Business Context and Reporting Period
Company: Peapack-Gladstone Financial Corp (PGC)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter ended March 31, 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.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $82.5 million | $64.4 million |
| Net Interest Income | $59.9 million | $45.5 million |
| Net Interest Margin (NIM) | 3.26% | 2.68% |
| Noninterest Income | $22.6 million | $18.9 million |
| Operating Expenses | $55.4 million | $49.4 million |
| Provision for Credit Losses | $7.3 million | $4.5 million |
| Net Income | $14.2 million | $7.6 million |
| Diluted EPS | $0.80 | $0.43 |
| Total Assets | $7.70 billion | $7.12 billion (Q1 2025) |
| Total Loans | $6.43 billion | $6.25 billion (Dec 31, 2025) |
| Total Deposits | $6.83 billion | $6.59 billion (Dec 31, 2025) |
| Allowance for Credit Losses (ACL) | $67.0 million | $71.0 million (Dec 31, 2025) |
| Nonperforming Assets | $59.3 million | $68.2 million (Dec 31, 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased $18.1 million (28%) year-over-year, driven primarily by a $14.4 million increase in net interest income and a $3.7 million increase in noninterest income.
- Net Interest Margin Expansion: NIM improved by 58 basis points to 3.26%, attributed to lower funding costs following Federal Reserve rate cuts and growth in lower-cost core deposits.
- Loan Portfolio Growth: Loans increased by approximately $180 million from the prior quarter, with significant growth in commercial real estate and commercial loans fueled by expansion into New York City and Long Island.
- Expense Increase: Operating expenses rose $6.0 million (12%), primarily due to personnel costs associated with geographic expansion, merit increases, and higher FDIC assessment rates.
- Asset Quality: Nonperforming assets decreased by $8.9 million to $59.3 million, largely due to the liquidation of a $9.6 million commercial loan. However, net charge-offs were $11.3 million, including the aforementioned liquidation and a $3.5 million multifamily loan sale.
- Capital Actions: The Company issued $30.0 million of Series B Preferred Stock and fully redeemed $100.0 million of subordinated debt during the quarter.
Guidance, Outlook, and Risks
- Strategic Expansion: Management continues to execute a strategic plan involving expansion into New York City and Long Island, which is driving deposit growth and loan originations but increasing operating costs.
- Interest Rate Environment: The Company benefited from a 175 basis-point reduction in the Federal Funds rate target during late 2024 and 2025, which lowered deposit costs. Management notes the portfolio is modestly liability-sensitive in the near term.
- Asset Quality Risks: While nonperforming assets declined, the Company highlighted persistent inflationary pressures affecting borrowers, particularly in the multifamily sector. A specific $36.2 million multifamily relationship contributed to an increase in loans past due 30-89 days.
- Regulatory Capital: The Company remains "well capitalized" under regulatory guidelines. Total capital to risk-weighted assets was 12.08% at March 31, 2026.
- Forward-Looking Statements: Risks include the ability to successfully integrate new teams, potential recessionary conditions in the Tri-State area, and the impact of legislative changes or cyberattacks.
Investor Verification Checklist
- Charge-off Concentration: Verify the impact of the $11.3 million in net charge-offs, specifically the $7.8 million commercial and industrial liquidation and the $3.5 million multifamily sale, on future provision requirements.
- Multifamily Exposure: Review the $36.2 million multifamily relationship cited as a driver for increased past-due loans and its classification status (Special Mention).
- Expense Trajectory: Monitor the sustainability of the $6.0 million increase in operating expenses as the New York City and Long Island expansion matures.
- Deposit Composition: Confirm the stability of the $2.25 billion in reciprocal deposit balances and the 31% uninsured deposit ratio.
- Preferred Stock Terms: Review the terms of the newly issued Series B Preferred Stock, including the 6.00% dividend rate and conversion features.