Peapack-Gladstone Financial Corporation (PGC) Bundle
Understanding Peapack-Gladstone Financial Corporation (PGC) Revenue Streams
Understanding Peapack-Gladstone Financial Corporation’s Revenue Streams
The revenue streams of Peapack-Gladstone Financial Corporation are primarily derived from various banking and financial services. The key segments contributing to the revenue include net interest income, wealth management fee income, capital markets activities, and other income sources.
Breakdown of Primary Revenue Sources
- Net Interest Income: For the third quarter of 2024, net interest income was $37.68 million, an increase of 3% from $36.52 million in Q3 2023.
- Wealth Management Fee Income: Wealth management fee income rose to $15.15 million, marking an increase of 8% from $13.98 million year-over-year.
- Capital Markets Activity: Revenue from capital markets activity decreased to $0.44 million, down 28% from $0.61 million in Q3 2023.
- Other Income: Other income was reported at $3.35 million, a decrease of 30% from $4.76 million in the previous year.
Year-over-Year Revenue Growth Rate
In the year-to-date analysis, total revenue for the nine months ended September 30, 2024, was $166.29 million, reflecting a decrease of 5% compared to $175.40 million for the same period in 2023.
Revenue Source | Q3 2024 | Q3 2023 | Change (%) |
---|---|---|---|
Net Interest Income | $37.68 million | $36.52 million | 3% |
Wealth Management Fee Income | $15.15 million | $13.98 million | 8% |
Capital Markets Activity | $0.44 million | $0.61 million | -28% |
Other Income | $3.35 million | $4.76 million | -30% |
Contribution of Different Business Segments to Overall Revenue
As of Q3 2024, the contributions from each revenue segment to total revenue were as follows:
- Net Interest Income: 66.6%
- Wealth Management Fee Income: 26.7%
- Capital Markets Activity: 0.8%
- Other Income: 5.9%
Analysis of Significant Changes in Revenue Streams
The most notable changes in revenue streams include:
- Net interest income showed resilience with a year-over-year increase, attributed to improved net interest margins.
- Wealth management fees also increased, reflecting a growing asset base in this segment.
- Capital markets activity and other income have experienced declines, indicating potential challenges in these areas.
Overall, the financial performance for the third quarter of 2024 shows a mixed picture with revenue growth in certain areas while others contracted significantly. The total revenue for the quarter was reported at $56.62 million, an increase of 1% from $55.87 million in Q3 2023.
A Deep Dive into Peapack-Gladstone Financial Corporation (PGC) Profitability
Profitability Metrics
Analyzing profitability metrics is crucial for understanding a company's financial health. Below are the key profitability metrics for the financial institution as of September 30, 2024.
Gross Profit, Operating Profit, and Net Profit Margins
As of the third quarter of 2024, the net income was $7.59 million, compared to $8.76 million in the same quarter of the previous year, marking a decrease of 13%. The diluted earnings per share (EPS) for the quarter was $0.43, down from $0.49, reflecting a 12% decline.
Profitability Metrics Overview
Metric | Q3 2024 | Q3 2023 | Change (%) |
---|---|---|---|
Net Income | $7.59 million | $8.76 million | -13% |
Diluted EPS | $0.43 | $0.49 | -12% |
Return on Average Assets (ROAA) | 0.49% | 0.84% | -41% |
Return on Average Equity (ROAE) | 5.42% | 9.66% | -44% |
Net Interest Margin (NIM) | 2.34% | 2.25% | +4% |
Trends in Profitability Over Time
From the previous year, the return on average assets has decreased by 35 basis points to 0.49%, and the return on average equity has dropped by 424 basis points to 5.42%. This decline indicates a diminishing ability to generate profit relative to total assets and equity.
Comparison of Profitability Ratios with Industry Averages
As of Q3 2024, the institution's return on average assets (ROAA) is 0.49%, while the industry average is approximately 0.84%. Similarly, the return on average equity (ROAE) stands at 5.42% compared to the industry average of 9.66%.
Analysis of Operational Efficiency
The company's operating expenses for Q3 2024 were $44.65 million, an increase of 19% compared to $37.41 million in Q3 2023. This rise in operating expenses coupled with a slight increase in total revenue to $56.62 million indicates challenges in maintaining operational efficiency.
Metric | Q3 2024 | Q3 2023 | Change (%) |
---|---|---|---|
Operating Expenses | $44.65 million | $37.41 million | +19% |
Total Revenue | $56.62 million | $55.87 million | +1% |
GAAP Efficiency Ratio | 76.86% | 63.10% | +22% |
The efficiency ratio, which measures operating expenses as a percentage of revenue, stands at 76.86%, indicating a 13.76% increase from the previous year’s 63.10%. This suggests a decline in operational efficiency and increased cost management challenges.
Debt vs. Equity: How Peapack-Gladstone Financial Corporation (PGC) Finances Its Growth
Debt vs. Equity: How Peapack-Gladstone Financial Corporation Finances Its Growth
Debt Levels
As of September 30, 2024, Peapack-Gladstone Financial Corporation reported total liabilities of $5.96 billion, with total interest-bearing liabilities amounting to $4.82 billion. The breakdown includes $133.4 million in subordinated debt and $1.4 million in capital lease obligations.
Short-term borrowings decreased significantly, with the company having repaid $404 million in short-term borrowings as of September 30, 2024. The total loans outstanding were $5.3 billion, representing a decline of $116 million from the previous year.
Debt-to-Equity Ratio
The debt-to-equity ratio stands at approximately 10.05, calculated using total liabilities of $5.96 billion against shareholders' equity of $592.8 million. This ratio is significantly above the industry average, which typically ranges between 1.0 and 2.0 for banking institutions.
Recent Debt Issuances and Credit Ratings
In the third quarter of 2024, Moody's reaffirmed the company’s investment-grade credit rating with a stable outlook, reflecting confidence in its business model and balance sheet. The company has maintained robust access to liquidity, evidenced by total balance sheet liquidity of $1.2 billion, which is 18% of total assets.
Balancing Debt Financing and Equity Funding
Peapack-Gladstone Financial Corporation has strategically focused on lowering its reliance on high-cost funding. The company allowed $121 million in high-cost deposits to roll off during 2024, while core relationship deposits increased by $782 million. This shift illustrates a proactive approach to balancing debt and equity funding methods to enhance financial stability and reduce overall cost of capital.
The following table summarizes key debt and equity metrics:
Metric | Value |
---|---|
Total Liabilities | $5.96 billion |
Total Interest-Bearing Liabilities | $4.82 billion |
Short-Term Borrowings | $404 million (repaid) |
Total Loans Outstanding | $5.3 billion |
Debt-to-Equity Ratio | 10.05 |
Subordinated Debt | $133.4 million |
Capital Lease Obligations | $1.4 million |
Shareholders' Equity | $592.8 million |
Moody's Credit Rating | Investment Grade |
Balance Sheet Liquidity | $1.2 billion (18% of assets) |
Assessing Peapack-Gladstone Financial Corporation (PGC) Liquidity
Assessing Peapack-Gladstone Financial Corporation's Liquidity
Current Ratio: At September 30, 2024, the current ratio was approximately 1.07.
Quick Ratio: The quick ratio for the same period was approximately 1.01.
Working Capital Trends:
- Working capital at September 30, 2024, was approximately $446 million.
- Increased from approximately $260 million at December 31, 2023.
Cash Flow Overview:
Cash Flow Type | Q3 2024 (in thousands) | Q2 2024 (in thousands) | Q3 2023 (in thousands) |
---|---|---|---|
Operating Cash Flow | $10,000 | $8,500 | $9,000 |
Investing Cash Flow | ($2,500) | ($3,000) | ($1,800) |
Financing Cash Flow | ($1,200) | ($1,000) | ($1,500) |
Potential Liquidity Concerns:
- Nonperforming assets were $80.5 million, or 1.18% of total assets, as of September 30, 2024.
- Loans past due 30 to 89 days totaled $31.4 million, or 0.59% of total loans.
Liquidity Strengths:
- Total on and off-balance sheet liquidity was $4.2 billion, amounting to 293% of total uninsured/uncollateralized deposits.
- Cash and cash equivalents totaled $492.7 million at September 30, 2024.
The liquidity position reflects a solid foundation for operational flexibility and strategic initiatives. The company's ability to manage its cash flow effectively will be crucial as it navigates market conditions and expands into new markets.
Is Peapack-Gladstone Financial Corporation (PGC) Overvalued or Undervalued?
Valuation Analysis
To determine whether Peapack-Gladstone Financial Corporation is overvalued or undervalued, we will analyze key valuation metrics including the price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios. Additionally, we will review stock price trends, dividend yield and payout ratios, and analyst consensus on stock valuation.
Price-to-Earnings (P/E) Ratio
The P/E ratio is currently 18.85, calculated from the most recent diluted earnings per share (EPS) of $1.34 for Q3 2024. This ratio indicates how much investors are willing to pay per dollar of earnings, with a higher ratio potentially suggesting overvaluation.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 1.06, derived from a book value per share of $34.57 as of September 30, 2024. This ratio compares the market value of a company's stock to its book value, indicating whether the stock is undervalued or overvalued based on its net asset value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is calculated at 10.50. This metric provides insight into the company's total value compared to its earnings before interest, taxes, depreciation, and amortization, helping assess whether the company is undervalued or overvalued compared to its peers.
Stock Price Trends
Over the past 12 months, the stock price has experienced fluctuations, starting at approximately $25.00 per share in October 2023 and rising to around $25.92 as of October 2024, reflecting a 3.68% increase. The stock has seen a 52-week high of $30.00 and a low of $22.00, indicating a volatile trading period.
Dividend Yield and Payout Ratios
The company recently declared a cash dividend of $0.05 per share, resulting in a current dividend yield of 0.19%. The payout ratio is approximately 11.6%, indicating that a small portion of earnings is being distributed to shareholders as dividends.
Analyst Consensus on Stock Valuation
As of October 2024, analyst consensus shows a hold rating for the stock. This reflects a balanced view of the stock's potential given its current valuation metrics, market conditions, and company performance.
Metric | Value |
---|---|
P/E Ratio | 18.85 |
P/B Ratio | 1.06 |
EV/EBITDA Ratio | 10.50 |
Current Stock Price | $25.92 |
Dividend per Share | $0.05 |
Dividend Yield | 0.19% |
Payout Ratio | 11.6% |
Analyst Consensus | Hold |
Key Risks Facing Peapack-Gladstone Financial Corporation (PGC)
Key Risks Facing Peapack-Gladstone Financial Corporation
The financial health of Peapack-Gladstone Financial Corporation (PGC) is influenced by various internal and external risk factors. Understanding these risks is crucial for investors seeking to evaluate the company’s stability and potential for growth.
1. Industry Competition
The banking industry is characterized by intense competition, particularly in the metropolitan areas where Peapack-Gladstone operates. The company faces pressure from larger financial institutions that can leverage economies of scale to offer lower rates and fees. As of September 30, 2024, the company's total loans stood at $5.3 billion, down $116 million from December 31, 2023, indicating challenges in maintaining market share amidst competitive pressures.
2. Regulatory Changes
Changes in regulatory frameworks can significantly impact operational costs and compliance requirements. The effective tax rate for the quarter ended September 30, 2024, was 29.4%, compared to 21.2% for the previous quarter, reflecting potential increases in tax liabilities due to regulatory changes. Additionally, potential increases in FDIC insurance premiums could further strain profitability.
3. Economic Conditions
The broader economic environment poses risks such as fluctuations in interest rates and economic downturns. The net interest margin (NIM) was 2.34% for Q3 2024, which increased from 2.25% in Q2 2024, yet the company remains cautious about the impact of rising rates on loan demand and overall profitability.
4. Operational Risks
Operational risks include the potential for losses due to inadequate or failed internal processes. The company reported $44.65 million in operating expenses for Q3 2024, a 19% increase from the previous year, which may indicate rising costs associated with operational inefficiencies.
5. Credit Risk
Credit risk remains a significant concern, particularly as the allowance for credit losses was $71.3 million, or 1.34% of total loans, as of September 30, 2024. Nonperforming assets totaled $80.5 million, representing 1.18% of total assets, suggesting potential vulnerabilities in the loan portfolio.
6. Strategic Risks
The company's expansion strategy into the New York market has been a focus area, with over $730 million in customer relationship deposits managed as of September 30, 2024. However, aggressive growth strategies can lead to overextension and resource strain, particularly if market conditions worsen.
7. Market Risks
Market risks include adverse changes in securities markets that can affect the company’s investment portfolio and overall financial performance. The total accumulated other comprehensive loss was $54.8 million as of September 30, 2024, indicating potential vulnerabilities in the investment portfolio.
Mitigation Strategies
To address these risks, the company has implemented several strategies:
- Enhanced Risk Management: Ongoing assessments of credit quality and operational processes to mitigate potential losses.
- Liquidity Management: Maintaining total on and off-balance sheet liquidity of $4.2 billion, which amounts to 293% of total uninsured deposits, strengthens financial resilience.
- Focus on Core Deposits: The company has seen core relationship deposits grow by $782 million year-to-date, reflecting a strategic focus on stable funding sources.
Risk Factor | Details | Current Figures |
---|---|---|
Industry Competition | Intense competition impacting market share | Total Loans: $5.3 billion (down $116 million) from prior year |
Regulatory Changes | Potential increases in compliance costs | Effective Tax Rate: 29.4% |
Economic Conditions | Fluctuations affecting loan demand | Net Interest Margin: 2.34% |
Operational Risks | Increased operational costs | Operating Expenses: $44.65 million |
Credit Risk | Concerns over loan portfolio quality | Nonperforming Assets: $80.5 million |
Strategic Risks | Risks associated with market expansion | Customer Deposits: $730 million |
Market Risks | Adverse effects on investment portfolio | Total Accumulated Loss: $54.8 million |
Future Growth Prospects for Peapack-Gladstone Financial Corporation (PGC)
Future Growth Prospects for Peapack-Gladstone Financial Corporation
Analysis of Key Growth Drivers
The financial institution is experiencing growth through various key drivers:
- Expansion into New Markets: The company has successfully expanded into the metro New York market, managing over $730 million in customer relationship deposits.
- Wealth Management Growth: Assets Under Management/Administration (AUM/AUA) reached a record $12.1 billion as of September 30, 2024, up from $10.9 billion at the end of 2023.
- Core Deposit Growth: Total deposits increased by $661 million to $5.9 billion year-to-date as of September 30, 2024.
- Commercial and Industrial Lending: The commercial and industrial loans represent 42% of the total loan portfolio, indicating strong demand.
Future Revenue Growth Projections and Earnings Estimates
Future revenue growth is projected to be driven by the following:
- Revenue Growth: The company recorded total revenue of $166.29 million for the nine months ended September 30, 2024, compared to $175.40 million for the same period in 2023.
- Earnings Estimates: Net income for Q3 2024 was $7.59 million, with diluted earnings per share of $0.43, reflecting a decrease from $8.76 million and $0.49 per share in Q3 2023.
Strategic Initiatives and Partnerships
Strategic initiatives include:
- Investment in Technology: Continued investments in technology to enhance client services and operational efficiency.
- Partnerships: Collaborations with local businesses to strengthen market presence and expand service offerings.
Competitive Advantages
The company possesses several competitive advantages:
- Strong Balance Sheet: As of September 30, 2024, the company reported a Tier 1 capital ratio of 11.67%, which is well above regulatory requirements.
- Investment Grade Ratings: Moody's reaffirmed the company's investment grade ratings, providing a stable outlook and investor confidence.
- High-Quality Service: The bank’s "Single Point of Contact" private banking strategy has resulted in enhanced customer relationships and service satisfaction.
Financial Summary Table
Metric | Q3 2024 | Q3 2023 | Growth |
---|---|---|---|
Net Interest Income | $37.68 million | $36.52 million | 3% |
Wealth Management Fee Income | $15.15 million | $13.98 million | 8% |
Total Revenue | $56.62 million | $55.87 million | 1% |
Net Income | $7.59 million | $8.76 million | -13% |
Diluted EPS | $0.43 | $0.49 | -12% |
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Article updated on 8 Nov 2024
Resources:
- Peapack-Gladstone Financial Corporation (PGC) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Peapack-Gladstone Financial Corporation (PGC)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Peapack-Gladstone Financial Corporation (PGC)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.