-----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, GAhkykAgTXCOsjvPTSDIxqivOyZ04Syz16l4XayYRqZGurNH8bXagPkkSjUy26dE 2ot1U+cT9sqHLM4gof/6vA== 0000950110-00-000475.txt : 20000512 0000950110-00-000475.hdr.sgml : 20000512 ACCESSION NUMBER: 0000950110-00-000475 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000511 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: 625792 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, 2000 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, 2000: 2,871,530 1 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, 1999 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, 2000 1999 --------- ------------ ASSETS Cash and due from banks $ 15,480 $ 17,770 Federal funds sold 18,994 15,247 --------- --------- Total cash and cash equivalents 34,474 33,017 Investment Securities:(approximate market value $62,324 in 2000 and $61,033 in 1999) 63,317 61,672 Securities Available for Sale:(amortized cost $100,533 in 2000 and $104,386 in 1999) 97,327 101,324 Loans: Loans secured by real estate 277,995 261,946 Other loans 26,434 25,987 --------- --------- Total loans 304,429 287,933 Less: Allowance for loan losses 3,072 2,962 --------- --------- Net loans 301,357 284,971 Premises and equipment 11,197 9,718 Accrued interest receivable 3,705 3,444 Other assets 3,810 3,389 --------- --------- TOTAL ASSETS $ 515,187 $ 497,535 ========= ========= LIABILITIES Deposits: Noninterest-bearing demand deposits $ 92,976 $ 87,034 Interest-bearing deposits: Checking 99,165 98,699 Savings 86,030 82,962 Money market accounts 44,013 33,605 Certificates of deposit over $100,000 34,285 33,637 Certificates of deposit less than $100,000 105,369 108,151 --------- --------- Total deposits 461,838 444,088 Accrued expenses and other liabilities 4,562 5,872 --------- --------- TOTAL LIABILITIES 466,400 449,960 STOCKHOLDERS' EQUITY Common stock (no par value; stated value $1 2/3 per share; authorized 10,000,000 shares; issued 2,883,428 shares.) 4,801 4,599 Surplus 19,471 19,667 Treasury Stock at cost, 11,898 shares in 2000 and 11,841 shares in 1999 (655) (655) Retained Earnings 27,269 25,918 Accumulated other comprehensive income- net unrealized (losses) on securities available for sale (net of income taxes) (2,099) (1,954) --------- --------- TOTAL STOCKHOLDERS' EQUITY 48,787 47,575 --------- --------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 515,187 $ 497,535 ========= ========= 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, 2000 1999 ---------- ---------- INTEREST INCOME Interest and fees on loans $ 5,876 $ 4,766 Interest on investment securities: Taxable 807 773 Tax-exempt 156 134 Interest on securities available for sale: Taxable 1,512 1,596 Dividends 0 6 Interest on federal funds sold 246 385 ---------- ---------- Total interest income 8,597 7,660 INTEREST EXPENSE Interest on savings account deposits 979 865 Interest on certificates of deposit over $100,000 297 415 Interest on other time deposits 1,468 1,331 ---------- ---------- Total interest expense 2,744 2,611 ---------- ---------- NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 5,853 5,049 Provision for loan losses 126 114 ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,727 4,935 ---------- ---------- OTHER INCOME Service charges and fees for other services 425 539 Trust Department Income 1,004 833 Securities gains 1 0 Other income 11 33 ---------- ---------- Total other income 1,441 1,405 OTHER EXPENSES Salaries and employee benefits 2,245 1,932 Premises and equipment 789 636 Merger Related Charges 500 0 Other expenses 994 930 ---------- ---------- Total other expenses 4,528 3,498 ---------- ---------- INCOME BEFORE INCOME TAX EXPENSE 2,640 2,842 Income tax expense 911 1,047 ---------- ---------- NET INCOME $ 1,729 $ 1,795 ========== ========== EARNINGS PER SHARE (Reflects a 5% stock dividend in 1999) Basic $ 0.60 $ 0.63 Diluted $ 0.59 $ 0.61 Average basic shares outstanding 2,871,497 2,867,258 Average diluted shares outstanding 2,939,604 2,950,738 See accompanying notes to consolidated financial statements. 4 PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Dollars in thousands) (Unaudited) Three Months Ended March 31, 2000 1999 -------- -------- Balance, Beginning of Period $ 47,575 $ 44,461 Comprehensive income: Net Income 1,729 1,795 Net unrealized holding losses on securities arising during the period, net of tax (150) (781) -------- -------- Total Comprehensive income 1,579 1,014 Common Stock Options Exercised 6 (13) Cash Dividends Declared (373) (293) -------- -------- Balance, March 31, $ 48,787 $ 45,169 ======== ======== 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, 2000 1999 -------- -------- OPERATING ACTIVITIES: Net Income: $ 1,729 $ 1,795 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 254 249 Amortization of premium and accretion of discount on securities, net 70 116 Provision for loan losses 126 114 Gains on securities (1) 0 Increase in interest receivable (261) (84) (Increase) decrease in other assets (54) 452 (Decrease) increase in other liabilities (1,310) 1,316 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 553 3,958 -------- -------- INVESTING ACTIVITIES: Proceeds from maturities of investment securities 8,922 7,189 Proceeds from maturities of securities available for sale 5,156 2,327 Proceeds from calls of investment securities 10 4,600 Proceeds from sales and calls of securities available for sale 0 5,000 Purchase of investment securities (10,594) (4,353) Purchase of securities available for sale (1,800) (16,876) Net decrease (increase) in short term investments 0 (470) Net increase in loans (16,512) (10,423) Net decrease in other real estate 0 (41) Purchase of premises and equipment (1,733) (244) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (16,551) (13,291) -------- -------- FINANCING ACTIVITIES: Net increase in deposits 17,750 19,649 Dividends paid (373) (293) Exercise of stock options 78 (13) Purchase of treasury stock 0 0 -------- -------- NET CASH USED IN FINANCING ACTIVITIES 17,455 19,343 -------- -------- Net increase (decrease) in cash and cash equivalents 1,457 10,010 -------- -------- Cash and cash equivalents at beginning of period 33,017 52,389 -------- -------- Cash and cash equivalents at end of period $ 34,474 $ 62,399 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest on deposits $ 3,150 $ 2,604 Income taxes 10 50
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. Effective January 7, 2000, the Corporation acquired Chatham Savings, FSB. The acquisition has been accounted for as a pooling-of-interests and, accordingly, the financial statements include the accounts and activities of Chatham for all periods presented. The transaction resulted in the issuance of 305,730 shares of the Corporation's common stock. Prior periods have been restated as follows: For the three months ended March 31, 1999
As Previously Reported As Restated ---------------------- ----------- Net Interest Income after Provision for Loan Losses $ 4,297,000 $ 4,935,000 =========== =========== Net Income $ 1,653,000 $ 1,795,000 =========== =========== As of December 31, 1999: Stockholders' Equity $40,715,000 $47,575,000 =========== ===========
In the first quarter of 2000, the Corporation recorded a pre-tax merger charge of $500,000 which primarily consisted of severance costs, professional fees and consolidation costs directly attributable to the merger. 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. COMPREHENSIVE INCOME The Corporation's total comprehensive income for the three months ended March 31, 2000 and 1999 was $1,579,000 and $1,014,000. The difference between the Corporation's net income and total comprehensive income for the three months ended March 31, 2000 and 1999 relates to the change in the net unrealized losses on securities available for sale during the applicable period of time. 7 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL: This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 which involve risks and uncertainties. Such statements are not historical facts and include expressions about management's confidence and strategies and management's expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. You can identify forward looking statements by looking for words such as "expect", "look", "believe", "anticipate", "may", "will", or similar statements or variations of such terms. These forward-looking statements involve certain risks and uncertainties. Actual results may differ materially from the results the forward-looking statements contemplate because of, among others, the following factors: the direction of interest rates is different than anticipated, declines in the levels of loan quality and origination volume, relationships with major customers including sources for loans, a decline in trust business, as well as the adverse effects of economic conditions and legal and regulatory barriers and structure. RESULTS OF OPERATIONS: The Corporation realized net income of $1,729,000 for the first quarter of 2000, as compared to net income of $1,795,000 reported for the same period in 1999. The first quarter of 2000 included non-recurring merger related charges, net of taxes, totaling $423,000 or $0.14 per diluted share. Earnings per diluted share were $0.59 for the first quarter of 2000 as compared to $0.61 for the prior year. First quarter 2000 operating earnings, before non-recurring merger related charges totaled $2,152,000 or $0.73 per diluted share. This represents an increase of $357,000 or 20% from earnings of $1,795,000 for the three months ended March 31, 1999. The increase in earnings before merger related charges for the first quarter of 2000 compared to 1999 was primarily the result of increased net interest income, offset in part by higher other expenses. EARNINGS ANALYSIS INTEREST INCOME: Interest income for the quarter ended March 31, 2000 was $8,597,000 an increase of $937,000 or 12.2% from the $7,660,000 reported for the same period in 1999. The yield on average interest earnings assets on a fully taxable equivalent basis increased 42 basis points to 7.07% for the first quarter of 2000 from 6.65% for the first quarter of 1999. Average interest earning assets were up $18,725,000 or 4.1%, with most of the growth experienced in the residential mortgage categories. INTEREST EXPENSE: The Corporation's interest expense for the first quarter of 2000 increased $133,000, or 5.1%, to $2,744,000 from $2,611,000 for the same period last year. Interest on certificates of deposit rose $174,000 as rates increased 44 basis points, offset in part by lower rates paid on other interest-bearing deposits. The average cost of interest-bearing liabilities decreased to 3.05% for the first quarter of 2000 from 3.07% for the first quarter of 1999. Average interest-bearing liabilities increased by $20,420,000 for the first quarter of 2000 compared to the same period in 1999, while average non-interest bearing deposits declined by $1,113,000. NET INTEREST INCOME: The net effect of the changes in interest income and interest expense for the first quarter of 2000 was an increase of $804,000 or 15.9% in net interest income as compared to the first quarter of 1999. The net interest margin and net interest spread, on a fully taxable equivalent basis, increased 42 basis points and 44 basis points, respectively, from the same period last year. OTHER INCOME: For the first quarter of 2000, other income increased $36,000 or 2.5% as compared to the same period a year ago. The increase was primarily due to higher trust income, up $171,000 offset in part by reduced mortgage banking activities. OTHER EXPENSES: For the quarter ended March 31, 2000, other expenses increased $1,030,000 from the same period last year. Included in the first quarter of 2000 were non-recurring merger related charges related to the Chatham acquisition of $500,000 pre-tax. Excluding these charges, other expense increased by $530,000 or 15.2% from 1999. Salary and benefits expense increased $313,000 as compared with the same period in 1999. Merit and promotional raises along with several additions to the professional staff contributed to this increase. Premises and equipment expense increased $153,000 as compared with the same period in 1999. This increase was primarily 8 due to higher occupancy and depreciation costs as various branch locations and equipment were renovated and upgraded. PROVISION FOR LOAN LOSSES: For the three months ended March 31, 2000, the provision for loan losses was $126,000, compared to $114,000 for the same period last year. The amount of the loan loss provision and the level of the allowance for possible loan losses are based upon a number of factors including Management's evaluation of potential losses in the portfolio, after consideration of appraised collateral values, financial condition and past credit history of the borrowers are well are prevailing and anticipated economic conditions. Net charge-offs were $15,000 during the first quarter of 2000 as compared with net charge-offs of $17,000 during the same period in 1999. A summary of the allowance for loan losses for the three month period ended March 31, follows: (In thousands) 2000 1999 ------- ------- Balance, January 1, $ 2,962 $ 2,428 Provision charged to expense 126 114 Loans charged off (34) (29) Recoveries 18 12 ------- ------- Balance, March 31, $ 3,072 $ 2,525 ======= ======= INCOME TAXES: Income taxes declined from $1,047,000 in the first quarter of 1999 to $911,000 during the same period in 2000. The effective tax rate for the quarters ended March 31, 2000 and 1999 was 35% and 37%, respectively. CAPITAL RESOURCES: Maintaining a strong capital position is an important goal of the Corporation. At March 31, 2000, total shareholders' equity (including net unrealized (losses)) was $48,787,000, representing an 8% increase over the same period in 1999. 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, 2000, the Bank's Tier 1 Capital and Total Capital ratios were 19.88% and 21.21%, 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, 2000 was 9.12%. Market Risk: The Corporation continues to monitor its exposure to various market risk sensitive instruments. These instruments and procedures employed to monitor market risks are listed in the Corporation's 1999 Annual Report. There has been no significant change in market risk since December 31, 1999. 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 2000. ITEM 3. DEFAULTS UPON SENIOR SECURITIES No default has occurred with respect to any of the Corporation's securities during 2000. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION 9 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 On January 11, 2000 the Corporation reported on Form 8-K the completion of the acquisition of Chatham Savings, FSB. On March 2, 2000 the Corporation reported on Form 8-K its results of operations for the one month ended February 29, 2000, solely to present the combined financial results for the Corporation to comply with pooling-of-interests accounting requirements in connection with the acquisition of Chatham Savings, FSB. 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 11th day of May 2000. PEAPACK-GLADSTONE FINANCIAL CORPORATION (Registrant) BY _______________________________________ (FRANK A. KISSEL, PRESIDENT AND CHIEF EXECUTIVE OFFICER) _______________________________________ (ARTHUR F. BIRMINGHAM, SENIOR VICE PRESIDENT AND TREASURER) 11 EX-27.1 2 FIANANCIAL DATA SCHEDULE
5 3-MOS DEC-31-2000 MAR-31-2000 34,474 160,644 308,134 3,072 0 3,810 11,197 0 515,187 461,838 0 0 0 4,801 43,986 515,187 0 10,038 0 0 4,528 126 2,744 2,640 911 1,729 0 0 0 1,729 0.60 0.59
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 12-MOS DEC-31-1999 DEC-31-1999 33,017 162,996 291,377 2,962 0 3,389 9,718 0 497,535 444,088 0 0 0 4,433 43,142 497,535 0 36,942 0 0 15,276 555 10,340 10,771 3,582 7,189 0 0 0 7,189 2.51 2.44
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