Business Context and Reporting Period
Company: Peapack-Gladstone Financial Corp (PGC)
Filing Type: Form 10-Q (Unaudited)
Period Ended: June 30, 2026
Business Overview: The Company operates two primary segments: Banking (commercial, commercial real estate, multifamily, residential, and consumer lending) and Wealth Management (investment management, trust services, and financial planning). The Company is an accelerated filer based in New Jersey, with significant operations in the Tri-State area.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Total Revenue | $86.1 million | $168.5 million |
| Net Interest Income | $63.9 million | $123.8 million |
| Net Income | $16.0 million | $30.1 million |
| Net Income Available to Common Shareholders | $15.8 million | $29.9 million |
| Diluted Earnings Per Share (EPS) | $0.86 | $1.65 |
| Return on Average Assets (ROAA) | 0.81% | 0.78% |
| Return on Average Common Equity (ROAE) | 8.94% | 8.73% |
| Net Interest Margin (NIM) | 3.32% | 3.29% |
| Total Assets | $7.97 billion (as of June 30, 2026) | |
| Total Loans | $6.68 billion (as of June 30, 2026) | |
| Total Deposits | $7.06 billion (as of June 30, 2026) | |
| Allowance for Credit Losses (ACL) | $69.2 million (1.04% of total loans) |
Material Changes vs. Prior Comparable Period
- Revenue Growth: Total revenue increased by $16.3 million (23%) for the quarter and $34.4 million (26%) for the six months compared to the same periods in 2025. This was driven primarily by a $15.6 million increase in Net Interest Income (NII) and growth in Wealth Management fee income.
- Net Interest Margin Expansion: NIM improved to 3.32% for the quarter and 3.29% for the six months, up from 2.77% and 2.73% respectively in 2025. This expansion resulted from higher yields on loans and a reduction in the cost of funds due to Federal Reserve rate cuts and a shift toward lower-cost core deposits.
- Loan Portfolio Growth: Total loans increased by approximately $421.5 million year-to-date. Significant growth occurred in Commercial loans (+$327.5 million average balance) and Commercial Mortgages (+$297.8 million average balance), driven by strategic expansion into New York City and Long Island.
- Operating Expenses: Expenses rose by $3.8 million (7%) for the quarter and $9.8 million (10%) for the six months. Increases were attributed to strategic hiring for expansion, merit increases, and higher health insurance costs.
- Asset Quality: Nonperforming assets increased to $72.2 million (0.91% of total assets) from $68.2 million at year-end 2025. This was driven by the classification of a $16.6 million multifamily relationship as nonaccrual. Net charge-offs totaled $17.2 million for the six months, primarily related to the liquidation of a commercial relationship and the sale of multifamily loans.
Guidance, Outlook, and Management Commentary
- Strategic Expansion: Management continues to execute its strategic plan to expand into the New York City and Long Island markets, which has successfully generated lower-cost core deposit relationships and loan growth.
- Capital Management: The Company strengthened its capital position by issuing $30.0 million of Series B Preferred Stock in March 2026 and redeeming $100.0 million of subordinated debt. All regulatory capital ratios remain well above the "well capitalized" thresholds.
- Interest Rate Environment: The Company benefited from a 175 basis-point reduction in the Federal Funds rate during the latter half of 2024 through 2025, which lowered deposit costs. Management notes that while the Company is modestly liability sensitive in the near term, net interest income is expected to improve in the second year under rising rate scenarios.
- Asset Quality Outlook: Management believes the ACL remains adequate to absorb expected losses despite recent charge-offs. They continue to monitor criticized and delinquent loan migration, particularly within the multifamily portfolio.
- Dividends: The Board declared a regular cash dividend of $0.05 per share on August 7, 2026, payable August 27, 2026.
Important Facts for Investor Verification
- Commercial Real Estate (CRE) Concentration: Total CRE concentration increased to 403% of the Bank's total regulatory capital, driven by growth in non-owner occupied CRE lending. Investors should monitor the risk management framework for this concentration.
- Specific Charge-offs: Verify the impact of the $7.8 million charge-off related to a specific commercial and industrial relationship and the $8.3 million charge-off associated with the sale of two multifamily loans.
- Preferred Stock Issuance: Confirm the terms and conversion features of the Series B Preferred Stock issued in March and July 2026, which qualifies as Tier 1 Capital.
- Uninsured Deposits: Approximately 35% of total deposits ($2.44 billion) were uninsured/unprotected as of June 30, 2026, excluding public funds.
- Loan Modifications: Review the payment status of modified loans, noting that $27.3 million of performing modifications were reported, with some loans moving to nonaccrual status.