Peapack Gladstone Financial Corp (PGC) Q3 2023 Earnings: A Mixed Bag Amid Economic Challenges
PGC reports Q3 2023 total revenue of $55.9 million, net income of $8.8 million, and diluted EPS of $0.49
Net interest margin declined to 2.28% for Q3 2023, compared to 2.49% for Q2 2023 and 2.98% for Q3 2022
Loans grew by $44 million to $5.5 billion, funded by deposit growth of $61 million to $5.3 billion
Company's liquidity position remains strong with balance sheet liquidity at $756 million as of September 30, 2023
Peapack Gladstone Financial Corp (NASDAQ:PGC) announced its third quarter 2023 financial results on October 24, 2023. The company recorded a total revenue of $55.9 million, a net income of $8.8 million, and diluted earnings per share (EPS) of $0.49 for the quarter ended September 30, 2023. This is a decline compared to the revenue of $61.9 million, net income of $20.1 million, and diluted EPS of $1.09 for the quarter ended September 30, 2022.
Performance and Challenges
PGC's third quarter results were impacted by the compression of the net interest margin, primarily driven by the rapid rise in the cost of funds. However, the company saw signs of stabilization in the margin during the quarter. The company's return on average assets was 0.54%, return on average equity was 6.20%, and return on average tangible equity was 6.75% for the quarter ended September 30, 2023.
Financial Achievements
Despite the challenges, PGC's Wealth Management business continued to generate a sizable and consistent stream of noninterest income, representing 35% of total revenue during the third quarter. The company's liquidity position also remains strong, with balance sheet liquidity at $756 million as of September 30, 2023. The company also had $2.8 billion of external borrowing capacity available, providing 294% coverage of uninsured deposits.
Income Statement, Balance Sheet, and Cash Flow Statement Highlights
PGC's total loans grew by $193 million or 4% to $5.5 billion at September 30, 2023, compared to $5.3 billion at December 31, 2022. Total deposits increased by $54.2 million to $5.3 billion from December 31, 2022. The company's net interest income (NII) of $36.5 million and net interest margin (NIM) of 2.28% for Q3 2023 decreased from NII of $38.9 million and NIM of 2.49% for Q2 2023.
Future Outlook
PGC has been approved by its regulators to open a location in mid-town Manhattan in 2024 and has hired a team of experienced professionals to gain entry into this lucrative market. The team is performing above expectations and is building robust pipelines. The company is also adopting new technology and processes to improve the client experience.
Summary
In conclusion, PGC's Q3 2023 results show a mixed bag of performance. While the company faced challenges due to economic conditions and saw a decline in net income and EPS, it also demonstrated growth in its Wealth Management and Commercial Banking sectors. With strong liquidity and plans for expansion, PGC is poised to navigate through the current economic environment.
This article first appeared on GuruFocus.
