Peapack-Gladstone Financial (PGC) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights Third Quarter 2025 Financial Performance Overview Peapack-Gladstone Financial Corporation reported strong Q3 2025 financial results, with net income and diluted EPS increasing significantly quarter-over-quarter. The company experienced substantial deposit and loan growth, alongside an improved net interest margin, driven by strategic expansion and client relationship building | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Change (QoQ) ($ million) | % Change (QoQ) | | :-------------------- | :------- | :------- | :----------- | :------------- | | Net Income | $9.6 million | $7.9 million | $1.7 million | 21% | | Diluted EPS ($) | $0.54 | $0.45 | $0.09 | 20% | - Deposits grew $433 million (7%) to $6.6 billion through the first nine months of 2025. Core relationship deposits increased $708 million, with noninterest-bearing deposits up $211 million (19%)[4] - Loan growth of $506 million was funded by deposit growth, achieving an incremental spread of over 400 basis points[4] | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :---------------- | :------- | :------- | :------- | | Net Interest Income | $50.6 million | $48.3 million | | | Net Interest Margin (%) | 2.81% | 2.77% | 2.34% | - Nonperforming assets declined by $31 million in the quarter, reflecting aggressive management of problem credits[7] Strategic Initiatives and Business Growth The Company continues its strategic expansion into Metro New York, successfully onboarding new client relationships and growing core deposits and loans. This expansion, coupled with investments in talent and infrastructure, has led to consistent positive operating leverage and improved core earnings - Over the past two years, newly hired teams have onboarded more than 850 new client relationships, adding over $1.75 billion in core relationship deposits and more than $900 million in new loans[6] - Delivered a fourth consecutive quarter of positive operating leverage and grew core earnings by 54% over the last twelve months[6] - Expanded equipment finance group in Long Island and hired three New York-based wealth advisors, reflecting the transformation into Peapack Private Bank & Trust[6] Key Financial and Operational Highlights The company reported specific achievements across its wealth management, commercial banking, and capital management divisions, demonstrating robust growth in AUM/AUA, loans, and deposits, while maintaining strong capital ratios and improving asset quality Wealth Management Highlights Wealth Management Division experienced significant growth in Assets Under Management/Administration (AUM/AUA) and strong new business inflows, contributing a substantial portion to total revenue - AUM/AUA grew by $1.0 billion to $12.9 billion at September 30, 2025, compared to $11.9 billion at December 31, 2024[7] | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :-------------------- | :------- | :------- | :------- | | Wealth Management Fee Income | $15.8 million | $15.9 million | $15.2 million | - New business inflows for Q3 2025 totaled $214 million[7] - Wealth Management fee income was $15.8 million in Q3 2025, amounting to 22% of total revenue[7] Commercial Banking and Balance Sheet Highlights Commercial banking saw substantial loan and deposit growth, with C&I lending being a primary driver. The company also improved its net interest margin - Total loans increased $506 million, or 9%, to $6.0 billion at September 30, 2025, from $5.5 billion at December 31, 2024, primarily driven by commercial and industrial loan originations[11] - Commercial and industrial lending (C&I) accounted for 69% of new business originations during Q3 and represented 44% of the total loan portfolio[11] - Total deposits increased by $433 million to $6.6 billion at September 30, 2025, from $6.1 billion at December 31, 2024. Noninterest-bearing demand deposits grew $86 million in Q3[11] - The Net Interest Margin (NIM) expanded to 2.81% for Q3 2025, an increase of 4 basis points compared to Q2 2025[11] Capital Management Highlights The company demonstrated strong capital management, with increases in tangible book value per share and regulatory capital ratios well above well-capitalized standards | Metric | Sep 30, 2025 ($) | Dec 31, 2024 ($) | % Change | | :-------------------------- | :----------- | :----------- | :------- | | Tangible book value per share ($) | $34.10 | $31.89 | 7% | | Book value per share ($) | $36.62 | $34.45 | 6% | | Regulatory Ratio (Sep 30, 2025) | Bank (%) | Company (%) | | :------------------------------ | :-------- | :-------- | | Tier 1 Leverage Ratio (%) | 9.89% | 8.86% | | Common Equity Tier 1 Ratio (%) | 11.70% | 10.47% | - All regulatory capital ratios remain significantly above well capitalized standards, benefiting from net income generation[11] Detailed Financial Performance Analysis Summary Income Statement Details The company reported significant revenue and net income growth across both quarterly and nine-month periods compared to the prior year, driven primarily by increased net interest income and effective expense management, despite a higher provision for credit losses Nine Months Ended September 30, 2025 vs. 2024 For the first nine months of 2025, total revenue increased by 23%, primarily due to a 35% rise in net interest income. Net income also grew by 6%, despite a substantial increase in the provision for credit losses | Metric | 9 Months Ended Sep 30, 2025 ($ million) | 9 Months Ended Sep 30, 2024 ($ million) | Increase/(Decrease) ($ million) | % Change | | :--------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Net interest income | $144.37 million | $107.10 million | $37.27 million | 35% | | Total Revenue | $204.80 million | $166.29 million | $38.51 million | 23% | | Operating expenses | $153.63 million | $127.82 million | $25.81 million | 20% | | Pretax income before provision | $51.17 million | $38.47 million | $12.70 million | 33% | | Provision for credit losses | $15.85 million | $5.76 million | $10.09 million | 175% | | Net income | $25.17 million | $23.75 million | $1.42 million | 6% | | Diluted EPS ($) | $1.42 | $1.34 | $0.08 | 6% | | Return on average assets (%) | 0.47% | 0.49% | (0.02)% | | | Return on average equity (%) | 5.41% | 5.42% | (0.01)% | | Three Months Ended September 30, 2025 vs. September 30, 2024 For Q3 2025, total revenue increased by 25% year-over-year, driven by a 34% increase in net interest income. Net income saw a 27% rise, and diluted EPS increased by 26%, reflecting improved profitability and asset utilization | Metric | 3 Months Ended Sep 30, 2025 ($ million) | 3 Months Ended Sep 30, 2024 ($ million) | Increase/(Decrease) ($ million) | % Change | | :--------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Net interest income | $50.57 million | $37.68 million | $12.89 million | 34% | | Total Revenue | $70.69 million | $56.62 million | $14.07 million | 25% | | Operating expenses | $52.30 million | $44.65 million | $7.65 million | 17% | | Pretax income before provision | $18.39 million | $11.97 million | $6.42 million | 54% | | Provision for credit losses | $4.79 million | $1.22 million | $3.57 million | 293% | | Net income | $9.63 million | $7.59 million | $2.04 million | 27% | | Diluted EPS ($) | $0.54 | $0.43 | $0.11 | 26% | | Return on average assets annualized (%) | 0.53% | 0.46% | 0.07% | | | Return on average equity annualized (%) | 6.12% | 5.12% | 1.00% | | Three Months Ended September 30, 2025 vs. June 30, 2025 (Linked Quarter) On a linked-quarter basis, Q3 2025 saw a 21% increase in net income and a 20% increase in diluted EPS, driven by a 5% rise in net interest income and a 27% decrease in the provision for credit losses | Metric | 3 Months Ended Sep 30, 2025 ($ million) | 3 Months Ended Jun 30, 2025 ($ million) | Increase/(Decrease) ($ million) | % Change | | :--------------------------------- | :--------------------------- | :--------------------------- | :-------------------- | :------- | | Net interest income | $50.57 million | $48.29 million | $2.28 million | 5% | | Total Revenue | $70.69 million | $69.74 million | $0.95 million | 1% | | Operating expenses | $52.30 million | $51.89 million | $0.41 million | 1% | | Pretax income before provision | $18.39 million | $17.85 million | $0.54 million | 3% | | Provision for credit losses | $4.79 million | $6.59 million | ($1.80) million | (27)% | | Net income | $9.63 million | $7.94 million | $1.69 million | 21% | | Diluted EPS ($) | $0.54 | $0.45 | $0.09 | 20% | | Return on average assets annualized (%) | 0.53% | 0.45% | 0.08% | | | Return on average equity annualized (%) | 6.12% | 5.11% | 1.01% | | Supplemental Quarterly Details This section provides further details on the performance of key business segments and financial metrics, including wealth management, loan growth, net interest income, liquidity, noninterest income, operating expenses, asset quality, and capital Wealth Management Performance The Wealth Management Division continued its growth trajectory with increased AUM/AUA and strong client inflows, despite a slight quarter-over-quarter dip in fee income - AUM/AUA grew by $1.0 billion to $12.9 billion at September 30, 2025, compared to $11.9 billion at December 31, 2024[19] | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :-------------------- | :------- | :------- | :------- | | Wealth Management Fee Income | $15.8 million | $15.9 million | $15.2 million | - Q3 2025 saw strong client inflows of $214 million, driven by new accounts and client additions[20] Loans and Commercial Banking Growth Total loans grew significantly, primarily driven by commercial and industrial (C&I) loan originations, reflecting the strength of the middle-market commercial banking franchise - Total loans increased $506 million, or 9%, to $6.0 billion at September 30, 2025, compared to $5.5 billion at December 31, 2024, primarily driven by commercial and industrial loan originations[21] - Total C&I loans and leases were $2.7 billion, or 44% of the total loan portfolio, at September 30, 2025[21] - Loans originated during the current year carried an average spread of more than 425 basis points above the current cost of funds[22] Net Interest Income (NII) and Net Interest Margin (NIM) Both Net Interest Income and Net Interest Margin showed strong improvements quarter-over-quarter and year-over-year, attributed to the private banking strategy and New York City expansion leading to lower-cost core deposit relationships | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :---------------- | :------- | :------- | :------- | | NII | $50.6 million | $48.3 million | $37.7 million | | NIM (%) | 2.81% | 2.77% | 2.34% | - NII increased $2.3 million (QoQ) and $12.9 million (YoY). NIM increased 4 basis points (QoQ) and 47 basis points (YoY)[23] - Improvement driven by the single point of contact private banking strategy and New York City expansion, delivering lower-cost core deposit relationships[23] Funding, Liquidity, and Interest Rate Risk Management The company strengthened its balance sheet liquidity through deposit growth, reducing reliance on external borrowings. It maintains substantial on- and off-balance sheet liquidity resources, significantly exceeding uninsured/uncollateralized deposits - Total deposits increased $433 million to $6.6 billion at September 30, 2025, from $6.1 billion at December 31, 2024[24] - No outstanding overnight borrowings at September 30, 2025[24] - Total on and off-balance sheet liquidity totaled $4.9 billion at September 30, 2025, which amounts to 267% of total uninsured/uncollateralized deposits[25] Noninterest Income (Capital Markets & Other) Noninterest income from Capital Markets activities significantly increased year-over-year, boosted by a corporate advisory transaction. Other noninterest income remained stable year-over-year but decreased quarter-over-quarter due to a one-time gain in the prior quarter | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :-------------------------- | :------- | :------- | :------- | | Capital Markets Activity Income | $0.901 million | $0.799 million | $0.435 million | - Q3 2025 Capital Markets income benefited from one corporate advisory transaction for $639,000[26][27] | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :-------------------- | :------- | :------- | :------- | | Other Noninterest Income | $3.4 million | $4.7 million | $3.4 million | - Q2 2025 other income included an $875,000 gain for the termination of a branch lease agreement[28] Operating Expenses and Income Taxes Operating expenses increased due to strategic expansion into Metro New York and Long Island, increased health insurance costs, and annual merit increases. The effective tax rate remained stable | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :------------------ | :------- | :------- | :------- | | Total Operating Expenses | $52.3 million | $51.9 million | $44.6 million | - The increase in operating expenses was primarily driven by the Company's ongoing expansion into New York City and Long Island, increased health insurance costs, and annual merit increases[29] | Metric | Q3 2025 (%) | Q2 2025 (%) | Q3 2024 (%) | | :---------------- | :------- | :------- | :------- | | Effective Tax Rate (%) | 29.2% | 29.5% | 29.4% | Asset Quality and Provision for Credit Losses Nonperforming assets significantly decreased due to the resolution of problem credits, though loans past due 30-89 days increased. The provision for credit losses was driven by specific reserves and loan growth, while the Allowance for Credit Losses (ACL) decreased due to charge-offs related to previously provisioned problem loans | Metric | Sep 30, 2025 ($ million) | Jun 30, 2025 ($ million) | Change ($ million) | | :-------------------------- | :----------- | :----------- | :----- | | Nonperforming assets | $84.1 million | $115.0 million | ($30.9 million) | | % of total assets | 1.13% | 1.60% | | - Decrease in nonperforming assets driven by the resolution of a $20.1 million equipment financing relationship and three multifamily loans totaling $11.8 million[32] | Metric | Q3 2025 ($ million) | Q2 2025 ($ million) | Q3 2024 ($ million) | | :-------------------------- | :------- | :------- | :------- | | Provision for credit losses | $4.8 million | $6.6 million | $1.2 million | - The provision for credit losses in Q3 2025 was driven by an increase in specific reserves totaling $4.3 million related to two multifamily loans, in addition to an increase driven by loan growth of $203 million[33] | Metric | Sep 30, 2025 ($ million) | Jun 30, 2025 ($ million) | Sep 30, 2024 ($ million) | | :-------------------- | :----------- | :----------- | :----------- | | ACL | $68.6 million | $81.8 million | $71.3 million | | ACL (% of total loans) (%) | 1.14% | 1.40% | 1.34% | - The decrease in ACL was mainly driven by charge-offs of $18.0 million during the period, related to one equipment financing relationship ($11.3 million) and three multifamily loans ($6.7 million)[34] Capital Position The company's capital position strengthened due to net income generation and positive movements in accumulated other comprehensive income, partially offset by share repurchases. Regulatory capital ratios remain strong and well above required standards - Capital position increased due to net income of $9.6 million and positive movement in accumulated other comprehensive income of $5.1 million[35] - Partially offset by the repurchase of 100,000 shares at a cost of $2.7 million[35] | Metric | Sep 30, 2025 ($) | Dec 31, 2024 ($) | % Change | | :-------------------------- | :----------- | :----------- | :------- | | Tangible book value per share ($) | $34.10 | $31.89 | 7% | | Book value per share ($) | $36.62 | $34.45 | 6% | - Regulatory capital ratios remain strong and well above regulatory well capitalized standards[36] - Declared a cash dividend of $0.05 per share payable on November 28, 2025[37] Company Information & Forward-Looking Statements About Peapack-Gladstone Financial Corporation Peapack-Gladstone Financial Corporation is a New Jersey bank holding company with $7.4 billion in total assets and $12.9 billion in AUM/AUA as of September 30, 2025. Its subsidiary, Peapack Private Bank & Trust, offers client-centric commercial banking and comprehensive wealth management solutions, focusing on high-quality products and customized services for various client segments in the Metro New York area - Total assets of $7.4 billion and assets under management and/or administration of $12.9 billion as of September 30, 2025[38] - Peapack Private Bank & Trust, founded in 1921, is a commercial bank offering client-centric banking with customized wealth management, investment banking, commercial, and retail solutions[38] - The wealth management division provides comprehensive financial, tax, fiduciary, and investment advice to individuals, families, privately held businesses, family offices, and not-for-profit organizations[38] Forward-Looking Statements The document contains forward-looking statements regarding future performance, strategies, and market conditions. These statements are subject to various risks and uncertainties, including economic downturns, interest rate fluctuations, credit losses, regulatory changes, and operational challenges, which could cause actual results to differ materially - Statements are not historical facts and include expressions about management's confidence and strategies, and expectations about new and existing programs, products, investments, relationships, opportunities, and market conditions[39] - Factors that may cause results to differ materially include the ability to grow the business and implement strategic plans, impact of higher operating expenses, unexpected economic declines, declines in net interest margin, higher than expected credit losses, inflation and interest rate changes, and legislative and regulatory actions[39][43] - The Company undertakes no duty to update any forward-looking statement and cannot guarantee future results, levels of activity, performance, or achievements[40][41] Consolidated Financial Data Tables Selected Consolidated Income Statement Data (Quarterly & Nine Months) This section presents detailed income statement data for various quarterly and nine-month periods, showing trends in interest income and expense, noninterest income, operating expenses, and net income, along with key performance ratios - Refer to tables in chunks 45 and 48 for detailed income statement data and performance ratios across different periods[45][48] Consolidated Statements of Condition (Balance Sheet) This table provides a detailed breakdown of the company's assets, liabilities, and shareholders' equity at various quarter-end dates, illustrating changes in cash, securities, loans, deposits, and capital structure - Refer to table in chunk 51 for detailed consolidated statements of condition[51] Selected Balance Sheet Data (Asset Quality & Capital Adequacy) This section presents key asset quality metrics, including nonperforming assets, past due loans, and the allowance for credit losses, alongside capital adequacy ratios for both the holding company and the bank, demonstrating compliance with regulatory standards - Refer to tables in chunks 53, 58, and 61 for detailed asset quality and capital adequacy data[53][58][61] Loans Closed This table details the volume of loans closed across different categories (residential, commercial, installment, home equity) for various quarterly and nine-month periods, highlighting the company's lending activity - Refer to table in chunk 63 for detailed loans closed data[63] Average Balance Sheet (Interest-Earning Assets & Liabilities) These tables provide average balances, income/expense, and annualized yields for interest-earning assets and liabilities, along with net interest income, net interest spread, and net interest margin, offering insights into the company's interest rate sensitivity and profitability - Refer to tables in chunks 67, 71, and 74 for detailed average balance sheet data[67][71][74] Non-GAAP Financial Measures Reconciliation Tangible Book Value Per Share Reconciliation This section defines and reconciles the non-GAAP measure of tangible book value per share and tangible equity to tangible assets, providing a clearer view of the company's equity excluding intangible assets, which is relevant for investors and regulatory assessment - Tangible equity and tangible assets are calculated by excluding intangible assets from shareholders' equity and total assets, respectively[78] - These non-GAAP measures provide information important to investors and are useful in understanding the financial position, results, and ratios, consistent with bank regulatory agencies[78][80] - Refer to table in chunk 81 for reconciliation of tangible book value per share and tangible equity to tangible assets[81] Return on Average Tangible Equity Reconciliation This section provides the reconciliation for Return on Average Tangible Equity, a non-GAAP measure that adjusts for intangible assets to offer a more focused view of profitability relative to tangible equity - Refer to table in chunk 82 for reconciliation of return on average tangible equity[82] Efficiency Ratio Reconciliation This section defines and reconciles the non-GAAP efficiency ratio, which measures expense control relative to recurring revenue by excluding certain non-recurring items, offering a clearer picture of core operational efficiency - The efficiency ratio is calculated by dividing total noninterest expenses (excluding other real estate owned provision) by net interest income and total noninterest income (excluding net gains/losses on loans held for sale at lower of cost or fair value and net gains on securities)[79] - This measure provides a reasonable assessment of core expenses relative to core revenue[79][80] - Refer to tables in chunks 82 and 83 for reconciliation of the efficiency ratio[82][83]