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    PGC
    Earnings call· Jun 2026(Q2 FY26)

    PEAPACK GLADSTONE FINANCIAL Q2 FY26 earnings call PGC

    Jul 28, 2026 Source

    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

    7
    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

    Operational metrics

    27
    Core earnings (pretax income before provision)
    $30.4 millionup 12% sequentially, 70% from a year ago
    Q2 FY26

    Reflects underlying profitability before credit loss provisions.

    Total revenue
    $86.1 millionup 4% compared to Q1 FY26, 23% year-over-year
    Q2 FY26

    Strong revenue growth driven by balance sheet expansion and wealth management.

    Net interest income growth (sequential)
    $4 millionfrom Q1 FY26
    Q2 FY26

    Consistent NII growth supported by balance sheet expansion and improved asset yields.

    Net interest income growth (year-over-year)
    $15.6 millionfrom a year ago
    Q2 FY26

    Consistent NII growth supported by balance sheet expansion and improved asset yields.

    Wealth management fee income
    $17.2 millionup 4% sequentially, 8% from a year ago
    Q2 FY26

    Key driver of noninterest income.

    Operating expenses
    $55.7 millionup less than 1% from Q1 FY26
    Q2 FY26

    Expense growth normalizing as investments become productive.

    Revenue growth vs expense growth
    10:1
    Q2 FY26

    Indicates strong positive operating leverage.

    Average earning asset yields
    increased
    Q2 FY26

    Contributed to NIM improvement.

    Average yields on new loan originations
    just north of 6%
    Q2 FY26

    Reflects disciplined loan pricing.

    Loan-to-deposit ratio
    95%
    Q2 FY26

    Remains well managed.

    Tangible book value per share
    $36.26up 3% during the quarter, 9% from a year ago
    Q2 FY26

    Benefits from earnings generation.

    Tier 1 capital ratio
    10.83%
    Q2 FY26

    Capital remains solid.

    Convertible preferred equity draw
    $20 millionremaining available
    July 2026

    Drawn to add capital to the balance sheet, based on current results and projected growth.

    Deposit cost for new deposits
    about 2.5%
    Q2 FY26

    Reflects increased competition for deposits.

    Loan back book repricing opportunity
    $1.5 billion
    next 6 quarters

    Significant opportunity for yield expansion as loans reprice.

    Multifamily loans in special mention
    $20 million
    Q2 FY26

    Part of the criticized loan portfolio.

    Multifamily loans past due (pass rated)
    $10 million
    Q2 FY26

    These are separate from the special mention loans.

    Reserve against one nonperforming multifamily loan
    $80,000
    Q2 FY26

    Example of specific reserve adjustment for a nonperforming asset.

    Provision for credit losses due to loan growth/economic conditions
    about half
    Q2 FY26

    Attribution of the current quarter's reserve build.

    Noninterest-bearing deposits growth (quarterly)
    approximately $80 million
    Q2 FY26

    Contributes to a more durable funding profile.

    Noninterest-bearing deposits growth (year-over-year)
    $386 millionfrom a year ago
    Q2 FY26

    Significant growth in operating accounts.

    Noninterest-bearing DDA accounts opened
    more than 650consistent with average volumes over recent quarters
    Q2 FY26

    Indicator of relationship quality and future funding durability.

    Multifamily loan portfolio change (quarterly)
    down $21 million
    Q2 FY26

    Specific portfolio adjustment.

    Multifamily loan portfolio change (year-to-date)
    down $58 million
    YTD Q2 FY26

    Specific portfolio adjustment.

    Special mention loans
    declined
    Q2 FY26

    Positive trend in early-stage credit quality.

    Performing modifications
    decreased materially
    Q2 FY26

    Indicates fewer loans requiring modification.

    Early-stage delinquencies
    relatively stable
    Q2 FY26

    No broad-based deterioration across the portfolio.

    Industry KPIs

    13
    MetricValueDetails
    Loans$6.7 billionUSD
    Deposits$7.1 billionUSD
    Rotce ROE—
    Cet1 ratio10.38%%
    Capital returns$20 millionUSD
    Fee income lines$17.2 millionUSD
    Allowance reserves1.04%% of total loans
    Net interest income$63.9 millionUSD
    Net interest margin3.32%%
    Net charge offs npls0.91%% of total assets
    Total operating expenses$55.7 millionUSD
    Provision for credit losses$8.1 millionUSD
    Efficiency ratio operating leverage65%%

    Product announcements

    1
    ProductTypeDetails
    Aviation and Yacht Financelaunch

    Risks & headwinds

    6
    Increased competition for depositsQ2 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 inflowsQ3 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 CityOngoing

    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 capacityOngoing

    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 cycleNext 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 lossesThrough 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

    5

    ROA and ROE targets

    Q4 FY26 or Q1 FY27
    CurrentOn track for 1% ROA and 10% ROE
    TargetAchieve 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.

    Q&A highlights

    7

    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 read5 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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%.

    04

    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%.

    05

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.