GLADSTONE, N.J.--(BUSINESS WIRE)--
Peapack-Gladstone Financial Corporation (NASDAQ Global Select
Market:PGC) (the Corporation) recorded net income for the first
quarter of 2009 of $2.5 million, a decline of $981 thousand from the
same quarter of 2008. Diluted earnings per share after payment of the
preferred dividend were $0.27 for the first quarter of 2009 as compared
to earnings per diluted share of $0.41 for the first quarter of 2008.
The decrease in 2009 earnings was primarily due to an increase in the
provision for loan losses as the Corporation recorded $2.0 million in
the first quarter of 2009 compared to $430 thousand for the same period
in 2008.
Frank A. Kissel, Chairman and CEO, stated, "We are pleased to report
positive earnings for the first quarter, especially in the current
economic climate. Peapack-Gladstone Bank is financially stable, well
capitalized and ready to lend to well-qualified individuals and
businesses."
EARNINGS
Net Interest Income
Net interest income, on a fully tax-equivalent basis, was $12.1 million
in the first quarter of 2009, an increase of $1.3 million or 11.9
percent from the same quarter last year due to the reduction in interest
rates on liabilities offset in part by lower interest rates on assets.
On a fully tax-equivalent basis, the net interest margin was 3.70
percent and 3.34 percent for the first quarters of 2009 and 2008,
respectively, and 3.84 percent for the fourth quarter of 2008.
The yield on earning assets was 5.23 percent for the first quarter of
2009 and 5.76 percent for the same quarter of 2008, a decline of 53
basis points. In the first quarter of 2009 and 2008, the cost of
interest-bearing liabilities was 1.84 percent and 2.98 percent,
respectively, a decrease of 114 basis points. The cost of
interest-bearing liabilities in the first quarter of 2009 declined 33
basis points from 2.17 percent in the fourth quarter of 2008.
Loans
For the first quarter of 2009, loans averaged $1.05 billion as compared
to $983 million for the 2008 quarter, an increase of $65.3 million or
6.6 percent over the same quarter of 2008. The average commercial
mortgage portfolio grew $31.5 million or 13.0 percent to $501.9 million.
The average commercial construction loan portfolio was $69.0 million, an
increase of $12.3 million or 21.6 percent and the average commercial
loan portfolio was $140.9 million, an increase of $9.2 million or 7.0
percent, respectively. The average home equity loan portfolio rose $13.7
million or 74.7 percent to $32.1 million. Yields on loans were 5.44
percent for the first quarter of 2009, as compared to 5.99 percent for
the same quarter of 2008, a decline of 55 basis points. The decrease was
due to competitive pressure and lower market rates.
Investment Securities
Average investments for the first quarter of 2009 were $229.3 million, a
decline of $59.3 million, or 20.5 percent, when compared to the same
quarter of 2008. Accounting for the decline is the other-than-temporary
impairment charges recorded in the fourth quarter of 2008. There were no
other-than-temporary impairment charges in the first quarter of 2009.
Yields on investments were 4.87 percent and 5.21 percent for the first
quarters of 2009 and 2008, respectively.
Deposits
For the first quarters of 2009 and 2008, average deposits were $1.24
billion and $1.20 billion, respectively, an increase of 3.3 percent.
Average rates paid on interest-bearing deposits declined 117 basis
points to 1.78 percent as compared to 2.95 percent for the same quarter
of 2008. Average non-interest bearing demand deposits increased $6.3
million, or 3.4 percent, to $192.2 million for the first quarter in 2009
as compared to the same quarter in 2008. Average interest-bearing
checking balances totaled $168.0 million in the first quarter of 2009,
rising $31.6 million or 23.2 percent from the same quarter in 2008 due
to the introduction of the Ultimate Checking product. Average money
market accounts declined $24.5 million or 6.0 percent due to competitive
pressure on rates and some deposits migrating to the new Ultimate
Checking product. Costs on money market products averaged 1.23 percent
for the first quarter of 2009, while interest-bearing checking costs
averaged 0.71 percent. The Federal Funds target rate remained at an
unprecedented zero to 0.25 percent for the first quarter of 2009.
PGB Trust and Investments
PGB Trust and Investments generated $2.3 million in fee income in the
first quarter of 2009, a decrease of $153 thousand or 6.2 percent over
the same quarter of 2008. The decrease reflects the lower market values
on assets under management on which the investment management fees are
based and reduced lower-margin custody fees.
Other Income
Other income for the first quarter of 2009 totaled $983 thousand as
compared to $934 thousand for the same quarter of 2008, rising $49
thousand, or 5.2 percent. In the first quarter of 2008, the Corporation
recorded net securities gains of $310 thousand as compared to net
securities gains of $5 thousand in the first quarter of 2009.
Income from Bank-Owned Life Insurance declined $55 thousand or 20.5
percent to $214 thousand for the first quarter of 2009 as compared to
2008 due to lower investment income earned. For the first quarter of
2009, income earned on the sale of mortgage loans at origination totaled
$93 thousand, an increase of $31 thousand or 49.6 percent over the same
quarter of 2008. More customers are interested in 30-year mortgages at
the current low rates and we usually sell those mortgages rather than
maintain them on our balance sheet for interest rate risk purposes.
Other Expenses
In the first quarter of 2009, the Corporation recorded other expense of
$9.5 million as compared to $8.6 million for the first quarter of 2008,
an increase of $915 thousand or 10.6 percent. Salary and benefit expense
in the first quarter of 2009 and 2008 was $5.5 million and $4.9 million,
respectively, increasing by $623 thousand or 12.7 percent. In addition
to salary increases, the Corporation added staff for two new branches in
the second and third quarters of 2008. The Corporation also expensed $77
thousand of stock-based compensation expense in the first quarter of
2009 as compared to $101 thousand in the same quarter of 2008.
Advertising expenses were $156 thousand and $253 thousand for the first
quarters in 2009 and 2008, respectively, a decline of $97 thousand.
Professional and legal fees rose $59 thousand.
In addition, the Corporation recorded an FDIC assessment of $373
thousand for the first quarter of 2009 as compared to $33 thousand for
the same period in 2008 and reflects the FDIC's increased assessment
charges.
ASSET QUALITY
Non-performing loans and other real estate owned totaled $12.1 million
or 0.85 percent of total assets at March 31, 2009 as compared to $5.5
million or 0.39 percent of total assets at March 31, 2008 and $6.6
million or 0.39 percent of total assets at December 31, 2008.
Non-performing loans have increased during the first quarter of 2009 due
to two construction loans to one borrower affected by the current
economic downturn. Mr. Kissel commented, "We are pleased with the
performance of our loan portfolios in this economic environment."
The allowance for loan losses was $9.8 million or 0.94 percent of total
loans at March 31, 2009 as compared to $7.8 million or 0.79 percent of
total loans at March 31, 2008. Net charge-offs of $1.9 million and $153
thousand were recorded in the first quarters of 2009 and 2008,
respectively. The majority of the 2009 charge-offs were previously
identified as impaired and specific reserves had been allocated.
For the first quarter of 2009, the provision for loan losses was $2.0
million as compared to $430 thousand for the same quarter of 2008.
Management has determined that a higher provision is prudent because of
the increase in non-performing loans and the continued weakness in the
housing markets and the overall economy.
CAPITAL
At March 31, 2009, total shareholders' equity was $114.2 million as
compared to $83.9 million at December 31, 2008. At March 31, 2009, the
Corporation's leverage ratio, tier 1 and total risk based capital ratios
were 8.21 percent, 11.73 percent and 12.73 percent, respectively. The
Corporation's capital ratios are at or above the minimum levels to be
considered well capitalized under applicable regulatory guidelines.
Mr. Kissel stated, "In January 2009, the Corporation issued $28.7
million of non-voting senior preferred stock to the U.S. Treasury in the
Capital Purchase Program (CPP) to bolster our capital position in the
face of what we believed may be becoming a deep and significant
financial crisis. Initially, strong community banks like ours were
encouraged to participate in CPP and use the money to stimulate the
economy. Unfortunately, the government has increased its oversight on
banks, placing greater restrictions on operations. Public perception of
banks taking CPP funds from the Treasury has changed and at 5.00 percent
after tax interest rate, the cost of the program is also significant."
"The Corporation's Board of Directors and Management believe that it is
in the Corporation's and shareholders' best interests," Mr. Kissel
continued, "to redeem the preferred stock at the appropriate time. This
decision whether to redeem the preferred stock will be based on the
Corporation's capital levels and our confidence that the economy is
beginning to improve. Such a redemption will require the approval of our
federal regulator."
"While we are waiting for the right time to repay the Treasury, we will
continue to build capital and strength in our balance sheet. A good part
of capital appreciation will come from ongoing profitability, but we
will consider other capital appreciation strategies, as well. One such
strategy is to continually monitor and manage the level of our future
cash dividends. Any savings, even for a limited period of time, would
immediately benefit capital."
Mr. Kissel added, "Other companies have increased capital by offering
discounted purchases of new shares through their dividend reinvestment
program. Although we have not made a decision on any of the options,
increasing our capital would strengthen the balance sheet, accelerate
our ability to pay off the CPP funds and ultimately support a higher
share price as many investors value our stock on a multiple of book
value. The Board of Directors will explore all risks and benefits of
these options before moving forward."
ABOUT THE CORPORATION
Peapack-Gladstone Financial Corporation is a bank holding company with
total assets of $1.42 billion as of March 31, 2009. Peapack-Gladstone
Bank, its wholly owned community bank, was established in 1921, and has
23 branches in Somerset, Hunterdon, Morris, Middlesex 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 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
confidence and strategies and management's expectations about new and
existing programs and products, investments, 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, those
risk factors set forth in the "Risk Factor" section of our Annual Report
on Form 10-K for the year ended December 31, 2008. Peapack-Gladstone
assumes no obligation for updating any such forward-looking statements
at any time.
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
At or For The Three Months
Ended
March 31,
2009 2008
Income Statement Data:
Interest Income $ 16,795 $ 18,345
Interest Expense 4,987 7,831
Net Interest Income 11,808 10,514
Provision For Loan Losses 2,000 430
Net Interest Income After
Provision For Loan Losses 9,808 10,084
Trust Fees 2,332 2,485
Other Income 983 934
Securities Gains 5 310
Other Expenses 9,524 8,609
Income Before Income Taxes 3,604 5,204
Income Tax Expense 1,122 1,741
Net Income 2,482 3,463
Dividends on Preferred
Stock and Accretion 205 -
Net Income Available to
Common Shareholders $ 2,277 $ 3,463
Balance Sheet Data:
Total Assets $ 1,424,307 $ 1,395,836
Federal Funds Sold and
Short-Term Investments 59,264 52,131
Securities Held To Maturity 48,379 42,819
Securities Available For Sale 182,878 232,997
Loans 1,039,226 983,358
Allowance For Loan Losses 9,762 7,777
Deposits 1,263,039 1,230,474
Borrowings 39,439 40,658
Shareholders' Equity 114,175 105,693
Trust Division Assets under
Management (Market
Value, Not Included
Above) $ 1,602,752 $ 1,952,278
Performance Ratios:
Return on Average Assets 0.71 % 1.02 %
Return on Average Common
Equity 10.45 12.81
PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)
At or For The Three Months
Ended
March 31,
2009 2008
Net Interest Margin
(Taxable Equivalent Basis) 3.70 % 3.34 %
Asset Quality:
Loans past due over 90 days
And Still Accruing $ - $ -
Non-Accrual Loans 11,139 4,506
Other Real Estate Owned 965 965
Net Charge-Offs (1,926 ) (153 )
Asset Quality Ratios:
Allowance for Loan Losses
to Total Loans 0.94 % 0.79 %
Non-Performing Assets to
Total Assets 0.85 0.39
Non-Performing Loans to
Total Loans 1.07 0.46
Per Common Share Data:
Earnings Per Share (Basic) $ 0.27 $ 0.42
Earnings Per Share (Diluted) 0.27 0.41
Book Value Per Share 10.49 12.75
Tangible Book Value Per Share 10.42 12.68
Dividends Per Share 0.16 0.16
Capital Adequacy:
Tier I Leverage 8.21 % 8.39 %
Tier I Capital to Risk-
Weighted Assets 11.73 11.94
Tier I & II Capital to
Risk-Weighted Assets 12.73 12.76
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTERS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
March 31, 2009 March 31, 2008
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
ASSETS:
Interest-Earning
Assets:
Investments:
Taxable (1) $ 179,304 $ 2,139 4.77 % $ 231,715 $ 2,983 5.15 %
Tax-Exempt (1) (2) 49,976 653 5.24 56,821 776 5.46
Loans (2) (3) 1,047,911 14,258 5.44 982,625 14,704 5.99
Federal Funds Sold 200 - 0.20 13,153 107 3.26
Interest-Earning 28,054 9 0.13 7,819 48 2.45
Deposits
Total
Interest-Earning 1,305,445 $ 17,059 5.23 % 1,292,133 $ 18,618 5.76 %
Assets
Noninterest-Earning
Assets:
Cash and Due from 19,697 20,809
Banks
Allowance for Loan (9,612 ) (7,463 )
Losses
Premises and 26,854 26,473
Equipment
Other Assets 54,654 28,436
Total
Noninterest-Earning 91,593 68,255
Assets
Total Assets $ 1,397,038 $ 1,360,388
LIABILITIES:
Interest-Bearing
Deposits
Checking $ 168,041 $ 297 0.71 % $ 136,440 210 0.62 %
Money Markets 381,532 1,171 1.23 406,070 2,649 2.61
Savings 68,087 78 0.46 64,753 99 0.61
Certificates of 427,011 3,090 2.89 403,912 4,503 4.46
Deposit
Total
Interest-Bearing 1,044,671 4,636 1.78 1,011,175 7,461 2.95
Deposits
Borrowings 41,646 351 3.37 41,014 370 3.61
Total
Interest-Bearing 1,086,317 4,987 1.84 1,052,189 7,831 2.98
Liabilities
Noninterest Bearing
Liabilities
Demand Deposits 192,166 185,818
Accrued Expenses
and Other 6,729 14,267
Liabilities
Total
Noninterest-Bearing 198,895 200,085
Liabilities
Shareholders' 111,826 108,114
Equity
Total Liabilities
and Shareholders' $ 1,397,038 $ 1,360,388
Equity
Net Interest Income $ 12,072 10,787
Net Interest Spread 3.39 % 2.78 %
Net Interest Margin 3.70 % 3.34 %
(4)
PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTERS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)
March 31, 2009 December 31, 2008
Average Income/ Average Income/
Balance Expense Yield Balance Expense Yield
ASSETS:
Interest-Earning
Assets:
Investments:
Taxable (1) $ 179,304 $ 2,139 4.77 % $ 209,425 $ 2,743 5.24 %
Tax-Exempt (1) (2) 49,976 653 5.24 44,303 613 5.54
Loans (2) (3) 1,047,911 14,258 5.44 1,045,085 14,949 5.72
Federal Funds Sold 200 - 0.20 361 1 0.67
Interest-Earning 28,054 9 0.13 1,034 2 0.66
Deposits
Total
Interest-Earning 1,305,445 $ 17,059 5.23 % 1,300,208 $ 18,308 5.63 %
Assets
Noninterest-Earning
Assets:
Cash and Due from 19,697 21,167
Banks
Allowance for Loan (9,612 ) (9,098 )
Losses
Premises and 26,854 26,850
Equipment
Other Assets 54,654 41,116
Total
Noninterest-Earning 91,593 80,035
Assets
Total Assets $ 1,397,038 $ 1,380,243
LIABILITIES:
Interest-Bearing
Deposits
Checking $ 168,041 $ 297 0.71 % $ 156,360 $ 363 0.93 %
Money Markets 381,532 1,171 1.23 373,225 1,711 1.83
Savings 68,087 78 0.46 66,936 99 0.59
Certificates of 427,011 3,090 2.89 397,179 3,190 3.21
Deposit
Total
Interest-Bearing 1,044,671 4,636 1.78 993,700 5,363 2.16
Deposits
Borrowings 41,646 351 3.37 79,513 449 2.26
Total
Interest-Bearing 1,086,317 4,987 1.84 1,073,213 5,812 2.17
Liabilities
Noninterest Bearing
Liabilities
Demand Deposits 192,166 192,515
Accrued Expenses
and Other 6,729 7,501
Liabilities
Total
Noninterest-Bearing 198,895 200,016
Liabilities
Shareholders' 111,826 107,014
Equity
Total Liabilities
and Shareholders' $ 1,397,038 $ 1,380,243
Equity
Net Interest Income $ 12,072 $ 12,496
Net Interest Spread 3.39 % 3.46 %
Net Interest Margin 3.70 % 3.84 %
(4)
(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.
Source: Peapack-Gladstone Financial Corporation
Contact: Peapack-Gladstone Financial Corporation
Jeffrey J. Carfora, 908-719-4308