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): April 20, 2020
____________________
METROPOLITAN BANK HOLDING CORP.
(Exact name of the registrant as specifiedin its charter)
____________________
| New York | 001-38282 | 13-4042724 |
|---|---|---|
| (State or other jurisdiction of<br><br> <br>incorporation or organization) | (Commission File Number) | (IRS Employer<br><br> <br>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<br><br> <br>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 |
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On April 20, 2020, Metropolitan Bank Holding Corp. (the “Company”), the holding company for Metropolitan Commercial Bank, issued a press release announcing its financial results for the quarter ended March 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 |
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The Company has also made available on its website presentation materials containing additional information about the Company’s financial results for the quarter ended March 31, 2020 (the “Presentation Materials”). The Presentation Materials is 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 April 20, 2020 |
| 99.2 | Presentation Materials |
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: April 20, 2020 | By: | /s/ Anthony Fabiano |
| Anthony Fabiano | ||
| Executive Vice President and Chief Financial Officer |
Exhibit 99.1
Release: 4:30 P.M. April 20, 2020
| Contact: | Investor Relations Department |
|---|
212-365-6721
IR@MetropolitanBankNY.com
Metropolitan Bank Holding Corp. ReportsNet Income of $6.1 Million
Diluted EPS of $0.72 and Growth in Loans,Deposits
and Net Interest Margin for the FirstQuarter
Includes $3.1 Million COVID-19-RelatedProvision for Loan Losses
NEW YORK, April 20, 2020 – Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), today reported net income of $6.1 million, or $0.72 per diluted common share, for the first quarter of 2020, as compared to net income of $8.5 million, or $1.01 per diluted common share, for the first quarter of 2019. Net income for the first quarter of 2020 included a provision for loan losses of $3.1 million due to the impact of the Coronavirus (“COVID-19”). The first quarter of 2019 included a $4.3 million recovery of taxi medallion loans previously charged-off. Excluding the COVID-19-related provision for loan losses, net income in the first quarter of 2020 would have been $8.2 million. Excluding the loan loss recovery in the first quarter of 2019, net income would have been $5.6 million.
Financial Highlights for the first quarter of 2020 include:
| · | Total assets increased $254.4 million, or 7.6%, to $3.61 billion at March 31, 2020, as<br>compared to $3.36 billion at December 31, 2019. |
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| · | Total loans increased 3.5%, or $93.2 million, to $2.77 billion at March 31, 2020, as<br>compared to $2.67 billion at December 31, 2019. For the first quarter of 2020, the Bank’s loan production was $152.6 million,<br>as compared to $289.8 million for the first quarter of 2019. The Bank reduced loan production for the first quarter of 2020 as<br>management continued to execute on its net interest margin strategies. |
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| · | Net interest margin increased 3 basis points for the first quarter of 2020 to 3.38%, as compared<br>to 3.35% for the fourth quarter of 2019. This increase in net interest margin was primarily due to a decrease in the cost of deposits.<br>The cost of deposits decreased by 32 basis points in the first quarter of 2020 to 1.33%, as compared to 1.65% in the fourth quarter<br>of 2019. This decrease was partially offset by a decrease of 16 basis points in the yield earned on total interest-earning assets<br>to 4.22% for the first quarter of 2020, as compared to 4.38% for the fourth quarter of 2019. The decrease was driven primarily<br>by decreases in the yield earned on overnight deposits and loans. The yield on loans decreased by 11 basis points to 4.85% in the<br>first quarter of 2020, as compared to 4.96% in the fourth quarter of 2019. The yield from overnight deposits decreased 42 basis<br>points to 1.36% for the first quarter of 2020, as compared to 1.78% for the fourth quarter of 2019. The decreases in yields on<br>interest-earning assets and the cost of interest-bearing liabilities are primarily due to the several interest rate cuts by the<br>Federal Reserve in 2019 and 2020. |
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| · | Total cash and cash equivalents increased $191.7 million, or 49.1%, to $582.4 million at March 31, 2020,<br>as compared to $390.7 million at December 31, 2019. Total securities, primarily those classified as available-for-sale (“AFS”),<br>decreased $35.3 million, or 14.6%, to $205.6 million at March 31, 2020, as compared to $240.9 million at December 31,<br>2019. |
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| · | Total deposits increased 8.3%, or $230.9 million, to $3.02 billion at March 31, 2020,<br>as compared to total deposits of $2.79 billion at December 31, 2019. This growth in deposits was across the Bank’s various<br>deposit verticals. |
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| · | The loan-to-deposit ratio decreased to 91.5% at March 31, 2020, as compared to 95.8%<br>at December 31, 2019. |
| --- | --- |
| · | Non-interest-bearing deposits increased by $160.1 million, or 14.7%, to $1.25 billion at March 31, 2020,<br>as compared to non-interest-bearing deposits of $1.09 billion at December 31, 2019. Interest-bearing deposits increased by $70.8<br>million, or 4.2%, to $1.77 billion at March 31, 2020 as compared to $1.70 billion at December 31, 2019. |
| --- | --- |
| · | The provision for loan losses for the first quarter of 2020 was $4.8 million, as compared to a<br>credit of $2.0 million for the first quarter of 2019. The provision for loan losses for the first quarter of 2020 included an additional<br>$3.1 million provision recorded in consideration of the economic impact of COVID-19 (see further discussion below). The remaining<br>provision of $1.7 million was primarily a result of the growth in the Bank’s loan portfolio. The provision for loan losses<br>for the first quarter of 2019 consisted of a $2.3 million provision, offset by a credit due to recoveries of $4.3 million related<br>primarily to the recovery of medallion loans charged off in 2017 and 2016. |
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| · | For the first quarter of 2020, Bank premises and equipment includes $615,000 of rent expense for<br>additional space at the Company’s headquarters in 99 Park Ave., New York, NY, which the Company took possession of in August<br>2019 and is currently renovating. During the first quarter of 2020, the Company charged-off the remaining balance of $575,000 of<br>leasehold improvements for the Company’s existing space. When renovations on the new space are complete and the Company vacates<br>its existing space, likely to be in the second quarter of 2020, the Company will cease rent payments on the former space resulting<br>in a reduction of rent expense of approximately $195,000 per quarter. The move to the new office space has been delayed by the<br>shut-down of businesses due to COVID-19. |
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Impact of the Coronavirus
Operational Readiness
The Company identified the potential threat of COVID-19 in February 2020, activated its Pandemic Plan in March 2020, and had a fully remote workforce for its corporate office by the early days of April 2020 as COVID-19 began to affect New York City, the Bank’s primary market. The activation of the established Pandemic Plan allowed the Bank to follow a disciplined approach to a rapidly changing situation.
The following timeline of actions reflects the speed of our response:
February 10 – Initiated our Business Continuity Response Team (Stage 1-Preparation and Testing)
February 25 – Enterprise Risk Management team informed the Board of Directors on monitoring activity
March 6 – Conducted a Pandemic Readiness Tabletop Exercise and activated our Pandemic Plan
March 12 – Commenced rotating staff schedules with 50% of employees working remotely
March 17 – Stage 2 of the Pandemic Plan was activated with 80% of employees working remotely
April 3 – Moved to full remote capabilities with substantially all employees working off-site (Stage 3 – Full Pandemic Event)
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Our actions ensured the Bank’s uninterrupted operational effectiveness, while safeguarding the health and safety of our customers and employees. The Pandemic Plan incorporated guidance from the regulatory and health communities, defined the Bank’s Business Continuity Response Team and the actions to be taken from the business lines up through the Board of Directors. Our branch network continued to serve the local community and our online platforms facilitated alternate methods for our customers to meet their financial needs. Since the early stages that the threat was identified, the Bank implemented social distancing and office cleaning measures to mitigate the risk of infection to the Bank’s staff and customers utilizing our branch network. While COVID-19 has resulted in widespread disruption to the lives and businesses of the Bank’s customers and employees, the Bank’s Pandemic Plan has enabled the Bank to remain focused on assisting customers and ensuring that the Bank remains fully operational.
Financial Impact
Loan Portfolio and Modifications
The Bank has taken several steps to assess the financial impact of the 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.
Loan Portfolio. As of March 31, 2020, total loans consisted primarily of commercial real estate loans (“CRE”), commercial and industrial loans (“C&I”) and multi-family mortgage loans. The Bank’s loan portfolio includes loans to the following industries:
| March 31, 2020 | |||||
|---|---|---|---|---|---|
| (dollars in thousands) | Balance | % of Total Loans | |||
| CRE: | |||||
| Skilled Nursing Facilities | $ | 498,152 | 18.0 | % | |
| Multi-family | 379,342 | 13.7 | % | ||
| Retail | 218,381 | 7.9 | % | ||
| Mixed use | 210,358 | 7.6 | % | ||
| Office | 174,123 | 6.3 | % | ||
| Hospitality | 158,406 | 5.7 | % | ||
| Other | 511,128 | 18.5 | % | ||
| Total CRE | $ | 2,149,890 | 77.7 | % | |
| C&I: | |||||
| Healthcare | $ | 109,696 | 4.0 | % | |
| Skilled Nursing Facilities | 109,567 | 4.0 | % | ||
| Finance & Insurance | 97,280 | 3.5 | % | ||
| Wholesale | 30,614 | 1.1 | % | ||
| Manufacturing | 17,613 | 0.6 | % | ||
| Transportation | 13,319 | 0.5 | % | ||
| Recreation & Restaurants | 10,177 | 0.4 | % | ||
| Other | 43,250 | 1.6 | % | ||
| Total C&I | $ | 431,516 | 15.6 | % |
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The largest concentration in the loan portfolio is to the healthcare industry amounting to $717.4 million or 25.9% of total loans and including $607.7 million in loans to skilled nursing facilities (“SNF”). The Bank believes that loans to SNF customers will not be significantly impacted by COVID-19 as the demand for nursing home beds remains strong and cash flows should not be adversely impacted.
Loan Modifications: The Bank has been working with customers to address their needs during this pandemic. Loan customers have requested various forms of relief during this period of financial stress, including payment deferrals, interest rate reductions and extensions of maturity dates. On March 22, 2020, the banking regulators and the Financial Accounting Standards Board (“FASB”) issued guidance to financial institutions who are working with borrowers affected by COVID-19 (“COVID-19 Guidance”). The guidance indicated that regulatory agencies will not criticize institutions for working with borrowers and will not direct banks to automatically categorize all COVID-19 related loan modifications as troubled debt restructurings (“TDRs”). In addition, the COVID-19 Guidance noted that modification or deferral programs mandated by the federal or a state government related to COVID-19 would not be in the scope of ASC 310-40, such as a state program that requires all institutions within that state to suspend mortgage payments for a specified period.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was signed into law. Section 4013 of the CARES Act, “Temporary Relief from Troubled Debt Restructurings,” allows banks to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19. A bank may elect to account for modifications on certain loans under Section 4013 of the CARES Act or, if a loan modification is not eligible under Section 4013, a bank may use the criteria in the COVID-19 Guidance to determine when a loan modification is not a TDR in accordance with ASC 310-40.
The following is a summary of loan modifications requested and in process through April 15, 2020, the latest practicable date for which we have information (dollars in thousands):
| CRE | C&I | Total | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Type of Modification | Balance | Number of Loans | Balance | Number of Loans | Balance | Number of Loans | ||||||
| Defer monthly principal payments ^(1)^ | $ | 145,322 | 31 | $ | 1,896 | 7 | $ | 147,218 | 38 | |||
| Reduce monthly principal payments ^(2)^ | — | — | 3,829 | 1 | 3,829 | 1 | ||||||
| Full payment deferral ^(3)^ | 111,242 | 14 | 25,746 | 37 | 136,988 | 51 | ||||||
| Remove interest rate floor ^(4)^ | 12,000 | 1 | — | — | 12,000 | 1 | ||||||
| Allow the use of reserve accounts | 50,500 | 4 | 1,400 | 1 | 51,900 | 5 | ||||||
| Cease escrowing for tax payments | 4,000 | 1 | — | — | 4,000 | 1 | ||||||
| Interest rate reduction ^(5)^ | 41,670 | 7 | 4,132 | 1 | 45,802 | 8 | ||||||
| $ | 364,734 | 58 | $ | 37,003 | 47 | $ | 401,737 | 105 | ||||
| (1) | Waived principal payments for 2 to 9 months. | |||||||||||
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| (2) | Reduced monthly principal payments for 3 months. | |||||||||||
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| (3) | Deferred principal and interest payments or interest-only payments for 3 to 6 months. Deferred<br>payments will be repaid during 2021. | |||||||||||
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| (4) | Interest rate is LIBOR plus 3% with 5% floor; removed floor. | |||||||||||
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| (5) | Rate reduced by approximately 100 basis points. | |||||||||||
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The following is a summary of loan modifications requested and in process through April 15, 2020 by industry, the latest practicable date for which we have information (dollars in thousands):
| Defer<br> monthly principal payments | Reduce<br> monthly principal payments | Full<br> payment deferral | Remove<br> interest rate floor | Allow<br> <br><br>the use of reserve accounts | Cease<br> escrowing for tax payments | Interest<br> rate reduction | Total | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CRE: | ||||||||||||||||
| Retail | ||||||||||||||||
| Balance | $ | 23,951 | $ | — | $ | 19,707 | $ | 12,000 | $ | 12,500 | $ | — | $ | 5,202 | $ | 73,360 |
| Number of loans | 7 | — | 2 | 1 | 1 | — | 1 | 12 | ||||||||
| Hospitality | ||||||||||||||||
| Balance | $ | 13,374 | $ | — | $ | 49,924 | $ | — | $ | 25,500 | $ | — | $ | 20,821 | $ | 109,619 |
| Number of loans | 2 | — | 5 | — | 2 | — | 1 | 10 | ||||||||
| Office | ||||||||||||||||
| Balance | $ | 21,165 | $ | — | $ | 18,000 | $ | — | $ | — | $ | — | $ | — | $ | 39,165 |
| Number of loans | 3 | — | 1 | — | — | — | — | 4 | ||||||||
| Mixed-Use | ||||||||||||||||
| Balance | $ | 9,432 | $ | — | $ | 10,000 | $ | — | $ | — | $ | 4,000 | $ | 11,900 | $ | 35,332 |
| Number of loans | 4 | — | 1 | — | — | 1 | 2 | 8 | ||||||||
| Multifamily | ||||||||||||||||
| Balance | $ | 61,130 | $ | — | $ | — | $ | — | $ | 12,500 | $ | — | $ | — | $ | 73,630 |
| Number of loans | 12 | — | — | — | 1 | — | — | 13 | ||||||||
| Warehouse | ||||||||||||||||
| Balance | $ | 16,270 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 16,270 |
| Number of loans | 3 | — | — | — | — | — | — | 3 | ||||||||
| Other | ||||||||||||||||
| Balance | $ | — | $ | — | $ | 13,611 | $ | — | $ | — | $ | — | $ | 3,747 | $ | 17,358 |
| Number of loans | — | — | 5 | — | — | — | 3 | 8 | ||||||||
| Total | ||||||||||||||||
| Balance | $ | 145,322 | $ | — | $ | 111,242 | $ | 12,000 | $ | 50,500 | $ | 4,000 | $ | 41,670 | $ | 364,734 |
| Number<br> of loans | 31 | — | 14 | 1 | 4 | 1 | 7 | 58 | ||||||||
| C&I: | ||||||||||||||||
| Leases | ||||||||||||||||
| Balance | $ | 1,383 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 1,383 |
| Number of loans | 6 | — | — | — | — | — | — | 6 | ||||||||
| Business | ||||||||||||||||
| Balance | $ | 513 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 4,132 | $ | 4,645 |
| Number of loans | 1 | — | — | — | — | — | 1 | 2 | ||||||||
| Healthcare | ||||||||||||||||
| Balance | $ | — | $ | 3,829 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,829 |
| Number of loans | — | 1 | — | — | — | — | — | 1 | ||||||||
| Real Estate secured | ||||||||||||||||
| Balance | $ | — | $ | — | $ | 22,767 | $ | — | $ | — | $ | — | $ | — | $ | 22,767 |
| Number of loans | — | — | 5 | — | — | — | — | 5 | ||||||||
| Other | ||||||||||||||||
| Balance | $ | — | $ | — | $ | 2,979 | $ | — | $ | 1,400 | $ | — | $ | — | $ | 4,379 |
| Number of loans | — | — | 32 | — | 1 | — | — | 33 | ||||||||
| Total | ||||||||||||||||
| Balance | $ | 1,896 | $ | 3,829 | $ | 25,746 | $ | — | $ | 1,400 | $ | — | $ | 4,132 | $ | 37,003 |
| Number<br> of loans | 7 | 1 | 37 | — | 1 | — | 1 | 47 |
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The following is a summary of the weighted average loan-to-value ratio (“LTV”) for CRE and C&I owner-occupied loan modifications requested and in process through April 15, 2020, the latest practicable date for which we have information (dollars in thousands):
| Industry | Total Modifications | Weighted Average LTV | |||
|---|---|---|---|---|---|
| CRE: | |||||
| Retail | $ | 73,360 | 48.7 | % | |
| Hospitality | 109,619 | 59.3 | % | ||
| Office | 39,165 | 44.7 | % | ||
| Mixed-Use | 35,332 | 45.3 | % | ||
| Multifamily | 73,630 | 28.0 | % | ||
| Warehouse | 16,270 | 33.9 | % | ||
| Other | 17,358 | 37.3 | % | ||
| Total CRE | $ | 364,734 | 45.7 | % | |
| C&I Owner-Occupied: | |||||
| Real Estate Secured | $ | 22,767 | 65.0 | % | |
| $ | 387,501 | 46.9 | % |
Allowance for Loan Losses (“ALLL”): We continue to assess the impact of the pandemic on the Bank’s financial condition, including its determination of the allowance for loan losses as of March 31, 2020. As part of that assessment, the Bank considered the effects of the response to COVID-19 on macro-economic conditions such as sharply increasing unemployment rates and the shut-down of all non-essential businesses. The Bank also analyzed the impact of COVID-19 on its primary market which is the New York metropolitan area as well as the impact on the Bank’s market sectors and its specific clients.
As part of its estimation of an adjustment to the ALLL due to COVID-19, the Bank identified those market sectors or industries that were more likely to be affected, such as hospitality, transportation and outpatient care centers. To determine the potential impact on the Bank’s customers, particularly in these industries, management primarily relied on the results of the semi-annual stress tests that have been performed for the Bank by a third-party. The scenarios used in these stress tests include significant revenue declines in a borrower’s business as well as reductions in its operating cash flows and the impact on their ability to repay its loans. Using the stress test results, management estimated the probability of default and loss-given-default for the various loan categories at March 31, 2020 and assigned a weighting to each scenario. Based on this analysis, management estimated the potential impact of a stressed environment, such as the one resulting from COVID-19, and the adjustment to the ALLL as of March 31, 2020. In addition to the stress tests, the Bank also established an additional qualitative loss factor solely related to the impact of COVID-19 and included that analysis in its ALLL calculations. As a result of management’s assessment, the Bank recorded an additional loan loss provision of $3.1 million in the first quarter of 2020. However, this is a period of great uncertainty. The impact of COVID-19 is likely to be felt over the next several quarters. As such, significant adjustments to the ALLL may be required as the full impact of COVID-19 on the Bank’s borrowers becomes known.
Liquidity
During periods of economic stress, such as during the COVID-19 pandemic, the Bank closely monitors deposit trends and the Bank’s liquidity position. At March 31, 2020, deposits totaled $3.02 billion, an increase of $230.9 million from December 31, 2019. At March 31, 2020, total cash and cash equivalents amounted to $582.4 million, or 16.1% of total assets, and securities available for sale amounted to $199.9 million. In addition, the Bank has available borrowing capacity of $316.7 million from the Federal Home Loan Bank of New York and an available line of credit of $84.5 million with the Federal Reserve Bank of New York. The Bank believes it has ample liquidity to address the COVID-19 uncertainties and remains vigilant in assessing its potential liquidity needs during this period.
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Capital
At March 31, 2020, the Company and the Bank were considered well-capitalized. Regulatory capital ratios at March 31, 2020 are as follows:
| March 31, 2020 | ||||||
|---|---|---|---|---|---|---|
| Regulatory Capital Ratios | Metropolitan Bank Holding Corp. | Metropolitan Commercial Bank | ||||
| Tier 1 Leverage | 9.1 | % | 9.8 | % | ||
| Common Equity Tier 1 Risk-Based (CET1) | 9.8 | 11.4 | ||||
| Tier 1 Risk-Based | 10.7 | 11.4 | ||||
| Total Risk-Based | 12.1 | 12.5 |
Mark DeFazio, the Company’s Chief Executive Officer commented, “My heart goes out to all who have been deeply affected by COVID-19. I want to especially thank all of the first responders and health care professionals who are on the front line of this war and are doing everything they can do to keep us safe. I want to assure our stakeholders that I have addressed COVID-19 as I have addressed many unforeseen challenges over the past 20 years since starting MCB. I stay focused, surround myself with smart people who care, gather intelligence I can rely on and make decisions to move MCB forward. MCB was very fortunate to have a pandemic plan which was ready for action. Our team responsible for this plan executed it flawlessly. We developed efficient lines of communication as we adapted to working apart and as we addressed the challenges that COVID-19 brought to bear.
We continue to build and protect our balance sheet. I am confident there is a light at the end of this tunnel and it’s starting to come into sight. Our country and its most important resource, which is each one of us, will be stronger, smarter and better prepared moving forward.”
Mr. DeFazio continued, “I am pleased with the financial results for the first quarter. We continue to focus on the main drivers of our business, such as growth in quality earning assets, lowering our cost of funds, margin management and efficiencies to name a few. In the midst of all the uncertainty, MCB is positioned to identify opportunities on both sides of its balance sheet which will continue to contribute to long term stability and the Company’s intrinsic franchise value.”
Mr. DeFazio concluded, “I want to thank the entire MCB team for their dedication and the care they have for our institution, the steadfast support and guidance we have received from our Board of Directors and a special thank you to our clients who are working as one with MCB in navigating through this difficult time.”
Balance Sheet
The Company had total assets of $3.61 billion at March 31, 2020, as compared to $3.36 billion at December 31, 2019. Loans, net of deferred fees and unamortized costs, increased by $93.2 million, or 3.5%, to $2.77 billion at March 31, 2020, as compared to $2.67 billion at December 31, 2019.
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Total cash and cash equivalents increased $191.7 million, or 49.1%, to $582.4 million at March 31, 2020, as compared to $390.7 million at December 31, 2019. Total securities, primarily those classified as AFS, decreased by $35.2 million, or 14.6% to $205.7 million at March 31, 2020, as compared to $240.9 million at December 31, 2019. The increases in cash and cash equivalents reflect the strong growth in deposits of $230.9 million that exceeded growth in loans of $93.2 million.
Total deposits increased $230.9 million, or 8.3%, to $3.02 billion at March 31, 2020, as compared to $2.79 billion at December 31, 2019. This was due to increases of $70.8 million in interest-bearing deposits to $1.77 billion at March 31, 2020, as compared to $1.70 billion at December 31, 2019, and of $160.1 million in non-interest-bearing deposits to $1.25 billion at March 31, 2020, as compared to $1.09 billion at December 31, 2019. The increase in deposits was primarily due to growth in the Bank’s bankruptcy account deposit vertical and property management accounts, as well as deposit growth in the Bank’s retail network.
Total stockholders’ equity increased $9.4 million to $308.5 million at March 31, 2020, as compared to $299.1 million at December 31, 2019. The increase was primarily due to an increase of $3.8 million in the fair value of available-for-sale securities and net income of $6.1 million for the first quarter of 2020, partially offset by a $726,000 decrease in the fair value of an interest rate cap derivative, which qualified as a cash flow hedge.
Metropolitan Commercial Bank meets all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. At March 31, 2020, total commercial real estate loans were 408.3% of risk-based capital, as compared to 412.5% at December 31, 2019.
Income Statement
| Three months ended March 31, | ||||||
|---|---|---|---|---|---|---|
| (dollars in thousands) | 2020 | 2019 | ||||
| Net income | $ | 6,097 | $ | 8,531 | ||
| Diluted earnings per common share | 0.72 | 1.01 | ||||
| Annualized return on average assets | 0.71 | % | 1.49 | % | ||
| Annualized return on average equity | 8.00 | % | 12.67 | % |
Net Income Summary
Net income decreased $2.4 million to $6.1 million for the first quarter of 2020, as compared to $8.5 million for the first quarter of 2019. This decrease was due primarily to a $6.8 million increase in non-interest expense and a $6.8 million increase in provision for loan losses, offset by a $8.4 million increase in net interest income, a $1.9 million increase in non-interest income and an $871,000 decrease in income tax expense. The provision for loan losses in the first quarter of 2020 included an additional $3.1 million reserve recorded in consideration of the economic impact of COVID-19.
| 8 |
| --- |
Net Interest Margin Analysis
| Three months ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2020 | March 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)^ | $ | 2,705,710 | $ | 32,827 | 4.85 | % | $ | 1,973,136 | $ | 25,050 | 5.15 | % | ||||
| Available-for-sale securities | 219,883 | 1,343 | 2.42 | % | 30,522 | 204 | 2.68 | % | ||||||||
| Held-to-maturity securities | 3,622 | 17 | 1.86 | % | 4,479 | 23 | 2.05 | % | ||||||||
| Equity investments - non-trading | 2,263 | 12 | 2.10 | % | 3,210 | 13 | 1.62 | % | ||||||||
| Overnight deposits | 470,638 | 1,593 | 1.36 | % | 228,506 | 1,409 | 2.50 | % | ||||||||
| Other interest-earning assets | 21,441 | 275 | 5.07 | % | 24,722 | 291 | 4.71 | % | ||||||||
| Total interest-earning assets | 3,423,557 | 36,067 | 4.22 | % | 2,264,575 | 26,990 | 4.83 | % | ||||||||
| Non-interest-earning assets | 57,567 | 44,204 | ||||||||||||||
| Allowance for loan and lease losses | (26,789 | ) | (20,228 | ) | ||||||||||||
| Total assets | $ | 3,454,335 | $ | 2,288,551 | ||||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Money market, savings and other interest-bearing accounts | $ | 1,638,362 | $ | 5,171 | 1.27 | % | $ | 856,477 | $ | 4,036 | 1.91 | % | ||||
| Certificates of deposit | 104,067 | 596 | 2.30 | % | 105,290 | 610 | 2.35 | % | ||||||||
| Total interest-bearing deposits | 1,742,429 | 5,767 | 1.33 | % | 961,767 | 4,646 | 1.96 | % | ||||||||
| Borrowed funds | 189,226 | 1,331 | 2.78 | % | 211,170 | 1,766 | 3.35 | % | ||||||||
| Total interest-bearing liabilities | 1,931,655 | 7,098 | 1.48 | % | 1,172,937 | 6,412 | 2.22 | % | ||||||||
| Non-interest-bearing liabilities: | ||||||||||||||||
| Non-interest-bearing deposits | 1,157,270 | 822,763 | ||||||||||||||
| Other non-interest-bearing liabilities | 58,923 | 23,433 | ||||||||||||||
| Total liabilities | 3,147,848 | 2,019,133 | ||||||||||||||
| Stockholders' Equity | 306,487 | 269,418 | ||||||||||||||
| Total liabilities and equity | $ | 3,454,335 | $ | 2,288,551 | ||||||||||||
| Net interest income | $ | 28,969 | $ | 20,578 | ||||||||||||
| Net interest rate spread ^(2)^ | 2.74 | % | 2.61 | % | ||||||||||||
| Net interest-earning assets | $ | 1,491,902 | $ | 1,091,638 | ||||||||||||
| Net interest margin ^(3)^ | 3.38 | % | 3.69 | % | ||||||||||||
| Ratio of interest earning assets to interest bearing liabilities | 1.77 | x | 1.93 | x | ||||||||||||
| (1) | Amount includes deferred loan fees and non-performing loans. | |||||||||||||||
| --- | --- | |||||||||||||||
| (2) | Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities<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. | |||||||||||||||
| --- | --- |
| 9 |
| --- |
Net Interest Income
Interest income increased $9.1 million to $36.1 million for the first quarter of 2020, as compared to $27.0 million for the first quarter of 2019. This increase was due primarily to increases of $7.8 million in interest income on loans, $1.1 million in interest on AFS securities and $184,000 in interest on overnight deposits.
The increase in interest income on loans was due to a $732.6 million increase in the average balance of loans to $2.71 billion for the first quarter of 2020, as compared to an average balance of $1.97 billion for the first quarter of 2019. The impact of the increase in average balance of loans was partially offset by a decrease of 30 basis points in average loan yield, which decreased to 4.85% for the first quarter of 2020, as compared to 5.15% for the first quarter of 2019.
The increase in interest on AFS securities was due to a $189.4 million increase in the average balance of AFS securities to $219.9 million for the first quarter of 2020, as compared to $30.5 million for the first quarter of 2019. The impact of the increase in average balance was partially offset by a decrease of 26 basis points in the average yield on AFS securities, which decreased to 2.42% for first quarter of 2020, as compared to 2.68% for first quarter of 2019.
The increase in interest on overnight deposits was due to an increase of $242.1 million in the average balance of overnight funds to $470.6 million for the first quarter of 2020, as compared to $228.5 million for the first quarter of 2019. The impact of the increase in average balance of overnight funds was partially offset by a decrease of 114 basis points in the average yield on overnight deposits, which decreased to 1.36% for the first quarter of 2020, as compared to 2.50% for the first quarter of 2019.
Interest expense increased $686,000 to $7.1 million for the first quarter of 2020, as compared to $6.4 million for the first quarter of 2019. This increase was due primarily to a $1.1 million increase in interest on deposits, offset by a $435,000 decrease in interest on borrowings. The increase in interest expense on deposits was primarily due to a $780.7 million increase in the average balance of interest-bearing deposits to $1.74 billion for the first quarter of 2020, as compared to an average balance of $961.8 million for the first quarter of 2019. The impact of the increase in average balance of deposits was partially offset by a decrease of 63 basis points in the average cost of interest-bearing deposits to 1.33% for the first quarter of 2020, as compared to 1.96% for the first quarter of 2019. Interest expense on borrowings decreased primarily due to a decrease of $21.9 million in the average balance of borrowings to $189.2 million for the first quarter of 2020, as compared to $211.2 million for the first quarter of 2019. Additionally, the average cost of borrowing decreased by 57 basis points to 2.78% for the first quarter of 2020, as compared to 3.35% for the first quarter of 2019.
The decreases in yields on interest-earning assets and the cost of interest-bearing liabilities are primarily due to the several interest rate cuts by the Federal Reserve in 2019 and 2020. The Federal Reserve reduced interest rates three times for a total of 75 basis points in the third and fourth quarters of 2019 and, in response to COVID-19, reduced interest rates by an additional 50 basis points on March 3, 2020 and 100 basis points on March 15, 2020.
Net interest margin decreased 31 basis points to 3.38% for the first quarter of 2020 from 3.69% for the first quarter of 2019. Total average interest-earning assets increased $1.16 billion to $3.42 billion for the first quarter of 2020, as compared to $2.26 billion for the first quarter of 2019. The total yield on average interest-earning assets decreased 61 basis points to 4.22% for the first quarter of 2020, as compared to 4.83% for the first quarter of 2019. The cost of interest-bearing liabilities decreased 74 basis points to 1.48% for the first quarter of 2020, as compared to 2.22% for the first quarter of 2019. The decrease in net interest margin was primarily due to a decrease in the yield earned on interest-earning assets as loans accounted for 79.0% of the average balance of interest-earning assets during the first quarter of 2020, as compared to 87.2% for the first quarter of 2019. This decrease was also due to the growth in overnight deposits and AFS securities, which had lower yields than loans. In addition, non-interest-bearing deposits accounted for 40.0% of average deposit funding in the first quarter of 2020, as compared to 46.1% in the first quarter of 2019. As a result, the ratio of average interest-earning assets to average interest-bearing liabilities decreased to 1.77x for the first quarter of 2020, as compared to 1.93x for the first quarter of 2019.
| 10 |
| --- |
Asset Quality
Non-performing assets consist of non-accrual loans, accruing loans that are 90 days or more past due, consumer loans placed in forbearance with payments past due over 90 days and still accruing, non-accrual TDRs and real estate owned (“REO”) that has been acquired in partial or full satisfaction of loan obligations or upon foreclosure. The Bank had no REO properties at March 31, 2020 or December 31, 2019.
Non-accrual loans increased by $2.0 million to $6.1 million at March 31, 2020, as compared to $4.1 million at December 31, 2019, primarily due to one C&I loan in the amount of $4.8 million. This addition to non-accrual loans was offset by a one-to-four family loan in the amount of $2.4 million, which was placed on non-accrual status in June 2019 and has made payments for six consecutive months since then.
The provision for loan losses for the first quarter of 2020 was $4.8 million, as compared to a credit of $2.0 million for the first quarter of 2019. The provision for loan losses for the first quarter of 2020 included an additional $3.1 million provision recorded for the economic impact of COVID-19. The remaining provision of $1.7 million was primarily a result of the growth in the Bank’s loan portfolio. The provision for loan losses for the first quarter of 2019 consisted of a $2.3 million provision, offset by a credit due to recoveries of $4.3 million related primarily to the recovery of medallion loans charged off in 2017 and 2016.
| (dollars in thousands) | March 31, 2020 | December 31, 2019 | ||||
|---|---|---|---|---|---|---|
| Non-performing assets: | ||||||
| Non-accrual loans: | ||||||
| One-to-four family | — | 2,345 | ||||
| Commercial and industrial | 5,801 | 1,047 | ||||
| Consumer | 335 | 693 | ||||
| Total non-accrual loans | $ | 6,136 | $ | 4,085 | ||
| Accruing loans 90 days or more past due | 205 | 408 | ||||
| Total non-performing loans and assets | $ | 6,341 | $ | 4,493 | ||
| Nonaccrual loans as % of loans outstanding | 0.22 | % | 0.15 | % | ||
| Non-performing loans as % of loans outstanding | 0.23 | % | 0.17 | % | ||
| Allowance for loan losses | $ | (30,924 | ) | $ | (26,272 | ) |
| Allowance for loan losses as % of loans outstanding | 1.12 | % | 0.98 | % | ||
| Three months ended March 31, | ||||||
| --- | --- | --- | --- | --- | --- | --- |
| (dollars in thousands) | 2020 | 2019 | ||||
| Provision for loan losses | $ | 4,790 | $ | (2,031 | ) | |
| Charge-offs | $ | (201 | ) | $ | (347 | ) |
| Recoveries | $ | 63 | $ | 4,270 | ||
| Net charge-offs/(recoveries) as % of average loans (annualized) | 0.02 | % | (0.80 | )% |
| 11 |
| --- |
Non-Interest Income
| Three months ended March 31, | ||||
|---|---|---|---|---|
| (dollars in thousands) | 2020 | 2019 | ||
| Service charges on deposit accounts | $ | 1,081 | $ | 819 |
| Prepaid third-party debit card income | 1,621 | 1,257 | ||
| Other service charges and fees | 627 | 278 | ||
| Unrealized gain on equity securities | 36 | 39 | ||
| Gain on sale of securities | 975 | — | ||
| Total non-interest income | $ | 4,340 | $ | 2,393 |
Non-interest income increased $1.9 million, or 79.2%, to $4.3 million in the first quarter of 2020, as compared to $2.4 million in the first quarter of 2019. This increase was due to increases of $364,000 in prepaid debit card income, $262,000 in service charges in deposit accounts, $349,000 in other service charges and fees and a $975,000 gain on sale of securities. The increase in debit card income reflects the growth in the debit card business. The increases in service charges on deposit accounts and other service charges and fees reflect the growth in deposits during 2020. The gain on securities sales was due to the sale of $20.0 million of U.S. Agency Securities.
Non-Interest Expense
| Three months ended March 31, | ||||
|---|---|---|---|---|
| (dollars in thousands) | 2020 | 2019 | ||
| Compensation and benefits | $ | 9,960 | $ | 7,490 |
| Bank premises and equipment | 2,500 | 1,335 | ||
| Professional fees | 955 | 794 | ||
| Technology costs | 758 | 565 | ||
| Licensing fees | 3,048 | 820 | ||
| Other expenses | 2,295 | 1,690 | ||
| Total non-interest expense | $ | 19,516 | $ | 12,694 |
Non-interest expense increased $6.8 million to $19.5 million for the first quarter of 2020 as compared to $12.7 million for the first quarter of 2019. Compensation and benefits increased $2.5 million to $10.0 million for the first quarter of 2020 as compared to $7.5 million for the first quarter of 2019. This increase was due primarily to an average increase in the number of full-time employees to 170 for the first quarter of 2020, as compared to 153 for the first quarter of 2019.
For the first quarter of 2020, licensing fees related to certain corporate cash management deposit products amounted to $3.0 million as compared to $820,000 for the first quarter of 2019, an increase of $2.3 million. Corporate cash management deposits related to these licensing fees amounted to $995.3 million at March 31, 2020, as compared to $262.4 million at March 31, 2019, primarily due to an increase in bankruptcy deposit accounts.
Bank premises and equipment increased $1.2 million to $2.5 million for the first quarter of 2020, as compared to $1.3 million for the first quarter of 2019, primarily due to the Company taking possession of new space, which is under renovation, at its headquarters in 99 Park Ave., New York, NY in August 2019. The additional rent amounted to $615,000 for the first quarter of 2020. In addition, the Bank accelerated the amortization of $575,000 of leasehold improvements related to the Bank’s current space at its headquarters in the first quarter of 2020. The move to the new office space has been delayed by the shut-down of businesses due to COVID-19. When renovations on the new space are complete and the Company vacates its existing space, likely to be in the second quarter of 2020, the Company will cease rent payments on the former space resulting in a reduction of rent expense of approximately $195,000 per quarter.
Other expenses increased by $605,000 to $2.3 million for the first quarter of 2020, as compared to $1.7 million for the first quarter of 2019. The increase in other expenses is a function of the growth of the business.
| 12 |
| --- |
About Metropolitan Bank Holding Corporation
Metropolitan Bank Holding Corp. (NYSE: MCB) is the holding company for Metropolitan Commercial Bank. The Bank provides a broad range of business, commercial and personal banking products and services to small and middle-market businesses, public entities and affluent individuals in the New York metropolitan area. Founded in 1999, the Bank is headquartered in New York City and operates six locations in Manhattan, Brooklyn and Great Neck, Long Island. The Bank is also an active issuer of debit cards for third-party debit card programs. Metropolitan Commercial Bank is a New York State chartered commercial bank 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 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 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 experience 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.
| 13 |
| --- |
Consolidated Balance Sheet
| March 31, 2020 | December 31, 2019 | |||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash and due from banks | $ | 12,501 | $ | 9,619 | ||
| Overnight deposits | 569,927 | 381,104 | ||||
| Total cash and cash equivalents | 582,428 | 390,723 | ||||
| Investment securities available for sale | 199,854 | 234,942 | ||||
| Investment securities held to maturity | 3,520 | 3,722 | ||||
| Investment securities -- Equity investments | 2,272 | 2,224 | ||||
| Total securities | 205,646 | 240,888 | ||||
| Other investments | 21,455 | 21,437 | ||||
| Loans, net of deferred fees and unamortized costs | 2,766,099 | 2,672,949 | ||||
| Allowance for loan losses | (30,924 | ) | (26,272 | ) | ||
| Net loans | 2,735,175 | 2,646,677 | ||||
| Receivable from prepaid card programs, net | 20,861 | 10,078 | ||||
| Accrued interest receivable | 9,108 | 8,862 | ||||
| Premises and equipment, net | 14,917 | 12,100 | ||||
| Prepaid expenses and other assets | 10,855 | 11,406 | ||||
| Goodwill | 9,733 | 9,733 | ||||
| Accounts receivable, net | 1,834 | 5,668 | ||||
| Total assets | $ | 3,612,012 | $ | 3,357,572 | ||
| Liabilities and Stockholders' Equity | ||||||
| Deposits: | ||||||
| Noninterest-bearing demand deposits | $ | 1,250,584 | $ | 1,090,479 | ||
| Interest-bearing deposits | 1,771,108 | 1,700,295 | ||||
| Total deposits | 3,021,692 | 2,790,774 | ||||
| Federal Home Loan Bank of New York advances | 144,000 | 144,000 | ||||
| Trust preferred securities | 20,620 | 20,620 | ||||
| Subordinated debt, net of issuance cost | 24,615 | 24,601 | ||||
| Secured Borrowings | 41,697 | 42,972 | ||||
| Accounts payable, accrued expenses and other liabilities | 26,234 | 23,556 | ||||
| Accrued interest payable | 1,146 | 1,229 | ||||
| Prepaid third-party debit cardholder balances | 23,472 | 10,696 | ||||
| Total liabilities | 3,303,476 | 3,058,448 | ||||
| Class B preferred stock | 3 | 3 | ||||
| Common stock | 82 | 82 | ||||
| Additional paid in capital | 216,701 | 216,468 | ||||
| Retained earnings | 87,461 | 81,364 | ||||
| Accumulated other comprehensive gain, net of tax effect | 4,289 | 1,207 | ||||
| Total stockholders’ equity | 308,536 | 299,124 | ||||
| Total liabilities and stockholders’ equity | $ | 3,612,012 | $ | 3,357,572 |
| 14 |
| --- |
Consolidated Statement of Income (unaudited)
| Three months ended March 31, | |||||
|---|---|---|---|---|---|
| (dollars in thousands) | 2020 | 2019 | |||
| Total interest income | $ | 36,067 | $ | 26,990 | |
| Total interest expense | 7,098 | 6,412 | |||
| Net interest income | 28,969 | 20,578 | |||
| Provision (credit) for loan losses | 4,790 | (2,031 | ) | ||
| Net interest income after provision for loan losses | 24,179 | 22,609 | |||
| Non-interest income: | |||||
| Service charges on deposit accounts | 1,081 | 819 | |||
| Prepaid third-party debit card income | 1,621 | 1,257 | |||
| Other service charges and fees | 627 | 278 | |||
| Unrealized gain on equity securities | 36 | 39 | |||
| Gain on sale of securities | 975 | — | |||
| Total non-interest income | 4,340 | 2,393 | |||
| Non-interest expense: | |||||
| Compensation and benefits | 9,960 | 7,490 | |||
| Bank premises and equipment | 2,500 | 1,335 | |||
| Professional fees | 955 | 794 | |||
| Technology costs | 3,806 | 1,385 | |||
| Other expenses | 2,295 | 1,690 | |||
| Total non-interest expense | 19,516 | 12,694 | |||
| Net income before income tax expense | 9,003 | 12,308 | |||
| Income tax expense | 2,906 | 3,777 | |||
| Net income | $ | 6,097 | $ | 8,531 | |
| Earnings per common share: | |||||
| Average common shares outstanding - basic | 8,215,959 | 8,150,452 | |||
| Average common shares outstanding - diluted | 8,411,365 | 8,285,220 | |||
| Basic earnings | $ | 0.73 | $ | 1.03 | |
| Diluted earnings | $ | 0.72 | $ | 1.01 |
| 15 |
| --- |
Summary of Income and Performance Measures
Five Quarter Trend (unaudited)
| Quarter Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | ||||||||||
| Net interest income | $ | 28,969 | $ | 28,042 | $ | 26,053 | $ | 22,937 | $ | 20,578 | |||||
| Provision (credit) for loan losses | 4,790 | 2,300 | 2,004 | 1,950 | (2,031 | ) | |||||||||
| Net interest income after provision for loan losses | 24,179 | 25,742 | 24,049 | 20,987 | 22,609 | ||||||||||
| Non-interest income | 4,340 | 2,862 | 2,700 | 2,674 | 2,393 | ||||||||||
| Non-interest expense: | |||||||||||||||
| Compensation and benefits | 9,960 | 7,956 | 7,875 | 7,921 | 7,490 | ||||||||||
| Other Expense | 9,556 | 9,086 | 7,620 | 6,803 | 5,204 | ||||||||||
| Total non-interest expense | 19,516 | 17,042 | 15,495 | 14,724 | 12,694 | ||||||||||
| Income before income tax expense | 9,003 | 11,562 | 11,254 | 8,937 | 12,308 | ||||||||||
| Income tax expense | 2,906 | 3,699 | 3,571 | 2,880 | 3,777 | ||||||||||
| Net income | 6,097 | 7,863 | 7,683 | 6,057 | 8,531 | ||||||||||
| Performance Measures: | |||||||||||||||
| Net income available to common shareholders | 6,031 | 7,741 | 7,550 | 5,950 | 8,396 | ||||||||||
| Per common share: | |||||||||||||||
| Basic earnings | $ | 0.73 | $ | 0.95 | $ | 0.92 | $ | 0.73 | $ | 1.03 | |||||
| Diluted earnings | $ | 0.72 | $ | 0.93 | $ | 0.90 | $ | 0.71 | $ | 1.01 | |||||
| Common shares outstanding: | |||||||||||||||
| Average - diluted | 8,411,365 | 8,363,080 | 8,348,970 | 8,336,064 | 8,285,220 | ||||||||||
| Period end | 8,300,687 | 8,312,918 | 8,319,852 | 8,320,816 | 8,320,816 | ||||||||||
| Return on (annualized): | |||||||||||||||
| Average total assets | 0.71 | % | 0.95 | % | 0.97 | % | 0.91 | % | 1.49 | % | |||||
| Average equity | 8.00 | % | 10.53 | % | 10.63 | % | 8.71 | % | 12.67 | % | |||||
| Yield on average earning assets | 4.22 | % | 4.38 | % | 4.47 | % | 4.66 | % | 4.83 | % | |||||
| Cost of interest-bearing liabilities | 1.48 | % | 1.77 | % | 2.15 | % | 2.22 | % | 2.22 | % | |||||
| Net interest spread | 2.74 | % | 2.61 | % | 2.32 | % | 2.44 | % | 2.61 | % | |||||
| Net interest margin | 3.38 | % | 3.35 | % | 3.26 | % | 3.47 | % | 3.69 | % | |||||
| Net charge-offs (recoveries) as % of average loans (annualized) | 0.02 | % | 0.07 | % | 0.05 | % | 0.01 | % | (0.80 | )% | |||||
| Efficiency ratio | 58.59 | % | 55.14 | % | 53.89 | % | 57.49 | % | 55.26 | % |
| 16 |
| --- |
ConsolidatedBalance Sheet Summary, Five Quarter Trend (unaudited)
| (dollars in thousands) | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||||||
| Total Assets | $ | 3,612,012 | $ | 3,357,572 | $ | 3,243,171 | $ | 2,960,613 | $ | 2,545,186 | |||||
| Overnight deposits | 569,927 | 381,045 | 424,170 | 424,276 | 346,674 | ||||||||||
| Total securities | 205,646 | 240,888 | 256,835 | 137,109 | 36,272 | ||||||||||
| Other investments | 21,455 | 20,939 | 20,921 | 22,972 | 23,652 | ||||||||||
| Loans, net of deferred fees and unamortized costs | 2,766,099 | 2,672,949 | 2,496,697 | 2,335,573 | 2,102,420 | ||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Deposits: | |||||||||||||||
| Noninterest-bearing demand deposits | $ | 1,250,584 | $ | 1,090,479 | $ | 1,041,102 | $ | 1,103,278 | $ | 865,908 | |||||
| Interest-bearing deposits | 1,771,108 | 1,700,295 | 1,664,104 | 1,272,844 | 1,100,222 | ||||||||||
| Total deposits | 3,021,692 | 2,790,774 | 2,705,206 | 2,376,122 | 1,966,130 | ||||||||||
| Borrowings | 189,235 | 189,221 | 189,207 | 235,193 | 260,179 | ||||||||||
| Total stockholders' Equity | 308,536 | 299,124 | 291,002 | 281,330 | 273,787 | ||||||||||
| Asset Quality | |||||||||||||||
| Total non-accrual loans | $ | 6,136 | $ | 4,085 | $ | 3,998 | $ | 2,415 | $ | 68 | |||||
| Total non-performing loans | $ | 6,341 | $ | 4,493 | $ | 4,714 | $ | 3,489 | $ | 1,498 | |||||
| Non-accrual loans to total loans | 0.22 | % | 0.15 | % | 0.16 | % | 0.10 | % | — | % | |||||
| Non-performing loans to total loans | 0.23 | % | 0.17 | % | 0.19 | % | 0.15 | % | 0.07 | % | |||||
| Allowance for loan losses | (30,924 | ) | (26,272 | ) | (24,444 | ) | (22,715 | ) | (20,834 | ) | |||||
| Allowance for loan losses to total loans | 1.12 | % | 0.98 | % | 0.98 | % | 0.97 | % | 0.99 | % | |||||
| Provision for loan losses | 4,790 | 2,300 | 2,004 | 1,950 | (2,031 | ) | |||||||||
| Net charge-offs (recoveries) | 138 | 472 | 275 | 69 | (3,923 | ) | |||||||||
| Regulatory Capital | |||||||||||||||
| Tier 1 Leverage: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 9.1 | % | 9.4 | % | 9.6 | % | 11.0 | % | 12.5 | % | |||||
| Metropolitan Commercial Bank | 9.8 | 10.1 | 10.3 | 11.2 | 13.4 | ||||||||||
| Common Equity Tier 1 Risk-Based (CET1): | |||||||||||||||
| Metropolitan Bank Holding Corp. | 9.8 | 10.1 | 10.4 | 10.7 | 11.8 | ||||||||||
| Metropolitan Commercial Bank | 11.4 | 11.8 | 12.2 | 12.5 | 13.9 | ||||||||||
| Tier 1 Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 10.7 | 11.0 | 11.4 | 11.7 | 12.9 | ||||||||||
| Metropolitan Commercial Bank | 11.4 | 11.8 | 12.2 | 12.5 | 13.9 | ||||||||||
| Total Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 12.1 | 12.5 | 13.0 | 13.4 | 14.8 | ||||||||||
| Metropolitan Commercial Bank | 12.5 | 12.7 | 13.1 | 13.4 | 14.8 |
| 17 |
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Reconciliation of GAAP to Non-GAAP Measures
In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP"), this earnings release includes certain non-GAAP financial measures. Management believes these non-GAAP financial measures provide meaningful information to investors in understanding the Company’s operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP/adjusted financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the following table:
| Dollars in thousands, except per share data | Mar. 31, 2020 | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Total Equity | $ | 308,536 | $ | 299,124 | $ | 291,002 | $ | 281,330 | $ | 273,787 |
| Less: preferred equity | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | |||||
| Common Equity | $ | 303,034 | $ | 293,622 | $ | 285,500 | $ | 275,828 | $ | 268,285 |
| Less: intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||
| Tangible common equity (book value) | $ | 293,301 | $ | 283,889 | $ | 275,767 | $ | 266,095 | $ | 258,552 |
| Common shares outstanding | 8,300,687 | 8,312,918 | 8,319,852 | 8,320,816 | 8,320,816 | |||||
| Book value per share (GAAP) | $ | 36.51 | $ | 35.32 | $ | 34.32 | $ | 33.15 | $ | 32.24 |
| Tangible book value per common share (non-GAAP)* | $ | 35.33 | $ | 34.15 | $ | 33.15 | $ | 31.98 | $ | 31.07 |
* Tangible book value divided by common shares outstanding at period-end.
| 18 |
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Exhibit 99.2
Investor Presentation 2020 Q1
1 Forward - looking Statement This presentation 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 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 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 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 or otherwise .
2 Company Overview ▪ Full service commercial bank since 1999 with goal of helping our clients build and sustain wealth ▪ Business model combines high - touch service and relationship - based focus of a community bank with extensive suite of financial products and services ▪ Expertise in commercial real estate and traditional C&I lending to middle market companies in the New York metro area ▪ Lower cost core deposit franchise through the following sources: ▪ Existing lending relationships ▪ Non - borrowing clients sourced through our banking centers ▪ Corporate cash management deposits for clients in possession of or having discretion over large pools of funds ▪ Global Payments Group: ▪ Prepaid debit card issuing business ▪ Banking services to digital currency businesses ▪ Merchant acquiring business ▪ Correspondent banking services ▪ Banking services to cannabidiol companies ▪ Strong balance sheet growth while managing net interest margin
3 Loan and Deposit Portfolio Metropolitan Commercial Bank • Multi - family loans – 50 % rent regulated • CRE/RBC ratio: MCB 408.3 % • CRE Owner - occupied is a segment of our C&I Lending platform Loan Portfolio at March 31, 2020 $2.77 Billion Deposits at March 31, 2020 $3.02 Billion 27% 14% 4% 22% 33% DDA (excl. Corporate Cash Management) Corporate Cash Management DDA Savings and CD's MMA (excl. Corporate Cash Management) Corporate Cash Management MMA 22% 41% 17% 14% 2% 1% 3% CRE - Owner Occupied CRE - Non-Owner Occupied C&I Multi-family Consumer Construction 1-4 family • Corporate cash management deposits designed for clients who are in possession of or have discretion over large deposits such as property management companies, title companies, and bankruptcy trustees. • Corporate cash management deposit accounts have an expected retention period of greater than 3 years. • Corporate cash management money market accounts have a weighted average cost of 0.87%. • Corporate cash management deposit accounts in total have a weighted average cost of 0.45%.
4 Quarterly Revenues, Profitability and Asset Quality *annualized (1) Results include a recovery of $4.2 million related to loans previously charged off in the first quarter of 2019. Excluding this recovery, net income would have been $5.6 million. (2) First quarter 2020 results include a pro vision in the amount of $3.1 million recorded for the economic impact of COVID - 19, excluding this reserve, net income would have been $8.2 million. (3) First quarter 2020 provision for loan losses and reserves include of $3.1 million recorded for the economic impact of COVID - 19. (dollars in thousands) 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 Summary Income Statement Net Interest Income $28,969 $28,042 $26,053 $22,937 $20,578 Provision (credit) for loan losses $4,790 (3) $2,300 $2,004 $1,950 ($2,031) (1) Non-Interest Income $4,340 $2,862 $2,700 $2,674 $2,393 Non-Interest expense $19,516 $17,042 $15,495 $14,724 $12,694 Net Income $6,097 (2) $7,863 $7,683 $6,057 $8,531 (1) Profitability Diluted EPS $0.72 (2) $0.93 $0.90 $0.71 $1.01 (1) ROAA* 0.71% 0.95% 0.97% 0.91% 1.49% ROAE* 8.00% 10.53% 10.63% 8.71% 12.67% NIM* 3.38% 3.35% 3.26% 3.47% 3.69% Efficiency Ratio 58.59% 55.14% 53.89% 57.49% 55.26% Asset Quality NPLs/Total Loans 0.23% 0.17% 0.19% 0.15% 0.07% NCOs/Average Total Loans* 0.02% 0.07% 0.05% 0.01% (0.80%) (1) Reserves/Loans 1.12% (3) 0.98% 0.98% 0.97% 0.99% 3 Months ended
5 Net Interest Margin Analysis 3.69% 3.47% 3.26% 3.35% 3.38% 4.83% 4.66% 4.47% 4.38% 4.22% 2.22% 2.22% 2.15% 1.77% 1.48% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 1Q19 2Q19 3Q19 4Q19 1Q20 Net Interest Margin Components ▬ NIM ▬ Yield on Interest - Earning Assets ▬ Rate on Interest - Bearing Liabilities Yield /Rate 1Q19 2Q19 3Q19 4Q19 1Q20 Loans 5.15% 5.05% 5.03% 4.96% 4.85% Total Interest-Earning Assets 4.83% 4.66% 4.47% 4.38% 4.22% Interest-Bearing Deposits 1.96% 2.01% 2.03% 1.65% 1.33% Borrowed Funds 3.35% 3.19% 3.03% 2.80% 2.78% Total Interest-Bearing Liabilities 2.22% 2.22% 2.15% 1.77% 1.48% Net Interest Rate Spread 2.61% 2.44% 2.32% 2.61% 2.74% Net Interest Margin 3.69% 3.47% 3.26% 3.35% 3.38%
6 Non - interest Income and Expense Detail Non - Interest Income ($000s) Non - Interest Expense ($000s) (1) Includes expenses related to additional leased space at the Company’s headquarter in the amounts of $615,000 for the firs t quarter of 2020 and the fourth quarter of 2019; and $400,000 for the third quarter of 2019. First quarter also includes a $575,000 charge - off of the remaining leasehold improvements for Company’s current space that will be vacated. 3/31/20 12/31/19 9/30/19 6/30/19 3/31/19 Compensation and Benefits $9,960 $7,956 $7,875 $7,921 $7,490 Bank Premises and Equipment 2,500 (1) 2,057 (1) 1,790 (1) 1,348 1,335 Professional Fees 955 810 906 917 794 Technology Costs 758 739 660 562 565 Corporate Cash Management Deposit Licensing Fees 3,048 2,724 2,866 2,056 820 Other Expenses 2,295 2,756 1,398 1,920 1,690 Total Non-interest Expense $19,516 $17,042 $15,495 $14,724 $12,694 3 Months Ended 3/31/20 12/31/19 9/30/19 6/30/19 3/31/19 Service charges on deposit accounts $1,081 $977 $852 $908 $819 Prepaid third-party debit card income 1,621 1,482 1,482 1,422 1,257 Other service charges and fees 627 413 349 313 278 Unrealized gain on equity securities 36 (10) 17 31 39 Gain on sale of securities 975 - - - - Total Non-interest Income $4,340 $2,862 $2,700 $2,674 $2,393 3 Months Ended
7 Balance Sheet and Capital *Metropolitan Bank Holding Corp. and Metropolitan Commercial Bank meet all the requirements to be considered “Well - Capitalized” under applicable regulatory guidelines at each date shown. 12/31/19 3/31/19 Balance Sheet ($000's) Total Assets $254,440 $1,066,826 Total Loans $93,150 $663,679 Total Deposits $230,918 $1,055,562 Capital MBHC MCB MBHC MCB MBHC MCB MBHC MCB MBHC MCB CET1* 9.8% 11.4% 10.1% 11.8% 10.4% 12.2% 10.7% 12.5% 11.8% 13.9% Total Risk-Based Capital* 12.1% 12.5% 12.5% 12.7% 13.0% 13.1% 13.4% 13.4% 14.8% 14.8% Tier 1 Leverage* 9.1% 9.8% 9.4% 10.1% 9.6% 10.3% 11.0% 11.2% 12.5% 13.4% $2,766,099 $3,021,692 $3,357,572 $2,672,949 3/31/2020 Change vs. As of 12/31/2019As of 3/31/2020 $3,612,012 As of 9/30/2019 As of 6/30/2019 As of 3/31/2019 $2,102,420 $2,790,774 $2,705,206 $1,966,130 $2,545,186$3,243,171 $2,496,697 $2,960,613 $2,335,573 $2,376,122
8 Strong Balance Sheet Growth Deposits ($mm) Total Equity ($mm) Assets ($mm) Loans, Net of Deferred Fees ($mm) $2,545 $2,961 $3,243 $3,358 $3,612 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 $2,102 $2,336 $2,497 $2,673 $2,766 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 $1,966 $2,376 $2,705 $2,791 $3,022 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 274 281 291 299 309 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 44.0% 46.4% 38.5% 39.1% 41.4% ■ % Non - interest Demand Deposits Total cost of deposits including DDA – 0.80% Cost of interest - bearing deposits – 1.33%
9 Robust Organic Loan Growth within a Diversified Portfolio (1) Includes commercial real estate, multifamily and construction ■ Total CRE ( 1) (Non - Owner Occupied) ■ Total CRE (Owner Occupied) ■ C&I ■ Other $2,105 $2,339 $2,501 $2,678 $2,771 139 1,142 1,330 1,409 1,530 1,551 366 419 495 545 599 422 427 449 449 482 176 164 148 155 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 The Bank’s loan production for the first quarter of 2020 was $152.6 million. The Bank reduced loan production for the first q uar ter of 2020 as management continued to execute on its net interest margin strategies. Loans Composition over time ($mm)
10 Commercial Growth Driven by Expertise in Specific Lending Verticals General Commercial and Industrial Overview C&I Composition at March 31, 2020 Target Market Key Metrics ▪ Middle market businesses with annual revenues below $200mm ▪ Primarily concentrated in the New York MSA ▪ Well - diversified across industries ▪ Average yield of 5.10% 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 52% 4% 22% 7% 2% 3% 1% 1% 5% 1% Healthcare Manufacturing Finance and Insurance Wholesale Trade Individuals Transportation Arts, Entertainment, and Recreation Retail Trade and RE Rental & Leasing Professional, Scientific, Technical and Other Services Accommodation and Food Services Individuals Secured 2%
11 Relationship - based Commercial Real Estate Lending Composition by Type at March 31, 2020 Composition by Region at March 31, 2020 Overview Target Market Key Metrics ▪ 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 ▪ Losses peaked at 0.51% in 2010 and have been de minimus since 2014 ▪ Average loan - to - value of 57.26% Majority of loans are originated through direct relationships or referrals from existing clients 18% 23% 10% 10% 10% 8% 2% 7% 2% 4% 3% 3% Multifamily Nursing Home CRE Mixed Use Other CRE Retail Office 1-4 Family Hospitality Construction Land Warehouse Commercial Condo and Co-op Other Unsecured 20% 21% 9% 27% 7% 4% 3% 7% 1% 1% Manhattan Brooklyn Queens Other Bronx Other NY New Jersey Long Island Staten Island Connecticut
12 NYC Stabilized Multi - family Loan Portfolio ▪ MCB multi - family loans underwritten to current cash flows – weighted average DCR of 1.80 on stabilized rent regulated properties ▪ Average LTV of 46.95% on stabilized rent regulated properties provide a cushion against falling values (dollars in thousands) Total Balance Weighted Average LTV Weighted Average DCR Weighted Average Debt Yield Stabilized NYC Multi- family $265,784,429 51.11% 1.65 10.87% Rent regulated $189,906,197 46.95% 1.80 12.14% Unregulated $75,878,232 61.51% 1.29 7.69%
13 Well - Developed, Diversified Healthcare Portfolio ▪ Active in Healthcare lending since 2002 ▪ CRE – SNF – Average loan - to - value of 68% ▪ Highly selective with the quality of Skilled Nursing Operators which 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. ▪ Sta bilized SNF – 71% 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 coverage ratio is 2.06x and average loan - to - value is 66%. Once the loans are seasoned, the mortgage portion of the bridge loan is refinanced with HUD. ▪ Stabilized loans and Non - Stabilized loans are $353.6 million and $142 million, respectively. ▪ Non - stabilized SNF – typically “turn - around” older SNFs acquired from owners who mismanaged the business, relied too heavily on 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.). C& I Healthcare Composition at March 31, 2020 Diversified Healthcare Portfolio 51% 12% 6% 3% 2% 1% 20% 5% Nursing and Residential Care Facilites Doctor Office Ambulatory Health Care Services Offices and Clinics of Dentists Medical Labs Offices of Speech Therapists Misc. Health Practitioners Ambulance Services CRE Skilled Nursing Facilities (SNF) - $498 million C&I Skilled Nursing Facilities (SNF) - $110 million C&I Other Healthcare - $110 million
14 Well - Developed, Diversified Healthcare Portfolio CRE Skilled Nursing Facility Exposure By State 6% 14% 1% 5% 8% 4% 4% 6% 35% 1% 6% 1% 5% 4% California Florida Georgia Indiana Maryland Massachusetts Missouri New Jersey New York Ohio Pennsylvania Rhode Island Tennessee Wisconsin Florida 71,811,600 14% Georgia 6,822,600 1% State Balance ($000's) % of Total CRE SNF California 28,286,400 6% Massachusetts 18,177,000 4% Missouri 18,276,600 4% Indiana 25,896,000 5% Maryland 40,138,800 8% Pennsylvania 32,320,200 6% New Jersey 28,884,000 6% New York 171,859,800 35% Ohio 7,171,200 1% Total CRE SNF 498,000,000 100% Rhode Island 7,071,600 1% Tennessee 23,754,600 5% 17,529,600 4% Wisconsin
15 Well - Developed, Diversified Healthcare Portfolio C&I Skilled Nursing Facility Exposure By State 7% 2% 4% 52% 13% 22% Florida Georgia/Indiana/Wisconsin New Jersey New York Pennsylvania Tennessee State Balance ($000's) % of Total C&I SNF Florida 7,222 7% New Jersey 4,693 4% New York 57,046 52% Georgia/Indiana/Wisconsin 1,792 2% Total C&I SNF 109,567 100% Pennsylvania 14,809 13% Tennessee 24,005 22%
16 Credit Metrics 0.07% 0.15% 0.19% 0.17% 0.23% 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 ALLL/Loans Non - Performing Assets/ALLL NCOs/Average Loans (Annualized) Non - Performing Assets/Loans 0.99% 0.97% 0.98% 0.98% 1.12% 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 7.2% 15.4% 19.3% 17.1% 20.5% 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 (0.80%) 0.01% 0.05% 0.07% 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 0.02%
17 Deposit Composition (1) Includes liquidation, receivership, litigation settlement and other fiduciary accounts. $1,966 $2,376 $2,705 $2,791 $3,022 707 675 758 805 898 262 425 527 580 861 210 285 355 375 387 283 310 328 392 353 244 225 221 207 219 210 205 139 104 129 50 251 377 328 173 2019Q1 2019Q2 2019Q3 2019Q4 2020Q1 Retail deposits Bankruptcy accounts Property managers Retail deposits with loan customers Debit cards Digital currency customers Corporate cash management deposits (1) Deposit Composition at March 31, 2020 Deposit composition over time ($mm) Deposit Type Balance ($000's) % of Total Deposits Retail deposits 898,109 30% Retail deposits with loan customers 353,630 12% Bankruptcy accounts 860,543 28% Property Managers 387,288 13% Debit cards 219,147 7% Digital currency customers 129,269 4% Corporate Cash Management Deposits 173,706 6% Total Deposits 3,021,692 100%
18 Well Positioned for Changing Rate Environment Estimated Sensitivity of Projected Annualized Net Interest Income as of Dec ember 31, 2019 Fixed vs. Floating Rate Loans at March 31, 2020 6.41% (4.53%) (8.21%) -100bps +100bps +200bps Floating 41% Fixed 59% Approximately 73.37% of floating rate loans have floors – Weighted average floor of 5.03% ■ Net Interest Income Note: Given the recent decreases in market interest rates, the Bank did not model a 200 - basis point decrease in interest rates at December 31, 2019
19 Outlook: Loan and Deposit growth, Margin Expansion, Operating Leverage Loan Growth Core Deposit Funding Performance ▪ Maintain a diversified commercial real estate portfolio ▪ Maintain CRE concentration below our internal limits ▪ Capture market share from larger competitors through differentiated service ▪ Corporate Cash Management relationships ▪ Support development of retail banking franchise ▪ Existing relationships ▪ Consider new retail banking centers ▪ Continue to provide cash management service to digital currency related clients ▪ Expand debit card issuing business to generate additional low - cost core deposits and fee income ▪ Fully develop merchant acquiring services and correspondent banking services ▪ Expect future profitability to be driven by: ▪ Impact of COVID - 19: Economic impact on asset quality and provision for loan losses. ▪ Growth: Demonstrated ability to capture market share ▪ Rate benefit: Low cost, core deposits funding short duration assets ▪ Our growth initiatives will yield enhanced profitability and value to the MCB franchise. Balance Sheet Growth = Long - Term Profitable Relationships
20 Appendix
21 MCB Selected Global Payment Clients Debit Card For teens with parental spending controls and financial literacy lessons Metropolitan Commercial Bank Issuing Bank Debit Card Premier mobile service provider in the Caribbean and Central America for money transfer Metropolitan Commercial Bank Issuing Bank Debit Card | Digital Currency General spend prepaid card that allows consumers to earn rewards paid in digital currency Metropolitan Commercial Bank Issuing Bank Debit Card GPR card that can be used to originate low cost transfers to Mexico for consumers Metropolitan Commercial Bank Issuing Bank Debit Card | Digital Currency Consumers use debit card to spend US$ that is funded by digital currency Metropolitan Commercial Bank Issuing Bank Payments Processor Acquiring bank for a company enabling mass payouts for the marketplace and freelancers Metropolitan Commercial Bank Global Payment Services Digital Currency Banking the e - wallet behind their speed routing for best price execution technology Metropolitan Commercial Bank Holding bank for US$ held in e - wallet Debit Card & Payment Solutions Focused on CoreCard Software and expanding footprint in the FinTech industry Metropolitan Commercial Bank Strategic Partner
22 MCB Selected Global Payment Clients Debit Card Issuer of debit cards linked to margin accounts for the largest U.S. electronic brokerage firm Metropolitan Commercial Bank Issuing Bank Payments Platform Providing global payment services via banking relationships throughout the world Metropolitan Commercial Bank Global payment services Debit Card General Purpose Reloadable cards and remittance products using the Univision card Metropolitan Commercial Bank Acquiring Bank for Cross Border Payments Payments Processor Digital check cashing and payment services Metropolitan Commercial Bank Sponsor Bank Deposit relationships for settlement and operating accounts. Cash management services Metropolitan Commercial Bank Money Transfer Company Acquiring bank enabling money transfers domestically and cross border Metropolitan Commercial Bank Global payment services