Metropolitan Bank Holding Corp. Reports Record Quarterly and Annual Net Income

·17 min read

Banking-As-A-Service Revenues Increased 94.3% Year-Over-Year

Tangible Book Value Per Share Increased 27.6% Year-Over-Year1

NEW YORK, January 20, 2022--(BUSINESS WIRE)--Metropolitan Bank Holding Corp. (the "Company") (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the "Bank"), reported net income of $18.9 million, or $1.69 per diluted common share, for the fourth quarter of 2021 compared to net income of $11.8 million, or $1.39 per diluted common share, for the fourth quarter of 2020. Net income for the year 2021 was $60.6 million, or $6.45 per diluted common share, compared to net income of $39.5 million, or $4.66 per diluted common share, for the year 2020.

Financial Highlights include:

For the Full Year 2021:

  • Total revenues of $180.7 million, up 27.3%.

  • Net income of $60.6 million, up 53.4%.

  • Diluted earnings per share of $6.45, up 38.4%.

  • Loans totaled $3.7 billion, up 19.0%. Loan originations of $1.2 billion for 2021 compared to $687 million for 2020.

  • Deposits were $6.4 billion, up 68.0%. Non-interest-bearing demand deposits increased to $3.7 billion, up 112.5%.

  • Common equity offering at a price of $75.00 per share completed in September 2021, which raised net proceeds of $163 million.

  • Book value per share was $50.98 per share, up 26.1%, and tangible book value per share1 was $50.09, up 27.6%.

  • Return on average equity of 14.7% and return on average tangible common equity (ROATCE)1 of 15.2%.

  • Efficiency ratio1 improved to 48.3% compared to 52.5% from the prior year.

Fourth Quarter of 2021 Compared to the Prior Linked Quarter:

  • Total revenues of $51.9 million, up 11.1%.

  • Net income of $18.9 million, up 16.5%.

  • Loans totaled $3.7 billion, up 3.6%.

  • Deposits were $6.4 billion, up 17.9%.

  • Annualized return on average equity of 13.6% and annualized ROATCE1 of 13.9%.

Mark DeFazio, President and Chief Executive Officer, commented, "2021 was a breakout year for MCB that underscores our sustained performance. Being recognized in Fortune’s 100 Fastest Growing Companies in 2021 highlights the success we have had in growing both the commercial bank and our Global Payments business, which was evident from the strong growth in loans and deposits as well as the expansion of Global Payments revenues from the banking-as-a-service we provide to our fintech partners. I could not be more proud of the men and women who show up in person every day and make this possible. I would also like to thank our board of directors for their support and guidance."

Balance Sheet

The Company had total assets of $7.1 billion at December 31, 2021, an increase of 15.9% from September 30, 2021. Total loans, net of deferred fees and unamortized costs, increased $129 million, or 3.6%, from the prior linked quarter to $3.7 billion. The increase in total loans was due primarily to an increase of $110 million in commercial real estate ("CRE") loans (including owner occupied) and $43 million in commercial and industrial loans. Loan production was $411 million for the fourth quarter of 2021, compared to $313 million for the prior linked quarter. Loans of $18 million were transferred to held-for-sale and sold in the fourth quarter.

Total assets increased 64.3% from December 31, 2020. Total loans, net of deferred fees and unamortized costs, increased to $3.7 billion at December 31, 2021, an increase of 19.0%, as compared to $3.1 billion at December 31, 2020. The increase in total loans was due primarily to an increase of $601 million in CRE loans (including owner occupied) and $63 million in commercial and industrial loans. Loan production was $1.2 billion for the year 2021 compared to $687 million for the year 2020.

Total cash and cash equivalents were $2.4 billion at December 31, 2021, an increase of $502 million, or 27.0% from September 30, 2021, and $1.5 billion, or 173.0%, from December 31, 2020. The increase in cash and cash equivalents reflected the strong growth in deposits as well as the cash received from the issuance of common stock during the third quarter of 2021.

Total securities were $951 million at December 31, 2021, an increase of 56.5% from September 30, 2021, and 250.7% from December 31, 2020, due primarily to the deployment of excess liquidity from deposit growth.

Total deposits increased $978 million to $6.4 billion at December 31, 2021, up 17.9% from September 30, 2021. The increase in deposits was due primarily to an increase in non-interest-bearing demand deposits from Global Payments Group clients. Total deposits increased $2.6 billion, up 68.0% from December 31, 2020. The increase in deposits from December 31, 2020, was due to increases of $1.9 billion in non-interest-bearing demand deposits and $663 million in interest-bearing deposits, resulting from increases across most deposit verticals.

Non-interest-bearing demand deposits were 57.0% of total deposits at December 31, 2021, as compared to 51.4% and 45.1% at September 30, 2021, and December 31, 2020, respectively.

The Company and the Bank each met all the requirements to be considered "Well-Capitalized" under applicable regulatory guidelines. Total non-owner-occupied commercial real estate loans were 343.4% of total risk-based capital at December 31, 2021, compared to 412.5% of total risk-based capital at December 31, 2020.

Income Statement

Financial Highlights

(dollars in thousands, except per share data)

Three Months Ended

Twelve Months Ended

Dec 31,

Sept 30,

Dec 31,

Dec 31,

2021

2021

2020

2021

2020

Total revenues

$

51,867

$

46,683

$

36,840

$

180,698

$

141,924

Net income

18,887

16,215

11,775

60,555

39,466

Diluted earnings per common share

1.69

1.77

1.39

6.45

4.66

Return on average assets (1)

1.10

%

1.09

%

1.13

%

1.06

%

1.02

%

Return on average equity (1)

13.57

%

16.30

%

13.94

%

14.65

%

12.31

%

Return on average tangible common equity (1), (2)

13.86

%

16.95

%

14.61

%

15.18

%

12.92

%

________________________________

(1) For periods less than a year, ratios are annualized.
(2) Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures starting on page 14.

Net Interest Income

Net interest income for the fourth quarter of 2021 was $44.8 million, an increase of $4.0 million from the prior linked quarter. This increase was primarily due to a higher average balance of $855 million in interest-earning assets, particularly in loans, held-to-maturity securities, and overnight deposits for the fourth quarter of 2021, which increased $128 million, $190 million and $477 million from the prior linked quarter, respectively.

Net interest income for the year 2021 was $157.0 million, an increase of $32.1 million from the prior year. This increase was primarily due to a higher average balance of $1.8 billion in interest-earning assets, particularly in loans and securities, which increased $560 million and $344 million from the prior year, respectively.

Net Interest Margin

Net interest margin decreased by 11 basis points to 2.59% for the fourth quarter of 2021, as compared to 2.70% for the prior linked quarter, primarily due to the increase in lower yielding overnight deposits driven by deposit growth. This was partially offset by an increase in loan yields which were up on elevated fees from loan payoffs, securities yields which were up due to new securities purchases at higher yields, and a modest decline in the average cost of interest-bearing liabilities.

Net interest margin decreased by 49 basis points to 2.77% for the year 2021, as compared to 3.26% for the prior year primarily due to the increase in lower-yielding overnight deposits driven by deposit growth and the decrease in yields on securities driven by the lower rate environment. This was partially offset by a decrease of 25 basis points in the average cost of interest-bearing liabilities driven by the lower rate environment.

Total cost of funds declined 3 basis points to 28 basis points for the fourth quarter of 2021 as compared to the prior linked quarter, driven by the shift toward non-interest bearing deposits as well as a decrease in cost of interest-bearing deposits.

Non-Interest Income

Non-interest income was $7.1 million for the fourth quarter of 2021, an increase of $1.2 million from the prior linked quarter driven primarily by the increase of $1.4 million in Global payments revenue from underlying client transaction volumes.

Non-interest income for the year 2021 increased by $6.7 million, as compared to the prior year, primarily due to an increase of $8.0 million in Global Payments Group revenue. This was partially offset by a decrease of $2.7 million in gain on sale of securities.

Non-Interest Expense

Non-interest expense was $23.3 million for the fourth quarter of 2021, an increase of $1.3 million from the prior linked quarter primarily driven by increased compensation and benefits and technology costs, which were in line with revenue growth and transaction volumes, respectively.

Non-interest expense increased $12.8 million, as compared to the prior year. Drivers included an increase in compensation and benefits costs due to additional full-time employees and an increase in professional fees and technology costs in line with revenue growth. This was partially offset by reduced licensing fees.

The estimated effective tax rate for the year ended December 31, 2021, was 32.4% compared to 31.9% for the year ended December 31, 2020.

Asset Quality

Credit quality remains strong as non-performing loans to total loans decreased to 0.28% at December 31, 2021, from 0.43% at September 30, 2021. During the fourth quarter of 2021, the Company recorded a provision of $0.5 million, which reflected loan growth and losses on transfers of loans to held for sale of $0.8 million. This was partially offset by a reduction in the provision of $1.4 million related to a reduction in non-performing consumer loans. Additionally, the Company recorded net charge-offs in the fourth quarter of $3.9 million which primarily related to one shared national credit loan of $3.1 million that had been substantially reserved for in 2020, as well as $0.8 million related to the loans transferred to held-for-sale.

The Company recorded a provision of $3.8 million for the full year 2021. Additionally, the Company recorded net charge-offs in 2021 of $4.5 million, which primarily related to one shared national credit loan of $3.1 million and two C&I loans in the amount of $0.9 million, which had been substantially reserved for in 2020, as well as $0.8 million related to the loans transferred to held for sale. Net charge-offs as a percentage of average loans for the full year 2021 were 13 basis points.

COVID-19 related full payment deferrals remained steady at $10.0 million, or 27 basis points of total loans as of December 31, 2021. Principal only deferrals were $39.2 million, or 1.05% of total loans, as of December 31, 2021.

Conference Call

The Company will conduct a conference call at 9:00 a.m. Eastern time on Friday, January 21, 2022, to discuss fourth quarter 2021 and full year 2021 results. To access the event by telephone, please dial 866-342-8591 (US), 203-518-9713 (INTL), and provide conference ID: MCBQ421 approximately 15 minutes prior to the start time (to allow time for registration).

The call will also be broadcast live over the Internet and accessible at MCB Quarterly Results Conference Call and in the Investor Relations section of the Company’s website at MCB News. To listen to the live webcast, please visit the site at least 15 minutes prior to the start time to register, download and install any necessary audio software.

For those unable to join for the live presentation, a replay of the webcast will also be available later that day accessible at MCB Quarterly Results Conference Call.

About Metropolitan Bank Holding Corp.

Metropolitan Bank Holding Corp. (NYSE: MCB) is the parent company of Metropolitan Commercial Bank (the "Bank"). The Bank is a New York City based commercial bank which provides a broad range of business, commercial and personal banking products and services to small, middle-market, corporate enterprises, municipalities, and affluent individuals. The Bank’s Global Payments Group is an established leader in BaaS ("Banking-as-a-Service") that include: domestic and international clients; digital payments settlements; gateway to payment networks; custodian of deposits; regulatory and compliance oversight; global settlement agent for crypto exchanges and a leading national issuer of third-party debit cards. The Bank operates banking centers in New York City and on Long Island in New York State and has been ranked as one of the 100 Fastest-Growing Companies by Fortune. The Bank is a New York State chartered commercial bank and a member of the Federal Reserve System and the Federal Deposit Insurance Corporation, and an equal opportunity lender. For more information, please visit MCBankNY.com.

Forward Looking Statement Disclaimer

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include but are not limited to the Company’s future financial condition and capital ratios, results of operations and the Company’s outlook and business. Forward-looking statements are not historical facts. Such statements may be identified by the use of such words as "may," "believe," "expect," "anticipate," "plan," "continue" or similar terminology. These statements relate to future events or our future financial performance and involve risks and uncertainties that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we caution you not to place undue reliance on these forward-looking statements. Factors which may cause our forward-looking statements to be materially inaccurate include, but are not limited to an unexpected deterioration in our loan or securities portfolios, unexpected increases in our expenses, greater than anticipated growth and our ability to manage our growth, unanticipated regulatory action or changes in regulations, unexpected changes in interest rates, an unanticipated decrease in deposits, an unanticipated loss of key personnel or existing customers, competition from other institutions resulting in unanticipated changes in our loan or deposit rates, unanticipated increases in FDIC costs, changes in regulations, legislation or tax or accounting rules and unanticipated adverse changes in our customers’ economic conditions or general economic conditions, as well as those discussed under the heading "Risk Factors" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Further, given its ongoing and dynamic nature, including the rate of vaccine acceptance and the development of new variants, it is difficult to predict the continued impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy worsens, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; our cyber security risks may increase if a significant number of our employees are forced to work remotely; and FDIC premiums may increase if the agency experiences additional resolution costs. Forward-looking statements speak only as of the date of this release. We do not undertake any obligation to update or revise any forward-looking statement.

Consolidated Balance Sheet (unaudited)

(in thousands)

Dec 31, 2021

Sept 30, 2021

June 30, 2021

Mar 31, 2021

Dec 31, 2020

Assets

Cash and due from banks

$

28,864

$

32,660

$

29,651

$

9,432

$

8,692

Overnight deposits

2,330,486

1,824,820

1,689,614

1,125,589

855,613

Total cash and cash equivalents

2,359,350

1,857,480

1,719,265

1,135,021

864,305

Investment securities available for sale

566,624

603,168

543,769

479,988

266,096

Investment securities held to maturity

382,099

2,017

2,222

2,492

2,760

Investment securities -- Equity investments

2,273

2,289

2,291

2,281

2,313

Total securities

950,996

607,474

548,282

484,761

271,169

Other investments

11,998

11,998

11,989

11,638

11,597

Loans, net of deferred fees and unamortized costs

3,731,929

3,603,288

3,449,490

3,237,664

3,137,053

Allowance for loan losses

(34,729

)

(38,121

)

(37,377

)

(35,502

)

(35,407

)

Net loans

3,697,200

3,565,167

3,412,113

3,202,162

3,101,646

Receivables from global payments business, net

39,864

48,302

40,091

38,356

27,259

Accrued interest receivable

15,195

13,504

14,424

13,982

13,249

Premises and equipment, net

15,116

14,031

13,337

13,756

13,475

Prepaid expenses and other assets

16,906

13,565

17,959

13,392

18,388

Goodwill

9,733

9,733

9,733

9,733

9,733

Total assets

$

7,116,358

$

6,141,254

$

5,787,193

$

4,922,801

$

4,330,821

Liabilities and Stockholders' Equity

Deposits:

Non-interest-bearing demand deposits

$

3,668,673

$

2,803,823

$

2,794,136

$

2,167,899

1,726,135

Interest-bearing deposits

2,766,899

2,653,746

2,494,137

2,258,818

2,103,471

Total deposits

6,435,572

5,457,569

5,288,273

4,426,717

3,829,606

Trust preferred securities

20,620

20,620

20,620

20,620

20,620

Subordinated debt, net of issuance cost

24,712

24,698

24,684

24,670

24,657

Secured Borrowings

32,461

35,559

36,449

36,475

36,964

Accounts payable, accrued expenses and other liabilities

36,411

38,129

30,598

42,737

61,645

Accrued interest payable

746

448

1,773

563

712

Prepaid third-party debit cardholder balances

8,847

21,577

21,201

22,802

15,830

Total liabilities

6,559,369

5,598,600

5,423,598

4,574,584

3,990,034

Class B preferred stock

3

3

3

3

Common stock

109

106

83

83

82

Additional paid in capital

382,999

382,922

219,098

217,384

218,899

Retained earnings

181,385

162,498

146,283

132,947

120,830

Accumulated other comprehensive gain, net of tax effect

(7,504

)

(2,875

)

(1,872

)

(2,200

)

973

Total stockholders’ equity

556,989

542,654

363,595

348,217

340,787

Total liabilities and stockholders’ equity

$

7,116,358

$

6,141,254

$

5,787,193

$

4,922,801

$

4,330,821

Consolidated Statement of Income (unaudited)

Three Months Ended

Twelve Months Ended

(dollars in thousands, except per share data)

Dec. 31, 2021

Sep. 30, 2021

Dec. 31, 2020

Dec. 31, 2021

Dec. 31, 2020

Total interest income

$

49,110

$

45,018

$

36,862

$

173,284

$

143,097

Total interest expense

4,300

4,226

3,395

16,283

18,176

Net interest income

44,810

40,792

33,467

157,001

124,921

Provision for loan losses

501

490

1,795

3,816

9,488

Net interest income after provision for loan losses

44,309

40,302

31,672

153,185

115,433

Non-interest income:

Service charges on deposit accounts (1)

1,313

1,344

981

4,755

3,728

Global payments revenue (1)

5,293

3,942

2,163

16,445

8,464

Other service charges and fees

468

614

236

1,950

1,477

Unrealized gain (loss) on equity securities

(17

)

(9

)

(7

)

(62

)

48

Gain (loss) on sale of securities

609

3,286

Total non-interest income

7,057

5,891

3,373

23,697

17,003

Non-interest expense:

...

Compensation and benefits

12,001

11,269

9,835

45,908

39,797

Bank premises and equipment

1,992

...

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