenses can be
attributed to additions to the professional staff, salary adjustments to attract
and retain highly qualified employees and higher health insurance and pension
costs. Higher premises and equipment costs relate to costs associated with a new
branch location and a new operations center.
The efficiency ratio was 58.28 percent for the quarter ended December 31,
2003 as compared to 56.37 percent for the same period in 2002. The Corporation
calculates the efficiency ratio 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.
Other expense for the year ended December 31, 2003 was $22.8 million as
compared to $21.4 million for the year ended December 31, 2002, an increase of
$1.4 million or 6.7 percent. Salaries and benefits increased $1.3 million or
10.9 percent to $13.3 million due to additions to staff, increases due to salary
adjustments and higher health insurance and pension costs. Premises and
equipment costs were $4.8 million, an increase of $686 thousand or 16.5 percent,
over last year's $4.2 million. Business expansion, including new and refurbished
branches and a new operations center, and depreciation charges relating to
investments in technology were the primary factors for the higher costs.
ASSET QUALITY
Non-performing loans totaled $215 thousand or 0.05 percent of total loans
at December 31, 2003 as compared to $383 thousand or 0.09 percent at December
31, 2002. The allowance for loan losses was $5.5 million or 1.28 percent of
total loans at December 31, 2003 as compared to $4.8 million or 1.17 percent of
total loans at December 31, 2002. Net recoveries were $41 thousand for the
fourth quarter of 2003 as compared to net recoveries of $3 thousand during the
fourth quarter of 2002.
CAPITAL
Shareholders' equity totaled $85.1 million at December 31, 2003, an
increase of $7.9 million or 10.2 percent over the $77.2 million reported at
December 31, 2002. The Corporation's leverage ratio, tier 1 and total risk based
capital ratios at December 31, 2003 were 8.91 percent, 20.38 percent and 21.74
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 $1.4 billion in assets at market value under
management at December 31, 2003, operates at the Bank's main office located at
190 Main Street in Gladstone, New Jersey, and the Chatham Office located at 311
Main Street, Chatham, 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.
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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, an 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, a decline in levels
of loan quality and origination volume and a decline in the volume of increase
in trust assets or deposits. 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 Three Months Ended At or For Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
-------------------------------- ------------------------------
Income Statement Data:
Interest income $ 10,447 $ 10,828 $ 41,426 $ 43,947
Interest expense 2,314 2,993 10,262 12,055
Net interest income 8,133 7,835 31,164 31,892
Provision for loan losses 150 201 600 800
Net interest income after
provision for loan losses 7,983 7,634 30,564 31,092
Other income 764 817 3,266 3,258
Securities Gains 57 34 1,284 52
Trust Fees 1,337 1,101 5,759 4,678
Other expense 5,964 5,498 22,786 21,355
Income before income taxes 4,177 4,088 18,087 17,725
Income tax expense 1,304 1,340 5,787 5,800
Net income $ 2,873 $ 2,748 $ 12,300 $ 11,925
Balance Sheet Data:
Total assets $ 968,126 $ 859,808
Federal funds sold 5,461 20,400
Short-term investments 30,949 549
Securities held to maturity 97,701 168,066
Securities available for sale 355,998 212,259
Loans 427,001 409,760
Allowance for Loan Losses 5,467 4,798
Deposits 845,771 769,688
Borrowings 30,032 5,000
Shareholders' equity 85,054 77,158
Trust Department Assets (book value, not included above) 1,089,447 $1,000,272
Average Balance Sheet Data:
Total Assets $ 947,634 $ 836,870 $ 918,961 $ 780,565
Earning Assets 896,552 790,054 868,478 736,080
Loans, net 411,054 414,078 402,136 420,281
Interest-Bearing Deposits 660,302 624,141 655,433 579,640
Demand Deposits 148,324 122,222 139,476 115,487
Borrowings 48,356 5,842 35,248 7,814
Shareholders' equity 83,636 75,693 81,226 69,894
Performance Ratios:
Return on average assets 1.21% 1.31% 1.34% 1.53%
Return on average equity 13.74 14.52 15.14 17.06
Efficiency Ratio 58.28% 56.37% 56.70% 53.62%
Net Interest Margin
(Taxable Equivalent Basis) 3.49% 3.97% 3.47% 4.35%
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
At or For The Three Months Ended At or For Twelve Months Ended
December 31, December 31,
2003 2002 2003 2002
-------------------------------- ------------------------------
Asset Quality:
Loans past due over 90 days and still accruing $ 56 $ 203
Non-accrual loans 159 180
Net recoveries/(charge-offs) 41 3 69 (25)
Allowance for loan losses
to total loans 1.28 % 1.17%
Per Share Data: (1)
Earnings per share (Basic) $ 0.39 $ 0.37 $ 1.67 $ 1.62
Earnings per share (Diluted) 0.38 0.36 1.62 1.59
Book Value per share 11.47 10.47
Capital Adequacy:
Tier I Leverage 8.91% 9.19%
Tier I Capital to Risk-Weighted Assets 20.38 19.51
Tier I & Tier II Capital to Risk-Weighted Assets 21.74 20.81
(1) Restated for the 2 for 1 stock split declared September 12, 2002
and the 10% stock dividend declared September 11, 2003