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 22, 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 |
|---|
On January 22, 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 and year ended December 31, 2019. 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 quarter and year ended December 31, 2019 (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 January 22, 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: January 22, 2020 | ||
| By: | /s/ Anthony Fabiano | |
| Anthony Fabiano | ||
| Executive Vice President and Chief <br><br>Financial Officer |
Exhibit 99.1
Release: 4:30 P.M. January 22, 2020
| Contact: | Investor Relations Department |
|---|---|
| 212-365-6721 | |
| IR@MetropolitanBankNY.com |
MetropolitanBank Holding Corp. Reports Sustained Growth in Earnings Diluted EPS of $0.93 for the Fourth Quarter
NEW YORK, January 22, 2020 – Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), today reported net income of $7.9 million, or $0.93 per diluted common share, for the fourth quarter of 2019, as compared to $6.3 million, or $0.75 per diluted common share, for the fourth quarter of 2018.
For the year ended December 31, 2019, the Company reported net income of $30.1 million, or $3.56 per diluted common share, compared to $25.6 million, or $3.06 per diluted common share, for the year ended December 31, 2018.
Financial Highlights for the fourth quarter of 2019 include:
| · | Total assets increased $1.18 billion, or 54.1%, to $3.36 billion at December 31, 2019,<br>as compared to $2.18 billion at December 31, 2018, and increased $113.9 million, or 3.5%, as compared to $3.24 billion at September 30, 2019. |
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| · | Total loans increased 43.2%, or $807.7 million, to $2.67 billion at December 31, 2019,<br>as compared to $1.87 billion at December 31, 2018. For the three months and year ended December 31, 2019, the Bank’s<br>loan production was $252.2 million and $1.1 billion, respectively, as compared to $283.0 million and $830.4 million for the three<br>months and year ended December 31, 2018, respectively. Total loans increased $176.3 million, or 7.1%, to $2.67 billion<br>at December 31, 2019, as compared to $2.50 billion at September 30, 2019. |
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| · | Net interest margin increased 9 basis points for the fourth quarter of 2019 to 3.35%, as compared<br>to 3.26% for the third quarter of 2019. This increase in net interest margin was primarily due to a decrease in the cost of deposits<br>and borrowings. The cost of deposits decreased by 38 basis points in the fourth quarter of 2019 to 1.65%, as compared to 2.03%<br>in the third quarter of 2019. The cost of borrowings decreased by 23 basis points to 2.80%, as compared to 3.03% in the third quarter<br>of 2019. These decreases were partially offset by a decrease of 9 basis points in the yield earned on total interest-earning assets<br>to 4.38% for the fourth quarter of 2019, as compared to 4.47% for the third 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 7 basis points to 4.96% in the<br>fourth quarter of 2019, as compared to 5.03% in the third quarter of 2019. The yield from overnight deposits decreased 52 basis<br>points to 1.78% for the fourth quarter of 2019, as compared to 2.30% for the third quarter of 2019. |
| --- | --- |
| · | Total cash and cash equivalents increased $158.2 million, or 67.9%, to $391.2 million at December 31, 2019,<br>as compared to $233.0 million at December 31, 2018. Total securities, primarily those classified as available-for-sale,<br>increased $203.8 million to $240.9 million, or 548.9%, at December 31, 2019, as compared to $37.1 million at December 31, 2018. |
| --- | --- |
| · | Total deposits increased 68.1%, or $1.13 billion, to $2.79 billion at December 31, 2019,<br>as compared to total deposits of $1.66 billion at December 31, 2018. This growth in deposits was across the Bank’s various<br>deposit verticals. |
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| · | The loan-to-deposit ratio decreased to 95.8% at December 31, 2019, as compared to 112.3%<br>at December 31, 2018. |
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| · | Non-interest-bearing deposits increased by $291.9 million, or 36.6%, to $1.09 billion at December 31, 2019,<br>as compared to non-interest-bearing deposits of $798.6 million at December 31, 2018. Interest-bearing deposits increased by $838.3<br>million, or 97.3%, to $1.70 billion at December 31, 2019 as compared to $862.0 million at December 31, 2018. |
| --- | --- |
| · | The provision for loan losses for the fourth quarter of 2019 was $2.3 million, an increase of $1.5<br>million, as compared to $844,000 for the fourth quarter of 2018. This increase was primarily a result of a $600,000 provision related<br>to the Bank’s remaining two taxi medallion loans and an additional $160,000 in provision related to consumer loans in the<br>fourth quarter of 2019. The Bank’s remaining taxi medallion loans have an unpaid principal balance of $1.0 million and a<br>related total specific reserve of $805,000 at December 31, 2019. While these loans are included in the Bank’s non-accrual<br>loans, they continue to make principal and interest payments. In addition, the provision for the fourth quarter of 2019 reflects<br>loan production of $252.2 million in the fourth quarter of 2019, as compared to $283.0 million in the fourth quarter of 2018. The<br>provision for loan losses for the year ended December 31, 2019 was $4.2 million, as compared to $3.1 million for year<br>ended December 31, 2018. The provision for loan losses for the year ended December 31, 2019 consisted of an<br>$8.5 million provision, offset by a credit due to recoveries of $4.3 million related primarily to the recovery of medallion loans<br>previously charged off in 2017 and 2016. |
| --- | --- |
| · | For the fourth quarter of 2019, Bank premises and equipment includes $615,000 of rent expense for<br>additional space at the Company’s headquarters in 99 Park Ave., NY, NY, which the Company took possession of in August 2019<br>and is currently renovating. When renovations on the new space are complete and the Company vacates its existing space, likely<br>to be in the first quarter of 2020, the Company will cease rent payments on the former space resulting in a reduction of rent expense<br>of approximately $195,000 per quarter. |
| --- | --- |
Mark DeFazio, the Company’s Chief Executive Officer commented, “I am very pleased with the year-end results for 2019. The MCB team stayed very focused throughout the year. Our disciplined approach toward margin management, asset quality and diversification continues to enhance shareholder value. I am optimistic that the markets in which we do business will continue to provide opportunities for the Company. I am sincerely grateful to the entire MCB team for achieving another year of sustained performance while maintaining a high degree of care for the Bank. I also want to thank our directors, who continue to add their support to the Bank’s initiatives.”
Balance Sheet
The Company had total assets of $3.36 billion at December 31, 2019, compared with $2.18 billion at December 31, 2018. Loans, net of deferred fees and unamortized costs, increased by $807.7 billion, or 43.3%, to $2.67 billion at December 31, 2019 as compared to $1.87 billion at December 31, 2018. For the three months and year ended December 31, 2019, the Bank’s loan production was $252.2 million and $1.1 billion, respectively, as compared to $283.0 million and $830.4 million for the three months and year ended December 31, 2018, respectively. The increase in loan production in 2019 was due primarily to expanding existing lending relationships, particularly in skilled nursing facilities, as well as developing new relationships. New loans related to skilled nursing facilities amounted to $330.0 million, or 30%, of the total loan production for 2019. The increase in loans during 2019 consisted of loan production of $567.4 million in commercial real estate loans and $506.0 million in commercial loans. The Bank was able to fund the increased level of loan production with deposits, which increased $1.13 billion, or 68.1%, during the year ended December 31, 2019.
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Total cash and cash equivalents increased $158.3 million, or 67.9%, to $391.2 million at December 31, 2019, as compared to $233.0 million at December 31, 2018. Total securities, primarily those classified as available-for-sale, increased $203.8 million, or 548.9% to $240.9 million at December 31, 2019, as compared to $37.1 million at December 31, 2018. The increases in cash and cash equivalents and securities reflect the strong growth in deposits of $1.13 billion that exceeded growth in loans of $807.7 million. At December 31, 2019, $126.2 million of securities available for sale (“AFS”) were pledged as collateral for certain deposits and were, therefore, considered encumbered as of December 31, 2019. There were no securities pledged at December 31, 2018.
Total deposits increased $1.13 billion, or 68.1%, to $2.79 billion at December 31, 2019, as compared to $1.66 billion at December 31, 2018. This was due to an increase of $838.3 million in interest-bearing deposits to $1.70 billion at December 31, 2019, as compared to $862.0 million at December 31, 2018, and an increase of $291.9 million in non-interest-bearing deposits to $1.09 billion at December 31, 2019, as compared to $798.6 million at December 31, 2018. 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.
Federal Home Loan Bank of New York (“FHLB”) advances decreased by $41.0 million, or 22.2%, to $144.0 million at December 31, 2019, as compared to $185.0 million at December 31, 2018, as the deposit growth during the year was sufficient to support the Bank’s loan growth and to reduce the level of borrowings.
Total stockholders’ equity was $299.1 million at December 31, 2019, as compared to $264.5 million at December 31, 2018. The increase of $34.6 million was primarily due to net income of $30.1 million for the year ended December 31, 2019.
Metropolitan Commercial Bank meets all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. At December 31, 2019, total commercial real estate loans were 412.5% of risk-based capital, as compared to 312.4% at December 31, 2018.
Income Statement
| Three months ended December 31, | Year ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Net income | $ | 7,863 | $ | 6,285 | $ | 30,134 | $ | 25,554 | ||||
| Diluted earnings per common share | 0.93 | 0.75 | 3.56 | 3.06 | ||||||||
| Annualized return on average assets | 0.95 | % | 1.25 | % | 1.06 | % | 1.31 | % | ||||
| Annualized return on average equity | 10.53 | % | 9.59 | % | 10.66 | % | 10.18 | % | ||||
| Annualized return on average common equity* | 10.73 | % | 9.80 | % | 10.87 | % | 10.41 | % |
*Common equity excludes Class B preferred stock. See reconciliation to GAAP measures on page 16.
Net Income Summary
Net income increased $1.6 million to $7.9 million for the fourth quarter of 2019, as compared to $6.3 million for the fourth quarter of 2018. This increase was due primarily to a $9.1 million increase in net interest income, partially offset by a $5.4 million increase in non-interest expense, a $1.5 million increase in provision for loan losses and a $1.3 million increase in income tax expense.
Net income increased $4.5 million to $30.1 million for year ended December 31, 2019, as compared to $25.6 million for the year ended December 31, 2018. This increase was primarily due to a $26.4 million increase in net interest income, partially offset by a $1.5 million decrease in non-interest income, a $16.5 million increase in non-interest expense and a $2.7 million increase in income tax expense.
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Net Interest Margin Analysis
| Three months ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | |||||||||||||
| Average | Average | |||||||||||||
| Outstanding | Yield/Rate | Outstanding | Yield/Rate | |||||||||||
| (dollars in thousands) | Balance | Interest | (annualized) | Balance | Interest | (annualized) | ||||||||
| Assets: | ||||||||||||||
| Interest-earning assets: | ||||||||||||||
| Loans ^(1)^ | $ | 2,589,126 | $ | 32,847 | 4.96 | % | $ | 1,760,937 | $ | 21,875 | 4.93 | % | ||
| Available-for-sale securities | 241,865 | 1,512 | 2.50 | % | 28,472 | 156 | 2.19 | % | ||||||
| Held-to-maturity securities | 3,827 | 19 | 1.99 | % | 4,668 | 24 | 2.01 | % | ||||||
| Equity investments - non-trading | 3,249 | 19 | 2.34 | % | 2,199 | 22 | 4.00 | % | ||||||
| Overnight deposits | 388,369 | 1,740 | 1.78 | % | 177,539 | 1,028 | 2.30 | % | ||||||
| Other interest-earning assets | 33,067 | 329 | 3.95 | % | 19,634 | 237 | 4.79 | % | ||||||
| Total interest-earning assets | 3,259,503 | 36,466 | 4.38 | % | 1,993,449 | 23,342 | 4.65 | % | ||||||
| Non-interest-earning assets | 52,240 | 41,101 | ||||||||||||
| Allowance for loan and lease losses | (24,827 | ) | (18,719 | ) | ||||||||||
| Total assets | $ | 3,286,916 | $ | 2,015,831 | ||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Money market, savings and other interest-bearing accounts | $ | 1,587,974 | $ | 6,391 | 1.60 | % | $ | 701,042 | $ | 2,773 | 1.57 | % | ||
| Certificates of deposit | 109,050 | 679 | 2.47 | % | 99,008 | 528 | 2.12 | % | ||||||
| Total interest-bearing deposits | 1,697,024 | 7,070 | 1.65 | % | 800,050 | 3,301 | 1.64 | % | ||||||
| Borrowed funds | 189,212 | 1,354 | 2.80 | % | 116,678 | 1,080 | 3.62 | % | ||||||
| Total interest-bearing liabilities | 1,886,236 | 8,424 | 1.77 | % | 916,728 | 4,381 | 1.90 | % | ||||||
| Non-interest-bearing liabilities: | ||||||||||||||
| Non-interest-bearing deposits | 1,073,011 | 812,415 | ||||||||||||
| Other non-interest-bearing liabilities | 31,441 | 24,658 | ||||||||||||
| Total liabilities | 2,990,688 | 1,753,801 | ||||||||||||
| Stockholders' Equity | 296,228 | 262,030 | ||||||||||||
| Total liabilities and equity | $ | 3,286,916 | $ | 2,015,831 | ||||||||||
| Net interest income | $ | 28,042 | $ | 18,961 | ||||||||||
| Net interest rate spread ^(2)^ | 2.61 | % | 2.75 | % | ||||||||||
| Net interest-earning assets | $ | 1,373,267 | $ | 1,076,721 | ||||||||||
| Net interest margin ^(3)^ | 3.35 | % | 3.77 | % | ||||||||||
| Ratio of interest earning assets to interest bearing liabilities | 1.73 | x | 2.17 | x | ||||||||||
| (1) | Amount includes deferred loan fees and non-performing loans. | |||||||||||||
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| (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. | |||||||||||||
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| (3) | Determined by dividing annualized net interest income by total average interest-earning assets. | |||||||||||||
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| Year ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2019 | December 31, 2018 | |||||||||||||
| Average | Average | |||||||||||||
| Outstanding | Yield/Rate | Outstanding | ||||||||||||
| (dollars in thousands) | Balance | Interest | (annualized) | Balance | Interest | Yield/Rate | ||||||||
| Assets: | ||||||||||||||
| Interest-earning assets: | ||||||||||||||
| Loans ^(1)^ | $ | 2,304,158 | $ | 117,124 | 5.08 | % | $ | 1,604,624 | $ | 77,342 | 4.82 | % | ||
| Available-for-sale securities | 142,135 | 3,579 | 2.52 | % | 28,482 | 608 | 2.13 | % | ||||||
| Held-to-maturity securities | 4,158 | 84 | 2.02 | % | 4,987 | 104 | 2.06 | % | ||||||
| Equity investments - non-trading | 3,229 | 78 | 2.42 | % | 2,181 | 60 | 2.75 | % | ||||||
| Overnight deposits | 340,533 | 7,570 | 2.22 | % | 257,841 | 4,838 | 1.88 | % | ||||||
| Other interest-earning assets | 29,867 | 1,345 | 4.50 | % | 27,962 | 993 | 3.55 | % | ||||||
| Total interest-earning assets | 2,824,080 | 129,780 | 4.60 | % | 1,926,077 | 83,945 | 4.36 | % | ||||||
| Non-interest-earning assets | 45,144 | 43,206 | ||||||||||||
| Allowance for loan and lease losses | (22,265 | ) | (17,301 | ) | ||||||||||
| Total assets | $ | 2,846,959 | $ | 1,951,982 | ||||||||||
| Liabilities and Stockholders' Equity: | ||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Money market, savings and other interest-bearing accounts | $ | 1,248,096 | $ | 22,824 | 1.83 | % | $ | 600,334 | $ | 7,511 | 1.25 | % | ||
| Certificates of deposit | 109,952 | 2,709 | 2.46 | % | 87,966 | 1,592 | 1.81 | % | ||||||
| Total interest-bearing deposits | 1,358,048 | 25,533 | 1.88 | % | 688,300 | 9,103 | 1.32 | % | ||||||
| Borrowed funds | 211,145 | 6,637 | 3.10 | % | 96,905 | 3,614 | 3.68 | % | ||||||
| Total interest-bearing liabilities | 1,569,193 | 32,170 | 2.05 | % | 785,205 | 12,717 | 1.62 | % | ||||||
| Non-interest-bearing liabilities: | ||||||||||||||
| Non-interest-bearing deposits | 968,030 | 884,604 | ||||||||||||
| Other non-interest-bearing liabilities | 27,132 | 31,143 | ||||||||||||
| Total liabilities | 2,564,355 | 1,700,952 | ||||||||||||
| Stockholders' Equity | 282,604 | 251,030 | ||||||||||||
| Total liabilities and equity | $ | 2,846,959 | $ | 1,951,982 | ||||||||||
| Net interest income | $ | 97,610 | $ | 71,228 | ||||||||||
| Net interest rate spread ^(2)^ | 2.55 | % | 2.74 | % | ||||||||||
| Net interest-earning assets | $ | 1,254,887 | $ | 1,140,872 | ||||||||||
| Net interest margin ^(3)^ | 3.46 | % | 3.70 | % | ||||||||||
| Ratio of interest earning assets to interest bearing liabilities | 1.80 | x | 2.45 | x | ||||||||||
| (1) | Amount includes deferred loan fees and non-performing loans. | |||||||||||||
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| (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. | |||||||||||||
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| (3) | Determined by dividing annualized net interest income by total average interest-earning assets. | |||||||||||||
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Net Interest Income
Interest income increased $13.2 million to $36.5 million for the fourth quarter of 2019, as compared to $23.3 million for the fourth quarter of 2018. This increase was due primarily to increases of $11.0 million in interest income on loans, $1.4 million in interest on AFS securities and $712,000 in interest on overnight deposits. The increase in interest income on loans was due to a $828.2 million increase in the average balance of loans to $2.59 billion and a 3 basis point increase in the average yield to 4.96% for the fourth quarter of 2019, as compared to an average balance of $1.76 billion and an average yield of 4.93% for the fourth quarter of 2018. The increase in interest on AFS securities was due to a $213.4 million increase in the average balance of AFS securities to $241.9 million for the fourth quarter of 2019, as compared to $28.5 million for the fourth quarter of 2018. Additionally, the average yield on AFS securities increased 31 basis points to 2.50% for the fourth quarter of 2019, as compared to 2.19% for the fourth quarter of 2018. The increase in interest on overnight deposits was due to an increase of $210.8 million in the average balance of overnight funds to $388.4 million for the three months ended December 31, 2019, as compared to $177.5 million for the three months ended December 31, 2018. The impact of the increase in average balance of overnight funds was partially offset by a decrease of 52 basis points in the average yield on overnight deposits, which decreased to 1.78% for three months ended December 31, 2019, as compared to 2.30% for the three months ended December 31, 2018, primarily due to a decrease in market interest rates.
Interest income increased $45.8 million to $129.8 million for the year ended December 31, 2019, as compared to $83.9 million for the year ended December 31, 2018. This increase was primarily due to increases of $39.8 million in interest income on loans, $3.0 million in interest on AFS securities, and $2.7 million in interest on overnight deposits. The increase in interest income on loans was due to a $699.5 million increase in the average balance of loans to $2.30 billion and a 26 basis point increase in the average yield to 5.08% for the year ended December 31, 2019, as compared to an average balance of $1.60 billion and an average yield of 4.82% on loans for the year ended December 31, 2018. The increase in interest on AFS securities was due to an $113.7 million increase in average balance of AFS securities to $142.1 million for 2019, as compared to $28.5 million for the year ended December 31, 2018. Additionally, the average yield on AFS securities increased 39 basis points to 2.52% for year ended December 31, 2019 as compared to 2.13% for the year ended December 31, 2018. The increase in interest on overnight deposits was due to an increase of $82.7 million in the average balance of overnight funds to $340.5 million for the year ended December 31, 2019, as compared to $257.8 million for the year ended December 31, 2018. The average yield on overnight deposits increased 34 basis points to 2.22% for the year ended December 31, 2019, as compared to 1.88% for the year ended December 31, 2018.
Interest expense was $8.4 million for the fourth quarter of 2019, as compared to $4.4 million for the fourth quarter of 2018, an increase of $4.0 million, primarily due to a $3.8 million increase in interest on deposits. The increase in interest expense on deposits was due primarily to an $897.0 million increase in the average balance of interest-bearing deposits to $1.70 billion for the fourth quarter of 2019, as compared to $800.0 million for three months ended December 31, 2018. There was no significant change in the average cost of deposits between the two periods.
Interest expense increased $19.5 million to $32.2 million for the year ended December 31, 2019, as compared to $12.7 million for the year ended December 31, 2018. This increase was due primarily to a $16.4 million increase in interest on deposits and a $3.0 million increase in interest on borrowings. The increase in interest expense on deposits was primarily due to a $669.7 million increase in the average balance of interest-bearing deposits to $1.36 billion for the year ended December 31, 2019 and 56 basis point increase in the average cost of deposits to 1.88%, as compared to an average balance of $688.3 million and an average cost of 1.32% for the year ended December 31, 2018. Interest expense on borrowings increased primarily due to an increase in the average balance of borrowings of $114.2 million to $211.1 million for the year ended December 31, 2019, as compared to $96.9 million for the year ended December 31, 2018, the impact of which was offset by a 58 basis point decrease in the average cost to 3.10% for the year ended December 31, 2019, as compared to 3.68% for the year ended December 31, 2018.
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Net interest margin decreased 42 basis points to 3.35% for the fourth quarter of 2019 from 3.77% for the fourth quarter of 2018. Total average interest-earning assets increased $1.27 billion to $3.26 billion for the fourth quarter of 2019, as compared to $1.99 billion for the fourth quarter of 2018. The total yield on average interest-earning assets decreased 27 basis points to 4.38% for the fourth quarter of 2019, as compared to 4.65% in the same period in 2018. The cost of interest-bearing liabilities decreased 13 basis points to 1.77% for the fourth quarter of 2019, as compared to 1.90% for the three months ended December 31, 2018. The decrease in net interest margin was due to a decrease in the yield earned on interest earning assets as loans accounted for 79.4% of the average balance of interest-earning assets during the fourth quarter of 2019, as compared to 88.3% for the fourth quarter of 2018. This decrease was due to the growth in overnight deposits and AFS securities, which had lower yields than loans. In addition, non-interest-bearing deposits accounted for 36% of total funding in the fourth quarter of 2019, as compared to 47% in the fourth quarter of 2018. As a result, the ratio of average interest-earning assets to average interest-bearing liabilities decreased to 1.73x for the fourth quarter of 2019, as compared to 2.17x for the three months ended December 31, 2018.
Net interest margin decreased 24 basis points to 3.46% for the year ended December 31, 2019 from 3.70% for the year ended December 31, 2018. Total average interest-earning assets increased $898.0 million to $2.82 billion for the year ended December 31, 2019, as compared to $1.93 billion for the year ended December 31, 2018. The total yield on average interest-earning assets increased 24 basis points to 4.60% for the year ended December 31, 2019 as compared to 4.36% for the year ended December 31, 2018. The cost of interest-bearing liabilities increased 43 basis points to 2.05% for the year ended December 31, 2019, as compared to 1.62% for the year ended December 31, 2018. Non-interest-bearing deposits accounted for 38% of total funding in 2019, as compared to 53% in 2018. As a result, the ratio of average interest-earning assets to average interest-bearing liabilities decreased to 1.80x for the year ended December 31, 2019, as compared to 2.45x for the year ended December 31, 2018.
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 troubled debt restructurings 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 December 31, 2019 and December 31, 2018.
Non-accrual loans increased by $4.0 million to $4.1 million at December 31, 2019, as compared to $50,000 at December 31, 2018, primarily due to a one-to-four family loan in the amount of $2.4 million, which was placed on non-accrual status in June 2019. The loan-to-value ratio for this loan was 48.9%. In addition, non-accrual loans included the remaining two taxi medallion loans with a principal balance of $1.0 million. As of December 31, 2019, an $805,000 reserve was booked against these loans.
| 7 |
| --- |
| (dollars in thousands) | December 31, 2019 | December 31, 2018 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Non-performing assets: | ||||||||||||
| Non-accrual loans: | ||||||||||||
| Commercial real estate | $ | — | $ | — | ||||||||
| One-to-four family | 2,345 | — | ||||||||||
| Commercial and industrial | 1,047 | — | ||||||||||
| Consumer | 693 | 50 | ||||||||||
| Total non-accrual loans | $ | 4,085 | $ | 50 | ||||||||
| Accruing loans 90 days or more past due | 408 | 239 | ||||||||||
| Total non-performing loans and assets | $ | 4,493 | $ | 289 | ||||||||
| Nonaccrual loans as % of loans outstanding | 0.15 | % | — | % | ||||||||
| Non-performing loans as % of loans outstanding | 0.17 | % | 0.02 | % | ||||||||
| Allowance for loan losses | $ | (26,272 | ) | $ | (18,942 | ) | ||||||
| Allowance for loan losses as % of loans outstanding | 0.98 | % | 1.02 | % | ||||||||
| Three months ended December 31, | Year ended December 31, | |||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||||
| Provision for loan losses | $ | 2,300 | $ | 844 | $ | 4,223 | $ | 3,138 | ||||
| Charge-offs | $ | 496 | $ | 504 | $ | 1,187 | $ | 783 | ||||
| Recoveries | $ | (24 | ) | $ | (109 | ) | $ | (4,294 | ) | $ | (1,700 | ) |
| Net charge-offs/(recoveries) as % of average loans (annualized) | 0.07 | % | 0.09 | % | (0.13 | )% | (0.06 | )% |
The provision for loan losses for the fourth quarter of 2019 was $2.3 million, an increase of $1.5 million, as compared to $844,000 for the fourth quarter of 2018. This increase was primarily a result of a $600,000 provision related to the remaining two taxi medallion loans and an additional $160,000 in provision related to consumer loans, with a principal balance of $728,000, in the fourth quarter of 2019. As of December 31, 2019, the remaining taxi medallion loans had a principal balance of $1.0 million. In addition, the provision for loan losses for the fourth quarter of 2019 reflects loan production of $252.2 million in the fourth quarter of 2019, as compared to $283.0 million in the fourth quarter of 2018.
The provision for loan losses for the year ended December 31, 2019 was $4.2 million, as compared to $3.1 million for year ended December 31, 2018. The provision for loan losses for the year ended December 31, 2019 consisted of an $8.5 million provision, offset by a credit due to recoveries of $4.3 million, of which $4.2 million related medallion loans previously charged off in 2016 and 2017. The provision was recorded as a result of the taxi medallion and consumer loan provisions noted above and the record loan growth during 2019.
| 8 |
| --- |
Non-Interest Income
| Three months ended December 31, | Year ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||
| Service charges on deposit accounts | $ | 977 | $ | 826 | $ | 3,556 | $ | 4,248 | ||
| Prepaid third-party debit card income | 1,482 | 1,133 | 5,643 | 4,640 | ||||||
| Other service charges and fees | 413 | 229 | 1,366 | 3,305 | ||||||
| Unrealized gain/(loss) on equity securities | (10 | ) | — | 64 | — | |||||
| Loss on sale of securities | — | — | — | (37 | ) | |||||
| Total non-interest income | $ | 2,862 | $ | 2,188 | $ | 10,629 | $ | 12,156 |
Non-interest income increased $674,000, or 30.8%, to $2.9 million in the fourth quarter of 2019, as compared to $2.2 million in the fourth quarter of 2018. This increase was due to increases of $349,000 in prepaid debit card income, $151,000 in service charges in deposit accounts and $184,000 increase in other service charges and fees, offset by a $10,000 unrealized loss on equity 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 2019.
Non-interest income decreased by $1.5 million, or 12.3%, to $10.6 million in the year ended December 31, 2019, as compared to $12.2 million for the year ended December 31, 2018, primarily due to decreases of $692,000 in service charges on deposit accounts and $1.9 million in other service charges and fees, offset by an increase of $1.0 million in debit card income. The decreases in service charges on deposit accounts and other service charges and fees were due to a decrease in wire fees and foreign currency conversion fees, which were at an elevated level during the first quarter of 2018 as customers, particularly those in the digital currency business, were transferring funds from their global corporate accounts back into their U.S. accounts with the Bank. The increase in debit card income reflects the growth in the debit card business.
Non-Interest Expense
| Three months ended December 31, | Year ended December 31, | |||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||
| Compensation and benefits | $ | 7,956 | $ | 6,962 | $ | 31,242 | $ | 25,658 |
| Bank premises and equipment | 2,057 | 1,324 | 6,530 | 5,063 | ||||
| Professional fees | 810 | 715 | 3,427 | 2,922 | ||||
| Technology costs | 739 | 598 | 2,525 | 2,986 | ||||
| Licensing fees | 2,724 | 427 | 8,467 | 1,001 | ||||
| Other expenses | 2,756 | 1,576 | 7,764 | 5,841 | ||||
| Total non-interest expense | $ | 17,042 | $ | 11,602 | $ | 59,955 | $ | 43,471 |
Non-interest expense increased $5.4 million to $17.0 million for the fourth quarter of 2019 as compared to $11.6 million for the fourth quarter of 2018. Compensation and benefits increased $994,000 to $8.0 million for the fourth quarter of 2019 as compared to $7.0 million for the fourth quarter of 2018. This increase was due primarily to an increase in the average number of full-time employees to 166 for the fourth quarter of 2019, as compared to 148 for the fourth quarter of 2018, reflecting the Company's growth during the year. For the fourth quarter of 2019, licensing fees related to certain corporate cash management deposit products amounted to $2.7 million as compared to $427,000 for the fourth quarter of 2018, an increase of $2.3 million. Corporate cash management deposits related to these licensing fees amounted to $908.7 million at December 31, 2019, as compared to $104.6 million at December 31, 2018, primarily due to an increase in bankruptcy deposit accounts. Bank premises and equipment increased $733,000 to $2.1 million for the three months ended December 31, 2019, as compared to $1.3 million for the three months ended December 31, 2018, primarily due to the Company taking possession of new space, which is under renovation, at its headquarters in 99 Park Ave., New York, New York in August 2019. The additional rent amounted to $615,000 for the fourth quarter of 2019. When renovations on the new space are complete and the Company vacates its existing space, likely to be in the first 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 $1.2 million to $2.8 million for the fourth quarter of 2019, as compared to $1.6 million for the fourth quarter of 2018. The increase was primarily due an increase of $755,000 in Federal Deposit Insurance Corporation (“FDIC”) assessments, which was a function of the record growth in the Bank’s assets.
Non-interest expense increased $16.5 million to $60.0 million for the year ended December 31, 2019 as compared to $43.5 million for the year ended December 31, 2018. Compensation and benefits increased $5.6 million to $31.2 million for the year ended December 31, 2019 as compared to $25.7 million for the year ended December 31, 2018. This increase was due primarily to an increase in the average number of full-time employees to 163 for the year ended December 31, 2019, as compared to 140 for the year ended December 31, 2018, reflecting the Company’s growth during the year. Technology costs decreased $461,000 to $2.5 million for the year ended December 31, 2019 as compared to $3.0 million for the year ended December 31, 2018. For the year ended December 31, 2019, licensing fees related to certain corporate cash management deposit products amounted to $8.5 million as compared to $1.0 million for the year ended December 31, 2018, an increase of $7.5 million. Bank premises and equipment increased $1.4 to $6.5 million for the year ended December 31, 2019, as compared to $5.1 million for the year ended December 31, 2018, primarily due to the additional rent of $1.0 million for the new space at the Company’s headquarters. Other expenses increased by $1.9 million to $7.8 million for the year ended December 31, 2019, as compared to $5.9 million for the year ended December 31, 2018. The increase was primarily due to an increase of $812,000 in FDIC assessments and an increase of $546,000 in software maintenance expense. The increase in FDIC assessments, which was a function of the growth in the Bank’s assets, is also due to a one-time credit of $251,000 that the Bank received in the third quarter of 2019 because the FDIC deposit insurance reserve ratio exceeded the FDIC established threshold. The increase in software maintenance fee was a result of the growth in the Bank’s assets and business needs.
| 9 |
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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. 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, 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.
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.
| 10 |
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Consolidated Balance Sheet
| December 31, 2019 | December 31, 2018 | |||||
|---|---|---|---|---|---|---|
| Assets | ||||||
| Cash and due from banks | $ | 10,176 | $ | 9,246 | ||
| Overnight deposits | 381,045 | 223,704 | ||||
| Total cash and cash equivalents | 391,221 | 232,950 | ||||
| Investment securities available for sale, substantially restricted | 234,942 | 30,439 | ||||
| Investment securities held to maturity | 3,722 | 4,571 | ||||
| Investment securities -- Equity investments | 2,224 | 2,110 | ||||
| Total securities | 240,888 | 37,120 | ||||
| Other investments | 20,939 | 22,287 | ||||
| Loans, net of deferred fees and unamortized costs | 2,672,949 | 1,865,216 | ||||
| Allowance for loan losses | (26,272 | ) | (18,942 | ) | ||
| Net loans | 2,646,677 | 1,846,274 | ||||
| Receivable from prepaid card programs, net | 10,078 | 8,218 | ||||
| Accrued interest receivable | 8,862 | 5,507 | ||||
| Premises and equipment, net | 12,100 | 6,877 | ||||
| Prepaid expenses and other assets | 11,406 | 8,158 | ||||
| Goodwill | 9,733 | 9,733 | ||||
| Accounts receivable, net | 5,668 | 5,520 | ||||
| Total assets | $ | 3,357,572 | $ | 2,182,644 | ||
| Liabilities and Stockholders' Equity | ||||||
| Deposits: | ||||||
| Noninterest-bearing demand deposits | $ | 1,090,479 | $ | 798,563 | ||
| Interest-bearing deposits | 1,700,295 | 861,991 | ||||
| Total deposits | 2,790,774 | 1,660,554 | ||||
| Federal Home Loan Bank of New York advances | 144,000 | 185,000 | ||||
| Trust preferred securities | 20,620 | 20,620 | ||||
| Subordinated debt, net of issuance cost | 24,601 | 24,545 | ||||
| Secured Borrowings | 42,972 | — | ||||
| Accounts payable, accrued expenses and other liabilities | 23,556 | 18,440 | ||||
| Accrued interest payable | 1,229 | 1,282 | ||||
| Prepaid third-party debit cardholder balances | 10,696 | 7,687 | ||||
| Total liabilities | 3,058,448 | 1,918,128 | ||||
| Class B preferred stock | 3 | 3 | ||||
| Common stock | 82 | 82 | ||||
| Additional paid in capital | 216,468 | 213,490 | ||||
| Retained earnings | 81,364 | 51,415 | ||||
| Accumulated other comprehensive gain (loss), net of tax effect | 1,207 | (473 | ) | |||
| Total stockholders’ equity | 299,124 | 264,517 | ||||
| Total liabilities and stockholders’ equity | $ | 3,357,572 | $ | 2,182,645 |
| 11 |
| --- |
Consolidated Statement of Income (unaudited)
| Three months ended December 31, | Year ended December 31, | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2019 | 2018 | 2019 | 2018 | ||||||
| Total interest income | $ | 36,466 | $ | 23,342 | $ | 129,780 | $ | 83,945 | ||
| Total interest expense | 8,424 | 4,381 | 32,170 | 12,717 | ||||||
| Net interest income | 28,042 | 18,961 | 97,610 | 71,228 | ||||||
| Provision for loan losses | 2,300 | 844 | 4,223 | 3,138 | ||||||
| Net interest income after provision for loan losses | 25,742 | 18,117 | 93,387 | 68,090 | ||||||
| Non-interest income: | ||||||||||
| Service charges on deposit accounts | 977 | 826 | 3,556 | 4,248 | ||||||
| Prepaid third-party debit card income | 1,482 | 1,133 | 5,643 | 4,640 | ||||||
| Other service charges and fees | 413 | 229 | 1,366 | 3,305 | ||||||
| Unrealized gain (loss) on equity securities | (10 | ) | — | 64 | — | |||||
| Losses on sale of securities | — | — | — | (37 | ) | |||||
| Total non-interest income | 2,862 | 2,188 | 10,629 | 12,156 | ||||||
| Non-interest expense: | ||||||||||
| Compensation and benefits | 7,956 | 6,962 | 31,242 | 25,658 | ||||||
| Bank premises and equipment | 2,057 | 1,324 | 6,530 | 5,063 | ||||||
| Professional fees | 810 | 715 | 3,427 | 2,922 | ||||||
| Technology costs | 3,463 | 1,025 | 10,992 | 3,987 | ||||||
| Other expenses | 2,756 | 1,576 | 7,764 | 5,841 | ||||||
| Total non-interest expense | 17,042 | 11,602 | 59,955 | 43,471 | ||||||
| Net income before income tax expense | 11,562 | 8,703 | 44,061 | 36,775 | ||||||
| Income tax expense | 3,699 | 2,418 | 13,927 | 11,221 | ||||||
| Net income | $ | 7,863 | $ | 6,285 | $ | 30,134 | $ | 25,554 | ||
| Earnings per common share: | ||||||||||
| Average common shares outstanding - basic | 8,178,593 | 8,142,594 | 8,174,143 | 8,133,553 | ||||||
| Average common shares outstanding - diluted | 8,363,080 | 8,273,220 | 8,339,142 | 8,288,524 | ||||||
| Basic earnings | $ | 0.95 | $ | 0.77 | $ | 3.63 | $ | 3.12 | ||
| Diluted earnings | $ | 0.93 | $ | 0.75 | $ | 3.56 | $ | 3.06 |
| 12 |
| --- |
Summary of Income and Performance Measures
Five Quarter Trend (unaudited)
| Quarter Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | ||||||||||
| Net interest income | $ | 28,042 | $ | 26,053 | $ | 22,937 | $ | 20,578 | $ | 18,961 | |||||
| Provision (credit) for loan losses | 2,300 | 2,004 | 1,950 | (2,031 | ) | 844 | |||||||||
| Net interest income after provision for loan losses | 25,742 | 24,049 | 20,987 | 22,609 | 18,117 | ||||||||||
| Non-interest income | 2,862 | 2,700 | 2,674 | 2,393 | 2,188 | ||||||||||
| Non-interest expense: | |||||||||||||||
| Compensation and benefits | 7,956 | 7,875 | 7,921 | 7,490 | 6,962 | ||||||||||
| Other Expense | 9,086 | 7,620 | 6,803 | 5,204 | 4,640 | ||||||||||
| Total non-interest expense | 17,042 | 15,495 | 14,724 | 12,694 | 11,602 | ||||||||||
| Income before income tax expense | 11,562 | 11,254 | 8,937 | 12,308 | 8,703 | ||||||||||
| Income tax expense | 3,699 | 3,571 | 2,880 | 3,777 | 2,418 | ||||||||||
| Net income | 7,863 | 7,683 | 6,057 | 8,531 | 6,285 | ||||||||||
| Performance Measures: | |||||||||||||||
| Net income available to common shareholders | 7,741 | 7,550 | 5,950 | 8,396 | 6,238 | ||||||||||
| Per common share: | |||||||||||||||
| Basic earnings | $ | 0.95 | $ | 0.92 | $ | 0.73 | $ | 1.03 | $ | 0.77 | |||||
| Diluted earnings | $ | 0.93 | $ | 0.90 | $ | 0.71 | $ | 1.01 | $ | 0.75 | |||||
| Common shares outstanding: | |||||||||||||||
| Average - diluted | 8,363,080 | 8,348,970 | 8,336,064 | 8,285,220 | 8,273,220 | ||||||||||
| Period end | 8,312,918 | 8,319,852 | 8,320,816 | 8,320,816 | 8,217,274 | ||||||||||
| Return on (annualized): | |||||||||||||||
| Average total assets | 0.95 | % | 0.97 | % | 0.91 | % | 1.49 | % | 1.25 | % | |||||
| Average equity | 10.53 | % | 10.63 | % | 8.71 | % | 12.67 | % | 9.59 | % | |||||
| Average common equity | 10.73 | % | 10.84 | % | 8.89 | % | 12.93 | % | 9.80 | % | |||||
| Yield on average earning assets | 4.38 | % | 4.47 | % | 4.66 | % | 4.83 | % | 4.65 | % | |||||
| Cost of interest-bearing liabilities | 1.77 | % | 2.15 | % | 2.22 | % | 2.15 | % | 1.90 | % | |||||
| Net interest spread | 2.61 | % | 2.32 | % | 2.44 | % | 2.68 | % | 2.75 | % | |||||
| Net interest margin | 3.35 | % | 3.26 | % | 3.47 | % | 3.68 | % | 3.77 | % | |||||
| Net charge-offs (recoveries) as % of average loans (annualized) | 0.07 | % | 0.05 | % | 0.01 | % | (0.80 | )% | 0.09 | % | |||||
| Efficiency ratio | 55.14 | % | 53.89 | % | 57.49 | % | 55.26 | % | 54.86 | % |
| 13 |
| --- |
ConsolidatedBalance Sheet Summary, Five Quarter Trend (unaudited)
| (dollars in thousands) | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets | |||||||||||||||
| Total Assets | $ | 3,357,572 | $ | 3,243,171 | $ | 2,960,613 | $ | 2,545,186 | $ | 2,182,644 | |||||
| Overnight deposits | 381,045 | 424,170 | 424,276 | 346,674 | 223,704 | ||||||||||
| Total securities | 240,888 | 256,835 | 137,109 | 36,272 | 37,120 | ||||||||||
| Other investments | 20,939 | 20,921 | 22,972 | 23,652 | 22,287 | ||||||||||
| Loans, net of deferred fees and unamortized costs | 2,672,949 | 2,496,697 | 2,335,573 | 2,102,420 | 1,865,216 | ||||||||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Deposits: | |||||||||||||||
| Noninterest-bearing demand deposits | $ | 1,090,479 | $ | 1,041,102 | $ | 1,103,278 | $ | 865,908 | $ | 798,563 | |||||
| Interest-bearing deposits | 1,700,295 | 1,664,104 | 1,272,844 | 1,100,222 | 861,991 | ||||||||||
| Total deposits | 2,790,774 | 2,705,206 | 2,376,122 | 1,966,130 | 1,660,554 | ||||||||||
| Borrowings | 189,221 | 189,207 | 235,193 | 260,179 | 230,165 | ||||||||||
| Total stockholders' Equity | 299,124 | 291,002 | 281,330 | 273,787 | 264,517 | ||||||||||
| Asset Quality | |||||||||||||||
| Total non-accrual loans | $ | 4,085 | $ | 3,998 | $ | 2,415 | $ | 68 | $ | 50 | |||||
| Total non-performing loans | $ | 4,493 | $ | 4,714 | $ | 3,489 | $ | 1,498 | $ | 289 | |||||
| Non-accrual loans to total loans | 0.15 | % | 0.16 | % | 0.10 | % | — | % | — | % | |||||
| Non-performing loans to total loans | 0.17 | % | 0.19 | % | 0.15 | % | 0.07 | % | 0.02 | % | |||||
| Allowance for loan losses | (26,272 | ) | (24,444 | ) | (22,715 | ) | (20,834 | ) | (18,942 | ) | |||||
| Allowance for loan losses to total loans | 0.98 | % | 0.98 | % | 0.97 | % | 0.99 | % | 1.02 | % | |||||
| Provision for loan losses | 2,300 | 2,004 | 1,950 | (2,031 | ) | 844 | |||||||||
| Net charge-offs (recoveries) | 472 | 275 | 69 | (3,923 | ) | 395 | |||||||||
| Regulatory Capital | |||||||||||||||
| Tier 1 Leverage: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 9.4 | % | 9.6 | % | 11.0 | % | 12.5 | % | 13.7 | % | |||||
| Metropolitan Commercial Bank | 10.1 | 10.3 | 11.2 | 13.4 | 14.7 | ||||||||||
| Common Equity Tier 1 Risk-Based (CET1): | |||||||||||||||
| Metropolitan Bank Holding Corp. | 10.1 | 10.4 | 10.7 | 11.8 | 13.2 | ||||||||||
| Metropolitan Commercial Bank | 11.8 | 12.2 | 12.5 | 13.9 | 15.6 | ||||||||||
| Tier 1 Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 11.0 | 11.4 | 11.7 | 12.9 | 14.6 | ||||||||||
| Metropolitan Commercial Bank | 11.8 | 12.2 | 12.5 | 13.9 | 15.6 | ||||||||||
| Total Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 12.5 | 13.0 | 13.4 | 14.8 | 16.9 | ||||||||||
| Metropolitan Commercial Bank | 12.7 | 13.1 | 13.4 | 14.8 | 16.7 |
| 14 |
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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 accompanying tables.
Balancesheet data, five quarter trend
| Dollars in thousands, except per share data | Dec. 31, 2019 | Sept. 30, 2019 | June 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Average assets | $ | 3,286,916 | $ | 3,131,100 | $ | 2,667,416 | $ | 2,288,551 | $ | 2,015,831 |
| Less: average intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||
| Average tangible assets | $ | 3,277,183 | $ | 3,121,367 | $ | 2,657,683 | $ | 2,278,818 | $ | 2,006,098 |
| Average equity | $ | 296,228 | $ | 286,647 | $ | 278,025 | $ | 269,418 | $ | 262,030 |
| Less: Average preferred equity | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | |||||
| Average common equity | $ | 290,726 | $ | 281,145 | $ | 272,523 | $ | 263,916 | $ | 256,528 |
| Less: average intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||
| Average tangible common equity | $ | 280,993 | $ | 271,412 | $ | 262,790 | $ | 254,183 | $ | 246,795 |
| Total assets | $ | 3,357,036 | $ | 3,243,171 | $ | 2,960,613 | $ | 2,545,186 | $ | 2,182,644 |
| Less: intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||
| Tangible assets | $ | 3,347,303 | $ | 3,233,438 | $ | 2,950,880 | $ | 2,535,453 | $ | 2,172,911 |
| Total Equity | $ | 299,124 | $ | 291,002 | $ | 281,330 | $ | 273,787 | $ | 264,517 |
| Less: preferred equity | 5,502 | 5,502 | 5,502 | 5,502 | 5,502 | |||||
| Common Equity | $ | 293,622 | $ | 285,500 | $ | 275,828 | $ | 268,285 | $ | 259,015 |
| Less: intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | |||||
| Tangible common equity (book value) | $ | 283,889 | $ | 275,767 | $ | 266,095 | $ | 258,552 | $ | 249,282 |
| Common shares outstanding | 8,312,918 | 8,319,852 | 8,320,816 | 8,320,816 | 8,217,274 | |||||
| Book value per share (GAAP) | $ | 35.32 | $ | 34.32 | $ | 33.15 | $ | 32.24 | $ | 31.52 |
| Tangible book value per common share (non-GAAP)* | $ | 34.15 | $ | 33.15 | $ | 31.98 | $ | 31.07 | $ | 30.34 |
* Tangible book value divided by common shares outstanding at period-end.
| 15 |
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Exhibit 99.2
Investor Presentation 2019 Q4
1 Forward - looking Statement This presentation contains certain “forward - looking statements” about the Company which, to the extent applicable, are intended to be covered by the safe harbor for forward - looking statements provided under Federal securities laws. 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, 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 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, unanticipated adverse changes in our customers’ economic conditions or economic conditions in our local area in general and other factors discussed in our filings with the Securities and Exchange Commission. 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 – 53 % rent regulated • CRE/RBC ratios: MCB 412.2 % • CRE Owner - occupied is a segment of our C&I Lending platform Loan Portfolio at Dec ember 31, 2019 $2.67 Billion Deposits at December 31, 2019 $ 2 .79 Billion 27% 12% 5% 22% 34% DDA (excl. Corporate Cash Management) Corporate Cash Management DDA Savings and CD's MMA (excl. Corporate Cash Management) Corporate Cash Management MMA 20% 42% 17% 14% 3% 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 1.50%. • Corporate cash management deposit accounts in total have a weighted average cost of 1.10%.
4 Quarterly Revenues, Profitability and Asset Quality *annualized (1) Results include a recovery of $4.2 million related to loans previously charged off in Q1. (dollars in thousands) 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018 Summary Income Statement Net Interest Income $28,042 $26,053 $22,937 $20,578 $18,961 Provision (credit) for loan losses $2,300 $2,004 $1,950 ($2,031) (1) $844 Non-Interest Income $2,862 $2,700 $2,674 $2,393 $2,188 Non-Interest expense $17,042 $15,495 $14,724 $12,694 $11,602 Net Income $7,863 $7,683 $6,057 $8,531 $6,285 Profitability Diluted EPS $0.93 $0.90 $0.71 $1.01 (1) $0.75 ROAA* 0.95% 0.97% 0.91% 1.49% 1.25% ROAE* 10.53% 10.63% 8.71% 12.67% 9.59% NIM* 3.35% 3.26% 3.47% 3.68% 3.77% Efficiency Ratio 55.14% 53.89% 57.49% 55.26% 54.86% Asset Quality NPLs/Total Loans 0.17% 0.19% 0.15% 0.07% 0.02% NCOs/Average Total Loans* 0.07% 0.05% 0.01% (0.80%) (1) 0.09% Reserves/Loans 0.98% 0.98% 0.97% 0.99% 1.02% 3 Months ended
5 Net Interest Margin Analysis 3.77% 3.68% 3.47% 3.26% 3.35% 4.65% 4.83% 4.66% 4.47% 4.38% 1.90% 2.15% 2.22% 2.15% 1.77% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 4Q18 1Q19 2Q19 3Q19 4Q19 Net Interest Margin Components ▬ NIM ▬ Yield on Interest - Earning Assets ▬ Rate on Interest - Bearing Liabilities Yield /Rate 4Q18 1Q19 2Q19 3Q19 4Q19 Loans 4.93% 5.15% 5.05% 5.03% 4.96% Total Interest-Earning Assets 4.65% 4.83% 4.66% 4.47% 4.38% Interest-Bearing Deposits 1.64% 1.89% 2.01% 2.03% 1.65% Borrowed Funds 3.62% 3.35% 3.19% 3.03% 2.80% Total Interest-Bearing Liabilities 1.90% 2.15% 2.22% 2.15% 1.77% Net Interest Rate Spread 2.75% 2.68% 2.44% 2.32% 2.61% Net Interest Margin 3.77% 3.68% 3.47% 3.26% 3.35%
6 Non - interest Income and Expense Detail Non - Interest Income ($000s) Non - Interest Expense ($000s) (1) Includes $615,000 and $400,000 related to additional leased space at the Company’s headquarters for the fourth and third qu arters of 2019, respectively. 12/31/19 9/30/19 6/30/19 3/31/19 12/31/18 Service Charges on Deposit Accounts $977 $852 $908 $819 $826 Prepaid Debit Card Income 1,482 1,482 1,422 1,257 1,133 Other Service Charges and Fees 413 349 313 278 229 Change in fair value of equity securities (10) 17 31 39 - Total Non-interest Income $2,862 $2,700 $2,674 $2,393 $2,188 3 Months Ended 12/31/19 9/30/19 6/30/19 3/31/19 12/31/18 Compensation and Benefits $7,956 $7,875 $7,921 $7,490 $6,962 Bank Premises and Equipment 2,057 (1) 1790 (1) 1,348 1,335 1,324 Professional Fees 810 906 917 794 715 Technology Costs 739 660 562 565 598 Corporate Cash Management Deposit Licensing Fees 2,724 2,866 2,056 1,135 427 Other Expenses 2,756 1,398 1,920 1,690 1,576 Total Non-interest Expense $17,042 $15,495 $14,724 $13,009 $11,602 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. (dollars in thousands) 9/30/19 12/31/18 Balance Sheet ($000's) Total Assets $114,401 $1,174,928 Total Loans $176,252 $807,733 Total Deposits $85,568 $1,130,220 Capital MBHC MCB MBHC MCB MBHC MCB MBHC MCB MBHC MCB CET1* 10.1% 11.8% 10.4% 12.2% 10.7% 12.5% 11.8% 13.9% 13.2% 15.6% Total Risk-Based Capital* 12.5% 12.7% 13.0% 13.1% 13.4% 13.4% 14.8% 14.8% 16.9% 16.7% Tier 1 Leverage* 9.4% 10.1% 9.6% 10.3% 11.0% 11.2% 12.5% 13.4% 13.7% 14.7% $1,865,216 $2,705,206 $2,376,122 $1,660,554 $2,182,644$2,960,613 $2,335,573 $2,545,186 $2,102,420 $1,966,130 12/31/2019 Change vs. As of 9/30/2019 As of 6/30/2019 As of 12/31/2018As of 12/31/2019 As of 3/31/2019 $3,357,572 $2,672,949 $2,790,774 $3,243,171 $2,496,697
8 Strong Balance Sheet Growth Deposits ($mm) Total Equity ($mm) Assets ($mm) Loans, Net of Deferred Fees ($mm) $2,183 $2,545 $2,961 $3,243 $3,357 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 $1,865 $2,102 $2,336 $2,497 $2,673 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 $1,661 $1,966 $2,376 $2,705 $2,791 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 265 274 281 291 299 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 48.1% 44.0% 46.4% 38.5% 39.1% ■ % Non - interest Demand Deposits Total cost of deposits including DDA – 1.06% Cost of interest - bearing deposits – 1.44%
9 Robust Organic Loan Growth within a Diversified Portfolio (1) Includes commercial real estate, multifamily, and construction (dollars in millions) ■ Total CRE ( 1) (Non Owner Occupied) ■ Total CRE (Owner Occupied) ■ C&I ■ Other $1,867 $2,105 $2,339 $2,501 $2,678 1,063 1,142 1,330 1,409 1,530 236 366 419 495 545 382 422 427 449 448 186 176 164 148 155 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 • The Bank’s loan production for the three months ended December 31, 2019 was $252.1 million, of which $105.3 million, or 42%, was from new customers and $146.8 million, or 58%, was from existing relationships. • The Bank’s loan production for the year ended December 31, 2019 was $1.1 billion, of which $593.3 million, or 54%, was from n ew customers and $497.1 million, or 46%, was from existing relationships. Loans Composition over time ($mm)
10 Commercial Growth Driven by Expertise in Specific Lending Verticals General Commercial and Industrial Overview C&I Composition at Dec ember 31, 2019 Target Market Key Metrics ▪ Middle market businesses with annual revenues below $200mm ▪ Primarily concentrated in the New York MSA ▪ Well - diversified across industries ▪ Weighted average yield of 5.30% 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 47% 6% 22% 7% 3% 3% 1% 1% 6% 2% 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 Dec ember 31, 2019 Composition by Region at Dec e mber 31, 2019 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 52.68% Majority of loans are originated through direct relationships or referrals from existing clients 18% 23% 10% 8% 9% 8% 4% 8% 1% 4% 3% 2% 2% 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% 25% 8% 5% 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 1.78 on stabilized rent regulated properties ▪ Average LTV of 46% 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 $260,398 49.34% 1.66 11.14% Rent regulated 199,783 46.15% 1.78 12.25% Unregulated 60,615 58.24% 1.25 7.47%
13 Well - Developed, Diversified Healthcare Portfolio ▪ Active in Healthcare lending since 2002 ▪ CRE – SNF – Average loan - to - value of 68% ▪ Highly selective in regards to 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 – 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 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 respectively $333 million and $127 million. ▪ 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 market place. 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 Dec ember 31, 2019 Diversified Healthcare Portfolio 53% 16% 6% 4% 3% 1% 12% 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) - $460 million C&I Skilled Nursing Facilities (SNF) - $99 million C&I Other Healthcare - $92 million
14 Well - Developed, Diversified Healthcare Portfolio CRE Skilled Nursing Facility Exposure By State 6% 17% 2% 7% 8% 4% 2% 2% 30% 2% 7% 2% 8% 1% 2% California Florida Georgia Indiana Maryland Massachusetts Missouri New Jersey New York Ohio Pennsylvania Rhode Island Tennessee Wisconsin Kansas State Balance ($000's) % of Total CRE SNF California 28,000 6% Florida 80,371 17% Georgia 10,550 2% Indiana 30,000 7% Maryland 35,521 8% Massachusetts 18,500 4% Missouri 10,000 2% New Jersey 11,419 2% New York 137,578 30% Ohio 7,008 2% Pennsylvania 34,553 7% Rhode Island 7,021 2% Tennessee 37,133 8% Wisconsin 2,340 1% Kansas 10,000 2% Total CRE SNF 459,993 100%
15 Well - Developed, Diversified Healthcare Portfolio C&I Skilled Nursing Facility Exposure By State 4% 2% 4% 51% 15% 24% Florida Georgia/Indiana/Wisconsin New Jersey New York Pennsylvania Tennessee State Balance ($000's) % of Total C&I SNF Florida 4,412 4% Georgia/Indiana/Wisconsin 1,749 2% New Jersey 4,206 4% New York 49,932 51% Pennsylvania 14,955 15% Tennessee 23,454 24% Total C&I SNF 98,708 100.00%
16 Credit Metrics 0.02% 0.07% 0.15% 0.19% 0.17% 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 ALLL/Loans Non - Performing Assets/ALLL NCOs/Average Loans (Annualized) Non - Performing Assets/Loans 1.02% 0.99% 0.97% 0.98% 0.98% 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 1.5% 7.2% 15.4% 19.3% 17.1% 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 0.09% (0.80% 0.01% 0.05% 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 0.07%
17 Deposit Composition (1) Includes liquidation, receivership, litigation settlement and other fiduciary accounts. $1,661 $1,966 $2,376 $2,705 $2,791 633 707 675 758 805 81 262 425 527 580 150 210 285 355 375 281 283 310 328 392 271 244 225 221 207 220 210 205 139 104 23 50 251 377 328 2018Q4 2019Q1 2019Q2 2019Q3 2019Q4 Retail deposits Bankruptcy accounts Property managers Retail deposits with loan customers Debit cards Digital currency customers Corporate cash management deposits (1) Deposit Composition at December 31, 2019 Deposit composition over time ($mm) Deposit Type Balance ($000's) % of Total Deposits Retail deposits 805,244 29% Retail deposits with loan customers 391,517 14% Bankruptcy accounts 580,409 21% Property Managers 374,430 13% Debit cards 206,671 7% Digital currency customers 104,244 4% Corporate Cash Management Deposits 328,259 12% Total Deposits 2,790,774 100%
18 Well Positioned for Changing Rate Environment Estimated Sensitivity of Projected Annualized Net Interest Income as of September 30, 2019 Fixed vs. Floating Rate Loans at Dec ember 31, 2019 5.55%% 3.94% (7.77%) -100bps +100bps +200bps Floating 41% Fixed 59% Approximately 75.06% of floating rate loans have floors – Weighted average floor of 4.99% ■ 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 September 30, 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 ▪ Future initiatives: Introduce merchant acquiring services and correspondent banking services ▪ Expect future profitability to be driven by organic growth ▪ 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