ピーパック・グラッドストーン・フィナンシャル（PGC）2026年第3四半期決算説明会：EPS、貸出成長、NIMの見通し

ピーパック・プライベートとして事業を展開するピーパック・グラッドストーン・フィナンシャル・コーポレーション（NASDAQ: PGC）は、2026年度第3四半期に引き続き収益およびバランスシートの拡大を報告しました。増収率が費用増加率を上回ったほか、純利ざや（NIM）、与信指標、業務効率も前四半期比で改善しました。

主なポイント

• 普通株主に帰属する純利益は前四半期比17%増の1,850万ドルとなりました。希薄化後1株当たり利益（EPS）は15%増の0.99ドルとなりました。
• 総売上高は前四半期比2%増、前年同期比24%増の8,800万ドルに達しました。コア引当前業務純益は前年同期比76%増の3,230万ドルに増加しました。
• 純利ざや（NIM）は前四半期比2ベーシスポイント上昇の3.34%となりました。経営陣は、資金調達コストの圧力はあるものの、2027年にかけて毎四半期さらに2〜3ベーシスポイントの改善を見込んでいます。
• 当四半期中の貸出金は4億300万ドル増の71億ドル、預金は3億100万ドル増の74億ドルとなりました。両指標とも同社の四半期成長目標を上回りました。
• 営業費用が前四半期比1%減少したことで、効率性比率（OHR）は63%に改善し、2024年第3四半期を約16ポイント下回りました。
• 信用力は前四半期比で改善しました。不良資産は20%減の5,800万ドルに減少し、純貸倒損失（ネットチャージオフ）は470万ドルに減少しました。

主要財務データ

実効税率は前四半期の28.4%に対し20.5%となりました。第3四半期には生産税額控除による約180万ドルの一時的な利益が含まれており、経営陣は第4四半期にこれが再現することはないとみています。

事業・営業パフォーマンス

商工業向け貸出（C&Iローン）は前年同期比で4億900万ドル（15%）増加しました。当四半期に新規実行された貸出の利回りは約6.4%、新規預金の金利は2%台半ばとなりました。貸出ポートフォリオの比率は、固定金利が約75%、変動金利が約25%でした。

無利息当座預金は前年同期比18%増の約16億ドルに達しました。同行は過去5四半期にわたり、1四半期あたり平均600口座を超える無利息事業用口座を新規開設しています。

ウェルスマネジメント事業の収益は前年同期比9%増の1,730万ドルとなりました。預かり・運用資産残高（AUM/AUA）は第2四半期をわずかに下回る136億ドルで四半期を終えました。市場の動きや顧客資金の流出入により第3四半期の資産残高はほぼ横ばいとなったものの、経営陣は10月のビジネス状況および第4四半期のパイプラインは好調であると述べました。

ニューヨークの家賃規制対象集合住宅向け融資ポートフォリオは7億7,500万ドルに減少し、全貸出残高に占める割合は2年前の18%から11%に低下しました。同社はこのセグメントでの新規融資を行っておらず、定例の元本返済や取引関係に伴う自然減少（ランオフ）を継続させています。

不良資産は前四半期比1,400万ドル減の5,800万ドルとなり、総資産の0.68%に相当します。30〜89日滞納貸出金は18%減の3,900万ドルとなり、総貸出残高の0.56%を占めています。不良債権に対する貸倒引当金カバー率は126%に改善しました。

バランスシートの成長を支援するため、同社は7月に残り2,000万ドルの転換優先株を発行しました。また、普通株式資本の補完的な調達源として、第4四半期に任意参加の配当再投資プログラムを開始しました。

業績見通し（ガイダンス）

経営陣は四半期ごとの「2-2-2」運用目標（貸出金増加2億ドル、預金増加2億ドル、コア引当前業務純益の追加増加200万ドル）を再確認しました。第3四半期の成長ペースは異例なほど好調だったと説明されたものの、同社は2026年第4四半期および2027年第1四半期に向けてこれらの目標達成に高い確信を持っていると述べました。

経営陣は、純利ざやが2027年にかけて毎四半期約2〜3ベーシスポイント改善すると予想しています。支えとなる要因には、新規案件の取り扱い規模に加え、今後2年間で約14億ドルの固定金利資産が改定（リプライシング）されることが含まれます。これらの資産の加重平均表面利率は約3.90%であり、経営陣は150〜200ベーシスポイントのリプライシング効果を見込んでいます。

2027年に向けて、経営陣は営業費用の伸びを1桁台半ばに抑える目標を掲げています。計画されている投資は、人員増員よりもテクノロジーや人工知能（AI）に重点を置く予定です。同社は、組織全体で約100のAIエージェントが最終テスト段階にあると説明しました。

CFOは、第3四半期の一時的項目やSBA（米中小企業庁）保証ローン売却事業からの撤退による長期的影響を除外すると、四半期あたりの非利息収入は約2,100万ドルが妥当な基準点になると示唆しました。

経営陣は、2027年初頭に総資産利益率（ROA）を四半期年率換算で1%超に伸ばすことを目標としています。中長期的な目標としては、2027年第4四半期までの達成に向けて、ROA少なくとも1.25%、自己資本利益率（ROE）14%を維持しています。同社はまた、年換算コア利益を現在の約1億3,000万ドルから約1億8,000万ドルへ拡大することを目指しています。

リスクおよび注視点

預金コストは、他社競合、米連邦準備理事会（FRB）による利上げ、連邦住宅ローン銀行（FHLB）借入の活用拡大により、引き続き圧力を受けています。有利息負債コストは前四半期比で10ベーシスポイント上昇しました。経営陣は全体的な預金ベータ50%〜60%を管理可能な範囲とみなしているものの、追加利上げがさらなる圧力となり得ることを認めました。

収益の改善にもかかわらず、急激な貸出増加により一部の自己資本バッファーが縮小しました。経営陣は、顧客取引関係の成長と資本規律のバランスを取っており、収益性の向上に伴い将来の必要資本のより大きな部分を利益剰余金でまかなえると予想していると述べました。

家賃規制対象集合住宅ポートフォリオにおける最新の鑑別（査定）結果では、担保評価にばらつきが見られます。一部の物件では評価額が軟化している一方、安定または改善している物件もあります。経営陣は構造的な悪化とはみていないものの、個別の案件で引当金の計上、減損処理、または条件変更の交渉が必要になると予想しています。

アナリスト質疑応答の要点

• 集合住宅向け融資のリプライシング：今後5四半期で、家賃規制対象集合住宅向け融資のうち約5億ドルの金利改定が見込まれています。通常のポートフォリオ元本返済額は四半期あたり約500万〜600万ドルです。
• 貸出条件の変更：潜在的な債務再編は個別ごとに評価されます。同行は条件緩和と引き換えに、元本の一部返済、追加担保、保証、返済スケジュールの見直し、あるいは短期間の延長を求める場合があります。
• 資金調達と純利ざや：一般に預金の金利改定は資産の金利改定よりも速く進行するものの、経営陣は既存債権（バックブック）のリプライシングと貸出伸長によって預金コスト上昇の圧力の大部分を相殺できると見込んでいます。
• 貸出パイプライン：同社はパイプラインが堅調であり、2026年第4四半期および2027年第1四半期の双方で高い透明性を確保していると述べました。成長は、異例に強含んだ第3四半期を経て、四半期ごとの「2-2-2」フレームワークにより近づく見込みです。
• 個人向け融資：成長には住宅ローンの新規実行、専門職向け信用枠、買い取りローン、投資担保付き信用枠、および数件のヨットローンが反映されました。
• 費用の見通し：3四半期にわたり費用がほぼ横ばいで推移した後、経営陣は人件費、医療保険、賃貸借契約の通常の改定により一時的な増加が生じ、その後はより正常化された成長率に戻ると見込んでいます。

決算説明会（トランスクリプト）全文

決算説明会の完全なトランスクリプト

経営陣による説明

Operator

Welcome to the Peapack-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.

Matthew Remo

Thank you and good morning, everyone. I'm joined today by our President and CEO, Doug Kennedy; and our CFO, Frank Cavallaro, who will provide an overview of our third quarter results. John Babcock, our President of Wealth Management; and Lisa Chalkan, our Chief Credit Officer, are also here if there are 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 peapackprivate.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 in the appendices to each document.

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

Douglas Kennedy

Thanks, Matt. Good morning, everybody, and thank you for joining us on our third quarter call. On behalf of the entire team at Peapack 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 as a result of a strategy that we've been executing on 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 pretax pre-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 6 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 experienced New York City team. By April 2024, we had 13 teams in the leadership in place. In January 2025, we rebranded to Peapack 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 pretax pre-provision revenue reached $129 million, which was approximately 2.7x 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 do we see this quarter? Our net interest margin continued to improve despite funding cost pressure 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 following. During the quarter, loans grew $403 million. Deposits grew $301 million. Now as we've said before, growth is never going to be 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 began Q4 with a strong loan and deposit pipeline. And the quality of that growth has been meaningful. We continue to see growth in noninterest-bearing operating relationships, which have increased 18% year-over-year. On the loan side, commercial and 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 the large 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 and 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 nonperforming assets and early-stage delinquencies declining. As a result, our allowance coverage for nonperforming loans improved to 126% in the quarter.

Our new rent-regulated multifamily portfolio is down 12% year-over-year and now represents 11% and 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 remained 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 corner stop 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 professionals to build. Wealth Management, as you would expect, Anchor is the entire strategy, customized banking spoke 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 and fiduciary advice, private 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.

Frank Cavallaro

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, 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. Noninterest 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 moderate. 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 onetime 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 to $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 5 quarters, we have opened an average of more than 600 noninterest-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. Noninterest-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. Nonperforming 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 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% 2 years ago. The reduction of flexible 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 proactive to support attractive relationship growth while observing 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 interest of existing shareholders. We entered 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.

Operator

[Operator Instructions] Our first question from Christopher Marinac with Brean Capital, LLC.

質疑応答

Christopher Marinac

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 in the last few quarters?

Douglas Kennedy

Chris, this is Doug. I would say, listen, we absolutely have seen a little bit of pressure. We've been sort of trying to gate at sort of that $200 million, $200 million range. And if you look at sort of the $200 million that we gotten core during the quarter. The pricing and the spread between that and what we're lending out at was north of that 4% target that we set for each other. So I think that the pricing will it's been more competitive, I think it's not -- certainly, it's not gotten out of hand. Maybe Frank...

Frank Cavallaro

Yes, 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 it's -- 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.

Douglas Kennedy

In terms of NIM, we invest in Q1, we've guided 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 2 to 3 basis point improvement in NIM in each of the quarters going into '27.

Christopher Marinac

Great. And then just a follow-up for -- 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?

Douglas Kennedy

Lisa Chalkan is here, so we'll have Lisa respond to that.

Lisa Chalkan

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

Christopher Marinac

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

Lisa Chalkan

Yes. As we're getting updated appraisals, and again, we only have to get an updated appraisal if something is nonperforming and the first time ago substandard we do. And then if it's nonperforming, 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.

Frank Cavallaro

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 and -- 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.

Operator

Your next question from the line of Steve Moss with Raymond James.

Stephen Moss

Maybe just following up here on the multifamily. Just kind of curious how to think about the cadence of potential paydowns over the next 4 to 5 quarters. I'm just curious like what percentage of those loans may be repriced over that time period as well.

Lisa Chalkan

Do you want to take the repricing?

Frank Cavallaro

Yes. So the repricing, I think we looked at -- we've got over the next 5 quarters, so let's say, through the end of next year, we think there's $0.5 million in rent-regulated multifamily that reprices. I think the $1 billion is the -- yes. But on the -- I think he's asking specifically rent regulated. Yes. So $500 million we're comfortable with that. And as far as -- you can answer the second...

Lisa Chalkan

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 that repricing in the document is over market. so they may be looking for some level of modification to make it a little bit more in line with what a current market rate might be.

Frank Cavallaro

Yes. It's declining. Not as quickly as we would hope it. But the important thing is it's not increasing. We're doing -- we're not originating anything new in that space. And then we continue to let pay downs 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?

Stephen Moss

Okay. So just kind of curious in terms of like the potential modification like would it be a new 5-year loan at maybe 6% kind of you're got to be thinking about it? Or just as a $500 million comes through in the next 5 quarters, what does that kind of refi process like our borrowers able to put up equity?

Lisa Chalkan

Yes. It runs a gamut. I wish there was -- I wish there was a menu of here's the 2 or 3 scenarios. Every single one is something different. Sometimes, we look for a pay down. We have had clients who have actually posted collateral accounts with us. We've had clients who have given us guarantees. We have done something that's maturing on a 1-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 2-year period, a 3-year period, nothing more than a 5-year period. But it really -- every single loan is looked at individually discussed and negotiated.

Frank Cavallaro

But the important thing is, 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.

Stephen Moss

Okay. Great. Now I appreciate that color there. And then just in terms of the margin here, I guess a couple of things, and 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 loans are variable rate as well?

Frank Cavallaro

So the origination question I think we announced that the originations were at about 6.4%. So mid-6s on the new loans. The mix I mean overall, the mix of the variable rate is about 2/3 fixed, 1/3 -- 25% -- I'm sorry, 75% fixed, 25% variable is probably the answer to the question on the mix.

Stephen Moss

Okay. Great. And then in terms of just the pipeline here, rates have moved up. Just kind of curious like have -- as we head to the fourth quarter, you have origination yield stepped up from there? Or are they holding steady?

Douglas Kennedy

So the tenure as you know, Steve, is just bouncing around. So right now, in every business, including real estate, which is recent, everything we're quoting is a spread to like [indiscernible]. We don't like the right until we get to a closing. And those spreads are pretty much constant. It's 2% to 2.5%, depending on the bat business. So the spreads to the 5-year or it's typically the 5-year -- 3 or 5 years, somewhere in there. That has been very consistent with the spread.

Stephen Moss

Okay. I 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.

Lisa Chalkan

Yes. Some of it was growth in the residential loan origination. We -- I think we've raised before that we have this professional line of credit that we are offering to count 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 all the case of it. And so those are the 3 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 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.

Douglas Kennedy

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

Lisa Chalkan

Correct. I think that we -- probably in these results, there were probably 3 yacht loans that we closed.

Stephen Moss

Okay. Great. Appreciate that. 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 definitely can first one from your net income color. But how you guys are thinking about the cadence of expense growth into '27 and any investments you may have to make?

Douglas Kennedy

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 that it will be 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 and set ourselves up to scale going forward, leveraging technology. So -- we also -- we've got ordinary raises, health care, we're expecting to have an increase. So Frank, I think it's coming mid to upper single digit is probably where we'll land for next year.

Frank Cavallaro

Yes. I mean...

Douglas Kennedy

The operating expense line.

Frank Cavallaro

If you look at the last 3 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 multiyear projection for next year, mid- to single-digit growth on the expense line. The last couple of years, you've seen us higher teens and the full year run rate is 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.

Douglas Kennedy

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 dip 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.

Operator

Your next question from the line of Manuel Navas with Piper Sandler.

Manuel Navas

Could you quantify the pipeline a little bit more. Just thoughts on how the fourth quarter looks versus the 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?

Douglas Kennedy

Our pipelines are very strong. The only way I'll describe it. In terms of visibility on the 2-2-2, we have absolute visibility in the fourth quarter. And I would say that we have enough strength that we could actually see the first quarter of next year as well.

Frank Cavallaro

I was just going to add to that, that will it be as strong as Q3 and Q3 was probably abnormally strong. So we expect the overall growth to some a little bit as we go into the coming quarters, probably closer to the 2-2-2 plan.

Douglas Kennedy

I would say us managing to the 2-2-2 in this quarter. noise 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 too.

Manuel Navas

And as we think about getting closer to $200 million, $200 million, 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?

Frank Cavallaro

Yes. The volume, clearly, the volume plus the back book repricing that we talked about earlier, those 2 things are really were going to help us with the NIM the next year as we kind of face the pressure of the funding cost increasing.

Douglas Kennedy

So 2-2-2, it's $200 million loans, $200 million deposits and $2 million in pretax pre-provision. That's what we're focused on.

Manuel Navas

On the back book repricing, am I missing -- can you just quantify that a bit more. I don't know if I misheard, I enter a dollar amount outside of the New York City multifamily piece. But just overall back book repricing and kind of where -- what yield is it going from and what it could potentially reprice to?

Frank Cavallaro

Yes. So I think the earlier question was just focused on the rent regulated. So we kind of give just an answer there. If we step back and look at the whole portfolio, over the next 2 years, about 20% of our book are about $1.4 billion in fixed rate assets will reprice the weighted average coupon on that is just -- it's around [ 3 90 ], and we think that we could pick up somewhere between 150 to 200 bps on a repricing over that time period.

Douglas Kennedy

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.

Manuel Navas

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

Frank Cavallaro

I would say, I think 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.

Manuel Navas

Okay. Any impact to pricing so far from the September rate hike and just thoughts about future hikes and impact on under originations, lows and deposits?

Douglas Kennedy

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 that we're up 10 basis points. I think those conversations have winded down a little bit. So we're not seeing a lot of follow-on from there. But another rate increase in December. Something we get through today. I think we'll just -- it will add a little bit more pressure. So 2 more rate increases sort of hanging -- having the 10-year hang at 5 over the next -- where Fed funds are right now, I would say we'll continue to bring pressure.

Frank Cavallaro

Yes. Look, we've talked about before that our -- 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 reprice 25% that we mentioned earlier, it takes 30 days or the end of a period to a little bit longer. So we're optimistic. But overall, don't kind of give you the guidance and we reiterated that 2 to 3 basis points per quarter, an increase in margin is what we're expecting, and that's what we think will carry into next year.

Douglas Kennedy

Even with the uncertainty is, we believe that we will get that.

Manuel Navas

Yes. I appreciate that. Could you give some color on recent initiatives on 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 a recent initiative and where the opportunities are and what could that produce in terms of growth next year?

Frank Cavallaro

0 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 2 things in there that we would call onetime 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 2, that's about half of the decline. We see them as onetime 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 was -- 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?

Douglas Kennedy

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. So -- but I'll tell you, we booked some good business in October. I'm really encouraged with our pipeline. I think we'll have 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 to business. So I think we're on track. It was just one of those quarters.

Operator

Your next question from the line of David Konrad with KBW.

David Konrad

Most of my questions have been asked and answered, so I appreciate that. But one comment, Doug made about 4Q '27. I think Frank, historically, you've talked about maybe 90 bps ROA of protein 1 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 on ROA at the end of next year.

Frank Cavallaro

I think what we've kind of guided to 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 million. We want to get to -- we're not just striving to get to 1%. We want to get into the upper kind of in the upper tier of returns. So -- so if you just continue to look at the string that we've been on for the last 5 or 6 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 we get back above 1% of a quarterly run rate and then continue that upward trend through the end of next year.

Douglas Kennedy

The idea is to control expenses as tight as we can, continue to build revenue. And here's the chart, I call it the smile 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 were and the timing of all of that. And the 2-2-2, if you model that with the margins that we discussed, you you'll land right in that ZIP code.

Frank Cavallaro

Not a crystal ball, change 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.

Douglas Kennedy

Yes. So it's a realistic plan, let's put it that way.

Operator

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

Douglas Kennedy

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 in executing our strategy. Thanks all, be well, and great to see you again.

Operator

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