Peapack-Gladstone Financial (PGC) - 2025 Q2 - Quarterly Results

Financial Performance Highlights Q2 2025 Key Results The company reported sequential growth in net income and deposits, alongside an improved net interest margin Q2 2025 vs Q1 2025 Financial Results | Metric | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | Net Income | $7.9 million | $7.6 million | | Diluted EPS | $0.45 | $0.43 | Deposit Growth as of June 30, 2025 | Metric | Value | Note | | :--- | :--- | :--- | | Total Deposits | $6.4 billion | +12% over last twelve months | | Noninterest-Bearing Deposits | - | +30% over last year; +$53 million in Q2 | | Newly Funded Accounts (Q2) | $282 million | Average weighted cost of 1.88% | Net Interest Income (NII) and Net Interest Margin (NIM) | Period | Net Interest Income | Net Interest Margin | | :--- | :--- | :--- | | Q2 2025 | $48.3 million | 2.77% | | Q1 2025 | $45.5 million | 2.68% | | Q2 2024 | - | 2.25% | Strategic Initiatives & CEO Remarks Strategic expansion into Metro New York drove significant growth, prompting further team additions and a corporate rebranding - The Metro New York expansion has driven significant growth, onboarding over 700 new relationships with more than $1.3 billion in new core deposit balances and $464 million in loan balances[6] - The company expanded its footprint by adding five new production teams in Long Island during the second quarter[6] - The company re-branded to Peapack Private Bank & Trust to reflect its evolution into a premier boutique private bank in Metro New York[6] Detailed Financial Analysis Income Statement Analysis Quarterly revenue and net income grew year-over-year, though higher credit loss provisions impacted six-month net income Q2 2025 vs. Q2 2024 Income Statement | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $69.7M | $56.6M | +23% | | Net Interest Income | $48.3M | $35.0M | +38% | | Provision for Credit Losses | $6.6M | $3.9M | +69% | | Net Income | $7.9M | $7.5M | +5% | | Diluted EPS | $0.45 | $0.42 | +7% | Q2 2025 vs. Q1 2025 Income Statement | Metric | Q2 2025 | Q1 2025 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $69.7M | $64.4M | +8% | | Net Interest Income | $48.3M | $45.5M | +6% | | Net Income | $7.9M | $7.6M | +4% | | Diluted EPS | $0.45 | $0.43 | +5% | Six Months Ended June 30, 2025 vs. 2024 | Metric | H1 2025 | H1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Interest Income | $93.8M | $69.4M | +35% | | Provision for Credit Losses | $11.1M | $4.5M | +144% | | Net Income | $15.6M | $16.2M | -4% | Business Segment & Key Metrics Analysis The company saw growth in wealth management and commercial loans, though rising expenses and deteriorating asset quality present challenges Wealth Management The Wealth Management division grew its AUM/AUA to $12.3 billion, supported by strong new business inflows Wealth Management Metrics | Metric | As of/For Q2 2025 | As of Dec 31, 2024 | | :--- | :--- | :--- | | AUM/AUA | $12.3 billion | $11.9 billion | | Q2 Fee Income | $15.9 million | - | | Q2 New Business Inflows | $193 million | - | Loans / Commercial Banking The loan portfolio expanded to $5.8 billion, driven by C&I lending with attractive new loan spreads - Total loans grew to $5.8 billion at June 30, 2025, a 5% increase from $5.5 billion at December 31, 2024[7][20] - Commercial and industrial (C&I) loans grew to $2.5 billion, representing 44% of the total loan portfolio at June 30, 2025[10][20] - New loans originated in 2025 carried an average spread of more than 450 basis points above the company's current cost of funds[21] Net Interest Income (NII)/Net Interest Margin (NIM) Net interest margin continued its upward trend, reaching 2.77% due to the successful private banking strategy NII and NIM Trends | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $48.3M | $45.5M | $35.0M | | Net Interest Margin | 2.77% | 2.68% | 2.25% | Funding / Liquidity / Interest Rate Risk Management Deposit growth enhanced balance sheet liquidity, providing robust coverage for uninsured deposits - Total deposits increased to $6.4 billion at June 30, 2025, up $234 million from December 31, 2024[23] - Total on and off-balance sheet liquidity was $4.6 billion, which amounts to 277% of total uninsured/uncollateralized deposits[24] Noninterest Income Noninterest income was boosted by strong Capital Markets activity and a one-time gain from a lease termination Capital Markets Activity (in thousands) | Category | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Gain on sale of SBA loans | $521 | $302 | $449 | | Fee income on swaps | $221 | $— | $— | | Total Capital Markets | $799 | $455 | $586 | - Other noninterest income of $4.7 million in Q2 2025 included a gain of $875,000 related to an early lease termination[27] Operating Expenses Operating expenses increased due to strategic investments in expansion, new teams, and rising employee-related costs - Q2 2025 operating expenses were $51.9 million, an increase from $49.4 million in Q1 2025 and $43.1 million in Q2 2024[28] - Expense growth was driven by ongoing expansion into New York City, new Long Island teams, increased health insurance costs, and annual merit increases[28][29] Asset Quality / Provision for Credit Losses Asset quality deteriorated with a rise in nonperforming assets, leading to an increased provision for credit losses - Nonperforming assets increased to $115.0 million (1.60% of total assets) at June 30, 2025, up from $97.2 million at March 31, 2025[31] - The provision for credit losses was $6.6 million for Q2 2025, driven by deterioration in economic model drivers and a $5.8 million specific reserve for one equipment financing relationship[32] Allowance for Credit Losses (ACL) to Total Loans | Date | ACL % of Total Loans | | :--- | :--- | | June 30, 2025 | 1.40% | | March 31, 2025 | 1.31% | | June 30, 2024 | 1.29% | Capital The company maintained a strong capital position while executing share repurchases and paying dividends Key Capital Ratios as of June 30, 2025 | Ratio | Company | Bank | | :--- | :--- | :--- | | Tier 1 Leverage | 8.94% | 9.99% | | Common Equity Tier 1 | 10.99% | 12.29% | - Tangible book value per share increased 4% to $33.19 at June 30, 2025 from $31.89 at December 31, 2024[35] - In Q2 2025, the company repurchased 100,000 shares for $2.8 million and declared a cash dividend of $0.05 per share[34][36] Supplementary Information About the Company The company is a New Jersey-based bank holding firm with significant assets and a focus on private banking - As of June 30, 2025, the company has total assets of $7.2 billion and assets under management and/or administration of $12.3 billion[37] Forward-Looking Statements This section outlines risks and uncertainties that could cause actual results to differ from stated expectations - The report contains forward-looking statements subject to numerous risks and uncertainties, such as economic declines, interest rate volatility, and the ability to implement its strategic plan[39] - The company states it undertakes no duty to update any forward-looking statements to conform to actual results, except as required by law[40] Detailed Financial Tables The appendix includes comprehensive unaudited financial tables covering performance, condition, and asset quality - The appendix contains detailed financial tables, including Selected Consolidated Financial Data (Income Statement), Consolidated Statements of Condition (Balance Sheet), Asset Quality data, Capital Adequacy ratios, Loans Closed, and Average Balance Sheets[42][43][50] Non-GAAP Financial Measures Reconciliation This section defines and reconciles non-GAAP metrics like tangible book value and the efficiency ratio to GAAP standards - The report provides reconciliations for non-GAAP measures to their nearest GAAP equivalents, explaining that intangible assets are excluded to calculate tangible equity and tangible assets[77][78] - The non-GAAP efficiency ratio is calculated by dividing core operating expenses by recurring revenue (net interest income plus noninterest income, excluding certain gains/losses)[79]