Metropolitan Bank Holding Corp. Reports Third Quarter 2023 Results

Rhea-AI Summary

Metropolitan Bank Holding Corp. reports net income of $22.1 million for Q3 2023, demonstrating a disciplined approach to balance sheet management and stability in net interest income.

Positive

• Total deposits increased by $233.0 million from June 30, 2023, and by $243.7 million from December 31, 2022.
• Net loan growth was $204.9 million from June 30, 2023, and $514.0 million from December 31, 2022.
• Return on average equity was 13.9% and return on average tangible common equity was 14.1%.
• The Company and Bank are 'well capitalized' with total risk-based capital ratios of 13.1% and 12.8%, respectively.
• Net interest income remained stable at $53.6 million.
• Total non-interest income was $6.5 million, a decrease of $1.3 million from the prior quarter.
• Credit quality remains strong with a non-performing loan ratio of 0.58%.

Negative

• Net income decreased from $25.0 million in Q3 2022 to $22.1 million in Q3 2023.
• Total cash and cash equivalents decreased by $24.4 million from June 30, 2023, and by $531.4 million from September 30, 2022.
• Total deposits decreased by $209.9 million from September 30, 2022.
• Net interest margin decreased to 3.27% in Q3 2023 from 3.85% in the prior year period.
• Total cost of funds increased to 303 basis points in Q3 2023 from 45 basis points in the prior year period.
• Non-interest income decreased by $1.3 million from the prior quarter.

Sustained Core Funding and Balance Sheet Growth Demonstrates Disciplined Approach to Balance Sheet Management

Quarterly Financial Highlights

• Total deposits at September 30, 2023 were $5.5 billion, an increase of $233.0 million from June 30, 2023 and an increase of $243.7 million from December 31, 2022.
• Strong prudent loan growth, with net loan growth of $204.9 million from June 30, 2023 and $514.0 million from December 31, 2022.
• Asset quality remains strong.
• Stable net interest income of $53.6 million.
• Return on average equity of 13.9% and return on average tangible common equity¹ of 14.1%.
• Liquidity remains strong. At September 30, 2023, cash on deposit with the Federal Reserve Bank of New York and available secured funding capacity totaled $3.1 billion, which was 223.7% of uninsured deposit balances and 56.9% of total deposits.
• The Company and Bank are “well capitalized” across all measures of regulatory capital, with total risk-based capital ratios of 13.1% and 12.8%, respectively, at September 30, 2023, well above regulatory minimums.

¹ Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures on page 13.

NEW YORK--(BUSINESS WIRE)-- Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), reported net income of $22.1 million, or $1.97 per diluted common share, for the third quarter of 2023 compared to net income of $25.0 million, or $2.23 per diluted common share, for the third quarter of 2022.

Mark DeFazio, President and Chief Executive Officer, commented,

“I am pleased with our results this quarter, particularly given the continuing challenges facing the banking industry. Notwithstanding the sustained high interest rate environment, we had a strong quarter which demonstrated a disciplined approach to balance sheet management and net interest income stability.

“We continue to be well positioned to support our clients and to enhance shareholder value.”

Balance Sheet

Total cash and cash equivalents were $177.4 million at September 30, 2023, a decrease of $24.4 million, or 12.1%, from June 30, 2023 and a decrease of $531.4 million from September 30, 2022. The decrease from June 30, 2023, primarily reflected the $204.9 million net deployment into loans and $88.0 million decline in borrowings partially offset by the $233.0 million increase in deposits. The decrease from September 30, 2022, reflected the $737.2 million net deployment into loans and the $209.9 million outflow of deposits primarily due to the decrease in crypto-related deposits.

Total loans, net of deferred fees and unamortized costs, were $5.4 billion, an increase of $204.9 million, or 4.0%, from June 30, 2023, and an increase of $737.2 million, or 16.0%, from September 30, 2022. Loan production was $333.5 million for the third quarter of 2023 compared to $425.4 million for the prior linked quarter and $423.6 million for the prior year period. The increase in total loans from June 30, 2023, was due primarily to an increase of $165.8 million in CRE loans (including owner-occupied) and $22.1 million in commercial and industrial (C&I) loans. The increase in total loans from September 30, 2022, was due primarily to an increase of $651.6 million in CRE loans (including owner-occupied) and $107.6 million in C&I loans, partially offset by a $34.2 million decrease in construction loans.

Total deposits were $5.5 billion at September 30, 2023, an increase of $233.0 million, or 4.4% from June 30, 2023, and a decrease of $209.9 million or 3.7% from September 30, 2022. The increase from June 30, 2023, was due primarily to an aggregate net increase of $286.1 million in deposit verticals, partially offset by a decrease of $53.1 million in crypto corporate-related deposits. The decrease in crypto corporate-related deposits reflects the Company’s final exit from the crypto-related vertical. The decrease in deposits from September 30, 2022, was primarily due to a decrease of $757.3 million in crypto-related deposits, partially offset by an aggregate net increase of $547.3 million in deposit verticals. Non-interest-bearing demand deposits declined to 31.6% of total deposits at September 30, 2023, compared to 32.7% at June 30, 2023 and 53.4% at September 30, 2022, primarily reflecting the outflow of crypto-related deposits.

Accumulated other comprehensive loss, net of tax, was $60.2 million, an increase of $9.2 million, from June 30, 2023, and $6.3 million from September 30, 2022. The increase from June 30, 2023 was due to an increase in unrealized losses on available-for-sale securities due to prevailing market interest rates. The increase from September 30, 2022 was due primarily to an increase in unrealized losses on available-for-sale securities due to the prevailing market interest rates, partially offset by the increases in unrealized gains on cash flow hedges prior to their termination in the third quarter of 2022.

At September 30, 2023, the Company had $3.0 billion in available secured wholesale funding capacity. The Company and the Bank each met all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. Total non-owner-occupied commercial real estate loans were 374.8% of total risk-based capital at September 30, 2023, compared to 363.2% and 343.3% at June 30, 2023 and September 30, 2022, respectively.

Income Statement
Financial Highlights
		Three months ended										Nine months ended
		Sept. 30,			Jun. 30,			Sept. 30,				Sept. 30,			Sept. 30,
(dollars in thousands, except per share data)		2023(1)			2023			2022				2023(1)			2022
Total revenues(2)		$	60,070		$	61,606		$	69,143			$	187,184		$	185,502
Net income (loss)			22,063			15,561			24,955				62,700			67,165
Diluted earnings (loss) per common share			1.97			1.37			2.23				5.61			5.98
Return on average assets(3)			1.33	%		0.98	%		1.51	%			1.31	%		1.33	%
Return on average equity(3)			13.9	%		10.1	%		16.8	%			13.7	%		15.7	%
Return on average tangible common equity(3), (4)			14.1	%		10.3	%		17.1	%			13.9	%		16.1	%

_____________________
(1) The three and nine months ended September 30, 2023, include a $3.0 million and $5.5 million, respectively, reversal of the regulatory settlement reserve recorded in the fourth quarter of 2022.
(2) Total revenues equal net interest income plus non-interest income.
(3) Ratios are annualized.
(4) Net income divided by average tangible common equity. Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures on page 13.

Net Interest Income

Net interest income of $53.6 million for the third quarter of 2023 was stable compared to $53.8 million for the prior linked quarter, notwithstanding the prevailing interest rate environment. The $194,000 decrease was primarily due to changes in prevailing market interest rates, and the shift from non-interest bearing deposits to interest bearing funding primarily related to the final exit from the crypto-related deposit vertical, partially offset by loan growth and the increase in loan yields.

Net interest income for the third quarter of 2023 decreased $9.8 million from the prior year period. The decrease from the prior year period was primarily due to the 258 basis point increase in total cost of funds and the increase in the average balance of borrowed funds related to the final exit from the crypto-related deposit vertical, partially offset by loan growth and the increase in loan yields.

Net Interest Margin

Net interest margin for the third quarter of 2023 was 3.27% compared to 3.44% and 3.85% for the prior linked quarter and prior year period, respectively. The 17 basis point decrease from the prior linked quarter was due primarily to the shift from non-interest bearing deposits to interest bearing funding related to the final exit from the crypto-related deposit vertical and to changes in prevailing interest rates, which were partially offset by loan growth and the increase in loan yields. The 58 basis point decrease from the prior year period was driven largely by the increase in the average balance of borrowed funds and the shift from non-interest bearing deposits to interest bearing deposits related to the final exit from the crypto-related deposit vertical, partially offset by loan growth and the increase in loan yields.

Total cost of funds for the third quarter of 2023 was 303 basis points compared to 252 basis points and 45 basis points for the prior linked quarter and prior year period, respectively, which primarily reflects higher short term borrowing balances and the shift from non-interest bearing deposits to interest bearing deposits related to the final exit from the crypto-related deposit vertical, and to changes in prevailing market interest rates.

Non-Interest Income

Non-interest income was $6.5 million for the third quarter of 2023, a decrease of $1.3 million from the prior linked quarter and an increase of $695,000 from the prior year period. The decrease from the prior linked quarter was primarily driven by the final exit from the digital currency business. The increase from the prior year period was primarily driven by other service charges and fees.

Non-Interest Expense

Non-interest expense was $30.9 million for the third quarter of 2023, a decrease of $1.5 million from the prior linked quarter and a decrease of $266,000 from the prior year period. The decrease from the prior linked quarter was due primarily to the $3.0 million reversal of the regulatory settlement reserve recorded in the fourth quarter of 2022 and the $1.1 million reduction in professional fees, partially offset by the $1.9 million increase in compensation and benefits. The decrease from the prior year period was due primarily to the $3.0 million reversal of the regulatory settlement reserve recorded in the fourth quarter of 2022 and the $2.2 million reduction in professional fees, partially offset by the $2.6 million increase in compensation and benefits.

Income Tax Expense

The effective tax rate for the third quarter of 2023 was 22.2% compared to 37.4% for the prior linked quarter, which reflects a discrete tax item related to the exercise of stock options in the third quarter of 2023 and the reversal of the regulatory settlement reserve. The effective tax rate was 30.6% for the prior year period.

Asset Quality

Credit quality remains strong. The ratio of non-performing loans to total loans was 0.58% at September 30, 2023 compared to 0.47% at June 30, 2023 and 0.00% at September 30, 2022, respectively. The allowance for credit losses (“ACL”) was $52.3 million at September 30, 2023, an increase of $648,000 from June 30, 2023 and an increase of $9.8 million from September 30, 2022. The increase from the prior linked quarter was due primarily to loan growth, partially offset by improved macroeconomic factor forecasts. The increase from the prior year period was due primarily to loan growth and the adoption of ASU No. 2016-13. The Company adopted ASU No. 2016-13, Financial Instruments – Credit Losses (ASC 326) effective January 1, 2023. ASU No. 2016-13 requires the measurement of all expected credit losses for financial assets held at amortized cost to be based on historical experience, current condition, and reasonable and supportable forecasts. Upon adoption, the Company recorded a $2.3 million increase to the ACL for loans, a $777,000 increase to the ACL for loan commitments, and a $2.1 million decrease to retained earnings, net of taxes.

Conference Call

The Company will conduct a conference call at 9:00 a.m. ET on Friday, October 20, 2023, to discuss the results. To access the event by telephone, please dial 800-343-5172 (US), 203-518-9814 (INTL), and provide conference ID: MCBQ323 approximately 15 minutes prior to the start time (to allow time for registration).

The call will also be broadcast live over the Internet and accessible at MCB Quarterly Results Conference Call and in the Investor Relations section of the Company’s website at MCB News. To listen to the live webcast, please visit the site at least 15 minutes prior to the start time to register, download and install any necessary audio software. For those unable to join for the live presentation, a replay of the webcast will also be available later that day accessible at MCB Quarterly Results Conference Call.

About Metropolitan Bank Holding Corp.

Metropolitan Bank Holding Corp. (NYSE: MCB) is the parent company of Metropolitan Commercial Bank (the “Bank”), a New York City based full-service commercial bank.

The Bank provides a broad range of business, commercial and personal banking products and services to individuals, small businesses, private and public middle-market and corporate enterprises and institutions, municipalities and local government entities.

Metropolitan Commercial Bank’s Global Payments Group is an established leader in providing payments services to domestic and international non-bank financial service companies. The Bank continues to grow its presence as a valued, trusted and innovative strategic partner across payments, custodial and money services businesses worldwide.

Metropolitan Commercial Bank’s EB-5 / E-2 International Group delivers banking services and products for United States Citizen and Immigration Services EB-5 Immigrant Investor Program investors, developers, Regional Centers, government agencies, law firms and consulting companies that specialize in EB-5 and E-2.

Metropolitan Commercial Bank was ranked by Independent Community Bankers of America among the top ten successful loan producers for 2023 by loan category and asset size for commercial banks with more than $1 billion in assets. The Bank finished ninth in S&P Global Market Intelligence’s annual ranking of the best-performing community banks with assets between $3 billion and $10 billion for 2022 and eighth among top-performing community banks in the Northeast region for 2022. The Bank is also a member of the Piper Sandler Sm-All Stars Class of 2022 and Kroll affirmed a BBB+ (investment grade) deposit rating on January 25, 2023.

The Bank is a New York State chartered commercial bank, a member of the Federal Reserve System and the Federal Deposit Insurance Corporation, and an equal housing lender.

For more information, please visit the Bank’s website at 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 future 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 are difficult to predict and are generally beyond our control and 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 the following: the interest rate policies of the Board of Governors of the Federal Reserve System; inflation; an unexpected deterioration in our loan or securities portfolios; changes in liquidity, including the size and composition of our deposit portfolio, including the percentage of uninsured deposits in the portfolio; further deterioration in the financial condition or stock prices of financial institutions generally; unexpected increases in our expenses; different than anticipated growth and our ability to manage our growth; the lingering effects of the COVID-19 pandemic on our business and results of operation; unanticipated regulatory action or changes in regulations; potential recessionary conditions; unanticipated volatility in deposits; unexpected increases in credit losses or in the level of delinquent, nonperforming, classified and criticized loans; our ability to absorb the amount of actual losses inherent in our existing loan portfolio; an unanticipated loss of key personnel or existing customers; competition from other institutions resulting in unanticipated changes in our loan or deposit rates; an unexpected adverse financial, regulatory or bankruptcy event experienced by our non-bank financial service partners; unanticipated increases in FDIC costs; changes in regulations, legislation or tax or accounting rules, monetary and fiscal policies of the U.S. Government including policies of the U.S. Treasury; impacts related to or resulting from recent bank failures; an unexpected failure to successfully manage our credit risk and the sufficiency of our allowance, the credit and other risks from borrower and depositor concentrations (by geographic area and by industry); the current or anticipated impact of military conflict, terrorism or other geopolitical events; the costs, including possibly incurring fines, penalties or other negative effects (including reputational harm), of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions; a failure in or breach of the Company’s operational or security systems or infrastructure, including cyberattacks; the failure to maintain current technologies, or to implement new technologies; the failure to maintain effective internal controls over financial reporting; the failure to retain or attract employees; and unanticipated adverse changes in our customers’ economic conditions or general economic conditions, as well as those discussed under the heading “Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q which have been filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended.

Forward-looking statements speak only as of the date of this release. We do not undertake (and expressly disclaim) any obligation to update or revise any forward-looking statement, except as may be required by law.

Consolidated Balance Sheet (unaudited)

		Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Sept. 30,
(in thousands)		2023				2023				2023				2022				2022
Assets
Cash and due from banks		$	36,438			$	33,534			$	32,525			$	26,780			$	28,929
Overnight deposits			140,929				168,242				266,978				230,638				679,849
Total cash and cash equivalents			177,367				201,776				299,503				257,418				708,778
Investment securities available-for-sale			429,850				426,068				444,169				445,747				423,265
Investment securities held-to-maturity			478,886				515,613				501,525				510,425				521,376
Equity investment securities, at fair value			2,015				2,066				2,087				2,048				2,027
Total securities			910,751				943,747				947,781				958,220				946,668
Other investments			35,015				28,040				27,099				22,110				17,484
Loans, net of deferred fees and unamortized costs			5,354,487				5,149,546				4,851,694				4,840,523				4,617,304
Allowance for credit losses			(52,298	)			(51,650	)			(47,752	)			(44,876	)			(42,541	)
Net loans			5,302,189				5,097,896				4,803,942				4,795,647				4,574,763
Receivables from global payments business, net			79,892				84,919				83,787				85,605				75,457
Other assets(1)			178,145				165,772				147,870				148,337				144,328
Total assets		$	6,683,359			$	6,522,150			$	6,309,982			$	6,267,337			$	6,467,478
Liabilities and Stockholders' Equity
Deposits
Non-interest-bearing demand deposits		$	1,746,626			$	1,730,380			$	2,122,606			$	2,422,151			$	3,058,014
Interest-bearing deposits			3,774,963				3,558,185				3,009,182				2,855,761				2,673,509
Total deposits			5,521,589				5,288,565				5,131,788				5,277,912				5,731,523
Federal funds purchased			—				243,000				195,000				150,000				—
Federal Home Loan Bank of New York advances			355,000				200,000				200,000				100,000				—
Trust preferred securities			20,620				20,620				20,620				20,620				20,620
Secured borrowings			7,621				7,655				7,689				7,725				26,912
Prepaid third-party debit cardholder balances			10,297				10,772				11,102				10,579				9,395
Other liabilities(1)			133,322				130,263				135,896				124,604				96,791
Total liabilities			6,048,449				5,900,875				5,702,095				5,691,440				5,885,241
Common stock			110				110				112				109				109
Additional paid in capital			393,544				392,742				394,124				389,276				387,406
Retained earnings			301,407				279,344				263,783				240,810				248,550
Accumulated other comprehensive gain (loss), net of tax effect			(60,151	)			(50,921	)			(50,132	)			(54,298	)			(53,828	)
Total stockholders’ equity			634,910				621,275				607,887				575,897				582,237
Total liabilities and stockholders’ equity		$	6,683,359			$	6,522,150			$	6,309,982			$	6,267,337			$	6,467,478

_____________________
(1) Includes adoption impact of ASU 2016-02, Leases (ASC 842) effective January 1, 2022.

Consolidated Statement of Income (unaudited)
		Three months ended										Nine months ended
		Sept. 30,				Jun. 30,			Sept. 30,			Sept. 30,				Sept. 30,
(dollars in thousands, except per share data)		2023				2023			2022			2023				2022
Total interest income		$	97,897			$	88,978		$	70,057		$	270,138			$	180,185
Total interest expense			44,340				35,227			6,732			104,296				14,926
Net interest income			53,557				53,751			63,325			165,842				165,259
Provision for credit losses			791				4,305			2,007			5,742				7,807
Net interest income after provision for credit losses			52,766				49,446			61,318			160,100				157,452
Non-interest income
Service charges on deposit accounts			1,463				1,481			1,445			4,400				4,289
Global Payments Group revenue			4,247				5,731			4,099			14,828				14,998
Other income			803				643			274			2,114				956
Total non-interest income			6,513				7,855			5,818			21,342				20,243
Non-interest expense
Compensation and benefits			17,208				15,288			14,568			48,751				41,404
Bank premises and equipment			2,396				2,287			2,228			7,027				6,608
Professional fees			3,873				4,973			6,086			13,033				9,252
Technology costs			1,171				1,482			984			3,966				3,527
Licensing fees			3,504				3,014			2,823			9,180				7,803
FDIC assessments			1,984				1,640			1,110			6,438				3,595
Regulatory settlement reserve			(3,021	)			—			—			(5,521	)			—
Other expenses			3,809				3,758			3,391			11,517				9,889
Total non-interest expense			30,924				32,442			31,190			94,391				82,078
Net income before income tax expense			28,355				24,859			35,946			87,051				95,617
Income tax expense			6,292				9,298			10,991			24,351				28,452
Net income (loss)		$	22,063			$	15,561		$	24,955		$	62,700			$	67,165
Earnings per common share:
Average common shares outstanding:
Basic			11,039,363				11,136,261			10,931,697			11,060,051				10,927,711
Diluted			11,136,873				11,277,975			11,177,152			11,123,348				11,204,735
Basic earnings (loss)		$	1.99			$	1.39		$	2.28		$	5.64			$	6.13
Diluted earnings (loss)		$	1.97			$	1.37		$	2.23		$	5.61			$	5.98

Loan Production, Asset Quality & Regulatory Capital
		Sept. 30				Jun. 30,				Mar. 31,				Dec. 31				Sept. 3
		2023				2023				2023				2022				2022
LOAN PRODUCTION (in millions)		$	333.5			$	425.4			$	265.4			$	411.3			$	423.6
ASSET QUALITY (in thousands)
Non-accrual loans:
Commercial real estate		$	24,000			$	24,000			$	24,000			$	—			$	—
Commercial and industrial			6,934				—				—				—				—
Consumer			24				24				24				24				24
Total non-accrual loans		$	30,958			$	24,024			$	24,024			$	24			$	24
Non-accrual loans to total loans			0.58	%			0.47	%			0.50	%			—	%			—	%
Allowance for credit losses		$	52,298			$	51,650			$	47,752			$	44,876			$	42,541
Allowance for credit losses to total loans			0.98	%			1.00	%			0.98	%			0.93	%			0.92	%
Charge-offs		$	(129	)		$	(44	)		$	(100	)		$	—			$	—
Recoveries		$	—			$	—			$	—			$	25			$	—
Net charge-offs/(recoveries) to average loans (annualized)			0.01	%			—	%			0.01	%			—	%			—	%
REGULATORY CAPITAL
Tier 1 Leverage:
Metropolitan Bank Holding Corp.			10.7	%			10.8	%			10.8	%			10.2	%			9.9	%
Metropolitan Commercial Bank			10.5	%			10.5	%			10.4	%			10.0	%			9.7	%
Common Equity Tier 1 Risk-Based (CET1):
Metropolitan Bank Holding Corp.			11.8	%			11.9	%			12.3	%			12.1	%			12.9	%
Metropolitan Commercial Bank			11.9	%			11.9	%			12.3	%			12.3	%			13.1	%
Tier 1 Risk-Based:
Metropolitan Bank Holding Corp.			12.2	%			12.2	%			12.7	%			12.5	%			13.3	%
Metropolitan Commercial Bank			11.9	%			11.9	%			12.3	%			12.3	%			13.1	%
Total Risk-Based:
Metropolitan Bank Holding Corp.			13.1	%			13.2	%			13.6	%			13.4	%			14.2	%
Metropolitan Commercial Bank			12.8	%			12.9	%			13.2	%			13.1	%			14.0	%

Performance Measures
		Three months ended												Nine months ended
		Sept. 30,				Jun. 30,				Sept. 30,				Sept. 30,				Sept. 30,
(dollars in thousands, except per share data)		2023(1)				2023				2022				2023(1)				2022
Net income per consolidated statements of income		$	22,063			$	15,561			$	24,955			$	62,700			$	67,165
Less: Earnings allocated to participating securities			(118	)			(82	)			(68	)			(285	)			(152	)
Net income (loss) available to common shareholders		$	21,945			$	15,479			$	24,887			$	62,415			$	67,013
Per common share:
Basic earnings (loss)		$	1.99			$	1.39			$	2.28			$	5.64			$	6.13
Diluted earnings (loss)		$	1.97			$	1.37			$	2.23			$	5.61			$	5.98
Common shares outstanding:
Period end			11,062,729				10,991,074				10,931,697				11,062,729				10,931,697
Average fully diluted			11,136,873				11,277,975				11,177,152				11,123,348				11,204,735
Return on:(2)
Average total assets			1.33		%		0.98		%		1.51		%		1.31		%		1.33		%
Average equity			13.9		%		10.1		%		16.8		%		13.7		%		15.7		%
Average tangible common equity(3)			14.1		%		10.3		%		17.1		%		13.9		%		16.1		%
Yield on average earning assets(2)			5.99		%		5.70		%		4.26		%		5.75		%		3.59		%
Total cost of deposits(2)			2.74		%		2.19		%		0.44		%		2.22		%		0.30		%
Net interest spread(2)			1.67		%		1.80		%		3.25		%		1.87		%		2.86		%
Net interest margin(2)			3.27		%		3.44		%		3.85		%		3.53		%		3.29		%
Net charge-offs as % of average loans(2)			0.01		%		—		%		—		%		0.01		%		—		%
Efficiency ratio(4)			51.5		%		52.7		%		45.1		%		50.43		%		44.25		%

_____________________
(1) The three and nine months ended September 30, 2023, include a $3.0 million and $5.5 million, respectively, reversal of the regulatory settlement reserve recorded in the fourth quarter of 2022.
(2) Ratios are annualized.
(3) Net income divided by average tangible common equity. Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures on page 13.
(4) Total non-interest expense divided by total revenues.

Interest Margin Analysis
		Three months ended
		Sept. 30, 2023										Jun. 30, 2023										Sept. 30, 2022
		Average							Yield /			Average							Yield /			Average							Yield /
(dollars in thousands)		Balance				Interest			Rate (1)			Balance				Interest			Rate (1)			Balance				Interest			Rate (1)
Assets:
Interest-earning assets:
Loans (2)		$	5,283,114			$	90,666		6.80	%		$	4,921,887			$	80,516		6.54	%		$	4,504,260			$	60,570		5.30	%
Available-for-sale securities			527,673				2,261		1.71				520,322				2,068		1.59				521,378				1,651		1.27
Held-to-maturity securities			497,682				2,412		1.94				519,076				2,602		2.01				527,050				2,466		1.87
Equity investments			2,387				13		2.20				2,375				13		2.09				2,342				9		1.47
Overnight deposits			124,211				1,783		5.62				237,449				3,086		5.14				913,566				5,114		2.19
Other interest-earning assets			36,952				762		8.24				39,197				693		7.08				17,360				247		5.69
Total interest-earning assets			6,472,019				97,897		5.99				6,240,306				88,978		5.70				6,485,956				70,057		4.26
Non-interest-earning assets			170,195										162,326										108,643
Allowance for credit losses			(52,357	)									(48,035	)									(41,494	)
Total assets		$	6,589,857									$	6,354,597									$	6,553,105
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market and savings accounts		$	3,465,347				35,969		4.12			$	2,987,237				27,100		3.64			$	2,572,111				6,407		0.99
Certificates of deposit			38,937				265		2.70				45,925				303		2.65				51,363				98		0.76
Total interest-bearing deposits			3,504,284				36,234		4.10				3,033,162				27,403		3.62				2,623,474				6,505		0.98
Borrowed funds			572,456				8,106		5.66				588,281				7,824		5.32				20,555				227		4.41
Total interest-bearing liabilities			4,076,740				44,340		4.32				3,621,443				35,227		3.90				2,644,029				6,732		1.01
Non-interest-bearing liabilities:
Non-interest-bearing deposits			1,734,956										1,977,443										3,243,664
Other non-interest-bearing liabilities			146,956										139,341										75,471
Total liabilities			5,958,652										5,738,227										5,963,164
Stockholders' equity			631,205										616,370										589,941
Total liabilities and equity		$	6,589,857									$	6,354,597									$	6,553,105
Net interest income						$	53,557									$	53,751									$	63,325
Net interest rate spread (3)									1.67	%									1.80	%									3.25	%
Net interest margin (4)									3.27	%									3.44	%									3.85	%
Total cost of deposits (5)									2.74	%									2.19	%									0.44	%
Total cost of funds (6)									3.03	%									2.52	%									0.45	%

_____________________
(1) Ratios are annualized.
(2) Amount includes deferred loan fees and non-performing loans.
(3) Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets.
(4) Determined by dividing annualized net interest income by total average interest-earning assets.
(5) Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits.
(6) Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits.

Interest Margin Analysis, continued
		Nine months ended
		Sept. 30, 2023										Sept. 30, 2022
		Average							Yield /			Average							Yield /
(dollars in thousands)		Balance				Interest			Rate (1)			Balance				Interest			Rate (1)
Assets:
Interest-earning assets:
Loans (2)		$	5,016,075			$	247,142		6.58	%		$	4,214,957			$	159,291		5.03	%
Available-for-sale securities			526,156				6,435		1.63				542,099			$	4,942		1.22
Held-to-maturity securities			507,771				7,391		1.94				488,058			$	6,260		1.71
Equity investments			2,375				38		2.12				2,335			$	22		1.25
Overnight deposits			189,552				7,353		5.12				1,424,119			$	9,023		0.84
Other interest-earning assets			32,166				1,779		7.37				16,030			$	647		5.38
Total interest-earning assets			6,274,095				270,138		5.75				6,687,598				180,185		3.59
Non-interest-earning assets			161,592										86,682
Allowance for credit losses			(48,693	)									(38,799	)
Total assets		$	6,386,994									$	6,735,481
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market and savings accounts		$	3,099,908			$	85,099		3.67			$	2,642,465			$	13,453		0.68
Certificates of deposit			45,874				911		2.66				63,074			$	383		0.81
Total interest-bearing deposits			3,145,782				86,010		3.66				2,705,539				13,836		0.68
Borrowed funds			451,063				18,286		5.41				27,099				1,090		5.36
Total interest-bearing liabilities			3,596,845				104,296		3.88				2,732,638				14,926		0.73
Non-interest-bearing liabilities:
Non-interest-bearing deposits			2,032,011										3,368,470
Other non-interest-bearing liabilities			144,712										61,303
Total liabilities			5,773,568										6,162,411
Stockholders' equity			613,426										573,070
Total liabilities and equity		$	6,386,994									$	6,735,481
Net interest income						$	165,842									$	165,259
Net interest rate spread (3)									1.87	%									2.86	%
Net interest margin (4)									3.53	%									3.29	%
Total cost of deposits (5)									2.22	%									0.30	%
Total cost of funds (6)									2.48	%									0.33	%

_____________________
(1) Ratios are annualized.
(2) Amount includes deferred loan fees and non-performing loans.
(3) Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets.
(4) Determined by dividing annualized net interest income by total average interest-earning assets.
(5) Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits.
(6) Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits.

Reconciliation of 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 following tables:

		Quarterly Data
(dollars in thousands,		Sept. 30,				Jun. 30,				Mar. 31,				Dec. 31,				Sept. 30,
except per share data)		2023				2023				2023				2022				2022
Average assets		$	6,589,857			$	6,354,597			$	6,212,624			$	6,283,813			$	6,553,105
Less: average intangible assets			9,733				9,733				9,733				9,733				9,733
Average tangible assets (non-GAAP)		$	6,580,124			$	6,344,864			$	6,202,891			$	6,274,080			$	6,543,372
Average common equity		$	631,205			$	616,370			$	592,521			$	595,769			$	589,941
Less: average intangible assets			9,733				9,733				9,733				9,733				9,733
Average tangible common equity (non-GAAP)		$	621,472			$	606,637			$	582,788			$	586,036			$	580,208
Total assets		$	6,683,359			$	6,522,150			$	6,309,982			$	6,267,337			$	6,467,478
Less: intangible assets			9,733				9,733				9,733				9,733				9,733
Tangible assets (non-GAAP)		$	6,673,626			$	6,512,417			$	6,300,249			$	6,257,604			$	6,457,745
Common equity		$	634,910			$	621,275			$	607,887			$	575,897			$	582,237
Less: intangible assets			9,733				9,733				9,733				9,733				9,733
Tangible common equity (book value) (non-GAAP)		$	625,177			$	611,542			$	598,154			$	566,164			$	572,504
Common shares outstanding			11,062,729				10,991,074				11,211,274				10,949,965				10,931,697
Book value per share (GAAP)		$	57.39			$	56.53			$	54.22			$	52.59			$	53.26
Tangible book value per share (non-GAAP) (1)		$	56.51			$	55.64			$	53.35			$	51.70			$	52.37

_____________________
(1) Tangible book value divided by common shares outstanding at period-end.

Explanatory Note

Some amounts presented within this document may not recalculate due to rounding.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231019829278/en/

Greg Sigrist

EVP & Chief Financial Officer

Metropolitan Commercial Bank

(212) 365-6721

IR@MCBankNY.com

Source: Metropolitan Bank Holding Corp.

FAQ

What is the net income for Metropolitan Bank Holding Corp. in Q3 2023?

$22.1 million.

What is the total deposit increase from June 30, 2023?

$233.0 million.

What is the return on average equity for the company?

13.9%.

Is the Company and Bank well capitalized?

Yes, with total risk-based capital ratios of 13.1% and 12.8%, respectively.

What is the net interest income for Q3 2023?

$53.6 million.

What is the non-performing loan ratio?

0.58%.