EX-99.1 2 ex99-1.htm

Exhibit 99.1

Contact:

Arthur F. Birmingham
Peapack-Gladstone Financial Corporation
T: 908-719-4308


PEAPACK-GLADSTONE FINANCIAL CORPORATION
REPORTS SECOND QUARTER RESULTS
BRANCH OPENING IN BRIDGEWATER EXPANDS MARKET AREA

GLADSTONE, N.J.—(BUSINESS WIRE)—August 1, 2005 – Peapack-Gladstone Financial Corporation (AMEX:PGC) reported net income of $3.2 million for the second quarter of 2005, the same level as recorded for the second quarter of 2004. Net income per diluted share was $0.38 for both periods. The annualized return on average assets (“ROA”) was 1.12 percent and the annualized return on average equity (“ROE”) was 13.31 percent for the second quarter of 2005.

        Net income for the six months of 2005 was $6.9 million, an increase of $431 thousand from the $6.5 million reported for the same period last year. Diluted earnings per share was $0.82, an increase of 6.5 percent over the $0.77 recorded in the year ago period. These results produced a return on average assets of 1.22 percent and a return on average equity of 14.40 percent.

        “Our second quarter results reflect continued strong balance sheet growth,” said Frank A. Kissel, Chairman and Chief Executive Officer. “We are pleased with our ability to absorb the external challenges arising from the continued net interest margin compression resulting from a flattening yield curve and competitive loan and deposit pricing pressures. Despite these factors and along with additional branch opening expenses, net income excluding securities gains in both periods increased 8.5 percent. Most importantly, we have increased our loan portfolios without compromising our underwriting standards. Credit quality remained excellent and loan delinquencies continued at very low levels.

        “Our 20th branch, in Bridgewater, New Jersey, has recently opened. We are excited with the prospect of bringing our style of community banking to the Bridgewater community. We expect to continue opening branches in communities that are contiguous to our current market area.”

EARNINGS

Net Interest Income

        In the second quarter of 2005, net interest income, on a fully tax-equivalent basis, was $9.21 million, an increase of $499 thousand or 5.7 percent over the same period last year and a decrease of $61 thousand or 0.7 percent over the first quarter of 2005. On a fully tax-equivalent basis, the net interest margin for the second quarter was 3.37 percent as compared to 3.71 percent for the same period last year and 3.53 percent in the first quarter of 2005. These declines are primarily the result of the flattening yield curve with funding costs increasing significantly faster than yields on new loan originations. The yield on earning assets increased over the first quarter of 2005 by 8 basis points, while cost of funds increased 25 basis points. The sharp rise in funding costs was due to the raising of short-term interest rates by the Federal Reserve and competitive pricing pressure.

        Average loans for the second quarter of 2005 increased $205.8 million or 46.4 percent to $649.7 million from $443.9 million for the second quarter of 2004. In the second quarter of 2005 as compared to the second quarter of 2004, the mortgage loan portfolio experienced growth of $184.6 million or 54.8 percent, while the commercial loan portfolio grew $16.6 million or 23.0 percent. Most of the mortgage loan growth was in adjustable-rate residential mortgage loans, which resulted from new business initiatives and our entry into new market areas.

        For the second quarter of 2005, average deposits grew $115.3 million or 13.4 percent to $977.7 million from $862.4 million for the second quarter of 2004. Contributing to deposit growth was the introduction of the Fed Tracker Money Market Account, the Fed Flyer CD and the Master Escrow Account, products that have been favorably received by our customers. Average borrowings increased $35.8 million, or 92.2 percent, from $38.9 million in the second quarter of 2004 to $74.7 million for the second quarter of 2005. Borrowings supplemented funding requirements for asset growth in the second quarter of 2005.

Other Income

        Other income was $2.8 million for the second quarter of 2005, a decline of $158 thousand, or 5.4 percent from the $2.9 million recorded for the second quarter of 2004. Securities gains of $37 thousand and $406 thousand in the second quarters of 2005 and 2004, respectively, were recorded. Income from PGB Trust and Investments was $1.9 million, an increase of $115 thousand or 6.4 percent over 2004 levels.

Other Expenses

        Other expenses totaled $7.0 million for the second quarter of 2005, an increase of $514 thousand or 7.9 percent, when compared to $6.5 million for the same quarter of 2004. Salaries and benefits expense was $4.0 million for the second quarter of 2005 as compared to $3.7 million for the same quarter of 2004, increasing $311 thousand, or 8.4 percent. Normal salary increases as well as additions to staff, branch expansion and higher health insurance costs account for the increase. Occupancy and equipment expenses increased $213 thousand or 14.7 percent to $1.7 million for the second quarter of 2005 as compared to $1.5 million for the same quarter of 2004. In the past year, occupancy and equipment expenses have grown due to the investment in two new branches. Other non-interest expense remained constant at $1.4 million for the second quarter of 2005 as compared to the same period in 2004. This marks the second consecutive quarter in which other non-interest expense level has remained flat with comparable prior-year periods.

ASSET QUALITY

        At June 30, 2005, non-performing loans totaled $354 thousand or 0.05 percent of total loans as compared to $918 thousand or 0.20 percent at June 30, 2004.

        Mr. Kissel stated, “We are pleased to report that credit quality remains strong with low levels of loan delinquencies. During this period of strong loan growth, we remain committed to maintaining credit quality.”

        The allowance for loan losses was $6.4 million or 0.92 percent of total loans at June 30, 2005 as compared to $5.7 million or 1.23 percent of total loans at June 30, 2004. Net recoveries of $12 thousand were recorded in the first half of 2005 while $61 thousand of net charge-offs were recorded in the first half of 2004.

CAPITAL

        At June 30, 2005, shareholders’ equity totaled $98.8 million as compared with $85.4 million at June 30, 2004, an increase of $13.4 million or 15.6 percent. The Corporation’s leverage ratio, tier 1 and total risk based capital ratios at June 30, 2005 were 8.68 percent, 17.73 percent and 18.88 percent, respectively.

        Peapack-Gladstone Financial Corporation is a bank holding company with total assets of $1.18 billion as of June 30, 2005. Peapack-Gladstone Bank, its wholly owned community bank was established in 1921, and has 20 branches in Somerset, Hunterdon and Morris Counties. Its Trust Division, PGB Trust and Investments, operates at the Bank’s main office located at 190 Main Street in Gladstone and at its Morristown office located at 233 South Street. To learn more about Peapack-Gladstone Financial Corporation and its services please visit our web site at www.pgbank.com or call 908-234-0700.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management’s view of future interest income and net loans, management’s confidence and strategies and management’s expectations about new and existing programs and products, relationships, opportunities and market conditions. These statements may be identified by such forward-looking terminology as “expect”, “look”, “believe”, “anticipate”, “may”, or similar statements or variations of such terms. Actual results may differ materially from such forward-looking statements. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated costs in connection with new branch openings, an unexpected decline in the direction of the economy in New Jersey, unexpected changes in interest rates, unexpected loan prepayment volume, a decline in levels of loan quality, development of new tax strategies or the disallowance of prior tax strategies and origination volume and a decline in the volume of increase in trust assets or deposits. Peapack-Gladstone assumes no obligation for updating any such forward-looking statements at any time.

(Tables to Follow)

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)

At or For The Three Months
Ended
June 30,		 At or For The Six Months
Ended
June 30,
2005 2004 2005 2004
Income Statement Data:                    
Interest Income     $ 13,400   $ 10,740   $ 26,056   $ 21,261  
Interest Expense       4,455     2,246     8,084     4,405  
Net Interest Income       8,945     8,494     17,972     16,856  
Provision For Loan Losses       200     150     350     300  
Net Interest Income After    
     Provision For Loan Losses       8,745     8,344     17,622     16,556  
Trust Fees       1,906     1,791     3,920     3,474  
Other Income       818     722     1,656     1,466  
Securities Gains       37     406     335     600  
Other Expenses       7,017     6,503     13,572     12,542  
Income Before Income Taxes       4,489     4,760     9,961     9,554  
Income Tax Expense       1,271     1,551     3,040     3,064  
Net Income     $ 3,218   $ 3,209   $ 6,921   $ 6,490  
Balance Sheet Data:    
Total Assets             $ 1,177,156   $ 1,013,463  
Federal Funds Sold               847     2,666  
Short-Term Investments               779     847  
Securities Held To Maturity               78,586     96,760  
Securities Available For Sale               337,043     387,567  
Loans               694,618     465,761  
Allowance For Loan Losses               6,366     5,706  
Deposits               992,621     875,623  
Borrowings               80,806     48,219  
Shareholders' Equity               98,804     85,447  
     
Trust Department Assets    
     (Market Value, Not    
        Included Above)             $ 1,671,005   $ 1,555,505  
     
Performance Ratios:    
Return on Average Assets       1.12 %   1.29 %   1.22 %   1.33 %
Return on Average Equity       13.31     14.72     14.40     14.93  

PEAPACK-GLADSTONE FINANCIAL CORPORATION
SELECTED CONSOLIDATED FINANCIAL DATA
UNAUDITED
(Dollars in Thousands, Except Per Share Amounts)

At or For The Three Months
Ended
June 30,		 At or For The Six Months
Ended
June 30,
2005 2004 2005 2004
 
Net Interest Margin                    
    (Taxable Equivalent Basis)       3.37 %   3.71 %   3.45 %   3.76 %
     
Asset Quality:    
Loans past due over 90 days    
     And Still Accruing     $ 0   $ 0   $ 0   $ 817  
Non-Accrual Loans                 354   101
Net Recoveries/(Charge-Offs)       5     (6 )   12     (61 )
Allowance For Loan Losses    
    To Total Loans               0.92 %   1.23 %
     
Per Share Data: (1)    
Earnings Per Share (Basic)     $ 0.39   $ 0.39   $ 0.84   $ 0.79  
Earnings Per Share (Diluted)       0.38     0.38     0.82     0.77  
Book Value Per Share               11.90     10.43  
Dividends Per Share               0.22     0.20  
     
Capital Adequacy:    
Tier I Leverage               8.68 %   8.72 %
Tier I Capital to Risk-    
  Weighted Assets               17.73     20.17  
Tier I & II Capital to    
    Risk-Weighted Assets               18.88     21.52  

(1)     Restated for the effect of the 10 percent stock dividend declared September 9, 2004.

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
QUARTERS ENDED
(Tax-Equivalent Basis, Dollars in Thousands)

June 30, 2005 June 30, 2004
Average
Balance 		Income/
Expense 		Yield Average
Balance 		Income/
Expense 		Yield
ASSETS:                            
Interest-Earning Assets:    
   Investments:    
     Taxable (1)     $ 385,908   $ 3,891     4.03 % $ 441,145   $ 4,114     3.72 %
     Tax-Exempt (1) (2)       55,881     655     4.69 %   42,095     536     5.09 %
   Loans (2) (3)       649,733     9,101     5.60 %   443,905     6,283     5.66 %
   Federal Funds Sold       1,719     12     2.90 %   9,302     22     0.95 %
   Interest-Earning Deposits       776     6     3.02 %   774     2     0.88 %
   Total Interest-Earning    
     Assets       1,094,017   $ 13,665     5.00 %   937,221   $ 10,957     4.67 %
Noninterest-Earning Assets:    
   Cash and Due from Banks       21,641             19,629          
   Allowance for Loan    
     Losses       (6,166 )           (5,625 )        
   Premises and Equipment       21,155             17,540          
   Other Assets       23,703             25,481          
   Total Noninterest-Earning    
     Assets       60,333             57,025          
Total Assets     $ 1,154,350           $ 994,246          
LIABILITIES:    
Interest-Bearing Deposits    
   Checking     $ 205,237   $ 609     1.19 % $ 162,593   $ 237     0.58 %
   Money Markets       130,355     789     2.42 %   66,143     93     0.56 %
   Tiered Money Markets       103,468     375     1.45 %   139,102     303     0.87 %
   Savings       101,952     177     0.69 %   107,310     165     0.61 %
   Certificates of Deposit       259,392     1,895     2.92 %   223,387     1,174     2.10 %
     Total Interest-Bearing    
       Deposits       800,404     3,845     1.92 %   698,535     1,972     1.13 %
   Borrowings       74,668     610     3.27 %   38,856     274     2.82 %
   Total Interest-Bearing    
      Liabilities       875,072     4,455     2.04 %   737,391     2,246     1.22 %
Noninterest Bearing    
     Liabilities    
   Demand Deposits       177,270             163,822          
   Accrued Expenses and    
     Other Liabilities       5,297             5,803          
   Total Noninterest-Bearing    
     Liabilities       182,567             169,625          
Shareholders' Equity       96,711             87,230          
   Total Liabilities and    
     Shareholders' Equity     $ 1,154,350           $ 994,246          
   Net Interest Income         $ 9,210           $ 8,711      
     Net Interest Spread               2.96 %           3.45 %
     Net Interest Margin (4)               3.37 %           3.71 %

PEAPACK-GLADSTONE FINANCIAL CORPORATION
AVERAGE BALANCE SHEET
UNAUDITED
YEAR-TO-DATE
(Tax-Equivalent Basis, Dollars in Thousands)

June 30, 2005 June 30, 2004
Average
Balance 		Income/
Expense 		Yield Average
Balance 		Income/
Expense 		Yield
ASSETS:                            
Interest-Earning Assets:    
   Investments:    
     Taxable (1)     $ 393,963   $ 7,894     4.01 % $ 430,113   $ 8,173     3.77 %
     Tax-Exempt (1) (2)       53,823     1,259     4.68 %   39,625     1,024     5.17 %
   Loans (2) (3)       621,555     17,381     5.59 %   435,164     12,428     5.71 %
   Federal Funds Sold       1,745     23     2.64 %   8,048     38     0.95 %
   Interest-Earning Deposits       700     9     2.65 %   2,507     13     1.04 %
   Total Interest-Earning    
     Assets       1,071,786   $ 26,566     4.96 %   915,457   $ 21,676     4.72 %
Noninterest-Earning Assets:    
   Cash and Due from Banks       21,306             19,237          
   Allowance for Loan    
     Losses       (6,097 )           (5,575 )        
   Premises and Equipment       20,668             16,756          
   Other Assets       24,451             27,047          
   Total Noninterest-Earning    
     Assets       60,328             57,465          
Total Assets     $ 1,132,114           $ 972,922          
LIABILITIES:    
 
Interest-Bearing Deposits    
   Checking     $ 203,050   $ 1,137     1.12 % $ 147,216   $ 349     0.47 %
   Money Markets       117,853     1,223     2.08 %   65,777     194     0.59 %
   Tiered Money Markets       113,108     789     1.40 %   144,281     648     0.90 %
   Savings       103,816     358     0.69 %   104,793     325     0.62 %
   Certificates of Deposit       255,620     3,528     2.76 %   223,279     2,347     2.10 %
     Total Interest-Bearing    
       Deposits       793,447     7,035     1.77 %   685,346     3,863     1.13 %
   Borrowings       65,652     1,048     3.19 %   37,676     542     2.88 %
   Total Interest-Bearing    
      Liabilities       859,099     8,083     1.88 %   723,022     4,405     1.22 %
Noninterest Bearing    
     Liabilities    
   Demand Deposits       171,835             156,352          
   Accrued Expenses and    
     Other Liabilities       5,069             6,581          
   Total Noninterest-Bearing    
     Liabilities       176,904             162,933          
Shareholders' Equity       96,111             86,967          
   Total Liabilities and    
     Shareholders' Equity     $ 1,132,114           $ 972,922          
   Net Interest Income         $ 18,483           $ 17,271      
     Net Interest Spread               3.08 %           3.50 %
     Net Interest Margin               3.45 %           3.76 %

(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.