Contact:
Arthur F. Birmingham
Peapack-Gladstone Financial Corporation
T: 908-719-4308
PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS INCREASE IN THIRD QUARTER EARNINGS
GLADSTONE, N.J.--(BUSINESS WIRE)--November 1, 2007 - Peapack-Gladstone Financial
Corporation (AMEX:PGC) reported net income of $2.6 million for the third quarter
of 2007, an increase of $1.3 million or 90.4 percent compared to the same period
last year. Diluted earnings per share were $0.32 for the third quarter of 2007
and $0.17 for the third quarter of 2006. The annualized return on average assets
was 0.81 percent and the annualized return on average equity was 9.91 percent
for the third quarter of 2007. These results include the impact of the 2006
balance sheet restructuring initiative that resulted in an after-tax charge of
$1.1 million, or $0.13 per diluted share in the third quarter of 2006. Excluding
the 2006 restructuring impact on quarterly earnings, the Corporation would have
reported an increase in net income of $140 thousand, or 5.6 percent, in the
third quarter of 2007. Diluted earnings per share excluding the restructuring
charge were $0.30 in the third quarter of 2006.
Net income was $8.2 million for the nine months ended September 30,
2007 as compared to $7.3 million for the same period of 2006, an increase of
$822 thousand or 11.2 percent. Diluted earnings per share were $0.97 for the
first nine months of 2007 compared to $0.88 for the same period in 2006. The
return on average assets was 0.83 percent and the return on average equity was
10.25 percent for the nine months ended September 30, 2007. Net income for the
first nine months of 2007 declined $296 thousand, or 3.5 percent, when compared
$8.5 million for the first nine months of 2006 excluding the impact of the
restructuring initiative. Diluted earnings per share excluding the restructuring
charge were $1.01 for the nine months ended September 30, 2006.
EARNINGS
Net Interest Income
On a fully tax-equivalent basis, net interest income for the third
quarter of 2007 was $9.1 million, an increase of $980 thousand or 12.0 percent
from the same quarter last year and an increase of $209 thousand or 2.3 percent
over the second quarter of 2007. The net interest margin, on a fully
tax-equivalent basis, for the third quarter of 2007 was 2.92 percent as compared
to 2.59 percent for the same period last year and 2.86 percent in the second
quarter of 2007. The increased emphasis on commercial and construction loans in
accordance with the Corporation's strategic plan has contributed to the
improvement in the margin. The Corporation expects the margin to improve further
as the plan progresses.
The yield on earning assets increased by 26 basis points to 5.92
percent in the third quarter of 2007 compared to 5.66 percent for the third
quarter of 2006. Funding costs of interest-bearing liabilities declined slightly
from 3.73 percent for the third quarter of 2006 to 3.71 percent for the third
quarter of 2007. The market for retail deposits remains very competitive and the
positive effect of higher deposits was offset in part by a change in the funding
mix into higher cost products.
For the third quarter of 2007, average loans increased $61.5 million to
$917.6 million as compared to $856.1 million for the same quarter of 2006.
Commercial mortgages, commercial loans and commercial construction loans
increased $58.6 million, or 19.0 percent. The average installment loan portfolio
grew by $3.3 million or 9.8 percent, during this period.
<page>
Frank Kissel, Chairman and CEO, states, "The intended effects of the
balance sheet restructuring initiative undertaken in the third quarter of 2006,
enhancing net interest margin and decreasing overall interest rate risk, are
being realized. We are pleased that the net interest margin for the third
quarter of 2007 shows a 33 basis point improvement over the third quarter of
2006 and average borrowings have declined by more than $94 million."
Mr. Kissel continued, "Another strategy we initiated this year was to
shift our asset mix to place more emphasis on commercial loans and mortgages and
this strategy is also showing strong results. Most of the loan growth this
quarter was in the commercial loan portfolios. While we have been successful in
growing the commercial business, our conservative underwriting requirements
remain unchanged. We believe that a material shift in our asset mix to higher
yielding commercial loans will deliver improved earnings performance over the
coming years. Our balance sheet is uniquely suited to accommodate a gradual and
significant change."
Average deposits grew $77.4 million, or 7.2 percent, for the third
quarter of 2007 to $1.16 billion from $1.08 billion in the third quarter of
2006. For the third quarter of 2007, money market accounts grew $56.6 million,
or 17.3 percent, when compared for the same quarter of 2006, averaging $384.0
million. Certificates of deposit increased $30.9 million, or 8.5 percent, on
average to $396.5 million for the third quarter of 2007. Certificates of deposit
paid an average of 4.90 percent, and money market accounts paid an average of
3.94 percent during the third quarter of 2007, as compared to 4.64 percent and
4.09 percent, respectively, in the same period a year ago.
Average short-term borrowings declined to zero for the third quarter of
2007 from $58.0 million for the same quarter of 2006, a result of the strategic
decision initiated in the third quarter of 2006 to reduce exposure to high-cost,
short-term borrowings and reduce interest rate risk. Average demand deposits
increased $7.6 million or 4.3 percent in the third quarter of 2007 from the year
ago period.
Other Income
Other income recorded in the third quarter of 2007 was $3.2 million as
compared to $915 thousand for the third quarter of 2006, which was primarily due
to the net loss on securities sales of $1.8 million in the third quarter of last
year. Fee income generated by PGB Trust and Investments was $2.3 million, an
increase of $380 thousand or 20.3 percent over the same quarter a year ago. The
market value of trust assets under administration was in excess of $2.06 billion
at September 30, 2007, an increase of $261.2 million or 14.4 percent over the
market value at September 30, 2006. Mr. Kissel noted, "PGB Trust and Investments
is not only an important service for our clients, but it is also a valuable
source of fee income to our organization."
There were no securities gains or losses for the third quarter of 2007,
while the restructuring initiative of 2006 resulted in net securities losses of
$1.8 million in the third quarter.
Other Expenses
Other expenses totaled $8.1 million for the third quarter of 2007 as
compared to $7.3 million for the same quarter of 2006, an increase of $827
thousand or 11.4 percent. Salaries and benefits expense for the third quarter of
2007 was $4.4 million, increasing $494 thousand or 12.6 percent. Normal salary
increases, additions to the professional lending and branch staff and higher
group health insurance accounted for the increase. Premises and equipment
expenses were $2.0 million and $1.8 million for the third quarter of 2007 and
2006, respectively, an increase of $189 thousand, or 10.6 percent, reflecting
investments in a new branch and equipment. All other expense categories
increased $144 thousand or 9.2 percent for the third quarter of 2007 as compared
to 2006 due in part to increased advertising expense. The Corporation opened its
newest branch in Summit in March.
<page>
ASSET QUALITY
Non-performing loans totaled $5.6 million or 0.60 percent of total
loans at September 30, 2007, as compared to $615 thousand or 0.07 percent at
September 30, 2006. The balance of non-performing assets at September 30, 2007
includes two commercial loans totaling $5.3 million. These loans are both well
collateralized by properties with appraised values in excess of the loan
amounts. Peapack-Gladstone Bank has no sub-prime loans or other higher-interest
rate loans to consumers with impaired or non-existent credit histories in its
mortgage loan portfolio.
The allowance for loan losses was $7.1 million or 0.75 percent of total
loans at September 30, 2007 as compared to $6.6 million or 0.77 percent of total
loans at September 30, 2006. There were net charge-offs of $7 thousand and $10
thousand recorded in the third quarters of 2007 and 2006, respectively.
CAPITAL
At September 30, 2007, shareholders' equity totaled $107.1 million as
compared with $103.5 million at September 30, 2006, an increase of $3.7 million
or 3.5 percent. The Corporation's leverage ratio, tier 1 and total risk based
capital ratios at September 30, 2007 were 8.48 percent, 14.95 percent and 15.91
percent, respectively.
In accordance with our stock buy back program for the purchase of
150,000 shares, the Corporation repurchased 12,000 shares during the third
quarter of 2007. A total of 72,900 shares have been repurchased since the
program was originally announced in April 2005 and 77,100 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 $1.33 billion as of September 30, 2007. Peapack-Gladstone Bank,
its wholly owned community bank was established in 1921, and has 22 branches in
Somerset, Hunterdon, Morris and Union 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 certain 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 actual results to differ materially from those contemplated by such
forward-looking statements include, among others, the following possibilities:
o Effectiveness of the Corporation's balance sheet restructuring initiative
o Unexpected decline in the direction of the economy in New Jersey.
o Unexpected changes in interest rates.
o Failure to grow commercial loans.
o Inability to manage growth in commercial loans.
o Unexpected loan prepayment volume.
o Unanticipated exposure to credit risks.
o Insufficient allowance for loan losses.
o Competition from other financial institutions.
o Adverse effects of new government regulation or different than anticipated
effects from existing regulations.
o Decline in the levels of loan quality and origination volume.
o Decline in trust assets or deposits.
Peapack-Gladstone assumes no obligation for updating any such forward-looking
statements at any time.
(Tables to Follow)
<page>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
<table>
<caption>
At or For The Three Months At or For The Nine Months
Ended Ended
September 30, September 30,
2007 2006 2007 2006
---- ---- ---- ----
<s> <c> <c> <c> <c>
Income Statement Data:
Interest Income $ 18,256 $ 17,524 $ 53,445 $ 49,900
Interest Expense 9,369 9,669 27,564 25,292
----------- ----------- ----------- -----------
Net Interest Income 8,887 7,855 25,881 24,608
Provision For Loan Losses 125 64 350 264
----------- ----------- ----------- -----------
Net Interest Income After
Provision For Loan Losses 8,762 7,791 25,531 24,344
Trust Fees 2,252 1,872 6,853 6,195
Other Income 912 880 2,677 2,678
Securities Gains/(Losses) -- (1,837) 382 (1,781)
Other Expenses 8,098 7,271 23,675 21,715
----------- ----------- ----------- -----------
Income Before Income Taxes 3,828 1,435 11,768 9,721
Income Tax Expense 1,179 44 3,614 2,389
----------- ----------- ----------- -----------
Net Income $ 2,649 $ 1,391 $ 8,154 $ 7,332
=========== =========== =========== ===========
Balance Sheet Data:
Total Assets $ 1,334,953 $ 1,272,194
Federal Funds Sold and
Short-Term Investments 2,503 3,820
Securities Held To Maturity 49,684 62,625
Securities Available For Sale 266,420 276,265
Loans 943,356 861,339
Allowance For Loan Losses 7,112 6,629
Deposits 1,151,397 1,086,534
Borrowings 64,923 74,904
Shareholders' Equity 107,137 103,469
Trust Division Assets under
Administration (Market
Value, Not Included
Above) $ 2,068,589 $ 1,807,418
Performance Ratios:
Return on Average Assets 0.81% 0.42% 0.83% 0.75%
Return on Average Equity 9.91 5.51 10.25 9.77
</table>
<page>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
<table>
<caption>
At or For The Three Months At or For The Nine Months
Ended Ended
September 30, September 30,
2007 2006 2007 2006
---- ---- ---- ----
<s> <c> <c> <c> <c>
Net Interest Margin
(Taxable Equivalent Basis) 2.92% 2.59% 2.86% 2.75%
Asset Quality:
Loans past due over 90 days
And Still Accruing $ -- $ 550
Non-Accrual Loans 5,613 65
Net Recoveries/(Charge-Offs) $ (7) $ (10) (6) (13)
Allowance For Loan Losses
To Total Loans 0.75% 0.77%
Per Share Data:
Earnings Per Share (Basic) $ 0.32 $ 0.17 $ 0.98 $ 0.89
Earnings Per Share (Diluted) 0.32 0.17 0.97 0.88
Book Value Per Share 12.89 12.53
Dividends Per Share 0.46 0.43
Capital Adequacy:
Tier I Leverage 8.48% 8.08%
Tier I Capital to Risk-
Weighted Assets 14.92 15.63
Tier I & II Capital to
Risk-Weighted Assets 15.89 16.62
</table>
<page>
<table>
<caption>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTER-TO-DATE
(Tax-Equivalent Basis, Dollars in Thousands)
September 30, 2007 September 30, 2006
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----
<s> <c> <c> <c> <c> <c> <c>
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 263,636 $ 3,431 5.21% $ 346,130 $ 4,009 4.63%
Tax-Exempt (1) (2) 55,041 717 5.21 51,543 699 5.42
Loans (2) (3) 917,599 14,179 6.18 856,142 13,046 6.10
Federal Funds Sold 11,116 149 5.36 2,298 30 5.25
Interest-Earning Deposits 706 9 4.99 1,724 21 5.04
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Earning
Assets 1,248,098 $ 18,485 5.92% 1,257,837 $ 17,805 5.66%
----------- ----------- ----------- ----------- ----------- -----------
Noninterest-Earning Assets:
Cash and Due from Banks 20,510 22,414
Allowance for Loan
Losses (6,996) (6,515)
Premises and Equipment 25,591 23,527
Other Assets 26,015 22,204
----------- -----------
Total Noninterest-Earning
Assets 65,120 61,630
----------- -----------
Total Assets $ 1,313,218 $ 1,319,467
=========== ===========
LIABILITIES:
Interest-Bearing Deposits
Checking $ 126,506 $ 254 0.80% $ 133,207 $ 307 0.92%
Money Markets 384,013 3,778 3.94 327,374 3,348 4.09
Savings 68,796 118 0.69 79,881 139 0.70
Certificates of Deposit 396,529 4,855 4.90 365,602 4,239 4.64
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Bearing
Deposits 975,844 9,005 3.69 906,064 8,033 3.55
Borrowings 35,578 364 4.09 129,966 1,636 5.04
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Bearing
Liabilities 1,011,422 9,369 3.71 1,036,030 9,669 3.73
----------- ----------- ----------- ----------- ----------- -----------
Noninterest Bearing
Liabilities
Demand Deposits 183,500 175,892
Accrued Expenses and
Other Liabilities 11,365 6,543
----------- -----------
Total Noninterest-Bearing
Liabilities 194,865 182,435
Shareholders' Equity 106,931 101,002
----------- -----------
Total Liabilities and
Shareholders' Equity $ 1,313,218 $ 1,319,467
=========== ===========
Net Interest Income $ 9,116 8,136
=========== ===========
Net Interest Spread 2.21% 1.93%
=========== ===========
Net Interest Margin (4) 2.92% 2.59%
=========== ===========
</table>
<page>
<table>
<caption>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTER-TO-DATE
(Tax-Equivalent Basis, Dollars in Thousands)
September 30, 2007 June 30, 2007
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----
<s> <c> <c> <c> <c> <c> <c>
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 263,636 $ 3,431 5.21% $ 271,494 $ 3,435 5.06%
Tax-Exempt (1) (2) 55,041 717 5.21 56,597 740 5.23
Loans (2) (3) 917,599 14,179 6.18 890,939 13,590 6.10
Federal Funds Sold 11,116 149 5.36 26,935 357 5.30
Interest-Earning Deposits 706 9 4.99 718 10 5.77
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Earning
Assets 1,248,098 $ 18,485 5.92% 1,246,683 $ 18,132 5.82%
----------- ----------- ----------- ----------- ----------- -----------
Noninterest-Earning Assets:
Cash and Due from Banks 20,510 22,727
Allowance for Loan
Losses (6,996) (6,896)
Premises and Equipment 25,591 25,121
Other Assets 26,015 26,851
----------- -----------
Total Noninterest-Earning
Assets 65,120 67,803
----------- -----------
Total Assets $ 1,313,218 $ 1,314,486
=========== ===========
LIABILITIES:
Interest-Bearing Deposits
Checking $ 126,506 $ 254 0.80% $ 138,530 $ 303 0.87%
Money Markets 384,013 3,778 3.94 371,605 3,669 3.95
Savings 68,796 118 0.69 70,232 122 0.69
Certificates of Deposit 396,529 4,855 4.90 402,787 4,927 4.89
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Bearing
Deposits 975,844 9,005 3.69 983,154 9,021 3.67
Borrowings 35,578 364 4.09 23,224 204 3.51
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Bearing
Liabilities 1,011,422 9,369 3.71 1,006,378 9,225 3.67
----------- ----------- ----------- ----------- ----------- -----------
Noninterest Bearing
Liabilities
Demand Deposits 183,500 190,432
Accrued Expenses and
Other Liabilities 11,365 11,235
----------- -----------
Total Noninterest-Bearing
Liabilities 194,865 201,667
Shareholders' Equity 106,931 106,441
----------- -----------
Total Liabilities and
Shareholders' Equity $ 1,313,218 $ 1,314,486
=========== ===========
Net Interest Income $ 9,116 $ 8,907
=========== ===========
Net Interest Spread 2.21% 2.15%
=========== ===========
Net Interest Margin (4) 2.92% 2.86%
=========== ===========
</table>
<page>
<table>
<caption>
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
YEAR-TO-DATE
(Tax-Equivalent Basis, Dollars in Thousands)
September 30, 2007 September 30, 2006
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
------- ------- ----- ------- ------- -----
<s> <c> <c> <c> <c> <c> <c>
ASSETS:
Interest-Earning Assets:
Investments:
Taxable (1) $ 272,355 $ 10,375 5.08% $ 363,609 $ 12,224 4.48%
Tax-Exempt (1) (2) 56,041 2,196 5.22 53,530 2,140 5.33
Loans (2) (3) 893,319 40,962 6.11 813,736 36,265 5.94
Federal Funds Sold 14,664 585 5.32 2,823 102 4.84
Interest-Earning Deposits 773 30 5.25 1,195 42 4.74
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Earning
Assets 1,237,152 $ 54,148 5.84% 1,234,893 $ 50,773 5.48%
----------- ----------- ----------- ----------- ----------- -----------
Noninterest-Earning Assets:
Cash and Due from Banks 22,112 22,276
Allowance for Loan
Losses (6,888) (6,477)
Premises and Equipment 25,044 22,832
Other Assets 26,500 22,045
----------- -----------
Total Noninterest-Earning
Assets 66,768 60,676
----------- -----------
Total Assets $ 1,303,920 $ 1,295,569
=========== ===========
LIABILITIES:
Interest-Bearing Deposits
Checking $ 133,954 $ 839 0.84% $ 139,801 $ 743 0.71%
Money Markets 377,922 11,283 3.98 304,092 8,252 3.62
Savings 70,520 365 0.69 84,120 435 0.69
Certificates of Deposit 390,621 14,246 4.86 344,561 11,028 4.27
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Bearing
Deposits 973,017 26,733 3.66 872,574 20,458 3.13
Borrowings 28,939 831 3.83 137,606 4,834 4.68
----------- ----------- ----------- ----------- ----------- -----------
Total Interest-Bearing
Liabilities 1,001,956 27,564 3.67 1,010,180 25,292 3.34
----------- ----------- ----------- ----------- ----------- -----------
Noninterest Bearing
Liabilities
Demand Deposits 184,738 179,684
Accrued Expenses and
Other Liabilities 11,190 5,677
----------- -----------
Total Noninterest-Bearing
Liabilities 195,928 185,361
Shareholders' Equity 106,036 100,028
----------- -----------
Total Liabilities and
Shareholders' Equity $ 1,303,920 $ 1,295,569
=========== ===========
Net Interest Income $ 26,584 $ 25,481
=========== ===========
Net Interest Spread 2.17% 2.14%
=========== ===========
Net Interest Margin (4) 2.86% 2.75%
=========== ===========
</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.