Peapack-Gladstone Financial Q1 Earnings Call Highlights

Key Points

• Earnings momentum: Sixth consecutive quarter of core earnings growth with net income of $14.2M (up 86% YoY), net interest income ~$60M, an improved efficiency ratio of ~67%, and net interest margin expanding to 3.26%, though management expects margin gains to slow to ~2–3 bps/quarter.
• Balance-sheet and funding strength: Loans rose to $6.4B (up 12% YoY) despite $225M in payoffs, deposits grew to $6.8B with non-interest-bearing accounts accounting for 49% of deposit growth, liquidity exceeds $5B, and the loan-to-deposit ratio is ~94%.
• Credit and capital actions: Asset quality improved with non-performing assets at 0.77% and an allowance of ~1.04%, management flagged early-stage delinquencies concentrated in a small NY rent-regulated sponsor group, took a $7.3M provision, redeemed $100M subordinated debt and issued preferred equity to lift Tier 1 above 11%, targeting >1% ROA and >10% return on capital on a run-rate basis.

Peapack-Gladstone Financial NASDAQ: PGC reported first quarter 2026 results that management said reflected continued momentum in profitability, balance sheet growth, and expansion in the metro New York region, marking the company’s inaugural public earnings call.

Earnings rise for sixth straight quarter

President and CEO Doug Kennedy said the company delivered its “sixth consecutive quarter” of core earnings growth, with net income of $14.2 million, up 16% from the prior quarter and 86% year-over-year. CFO Frank Cavallaro said results reflected “the strength of the franchise and the consistency of execution across the platform.”

Net interest income increased to approximately $60 million, rising 6% sequentially and 32% year-over-year, Cavallaro said. Kennedy added that revenue rose 28% year-over-year while expenses increased at a “more muted pace,” driving positive operating leverage.

Operating expenses totaled $55.4 million, up modestly from the prior quarter, according to Cavallaro. The efficiency ratio improved to approximately 67%, which Cavallaro said marked the sixth consecutive quarter of improvement.

Margin expands; management expects slower pace ahead

Net interest margin expanded 18 basis points during the quarter to 3.26%, extending what Kennedy described as a “meaningful upward trend” over the past six months. Kennedy attributed the expansion to disciplined loan pricing and improvement in the funding mix, particularly non-interest-bearing deposits.

Cavallaro told analysts the company expects continued margin improvement, though “not at the same pace,” with management suggesting a cadence of roughly 2–3 basis points per quarter. On the call, management also pointed to loan repricing dynamics, noting the loan portfolio includes a meaningful amount of floating-rate assets.

When asked about loan pricing, management said it has remained disciplined. In response to an analyst question, management said it has targeted minimum spreads of about 210–225 basis points over the swap curve for certain fixed-rate structures, with a “coupon…starting with the number six in front of it” in many cases, and 225–250 over SOFR on the C&I side. Management said there have been exceptions when accompanied by significant non-interest-bearing DDA balances.

Loan and deposit growth continues despite payoffs

Kennedy said that despite $225 million in loan payoffs during the quarter, loans grew by $184 million to $6.4 billion, up 12% year-over-year. Deposits increased $238 million to $6.8 billion, up 9% year-over-year.

Management emphasized deposit mix improvement. Kennedy said non-interest-bearing deposits comprised 49% of deposit growth in the quarter, increasing by $116 million. Cavallaro added that the bank opened and funded 683 new non-interest-bearing DDA accounts during the quarter.

Liquidity metrics also featured prominently. Kennedy said the loan-to-deposit ratio was 94% and the company maintained “limited borrowings” and “no brokered fundings.” Cavallaro cited more than $5 billion in available liquidity, including off-balance-sheet sources.

In response to a question on deposit outlook, management said it was targeting roughly $175 million–$200 million in loan growth and deposit growth, while noting quarterly variability. Management also referenced $70 million–$80 million in balances that were off balance sheet through an insured sweep at quarter-end. On competition, John Babcock, Senior EVP and President of Private Wealth Management, said the latter part of the quarter brought “some crazy things on the rate side from competition,” while emphasizing the company’s “disciplined pricing” approach. Management added it has been “walking away from opportunities.”

Credit metrics improve, though early-stage delinquencies tick up

Asset quality improved overall, according to management. Kennedy said non-performing assets declined for the third consecutive quarter to 77 basis points. Cavallaro said non-performing assets fell to 0.77% of total assets and the allowance for credit losses remained stable at approximately 1.04% of total loans.

The provision for credit losses was $7.3 million, which Cavallaro said reflected continued loan growth as well as “specific reserves on a limited number of relationships.” Kennedy acknowledged an increase in early-stage delinquencies but said management remained confident in the direction of overall credit quality metrics.

During Q&A, Chief Credit Officer Lisa Chalkan addressed an analyst’s question regarding an uptick in special mention and 30–89 day past dues tied to New York rent-regulated exposure. Chalkan said the increase was “largely one sponsor group” across multiple loans. She noted that three of eight loans made a payment after quarter-end, and said the bank is actively communicating with the client to get the loans current.

Chalkan said that if the loans reach 90 days past due, the bank will “aggressively pursue collection.” She added that, based on submitted financial information, management believes “the financial condition of these buildings is not compromised” and that positive cash flow “should be available to pay the loans.” Chalkan also referenced a concern about whether fund expenses could be displacing bank loan payments, saying the bank would pursue that issue “aggressively.” She said appraisals were about a year old and loan-to-value ratios ranged from 70% to 85%, adding that the three loans paid after quarter-end were the largest in the pool.

Capital actions and wealth management update

Management outlined capital actions taken during the quarter. Kennedy said the company redeemed $100 million of subordinate debt and replaced a portion with preferred equity. Cavallaro said the company completed a $30 million private placement of convertible preferred stock, with the option to draw an additional $20 million through the end of 2027 if needed. Cavallaro said the action increased Tier 1 capital and improved capital efficiency, with Tier 1 capital rising “above 11%,” while CET1 improved sequentially through organic capital generation and balance sheet management.

On wealth management, Kennedy said revenue increased to $16.5 million, up 7% year-over-year, with assets under management and administration stable at approximately $13 billion. He also cited gross inflows of $227 million and said New York “beginning to ramp up quite nicely,” though Babcock later said wealth inflows were still more driven by the legacy franchise and that New York remains in the “early innings.”

In closing remarks, Kennedy said the company remains focused on the “incremental margin of both loans and deposits” and is managing toward goals through the end of 2027. He also said management believes the company can cross 1% ROA and 10% return on capital on a run-rate basis as it closes out the year, while remaining mindful of macroeconomic and geopolitical risks, including “an increased risk of stagflation.”

About Peapack-Gladstone Financial NASDAQ: PGC

Peapack-Gladstone Financial Corporation is the parent company of Peapack-Gladstone Bank, a New Jersey-chartered commercial bank headquartered in Bedminster, New Jersey, that trades on the NASDAQ under the symbol PGC. Through Peapack-Gladstone Bank, the company offers a broad range of deposit and lending solutions, including checking and savings accounts, residential and commercial real estate loans, lines of credit and treasury management services. Clients benefit from both in-branch relationship banking and an expanding suite of digital banking tools designed to support personal and business financial needs.

Complementing its core banking operations, Peapack-Gladstone Financial provides wealth management, trust and financial planning services through its subsidiary, Peapack-Gladstone Wealth Management.

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