-----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, UuQqSsJHPuSDDjpeMJWpATdqAdItcDaTH4ogDIAfhy/kVJlMFf5biXnJ+P6+RFcj /SKSBtXHr0O9L+GeCIW8Mw== 0000950110-98-000588.txt : 19980514 0000950110-98-000588.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950110-98-000588 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PEAPACK GLADSTONE FINANCIAL CORP CENTRAL INDEX KEY: 0001050743 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 223537895 STATE OF INCORPORATION: NJ FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23537 FILM NUMBER: 98617824 BUSINESS ADDRESS: STREET 1: PEAPACK GLADSTONE FINACIAL CORP STREET 2: 158 ROUTE 206 NORTH CITY: GLADSTONE STATE: NJ ZIP: 07934 BUSINESS PHONE: 9082340700 MAIL ADDRESS: STREET 1: PEAPACK GLADSTONE FINANCIAL CORP STREET 2: 158 ROUTE 206 NORTH CITY: GLADSTONE STATE: NJ ZIP: 07934 10-Q 1 FORM 10-Q ================================================================================ FORM 10-Q ---------------- QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1998 ---------- 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) (Zip Code) REGISTRANT'S TELEPHONE NUMBER (908) 234-0700 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 --- --- Number of shares of Common stock outstanding as of March 31, 1998: 2,327,898 ================================================================================ PEAPACK-GLADSTONE FINANCIAL CORPORATION PART I. FINANCIAL INFORMATION Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the December 31, 1997 Annual Report on Form 10-K for Peapack-Gladstone Financial Corporation (the "Corporation"). The Corporation considers that all adjustments (all of which are normal recurring accruals) necessary for a fair statement of the financial position and results of operations for these periods have been made; however, results for such interim periods are subject to year-end adjustments. Results for such interim periods are not necessarily indicative of results for a full year. 2 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CONDITION (Dollars in thousands) (Unaudited) March 31, December 31, 1998 1997 -------- ----------- ASSETS Cash and due from banks ............................ $ 11,171 $ 17,740 Federal funds sold ................................. 14,000 15,500 -------- -------- Total cash and cash equivalents ................ 25,171 33,240 Investment Securities:(approximate market value $54,909 in 1998 and $54,452 in 1997) U.S. Treasury and Government agencies .............. 45,809 44,557 State and political subdivisions ................... 8,663 9,421 -------- -------- Total Investment Securities .................... 54,472 53,978 Securities Available for Sale:(amortized cost $87,525 in 1998 and $90,817 in 1997) U.S. Treasury and Government agencies .............. 85,256 86,799 Other securities available for sale ................ 2,856 4,781 -------- -------- Total Securities Available for Sale ............ 88,112 91,580 Loans: Loans secured by real estate ....................... 159,329 149,684 Other loans ........................................ 23,621 24,690 -------- -------- Total loans .................................... 182,950 174,374 Less: Allowance for loan losses .............. 1,975 1,893 -------- -------- Net loans ...................................... 180,975 172,481 Premises and equipment ............................. 8,701 8,595 Other real estate owned ............................ 236 340 Accrued interest receivable ........................ 3,071 3,006 Other assets ....................................... 305 445 -------- -------- TOTAL ASSETS ................................. $361,043 $363,665 ======== ======== LIABILITIES Deposits: Noninterest-bearing demand deposits .............. $ 68,309 $ 74,712 Interest-bearing deposits: Checking ....................................... 71,437 70,745 Savings ........................................ 69,703 70,419 Money market accounts .......................... 22,636 24,624 Certificates of deposit over $100,000 .......... 21,399 18,243 Certificates of deposit less than $100,000 ..... 70,307 69,730 -------- -------- Total deposits ..................................... 323,791 328,473 Accrued expenses and other liabilities ............. 2,363 1,553 -------- -------- TOTAL LIABILITIES ............................ 326,154 330,026 ======== ======== STOCKHOLDERS' EQUITY Common stock (no par value; stated value $1 2/3 per share; authorized 10,000,000 shares; issued 2,335,238 shares.) ................ 3,892 3,892 Surplus ............................................ 6,270 6,218 Treasury Stock at cost, 7,340 shares in 1998 and 11,178 shares in 1997 ........................ (293) (367) Retained Earnings .................................. 24,656 23,420 Accumulated other comprehensive income-- net unrealized gains on securities available for sale (net of income taxes) ......... 364 476 -------- -------- TOTAL STOCKHOLDERS' EQUITY ................... 34,889 33,639 -------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY ..... $361,043 $363,665 ======== ======== 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 March 31, ----------------------- 1998 1997 ---------- ---------- INTEREST INCOME Interest and fees on loans ........................... $ 3,558 $ 3,045 Interest on investment securities: Taxable ......................................... 695 674 Tax-exempt ...................................... 112 136 Interest on securities available for sale: Taxable ... 1,430 1,371 Interest on federal funds sold ....................... 202 217 ---------- ---------- Total interest income ........................... 5,997 5,443 INTEREST EXPENSE Interest on savings account deposits ................. 812 870 Interest on certificates of deposit over $100,000 .... 267 232 Interest on other time deposits ...................... 919 785 ---------- ---------- Total interest expense .......................... 1,998 1,887 ---------- ---------- NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES ....................... 3,999 3,556 Provision for loan losses ............................ 91 100 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ....................... 3,908 3,456 ---------- ---------- OTHER INCOME Service charges and fees for other services .......... 1,251 936 Securities gains ..................................... 67 0 Other income ......................................... 28 27 ---------- ---------- Total other income .............................. 1,346 963 OTHER EXPENSES Salaries and employee benefits ....................... 1,632 1,508 Premises and equipment ............................... 534 562 Other expense ........................................ 695 630 ---------- ---------- Total other expenses ............................ 2,861 2,700 ---------- ---------- INCOME BEFORE INCOME TAX EXPENSE ..................... 2,393 1,719 Income tax expense ................................... 903 616 ---------- ---------- NET INCOME ...................................... $ 1,490 $ 1,103 ========== ========== EARNINGS PER SHARE (Reflects a 2:1 stock split in December, 1997.) Basic ................................................ $ 0.64 $ 0.47 Diluted .............................................. $ 0.62 $ 0.47 Average basic shares outstanding ..................... 2,328,546 2,329,792 Average diluted shares outstanding ................... 2,399,244 2,368,968 See accompanying notes to consolidated financial statements. 4 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Dollars in thousands) (Unaudited) Three Months Ended March 31, ------------------- 1998 1997 ------- ------- Balance, Beginning of Period ......................... $33,639 $30,208 Comprehensive income: Net Income ......................................... 1,490 1,103 Change in net unrealized gains on securities available for sale ............................. (112) (620) ------- ------- Total Comprehensive income ....................... 1,378 483 Common Stock Options Exercised ....................... 12 0 Treasury Stock Transactions, net ..................... 115 0 Cash Dividends Declared .............................. (255) (233) ------- ------- Balance, March 31, ................................... $34,889 $30,458 ======= ======= See accompanying notes to consolidated financial statements. 5 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Three Months Ended March 31, -------------------- 1998 1997 -------- -------- OPERATING ACTIVITIES: Net Income: ............................................ $ 1,490 $ 1,103 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ........................................... 189 171 Amortization of premium and accretion of discount on securities, net .......................... 12 15 Provision for loan losses .............................. 91 100 Provision for deferred taxes ........................... (6) (11) Gains on securities .................................... (67) 0 Increase in interest receivable ........................ (65) (171) Decrease in other assets ............................... 209 71 Increase in other liabilities .......................... 810 520 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES ........... 2,663 1,798 -------- -------- INVESTING ACTIVITIES: Proceeds from maturities of investment securities ...... 4,750 2,725 Proceeds from maturities of securities available for sale ............................................ 6,000 5,500 Proceeds from sales and calls of securities available for sale ................................... 13,754 0 Purchase of investment securities ...................... (5,249) (4,173) Purchase of securities available for sale .............. (17,324) (7,995) Net decrease in short term investments ................. 924 2,026 Net increase in loans .................................. (8,585) (3,490) Net decrease in other real estate ...................... 104 352 Purchase of premises and equipment ..................... (295) (99) -------- -------- NET CASH USED IN INVESTING ACTIVITIES ............... (5,921) (5,154) -------- -------- FINANCING ACTIVITIES: Net (decrease) increase in deposits .................... (4,683) 10,780 Dividends paid ......................................... (255) (233) Exercise of stock options .............................. 12 0 Treasury stock transactions, net ....................... 115 0 -------- -------- NET CASH USED IN FINANCING ACTIVITIES ............... (4,811) 10,547 -------- -------- Net (decrease) increase in cash and cash equivalents. (8,069) 7,191 -------- -------- Cash and cash equivalents at beginning of period ....... 33,240 26,762 -------- -------- Cash and cash equivalents at end of period ............. $ 25,171 $ 33,953 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest on deposits ................................. $ 2,146 $ 2,135 Income taxes ......................................... 864 528 Noncash investing activities: Transfer of loans to Other Real Estate ............... 0 248 See accompanying notes to consolidated financial statements. 6 PEAPACK-GLADSTONE FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. PRINCIPLES OF CONSOLIDATION 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, the Peapack-Gladstone Bank. All significant intercompany balances and transactions have been eliminated from the accompanying consolidated financial statements. 2. ALLOWANCE FOR LOAN LOSSES The allowance for loan losses is maintained at a level that management considers adequate to reflect the risk of future losses inherent in the Corporation's loan portfolio. In its evaluation of the adequacy of the allowance for loan losses, management considers past loan loss experience, changes in the composition of non-performing loans, the condition of borrowers facing financial pressure, the relationship of the current level of the allowance to the credit portfolio and to non-performing loans and existing economic conditions. The process of determining the adequacy of the allowance is necessarily judgmental and subject to changes in external conditions. The allowance is increased by provisions charged to expense and reduced by net charge-offs. 3. EARNINGS PER COMMON SHARE -- BASIC AND DILUTED Basic earnings per share is computed by dividing income available to common stockholders 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). 4. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS During the first quarter of 1998, the Corporation adopted the provisions of Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income" (SFAS 130). SFAS 130 establishes standards for reporting and display of comprehensive income and its components (revenues, expenses, gains and losses) in a full set of general purpose financial statements. This Statement requires that all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. This Statement requires that an enterprise (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. In accordance with the provisions of SFAS 130 for interim period reporting, the Corporation's total comprehensive income for the three months ended March 31, 1998 and 1997 was $1,378,000 and $483,000. The difference between the Corporation's net income and total comprehensive income for these periods relates to the change in the net unrealized gains on securities available for sale during the applicable period of time. 7 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS: Net income for the three month period ended March 31, 1998 was $1,490,000, as compared to, net income of $1,103,000 in 1997. On a diluted per share basis, the Corporation earned $0.62 and $0.47 during the first quarter of 1998 and 1997, respectively. Higher net interest income and higher other income were the main factors contributing to the increase in net income. NET INTEREST INCOME: Net interest income after provision for loan losses for the first quarter of 1998 increased 13% to $3,908,000 from $3,456,000 in 1997. The increase in net interest income is primarily due to increased loan volume, which was funded by increased low cost core deposits. Average interest-bearing assets during the first quarter of 1998 were $335,404,000, representing an increase of $27,742,000 or 9% over the previous year. Average interest-bearing liabilities rose to $256,513,000 for the first three months of 1998 as compared with $245,110,000 during the same period in 1997. The yield on interest-earning assets, including securities, federal funds sold and loans, was flat during the first three months of 1998 as compared with the first three months of 1997, as slightly lower rates earned on securities and loans were offset by higher yields on federal funds sold. The rate paid on interest-bearing liabilities increased to 3.16% during the first three months of 1998 from 3.09% over the previous year. Higher rates paid on Certificates of Deposits were offset by lower rates paid on interest bearing checking and money market accounts. Further contributing to the increase in the net interest margin was strong growth in noninterest-bearing demand deposits. Average noninterest-bearing demand deposits increased to $67,870,000, representing a 21% increase over the previous year. OTHER INCOME: Other income before gains on securities was $1,279,000 and $963,000 for the first three months of 1998 and 1997, respectively. This increase was primarily due to higher trust fees, up $296,000 from 1997. During the first three months of 1998, gains on sale of securities amounted to $67,000. The Corporation had no gains or losses on the sale of securities during the first quarter of 1997. OTHER EXPENSES: Other expenses for the first three months of 1998 increased from $2,700,000 in 1997 to $2,861,000 in 1998. Salary and employee benefit expenses for the first quarter of 1998 increased $124,000 as compared with the same period in 1997. Merit and promotional raises plus several additions to the professional staff contributed to this increase. Other operating expenses increased $65,000 or 10% in the first quarter as compared with the same period in 1997. Higher Trust Department expenses and professional fees accounted for a majority of this increase. PROVISION FOR LOAN LOSSES: At March 31, 1998, the allowance for loan losses amounted to $1,975,000 as compared with $1,663,000 a year earlier. Non-performing loans (consisting of all non-accrual loans and loans over 90 days past due and still accruing interest) were $956,000 and $829,000 at March 31, 1998 and 1997, respectively. A provision of $91,000 and $100,000 for loan losses was expensed for the period ended March 31, 1998 and 1997, respectively. Net charge-offs were $9,000 during the first three months of 1998 as compared with net charge-offs of $73,000 during the same period in 1997. A summary of the allowance for loan losses for the three month period ending March 31, follows: 1998 1997 ------ ------ (In thousands) Balance, January 1 .................................. $1,893 $1,636 Provision charged to expense ........................ 91 100 Loans charged off ................................... (15) (81) Recoveries .......................................... 6 8 ------ ------ Balance, March 31 ................................... $1,975 $1,663 ====== ====== 8 CAPITAL RESOURCES: Maintaining a strong capital position is an important goal of the Corporation. At March 31, 1998, total shareholders' equity (including net unrealized gains) was $34,889,000, representing an 15% increase over the same period in 1997. The Federal Reserve Board has adopted risk-based capital guidelines for banks. The minimum guidelines for the ratio of total capital to risk-weighted assets is 8%. At least half of the total capital is to be comprised of common stock, retained earnings, minority interests in the equity accounts of consolidated subsidiaries, non-cumulative preferred stock, less goodwill and certain other intangibles ("Tier 1 Capital"). The remainder may consist of other preferred stock, certain other instruments and a portion of the loan loss allowance. At March 31, 1998, the Bank's Tier 1 Capital and Total Capital ratios were 20.26% and 21.44%, respectively. In addition, the Federal Reserve Board has established minimum leverage ratio guidelines for banks. These guidelines provide for a minimum ratio of Tier 1 Capital to average total assets of 3% 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% plus an additional cushion of 100 to 200 basis points. The Bank's leverage ratio at March 31, 1998 was 9.42%. 9 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS No information is reported under this item. ITEM 2. CHANGES IN SECURITIES No changes have been made to the rights of holders of any class of securities during the first quarter of 1998. ITEM 3. DEFAULTS UPON SENIOR SECURITIES No default has occurred with respect to any of the Corporation's securities during 1998. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION No information is reported under this item. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 10 SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the twelfth day of May 1998. PEAPACK-GLADSTONE FINANCIAL CORPORATION (Registrant) By: /s/ FRANK A. KISSEL ----------------------------------- (Frank A. Kissel, President and Chief Executive Officer) /s/ ARTHUR F. BIRMINGHAM ----------------------------------- (Arthur F. Birmingham, Senior Vice President and Treasurer) 11 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS DEC-31-1998 MAR-31-1998 25,171 142,584 186,021 1,975 0 541 8,701 0 361,043 326,154 0 0 0 3,892 30,997 361,043 0 7,343 0 0 2,861 91 1,998 2,393 903 1,490 0 0 0 1,490 0.64 0.62
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