BEDMINSTER, NJ -- (Marketwire) -- 01/31/13 -- For the year and fourth quarter ended December 31, 2012, Peapack-Gladstone Financial Corporation (NASDAQ: PGC) (the Corporation) recorded net income of $9.70 million (year) and $1.06 million (quarter), respectively, and diluted earnings per share of $1.05 (year) and $0.12 (quarter), respectively.
Doug Kennedy, CEO, said, "We took several strategic steps during the quarter that have positioned us well for the future. These strategic initiatives have strengthened our core operating base as we embark on a plan to grow our core lending, retail, and wealth advisory businesses, while maintaining and enhancing our high levels of customer service."
The 2012 fourth quarter included the following strategic initiatives:
a) Approximately $19 million of classified loans were transferred to loans held for sale and are being marketed for sale. The transfer of these loans to held for sale resulted in an additional provision for loan losses of $4.0 million and charge-offs of $5.4 million.
b) The Company's Pooled Trust Preferred Securities portfolio was sold, resulting in a $2.87 million gain. This transaction also resulted in a significant reduction in risk-weighted assets for regulatory capital purposes and the realization of the majority of the Company's deferred tax assets, with the monetization of much of that to occur in 2013. As part of this, $260 thousand of additional tax expense needed to be recorded, which was related to the realization of the deferred tax assets to be carried-back to the prior two years at a slightly lower tax rate compared to the tax rate as recorded.
c) All of the Company's remaining Held to Maturity securities were transferred to Available for Sale, affording greater flexibility in the management of liquidity and interest rate risk.
d) The organization and set-up of PGB Trust & Investments of Delaware was completed just prior to year end, resulting in legal fees of $74 thousand.
e) Staffing and organizational restructuring coupled with various resignations, retirements, and position eliminations, Resulted in the recording of a $965 thousand severance accrual.
f) The position of Chairman and CEO was split when Mr. Kennedy joined the Company as CEO in early October 2012. Frank Kissel remained as Chairman of the Board. Professional, legal, and other costs totaling $336 thousand were recorded in connection with the CEO search.
Additionally, the fourth quarter of 2012 included $175 thousand of costs and fee waivers as a result of Hurricane Sandy.
The 2011 year included a state income tax benefit of $2.99 million related to the reversal of a valuation allowance previously recorded in 2008. Circumstances and projections indicated that the deferred tax asset would be realized in future periods and it was, in fact, realized upon the sale of the Pooled Trust Preferred Securities portfolio in the fourth quarter of 2012, as noted above.
For comparative purposes, the Corporation believes that comparing earnings excluding unusual items provides a better analysis of earnings trends. The information discussed in the next two paragraphs are non-GAAP measures.
As detailed in the financial tables on pages 16, 17 and 18, net income and diluted earnings per share for the year ended December 31, 2012, excluding the unusual items, were $11.89 million and $1.30, respectively. This compared favorably to net income of $9.18 million and diluted earnings per share of $0.91 for the 2011 full-year period, after excluding the unusual items.
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