FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED JUNE 30, 2001 ------------------- 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 June 30, 2001: 3,026,305 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 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. 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, 2000 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. 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) June 30, December 31, 2001 2000 ---------- ------------ ASSETS Cash and due from banks $ 18,615 $ 17,881 Federal funds sold 31,985 36,376 --------- --------- Total cash and cash equivalents 50,600 54,257 Interest-bearing deposits 15,000 -- Investment Securities:(approximate market value $61,479 in 2001 and $70,230 in 2000) 59,870 69,575 Securities Available for Sale:(amortized cost $105,236 in 2001 and $86,069 in 2000) 105,894 85,331 Loans: Loans secured by real estate 356,324 315,655 Other loans 30,070 28,644 --------- --------- Total loans 386,394 344,299 Less: Allowance for loan losses 3,699 3,435 --------- --------- Net loans 382,695 340,864 Premises and equipment, net 12,203 11,661 Accrued interest receivable 4,393 4,164 Other assets 2,011 2,561 --------- --------- TOTAL ASSETS $ 632,666 $ 568,413 ========= ========= LIABILITIES Deposits: Noninterest-bearing demand deposits $ 115,359 $ 103,858 Interest-bearing deposits: Checking 103,172 108,780 Savings 77,602 74,657 Money market accounts 95,446 67,962 Certificates of deposit over $100,000 48,936 40,064 Certificates of deposit less than $100,000 129,408 114,939 --------- --------- Total deposits 569,923 510,260 Accrued expenses and other liabilities 3,475 2,997 --------- --------- TOTAL LIABILITIES 573,398 513,257 STOCKHOLDERS' EQUITY Common stock (no par value; stated value $1 2/3 per share; authorized 10,000,000 shares; issued at June 30, 2001 3,055,039 shares; issued at December 31, 2000 3,038,715 shares.) 5,086 5,064 Surplus 25,269 25,104 Treasury Stock at cost, 28,734 shares in 2001 and 20,642 shares in 2000 (1,281) (956) Retained Earnings 29,794 26,420 Accumulated other comprehensive income- net unrealized gains/(losses) on securities available for sale (net of income taxes) 400 (476) --------- --------- TOTAL STOCKHOLDERS' EQUITY 59,268 55,156 --------- --------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 632,666 $ 568,413 ========= ========= See accompanying notes to consolidated financial statements. 3
<TABLE> <CAPTION> PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except share data) (Unaudited) Six months ended Three months ended June 30, June 30, ------------------------- ------------------------- 2001 2000 2001 2000 ----------- ----------- ----------- ----------- <S> <C> <C> <C> <C> INTEREST INCOME Interest and fees on loans $ 13,708 $ 12,012 $ 6,917 $ 6,136 Interest on investment securities: Taxable 1,725 1,658 817 851 Tax-exempt 314 280 162 124 Interest on securities available for sale: Taxable 2,879 2,987 1,527 1,475 Tax-exempt 13 -- 13 -- Interest-bearing deposits 224 -- 178 -- Interest on federal funds sold 988 597 382 351 ----------- ----------- ----------- ----------- Total interest income 19,851 17,534 9,996 8,937 INTEREST EXPENSE Interest on savings account deposits 3,112 2,028 1,525 1,049 Interest on certificates of deposit over $100,000 1,290 773 631 476 Interest on other time deposits 3,607 2,838 1,858 1,370 ----------- ----------- ----------- ----------- Total interest expense 8,009 5,639 4,014 2,895 ----------- ----------- ----------- ----------- NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 11,842 11,895 5,982 6,042 Provision for loan losses 250 252 124 126 ----------- ----------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 11,592 11,643 5,858 5,916 ----------- ----------- ----------- ----------- OTHER INCOME Service charges and fees for other services 669 877 326 452 Trust Department income 2,065 1,877 930 873 Securities Gains/(Losses) 79 (196) 79 (197) Other income 408 227 343 216 ----------- ----------- ----------- ----------- Total other income 3,221 2,785 1,678 1,344 OTHER EXPENSES Salaries and employee benefits 4,843 4,435 2,456 2,190 Premises and equipment 1,714 1,516 868 727 Merger related charges -- 500 -- -- Other expense 1,958 2,216 940 1,222 ----------- ----------- ----------- ----------- Total other expenses 8,515 8,667 4,264 4,139 ----------- ----------- ----------- ----------- INCOME BEFORE INCOME TAX EXPENSE 6,298 5,761 3,272 3,121 Income tax expense 2,077 1,974 1,081 1,063 ----------- ----------- ----------- ----------- NET INCOME $ 4,221 $ 3,787 $ 2,191 $ 2,058 =========== =========== =========== =========== EARNINGS PER SHARE Basic $ 1.40 $ 1.26 $ 0.73 $ 0.69 Diluted $ 1.37 $ 1.22 $ 0.71 $ 0.66 Average basic shares outstanding 3,024,415 3,017,177 3,027,076 3,019,282 Average diluted shares outstanding 3,079,557 3,082,213 3,082,218 3,084,318 </TABLE> See accompanying notes to consolidated financial statements. 4
PEAPACK-GLADSTONE FINANCIAL CORPORATION CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Dollars in thousands) (Unaudited) Six Months Ended June 30, -------------------- 2001 2000 -------- -------- Balance, Beginning of Period $ 55,156 $ 47,575 Comprehensive income: Net Income 4,221 3,787 Unrealized holding gains/(losses) on securities arising during the period, net of tax 928 (205) Less: Reclassification adjustment for (gains)/losses included in net income (52) 129 Unrealized holding gains/(losses) on securities arising during the period, net of tax 876 (76) -------- -------- Total Comprehensive income 5,097 3,711 Common Stock Options Exercised 188 117 Purchase of Treasury Stock (325) -- Cash Dividends Declared (848) (747) -------- -------- Balance, June 30, $ 59,268 $ 50,656 ======== ======== 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, --------------------- 2001 2000 -------- --------- OPERATING ACTIVITIES: Net Income: $ 4,221 $ 3,787 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 556 498 Amortization of premium and accretion of discount on securities, net 93 134 Provision for loan losses 250 252 (Gains)/Losses on security sales (79) 196 Increase in interest receivable accrued (229) (16) Decrease/(increase) in other assets 279 (594) Increase/(decrease) in other liabilities 230 (2,524) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 5,321 1,733 -------- -------- INVESTING ACTIVITIES: Proceeds from maturities of investment securities 3,408 10,305 Proceeds from maturities of securities available for sale 46,310 19,216 Proceeds from calls of investment securities 7,211 10 Proceeds from sales and calls of securities available for sale 32,655 8,484 Purchase of investment securities (916) (14,093) Purchase of securities available for sale (98,145) (10,248) Net increase in short term investments (15,000) -- Net increase in loans (42,081) (33,123) Purchase of premises and equipment (1,098) (2,362) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (67,656) (21,811) -------- -------- FINANCING ACTIVITIES: Net increase in deposits 59,663 25,801 Dividends paid (848) (747) Exercise of stock options 188 117 Purchase of Treasury Stock (325) -- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 58,678 25,171 -------- -------- Net (decrease)/increase in cash and cash equivalents (3,657) 5,093 -------- -------- Cash and cash equivalents at beginning of period 54,257 33,017 -------- -------- Cash and cash equivalents at end of period $ 50,600 $ 38,110 ======== ======== Supplemental disclosures of cash flow information: Cash paid during the year for: Interest on deposits $ 8,582 $ 6,016 Income taxes 2,177 2,125 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. COMPREHENSIVE INCOME The Corporation's total comprehensive income for the six months ended June 30, 2001 and 2000 was $5.10 million and $3.71 million, respectively. Comprehensive income was $2.32 million and $2.13 million for the three months ended June 30, 2001 and 2000, respectively. The difference between the Corporation's net income and total comprehensive income for the six months ended June 30, 2001 and 2000 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. 5. RECENT ACCOUNTING PRONOUNCEMENTS Statement of Financial Accounting Standards No. 141, "Business Combinations" (SFAS No. 141), was issued by the Financial Accounting Standards Board (FASB) on June 27, 2001. SFAS No. 141 eliminated pooling-of-interests accounting for mergers. All transactions initiated after June 30, 2001 must use purchase accounting. SFAS No. 141 also redefines intangible assets and requires separation of intangible assets from goodwill and requires non-amortization of new goodwill and certain intangible assets. The Company anticipates that the adoption of SFAS No. 141 will not have a material impact on the financial statements. Statement of Financial Accounting Standards No. 142, "Goodwill and Intangible Assets" (SFAS No. 142), was issued by the Financial Accounting Standards Board (FASB) on June 27, 2001. SFAS No. 142 eliminates the amortization of existing goodwill and requires evaluating goodwill for impairment on an annual basis of whenever circumstances occur that would reduce the fair value. SFAS No. 142 also requires allocation of goodwill to reporting segments defined by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information". This Statement is effective for fiscal years beginning after December 15, 2001. The Company anticipates that the adoption of SFAS No. 142 will not have a material impact on the financial statements. 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. The Corporation is under no obligation to update any forward looking statements at any time. RESULTS OF OPERATIONS: The Corporation realized earnings of $0.71 per diluted share for second quarter of 2001 as compared to $0.66 per diluted share for the same quarter last year. Net income for the quarter rose 6.3 percent to $2.19 million compared with $2.06 million in the same period in 2000. Return on average assets for the quarter was 1.42 percent and return on average equity was 15.07 percent. Net income for the six months ended June 30, 2001 was $4.22 million or $1.37 per diluted share. These results compare to net income of $3.79 million or $1.22 per diluted share for the first six months of 2000, including a merger related charge of $423 thousand, net of tax, or $.14 per diluted share. For the six months ended June 30, 2001, the return on average assets was 1.41 percent and the return on average equity was 14.82 percent. Excluding the merger-related charges recorded in 2000, net income was $4.21 million as compared to $4.22 million in 2001. EARNINGS ANALYSIS NET INTEREST INCOME: Net interest income remained flat for the second quarter of 2001 as compared to the second quarter of 2000. Net interest income on a tax-equivalent basis was $6.06 million for the three months ended June 30, 2001 and 2000. Average loans increased $56.3 million quarter to quarter while the average interest rate declined 17 basis points. Average investment securities, federal funds sold and interest bearing deposits increased $39.8 million over the second quarter of last year. The average interest earned declined 86 basis points from the second quarter of 2000 as compared to the second quarter of 2001. Total average interest bearing liabilities increased $78.1 million for the quarter ended June 30, 2001 as compared to the same quarter last year; however, interest rates paid increased 47 basis points during this same period. The combination of rising rates on the liabilities and falling rates on the assets contributed to a decrease in the net interest margin of 81 basis points, from 4.87 percent to 4.06 for the three months ended June 30, 2000 and 2001, respectively. Net interest income for the six months ended June 30, 2001 also remained flat over the same period last year. Increased interest income was offset by an increase in interest expense. On a fully tax-equivalent basis, net interest income was $12.03 million as compared to $12.01 million for the year to date 2001 and 2000, respectively. Average interest-earning assets increased $84.6 million, or 17.5 percent for the first six months of 2001 over the comparable 2000 period. Average loans increased 17.2 percent or $52.5 million and interest-bearing deposits including federal funds sold increased $29.4 million or 152.5 percent. Average investments increased $2.7 million or 1.7 percent. For the first six months of 2001, average interest-bearing liabilities were $68.1 million higher, or 18.5 percent, than the same period in 2000. The funding of the loan growth was accomplished by the introduction of a tiered money market account and 14-month certificates of deposit with attractive rates. Money market accounts grew 114.6 percent or $48.7 million, while certificates of deposit grew 19.2 percent or $27.2 million. Interest rates on average interest-earning assets decreased during the first six months of 2001 to 7.16 percent from 7.33 percent for the comparable period in 2000. The decrease can be attributed to lower interest rates on federal funds sold, down 113 basis points. Average interest rates on investment securities and loans also decreased during the six months of 2001, down 6 and 12 basis points, respectively. Average interest rates on interest-bearing liabilities increased 64 basis points from 3.07 percent to 3.71 percent. The increase in interest expense was primarily due to 8
higher average balances in the higher rate money market accounts and certificates of deposits, up 112 and 75 basis points, respectively. This contributed to a net decrease in the interest margin of 73 basis points, from 4.88 percent to 4.15 percent for the year to date ended June 30, 2000 and 2001, respectively. OTHER INCOME: Other income increased from $1.34 million for the quarter ended June 30, 2000 to $1.68 million for the same period in 2001, a 25.4 percent increase. Contributing to this increase was a 6.5 percent increase in Trust Department income from $873 thousand for the second quarter of 2000 to $930 thousand for the second quarter of 2001, partially offset by lower service charges and fees. The Corporation also posted security gains in the quarter ended June 30, 2001, of $79 thousand as compared to $197 thousand of security losses in the quarter ended June 30, 2000. For the six months ended June 30, 2001, other income was $3.22 million, an increase of 15.7 percent over the same period last year. Security gains of $79 thousand were realized this year compared to $196 thousand in security losses last year. Trust Department income rose 10.0 percent to $2.07 million for the six months ended June 30, 2001 as compared to $1.88 million for the same six months in 2000 and was partially offset by lower service charges and fees. OTHER EXPENSES: Other expenses rose 2.9 percent from $4.14 million for the three months ended June 30, 2000 to $4.26 for the same three months in 2001. Higher other expenses included salaries and benefits expense of $2.46 million, which increased 12.1 percent, and premises and equipment expense of $868 thousand, which increased of 19.4 percent. Offsetting these increases was a 23.0 percent decline in other operational expenses from $1.22 million for the quarter ended June 30, 2000 to $940 thousand for the same quarter in 2001. The reduced costs reflect the savings realized from elimination of redundant expenses associated with the Chatham Savings, FSB merger. Other expenses totaled $8.52 million for the six months ended June 30, 2001 compared to $8.67 million the previous year, a 1.7 percent decrease. Excluding pre-tax merger-related charges of $500 thousand for 2000, other expenses increased 4.3 percent year to year. The largest component of other expense, salaries and benefits expense increased 9.0 percent from $4.44 million for the first six months of 2000 to $4.84 million for the same period of 2001. This increase can be attributed to additions to the professional staff and upward salary adjustments to attract and maintain qualified employees. Premises and equipment expense rose $198 thousand or 13.1 percent as compared with the same six months in 2000. This increase is attributable to additional expenditures related to new branch locations and equipment upgrades. Other major components of this category, advertising, insurance, telephone, postage, and trust expense, increased by $38 thousand or 6.0 percent to $675 thousand for the year to date June 30, 2001 from $637 thousand for the same period of 2000. 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 $405 thousand and $421 thousand at June 30, 2001 and 2000, respectively. Loans past due in excess of 90 days and still accruing are in the process of collection and are well secured. The following table sets forth non-performing assets on the dates indicated, in conjunction with asset quality ratios: (In thousands) June 30, 2001 December 31, 2000 ------------- ------------------ Loans past due in excess of 90 days and still accruing $ 11 $ 75 Non-accrual loans 287 325 ------- ------- Total non-performing assets $ 405 $ 400 ======= ======= Non-performing loans as a % of total loans .10% .12% Non-performing assets as a % of total Loans plus other real estate owned .10% .12% Allowance as a % of loans 0.96% 1.00% PROVISION FOR LOAN LOSSES: For the three months ended June 30, 2001, the provision for loan losses was $124 thousand, compared to $126 thousand for the three months ended June 30, 2000. 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, 9
financial condition and past credit history of the borrowers as well as prevailing and anticipated economic conditions. Net recoveries were $11 thousand during the three months ended June 30, 2001 as compared to net charge-offs of $83 thousand during the same period in 2000. For the six months ended June 30, 2001, net recoveries were $14 thousand compared to $99 thousand in net charge-offs for the same period in 2000. A summary of the allowance for loan losses for the six-month period ended June 30, follows: (In thousands) 2001 2000 ------ ------ Balance, January 1, $3,435 $2,962 Provision charged to expense 250 252 Loans charged off (44) (131) Recoveries 58 32 ------- ------ Balance, June 30, $3,699 $3,115 ======= ====== INCOME TAXES: Income tax expense as a percentage of pre-tax income was 33 percent for both the three and six months ended June 30, 2001, as compared to 34 percent for the same periods in 2000. Income taxes increased 5.6 percent from $1.97 million in 2000 to $2.08 in 2001, reflecting higher taxable income. CAPITAL RESOURCES: The Corporation is committed to maintaining a strong capital position. At June 30, 2001, total shareholders' equity, including net unrealized gains, was $59.27 million, representing a 17.0 percent increase over the same period in 2000. 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. 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 June 30, 2001, the Bank's Tier 1 Capital and Total Capital ratios were 17.84 percent and 19.10 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 Bank's leverage ratio at June 30, 2001, was 8.80 percent. 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 2000 Annual Report. There has been no significant change in market risk since December 31, 2000. 10
PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of shareholders held on April 24, 2001, in Peapack-Gladstone, New Jersey, the following matters were discussed and voted upon: (1) The following persons were elected as directors of Peapack-Gladstone Financial Corporation for a term of one year: BROKER DIRECTORS FOR WITHHELD ABSTAINED NON-VOTE TOTAL --------- --- -------- --------- -------------- Anthony J. Consi II 2,324,017 1,094 0 130,762 Pamela Hill 2,304,426 20,685 0 130,762 T. Leonard Hill 2,322,874 2,237 0 130,762 Frank A. Kissel 2,324,017 1,094 0 130,762 John D. Kissel 2,324,017 1,094 0 130,762 James R. Lamb 2,324,017 1,094 0 130,762 George R. Layton 2,323,483 1,628 0 130,762 Edward A. Merton 2,318,308 6,803 0 130,762 F. Duffield Meyercord 2,318,842 6,269 0 130,762 John R. Mulcahy 2,318,842 6,269 0 130,762 Philip W. Smith III 2,322,373 2,738 0 130,762 Jack D. Stine 2,323,160 1,951 0 130,762 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 11
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 10th day of August 2001. PEAPACK-GLADSTONE FINANCIAL CORPORATION (Registrant) BY ------------------------------------- (Frank A. Kissel, President and Chief Executive Officer) ------------------------------------- (Arthur F. Birmingham, Senior Vice President and Treasurer) 12