-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SFvqG0BIW0Nf+vF7ylG32YjZsOCD1fVDAYAZ4qzzyZtW7R0GYDlXFhPEvcucbnjl jES+rnqqu0pQBkfvgMbn7w== 0000914317-04-002986.txt : 20040805 0000914317-04-002986.hdr.sgml : 20040805 20040805154402 ACCESSION NUMBER: 0000914317-04-002986 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040805 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEAPACK GLADSTONE FINANCIAL CORP CENTRAL INDEX KEY: 0001050743 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 223537895 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-16197 FILM NUMBER: 04954759 BUSINESS ADDRESS: STREET 1: 158 ROUTE 206 NORTH CITY: GLADSTONE STATE: NJ ZIP: 07934 BUSINESS PHONE: 9082340700 MAIL ADDRESS: STREET 1: 158 ROUTE 206 NORTH CITY: GLADSTONE STATE: NJ ZIP: 07934 10-Q 1 form10q-62238_pg.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended June 30, 2004 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-16197 PEAPACK-GLADSTONE FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) New Jersey 22-3537895 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 158 Route 206 North, Gladstone, New Jersey 07934 (Address of principal executive offices, including zip code) (908) 234-0700 (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [_]. Indicate by check mark whether the Registrant is an accelerated filer (as defined in Exchange Act Rule 12b-d). Yes [X] No [_] Number of shares of Common stock outstanding as of August 2, 2004: 7,454,160 1 PEAPACK-GLADSTONE FINANCIAL CORPORATION PART 1 FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited): Consolidated Statements of Condition June 30, 2004 and December 31, 2003 Page 3 Consolidated Statements of Income for the three and six months ended June 30, 2004 and 2003 Page 4 Consolidated Statements of Changes in Shareholders' Equity for the six months ended June 30, 2004 and 2003 Page 5 Consolidated Statements of Cash Flows for the six months ended June 30, 2004 and 2003 Page 6 Notes to the Consolidated Financial Statements Page 7 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Page 8 Item 3 Quantitative and Qualitative Disclosures about Market Risk Page 15 Item 4 Controls and Procedures Page 16 PART 2 OTHER INFORMATION Item 2 Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities Page 16 Item 4 Submission of Matters to a Vote of Security Holders Page 17 Item 6 Exhibits and Reports on Form 8-K Page 17
2 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited)
June 30, December 31, 2004 2003 ----------- ----------- ASSETS Cash and due from banks $ 22,387 $ 17,234 Federal funds sold 2,666 5,461 ----------- ----------- Total cash and cash equivalents 25,053 22,695 Interest-earning deposits 847 30,949 Investment Securities (approximate market value $96,514 in 2004 and $99,515 in 2003) 96,760 97,701 Securities Available for Sale 387,567 355,998 Loans: Loans secured by real estate 435,633 397,068 Other loans 30,128 29,933 ----------- ----------- Total loans 465,761 427,001 Less: Allowance for loan losses 5,706 5,467 ----------- ----------- Net loans 460,055 421,534 Premises and equipment, net 17,958 15,132 Accrued interest receivable 4,560 4,295 Cash surrender value of life insurance 16,919 16,548 Other assets 3,744 3,274 ----------- ----------- TOTAL ASSETS $ 1,013,463 $ 968,126 =========== =========== LIABILITIES Deposits: Noninterest-bearing demand deposits $ 161,713 $ 155,189 Interest-bearing deposits: Checking 168,268 140,393 Savings 108,562 101,451 Money market accounts 215,055 225,863 Certificates of deposit over $100,000 60,018 60,373 Certificates of deposit less than $100,000 162,007 162,502 ----------- ----------- Total deposits 875,623 845,771 Borrowed Funds 48,219 30,032 Accrued expenses and other liabilities 4,174 7,269 ----------- ----------- TOTAL LIABILITIES 928,016 883,072 ----------- ----------- SHAREHOLDERS' EQUITY Common stock (no par value; stated value $0.83 per share; authorized 20,000,000 shares; issued shares, 7,579,760 at June 30, 2004 and 7,535,160 at December 31, 2003; outstanding shares, 7,451,778 at June 30, 2004 and 7,416,031 at December 31, 2003) 6,311 6,274 Surplus 62,647 61,959 Treasury Stock at cost, 127,982 shares in 2004 and 119,129 shares in 2003 (2,672) (2,391) Retained Earnings 21,630 16,557 Accumulated other comprehensive (loss)/income, net of income tax (2,469) 2,655 ----------- ----------- TOTAL SHAREHOLDERS' EQUITY 85,447 85,054 ----------- ----------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 1,013,463 $ 968,126 =========== ===========
See accompanying notes to consolidated financial statements. 3 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share data) (Unaudited)
Three months ended Six months ended June 30, June 30, 2004 2003 2004 2003 ---------- ---------- ---------- ---------- INTEREST INCOME Interest and fees on loans $ 6,278 $ 6,359 $ 12,417 $ 12,897 Interest on investment securities: Taxable 690 1,113 1,446 2,520 Tax-exempt 234 133 438 243 Interest on securities available for sale: Taxable 3,423 2,703 6,727 5,133 Tax-exempt 91 90 182 180 Interest-earning deposits 2 2 13 3 Interest on federal funds sold 22 28 38 56 ---------- ---------- ---------- ---------- Total interest income 10,740 10,428 21,261 21,032 INTEREST EXPENSE Interest on savings and interest-bearing deposit accounts 798 873 1,516 1,846 Interest on certificates of deposit over $100,000 315 393 630 823 Interest on other time deposits 859 1,198 1,717 2,423 Interest on borrowed funds 274 202 542 258 ---------- ---------- ---------- ---------- Total interest expense 2,246 2,666 4,405 5,350 ---------- ---------- ---------- ---------- NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 8,494 7,762 16,856 15,682 Provision for loan losses 150 150 300 300 ---------- ---------- ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 8,344 7,612 16,556 15,382 ---------- ---------- ---------- ---------- OTHER INCOME Service charges and fees for other services 427 418 824 837 Trust department income 1,791 1,621 3,474 3,064 Securities gains 406 554 600 827 Bank owned life insurance 195 225 415 444 Other income 100 110 227 237 ---------- ---------- ---------- ---------- Total other income 2,919 2,928 5,540 5,409 OTHER EXPENSES Salaries and employee benefits 3,685 3,360 7,220 6,597 Premises and equipment 1,450 1,120 2,766 2,202 Other expense 1,368 1,185 2,556 2,274 ---------- ---------- ---------- ---------- Total other expenses 6,503 5,665 12,542 11,073 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAX EXPENSE 4,760 4,875 9,554 9,718 Income tax expense 1,551 1,592 3,064 3,175 ---------- ---------- ---------- ---------- NET INCOME $ 3,209 $ 3,283 $ 6,490 $ 6,543 ========== ========== ========== ========== EARNINGS PER SHARE Basic $ 0.43 $ 0.44 $ 0.87 $ 0.88 Diluted $ 0.42 $ 0.43 $ 0.85 $ 0.86 Average basic shares outstanding 7,446,078 7,378,182 7,435,281 7,376,695 Average diluted shares outstanding 7,647,272 7,604,993 7,643,074 7,594,313
See accompanying notes to consolidated financial statements. 4 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Dollars in thousands) (Unaudited) Six Months Ended June 30, 2004 2003 -------- -------- Balance, Beginning of Period $ 85,054 $ 77,158 Comprehensive income: Net Income 6,490 6,543 Unrealized holding (losses)/gains on securities arising during the period, net of tax (4,734) 1,055 Less: Reclassification adjustment for gains included in net income, net of tax 390 538 -------- -------- (5,124) 517 -------- -------- Total Comprehensive income 1,366 7,060 Common Stock Options Exercised 538 144 Purchase of Treasury Stock (282) (92) Cash Dividends Declared (1,416) (1,207) Tax Benefit on Disqualifying and Nonqualifying 187 139 Exercise of Stock Options -------- -------- Balance, June 30, $ 85,447 $ 83,202 ======== ======== See accompanying notes to consolidated financial statements. 5 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited)
Six Months Ended June 30, 2004 2003 --------- --------- OPERATING ACTIVITIES: Net Income: $ 6,490 $ 6,543 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 802 713 Amortization of premium and accretion of discount on securities, net 790 1,191 Provision for loan losses 300 300 Gains on security sales (600) (827) Tax benefit on stock option exercises 187 139 Increase in cash surrender value of life insurance, net (371) (406) Increase in accrued interest receivable (265) (115) Decrease/(increase) in other assets 1,275 (932) (Decrease)/increase in other liabilities (1,480) 883 --------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES 7,128 7,489 --------- --------- INVESTING ACTIVITIES: Proceeds from maturities of investment securities 14,301 39,534 Proceeds from maturities of securities available for sale 21,402 11,799 Proceeds from calls of investment securities 235 6,170 Proceeds from calls of securities available for sale 37,346 30,425 Proceeds from sales of securities available for sale 23,683 45,579 Purchase of investment securities (13,845) (24,780) Purchase of securities available for sale (122,357) (219,298) Net decrease in short-term investments 30,102 26 Net (increase)/decrease in loans (38,819) 538 Purchases of premises and equipment (3,628) (902) --------- --------- NET CASH USED IN INVESTING ACTIVITIES (51,580) (110,909) --------- --------- FINANCING ACTIVITIES: Net increase in deposits 29,852 30,857 Net increase in short-term borrowings 19,000 33,600 Net increase in long-term debt -0- 26,000 Repayments of long-term debt (813) (172) Cash dividends paid (1,485) (1,207) Exercise of stock options 538 144 Purchase of Treasury Stock (282) (92) --------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 46,810 89,130 --------- --------- Net increase/(decrease) in cash and cash equivalents 2,358 (14,290) Cash and cash equivalents at beginning of period 22,695 38,320 --------- --------- Cash and cash equivalents at end of period $ 25,053 $ 24,030 ========= ========= Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 4,421 $ 5,845 Income taxes 3,552 2,949
See accompanying notes to consolidated financial statements. 6 PEAPACK-GLADSTONE FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Certain information and footnote disclosures normally included in the unaudited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the December 31, 2003 Annual Report on Form 10-K for Peapack-Gladstone Financial Corporation (the "Corporation"). Principles of Consolidation: The Corporation considers that all adjustments (all of which are normal recurring accruals) necessary for a fair presentation of the statement of the financial position and results of operations in accordance with accounting principles generally accepted in the United States for these periods have been made. Results for such interim periods are not necessarily indicative of results for a full year. The consolidated financial statements of Peapack-Gladstone Financial Corporation are prepared on the accrual basis and include the accounts of the Corporation and its wholly owned subsidiary, Peapack-Gladstone Bank. All significant intercompany balances and transactions have been eliminated from the accompanying consolidated financial statements. Allowance for Loan Losses: The allowance for loan losses is maintained at a level considered adequate to provide for probable loan losses inherent in the Corporation's loan portfolio. The allowance is based on management's evaluation of the loan portfolio considering, among other things, current economic conditions, the volume and nature of the loan portfolio, historical loan loss experience, and individual credit situations. The allowance is increased by provisions charged to expense and reduced by net charge-offs. Stock Option Plans: At June 30, 2004, the Corporation had stock-based employee and non-employee director compensation plans. The Corporation accounts for these plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income as all options granted under those plans had an exercise price equal to or greater than the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income and earnings per share for the periods indicated if the Corporation had applied the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation:
Three Months Ended Six Months Ended June 30, June 30, (In Thousands Except per Share Data) 2004 2003 2004 2003 ----- ----- ----- ----- Net Income: As Reported $3,209 $3,283 $6,490 $6,543 Less: Total Stock-Based Compensation Expense Determined under the Fair Value Based Method on all Stock Options, Net of Related Tax Effects 100 48 1,360 96 ----- ----- ----- ----- Pro Forma $3,109 $3,235 $5,130 $6,447 Earnings Per Share: As Reported Basic $ 0.43 $ 0.44 $ 0.87 $ 0.88 Diluted $ 0.42 $ 0.43 $ 0.85 $ 0.86 Pro Forma Basic $ 0.42 $ 0.44 $ 0.69 $ 0.87 Diluted $ 0.41 $ 0.43 $ 0.67 $ 0.85
7 Earnings per Common Share - Basic and Diluted: Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per share includes any additional common shares as if all potentially dilutive common shares were issued (i.e., stock options) utilizing the treasury stock method. All share and per share amounts have been restated to reflect all prior stock dividends and stock splits. Comprehensive Income: The difference between the Corporation's net income and total comprehensive income for the three and six months ended June 30, 2004 and 2003 relates to the change in the net unrealized gains and losses on securities available for sale during the applicable period of time less adjustments for realized gains and losses. 2. BENEFIT PLANS The Corporation has a defined benefit pension plan covering substantially all of its salaried employees. The net periodic expense for the three and six months ended June 30 included the following components:
Three Months Ended Six Months Ended June 30, June 30, (In Thousands) 2004 2003 2004 2003 ----- ----- ----- ----- Service Cost $ 275 $ 245 $ 549 $ 489 Interest Cost 126 110 252 219 Expected Return on Plan Assets (117) (98) (234) (197) Amortization of: Net Loss 6 13 12 28 Unrecognized Prior Service Cost (1) (1) (1) (1) Unrecognized Remaining Net Assets (1) (1) (3) (3) ----- ----- ----- ----- Net Periodic Benefit Cost $ 288 $ 268 $ 575 $ 535 ===== ===== ===== =====
As previously disclosed in the financial statements for the year ended December 31, 2003, the Corporation expects to contribute $1.2 million to its pension plan in 2004. As of June 30, 2004, contributions of $600 thousand had been made in the current year. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL: The following discussion and analysis 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 actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: o Unanticipated changes or no change in interest rates. o Competitive pressure in the banking industry causes unanticipated adverse changes. o An unexpected decline in the economy of New Jersey causes customers to default in the payment of their loans or causes loans to become impaired. o Enforcement of the Highlands Water Protection and Planning Act o Loss of key managers or employees. o Loss of major customers or failure to develop new customers. o A decrease in loan quality and loan origination volume. o An increase in non-performing loans. o A decline in the volume of increase in trust assets or deposits. The Corporation assumes no responsibility to update such forward-looking statements in the future. 8 CRITICAL ACCOUNTING POLICIES AND ESTIMATES: "Management's Discussion and Analysis of Financial Condition and Results of Operations" is based upon the Corporation's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Corporation to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Note 1 to the Corporation's Audited Consolidated Financial Statements included in the December 31, 2003 Annual Report on Form 10-K, contains a summary of the Corporation's significant accounting policies. Management believes the Corporation's policy with respect to the methodology for the determination of the allowance for loan losses involves a higher degree of complexity and requires management to make difficult and subjective judgments, which often require assumptions or estimates about highly uncertain matters. Changes in these judgments, assumptions or estimates could materially impact results of operations. This critical policy and its application are periodically reviewed with the Audit Committee and the Board of Directors. The provision for loan losses is based upon management's evaluation of the adequacy of the allowance, including an assessment of known and inherent risks in the portfolio, giving consideration to the size and composition of the loan portfolio, actual loan loss experience, level of delinquencies, detailed analysis of individual loans for which full collectibility may not be assured, the existence and estimated net realizable value of any underlying collateral and guarantees securing the loans, and current economic and market conditions. Although management uses the best information available, the level of the allowance for loan losses remains an estimate which is subject to significant judgment and short-term change. Various regulatory agencies, as an integral part of their examination process, periodically review the Corporation's provision for loan losses. Such agencies may require the Corporation to make additional provisions for loan losses based upon information available to them at the time of their examination. Furthermore, the majority of the Corporation's loans are secured by real estate in the State of New Jersey. Accordingly, the collectibility of a substantial portion of the carrying value of the Corporation's loan portfolio is susceptible to changes in local market conditions and may be adversely affected should real estate values decline or the Central New Jersey area experience an adverse economic shock. Future adjustments to the provision for loan losses may be necessary due to economic, operating, regulatory and other conditions beyond the Corporation's control. OVERVIEW: The Corporation realized earnings of $0.42 per diluted share for the second quarter of 2004 as compared to $0.43 per diluted share for the second quarter of 2003. Net income of $3.21 million for the quarter was marginally lower when compared to net income of $3.28 million for the same quarter last year. Annualized return on average assets for the quarter was 1.29 percent and annualized return on average equity was 14.72 percent for the second quarter of 2004. Year to date June 30, 2004 net income was $6.49 million as compared to $6.54 million for the same period last year. The diluted earnings per share were $0.85 for the first half of the year as compared to $0.86 for the first half of last year. The year to date annualized return on average assets was 1.33 percent and annualized return on average equity was 14.93 percent for the six months ended June 30, 2004. EARNINGS ANALYSIS NET INTEREST INCOME: On a tax-equivalent basis, net interest income, before the provision for loan losses, was $8.71 million for the second quarter of 2004, while the same quarter of 2003 was $7.91 million, an increase of $798 thousand or 10.1 percent. The increase in net interest income during the quarter was primarily the result of lower deposit rates paid and an increase in average earning assets offset in part by a decline in the rates paid on investments and loans. The net interest margin on a fully tax equivalent basis was 3.71 percent in the second quarter of 2004 as compared to 3.68 percent for the second quarter of 2003, an increase of 3 basis points. When compared to the first quarter of 2004, net interest income increased $151 thousand, or 1.8 percent, from $8.56 million on a tax-equivalent basis. The net interest margin, on a fully tax equivalent basis declined from 3.81 percent in the first quarter of 2004, to 3.71 percent in the second quarter of 2004. Average interest earning assets increased $78.5 million or 9.1 percent for the second quarter of 2004 to $938.7 million as compared to $860.3 million for the same quarter in 2003. This was due to the increase in average loan balances of $42.9 million and average investment security balances of $35.4 million. The balance sheet has been positioned to reduce interest rate risk and benefit in the long term by not extending the maturities in our loan portfolio. In a rising rate market, we continue to portfolio our shorter-term mortgage loans maintaining close relationships with our customers. 9 Average interest-bearing liabilities increased $56.4 million or 8.3 percent to $737.4 million for the quarter ended June 30, 2004 from $681.0 million in the same period in 2003. Average balances of interest-bearing checking accounts rose $35.3 million or 27.8 percent, money market accounts increased $19.8 million or 10.7 percent and average balances of savings accounts rose $5.9 million or 5.8 percent. For the second quarter of 2004, average certificates of deposits declined $13.1 million, or 5.5 percent, when compared to the second quarter of 2003. Federal Home Loan Bank advances averaged $38.9 million for the quarter ended June 30, 2004 as compared to $30.4 million for the quarter ended June 30, 2003. When comparing the second quarter of 2004 to the same quarter of 2003, average demand deposits increased $24.5 million or 17.6 percent. For the quarter ended June 30, 2004, average interest rates earned on interest-earning assets, on a tax-equivalent basis, declined 25 basis points to 4.67 percent, from 4.92 percent earned in the same quarter of 2003. In the second quarter of 2004, the average interest rates earned on loans declined 69 basis points while the average interest rates earned on investment securities declined 6 basis points to 3.85 percent as compared with the same period in 2003. The average interest rate paid during the quarter on interest-bearing liabilities declined 35 basis points to 1.22 percent when compared to the second quarter of 2003. In the second quarter of 2004, the average rate paid on certificate of deposits declined 59 basis points and average rates paid on money market accounts declined 32 basis points to 0.77 percent when compared with the same quarter in 2003. This contributed to a lower cost of funds for the second quarter of 2004 of 1.00 percent as compared to the second quarter of 2003 of 1.30 percent. Net interest income, on a tax-equivalent basis before the provision for loan losses, increased $1.31 million or 8.2 percent to $17.27 million for the first half of 2004 from $15.97 million for the same period of 2003. The increase in net interest income was primarily the result of lower deposit rates paid and higher average balances of interest-earning assets, partially offset by a decline in the rates earned on investments and loans. The net interest margin, on a fully tax equivalent basis, for the six months ended June 30, 2004 was 3.76 percent as compared to 3.81 percent for the same period in 2003, a decline of 5 basis points. For the year to date 2004, average earning assets increased $81.4 million or 9.7 percent to $918.9 million. Investment securities averaged $473.1 million and $426.3 million for the six months ended June 30, 2004 and 2003, respectively, a $46.8 million or 11.0 percent increase. Average loans for this period in 2004 increased to $435.2 million, an increase of $33.9 million or 8.5 percent over the six months ended June 30, 2003. Average interest-bearing liabilities for the first six months in 2004 were $723.0 million compared to $667.6 million for the same period in 2003, an increase of $55.4 million or 8.3 percent. Over one-third of this increase is in the interest-bearing checking accounts, which grew to $147.2 million, a $20.2 million or 15.9 percent increase. This is due to the introduction of our Master Escrow Account, which is designed for those who act as agents in a fiduciary capacity for client or other third-party funds. It is designed for entities that require sub-accounting, such as municipalities, assisted living communities, realtors, title companies and accountants. Average money market accounts increased $24.0 million or 12.9 percent during the first half of 2004 to $210.1 million from $186.0 million during the same period of 2003. Partially offsetting these increases is the decline in average certificate of deposit balances of $13.3 million or 5.6 percent to $223.3 million. Federal Home Loan Bank advances averaged $37.7 million for the six months ended June 30, 2004 as compared to $19.4 million for the six months ended June 30, 2003. Average demand deposits increased $24.4 million or 18.5 percent to $156.4 million year to date June 30, 2004 as compared to the same period in 2003. Average interest rates, on a tax-equivalent basis, earned on interest earning assets was 4.72 percent for the six-months ended June 30, 2004 as compared to 5.09 percent for the same period in 2003. Year to date 2004, average rates earned on loans was 5.71 percent, a 72 basis point decline from the year to date 2003 average rates earned of 6.43 percent. The average interest rates earned on investment securities in the six months ended June 30, 2004, declined slightly to 3.92 percent from 3.99 percent in the same period in 2003. The average interest rate paid on interest-bearing liabilities declined 38 basis points to 1.22 percent when compared to the first half of 2003. In the first half of 2004, the average rate paid on certificate of deposits declined 64 basis points to 2.10 percent and average rates paid on money market accounts declined 35 basis points to 0.80 percent when compared with the same period in 2003. 10 The following tables reflect the components of net interest income for each of the three and six months ended June 30, 2004 and 2003: Average Balance Sheet Unaudited Quarters Ended (Tax-Equivalent Basis, Dollars in Thousands)
June 30, 2004 June 30, 2003 ------------- ------------- Average Income/ Average Income/ Balance Expense Yield Balance Expense Yield --------- --------- ------- --------- --------- ------- ASSETS: Interest-Earning Assets: Investments: Taxable $ 442,672 $ 4,114 3.72% $ 423,801 $ 3,817 3.60% Tax-Exempt (1) 42,095 536 5.09 25,524 368 5.76 Loans (1) (2) 443,905 6,283 5.66 401,030 6,364 6.35 Federal Funds Sold 9,302 22 0.95 9,277 28 1.19 Interest-Earning Deposits 774 2 0.88 643 2 1.12 --------- --------- ------- --------- --------- ------- Total Interest-Earning Assets 938,748 $ 10,957 4.67% 860,275 $ 10,579 4.92% --------- --------- ------- --------- --------- ------- Noninterest-Earning Assets: Cash and Due from Banks 19,629 18,545 Allowance for Loan Losses (5,625) (5,054) Premises and Equipment 17,540 14,575 Other Assets 23,954 21,346 --------- --------- Total Noninterest-Earning Assets 55,498 49,412 --------- --------- Total Assets $ 994,246 $ 909,687 ========= ========= LIABILITIES: Interest-Bearing Deposits Checking $ 162,593 $ 237 0.58% $ 127,259 $ 156 0.49% Money Markets 66,143 93 0.56 64,370 155 0.96 Tiered Money Markets 139,102 303 0.87 121,030 352 1.16 Savings 107,310 165 0.61 101,446 210 0.83 Certificates of Deposit 223,387 1,174 2.10 236,502 1,591 2.69 --------- --------- ------- --------- --------- ------- Total Interest-Bearing Deposits 698,535 1,972 1.13 650,607 2,464 1.51 Borrowings 38,856 274 2.82 30,377 202 2.66 --------- --------- ------- --------- --------- ------- Total Interest-Bearing Liabilities 737,391 2,246 1.22 680,984 2,666 1.57 --------- --------- ------- --------- --------- ------- Noninterest Bearing Liabilities Demand Deposits 163,822 139,315 Accrued Expenses and Other Liabilities 5,803 8,505 --------- --------- Total Noninterest-Bearing Liabilities 169,625 147,820 Shareholders' Equity 87,230 80,883 --------- --------- Total Liabilities and Shareholders' Equity $ 994,246 $ 909,687 ========= ========= Net Interest Income (tax-equivalent basis) 8,711 7,913 Net Interest Spread 3.45% 3.35% ======= ======= Net Interest Margin (3) 3.71% 3.68% ======= ======= Tax equivalent adjustment (217) (151) --------- --------- Net Interest Income $ 8,494 $ 7,762 ========= =========
(1) Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. (2) Loans are stated net of unearned income and include non-accrual loans. (3) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. 11
June 30, 2004 June 30, 2003 ------------- ------------- Average Income/ Average Income/ Balance Expense Yield Balance Expense Yield --------- --------- ------- --------- --------- ------- ASSETS: Interest-Earning Assets: Investments: Taxable $ 433,517 $ 8,173 3.77% $ 402,722 $ 7,653 3.80% Tax-Exempt (1) 39,625 1,024 5.17 23,600 697 5.91 Loans (1) (2) 435,164 12,428 5.71 401,247 12,907 6.43 Federal Funds Sold 8,048 38 0.95 9,263 56 1.21 Interest-Earning Deposits 2,507 13 1.04 605 3 1.07 --------- --------- ------- --------- --------- ------- Total Interest-Earning Assets 918,861 $ 21,676 4.72% 837,437 $ 21,316 5.09% --------- --------- ------- --------- --------- ------- Noninterest-Earning Assets: Cash and Due from Banks 19,237 18,774 Allowance for Loan Losses (5,575) (4,965) Premises and Equipment 16,756 14,601 Other Assets 23,643 21,278 --------- --------- Total Noninterest-Earning Assets 54,061 49,688 --------- --------- Total Assets $ 972,922 $ 887,125 ========= ========= LIABILITIES: Interest-Bearing Deposits Checking $ 147,216 $ 349 0.47% $ 127,062 $ 339 0.53% Money Markets 65,777 194 0.59 66,073 330 1.00 Tiered Money Markets 144,281 648 0.90 119,964 737 1.23 Savings 104,793 325 0.62 98,511 440 0.89 Certificates of Deposit 223,279 2,347 2.10 236,543 3,246 2.74 --------- --------- ------- --------- --------- ------- Total Interest-Bearing Deposits 685,346 3,863 1.13 648,153 5,092 1.57 Borrowings 37,676 542 2.88 19,433 258 2.66 --------- --------- ------- --------- --------- ------- Total Interest-Bearing Liabilities 723,022 4,405 1.22 667,586 5,350 1.60 --------- --------- ------- --------- --------- ------- Noninterest Bearing Liabilities Demand Deposits 156,352 131,979 Accrued Expenses and Other Liabilities 6,581 7,929 --------- --------- Total Noninterest-Bearing Liabilities 162,933 139,908 Shareholders' Equity 86,967 79,631 Total Liabilities and Shareholders' Equity $ 972,922 $ 887,125 ========= ========= Net Interest Income (tax-equivalent basis) 17,271 15,966 Net Interest Spread 3.50% 3.49% ======= ======= Net Interest Margin (3) 3.76% 3.81% ======= ======= Tax equivalent adjustment (415) (284) --------- --------- Net Interest Income $ 16,856 $ 15,682 ========= =========
(1) Interest income is presented on a tax-equivalent basis using a 35 percent federal tax rate. (2) Loans are stated net of unearned income and include non-accrual loans. (3) Net interest income on a tax-equivalent basis as a percentage of total average interest-earning assets. 12 OTHER INCOME: For the second quarter 2004, other income was $2.92 million as compared to $2.93 million in the same period a year ago. Income from PGB Trust and Investments, the Bank's trust division, was $1.79 million, an increase of $170 thousand or 10.5 percent over last year's second quarter. This increase was primarily due to an increase in trust assets under management. Security gains were $406 thousand in the second quarter of 2004, a decline of $148 thousand as compared to the same quarter of 2003. Service charges and fees increased from $418 thousand in the second quarter of 2003 to $427 thousand for the same quarter this year. Other income for the first half of 2004 was $5.54 million as compared to $5.41 million for the first half of 2003. Trust income increased $410 thousand or 13.4 percent to $3.47 million during this period. Security gains declined $227 thousand to $600 thousand for the six months ended June 30, 2004 when compared to the same period in 2003. Income from service charges and fees declined to $824 thousand from $837 thousand. The following table presents the components of other income for the three and six months ended June 30, 2004 and 2003:
Three Months Ended Six Months Ended June 30, June 30, (In Thousands) 2004 2003 2004 2003 ------ ------ ------ ------ Trust department income $1,791 $1,621 $3,474 $3,064 Service charges 427 418 824 837 Bank owned life insurance 195 225 415 444 Safe deposit rental fees 54 52 115 111 Other non-interest income 37 38 85 90 Fee for other services 9 20 27 36 Securities gains 406 554 600 827 ------ ------ ------ ------ Total other income $2,919 $2,928 $5,540 $5,409 ====== ====== ====== ======
OTHER EXPENSES: Other expenses for the second quarter of 2004 were $6.50 million compared to $5.67 million for the second quarter of 2003, an increase of $838 thousand or 14.8 percent. Salaries and benefits expense grew $325 thousand or 9.7 percent during the second quarter of 2004 as compared to the second quarter of 2003. Additions to the professional and clerical staff, required to service higher levels of business activity, along with the related benefits costs account for the increase. Occupancy expenses increased $330 thousand to $1.45 million for the second quarter of 2004 as compared to $1.12 million for the same quarter of 2003. In the past year, occupancy expenses have grown due to the investment in two new branches and a new operations center. Our newest branch, in Oldwick, New Jersey opened in late June and we anticipate opening a new branch in Morristown, New Jersey, later in the year. The new operations center expands the Corporation's technological capacity for future growth. For the six months ended June 30, 2004, other expenses increased $1.47 million or 13.3 percent to $12.54 million. Salary and benefit expense and occupancy costs were the primary reasons for the higher level of other expenses. Salaries and benefits rose $623 thousand or 9.4 percent while occupancy costs rose to $2.77 million, as compared to $2.20 million for the first half of 2003. As discussed in the previous paragraph, additions to staff, merit increases and the related benefits costs account for the increase in salaries and benefits expense. Premises and equipment increases are due to investments in future growth in the form of new branches and a new operations center. 13 The following table presents the components of other expense for the three and six months ended June 30, 2004 and 2003:
Three Months Ended Six Months Ended June 30, June 30, (In Thousands) 2004 2003 2004 2003 -------- -------- -------- -------- Salaries and employee benefits $ 3,685 $ 3,360 $ 7,220 $ 6,597 Premises and equipment 1,450 1,120 2,766 2,202 Advertising 228 141 329 234 Stationery and supplies 164 139 267 263 Professional fees 114 173 250 323 Telephone 141 89 243 177 Trust department expense 91 124 193 260 Postage 96 72 180 177 Insurance 79 36 160 69 Deferred Loan Origination Costs (111) (159) (182) (298) Other expense 566 570 1,116 1,069 -------- -------- -------- -------- Total other expense $ 6,503 $ 5,665 $ 12,542 $ 11,073 ======== ======== ======== ========
NON-PERFORMING ASSETS: Other real estate owned (OREO), loans past due in excess of 90 days and still accruing, and non-accrual loans are considered non-performing assets. These assets totaled $918 thousand and $168 thousand at June 30, 2004 and 2003, respectively. The increase was primarily due to the addition to non-performing loans of a commercial mortgage in the amount of $747 thousand. The underlying property is currently under contract for sale for an amount in excess of the loan and interest receivable balances. Loans past due in excess of 90 days and still accruing are in the process of collection and are considered well secured. The following table sets forth non-performing assets on the dates indicated, in conjunction with asset quality ratios: June 30, (In thousands) 2004 2003 ------------------ Other real estate owned $ - $ - Loans past due in excess of 90 days and still accruing 817 1 Non-accrual loans 101 167 ---- ---- Total non-performing assets $ 918 $ 168 ==== ==== Non-performing loans as a % of total loans 0.20% 0.04% Non-performing assets as a % of total Loans plus other real estate owned 0.20% 0.04% Allowance as a % of loans 1.23% 1.25% PROVISION FOR LOAN LOSSES: The provision for loan losses was $150 thousand for both the second quarters of 2004 and 2003. For the six months ended June 30, 2004 and 2003, the provision for loan losses was $300 thousand. The amount of the loan loss provision and the level of the allowance for loan losses are based upon a number of factors including Management's evaluation of probable losses inherent in the portfolio, after consideration of appraised collateral values, financial condition and past credit history of the borrowers as well as prevailing economic conditions. For the second quarter of 2004, net charge-offs were $6 thousand as compared to net charge-offs of $8 thousand during the second quarter of 2003. Net charge-offs for the first half of 2004 were $61 thousand as compared to net recoveries for the first half of 2003 of $27 thousand. 14 A summary of the allowance for loan losses for the six-month period ended June 30, follows: (In thousands) 2004 2003 ---- ---- Balance, January 1, $ 5,467 $ 4,798 Provision charged to expense 300 300 Loans charged off (72) (15) Recoveries 11 42 ------- ------- Balance, June 30, $ 5,706 $ 5,125 ======= ======= INCOME TAXES: Income tax expense as a percentage of pre-tax income was 32.6 percent for the three months ended June 30, 2004 compared to 32.7 percent for the same period in 2003. On a year to date basis, income tax expense as a percentage of pre-tax income was 32.1 percent in 2004 and 32.7 percent in 2003. The rate of income tax expense decline was due to higher levels of tax-exempt income. CAPITAL RESOURCES: The Corporation is committed to maintaining a strong capital position. At June 30, 2004, total shareholders' equity, including net unrealized losses on securities available for sale, was $85.4 million, representing a slight increase over total shareholders' equity recorded at December 31, 2003. The Federal Reserve Board has adopted risk-based capital guidelines for banks. The minimum guideline for the ratio of total capital to risk-weighted assets is 8 percent. Tier 1 Capital consists of common stock, retained earnings, minority interests in the equity accounts of consolidated subsidiaries, non-cumulative preferred stock, less goodwill and certain other intangibles. The remainder may consist of other preferred stock, certain other instruments and a portion of the allowance for loan loss. At June 30, 2004, the Corporation's Tier 1 Capital and Total Capital ratios were 20.17 percent and 21.52 percent, respectively. In addition, the Federal Reserve Board has established minimum leverage ratio guidelines. These guidelines provide for a minimum ratio of Tier 1 Capital to average total assets of 3 percent for banks that meet certain specified criteria, including having the highest regulatory rating. All other banks are generally required to maintain a leverage ratio of at least 3 percent plus an additional 100 to 200 basis points. The Corporation's leverage ratio at June 30, 2004, was 8.72 percent. LIQUIDITY: Liquidity refers to an institution's ability to meet short-term requirements in the form of loan requests, deposit withdrawals and maturing obligations. Principal sources of liquidity include cash, temporary investments and securities available for sale. Management's opinion is that the Corporation's liquidity position is sufficient to meet future needs. Cash and cash equivalents, interest earning deposits and federal funds sold totaled $25.9 million at June 30, 2004. In addition, the Corporation has $387.6 million in securities designated as available for sale. These securities can be sold in response to liquidity concerns or pledged as collateral for borrowings as discussed below. Book value as of June 30, 2004, of investment securities and securities available for sale maturing within one year amounted to $16.0 million and $6.4 million, respectively. The primary source of funds available to meet liquidity needs is the Corporation's core deposit base, which excludes certificates of deposit greater than $100 thousand. As of June 30, 2004, core deposits equaled $815.6 million. Another source of liquidity is borrowing capacity. The Corporation has a variety of sources of short-term liquidity available, including federal funds purchased from correspondent banks, short-term and long-term borrowings from the Federal Home Loan Bank of New York, access to the Federal Reserve Bank discount window and loan participations or sales of loans. The Corporation also generates liquidity from the regular principal payments made on its mortgage-backed security and loan portfolios. ITEM 3. Quantitative and Qualitative Disclosures about Market Risk There have been no material changes to information required regarding quantitative and qualitative disclosures about market risk from the end of the preceding fiscal year to the date of the most recent interim financial statements (June 30, 2004). 15 ITEM 4. Controls and Procedures The Corporation's Chief Executive Officer and Chief Financial Officer, with the assistance of other members of the Corporation's management, have evaluated the effectiveness of the Corporation's disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Corporation's Chief Executive Officer and Chief Financial Officer have concluded that the Corporation's disclosure controls and procedures are effective. The Corporation's Chief Executive Officer and Chief Financial Officer have also concluded that there have not been any changes in the Corporation's internal control over financial reporting that have materially affected, or is reasonably likely to materially affect, the Corporation's internal control over financial reporting. The Corporation's management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud. A control system, no matter how well conceived and operated, provides reasonable, not absolute, assurance that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Corporation have been or will be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. There can be no assurance that any design will succeed in achieving its stated goals under all future conditions; over time, control may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. PART II. OTHER INFORMATION ITEM 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities Issuer Purchases of Equity Securities
Total Number of Shares Purchased as Part of Maximum Number of Total Number Weighted Publicly Announced Shares that May Yet Be of Shares Average Price Plans or Programs Purchased Under the - Purchased Paid per Share Plans or Programs Period April 1-30, 2004 286 34.83 - - May 1-31, 2004 2,783 30.40 - - June 1-30, 2004 15 32.55 - - ---------------- ----------------- ------------------------ ------------------------- Total 3,084 $ 30.82 - - ================ ================= ======================== =========================
Note: The Corporation has no repurchase plan or program. All shares listed above are added to treasury stock through the cashless exercise of employee and director stock options as allowed in the Stock Option Plans. 16 ITEM 4. Submission of Matters to a Vote of Security Holders At the Annual Meeting of shareholders held on April 27, 2004, in Peapack-Gladstone, New Jersey, the following persons were elected as directors of Peapack-Gladstone Financial Corporation for a term of one year: DIRECTORS FOR WITHHELD --------- --- -------- Anthony J. Consi II 4,961,560 25,607 Pamela Hill 4,959,673 27,494 T. Leonard Hill 4,958,360 28,807 Frank A. Kissel 4,960,309 26,858 John D. Kissel 4,959,833 27,334 James R. Lamb 4,864,831 122,336 Edward A. Merton 4,951,198 35,969 F. Duffield Meyercord 4,963,495 23,672 John R. Mulcahy 4,946,051 41,116 Robert M. Rogers 4,964,748 22,419 Philip W. Smith III 4,959,027 28,140 Craig C. Spengeman 4,963,999 23,168 Jack D. Stine 4,956,459 30,708 ITEM 6. Exhibits and Reports on Form 8-K a. Exhibits 3 Articles of Incorporation and By-Laws: A. Restated Certificate of Incorporation as in effect on the date of this filing is incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003. B. By-Laws of the Registrant as in effect on the date of this filing are incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. 31.1 Certification of Frank A. Kissel, Chief Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a). 31.2 Certification of Arthur F. Birmingham, Chief Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a). 32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act Of 2002, signed by Frank A. Kissel, Chief Executive Officer of the Corporation, and Arthur F. Birmingham, Chief Financial Officer of the Corporation. b. Reports on Form 8-K 1 Current Report on Form 8-K dated April 29, 2004 (furnishing first quarter earnings release for Peapack-Gladstone Financial Corporation). 17 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PEAPACK-GLADSTONE FINANCIAL CORPORATION (Registrant) DATE: August 5, 2004 By: /s/ FRANK A. KISSEL ---------------------------------------------- FRANK A. KISSEL Chairman of the Board and Chief Executive Officer DATE: August 5, 2004 By: /s/ ARTHUR F. BIRMINGHAM ------------------------------------------------- ARTHUR F. BIRMINGHAM Executive Vice President and Chief Financial Officer 18 EXHIBIT INDEX Number Description - ------ ----------- 3 Articles of Incorporation and By-Laws: A. Restated Certificate of Incorporation as in effect on the date of this filing is incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003. B. By-Laws of the Registrant as in effect on the date of this filing are incorporated herein by reference to the Registrant's Quarterly Report on Form 10-Q for the quarter ended September 30, 2003. 31.1 Certification of Frank A. Kissel, Chief Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a). 31.2 Certification of Arthur F. Birmingham, Chief Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a). 32 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of The Sarbanes-Oxley Act Of 2002, signed by Frank A. Kissel, Chief Executive Officer of the Corporation, and Arthur F. Birmingham, Chief Financial Officer of the Corporation. 19 EX-31.1 2 exhibit31-1.txt Exhibit 31.1 CERTIFICATIONS -------------- I, Frank A. Kissel, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Peapack-Gladstone Financial Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 5, 2004 /s/ Frank A. Kissel - ----------------------- Frank A. Kissel Chairman of the Board and Chief Executive Officer 20 EX-31.2 3 exhibit31-2.txt Exhibit 31.2 CERTIFICATIONS -------------- I, Arthur F. Birmingham, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Peapack-Gladstone Financial Corporation; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: August 5, 2004 /s/ Arthur F. Birmingham - ------------------------ Arthur F. Birmingham Executive Vice President and Chief Financial Officer 21 EX-32 4 exhibt32.txt Exhibit 32 CERTIFICATIONS PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report on Form 10-Q of Peapack-Gladstone Financial Corporation, (the "Corporation") for the quarterly period ended June 30, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), Frank A. Kissel, as Chief Executive Officer of the Corporation, and Arthur F. Birmingham, as Chief Financial Officer, each hereby certifies, pursuant to 18 U.S.C. (section) 1350, as adopted pursuant to (section) 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation. /s/ Frank A. Kissel - ------------------------------ Name: Frank A. Kissel Title: Chief Executive Officer Date: August 5, 2004 /s/ Arthur F. Birmingham - ------------------------------ Name: Arthur F. Birmingham Title: Chief Financial Officer Date: August 5, 2004 22 -----END PRIVACY-ENHANCED MESSAGE-----