Exhibit 99.1
Contact:
Arthur F. Birmingham
Peapack-Gladstone Financial Corporation
T: 908-719-4308
PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS FOURTH QUARTER AND ANNUAL EARNINGS
GLADSTONE, N.J.--(BUSINESS WIRE)--February 1, 2007 - Peapack-Gladstone Financial
Corporation (AMEX:PGC) today announced fourth quarter and annual financial
results for 2006. Net income for the fourth quarter was $2.89 million, a
decrease of $100 thousand, compared to the same period last year. Diluted
earnings per share for the fourth quarter were $0.34, as compared to $0.36
reported in the fourth quarter of 2005. The annualized return on average assets
was 0.90 percent and the annualized return on average equity was 11.05 percent
for the fourth quarter of 2006.
Net income for the year ended December 31, 2006 was $10.23 million
compared to $13.13 million in 2005. Diluted earnings per share were $1.22 and
$1.56 for the twelve months ended December 31, 2006 and 2005, respectively. For
the year ended December 31, 2006, the annualized return on average assets was
0.79 percent and the annualized return on average equity was 10.10 percent.
In September 2006, the Corporation sold $61.6 million of
available-for-sale securities, which were yielding 4.14 percent, and resulted in
an after-tax charge of approximately $1.1 million. The majority of the proceeds
from the sale were used to redeem high cost, short-term borrowings and
approximately $20 million were used to purchase floating rate securities.
Excluding the impact of the balance sheet restructuring, the Corporation would
have reported net income of $11.34 million or $1.36 per dilutive share for the
year ended December 31, 2006, with resulting return on average assets of 0.88
percent and annualized return on average equity of 11.21 percent.
<page>
Chairman of the Board, Frank A. Kissel stated, "Despite the challenging
interest rate environment that continues to adversely impact our net interest
income and margin, we are pleased with our annual performance. Loan and deposit
growth was strong in 2006, with average balances increasing by $145.7 million
and $83.5 million, respectively."
Mr. Kissel continued, "The balance sheet restructuring completed in
September positively affected our net interest income in the fourth quarter of
2006 with the net interest margin increasing 20 basis points over the third
quarter of 2006. We will continue to monitor operating expenses for potential
savings and look for opportunities to grow our commercial loan portfolios."
EARNINGS
Net Interest Income
Net interest income, on a fully tax-equivalent basis, was $8.5 million in
the fourth quarter of 2006, a decline of $336 thousand or 3.8 percent from the
same quarter last year and an increase of $351 thousand or 4.3 percent over the
third quarter of 2006. The net interest margin, on a fully tax-equivalent basis,
was 2.79 percent for the fourth quarter of 2006 as compared to 3.02 percent for
the same period last year and 2.59 percent for the third quarter of 2006. Due to
the inverted yield curve, funding costs continue to increase at a faster pace
than yields on new loan originations and securities purchases. However, the
Corporation's strategic decision to implement a balance sheet restructuring and
its efforts to grow the Corporation's commercial loan portfolios have resulted
in higher net interest and margin in the fourth quarter as compared to the third
quarter of 2006.
The yield on earning assets was 5.81 percent for the fourth quarter of
2006 and 5.25 percent for the same quarter of 2005, increasing by 56 basis
points, while the cost of interest-bearing liabilities increased 95 basis points
from 2.75 percent in the fourth quarter of 2005 to 3.70 percent in the fourth
quarter of 2006.
Average loans continued to grow at a strong pace, averaging $871.7 million
in the fourth quarter of 2006, increasing $113.7 million or 15.0 percent over
the fourth quarter of 2005. During this period, the average commercial loan
portfolio grew $46.4 million or 42.3 percent, reflecting the Corporation's
commitment to changing the total loan mix toward higher yielding commercial and
construction loans. The average mortgage loan portfolio grew by $56.8 million or
9.4 percent. A majority of the mortgage loan growth was in balloon and
adjustable-rate residential mortgage loans. Yields on loans improved by 34 basis
points to 6.10 percent for the fourth quarter of 2006 when compared to the same
period of 2005.
<page>
Average investments for the fourth quarter of 2006 declined $69.7 million
when compared to the fourth quarter of 2005 and yields on investments increased
75 basis points to 5.07 percent over the same period. The Corporation invested
the proceeds of maturing and sold securities into higher yielding loans and
securities and retired higher rate short-term borrowings.
For the fourth quarter of 2006, average deposits totaled $1.1 billion, an
increase of $103.2 million or 10.1 percent over the average for the fourth
quarter of 2005, while average rates paid on interest-bearing deposits were 3.66
percent as compared to 2.58 percent for the same quarter of 2005, an increase of
108 basis points or 41.9 percent. While the Federal Reserve Bank did not
increase the federal funds rate in the fourth quarter, deposit gathering remains
highly competitive and deposit rates continued to rise. Money markets and
certificates of deposit continue to be the deposit products experiencing the
fastest growth, with rates averaging 4.15 percent and 4.78 percent,
respectively, for the fourth quarter of 2006. Interest-bearing checking, which
includes escrow accounts, declined $30.5 million, averaging $132.8 million for
the fourth quarter of 2006. The decline was primarily due to the loss of two
large municipal escrow accounts, which required above-market interest rates,
which the Corporation was not willing to pay.
Average borrowings decreased by $61.0 million from $109.6 million in the
fourth quarter of 2005 to $48.6 million for the same quarter of 2006 as a result
of the balance sheet restructuring. Average non-interest bearing demand deposits
increased $4.7 million or 2.7 percent in the fourth quarter of 2006 from the
year ago period.
Other Income
For the fourth quarter of 2006, other income totaled $3.2 million, as
compared to $2.6 million for the same quarter of 2005, an increase of $530
thousand, or 20.0 percent. PGB Trust and Investments generated $2.2 million in
fee income in the fourth quarter of 2006, an increase of $347 thousand or 19.0
percent over the same quarter of 2005. The market value of trust assets under
management was over $1.9 billion at December 31, 2006, an increase of $163.1
million or 9.3 percent over the market value at December 31, 2005.
Other Expenses
Other expenses totaled $7.2 million for the fourth quarter of 2006, an
increase of $281 thousand, or 4.0 percent when compared to the fourth quarter of
2005. Salaries and benefits expense was $4.0 million for the fourth quarter of
2006, increasing $508 thousand or 14.6 percent from the year ago period. Lower
bonus and profit sharing plan contributions in the fourth quarter of 2005,
offset in part by normal salary increases, additions to professional staff and
higher group health insurance, accounted for the increase. For the fourth
quarter of 2006, premises and equipment expenses were $1.7 million, decreasing
$83 thousand or 4.7 percent from the year ago period. During the fourth quarter
of 2006, other expenses decreased $144 thousand or 8.6 percent to $1.5 million,
when compared to the same period of 2005.
INCOME TAXES
Income tax expense as a percentage of pre-tax income was 27.8 percent and
29.6 percent for the three months ended December 31, 2006 and 2005 respectively.
The effective tax rate decreased due to increased tax-exempt income, as well as,
a decline in state income tax due to a higher proportion of revenue being
generated at a lower effective state tax rate.
<page>
ASSET QUALITY
At December 31, 2006, non-performing loans totaled $1.9 million or 0.22
percent of total loans as compared to $386 thousand or 0.05 percent of total
loans at December 31, 2005. The increase in non-performing assets in the fourth
quarter is primarily the result of a commercial mortgage loan and line of credit
of $1.5 million, which are well collateralized. No loss of principal or interest
is anticipated.
The allowance for loan losses was $6.8 million or 0.78 percent of total
loans at December 31, 2006 as compared to $6.4 million or 0.83 percent of total
loans at December 31, 2005. There were net charge-offs of $11 thousand in the
fourth quarter of 2006 as compared to $12 thousand of net charge-offs in the
fourth quarter of 2005.
CAPITAL
At December 31, 2006, shareholders' equity totaled $103.8 million as
compared with $99.2 million at December 31, 2005, an increase of $4.6 million,
or 4.6 percent. The Corporation's leverage ratio, tier 1 and total risk based
capital ratios at December 31, 2006 were 8.20 percent, 15.33 percent and 16.31
percent, respectively.
Due to the adoption of Statement of Financial Accounting Standards No. 158
on December 31, 2006, the Corporation recorded a $1.3 million, after-tax
decrease to accumulated other comprehensive income to recognize the unfunded
portion of its defined benefit pension plan.
In the fourth quarter of 2006, the Corporation did not purchase any shares
under its stock buy back program. A total of 60,900 shares have been repurchased
since the program was originally announced and 89,100 shares are eligible to be
repurchased under the program in the future.
Peapack-Gladstone Financial Corporation is a bank holding company with
total assets of $1.29 billion as of December 31, 2006. Peapack-Gladstone Bank,
its wholly owned community bank, was established in 1921, and has 21 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, the ability of management to effectively
execute its balance sheet restructuring initiative, 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)
<page>
<table>
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 Twelve Months
Ended Ended
December 31, December 31,
2006 2005 2006 2005
---- ---- ---- ----
<s>
Income Statement Data:
Interest Income $ 17,368 $ 15,091 $ 67,267 $ 55,414
Interest Expense 9,152 6,535 34,444 20,123
---------- ---------- ---------- ----------
Net Interest Income 8,216 8,556 32,823 35,291
Provision For Loan Losses 150 0 414 391
---------- ---------- ---------- ----------
Net Interest Income After
Provision For Loan Losses 8,066 8,556 32,409 34,900
Trust Fees 2,172 1,825 8,367 7,640
Other Income 1,003 820 3,681 3,304
Securities (Losses)/Gains 0 0 (1,781) 551
Other Expenses 7,230 6,949 28,945 27,492
---------- ---------- ---------- ----------
Income Before Income Taxes 4,011 4,252 13,731 18,903
Income Tax Expense 1,117 1,258 3,505 5,773
---------- ---------- ---------- ----------
Net Income $ 2,894 $ 2,994 $ 10,226 $ 13,130
========== ========== ========== ==========
Balance Sheet Data:
Total Assets $1,288,376 $1,255,383
Federal Funds Sold 103 2,631
Short-Term Investments 6,965 1,295
Securities Held To Maturity 55,165 78,084
Securities Available For Sale 286,186 341,584
Loans 870,153 768,473
Allowance For Loan Losses 6,768 6,378
Deposits 1,144,736 1,041,996
Borrowings 23,964 109,205
Shareholders' Equity 103,763 99,155
Trust Division Assets under
Management (Market
Value, Not Included
Above) $1,924,954 $1,761,846
Performance Ratios:
Return on Average Assets 0.90% 0.97% 0.79% 1.12%
Return on Average Equity 11.05 12.20 10.10 13.49
</table>
<page>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
<table>
At or For The Three Months At or For The Twelve Months
Ended Ended
December 31, December 31,
2006 2005 2006 2005
---- ---- ---- ----
<s>
Net Interest Margin
(Taxable Equivalent Basis) 2.79% 3.02% 2.76% 3.27%
Asset Quality:
Loans past due over 90 days
And Still Accruing $ 197 $ 47
Non-Accrual Loans 1,880 339
Net (Charge-Offs)/Recoveries $ (11) $ (12) (24) (2)
Allowance For Loan Losses
To Total Loans 0.78% 0.83%
Per Share Data:
Earnings Per Share (Basic) $ 0.35 $ 0.36 $ 1.24 $ 1.58
Earnings Per Share (Diluted) 0.34 0.36 1.22 1.56
Book Value Per Share 12.55 11.97
Dividends Per Share 0.58 0.50
Capital Adequacy:
Tier I Leverage 8.20% 8.66%
Tier I Capital to Risk-
Weighted Assets 15.33 16.71
Tier I & II Capital to
Risk-Weighted Assets 16.31 17.78
</table>
<page>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTERS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
<table>
December 31, 2006 December 31, 2005
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----
<s>
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 290,532 $ 3,634 5.00% $ 356,867 $ 3,749 4.20%
Tax-Exempt (1) (2) 47,617 653 5.49 50,983 652 5.12
Loans (2) (3) 871,664 13,291 6.10 757,972 10,921 5.76
Federal Funds Sold 3,282 43 5.29 2,835 28 3.91
Interest-Earning Deposits 1,548 18 4.70 809 8 4.07
------------ ----------- ----- ------------- ------------ -----
Total Interest-Earning
Assets 1,214,643 $ 17,639 5.81% 1,169,466 $ 15,358 5.25%
------------ ----------- ----- ------------- ------------ -----
Noninterest-Earning Assets:
Cash and Due from Banks 23,068 21,858
Allowance for Loan
Losses (6,632) (6,517)
Premises and Equipment 23,649 21,540
Other Assets 25,465 23,026
------------ -------------
Total Noninterest-Earning
Assets 65,550 59,907
------------ -------------
Total Assets $ 1,280,193 $ 1,229,373
============ =============
LIABILITIES:
Interest-Bearing Deposits
Checking $ 132,834 $ 301 0.91% $ 163,344 381 0.93%
Money Markets 357,379 3,705 4.15 283,461 2,112 2.98
Savings 75,773 132 0.70 92,223 161 0.70
Certificates of Deposit 374,529 4,476 4.78 303,015 2,774 3.66
------------ ----------- ----- ------------- ------------ -----
Total Interest-Bearing
Deposits 940,515 8,614 3.66 842,043 5,428 2.58
Borrowings 48,638 538 4.42 109,642 1,107 4.04
------------ ----------- ----- ------------- ------------ -----
Total Interest-Bearing
Liabilities 989,153 9,152 3.70 951,685 6,535 2.75
------------ ----------- ----- ------------- ------------ -----
Noninterest Bearing
Liabilities
Demand Deposits 179,338 174,649
Accrued Expenses and
Other Liabilities 6,962 4,891
------------ -------------
Total Noninterest-Bearing
Liabilities 186,300 179,540
Shareholders' Equity 104,740 98,148
------------ -------------
Total Liabilities and
Shareholders' Equity $ 1,280,193 $ 1,229,373
============ =============
Net Interest Income $ 8,487 8,823
=========== ============
Net Interest Spread 2.11% 2.50%
===== =====
Net Interest Margin (4) 2.79% 3.02%
===== =====
</table>
<page>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTERS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
<table>
December 31, 2006 September 30, 2006
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
<s>
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 290,532 $ 3,634 5.00% $ 346,130 $ 4,009 4.63%
Tax-Exempt (1) (2) 47,617 653 5.49 51,543 699 5.42
Loans (2) (3) 871,664 13,291 6.10 856,142 13,046 6.10
Federal Funds Sold 3,282 43 5.29 2,298 30 5.25
Interest-Earning Deposits 1,548 18 4.70 1,724 21 5.04
------------ ----------- ----- ------------- ------------ -----
Total Interest-Earning
Assets 1,214,643 $ 17,639 5.81% 1,257,837 $ 17,805 5.66%
------------ ----------- ----- ------------- ------------ -----
Noninterest-Earning Assets:
Cash and Due from Banks 23,068 22,414
Allowance for Loan
Losses (6,632) (6,515)
Premises and Equipment 23,649 23,527
Other Assets 25,465 22,204
------------ -------------
Total Noninterest-Earning
Assets 65,550 61,630
------------ -------------
Total Assets $ 1,280,193 $ 1,319,467
============ =============
LIABILITIES:
Interest-Bearing Deposits
Checking $ 132,834 $ 301 0.91% $ 133,207 $ 307 0.92%
Money Markets 357,379 3,705 4.15 327,374 3,348 4.09
Savings 75,773 132 0.70 79,881 139 0.70
Certificates of Deposit 374,529 4,476 4.78 365,602 4,239 4.64
------------ ----------- ----- ------------- ------------ -----
Total Interest-Bearing
Deposits 940,515 8,614 3.66 906,064 8,033 3.55
Borrowings 48,638 538 4.42 129,966 1,636 5.04
------------ ----------- ----- ------------- ------------ -----
Total Interest-Bearing
Liabilities 989,153 9,152 3.70 1,036,030 9,669 3.73
------------ ----------- ----- ------------- ------------ -----
Noninterest Bearing
Liabilities
Demand Deposits 179,338 175,892
Accrued Expenses and
Other Liabilities 6,962 6,543
------------ -------------
Total Noninterest-Bearing
Liabilities 186,300 182,435
Shareholders' Equity 104,740 101,002
------------ -------------
Total Liabilities and
Shareholders' Equity $ 1,280,193 $ 1,319,467
============ =============
Net Interest Income $ 8,487 $ 8,136
=========== ============
Net Interest Spread 2.11% 1.93%
===== =====
Net Interest Margin (4) 2.79% 2.59%
===== =====
</table>
<page>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
YEAR-TO-DATE
(Tax-Equivalent Basis, Dollars in Thousands)
<table>
December 31, 2006 December 31, 2005
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
<s>
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 345,190 $ 15,857 4.59% $ 373,618 $ 15,210 4.07%
Tax-Exempt (1) (2) 52,040 2,793 5.37 52,732 2,550 4.84
Loans (2) (3) 828,337 49,555 5.98 682,648 38,593 5.65
Federal Funds Sold 2,939 146 4.96 2,253 73 3.26
Interest-Earning Deposits 1,284 61 4.72 807 26 3.17
------------ ----------- ----- ------------- ------------ -----
Total Interest-Earning
Assets 1,229,790 $ 68,412 5.56% 1,112,058 $ 56,452 5.08%
------------ ----------- ----- ------------- ------------ -----
Noninterest-Earning Assets:
Cash and Due from Banks 22,475 21,411
Allowance for Loan
Losses (6,516) (6,271)
Premises and Equipment 23,038 21,124
Other Assets 22,564 24,154
------------ -------------
Total Noninterest-Earning
Assets 61,561 60,418
------------ -------------
Total Assets $ 1,291,351 $ 1,172,476
============ =============
LIABILITIES:
Interest-Bearing Deposits
Checking $ 138,045 $ 1,044 0.76% $ 191,305 $ 2,192 1.15%
Money Markets 317,524 11,955 3.77 249,096 5,613 2.25
Savings 82,016 567 0.69 99,594 691 0.69
Certificates of Deposit 352,114 15,505 4.40 273,140 8,609 3.15
------------ ----------- ----- ------------- ------------ -----
Total Interest-Bearing
Deposits 889,699 29,071 3.27 813,135 17,105 2.10
Borrowings 115,181 5,373 4.66 84,490 3,018 3.57
------------ ----------- ----- ------------- ------------ -----
Total Interest-Bearing
Liabilities 1,004,880 34,444 3.43 897,625 20,123 2.24
------------ ----------- ----- ------------- ------------ -----
Noninterest Bearing
Liabilities
Demand Deposits 179,597 172,692
Accrued Expenses and
Other Liabilities 5,659 4,827
------------ -------------
Total Noninterest-Bearing
Liabilities 185,256 177,519
Shareholders' Equity 101,215 97,332
------------ -------------
Total Liabilities and
Shareholders' Equity $ 1,291,351 $ 1,172,476
============ =============
Net Interest Income $ 33,968 36,329
=========== ============
Net Interest Spread 2.13% 2.84%
===== =====
Net Interest Margin (4) 2.76% 3.27%
===== =====
</table>
(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.