Peapack-Gladstone shares surge 3% on earnings beat
New Jersey bank beats profit estimates by 14.5% as loan growth accelerates and credit quality improves
Peapack-Gladstone Financial Corporation shares rose 3.1% on Wednesday after the New Jersey-based regional bank reported fourth-quarter earnings that exceeded analyst expectations, driven by accelerating loan growth and an expanding net interest margin.
The company reported earnings per share of $0.69 for the quarter, beating the consensus estimate of $0.6025 by 14.5%, according to regulatory filings with the Securities and Exchange Commission. Revenue of $78.2 million topped forecasts of $72.4 million, representing an 8% upside surprise.
The standout performance came from the bank's core lending operations. Loans outstanding grew 13% year-over-year to $6.3 billion, signaling robust demand despite an elevated interest rate environment. The net interest margin, a key profitability metric for banks, expanded by 27 basis points sequentially to 3.08%, reflecting improved pricing power and successful balance sheet management.
Credit quality metrics also strengthened significantly. Nonperforming assets declined to 0.91% of total assets from 1.13% in the prior period, indicating the bank's risk management practices are effectively containing potential losses in an uncertain economic climate.
"The quarter demonstrates our ability to execute on our strategy of disciplined growth while maintaining strong credit fundamentals," the bank's management noted in the earnings release, without providing specific executive commentary.
The strong results have already caught the attention of Wall Street analysts. Peapack-Gladstone currently holds a consensus rating of buy from analysts covering the stock, with four firms recommending it as a strong buy or buy and none suggesting a hold or sell rating. The average price target of $35.62 represents potential upside of approximately 18% from current levels around $30.14.
The stock's 52-week performance has been relatively resilient, trading between a low of $23.82 and a high of $35.21, with Wednesday's gain pushing shares back toward the upper end of that range. At its current valuation, the bank trades at 15.3 times trailing earnings and 9.6 times forward estimates, suggesting investors are pricing in continued earnings momentum.
Peapack-Gladstone, headquartered in Bedminster, New Jersey, focuses on private banking and wealth management services for high-net-worth individuals and businesses. The regional banking model has faced headwinds over the past two years as interest rates rose, but banks with strong relationships in niche markets have demonstrated relative resilience.
The improved net interest margin is particularly noteworthy as many regional banks have seen margins compress due to higher funding costs. Peapack-Gladstone's ability to expand NIM suggests either successful repricing of loan portfolios or effective management of deposit costs, or a combination of both factors.
Institutional investors hold approximately 75% of outstanding shares, indicating confidence from sophisticated market participants. Insider ownership of 10.9% also suggests management has significant skin in the game, aligning leadership interests with those of shareholders.
Looking ahead, investors will be watching whether the bank can sustain its loan growth momentum and maintain credit quality improvements. The forward price-to-earnings ratio below 10 suggests the market expects earnings growth to continue in 2026, though economic uncertainty remains a potential headwind for all lending institutions.
The bank's dividend yield of 0.64% provides modest income for shareholders, though the primary appeal appears to be growth potential and value characteristics given the price-to-book ratio of 0.81, indicating shares trade below the value of the bank's assets.