8-K: Peapack-Gladstone Q3 Earnings Up 21%, Metro NY Expansion Fuels Growth

Peapack-Gladstone Financial Corporation reported a 21% increase in Q3 2025 net income and diluted EPS, driven by strong deposit and loan growth and expansion in the Metro New York market.

Summary

• Net income for Q3 2025 was $9.6 million, an increase of 21% compared to $7.9 million in Q2 2025.
• Diluted earnings per share (EPS) for Q3 2025 was $0.54, up from $0.45 in Q2 2025.
• Deposits grew by $433 million, or 7%, to $6.6 billion as of September 30, 2025, year-to-date.
• Core relationship deposits increased by $708 million year-to-date, with noninterest-bearing deposits rising by $211 million, or 19%, during this period.
• Loan growth totaled $506 million year-to-date at a weighted average coupon of 6.75%, resulting in an incremental spread of more than 400 basis points.
• Net interest income increased by $2.3 million, or 5%, on a linked quarter basis to $50.6 million for Q3 2025.
• The net interest margin (NIM) increased to 2.81% for Q3 2025, up from 2.77% in Q2 2025 and 2.34% in Q3 2024.
• Assets Under Management/Administration (AUM/AUA) in the Wealth Management Division grew by $1.0 billion to $12.9 billion at September 30, 2025, compared to $11.9 billion at December 31, 2024.
• Nonperforming assets decreased by $31 million in the quarter to $84.1 million, or 1.13% of total assets, at September 30, 2025.
• Tangible book value per share increased 7% to $34.10 per share at September 30, 2025, from $31.89 at December 31, 2024.
• The company achieved its fourth consecutive quarter of positive operating leverage and grew core earnings by 54% over the last twelve months.
• The provision for credit losses was $4.8 million for Q3 2025, compared to $6.6 million for Q2 2025 and $1.2 million for Q3 2024.
• Charge-offs of $18.0 million occurred in Q3 2025, including $11.3 million related to one equipment financing relationship and $6.7 million associated with three multifamily loans.

Sentiment

Score: 8

Explanation: The company delivered strong financial results with significant growth in net income, EPS, and net interest margin, driven by successful strategic expansion and robust deposit and loan growth. Asset quality improved with a notable reduction in nonperforming assets, and capital ratios remain strong. While there were elevated charge-offs and provision for credit losses, these were actively managed and tied to specific reserves from prior periods. Overall, the filing indicates strong operational momentum and a positive outlook.

Positives

• Net income increased 21% to $9.6 million and diluted EPS increased 20% to $0.54 on a linked quarter basis.
• Deposits grew $433 million (7%) year-to-date to $6.6 billion, with core relationship deposits increasing $708 million and noninterest-bearing deposits up $211 million (19%) year-to-date.
• Loan growth of $506 million year-to-date at a weighted average coupon of 6.75% generated an incremental spread of over 400 basis points.
• Net interest income increased for the seventh consecutive quarter, up 5% linked quarter to $50.6 million and 34% year-over-year.
• Net Interest Margin (NIM) expanded to 2.81%, a 4 basis point increase linked quarter and 47 basis points year-over-year.
• Wealth Management AUM/AUA reached a record $12.9 billion, up $1.0 billion (8.4%) since December 31, 2024, with strong new business inflows of $214 million in Q3 2025.
• Nonperforming assets declined significantly by $31 million (27%) in the quarter to $84.1 million (1.13% of total assets).
• Tangible book value per share increased 7% to $34.10.
• Achieved a fourth consecutive quarter of positive operating leverage and 54% core earnings growth over the last twelve months.
• Regulatory capital ratios remain strong and significantly above well-capitalized standards, with the Bank's Tier 1 Leverage Ratio at 9.89% and Common Equity Tier 1 Ratio at 11.70%.
• Successful Metro New York expansion has onboarded over 850 new client relationships, adding over $1.75 billion in core relationship deposits and more than $900 million in new loans over the past two years.
• No outstanding overnight borrowings at September 30, 2025, and strong total on and off-balance sheet liquidity of $4.9 billion (267% of uninsured/uncollateralized deposits).
• Moodys affirmed the company's investment grade rating with a stable outlook during the third quarter.

Negatives

• Provision for credit losses increased significantly year-over-year to $4.8 million in Q3 2025 from $1.2 million in Q3 2024, driven by specific reserves on two multifamily loans and loan growth.
• Loans past due 30 to 89 days and still accruing increased to $28.8 million (0.48% of total loans) at September 30, 2025, from $15.5 million (0.27%) at June 30, 2025, primarily due to $4.2 million of multifamily loans and $8.8 million of C&I loans.
• Allowance for credit losses (ACL) decreased to $68.6 million (1.14% of total loans) at September 30, 2025, from $81.8 million (1.40%) at June 30, 2025, mainly due to $18.0 million in charge-offs.
• Charge-offs of $18.0 million were recorded in Q3 2025, including $11.3 million for one equipment financing relationship and $6.7 million for three multifamily loans.
• Operating expenses increased due to ongoing expansion efforts, increased health insurance costs, and annual merit increases.

Risks

• Ability to successfully grow the business and implement the strategic plan, including generating revenues to offset increased personnel and other costs related to the strategic plan.
• Impact of anticipated higher operating expenses in 2025 and beyond.
• Ability to successfully integrate wealth management firm and team acquisitions.
• Ability to successfully integrate the expanded employee base.
• An unexpected decline in the economy, particularly in New Jersey and New York market areas, including potential recessionary conditions.
• Declines in net interest margin caused by the interest rate environment (including the shape of the yield curve) and a highly competitive market.
• Declines in the value of the investment portfolio.
• Impact from a pandemic event on the business, operations, customers, allowance for credit losses, and capital levels.
• Higher than expected increases in the allowance for credit losses.
• Higher than expected increases in credit losses or in the level of delinquent, nonperforming, classified, and criticized loans or charge-offs.
• Inflation and changes in interest rates, which may adversely impact margins and yields, reduce the fair value of financial instruments, reduce loan originations, and lead to higher operating costs.
• Decline in real estate values within market areas.
• Legislative and regulatory actions (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Basel III and related regulations) that may result in increased compliance costs.
• The imposition of tariffs or other domestic or international governmental policies and retaliatory responses.
• The impact of the current federal government shutdown.
• The failure to maintain current technologies and/or to successfully implement future information technology enhancements.
• Successful cyberattacks against the IT infrastructure and that of IT and third-party providers.
• Higher than expected FDIC insurance premiums.
• Adverse weather conditions.
• The current or anticipated impact of military conflict, terrorism, or other geopolitical events.
• Inability to successfully generate new business in new geographic markets, including expansion into New York City and Long Island.
• A reduction in lower-cost funding sources.
• Changes in liquidity, including the size and composition of the deposit portfolio, and the percentage of uninsured deposits in the portfolio.
• Inability to adapt to technological changes.
• Claims and litigation pertaining to fiduciary responsibility, environmental laws, and other matters.
• Inability to retain key employees.
• Demands for loans and deposits in market areas.
• Adverse changes in securities markets.
• Changes in New York City rent regulation law.
• Changes in governmental regulation, including, but not limited to, any increase in FDIC insurance premiums and changes in the monetary policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System.
• Changes in accounting policies and practices.
• Other unexpected material adverse changes in financial condition, operations, or earnings.

Future Outlook

The company anticipates continued growth and profitability from its strategic expansion into Metro New York City and Long Island, driven by investments in talent and client experience. Management expects to actively manage problem assets with a focus on capital preservation and continue to seek opportunities to create efficiencies and manage expenses while enhancing the client experience.

Management Comments

• Douglas L. Kennedy, President and CEO: "Over the past two years, our 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. This momentum has enabled us to deliver a fourth consecutive quarter of positive operating leverage, grow core earnings by 54% over the last twelve months, drive improvement in earnings per share and tangible book value per share, all while absorbing significant investments in our expansion efforts."
• Douglas L. Kennedy, President and CEO: "Our transformation into Peapack Private Bank & Trust reflects our evolution toward becoming the premier boutique private bank serving Metro New York."
• Douglas L. Kennedy, President and CEO: "With strong earnings momentum, we aggressively addressed problem credits as nonperforming assets declined by $31 million in the quarter. Going forward we will continue to actively manage other problem assets with a focus on capital preservation."
• Douglas L. Kennedy, President and CEO: "We are proud to have built a leading middle-market commercial banking franchise, as evidenced by our C&I loan portfolio and complimented by Treasury Management services, Corporate Advisory and SBA businesses. These business lines fit perfectly with our private banking business model and will continue to generate solid production going forward."
• Douglas L. Kennedy, President and CEO: "We continue to make investments related to our strategic decision to expand into Metro New York City and are confident that these investments will position us for future growth and profitability, which will ultimately translate to increased shareholder value. We continue to look for opportunities to create efficiencies and manage expenses throughout the Company while investing in enhancements to the client experience."
• John Babcock, President of Wealth Management Division: "Q3 2025 saw continued strong client inflows driven by new accounts and client additions of $214 million. Our new business pipeline is healthy, and we continue to remain focused on delivering excellent service and advice to our clients."
• John Babcock, President of Wealth Management Division: "Our highly skilled wealth management professionals, our fiduciary powers and expertise, and our financial planning capabilities combined with our high-touch client service model distinguishes us in our market and continues to drive our growth and success."

Industry Context

Peapack-Gladstone's strategic focus on a 'boutique private bank' model in the competitive Metro New York region positions it as a differentiated alternative to larger financial institutions. Its successful expansion, coupled with strong growth in wealth management and commercial & industrial (C&I) lending, aligns with a broader industry trend of regional banks seeking high-value client relationships and specialized market niches. The emphasis on core deposit growth and reduced reliance on external borrowings reflects a prudent approach to funding in the current interest rate environment, while active management of credit quality is critical amidst economic uncertainties.

Comparison to Industry Standards

• The company positions itself as 'The Premier Alternative to the Mega Banks in Metropolitan New York,' indicating a differentiation strategy focused on personalized service rather than direct scale comparison with large national or global banks.
• The 11% CAGR over six years and 14% CAGR over a decade in Wealth AUM/AUA demonstrates sustained strong performance, which can be benchmarked against specialized wealth management firms and the wealth divisions of other regional banks.
• The 36% EBITDA margin in FY 2024 for the Wealth Management division suggests strong operating efficiency within this segment, comparable to leading wealth management providers.
• Regulatory capital ratios, including a Bank Tier 1 Leverage Ratio of 9.89% and Common Equity Tier 1 Ratio of 11.70%, remain significantly above 'well capitalized' standards, indicating a robust capital position relative to industry regulatory benchmarks.

Stakeholder Impact

• Shareholders: Benefited from increased diluted EPS, a 7% rise in tangible book value per share, and a declared cash dividend of $0.05 per share.
• Employees: The company's expansion efforts, including hiring new teams and wealth advisors, indicate job growth and opportunities. Recognition as 'ABA Best Banks To Work For' and 'Crains Best Places to Work in NYC' suggests a positive work environment.
• Customers: The strategic expansion into Metro New York and the 'single point of contact private banking strategy' aim to enhance service and attract new clients, as evidenced by strong deposit and loan growth.
• Creditors: Strong capital ratios and an improved liquidity profile, with no outstanding overnight borrowings, enhance the company's financial stability and reduce credit risk.

Next Steps

• Continue to actively manage problem assets with a focus on capital preservation.
• Continue to add talented professionals and expand the equipment finance group and wealth advisors in the New York market.
• Continue to look for opportunities to create efficiencies and manage expenses throughout the company.
• Continue investing in enhancements to the client experience.
• Cultivate and foster a strong client-centric culture.
• Actively embrace artificial intelligence to drive operational efficiency and support client service.
• Pay a cash dividend of $0.05 per share on November 28, 2025, to shareholders of record on November 6, 2025.

Key Dates

Recommendation

The company's Q3 2025 results demonstrate robust financial health and successful execution of its strategic growth initiatives. Significant increases in net income, EPS, net interest income, and NIM, coupled with record wealth management AUM/AUA, highlight strong operational momentum. The Metro New York expansion is yielding substantial returns in client acquisition and core deposit growth. While there were notable charge-offs and provisions for credit losses, these were actively managed, leading to a significant reduction in nonperforming assets. The strong capital position, improved liquidity, and positive industry recognition further de-risk the investment. These factors collectively indicate a compelling investment opportunity with strong upside potential.

Keywords

Peapack-Gladstone, PGC, Financial Results, Q3 2025, Earnings, Net Income, EPS, Deposits, Loans, Wealth Management, AUM, NIM, Net Interest Margin, Nonperforming Assets, Capital Ratios, Metro New York, Commercial Banking, Private Banking, Financial Services, Banking, Regional Bank, New Jersey, New York