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Sep 30, 2023
Peapack-Gladstone Q3 2023 Earnings Report
Peapack-Gladstone's financial performance was impacted by net interest margin compression and elevated credit loss provisions.
Key Takeaways
Peapack-Gladstone Financial Corporation reported a decrease in total revenue to $55.9 million, net income to $8.8 million, and EPS to $0.49 for Q3 2023, compared to the same quarter last year. The results were impacted by net interest margin compression and an elevated provision for credit losses due to challenges in the freight industry.
Total revenue reached $55.9 million, with net income at $8.8 million and diluted EPS at $0.49.
Loans grew by $44 million to $5.5 billion, funded by deposit growth of $61 million to $5.3 billion.
Net interest margin declined to 2.28%, impacted by the rising cost of funds.
Wealth Management fee income was $14.0 million, representing 25% of total revenue.
Peapack-Gladstone
Peapack-Gladstone
Forward Guidance
Peapack-Gladstone Financial Corporation is adopting new technology and processes to improve client experience. The company plans to manage expenses closely and prudently, while continuing to invest in talent and expand its core wealth management and commercial banking businesses.
Positive Outlook
- Signs of stabilization in the net interest margin were observed on a monthly basis during the quarter.
- The business continues to generate a consistent stream of noninterest income, led by Wealth Management.
- The company has been approved by regulators to open a location in mid-town Manhattan in 2024.
- A team of experienced professionals has been hired to gain entry into the Manhattan market, with performance exceeding expectations.
- New technology and processes are being adopted to improve the client experience.
Challenges Ahead
- Third quarter results were impacted by continuing compression of the net interest margin due to rising cost of funds.
- An elevated provision for credit losses was driven by two credit relationships transferred to non-performing status.
- The freight industry is currently facing a downturn due to supply and demand imbalances, impacting credit relationships.
- The company is dealing with a handful of credit issues that have arisen as a result of current economic conditions.
- Loan demand is expected to be muted somewhat compared to recent prior years due to economic uncertainty and rising interest rates.