Company Quick10K Filing
Metropolitan Bank Holding
Price41.75 EPS3
Shares8 P/E12
MCap349 P/FCF7
Net Debt-435 EBIT75
TEV-87 TEV/EBIT-1
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-05
10-K 2019-12-31 Filed 2020-03-09
10-Q 2019-09-30 Filed 2019-11-08
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-09
10-K 2018-12-31 Filed 2019-03-13
10-Q 2018-09-30 Filed 2018-11-13
10-Q 2018-06-30 Filed 2018-08-14
10-Q 2018-03-31 Filed 2018-05-15
10-K 2017-12-31 Filed 2018-03-28
10-Q 2017-09-30 Filed 2017-12-19
8-K 2020-07-22 Earnings, Regulation FD, Exhibits
8-K 2020-06-24 Officers
8-K 2020-04-21
8-K 2020-04-20
8-K 2020-01-22
8-K 2020-01-07
8-K 2019-11-27
8-K 2019-10-23
8-K 2019-09-25
8-K 2019-07-24
8-K 2019-05-28
8-K 2019-05-28
8-K 2019-05-16
8-K 2019-04-24
8-K 2019-01-24
8-K 2018-12-21
8-K 2018-11-07
8-K 2018-10-25
8-K 2018-07-30
8-K 2018-07-25
8-K 2018-07-25
8-K 2018-05-29
8-K 2018-05-21
8-K 2018-04-25
8-K 2018-04-04
8-K 2018-03-06
8-K 2018-02-05
8-K 2018-01-29
8-K 2018-01-16

MCB 10Q Quarterly Report

Note 1 - Organization
Note 2 – Basis of Presentation
Note 3 – Summary of Recent Accounting Pronouncements
Note 4 - Investment Securities
Note 5 – Loans and Allowance for Loan Losses
Note 6 – Earnings per Share
Note 7 - Stock Compensation Plan
Note 8 - Fair Value of Financial Instruments
Note 9 - Accumulated Other Comprehensive Loss
Note 10 - Financial Instruments with Off - Balance - Sheet Risk
Note 11 – Revenue From Contracts with Customers
Note 12 – Derivatives
Item 2. Management’S Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 mcb-20200331ex311293423.htm
EX-31.2 mcb-20200331ex312a7dc6d.htm
EX-32 mcb-20200331xex32.htm

Metropolitan Bank Holding Earnings 2020-03-31

Balance SheetIncome StatementCash Flow

10-Q 1 mcb-20200331x10q.htm 10-Q mcb_Current_Folio_10Q

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from __________________ to __________________

Commission File No. 001‑38282

Metropolitan Bank Holding Corp.

(Exact Name of Registrant as Specified in Its Charter)

New York

    

13-4042724

(State or Other Jurisdiction of Incorporation or Organization)

 

(I.R.S. Employer Identification No.)

 

 

 

99 Park Avenue, New York, New York

 

10016

(Address of Principal Executive Offices)

 

(Zip Code)

 

(212) 659‑0600

(Registrant’s Telephone Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:

 

 

 

 

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

MCB

 

New York Stock Exchange

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.

YES ☒ NO ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

 

Emerging Growth Company

 

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. ◻

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act).

YES ☐     NO ☒

There were 8,294,801 shares of the Registrant’s common stock, par value $0.01 per share, outstanding as of May 4, 2020.

 

 

METROPOLITAN BANK HOLDING CORP.

Form 10‑Q

Table of Contents

 

 

 

Page

 

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1. Financial Statements (unaudited)

 

 

 

Consolidated Statements of Financial Condition as of March 31, 2020 and December 31, 2019 

5

 

 

Consolidated Statements of Operations for the Three Months ended March 31, 2020 and 2019 

6

 

 

Consolidated Statements of Comprehensive Income for the Three Months ended March 31, 2020 and 2019 

7

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months ended March 31, 2020 and 2019 

8

 

 

Consolidated Statements of Cash Flows for the three Months ended March 31, 2020 and 2019 

9

 

 

Notes to Unaudited Consolidated Financial Statements 

10

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

32

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk 

51

 

 

Item 4. Controls and Procedures 

53

 

 

PART II. OTHER INFORMATION 

54

 

 

Item 1. Legal Proceedings 

54

 

 

Item 1A. Risk Factors 

54

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 

55

 

 

Item 3. Defaults Upon Senior Securities 

56

 

 

Item 4. Mine Safety Disclosures 

56

 

 

Item 5. Other Information 

56

 

 

Item 6. Exhibits 

56

 

 

Signatures 

58

 

 

2

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10‑Q contains certain “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “consider,” “should,” “plan,” “estimate,” “predict,” “continue,” “probable,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Metropolitan Bank Holding Corp. (the “Company”) and its wholly-owned subsidiary Metropolitan Commercial Bank (the “Bank”), and the Company’s strategies, plans, objectives, expectations and intentions, and other statements contained in this Quarterly Report on Form 10‑Q that are not historical facts. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company’s control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors that may cause actual results to differ from those results expressed or implied include those factors listed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on March 9, 2020 and “Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. In addition, these factors include but are not limited to:

·

increases in competitive pressure among financial institutions or from non-financial institutions;

·

changes in the interest rate environment may reduce interest margins or affect the value of the Bank’s investments;

·

changes in deposit flows, loan demand or real estate values may adversely affect the Bank’s business;

·

changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently;

·

general economic conditions, including unemployment rates, either nationally or locally in some or all of the areas in which the Bank does business, or conditions in the securities markets or the banking industry may be less favorable than currently anticipated;

·

declines in real estate values in Bank’s market area may adversely affect its loan production;

·

legislative or regulatory changes may adversely affect the Bank’s business;

·

applicable technological changes may be more difficult or expensive than anticipated;

·

success or consummation of new business initiatives may be more difficult or expensive than anticipated;

·

the risks associated with adverse changes to credit quality, including changes in the level of loan delinquencies and non-performing assets and charge-offs and changes in estimates of the adequacy of the allowance for loan losses;

·

difficulties associated with achieving or predicting expected future financial results; and

·

the potential impact on the Bank’s operations and customers resulting from natural or man-made disasters, wars, acts of terrorism, cyber-attacks and pandemics such as the Novel Coronavirus (“COVID-19”), as discussed below.

Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the Company’s business. The extent of such impact will depend on future developments, which are highly uncertain, including when COVID-19 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, the Company could be subject to any of the following risks, any of which could have a material, adverse effect on its business, financial condition, liquidity, and results of operations: the demand for the Bank’s 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; the Company’s allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely

3

affect the Company’s net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to the Bank; as the result of the decline in the Federal Reserve Board’s target federal funds rate to near 0%, the yield on the Company’s assets may decline to a greater extent than the decline in the Company’s  cost of interest-bearing liabilities, reducing its net interest margin and spread and reducing net income; if legislation is enacted or governmental or regulatory action is enacted limiting the amount of ATM fees or surcharges that Bank may receive or on its ability to charge overdraft or other fees, it could adversely impact the Company’s financial results; the Company’s cyber security risks are increased as the result of an increased use of the Bank’s online banking platform and an increase in the number of employees working remotely; and FDIC premiums may increase if the agency experiences additional resolution costs.

The Company’s ability to predict results or the actual effects of its plans or strategies is inherently uncertain. As such, forward-looking statements can be affected by inaccurate assumptions made or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect conditions only as of the date of this filing. The Company does not intend to update any of the forward-looking statements after the date of this Form 10‑Q or to conform these statements to actual events.

4

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2020

    

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, at fair value

 

 

199,854

 

 

234,942

Investment securities held to maturity (estimated fair value of $3,588 and $3,712 at March 31, 2020 and December 31, 2019 respectively)

 

 

3,520

 

 

3,722

Equity investment securities

 

 

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 borrowing

 

 

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, $0.01 par value, authorized 2,000,000 shares, 272,636 issued and outstanding at March 31, 2020 and December 31, 2019

 

$

 3

 

$

 3

Common stock, $0.01 par value, 25,000,000 shares authorized, 8,294,801 and 8,312,918 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

 

 

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

 

See accompanying notes to unaudited consolidated financial statements

5

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 

 

 

 

 

    

2020

    

2019

    

 

    

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

32,827

 

$

25,050

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

Taxable

 

 

1,372

 

 

233

 

 

 

Tax-exempt

 

 

 —

 

 

 7

 

 

 

Money market funds

 

 

30

 

 

34

 

 

 

Overnight deposits

 

 

1,593

 

 

1,409

 

 

 

Other interest and dividends

 

 

245

 

 

257

 

 

 

Total interest income

 

$

36,067

 

$

26,990

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

$

5,767

 

$

4,646

 

 

 

Borrowed funds

 

 

736

 

 

1,104

 

 

 

Trust preferred securities interest expense

 

 

190

 

 

257

 

 

 

Subordinated debt interest expense

 

 

405

 

 

405

 

 

 

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:

 

 

 

 

 

 

 

 

 

Basic earnings

 

$

0.73

 

$

1.03

 

 

 

Diluted earnings

 

$

0.72

 

$

1.01

 

 

 

 

See accompanying notes to unaudited consolidated financial statements

6

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 

 

 

    

2020

    

2019

    

Net Income

 

$

6,097

 

$

8,531

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Unrealized gain (loss) on securities available for sale:

 

 

 

 

 

 

 

Unrealized holding gain (loss) arising during the period

 

$

6,539

 

$

385

 

Reclassification adjustment for gain included in net income

 

 

(975)

 

 

 —

 

Tax effect

 

 

(1,756)

 

 

(127)

 

Net of tax

 

$

3,808

 

$

258

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on cash flow hedges:

 

 

 

 

 

 

 

Unrealized holding gain (loss) arising during the period

 

$

(1,060)

 

$

 —

 

Tax effect

 

 

334

 

 

 —

 

Net of tax

 

$

(726)

 

$

 —

 

 

 

 

 

 

 

 

 

         Total other comprehensive income

 

$

3,082

 

$

258

 

 

 

 

 

 

 

 

 

Comprehensive Income

 

$

9,179

 

$

8,789

 

 

 

 

See accompanying notes to unaudited consolidated financial statements

7

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

For three months ended March 31, 2020 and 2019

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

 

 

 

 

 

Additional

 

 

 

 

AOCI

 

 

 

 

 

Stock,

 

 

Common

 

Paid-in

 

Retained

 

(Loss),

 

 

 

 

  

Class B

  

 

Stock

  

Capital

  

Earnings

  

Net

  

Total

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2020

 

272,636

 

$

 3

 

 

8,312,918

 

$

82

 

$

216,468

 

$

81,364

 

$

1,207

 

$

299,124

Restricted stock, net of forfeiture

 

 —

 

 

 —

 

 

(12,244)

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Employee and non-employee stock-based compensation

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

812

 

 

 —

 

 

 —

 

 

812

Repurchase of shares for tax withholding for restricted stock vesting

 

 —

 

 

 —

 

 

(5,873)

 

 

 —

 

 

(579)

 

 

 —

 

 

 —

 

 

(579)

Net income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

6,097

 

 

 —

 

 

6,097

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

3,082

 

 

3,082

Balance at March 31, 2020

 

272,636

 

$

 3

 

 

8,294,801

 

$

82

 

$

216,701

 

$

87,461

 

$

4,289

 

$

308,536

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred

 

 

 

 

 

 

 

Additional

 

 

 

 

AOCI

 

 

 

 

 

Stock,

 

 

Common

 

Paid-in

 

Retained

 

(Loss),

 

 

 

 

  

Class B

  

 

Stock

  

Capital

  

Earnings

  

Net

  

Total

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

272,636

 

$

 3

 

 

8,217,274

 

$

82

 

$

213,490

 

$

51,415

 

$

(473)

 

$

264,517

ASU 2016-01 Accounting adjustment to opening retained earnings

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(68)

 

 

68

 

 

 —

ASU 2014-09 Accounting adjustment to opening retained earnings

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

(117)

 

 

 —

 

 

(117)

Balance at January 1, 2019, as adjusted

 

272,636

 

 

 3

 

 

8,217,274

 

 

82

 

 

213,490

 

 

51,230

 

 

(405)

 

 

264,400

Restricted stock, net of forfeiture

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Employee and non-employee stock-based compensation

 

 —

 

 

 —

 

 

106,423

 

 

 —

 

 

686

 

 

 —

 

 

 —

 

 

686

Repurchase of shares for tax withholding for restricted stock vesting

 

 —

 

 

 —

 

 

(2,881)

 

 

 —

 

 

(88)

 

 

 —

 

 

 —

 

 

(88)

Net income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

8,531

 

 

 —

 

 

8,531

Other comprehensive income

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

258

 

 

258

Balance at March 31, 2019

 

272,636

 

$

 3

 

 

8,320,816

 

$

82

 

$

214,088

 

$

59,761

 

$

(147)

 

$

273,787

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statement

 

 

 

 

 

8

 

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 

 

 

    

2020

    

2019

    

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

6,097

 

$

8,531

 

Adjustments to reconcile net income to net cash:

 

 

 

 

 

 

 

Net depreciation amortization and accretion

 

 

1,203

 

 

454

 

Provision (credit) for loan losses

 

 

4,790

 

 

(2,031)

 

Net change in deferred loan fees

 

 

(270)

 

 

731

 

Income taxes

 

 

(1,423)

 

 

 —

 

Gain on sale of available-for-sale securities

 

 

(975)

 

 

 —

 

Employee and non-employee stock-based expense

 

 

812

 

 

686

 

Gain on sale of loans

 

 

(18)

 

 

 —

 

Dividends earned on CRA fund

 

 

(12)

 

 

 —

 

Unrealized gain/loss of equity securities

 

 

(36)

 

 

(39)

 

Net change in:

 

 

 

 

 

 

 

Accrued interest receivable

 

 

(246)

 

 

(889)

 

Accounts payable, accrued expenses and other liabilities

 

 

2,678

 

 

9,205

 

Prepaid third-party debit cardholder balances

 

 

12,776

 

 

7,838

 

Accrued interest payable

 

 

(83)

 

 

(298)

 

Accounts receivable, net

 

 

3,834

 

 

4,580

 

Receivable from prepaid card programs, net

 

 

(10,783)

 

 

(8,298)

 

Prepaid expenses and other assets

 

 

2,471

 

 

559

 

Net cash provided by operating activities

 

 

20,815

 

 

21,029

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Loan originations, purchases and payments, net of recoveries

 

 

(102,966)

 

 

(233,318)

 

Proceeds from loans sold

 

 

9,968

 

 

 —

 

Redemptions of other investments

 

 

 —

 

 

1,350

 

Purchases of other investments

 

 

(18)

 

 

(2,715)

 

Proceeds from calls of securities available for sale

 

 

5,000

 

 

 —

 

Proceeds from sales of securities available for sale

 

 

20,975

 

 

 —

 

Proceeds from paydowns and maturities of securities available for sale

 

 

15,438

 

 

1,042

 

Proceeds from paydowns and maturities of securities held to maturity

 

 

194

 

 

172

 

Purchase of derivative contract

 

 

(2,980)

 

 

 —

 

Purchase of premises and equipment, net

 

 

(3,785)

 

 

48

 

Net cash used in investing activities

 

 

(58,174)

 

 

(233,421)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from FHLB advances

 

 

 —

 

 

350,000

 

Repayments of FHLB advances

 

 

 —

 

 

(320,000)

 

Redemption of common stock for tax withholdings for restricted stock vesting

 

 

(579)

 

 

(88)

 

Payments of secured borrowings

 

 

(1,275)

 

 

 —

 

Net increase in deposits

 

 

230,918

 

 

305,576

 

Net cash provided by financing activities

 

 

229,064

 

 

335,488

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

191,705

 

 

123,096

 

Cash and cash equivalents at the beginning of the period

 

 

390,723

 

 

232,950

 

Cash and cash equivalents at the end of the period

 

$

582,428

 

$

356,046

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

Interest

 

$

7,181

 

$

6,395

 

Income Taxes

 

$

1,850

 

$

1,200

 

 

 

 

 

 

See accompanying notes to unaudited consolidated financial statements

9

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION

Metropolitan Bank Holding Corp., a New York corporation, (the “Company”) is a bank holding company whose principal activity is the ownership and management of Metropolitan Commercial Bank (the “Bank”), its wholly-owned subsidiary. The Bank’s primary market is the New York metropolitan area. The Bank offers a traditional range of services to individuals, businesses and others needing banking services. Its primary lending products are commercial real estate loans and commercial and industrial loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from the cash flows from the operations of the business. The Bank’s primary deposit products are checking, savings, and term deposit accounts, and its deposit accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to the maximum amounts allowed by law.

 

The Company and the Bank are subject to the regulations of certain state and federal agencies and, accordingly, are periodically examined by those regulatory authorities. As a consequence of the extensive regulation of commercial banking activities, the Company’s business is affected by state and federal legislation and regulations.

 

NOTE 2 – BASIS OF PRESENTATION

The accounting and reporting policies of the Company conform with U.S. generally accepted accounting principles (“GAAP”) and predominant practices within the U.S. banking industry. All intercompany balances and transactions have been eliminated. The Unaudited Consolidated Financial Statements, which include the accounts of the Company and the Bank, have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10‑Q and Article 8 of Regulation S-X. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The Unaudited Consolidated Financial Statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. The accounting and reporting policies of the Company conform with U.S generally accepted accounting principles and predominant practices within the U.S. banking industry.

Certain prior-year amounts have been reclassified to conform to current year’s presentation.

The results of operations for the three months ended March 31, 2020 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period. Management believes that results of future periods are rendered particularly unpredictable due to the Novel Coronavirus (“COVID-19”).

To prepare financial statements in conformity with GAAP, management makes estimates and assumptions based on available information. These estimates and assumptions affect the amounts reported in the consolidated financial statements and the disclosures provided, and actual results could differ. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, including COVID-19-related changes, and changes in the financial condition of borrowers.

The Company has evaluated goodwill for impairment resulting from COVID-19 and has concluded that no impairment existed at March 31, 2020. Management will continue to monitor if a triggering event requiring further goodwill impairment testing has occurred.

The Company could experience a material adverse effect on its business as a result of the impact of the COVID-19 pandemic, and the resulting governmental actions to curtail its spread. It is at least reasonably possible that information that was available at the date of the financial statements will change in the near term due to the COVID-19 pandemic and

10

that the effect of the change would be material to the financial statements. The extent to which the COVID-19 pandemic will impact our estimates and assumptions is highly uncertain at this time. See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Item 1A. Risk Factors” in this Report for further discussion on the impact of COVID-19.

The unaudited consolidated financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to audited consolidated financial statements included in the Company’s Annual Report on Form 10‑K (“Annual Report”) for the year ended December 31, 2019 as filed with the Securities and Exchange Commission (“SEC”).

The following accounting policy represents a material update and addition to the accounting policies previously disclosed in the Company’s Annual Report for the fiscal year ended December 31, 2019 as filed with the SEC.

Derivatives: The Company has entered into an interest rate cap derivative that, based on the Company’s intentions and belief as to the likely effectiveness as a hedge, was designated as a cash flow hedge. A cash flow hedge is a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability.  For a cash flow hedge, the gain or loss on the derivative is reported in accumulated other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. Changes in the fair value of the derivative that are not highly effective in hedging the changes in expected cash flows of the hedged item are recognized immediately in current earnings. The amounts are reclassified to earnings in the same income statement line item that is used to present the earnings effect of the hedged item when the hedged item affects earnings.

The Company formally documents the relationship between derivatives and hedged items, as well as the risk management objective and the strategy for undertaking hedged transactions at the inception of the hedging relationship. The documentation includes linking the cash flow hedges to specific assets and liabilities on the balance sheet or to specific forecasted transactions or group of forecasted transactions. The Company also formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, or treatment of the derivative as a hedge is no longer appropriate or intended.

When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in accumulated other comprehensive income are amortized into earnings over the same periods in which the hedged transactions will affect earnings. If the forecasted transaction is deemed probable to not occur, the derivative gain or loss reported in accumulated other comprehensive income is reclassified into current earnings. 

NOTE 3 – SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS

Pursuant to the Jumpstart Our Business Startups Act (“JOBS Act”), an Emerging Growth Company (“EGC”) is permitted to elect to adopt new accounting guidance using adoption dates of nonpublic entities. The Company elected delayed effective dates of recently issued accounting standards.

Accounting Standards Update (ASU) 2014‑09, Revenue from Contracts with Customers (Topic 606) implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014‑09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In August 2016, the Financial Accounting Standards Board (“FASB”) deferred the effective date of the ASU by one year which resulted in ASU 2014‑09 being effective for the Company beginning January 1, 2019. The Company adopted the new revenue guidance as of January 1, 2019, using the five-step model prescribed by the ASU and described

11

above. Management evaluated the Company’s revenue streams and recorded an adjustment to opening retained earnings of $117,000 in accordance with the modified retrospective method allowed by the ASU.

In January 2016, the FASB issued ASU 2016‑01, an amendment to Recognition and Measurement of Financial Assets and Financial Liabilities (Subtopic 825‑10). The objectives of the ASU are to: (1) require equity investments to be measured at fair value, with changes in fair value recognized in net income, (2) simplify the impairment assessment of equity investments without readily determinable fair values, (3) eliminate the requirement to disclose methods and significant assumptions used to estimate fair value for financial instruments measured at amortized cost on the balance sheet, (4) require the use of the exit price notion when measuring the fair value of financial instruments, and (5) clarify the need for a valuation allowance on a deferred tax asset related to available-for-sale securities in combination with the entity’s other deferred tax assets. In February 2018, the FASB issued ASU 2018‑03, Technical Corrections and Improvements to Financial Instruments – Overall – Recognition and Measurement of Financial Assets and Liabilities, an amendment to ASU 2016‑01. The amendments clarify certain aspects of the guidance issued in ASU 2016‑01. The Company adopted these ASUs on January 1, 2019. The Company evaluated the impact of ASU 2016‑01 and 2018‑03 and recorded $68,000, net of tax, as an adjustment to opening retained earnings and accumulated other comprehensive income in accordance with the modified retrospective method allowed by the ASU.

In February 2016, the FASB issued ASU 2016‑02, Leases (Topic 842). ASU 2016‑02 requires companies that lease valuable assets to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. In October 2019, the FASB approved a delay for the implementation of the ASU for non-public business entities (“PBE”) and smaller reporting companies (“SRC”). Accordingly, as an EGC and an SRC, the Company’s effective date for the implementation of the ASU will be December 31, 2021. Under ASU 2016‑02, the Company will recognize a right-of-use asset and a lease obligation liability on the consolidated balance sheet, which will increase the Company’s assets and liabilities. The Company is evaluating other potential impacts of ASU 2016‑02 on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016‑13, Financial Instruments – Credit Losses (Topic 326), which requires the measurement of all expected credit losses for financial assets held at the reporting date be based on historical experience, current condition, and reasonable and supportable forecasts. Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates. This guidance also amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In October 2019, the FASB approved a delay for the implementation of the ASU for non-PBEs and SRCs. Accordingly, as an EGC and an  SRC, the Company’s effective date for the implementation of the ASU will be January 1, 2023. Management has established a committee to evaluate the impact of ASU 2016‑13 on the Company’s financial statements. The Company expects to recognize a one-time cumulative adjustment to the allowance for loan losses as of the beginning of the reporting period in which the ASU takes effect but cannot yet determine the magnitude of the impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017‑04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates the second step in the goodwill impairment test, which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard is effective for the Company beginning January 1, 2021, with early adoption permitted for goodwill impairment tests performed after January 1, 2017. Management expects that ASU 2017‑04 will not have a material impact on its consolidated financial statements. 

12

NOTE 4 - INVESTMENT SECURITIES

The following tables summarize the amortized cost and fair value of securities available for sale and securities held to maturity at March 31, 2020 and December 31, 2019 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized gains and losses (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

Gross