Metropolitan Bank Holding Corp. Reports Second Quarter 2023 Results

Balance Sheet Strength and Stability Continue to Stand Out

Strength and Stability

  • Total deposit verticals at June 30, 2023 were $5.2 billion, excluding crypto-related corporate and reserve deposits of $58.1 million, an increase of $377.2 million, or 7.8%, from March 31, 2023.
  • Insured deposits accounted for approximately 73% of total deposits at June 30, 2023, up from 60% at December 31, 2022.
  • Liquidity remains strong. At June 30, 2023, cash on deposit with the Federal Reserve Bank of New York and available secured funding capacity totaled $3.6 billion, which was 259% of uninsured deposit balances and 69% of total deposits.
  • Asset quality remains strong. At June 30, 2023, the commercial real estate (“CRE”) portfolio, which includes owner-occupied CRE, is broadly diversified by geography and property type, with Manhattan office exposures comprising only 2.6% of the total loan portfolio, with a 52% average loan-to-value ratio significantly mitigating credit risk.
  • Strong prudent loan growth for the second quarter of 2023, with net loan growth of $297.9 million, or 6.1%.
  • The Company and Bank are “well capitalized” across all measures of regulatory capital, with total risk-based capital ratios of 13.2% and 12.9%, respectively, at June 30, 2023, well above regulatory minimums.

Year-Over-Year Financial Highlights for the Six Months Ended June 30, 2023

  • Revenues1 of $127.1 million, an increase of 9.2%.
  • Net interest income of $112.3 million, an increase of 10.2%.
  • Net interest margin of 3.65%, an increase of 65 basis points, with an average loan yield of 6.45% and total cost of funds of 2.18%.
  • Loans totaled $5.1 billion at June 30, 2023, an increase of 17.7% from June 30, 2022.
  • Return on average equity of 13.6% and return on average tangible common equity2 of 13.8%.

1 Total revenues equal net interest income plus non-interest income.
2 Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures on page 13.

NEW YORK--()--Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), reported net income of $15.6 million, or $1.37 per diluted common share, for the second quarter of 2023 compared to net income of $23.2 million, or $2.07 per diluted common share, for the second quarter of 2022.

Results for the second quarter of 2023 include:

  • Non-interest bearing crypto-related deposits were replaced with borrowings due to the final exit from the digital currency business as projected.
  • A provision for credit losses of $4.3 million, primarily related to loan growth late in the second quarter of 2023.
  • Elevated professional fees.
  • Elevated tax expenses due to a discrete tax item related to the rescission of stock awards in the second quarter of 2023.

Mark DeFazio, President and Chief Executive Officer, commented,

“I am pleased with how MCB navigated a turbulent quarter for the banking industry. The strength and stability of our balance sheet, not to mention the sustainability of our business model, are very apparent in the second quarter's successful deposit and loan growth. I am confident that the funding strategies we have laid out will further differentiate MCB.

“We are fortunate to have a team so dedicated to ensuring the success of our clients. That is a key ingredient to MCB's performance in times of market stress.”

Balance Sheet

Total cash and cash equivalents were $201.8 million at June 30, 2023, a decrease of $97.7 million, or 32.6%, from March 31, 2023 and a decrease of $1.1 billion from June 30, 2022. The decrease from March 31, 2023, primarily reflected the $297.9 million net deployment into loans offset by the $156.8 million increase in deposits. The decrease from June 30, 2022, reflected the $774.4 million net deployment into loans and the $889.8 million outflow of deposits primarily due to the decrease in crypto-related deposits.

Total loans, net of deferred fees and unamortized costs, were $5.1 billion, an increase of $297.9 million, or 6.1%, from March 31, 2023, and an increase of $774.4 million, or 17.7%, from June 30, 2022. Loan production was $425.4 million for the second quarter of 2023 compared to $265.4 million for the prior linked quarter and $512.8 million for the prior year period. The increase in total loans from March 31, 2023, was due primarily to an increase of $267.3 million in CRE (including owner-occupied). The increase in total loans from June 30, 2022, was due primarily to an increase of $624.6 million in CRE loans (including owner-occupied) and $174.0 million in commercial and industrial loans, partially offset by a $54.3 million decrease in construction loans.

Total deposits were $5.3 billion at June 30, 2023, an increase of $156.8 million, or 3.1% from March 31, 2023, and a decrease of $889.8 million or 14.4% from June 30, 2022. The increase from March 31, 2023, was due primarily to an aggregate net increase of $377.2 million in non-crypto-related deposit verticals, partially offset by a decrease of $220.4 million in crypto-related deposits. The decrease in crypto-related deposits reflects the Company’s final exit from the crypto-related vertical. The decrease in deposits from June 30, 2022, was primarily due to a decrease of $1.2 billion in crypto-related deposits, partially offset by an aggregate net increase of $300.2 million in non-crypto-related deposits. Non-interest-bearing demand deposits declined to 32.7% of total deposits at June 30, 2023, compared to 41.4% at March 31, 2023 and 56.2% at June 30, 2022, primarily reflecting the outflow of crypto-related deposits.

Accumulated other comprehensive loss, net of tax, was $50.9 million, an increase of $0.8 million, from March 31, 2023, and $16.2 million from June 30, 2022. The increase from March 31, 2023 was due to an increase in unrealized losses on available-for-sale securities due to the prevailing interest rate environment, partially offset by an unrealized gain on an outstanding cash flow hedge. The increase from June 30, 2022 was due primarily to unrealized losses on available-for-sale securities due to the prevailing interest rate environment, partially offset by the increases in unrealized gains on cash flow hedges prior to their termination in the third quarter of 2022.

At June 30, 2023, the Company had $3.5 billion available secured wholesale funding capacity. The Company and the Bank each met all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. Total non-owner-occupied commercial real estate loans were 363.2% of total risk-based capital at June 30, 2023, compared to 357.8% and 343.4% at March 31, 2023 and June 30, 2022, respectively.

Income Statement

Financial Highlights

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

Six months ended

 

 

Jun. 30,

 

Mar. 31,

 

Jun. 30,

 

 

Jun. 30,

 

Jun. 30,

 

(dollars in thousands, except per share data)

 

2023

 

2023(1)

 

2022

 

 

2023(1)

 

2022

 

Total revenues(2)

 

$

61,606

 

$

65,508

 

$

62,300

 

 

$

127,114

 

$

116,359

 

Net income (loss)

 

 

15,561

 

 

25,076

 

 

23,189

 

 

 

40,637

 

 

42,210

 

Diluted earnings (loss) per common share

 

 

1.37

 

 

2.25

 

 

2.07

 

 

 

3.59

 

 

3.76

 

Return on average assets(3)

 

 

0.98

%

 

1.64

%

 

1.38

%

 

 

1.30

%

 

1.25

%

Return on average equity(3)

 

 

10.1

%

 

17.2

%

 

16.4

%

 

 

13.6

%

 

15.1

%

Return on average tangible common equity(3), (4)

 

 

10.3

%

 

17.4

%

 

16.7

%

 

 

13.8

%

 

15.5

%

(1) Includes a $2.5 million reversal of the regulatory settlement reserve recorded in the fourth quarter of 2022.
(2) Total revenues equal net interest income plus non-interest income.
(3) Ratios are annualized.
(4) Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures on page 13.

Net Interest Income

Net interest income for the second quarter of 2023 was $53.8 million, a decrease of $4.8 million from the prior linked quarter and a decrease of $1.6 million from the prior year period. The decrease from the prior linked quarter was primarily due to prevailing interest rates and higher borrowing balances related to the final exit from the crypto-related deposit vertical, which were partially offset by loan growth that occurred late in the second quarter of 2023. The decrease from the prior year period was primarily due to the 227 basis point increase in total cost of funds, partially offset by loan growth that occurred late in the second quarter of 2023.

Net Interest Margin

Net interest margin for the second quarter of 2023 was 3.44% compared to 3.86% and 3.27% for the prior linked quarter and prior year period, respectively. The 42 basis point decrease from the prior linked quarter was due primarily to higher borrowing balances related to the final exit from the crypto-related deposit vertical (approximately 21 basis points) and to prevailing interest rates, which were partially offset by loan growth that occurred late in the second quarter of 2023. The 17 basis point increase for the prior year period was driven largely by the increase in the average balance of loans and the increase in loan yields partially offset by the higher cost of funds.

Total cost of funds for second quarter of 2023 was 252 basis points compared to 183 basis points and 25 basis points for the prior linked quarter and prior year period, respectively, which primarily reflects higher borrowing balances related to the final exit from the crypto-related deposit vertical and to prevailing interest rates.

Non-Interest Income

Non-interest income was $7.9 million for the second quarter of 2023, an increase of $881,000 from the prior linked quarter and an increase of $857,000 from the prior year period. The increases from the prior linked quarter and the prior year period were primarily driven by higher Global Payments Group revenues.

Non-Interest Expense

Non-interest expense was $32.4 million for the second quarter of 2023, an increase of $1.4 million from the prior linked quarter and an increase of $6.2 million from the prior year period. The increase from the prior linked quarter was due primarily to the $2.5 million reversal of the regulatory settlement reserve recorded in the first quarter of 2023. The increase from the prior year period was due primarily to an increase in professional fees and the increase in compensation and benefits due to the increase in the number of full-time employees.

Income Tax Expense

The effective tax rate for the second quarter of 2023 was 37.4% compared to 25.9% for the prior linked quarter, which reflects the effects of discrete taxes related to the conversion of stock awards in the first quarter of 2023 that were rescinded in the second quarter of 2023. The effective tax rate was 31.0% for the prior year period.

Asset Quality

Credit quality remains strong. The ratio of non-performing loans to total loans was 0.47% at June 30, 2023 compared to 0.50% at March 31, 2023 and 0.00% at June 30, 2022, respectively. The allowance for credit losses (“ACL”) was $51.7 million at June 30, 2023, an increase of $3.9 million from March 31, 2023 and an increase of $11.1 million from June 30, 2022. The increase from the prior linked quarter was due primarily due to the growth in loans. The increase from the prior year period was primarily due to the growth in loans and the adoption of ASU No. 2016-13. The Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (ASC 326) effective January 1, 2023. ASU No. 2016-13 requires the measurement of all expected credit losses for financial assets held at amortized cost to be based on historical experience, current condition, and reasonable and supportable forecasts. Upon adoption, the Company recorded a $2.3 million increase to the ACL for loans, a $777,000 increase to the ACL for loan commitments, and a $2.1 million decrease to retained earnings, net of taxes.

Conference Call

The Company will conduct a conference call at 9:00 a.m. ET on Friday, July 21, 2023, to discuss the results. To access the event by telephone, please dial 800-245-3047 (US), 203-518-9843 (INTL), and provide conference ID: MCBQ223 approximately 15 minutes prior to the start time (to allow time for registration).

The call will also be broadcast live over the Internet and accessible at MCB Quarterly Results Conference Call and in the Investor Relations section of the Company’s website at MCB News. To listen to the live webcast, please visit the site at least 15 minutes prior to the start time to register, download and install any necessary audio software. For those unable to join for the live presentation, a replay of the webcast will also be available later that day accessible at MCB Quarterly Results Conference Call.

About Metropolitan Bank Holding Corp.

Metropolitan Bank Holding Corp. (NYSE: MCB) is the parent company of Metropolitan Commercial Bank (the “Bank”), a New York City based full-service commercial bank. The Bank provides a broad range of business, commercial and personal banking products and services to small businesses, private and public middle-market and corporate enterprises and institutions, municipalities and local government entities, and affluent individuals.

Metropolitan Commercial Bank’s Global Payments Group is an established leader in providing payments services to domestic and international non-bank financial service companies, including: providing digital payments settlements; providing a gateway to payment networks; acting as a custodian of deposits; providing merchant acquiring services; acting as a global settlement agent, and as a leading national issuer of third-party debit cards. The Bank continues to grow its presence as a valued, trusted and innovative strategic partner across payments, custodial and money services businesses worldwide.

Metropolitan Commercial Bank’s EB-5 / E-2 International Group delivers banking services and products for United States Citizen and Immigration Services EB-5 Immigrant Investor Program investors, developers, Regional Centers, government agencies, law firms and consulting companies that specialize in EB-5 and E-2.

Metropolitan Commercial Bank was ranked by Independent Community Bankers of America among the top ten successful loan producers for 2023 by loan category and asset size for commercial banks with more than $1 billion in assets. The Bank finished ninth in S&P Global Market Intelligence’s annual ranking of the best-performing community banks with assets between $3 billion and $10 billion for 2022 and eighth among top-performing community banks in the Northeast region for 2022. The Bank is also a member of the Piper Sandler Sm-All Stars Class of 2022 and Kroll affirmed a BBB+ (investment grade) deposit rating on January 25, 2023.

Metropolitan Commercial Bank operates banking centers and private client offices in Manhattan and Boro Park, Brooklyn in New York City and Great Neck on Long Island in New York State.

The Bank is a New York State chartered commercial bank, a member of the Federal Reserve System and the Federal Deposit Insurance Corporation, and an equal housing lender. For more information, please visit the Bank’s website at MCBankNY.com.

Forward-Looking Statement Disclaimer

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include but are not limited to the Company’s future financial condition and capital ratios, results of operations and the Company’s outlook and business. Forward-looking statements are not historical facts. Such statements may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “plan,” “continue” or similar terminology. These statements relate to future events or our future financial performance and involve risks and uncertainties that are difficult to predict and are generally beyond our control and may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we caution you not to place undue reliance on these forward-looking statements. Factors which may cause our forward-looking statements to be materially inaccurate include, but are not limited to the following: the interest rate policies of the Board of Governors of the Federal Reserve System; inflation; an unexpected deterioration in our loan or securities portfolios; changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio; further deterioration in the financial condition or stock prices of financial institutions generally; unexpected increases in our expenses; different than anticipated growth and our ability to manage our growth; the lingering effects of the COVID-19 pandemic on our business and results of operation; unanticipated regulatory action or changes in regulations; potential recessionary conditions; unanticipated volatility in deposits; unexpected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans; our ability to absorb the amount of actual losses inherent in our existing loan portfolio; an unanticipated loss of key personnel or existing customers; competition from other institutions resulting in unanticipated changes in our loan or deposit rates; an unexpected adverse financial, regulatory or bankruptcy event experienced by our non-bank financial service partners; unanticipated increases in FDIC costs; changes in regulations, legislation or tax or accounting rules, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury; impacts related to or resulting from recent bank failures; an unexpected failure to successfully manage our credit risk and the sufficiency of our allowance, the credit and other risks from borrower and depositor concentrations (by geographic area and by industry); the current or anticipated impact of military conflict, terrorism or other geopolitical events; the costs, including possibly incurring fines, penalties or other negative effects (including reputational harm), of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions; a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks; the failure to maintain current technologies, or to implement new technologies; the failure to maintain effective internal controls over financial reporting; the failure to retain or attract employees; and unanticipated adverse changes in our customers’ economic conditions or general economic conditions, as well as those discussed under the heading “Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q which have been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

Forward-looking statements speak only as of the date of this release. We do not undertake (and expressly disclaim) any obligation to update or revise any forward-looking statement, except as may be required by law.

Consolidated Balance Sheet (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jun. 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

Jun. 30,

(in thousands)

 

2023

 

2023

 

2022

 

2022

 

2022

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

33,534

 

$

32,525

 

$

26,780

 

$

28,929

 

$

33,143

Overnight deposits

 

 

168,242

 

 

266,978

 

 

230,638

 

 

679,849

 

 

1,308,738

Total cash and cash equivalents

 

 

201,776

 

 

299,503

 

 

257,418

 

 

708,778

 

 

1,341,881

Investment securities available-for-sale

 

 

426,068

 

 

444,169

 

 

445,747

 

 

423,265

 

 

465,661

Investment securities held-to-maturity

 

 

515,613

 

 

501,525

 

 

510,425

 

 

521,376

 

 

530,740

Equity investment securities, at fair value

 

 

2,066

 

 

2,087

 

 

2,048

 

 

2,027

 

 

2,107

Total securities

 

 

943,747

 

 

947,781

 

 

958,220

 

 

946,668

 

 

998,508

Other investments

 

 

28,040

 

 

27,099

 

 

22,110

 

 

17,484

 

 

17,357

Loans, net of deferred fees and unamortized costs

 

 

5,149,546

 

 

4,851,694

 

 

4,840,523

 

 

4,617,304

 

 

4,375,165

Allowance for credit losses

 

 

(51,650)

 

 

(47,752)

 

 

(44,876)

 

 

(42,541)

 

 

(40,534)

Net loans

 

 

5,097,896

 

 

4,803,942

 

 

4,795,647

 

 

4,574,763

 

 

4,334,631

Receivables from global payments business, net

 

 

84,919

 

 

83,787

 

 

85,605

 

 

75,457

 

 

68,214

Other assets(1)

 

 

165,772

 

 

147,870

 

 

148,337

 

 

144,328

 

 

152,941

Total assets

 

$

6,522,150

 

$

6,309,982

 

$

6,267,337

 

$

6,467,478

 

$

6,913,532

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing demand deposits

 

$

1,730,380

 

$

2,122,606

 

$

2,422,151

 

$

3,058,014

 

$

3,470,325

Interest-bearing deposits

 

 

3,558,185

 

 

3,009,182

 

 

2,855,761

 

 

2,673,509

 

 

2,708,075

Total deposits

 

 

5,288,565

 

 

5,131,788

 

 

5,277,912

 

 

5,731,523

 

 

6,178,400

Federal funds purchased

 

 

243,000

 

 

195,000

 

 

150,000

 

 

 

 

Federal Home Loan Bank of New York advances

 

 

200,000

 

 

200,000

 

 

100,000

 

 

 

 

Trust preferred securities

 

 

20,620

 

 

20,620

 

 

20,620

 

 

20,620

 

 

20,620

Secured borrowings

 

 

7,655

 

 

7,689

 

 

7,725

 

 

26,912

 

 

32,044

Prepaid third-party debit cardholder balances

 

 

10,772

 

 

11,102

 

 

10,579

 

 

9,395

 

 

23,531

Other liabilities(1)

 

 

130,263

 

 

135,896

 

 

124,604

 

 

96,791

 

 

84,631

Total liabilities

 

 

5,900,875

 

 

5,702,095

 

 

5,691,440

 

 

5,885,241

 

 

6,339,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

110

 

 

112

 

 

109

 

 

109

 

 

109

Additional paid in capital

 

 

392,742

 

 

394,124

 

 

389,276

 

 

387,406

 

 

385,369

Retained earnings

 

 

279,344

 

 

263,783

 

 

240,810

 

 

248,550

 

 

223,595

Accumulated other comprehensive gain (loss), net of tax effect

 

 

(50,921)

 

 

(50,132)

 

 

(54,298)

 

 

(53,828)

 

 

(34,767)

Total stockholders’ equity

 

 

621,275

 

 

607,887

 

 

575,897

 

 

582,237

 

 

574,306

Total liabilities and stockholders’ equity

 

$

6,522,150

 

$

6,309,982

 

$

6,267,337

 

$

6,467,478

 

$

6,913,532

(1) Includes adoption impact of ASU 2016-02, Leases (ASC 842) effective January 1, 2022.

Consolidated Statement of Income (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

Jun. 30,

 

Mar. 31,

 

Jun. 30,

 

Jun. 30,

 

Jun. 30,

(dollars in thousands, except per share data)

 

2023

 

2023

 

2022

 

2023

 

2022

Total interest income

 

$

88,978

 

$

83,263

 

$

59,158

 

$

172,241

 

$

110,128

Total interest expense

 

 

35,227

 

 

24,729

 

 

3,856

 

 

59,956

 

 

8,194

Net interest income

 

 

53,751

 

 

58,534

 

 

55,302

 

 

112,285

 

 

101,934

Provision for credit losses

 

 

4,305

 

 

646

 

 

2,400

 

 

4,951

 

 

5,800

Net interest income after provision for credit losses

 

 

49,446

 

 

57,888

 

 

52,902

 

 

107,334

 

 

96,134

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

1,481

 

 

1,456

 

 

1,474

 

 

2,937

 

 

2,844

Global Payments Group revenue

 

 

5,731

 

 

4,850

 

 

5,242

 

 

10,581

 

 

10,899

Other income

 

 

643

 

 

668

 

 

282

 

 

1,311

 

 

682

Total non-interest income

 

 

7,855

 

 

6,974

 

 

6,998

 

 

14,829

 

 

14,425

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

15,288

 

 

16,255

 

 

13,415

 

 

31,543

 

 

26,836

Bank premises and equipment

 

 

2,287

 

 

2,344

 

 

2,264

 

 

4,631

 

 

4,380

Professional fees

 

 

4,973

 

 

4,187

 

 

1,692

 

 

9,160

 

 

3,166

Technology costs

 

 

1,482

 

 

1,313

 

 

1,144

 

 

2,795

 

 

2,543

Licensing fees

 

 

3,014

 

 

2,662

 

 

2,686

 

 

5,676

 

 

4,980

FDIC assessments

 

 

1,640

 

 

2,814

 

 

1,240

 

 

4,454

 

 

2,485

Regulatory settlement reserve

 

 

 

 

(2,500)

 

 

 

 

(2,500)

 

 

Other expenses

 

 

3,758

 

 

3,950

 

 

3,828

 

 

7,708

 

 

6,498

Total non-interest expense

 

 

32,442

 

 

31,025

 

 

26,269

 

 

63,467

 

 

50,888

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income before income tax expense

 

 

24,859

 

 

33,837

 

 

33,631

 

 

58,696

 

 

59,671

Income tax expense

 

 

9,298

 

 

8,761

 

 

10,442

 

 

18,059

 

 

17,461

Net income (loss)

 

$

15,561

 

$

25,076

 

$

23,189

 

$

40,637

 

$

42,210

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

11,136,261

 

 

11,044,624

 

 

10,931,697

 

 

11,090,695

 

 

10,925,718

Diluted

 

 

11,277,975

 

 

11,103,008

 

 

11,189,807

 

 

11,271,316

 

 

11,208,992

Basic earnings (loss)

 

$

1.39

 

$

2.26

 

$

2.12

 

$

3.65

 

$

3.86

Diluted earnings (loss)

 

$

1.37

 

$

2.25

 

$

2.07

 

$

3.59

 

$

3.76

 
 

Loan Production, Asset Quality & Regulatory Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Jun. 30,

 

Mar. 31,

 

Dec. 31,

 

Sept. 30,

 

Jun. 30,

 

 

 

2023

 

2023

 

2022

 

2022

 

2022

 

LOAN PRODUCTION (in millions)

 

$

425.4

 

$

265.4

 

$

411.3

 

$

423.6

 

$

512.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSET QUALITY (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-accrual loans:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate

 

$

24,000

 

$

24,000

 

$

 

$

 

$

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

Consumer

 

 

24

 

 

24

 

 

24

 

 

24

 

 

24

 

Total non-accrual loans

 

$

24,024

 

$

24,024

 

$

24

 

$

24

 

$

24

 

Non-accrual loans to total loans

 

 

0.47

%

 

0.50

%

 

%

 

%

 

%

Allowance for credit losses

 

$

51,650

 

$

47,752

 

$

44,876

 

$

42,541

 

$

40,534

 

Allowance for credit losses to total loans

 

 

1.00

%

 

0.98

%

 

0.93

%

 

0.92

%

 

0.93

%

Charge-offs

 

$

(44)

 

$

(100)

 

$

 

$

 

$

 

Recoveries

 

$

 

$

 

$

25

 

$

 

$

 

Net charge-offs/(recoveries) to average loans (annualized)

 

 

%

 

0.01

%

 

%

 

%

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

REGULATORY CAPITAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 Leverage:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metropolitan Bank Holding Corp.

 

 

10.8

%

 

10.8

%

 

10.2

%

 

9.9

%

 

9.2

%

Metropolitan Commercial Bank

 

 

10.5

%

 

10.4

%

 

10.0

%

 

9.7

%

 

9.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Equity Tier 1 Risk-Based (CET1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metropolitan Bank Holding Corp.

 

 

11.9

%

 

12.3

%

 

12.1

%

 

12.9

%

 

13.0

%

Metropolitan Commercial Bank

 

 

11.9

%

 

12.3

%

 

12.3

%

 

13.1

%

 

13.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tier 1 Risk-Based:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metropolitan Bank Holding Corp.

 

 

12.3

%

 

12.7

%

 

12.5

%

 

13.3

%

 

13.4

%

Metropolitan Commercial Bank

 

 

11.9

%

 

12.3

%

 

12.3

%

 

13.1

%

 

13.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Risk-Based:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Metropolitan Bank Holding Corp.

 

 

13.2

%

 

13.6

%

 

13.4

%

 

14.2

%

 

14.3

%

Metropolitan Commercial Bank

 

 

12.9

%

 

13.2

%

 

13.1

%

 

14.0

%

 

14.1

%

 
 

Performance Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Six months ended

 

 

 

Jun. 30,

 

Mar. 31,

 

Jun. 30,

 

Jun. 30,

 

Jun. 30,

 

(dollars in thousands, except per share data)

 

2023

 

2023(1)

 

2022

 

2023(1)

 

2022

 

Net income per consolidated statements of income

 

$

15,561

 

$

25,076

 

$

23,189

 

$

40,637

 

$

42,210

 

Less: Earnings allocated to participating securities

 

 

(82)

 

 

(84)

 

 

(63)

 

 

(170)

 

 

(85)

 

Net income (loss) available to common shareholders

 

$

15,479

 

$

24,992

 

$

23,126

 

$

40,467

 

$

42,125

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss)

 

$

1.39

 

$

2.26

 

$

2.12

 

$

3.65

 

$

3.86

 

Diluted earnings (loss)

 

$

1.37

 

$

2.25

 

$

2.07

 

$

3.59

 

$

3.76

 

Common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Period end

 

 

10,991,074

 

 

11,211,274

 

 

10,931,697

 

 

10,991,074

 

 

10,931,697

 

Average fully diluted

 

 

11,277,975

 

 

11,103,008

 

 

11,189,807

 

 

11,271,316

 

 

11,208,992

 

Return on:(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average total assets

 

 

0.98

%

 

1.64

%

 

1.38

%

 

1.30

%

 

1.25

%

Average equity

 

 

10.1

%

 

17.2

%

 

16.4

%

 

13.6

%

 

15.1

%

Average tangible common equity(3)

 

 

10.3

%

 

17.4

%

 

16.7

%

 

13.8

%

 

15.5

%

Yield on average earning assets(2)

 

 

5.70

%

 

5.51

%

 

3.50

%

 

5.61

%

 

3.24

%

Total cost of deposits(2)

 

 

2.19

%

 

1.72

%

 

0.24

%

 

1.95

%

 

0.24

%

Net interest spread(2)

 

 

1.80

%

 

2.25

%

 

2.95

%

 

2.01

%

 

2.65

%

Net interest margin(2)

 

 

3.44

%

 

3.86

%

 

3.27

%

 

3.65

%

 

3.00

%

Net charge-offs as % of average loans

 

 

%

 

0.01

%

 

%

 

%

 

%

Efficiency ratio(4)

 

 

52.7

%

 

47.4

%

 

42.2

%

 

49.93

%

 

43.73

%

(1) Includes a $2.5 million reversal of the regulatory settlement reserve recorded in the fourth quarter of 2022.
(2) Ratios are annualized.
(3) Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures on page 13.
(4) Total non-interest expense divided by total revenues.

Interest Margin Analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

 

Jun. 30, 2023

 

 

Mar. 31, 2023

 

 

Jun. 30, 2022

 

 

 

Average

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

Outstanding

 

 

 

 

Yield /

 

 

Outstanding

 

 

 

 

Yield /

 

 

Outstanding

 

 

 

 

Yield /

 

(dollars in thousands)

 

Balance

 

Interest

 

Rate (1)

 

 

Balance

 

Interest

 

Rate (1)

 

 

Balance

 

Interest

 

Rate (1)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (2)

 

$

4,921,887

 

$

80,516

 

6.54

%

 

$

4,838,336

 

$

75,960

 

6.34

%

 

$

4,232,016

 

$

52,185

 

4.87

%

Available-for-sale securities

 

 

520,322

 

 

2,068

 

1.59

 

 

 

530,503

 

 

2,106

 

1.59

 

 

 

540,100

 

 

1,643

 

1.22

 

Held-to-maturity securities

 

 

519,076

 

 

2,602

 

2.01

 

 

 

506,655

 

 

2,377

 

1.88

 

 

 

489,082

 

 

2,056

 

1.68

 

Equity investments

 

 

2,375

 

 

13

 

2.09

 

 

 

2,362

 

 

12

 

2.08

 

 

 

2,334

 

 

7

 

1.25

 

Overnight deposits

 

 

237,449

 

 

3,086

 

5.14

 

 

 

207,917

 

 

2,484

 

4.78

 

 

 

1,401,027

 

 

2,994

 

0.85

 

Other interest-earning assets

 

 

39,197

 

 

693

 

7.08

 

 

 

20,163

 

 

324

 

6.42

 

 

 

17,357

 

 

273

 

6.29

 

Total interest-earning assets

 

 

6,240,306

 

 

88,978

 

5.70

 

 

 

6,105,936

 

 

83,263

 

5.51

 

 

 

6,681,916

 

 

59,158

 

3.50

 

Non-interest-earning assets

 

 

162,326

 

 

 

 

 

 

 

 

152,302

 

 

 

 

 

 

 

 

93,597

 

 

 

 

 

 

Allowance for credit losses

 

 

(48,035)

 

 

 

 

 

 

 

 

(45,614)

 

 

 

 

 

 

 

 

(38,713)

 

 

 

 

 

 

Total assets

 

$

6,354,597

 

 

 

 

 

 

 

$

6,212,624

 

 

 

 

 

 

 

$

6,736,800

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market and savings accounts

 

$

2,987,237

 

 

27,100

 

3.64

 

 

$

2,840,271

 

 

22,030

 

3.15

 

 

$

2,716,676

 

 

3,583

 

0.53

 

Certificates of deposit

 

 

45,925

 

 

303

 

2.65

 

 

 

52,912

 

 

343

 

2.63

 

 

 

62,247

 

 

123

 

0.80

 

Total interest-bearing deposits

 

 

3,033,162

 

 

27,403

 

3.62

 

 

 

2,893,183

 

 

22,373

 

3.14

 

 

 

2,778,923

 

 

3,706

 

0.53

 

Borrowed funds

 

 

588,281

 

 

7,824

 

5.32

 

 

 

188,230

 

 

2,356

 

5.01

 

 

 

20,621

 

 

150

 

2.91

 

Total interest-bearing liabilities

 

 

3,621,443

 

 

35,227

 

3.90

 

 

 

3,081,413

 

 

24,729

 

3.26

 

 

 

2,799,544

 

 

3,856

 

0.55

 

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

 

1,977,443

 

 

 

 

 

 

 

 

2,390,840

 

 

 

 

 

 

 

 

3,290,328

 

 

 

 

 

 

Other non-interest-bearing liabilities

 

 

139,341

 

 

 

 

 

 

 

 

147,850

 

 

 

 

 

 

 

 

78,997

 

 

 

 

 

 

Total liabilities

 

 

5,738,227

 

 

 

 

 

 

 

 

5,620,103

 

 

 

 

 

 

 

 

6,168,869

 

 

 

 

 

 

Stockholders' equity

 

 

616,370

 

 

 

 

 

 

 

 

592,521

 

 

 

 

 

 

 

 

567,931

 

 

 

 

 

 

Total liabilities and equity

 

$

6,354,597

 

 

 

 

 

 

 

$

6,212,624

 

 

 

 

 

 

 

$

6,736,800

 

 

 

 

 

 

Net interest income

 

 

 

 

$

53,751

 

 

 

 

 

 

 

$

58,534

 

 

 

 

 

 

 

$

55,302

 

 

 

Net interest rate spread (3)

 

 

 

 

 

 

 

1.80

%

 

 

 

 

 

 

 

2.25

%

 

 

 

 

 

 

 

2.95

%

Net interest margin (4)

 

 

 

 

 

 

 

3.44

%

 

 

 

 

 

 

 

3.86

%

 

 

 

 

 

 

 

3.27

%

Total cost of deposits (5)

 

 

 

 

 

 

 

2.19

%

 

 

 

 

 

 

 

1.72

%

 

 

 

 

 

 

 

0.24

%

Total cost of funds (6)

 

 

 

 

 

 

 

2.52

%

 

 

 

 

 

 

 

1.83

%

 

 

 

 

 

 

 

0.25

%

(1) Ratios are annualized.
(2) Amount includes deferred loan fees and non-performing loans.
(3) Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets.
(4) Determined by dividing annualized net interest income by total average interest-earning assets.
(5) Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits.
(6) Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits.

Interest Margin Analysis, continued

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

 

 

 

Jun. 30, 2023

 

 

Jun. 30, 2022

 

 

 

Average

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

Outstanding

 

 

 

 

Yield /

 

 

Outstanding

 

 

 

 

Yield /

 

(dollars in thousands)

 

Balance

 

Interest

 

Rate (1)

 

 

Balance

 

Interest

 

Rate (1)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans (2)

 

$

4,880,343

 

$

156,476

 

6.45

%

 

$

4,067,908

 

$

98,721

 

4.85

%

Available-for-sale securities

 

 

525,384

 

 

4,175

 

1.59

 

 

 

552,631

 

$

3,291

 

1.19

 

Held-to-maturity securities

 

 

512,900

 

 

4,978

 

1.94

 

 

 

468,239

 

$

3,794

 

1.62

 

Equity investments

 

 

2,368

 

 

25

 

2.09

 

 

 

2,331

 

$

13

 

1.14

 

Overnight deposits

 

 

222,765

 

 

5,570

 

4.97

 

 

 

1,683,626

 

$

3,909

 

0.46

 

Other interest-earning assets

 

 

29,733

 

 

1,017

 

6.84

 

 

 

15,354

 

$

400

 

5.21

 

Total interest-earning assets

 

 

6,173,493

 

 

172,241

 

5.61

 

 

 

6,790,089

 

 

110,128

 

3.24

 

Non-interest-earning assets

 

 

157,338

 

 

 

 

 

 

 

 

75,520

 

 

 

 

 

 

Allowance for credit losses

 

 

(46,831)

 

 

 

 

 

 

 

 

(37,429)

 

 

 

 

 

 

Total assets

 

$

6,284,000

 

 

 

 

 

 

 

$

6,828,180

 

 

 

 

 

 

Liabilities and Stockholders' Equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money market and savings accounts

 

$

2,914,160

 

$

49,129

 

3.40

 

 

$

2,678,146

 

$

7,046

 

0.53

 

Certificates of deposit

 

 

49,399

 

 

647

 

2.64

 

 

 

69,026

 

$

285

 

0.83

 

Total interest-bearing deposits

 

 

2,963,559

 

 

49,776

 

3.39

 

 

 

2,747,172

 

 

7,331

 

0.54

 

Borrowed funds

 

 

389,360

 

 

10,180

 

5.23

 

 

 

30,426

 

 

863

 

5.67

 

Total interest-bearing liabilities

 

 

3,352,919

 

 

59,956

 

3.61

 

 

 

2,777,598

 

 

8,194

 

0.59

 

Non-interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest-bearing deposits

 

 

2,183,000

 

 

 

 

 

 

 

 

3,431,987

 

 

 

 

 

 

Other non-interest-bearing liabilities

 

 

143,573

 

 

 

 

 

 

 

 

54,100

 

 

 

 

 

 

Total liabilities

 

 

5,679,492

 

 

 

 

 

 

 

 

6,263,685

 

 

 

 

 

 

Stockholders' equity

 

 

604,508

 

 

 

 

 

 

 

 

564,495

 

 

 

 

 

 

Total liabilities and equity

 

$

6,284,000

 

 

 

 

 

 

 

$

6,828,180

 

 

 

 

 

 

Net interest income

 

 

 

 

$

112,285

 

 

 

 

 

 

 

$

101,934

 

 

 

Net interest rate spread (3)

 

 

 

 

 

 

 

2.01

%

 

 

 

 

 

 

 

2.65

%

Net interest margin (4)

 

 

 

 

 

 

 

3.65

%

 

 

 

 

 

 

 

3.00

%

Total cost of deposits (5)

 

 

 

 

 

 

 

1.95

%

 

 

 

 

 

 

 

0.24

%

Total cost of funds (6)

 

 

 

 

 

 

 

2.18

%

 

 

 

 

 

 

 

0.27

%

(1) Ratios are annualized.
(2) Amount includes deferred loan fees and non-performing loans.
(3) Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets.
(4) Determined by dividing annualized net interest income by total average interest-earning assets.
(5) Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits.
(6) Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits.

Reconciliation of Non-GAAP Measures

In addition to the results presented in accordance with Generally Accepted Accounting Principles (“GAAP”), this earnings release includes certain non-GAAP financial measures. Management believes these non-GAAP financial measures provide meaningful information to investors in understanding the Company’s operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP/adjusted financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the following tables:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Data

 

(dollars in thousands,

 

Jun. 30,

 

 

Mar. 31,

 

 

Dec. 31,

 

 

Sept. 30,

 

 

Jun. 30,

 

except per share data)

 

2023

 

 

2023

 

 

2022

 

 

2022

 

 

2022

 

Average assets

 

$

6,354,597

 

 

$

6,212,624

 

 

$

6,283,813

 

 

$

6,553,105

 

 

$

6,736,800

 

Less: average intangible assets

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

Average tangible assets (non-GAAP)

 

$

6,344,864

 

 

$

6,202,891

 

 

$

6,274,080

 

 

$

6,543,372

 

 

$

6,727,067

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common equity

 

$

616,370

 

 

$

592,521

 

 

$

595,769

 

 

$

589,941

 

 

$

567,931

 

Less: average intangible assets

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

Average tangible common equity (non-GAAP)

 

$

606,637

 

 

$

582,788

 

 

$

586,036

 

 

$

580,208

 

 

$

558,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

6,522,150

 

 

$

6,309,982

 

 

$

6,267,337

 

 

$

6,467,478

 

 

$

6,913,532

 

Less: intangible assets

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

Tangible assets (non-GAAP)

 

$

6,512,417

 

 

$

6,300,249

 

 

$

6,257,604

 

 

$

6,457,745

 

 

$

6,903,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common equity

 

$

621,275

 

 

$

607,887

 

 

$

575,897

 

 

$

582,237

 

 

$

574,306

 

Less: intangible assets

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

 

 

9,733

 

Tangible common equity (book value) (non-GAAP)

 

$

611,542

 

 

$

598,154

 

 

$

566,164

 

 

$

572,504

 

 

$

564,573

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding

 

 

10,991,074

 

 

 

11,211,274

 

 

 

10,949,965

 

 

 

10,931,697

 

 

 

10,931,697

 

Book value per share (GAAP)

 

$

56.53

 

 

$

54.22

 

 

$

52.59

 

 

$

53.26

 

 

$

52.54

 

Tangible book value per share (non-GAAP) (1)

 

$

55.64

 

 

$

53.35

 

 

$

51.70

 

 

$

52.37

 

 

$

51.65

 

(1) Tangible book value divided by common shares outstanding at period-end.

Explanatory Note

Some amounts presented within this document may not recalculate due to rounding.

Contacts

Greg Sigrist
EVP & Chief Financial Officer
Metropolitan Commercial Bank
(212) 365-6721
IR@MCBankNY.com

Contacts

Greg Sigrist
EVP & Chief Financial Officer
Metropolitan Commercial Bank
(212) 365-6721
IR@MCBankNY.com