PGC Q3 2026 earnings call transcript, October 28, 2026

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. We'll provide an overview of our third quarter results. 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 ppacprivate.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 be 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. 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 poor pre-tax, pre-provisioned revenue to $32.3 million, up 76% year-over-year, and net income available to common shareholders to $18.5 million. Deluded 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 and the leadership in place. in January 25th, 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 pre-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 do 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. Revenants are up, our expenses are down, and improved earnings are falling. 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 of 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. 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's going to cover capital position in the current offering under our voluntary dividend.

investment 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% 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 scale 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, 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 the integrated client relationship, wealth and 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 for moving forward, achieving both best smarts 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 two 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. 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...

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 a 24% year over year increase in revenue, this is producing strong positive operating leverage and contributing to earnings growth. 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 and a half percent. 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 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 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 the 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 credit, non-performing assets. $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 a trillion equitable 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 the decline to $775 million as

September 30th. 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 the 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. We will now begin the question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. If you are muted, please remember to unmute your device. Please stand by while we compile the Q&A roster.

Our first question from Christopher Maranak 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... 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. You know, we've been sort of trying to gate at, you know, sort of the 200, 200 range. And if you look at sort of the 200 that we got in core during the quarter, the pricing... 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, you know, the pricing, while it's been more competitive, you know, I think it's not, it certainly has not gotten out of hand. You know, maybe, Frank? Yeah, I was just looking at the quarter to quarter, the interest-bearing liabilities went up 10 basis points. So, you know, we expected that because of the 25 basis point move by Fed during the quarter. In addition, we were borrowing a little bit of money from the Federal and Loan Bank. So, you know, 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, you know, if we've managed the overall beta to 50 to 60 percent, we think that's a comfortable level for us to manage the overall interest rate risk. In terms of NIM, you know, we've been at the Q1, we've got sort of... six to nine 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, you know, we can still, you know, sort of get a two to three basis point improvement in NIM in each of the quarters going into 27. Great. Thank you for that. And then just to follow up for on the credit side, did you see any further shift on multi?

family values for you, in terms of how you've calibrated it at this point? Lisa Tralkins here, so have Lisa respond to that. Values on the underlying collateral or a value of the actual loans in a trade? Well, it's actually just the collateral. And, you know, would you have to make additional reserve additions and or write downs from here? Yeah, you know, as we're getting updated appraisals, and again, we only have to get an updated appraisal if something is non-performing in substance. The first time it goes substandard, we do. And then if it's not 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 off? Absolutely. But it does seem to be that we're seeing it across the board or systemically. Additional provisioning to your question, you know, 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, you know, 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. Thank you, Lisa. 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, you know, just kind of curious how to think about the cadence of potential paydowns over the next, you know, four to five quarters and just curious, like, you know, what percentage of those loans maybe reprice 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 a half a million dollars in rent-regulated multifamily that reprices. I think a billion is the total. Yeah, but on the rent, I think he's asking specifically rent-regulated.

It's about 500 million. Yeah, so 500 million. We're comfortable with that. And as far as, you know, you can answer the second amortization. Yeah, I mean, the normal amortization on the portfolio of the New York rent-regulated is, you know, I would say five or six million dollars a quarter. We have seen some small payoffs. I'm anticipating more than not. You know, many of the loans will either reprice or be looking for some that were 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 not as quickly as you know, 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 you know, pay down to happen, you know, obviously on monthly P&I payments. But anytime we see a relationship that's just transactional, you know, we kind of encourage them to seek other funding when their maturity date comes up.

Okay. So just kind of curious in terms of like potential modification, like, would it be a new five-year loan at maybe 6% is kind of how you guys are thinking about it? Or just as this half, you know, $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, you know, here's the two or three scenarios. Every single one is something different. Sometimes, you know, 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, you know, 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 it really every single loan is 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, you know, 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. things that I apologize, Frank, I had a hard time hearing you on your margin comments. But, you know, just curious in terms of where were, you know, new loan originations this quarter? And just in terms of just thinking about, you know, what percentage of 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 sixes 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, on the mix. Okay, great. And then in terms of just the pipeline here, you know, rates have moved up. Just kind of curious, like, you know, have, as we handle fourth quarter here, have origination yields stepped up from there or are they holding? Steady. So the 10 years, 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 we don't like the rate until we get to a closing. And those spreads are pretty much constant. It's two to two.

So the spreads to, you know, the five-year or, you know, 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, you know, in terms of loan growth, you know, good loan growth overall, the Consumer Book definitely shot up this quarter. I'm just kind of curious on the drivers there. Yeah, some of it was growth in the residential loan origination. I think we've 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. Yeah. And so those are the... 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. They're 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, you know, in terms of expenses here, you know, efficiency ratio is steadily improved. And, you know, Doug, I hear you on operational improvement. Just kind of curious here, and I definitely can infer some 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 the inclination is probably going to be more towards technology, the investment. Going into 27, that 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 and set ourselves up to scale, you know, going forward, leveraging technology. So we also, you know, we've got, you know, ordinary raises, healthcare, we're expecting to have an increase. So Frank, I... I think it's, you know, probably, probably mid to upper single digit is probably where we'll land for next year. Yeah, I mean, look, 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, you know, leases and things like that, that'll step up. But we're targeting, when we look at our multi-year projection for next year, you know, mid to single digit growth on the expense line, you know, the last couple of years, you've seen as higher teams and the full year run rate is carried in 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.

Okay, great. I appreciate all the call here. I'll step back. 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, you know, the returns. It won't be a destination return, but it'll 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. Can you quantify the pipeline a little bit more? Just thoughts on how the fourth quarter looks versus the 200, 200. 100 targets because you exceeded them so much here in the third quarter. And how long can this kind of accelerated pace go into next year?

Pipelines are very strong. That's 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 can actually see the first quarter of next year as well. That's all.

I appreciate that. I was just going to add to that that, you know, will it be as strong as Q3? Q3 was probably abnormally strong. So we expect the overall growth to step back a little bit as we go into the coming quarters, probably closer to the 2-2-2 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 benefits should increase since you're getting an increase. of margin on those new loans and deposits. So that could bode well into next year, correct? Yeah, the volume clearly, the volume plus the back book repricing that we talked about earlier, those two things are really what's going to help us within the next year as we, you know, kind of face the pressure of the funding cost increasing. So 222, it's 200 million loans, 200 million deposits. and $2 million in pre-tax pre-provision. That's what we're focused on. On the back book 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 back book repricing and kind of where is it, what yield is it going from, what it could. 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 a billion four in fixed rate assets will reprice. The weighted average coupon on that is just that it's around 390, and we think that we could pick up somewhere between 150 to 200 bps on a region. pricing over that time period. That's powerful. Getting back to the early discussion, I was going to say that 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 a 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 Q2.

Q3, it's a little lumpy. Outside of that, I think it kind of, 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? Lows and deposits? Higher for longer is not good for us. That's the executive summary. You know, folks, the longer we sit in the zip code, the more time people have to sort of talk about, you know, getting a higher rate. And so higher for longer is not good. Where it ultimately ends up, you know, 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 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 having the 10-year hang at five over the next, you know, where Fed funds are right now, I would say we'll continue to bring pressure. Yeah, look, we've talked about before that we see ourselves as a, you know, kind of neutral position on the balance sheet, you know, 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, you know, it takes 30 days or the end of a period takes a little bit longer. So, you know, we're optimistic, but overall, the kind of gave you the guidance that we reiterated that, you know, two to three basis points per

quarter and increase in margin is what we're expecting. And that's what we think we'll carry into next year. Yeah, even with the uncertainty in the headwinds, we believe that we will get that. Yeah, 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 We'll be there for you to get to get to know. Just look over there. I think we're going to do it. I've got a model of 2,000. I think we're going to do it right now. But we have a couple more players of our players, you know, and I think it's kind of a practical 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 dollars 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. And then there was also a fair value, a negative fair value adjustment on 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

if 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... 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've booked some good business in October. We encouraged with our, 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, you know, outside COIs and self-sourced new business. So I think we're on track. It was just one of those, 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, you know, asked and answered, so I appreciate that. But, you know, one comment Doug made about 4Q27. I think, Frank, historically, you've talked about maybe 90 bits ROA approaching one is maybe a goal. But, you know, on a core basis, you know, you're already around 86 bits this quarter. So it feels like you're ahead of schedule. So maybe any updated thoughts about ROA, you know, at the end of next year? I think what we've kind of got to, you know, 90 bits 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 really, you know, closer to 125. We want to get to, we're not just striving to get to one. We want to get into the, you know, into the upper kind of, in the upper tier of returns. So if you just continue to, you know, 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.

The idea is the control expenses as tight as we can. Continue to build revenue. And 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'll drive all the results that Frank just described. You 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 come, you'll land right in that zip code. Without a crystal ball or shape of the U curve or, you know, asset quality headwinds, you know, 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, it's a realistic.

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, you know, 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, you know, on 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, you know, rare 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 seeing you again.

This concludes today's call. Thank you. For attending, you may now disconnect.