Company Quick10K Filing
Quick10K
Metropolitan Bank Holding
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$41.66 8 $347
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
8-K 2019-05-28 Shareholder Vote
8-K 2019-05-16 Other Events
8-K 2019-04-24 Earnings, Regulation FD, Exhibits
8-K 2019-01-24 Earnings, Regulation FD, Exhibits
8-K 2019-01-24 Earnings, Regulation FD, Exhibits
8-K 2018-12-21 Officers, Exhibits
8-K 2018-11-07 Other Events, Exhibits
8-K 2018-10-25 Earnings, Regulation FD, Exhibits
8-K 2018-07-30 Other Events, Exhibits
8-K 2018-07-25 Earnings, Exhibits
8-K 2018-07-25 Regulation FD, Exhibits
8-K 2018-05-29 Officers, Code of Ethics, Shareholder Vote, Exhibits
8-K 2018-05-21 Regulation FD, Exhibits
8-K 2018-04-25 Earnings, Exhibits
8-K 2018-04-04 Other Events
8-K 2018-03-06 Officers
8-K 2018-02-05 Officers, Exhibits
8-K 2018-01-29 Earnings, Exhibits
8-K 2018-01-16 Other Events, Exhibits
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WVE Wave Life Sciences 936
GRVY Gravity 445
AMAG Amag Pharmaceuticals 378
PBHC Pathfinder Bancorp 59
MIND Mitcham Industries 47
ICTV ICTV Brands 0
MCB 2019-03-31
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
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-20190331ex3116ec14d.htm
EX-31.2 mcb-20190331ex31223996c.htm
EX-32 mcb-20190331xex32.htm

Metropolitan Bank Holding Earnings 2019-03-31

MCB 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 mcb-20190331x10q.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, 2019

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)

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 ☒

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

 

There were 8,320,816 shares of the Registrant’s common stock, par value $0.01 per share, outstanding as of May 07, 2019.

 

 


 

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, 2019 and December 31, 2018 

4

 

 

Consolidated Statements of Operations for the Three Months ended March 31, 2019 and 2018 

5

 

 

Consolidated Statements of Comprehensive Income for the Three Months ended March 31, 2019 and 2018 

6

 

 

Consolidated Statements of Changes in Stockholders’ Equity for the Three Months ended March 31, 2019 and 2018 

7

 

 

Consolidated Statements of Cash Flows for the Three Months ended March 31, 2019 and 2018 

8

 

 

Notes to Unaudited Consolidated Financial Statements 

9

 

 

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

27

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk 

38

 

 

Item 4. Controls and Procedures 

40

 

 

PART II. OTHER INFORMATION 

40

 

 

Item 1. Legal Proceedings 

40

 

 

Item 1A. Risk Factors 

40

 

 

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

40

 

 

Item 3. Defaults Upon Senior Securities 

40

 

 

Item 4. Mine Safety Disclosures 

40

 

 

Item 5. Other Information 

41

 

 

Item 6. Exhibits 

41

 

 

Signatures 

43

 

 

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 10K filed with the Securities and Exchange Commission (the “SEC”) on March 13, 2019. 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;

·

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 and cyber-attacks.

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.

3


 

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

March 31, 

 

December 31, 

 

    

2019

    

2018

Assets

 

 

 

 

 

 

Cash and due from banks

 

$

9,372

 

$

9,246

Overnight deposits

 

 

346,674

 

 

223,704

Total cash and cash equivalents

 

 

356,046

 

 

232,950

Investment securities available for sale, at fair value

 

 

29,731

 

 

30,439

Investment securities held to maturity (estimated fair value of  $4,295 and $4,403 at March 31, 2019 and December 31, 2018 respectively)

 

 

4,392

 

 

4,571

Marketable equity investments, at fair value

 

 

2,149

 

 

2,110

Total securities

 

 

36,272

 

 

37,120

Other investments

 

 

23,652

 

 

22,287

Loans, net of deferred fees and unamortized costs

 

 

2,102,420

 

 

1,865,216

Allowance for loan losses

 

 

(20,834)

 

 

(18,942)

Net loans

 

 

2,081,586

 

 

1,846,274

Receivable from prepaid card programs, net

 

 

16,516

 

 

8,218

Accrued interest receivable

 

 

6,396

 

 

5,507

Premises and equipment, net

 

 

6,446

 

 

6,877

Prepaid expenses and other assets

 

 

7,599

 

 

8,158

Goodwill

 

 

9,733

 

 

9,733

Accounts receivable, net

 

 

940

 

 

5,520

Total assets

 

$

2,545,186

 

$

2,182,644

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

Noninterest-bearing demand deposits

 

$

915,499

 

$

798,563

Interest-bearing deposits

 

 

1,050,631

 

 

861,991

Total deposits

 

 

1,966,130

 

 

1,660,554

Federal Home Loan Bank of New York advances

 

 

215,000

 

 

185,000

Trust preferred securities

 

 

20,620

 

 

20,620

Subordinated debt, net of issuance cost

 

 

24,559

 

 

24,545

Accounts payable, accrued expenses and other liabilities

 

 

28,581

 

 

18,439

Accrued interest payable

 

 

984

 

 

1,282

Prepaid third-party debit cardholder balances

 

 

15,525

 

 

7,687

Total liabilities

 

 

2,271,399

 

 

1,918,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class B preferred stock, $0.01 par value, authorized 2,000,000 shares, 272,636 issued and outstanding at March 31, 2019 and December 31, 2018

 

 

 3

 

 

 3

Common stock, $0.01 par value, 25,000,000 shares authorized, 8,320,816 and 8,217,274 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

 

 

82

 

 

82

Additional paid in capital

 

 

214,088

 

 

213,490

Retained earnings

 

 

59,761

 

 

51,415

Accumulated other comprehensive loss, net of tax effect

 

 

(147)

 

 

(473)

Total stockholders’ equity

 

 

273,787

 

 

264,517

Total liabilities and stockholders’ equity

 

$

2,545,186

 

$

2,182,644

 

See accompanying notes to unaudited consolidated financial statements

4


 

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 

 

 

 

 

    

2019

    

2018

    

 

    

Interest and dividend income:

 

 

 

 

 

 

 

 

 

Loans, including fees

 

$

25,050

 

$

17,212

 

 

 

Securities:

 

 

 

 

 

 

 

 

 

Taxable

 

 

243

 

 

186

 

 

 

Tax-exempt

 

 

 7

 

 

 7

 

 

 

Money market funds

 

 

54

 

 

119

 

 

 

Overnight deposits

 

 

1,389

 

 

1,043

 

 

 

Other interest and dividends

 

 

247

 

 

126

 

 

 

Total interest income

 

$

26,990

 

$

18,693

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

Deposits

 

$

4,331

 

$

1,439

 

 

 

Borrowed funds

 

 

1,104

 

 

150

 

 

 

Trust preferred securities interest expense

 

 

257

 

 

184

 

 

 

Subordinated debt interest expense

 

 

405

 

 

404

 

 

 

Total interest expense

 

$

6,097

 

$

2,177

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

20,893

 

 

16,516

 

 

 

Provision for loan losses

 

 

(2,031)

 

 

1,477

 

 

 

Net interest income after provision for loan losses

 

$

22,924

 

$

15,039

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

$

819

 

$

1,910

 

 

 

Prepaid  third-party debit card income

 

 

1,257

 

 

908

 

 

 

Other service charges and fees

 

 

278

 

 

2,494

 

 

 

Gains on securities, net

 

 

39

 

 

 —

 

 

 

Total non-interest income

 

$

2,393

 

$

5,312

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

$

7,490

 

$

6,317

 

 

 

Bank premises and equipment

 

 

1,335

 

 

1,180

 

 

 

Professional fees

 

 

794

 

 

753

 

 

 

Technology costs

 

 

1,700

 

 

1,506

 

 

 

Other expenses

 

 

1,690

 

 

1,482

 

 

 

Total non-interest expense

 

$

13,009

 

$

11,238

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income before income tax expense

 

 

12,308

 

 

9,113

 

 

 

Income tax expense

 

 

3,777

 

 

2,822

 

 

 

Net income

 

$

8,531

 

$

6,291

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic earnings

 

$

1.03

 

$

0.77

 

 

 

Diluted earnings

 

$

1.01

 

$

0.75

 

 

 

 

See accompanying notes to unaudited consolidated financial statements

5


 

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 

 

 

 

    

2019

    

2018

    

 

Net Income

 

$

8,531

 

$

6,291

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

     Unrealized holding gain (loss) arising during the period

 

 

385

 

 

(423)

 

 

    Tax effect

 

 

(127)

 

 

101

 

 

       Total unrealized gain (loss) on securities available for sale, net

 

 

258

 

 

(322)

 

 

Comprehensive income

 

$

8,789

 

$

5,969

 

 

 

See accompanying notes to unaudited consolidated financial statements

6


 

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

For the three months ended March 31, 2019 and 2018

(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, 2018

 

272,636

$

 3

 

 

8,196,310

$

81

 

$

211,145

 

$

25,861

 

$

(206)

 

$

236,884

Issuance of common stock, net (1)

 

 —

 

 —

 

 

 —

 

 —

 

 

(33)

 

 

 —

 

 

 —

 

 

(33)

Repurchase of shares for exercise of stock options and tax withholding for restricted stock vesting

 

 —

 

 —

 

 

(1,385)

 

 —

 

 

(72)

 

 

 —

 

 

 —

 

 

(72)

Employee stock-based compensation expense

 

 —

 

 —

 

 

 —

 

 —

 

 

293

 

 

 —

 

 

 —

 

 

293

Net Income

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

6,291

 

 

 —

 

 

6,291

Other comprehensive loss

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

(322)

 

 

(322)

Balance at  March 31, 2018

 

272,636

$

 3

 

 

8,194,925

$

81

 

$

211,333

 

$

32,152

 

$

(528)

 

$

243,041

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 1, 2019

 

272,636

$

 3

 

 

8,217,274

$

82

 

$

213,490

 

$

51,415

 

$

(473)

 

$

264,517

Repurchase of shares for tax withholding for restricted stock vesting

 

 —

 

 —

 

 

(2,881)

 

 —

 

 

(88)

 

 

 —

 

 

 —

 

 

(88)

Employee and non-employee restricted stock, net of forfeiture

 

 —

 

 —

 

 

106,423

 

 —

 

 

686

 

 

 —

 

 

 —

 

 

686

Net income

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

8,531

 

 

 —

 

 

8,531

ASU 2016-01 -- Cumulative effect of adopting new accounting standard

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(68)

 

 

68

 

 

 —

ASU 2014-09 -- Cumulative effect of adopting new accounting standard

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

(117)

 

 

 —

 

 

(117)

Other comprehensive income

 

 —

 

 —

 

 

 —

 

 —

 

 

 —

 

 

 —

 

 

258

 

 

258

Balance at March 31, 2019

 

272,636

$

 3

 

 

8,320,816

$

82

 

$

214,088

 

$

59,761

 

$

(147)

 

$

273,787


(1)

Represents costs incurred in connection with the Company’s initial public offering completed in November 2017.

See accompanying notes to unaudited consolidated financial statements

7


 

METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

 

Three months ended March 31, 

 

 

    

2019

    

2018

    

Cash flows from operating activities:

 

 

 

 

 

 

 

Net income

 

$

8,531

 

$

6,291

 

Adjustments to reconcile net income to net cash:

 

 

 

 

 

 

 

Net depreciation amortization and accretion

 

 

454

 

 

368

 

Provision for loan losses

 

 

(2,031)

 

 

1,477

 

Net change in deferred loan fees

 

 

731

 

 

698

 

Stock-based compensation expense

 

 

586

 

 

293

 

Non-employee stock-based expense

 

 

100

 

 

 —

 

Change in fair value of equity securities

 

 

(39)

 

 

 —

 

Net change in:

 

 

 

 

 

 

 

Accrued interest receivable

 

 

(889)

 

 

55

 

Accounts payable, accrued expenses and other liabilities

 

 

9,205

 

 

1,660

 

Debit card holder balances

 

 

7,838

 

 

(2,067)

 

Accrued interest payable

 

 

(298)

 

 

(295)

 

Accounts receivable, net

 

 

4,580

 

 

4,927

 

Receivable from prepaid card programs, net

 

 

(8,298)

 

 

2,056

 

Prepaid expenses and other assets

 

 

559

 

 

(141)

 

Net cash provided by operating activities

 

 

21,029

 

 

15,322

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Loan originations, purchases and payments, net of recoveries

 

 

(233,318)

 

 

(118,967)

 

Proceeds from sale of loans

 

 

 —

 

 

11,895

 

Redemptions of other investments

 

 

1,350

 

 

414

 

Purchases of other investments

 

 

(2,715)

 

 

(3,303)

 

Proceeds from paydowns and maturities of securities available for sale

 

 

1,042

 

 

1,408

 

Proceeds from paydowns of securities held to maturity

 

 

172

 

 

208

 

Purchase of premises and equipment, net

 

 

48

 

 

(716)

 

Net cash used in investing activities

 

 

(233,421)

 

 

(109,061)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from issuance of common stock, net *

 

 

 —

 

 

(33)

 

Proceeds from FHLB advances

 

 

350,000

 

 

 —

 

Repayments of FHLB advances

 

 

(320,000)

 

 

(9,198)

 

Redemption of common stock for tax withholdings for restricted stock vesting

 

 

(88)

 

 

(72)

 

Net increase in deposits

 

 

305,576

 

 

212,761

 

Net cash provided by financing activities

 

 

335,488

 

 

203,458

 

 

 

 

 

 

 

 

 

Increase in cash and cash equivalents

 

 

123,096

 

 

109,719

 

Cash and cash equivalents at the beginning of the period

 

 

232,950

 

 

261,231

 

Cash and cash equivalents at the end of the period

 

$

356,046

 

$

370,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplemental information:

 

 

 

 

 

 

 

Cash paid for:

 

 

 

 

 

 

 

Interest

 

$

6,395

 

$

2,472

 

Income Taxes

 

$

       1,200

 

$

       4,862

 

Non-cash item:

 

 

 

 

 

 

 

Transfer of loans held for investment to held for sale

 

$

 —

 

$

11,895

 

 

 

*Represents costs incurred in connection with the Company’s initial public offering completed in November 2017.

 

 

See accompanying notes to unaudited consolidated financial statements

8


 

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 mortgages 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 susceptible to being 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 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 U.S. generally accepted accounting principles (“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, 2019 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. 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 for the year ended December 31, 2018.

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

9


 

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 means ASU 2014‑09 is effective for the Company beginning January 1, 2019. The Company adopted the new revenue guidance as January 1, 2019, using the five-step model prescribed by the ASU and described 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 has evaluated the impact of ASU 2016‑01 and 2018‑03 and has 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. The amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, however, early adoption is permitted. 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. For the Company, this guidance is effective for fiscal years and interim periods beginning after December 15, 2020. Management has established a committee to evaluate the impact of ASU 2016‑13 on the Company’s financial statements. Management has also engaged a third party vendor for a software solution to begin testing models and comparing results with current incurred loss estimates. Since the Bank has been using this vendor for credit analysis and stress testing solutions for over five years, sufficient loan level information should be readily available to test the Historical Loss and Migration Analysis models, among other potential modeling solutions. 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.

10


 

In March 2017, the FASB issued ASU 2017‑08, Premium Amortization on Purchased Callable Debt Securities, which shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. Today, entities generally amortize the premium over the contractual life of the security. The new guidance does not change the accounting for purchased callable debt securities held at a discount as discounts continue to be amortized to maturity. ASU No. 2017‑08 is effective for interim and annual reporting periods beginning after December 15, 2019 and early adoption is permitted. The guidance includes a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Management expects that ASU 2017‑08 will not have a material impact on its consolidated financial statements.

On February 14, 2018 the FASB issued final guidance in the form of ASU 2018‑02, which permits — but does not require — companies to reclassify stranded tax effects caused by 2017 tax reform from accumulated other comprehensive income to retained earnings. Additionally, the ASU requires new disclosures by all companies, whether they opt to do the reclassification or not. ASU 2018-02 became effective for the Company on January 1, 2019 and the Company opted not to make the reclassification under ASU 2018-02.

 

NOTE 4 - INVESTMENT SECURITIES

The following table summarizes the amortized cost and fair value of securities available for sale and securities held to maturity at March 31, 2019 and December 31, 2018 and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive loss and gross unrecognized losses (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

 

 

 

Unrealized/

 

Unrealized/

 

 

 

 

 

Amortized

 

Unrecognized

 

Unrecognized

 

 

 

At March 31, 2019

    

Cost

    

Gains

    

Losses

    

Fair Value

Debt securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities

 

$

20,914

 

$

35

 

$

(243)

 

$

20,706

Residential collateralized mortgage obligations

 

 

2,107

 

 

 —

 

 

(76)

 

 

2,031

Commercial mortgage-backed securities

 

 

5,859

 

 

66

 

 

 —

 

 

5,925

Municipal bond

 

 

1,068

 

 

 1

 

 

 —

 

 

1,069

Total securities available-for-sale

 

$

29,948

 

$

102

 

$

(319)

 

$

29,731

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

  Residential mortgage-backed securities

 

$

4,367

 

$

 —

 

$

(97)

 

$

4,270

  Foreign government securities

 

 

25

 

 

 —

 

 

 —

 

 

25

      Total securities held-to-maturity

 

$

4,392

 

$

 —

 

$

(97)

 

$

4,295

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

  CRA Mutual Fund

 

$

2,220

 

$

 —

 

$

(71)

 

$

2,149

      Total non-trading equity investment securities

 

$

2,220

 

$

 —

 

$

(71)

 

$

2,149

 

11


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

 

 

 

Unrealized/

 

Unrealized/

 

 

 

 

 

Amortized

 

Unrecognized

 

Unrecognized

 

 

 

At December 31, 2018

    

Cost

    

Gains

    

Losses

    

Fair Value

Debt securities available-for-sale

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities

 

$

21,880

 

$

 3

 

$

(486)

 

$

21,397

Residential collateralized mortgage obligations

 

 

2,213

 

 

 —

 

 

(97)

 

 

2,116

Commercial mortgage-backed securities

 

 

5,874

 

 

 —

 

 

(25)

 

 

5,849

Municipal bond

 

 

1,074

 

 

 3

 

 

 —

 

 

1,077

Total securities available-for-sale

 

$

31,041

 

$

 6

 

$

(608)

 

$

30,439

 

 

 

 

 

 

 

 

 

 

 

 

 

Held-to-maturity securities:

 

 

 

 

 

 

 

 

 

 

 

 

Residential mortgage-backed securities

 

$

4,546

 

$

 —

 

$

(168)

 

$

4,378

Foreign government securities

 

 

25

 

 

 —

 

 

 —

 

 

25

Total securities held-to-maturity

 

$

4,571

 

$

 —

 

$

(168)

 

$

4,403

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable equity securities:

 

 

 

 

 

 

 

 

 

 

 

 

  CRA Mutual Fund

 

$

2,208

 

$

 —

 

$

(98)

 

$

2,110

      Total non-trading equity investment securities

 

$

2,208

 

$

 —

 

$

(98)

 

$

2,110

 

There were no sales or calls of securities for the three months ended March 31, 2019 and March 31, 2018.

 

The amortized cost and fair value of debt securities at March 31, 2019 and December 31, 2018 are shown by contractual maturity. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Held to Maturity

 

Available for Sale

At March 31, 2019

    

Amortized Cost

    

Fair Value

    

Amortized Cost

    

Fair Value

Within one year

 

$

25

 

$

25

 

$

256

 

$

256

One to five years

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Five to ten years

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Due after ten years