Metropolitan Bank Holding Corp. [MCB] Filings

10-Q 1 mcb-20240630x10q.htm 10-Q

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 June 30, 2024


	☐ 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 11,192,936 shares of the Registrant’s common stock, par value $0.01 per share, outstanding as of July 31, 2024.

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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	6

Consolidated Statements of Operations	7

Consolidated Statements of Comprehensive Income	8

Consolidated Statements of Changes in Stockholders’ Equity	9

Consolidated Statements of Cash Flows	10

Notes to Unaudited Consolidated Financial Statements	11

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3. Quantitative and Qualitative Disclosures About Market Risk	42

Item 4. Controls and Procedures	44

PART II. OTHER INFORMATION	45

Item 1. Legal Proceedings	45

Item 1A. Risk Factors	45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 3. Defaults Upon Senior Securities	45

Item 4. Mine Safety Disclosures	45

Item 5. Other Information	45

Item 6. Exhibits	46

Signatures	47

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GLOSSARY OF COMMON TERMS AND ACRONYMS


ACL	Allowance for credit losses	FHLB	Federal Home Loan Bank
AFS	Available-for-sale	FHLBNY	Federal Home Loan Bank of New York
ALCO	Asset Liability Committee	FRB	Federal Reserve Bank
ALLL	Allowance for loan and lease losses	FRBNY	Federal Reserve Bank of New York
AOCI	Accumulated other comprehensive income	FX	Foreign exchange
ASC	Accounting Standards Codification	GAAP	U.S. Generally accepted accounting principles
ASU	Accounting Standards Update	GPG	Global Payments Group
Bank	Metropolitan Commercial Bank	HTM	Held-to-maturity
BHC Act	Bank Holding Company Act of 1956, as amended	IRR	Interest rate risk
BSA	Bank Secrecy Act	ISO	Incentive stock option
C&I	Commercial and industrial	JOBS Act	The Jumpstart Our Business Startups Act
CARES Act	Coronavirus Aid, Relief, and Economic Security Act	LIBOR	London Inter-Bank Offered Rate
CECL	Current Expected Credit Loss	LTV	Loan-to-value
CFPB	Consumer Financial Protection Bureau	MBS	Mortgage-backed securities
Company	Metropolitan Bank Holding Corp.	NYSDFS	New York State Department of Financial Services
Coronavirus	COVID-19	OCC	Office of the Comptroller of the Currency
CRA	Community Reinvestment Act	OTTI	Other-than-temporary impairment
CRE	Commercial real estate	PPP	Paycheck Protection Program
CRE Guidance	Commercial Real Estate Lending, Sound Risk Management Practices	PRSU	Performance restricted share units
DIF	Deposit Insurance Fund	ROU	Right of use
EB-5 Program	EB-5 Immigrant Investor Program	SEC	U.S. Securities and Exchange Commission
EGC	Emerging Growth Company	SOFR	Secured Overnight Financing Rate
EVE	Economic value of equity	TDR	Troubled debt restructuring
FASB	Financial Accounting Standards Board	USD	U.S. dollar
FDIC	Federal Deposit Insurance Corporation

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NOTE ABOUT FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q may contain 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 that are difficult to predict and are generally beyond our control and that may 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 SEC on February 28, 2024 and in this Quarterly Report on Form 10-Q. In addition, these factors include but are not limited to:

●

the interest rate policies of the Board of Governors of the Federal Reserve System and other regulatory bodies;

●

an unexpected deterioration in the performance of our loan or securities portfolios;

●

changes in liquidity, including the size and composition of our deposit portfolio and the percentage of uninsured deposits in the portfolio;

●

unexpected increases in our expenses;

●

different than anticipated growth and our ability to manage our growth;

●

global pandemics, including the lingering effects of COVID-19, or localized epidemics, could adversely affect the Company’s financial condition and results of operations;

●

potential recessionary conditions, including the related effects on our borrowers and on our financial condition and results of operations;

●

an inability to absorb the amount of actual losses inherent in our existing loan portfolio;

●

an unanticipated loss of key personnel or existing clients;

●

increases in competitive pressures among financial institutions or from non-financial institutions, which may result in unanticipated changes in our loan or deposit rates;

●

unanticipated increases in FDIC costs;

●

legislative, tax or regulatory changes or actions, which may adversely affect the Company’s business;

●

impacts related to or resulting from recent bank failures;

●

changes in deposit flows, funding sources or loan demand, which may adversely affect the Company’s business;

●

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

●

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

●

unanticipated adverse changes in our clients’ economic conditions;

●

inflation, which may lead to higher operating costs;

●

declines in real estate values in the Company’s market area, which may adversely affect our loan production;

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●

an unexpected adverse financial, regulatory, legal or bankruptcy event experienced by our non-bank financial service clients;

●

technological changes that may be more difficult or expensive to implement than anticipated;

●

system failures or cybersecurity breaches of our information technology infrastructure and/or confidential information or those of the Company’s third-party service providers or those of our non-bank financial service clients for which we provide global payments infrastructure;

●

emerging issues related to the development and use of artificial intelligence could give rise to legal or regulatory action, damage our reputation or otherwise materially harm our business or clients;

●

failure to maintain current technologies and to successfully implement future information technology enhancements;

●

the effects of any developments, changes or actions relating to any litigation or regulatory proceedings brought against us or any of our subsidiaries;

●

the costs, including the possible incurrence of fines, penalties, or other negative effects (including reputational harm) of any adverse judicial, administrative, or arbitral rulings or proceedings, regulatory enforcement actions, or other legal actions to which we or any of our subsidiaries are a party, and which may adversely affect our results;

●

the current or anticipated impact of military conflict, terrorism or other geopolitical events;

●

the ability to attract or retain key employees;

●

the successful implementation or consummation of new business initiatives, which may be more difficult or expensive than anticipated;

●

the timely and efficient development of new products and services offered by the Company or its strategic partners, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value and acceptance of these products and services by clients;

●

changes in consumer spending, borrowing or savings habits;

●

the risks associated with adverse changes to credit quality, including changes in the level of classified and criticized loans, delinquent and non-performing loans, charge-offs and changes in the estimates of the adequacy of the ACL;

●

an unexpected failure to successfully manage our credit risk and the sufficiency of our ACL;

●

credit and other risks from borrower and depositor concentrations (e.g., by geographic area and by industry);

●

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

●

the potential impact on the Company’s operations and clients resulting from natural or man-made disasters, wars, acts of terrorism, cyberattacks and pandemics.

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. Forward-looking statements speak only as of the date of this document. The Company undertakes no obligation (and expressly disclaims) to publicly release the results of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements, except as may be required by law.

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METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

(in thousands, except share data)


	June 30,		December 31,
	2024		2023
Assets
Cash and due from banks	$	18,152	$	31,973
Overnight deposits		226,510		237,492
Total cash and cash equivalents		244,662		269,465
Investment securities available-for-sale, at fair value		504,748		461,207
Investment securities held-to-maturity (estimated fair value of $382.6 million and $404.3 million at June 30, 2024 and December 31, 2023, respectively)		449,368		468,860
Equity investment securities, at fair value		2,122		2,123
Total securities		956,238		932,190
Other investments		26,584		38,966
Loans, net of deferred fees and costs		5,838,892		5,624,797
Allowance for credit losses		(60,008)		(57,965)
Net loans		5,778,884		5,566,832
Receivable from global payments business, net		90,626		87,648
Other assets		168,597		172,571
Total assets	$	7,265,591	$	7,067,672
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing demand deposits	$	1,883,176	$	1,837,874
Interest-bearing deposits		4,286,486		3,899,418
Total deposits		6,169,662		5,737,292
Federal funds purchased		—		99,000
Federal Home Loan Bank of New York advances		150,000		440,000
Trust preferred securities		20,620		20,620
Secured and other borrowings		107,514		7,585
Prepaid third-party debit cardholder balances		22,631		10,178
Other liabilities		102,760		93,976
Total liabilities		6,573,187		6,408,651

Common stock, $0.01 par value, 25,000,000 shares authorized, 11,192,936 and 11,062,729 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively		112		111
Additional paid in capital		395,520		395,871
Retained earnings		348,977		315,975
Accumulated other comprehensive income (loss), net of tax		(52,205)		(52,936)
Total stockholders’ equity		692,404		659,021
Total liabilities and stockholders’ equity	$	7,265,591	$	7,067,672

See accompanying notes to unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Interest and dividend income
Loans, including fees	$	104,595	$	80,516	$	206,976	$	156,476
Securities		5,493		4,683		10,637		9,178
Overnight deposits		5,167		3,086		9,321		5,570
Other interest and dividends		506		693		1,162		1,017
Total interest income		115,761		88,978		228,096		172,241
Interest expense
Deposits		50,555		27,403		97,441		49,776
Borrowed funds		3,287		7,461		8,648		9,487
Trust preferred securities		380		363		759		693
Total interest expense		54,222		35,227		106,848		59,956

Net interest income		61,539		53,751		121,248		112,285
Provision for credit losses		1,538		4,305		2,066		4,951
Net interest income after provision for credit losses		60,001		49,446		119,182		107,334

Non-interest income
Service charges on deposit accounts		2,094		1,481		3,957		2,937
Global Payments Group revenue		3,686		5,731		7,755		10,581
Other income		359		643		1,431		1,311
Total non-interest income		6,139		7,855		13,143		14,829

Non-interest expense
Compensation and benefits		18,532		15,288		38,359		31,543
Bank premises and equipment		2,322		2,287		4,665		4,631
Professional fees		6,916		4,973		12,888		9,160
Technology costs		3,043		1,482		6,054		2,795
Licensing fees		3,180		3,014		6,456		5,676
FDIC assessments		2,925		1,640		5,850		4,454
Regulatory settlement reserve		—		—		—		(2,500)
Other expenses		5,339		3,758		9,885		7,708
Total non-interest expense		42,257		32,442		84,157		63,467

Net income before income tax expense		23,883		24,859		48,168		58,696
Income tax expense		7,084		9,298		15,166		18,059
Net income	$	16,799	$	15,561	$	33,002	$	40,637

Earnings per common share
Basic earnings	$	1.50	$	1.39	$	2.96	$	3.65
Diluted earnings	$	1.50	$	1.37	$	2.96	$	3.59

See accompanying notes to unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

(in thousands)


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023
Net Income	$	16,799	$	15,561	$	33,002	$	40,637

Other comprehensive income (loss):
Securities available-for-sale:
Unrealized gain (loss) arising during the period		146		(6,733)		(4,342)		1,500
Tax effect		(43)		2,058		1,879		(456)
Net of tax		103		(4,675)		(2,463)		1,044


Cash flow hedges:
Unrealized gain (loss) arising during the period		932		6,777		7,019		5,771
Reclassification adjustment for gains included in net income		(1,262)		(1,218)		(2,513)		(2,453)
Tax effect		112		(1,673)		(1,312)		(985)
Net of tax		(218)		3,886		3,194		2,333

Total other comprehensive income (loss)		(115)		(789)		731		3,377

Comprehensive Income (Loss)	$	16,684	$	14,772	$	33,733	$	44,014

See accompanying notes to unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)

(in thousands, except share data)


	Common			Additional		Retained		AOCI (Loss),
	Stock			Paid-in Capital		Earnings		Net		Total
	Shares	Amount
Three Months Ended
Balance at April 1, 2024	11,191,958	$	112	$	393,341	$	332,178	$	(52,090)	$	673,541
Issuance of common stock under stock compensation plans	1,470		—		—		—		—		—
Employee and non-employee stock-based compensation	—		—		2,200		—		—		2,200
Redemption of common stock for exercise of stock options and tax withholdings for restricted stock vesting	(492)		—		(21)		—		—		(21)
Net income	—		—		—		16,799		—		16,799
Other comprehensive income (loss)	—		—		—		—		(115)		(115)
Balance at June 30, 2024	11,192,936	$	112	$	395,520	$	348,977	$	(52,205)	$	692,404

Balance at April 1, 2023	11,211,274		112		394,124		263,783		(50,132)		607,887
Issuance of common stock under stock compensation plans	(220,200)		(2)		(3,962)		—		—		(3,964)
Employee and non-employee stock-based compensation	—		—		2,580		—		—		2,580
Net income	—		—		—		15,561		—		15,561
Other comprehensive income (loss)	—		—		—		—		(789)		(789)
Balance at June 30, 2023	10,991,074	$	110	$	392,742	$	279,344	$	(50,921)	$	621,275

Six Months Ended
Balance at January 1, 2024	11,062,729	$	111	$	395,871	$	315,975	$	(52,936)	$	659,021
Issuance of common stock under stock compensation plans	216,743		1		—		—		—		1
Employee and non-employee stock-based compensation	—		—		4,126		—		—		4,126
Redemption of common stock for exercise of stock options and tax withholdings for restricted stock vesting	(86,536)		—		(4,477)		—		—		(4,477)
Net income	—		—		—		33,002		—		33,002
Other comprehensive income (loss)	—		—		—		—		731		731
Balance at June 30, 2024	11,192,936	$	112	$	395,520	$	348,977	$	(52,205)	$	692,404

Balance at January 1, 2023	10,949,965	$	109	$	389,276	$	240,810	$	(54,298)	$	575,897
Cumulative effect of changes in accounting principle	—		—		—		(2,103)		—		(2,103)
Issuance of common stock under stock compensation plans	64,990		1		—		—		—		1
Employee and non-employee stock-based compensation	—		—		4,802		—		—		4,802
Redemption of common stock for exercise of stock options and tax withholdings for restricted stock vesting	(23,881)		—		(1,336)		—		—		(1,336)
Net income	—		—		—		40,637		—		40,637
Other comprehensive income (loss)	—		—		—		—		3,377		3,377
Balance at June 30, 2023	10,991,074	$	110	$	392,742	$	279,344	$	(50,921)	$	621,275

See accompanying notes to unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(in thousands)


	Six months ended June 30,
	2024		2023
Cash flows from operating activities
Net income	$	33,002	$	40,637
Adjustments to reconcile net income to net cash:
Net depreciation, amortization, and accretion		(5,737)		4,014
Provision for credit losses		2,066		4,951
Stock-based compensation		4,126		4,802
Other, net		1		(18)
Net change in:
Receivable from global payments, net		(2,978)		686
Third-party debit cardholder balances		12,453		193
Other assets		6,571		(15,187)
Other liabilities		10,748		5,613
Net cash provided by (used in) operating activities		60,252		45,691

Cash flows from investing activities
Loan originations, purchases and payments, net		(206,900)		(311,594)
Redemptions of FRB and FHLB Stock		37,768		110,451
Purchases of FRB and FHLB Stock		(25,386)		(116,381)
Purchase of securities available-for-sale		(72,810)		—
Purchase of securities held-for-investment		—		(24,595)
Proceeds from paydowns and maturities of securities available-for-sale		25,115		21,061
Proceeds from paydowns and maturities of securities held-to-maturity		19,200		19,366
Purchase of premises and equipment, net		(864)		(1,888)
Net cash provided by (used in) investing activities		(223,877)		(303,580)

Cash flows from financing activities

Metropolitan Bank Holding Corp. [MCB] Filings
10-Q	[2024-08-02]
10-Q	[2024-05-03]
10-K	[2024-02-28]
10-Q	[2023-11-03]
10-Q	[2023-08-04]
10-Q	[2023-05-04]
10-K	[2023-02-28]
10-Q	[2022-10-31]
10-Q	[2022-08-09]
10-Q	[2022-05-06]
10-K	[2022-03-10]
10-Q	[2021-11-03]
10-Q	[2021-08-04]
10-Q	[2021-05-05]
10-K	[2021-03-08]
10-Q	[2020-11-04]
10-Q	[2020-08-05]
10-Q	[2020-05-05]
10-K	[2020-03-09]
10-Q	[2019-11-08]
10-Q	[2019-08-07]
10-Q	[2019-05-09]
10-K	[2019-03-13]
10-Q	[2018-11-13]
10-Q	[2018-08-14]
10-Q	[2018-05-15]
10-K	[2018-03-28]
10-Q	[2017-12-19]
S-1	[2017-10-04]