Peapack-Gladstone Financial Corporation (PGC) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $7.5 million, down from $13.1 million in Q2 2023, with diluted EPS of $0.42 versus $0.73 year-over-year.

• Total revenue for Q2 2024 was $56.6 million, slightly down from $57.5 million in Q2 2023; six-month revenue was $109.7 million, down from $119.5 million year-over-year.

• Core relationship deposits grew $354 million in Q2 2024, annualized at 33%, supporting full repayment of $119.5 million in short-term borrowings.

• Wealth management AUM/AUA reached $11.5 billion, with fee income of $16.4 million, representing 29% of total revenue.

• Expansion into New York City continued with the addition of 13 commercial private banking teams and a new retail branch.

Financial highlights

• Net interest income for Q2 2024 was $35.0 million, down from $38.9 million in Q2 2023, but up 2% sequentially.

• Wealth management fee income rose to $16.4 million in Q2 2024, up 15% year-over-year and 14% sequentially.

• Provision for credit losses increased to $3.9 million in Q2 2024, mainly due to charge-offs on two problem loans.

• Operating expenses increased 14% year-over-year to $43.1 million for Q2 2024, reflecting expansion costs and higher compensation.

• Return on average assets was 0.47% and return on average equity was 5.22% for Q2 2024, both down from Q2 2023.

Outlook and guidance

• Management expects continued pressure on net interest margin due to competitive deposit markets and higher funding costs.

• Expansion into New York City is anticipated to further support deposit growth and reduce reliance on higher-cost funding.

• Wealth management and other fee-based income streams are expected to remain stable.

• A healthy pipeline of C&I loans is expected to offset the loan portfolio decline experienced in the first half of 2024.

• Management remains focused on executing its private banking strategy despite credit quality and rate headwinds.