8-K
Metropolitan Bank Holding Corp. (MCB)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest eventreported): January 21, 2021
METROPOLITAN BANK HOLDING CORP.
(Exact name of the registrant as specifiedin its charter)
| New York | 001-38282 | 13-4042724 |
|---|---|---|
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) |
| 99 Park Avenue | ||
| --- | --- | |
| New York, New York | 10016 | |
| (Address of principal executive offices) | (Zip Code) |
(212) 659-0600
(Registrant’s telephone number)
N/A
(Former name or former address, if changedsince last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
|---|---|---|
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4c) | |
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| --- | --- | --- |
| Common Stock, par value $0.01 per share | MCB | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company x
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On January 21, 2021, Metropolitan Bank Holding Corp. (the “Company”), the holding company for Metropolitan Commercial Bank, issued a press release announcing its financial results for the three and twelve months ended December 31, 2020. The press release containing the financial results is attached hereto as Exhibit 99.1 and shall not be deemed “filed” for any purpose, nor shall the information or Exhibit 99.1 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.
| Item 7.01 | Regulation FD Disclosure |
|---|
The Company has also made available on its website presentation materials containing additional information about the Company’s financial results for the three and twelve months ended December 31, 2020 (the “Presentation Materials”). The Presentation Materials are furnished herewith as Exhibit 99.2 and is incorporated by reference in this Item 7.01.
The information provided in Item 7.01 of this report, including Exhibit 99.2, shall not be deemed “filed” for any purpose, nor shall the information or Exhibit 99.2 be deemed incorporated by reference in any filings under the Securities Act of 1933, as amended.
| Item 9.01. | Financial Statements and Exhibits |
|---|
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated January 21, 2021 |
| 99.2 | Presentation Materials |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| METROPOLITAN BANK HOLDING CORP. | ||
|---|---|---|
| Dated: January 21, 2021 | By: | /s/<br> Gregory A. Sigrist |
| Gregory A. Sigrist | ||
| Executive Vice President<br> and Chief Financial Officer |
Exhibit 99.1
Release: 4:30 P.M. January 21, 2021
**Contact:**Investor Relations Department
212-365-6721
IR@MetropolitanBankNY.com
Metropolitan Bank Holding Corp. ReportsRecord Net Income
of $11.8 Millionand Diluted EPS of $1.39 for the Fourth Quarter
NEW YORK, January 21, 2021 – Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), today reported net income of $11.8 million, or $1.39 per diluted common share, for the fourth quarter of 2020 compared to net income of $7.9 million, or $0.93 per diluted common share, for the fourth quarter of 2019.
For the year ended December 31, 2020, the Company reported net income of $39.5 million, or $4.66 per diluted common share, as compared to $30.1 million, or $3.56 per diluted common share, for the twelve months ended December 31, 2019.
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 and 12.92%<br>for the full year 2020. |
| --- | --- |
| · | Net interest margin improved to 3.21% for the fourth quarter of 2020, a quarter-on-quarter increase<br>of 3 basis points. |
| --- | --- |
| · | Total assets increased 29.0% year-over-year to $4.33 billion as of December 31, 2020, driven<br>by $1.03 billion, or 36.8%, growth in deposits, with year-over-year net loan growth of 17.4%. Year-over-year growth in deposits<br>was largely driven by $624.6 million, or 57.3%, increase in non-interest-bearing deposits. |
| --- | --- |
| · | Total loan deferrals related to the Coronavirus pandemic (“COVID-19”) decreased by<br>29.8% in the fourth quarter of 2020 to $220.3 million, or 7.0% of the total loan portfolio, as of December 31, 2020. Remaining<br>deferrals have contractual expirations that would reduce outstanding balance of deferrals to $56.0 million by March 31, 2020,<br>of which $17.8 million would be full payment deferrals with remainder being principal only deferrals. |
| --- | --- |
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.
* Non-GAAP financial measure. See Reconciliation of Non-GAAP measures on page 15
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“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 $4.33 billion at December 31, 2020, an increase of 29.0% from December 31, 2019. Total loans before deferred fees increased to $3.14 billion at December 31, 2020, as compared to $2.99 billion and $2.67 billion at September 30, 2020 and December 31, 2019, respectively. The increase from September 30, 2020 primarily included increases of $81.3 million in Commercial Real Estate (“CRE”) loans, $63.4 million in Commercial and Industrial (“C&I”) loans and $7.8 million in 1-4 Family loans, partially offset by net paydowns and amortization of $5.0 in Consumer loans. The increase from December 31, 2019 primarily included increases of $358.4 million in CRE loans and $142.9 million in C&I loans, partially offset by net paydowns and amortization of $11.3 million and $25.5 million in 1-4 Family and Consumer loans, respectively. For the three and twelve months ended December 31, 2020, the Bank’s loan production was $174.0 million and $687.2 million, respectively, as compared to $252.2 million and $1.1 billion for the three and twelve months ended December 31, 2019, respectively.
Total cash and cash equivalents were $864.3 million at December 31, 2020, an increase of 122.1% from December 31, 2019. The increases in cash and cash equivalents reflect the strong growth in deposits of $1.03 billion that exceeded growth in loans of $464.1 million for the twelve months ended December 31, 2020. Total securities, primarily those classified as available-for-sale (“AFS”), were $271.2 million at December 31, 2020, an increase of 12.6% from December 31, 2019.
Total deposits increased to $3.82 billion at December 31, 2020, up 8.2% and 36.8%, respectively, from $3.53 billion at September 30, 2020 and $2.79 billion at December 31, 2019, respectively. The increase in deposits for the fourth quarter of 2020 was due to increases of $161.8 million in non-interest-bearing deposits and $129.1 million in interest-bearing deposits. The year-to-date increase in deposits was due to increases of $624.6 million in non-interest-bearing deposits to $1.72 billion at December 31, 2020, as compared to $1.09 billion at December 31, 2019 and $403.2 million in interest-bearing deposits to $2.10 billion at December 31, 2020, as compared to $1.70 billion at December 31, 2019. The increase in deposits for the quarter and year was primarily due to growth in U.S. Bankruptcy Trustee and property management accounts, as well as deposit growth in the Bank’s retail network. Non-interest-bearing deposits were 44.9% of total deposits at December 31, 2020, as compared to 39.1% at December 31, 2019.
The Bank fully paid down its Federal Home Loan Bank (“FHLB”) advances, a decrease of $144.0 million from December 31, 2019.
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 412.5% of total risk based capital at both December 31, 2020 and December 31, 2019.
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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 $33.5 million, an increase of $1.1 million from the linked quarter. This increase was primarily due to the higher average balance of $4.12 billion in interest-earning assets for the fourth quarter of 2020, which increased $122.1 million from the linked quarter, partially offset by an increase of $60.3 million in average interest-bearing liabilities, which were $2.10 billion for the fourth quarter of 2020, as compared to $2.04 billion for the linked quarter.
Additionally, in September 2020, the Bank repaid $104.0 million of FHLB advances with a weighted-average cost of funds of 2.09% resulting in a lower average cost of interest-bearing liabilities for the fourth quarter of 2020, as compared to the linked quarter.
NetInterest Margin
Net interest margin improved by 3 basis points to 3.21% for the fourth quarter of 2020, as compared to 3.18% for the linked quarter primarily due to the repayment of $104.0 million of FHLB advances in September 2020, which reduced the average cost of interest-bearing-liabilities by 7 basis points for the fourth quarter of 2020, as compared to the linked quarter. Additionally, average loan balances increased and average overnight deposits, which are lower-yielding, decreased in the fourth quarter of 2020, as compared to the linked quarter. Loans and overnight deposits were 75% and 20% of the asset mix, respectively, and yielded 4.62% and 0.14%, respectively, for the fourth quarter of 2020, as compared to being 74% and 21% of the asset mix, respectively, and yielding 4.66% and 0.14%, respectively, for the third quarter of 2020.
Non-Interest Income
Non-interest income was $3.4 million for the fourth quarter of 2020, a decrease of $264,000 from the linked quarter. The decrease was due to elevated third quarter revenues given timing of new client onboarding and certain debit card programs.
Non-interest income was $17.0 million for the year ended December 31, 2020, an increase of $6.4 million as compared to the same period in 2019. The increase was primarily due to an increase of $2.8 million global payments revenue, reflecting the growth in the global payments business, and a gain of $3.3 million on sale of AFS securities in 2020.
Non-Interest Expense
Non-interest expense was $17.8 million for the fourth quarter of 2020, a decrease of $1.1 million from the linked quarter primarily due to decreases in Bank premises and equipment expenses, professional fees and other expenses.
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Bank premises and equipment was $1.8 million for the fourth quarter of 2020, a decrease of $269,000 from the linked quarter, primarily due to moving expenses and costs related to disposal of furniture that were incurred in the third quarter of 2020, related to the Company taking possession of new space at its headquarters in 99 Park Ave., New York, NY in July 2020.
Professional fees were $1.1 million for the fourth quarter of 2020, a decrease of $157,000 from the linked quarter, principally due to decreased consulting fees.
Other expenses were $2.2 million for the fourth quarter of 2020, a decrease of $461,000 from the linked quarter, driven largely by regulatory premiums and certain business-related reserves that were recognized in the third quarter of 2020.
Non-interest expense was $74.5 million for the twelve months ended December 31, 2020, an increase of $14.6 million from the twelve months ended December 31, 2019. The increase was primarily due to increases in compensation and benefits cost, licensing fees and technology costs, and Bank premises and equipment costs.
Compensation and benefits expense was $39.8 million for the twelve months ended December 31, 2020, an increase of $8.6 million over the twelve months ended December 31, 2019. This increase was due to year-on-year growth in the number of full-time employees, as well as total compensation in line with year-on-year loan growth and revenue generation for the twelve months ended December 31, 2020 from December 31, 2019.
For the twelve months ended December 31, 2020, licensing fees and technology costs were $13.0 million, an increase of $2.0 million over the twelve months ended December 31, 2019. This increase was primarily due to increases in licensing fees related to certain corporate cash management deposits and technology costs. Licensing fees amounted to $9.7 million for the year ended December 31, 2020, an increase of $1.2 million over the year ended December 31, 2019. Average corporate cash management deposits related to these licensing fees amounted to $773.4 million for the year ended December 31, 2020, as compared to $375.3 million for the year ended December 31, 2019, primarily due to an increase in U.S. Bankruptcy Trustee deposit accounts. Technology costs were $3.4 million for the year ended December 31, 2020, an increase of $862,000 over the year ended December 31, 2019. The increase in technology costs was due to the growth of the business and its technology needs.
Bank premises and equipment was $8.3 million for the year ended December 31, 2020, an increase of $1.8 million over the year ended December 31, 2019, primarily due to the Company taking possession of and renovating new headquarters space. In addition, the Bank accelerated the amortization of $575,000 of leasehold improvements related to the Bank’s prior space at its headquarters in the first quarter of 2020.
Asset Quality
Non-performing loans were $6.4 million at December 31, 2020, which was consistent with the third quarter of 2020. The Bank’s ratio of non-performing loans to total loans remains low at 20 basis points at December 31, 2020.
The provision for loan losses for the fourth quarter of 2020 was $1.8 million, an increase of $658,000 from the linked quarter. The provision for loan losses for the fourth quarter of 2020 was higher than the linked quarter primarily due to higher net loan growth in the fourth quarter of 2020, as compared to the linked quarter as well as an increase in specific reserves for certain C&I and consumer loans.
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| (dollars in thousands) | December 31, 2020 | September 30, 2020 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 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 <br> December 31, | Year ended <br> December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (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 50% of employees to return to work. The Bank has made available, at no cost to employees, on-site COVID-19 testing on a 2-week schedule. Based on the success of the on-site testing program, the Bank has revised its Return-to-work Plan to allow up to 75% of employees to return to work as of January 11, 2021. The Bank is monitoring conditions in New York City and the surrounding areas and will continue to revise the Return-to-Work Plan, as necessary. The Bank requires certain health protocols to be followed by all employees including, but not limited to, daily temperature checks prior to entering the common workspace, daily health certifications by employees, office cleaning measures, social distancing practices and the use of face coverings in all common areas.
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 $824.4 million, or 26.3% of total loans at December 31, 2020, including $709.2 million in loans to skilled nursing facilities (“SNF”). The Bank has not noted any significant impact on SNF loans because of COVID-19 as cash flows for these borrowers have not been significantly affected.
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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<br> of<br> Loans | Balance | Number<br> of<br> Loans | Balance | Number<br> of<br> Loans | Balance | Number<br> of<br> Loans | Balance | Number<br> of <br> 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 7.0% at December 31, 2020, as compared to 10.5% at September 30, 2020. Principal-only payment deferrals have contractual maturities that would reduce outstanding balance of these deferrals to $41.4 million and $37.4 million at January 31, 2021 and March 31, 2021, respectively. Full payments deferrals have contractual maturities that would reduce outstanding balance of these deferrals to $50.2 million and $17.8 million at January 31, 2021 and March 31, 2021, respectively.
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<br><br> Average LTV | |||
|---|---|---|---|---|---|
| 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.
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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 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.
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.
7
Consolidated Balance Sheet
| December 31,<br> 2020 | December 31,<br> 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 |
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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 |
9
Net Interest Margin Analysis
| Three months ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | September 30, 2020 | |||||||||||||||
| Average | Average | |||||||||||||||
| Outstanding | Yield/Rate | Outstanding | Yield/Rate | |||||||||||||
| (dollars in thousands) | Balance | Interest | (annualized) | Balance | Interest | (annualized) | ||||||||||
| 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 | % | 14,680 | 196 | 5.22 | % | ||||||||
| Total interest-earning assets | 4,124,068 | 36,862 | 3.54 | % | 4,001,939 | 35,945 | 3.54 | % | ||||||||
| Non-interest-earning assets | 63,962 | 57,545 | ||||||||||||||
| Allowance for loan and lease losses | (34,122 | ) | (33,118 | ) | ||||||||||||
| Total assets | $ | 4,153,908 | $ | 4,026,366 | ||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Money market, savings and other interest-bearing accounts | $ | 1,962,417 | $ | 2,554 | 0.52 | % | $ | 1,818,436 | $ | 2,258 | 0.49 | % | ||||
| Certificates of deposit | 94,546 | 327 | 1.38 | % | 97,685 | 423 | 1.72 | % | ||||||||
| Total interest-bearing deposits | 2,056,963 | 2,881 | 0.56 | % | 1,916,121 | 2,681 | 0.56 | % | ||||||||
| Borrowed funds | 45,268 | 514 | 4.44 | % | 125,841 | 940 | 2.92 | % | ||||||||
| Total interest-bearing liabilities | 2,102,231 | 3,395 | 0.64 | % | 2,041,962 | 3,621 | 0.71 | % | ||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||
| Non-interest-bearing deposits | 1,636,417 | 1,583,037 | ||||||||||||||
| Other non-interest-bearing liabilities | 79,320 | 76,491 | ||||||||||||||
| Total liabilities | 3,817,968 | 3,701,490 | ||||||||||||||
| Stockholders' Equity | 335,940 | 324,876 | ||||||||||||||
| Total liabilities and equity | $ | 4,153,908 | $ | 4,026,366 | ||||||||||||
| Net interest income | $ | 33,467 | $ | 32,324 | ||||||||||||
| Net interest rate spread ^(2)^ | 2.90 | % | 2.83 | % | ||||||||||||
| Net interest-earning assets | $ | 2,021,837 | $ | 1,959,977 | ||||||||||||
| Net interest margin ^(3)^ | 3.21 | % | 3.18 | % | ||||||||||||
| (1) | Amount includes deferred loan fees and non-performing<br>loans. | |||||||||||||||
| --- | --- | |||||||||||||||
| (2) | Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities<br>from the annualized weighted average yield on total interest-earning assets. | |||||||||||||||
| --- | --- | |||||||||||||||
| (3) | Determined by dividing annualized net interest income by total average interest-earning assets. | |||||||||||||||
| --- | --- |
10
| Three months ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | December 31, 2019 | |||||||||||||||
| Average | Average | |||||||||||||||
| Outstanding | Yield/Rate | Outstanding | Yield/Rate | |||||||||||||
| (dollars in thousands) | Balance | Interest | (annualized) | Balance | Interest | (annualized) | ||||||||||
| Assets: | ||||||||||||||||
| Interest-earning assets: | ||||||||||||||||
| Loans ^(1)^ | $ | 3,070,850 | $ | 35,843 | 4.62 | % | $ | 2,589,126 | $ | 32,847 | 4.96 | % | ||||
| Available-for-sale securities | 230,080 | 573 | 0.97 | % | 241,865 | 1,512 | 2.50 | % | ||||||||
| Held-to-maturity securities | 2,906 | 12 | 1.65 | % | 3,827 | 19 | 1.99 | % | ||||||||
| Equity investments - non-trading | 2,294 | 9 | 1.46 | % | 2,251 | 12 | 2.13 | % | ||||||||
| Overnight deposits | 806,602 | 280 | 0.14 | % | 401,010 | 1,796 | 1.78 | % | ||||||||
| Other interest-earning assets | 11,336 | 145 | 5.09 | % | 21,424 | 280 | 5.19 | % | ||||||||
| Total interest-earning assets | 4,124,068 | 36,862 | 3.54 | % | 3,259,503 | 36,466 | 4.38 | % | ||||||||
| Non-interest-earning assets | 63,962 | 52,240 | ||||||||||||||
| Allowance for loan and lease losses | (34,122 | ) | (24,827 | ) | ||||||||||||
| Total assets | $ | 4,153,908 | $ | 3,286,916 | ||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Money market, savings and other interest-bearing accounts | $ | 1,962,417 | $ | 2,554 | 0.52 | % | $ | 1,587,974 | $ | 6,391 | 1.60 | % | ||||
| Certificates of deposit | 94,546 | 327 | 1.38 | % | 109,050 | 679 | 2.47 | % | ||||||||
| Total interest-bearing deposits | 2,056,963 | 2,881 | 0.56 | % | 1,697,024 | 7,070 | 1.65 | % | ||||||||
| Borrowed funds | 45,268 | 514 | 4.44 | % | 189,212 | 1,354 | 2.80 | % | ||||||||
| Total interest-bearing liabilities | 2,102,231 | 3,395 | 0.64 | % | 1,886,236 | 8,424 | 1.77 | % | ||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||
| Non-interest-bearing deposits | 1,636,417 | 1,073,011 | ||||||||||||||
| Other non-interest-bearing liabilities | 79,320 | 31,441 | ||||||||||||||
| Total liabilities | 3,817,968 | 2,990,688 | ||||||||||||||
| Stockholders' Equity | 335,940 | 296,228 | ||||||||||||||
| Total liabilities and equity | $ | 4,153,908 | $ | 3,286,916 | ||||||||||||
| Net interest income | $ | 33,467 | $ | 28,042 | ||||||||||||
| Net interest rate spread ^(2)^ | 2.90 | % | 2.61 | % | ||||||||||||
| Net interest-earning assets | $ | 2,021,837 | $ | 1,373,267 | ||||||||||||
| Net interest margin ^(3)^ | 3.21 | % | 3.35 | % | ||||||||||||
| (1) | Amount includes deferred loan fees and non-performing loans. | |||||||||||||||
| --- | --- | |||||||||||||||
| (2) | Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities<br>from the annualized weighted average yield on total interest-earning assets. | |||||||||||||||
| --- | --- | |||||||||||||||
| (3) | Determined by dividing annualized net interest income by total average interest-earning assets. | |||||||||||||||
| --- | --- |
11
| Year ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2020 | December 31, 2019 | |||||||||||||||
| Average | Average | |||||||||||||||
| Outstanding | Yield/Rate | Outstanding | ||||||||||||||
| (dollars in thousands) | Balance | Interest | (annualized) | Balance | Interest | Yield/Rate | ||||||||||
| Assets: | ||||||||||||||||
| Interest-earning assets: | ||||||||||||||||
| Loans ^(1)^ | $ | 2,888,180 | $ | 136,497 | 4.73 | % | $ | 2,304,158 | $ | 117,124 | 5.08 | % | ||||
| Available-for-sale securities | 192,472 | 3,108 | 1.59 | % | 142,135 | 3,579 | 2.52 | % | ||||||||
| Held-to-maturity securities | 3,282 | 59 | 1.77 | % | 4,158 | 84 | 2.02 | % | ||||||||
| Equity investments - non-trading | 2,279 | 41 | 1.77 | % | 2,231 | 50 | 2.23 | % | ||||||||
| Overnight deposits | 732,130 | 2,546 | 0.35 | % | 349,123 | 7,752 | 2.22 | % | ||||||||
| Other interest-earning assets | 16,467 | 846 | 5.14 | % | 22,275 | 1,191 | 5.35 | % | ||||||||
| Total interest-earning assets | 3,834,810 | 143,097 | 3.73 | % | 2,824,080 | 129,780 | 4.60 | % | ||||||||
| Non-interest-earning assets | 59,584 | 45,144 | ||||||||||||||
| Allowance for loan and lease losses | (31,381 | ) | (22,265 | ) | ||||||||||||
| Total assets | $ | 3,863,013 | $ | 2,846,959 | ||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Money market, savings and other interest-bearing accounts | $ | 1,798,109 | $ | 12,420 | 0.69 | % | $ | 1,248,096 | $ | 22,824 | 1.83 | % | ||||
| Certificates of deposit | 98,483 | 1,824 | 1.85 | % | 109,952 | 2,709 | 2.46 | % | ||||||||
| Total interest-bearing deposits | 1,896,592 | 14,244 | 0.75 | % | 1,358,048 | 25,533 | 1.88 | % | ||||||||
| Borrowed funds | 129,460 | 3,932 | 2.99 | % | 211,145 | 6,637 | 3.10 | % | ||||||||
| Total interest-bearing liabilities | 2,026,052 | 18,176 | 0.90 | % | 1,569,193 | 32,170 | 2.05 | % | ||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||
| Non-interest-bearing deposits | 1,443,094 | 968,030 | ||||||||||||||
| Other non-interest-bearing liabilities | 73,250 | 27,132 | ||||||||||||||
| Total liabilities | 3,542,396 | 2,564,355 | ||||||||||||||
| Stockholders' Equity | 320,617 | 282,604 | ||||||||||||||
| Total liabilities and equity | $ | 3,863,013 | $ | 2,846,959 | ||||||||||||
| Net interest income | $ | 124,921 | $ | 97,610 | ||||||||||||
| Net interest rate spread ^(2)^ | 2.83 | % | 2.55 | % | ||||||||||||
| Net interest-earning assets | $ | 1,808,758 | $ | 1,254,887 | ||||||||||||
| Net interest margin ^(3)^ | 3.26 | % | 3.46 | % | ||||||||||||
| (1) | Amount includes deferred loan fees and non-performing loans. | |||||||||||||||
| --- | --- | |||||||||||||||
| (2) | Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities<br>from the annualized weighted average yield on total interest-earning assets. | |||||||||||||||
| --- | --- | |||||||||||||||
| (3) | Determined by dividing annualized net interest income by total average interest-earning assets. | |||||||||||||||
| --- | --- |
12
Summary of Income and Performance Measures
Five Quarter Trend (unaudited)
| Quarter Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
| Net interest income | $ | 33,467 | $ | 32,324 | $ | 30,161 | $ | 28,969 | $ | 28,042 | |||||
| Provision for loan losses | 1,795 | 1,137 | 1,766 | 4,790 | 2,300 | ||||||||||
| Net interest income after provision for loan losses | 31,672 | 31,187 | 28,395 | 24,179 | 25,742 | ||||||||||
| Non-interest income | 3,373 | 3,637 | 5,653 | 4,340 | 2,862 | ||||||||||
| Non-interest expense: | |||||||||||||||
| Compensation and benefits | 9,835 | 9,944 | 10,058 | 9,960 | 7,956 | ||||||||||
| Other Expense | 7,953 | 8,986 | 8,226 | 9,556 | 9,086 | ||||||||||
| Total non-interest expense | 17,788 | 18,930 | 18,284 | 19,516 | 17,042 | ||||||||||
| Income before income tax expense | 17,257 | 15,894 | 15,764 | 9,003 | 11,562 | ||||||||||
| Income tax expense | 5,482 | 5,111 | 4,953 | 2,906 | 3,699 | ||||||||||
| Net income | 11,775 | 10,783 | 10,811 | 6,097 | 7,863 | ||||||||||
| Pre-tax, pre-provision income* | $ | 19,052 | $ | 17,031 | $ | 17,530 | $ | 13,793 | $ | 13,862 | |||||
| Performance Measures: | |||||||||||||||
| Net income available to common shareholders | 11,690 | 10,694 | 10,716 | 6,032 | 7,741 | ||||||||||
| Per common share: | |||||||||||||||
| Basic earnings | $ | 1.42 | $ | 1.30 | $ | 1.30 | $ | 0.73 | $ | 0.95 | |||||
| Diluted earnings | $ | 1.39 | $ | 1.27 | $ | 1.28 | $ | 0.72 | $ | 0.93 | |||||
| Common shares outstanding: | |||||||||||||||
| Average - diluted | 8,417,729 | 8,393,211 | 8,359,450 | 8,412,782 | 8,363,080 | ||||||||||
| Period end | 8,295,272 | 8,289,479 | 8,294,801 | 8,294,801 | 8,312,918 | ||||||||||
| Return on (annualized): | |||||||||||||||
| Average total assets | 1.13 | % | 1.07 | % | 1.14 | % | 0.71 | % | 0.95 | % | |||||
| Average equity | 13.94 | % | 13.20 | % | 13.82 | % | 8.00 | % | 10.53 | % | |||||
| Average tangible common equity* | 14.61 | % | 13.85 | % | 14.36 | % | 8.33 | % | 11.13 | % | |||||
| Yield on average earning assets | 3.54 | % | 3.54 | % | 3.62 | % | 4.22 | % | 4.38 | % | |||||
| Cost of interest-bearing liabilities | 0.64 | % | 0.71 | % | 0.81 | % | 1.48 | % | 1.77 | % | |||||
| Net interest spread | 2.90 | % | 2.83 | % | 2.81 | % | 2.74 | % | 2.61 | % | |||||
| Net interest margin | 3.21 | % | 3.18 | % | 3.19 | % | 3.38 | % | 3.35 | % | |||||
| Net charge-offs as % of average loans (annualized) | 0.00 | % | 0.00 | % | 0.03 | % | 0.02 | % | 0.07 | % | |||||
| Efficiency ratio | 48.28 | % | 52.64 | % | 54.58 | % | 58.59 | % | 55.14 | % |
*Non-GAAP financial measure. See Reconciliation of Non-GAAP measures on page 15.
13
ConsolidatedBalance Sheet Summary**, Five Quarter Trend (unaudited)**
| (dollars in thousands) | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||||||
| Total Assets | $ | 4,330,821 | $ | 4,001,759 | $ | 3,970,441 | $ | 3,612,012 | $ | 3,357,572 | |||||
| Overnight deposits | 855,613 | 758,913 | 813,147 | 569,927 | 381,104 | ||||||||||
| Total securities | 271,169 | 187,695 | 194,979 | 205,646 | 240,888 | ||||||||||
| Other investments | 11,597 | 11,097 | 15,731 | 21,455 | 21,437 | ||||||||||
| Loans, net of deferred fees and unamortized costs | 3,137,053 | 2,989,550 | 2,892,274 | 2,766,099 | 2,672,949 | ||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing demand deposits | $ | 1,715,042 | $ | 1,553,241 | $ | 1,526,439 | $ | 1,250,584 | $ | 1,090,479 | |||||
| Interest-bearing deposits | 2,103,471 | 1,974,385 | 1,868,300 | 1,771,108 | 1,700,295 | ||||||||||
| Total deposits | 3,818,513 | 3,527,626 | 3,394,739 | 3,021,692 | 2,790,774 | ||||||||||
| Borrowings | 45,277 | 45,263 | 149,249 | 189,235 | 189,221 | ||||||||||
| Total stockholders' Equity | 340,787 | 328,584 | 317,169 | 308,536 | 299,124 | ||||||||||
| Asset Quality | |||||||||||||||
| Total non-accrual loans | $ | 5,620 | $ | 5,669 | $ | 7,083 | $ | 6,136 | $ | 4,085 | |||||
| Total non-performing loans | $ | 6,389 | $ | 6,623 | $ | 8,448 | $ | 6,341 | $ | 4,493 | |||||
| Non-accrual loans to total loans | 0.18 | % | 0.19 | % | 0.24 | % | 0.22 | % | 0.15 | % | |||||
| Non-performing loans to total loans | 0.20 | % | 0.22 | % | 0.29 | % | 0.23 | % | 0.17 | % | |||||
| Allowance for loan losses | (35,407 | ) | (33,614 | ) | (32,505 | ) | (30,924 | ) | (26,272 | ) | |||||
| Allowance for loan losses to total loans | 1.13 | % | 1.12 | % | 1.12 | % | 1.12 | % | 0.98 | % | |||||
| Provision for loan losses | 1,795 | 1,137 | 1,766 | 4,790 | 2,300 | ||||||||||
| Net charge-offs | 2 | 28 | 185 | 138 | 472 | ||||||||||
| Regulatory Capital | |||||||||||||||
| Tier 1 Leverage: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 8.5 | % | 8.4 | % | 8.6 | % | 9.1 | % | 9.4 | % | |||||
| Metropolitan Commercial Bank | 9.0 | % | 9.0 | % | 9.2 | % | 9.8 | % | 10.1 | % | |||||
| Common Equity Tier 1 Risk-Based (CET1): | |||||||||||||||
| Metropolitan Bank Holding Corp. | 10.1 | % | 10.1 | % | 9.9 | % | 9.8 | % | 10.1 | % | |||||
| Metropolitan Commercial Bank | 11.6 | % | 11.8 | % | 11.6 | % | 11.5 | % | 11.8 | % | |||||
| Tier 1 Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 10.9 | % | 11.0 | % | 10.8 | % | 10.7 | % | 11.0 | % | |||||
| Metropolitan Commercial Bank | 11.6 | % | 11.8 | % | 11.6 | % | 11.5 | % | 11.8 | % | |||||
| Total Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 12.7 | % | 12.9 | % | 12.7 | % | 12.1 | % | 12.5 | % | |||||
| Metropolitan Commercial Bank | 12.7 | % | 12.9 | % | 12.6 | % | 12.5 | % | 12.7 | % |
14
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 table:
| Quarterly<br> Data | YTD | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollars<br> in thousands, except per share data | Dec. 31,<br> 2020 | Sept.<br> 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31,<br> 2019 | Dec. 31,<br> 2020 | Dec. 31,<br> 2019 | |||||||
| Average<br> assets | $ | 4,153,908 | $ | 4,026,366 | $ | 3,812,225 | $ | 3,454,335 | $ | 3,286,916 | $ | 3,863,013 | $ | 2,846,959 |
| Less:<br> average intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||||
| Average<br> tangible assets | $ | 4,144,175 | $ | 4,016,633 | $ | 3,802,492 | $ | 3,444,602 | $ | 3,277,183 | $ | 3,853,280 | $ | 2,837,226 |
| Average<br> equity | $ | 335,940 | $ | 324,876 | $ | 314,727 | $ | 306,487 | $ | 296,228 | $ | 320,617 | $ | 282,604 |
| Less:<br> Average preferred equity | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | |||||||
| Average<br> common equity | $ | 330,438 | $ | 319,374 | $ | 309,225 | $ | 300,985 | $ | 290,726 | $ | 315,115 | $ | 277,102 |
| Less:<br> average intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||||
| Average<br> tangible common equity | $ | 320,705 | $ | 309,641 | $ | 299,492 | $ | 291,252 | $ | 280,993 | $ | 305,382 | $ | 267,369 |
| Total<br> assets | $ | 4,330,821 | $ | 4,001,759 | $ | 3,970,441 | $ | 3,612,012 | $ | 3,357,572 | $ | 4,330,821 | $ | 3,357,572 |
| Less:<br> intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||||
| Tangible<br> assets | $ | 4,321,088 | $ | 3,992,026 | $ | 3,960,708 | $ | 3,602,279 | $ | 3,347,839 | $ | 4,321,088 | $ | 3,347,839 |
| Total<br> Equity | $ | 340,787 | $ | 328,584 | $ | 317,169 | $ | 308,536 | $ | 299,124 | $ | 340,787 | $ | 299,124 |
| Less:<br> preferred equity | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | |||||||
| Common<br> Equity | $ | 335,285 | $ | 323,082 | $ | 311,667 | $ | 303,034 | $ | 293,622 | $ | 335,285 | $ | 293,622 |
| Less:<br> intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||||
| Tangible<br> common equity (book value) | $ | 325,552 | $ | 313,349 | $ | 301,934 | $ | 293,301 | $ | 283,889 | $ | 325,552 | $ | 283,889 |
| Common<br> shares outstanding | 8,295,272 | 8,289,479 | 8,294,801 | 8,294,801 | 8,312,918 | 8,295,272 | 8,312,918 | |||||||
| Book<br> value per share (GAAP) | $ | 40.42 | $ | 38.97 | $ | 37.57 | $ | 36.53 | $ | 35.32 | $ | 40.42 | $ | 35.32 |
| Tangible<br> book value per share (non-GAAP)* | $ | 39.25 | $ | 37.80 | $ | 36.40 | $ | 35.36 | $ | 34.15 | $ | 39.25 | $ | 34.15 |
* Tangible book value divided by common shares outstanding at period-end.
| Dollars in thousands | Dec. 31, 2020 | Sept. 30, 2020 | June 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Net income | $ | 11,775 | $ | 10,783 | $ | 10,811 | $ | 6,097 | $ | 7,863 |
| Plus: income tax expense | 5,482 | 5,111 | 4,953 | 2,906 | 3,699 | |||||
| Income before income tax expense | $ | 17,257 | $ | 15,894 | $ | 15,764 | $ | 9,003 | $ | 11,562 |
| Plus: provision for loan losses | 1,795 | 1,137 | 1,766 | 4,790 | 2,300 | |||||
| Pre-tax, pre-provision income | $ | 19,052 | $ | 17,031 | $ | 17,530 | $ | 13,793 | $ | 13,862 |
15
Exhibit 99.2
| 4Q 2020 Investor Presentation | ||||
|---|---|---|---|---|
| Disclosure This presentation contains “forward-looking state-ments” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of for-ward-looking statements include but are not limited to the Company’s financial condition and capital ratios, results of operations and the Company’s out-look and business. Forward-looking statements are not historical facts. Such statements may be iden-tified by the use of such words as “may”, “believe”, “expect”, “anticipate”, “plan”, “continue”, or similar ter-minology. 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 materi-ally 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 deteriora-tion 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 unantici-pated 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 Coronavirus (“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 how the economy may be reopened. 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 unem-ployment 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 0%, the yield on our assets may decline to a greater extent than the decline in our cost of interest-bearing liabilities, reducing our net interest margin and spread and reducing net income; our cyber security risks are increased as the result of an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experience additional resolution costs. Forward-looking statements speak only as of the date of this presentation. We do not undertake any obligation to update or revise any forward-looking statement, whether the result of new information, future events<br>or otherwise. 1 | ||||
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| How We Succeed A Diversified Financial Institution Our Unique Product Offerings and Solutions Personal Banking Broad range of hallmark personal checking and savings accounts A full suite of electronic banking services that allow clients to easily manage their everyday financing needs Commercial Lending Relationship based commercial real estate lending Commercial lending growth driven by expertise in specific lending verticals Weighted-average loan-to-value (“LTV”) of 53.44% Peak losses of 51 bps in 2010 and have been de minimus since 2014 Business Banking Checking, deposit, lending and cash management product and services for small and middle-market businesses MCB Business Bankers with deep knowledge and expertise in multiple markets, including but not limited to law firms, resident healthcare, real estate property management, U.S. Trustee and municipalities. Global Digital Payments Administers domestic and international digital payments settlement Leading national, third-party debit card issuer Fee business growing at a 33% Compounded Annual Growth Rate (“CAGR”) Meaningful deposit contribution growing at 60% CAGR 2 | ||||
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| How We Succeed Delivering Financial Results Financial Highlights Record full year 2020 net income and diluted earnings per common share of $39.5 million and $4.66, respectively Year-to-date (“YTD”) return on average tangible common equity (“ROATCE”)* of 12.9% Total pre-tax, pre-provision income* up 39.6% year-over-year Total assets up 29.0% year-over-year, driven by 36.8% growth in total deposits Total loans up 17.4% year-over-year; YTD production of $687.2 million Book value per share and tangible book value per share* Diluted EPS at December 31, 2020 $3.06 $2.34 $3.56 $4.66 increased year-over-year 14.4% and 14.9%, respectively Quarterly Net Income 2017 ROATCE* 2018 2019 2020 $ thousands 2017 2,548 2,651 3,8453,326 1Q 2Q at December 31, 2020 12.32% 2018 6,2915,8657,1136,285 3Q 4Q 10.46% 10.84% 11.27% 2019 2020 $599 8,5316,0577,6837,863 6,09710,81110,78311,775 2017 2018 2019 2020 *Non-GAAP financial measure. See reconciliation to GAAP measure at the end of the presentation. 3 | ||||
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| How We Succeed Strong Balance Sheet Growth Assets at December 31, 2020 | $ millions Loans, Net of Deferred Fees at December 31, 2020 | $ millions $3,358 $4,331 $2,647 $3,101 $768 $965 $1,220 $1,760 $2,183 $627 $810 $1,043 $1,405 $1,846 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 Deposits at December 31, 2020 | $ millions Total Equity at December 31, 2020 | $ millions $2,791 $3,819 $237 $265 $299 $341 $616 2014 4 $766 2015 $994 2016 $1,404 2017 $1,661 2018 2019 2020 $59 2014 $76 2015 $109 2016 2017 2018 2019 2020 |
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| How We Succeed Strong Growth in Revenue Total Revenues at December 31, 2020 | $ thousands Global Payments Group (“GPG”) $141,924 $8,464 $108,239 $5,643 $26,286 $1,551 $24,735 2014 $31,920 $2,568 $29,352 2015 $43,489 $2,926 $40,563 2016 $63,382 $3,369 $60,013 2017 $83,384 $4,640 $78,744 2018 $102,596 2019 $133,460 2020 Revenues Excluding GPG In addition to revenue of $8.5 million, GPG contributed non-interest bearing deposits, the value of which was estimated at $4.0 million1. 1 On an FTP basis, assuming the alternative source of funding to be 3 year FHLB advances to match fund interest earning asset, at an average cost of funds of 0.90% YTD through December 31, 2020. 5 | |||
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| How We Succeed Stable Net Interest Margin Net Interest Margin Analysis at December 31, 2020 3.38% 0.25% 3.36% 0.26% 3.53% 0.51% 3.52% 1.10% 3.70% 1.91% 3.46% 2.28% 3.26% 0.54% MCB Net Interest Margin (“NIM”) Average Fed Funds Rate 2014 2015 2016 2017 2018 2019 2020 6 | ||||
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| How We Succeed Loan Portfolio Growth and Diversification $3.14 billion Loan Portfolio at December 31, 2020 | $ millions $2,995 $3,142 $118 Total CRE1 (Non-Owner Occupied) Total CRE (Owner A Diversified Portfolio at December 31, 2020 CRE – Non-Owner Occupied CRE – Owner Occupied C&I Multifamily $2,501 $148 $449 $495 $2,678 $155 $449 $545 $2,771 $139 $482 $599 $2,897 $125 $444 $636 $116 $527 $620 $591 $655 Occupied) C&I Other 14% 19% 39% Construction 1-4 family Consumer 21% $1,409 $1,530 $1,551 $1,692 $1,732 $1,778 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 Multifamily loans – 43% rent regulated CRE/RBC ratios: MCB 412.54% CRE Owner-Occupied is a segment of our C&I Lending platform 1 Includes commercial real estate, multifamily and construction loans. 7 | |||
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| How We Succeed Commercial Growth Driven by Expertise in Specific Lending Verticals General Commercial and Industrial OverviewC&I Composition at December 31, 2020 41% Healthcare Target Market Middle market businesses with annual revenues below $200 million Primarily concentrated in the New York MSA Well-diversified across industries Key Metrics Average yield of 4.66% YTD Strong historical credit performance Pledged collateral and/or personal guarantees from high-net-worth individuals support most loans Target borrowers have strong historical cash flows, good asset coverage and positive industry outlooks 4% 5% 7% 8% 9% 20% 41% 20% Finance and Insurance 9% Retail Trade and RE Rental & Leasing 8% Wholesale Trade7% Individuals - Unsecured 5% Professional, Scientific, Technical and Other Services 4% Individuals - Secured 3% Manufacturing 2% Transportation 1% Accommodation and Food Services 8 | ||||
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| How We Succeed Relationship-Based Commercial Real Estate Lending Target Market New York metropolitan area real estate entrepreneurs with a net worth in excess of $5 million Primarily concentrated in the New York MSA Well-diversified across various property types Key Metrics Losses peaked at 51 basis points in 2010 and have been de minimus since 2014 Weighted average LTV of 53.44% Average LTV of 44.49% on stabilized rent regulated properties provide a cushion against any falling values Composition by Type at December 31, 2020 5% 5% 6% 7% 8% 9%9% 25% 18% 25% Nursing Home CRE 18% Multifamily 9% Other CRE 9% Retail 8% Mixed Use 7% Office 6% Hospitality 5% Land 5% Construction 3% Commercial Condo and Co-op 2% 1-4 Family 2% Warehouse Composition by Region at December 31, 2020 4% 5% 27% 9% 10% 21% 19% 27% Other 21% Brooklyn 19% Manhattan 10% Queens 9% Bronx 5% Long Island 4% Other NY 3% New Jersey 1% Connecticut 1% Staten Island Majority of loans are originated through direct relationships or referrals from existing clients. 9 | ||||
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| How We Succeed Well-Developed, Sector Diversified Healthcare Portfolio Active in Healthcare lending since 2002 CRE – Skilled Nursing Facilities (SNF) – Average LTV of 68% Highly selective regarding the quality of Skilled Nursing Operators that we finance Borrowers typically have over 1,000 beds under management Loans are made only in “certificate of need” states which limits the supply of beds and supports stable occupancy rates. Stabilized SNF – 72% of CRE SNF portfolio. Stabilized facility provides adequate cash flows to support debt service and collateral value. Borrowers primary motive for acquisition of a stabilized property is for synergies with existing portfolio of SNFs. Average debt service C&I Other $116 million C&I SNF $103 million CRE SNF $596 million CRE Skilled Nursing Facilities (SNF) – $596 million C&I Other Healthcare – $116 million C&I Skilled Nursing Facilities (SNF) – $103 million coverage ratio is 2.02x and average loan-to-value is 67%. Once the loans are seasoned, the mortgage portion of the bridge loan is refinanced with HUD. Stabilized loans and Non-Stabilized loans are respectively $515 million and $78 million. Non-stabilized SNF – typically “turn-around” older SNFs acquired from owners who mismanaged the business, relied too heavily on C& I Healthcare Composition at December 31, 2020 4% 8% 47% Nursing and Residential Care Facilites 22% Ambulatory Health Care Services 13% Misc. Health Practitioners long-term care (Medicaid reimbursement) or did not stay current with changes in the marketplace. Opportunity for owner to create value by renovating and adding services with higher Medicaid reimbursements rates (rehabilitation services, dialysis, etc.). 13% 22% 47% 8% Doctor Office 4% Ambulance Services 3% Medical Labs 2% Offices and Clinics of Dentists 10 | ||||
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| How We Succeed Well-Developed, Geographically Diversified Skilled Nursing Facility Portfolio CRE Skilled Nursing Facility Exposure by StateC&I Skilled Nursing Facility Exposure by State 4% 4% 32% 4% 4% 5% 32% New York 18% Florida 8% Pennsylvania 6% Massachusetts 5% California 5% Tennessee 4% Indiana 4% Maryland 4% Kentucky 4% Wisconsin 3% Georgia, Ohio, Rhode Island 7% 8% 12% 37% 37% New York 22% Tennessee 13% Pennsylvania 12% District of Columbia 8% New Jersey 7% Georgia, Indiana, Wisconsin, Virginia, Ohio, Kentucky 1% Florida 5% 6%18% 8% 3% Missouri 2% New Jersey 2% Virginia 13% 22% 11 | ||||
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| How We Succeed Credit Metrics at December 31, 2020 NCOs/Average Loans (Annualized) Non-Performing Loans/Loans 0.66% 0.33% 0.35% 0.32% 0.26% 0.24% 0.17% 0.20% 0.00% 0.00% -0.06% -0.13% 0.00% 0.02% 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 2018 2019 2020 ALLL/LoansNon-Performing Loans/ALLL 1.25% 1.21% 1.12% 1.05% 1.02% 0.98% 1.13% 26.2% 20.9% 31.0% 22.8% 17.1% 18.0% 2014 2015 2016 2017 2018 2019 2020 2014 2015 2016 2017 1.5% 2018 2019 2020 12 | ||||
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| How We Succeed Deposit Composition Deposits $3.82 billion at December 31, 2020 12% 33% DDA (excl. Corporate Cash Management) 30% Corporate Cash Management MMA 22% MMA (excl. Corporate Deposit Composition Over Time at December 31, 2020 | $ millions $3,819 $3,395 $221 $3,022 $106 $173 $318 $129 $219 $515 $353 $220$140 Retail Deposits Bankruptcy Accounts Property Managers Retail Deposits with 22% 30% 33% Cash Management) 12% Corporate Cash Management DDA 3% Savings and CD’s $2,705 $377 $139 $221 $328 $355 $527 $2,791 $328 $104 $207 $392 $375 $580 $387 $861 $396 $856 $97 $389 $601 $436 $813 $392 $659 $598 $758 Loan Customers Debit Cards - Global Payments Group Digital Currency Customers - Global Payments Group Corporate Cash Management Deposits1 Corporate cash management deposits: Have an expected retention period of greater than 3 years. In total have a weighted average cost of 54 basis points. $758 $805 $898 $983 $972 $1,016 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1 Includes liquidation, receivership, litigation settlement and other fiduciary accounts. 13 | |||
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| How We Succeed Well Positioned for Changing Rate Environment Estimated Sensitivity of Projected Annualized Net Interest Income as of September 30, 2020 Fixed vs. Floating Rate Loans at December 31, 2020 -100 bps+100 bps+200 bps 4.92% Note: Given the recent decreases in market interest rates, the Bank did not model a 200-basis point decrease in interest rates at September 30, 2020. 42% Floating 58% Fixed 0.57%0.53% Approximately 68% of floating rate loans have floors – Weighted average floor of 4.99% 14 | ||||
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| Global Payments Group Singular Focus Digital Payments Worldwide, Every Day 15 | ||||
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| How We Succeed | Global Payments Group Strong Growth in Revenue Non-Interest Income at December 31, 2020 | $ thousands 99% 57%54%30%38%53% 50% Global Payments Non-Interest Income (% of Total Non-Interest Income ) $8,464 $5,643 $4,640 $2,568 $2,926 $3,369 $1,551 2014 2015 2016 2017 2018 2019 2020 16 | ||
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| How We Succeed | Global Payments Group Customer Centric Digital Payments Worldwide at December 31, 2020 | Unaudited Clients 146 160 More than Active Customers millions 2.05 94with offices on six continents customers across 200 countries 1.16 1.30 2018 2019 2020 2018 2019 2020 Client Transactions millions Customer $ Volume $ billions 42.30 54.54 Over 54.5 million domestic and international transactions totaling $7.09 billion in 130 fiat and digital currencies and 120+ languages $3.96 $3.85 $7.09 2018 17 2019 2020 2018 2019 2020 | ||
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| How We Succeed | Global Payments Group Who Are Our Payment Clients? 18 | |||
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| How We Succeed | Global Payments Group Delivering Critical Financial Infrastructure, Every Day Domestic and international digital payments settlements, every day Gateway to payment networks – Wire, ACH, Visa, Mastercard, Remittance, every day Custodian of deposits on behalf of clients and their customers, every day Sponsorship for select clients as an extension of MCB’s expertise and legal authority e.g., money transmitter, issuing bank, acquiring bank, lending activities, every day Regulatory oversight by experienced MCB bankers with the expertise to deploy and manage regulatory compliance across a broad spectrum of client sectors including fintech, digital payments and money services businesses, every day Merchant Acquiring Services for the banked, underbanked and unbanked, every day A leading national issuer of third-party debit cards status, every day Digital payment platforms are the underpinnings of E-commerce – E-commerce 1.0 was about selling goods, starting with Dell.com and Book Stacks Unlimited in the early 1990s. E-commerce 2.0 is about buying, selling and connecting a limitless array of products and services with desktop and mobile devices: Video, movies, TV programs, music, books, podcasts and news streaming services DIY online learning – from around the corner to around the world; how to knit to PhD Global gig work opportunities Tickets to in-person and virtual sporting and entertainment events Grocery and prepared meals delivered The list goes on and on... 19 | |||
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| How We Succeed | Global Payments Group Industry and Product Diversification at December 31, 2020 | Unaudited 16 Digital Products 25.9% ACH Processing and Settlement 16.1% Card Present Debit Card 11.5% Digital Assets Settlement 9.8% Mobile Payment 20 Digital Industries Online Gambling and Gaming combined 22.2% Cryptocurrency 17.8% Mobile Banking 14.4% Financial Services to the Unbanked/ Underbanked 7.8% Correspondent 4.0% 4.0% 4.6% 5.2% 5.7% 9.8% 11.5% 25.9% 16.1% Settlement 5.7% Peer-To-Peer (P2P) Payments 5.2% Virtual Debit Card 4.6% International Remittance 4.0% Bill Payment 4.0% E-Wallet Debit Card 3.4% Merchant Acquiring 3.4% Push Payments – Real Time Domestic and International 2.9% Loan Advance / Payment Settlement 1.7% Accounts Payable / Expense Management 0.6% Claim Handling and Processing 0.6% Government Benefits Settlement 0.6% Rebate Settlement 3.4% 3.4% 3.4% 4.4% 4.4% 4.4% 7.8% 14.4% 22.2% 17.8% Banking 4.4% Corporate Accounts Payable Management 4.4% Merchant Acquiring 4.4% Online Gambling and Gaming 3.4% Consumer Lending 3.4% Corporate Payroll 3.4% Foreign Exchange 3.4% Prepaid Phonecards 2.2% Auto 2.2% Trucking 1.1% Criminal Justice and Corrections 1.1% Government Payments 1.1% Healthcare Co-Pay 1.1% Hospitality 1.1% Pharmaceutical 1.1% Travel 20 | ||
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| How We Succeed | Global Payments Group Contributions to Deposits Total Average Deposits at December 31, 2020 | $ millions $616.1 $391.4 $410.3 $439.0 $157.6 $77.9 $25.9 2014 2015 2016 2017 2018 2019 2020 21 | ||
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| Appendix 22 | ||||
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| How We Succeed A Diversified Financial Institution We are More than a Commercial Bank Our Mission To offer a full range of banking and innovative financial services to businesses and individuals embracing the new digital banking era. Serve markets underserved by the ever-consolidating financial services industry and advance our leading-edge model that combines new technologies with the best of traditional banking practices. Our Strategic Priorities Enhance our position as a leader in the settlement of global and digital payments that brings people around the world closer together. Be the critical financial infrastructure for select fintechs to access our global payments settlement platform. 21-Years of Reliable Asset Quality and Financial Performance Organic business loan origination platform Core funded organic deposit franchise Helping our clients build and sustain generational wealth since 1999 23 | ||||
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| How We Succeed | Global Payments Group Delivering Critical Financial Infrastructure, Every Day U.S. Treasury Government Payments Corporate Prefund Network Loads WU, MG GD Direct Deposits/ ACH Loads Other Load Types MG, WU, GD, VRL, MCR Law Firms Payouts for Legal Settlements Pension Companies Public and Private Pension Payments MCB Clients MCB Reserve Account Extraordinary Events MCB Pooled Funds Account Adjustment Account Charge Back Disputes or Provisional Credits Net Network Settlement Cardholder Activity MCB Revenue Account MCB’s Revenue MCB Settlement Account Net of Fees (Program Earnings and Expenses} Program Revenue Account Program’s Revenue MCB Prepaid Invoice Account External Activity Moved by External Party Program Owned Operating Account MCB Owned 24 Moved by MCB Moved by External Party | |||
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| How We Succeed | Global Payments Group Partner with the Leading Processors and Payment Processing Networks, Every Day Leading ProcessorsLeading Payment Processing Networks 25 | |||
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| How We Succeed | Global Payments Group Tending to Our Diverse Digital Payment Products Ecosystem, Every Day Peer-To-Peer (P2P) Payments Paying in for Sally’s wedding gift was easier than deciding what the gift should be. Push Payments – Real Time Domestic and International Foreign travel is exciting, not having to think about exchange rates is joyful. Rebate Settlement Morning coffee with my loyalty rewards prepaid debit card in Seattle, Washington. Virtual Debit Card Traded in my wallet for paying mobile. More space in my purse for makeup. Illustrative photography and captions, not actual customers. 26 | |||
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| How We Succeed | Global Payments Group Securing Our Place in a Diverse Digital Payment Industry Complex, Every Day Auto Consumer Lending Corporate Accounts Payable Management Corporate Payroll Correspondent Banking Criminal Justice and Corrections Crypto Currency Financial Services to the Unbanked/Underbanked Foreign Exchange Government Payments Healthcare Co-PayHospitality Merchant Acquiring Mobile Banking Online Gambling Online Gaming TravelTruckingPharmaceutical Prepaid Phonecards Illustrative photography, not actual customers. 27 | |||
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| How We Succeed Reconciliation of GAAP to Non-GAAP Measures $ thousands, except per share data Dec 31, 2020Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Dec 31, 2020 Dec 31, 2019 In addition to the results presented in Average assets $ 4,153,908$ 4,026,366 $ 3,812,225 $ 3,454,335 $ 3,286,916 $ 3,863,013 $ 2,846,959 accordance with Generally Accepted Less: average intangible assets 9,7339,733 9,733 9,733 9,733 9,733 9,733 Accounting Principles (“GAAP”), this earnings Average tangible assets $ 4,144,175$ 4,016,633 $ 3,802,492 $ 3,444,602 $ 3,277,183 $ 3,853,280 $ 2,837,226 release includes certain non-GAAP financial Average equity $335,940$324,876 $314,727 $306,487 $296,228 $320,617 $282,604 measures. Management believes these non-Less: average preferred equity 5,5025,502 5,502 5,502 5,502 5,502 5,502 GAAP financial measures provide meaningful Average common equity $330,438319,374 $309,225 $300,985 $290,726 $315,115 $277,102 Less: average intangible assets 9,7339,733 9,733 9,733 9,733 9,733 9,733 information to investors in understanding the Company’s operating performance and Average tangible common equity $320,705$309,641 $299,492 $291,252 $280,993 $305,382 $267,369 trends. These non-GAAP measures have Total assets $ 4,330,8214,001,759 $ 3,970,441 $ 3,612,012 $ 3,357,572 Less: intangible assets 9,7339,733 9,733 9,733 9,733 inherent limitations and are not required to Tangible assets $ 4,321,0883,992,026 $ 3,960,708 $ 3,602,279 $ 3,347,839 Total equity $340,787328,584 $317,169 $308,536 $299,124 Less: preferred equity 5,5025,502 5,502 5,502 5,502 or as a substitute for an analysis of results Common equity $335,285323,082 $311,667 $303,034 $293,622 reported under GAAP. These non-GAAP Less: intangible assets 9,7339,733 9,733 9,733 9,733 measures may not be comparable to similarly Tangible common equity (book value) $325,552313,349 $301,934 $293,301 $283,889 titled measures reported by other companies. Common shares outstanding 8,295,2728,289,479 8,294,801 8,294,801 8,312,918 Reconciliations of non-GAAP/adjusted Book value per share (GAAP) $40.4238.97 $$37.57 $36.53 $35.32 financial measures disclosed in this earnings release to the comparable GAAP measures Tangible book value per share (non-GAAP)* $39.2537.80 $$36.40 $35.36 $34.15 are provided in the accompanying tables. Year-To-Date be uniformly applied and are not audited. They should not be considered in isolation $ thousandsDec 31, 2020Dec 31, 2019 *Tangible common equity divided by common shares outstanding at period-end 28 | ||||
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