Peapack-Gladstone Financial Corp (PGC) 2026 Q3 法說會逐字稿

Welcome to the PPAC Gladstone Financial Corporation Third Quarter 2026 Earnings Call. Please be advised that today's conference is being recorded. I will now hand the conference over to Matthew Remo, Treasurer and Head of Corporate Finance. Please go ahead.

Thank you, and good morning, everyone. I'm joined today by our President and CEO, Doug Kennedy, and our CFO, Frank Cavallero, who will provide an overview of our third quarter results. John Babcock, our President of Wealth Management, and Lisa Chalkin, our Chief Credit Officer, are also here to answer any questions. If you have not yet read the earnings release and investor presentation we issued yesterday afternoon, you may access them by going to the Investor Relations page on our company website at pfacprivate.com. You may also access the investor presentation directly within our webcast today. After the presentation, we will be happy to take questions. Our comments today may contain forward-looking statements, which are subject to risks and uncertainties that may cause our results to differ materially from expectations. Cautionary statements about reliance on this information are included in the earnings release and investor presentation as well as our SEC filings and other investor materials. The earnings release and presentation also include non-GAAP financial measures, so it is important to review the appropriate reconciliations and the appendices to each document.

And with that, it is my pleasure to turn the call over to Doug.

Thanks, Matt. Good morning, everybody, and thank you for joining us in our third quarter call. On behalf of the entire team at PPAC Private, I'm pleased to report yet another strong quarter for our company. Before we get into the numbers, I want to frame the quarter. What you're seeing in Q3 is not a one-quarter story. It's the result of a strategy that we've been executing on in 2023 and is now showing up consistently in our results.

The big takeaway for the quarter is continued growth and profitability. Revenue continued to grow significantly faster than expenses and expenses actually declined from the second quarter. That combination drove core pre-tax-provision revenue to $32.3 million, up 76% year-over-year and net income available to common shareholders to $18.5 million.

Diluted earnings per share were $0.99, up 15% on a linked-quarter basis. This forward momentum marks 10 consecutive quarters of revenue and six consecutive quarters of earnings growth. And I'll add that during the quarter, Moody's affirmed our investment grade rating with a stable outlook. So how did we get here? Let me put that in context. In 2023, the banking industry went through a real stress.

Three large bank failures, and a significant dislocation. We saw that dislocation as an opportunity and we acted. In May 2023, we hired our first Experience New York City team. By April 2024, we had 13 teams and the leadership in place. In January 2025, we rebranded to PPAC Private. That April, we opened our flagship branch on 300 Park Avenue.

And over the past year, we expanded to Long Island and added wealth, commercial real estate and equipment finance talent. This past quarter, our annualized pre-tax-provision revenue reached $129 million, which was approximately 2.7 times the trough that we saw in the third quarter of 2024. We made the investment, we built the teams and repositioned our brand, and now these investments are showing up in higher core earnings.

So what did we see this quarter? Our net interest margin continued to improve despite funding cost pressure and our efficiency ratio improved even further. That positive operating leverage is in its simplest form. Revenues are up, our expenses are down and improved earnings are following. During the quarter, loans grew $403 million, deposits grew $301 million. Now, as we've said before, growth is never going to be a linear. And we don't expect that to ever be the fact, but our quarterly operating objectives remain $200 million of loan growth, $200 million of deposit growth and $2 million in core earnings growth. Q3 exceeded the loan and deposit objectives and delivered $2 million of core earnings growth. We begin Q4 with a strong loan and deposit pipeline.

And the quality of that growth has been meaningful. We continue to see growth in non-interest-bearing operating relationships, which have increased 18% year-over-year. On the loan side, commercial industrial lending grew $409 million year-over-year, up 15%, and we're seeing growth across virtually every asset category. That healthy margin expansion, combined with strong balance sheet growth, as you would expect, are improving our returns. Our return on average tangible equity was 11.4%, up 587 basis points since the third quarter of 2024. So despite all our growth and some isolated headwinds, our capital and credit have remained very solid. Our capital position continues to provide buffers that give us the capacity to support continued growth, and we're managing that capacity thoughtfully.

Our focus is on balancing attractive growth opportunities with capital discipline as earnings improve. Frank is going to cover capital position in the current offering under our voluntary dividend reinvestment program, which will supplement organic capital generation as we support anticipated growth.

Credit quality also improved sequentially with lower non-performing assets and early stage delinquencies declining. As a result, our allowance coverage for non-performing loans improved to 126% in the quarter. Our New York rent-regulated multifamily portfolio is down 12% year-over-year and now represents 11% of total loans versus 18% at September 30, 2024. We expect that this will continue into the future.

Wealth management remains a foundational aspect of our company, who we are and how we act as a private bank. We ended the quarter with $13.6 billion in assets under management and administration, down slightly from the second quarter. Gross inflows remain solid. Wealth revenue was $17.3 million, up 9% year-over-year and $51 million year-to-date.

This is a scaled, long-established franchise. It deepens relationships across generations. It gives us real scarcity value through fiduciary expertise, specialist investment talent, sell side advisory for business owners. It is the cornerstone of what it is that we do. Client trust in this space is very hard to replicate. It takes decades of performance and the highest level of professionalism to build. Wealth management, as you would expect. Anchors the entire strategy, customized banking, bespoke credit, and treasury delivered through one coordinated team providing a high level of customer service, a single point of contact solving the complex needs of affluent families and business owners one client at a time.

So to summarize, our differentiated model is driving growth and improved profitability. Momentum is strong, and we're very constructive about our company's future. We have an established platform and are building an enviable differentiated franchise across Metro New York. Experienced teams, specialist capabilities, scaled infrastructure, and an integrated client relationship, wealth of fiduciary advice, private and commercial banking, credit treasury solutions. All coordinated and made easy through a single point of contact. Our long-term objectives remain unchanged, a 125 plus return on assets and a 14% plus return on equity or better. We are not there yet, but we're moving forward, achieving both benchmarks incrementally in a very thoughtful manner. So with that, I want to thank you again for your confidence and support. And at this point, I'm going to turn it over to Frank, who will give you a detailed overview of the quarter.

Thanks, Doug, and good morning, everyone. I'll begin with earnings and then take you through the balance sheet, credit quality, and wrap up with a few comments on capital. Net income available to common shareholders increased 17% sequentially to $18.5 million or $0.99 per diluted share, compared with $15.8 million or $0.86 in the second quarter.

Total revenue was $88 million, up 2% sequentially and 24% year-over-year. That growth was primarily driven by net interest income, which increased to $68 million, up 3.6 million, which is 6% growth sequentially and 33% year-over-year. Net interest margin was 3.34%, an increase of 2 basis points from the second quarter. This change is consistent with our expectations and aligns with our prior guidance. Pricing on new business remained attractive. Loans originated during the quarter, carried yields of approximately 6.4%, while new deposits came in the mid 2% range. However, rapid loan growth and increased competition for deposits required us to use more borrowings than in recent quarters, tempering the margin benefit of that growth.

Non-interest income totaled $20 million, down $2.1 million or approximately 10% sequentially. A loss on the sale of an ORE property in addition to a fair value mark on a CRA equity security were responsible for approximately half of the linked-quarter decline.

As revenue continues to grow, expense growth is moderating. We supported substantial new business during the third quarter using the infrastructure we have built while holding expenses essentially flat. Operating expenses totaled $55 million, down 1% sequentially and up 5% year-over-year, combined with the 24% year-over-year increase in revenue. This is producing strong positive operating leverage and contributing to earnings growth. Core earnings or pre-provision net revenue totaled $32.3 million, up approximately $2 million or 6% on a linked-quarter basis.

Our efficiency ratio improved to 63%, which is down approximately 1.7 percentage points sequentially and nearly 16 full percentage points lower than the third quarter of 2024. The effective tax rate in the quarter was approximately 20.5% compared to 28.4% in the second quarter.

The third quarter rate includes a discrete benefit of approximately $1.8 million related to the purchase of production tax credits resulting in a lower tax provision. We consider this a one-time item and do not expect that benefit to recur next quarter. Turning to the balance sheet, growth was strong across the company during the third quarter. Total loans increased $403 million sequentially to $7.1 billion.

Up 17% year-over-year. Growth was diversified across the franchise with C&I and commercial real estate showing particularly strong results. At the same time, our New York rent-regulated multifamily portfolio continued to run off and become a smaller portion of the overall balance sheet. Deposits increased $301 million or 4% quarter-to-quarter $7.4 billion.

Deposits increased approximately $800 million or 12% year-over-year. Deposit growth continues to come from across the franchise with a focus on delivering core relationships with significant operating account balances. Over the past five quarters, we have opened an average of more than 600 non-interest-bearing operating accounts per quarter.

We also monitor how those accounts fund and develop over time to assess the depth and the economics of each relationship. Non-interest-bearing demand deposits ended the third quarter at approximately $1.6 billion, which reflects 18% growth year over year. We remain confident in our comprehensive relationship strategy as it continues to deliver fully banked relationships, supporting growth and managing our funding mix over time.

Turning to credit, non-performing assets declined by $14 million or 20% sequentially to $58 million representing 0.68% of total assets compared to 1.13% a year ago. Loans 30% to 89 days past due declined $9 million or 18% sequentially to $39 million representing 0.56% of total loans.

The provision for credit losses was $8.5 million compared to $8.1 million in the second quarter. Of that amount, $5 million of it was attributable to loan growth. Loan losses associated with loan workouts were lower than anticipated during the current quarter. Net charge-offs were $4.7 million compared with $5.9 million in the second quarter of 2026.

These improvements are encouraging and we continue to actively manage individual problem credits. Within the New York rent-regulated multifamily portfolio, balances declined to $775 million as of September 30. That portfolio represented approximately 11% of total loans compared to 18% two years ago. The reduction reflects both portfolio runoff and growth elsewhere in the loan portfolio.

Turning to capital, as Doug noted, we maintain buffers above regulatory capital thresholds. Our strong balance sheet growth has reduced some of those buffers even as earnings have improved, while we are managing capital proactively to support attractive relationship growth while preserving an appropriate cushion.

To support our growth, we issued the remaining $20 million of convertible preferred equity in July of this year. This supported capital at both the bank and the holding company levels. As profitability improves, we expect retained earnings to support a greater portion of our capital growth internally. In the meantime, we are actively managing the capital needed to support the business we are generating today.

We launched our voluntary dividend reinvestment program in the fourth quarter, which is scheduled to close in mid-November. This program has successfully increased common equity in the past and provides a supplemental source of capital as earnings improve. Going forward, we continue to evaluate capital in the context of business opportunities, risk and the interests of existing shareholders. We enter the fourth quarter with a stronger earnings base. Continued relationship growth and expense discipline are supporting earnings and our priority is to translate that progress into higher returns while maintaining funding, credit and capital discipline. With that, we are happy to answer your questions.

( Operators Instructions ) Our first question from Christopher Marinak with Breen Capital LLC. Your line is now open, please go ahead.

Hey, good morning. Frank and Doug and team, can you talk a little bit about where you see deposit pricing going from here? And do you see any further mix shift beyond what we've seen the last few quarters?

Hey, Chris, good morning. How are you? This is Doug. I would say, listen, we absolutely have seen a little bit of pressure. We've been sort of trying to.

At sort of the $200,000, $200,000 range. And if you look at sort of the $200,000 that we got in core during the quarter, the pricing of the spread between that and what we were lending out at was north of that 4% target that we set for each other. So I think that the pricing, while it's been more competitive, I think it certainly has not gotten out of hand.

Maybe, Frank?

Yeah, I was just looking at the quarter-to-quarter, the interest-bearing liabilities went up 10 basis points. So we expected that because of the 25 basis point move by the Fed during the quarter. In addition, we were borrowing a little bit of money from the federal loan bank. So putting some pressure there. But I think to answer your question, we do expect to see upward pricing pressure on the cost of deposits.

But if we've managed the overall beta to 50% to 60%, we think that's a comfortable level for us to manage the overall interest rate risk.

In terms of NIM, after Q1, we've got sort of 6% to 9 basis points for the year. We're kind of right in that range now. We expect that will play out this year between the back book repricing, even with the added pressure on funding costs.

We think that we can still sort of get a 2 to 3 basis point improvement in them in each of the quarters going into '27.

Great. Thank you for that. And then just a follow-up on the credit side, do you see any further shift on multifamily values for you in terms of how you've calibrated it at this point?

Is here, so I'll Lisa respond to that.

Values on the underlying collateral or value of the actual loans in a trade?

Well, it's actually just the collateral and would you have to make additional preserve additions and/or write-downs from here?

As we're getting updated appraisals, and again, we only have to get an updated appraisal if something is non-performing. The first time it goes substandard, we do, and then if it's non-performing, we get them annually. And I would say that we're seeing a mix. We are seeing some properties where there seems to be some softening of value, but at the same time, we are seeing some properties that are either holding up or actually have an improvement in value over the appraisal that was obtained a year ago. So I don't think that there's anything pervasive. Could there be one-offs? Absolutely. But it doesn't seem to be that we're seeing it across the board or systemically.

Additional provisioning to your question, we're absorbing it in our normal provision run rate. So like Lisa said, there's going to be one-offs. We're dealing with them as they come up. But we don't see a landslide of deals coming our way. So we're pretty comfortable with how it's been performing to date.

Great. Thank you, Frank and thank you, Lisa. I appreciate you taking our questions.

Your next question from the line of Steve Moss with Raymond James. Your line is now open. Please go ahead.

Good morning.

Maybe just following up here on the multifamily, just kind of curious how to think about the cadence of potential paydowns over the next four to five quarters.

And just curious like what percentage of those loans may be repriced over that time period as well?

Do you want to take the repricing?

So the repricing, I think we looked at -- we've got over the next five quarters, so let's say through the end of next year, we think there's $0.5 million in regulated multifamily that reprices.

I think $1 billion is the total CO.

But on the right, I think he's asking specifically rent-regulated.

It's about $500 million. We're comfortable with that. And as far as you can ask the second.

Yes, I mean, the normal amortization on the portfolio, the New York rent-regulated is, I would say, $5 million or $6 million a quarter.

We have seen some. Small payoffs. I'm anticipating more than not.

Many of the loans will either reprice or be looking for some -- the repricing in the documents is over market. So they may be looking for some level of a modification to make it a little bit more in line with what a current market rate might be.

It's declining, not as quickly as we would hope it, but the important thing is it's not increasing. We're not originating anything new in that space.

And then we continue to let paydowns happen, obviously, on monthly P&I payments. But anytime we see a relationship that's just transactional, we kind of encourage them to seek other funding when their maturity date comes up.

Correct.

Okay. So just kind of curious in terms of like potential modification, like would it be a new five-year loan at maybe 6%, kind of how you guys are thinking about it, or just as this half $500 million comes through in the next five quarters.

What does that kind of refi process look like? Are borrowers able to put up equity?

Yeah, it runs the gamut.

I wish that there was a menu of here's the two or three scenarios. Every single one is something different. Sometimes we look for a pay down. We have had clients who've actually posted collateral accounts with us. We've had clients who've given us guarantees. We have done something that's maturing, done a one-year IO to give them time to be able to refinance it or sort out how they want to move forward. We have reset the interest rate and reset the amortization for a two-year period, a three-year period, nothing more than a five-year period. But every single loan is looked at individually, discussed and negotiated.

The important thing is that we're agreeing to a modification, we're conceding. Something to the borrower, but we're getting something in return. And that's, we're open to discussion on what that something is in every case.

Okay, great. No, appreciate that color there. And then just in terms of the margin here, I guess a couple of things that I apologize, Frank, I had a hard time hearing you on your margin comments. But, just curious in terms of where were, new loan originations this quarter and just in terms of just thinking about. What percentage of the loans are variable rate as well?

So the origination question, I think we announced that the originations were at about a 6.4%, so mid-6s on the new loans.

The mix -- I mean, overall, the mix of the variable rate is about two-thirds fixed, one-third, 25% -- I'm sorry, 75% fixed, 25% variable is probably the answer to the question on the mix.

Okay, great. And then in terms of just the pipeline here, rates have moved up, just kind of curious like as we end the fourth quarter here, have origination yields stepped up from there or are they holding steady?

So the 10 years, Steve, is just bouncing around.

Right now, in every business, including real estate, which is recent, everything we're quoting is a spread to like the treasury. We don't want the rate until we get to a closing.

And those spreads are pretty much constant. It's 2 to 2.5, depending on the business.

So the spreads to.

The five-year or it's typically the five-year, three or five-year, somewhere in there, that has been very consistent, the spread.

Okay.

Appreciate that. And then in terms of just kind of thinking -- the other thing I was curious on here, in terms of loan growth, good loan growth overall, the consumer book definitely shot up this quarter. I'm just kind of curious on the drivers there.

Yes, some of it was growth in the residential loan origination.

I think we raised before that we have this professional line of credit that we are offering to attorneys and accountants, we've seen more volume there. We also have had a pool of loans that we.

Purchased from a third-party, we had been doing that. And so that was also a piece of it. And so those are the three drivers.

We also are seeing a lot more volume in the investment credit lines tied to the growth in John's business. We offer a product that's margin allows people to borrow against their margin collateral. And we are definitely seeing a lot more volume there, although I would say many of those lines remain unused.

Their liquidity lines, but there's a lot more volume.

And we've also closed out a couple of yacht loans as well.

Correct. I think that we probably in these results, there were probably three yacht loans that we closed.

Okay, great. Appreciate that. And maybe just in terms of expenses here, efficiency ratio has steadily improved. And Doug, I hear you on operational improvement.

Just kind of curious here, and I can definitely come first on from your net income caller, but how do you guys think about the cadence of expense growth into '27 and any investments you may have to make?

So we've really leaned into AI across the enterprise. I've got a meeting actually this afternoon. It's literally -- we've got AI champions in every area of the bank. We've actually stood up 100 agents across the institution.

They're right now in final testing, for example, loan closings, which was a very complicated sort of do. So I would say that the inclination is probably going to be more towards technology, the investment going into '27 than it will be on people. And the idea is to take a lot of what we do that's, I'll call it like an arts and crafts business, getting our processes very consistent, and then being able to scale.

Set ourselves up to scale going forward leveraging technology. So we also we've got ordinary raises, healthcare, we're expecting to have an increase. So Frank, I think it's probably mid to upper. Single-digit is probably where we'll land for next year on the operating expense line.

If you look at the last three quarters, we've held it flat, which we're very pleased with. There's a natural in Q1, there's kind of that natural merit increases and resets for leases and things like that that will step up. But we're targeting when we look at our multi-year projection for next year, mid to single-digit growth on the expense line.

The last couple of years, you've seen us hire 10s and the full-year run rate has carried into the following year, that will trickle off and we'll get back to kind of a normalized growth rate as we look into '27 and beyond.

Steve, let me just say the last commentary is that and I've said before, we're really focused on Q4 of '27 to get the returns. It won't be a destination return, but it will be.

It sort of gets us to the ZIP code that we want to be in based on the investments that we've made. So we're very focused on executing through the end of next year.

Your next question from the line of Manuel Navas with Piper Sandler. Your line is now open. Please go ahead.

Hey, good morning.

Quantify the pipeline a little bit more, just thoughts on how the fourth quarter looks versus the 200-200 targets because you've exceeded them so much here in the third quarter and how long can this kind of accelerated pace go into next year?

Our pipelines are very strong is the only way I'll describe it.

In terms of visibility on the 2.2, we have absolute visibility in the fourth quarter. And I would say that we have enough strength that we can actually see the first quarter of next year as well.

I appreciate that.

I was just going to add to that will it be as strong as Q3 was probably abnormally strong.

So we expect the overall growth to step back a little bit as we go into the coming quarter, probably closer to the 222 plan.

I would say us managing through the 2-2 in this quarter is that some stuff may fall into January that could, if we pulled it forward, could happen. So we're managing to a 2-2-2, but not because we're leaning in to get stuff closed. It's kind of trying to manage a pipeline into the next quarter.

So we feel very comfortable about this quarter and next quarter.

And as we think about getting closer to $200, $200, the NIM benefit should increase since you're getting an accretive margin on those new loans and deposits, so that could bode well into next year, correct?

Yes, the volume clearly, the volume. Plus the backbook repricing that we talked about earlier, those two things are really what's going to help us within the next year as we kind of face the pressure of the funding cost increasing.

So 2-2-2, it's $200 million loans, $200 million deposits and $2 million in pre-tax-provision.

That's what we're focused on.

On the backbook. Repricing. Am I missing -- can you just quantify that a bit more? I don't know if I misheard. I didn't hear a dollar amount outside of the New York City multifamily piece, but just overall BackBook repricing and kind of where is it -- what yield is it going from and what it could potentially reprice to?

Yeah, so I think the earlier question was just focused on the rent-regulated, so we kind of gave just an answer there. If we step back and look at the whole portfolio, over the next two years, about 20% of our book or about $1.4 billion in fixed-rate assets will reprice. The weighted average coupon on that is just it's around 390, and we think that we could pick up somewhere between 150 to 200 bps on a repricing over that time period.

That's powerful.

So the next few years -- I was getting back to the earlier discussion. I was going to say that would completely mitigate the pressure that we're feeling on the funding side.

Over the next few years, is that pretty steady or is it lumpier in any particular half of the year or anything like that?

I would say I think if we look at it quarterly, I think in the middle of next year, like Q2 and Q3, it's a little lumpy. Outside of that, I think it kind of smooths out. I.

Appreciate that.

Any impact of pricing so far from the September rate hike and just thoughts about future hikes and impact on your originations, loans and deposits?

Higher for longer is not good for us. That's the executive summary.

Folks, the longer we sit in the zip code, the more time people have to sort of talk about getting a higher rate. And so higher for longer is not good. Where it ultimately ends up, there was a flurry of folks that we had to reprice, Frank mentioned the work 10 basis points.

I think those conversations have quieted down a little bit.

So we're not seeing a lot of follow-on from there, but another rate increase in December, assuming we get through today.

I think we'll just add a little bit more pressure.

So two more rate increases, sort of hanging, having the 10-year hang at five over the next where Fed funds are right now, I would say.

Continue to bring pressure in.

Yeah, look, we've talked about before that we see ourselves as a kind of neutral position on the balance sheet, asset and liabilities neutral.

But the pressure always seems like it feels like it comes from the deposit side faster and more rapidly. A lot of the loans that reset and repriced that 25% that we mentioned earlier, it takes 30 days or the end of a period, it takes a little bit longer. So we're optimistic, but overall, Doug kind of gave you the guidance and we reiterated that.

Two to three basis points per quarter, an increase in margin is what we're expecting, and that's what we think will carry into next year.

Even with the uncertainty in the headwinds, we believe that we will get that.

I appreciate that. Could you give some color on recent initiatives in the fee side and how that could progress into next year?

Wealth management was a little bit flat this quarter, but it's definitely up year-over-year, just kind of recent initiatives and where the opportunities are and what could that produce in terms of growth next year.

So I'll say that in this quarter, if you look at our fee revenue, it was running at about overall at about $22 million a quarter. And this quarter, it dipped down to $20 million.

There were two things in there that we would call one-time events. There was a loss on the disposition of an ORE property that runs through that line. And then there was also a fair value, a negative fair value adjustment on a CRA equity security in there. So those two, that's about half of the decline. We see them as one-time and should not repeat going forward.

The other decline was attributable to the SBA. We used to capture gains on SBA sales and we've exited that business. So that's probably more of a longer-term decline. I don't know that we have any anticipation of stepping back into that or replacing it. But if you took $22 million a quarter down to $21 million a quarter, that's probably where I would say I'd be comfortable looking at it into the future.

I don't know, John, if there's any color on the fee revenue for wealth, which is a big component of that that you'd like to add?

No, look, I mean, the third quarter was interesting in the markets. While the S&P was up a couple of percent, the Russell 2000, which probably looks more like many of our portfolios, was down 7.5% in the quarter. So our flows were.

When you kind of mix it all up pretty flat, we had some inflows and outflows and trying to separate kind of the fee impact of those inflows and outflows, that was about flat as well.

But I'll tell you, we booked some good business in October, I'm really encouraged.

With our pipeline, I think we'll a good fourth quarter. And that also includes New York, where we continue to build momentum, working with the bankers there in New York, as well as with outside COIs and self-source new business. So I think we're on track. It was just one of those quarters.

I appreciate the color.

Thank you, guys. I'll step back into the queue.

Your next question from the line of David Conrad with KBW. Your line is now open. Please go ahead.

Yeah, good morning. Most of my questions have been asked and answered, so appreciate that. But one comment Doug made about 4Q27. I think, Frank, historically, you've talked about maybe. 90 BPS ROA approaching one is maybe a goal, but on a core basis, you're already around 86 BPS this quarter. So it feels like you're ahead of schedule. So maybe any updated thoughts about ROA at the end of next year?

I think what we've kind of got into 90 BPS now, maybe getting to 1% early next year.

Is what we're targeting. As we look to the fourth quarter of jumping a year ahead, we put it in our investor deck that our target is really closer to $125. We want to get to we're not just striving to get to $1, we want to get into the upper tier of returns.

So if you just continue to look at the string that we've been on for the last five or six quarters and just keep stacking those quarters together.

I would say that we're right around the pace that we expected and hopefully as we flip into '27, we get back above 1% on a quarterly run rate and then continue that upward trend through the end of next year.

Perfect.

Thank you.

The idea is to control expenses as tight as we can, continue to build revenue and there's the chart, I call it the smiley chart, but if you look at the annualized.

Core earnings of the company, which is about $130 million. The goal is to get that to about $180 million, and that will drive all the results that Frank just described. So we know exactly what number, where, and the timing of all of that. And the 222, if you model that with the margins that we discussed, you'll land right in that zip code.

Not a crystal ball or shape of the yield curve or asset quality headwinds. But if we continue on the track that we're on, we're pretty comfortable that we can get to that destination.

Yeah. It's a realistic plan, let's put that way.

Great. Appreciate it.

Thank you.

There are no further questions at this time. I will now turn the call back to Doug for closing remarks.

Well, thank you very much all and a special thanks to all of our employees who have really committed themselves to delivering outstanding performance on behalf of our shareholders. We've got a tremendous franchise that we've been able to build based on those people and we've got all the product and. As you can see, based on results, we're executing in a way that is exceeding what we thought we could reasonably achieve when we set out on this course a couple of years ago. Our wealth franchise continues to be rarefied air. There's a lot of institutions that would love to have what we have. It is anchoring a private banking sort of business model and we are truly delivering a differentiated service model to the Greater New York area and have a very viable plan as we just discussed that we're executing on that we think is going to give great returns over time for our shareholders. So with that, again, thanks for dialing in, listening and thanks for your commitment and patience and we'll continue to deliver results as we move forward and executing our strategy. Thanks all, be well and great seeing you again.

This concludes today's call. Thank you for attending. You may now disconnect.