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Section 1: 8-K (FORM 8-K)

 

  

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

  

FORM 8-K

 

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of report (Date of earliest event reported): October 23, 2019

 

 

 

METROPOLITAN BANK HOLDING CORP.

(Exact name of the registrant as specified in its charter)

 

 

 

New York 001-38282 13-4042724

(State or other jurisdiction of

incorporation or organization)

(Commission File Number)

(IRS Employer

Identification No.)

 

99 Park Avenue    
New York, New York   10016
(Address of principal executive offices)   (Zip Code)

 

(212) 659-0600

(Registrant’s telephone number)

 

N/A

(Former name or former address, if changed since last report)

 

 

  

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c)

 

Title of each class  

Trading

Symbol(s)

  Name of each exchange on which registered
Common Stock, par value $0.01 per share   MCB   New York Stock Exchange  

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

 

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 2.02Results of Operations and Financial Condition

 

On October 23, 2019, Metropolitan Bank Holding Corp. (the “Company”), the holding company for Metropolitan Commercial Bank, issued a press release announcing its financial results for the three and nine months ended September 30, 2019. The press release containing the financial results is attached hereto as Exhibit 99.1 and shall not be deemed “filed” for any purpose, nor shall the information or Exhibit 99.1 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.

 

Item 7.01Regulation FD Disclosure

 

The Company has also made available on its website presentation materials containing additional information about the Company’s financial results for the third quarter ended September 30, 2019 (the “Presentation Materials”). The Presentation Materials is furnished herewith as Exhibit 99.2 and is incorporated by reference in this Item 7.01.

 

The information provided in Item 7.01 of this report, including Exhibit 99.2, shall not be deemed “filed” for any purpose, nor shall the information or Exhibit 99.2 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.

 

Item 9.01Financial Statements and Exhibits

 

(d)Exhibits.

 

Exhibit No.   Description
99.1   Press Release dated October 23, 2019
99.2   Presentation Materials

 

 

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

  METROPOLITAN BANK HOLDING CORP.  
     
     
Dated: October 23, 2019 By: /s/ Anthony Fabiano  
    Anthony Fabiano  
    Executive Vice President and Chief Financial Officer  

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit 99.1

 

 

Release: 4:30 P.M. October 23, 2019

 

Contact: Investor Relations Department
  212-365-6721
  [email protected]

 

Metropolitan Bank Holding Corp. Reports Sustained Growth in Earnings, Loans and Deposits

 

NEW YORK, October 23, 2019 – Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), today reported net income of $7.7 million, or $0.90 per diluted common share, for the third quarter of 2019, as compared to $7.1 million, or $0.85 per diluted common share, for the third quarter of 2018.

 

For the nine months ended September 30, 2019, the Company reported net income of $22.3 million, or $2.63 per diluted common share, compared to $19.3 million, or $2.31 per diluted common share, for the nine months ended September 30, 2018.

 

Financial Highlights for the third quarter of 2019 include:

 

·Total assets increased $1.06 billion or 48.6% to $3.24 billion at September 30, 2019, as compared to $2.18 billion at December 31, 2018 and increased $282.6 million or 9.5%, as compared to $2.96 billion at June 30, 2019.

 

·Total loans increased 33.8%, or $631.5 million, to $2.50 billion at September 30, 2019, as compared to $1.87 billion at December 31, 2018. For the three and nine months ended September 30, 2019, the Bank’s loan production was $267.7 million and $839.7 million, respectively, as compared to $146.9 million and $528.2 million for the three and nine months ended September 30, 2018, respectively. Total loans increased $161.1 million or 6.9% to $2.50 billion at September 30, 2019, as compared to $2.34 billion at June 30, 2019.

 

·Total cash and cash equivalents increased $202.4 million, or 86.9%, to $435.4 million at September 30, 2019, as compared to $233.0 million at December 31, 2018. Total securities, primarily those classified as available-for-sale, increased $219.7 million to $256.8 million at September 30, 2019, as compared to $37.1 million at December 31, 2018.

 

·Total deposits increased 63.5%, or $1.05 billion, to $2.71 billion at September 30, 2019, as compared to total deposits of $1.66 billion at December 31, 2018. This growth in deposits was across the Bank’s various deposit verticals.

 

·The loan-to-deposit ratio decreased to 92.3% at September 30, 2019, as compared to 112.3% at December 31, 2018.

 

·Non-interest-bearing deposits increased 30.4% to $1.04 billion at September 30, 2019, as compared to non-interest-bearing deposits of $798.6 million at December 31, 2018. Interest-bearing deposits increased 93.1% to $1.66 billion at September 30, 2019 as compared to $862.0 million at December 31, 2018.

 

·Net interest margin decreased 21 basis points for the third quarter of 2019 to 3.26%, as compared to 3.47% for the second quarter of 2019. This decrease in net interest margin was primarily due to a change in the mix of interest-earning assets in the current quarter. The average balance of securities available for sale increased $184.0 million to $238.4 million for the third quarter of 2019 as compared to $54.4 million for the second quarter of 2019. In addition, the average balance of overnight deposits increased $80.4 million during the same period. As a result of these increases, the average balance of loans, which have a higher yield than securities and overnight funds, represented 78% of total interest-earning average assets for the third quarter of 2019, as compared to 84% for the second quarter of 2019. Further, the ratio of average interest-earning assets to average interest-bearing liabilities decreased to 1.78x for the third quarter of 2019, as compared to 1.86x for the second quarter of 2019.

 

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·The provision for loan losses for the third quarter of 2019 was $2.0 million, as compared to a credit of $453,000 for the third quarter of 2018. The provision for loan losses in the third quarter of 2018 reflects a recovery of $1.5 million related to taxi medallion loans previously charged-off. The provision for loan losses for the nine months ended September 30, 2019 was $1.9 million, as compared to $2.3 million for nine months ended September 30, 2018. The provision for the nine months ended September 30, 2019 consisted of a $6.2 million provision recorded as a result of the record loan growth during 2019, partially offset by negative provision due to recoveries of $4.3 million, of which $4.2 million related to the medallion loans.

  

Mark R. DeFazio, the Company’s President and Chief Executive Officer, commented, “I am pleased with MCB’s sustainable growth across several key financial measures. This growth continues to add to shareholder and franchise value. Although the Bank’s net interest margin compressed during the third quarter, as compared to the prior sequential quarter, the catalyst for this compression was a significant increase in both our securities portfolio and overnight Federal Funds balance due to an increase of deposits.”

 

Mr. DeFazio continued, “Notwithstanding the compression in net interest margin, MCB was able to maintain loan yields consistent with prior quarters and decreased our efficiency ratio to 53.89% in the third quarter from 57.49% for the second quarter of 2019.”

 

Balance Sheet

 

The Company had total assets of $3.24 billion at September 30, 2019, compared with $2.18 billion at December 31, 2018. Loans, net of deferred fees and unamortized costs, increased to $2.50 billion at September 30, 2019 as compared to $1.87 billion at December 31, 2018. For the three and nine months ended September 30, 2019, the Bank’s loan production was $267.7 million and $839.7 million, respectively, as compared to $146.9 million and $528.2 million for the three and nine months ended September 30, 2018, respectively. The increase in loan production in 2019 was due primarily to expanding existing lending relationships, particularly in skilled nursing facilities, as well as developing new relationships. MCB was able to fund the increased level of loan production with deposits, which increased $1.05 billion, or 63.5%, during the nine months ended September 30, 2019.

 

Total cash and cash equivalents increased $202.4 million, or 86.9%, to $435.4 million at September 30, 2019, as compared to $233.0 million at December 31, 2018. Total securities, primarily those classified as available-for-sale, increased $219.7 million, or 591.9% to $256.8 million at September 30, 2019, as compared to $37.1 million at December 31, 2018. The increases in cash and cash equivalents and securities reflect the strong growth in deposits of $1.05 billion that exceeded growth in loans of $631.5 million. At September 30, 2019, $254.6 million of securities available for sale were pledged as collateral for certain deposits and were therefore considered encumbered as of September 30, 2019. There were no securities pledged at December 31, 2018.

 

Total deposits increased $1.05 billion, or 63.5%, to $2.71 billion at September 30, 2019, as compared to $1.66 billion at December 31, 2018. This was due to increases of $802.1 million in interest-bearing demand deposits and $242.5 million in non-interest-bearing deposits. $928.5 million of deposits were money market, savings and other interest-bearing specialty deposits.

 

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Federal Home Loan Bank of New York (“FHLB”) advances decreased by $41.0 million, or 22.2%, to $144.0 million at September 30, 2019, as compared to $185.0 million at December 31, 2018, as the deposit growth during the year was sufficient to support the Bank’s loan growth and to reduce the level of borrowings.

 

Total stockholders’ equity was $291.0 million at September 30, 2019, as compared to $264.5 million at December 31, 2018. The increase of $26.5 million was primarily due to net income of $22.3 million for the nine months ended September 30, 2019.

 

Metropolitan Commercial Bank meets all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. At September 30, 2019, total Commercial Real Estate Loans (“CRE”) were 390.6% of risk-based capital, as compared to 312.4% at December 31, 2018.

 

Income Statement

                           
    Three months ended September 30,    Nine months ended September 30,   
(dollars in thousands)   2019   2018   2019   2018  
Net income   $  7,683   $  7,113   $  22,271   $  19,268  
Diluted earnings per common share      0.90      0.85      2.63      2.31  
Annualized return on average assets      0.97 %    1.45 %      1.10 %    1.34 %
Annualized return on average equity      10.63 %    11.22 %      10.71 %    10.31 %
Annualized return on average common equity*      10.84 %    11.47 %      10.93 %    10.67 %

 

*Common equity excludes Class B preferred stock. See reconciliation to GAAP measures on page 15.

 

Net Income Summary

 

Net income increased $570,000 to $7.7 million for the third quarter of 2019, as compared to $7.1 million for the same period in 2018. This increase was due primarily to a $7.7 million increase in net interest income, partially offset by $5.1 million increase in non-interest expense and a $2.5 million increase in provision for loan losses.

 

Net income increased $3.0 million to $22.3 million for nine months ended September 30, 2019, as compared to $19.3 million for the same period in 2018. This increase was due primarily to a $17.3 million increase in net interest income, partially offset by a $2.2 million decrease in non-interest income and an $11.0 million increase in non-interest expense.

 

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Net Interest Margin Analysis

                                   
    Three months ended  
    September 30, 2019   September 30, 2018  
    Average             Average            
    Outstanding         Yield/Rate   Outstanding         Yield/Rate  
(dollars in thousands)   Balance   Interest   (annualized) (4)   Balance   Interest   (annualized)  
Assets:                                  

Interest-earning assets:

                                 
Loans (1)   $  2,419,774   $  31,208   5.03 %   $  1,639,958   $  20,255   4.90 %
Available-for-sale securities      238,384      1,521   2.55 %      27,846      150   2.13 %
Held-to-maturity securities      4,050      20   1.98 %      4,876      25   2.03 %
Equity investments - non-trading      3,235      20   2.47 %      2,187      15   2.71 %
Overnight deposits      411,363      2,381   2.30 %      240,604      1,233   2.03 %
Other interest-earning assets      30,604      346   4.48 %      20,794      229   4.37 %
Total interest-earning assets      3,107,410      35,496   4.47 %      1,936,265      21,907   4.49 %
Non-interest-earning assets      46,886                42,384            
Allowance for loan and lease losses      (23,196)                (18,331)            
Total assets   $  3,131,100             $  1,960,318            
                                   
Liabilities and Stockholders' Equity:                                  
Interest-bearing liabilities:                                  
Money market, savings and other interest-bearing accounts   $  1,426,576   $  7,163   1.99 %   $  633,474   $  2,045   1.28 %
Certificates of deposit      112,856      718   2.52 %      95,032      520   2.17 %
Total interest-bearing deposits      1,539,432      7,881   2.03 %      728,506      2,565   1.40 %
Borrowed funds      202,047      1,562   3.03 %      105,403      991   3.73 %
Total interest-bearing liabilities      1,741,479      9,443   2.15 %      833,909      3,556   1.69 %
Non-interest-bearing liabilities:                                  
Non-interest-bearing deposits      1,075,781                850,325            
Other non-interest-bearing liabilities      27,193                22,568            
Total liabilities      2,844,453                1,706,802            
                                   
Stockholders' Equity      286,647                253,516            
Total liabilities and equity   $  3,131,100             $  1,960,318            
                                   
Net interest income         $  26,053             $  18,351      
Net interest rate spread (2)               2.32 %               2.80 %
Net interest-earning assets   $  1,365,931             $  1,102,356            
Net interest margin (3)               3.26 %               3.76 %
Ratio of interest earning assets to interest bearing liabilities               1.78 x               2.32 x

 

 

(1)Amount includes deferred loan fees and non-performing loans.
(2)Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.
(3)Determined by dividing annualized net interest income by total average interest-earning assets.
(4)Annualized yield for loans excludes prepayment penalty of $690,000 on one specific loan, which is an anomaly and management believes that it is not truly reflective of annual yield. The yield related to prepayment was added to the annualized yield on loans.

 

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    Nine months ended  
    September 30, 2019   September 30, 2018  
    Average             Average            
    Outstanding         Yield/Rate   Outstanding            
(dollars in thousands)   Balance   Interest   (annualized) (4)   Balance   Interest   Yield/Rate  
Assets:                                  
Interest-earning assets:                                  
Loans (1)   $  2,208,125   $  84,277   5.09 %   $  1,550,278   $  55,467   4.78 %
Available-for-sale securities      108,526      2,068   2.54 %      28,486      451   2.09 %
Held-to-maturity securities      4,270      65   2.03 %      5,095      80   2.09 %
Equity investments - non-trading      3,223      59   2.44 %      2,175      38   2.30 %
Overnight deposits      324,412      5,830   2.40 %      272,039      3,810   1.87 %
Other interest-earning assets      28,789      1,015   4.71 %      30,768      756   3.28 %
Total interest-earning assets      2,677,345      93,314   4.65 %      1,888,841      60,602   4.29 %
Non-interest-earning assets      42,752                42,084            
Allowance for loan and lease losses      (21,401)                (16,823)            
Total assets   $  2,698,696             $  1,914,102            
                                   
Liabilities and Stockholders' Equity:                                  
Interest-bearing liabilities:                                  
Money market, savings and other interest-bearing accounts   $  1,134,004   $  16,434   1.94 %   $  566,396   $  4,663   1.10 %
Certificates of deposit      110,256      2,029   2.46 %      84,244      1,139   1.81 %
Total interest-bearing deposits      1,244,260      18,463   1.98 %      650,640      5,802   1.19 %
Borrowed funds      218,537      5,283   3.19 %      90,241      2,534   3.75 %
Total interest-bearing liabilities      1,462,797      23,746   2.17 %      740,881      8,336   1.50 %
Non-interest-bearing liabilities:                                  
Non-interest-bearing deposits      933,938                902,495            
Other non-interest-bearing liabilities      23,947                22,178            
Total liabilities      2,420,682                1,665,554            
                                   
Stockholders' Equity      278,014                248,548            
Total liabilities and equity   $  2,698,696             $  1,914,102            
                                   
Net interest income         $  69,568             $  52,266      
Net interest rate spread (2)               2.48 %               2.79 %
Net interest-earning assets   $  1,214,548             $  1,147,960            
Net interest margin (3)               3.47 %               3.70 %
Ratio of interest earning assets to interest bearing liabilities               1.83 x               2.55 x

 

 

(1)Amount includes deferred loan fees and non-performing loans.
(2)Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.
(3)Determined by dividing annualized net interest income by total average interest-earning assets.
(4)Annualized yield for loans excludes prepayment penalty of $690,000 on one specific loan, which is an anomaly and management believes that it is not truly reflective of annual yield. The yield related to prepayment was added to the annualized yield on loans.

 

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Net Interest Income

 

Interest income increased $13.6 million to $35.5 million for the third quarter of 2019, as compared to $21.9 million for the third quarter of 2018. This increase was due primarily to increases of $11.0 million in interest income on loans, $1.4 million in interest on available-for-sale (“AFS”) securities and $1.2 million in interest on overnight deposits. The increase in interest income on loans was due to a $779.8 million increase in the average balance of loans to $2.42 billion and a 13 basis point increase in the average yield to 5.03% for the third quarter of 2019, as compared to an average balance of $1.64 billion and an average yield of 4.90% for the third quarter of 2018. The increase in interest on AFS securities was due to a $210.5 million increase in average balance to $238.4 million for the third quarter of 2019, as compared to $27.8 million for the third quarter of 2018. Additionally, the average yield on AFS securities increased 42 basis points to 2.55% for third quarter of 2019, as compared to 2.13% for third quarter of 2018. The increase in interest on overnight deposits was due to an increase of $170.8 million in the average balance to $411.4 million for the three months ended September 30, 2019, as compared to $240.6 million for the same period in 2018. The average yield on overnight deposits increased 27 basis points to 2.30% for three months ended September 30, 2019, as compared to 2.03% for the same period in 2018.

 

Interest income increased $32.7 million to $93.3 million for the nine months ended September 30, 2019, as compared to $60.6 million for the nine months ended September 30, 2018. This increase was due primarily to increases of $28.8 million in interest income on loans, $1.6 million in interest on AFS securities, and $2.0 million in interest on overnight deposits. The increase in interest income on loans was due to a $657.8 million increase in the average balance of loans to $2.21 billion and a 31 basis point increase in the average yield to 5.09% for the nine months ended September 30, 2019, as compared to an average balance of $1.55 billion and an average yield of 4.78% on loans for the same period in 2018. The increase in interest on AFS securities was due to an $80.0 million increase in average balance of AFS securities to $108.5 million for the nine months ended 2019, as compared to $28.5 million for the same period of 2018. Additionally, the average yield on AFS securities increased 45 basis points to 2.54% for nine months ended 2019 as compared to 2.09% for the same period in 2018. The increase in interest on overnight deposits was due to an increase of $52.4 million in the average balance to $324.4 million for the nine months ended September 30, 2019, as compared to $272.0 million for the same period in 2018. The average yield on overnight deposits increased 53 basis points to 2.40% for nine months ended September 30, 2019, as compared to 1.87% for the same period in 2018.

 

Interest expense was $9.4 million for the third quarter of 2019, as compared to $3.6 million for the third quarter of 2018, an increase of $5.8 million due primarily to a $5.3 million increase in interest on deposits. The increase in interest expense on deposits was due primarily to an $810.9 million increase in the average balance of interest-bearing deposits to $1.54 billion for the third quarter of 2019 and a 63 basis point increase in the average cost of deposits to 2.03%, as compared to an average balance of interest-bearing deposits of $728.5 million and an average cost of 1.40% for the same period in 2018.

 

Interest expense increased $15.4 million to $23.7 million for the nine months ended September 30, 2019, as compared to $8.3 million for the nine months ended September 30, 2018. This increase was due primarily to a $12.7 million increase in interest on deposits and a $2.7 million increase in interest on borrowings. The increase in interest expense on deposits was due primarily to a $593.6 million increase in the average balance of interest-bearing deposits to $1.24 billion for the nine months ended September 30, 2019 and 79 basis point increase in the average cost of deposits to 1.98%, as compared to an average balance of $650.6 billion and an average cost of 1.19% for the same period in 2018. Interest expense on borrowings increased primarily due to increase in the average balance of borrowings of $128.3 million to $218.5 million for the nine months ended September 30, 2019, as compared to $90.2 million for the nine months ended September 30, 2018, offset by a 56 basis point decrease in the average cost to 3.19% for the nine months ended September 30, 2019, as compared to 3.75% for the nine months ended September 30, 2018.

 

Net interest margin decreased 50 basis points to 3.26% for the third quarter of 2019 from 3.76% for the third quarter of 2018. Total average interest-earning assets increased $1.17 billion for the third quarter of 2019, as compared to the third quarter of 2018 and the total yield on average interest-earning assets decreased 2 basis points to 4.47% in the third quarter of 2019 as compared to 4.49% in the same period in 2018. The cost of interest-bearing liabilities increased 46 basis points to 2.15% for the third quarter of 2019, as compared to 1.69% for the same period in 2018. The decrease in net interest margin was also due to a change in the mix of interest-earning assets in the third quarter of 2019 as compared to the same period in 2018. The average balances of securities available for sale increased $210.5 million to $238.4 million for the third quarter of 2019 as compared to $27.8 million for the third quarter of 2018. In addition, the average balance of overnight deposits increased $170.8 million for those same periods. As a result of these increases, the average balance of loans represented 78% of total interest-earning average assets for the third quarter of 2019, as compared to 85% for the third quarter of 2018. In addition, the ratio of average interest-earning assets to average interest-bearing liabilities decreased to 1.78x for the third quarter of 2019, as compared to 2.32x for the third quarter of 2018.

 

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Net interest margin decreased 23 basis points to 3.47% for the nine months ended September 30, 2019 from 3.70% for the nine months ended September 30, 2018. Total average interest-earning assets increased $788.5 million to $2.68 billion for the nine months ended September 30, 2019, as compared to $1.89 billion for the nine months ended September 30, 2018, and the total yield on average interest-earning assets increased 36 basis points to 4.65% for the nine months ended September 30, 2019 as compared to 4.29% for the same period in 2018. The cost of interest-bearing liabilities increased 67 basis points to 2.17% for the nine months ended September 30, 2019, as compared to 1.50% for the same period in 2018. As the yield curve flattened and inverted over the last year, the cost of deposits and short-term borrowings grew at a higher rate than the yield on average interest-earning assets, resulting in a lower net interest margin for the nine months ended September 30, 2019, as compared to the same period in 2018. In addition, the ratio of average interest-earning assets to average interest-bearing liabilities decreased to 1.83x for the nine months ended September 30, 2019, as compared to 2.55x for the same period in 2018.

 

Asset Quality

 

Non-performing assets consist of non-accrual loans, accruing loans that are 90 days or more past due, consumer loans placed in forbearance with payments past due over 90 days and still accruing, non-accrual troubled debt restructurings and real estate owned (“REO”) that has been acquired in partial or full satisfaction of loan obligations or upon foreclosure. The Bank had no REO properties at September 30, 2019 and December 31, 2018.

 

Non-accrual loans increased by $3.9 million due primarily to one one-to-four-family loan in the amount of $2.4 million, which became non-accrual in June 2019. As of September 2019, the loan was current; however, the loan will remain in non-accrual status until the borrower makes regular payments for a period of six consecutive months. The loan-to-value ratio for this loan was 49.5%.

 

 7 

 

 

 

               
(dollars in thousands)   September 30, 2019   December 31, 2018  
Non-performing assets:              
Non-accrual loans:              
Commercial   $  —   $  —  
One-to-four family      2,357      —  
Commercial and industrial      1,047      —  
Consumer      594      50  
Total non-accrual loans   $  3,998   $  50  
Accruing loans 90 days or more past due      716      239  
Total non-performing loans and assets   $  4,714   $  289  
Nonaccrual loans as % of loans outstanding     0.16 %      — %
Non-performing loans as % of loans outstanding     0.19 %     0.02 %
Allowance for loan losses   $  (24,444)   $  (18,942)  
Allowance for loan losses as % of loans outstanding      0.98 %      1.02 %

                           
    Three months ended September 30,    Nine months ended September 30,   
(dollars in thousands)   2019   2018   2019   2018  
Provision/(credit) for loan losses   $  2,004   $  (453)   $  1,923   $  2,294  
Charge-offs   $  275   $  54   $  691   $  278  
Recoveries   $  —   $  (1,537)   $  (4,270)   $  (1,590)  
Net charge-offs/(recoveries) as % of average loans (annualized)      0.05 %      (0.36) %      (0.22) %      (0.11) %

 

The provision for loan losses for the third quarter of 2019 was $2.0 million, as compared to a $453,000 credit for third quarter of 2018. The credit in the provision for loan losses for the third quarter of 2018 reflects a recovery of $1.5 million related to taxi medallion loans. In addition, the provision for the third quarter of 2019 reflects loan production of $252.7 million in the third quarter of 2019, as compared to $146.9 million in the third quarter of 2018.

 

The provision for loan losses for the nine months ended 2019 was a $1.9 million, as compared to $2.3 million for same period in 2018. The provision for the nine months ended September 30, 2019 consisted of a $6.2 million provision for loan losses recorded as a result of the record loan growth during 2019, partially offset by a negative provision due to recoveries of $4.3 million, of which $4.2 million related to the taxi medallion loans.

 

Non-Interest Income

                 
   Three months ended September 30,   Nine months ended September 30, 
(dollars in thousands)  2019   2018   2019   2018 
Service charges on deposit accounts  $852   $693   $2,579   $3,422 
Prepaid third-party debit card income   1,482    1,080    4,161    3,506 
Other service charges and fees   349    239    940    3,076 
Unrealized gain on equity securities   17        87     
Loss on sale of securities               (37)
Total non-interest income  $2,700   $2,012   $7,767   $9,967 

 

Non-interest income increased $688,000 or 34.2% to $2.7 million in the third quarter of 2019, as compared to $2.0 million in the third quarter of 2018. This increase was due primarily to a $402,000 increase in prepaid third-party debit card income and a $159,000 increase in service charges in deposits. The increase in debit card income reflects the growth in the debit card business.

 8 

 

 

 

Non-interest income decreased by $2.2 million, or 22.1%, to $7.8 million in the nine months ended September 30, 2019, as compared to $10.0 million for the nine months ended September 30, 2018, primarily due to decreases of $869,000 decrease in service charges on deposit accounts and $2.1 million in other service charges and fees, offset by an increase $655,000 in debit card income. The decrease in service charges on deposit accounts and other service charges and fees were due to a decrease in wire fees and foreign currency conversion fees, which were at an elevated level during first quarter of 2018 as customers, particularly those in the digital currency business, were transferring funds from their global corporate accounts back into their U.S. accounts with the Bank. The increase in debit card income reflects the growth in the debit card business.

 

Non-Interest Expense

                 
   Three months ended September 30,   Nine months ended September 30, 
(dollars in thousands)  2019   2018   2019   2018 
Compensation and benefits  $7,875   $6,253   $23,286   $18,696 
Bank premises and equipment   1,790    1,273    4,473    3,739 
Professional fees   906    587    2,617    2,207 
Technology costs   660    582    1,788    2,387 
Licensing fees   2,866    265    5,741    574 
Other expenses   1,398    1,395    5,008    4,265 
Total non-interest expense  $15,495   $10,355   $42,913   $31,868 

 

Non-interest expense increased $5.1 million to $15.5 million for the third quarter of 2019 as compared to $10.4 million for the third quarter of 2018. Compensation and benefits increased $1.6 million to $7.9 million for the third quarter of 2019 as compared to $6.3 million for the third quarter of 2018. This increase was due primarily to an increase in the average number of full-time employees to 168 for the third quarter of 2019, as compared to 139 for the third quarter of 2018. For the third quarter of 2019, licensing fees related to specialty deposit products amounted to $2.9 million as compared to $265,000 for the third quarter of 2018, an increase of $2.6 million. Specialty deposits are designed for clients who are in possession of or have discretion over large deposits such as, but not limited to, property management companies, title companies and bankruptcy trustees. Specialty deposits amounted to $1.26 billion at September 30, 2019, as compared to $87.1 million at September 30, 2018. Bank premises and equipment increased $517,000 to $1.8 million for the three months ended September 30, 2019, as compared to $1.3 million for the same period in 2018, primarily due to the Company taking possession of new space, which is under renovation, at its headquarters in 99 Park Ave., New York, New York in August 2019. The additional rent amounted to $400,000 and it is anticipated that rent expense will include $600,000 for the new space for the fourth quarter of 2019. When renovations on the new space are complete and the Company vacates its existing space, likely to be in the first quarter of 2020, the Company will cease rent payments on the former space resulting in a reduction of rent expense of approximately $195,000 per quarter.

 

Non-interest expense increased $11.0 million to $42.9 million for the nine months ended September 30, 2019 as compared to $31.9 million for the nine months ended September 30, 2018. Compensation and benefits increased $4.6 million to $23.3 million for the nine months ended September 30, 2019 as compared to $18.7 million for the nine months ended September 30, 2018. This increase was due primarily to an increase in the average number of full-time employees to 162 for nine months ended September 30, 2019, as compared to 137 for the same period in 2018. Technology costs decreased $599,000 to $1.8 million for the nine months ended September 30, 2019 as compared to $2.4 million for the nine months ended September 30, 2018. For the nine months ended September 30, 2019, licensing fees related to specialty deposit products amounted to $5.7 million as compared to $574,000 for the nine months ended September 30, 2018, an increase of $5.2 million. Bank premises and equipment increased $734,000 to $4.5 million for the nine months ended September 30, 2019, as compared to $3.7 million for the same period in 2018, due primarily to the additional rent of $400,000 for the new space at the Company’s headquarters.

 

 9 

 

 

 

About Metropolitan Bank Holding Corporation

 

Metropolitan Bank Holding Corp. (NYSE: MCB) is the holding company for Metropolitan Commercial Bank. The Bank provides a broad range of business, commercial and personal banking products and services to small and middle-market businesses, public entities and affluent individuals in the New York metropolitan area. Founded in 1999, the Bank is headquartered in New York City and operates six locations in Manhattan, Brooklyn and Great Neck, Long Island. The Bank is also an active issuer of debit cards for third-party debit card programs. Metropolitan Commercial Bank is a New York State chartered commercial bank, a Federal Reserve System member bank whose deposits are insured up to applicable limits by the FDIC, and an equal opportunity lender. For more information, please visit www.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 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 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 those discussed under the heading “Risk Factors” in our Annual Report on Form 10-K, as well as an unexpected deterioration in our loan portfolio, unexpected increases in our expenses, greater than anticipated growth and our ability to manage such growth, unanticipated regulatory action, unexpected changes in interest rates, an unanticipated decrease in deposits, an unanticipated loss of key personnel, an unanticipated loss of existing customers, competition from other institutions resulting in unanticipated changes in our loan or deposit rates, unanticipated increases in Federal Deposit Insurance Corporation costs and unanticipated adverse changes in our customers’ economic conditions or economic conditions in our local area in general.

 

Forward-looking statements speak only as of the date of this release. We do not undertake any obligation to update or revise any forward-looking statement.

 

 10 

 

 

 

Consolidated Balance Sheet

 

         
   September 30, 2019   December 31, 2018 
Assets          
Cash and due from banks  $11,270   $9,246 
Overnight deposits   424,170    223,704 
Total cash and cash equivalents   435,440    232,950 
Investment securities available for sale, substantially restricted   250,674    30,439 
Investment securities held to maturity   3,938    4,571 
Investment securities -- Equity investments   2,223    2,110 
Total securities   256,835    37,120 
Other investments   20,921    22,287 
Loans, net of deferred fees and unamortized costs   2,496,697    1,865,216 
Allowance for loan losses   (24,444)   (18,942)
Net loans   2,472,253    1,846,274 
Receivable from prepaid card programs, net   16,257    8,218 
Accrued interest receivable   8,273    5,507 
Premises and equipment, net   9,628    6,877 
Prepaid expenses and other assets   9,859    8,158 
Goodwill   9,733    9,733 
Accounts receivable, net   3,972    5,520 
Total assets  $3,243,171   $2,182,644 
Liabilities and Stockholders' Equity          
Deposits:          
Noninterest-bearing demand deposits  $1,041,102   $798,563 
Interest-bearing deposits   1,664,104    861,991 
Total deposits   2,705,206    1,660,554 
Federal Home Loan Bank of New York advances   144,000    185,000 
Trust preferred securities   20,620    20,620 
Subordinated debt, net of issuance cost   24,587    24,545 
Accounts payable, accrued expenses and other liabilities   41,067    18,439 
Accrued interest payable   958    1,282 
Prepaid third-party debit cardholder balances   15,731    7,687 
Total liabilities   2,952,169    1,918,127 
           
Class B preferred stock   3    3 
Common stock   82    82 
Additional paid in capital   215,677    213,490 
Retained earnings   73,501    51,415 
Accumulated other comprehensive gain (loss), net of tax effect   1,739    (473)
Total stockholders’ equity   291,002    264,517 
Total liabilities and stockholders’ equity  $3,243,171   $2,182,644 

 

 11 

 

 

 

Consolidated Statement of Income (unaudited)

                 
   Three months ended September 30,   Nine months ended September 30, 
(dollars in thousands)  2019   2018   2019   2018 
Total interest income  $35,496   $21,907   $93,314   $60,602 
Total interest expense   9,443    3,556    23,746    8,336 
Net interest income   26,053    18,351    69,568    52,266 
Provision for loan losses   2,004    (453)   1,923    2,294 
Net interest income after provision for loan losses   24,049    18,804    67,645    49,972 
                     
Non-interest income:                    
Service charges on deposit accounts   852    693    2,579    3,422 
Prepaid third-party debit card income   1,482    1,080    4,161    3,506 
Other service charges and fees   349    239    940    3,076 
Unrealized gain on equity securities   17        87     
Losses on sale of securities               (37)
Total non-interest income   2,700    2,012    7,767    9,967 
                     
Non-interest expense:                    
Compensation and benefits   7,875    6,253    23,286    18,696 
Bank premises and equipment   1,790    1,273    4,473    3,739 
Professional fees   906    587    2,617    2,207 
Technology costs   3,526    847    7,529    2,961 
Other expenses   1,398    1,395    5,008    4,265 
Total non-interest expense   15,495    10,355    42,913    31,868 
                     
Net income before income tax expense   11,254    10,461    32,499    28,071 
Income tax expense   3,571    3,348    10,228    8,803 
Net income  $7,683   $7,113   $22,271   $19,268 
                     
Earnings per common share:                    
Average common shares outstanding - basic   8,175,164    8,135,398    8,172,638    8,126,220 
Average common shares outstanding - diluted   8,348,970    8,289,732    8,339,958    8,281,021 
Basic earnings  $0.92   $0.87   $2.69   $2.35 
Diluted earnings  $0.90   $0.85   $2.63   $2.31 

 

 12 

 

 

 

Summary of Income and Performance Measures

Five Quarter Trend (unaudited)

                     
   Quarter Ended 
(Dollars in thousands)  Sept. 30, 2019   June 30, 2019   Mar. 31, 2019   Dec. 31, 2018   Sept. 30, 2018 
Net interest income  $26,053   $22,937   $20,578   $18,961   $18,351 
Provision (credit) for loan losses   2,004    1,950    (2,031)   844    (453)
Net interest income after provision for loan losses   24,049    20,987    22,609    18,117    18,804 
Non-interest income   2,700    2,674    2,393    2,188    2,012 
Non-interest expense:                         
Compensation and benefits   7,875    7,921    7,490    6,962    6,253 
Other Expense   7,620    6,803    5,204    4,640    4,102 
Total non-interest expense   15,495    14,724    12,694    11,602    10,355 
                          
Income before income tax expense   11,254    8,937    12,308    8,703    10,461 
Income tax expense   3,571    2,880    3,777    2,418    3,348 
Net income   7,683    6,057    8,531    6,285    7,113 
                          
Performance Measures:                         
Net income available to common shareholders   7,550    5,950    8,396    6,238    7,057 
Per common share:                         
Basic earnings  $0.92   $0.73   $1.03   $0.77   $0.87 
Diluted earnings  $0.90   $0.71   $1.01   $0.75   $0.85 
Common shares outstanding:                         
Average - diluted   8,348,970    8,336,064    8,285,220    8,273,220    8,289,732 
Period end   8,319,852    8,320,816    8,320,816    8,217,274    8,207,234 
Return on (annualized):                         
Average total assets   0.97%   0.91%   1.49%   1.25%   1.45%
Average equity   10.63%   8.71%   12.67%   9.59%   11.22%
Average common equity   10.84%   8.89%   12.93%   9.80%   11.47%
Yield on average earning assets   4.47%   4.66%   4.83%   4.65%   4.49%
Cost of interest-bearing liabilities   2.15%   2.22%   2.15%   1.90%   1.69%
Net interest spread   2.32%   2.44%   2.68%   2.75%   2.80%
Net interest margin   3.26%   3.47%   3.68%   3.77%   3.76%
Net charge-offs (recoveries) as % of average loans (annualized)   0.05%   0.01%   (0.80)%   0.09%   (0.36)%
Efficiency ratio   53.89%   57.49%   55.26%   54.86%   50.85%

  

 13 

 

 

 

Consolidated Balance Sheet Summary, Five Quarter Trend (unaudited)

                                 
(dollars in thousands)   Sept. 30, 2019   June 30, 2019   Mar. 31, 2019   Dec. 31, 2018   Sept. 30, 2018  
Assets                                
Total Assets   $  3,243,171   $  2,960,613   $  2,545,186   $  2,182,644   $  1,930,714  
Overnight deposits      424,170      424,276      346,674      223,704      148,260  
Total securities      256,835      137,109      36,272      37,120      32,247  
Other investments      20,921      22,972      23,652      22,287      16,645  
Loans, net of deferred fees and unamortized costs      2,496,697      2,335,573      2,102,420      1,865,216      1,698,929  
                                 
Liabilities and Stockholders' Equity                                
Deposits:                                
Noninterest-bearing demand deposits   $  1,041,102   $  1,103,278   $  865,908   $  798,563   $  772,754  
Interest-bearing deposits      1,664,104      1,272,844      1,100,222      861,991      761,177  
Total deposits      2,705,206      2,376,122      1,966,130      1,660,554      1,533,931  
Borrowings      189,207      235,193      260,179      230,165      105,151  
Total stockholders' Equity      291,002      281,330      273,787      264,517      257,270  
                                 
Asset Quality                                
Total non-accrual loans   $  3,998   $  2,415   $  68   $  50   $  79  
Total non-performing loans   $  4,714   $  3,489   $  1,498   $  289   $  407  
Non-accrual loans to total loans      0.16 %      0.10 %      — %      — %      — %
Non-performing loans to total loans      0.19 %      0.15 %      0.07 %      0.02 %      0.02 %
Allowance for loan losses      (24,444)      (22,715)      (20,834)      (18,942)      (18,493)  
Allowance for loan losses to total loans      0.98 %      0.97 %      0.99 %      1.02 %      1.09 %
Provision for loan losses      2,004      1,950      (2,031)      844      (453)  
Net charge-offs (recoveries)      275      69      (3,923)      395      (1,483)  
                                 
Regulatory Capital                                
Tier 1 Leverage:                                
Metropolitan Bank Holding Corp.      9.6 %      11.0 %      12.5 %      13.7 %      13.8 %
Metropolitan Commercial Bank      10.3      11.2      13.4      14.7      14.8  
                                 
Common Equity Tier 1 Risk-Based (CET1):                                
Metropolitan Bank Holding Corp.      10.4      10.7      11.8      13.2      13.9  
Metropolitan Commercial Bank      12.2      12.5      13.9      15.6      16.5  
                                 
Tier 1 Risk-Based:                                
Metropolitan Bank Holding Corp.      11.4      11.7      12.9      14.6      15.4  
Metropolitan Commercial Bank      12.2      12.5      13.9      15.6      16.5  
                                 
Total Risk-Based:                                
Metropolitan Bank Holding Corp.      13.0      13.4      14.8      16.9      17.9  
Metropolitan Commercial Bank      13.1      13.4      14.8      16.7      17.6  

 

 14 

 

 

 

Reconciliation of GAAP to 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 accompanying tables.

 

Balance sheet data, five quarter trend

                     
Dollars in thousands, except per share data  Sept. 30, 2019   June 30, 2019   Mar. 31, 2019   Dec. 31, 2018   Sept. 30, 2018 
Average assets  $3,131,100   $2,667,416   $2,288,551   $2,015,831   $1,960,318 
Less: average intangible assets   9,733    9,733    9,733    9,733    9,733 
Average tangible assets  $3,121,367   $2,657,683   $2,278,818   $2,006,098   $1,950,585 
                          
Average equity  $286,647   $278,025   $269,418   $262,030   $253,516 
Less: Average preferred equity   5,502    5,502    5,502    5,502    5,502 
Average common equity  $281,145   $272,523   $263,916   $256,528   $248,014 
Less: average intangible assets   9,733    9,733    9,733    9,733    9,733 
Average tangible common equity  $271,412   $262,790   $254,183   $246,795   $238,281 
                          
Total assets  $3,243,171   $2,960,613   $2,545,186   $2,182,644   $1,930,714 
Less: intangible assets   9,733    9,733    9,733    9,733    9,733 
Tangible assets  $3,233,438   $2,950,880   $2,535,453   $2,172,911   $1,920,981 
                          
Total Equity  $291,002   $281,330   $273,787   $264,517   $257,270 
Less: preferred equity   5,502    5,502    5,502    5,502    5,502 
Common Equity  $285,500   $275,828   $268,285   $259,015   $251,768 
Less: intangible assets   9,733    9,733    9,733    9,733    9,733 
Tangible common equity (book value)  $275,767   $266,095   $258,552   $249,282   $242,035 
                          
Common shares outstanding   8,319,852    8,320,816    8,320,816    8,217,274    8,207,234 
                          
Book value per share (GAAP)  $34.32   $33.15   $32.24   $31.52   $30.68 
Tangible book value per common share (non-GAAP)*  $33.15   $31.98   $31.07   $30.34   $29.49 

 

* Tangible book value divided by common shares outstanding at period-end.

  

 15 

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Section 3: EX-99.2 (EXHIBIT 99.2)

 

Exhibit 99.2

Investor Presentation 2019 Q3

 

 

1 Forward - looking Statement This presentation contains certain “forward - looking statements” about the Company which, to the extent applicable, are intended to be covered by the safe harbor for forward - looking statements provided under Federal securities laws. Examples of forward - looking statements include but are not limited to the Company’s 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 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, an unexpected deterioration in our loan portfolio, unexpected increases in our expenses, greater than anticipated growth and our ability to manage such growth, unanticipated regulatory action, unexpected changes in interest rates, an unanticipated loss of key personnel, an unanticipated loss of existing customers, competition from other institutions resulting in unanticipated changes in our loan or deposit rates, unanticipated increases in Federal Deposit Insurance Corporation costs, unanticipated adverse changes in our customers’ economic conditions or economic conditions in our local area in general and other factors discussed in our filings with the Securities and Exchange Commission. Forward - looking statements speak only as of the date of this presentation. We do not undertake any obligation to update or revise any forward - looking statement, whether the result of new information, future events or otherwise.

 

 

2 Company Overview ▪ Full service commercial bank since 1999 with goal of helping our clients build and sustain wealth ▪ Business model combines high - touch service and relationship - based focus of a community bank with extensive suite of financial products and services ▪ Expertise in commercial real estate and traditional C&I lending to middle market companies in the New York metro area ▪ Lower cost core deposit franchise through the following sources: ▪ Existing lending relationships ▪ Non - borrowing clients sourced through our banking centers ▪ Specialty deposits for clients in possession of or having discretion over large pools of funds ▪ Global Payments Group: ▪ Prepaid debit card issuing business ▪ Banking services to digital currency businesses ▪ Merchant acquiring business ▪ Correspondent banking services ▪ Banking services to cannabidiol companies ▪ Strong balance sheet growth while managing margin despite the inverted yield curve

 

 

3 Loan and Deposit Portfolio Metropolitan Commercial Bank • Multi - family loans – 60% rent regulated • CRE/RBC ratios: MCBH 394.82% and MCB 390.62% • CRE Owner - occupied is a segment of our C&I Lending platform Loan Portfolio at September 30, 2019 $2.50 Billion Deposits at September 30, 2019 $ 2 .71 Billion 26% 12% 5% 23% 34% DDA (excl. Specialty) Specialty DDA Savings and CD's MMA (excl. Specialty) Specialty MMA 19% 41% 18% 14% 3% 2% 3% CRE - Owner Occupied CRE - Non-Owner Occupied C&I Multi-family Consumer Construction 1-4 family • Specialty deposits designed for clients who are in possession of or have discretion over large deposits such as property management companies, title companies, and bankruptcy trustees. • Specialty deposit accounts have an expected retention period of greater than 3 years. • Specialty money market accounts have a weighted average cost of 1.55%. • Specialty deposit accounts in total have a weighted average cost of 1.14%.

 

 

4 Quarterly Revenues, Profitability and Asset Quality *annualized (1) Results include a recovery of $4.2 million related to loans previously charged off in Q1. (2) Results include a recovery of $1.5 million related to loans previously charged off. 3 Months ended 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018 Summary Income Statement Net Interest Income $26,053 $22,937 $20,578 $18,961 $18,351 Provision credit for loan losses $2,004 $1,950 ($2,031) (1) $844 ($453) (2) Non-Interest Income $2,700 $2,674 $2,393 $2,188 $2,012 Non-Interest expense $15,495 $14,724 $12,694 $11,602 $10,355 Net Income $7,683 $6,057 $8,531 $6,285 $7,113 Profitability Diluted EPS $0.90 $0.71 $1.01 (1) $0.75 $0.85 (2) ROAA* 0.97% 0.91% 1.49% 1.25% 1.45% ROAE* 10.63% 8.71% 12.67% 9.59% 11.22% NIM* 3.26% 3.47% 3.68% 3.77% 3.76% Efficiency Ratio 53.89% 57.49% 55.26% 54.86% 50.85% Asset Quality NPLs/Total Loans 0.19% 0.15% 0.07% 0.02% 0.02% NCOs/Average Total Loans* 0.05% 0.01% (0.80%) (1) 0.09% (0.36%) (2) Reserves/Loans 0.98% 0.97% 0.99% 1.02% 1.09% (dollars in thousands)

 

 

5 Net Interest Margin Analysis 3.76% 3.77% 3.68% 3.47% 3.26% 4.49% 4.65% 4.83% 4.66% 4.47% 1.69% 1.90% 2.15% 2.22% 2.15% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 3Q18 4Q18 1Q19 2Q19 3Q19 Net Interest Margin Components ▬ NIM ▬ Yield on Interest - Earning Assets ▬ Rate on Interest - Bearing Liabilities Yield /Rate 3Q18 4Q18 1Q19 2Q19 3Q19 Loans 4.90% 4.93% 5.15% 5.05% 5.03% Total Interest-Earning Assets 4.49% 4.65% 4.83% 4.66% 4.47% Interest-Bearing Deposits 1.40% 1.64% 1.89% 2.01% 2.03% Borrowed Funds 3.73% 3.62% 3.35% 3.19% 3.03% Total Interest-Bearing Liabilities 1.69% 1.90% 2.15% 2.22% 2.15% Net Interest Rate Spread 2.80% 2.75% 2.68% 2.44% 2.32% Net Interest Margin 3.76% 3.77% 3.68% 3.47% 3.26%

 

 

6 Non - interest Income and Expense Detail Non - Interest Income ($000s) Non - Interest Expense ($000s) 9/30/19 6/30/19 12/31/18 9/30/18 Service Charges on Deposit Accounts $852 $908 $826 $693 Prepaid Debit Card Income 1,482 1,422 1,133 1,080 Other Service Charges and Fees 349 313 229 239 Change in fair value of equity securities 17 31 - - Total Noninterest Income $2,700 $2,674 $2,188 $2,012 3 Months Ended 9/30/19 6/30/19 12/31/18 9/30/18 Compensation and Benefits $7,875 $7,921 $6,962 $6,253 Bank Premises and Equipment 1,790 (1) 1,348 1,324 1,273 Professional Fees 906 917 715 587 Technology Costs -2205 562 598 317 Specialty Deposit Licensing Fees 2,866 2,056 427 265 Other Expenses 2,866 1,920 1,576 265 Total Noninterest Income $1,398 $14,724 $11,602 $1,395 3 Months Ended (1) Includes $400,000 related to additional leased space at the Company’s headquarters.

 

 

7 Balance Sheet and Capital *Metropolitan Bank Holding Corp. and Metropolitan Commercial Bank meet all the requirements to be considered “Well - Capitalized” under applicable regulatory guidelines at each date shown. (dollars in thousands) 6/30/19 12/31/18 Balance Sheet ($000's) Total Assets $282,558 $1,060,527 Total Loans $161,124 $631,481 Total Deposits $329,084 $1,044,652 Capital MBHC MCB MBHC MCB MBHC MCB CET1* 10.4% 12.2% 10.7% 12.5% 13.2% 15.6% Total Risk-Based Capital* 13.0% 13.1% 13.4% 13.4% 16.9% 16.7% Tier 1 Leverage* 9.6% 10.3% 11.0% 11.2% 13.7% 14.7% $3,243,171 $2,960,613 $2,182,644 9/30/2019 Change vs. As of 9/30/2019 As of 6/30/2019 As of 12/31/2018 $2,496,697 $2,335,573 $1,865,216 $2,705,206 $2,376,122 $1,660,554

 

 

8 Strong Balance Sheet Growth Deposits ($mm) Total Equity ($mm) Assets ($mm) Loans, Net of Deferred Fees ($mm) $1,931 $2,183 $2,545 $2,961 $3,243 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 $1,699 $1,865 $2,102 $2,336 $2,497 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 $1,534 $1,661 $1,966 $2,376 $2,705 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 257 265 274 281 291 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 50.4% 48.1% 44.0% 46.4% 38.5% ■ % Non - interest Demand Deposits Total cost of deposits including DDA – 1.20% Cost of interest - bearing deposits – 2.03%

 

 

9 Robust Organic Loan Growth within a Diversified Portfolio 1 Includes commercial real estate, multifamily, and construction (dollars in millions) ■ Total CRE¹ (Non Owner Occupied) ■ Total CRE (Owner Occupied) ■ C&I ■ Other $1,600 $1,699 $1,867 $2,105 $2,339 $2,501 903 964 1,063 1,142 1,330 1,409 234 228 236 366 419 495 353 367 382 422 427 449 110 140 186 176 164 148 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3

 

 

10 Commercial Growth Driven by Expertise in Specific Lending Verticals General Commercial and Industrial Overview C&I Composition at September 30, 2019 Target Market Key Metrics ▪ Middle market businesses with annual revenues below $200mm ▪ Primarily concentrated in the New York MSA ▪ Well - diversified across industries ▪ Weighted average yield of 5.41% YTD ▪ Strong historical credit performance ▪ Pledged collateral and/or personal guarantees from high net worth individuals support most loans ▪ Target borrowers have strong historical cash flows, good asset coverage and positive industry outlooks 45% 10% 18% 8% 2% 3% 3% 2% 1% 2% 2% 4% Healthcare Manufacturing Finance and Insurance Wholesale Trade Individuals Waste Mgt Transportation Arts, Entertainment, and Recreation Retail Trade Professional, Scientific and Technical Services Accommodation and Food Services RE Rental & Leasing

 

 

11 Relationship - based Commercial Real Estate Lending Composition by Type at September 30, 2019 Composition by Region at Septe mber 30, 2019 Overview Target Market Key Metrics ▪ New York metropolitan area real estate entrepreneurs with a net worth in excess of $5 million ▪ Primarily concentrated in the New York MSA ▪ Well - diversified across various property types ▪ Losses peaked at 0.51% in 2010 and have been de minimus since 2014 ▪ Average loan - to - value of 51.4% Majority of loans are originated through direct relationships or referrals from existing clients 19% 23% 11% 9% 10% 8% 3% 4% 2% 4% 3% 2% 2% Multifamily Nursing Home CRE Mixed Use Other CRE Retail Office 1-4 Family Hospitality Construction Land Warehouse Commercial Condo and Co-op Other Unsecured 21% 23% 10% 23% 8% 5% 2% 6% 1% 1% Manhattan Brooklyn Queens Other Bronx Other NY New Jersey Long Island Staten Island Connecticut

 

 

12 NYC Stabilized Multi - family Loan Portfolio New Rent Regulations ▪ MCB multi - family loans underwritten to current cash flows – weighted average DCR of 1.78 on stabilized rent regulated properties ▪ Average LTV of 47% on stabilized rent regulated properties provide a cushion against falling values (dollars in thousands) Total Balance Weighted Average LTV Weighted Average DCR Weighted Average Debt Yield Total NYC Multi-family $273,869 55.49% 1.66 11.13% Rent regulated 216,230 46.78% 1.78 12.13% Unregulated 57,639 59.29% 1.23 7.34%

 

 

13 Well - Developed, Diversified Healthcare Portfolio ▪ Active in Healthcare lending since 2002 ▪ CRE – SNF – Average loan - to - value of 69% ▪ Highly selective in regards to the quality of Skilled Nursing Operators which we finance ▪ Borrowers typically have over 1,000 beds under management ▪ Loans are made only in “certificate of need” states which limits the supply of beds and supports stable occupancy rates. ▪ Sta bilized SNF – 68% of CRE SNF portfolio. Stabilized facility provides adequate cash flows to support debt service and collateral value. Borrowers primary motive for acquisition of a stabilized property is for synergies with existing portfolio of SNFs. Average debt service coverage ratio is 2.05x and average loan - to - value is 68%. Once the loans are seasoned, the mortgage portion of the bridge loan is refinanced with HUD. ▪ Non - stabilized SNF – typically “turn - around” older SNFs acquired from owners who mismanaged the business, relied too heavily on long - term care (Medicaid reimbursement) or did not stay current with changes in the market place. Opportunity for owner to create value by renovating and adding services with higher Medicaid reimbursements rates (rehabilitation services, dialysis , etc.). C& I Healthcare Composition at September 30, 2019 Diversified Healthcare Portfolio 49% 18% 5% 4% 3% 2% 12% 5% 2% Nursing and Residential Care Facilites Doctor Office Ambulatory Health Care Services Offices and Clinics of Dentists Medical Labs Offices of Speech Therapists Misc. Health Practitioners Ambulance Services General Medical & Surgical Hospitals CRE – Skilled Nursing Facilities (SNF) : $429 million C&I – Healthcare - $184 million

 

 

14 Credit Metrics 0.02% 0.02% 0.07% 0.15% 0.19% 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 ALLL/Loans Non - Performing Assets/ALLL NCOs/Average Loans (Annualized) Non - Performing Assets/Loans 1.09% 1.02% 0.99% 0.97% 0.98% 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 2.2% 1.5% 7.2% 15.4% 19.3% 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 (0.36%) 0.09% (0.80%) 0.01% 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 0.05 %

 

 

15 Diversified Deposit Gathering Capabilities Deposit Composition ($mm) 1,012 878 773 799 866 1,103 1,041 605 662 761 862 1,100 1,273 1,664 $1,617 $1,540 $1,534 $1,661 $1,966 0.38% 0.44% 0.62% 0.81% 1.06% 1.12% 1.20% 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 $ 2,376 $ 2,705 ▪ Conversion of commercial borrowing clients into full retail relationships ▪ Funds additional commercial loans ▪ Provide commercial clients with competitive solutions (e.g., remote deposit capture and online banking) Existing Lending Customers ▪ Six strategically located banking centers within close proximity to a “critical mass” of target clients ▪ Non - borrowing retail relationships ▪ Growing number of retail deposits tied to cryptocurrency related accounts Retail Banking Centers ▪ Debit card issuing business ▪ Digital currency customers ▪ Banking services to cannabidiol companies Future products and services: ▪ Merchant acquiring business ▪ Correspondent banking services Global Payments Group ■ Noninterest Bearing ■ Interest Bearing ▬ Total Cost of Deposits Other Deposit Verticals ▪ Unique deposit relationships ▪ Property management companies ▪ Bankruptcy trustees ▪ Title companies

 

 

16 Well Positioned for Changing Rate Environment Estimated Sensitivity of Projected Annualized Net Interest Income as of June 30, 2019 Fixed vs. Floating Rate Loans at September 30, 2019 11.03% 3.96% (3.13%) (6.68%) -200bps -100bps +100bps +200bps Floating 41% Fixed 59% Approximately 63.7 % of floating rate loans have floors – Weighted average floor of 4.93% ■ Net Interest Income

 

 

17 Outlook: Loan and Deposit growth, Margin Expansion, Operating Leverage Loan Growth Core Deposit Funding Performance ▪ Maintain a diversified commercial real estate portfolio ▪ Maintain CRE concentration below our internal limits ▪ Capture market share from larger competitors through differentiated service ▪ Specialty Deposit relationships ▪ Support development of retail banking franchise ▪ Existing relationships ▪ Consider new retail banking centers ▪ Continue to provide cash management service to digital currency related clients ▪ Expand debit card issuing business to generate additional low - cost core deposits and fee income ▪ Future initiatives: Introduce merchant acquiring services and correspondent banking services ▪ Expect future profitability to be driven by organic growth ▪ Growth: Demonstrated ability to capture market share ▪ Rate benefit: Low cost, core deposits funding short duration assets ▪ Growth in new deposit verticals has resulted in additional costs ahead of revenue growth due to inverted yield curve. ▪ Our growth initiatives will yield enhanced profitability and value to the MCB franchise which will become evident over time. Balance Sheet Growth = Long - Term Profitable Relationships

 

 

18 Appendix

 

 

19 MCB Selected Global Payment Clients Debit Card For teens with parental spending controls and financial literacy lessons Metropolitan Commercial Bank Issuing Bank Debit Card Premier mobile service provider in the Caribbean and Central America for money transfer Metropolitan Commercial Bank Issuing Bank Debit Card | Digital Currency General spend prepaid card that allows consumers to earn rewards paid in digital currency Metropolitan Commercial Bank Issuing Bank Debit Card GPR card that can be used to originate low cost transfers to Mexico for consumers Metropolitan Commercial Bank Issuing Bank Debit Card | Digital Currency Consumers use debit card to spend US$ that is funded by digital currency Metropolitan Commercial Bank Issuing Bank Payments Processor Acquiring bank for a company enabling mass payouts for the marketplace and freelancers Metropolitan Commercial Bank Global Payment Services Digital Currency Banking the e - wallet behind their speed routing for best price execution technology Metropolitan Commercial Bank Holding bank for US$ held in e - wallet Debit Card & Payment Solutions Focused on CoreCard Software and expanding footprint in the FinTech industry Metropolitan Commercial Bank Strategic Partner

 

 

20 MCB Selected Global Payment Clients Debit Card Issuer of debit cards linked to margin accounts for the largest U.S. electronic brokerage firm Metropolitan Commercial Bank Issuing Bank Payments Platform Providing global payment services via banking relationships throughout the world Metropolitan Commercial Bank Global payment services Debit Card General Purpose Reloadable cards and remittance products using the Univision card Metropolitan Commercial Bank Acquiring Bank for Cross Border Payments Payments Processor Digital check cashing and payment services Metropolitan Commercial Bank Sponsor Bank Deposit relationships for settlement and operating accounts. Cash management services Metropolitan Commercial Bank Money Transfer Company Acquiring bank enabling money transfers domestically and cross border Metropolitan Commercial Bank Global payment services

 

 

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