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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): July 24, 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 July 24, 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 six months ended June 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 second quarter ended June 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 9.01.Financial Statements and Exhibits

 

(d)Exhibits.

 

  Exhibit No.   Description
       
  99.1   Press Release dated July 24, 2019
       
  99.2   The 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: July 25, 2019 By: /s/ Mark R. DeFazio
    Mark R. DeFazio
    President and Chief Executive Officer

 

 

(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

 

Exhibit 99.1

 

 

Release:4:00 P.M. July 24, 2019

 

Contact:Investor Relations Department

212-365-6721

[email protected]

 

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

 

NEW YORK, July 24, 2019 – Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), today reported net income of $6.1 million, or $0.71 per diluted common share, for the second quarter of 2019, as compared to $5.9 million, or $0.70 per diluted common share, for the second quarter of 2018.

For the six months ended June 30, 2019, the Company reported net income of $14.6 million, or $1.72 per diluted common share, compared to $12.2 million, or $1.46 per diluted common share, for the six months ended June 30, 2018.

 

Financial Highlights for the second quarter of 2019 include:

 

·GAAP net income decreased $2.4 million to $6.1 million, or $0.71 per diluted common share, for the second quarter of 2019, as compared to GAAP net income of $8.5 million, or $1.01 per diluted common share, for the first quarter of 2019. Core earnings (a non-GAAP measure) increased $471,000 to $6.1 million, or $0.71 per diluted common share, for the second quarter of 2019, as compared to core earnings of $5.6 million, or $0.66 per diluted common share, for the first quarter of 2019. Core earnings excludes the $2.9 million (on an after-tax basis) recovery of loan losses, in the first quarter of 2019, related to taxi medallion loans. See reconciliation to GAAP measures on page 15.

 

·Total assets increased $778.0 million or 35.6% to $2.96 billion at June 30, 2019, as compared to $2.18 billion at December 31, 2018. Total assets increased $415.4 million or 16.3% to $2.96 billion at June 30, 2019, as compared to $2.55 billion at March 31, 2019.

 

·Total loans increased $470.4 million, or 25.2%, to $2.34 billion at June 30, 2019, as compared to $1.87 billion at December 31, 2018. For the three and six months ended June 30, 2019, the Bank’s organic loan production was $299.7 million and $571.9 million, respectively, as compared to $153.8 million and $390.6 million for the three and six months ended June 30, 2018, respectively. Total loans increased $233.2 million or 11.1% to $2.34 billion at June 30, 2019, as compared to $2.10 billion at March 31, 2019.

 

·Total deposits increased $715.6 million, or 43.1%, to $2.38 billion at June 30, 2019, as compared to $1.66 billion at December 31, 2018. This growth in deposits was across the Bank’s deposit verticals.

 

·The loan-to-deposit ratio decreased to 98.3% at June 30, 2019, as compared to 112.3% at December 31, 2018.

 

·Non-interest-bearing deposits increased 38.2% to $1.10 billion at June 30, 2019, as compared to $798.6 million at December 31, 2018. Interest-bearing deposits increased 47.7% to $1.27 billion at June 30, 2019 as compared to $862.0 million at December 31, 2018.

 

 

 

·Net interest margin decreased 12 basis points to 3.47% for the second quarter of 2019 from 3.59% for the second quarter of 2018. For the six months ended June 30, 2019, net interest margin decreased to 3.57%, as compared to 3.63% for the same period in 2018.

 

·The provision for loan losses for the second quarter of 2019 was $2.0 million, as compared to $1.3 million for the second quarter of 2018. The provision for loan losses for the six months ended June 30, 2019 was a credit of $81,000, as compared to $2.7 million for six months ended June 30, 2018. The negative provision for loan losses for the six months ended June 30, 2019 consisted of a $4.2 million provision recorded as a result of the record loan growth during 2019, and recoveries of $4.3 million, of which $4.2 million related to the taxi medallion loans

 

Mark R. DeFazio, the Company’s President and Chief Executive Officer, commented, “I am pleased with the sustainable growth in loans and deposits. We were modestly affected by margin compression this quarter as we continue to work on various new deposit strategies that will drive lower funding costs and address the flattening of the yield curve. While the growth in our new deposit verticals has resulted in additional costs ahead of revenue due to the inverted yield curve, these new initiatives will yield enhanced profitability and stability to the MCB franchise, which will become increasingly evident over time.”

 

Mr. DeFazio continued, “Since the inception of MCB 20 years ago we have developed significant diversification on both sides of the balance sheet. This strategy has defended the bank through volatile interest rate environments as well as market conditions that affect asset quality. We expect this strategy to prove its value again as we continue to deal with a difficult yield curve. As we stay very focused on our core strategy, we expect to continue to take market share from larger regional banks.”

 

Balance Sheet

 

The Company had total assets of $2.96 billion at June 30, 2019, compared with $2.18 billion at December 31, 2018. Loans, net of deferred fees and unamortized costs, increased to $2.34 billion at June 30, 2019 as compared to $1.87 billion at December 31, 2018. For the three and six months ended June 30, 2019, the Bank’s loan production was $299.7 million and $571.9 million, respectively, as compared to $153.8 million and $390.6 million for the three and six months ended June 30, 2018, respectively.

 

Total cash and cash equivalents increased $200.4 million, or 86.0%, to $433.4 million at June 30, 2019, as compared to $233.0 million at December 31, 2018. Total securities, primarily those classified as available-for-sale increased to $137.1 million, or 269.4% at June 30, 2019, as compared to $37.1 million at December 31, 2018. The increases in cash and cash equivalents and securities were primarily due to the strong growth in deposits of $715.6, partially offset by growth in loans of $470.4 million at June 30, 2019, as compared to December 31, 2018.

 

Total deposits increased $715.6 million, or 43.1%, to $2.38 billion at June 30, 2019, as compared to $1.66 billion at December 31, 2018. This was due to increases of $410.9 million in interest-bearing demand deposits and $304.7 million in non-interest-bearing deposits.

 

Total borrowings increased by $5.0 million to $235.2 million at June 30, 2019, as compared to $230.2 million at December 31, 2018. This was due to an increase of $5.0 million in Federal Home Loan Bank advances, which were used to support the Bank’s loan growth.

 

Total stockholders’ equity was $281.3 million at June 30, 2019, as compared to $264.5 million at December 31, 2018. The increase of $16.8 million was primarily due to net income of $14.6 million for the six months ended June 30, 2019.

 

 

 

Metropolitan Commercial Bank meets all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. At June 30, 2019, total Commercial Real Estate Loans (“CRE”) were 372.5% of risk-based capital, as compared to 312.4% at December 31, 2018.

 

Income Statement

 

   Three months ended June 30,   Six months ended June 30, 
(dollars in thousands)  2019   2018   2019   2018 
Net income  $6,057   $5,865   $14,588   $12,156 
Diluted earnings per common share   0.71    0.70    1.72    1.46 
Annualized return on average assets   0.91%   1.20%   1.18%   1.28%
Annualized return on average equity   8.71%   9.53%   10.66%   10.00%
Annualized return on average common equity*   8.89%   9.75%   10.88%   10.23%

 

 

*Common equity excludes Class B preferred stock. See reconciliation to GAAP measures on page 14.

 

Net Income Summary

 

Net income increased $192,000 to $6.1 million for the second quarter of 2019, as compared to $5.9 million for the same period in 2018. This increase was due primarily to a $5.5 million increase in net interest income, partially offset by $4.4 million increase in non-interest expense and a $680,000 increase in provision for loan losses.

 

Net income increased $2.4 million to $14.6 million for six months ended June 30, 2019, as compared to $12.2 million for the same period in 2018. This increase was due primarily to a $9.6 million increase in net interest income and a $2.8 million decrease in the provision for loan losses, partially offset by a $2.9 million decrease in non-interest income and a $5.9 million increase in non-interest expense.

 

 

 

Net Interest Margin Analysis

 

   Three months ended 
   June 30, 2019   June 30, 2018 
   Average           Average         
   Outstanding       Yield/Rate   Outstanding       Yield/Rate 
(dollars in thousands)  Balance   Interest   (annualized)   Balance   Interest   (annualized) 
Assets:                              
Interest-earning assets:                              
Loans (1)  $2,226,557   $28,019    5.05%  $1,532,073   $17,996    4.71%
Available-for-sale securities   54,389    342    2.49%   27,942    146    2.07%
Held-to-maturity securities   4,287    22    2.01%   5,096    27    2.09%
Equity investments - non-trading   3,223    16    1.96%   2,175    12    2.13%
Overnight deposits   330,962    2,060    2.50%   340,300    1,534    1.81%
Other interest-earning assets   31,371    369    4.72%   35,932    283    3.16%
Total interest-earning assets   2,650,789    30,828    4.66%   1,943,518    19,998    4.13%
Non-interest-earning assets   38,093              20,134           
Allowance for loan and lease losses   (21,466)             (16,742)          
Total assets  $2,667,416             $1,946,910           
                               
Liabilities and Stockholders' Equity:                              
Interest-bearing liabilities:                              
Money market, savings and other interest-bearing accounts  $1,071,388   $5,235    1.96%  $549,950   $1,428    1.04%
Certificates of deposit   112,538    701    2.50%   84,636    371    1.76%
Total interest-bearing deposits   1,183,926    5,936    2.01%   634,586    1,799    1.14%
Borrowed funds   242,493    1,955    3.19%   80,772    804    3.99%
Total interest-bearing liabilities   1,426,419    7,891    2.22%   715,358    2,603    1.46%
Non-interest-bearing liabilities:                              
Non-interest-bearing deposits   937,222              948,021           
Other non-interest-bearing liabilities   25,750              37,422           
Total liabilities   2,389,391              1,700,801           
                               
Stockholders' Equity   278,025              246,109           
Total liabilities and equity  $2,667,416             $1,946,910           
                               
Net interest income       $22,937             $17,395      
Net interest rate spread (2)             2.44%             2.67%
Net interest-earning assets  $1,224,370             $1,228,160           
Net interest margin (3)             3.47%             3.59%
Ratio of interest earning assets to interest bearing liabilities             1.86x             2.72x

 

 

(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.

 

 

 

   Six months ended 
   June 30, 2019   June 30, 2018 
   Average           Average         
   Outstanding           Outstanding         
(dollars in thousands)  Balance   Interest   Yield/Rate   Balance   Interest   Yield/Rate 
Assets:                              
Interest-earning assets:                              
Loans (1)  $2,100,546   $53,069    5.09%  $1,504,695   $35,208    4.72%
Available-for-sale securities   42,521    546    2.55%   28,801    301    2.08%
Held-to-maturity securities   4,382    45    2.04%   5,207    54    2.10%
Equity investments - non-trading   3,216    39    2.41%   2,169    23    2.13%
Overnight deposits   280,216    3,449    2.48%   304,686    2,577    1.71%
Other interest-earning assets   27,866    670    4.85%   35,838    528    2.97%
Total interest-earning assets   2,458,747    57,818    4.74%   1,881,396    38,691    4.15%
Non-interest-earning assets   40,739              34,055           
Allowance for loan and lease losses   (20,489)             (16,057)          
Total assets  $2,478,997             $1,899,394           
                               
Liabilities and Stockholders' Equity:                              
Interest-bearing liabilities:                              
Money market, savings and other interest-bearing accounts  $980,365   $9,271    1.91%  $532,301   $2,619    0.99%
Certificates of deposit   108,934    1,311    2.43%   78,761    619    1.58%
Total interest-bearing deposits   1,089,299    10,582    1.96%   611,062    3,238    1.07%
Borrowed funds   226,918    3,721    3.26%   82,535    1,542    3.77%
Total interest-bearing liabilities   1,316,217    14,303    2.19%   693,597    4,780    1.39%
Non-interest-bearing liabilities:                              
Non-interest-bearing deposits   864,470              919,990           
Other non-interest-bearing liabilities   24,598              42,608           
Total liabilities   2,205,285              1,656,195           
                               
Stockholders' Equity   273,712              243,199           
Total liabilities and equity  $2,478,997             $1,899,394           
                               
Net interest income       $43,515             $33,911      
Net interest rate spread (2)             2.55%             2.75%
Net interest-earning assets  $1,142,530             $1,187,799           
Net interest margin (3)             3.57%             3.63%
Ratio of interest earning assets to interest bearing liabilities             1.87x             2.71x

 

 

(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.

 

 

 

Net Interest Income

 

Interest income increased $10.8 million to $30.8 million for the second quarter of 2019, as compared to $20.0 million for the second quarter of 2018. This increase was due primarily to a $10.0 million increase in interest income on loans. The increase in interest income on loans was due to a $694.5 million increase in the average balance of loans to $2.23 billion and a 34 basis point increase in the average yield to 5.05% for the second quarter of 2019, as compared to 4.71% for the second quarter of 2018.

 

Interest income increased $19.1 million to $57.8 million for the six months ended June 30, 2019, as compared to $38.7 million for the six months ended June 30, 2018. This increase was due primarily to a $17.9 million increase in interest income on loans. The increase in interest income on loans was due to a $595.9 million increase in the average balance of loans to $2.10 billion and a 37 basis point increase in the average yield to 5.09% for the six months ended June 30, 2019.

 

Interest expense was $7.9 million for the second quarter of 2019, as compared to $2.6 million for the second quarter of 2018, an increase of $5.3 million. This increase was due to a $4.1 million increase in interest on deposits and a $1.2 million increase in interest on borrowings. The increase in interest expense on deposits was due primarily to a $549.3 million increase in the average balance of interest-bearing deposits to $1.18 billion for the second quarter of 2019 and an 87 basis point increase in the average cost of deposits to 2.01%. Interest expense on borrowings increased primarily due to an increase in the average balance of borrowings of $161.7 million to $242.5 million for the second quarter of 2019, as compared to $80.8 million for the second quarter of 2018.

 

Interest expense was $14.3 million for the six months ended June 30, 2019, as compared to $4.8 million for the six months ended June 30, 2018, an increase of $9.5 million. This increase was due primarily to a $7.3 million increase in interest on deposits and a $2.2 million increase in interest on borrowings. The increase in interest expense on deposits was due primarily to a $478.2 million increase in the average balance of interest-bearing deposits to $1.09 billion for the six months ended June 30, 2019 and an 89 basis point increase in the average cost of deposits to 1.96%. Interest expense on borrowings increased primarily due to increase in the average balance of borrowings of $144.4 million to $226.9 million for the six months ended June 30, 2019, as compared to $82.5 million for the six months ended June 30, 2018.

 

Net interest margin decreased 12 basis points to 3.47% for the second quarter of 2019 from 3.59% for the second quarter of 2018. Total average interest-earning assets increased $707.3 million for the second quarter of 2019 as compared to the second quarter of 2018, due primarily to a $694.5 million increase in the average balance of loans. The total yield on average interest-earning assets increased 53 basis points to 4.66% in the second quarter of 2019 as compared to 4.13% in the same period in 2018. The cost of interest-bearing liabilities increased 76 basis points to 2.22% for the second quarter of 2019, as compared to 1.46% for the second quarter of 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 second quarter of 2019, as compared to the second quarter of 2018. In addition, non-interest-bearing deposits accounted for 44% of total average deposits in the second quarter of 2019 as compared to 60% in the second quarter of 2018. When compared to the second quarter of 2018, yields on interest-earning assets increased at a rate of 13%, while the cost of deposits and short-term borrowings grew at a rate of 52%.

 

Net interest margin decreased 7 basis point to 3.57% for the six months ended June 30, 2019 from 3.63% for the six months ended June 30, 2018. Total average interest-earning assets increased $577.4 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018, due primarily to a $595.9 million increase in the balance of loans and a $13.9 million increase in the average balance of securities, which was partially offset by a decrease of $32.4 million in average balance of overnight funds and other interest-earning assets. The total yield on average interest-earning assets increased 59 basis points to 4.74% in the six months ended June 30, 2019 as compared to 4.15% in the same period in 2018. The cost of interest-bearing liabilities increased 80 basis points to 2.19% for the six months ended June 30, 2019, as compared to 1.39% 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 six months ended June 30, 2019, as compared to the same period in 2018. In addition, non-interest-bearing deposits accounted for 44% of total average deposits for the six months ended June 30, 2019 as compared to 60% for the six months ended June 30, 2018. When compared to the six months ended June 30, 2018, yields on interest-earning assets increased at a rate of 14%, while the cost of borrowing grew at a rate of 58%.

 

 

 

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 June 30, 2019 and December 31, 2018.

 

 

(dollars in thousands)  June 30, 2019   December 31, 2018 
Non-performing assets:          
Non-accrual loans:          
Commercial  $   $ 
One-to-four family        
Commercial and industrial        
Consumer   38    50 
Total non-accrual loans  $38   $50 
Accruing loans 90 days or more past due   1,074    239 
Total non-performing loans and assets  $1,112   $289 
Nonaccrual loans as % of loans outstanding   %   %
Non-performing loans as % of loans outstanding   0.05%   0.02%
Allowance for loan losses  $(22,715)  $(18,942)
Allowance for loan losses as % of loans outstanding   0.97%   1.02%

 

   Three months ended June 30,   Six months ended June 30, 
(dollars in thousands)  2019   2018   2019   2018 
Provision/(credit) for loan losses  $1,950   $1,270   $(81)  $2,747 
Charge-offs  $69   $67   $416   $224 
Recoveries  $   $   $(4,270)  $(53)
Net charge-offs/(recoveries) as % of average loans (annualized)   0.01%   0.02%   (0.37)%   0.02%

 

The provision for loan losses for the second quarter of 2019 was $2.0 million, as compared to $1.3 million for 2018. The provision for loan losses for the six months ended June 30, 2019 was a credit of $81,000, as compared to $2.7 million for six months ended June 30, 2018. The negative provision for loan losses for the six months ended June 30, 2019 consisted of a $4.2 million provision recorded as a result of the record loan growth during 2019, and recoveries of $4.3 million, of which $4.2 million related to the taxi medallion loans.

 

 

 

Non-Interest Income

 

   Three months ended June 30,   Six months ended June 30, 
(dollars in thousands)  2019   2018   2019   2018 
Service charges on deposit accounts  $908   $821   $1,727   $2,731 
Prepaid third-party debit card income   1,422    1,519    2,679    2,427 
Other service charges and fees   313    346    591    2,840 
Unrealized gain/(loss) of equity securities   31        70     
Gains/(Losses) on sale of securities       (37)       (37)
Total non-interest income  $2,674   $2,649   $5,067   $7,961 

 

Non-interest income was substantially unchanged at $2.7 million in the second quarter of 2019, as compared to $2.6 million in the second quarter of 2018.

 

Non-interest income decreased by $2.9 million to $5.1 million in the six months ended June 30, 2019, as compared to $8.0 million for the six months ended June 30, 2018, primarily due to decreases of $1.0 million in service charges on deposits and $2.2 million in other charges and fees, partially offset by an increase in debit card income of $252,000. The decrease in service charges on deposits was primarily due to a decline of $1.1 million in wire fees related to transactions by digital currency customers. The decrease in other service charges and fees was due to a $2.1 million decrease in 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.

 

Non-Interest Expense

 

   Three months ended June 30,   Six months ended June 30, 
(dollars in thousands)  2019   2018   2019   2018 
Compensation and benefits  $7,921   $6,126   $15,411   $12,443 
Bank premises and equipment   1,348    1,288    2,683    2,468 
Professional fees   917    841    1,711    1,619 
Technology costs   2,618    609    4,003    2,115 
Other expenses   1,920    1,411    3,610    2,868 
Total non-interest expense  $14,724   $10,275   $27,418   $21,513 

 

Non-interest expense increased $4.4 million to $14.7 million during the second quarter of 2019 as compared to $10.3 million for the second quarter of 2018. Compensation and benefits increased $1.8 million to $7.9 million for the second quarter of 2019 as compared to $6.1 million for the second quarter of 2018. This increase was due primarily to an increase of 24 full-time equivalent employees for the second quarter of 2019, as compared to the second quarter of 2018. This increase included 9 employees in back-office operations and risk management positions to support the Bank’s growth. Technology costs increased $2.0 million for the second quarter of 2019 as compared to the second quarter of 2018. For the second quarter of 2019, technology costs included licensing fees related to software interfaces for specialty deposit products of $1.8 million as compared to $185,000 for the second quarter of 2018, an increase of $1.6 million. Specialty deposits are designed for clients who are in possession of or have discretion over large deposits such as property management companies, title companies and bankruptcy trustees.

 

Non-interest expense increased $5.9 million to $27.4 million for the six months ended June 30, 2019 as compared to $21.5 million for the six months ended June 30, 2018. Compensation and benefits increased $3.0 million to $15.4 million for the six months ended June 30, 2019 as compared to $12.4 million for the six months ended June 30, 2018. This increase was due primarily to an increase of 24 full-time equivalent employees for the first six months of 2019 as compared to the first six months of 2018. This increase included 9 employees in back-office operations and risk management positions to support the Bank’s growth. Technology costs increased $1.9 million for the six months ended June 30, 2019 as compared to $2.1 million for the six months ended June 30, 2018. For the six months ended June 30, 2019, technology costs included licensing fees related to software interfaces for specialty deposit products of $2.8 million as compared to $309,000 for the six months ended June 30, 2018, an increase of $2.5 million. This increase was partially offset by a decrease of $704,000 in transaction costs related to the decreased volume of wire transactions by digital currency customers in the six months ended June 30, 2019 as compared to the six months ended June 30, 2018.

 

 

 

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.

 

 

 

Consolidated Balance Sheet

 

   June 30, 2019   December 31, 2018 
Assets          
Cash and due from banks  $9,115   $9,246 
Overnight deposits   424,276    223,704 
Total cash and cash equivalents   433,391    232,950 
Investment securities available for sale   130,755    30,439 
Investment securities held to maturity   4,161    4,571 
Investment securities -- Equity investments   2,193    2,110 
Total securities   137,109    37,120 
Other investments   22,972    22,287 
Loans, net of deferred fees and unamortized costs   2,335,573    1,865,216 
Allowance for loan losses   (22,715)   (18,942)
Net loans   2,312,858    1,846,274 
Receivable from prepaid card programs, net   16,533    8,218 
Accrued interest receivable   7,795    5,507 
Premises and equipment, net   6,626    6,877 
Prepaid expenses and other assets   10,967    8,158 
Goodwill   9,733    9,733 
Accounts receivable, net   2,629    5,520 
Total assets  $2,960,613   $2,182,644 
Liabilities and Stockholders' Equity          
Deposits:          
Noninterest-bearing demand deposits  $1,103,278   $798,563 
Interest-bearing deposits   1,272,844    861,991 
Total deposits   2,376,122    1,660,554 
Federal Home Loan Bank of New York advances   190,000    185,000 
Trust preferred securities   20,620    20,620 
Subordinated debt, net of issuance cost   24,573    24,545 
Accounts payable, accrued expenses and other liabilities   50,716    18,439 
Accrued interest payable   1,535    1,282 
Prepaid third-party debit cardholder balances   15,717    7,687 
Total liabilities   2,679,283    1,918,127 
           
Class B preferred stock   3    3 
Common stock   82    82 
Additional paid in capital   214,880    213,490 
Retained earnings   65,818    51,415 
Accumulated other comprehensive gain (loss), net of tax effect   547    (473)
Total stockholders’ equity   281,330    264,517 
Total liabilities and stockholders’ equity  $2,960,613   $2,182,644 

 

10 

 

 

Consolidated Statement of Income (unaudited)

 

   Three months ended June 30,   Six months ended June 30, 
(dollars in thousands)  2019   2018   2019   2018 
Total interest income  $30,828   $19,998   $57,818   $38,691 
Total interest expense   7,891    2,603    14,303    4,780 
Net interest income   22,937    17,395    43,515    33,911 
Provision for loan losses   1,950    1,270    (81)   2,747 
Net interest income after provision for loan losses   20,987    16,125    43,596    31,164 
                     
Non-interest income:                    
Service charges on deposit accounts   908    821    1,727    2,731 
Prepaid third-party debit card income   1,422    1,519    2,679    2,427 
Other service charges and fees   313    346    591    2,840 
Unrealized gain on equity securities   31        70     
Losses on sale of securities       (37)       (37)
Total non-interest income   2,674    2,649    5,067    7,961 
                     
Non-interest expense:                    
Compensation and benefits   7,921    6,126    15,411    12,443 
Bank premises and equipment   1,348    1,288    2,683    2,468 
Professional fees   917    841    1,711    1,619 
Technology costs   2,618    609    4,003    2,115 
Other expenses   1,920    1,411    3,610    2,868 
Total non-interest expense   14,724    10,275    27,418    21,513 
                     
Net income before income tax expense   8,937    8,499    21,245    17,612 
Income tax expense   2,880    2,634    6,657    5,456 
Net income  $6,057   $5,865   $14,588   $12,156 
                     
Earnings per common share:                    
Average common shares outstanding - basic   8,173,487    8,129,487    8,171,360    8,126,772 
Average common shares outstanding - diluted   8,336,064    8,290,048    8,320,866    8,283,606 
Basic earnings  $0.73   $0.72   $1.76   $1.48 
Diluted earnings  $0.71   $0.70   $1.72   $1.46 

 

11 

 

 

Summary of Income and Performance Measures

Five Quarter Trend (unaudited)

 

   Quarter Ended 
(Dollars in thousands)  June 30, 2019   Mar. 31, 2019   Dec. 31, 2018   Sept. 30, 2018   June 30, 2018 
Net interest income  $22,937   $20,578   $18,961   $18,351   $17,395 
Provision (credit) for loan losses   1,950    (2,031)   844    (453)   1,270 
Net interest income after provision for loan losses   20,987    22,609    18,117    18,804    16,125 
Non-interest income   2,674    2,393    2,188    2,012    2,649 
Non-interest expense:                         
Compensation and benefits   7,921    7,490    6,962    6,253    6,126 
Other Expense   6,803    5,204    4,640    4,102    4,149 
Total non-interest expense   14,724    12,694    11,602    10,355    10,275 
                          
Income before income tax expense   8,937    12,308    8,703    10,461    8,499 
Income tax expense   2,880    3,777    2,418    3,348    2,634 
Net income   6,057    8,531    6,285    7,113    5,865 
                          
Performance Measures:                         
Net income available to common shareholders   5,950    8,396    6,238    7,057    5,816 
Per common share:                         
Basic earnings  $0.73   $1.03   $0.77   $0.87   $0.72 
Diluted earnings  $0.71   $1.01   $0.75   $0.85   $0.70 
Common shares outstanding:                         
Average - diluted   8,336,064    8,285,220    8,273,220    8,292,385    8,290,048 
Period end   8,320,816    8,320,816    8,217,274    8,207,234    8,205,234 
Return on (annualized):                         
Average total assets   0.91%   1.49%   1.25%   1.45%   1.20%
Average equity   8.71%   12.67%   9.59%   11.22%   9.53%
Average common equity   8.89%   12.93%   9.80%   11.47%   9.75%
Yield on average earning assets   4.66%   4.83%   4.65%   4.49%   4.13%
Cost of interest-bearing liabilities   2.22%   2.15%   1.90%   1.69%   1.46%
Net interest spread   2.44%   2.68%   2.75%   2.80%   2.67%
Net interest margin   3.47%   3.68%   3.77%   3.76%   3.59%
Net charge-offs (recoveries) as % of average loans (annualized)   0.01%   (0.80)%   0.09%   (0.36)%   0.02%
Efficiency ratio   57.49%   55.26%   54.86%   50.85%   51.26%

 

12 

 

 

Consolidated Balance Sheet Summary, Five Quarter Trend (unaudited)

 

(dollars in thousands)  June 30, 2019   Mar. 31, 2019   Dec. 31, 2018   Sept. 30, 2018   June 30, 2018 
Assets                         
Total Assets  $2,960,613   $2,545,186   $2,182,644   $1,930,714   $1,924,495 
Overnight deposits   424,276    346,674    223,704    148,260    240,994 
Total securities   137,109    36,272    37,120    32,247    33,974 
Other investments   22,972    23,652    22,287    16,645    16,770 
Loans, net of deferred fees and unamortized costs   2,335,573    2,102,420    1,865,216    1,698,929    1,599,647 
                          
Liabilities and Stockholders' Equity                         
Deposits:                         
Noninterest-bearing demand deposits  $1,103,278   $865,908   $798,563   $772,754   $878,703 
Interest-bearing deposits   1,272,844    1,100,222    861,991    761,177    661,779 
Total deposits   2,376,122    1,966,130    1,660,554    1,533,931    1,540,482 
Borrowings   235,193    260,179    230,165    105,151    108,137 
Total stockholders' Equity   281,330    273,787    264,517    257,270    249,584 
                          
Asset Quality                         
Total non-accrual loans  $38   $68   $50   $79   $192 
Total non-performing loans  $1,112   $1,498   $289   $407   $192 
Non-accrual loans to total loans   %   %   %   %   0.01%
Non-performing loans to total loans   0.05%   0.07%   0.02%   0.02%   0.01%
Allowance for loan losses   (22,715)   (20,834)   (18,942)   (18,493)   (17,463)
Allowance for loan losses to total loans   0.97%   0.99%   1.02%   1.09%   1.09%
Provision for loan losses   1,950    (2,031)   844    (453)   1,270 
Net charge-offs (recoveries)   69    (3,923)   395    (1,483)   67 
                          
Regulatory Capital                         
Tier 1 Leverage:                         
Metropolitan Bank Holding Corp.   11.0%   12.5%   13.7%   13.8%   13.5%
Metropolitan Commercial Bank   11.2    13.4    14.7    14.8    14.5 
                          
Common Equity Tier 1 Risk-Based (CET1):                         
Metropolitan Bank Holding Corp.   10.7    11.8    13.2    13.9    14.3 
Metropolitan Commercial Bank   12.5    13.9    15.6    16.5    17.0 
                          
Tier 1 Risk-Based:                         
Metropolitan Bank Holding Corp.   11.7    12.9    14.6    15.4    15.8 
Metropolitan Commercial Bank   12.5    13.9    15.6    16.5    17.0 
                          
Total Risk-Based:                         
Metropolitan Bank Holding Corp.   13.4    14.8    16.9    17.9    18.4 
Metropolitan Commercial Bank   13.4    14.8    16.7    17.6    18.1 

 

13 

 

 

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  June 30, 2019   Mar. 31, 2019   Dec. 31, 2018   Sept. 30, 2018   June 30, 2018 
Average assets  $2,667,416   $2,288,551   $2,015,831   $1,960,318   $1,946,910 
Less: average intangible assets   9,733    9,733    9,733    9,733    9,733 
Average tangible assets  $2,657,683   $2,278,818   $2,006,098   $1,950,585   $1,937,177 
                          
Average equity  $278,025   $269,418   $262,030   $253,516   $246,108 
Less: Average preferred equity   5,502    5,502    5,502    5,502    5,502 
Average common equity  $272,523   $263,916   $256,528   $248,014   $240,606 
Less: average intangible assets   9,733    9,733    9,733    9,733    9,733 
Average tangible common equity  $262,790   $254,183   $246,795   $238,281   $230,873 
                          
Total assets  $2,960,613   $2,545,186   $2,182,644   $1,930,714   $1,924,495 
Less: intangible assets   9,733    9,733    9,733    9,733    9,733 
Tangible assets  $2,950,880   $2,535,453   $2,172,911   $1,920,981   $1,914,762 
                          
Total Equity  $281,330   $273,787   $264,517   $257,270   $249,584 
Less: preferred equity   5,502    5,502    5,502    5,502    5,502 
Common Equity  $275,828   $268,285   $259,015   $251,768   $244,082 
Less: intangible assets   9,733    9,733    9,733    9,733    9,733 
Tangible common equity (book value)  $266,095   $258,552   $249,282   $242,035   $234,349 
                          
Common shares outstanding   8,320,816    8,320,816    8,217,274    8,207,234    8,205,234 
                          
Book value per share (GAAP)  $33.15   $32.24   $31.52   $30.68   $29.75 
Tangible book value per common share (non-GAAP)*  $31.98   $31.07   $30.34   $29.49   $28.56 

 

 

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

 

14 

 

 

Income data 

Three months ended

June 30, 2019

  

Three months ended

March 31, 2019

  

Six months ended

June 30, 2019

 
Net income, as reported (GAAP)  $6,057   $8,531   $14,588 
Loan loss recovery related to Medallion loans       (4,248)   (4,248)
Tax effect       1,304    1,304 
Core earnings   6,057    5,587    11,644 
Less:  Earnings allocated to participating securities   (107)   (89)   (196)
Core earnings available to common stockholders  $5,950   $5,498   $11,448 
                
Weighted average common shares outstanding   8,173,487    8,150,452    8,171,360 
                
Core earnings per basic common share  $0.73   $0.67   $1.40 
                
Diluted               
Net income allocated to common stockholders  $5,950   $5,498   $11,448 
                
Average diluted common shares   8,336,064    8,285,220    8,320,866 
                
Diluted core earnings per common share  $0.71   $0.66   $1.38 

 

15 

(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

 

Exhibit 99.2

 

Investor Presentation 2019 Q2

 

 

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 and, regardless of such coverage, you are cautioned about. 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. This presentation includes non - GAAP financial measures. Non - GAAP financial measures are commonly used in our industry, have certain limitations and should not be construed as alternatives to financial measures determined in accordance with GAAP. The non - GAAP measures as defined by us may not be comparable to similar non - GAAP measures presented by other companies. Our presentation of such measures, which may include adjustments to exclude unusual or non - recurring items, should not be construed as an inference that our future results will be unaffected by other unusual or non - recurring items. See the appendix to this presentation for a reconciliation of these non - GAAP financial measures to the most directly comparable GAAP measure.

 

 

2 Company Overview ▪ Full service commercial bank with goal of helping our clients build and sustain wealth since 1999 ▪ 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 ▪ 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 maintaining margin management despite the inverted yield curve.

 

 

3 Loan and Deposit Portfolio Metropolitan Commercial Bank • Multi - family loans – 78% rent regulated • CRE/RBC ratios: MCBH 374.2% and MCB 372.6% • CRE Owner - occupied is a segment of our C&I Lending platform Loan Portfolio at June 30, 2019 $2.34 Billion Deposits at June 30, 2019 $ 2 .38 Billion 35% 11% 6% 22% 26% DDA (excl. Specialty) Specialty DDA Savings and CD's MMA (excl. Specialty) Specialty MMA 18% 40% 18% 15% 4% 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, bankruptcy trustees, etc. • Specialty Deposit Accounts have an expected retention period of greater than 3 years. • Specialty money market accounts have a weighted average cost of 1.80%. • Specialty Deposit Accounts in total have a weighted average cost of 1.16%.

 

 

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 6/30/2019 3/31/2019 12/31/2018 9/30/2018 6/30/2018 Summary Income Statement Net Interest Income $22,937 $20,578 $18,961 $18,351 $17,395 Provision for loan losses (1) $1,950 ($2,031) (1) $844 ($453) (2) $1,270 Non-Interest Income $2,674 $2,393 $2,188 $2,012 $2,649 Non-Interest expense $14,724 $12,694 $11,602 $10,355 $10,275 Net Income $6,057 $8,531 $6,285 $7,113 $5,865 Profitability Diluted EPS (1) $0.71 $1.01 (1) $0.75 $0.85 (2) $0.70 ROAA* 0.91% 1.49% 1.25% 1.45% 1.20% ROAE* 8.71% 12.67% 9.59% 11.22% 9.53% NIM* 3.47% 3.68% 3.77% 3.76% 3.59% Efficiency Ratio 57.49% 55.26% 54.86% 50.85% 51.26% Asset Quality NPLs/Total Loans 0.05% 0.07% 0.02% 0.02% 0.01% NCOs/Average Total Loans* 0.01% (0.80%) (1) 0.09% (0.36%) (2) 0.02% Reserves/Loans 0.97% 0.99% 1.02% 1.09% 1.09% (dollars in thousand)

 

 

5 Net Interest Margin Analysis 3.59% 3.76% 3.77% 3.68% 3.47% 4.13% 4.49% 4.65% 4.83% 4.66% 1.46% 1.69% 1.90% 2.15% 2.22% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 2Q18 3Q18 4Q18 1Q19 2Q19 Net Interest Margin Components ▬ NIM ▬ Yield on Interest - Earning Assets ▬ Rate on Interest - Bearing Liabilities Yield /Rate 2Q18 3Q18 4Q18 1Q19 2Q19 Loans 4.71% 4.90% 4.93% 5.15% 5.05% Total Interest-Earning Assets 4.13% 4.49% 4.65% 4.83% 4.66% Interest-Bearing Deposits 1.14% 1.40% 1.64% 1.89% 2.01% Borrowed Funds 3.99% 3.73% 3.62% 3.35% 3.19% Total Interest-Bearing Liabilities 1.46% 1.69% 1.90% 2.15% 2.22% Net Interest Rate Spread 2.67% 2.80% 2.75% 2.68% 2.44% Net Interest Margin 3.59% 3.76% 3.77% 3.68% 3.47%

 

 

6 Non - interest Income and Expense Detail Non - Interest Income ($000s) Non - Interest Expense ($000s) 6/30/19 3/31/19 12/31/18 6/30/18 Service Charges on Deposit Accounts $908 $819 $826 $821 Prepaid Debit Card Income 1,422 1,257 1,133 1,519 Other Service Charges and Fees 313 278 229 346 Change in fair value of equity securities 31 39 - - Gains/(Losses) on sale of securities - - - (37) Total Noninterest Income $2,674 $2,393 $2,188 $2,649 3 Months Ended 6/30/19 3/31/19 12/31/18 6/30/18 Compensation and Benefits $7,921 $7,490 $6,962 $6,126 Bank Premises and Equipment 1,348 1,335 1,324 1,288 Professional Fees 917 794 715 841 Technology Costs 562 565 598 424 Specialty Deposit Licensing Fees 2,056 820 427 185 Other Expenses 1,920 1,690 1,576 1,411 Total Noninterest Income $14,724 $12,694 $11,602 $10,275 3 Months Ended

 

 

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. 3/31/19 12/31/18 Balance Sheet Total Assets $415,427 $777,969 Total Loans $233,153 $470,357 Total Deposits $409,992 $715,568 Capital MBHC MCB MBHC MCB MBHC MCB CET1* 10.7% 12.5% 11.8% 13.9% 13.2% 15.6% Total Risk-Based Capital* 13.4% 13.4% 14.8% 14.8% 16.9% 16.7% Tier 1 Leverage* 11.0% 11.2% 12.5% 13.4% 13.7% 14.7% $2,335,573 $2,102,420 $1,865,216 $2,376,122 $1,966,130 $1,660,554 $2,960,613 $2,545,186 $2,182,644 6/30/2019 Change vs. As of 6/30/2019 As of 3/31/2019 As of 12/31/2018

 

 

8 Strong Balance Sheet Growth Deposits ($mm) Total Equity ($mm) Assets ($mm) Loans, Net of Deferred Fees ($mm) $1,924 $1,931 $2,183 $2,545 $2,961 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 $1,600 $1,699 $1,865 $2,102 $2,336 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 $1,540 $1,534 $1,661 $1,966 $2,376 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 250 257 265 274 281 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 57.0% 50.4% 48.1% 44.0% 46.4% ■ % Non - interest Demand Deposits Total cost of deposits including DDA – 1.12% Cost of interest - bearing deposits – 2.01%

 

 

9 Robust Organic Loan Growth within a Diversified Portfolio 1 Includes commercial real estate, multifamily, and construction ■ Total CRE¹ (Non Owner Occupied) ■ Total CRE (Owner Occupied) ■ C&I ■ Other $1,526 $1,600 $1,699 $1,867 $2,105 $2,339 859 903 964 1,063 1,142 1,330 210 234 228 236 366 419 342 353 367 382 422 427 115 110 140 186 176 164 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

 

 

10 Commercial Growth Driven by Expertise in Specific Lending Verticals General Commercial and Industrial Overview C&I Composition at June 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 5.51% 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 44% 11% 17% 9% 2% 3% 3% 3% 1% 2% 1% 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 June 30, 2019 Composition by Region at June 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 52.89% Majority of loans are originated through direct relationships or referrals from existing clients 20% 18% 11% 10% 10% 10% 4% 5% 2% 2% 4% 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 Rent regulated 16% Non - rent regulated 4 % 22% 23% 11% 21% 8% 3% 2% 8% 1% 1% Manhattan Brooklyn Queens Other Bronx Other NY New Jersey Long Island Staten Island Connecticut

 

 

12 NYC Multi - family Loan Portfolio New Rent Regulations Total Balance Weighted Average LTV Weighted Average DCR Weighted Average Debt Yield Total NYC Multi-family $181,333 47.69% 1.74 11.97% Rent regulated 141,037 44.87% 1.87 13.31% Unregulated 40,296 57.59% 1.28 7.28% ▪ MCB multi - family loans underwritten to current cash flows – weighted average DCR of 1.87 on rent regulated properties ▪ Average LTV of 45% on rent regulated properties provide a cushion against falling values

 

 

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 ▪ Majority of loans supported by personal guarantee of high net worth guarantors with: – Average net worth - $103 million – Average Liquidity - $17 million – Average annual cash flow - $ 6 million ▪ 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 2.09x and average loan - to - value is 66%. 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 reimbursement rates (rehabilitation services, dialysis, etc.). C& I Healthcare Composition at June 30, 2019 Diversified Healthcare Portfolio ■ Nursing and Residential Care Facilities ■ 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 47% 20% 6% 5% 4% 2% 9% 5% 2% CRE – Skilled Nursing Facilities (SNF) : $331 million C&I – Healthcare - $180 million

 

 

14 Credit Metrics 0.01% 0.02% 0.02% 0.07% 0.05% 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 ALLL/Loans Non - Performing Assets/ALLL NCOs/Average Loans (Annualized) Non - Performing Assets/Loans 1.09% 1.09% 1.02% 0.99% 0.97% 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 1.1% 2.2% 1.5% 7.2% 4.9% 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 0.02% (0.36%) 0.09% (0.80%) 0.01% 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2

 

 

15 Diversified Deposit Gathering Capabilities Deposit Composition ($mm) 812 1,012 878 773 799 866 1,103 592 605 662 761 862 1,100 1,273 $1,404 $1,617 $1,540 $1,534 $1,661 $1,966 $2,376 0.47% 0.38% 0.44% 0.62% 0.81% 1.06% 1.12% 2017 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 ▪ 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 Global Payments Group Metropolitan Commercial Bank $282 $250 $280 $251 $229 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 Average Deposits Related to Debit Card Programs ($mm) ▪ Payroll ▪ Corporate ▪ Incentive ▪ Commission ▪ Rebates ▪ Gift Cards General purpose reloadable debit cards Average Deposits to All Digital Currency - Related Customers ($mm) ■ Settlement Account ■ Operating Account 266 189 123 118 107 130 108 116 99 106 396 297 239 217 2Q18 3Q18 4Q18 1Q19 2Q19 213 Digital Currency Involvement/Exposure ▪ MCB provides cash management services including wire transfers, ACH and foreign exchange conversion ▪ MCB has no assets or liabilities denominated in digital currencies ▪ New digital currency customers of $25.0 million for the first six months of 2019 ▪ New debit card relationships of $25 million in the first six months of 2019.

 

 

17 Well Positioned for Changing Rate Environment Estimated Sensitivity of Projected Annualized Net Interest Income as of March 31, 2019 Fixed vs. Floating Rate Loans at June 30, 2019 (1.92%) (1.54%) 1.52% 2.64% 4.02% 5.40% -200bps -100bps +100bps +200bps +300bps +400bps Floating 39% Fixed 61% Approximately 58% of floating rate loans have floors – Weighted average floor of 4.75% ■ Net Interest Income

 

 

18 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

 

 

19 Appendix

 

 

20 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

 

 

21 MCB Selected Global Payment Clients Payments Processor Digital check cashing and payment services Metropolitan Commercial Bank Sponsor Bank 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

 

 

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