Metropolitan Bank (MCB) - 2019 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (unaudited) This section presents the unaudited consolidated financial statements for the quarterly period ended March 31, 2019, including detailed notes on accounting policies and financial instruments Consolidated Statements of Financial Condition Total assets reached $2.55 billion by March 31, 2019, driven by net loan growth, with liabilities and equity also increasing Consolidated Balance Sheet Highlights (in thousands) | Metric | March 31, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Assets | $2,545,186 | $2,182,644 | | Net Loans | $2,081,586 | $1,846,274 | | Total Deposits | $1,966,130 | $1,660,554 | | Total Liabilities | $2,271,399 | $1,918,127 | | Total Stockholders' Equity | $273,787 | $264,517 | Consolidated Statements of Operations Net income for Q1 2019 increased to $8.53 million, driven by higher net interest income despite lower non-interest income, resulting in improved diluted EPS Quarterly Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net Interest Income | $20,893 | $16,516 | | Provision for Loan Losses | ($2,031) | $1,477 | | Non-interest Income | $2,393 | $5,312 | | Net Income | $8,531 | $6,291 | | Diluted EPS | $1.01 | $0.75 | Consolidated Statements of Comprehensive Income Comprehensive income for Q1 2019 rose to $8.79 million, primarily due to increased net income and a positive shift in unrealized gains on available-for-sale securities Quarterly Comprehensive Income (in thousands) | Metric | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net Income | $8,531 | $6,291 | | Other Comprehensive Income (Loss), net | $258 | ($322) | | Comprehensive Income | $8,789 | $5,969 | Consolidated Statements of Changes in Stockholders' Equity Stockholders' equity increased to $273.8 million by Q1 2019, primarily driven by the $8.5 million net income earned during the quarter - Total stockholders' equity grew by $9.3 million during Q1 2019, primarily driven by net income of $8.5 million[16] Consolidated Statements of Cash Flows Cash and cash equivalents increased by $123.1 million in Q1 2019, primarily due to strong net cash from financing activities offsetting investing outflows Quarterly Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2019 | Q1 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $21,029 | $15,322 | | Net Cash used in Investing Activities | ($233,421) | ($109,061) | | Net Cash from Financing Activities | $335,488 | $203,458 | | Net Increase in Cash | $123,096 | $109,719 | Notes to Unaudited Consolidated Financial Statements Notes detail accounting policies, including new ASU adoptions, loan portfolio growth to $2.1 billion, and off-balance-sheet commitments of $184.1 million in undrawn credit lines - The company adopted ASU 2014-09 (Revenue from Contracts) and ASU 2016-01 (Financial Instruments) on January 1, 2019, recording adjustments to retained earnings of $117,000 and $68,000 (net of tax), respectively[29][30] - Total loans grew to $2.105 billion, with Commercial Real Estate representing the largest segment at $1.134 billion[42] - Net recoveries for Q1 2019 were $3.9 million, largely due to $4.2 million in recoveries related to previously charged-off taxi medallion loans[42] - As of March 31, 2019, the company had off-balance-sheet commitments including $184.1 million in undrawn lines of credit and $36.2 million in standby letters of credit[83] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2019's strong financial performance, including asset and loan growth, increased net income to $8.5 million, and the bank's 'Well-Capitalized' status - Total assets increased to $2.55 billion at March 31, 2019, from $2.18 billion at December 31, 2018, driven by loan production of $289.8 million in Q1 2019[99] - Net income for Q1 2019 rose to $8.5 million from $6.3 million in Q1 2018. The increase was primarily due to higher net interest income and a $3.5 million decrease in the provision for loan losses[127] - The provision for loan losses was a credit of $2.0 million for Q1 2019, mainly due to a $4.2 million recovery on previously charged-off taxi medallion loans[138] - Non-interest income decreased by $2.9 million YoY, primarily due to a $1.1 million decline in wire fees and a $2.1 million decrease in foreign currency conversion fees related to digital currency customers[140] - The Bank meets all requirements to be considered "Well-Capitalized" under applicable regulatory guidelines, with a Tier 1 leverage ratio of 13.4% as of March 31, 2019[153][158] Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk using NII and EVE sensitivity models, showing asset-sensitivity with NII increasing by 2.64% and EVE decreasing by 5.28% in a +200 bps rate scenario Net Interest Income Sensitivity Analysis (Year 1 Forecast) | Rate Shock (bps) | Change from Level (%) | | :--- | :--- | | +400 | 5.40% | | +200 | 2.64% | | -100 | (1.54)% | | -200 | (1.92)% | Economic Value of Equity (EVE) Sensitivity Analysis | Rate Shock (bps) | Change in EVE (%) | | :--- | :--- | | +400 | (10.68)% | | +200 | (5.28)% | | -100 | (0.26)% | | -200 | (3.15)% | Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2019, with no material changes to internal control over financial reporting - The Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures are effective as of March 31, 2019[170] - No material changes were made to the Company's internal control over financial reporting during the most recent fiscal quarter[170] PART II. OTHER INFORMATION Legal Proceedings The company is involved in various legal actions, but management believes the ultimate liability will not materially impact financial condition or results - Management believes that any liability from pending or threatened legal actions will not be material to the Company's financial condition or results[172] Risk Factors No material changes to the company's risk factors have occurred since the Annual Report on Form 10-K filing - The Company's evaluation of risk factors has not changed materially from those disclosed in the Annual Report on Form 10-K filed on March 13, 2019[173] Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported for the period - None[174] Defaults Upon Senior Securities No defaults upon senior securities were reported for the period - None[175] Mine Safety Disclosures This item is not applicable to the company - Not applicable[176] Other Information No other information was reported for this item - None[177] Exhibits This section indexes exhibits, including CEO and CFO certifications and XBRL Interactive Data Files - The report includes CEO and CFO certifications pursuant to Rule 13a-14(a) and Section 906 of the Sarbanes-Oxley Act[182] - XBRL interactive data files are included as exhibits[182]