MetroCity Bankshares, Inc. Reports Earnings For Third Quarter 2020

Rhea-AI Summary

MetroCity Bankshares, Inc. (NASDAQ: MCBS) reported a net income of $9.4 million for Q3 2020, an increase of 21.3% from Q2 2020 but 24.0% lower than Q3 2019. The annualized return on average assets rose to 2.20%, while the equity return climbed to 16.22%. Total loans increased by 7.0% to $1.46 billion. Nonperforming assets reached 1.01% of total assets. Challenges from the COVID-19 pandemic continue to impact operations, although the company has implemented loan deferral programs to assist customers.

Positive

• Net income increased by $1.7 million, or 21.3%, from Q2 2020.
• Total loans rose by $94.9 million, or 7.0%, from the previous quarter.
• The efficiency ratio improved to 42.5% from 45.6% in Q2 2020.

Negative

• Net income decreased by $3.0 million, or 24.0%, compared to Q3 2019.
• Interest income fell by $952,000, or 5.0%, from the previous quarter.
• Nonperforming assets increased by $3.8 million from Q2 2020.

ATLANTA, Oct. 23, 2020 /PRNewswire/ -- MetroCity Bankshares, Inc. ("MetroCity" or the "Company") (NASDAQ: MCBS), holding company for Metro City Bank (the "Bank"), today reported net income of $9.4 million, or $0.36 per diluted share, for the third quarter of 2020, compared to $7.7 million, or $0.30 per diluted share, for the second quarter of 2020, and $12.4 million, or $0.50 per diluted share, for the third quarter of 2019.

Third Quarter 2020 Highlights:

• Annualized return on average assets was 2.20%, compared to 1.89% for the second quarter of 2020 and 3.07% for the third quarter of 2019.
• Annualized return on average equity was 16.22%, compared to 13.92% for the second quarter of 2020 and 26.44% for the third quarter of 2019.
• Efficiency ratio of 42.5%, compared to 45.6% for the second quarter of 2020 and 37.7% for the third quarter of 2019.
• Total loans increased by $94.9 million, or 7.0%, to $1.46 billion from the previous quarter.
• Annualized net charge-off to average loans for the quarter was 0.00%, compared to 0.01% for the second quarter of 2020 and a net recovery ratio of 0.11% for the third quarter of 2019.

COVID-19 Pandemic

The Company prioritizes the health and safety of its employees and customers, and has taken protective measures such as implementing remote work arrangements to the fullest extent possible and by adjusting banking center hours and operational measures to promote social distancing, and it will continue to do so throughout the duration of the pandemic. At the same time, the Company continues to closely monitor the effects of the COVID-19 pandemic on our loan and deposit customers, and is assessing the risks in our loan portfolio and working with our customers to reduce the pandemic's impact on them while minimizing losses for the Company. In addition, the Company remains focused on improving shareholder value, managing credit exposure, monitoring expenses, enhancing the customer experience and supporting the communities it serves.

We have implemented loan programs to allow customers who are experiencing hardships from the COVID-19 pandemic to defer loan principal and interest payments for up to six months. The Small Business Administration (SBA) also guaranteed the principal and interest payments of all our SBA loan customers for six months through the end of September 2020. As of September 30, 2020, we had 24 non-SBA commercial customers with outstanding loan balances totaling $82.5 million who were approved for a second round of payment deferrals. This is a significant decline from the first round of payment deferrals that were granted to our non-SBA commercial customers (89 non-SBA commercial customers with outstanding balances totaling $157.5 million as of June 30, 2020). Included in the second round of non-SBA payment deferrals were 15 loans totaling $61.5 million with a weighted average loan-to-value ("LTV") of 54.6% in the hotel industry and only one loan totaling $495,000 in the restaurant industry, which are two industries heavily impacted by the COVID-19 pandemic. As of September 30, 2020, the Company had 50 loans totaling $122.9 million in the hotel industry and 116 loans totaling $35.6 million in the restaurant industry.

As a preferred SBA lender, we participated in the SBA Paycheck Protection Program under the Coronavirus Aid, Relief and Economic Security Act to help provide loans to our business customers in need. As of September 30, 2020, the Company had approved and funded over 1,800 PPP loans totaling $96.9 million. The PPP loans were funded with our current cash balances. As of October 22, 2020, none of our PPP loans had been granted a loan forgiveness by the SBA.  

As of September 30, 2020, our residential real estate loan portfolio made up 56.7% of our total loan portfolio and had a weighted average amortized LTV of approximately 55.8%. As of September 30, 2020, only 1.7% of our residential mortgages had been granted a second hardship payment deferral covering principal and interest payments for up to three months. This is a significant decrease from the first round of payment deferrals granted during the second quarter of 2020, which made up 19.2% of our residential mortgage balances as of June 30, 2020.

Based on the Company's capital levels, conservative underwriting policies, low loan-to-value ratios, and strong liquidity position, management expects to be able to assist the Company's customers and communities during these difficult times, manage the economic risks and uncertainties associated with the COVID-19 pandemic and remain adequately capitalized.

Results of Operations

Net Income

Net income was $9.4 million for the third quarter of 2020, an increase of $1.7 million, or 21.3%, from $7.7 million for the second quarter of 2020. This increase was primarily due to the increase in noninterest income of $2.5 million, partially offset by the increase in provision for loan losses of $389,000 and the increase in noninterest expense of $426,000 while net interest income remained flat. Net income decreased $3.0 million, or 24.0%, in the third quarter of 2020 compared to net income of $12.4 million for the third quarter of 2019. This decrease was primarily due to the decrease in noninterest income of $3.0 million and a $1.5 million increase in provision for loan losses, partially offset by the decrease in provision for income taxes of $1.5 while net interest income and noninterest expense remained flat.

Net Interest Income and Net Interest Margin

Interest income totaled $18.1 million for the third quarter of 2020, a decrease of $952,000, or 5.0%, from the previous quarter, primarily due to a 64 basis points decrease in the yield on average loans. We recognized no PPP loan fee income during the third quarter of 2020 compared to $1.2 million recognized during the second quarter of 2020 as we reevaluated the estimated life of our PPP loan fee amortization period, extending it from 9 months to 24 months due to the uncertainty of the PPP loan forgiveness process. As compared to the third quarter of 2019, interest income decreased by $3.8 million, or 17.2%, primarily due to a 117 basis points decrease in the yield on average loans.

Interest expense totaled $2.2 million for the third quarter of 2020, a decrease of $1.0 million, or 32.3%, from the previous quarter, primarily due to a 44 basis points decrease in deposit costs coupled with a $34.0 million decrease in average balances for total interest-bearing deposits. As compared to the third quarter of 2019, interest expense decreased by $3.7 million, or 63.0%, primarily due to a 135 basis points decrease in deposit costs coupled with a $270.1 million decrease in average time deposit balances.

The net interest margin for the third quarter of 2020 was 3.97% compared to 4.09% for the previous quarter, a decrease of 12 basis points. The cost of interest-bearing liabilities for the third quarter of 2020 decreased by 41 basis points to 0.91% compared with the previous quarter, while the yield on interest-earning assets for the third quarter of 2020 decreased by 42 basis points to 4.51% from 4.93% for the previous quarter. Average earning assets increased by $42.4 million from the previous quarter, primarily due to an increase in average loans of $76.9 million, offset by a $34.3 million decrease in average interest-earning cash accounts. Average interest-bearing liabilities decreased by $32.5 million from the previous quarter as average interest-bearing deposits decreased by $34.0 million and average borrowings increased by only $1.5 million. The inclusion of PPP loan average balances had a 36 basis points impact on the yield on average loans and a 25 basis points impact on the net interest margin.

As compared to the same period a year ago, the net interest margin for the third quarter of 2020 decreased by 25 basis points to 3.97% from 4.22%, primarily due to a 132 basis point decrease in the cost of interest-bearing liabilities of $954.7 million and a decrease of 127 basis points in the yield on average interest-earning assets of $1.60 billion. Average earning assets increased by $95.4 million from the third quarter of 2019, primarily due to an increase of $25.0 million in securities purchased under agreements to resell and a $77.2 million increase in average loans. Average interest-bearing liabilities decreased by $101.9 million from the third quarter of 2019, primarily driven by a decrease in average interest-bearing deposits of $149.4 million, offset by an increase in average borrowings of $47.5 million.

Noninterest Income

Noninterest income for the third quarter of 2020 was $8.0 million, an increase of $2.5 million, or 44.8%, from the second quarter of 2020, primarily due to a $1.7 million fair value adjustment gain on our SBA servicing asset and higher mortgage loan fees as mortgage volume significantly increased during the quarter. We also recorded a $89,000 fair value impairment charge on our mortgage servicing asset. These servicing asset adjustments had a $0.05 per share impact on our diluted earnings per share for the quarter.

Compared to the same period a year ago, noninterest income for the quarter decreased by $3.0 million, or 27.6%, primarily due to the decrease in mortgage loan fees, mortgage servicing income and gains earned from the sales of mortgage loans. Mortgage loan originations totaled $120.3 million during the third quarter of 2020 compared to $163.5 million during the third quarter of 2019. There were no mortgage loan sales during the third quarter of 2020 compared to mortgage loan sales of $152.5 million during the same period a year ago.

Noninterest Expense

Noninterest expense for the third quarter of 2020 totaled $10.2 million, an increase of $426,000, or 4.4%, from $9.7 million for the second quarter of 2020. The increase was primarily attributable to higher salaries and employee benefits. Noninterest expense remained flat compared to the third quarter of 2019.

The Company's efficiency ratio was 42.5% in the third quarter of 2020 compared with 45.6% and 37.7% for the second quarter of 2020 and third quarter of 2019, respectively. For the nine months ended September 30, 2020, the efficiency ratio was 43.7% compared with 39.4% for the same period in 2019.

Income Tax Expense

The Company's effective tax rate for the third quarter of 2020 was 23.7%, compared to 26.7% for the second quarter of 2020 and 26.5% for the third quarter of 2019. The decrease in the effective tax rate for the third quarter of 2020 was due to Georgia state tax credits recognized during the quarter.

Balance Sheet

Total Assets

Total assets were $1.74 billion at September 30, 2020, an increase of $18.1 million, or 1.1%, from $1.72 billion at June 30, 2020, and an increase of $95.1 million, or 5.8%, from $1.64 billion at September 30, 2019. The $18.1 million increase from the prior quarter was primarily due to increases in loans of $94.9 million and bank owned life insurance of $15.1 million, partially offset by a $99.1 million decrease in cash and due from banks. The $95.1 million increase from the prior year quarter was primarily due to increases in securities purchased under agreements to resell of $25.0 million, loans of $200.9 million, and bank owned life insurance of $15.5 million, partially offset by a $155.7 million decrease in cash and due from banks.

Loans

Loans held for investment at September 30, 2020, were $1.46 billion, an increase of $94.9 million, or 7.0%, compared to $1.36 billion at June 30, 2020, and an increase of $200.9 million, or 16.0%, compared to $1.26 billion at September 30, 2019. The increase from prior quarter was primarily due to a $75.8 million increase in residential mortgages, $18.6 million increase in commercial real estate loans and a $5.3 million increase in commercial and industrial loans. Included in commercial and industrial loans are PPP loans totaling $96.9 million as of September 30, 2020. There were no loans classified as held for sale at September 30, 2020, June 30, 2020 or September 30, 2019.

Deposits

Total deposits at September 30, 2020 were $1.34 billion, a decrease of $12.1 million, or 0.9%, compared to total deposits of $1.35 billion at June 30, 2020, and slight increase of $2.4 million, or 0.2%, compared to total deposits of $1.34 billion at September 30, 2019. The decrease from the prior quarter was primarily due to the $110.2 million decrease in time deposits, partially offset by a $82.0 million increase in money market accounts and an $11.5 million increase in noninterest bearing deposits. The increase in money market accounts was partially due to the addition of a $40.0 million brokered money market account during the quarter.

Noninterest bearing deposits were $460.7 million at September 30, 2020, compared to $449.2 million at June 30, 2020, and $311.2 million at September 30, 2019. Noninterest bearing deposits constituted 34.4% of total deposits at September 30, 2020, compared to 33.3% at June 30, 2020, and 23.3% at September 30, 2019. Interest bearing deposits were $877.1 million at September 30, 2020, compared to $900.7 million at June 30, 2020, and $1.0 billion at September 30, 2019. Interest bearing deposits constituted 65.6% of total deposits at September 30, 2020, compared to 66.7% at June 30, 2020, and 76.7% at September 30, 2019.

Asset Quality

The Company recorded provision for loan losses of $1.5 million during the third quarter of 2020. Annualized net charge-offs to average loans for the third quarter of 2020 was 0.00%, compared to 0.01% for the second quarter of 2020, and a net recovery of 0.11% for the third quarter of 2019. We continue to increase the qualitative factors in our allowance for loan losses calculation for the economic uncertainties caused by the COVID-19 pandemic resulting in the increased provision expense recorded during the quarter. The Company is not required to implement the provisions of the current expected credit losses accounting standard issued by the Financial Accounting Standards Board in the Accounting Standards Update No. 2016-13 until January 1, 2023, and is continuing to account for the allowance for loan losses under the incurred loss model.

Nonperforming assets totaled $17.5 million, or 1.01% of total assets, at September 30, 2020, an increase of $3.8 million from $13.7 million, or 0.79% of total assets, at June 30, 2020, and an increase of $2.6 million from $14.9 million, or 0.91% of total assets, at September 30, 2019. The increase during the quarter was primarily due to a $4.6 million increase in accruing troubled debt restructured loans, offset by a $605,000 decrease in nonaccrual loans and $141,000 decrease in other real estate owned.

Allowance for loan losses as a percentage of total loans was 0.64% at September 30, 2020, compared to 0.58% at June 30, 2020 and 0.54% at September 30, 2019. Excluding outstanding PPP loans of $96.9 million as of September 30, 2020, the allowance for loan losses as a percentage of total loans was 0.68%. Allowance for loan losses as a percentage of nonperforming loans was 54.24% at September 30, 2020, compared to 59.66% and 47.19% at June 30, 2020 and September 30, 2019, respectively.

About MetroCity Bankshares, Inc.

MetroCity Bankshares, Inc. is a Georgia corporation and a bank holding company for its wholly-owned banking subsidiary, Metro City Bank, which is headquartered in the Atlanta metropolitan area. Founded in 2006, Metro City Bank currently operates 19 full-service branch locations in multi-ethnic communities in Alabama, Florida, Georgia, New York, New Jersey, Texas and Virginia. To learn more about Metro City Bank, visit www.metrocitybank.bank.

Forward-Looking Statements

Statements in this press release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets, including statements regarding the potential effects of the COVID-19 pandemic on our business and financial results and conditions, constitute "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical in nature and often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this press release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this press release and could cause us to make changes to our future plans. Factors that might cause such differences include, but are not limited to: business and economic conditions, particularly those affecting the financial services; the impact of the COVID-19 pandemic on the Company's assets, business, cash flows, financial condition, liquidity, prospects and results of operations; potential increases in the provision for loan losses resulting from the COVID-19 pandemic; changes in the interest rate environment, including changes to the federal funds rate; competition in our markets that may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income; interest rate fluctuations, which could have an adverse effect on the Company's profitability; legislation or regulatory changes which could adversely affect the ability of the consolidated Company to conduct business combinations or new operations, including changes to statutes, regulations or regulatory policies or practices as a result of, or in response to COVID-19; and adverse results from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of the Company's participation in and execution of government programs related to the COVID-19 pandemic. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in the sections titled "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 19, 2020, and in other documents that we file with the SEC from time to time, which are available on the SEC's website, http://www.sec.gov. In addition, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law. All forward-looking statements, express or implied, included in this press release are qualified in their entirety by this cautionary statement.

Contacts
Farid Tan	Lucas Stewart
President & Chief Financial Officer	Chief Accounting Officer
770-455-4978	678-580-6414
faridtan@metrocitybank.bank	lucasstewart@metrocitybank.bank

METROCITY BANKSHARES, INC.
SELECTED FINANCIAL DATA
	As of and for the Three Months Ended															As of and for the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(Dollars in thousands, except per share data)	2020			2020			2020			2019			2019			2020			2019
Selected income statement data:
Interest income	$	18,131		$	19,083		$	20,556		$	20,625		$	21,908		$	57,770		$	62,588
Interest expense		2,192			3,240			4,646			5,681			5,929			10,078			16,557
Net interest income		15,939			15,843			15,910			14,944			15,979			47,962			46,031
Provision for loan losses		1,450			1,061			—			—			—			2,511			—
Noninterest income		7,964			5,500			7,509			9,360			11,001			21,073			30,533
Noninterest expense		10,150			9,724			10,049			9,840			10,162			30,023			30,160
Income tax expense		2,918			2,819			3,554			3,794			4,462			9,291			12,356
Net income		9,385			7,739			9,816			10,670			12,356			26,940			34,048
Per share data:
Basic income per share	$	0.37		$	0.30		$	0.38		$	0.42		$	0.51		$	1.05		$	1.40
Diluted income per share	$	0.36		$	0.30		$	0.38		$	0.42		$	0.50		$	1.05		$	1.39
Dividends per share	$	0.09		$	0.11		$	0.11		$	0.11		$	0.11		$	0.31		$	0.31
Book value per share (at period end)	$	9.23		$	8.94		$	8.76		$	8.49		$	8.00		$	9.23		$	8.00
Shares of common stock outstanding		25,674,067			25,674,067			25,529,891			25,529,891			24,305,378			25,674,067			24,305,378
Weighted average diluted shares		25,858,741			25,717,339			25,736,435			25,586,733			24,502,621			25,774,500			24,440,485
Performance ratios:
Return on average assets		2.20	%		1.89	%		2.44	%		2.57	%		3.07	%		2.17	%		2.98	%
Return on average equity		16.22			13.92			18.21			20.40			26.44			16.10			25.81
Dividend payout ratio		24.78			36.53			28.80			26.36			21.79			29.62			22.29
Yield on total loans		5.05			5.69			6.11			6.04			6.22			5.60			6.17
Yield on average earning assets		4.51			4.93			5.42			5.27			5.78			4.95			5.80
Cost of average interest bearing liabilities		0.91			1.32			1.78			2.06			2.23			1.35			2.19
Cost of deposits		0.94			1.38			1.86			2.15			2.29			1.41			2.21
Net interest margin		3.97			4.09			4.19			3.82			4.22			4.08			4.27
Efficiency ratio(1)		42.46			45.56			42.91			40.49			37.66			43.66			39.39
Asset quality data (at period end):
Net charge-offs/(recoveries) to average loans held for investment		0.00	%		0.01	%		(0.01)	%		0.00	%		(0.11)	%		0.00	%		(0.02)	%
Nonperforming assets to gross loans and OREO		1.19			1.00			1.13			1.30			1.18			1.19			1.18
ALL to nonperforming loans		54.24			59.66			49.47			46.54			47.19			54.24			47.19
ALL to loans held for investment		0.64			0.58			0.54			0.59			0.54			0.64			0.54
Balance sheet and capital ratios:
Gross loans held for investment to deposits		109.50	%		101.48	%		101.67	%		88.97	%		94.46	%		109.50	%		94.46	%
Noninterest bearing deposits to deposits		34.44			33.28			25.83			22.34			23.30			34.44			23.30
Common equity to assets		13.63			13.32			13.94			13.28			11.82			13.63			11.82
Leverage ratio		13.44			13.44			13.40			12.70			11.68			13.44			11.68
Common equity tier 1 ratio		20.20			21.75			21.75			21.31			18.82			20.20			18.82
Tier 1 risk-based capital ratio		20.20			21.75			21.75			21.31			18.82			20.20			18.82
Total risk-based capital ratio		21.03			22.53			22.44			22.01			19.51			21.03			19.51
Mortgage and SBA loan data:
Mortgage loans serviced for others	$	1,063,500		$	1,136,824		$	1,186,825		$	1,168,601		$	1,122,551		$	1,063,500		$	1,122,551
Mortgage loan production		120,337			48,850			120,076			112,259			163,517			289,263			503,298
Mortgage loan sales		—			—			92,737			106,548			152,503			92,737			413,519
SBA loans serviced for others		500,047			476,629			464,576			441,593			446,266			500,047			446,266
SBA loan production		52,742			114,899			43,447			30,763			48,878			211,088			124,284
SBA loan sales		37,923			35,247			29,958			30,065			28,914			103,128			88,340

(1)   Represents noninterest expense divided by the sum of net interest income plus noninterest income.

METROCITY BANKSHARES, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
	As of the Quarter Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands, except per share data)	2020			2020			2020			2019			2019
ASSETS
Cash and due from banks	$	109,263		$	208,325		$	201,020		$	270,496		$	264,981
Federal funds sold		17,268			7,444			6,618			5,917			9,567
Cash and cash equivalents		126,531			215,769			207,638			276,413			274,548
Securities purchased under agreements to resell		40,000			40,000			40,000			15,000			15,000
Securities available for sale (at fair value)		18,204			18,415			18,182			15,695			15,913
Loans		1,459,899			1,364,989			1,261,603			1,161,162			1,259,046
Allowance for loan losses		(9,339)			(7,894)			(6,859)			(6,839)			(6,850)
Loans less allowance for loan losses		1,450,560			1,357,095			1,254,744			1,154,323			1,252,196
Loans held for sale		—			—			—			85,793			—
Accrued interest receivable		7,999			8,270			5,534			5,101			5,465
Federal Home Loan Bank stock		5,723			4,873			4,873			3,842			3,842
Premises and equipment, net		14,083			14,231			14,344			14,460			14,484
Operating lease right-of-use asset		10,786			11,220			11,663			11,957			12,431
Foreclosed real estate, net		282			423			423			423			423
SBA servicing asset, net		10,173			8,446			7,598			8,188			8,566
Mortgage servicing asset, net		14,599			16,064			16,791			18,068			17,740
Bank owned life insurance		35,578			20,450			20,335			20,219			20,101
Other assets		5,355			6,501			2,417			2,376			4,036
Total assets	$	1,739,873		$	1,721,757		$	1,604,542		$	1,631,858		$	1,644,745
LIABILITIES
Noninterest-bearing deposits	$	460,679		$	449,185		$	320,982		$	292,008		$	311,198
Interest-bearing deposits		877,112			900,713			921,899			1,015,369			1,024,154
Total deposits		1,337,791			1,349,898			1,242,881			1,307,377			1,335,352
Federal Home Loan Bank advances		100,000			80,000			80,000			60,000			60,000
Other borrowings		491			3,060			3,097			3,129			3,154
Operating lease liability		11,342			11,769			12,198			12,476			12,922
Accrued interest payable		310			549			760			890			940
Other liabilities		52,843			47,060			41,871			31,262			37,955
Total liabilities	$	1,502,777		$	1,492,336		$	1,380,807		$	1,415,134		$	1,450,323
SHAREHOLDERS' EQUITY
Preferred stock		—			—			—			—			—
Common stock		257			257			255			255			243
Additional paid-in capital		55,098			54,524			54,142			53,854			39,526
Retained earnings		181,576			174,518			169,606			162,616			154,652
Accumulated other comprehensive income (loss)		165			122			(268)			(1)			1
Total shareholders' equity		237,096			229,421			223,735			216,724			194,422
Total liabilities and shareholders' equity	$	1,739,873		$	1,721,757		$	1,604,542		$	1,631,858		$	1,644,745

METROCITY BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
	Three Months Ended															Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(Dollars in thousands, except per share data)	2020			2020			2020			2019			2019			2020			2019
Interest and dividend income:
Loans, including Fees	$	17,880		$	18,826		$	19,508		$	19,483		$	20,857		$	56,214		$	59,855
Other investment income		187			196			882			1,023			907			1,265			2,271
Federal funds sold		64			61			166			119			144			291			462
Total interest income		18,131			19,083			20,556			20,625			21,908			57,770			62,588
Interest expense:
Deposits		2,046			3,096			4,514			5,576			5,873			9,656			16,375
FHLB advances and other borrowings		146			144			132			105			56			422			182
Total interest expense		2,192			3,240			4,646			5,681			5,929			10,078			16,557
Net interest income		15,939			15,843			15,910			14,944			15,979			47,692			46,031
Provision for loan losses		1,450			1,061			—			—			—			2,511			—
Net interest income after provision for loan losses		14,489			14,782			15,910			14,944			15,979			45,181			46,031
Noninterest income:
Service charges on deposit accounts		215			202			287			296			294			704			811
Other service charges, commissions and fees		2,023			970			2,203			2,335			2,592			5,196			8,049
Gain on sale of residential mortgage loans		—			—			2,529			2,687			2,901			2,529			6,454
Mortgage servicing income, net		235			783			372			2,046			2,594			1,390			7,248
Gain on sale of SBA loans		2,265			1,276			1,301			1,148			1,404			4,842			3,080
SBA servicing income, net		2,931			1,959			516			665			900			5,406			4,296
Other income		295			310			401			183			316			1,006			595
Total noninterest income		7,964			5,500			7,609			9,360			11,001			21,073			30,533
Noninterest expense:
Salaries and employee benefits		6,416			5,749			6,513			5,997			6,573			18,678			18,926
Occupancy		1,302			1,277			1,211			1,202			1,161			3,790			3,547
Data Processing		287			201			277			264			245			765			765
Advertising		127			140			161			194			142			428			455
Other expenses		2,018			2,357			1,987			2,183			2,041			6,362			6,467
Total noninterest expense		10,150			9,724			10,149			9,840			10,162			30,023			30,160
Income before provision for income taxes		12,303			10,558			13,370			14,464			16,818			36,231			46,404
Provision for income taxes		2,918			2,819			3,554			3,794			4,462			9,291			12,356
Net income available to common shareholders	$	9,385		$	7,739		$	9,816		$	10,670		$	12,356		$	26,940		$	34,048

METROCITY BANKSHARES, INC.
AVERAGE BALANCES AND YIELDS/RATES
	Three Months Ended
	September 30, 2020								June 30, 2020								September 30, 2019
	Average			Interest and			Yield /		Average			Interest and			Yield /		Average			Interest and			Yield /
(Dollars in thousands)	Balance			Fees			Rate		Balance			Fees			Rate		Balance			Fees			Rate
Earning Assets:
Federal funds sold and other investments(1)	$	132,781		$	87		0.26	%	$	167,059		$	97		0.23	%	$	141,239		$	842		2.37	%
Securities purchased under agreements to resell		40,000			61		0.61			40,000			57		0.57			15,000			107		2.83
Securities available for sale		18,161			103		2.26			18,410			103		2.25			16,486			102		2.45
Total investments		190,942			251		0.52			225,469			257		0.46			172,725			1,051		2.41
Construction and development		33,587			414		4.90			31,617			421		5.36			34,903			579		6.58
Commercial real estate		476,174			6,417		5.36			472,113			6,246		5.32			474,455			8,210		6.87
Commercial and industrial		139,083			870		2.49			111,629			2,076		7.48			46,931			837		7.08
Residential real estate		757,982			10,132		5.32			714,095			10,025		5.65			772,068			11,181		5.75
Consumer and other		844			47		22.15			1,275			58		18.30			2,142			50		9.26
Gross loans(2)		1,407,670			17,880		5.05			1,330,729			18,826		5.69			1,330,499			20,857		6.22
Total earning assets		1,598,612			18,131		4.51			1,556,198			19,083		4.93			1,503,224			21,908		5.78
Noninterest-earning assets		96,234								93,152								95,437
Total assets		1,694,846								1,649,350								1,598,661
Interest-bearing liabilities:
NOW and savings deposits		73,299			42		0.23			64,081			40		0.25			49,880			40		0.32
Money market deposits		250,200			341		0.54			207,785			393		0.76			152,867			822		2.13
Time deposits		546,648			1,663		1.21			632,257			2,663		1.69			816,752			5,011		2.43
Total interest-bearing deposits		870,147			2,046		0.94			904,123			3,096		1.38			1,019,499			5,873		2.29
Borrowings		84,564			146		0.69			83,096			144		0.70			37,075			56		0.60
Total interest-bearing liabilities		954,711			2,192		0.91			987,219			3,240		1.32			1,056,574			5,929		2.23
Noninterest-bearing liabilities:
Noninterest-bearing deposits		445,970								377,136								303,759
Other noninterest-bearing liabilities		64,045								61,449								52,954
Total noninterest-bearing liabilities		510,015								438,585								356,713
Shareholders' equity		230,120								223,546								185,374
Total liabilities and shareholders' equity	$	1,694,846							$	1,649,350							$	1,598,661
Net interest income				$	15,939							$	15,843							$	15,979
Net interest spread							3.60								3.61								3.55
Net interest margin							3.97								4.09								4.22

(1)   Includes income and average balances for term federal funds sold, interest-earning cash accounts and other miscellaneous interest-earning assets.

(2)   Average loan balances include nonaccrual loans and loans held for sale.

METROCITY BANKSHARES, INC.
AVERAGE BALANCES AND YIELDS/RATES
	Nine Months Ended
	September 30, 2020								September 30, 2019
	Average			Interest and			Yield /		Average			Interest and			Yield /
(Dollars in thousands)	Balance			Fees			Rate		Balance			Fees			Rate
Earning Assets:
Federal funds sold and other investments(1)	$	164,287		$	986		0.80	%	$	112,310		$	2,056		2.45	%
Securities purchased under agreements to resell		37,354			258		0.92			15,000			334		2.98
Securities available for sale		17,747			312		2.35			17,949			343		2.55
Total investments		219,388			1,556		0.95			145,259			2,733		2.52
Construction and development		30,822			1,232		5.34			34,598			1,721		6.65
Commercial real estate		475,036			19,913		5.60			453,741			23,109		6.81
Commercial and industrial		103,680			3,925		5.06			41,096			2,229		7.25
Residential real estate		730,283			30,997		5.67			764,873			32,636		5.70
Consumer and other		1,233			147		15.93			2,490			160		8.59
Gross loans(2)		1,341,054			56,214		5.60			1,296,798			59,855		6.17
Total earning assets		1,560,442			57,770		4.95			1,442,057			62,588		5.80
Noninterest-earning assets		94,284								83,947
Total assets		1,654,726								1,526,004
Interest-bearing liabilities:
NOW and savings deposits		65,223			125		0.26			52,007			132		0.34
Money market deposits		231,414			1,403		0.81			119,931			1,957		2.18
Time deposits		619,118			8,128		1.75			819,510			14,286		2.33
Total interest-bearing deposits		915,755			9,656		1.41			991,448			16,375		2.21
Borrowings		81,191			422		0.69			21,529			182		1.13
Total interest-bearing liabilities		996,946			10,078		1.35			1,012,977			16,557		2.19
Noninterest-bearing liabilities:
Noninterest-bearing deposits		374,310								300,851
Other noninterest-bearing liabilities		59,954								35,791
Total noninterest-bearing liabilities		434,264								336,642
Shareholders' equity		223,516								176,385
Total liabilities and shareholders' equity	$	1,654,726							$	1,526,004
Net interest income				$	47,692							$	46,031
Net interest spread							3.60								3.61
Net interest margin							4.08								4.27

(1)   Includes income and average balances for term federal funds sold, interest-earning cash accounts and other miscellaneous interest-earning assets.

(2)   Average loan balances include nonaccrual loans and loans held for sale.

METROCITY BANKSHARES, INC.
LOAN DATA
	As of the Quarter Ended
	September 30, 2020					June 30, 2020					March 31, 2020					December 31, 2019					September 30, 2019
				% of					% of					% of					% of					% of
(Dollars in thousands)	Amount			Total		Amount			Total		Amount			Total		Amount			Total		Amount			Total
Construction and Development	$	38,607		2.6	%	$	42,847		3.1	%	$	36,477		2.9	%	$	31,739		2.7	%	$	42,106		3.3	%
Commercial Real Estate		447,596		30.6			429,019		31.3			431,205		34.1			424,950		36.5			436,692		34.6
Commercial and Industrial		146,880		10.0			141,540		10.3			60,183		4.8			53,105		4.6			47,247		3.8
Residential Real Estate		831,334		56.7			755,521		55.2			734,262		58.1			651,645		56.0			733,702		58.2
Consumer and other		505		0.1			967		0.1			1,454		0.1			1,768		0.2			1,658		0.1
Gross loans	$	1,464,922		100.0	%	$	1,369,894		100.0	%	$	1,263,581		100.0	%	$	1,163,207		100.0	%	$	1,261,405		100.0	%
Unearned income		(5,023)					(4,905)					(1,978)					(2,045)					(2,359)
Allowance for loan losses		(9,339)					(7,894)					(6,859)					(6,839)					(6,850)
Net loans	$	1,450,560				$	1,357,095				$	1,254,744				$	1,154,323				$	1,252,196

METROCITY BANKSHARES, INC.
NONPERFORMING ASSETS
	As of the Quarter Ended
	September 30,			June 30,			March 31,			December 31,			September 30,
(Dollars in thousands)	2020			2020			2020			2019			2019
Nonaccrual loans	$	9,730		$	10,335		$	10,944		$	12,236		$	11,039
Past due loans 90 days or more and still accruing		—			—			—			—			509
Accruing troubled debt restructured loans		7,487			2,896			2,922			2,459			2,969
Total non-performing loans		17,217			13,231			13,866			14,695			14,517
Other real estate owned		282			423			423			423			423
Total non-performing assets	$	17,499		$	13,654		$	14,289		$	15,118		$	14,940
Nonperforming loans to gross loans		1.18	%		0.97	%		1.10	%		1.26	%		1.15	%
Nonperforming assets to total assets		1.01			0.79			0.89			0.93			0.91
Allowance for loan losses to non-performing loans		54.24			59.66			49.47			46.54			47.19

METROCITY BANKSHARES, INC.
ALLOWANCE FOR LOAN LOSSES
	As of and for the Three Months Ended															As of and for the Nine Months Ended
	September 30,			June 30,			March 31,			December 31,			September 30,			September 30,			September 30,
(Dollars in thousands)	2020			2020			2020			2019			2019			2020			2019
Balance, beginning of period	$	7,894		$	6,859		$	6,839		$	6,850		$	6,483		$	6,839		$	6,645
Net charge-offs/(recoveries):
Construction and development		—			—			—			—			—			—			—
Commercial real estate		(3)			(3)			(2)			(3)			(501)			(8)			(512)
Commercial and industrial		—			—			(25)			—			—			(25)			14
Residential real estate		—			—			—			—			—			—			—
Consumer and other		8			29			7			14			134			44			293
Total net charge-offs/(recoveries)		5			26			(20)			11			(367)			11			(205)
Provision for loan losses		1,450			1,061			—			—			—			2,511			—
Balance, end of period	$	9,339		$	7,894		$	6,859		$	6,839		$	6,850		$	9,339		$	6,850
Total loans at end of period	$	1,464,922		$	1,369,894		$	1,263,581		$	1,163,207		$	1,261,405		$	1,464,922		$	1,261,405
Average loans(1)	$	1,407,670		$	1,330,729		$	1,241,138		$	1,236,392		$	1,295,657		$	1,319,606		$	1,229,866
Net charge-offs to average loans		0.00	%		0.01	%		(0.01)	%		0.00	%		(0.11)	%		0.00	%		(0.02)	%
Allowance for loan losses to total loans		0.64			0.58			0.54			0.59			0.54			0.64			0.54

(1)   Excludes loans held for sale

 

 

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SOURCE MetroCity Bankshares, Inc.

FAQ

What was MetroCity Bankshares' net income for Q3 2020?

MetroCity Bankshares reported a net income of $9.4 million for Q3 2020.

How much did total loans increase in Q3 2020 for MCBS?

Total loans increased by $94.9 million or 7.0% to $1.46 billion.

What is the annualized return on average assets for MCBS in Q3 2020?

The annualized return on average assets was 2.20% in Q3 2020.

How did MetroCity's efficiency ratio change in Q3 2020?

The efficiency ratio improved to 42.5% from 45.6% in Q2 2020.

What challenges did MetroCity face during the COVID-19 pandemic?

MetroCity implemented loan deferral programs to assist customers affected by the pandemic.