Metropolitan Bank Holding Corp. Reports Record Net Income of $11.8 Million and Diluted EPS of $1.39 for the Fourth Quarter
Metropolitan Bank Holding Corp. (NYSE: MCB) reported a net income of $11.8 million for Q4 2020, reflecting a 49% increase from $7.9 million in Q4 2019. For the year, net income reached $39.5 million, up 31% year-over-year. Total assets rose 29% to $4.33 billion, driven by a 36.8% increase in deposits. Notably, non-interest-bearing deposits surged 57.3% year-over-year. The bank's net interest margin improved to 3.21%. However, loan deferrals related to COVID-19 decreased by 29.8% to $220.3 million, comprising 7% of total loans.
- Record full-year 2020 net income of $39.5 million, a 31% increase year-over-year.
- Fourth quarter net income of $11.8 million, up 49% from $7.9 million in Q4 2019.
- Total assets increased by 29% to $4.33 billion.
- Deposits grew by 36.8%, primarily from a significant increase in non-interest-bearing deposits.
- Although net income increased, challenges remain due to COVID-19 impacts on loan servicing.
- Loan deferrals were still substantial at $220.3 million, indicating ongoing uncertainty.
Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), today reported net income of
For the year ended December 31, 2020, the Company reported net income of
Financial Highlights include:
-
Record full-year 2020 net income and diluted EPS with
31% year-over-year increases. -
Return on average tangible common equity* was
14.61% for the fourth quarter of 2020 and12.92% for the full year 2020. -
Net interest margin improved to
3.21% for the fourth quarter of 2020, a quarter-on-quarter increase of 3 basis points. -
Total assets increased
29.0% year-over-year to$4.33 billion as of December 31, 2020, driven by$1.03 billion , or36.8% , growth in deposits, with year-over-year net loan growth of17.4% . Year-over-year growth in deposits was largely driven by$624.6 million , or57.3% , increase in non-interest-bearing deposits. -
Total loan deferrals related to the Coronavirus pandemic (“COVID-19”) decreased by
29.8% in the fourth quarter of 2020 to$220.3 million , or7.0% of the total loan portfolio, as of December 31, 2020. Remaining deferrals have contractual expirations that would reduce outstanding balance of deferrals to$56.0 million by March 31, 2020, of which$17.8 million would be full payment deferrals with remainder being principal only deferrals.
* Non-GAAP financial measure. See Reconciliation of Non-GAAP measures on page 15.
Mark R. DeFazio, President and Chief Executive Officer commented, “While 2020 was a very challenging year, our success was driven by our focus and discipline as well as the strong foundation we have built over the last 20 years. I am very pleased with our 2020 results, our recent operating metrics, and especially the outstanding performance of our team in supporting our customers through this unprecedented crisis.
“Record results for the most volatile period in our history as a public company underscore the strength and resilience of our business model and our team. Our underwriting prowess coupled with our high quality client base yielded positive momentum in an uncertain environment.
“As highlighted in our newly refreshed investor presentation, we were early to recognize the evolution and changes underway in the payments industry over the last several years. We have been extremely focused on forming strong, durable relationships with the FinTech community and the leading participants for many years. Our Global Payments business provides key financial infrastructure to numerous FinTech partners. We are confident that as we grow our base of FinTech partners and they continue to take market share from traditional providers of financial services, MCB will benefit from improving scale and profitability.
“I would like to once again thank our amazing staff for their dedication, loyalty and diligence along with the steadfast leadership and support from our Board of Directors,” Mr. DeFazio concluded.
Balance Sheet
The Company had total assets of
Total cash and cash equivalents were
Total deposits increased to
The Bank fully paid down its Federal Home Loan Bank (“FHLB”) advances, a decrease of
The Company and the Bank each meet all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. Total non-owner-occupied commercial real estate loans were
Income Statement
Financial Highlights
|
|
Three months ended December 31, |
|
Year ended December 31, |
|
||||||||
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
||||
Annualized return on average assets |
|
|
1.13 |
% |
|
0.95 |
% |
|
1.02 |
% |
|
1.06 |
% |
Annualized return on average equity |
|
|
13.94 |
% |
|
10.53 |
% |
|
12.31 |
% |
|
10.66 |
% |
Annualized return on average tangible common equity* |
|
|
14.61 |
% |
|
11.13 |
% |
|
12.92 |
% |
|
11.27 |
% |
*Non-GAAP financial measure. See Reconciliation of Non-GAAP measures on page 15. |
Net Interest Income
Net interest income for the fourth quarter of 2020 was
Additionally, in September 2020, the Bank repaid
Net Interest Margin
Net interest margin improved by 3 basis points to
Non-Interest Income
Non-interest income was
Non-interest income was
Non-Interest Expense
Non-interest expense was
Bank premises and equipment was
Professional fees were
Other expenses were
Non-interest expense was
Compensation and benefits expense was
For the twelve months ended December 31, 2020, licensing fees and technology costs were
Bank premises and equipment was
Asset Quality
Non-performing loans were
The provision for loan losses for the fourth quarter of 2020 was
|
|
|
||||||
(dollars in thousands) |
|
December 31,
|
|
September 30,
|
||||
Non-performing loans: |
|
|
|
|
|
|
||
Non-accrual loans: |
|
|
|
|
|
|
||
Commercial and industrial |
|
|
4,192 |
|
|
|
4,512 |
|
Consumer |
|
|
1,428 |
|
|
|
1,157 |
|
Total non-accrual loans |
|
$ |
5,620 |
|
|
$ |
5,669 |
|
Accruing loans 90 days or more past due |
|
|
769 |
|
|
|
954 |
|
Total non-performing loans |
|
$ |
6,389 |
|
|
$ |
6,623 |
|
Non-accrual loans as % of loans outstanding |
|
|
0.18 |
% |
|
0.19 |
% |
|
Non-performing loans as % of loans outstanding |
|
|
0.20 |
% |
|
0.22 |
% |
|
Allowance for loan losses |
|
$ |
(35,407 |
) |
|
$ |
(33,614 |
) |
Allowance for loan losses as % of loans outstanding |
|
|
1.13 |
% |
|
1.12 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three months ended
|
|
Year ended
|
||||||||||||
(dollars in thousands) |
2020 |
2019 |
2020 |
2019 |
||||||||||||
Provision for loan losses |
|
$ |
1,795 |
|
|
$ |
2,300 |
|
|
$ |
9,488 |
|
|
$ |
4,223 |
|
Charge-offs |
|
$ |
(30 |
) |
|
$ |
(496 |
) |
|
$ |
(505 |
) |
|
$ |
(1,187 |
) |
Recoveries |
|
$ |
28 |
|
|
$ |
24 |
|
|
$ |
152 |
|
|
$ |
4,294 |
|
Net charge-offs/(recoveries) as % of average loans (annualized) |
|
|
0.00 |
% |
|
0.07 |
% |
|
0.01 |
% |
|
(0.13 |
)% |
Coronavirus Update
Operational Readiness
On September 7, 2020, the Bank implemented its Return-to-Work Plan, which allowed for up to
Financial Impact
Loan Portfolio and Modifications
The Bank has taken several steps to assess the financial impact of COVID-19 on its business, including contacting customers to determine how their business was being affected and analyzing the impact of the virus on the different industries that the Bank serves.
The largest concentration in the loan portfolio is healthcare, which amounted to
Loan Deferrals: The Bank has been working with customers to address their needs during the pandemic. Loan customers have requested various forms of relief during this period, including payment deferrals, interest rate reductions and extensions of maturity dates. The following is a summary of deferrals requested and in process as of December 31, 2020 (dollars in thousands):
|
|
CRE |
|
C&I |
|
1-4 Family |
|
Consumer |
|
Total |
|||||||||||||||
Type of Deferral |
|
Balance |
|
Number of Loans |
|
Balance |
|
Number of Loans |
|
Balance |
|
Number of Loans |
|
Balance |
|
Number of Loans |
|
Balance |
|
Number of Loans |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Defer monthly principal payments |
$ |
121,395 |
24 |
$ |
— |
|
— |
$ |
— |
— |
$ |
— |
— |
$ |
121,395 |
24 |
|||||||||
Full payment deferral |
|
|
93,389 |
|
10 |
|
|
1,400 |
|
1 |
|
|
2,853 |
|
9 |
|
|
1,271 |
|
19 |
|
|
98,913 |
|
39 |
|
|
$ |
214,784 |
|
34 |
|
$ |
1,400 |
|
1 |
|
$ |
2,853 |
|
9 |
|
$ |
1,271 |
|
19 |
|
$ |
220,308 |
|
63 |
Loan deferrals as a percentage of total loans decreased to
The following is a summary of the weighted average LTV for CRE and 1-4 Family loan deferrals as of December 31, 2020 (dollars in thousands):
Industry |
|
Total Deferrals |
|
Weighted
|
||
|
|
|
|
|
||
CRE: |
|
|
|
|
||
Retail |
|
$ |
21,613 |
|
42.6 |
% |
Hospitality |
|
|
75,839 |
|
50.8 |
% |
Office |
|
|
12,339 |
|
28.1 |
% |
Mixed-Use |
|
|
22,200 |
|
63.2 |
% |
Multifamily |
|
|
53,912 |
|
15.7 |
% |
Warehouse |
|
|
15,271 |
|
32.0 |
% |
Other |
|
|
13,610 |
|
68.4 |
% |
Total CRE |
|
$ |
214,784 |
|
40.9 |
% |
1-4 Family |
|
|
|
|
||
Residential Real Estate |
|
$ |
2,853 |
|
45.0 |
% |
|
|
|
|
|
||
|
|
$ |
217,637 |
|
41.0 |
% |
Allowance for Loan Losses (“ALLL”): Management continues to monitor the impact of COVID-19, particularly as the term of loan modifications expire and borrowers return to a normal debt service schedule, as well as the commencement of a repayment schedule for payments that were deferred. As such, significant adjustments to the ALLL may be required as the full impact of COVID-19 on the Bank’s borrowers becomes known.
The Bank has not yet adopted ASU No. 2016-13, Financial Instruments – Credit Losses, which requires the measurement of all expected credit losses (“CECL”) for financial assets. The Bank is required to implement CECL by January 1, 2023. The Bank is currently developing CECL models and evaluating its potential impact on the Bank’s ALLL.
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 and provides critical global payments infrastructure to its FinTech partners. Metropolitan Commercial Bank is a New York State chartered commercial bank and 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 and Quarterly Reports on Form 10-Q, 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.
Further, given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and whether the gradual reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen, and high levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near
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
|
|
December 31, 2020 |
|
December 31, 2019 |
||||
Assets |
|
|
|
|
|
|
||
Cash and due from banks |
|
$ |
8,692 |
|
|
$ |
8,116 |
|
Overnight deposits |
|
|
855,613 |
|
|
|
381,104 |
|
Total cash and cash equivalents |
|
|
864,305 |
|
|
|
389,220 |
|
Investment securities available for sale |
|
|
266,096 |
|
|
|
234,942 |
|
Investment securities held to maturity |
|
|
2,760 |
|
|
|
3,722 |
|
Investment securities -- Equity investments |
|
|
2,313 |
|
|
|
2,224 |
|
Total securities |
|
|
271,169 |
|
|
|
240,888 |
|
Other investments |
|
|
11,597 |
|
|
|
21,437 |
|
Loans, net of deferred fees and unamortized costs |
|
|
3,137,053 |
|
|
|
2,672,949 |
|
Allowance for loan losses |
|
|
(35,407 |
) |
|
|
(26,272 |
) |
Net loans |
|
|
3,101,646 |
|
|
|
2,646,677 |
|
Receivable from prepaid card programs, net |
|
|
27,259 |
|
|
|
11,581 |
|
Accrued interest receivable |
|
|
13,249 |
|
|
|
8,862 |
|
Premises and equipment, net |
|
|
13,475 |
|
|
|
12,100 |
|
Prepaid expenses and other assets |
|
|
18,388 |
|
|
|
17,074 |
|
Goodwill |
|
|
9,733 |
|
|
|
9,733 |
|
Total assets |
|
$ |
4,330,821 |
|
|
$ |
3,357,572 |
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
||
Deposits: |
|
|
|
|
|
|
||
Non-interest-bearing demand deposits |
|
$ |
1,715,042 |
|
|
$ |
1,090,479 |
|
Interest-bearing deposits |
|
|
2,103,471 |
|
|
|
1,700,295 |
|
Total deposits |
|
|
3,818,513 |
|
|
|
2,790,774 |
|
Federal Home Loan Bank of New York advances |
|
|
— |
|
|
|
144,000 |
|
Trust preferred securities |
|
|
20,620 |
|
|
|
20,620 |
|
Subordinated debt, net of issuance cost |
|
|
24,657 |
|
|
|
24,601 |
|
Secured Borrowings |
|
|
36,964 |
|
|
|
42,972 |
|
Accounts payable, accrued expenses and other liabilities |
|
|
61,645 |
|
|
|
23,556 |
|
Accrued interest payable |
|
|
712 |
|
|
|
1,229 |
|
Prepaid third-party debit cardholder balances |
|
|
26,923 |
|
|
|
10,696 |
|
Total liabilities |
|
|
3,990,034 |
|
|
|
3,058,448 |
|
|
|
|
|
|
|
|
||
Class B preferred stock |
|
|
3 |
|
|
|
3 |
|
Common stock |
|
|
82 |
|
|
|
82 |
|
Additional paid in capital |
|
|
218,899 |
|
|
|
216,468 |
|
Retained earnings |
|
|
120,830 |
|
|
|
81,364 |
|
Accumulated other comprehensive gain, net of tax effect |
|
|
973 |
|
|
|
1,207 |
|
Total stockholders’ equity |
|
|
340,787 |
|
|
|
299,124 |
|
Total liabilities and stockholders’ equity |
|
$ |
4,330,821 |
|
|
$ |
3,357,572 |
|
Consolidated Statement of Income (unaudited)
|
|
Three months ended December 31, |
|
Year ended December 31, |
||||||||
(dollars in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
Total interest income |
|
$ |
36,862 |
|
$ |
36,466 |
|
$ |
143,097 |
|
$ |
129,780 |
Total interest expense |
|
|
3,395 |
|
|
8,424 |
|
|
18,176 |
|
|
32,170 |
Net interest income |
|
|
33,467 |
|
|
28,042 |
|
|
124,921 |
|
|
97,610 |
Provision for loan losses |
|
|
1,795 |
|
|
2,300 |
|
|
9,488 |
|
|
4,223 |
Net interest income after provision for loan losses |
|
|
31,672 |
|
|
25,742 |
|
|
115,433 |
|
|
93,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest income: |
|
|
|
|
|
|
|
|
|
|
|
|
Service charges on deposit accounts |
|
|
981 |
|
|
977 |
|
|
3,728 |
|
|
3,556 |
Global payments revenue |
|
|
2,163 |
|
|
1,482 |
|
|
8,464 |
|
|
5,643 |
Other service charges and fees |
|
|
236 |
|
|
413 |
|
|
1,477 |
|
|
1,366 |
Unrealized gain (loss) on equity securities |
|
|
(7) |
|
|
(10) |
|
|
48 |
|
|
64 |
Gain on sale of securities |
|
|
— |
|
|
— |
|
|
3,286 |
|
|
— |
Total non-interest income |
|
|
3,373 |
|
|
2,862 |
|
|
17,003 |
|
|
10,629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
9,835 |
|
|
7,956 |
|
|
39,797 |
|
|
31,242 |
Bank premises and equipment |
|
|
1,842 |
|
|
2,057 |
|
|
8,340 |
|
|
6,530 |
Professional fees |
|
|
1,064 |
|
|
810 |
|
|
4,122 |
|
|
3,427 |
Licensing fees and technology costs |
|
|
2,814 |
|
|
3,463 |
|
|
13,040 |
|
|
10,992 |
Other expenses |
|
|
2,233 |
|
|
2,756 |
|
|
9,219 |
|
|
7,764 |
Total non-interest expense |
|
|
17,788 |
|
|
17,042 |
|
|
74,518 |
|
|
59,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income before income tax expense |
|
|
17,257 |
|
|
11,562 |
|
|
57,918 |
|
|
44,061 |
Income tax expense |
|
|
5,482 |
|
|
3,699 |
|
|
18,452 |
|
|
13,927 |
Net income |
|
$ |
11,775 |
|
$ |
7,863 |
|
$ |
39,466 |
|
$ |
30,134 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Average common shares outstanding - basic |
|
|
8,225,083 |
|
|
8,178,593 |
|
|
8,221,429 |
|
|
8,174,142 |
Average common shares outstanding - diluted |
|
|
8,417,729 |
|
|
8,363,080 |
|
|
8,398,444 |
|
|
8,339,141 |
Basic earnings |
|
$ |
1.42 |
|
$ |
0.95 |
|
$ |
4.76 |
|
$ |
3.63 |
Diluted earnings |
|
$ |
1.39 |
|
$ |
0.93 |
|
$ |
4.66 |
|
$ |
3.56 |
Net Interest Margin Analysis
|
Three months ended |
||||||||||||||||||
|
December 31, 2020 |
|
September 30, 2020 |
||||||||||||||||
(dollars in thousands) |
Average
|
|
Interest |
|
Yield/Rate
|
|
|
Average
|
|
Interest |
|
Yield/Rate
|
|
||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Loans (1) |
$ |
3,070,850 |
|
|
$ |
35,843 |
|
4.62 |
% |
|
$ |
2,946,359 |
|
|
$ |
34,844 |
|
4.66 |
% |
Available-for-sale securities |
|
230,080 |
|
|
|
573 |
|
0.97 |
% |
|
|
180,698 |
|
|
|
582 |
|
1.26 |
% |
Held-to-maturity securities |
|
2,906 |
|
|
|
12 |
|
1.65 |
% |
|
|
3,181 |
|
|
|
14 |
|
1.71 |
% |
Equity investments - non-trading |
|
2,294 |
|
|
|
9 |
|
1.46 |
% |
|
|
2,284 |
|
|
|
10 |
|
1.63 |
% |
Overnight deposits |
|
806,602 |
|
|
|
280 |
|
0.14 |
% |
|
|
854,737 |
|
|
|
299 |
|
0.14 |
% |
Other interest-earning assets |
|
11,336 |
|
|
|
145 |
|
5.09 |
FAQ
What were the key financial results for MCB in Q4 2020?
How much did MCB's total assets increase by in 2020?
What was the year-over-year growth in deposits for MCB?
What is the current status of loan deferrals at MCB?