Press Release

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

Company Release - 10/23/2019 4:30 PM ET

NEW YORK--(BUSINESS WIRE)-- 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.
  • 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.

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.

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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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.

 

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.

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%.

 

 

 

 

 

 

 

 

 

 

 

 

(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.

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.

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

 

 

 

 

 

 

 

 

 

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

 

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

 

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

%

 

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