Contact:
Arthur F. Birmingham
Peapack-Gladstone Financial Corporation
T: 908-719-4308
PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS THIRD QUARTER RESULTS
NEW BRIDGEWATER BRANCH EXCEEDS DEPOSIT GROWTH
EXPECTATIONS
GLADSTONE, N.J.--(BUSINESS WIRE)--November 1, 2005 - Peapack-Gladstone Financial
Corporation (AMEX:PGC) reported net income for the first nine months of 2005 of
$10.1 million, an increase of $111 thousand from the $10.0 million reported for
the same period last year. Diluted earnings per share for the nine months ended
September 30, 2005 was $1.21, an increase of 1.7 percent over the $1.19 recorded
in the year ago period. These results produced a return on average assets of
1.17 percent and a return on average equity of 13.92 percent.
Net income was $3.2 million for the third quarter of 2005, a decline of
$320 thousand, or 9.1 percent as compared to the same period last year. Net
income per diluted share was $0.38, a decline of 9.5 percent as compared to the
$0.42 reported in the third quarter of 2004. Net income and diluted earnings per
share were consistent with the second quarter of 2005.
"The third quarter was highlighted by robust growth in both the loan
portfolio and deposits," said Frank A. Kissel, Chairman and Chief Executive
Officer. "Our new Bridgewater branch has generated deposits of $25 million in
its first two months of operation, exceeding our expectations by a wide margin.
"The net interest margin and the corresponding net interest income
continues to be negatively impacted by a combination of an aberrant rate cycle,
market pressure on loan spreads and the change in deposit funding mix towards
higher cost certificates and money market accounts. While our net interest
margin will likely remain under pressure in the short term, we believe the
relatively short repricing term of our earning assets will yield margin
expansion when the interest rate yield curve returns to more historically normal
levels. We remain confident that our strategy of providing superior service will
enable us to grow and expand our customer relationships and further drive our
business expansion.
"We also continue to benefit from the income diversification provided by
our PGB Trust and Investments division which recorded another excellent increase
in trust fee income."
EARNINGS
Net Interest Income
In the third quarter of 2005, net interest income, on a fully
tax-equivalent basis, was $9.02 million, a decline of $235 thousand or 2.5
percent over the same period last year and a decrease of $187 thousand or 2.0
percent over the second quarter of 2005. On a fully tax-equivalent basis, the
net interest margin for the third quarter of 2005 was 3.18 percent as compared
to 3.78 percent for the same period last year and 3.37 percent in the second
quarter of 2005. These declines are primarily the result of the flattening yield
curve with funding costs increasing significantly faster than yields on new loan
originations. The yield on earning assets increased over the second quarter of
2005 by 12 basis points,
while cost of funds increased 33 basis points. The sharp rise in funding costs
was due to the raising of short-term interest rates by the Federal Reserve,
competitive pricing pressure, and a change in funding mix into higher cost
products.
Average loans for the third quarter of 2005 increased $225.0 million or
44.8 percent to $727.5 million from $502.6 million for the third quarter of
2004. In the third quarter of 2005, as compared to the third quarter of 2004,
the average mortgage loan portfolio experienced growth of $202.2 million or 52.3
percent, while the average commercial loan portfolio grew $18.9 million or 23.6
percent. Most of the mortgage loan growth was in adjustable-rate residential
mortgage loans, which resulted from new business initiatives and our entry into
new market areas. For the third quarter of 2005, average deposits grew $122.3
million, or 14.0 percent to $995.4 million from $873.0 million for the third
quarter of 2004. Contributing to deposit growth was the continued success of the
Fed Tracker Money Market Account, the Fed Flyer CD and the Master Escrow
Account, products that have been favorably received by our customers. Average
short-term borrowings increased $24.6 million from $39.5 million in the third
quarter of 2004 to $64.1 million for the third quarter of 2005. Average
short-term borrowings represented 5.9 percent of total average funding during
the third quarter of 2005.
Other Income
Other income was $2.9 million for the third quarter of 2005, an increase
of $464 thousand, or 18.7 percent from the $2.5 million recorded for the third
quarter of 2004. Securities gains of $216 thousand and $12 thousand were
recorded in the third quarters of 2005 and 2004, respectively. Income from PGB
Trust and Investments was $1.9 million, an increase of $229 thousand or 13.7
percent over third quarter 2004 levels. The increased fee income is attributable
to growth in client assets, which increased $154.4 million, or 9.9 percent, in
market value over the third quarter of 2004.
Other Expenses
Other expenses totaled $6.9 million for the third quarter of 2005, an
increase of $719 thousand or 11.7 percent, when compared to $6.1 million for the
same quarter of 2004. Salaries and benefits expense was $3.8 million for the
third quarter of 2005 as compared to $3.5 million for the same quarter of 2004,
increasing $305 thousand, or 8.8 percent. Normal salary increases, as well as
additions to staff, branch expansion and higher group health insurance and
pension plan costs accounted for the increase. Occupancy and equipment expenses
increased $275 thousand or 19.4 percent to $1.7 million for the third quarter of
2005 as compared to $1.4 million for the same quarter of 2004. In the past year,
occupancy and equipment expenses have grown due to the investment in two new
branches. Other non-interest expense increased $139 thousand or 11.1 percent to
$1.4 million for the third quarter of 2005 as compared to $1.3 million for the
same quarter of 2004. The significant components of other expense include
advertising, stationery and supplies, professional fees and trust division
expense. Advertising expense experienced the most significant increase, $68
thousand or 61.8 percent, due to marketing campaigns for new branches and new
products.
ASSET QUALITY
At September 30, 2005, non-performing loans totaled $532 thousand or 0.07
percent of total loans as compared to $289 thousand or 0.05 percent at September
30, 2004.
Mr. Kissel stated, "We are pleased to report that credit quality remains
strong with low levels of loan delinquencies. During this period of strong loan
growth, we remain committed to maintaining credit quality."
The allowance for loan losses was $6.5 million or 0.87 percent of total
loans at September 30, 2005 as compared to $5.9 million or 1.07 percent of total
loans at September 30, 2004. Net recoveries of $10 thousand were recorded in the
first nine months of 2005 while $65 thousand of net charge-offs were recorded in
the first nine months of 2004.
CAPITAL
At September 30, 2005, shareholders' equity totaled $98.5 million as
compared with $92.7 million at September 30, 2004, an increase of $5.8 million
or 6.2 percent. The Corporation's leverage ratio, tier 1 and total risk based
capital ratios at September 30, 2005 were 8.67 percent, 17.05 percent and 18.16
percent, respectively.
In accordance with the stock buy back program announced on April 15, 2005,
the Corporation repurchased 16,000 shares during the third quarter of 2005 at an
average price of $27.25 per share.
Peapack-Gladstone Financial Corporation is a bank holding company with
total assets of $1.22 billion as of September 30, 2005. Peapack-Gladstone Bank,
its wholly owned community bank was established in 1921, and has 20
branches in Somerset, Hunterdon and Morris Counties. Its Trust Division, PGB
Trust and Investments, operates at the Bank's main office located at 190 Main
Street in Gladstone and at its Morristown office located at 233 South Street. 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", 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, unanticipated costs in connection with new
branch openings, an unexpected decline in the direction of the economy in New
Jersey, unexpected changes in interest rates, unexpected loan prepayment volume,
a decline in levels of loan quality, development of new tax strategies or the
disallowance of prior tax strategies 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 At or For The Nine Months
Ended Ended
September 30, September 30,
2005 2004 2005 2004
---- ---- ---- ----
Income Statement Data:
Interest Income $ 14,266 $ 11,547 $ 40,324 $ 32,809
Interest Expense 5,504 2,525 13,589 6,930
-------- -------- ---------- ----------
Net Interest Income 8,762 9,022 26,735 25,879
Provision For Loan Losses 150 150 500 450
-------- -------- ---------- ----------
Net Interest Income After
Provision For Loan Losses 8,612 8,872 26,235 25,429
Trust Fees 1,895 1,666 5,815 5,141
Other Income 828 797 2,484 2,262
Securities Gains 216 12 551 612
Other Expenses 6,861 6,142 20,434 18,685
-------- -------- ---------- ----------
Income Before Income Taxes 4,690 5,205 14,651 14,759
Income Tax Expense 1,475 1,670 4,515 4,734
-------- -------- ---------- ----------
Net Income $ 3,215 $ 3,535 $ 10,136 $ 10,025
======== ======== ========== ==========
Balance Sheet Data:
Total Assets $1,224,936 $1,055,575
Federal Funds Sold 19,523 1,897
Short-Term Investments 830 656
Securities Held To Maturity 69,060 91,946
Securities Available For Sale 316,287 351,578
Loans 752,052 546,742
Allowance For Loan Losses 6,514 5,852
Deposits 1,044,077 879,872
Borrowings 77,133 75,308
Shareholders' Equity 98,474 92,686
Trust Division Assets
(Market Value, Not
Included Above) $1,715,283 $1,560,904
Performance Ratios:
Return on Average Assets 1.08% 1.37% 1.17% 1.34%
Return on Average Equity 13.00 16.00 13.92 15.29
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
At or For The Three Months At or For The Nine Months
Ended Ended
September 30, September 30,
2005 2004 2005 2004
---- ---- ---- ----
Net Interest Margin
(Taxable Equivalent Basis) 3.18% 3.78% 3.36% 3.78%
Asset Quality:
Loans past due over 90 days
And Still Accruing $ $ $ 192 $ 188
Non-Accrual Loans 340 101
Net Recoveries/(Charge-Offs) (2) (4) 10 (65)
Allowance For Loan Losses
To Total Loans 0.87% 1.07%
Per Share Data: (1)
Earnings Per Share (Basic) $ 0.39 $ 0.43 $ 1.22 $ 1.22
Earnings Per Share (Diluted) 0.38 0.42 1.21 1.19
Book Value Per Share 11.88 11.28
Dividends Per Share 0.36 0.31
Capital Adequacy:
Tier I Leverage 8.67% 9.08%
Tier I Capital to Risk-
Weighted Assets 17.05 19.59
Tier I & II Capital to
Risk-Weighted Assets 18.16 20.86
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTERS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
September 30, 2005 September 30, 2004
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 350,342 $ 3,567 4.07% $ 427,945 $ 4,061 3.80%
Tax-Exempt (1) (2) 52,334 638 4.88 46,753 582 4.98
Loans (2) (3) 727,517 10,291 5.66 502,552 7,133 5.68
Federal Funds Sold 2,670 23 3.40 1,475 5 1.36
Interest-Earning Deposits 1,014 8 3.18 715 2 1.12
---------- ------------------- ---------- -----------------
Total Interest-Earning
Assets 1,133,877 $14,527 5.12% 979,440 $11,783 4.81%
---------- ------------------- ---------- -----------------
Noninterest-Earning Assets:
Cash and Due from Banks 21,171 19,969
Allowance for Loan
Losses (6,367) (5,769)
Premises and Equipment 21,606 18,242
Other Assets 24,697 23,407
---------- ----------
Total Noninterest-Earning
Assets 61,107 55,849
---------- ----------
Total Assets $1,194,984 $1,035,289
========== ==========
LIABILITIES:
Interest-Bearing Deposits
Checking $ 196,156 $ 674 1.37% $ 165,293 $ 279 0.68%
Money Markets 154,565 1,124 2.91 66,220 117 0.71
Tiered Money Markets 95,849 363 1.51 155,854 367 0.94
Savings 98,657 172 0.70 109,557 169 0.62
Certificates of Deposit 277,733 2,307 3.32 218,611 1,183 2.16
---------- ------------------- ---------- -----------------
Total Interest-Bearing
Deposits 822,960 4,640 2.26 715,535 2,115 1.18
Borrowings 96,398 864 3.59 68,474 410 2.40
---------- ------------------- ---------- -----------------
Total Interest-Bearing
Liabilities 919,358 5,504 2.39 784,009 2,525 1.29
---------- ------------------- ---------- -----------------
Noninterest Bearing
Liabilities
Demand Deposits 172,421 157,508
Accrued Expenses and
Other Liabilities 4,287 5,409
---------- ----------
Total Noninterest-Bearing
Liabilities 176,708 162,917
Shareholders' Equity 98,918 88,363
---------- ----------
Total Liabilities and
Shareholders' Equity $1,194,984 $1,035,289
========== ==========
Net Interest Income $ 9,023 $ 9,258
======= =======
Net Interest Spread 2.73% 3.52%
==== ====
Net Interest Margin (4) 3.18% 3.78%
==== ====
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTERS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
September 30, 2005 June 30, 2005
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 350,342 $ 3,567 4.07% $ 385,908 $ 3,891 4.03%
Tax-Exempt (1) (2) 52,334 638 4.88 55,881 655 4.69
Loans (2) (3) 727,517 10,291 5.66 649,733 9,101 5.60
Federal Funds Sold 2,670 23 3.40 1,719 12 2.90
Interest-Earning Deposits 1,014 8 3.18 776 6 3.02
---------- ----------------- ---------- ----------------
Total Interest-Earning Assets 1,133,877 $ 14,527 5.12% 1,094,017 $13,665 5.00%
---------- ----------------- ---------- ----------------
Noninterest-Earning Assets:
Cash and Due from Banks 21,171 21,641
Allowance for Loan Losses (6,367) (6,166)
Premises and Equipment 21,606 21,155
Other Assets 24,697 23,703
---------- ----------
Total Noninterest-Earning Assets 61,107 60,333
---------- ----------
Total Assets $1,194,984 $1,154,350
========== ==========
LIABILITIES:
Interest-Bearing Deposits
Checking $196,156 $ 674 1.37% $ 205,237 $ 609 1.19%
Money Markets 154,565 1,124 2.91 130,355 789 2.42
Tiered Money Markets 95,849 363 1.51 103,468 375 1.45
Savings 98,657 172 0.70 101,952 177 0.69
Certificates of Deposit 277,733 2,307 3.32 259,392 1,895 2.92
---------- ----------------- ---------- ----------------
Total Interest-Bearing Deposits 822,960 4,640 2.26 800,404 3,845 1.92
Borrowings 96,398 864 3.59 74,668 610 3.27
---------- ----------------- ---------- ----------------
Total Interest-Bearing Liabilities 919,358 5,504 2.39 875,072 4,455 2.04
---------- ----------------- ---------- ----------------
Noninterest Bearing
Liabilities
Demand Deposits 172,421 177,270
Accrued Expenses and
Other Liabilities 4,287 5,297
---------- ----------
Total Noninterest-Bearing
Liabilities 176,708 182,567
Shareholders' Equity 98,918 96,711
---------- ----------
Total Liabilities and
Shareholders' Equity $1,194,984 $1,154,350
========== ==========
Net Interest Income
(tax-equivalent basis) 9,023 9,210
========== ==========
Net Interest Spread 2.73% 2.96%
==== ====
Net Interest Margin (4) 3.18% 3.37%
==== ====
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
YEAR-TO-DATE
(Tax-Equivalent Basis, Dollars in Thousands)
September 30, 2005 September 30, 2004
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 379,263 $ 11,461 4.03% $ 429,385 $ 12,234 3.80%
Tax-Exempt (1) (2) 53,321 1,898 4.75 42,018 1,606 5.09
Loans (2) (3) 657,264 27,672 5.61 457,791 19,561 5.70
Federal Funds Sold 2,057 46 2.97 5,841 43 0.98
Interest-Earning Deposits 806 17 2.87 1,905 15 1.05
----------- ----------------- --------- ----------------
Total Interest-Earning
Assets 1,092,711 $ 41,094 5.01% 936,940 $ 33,459 4.76%
----------- ----------------- --------- ----------------
Noninterest-Earning Assets:
Cash and Due from Banks 21,260 19,483
Allowance for Loan
Losses (6,188) (5,640)
Premises and Equipment 20,984 17,255
Other Assets 24,534 25,825
----------- ---------
Total Noninterest-Earning
Assets 60,590 56,923
----------- ---------
Total Assets $ 1,153,301 $ 993,863
=========== =========
LIABILITIES:
Interest-Bearing Deposits
Checking $ 200,727 $ 1,811 1.20% $ 153,285 $ 629 0.55%
Money Markets 130,224 2,348 2.40 65,926 311 0.63
Tiered Money Markets 107,292 1,153 1.43 148,167 1,013 0.91
Savings 102,077 530 0.69 106,393 493 0.62
Certificates of Deposit 263,072 5,835 2.96 221,711 3,531 2.12
----------- ----------------- --------- ---------------
Total Interest-Bearing
Deposits 803,392 11,677 1.94 695,482 5,977 1.15
Borrowings 76,013 1,912 3.35 48,017 953 2.64
----------- ----------------- --------- ---------------
Total Interest-Bearing
Liabilities 879,405 13,589 2.06 743,499 6,930 1.24
----------- ----------------- --------- ---------------
Noninterest Bearing
Liabilities
Demand Deposits 172,033 156,740
Accrued Expenses and
Other Liabilities 4,806 6,188
----------- ---------
Total Noninterest-Bearing
Liabilities 176,839 162,928
Shareholders' Equity 97,057 87,436
----------- ---------
Total Liabilities and
Shareholders' Equity $ 1,153,301 $ 993,863
=========== =========
Net Interest Income $ 27,505 $ 26,529
======== ========
Net Interest Spread 2.95% 3.52%
===== =====
Net Interest Margin 3.36% 3.78%
===== =====
(1) Average balances for available-for sale securities are based on amortized
cost.
(2) Interest income is presented on a tax-equivalent basis using a 35 percent
federal tax rate.
(3) Loans are stated net of unearned income and include non-accrual loans.
(4) Net interest income on a tax-equivalent basis as a percentage of total
average interest-earning assets.