NEW YORK--(BUSINESS WIRE)--

Metropolitan Bank Holding Corp. (NYSE:MCB), the holding company (the “Company”) for Metropolitan Commercial Bank (the “Bank”), today reported net income of $6.3 million, or $0.75 per diluted common share, for the first quarter of 2018 (Q1 2018) compared to $3.3 million, or $0.49 per diluted common share, for the fourth quarter of 2017 (Q4 2017), and $2.5 million, or $0.55 per diluted common share, for the first quarter of 2017 (Q1 2017).

The Company had solid growth in loans and deposits during the quarter. Loans increased to $1.5 billion at March 31, 2018, an increase of $105 million, or 7.5%, from December 31, 2017, and an increase of $428 million, or 39.0% from March 31, 2017. Total deposits increased $213 million, or 15%, to $1.6 billion during Q1 2018, reflecting increases in non-interest bearing demand, money market and savings deposits. Deposits increased $600 million as compared to Q1 2017. Asset quality remained strong and continued to improve. Non-accrual loans were $85,000, or 0.01% of total loans, at March 31, 2018, versus $3.4 million, or 0.24% of total loans, at December 31, 2017.

Mark DeFazio, the Company’s CEO and President, commented, “The strong momentum we experienced in 2017 continues and we are off to a good start for 2018. We were pleased with our solid asset quality and the growth we are experiencing in many of our key metrics such as revenue, core funding, loans and net interest margin. We improved our return on assets and return on equity in the quarter and we expect these metrics to maintain their upward trajectory.”

“We continue to focus on key strategic growth drivers such as core deposits, loans, and the cash management business, and on the enterprise-wide risk management processes required to sustain our positive performance. Our diversification on both sides of the balance sheet positions us well to generate solid yields and differentiates us from our peers while balancing risk appropriately,” said Mr. DeFazio.

The Bank’s deposit gathering initiatives are diversified and include a number of verticals leading to a solid core deposit base. Along with lending and non-borrowing retail relationships, the Bank also obtains deposits through its debit card issuing business and relationships with digital currency related businesses, which maintain non-interest-bearing corporate and settlement accounts with the Bank. As a policy, these settlement account balances are not incorporated into the Bank’s funding strategies. The Bank’s policy is to keep corporate deposit accounts related to digital currencies that are used for funding to less than 10% of its total deposit base.

Results of Operations

Net income was $6.3 million, or $0.75 diluted earnings per common share, in Q1 2018 compared to $3.3 million, or $0.49 diluted earnings per common share, in Q4 2017. Q4 2017 net income included a provision expense related to the Bank’s taxi medallion portfolio of $2.2 million after tax and a net tax expense of $1.6 million due to the recently enacted Tax Cuts and Jobs Act. Excluding these items, adjusted (non-GAAP) net income and diluted EPS in Q4 2017 were $7.1 million and $1.04, respectively. Compared to Q1 2017, net income increased by $3.7 million and diluted EPS increased by $0.20 or 36%.

• Return on average assets was 1.35%, an improvement of 54 basis points compared to Q4 2017 and 52 basis points compared to Q1 2017.
• The Company’s efficiency ratio in the first quarter of 2018 improved to 51.5% from 60.2% in the first quarter of 2017.

Net interest margin improved by 7 basis points from Q1 2017. The improvement was mainly the result of a $580 million increase in average interest earning assets, led by $411 million higher average loan balances from increased activity in the commercial and industrial, multi-family and commercial real estate loan portfolios. In addition to increased average loan volume, net interest margin benefited from a 18 basis point increase in average loan yields.

• Net interest margin also benefited from the effect of higher average non-interest-bearing deposits in Q1 2018, which replaced higher priced interest-bearing deposits compared to Q1 2017.
• When compared to Q4 2017, net interest income improved $880 thousand, or 6.0%, largely due to the effect of a $32.7 million increase in interest-earning assets, composed of $79.3 million of loan growth, partially offset by a $44.8 million reduction in comparatively lower yielding other interest-earning assets. Yields on loans were 8 basis points higher than Q4 2017, driven by a $184 million increase in average commercial and industrial loan balances.
• On a net basis, average deposit balances increased $13 million from 4Q 2017. The shift in mix toward higher non-interest-bearing balances of $935 million in Q1 2018, compared to $868 million in Q4 2017, moderated the impact of recent Federal Reserve rate increases on the Bank’s cost of funds.

Provision for loan losses was $1.5 million, a decrease of $2.0 million from Q4 2017 and an increase of $0.9 million over Q1 2017. Other than the effect of the Q4 2017 $3.7 million charge-off related to taxi medallion loans, the loan loss provisions have primarily been driven by loan growth.

• The allowance for loan losses as a percentage of loans outstanding was 1.07% at March 31, 2018, versus 1.05% at December 31, 2017 and 1.11% at March 31, 2017.
• Non-performing loans totaled $85,000 at March 31, 2018, down from $3.4 million at December 31, 2017 and $4.5 million at March 31, 2017.
• On March 31, 2018 total Commercial Real Estate (CRE) was 2.88% of risk-based capital, compared to 2.73% on December 31, 2017 and 3.79% on March 31, 2017.

Non-Interest Income and Expense

Non-interest income declined $0.9 million from Q4 2017, driven by lower cash management fees. The increase of $4.1 million in non-interest income over Q1 2017 was the result of the growth of the Company’s cash management business.

Non-interest expense increased $1.5 million from Q4 2017, driven by increased staff levels, performance related incentive payments, and data processing expenses. Non-interest expense was also higher by $4.0 million as compared to Q1 2017, due to increased staffing and data processing costs.

Balance Sheet

The Company had total assets of $1.97 billion at March 31, 2018, compared with $1.76 billion on December 31, 2017 and $1.27 billion on March 31, 2017. Net loans were $1.5 billion at the end of Q1 2018, or 7.5% higher than at December 31, 2017 and 39.0% higher than at March 31, 2017. Total deposits were $1.62 billion at March 31, 2018, or 15.2% higher than at December 31, 2017, and 59.1% higher than at March 31, 2017.

Total stockholders’ equity was $243 million on March 31, 2018, $237 million at December 31, 2017, and $112 million at March 31, 2017. The Company completed an Initial Public Offering (IPO) in November 2017 that increased diluted shares outstanding to 8,253,536 at March 31, 2018 from 4,633,012 on March 31, 2017.

Capital ratios at March 31, 2018 reflected the capital raised from the November 2017 IPO. Metropolitan Commercial Bank remains “Well-Capitalized” under applicable regulatory guidelines. The Company’s tangible common equity ratio was 11.57% at March 31, 2018.

Forward Looking Statement Disclaimer

This release contains certain “forward-looking statements” about the Company which, to the extent applicable, are intended to be covered by the safe harbor for forward-looking statements provided under Federal securities laws and, regardless of such coverage, you are cautioned about. Examples of forward-looking statements include but are not limited to the Company’s financial condition and capital ratios, results of operations and the Company’s outlook and business. Forward-looking statements are not historical facts. Such statements may be identified by the use of such words as “may”, “believe”, “expect”, “anticipate”, “plan”, “continue”, or similar terminology. These statements relate to future events or our future financial performance and involve risks and uncertainties that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we caution you not to place undue reliance on these forward-looking statements. Factors which may cause our forward-looking statements to be materially inaccurate include, but are not limited to those discussed under the heading “Risk Factors” in our Annual Report on Form 10-K, as well as an unexpected deterioration in our loan portfolio, unexpected increases in our expenses, greater than anticipated growth, unanticipated regulatory action, unexpected changes in interest rates, an unanticipated decrease in deposits, an unanticipated loss of key personnel, an unanticipated loss of existing customers, competition from other institutions resulting in unanticipated changes in our loan or deposit rates, unanticipated increases in Federal Deposit Insurance Corporation costs and unanticipated adverse changes in our customers’ economic conditions or economic conditions in our local area in general.

Forward-looking statements speak only as of the date of this release. We do not undertake any obligation to update or revise any forward-looking statement, whether the result of new information, future events or otherwise.

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