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
Total Assets
$
3,243,171
$
2,960,613
$
2,545,186
$
2,182,644
$
1,930,714
Overnight deposits
424,170
424,276
346,674
223,704
148,260
Total securities
256,835
137,109
36,272
37,120
32,247
Other investments
20,921
22,972
23,652
22,287
16,645
Loans, net of deferred fees and
unamortized costs
2,496,697
2,335,573
2,102,420
1,865,216
1,698,929
Liabilities and Stockholders'
Equity
Deposits:
Noninterest-bearing demand deposits
$
1,041,102
$
1,103,278
$
865,908
$
798,563
$
772,754
Interest-bearing deposits
1,664,104
1,272,844
1,100,222
861,991
761,177
Total deposits
2,705,206
2,376,122
1,966,130
1,660,554
1,533,931
Borrowings
189,207
235,193
260,179
230,165
105,151
Total stockholders' Equity
291,002
281,330
273,787
264,517
257,270
Asset Quality
Total non-accrual loans
$
3,998
$
2,415
$
68
$
50
$
79
Total non-performing loans
$
4,714
$
3,489
$
1,498
$
289
$
407
Non-accrual loans to total loans
0.16
%
0.10
%
—
%
—
%
—
%
Non-performing loans to total loans
0.19
%
0.15
%
0.07
%
0.02
%
0.02
%
Allowance for loan losses
(24,444)
(22,715)
(20,834)
(18,942)
(18,493)
Allowance for loan losses to total
loans
0.98
%
0.97
%
0.99
%
1.02
%
1.09
%
Provision for loan losses
2,004
1,950
(2,031)
844
(453)
Net charge-offs (recoveries)
275
69
(3,923)
395
(1,483)
Regulatory Capital
Tier 1 Leverage:
Metropolitan Bank Holding Corp.
9.6
%
11.0
%
12.5
%
13.7
%
13.8
%
Metropolitan Commercial Bank
10.3
11.2
13.4
14.7
14.8
Common Equity Tier 1 Risk-Based
(CET1):
Metropolitan Bank Holding Corp.
10.4
10.7
11.8
13.2
13.9
Metropolitan Commercial Bank
12.2
12.5
13.9
15.6
16.5
Tier 1 Risk-Based:
Metropolitan Bank Holding Corp.
11.4
11.7
12.9
14.6
15.4
Metropolitan Commercial Bank
12.2
12.5
13.9
15.6
16.5
Total Risk-Based:
Metropolitan Bank Holding Corp.
13.0
13.4
14.8
16.9
17.9
Metropolitan Commercial Bank
13.1
13.4
14.8
16.7
17.6
Reconciliation of GAAP to Non-GAAP
Measures
In addition to the results presented in accordance with
Generally Accepted Accounting Principles ("GAAP"), this earnings
release includes certain non-GAAP financial measures. Management
believes these non-GAAP financial measures provide meaningful
information to investors in understanding the Company’s operating
performance and trends. These non-GAAP measures have inherent
limitations and are not required to be uniformly applied and are
not audited. They should not be considered in isolation or as a
substitute for an analysis of results reported under GAAP. These
non-GAAP measures may not be comparable to similarly titled
measures reported by other companies. Reconciliations of
non-GAAP/adjusted financial measures disclosed in this earnings
release to the comparable GAAP measures are provided in the
accompanying tables.
Balance sheet data, five quarter
trend
Dollars in thousands, except per share
data
Sept. 30, 2019
June 30, 2019
Mar. 31, 2019
Dec. 31, 2018
Sept. 30, 2018
Average assets
$
3,131,100
$
2,667,416
$
2,288,551
$
2,015,831
$
1,960,318
Less: average intangible assets
9,733
9,733
9,733
9,733
9,733
Average tangible assets
$
3,121,367
$
2,657,683
$
2,278,818
$
2,006,098
$
1,950,585
Average equity
$
286,647
$
278,025
$
269,418
$
262,030
$
253,516
Less: Average preferred equity
5,502
5,502
5,502
5,502
5,502
Average common equity
$
281,145
$
272,523
$
263,916
$
256,528
$
248,014
Less: average intangible assets
9,733
9,733
9,733
9,733
9,733
Average tangible common equity
$
271,412
$
262,790
$
254,183
$
246,795
$
238,281
Total assets
$
3,243,171
$
2,960,613
$
2,545,186
$
2,182,644
$
1,930,714
Less: intangible assets
9,733
9,733
9,733
9,733
9,733
Tangible assets
$
3,233,438
$
2,950,880
$
2,535,453
$
2,172,911
$
1,920,981
Total Equity
$
291,002
$
281,330
$
273,787
$
264,517
$
257,270
Less: preferred equity
5,502
5,502
5,502
5,502
5,502
Common Equity
$
285,500
$
275,828
$
268,285
$
259,015
$
251,768
Less: intangible assets
9,733
9,733
9,733
9,733
9,733
Tangible common equity (book value)
$
275,767
$
266,095
$
258,552
$
249,282
$
242,035
Common shares outstanding
8,319,852
8,320,816
8,320,816
8,217,274
8,207,234
Book value per share (GAAP)
$
34.32
$
33.15
$
32.24
$
31.52
$
30.68
Tangible book value per common share
(non-GAAP)*
$
33.15
$
31.98
$
31.07
$
30.34
$
29.49
* Tangible book value divided by common shares outstanding at
period-end.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191023005799/en/
Investor Relations Department Anthony Fabiano 212-365-6721
IR@MetropolitanBankNY.com
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