Metropolitan Bank (MCB) - 2024 Q3 - Quarterly Results

Executive Summary & Financial Highlights Metropolitan Bank Holding Corp. reported decreased net income and EPS due to significant pre-tax expenses, offset by strong operating results, increased net interest margin, and robust capital and liquidity Overall Performance Metropolitan Bank Holding Corp. reported a decrease in net income and diluted EPS for Q3 2024 compared to the prior quarter and prior year, primarily due to significant pre-tax expenses related to a regulatory reserve, digital transformation, and the GPG wind-down | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :----------------- | :----------- | :----------- | :----------- | | Net Income | $12.3 million| $16.8 million| $22.1 million| | Diluted EPS | $1.08 | $1.50 | $1.97 | | EPS Impact (Q3 2024)| -$0.78 | N/A | N/A | - Q3 2024 diluted earnings per share included $12.6 million of pre-tax expenses, impacting EPS by $0.78, related to a $10 million regulatory reserve, Modern Banking in Motion digital transformation, Global Payments Group (GPG) wind down, and other regulatory remediation costs[1] Key Financial Metrics The company demonstrated strong operating results with an increased net interest margin and continued growth in loans and deposits, while maintaining stable asset quality and strong liquidity, and remaining well-capitalized | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :-------------------------------------- | :----------- | :----------- | :----------- | | Net Interest Margin | 3.62% | 3.44% | N/A | | Total Loans | $5.9 billion | $5.84 billion| $5.36 billion| | Total Deposits | $6.3 billion | $6.2 billion | $5.55 billion| | Non-performing loans to total loans | 0.53% | 0.53% | N/A | | Total Risk-Based Capital Ratio (Company)| 13.2% | N/A | N/A | | Total Risk-Based Capital Ratio (Bank) | 12.9% | N/A | N/A | - Liquidity remains strong, with cash on deposit with the Federal Reserve Bank of New York and available secured funding capacity totaling $3.1 billion at September 30, 2024, representing 212% of uninsured deposits[1] Management Commentary Management commentary highlights strong business fundamentals, net interest income growth, successful deposit expansion, and strategic initiatives including GPG exit and risk management investments CEO's Remarks CEO Mark DeFazio highlighted strong underlying business fundamentals, significant growth in net interest income, and successful deposit growth despite a challenging environment, emphasizing the ongoing exit from the GPG vertical, investments in risk management, and the resolution of a $10 million regulatory reserve related to a past fintech client, positioning the Bank for future outperformance - Net interest income increased 6% quarter-over-quarter and 12% year-to-date, supported by continued strength and growth in the net interest margin[2] - The company remains focused on the exit from the Global Payments Group (GPG) vertical and is making investments in building out its risk management framework and personnel[3] - A $10 million regulatory reserve has been established to resolve an investigation with a state agency connected to a fintech client last worked with in 2020[3] Balance Sheet Analysis The balance sheet reflects significant increases in cash and cash equivalents, continued loan and deposit growth, and robust capital and liquidity positions Cash and Cash Equivalents Total cash and cash equivalents saw a significant increase both quarter-over-quarter and year-over-year, primarily driven by a substantial rise in deposits | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :--------------------------- | :----------- | :----------- | :----------- | | Total Cash & Cash Equivalents| $318.5 million| $244.7 million| $177.4 million| | QoQ Change | +30.2% | N/A | N/A | | YoY Change | +79.6% | N/A | N/A | - The increase from June 30, 2024, primarily reflects a $100.2 million increase in deposits, while the increase from September 30, 2023, primarily reflects a $748.3 million increase in deposits, partially offset by an increase in the loan book and a decrease in wholesale funding[3] Loans Total loans continued to grow, with strong loan production in Q3 2024, primarily driven by increases in commercial real estate (CRE) loans and commercial and industrial (C&I) loans | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :----------------- | :----------- | :----------- | :----------- | | Total Loans | $5.9 billion | $5.84 billion| $5.35 billion| | QoQ Growth | +1.0% | N/A | N/A | | YoY Growth | +10.1% | N/A | N/A | | Q3 2024 Loan Production| $460.6 million| $290.8 million| $333.5 million| - The increase in total loans from June 30, 2024, was primarily due to a $116.7 million increase in commercial real estate (CRE) loans (including owner-occupied), partially offset by a $51.0 million decrease in multi-family loans[4] - The increase in total loans from September 30, 2023, was primarily due to a $460.0 million increase in CRE loans (including owner-occupied) and a $92.9 million increase in commercial and industrial (C&I) loans[4] Deposits Total deposits experienced solid growth both quarter-over-quarter and year-over-year, with increases across various deposit verticals, despite a decrease in GPG deposits | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :------------- | :----------- | :----------- | :----------- | | Total Deposits | $6.3 billion | $6.17 billion| $5.52 billion| | QoQ Growth | +1.6% | N/A | N/A | | YoY Growth | +13.6% | N/A | N/A | - The quarter-over-quarter increase was primarily due to a $133.4 million increase in property manager deposits and a $105.6 million increase in retail deposits, partially offset by a $122.0 million decrease in GPG deposits[5] - The year-over-year increase in deposits was due to broad-based increases across most of the Bank's various deposit verticals[5] Capital and Liquidity The company and the Bank maintained strong capital positions, both classified as 'well capitalized' under regulatory guidelines, with ample liquidity to cover uninsured deposits - At September 30, 2024, cash on deposit with the Federal Reserve Bank of New York and available secured funding capacity totaled $3.1 billion, representing 212% of uninsured deposits[5] - The Company and the Bank each met all the requirements to be considered 'well capitalized' under applicable regulatory guidelines[5] - Total non-owner-occupied commercial real estate loans were 353.3% of total risk-based capital at September 30, 2024, a decrease from 358.4% at June 30, 2024, and 374.8% at September 30, 2023[5] Income Statement Analysis Income statement analysis reveals increased net interest income and margin, a slight rise in non-interest income, significantly higher non-interest expenses, and an elevated effective tax rate Net Interest Income Net interest income increased significantly both quarter-over-quarter and year-over-year, primarily driven by growth in average loan balances and yields, despite some offsetting factors like increased cost of funds | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :---------------- | :----------- | :----------- | :----------- | | Net Interest Income| $65.2 million| $61.5 million| $53.6 million| | QoQ Change | +$3.7 million| N/A | N/A | | YoY Change | +$11.7 million| N/A | N/A | - The quarter-over-quarter increase was primarily due to an increase in the average balance of loans and an increase in the yield on loans, partially offset by a decrease in the average balance of overnight deposits and a modest increase in the cost of funds[8] - The year-over-year increase was primarily due to an increase in the average balance of loans, an increase in loan yields, and a decrease in the average balance of borrowed funds, partially offset by an increase in the average balance of deposits and an increase in the cost of funds[8] Net Interest Margin The net interest margin expanded both sequentially and annually, driven by higher loan balances and yields, as well as elevated prepayment penalties, partially offset by an increase in the cost of funds | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :---------------- | :------ | :------ | :------ | | Net Interest Margin| 3.62% | 3.44% | 3.27% | | QoQ Change | +18 bps | N/A | N/A | | YoY Change | +35 bps | N/A | N/A | - The 18 basis point increase from the prior linked quarter was driven largely by an increase in the average balance of loans and an increase in loan yields in combination with elevated prepayment penalties and deferred fee recognition, partially offset by an increase in the cost of funds[9] - The total cost of funds for Q3 2024 was 339 basis points, up from 334 basis points in Q2 2024 and 303 basis points in Q3 2023, reflecting high short-term interest rates, intense deposit competition, and the runoff of lower cost GPG deposits[10] Non-Interest Income Non-interest income showed a slight increase quarter-over-quarter due to higher wire and letter of credit fees, but decreased year-over-year primarily due to lower GPG revenue as that business is wound down | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :---------------- | :----------- | :----------- | :----------- | | Non-Interest Income| $6.3 million | $6.1 million | $6.5 million | | QoQ Change | +$146,000 | N/A | N/A | | YoY Change | -$228,000 | N/A | N/A | - The quarter-over-quarter increase was driven primarily by an increase in wire and letter of credit fees, partially offset by the continuing decline in GPG revenue[10] - The year-over-year decrease was driven primarily by lower GPG revenue, partially offset by an increase in service charges on deposit accounts[10] Non-Interest Expense Non-interest expense significantly increased both quarter-over-quarter and year-over-year, largely due to a $10 million regulatory reserve and higher compensation and technology costs related to digital transformation | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :---------------- | :----------- | :----------- | :----------- | | Non-Interest Expense| $51.3 million| $42.3 million| $30.9 million| | QoQ Change | +$9.0 million| N/A | N/A | | YoY Change | +$20.3 million| N/A | N/A | - The quarter-over-quarter increase was primarily due to the pre-tax $10 million regulatory reserve and a $1.4 million increase in compensation and benefits, partially offset by a $2.2 million decline in professional fees[11] - The year-over-year increase was primarily due to the pre-tax $10 million regulatory reserve, a $2.7 million increase in compensation and benefits (related to employee growth), and a $1.8 million increase in technology costs (related to digital transformation)[11] Income Tax Expense The effective tax rate increased sequentially and significantly year-over-year, with the prior year's lower rate influenced by discrete tax items and a regulatory settlement reserve reversal | Metric | Q3 2024 | Q2 2024 | Q3 2023 | | :---------------- | :------ | :------ | :------ | | Effective Tax Rate| 30.2% | 29.7% | 22.2% | - The effective tax rate for the prior year period (Q3 2023) reflects a discrete tax item related to the exercise of stock options and the reversal of the regulatory settlement reserve in that period[12] Asset Quality Asset quality remained stable with an unchanged non-performing loans ratio, while the allowance for credit losses increased reflecting loan growth Credit Quality Overview Credit quality remained stable, with the non-performing loans ratio unchanged quarter-over-quarter and an increase in the allowance for credit losses reflecting loan growth | Metric | Sep 30, 2024 | Jun 30, 2024 | Sep 30, 2023 | | :-------------------------------- | :----------- | :----------- | :----------- | | Non-performing loans to total loans| 0.53% | 0.53% | 0.58% | | Allowance for credit losses | $62.5 million| $60.0 million| N/A | - The allowance for credit losses increased by $2.5 million from June 30, 2024, reflecting loan growth production and a modest increase in the duration of the loan book[13] Company Information This section provides details for the upcoming Q3 2024 earnings conference call and an overview of Metropolitan Bank Holding Corp Conference Call Details Metropolitan Bank Holding Corp. will host a conference call on October 18, 2024, to discuss its Q3 2024 results, with details provided for telephone access and live webcast - A conference call to discuss the results will be held at 9:00 a.m. ET on Friday, October 18, 2024[15] - Access to the event is available by telephone (800-445-7795 US, 785-424-1699 INTL, Conference ID: MCBQ324) and live webcast via the Company's investor relations website[15] About Metropolitan Bank Holding Corp. Metropolitan Bank Holding Corp. is the parent company of Metropolitan Commercial Bank, a New York City-based full-service commercial bank recognized for its performance and strong ratings - Metropolitan Bank Holding Corp. (NYSE: MCB) is the parent company of Metropolitan Commercial Bank, a New York City based full-service commercial bank[16] - The Bank provides a broad range of business, commercial and personal banking products and services to individuals, small businesses, private and public middle-market and corporate enterprises and institutions, municipalities, and local government entities[16] - Metropolitan Commercial Bank was named one of Newsweek's Best Regional Banks and Credit Unions 2024, ranked among the top ten successful loan producers by ICBA, affirmed a BBB+ (investment grade) deposit rating by Kroll, and earned a place in the Piper Sandler Bank Sm-All Stars Class of 2024[16] Forward-Looking Statement Disclaimer This section provides a standard disclaimer regarding forward-looking statements, outlining inherent risks and uncertainties that may cause actual results to differ materially Disclaimer Content This section contains a standard forward-looking statement disclaimer, cautioning readers that statements regarding future financial condition, results of operations, and business outlook are subject to risks and uncertainties that may cause actual results to differ materially from expectations, listing various factors that could impact these statements, including interest rate policies, inflation, credit quality, liquidity, regulatory actions, and economic conditions - The release contains 'forward-looking statements' regarding future financial condition, results of operations, and business outlook, which are not historical facts and involve difficult-to-predict risks and uncertainties[19] - Factors that may cause actual results to differ materially include interest rate policies, inflation, unexpected deterioration in loan or securities portfolios, changes in liquidity, unanticipated regulatory action, potential recessionary conditions, and unexpected increases in credit losses[19] - The company does not undertake any obligation to update or revise any forward-looking statement, except as required by law[19] Consolidated Financial Statements This section presents the company's unaudited consolidated financial statements, including balance sheets, income statements, asset quality, capital, and performance metrics Consolidated Balance Sheet (unaudited) The unaudited consolidated balance sheet provides a detailed breakdown of assets, liabilities, and stockholders' equity for Metropolitan Bank Holding Corp. across several quarters, highlighting trends in cash, loans, deposits, and capital | (in thousands) Assets | Sept. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | | :----------------------------------------------------------------------- | :------------- | :------------ | :------------ | :------------ | :------------- | | Cash and due from banks | $16,674 | $18,152 | $34,037 | $31,973 | $36,438 | | Overnight deposits | 301,804 | 226,510 | 500,366 | 237,492 | 140,929 | | Total cash and cash equivalents | 318,478 | 244,662 | 534,403 | 269,465 | 177,367 | | Investment securities available-for-sale | 510,966 | 504,748 | 497,789 | 461,207 | 429,850 | | Investment securities held-to-maturity | 438,445 | 449,368 | 460,249 | 468,860 | 478,886 | | Equity investment securities, at fair value | 5,213 | 2,122 | 2,115 | 2,123 | 2,015 | | Total securities | 954,624 | 956,238 | 960,153 | 932,190 | 910,751 | | Other investments | 26,586 | 26,584 | 32,669 | 38,966 | 35,015 | | Loans, net of deferred fees and unamortized costs | 5,897,119 | 5,838,892 | 5,719,218 | 5,624,797 | 5,354,487 | | Allowance for credit losses | (62,493) | (60,008) | (58,538) | (57,965) | (52,298) | | Net loans | 5,834,626 | 5,778,884 | 5,660,680 | 5,566,832 | 5,302,189 | | Receivables from global payments business, net | 96,048 | 90,626 | 93,852 | 87,648 | 79,892 | | Other assets | 172,996 | 168,597 | 171,614 | 172,571 | 178,145 | | Total assets | $7,403,358 | $7,265,591 | $7,453,371 | $7,067,672 | $6,683,359 | | Liabilities and Stockholders' Equity | | | | | | | Deposits | | | | | | | Non-interest-bearing demand deposits | $1,780,305 | $1,883,176 | $1,927,629 | $1,837,874 | $1,746,626 | | Interest-bearing deposits | 4,489,602 | 4,286,486 | 4,309,913 | 3,899,418 | 3,774,963 | | Total deposits | 6,269,907 | 6,169,662 | 6,237,542 | 5,737,292 | 5,521,589 | | Federal funds purchased | — | — | — | 99,000 | — | | Federal Home Loan Bank of New York advances | 150,000 | 150,000 | 300,000 | 440,000 | 355,000 | | Trust preferred securities | 20,620 | 20,620 | 20,620 | 20,620 | 20,620 | | Secured and other borrowings | 107,478 | 107,514 | 107,549 | 7,585 | 7,621 | | Prepaid third-party debit cardholder balances | 21,970 | 22,631 | 18,685 | 10,178 | 10,297 | | Other liabilities | 118,192 | 102,760 | 95,434 | 93,976 | 133,322 | | Total liabilities | 6,688,167 | 6,573,187 | 6,779,830 | 6,408,651 | 6,048,449 | | Common stock | 112 | 112 | 112 | 111 | 110 | | Additional paid in capital | 397,963 | 395,520 | 393,341 | 395,871 | 393,544 | | Retained earnings | 361,243 | 348,977 | 332,178 | 315,975 | 301,407 | | Accumulated other comprehensive gain (loss), net of tax effect | (44,127) | (52,205) | (52,090) | (52,936) | (60,151) | | Total stockholders' equity | 715,191 | 692,404 | 673,541 | 659,021 | 634,910 | | Total liabilities and stockholders' equity | $7,403,358 | $7,265,591 | $7,453,371 | $7,067,672 | $6,683,359 | Consolidated Statement of Income (unaudited) The unaudited consolidated statement of income presents the company's revenues, expenses, and net income for the third quarter and nine months ended September 30, 2024, with comparative periods, detailing interest income, non-interest income, and various expense categories | (dollars in thousands, except per share data) | Sept. 30, 2024 | Three months ended Jun. 30, 2024 | Sept. 30, 2023 | Nine months ended Sept. 30, 2024 | Sept. 30, 2023 | | :-------------------------------------------- | :------------- | :------------------------------- | :------------- | :------------------------------- | :------------- | | Total interest income | $120,454 | $115,761 | $97,897 | $348,550 | $270,138 | | Total interest expense | 55,221 | 54,222 | 44,340 | 162,069 | 104,296 | | Net interest income | 65,233 | 61,539 | 53,557 | 186,481 | 165,842 | | Provision for credit losses | 2,691 | 1,538 | 791 | 4,757 | 5,742 | | Net interest income after provision for credit losses | 62,542 | 60,001 | 52,766 | 181,724 | 160,100 | | Non-interest income | | | | | | | Service charges on deposit accounts | 2,135 | 2,094 | 1,463 | 6,092 | 4,400 | | Global Payments Group revenue | 3,500 | 3,686 | 4,247 | 11,255 | 14,828 | | Other income | 650 | 359 | 803 | 2,081 | 2,114 | | Total non-interest income | 6,285 | 6,139 | 6,513 | 19,428 | 21,342 | | Non-interest expense | | | | | | | Compensation and benefits | 19,885 | 18,532 | 17,208 | 58,244 | 48,751 | | Bank premises and equipment | 2,471 | 2,322 | 2,396 | 7,136 | 7,027 | | Professional fees | 4,745 | 6,916 | 3,873 | 17,633 | 13,033 | | Technology costs | 2,969 | 3,043 | 1,171 | 9,023 | 3,966 | | Licensing fees | 3,411 | 3,180 | 3,504 | 9,867 | 9,180 | | FDIC assessments | 2,950 | 2,925 | 1,984 | 8,800 | 6,438 | | Regulatory settlement reserve | 10,000 | — | (3,021) | 10,000 | (5,521) | | Other expenses | 4,826 | 5,339 | 3,809 | 14,711 | 11,517 | | Total non-interest expense | 51,257 | 42,257 | 30,924 | 135,414 | 94,391 | | Net income before income tax expense | 17,570 | 23,883 | 28,355 | 65,738 | 87,051 | | Income tax expense | 5,304 | 7,084 | 6,292 | 20,470 | 24,351 | | Net income (loss) | $12,266 | $16,799 | $22,063 | $45,268 | $62,700 | | Earnings per common share: | | | | | | | Average common shares outstanding: | | | | | | | Basic | 11,193,063 | 11,192,936 | 11,039,363 | 11,173,214 | 11,060,051 | | Diluted | 11,312,773 | 11,199,736 | 11,136,873 | 11,208,471 | 11,123,348 | | Basic earnings (loss) | $1.10 | $1.50 | $1.99 | $4.05 | $5.64 | | Diluted earnings (loss) | $1.08 | $1.50 | $1.97 | $4.04 | $5.61 | Loan Production, Asset Quality & Regulatory Capital This section provides a tabular overview of loan production, key asset quality indicators such as non-accrual loans and allowance for credit losses, and regulatory capital ratios for both the holding company and the bank | LOAN PRODUCTION (in millions) | Sept. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | | :------------------------------------------------- | :------------- | :------------ | :------------ | :------------ | :------------- | | Loan Production | $460.6 | $290.8 | $269.6 | $342.5 | $333.5 | | ASSET QUALITY (in thousands) | | | | | | | Non-accrual loans: | | | | | | | Commercial real estate | $24,000 | $24,000 | $44,939 | $44,939 | $24,000 | | Commercial and industrial | 6,989 | 6,989 | 6,989 | 6,934 | 6,934 | | Consumer | — | — | — | 24 | 24 | | Total non-accrual loans | $30,989 | $30,989 | $51,928 | $51,897 | $30,958 | | Non-accrual loans to total loans | 0.53 % | 0.53 % | 0.91 % | 0.92 % | 0.58 % | | Allowance for credit losses | $62,493 | $60,008 | $58,538 | $57,965 | $52,298 | | Allowance for credit losses to total loans | 1.06 % | 1.03 % | 1.02 % | 1.03 % | 0.98 % | | Charge-offs | $(122) | $(16) | $(3) | $(946) | $(129) | | Recoveries | $2 | $— | $2 | $— | $— | | Net charge-offs/(recoveries) to average loans (annualized) | 0.01 % | — % | — % | 0.07 % | 0.01 % | | REGULATORY CAPITAL | | | | | | | Tier 1 Leverage: | | | | | | | Metropolitan Bank Holding Corp. | 10.6 % | 10.3 % | 10.3 % | 10.6 % | 10.7 % | | Metropolitan Commercial Bank | 10.3 % | 10.1 % | 10.1 % | 10.3 % | 10.5 % | | Common Equity Tier 1 Risk-Based (CET1): | | | | | | | Metropolitan Bank Holding Corp. | 11.9 % | 11.7 % | 11.6 % | 11.5 % | 11.8 % | | Metropolitan Commercial Bank | 11.9 % | 11.8 % | 11.7 % | 11.5 % | 11.9 % | | Tier 1 Risk-Based: | | | | | | | Metropolitan Bank Holding Corp. | 12.2 % | 12.1 % | 11.9 % | 11.8 % | 12.2 % | | Metropolitan Commercial Bank | 11.9 % | 11.8 % | 11.7 % | 11.5 % | 11.9 % | | Total Risk-Based: | | | | | | | Metropolitan Bank Holding Corp. | 13.2 % | 13.0 % | 12.9 % | 12.8 % | 13.1 % | | Metropolitan Commercial Bank | 12.9 % | 12.8 % | 12.6 % | 12.5 % | 12.8 % | Performance Measures This table presents key performance indicators including earnings per share, various return on asset/equity metrics, yield on earning assets, cost of deposits, net interest spread, net interest margin, net charge-offs, and the efficiency ratio for recent quarters and year-to-date periods | (dollars in thousands, except per share data) Net income per consolidated statements of income | Sept. 30, 2024 | Three months ended Jun. 30, 2024 | Sept. 30, 2023 | Nine months ended Sept. 30, 2024 | Sept. 30, 2023 | | :--------------------------------------------------------------------------------------------- | :------------- | :------------------------------- | :------------- | :------------------------------- | :------------- | | Net income per consolidated statements of income | $12,266 | $16,799 | $22,063 | $45,268 | $62,700 | | Less: Earnings allocated to participating securities | — | — | (118) | — | (285) | | Net income (loss) available to common shareholders | $12,266 | $16,799 | $21,945 | $45,268 | $62,415 | | Per common share: | | | | | | | Basic earnings (loss) | $1.10 | $1.50 | $1.99 | $4.05 | $5.64 | | Diluted earnings (loss) | $1.08 | $1.50 | $1.97 | $4.04 | $5.61 | | Common shares outstanding: Period end | 11,194,411 | 11,192,936 | 11,062,729 | 11,194,411 | 11,062,729 | | Average fully diluted | 11,312,773 | 11,199,736 | 11,136,873 | 11,208,471 | 11,123,348 | | (1) Return on: | | | | | | | Average total assets | 0.67 % | 0.92 % | 1.33 % | 0.83 % | 1.31 % | | Average equity | 6.9 % | 9.9 % | 13.9 % | 8.8 % | 13.7 % | | Average tangible common equity (2), (3) | 7.0 % | 10.1 % | 14.1 % | 9.0 % | 13.9 % | | (1) Yield on average earning assets | 6.68 % | 6.47 % | 5.99 % | 6.52 % | 5.75 % | | (1) Total cost of deposits | 3.32 % | 3.26 % | 2.74 % | 3.25 % | 2.22 % | | Net interest spread (1) | 1.93 % | 1.77 % | 1.67 % | 1.82 % | 1.87 % | | Net interest margin (1) | 3.62 % | 3.44 % | 3.27 % | 3.49 % | 3.53 % | | (1) Net charge-offs as % of average loans | 0.01 % | — % | 0.01 % | — % | 0.01 % | | Efficiency ratio (4) | 71.7 % | 62.4 % | 51.5 % | 65.8 % | 50.4 % | Interest Margin Analysis This analysis details the average balances, interest earned/paid, and corresponding yields/rates for interest-earning assets and interest-bearing liabilities, providing insights into the calculation of net interest income, net interest spread, net interest margin, and total cost of funds for both quarterly and nine-month periods | (dollars in thousands) Assets: | Sept. Average Balance | 30, 2024 Interest | Yield / Rate (1) | Three Jun. Average Balance | months ended 30, 2024 Interest | Yield / Rate (1) | Sept. Average Balance | 30, 2023 Interest | Yield / Rate (1) | | :----------------------------------------------- | :-------------------- | :---------------- | :--------------- | :------------------------- | :----------------------------- | :--------------- | :-------------------- | :---------------- | :--------------- | | Interest-earning assets: | | | | | | | | | | | Loans (2) | $5,889,298 | $111,286 | 7.52 % | $5,754,283 | $104,594 | 7.31 % | $5,283,114 | $90,666 | 6.80 % | | Available-for-sale securities | 581,529 | 3,350 | 2.29 | 589,825 | 3,353 | 2.29 | 527,673 | 2,261 | 1.71 | | Held-to-maturity securities | 444,842 | 2,061 | 1.84 | 456,078 | 2,124 | 1.87 | 497,682 | 2,412 | 1.94 | | Equity investments | 3,164 | 23 | 2.89 | 2,431 | 16 | 2.59 | 2,387 | 13 | 2.20 | | Overnight deposits | 231,946 | 3,223 | 5.53 | 369,169 | 5,167 | 5.63 | 124,211 | 1,783 | 5.62 | | Other interest-earning assets | 26,584 | 511 | 7.65 | 27,301 | 506 | 7.45 | 36,952 | 762 | 8.24 | | Total interest-earning assets | 7,177,363 | 120,454 | 6.68 | 7,199,087 | 115,761 | 6.47 | 6,472,019 | 97,897 | 5.99 | | Non-interest-earning assets | 180,748 | | | 182,234 | | | 170,195 | | | | Allowance for credit losses | (60,608) | | | (58,841) | | | (52,357) | | | | Total assets | $7,297,503 | | | $7,322,480 | | | $6,589,857 | | | | Liabilities and Stockholders' Equity: | | | | | | | | | | | Interest-bearing liabilities: | | | | | | | | | | | Money market and savings accounts | $4,314,237 | 51,266 | 4.73 | $4,319,340 | 50,236 | 4.68 | $3,465,347 | 35,969 | 4.12 | | Certificates of deposit | 41,028 | 471 | 4.57 | 37,084 | 318 | 3.45 | 38,937 | 265 | 2.70 | | Total interest-bearing deposits Borrowed funds | 4,355,265 270,633 | 51,737 3,484 | 4.73 5.12 | 4,356,424 287,104 | 50,554 3,667 | 4.67 5.14 | 3,504,284 572,456 | 36,234 8,106 | 4.10 5.66 | | Total interest-bearing liabilities | 4,625,898 | 55,221 | 4.75 | 4,643,528 | 54,222 | 4.70 | 4,076,740 | 44,340 | 4.32 | | Non-interest-bearing liabilities: | | | | | | | | | | | Non-interest-bearing deposits | 1,851,497 | | | 1,879,213 | | | 1,734,956 | | | | Other non-interest-bearing liabilities | 113,666 | | | 119,675 | | | 146,956 | | | | Total liabilities | 6,591,061 | | | 6,642,416 | | | 5,958,652 | | | | Stockholders' equity | 706,442 | | | 680,064 | | | 631,205 | | | | Total liabilities and equity | $7,297,503 | | | $7,322,480 | | | $6,589,857 | | | | Net interest income | | $65,233 | | | $61,539 | | | $53,557 | | | Net interest rate spread (3) | | | 1.93 % | | | 1.77 % | | | 1.67 % | | Net interest margin (4) | | | 3.62 % | | | 3.44 % | | | 3.27 % | | Total cost of deposits (5) | | | 3.32 % | | | 3.26 % | | | 2.74 % | | Total cost of funds (6) | | | 3.39 % | | | 3.34 % | | | 3.03 % | | (dollars in thousands) | Average Balance | Sept. 30, 2024 Interest | Yield / Rate (1) | Average Balance | Sept. 30, 2023 Interest | Yield / Rate (1) | | :-------------------------------------- | :-------------- | :---------------------- | :--------------- | :-------------- | :---------------------- | :--------------- | | Assets: Interest-earning assets: | | | | | | | | Loans (2) | $5,780,539 | $318,262 | 7.35 % | $5,016,075 | $247,142 | 6.58 % | | Available-for-sale securities | 578,891 | 9,660 | 2.23 | 526,156 | 6,435 | 1.63 | | Held-to-maturity securities | 455,358 | 6,357 | 1.86 | 507,771 | 7,391 | 1.94 | | Equity investments | 2,672 | 54 | 2.67 | 2,375 | 38 | 2.12 | | Overnight deposits | 299,455 | 12,544 | 5.60 | 189,552 | 7,353 | 5.12 | | Other interest-earning assets | 29,095 | 1,673 | 7.68 | 32,166 | 1,779 | 7.37 | | Total interest-earning assets | 7,146,010 | 348,550 | 6.52 | 6,274,095 | 270,138 | 5.75 | | Non-interest-earning assets | 182,738 | | | 161,592 | | | | Allowance for credit losses | (59,326) | | | (48,693) | | | | Total assets | $7,269,422 | | | $6,386,994 | | | | Liabilities and Stockholders' Equity: | | | | | | | | Interest-bearing liabilities: | | | | | | | | Money market and savings accounts | $4,243,887 | $148,114 | 4.66 | $3,099,908 | $85,099 | 3.67 | | Certificates of deposit | 37,472 | 1,064 | 3.79 | 45,874 | 911 | 2.66 | | Total interest-bearing deposits | 4,281,359 | 149,178 | 4.65 | 3,145,782 | 86,010 | 3.66 | | Borrowed funds | 331,486 | 12,891 | 5.19 | 451,063 | 18,286 | 5.41 | | Total interest-bearing liabilities | 4,612,845 | 162,069 | 4.69 | 3,596,845 | 104,296 | 3.88 | | Non-interest-bearing liabilities: | | | | | | | | Non-interest-bearing deposits | 1,856,061 | | | 2,032,011 | | | | Other non-interest-bearing liabilities | 115,199 | | | 144,712 | | | | Total liabilities | 6,584,105 | | | 5,773,568 | | | | Stockholders' equity | 685,317 | | | 613,426 | | | | Total liabilities and equity | $7,269,422 | | | $6,386,994 | | | | Net interest income | | $186,481 | | | $165,842 | | | Net interest rate spread (3) | | | 1.82 % | | | 1.87 % | | Net interest margin (4) | | | 3.49 % | | | 3.53 % | | Total cost of deposits (5) | | | 3.25 % | | | 2.22 % | | Total cost of funds (6) | | | 3.35 % | | | 2.48 % | Reconciliation of Non-GAAP Measures This section provides a reconciliation of non-GAAP financial measures to their most directly comparable GAAP measures, offering additional insights into the company's operating performance and trends, particularly for tangible assets and equity - The earnings release includes certain non-GAAP financial measures, which management believes provide meaningful information to investors in understanding the Company's operating performance and trends[31] | (dollars in thousands, except per share data) Average assets Less: average intangible assets | Sept. 30, 2024 | Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sept. 30, 2023 | Nine months Sept. 30, 2024 | ended Sept. 30, 2023 | | :------------------------------------------------------------------------------------------- | :------------- | :------------ | :------------ | :------------ | :------------- | :------------------------- | :------------------- | | Average assets | $7,297,503 | $7,322,480 | $7,185,768 | $6,861,335 | $6,589,857 | $7,269,422 | $6,386,994 | | Less: average intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | | Average tangible assets (non-GAAP) | $7,287,770 | $7,312,747 | $7,176,035 | $6,851,602 | $6,580,124 | $7,259,689 | $6,377,261 | | Average common equity | $706,442 | $680,064 | $667,009 | $643,257 | $631,205 | $685,317 | $613,426 | | Less: average intangible assets Average tangible common equity (nonGAAP) | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | | Average tangible common equity (nonGAAP) | $696,709 | $670,331 | $657,276 | $633,524 | $621,472 | $675,584 | $603,693 | | Total assets | $7,403,358 | $7,265,591 | $7,453,371 | $7,067,672 | $6,683,359 | $7,403,358 | $6,683,359 | | Less: intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | | Tangible assets (non-GAAP) | $7,393,625 | $7,255,858 | $7,443,638 | $7,057,939 | $6,673,626 | $7,393,625 | $6,673,626 | | Common equity | $715,191 | $692,404 | $673,541 | $659,021 | $634,910 | $715,191 | $634,910 | | Less: intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | | Tangible common equity (book value) (non-GAAP) | $705,458 | $682,671 | $663,808 | $649,288 | $625,177 | $705,458 | $625,177 | | Common shares outstanding | | | | | | | | | Book value per share (GAAP) Tangible book value per share (non-GAAP) | 11,194,411 63.89 | 11,192,936 61.86 | 11,191,958 60.18 | 11,062,729 59.57 | 11,062,729 57.39 | 11,194,411 63.89 | 11,062,729 57.39 |