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Peapack Gladstone Financial (PGC) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 28, 2026

Source: earnings call transcript

Executive summary

Peapack-Gladstone Financial Corporation Q2 FY26 — Strong Growth and Profitability Amid Strategic Investments

Peapack-Gladstone Financial reported a strong Q2 FY26, demonstrating continued momentum from strategic investments in its private banking model. The company achieved significant loan and deposit growth, particularly in noninterest-bearing accounts, alongside robust wealth management performance. Despite facing increased competition for deposits and potential NIM volatility, management expressed confidence in its ability to deliver on profitability targets and sustain its earnings trajectory, having successfully integrated its New York expansion.

Highlights

5

  • Net income increased 11% linked-quarter to $15.8 million and 99% year-over-year.

  • Wealth Management business grew 6% year-to-date and 13% year-over-year with positive flows.

  • Deposits grew $231 million in the quarter, with 35% noninterest-bearing, and 56% of last 12 months' growth in noninterest-bearing accounts.

  • Loans increased $236 million during the quarter to $6.7 billion, up 15% year-over-year, concentrated in C&I, equipment finance, and CRE.

  • Net interest margin (NIM) increased by 6 basis points to 3.32%, and the efficiency ratio declined to 65%, marking the seventh consecutive quarter of improvement.

Concerns

5

  • Competition for deposits has increased markedly, with rates for new deposits around 2.5% and a '4 handle' becoming common.

  • Net charge-offs were $5.9 million in the quarter, concentrated in one multifamily loan and one commercial mortgage relationship.

  • Nonperforming assets increased to $72.2 million or 0.91% of total assets, up from 0.77% in Q1, primarily due to a previously disclosed larger multifamily relationship.

  • The provision for credit losses is expected to remain elevated at approximately $7.5 million per quarter through the end of the year.

  • Management anticipates a 'rocky road' during the loan repricing cycle over the next 6 quarters, potentially causing noise in delinquencies and nonperformers.

Guidance & targets

CategoryTargetConfidence
Return on Assets (ROA)
1%
high materiality
High
Return on Equity (ROE)
10%
high materiality
High
Net Interest Margin (NIM) Growth
6 to 9 basis points total
high materiality
Medium
Quarterly Deposit Growth
$200 million
medium materiality
High
Noninterest-Bearing Deposit Mix
about 1/3
medium materiality
High
Quarterly Loan Growth
$300 million
medium materiality
High
Provision for Credit Losses
$7.5 million a quarter
medium materiality
Medium

Product announcements

ProductTypeDetails
Aviation and Yacht Financelaunch

Risks & headwinds

Increased competition for deposits Q2 FY26 and ongoing

Rates with a '4 handle' becoming very common for deposits; new deposits added at ~2.5%

Mitigation:Disciplined pricing and focus on relationship quality and noninterest-bearing accounts.

NIM volatility due to timing of loan funding vs deposit inflows Q3 FY26 and beyond

May give some back over coming quarters, progression will not necessarily be linear.

Mitigation:Commitment to broader full-year NIM growth guidance (6-9 bps from Q1 FY26).

Protracted foreclosure process in New York City Ongoing

Incredibly protracted post-COVID, not gotten any better.

Mitigation:Commencing foreclosure, awaiting receiver appointment, considering note sale, or restructuring if agreement reached with borrower.

Borrowers refusing to pay despite capacity Ongoing

One relationship with capacity to pay, 1:1 debt coverage, equity in appraisal, but borrower not making payments.

Mitigation:Commenced foreclosure, viewing it as a negotiation tactic.

Potential noise in delinquencies/nonperformers from loan repricing cycle Next 6 quarters

Rocky road expected over the next 6 quarters; client negotiations could lead to delinquencies/nonperformers.

Mitigation:Dealing with each loan individually; not seeing systemic issues, but anticipating individual challenges.

Elevated provision for credit losses Through end of FY26

Expected to remain at ~$7.5 million per quarter through end of FY26.

Mitigation:Aggressively attacking existing issues; half of current provision due to loan growth/economic conditions factored into model.

What to watch in Q3 FY26

ROA and ROE targets

Q4 FY26 or Q1 FY27
Current On track for 1% ROA and 10% ROE
Target Achieve 1% ROA and 10% ROE

Why it matters

These are key profitability targets that management has committed to achieving by year-end or early next year, indicating the success of their strategic investments.

We continue to be on track to deliver a 1% ROA and 10% ROE by the fourth quarter of this year, possibly slipping into the first quarter of next, which is what we communicated to all of you previously.

Find out whether PGC delivers this. Inve re-checks your case every morning.

Q&A highlights

Can you provide an update on the deposit growth pipeline, especially regarding the mix of noninterest-bearing deposits?

The deposit pipeline remains robust, consistent with prior trends. The company expects to add $200 million in deposits each quarter, with approximately one-third being noninterest-bearing, despite some fluctuation.

“I think that in terms of guidance, we sort of have talked to $200 million each quarter. We still believe that about 1/3 of that would be in noninterest-bearing.”

asked by Manuel Navas · answered by Douglas Kennedy

2 min read 5 chapters

Detailed narrative

Strategic Investments and New York Expansion

Peapack-Gladstone Financial made significant strategic investments in 2023, building out its product offering and lifting teams from First Republic and Signature. To date, the company has hired 20 teams and nearly 200 professionals to cover the Metro New York market. These investments temporarily impacted earnings, which bottomed out in Q3 2024, but profits have rebounded quickly, making the New York expansion profitable in under two years, ahead of schedule.

Wealth Management Growth and Deposit Strategy

The Wealth Management business continues to be a key driver, growing 6% year-to-date and 13% year-over-year with positive flows. The company's deposit strategy focuses on relationship-based banking, evidenced by $231 million in deposit growth this quarter, with 35% being noninterest-bearing. Over the last 12 months, 56% of deposit growth has been in noninterest-bearing accounts, and over 650 new noninterest-bearing DDA accounts were opened in Q2, indicating strong relationship quality.

Net Interest Margin Dynamics and Funding Costs

Net interest margin (NIM) increased by 6 basis points to 3.32% in Q2, driven by improved asset yields and disciplined loan pricing, with new originations yielding just north of 6%. While the company reiterates its full-year NIM growth guidance of 6-9 basis points from Q1 FY26, it acknowledges potential volatility and competitive pressures on deposit pricing, with new deposits coming on at approximately 2.5%.

Loan Growth and Portfolio Repricing

Total loans grew $236 million in the quarter to $6.7 billion, a 15% year-over-year increase, with strong performance in C&I, equipment finance, and CRE. Multifamily loans saw a reduction of $21 million in the quarter. The company has a significant back book repricing opportunity of $1.5 billion over the next six quarters, with an expected yield pickup of over 1% on these repriced loans, moving from current coupons just above 4% to over 6%.

Credit Quality and Nonperforming Assets

The provision for credit losses was $8.1 million, with net charge-offs of $5.9 million concentrated in two specific relationships. Nonperforming assets increased to $72.2 million (0.91% of total assets) due to the migration of a large multifamily relationship. While special mention loans declined and early-stage delinquencies remained stable, management anticipates continued elevated provisions of around $7.5 million per quarter through year-end due to ongoing negotiations and potential noise from the loan repricing cycle.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.