MetroCity Bankshares(MCBS) - 2025 Q2 - Quarterly Results

Earnings Release Summary MetroCity Bankshares reported its financial results for Q2 and H1 2025, highlighting net income, EPS, and key performance ratios Q2 2025 & H1 2025 Performance Highlights MetroCity Bankshares reported net income of $16.8 million for Q2 2025, a slight increase from $16.3 million in Q1 2025 but a small decrease from $16.9 million in Q2 2024. For the first six months of 2025, net income grew 4.9% year-over-year to $33.1 million. Key performance indicators for Q2 2025 showed an annualized ROA of 1.87% and an improved net interest margin of 3.77%. The efficiency ratio improved quarter-over-quarter to 37.2% but worsened compared to the prior year Net Income and Diluted EPS | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Income | $16.8 million | $16.3 million | $16.9 million | | Diluted EPS | $0.65 | $0.63 | $0.66 | Half-Year Net Income and Diluted EPS | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net Income | $33.1 million | $31.6 million | | Diluted EPS | $1.29 | $1.24 | Key Performance Ratios | Performance Ratio | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Annualized ROA | 1.87% | 1.85% | 1.89% | | Annualized ROE | 15.74% | 15.67% | 17.10% | | Efficiency Ratio | 37.2% | 38.3% | 35.9% | | Net Interest Margin | 3.77% | 3.67% | 3.66% | Acquisition of First IC Corporation The company has secured all necessary approvals for its merger with First IC Corporation, with closing anticipated in early Q4 2025 Merger Details The company has successfully obtained all required regulatory and shareholder approvals for its merger with First IC Corporation, the parent of First IC Bank. The transaction is anticipated to be finalized in the early fourth quarter of 2025, pending the fulfillment of standard closing conditions - On July 15, 2025, MetroCity received all required regulatory approvals and non-objections to complete the merger with First IC Corporation[5] - First IC's shareholders voted to approve the merger on July 15, 2025[5] - The merger is expected to be completed early in the fourth quarter of 2025, subject to customary closing conditions[5] Results of Operations This section details the company's financial performance, including net income, net interest income, noninterest income, noninterest expenses, and income tax expense Net Income Q2 2025 net income increased 3.2% quarter-over-quarter to $16.8 million, primarily driven by higher net interest income. However, it decreased by 0.7% year-over-year due to increased noninterest expenses and a higher provision for credit losses. For the first half of 2025, net income rose 4.9% year-over-year to $33.1 million, largely due to a $4.9 million increase in net interest income - Q2 2025 net income increased by $529,000 (3.2%) from Q1 2025, mainly due to a $1.6 million increase in net interest income and a $277,000 increase in noninterest income[6] - Compared to Q2 2024, net income decreased by $111,000 (0.7%) due to higher noninterest expense ($1.1 million), income tax expense ($413,000), and provision for credit losses ($257,000)[6] - For the six months ended June 30, 2025, net income increased by $1.6 million (4.9%) from the same period in 2024, driven by a $4.9 million increase in net interest income[7] Net Interest Income and Net Interest Margin Net interest income for Q2 2025 was $32.2 million. The net interest margin expanded by 10 basis points quarter-over-quarter to 3.77%, driven by a 9 basis point decrease in the cost of average interest-bearing liabilities. Year-over-year, the margin increased by 11 basis points, also due to a significant 29 basis point decrease in liability costs. The company's interest rate derivatives contributed a $4.2 million credit to interest expense during the quarter Net Interest Income and Net Interest Margin | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Net Interest Income | $32.2M | $30.6M | $30.7M | | Net Interest Margin | 3.77% | 3.67% | 3.66% | - The QoQ increase in NIM was driven by a 9 basis point decrease in the cost of average interest-bearing liabilities (to 3.39%) and a 3 basis point increase in the yield on average interest-earning assets (to 6.34%)[11] - Interest expense decreased by 6.5% YoY, primarily due to a 38 basis point decrease in deposit costs[9] - The company recorded a credit to interest expense of $4.2 million from interest rate derivative agreements during Q2 2025[9][10] Noninterest Income Noninterest income for Q2 2025 increased by 5.1% quarter-over-quarter to $5.7 million, primarily due to higher gains on the sale of residential mortgage loans. This was partially offset by lower gains from SBA loan sales. Year-over-year, noninterest income grew 3.1%, driven by higher gains on SBA loan sales and other income - Q2 2025 noninterest income increased by $277,000 (5.1%) from Q1 2025, mainly due to higher gains on sale of residential mortgage loans[13] Loan Activity (Q2 2025 vs Q1 2025) | Loan Activity (Q2 2025 vs Q1 2025) | Q2 2025 | Q1 2025 | | :--- | :--- | :--- | | SBA Loan Sales | $20.7M | $16.6M | | Mortgage Loan Sales | $54.3M | $40.1M | - For the six months ended June 30, 2025, noninterest income increased by a modest $62,000 (0.6%) compared to the same period in 2024[15] Noninterest Expense Noninterest expense in Q2 2025 rose 2.3% quarter-over-quarter to $14.1 million, partly due to $333,000 in expenses related to the First IC merger. Year-over-year, expenses increased by 8.3%, driven by higher salaries, professional fees, and merger costs. Consequently, the efficiency ratio improved to 37.2% from the previous quarter but deteriorated from 35.9% in the prior year's quarter - Q2 2025 noninterest expense increased by $314,000 (2.3%) QoQ, including $333,000 of First IC merger-related expenses[17] - YoY, noninterest expense increased by $1.1 million (8.3%), primarily due to higher salary and employee benefits, professional fees, and merger-related expenses[18] Efficiency Ratio | Efficiency Ratio | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Ratio | 37.2% | 38.3% | 35.9% | Income Tax Expense The company's effective tax rate for Q2 2025 was 28.9%, which is higher than the 26.2% in Q1 2025 and 27.5% in Q2 2024. For the first six months of 2025, the effective tax rate was 27.6%, slightly down from 27.9% in the same period of 2024 Effective Tax Rate | Effective Tax Rate | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | | Rate | 28.9% | 26.2% | 27.5% | Balance Sheet This section provides an overview of the company's financial position, detailing total assets, loan portfolio composition, and deposit trends Total Assets As of June 30, 2025, total assets were $3.62 billion, a decrease of 1.2% from the previous quarter, primarily due to a $29.5 million reduction in loans held for sale and an $11.0 million decrease in loans held for investment. Year-over-year, total assets remained relatively unchanged Total Assets | Period End | Total Assets | | :--- | :--- | | June 30, 2025 | $3.62 billion | | March 31, 2025 | $3.66 billion | | June 30, 2024 | $3.62 billion | - The $44.0 million quarter-over-quarter decrease in total assets was primarily driven by decreases in loans held for sale ($29.5 million) and loans held for investment ($11.0 million)[22] Loans Loans held for investment totaled $3.12 billion at the end of Q2 2025, down 0.4% from the prior quarter but up 1.0% year-over-year. The quarterly decrease was mainly due to a $26.7 million decline in residential mortgage loans, which was partially offset by growth in commercial real estate and commercial and industrial loans Loans Held for Investment | Period End | Loans Held for Investment | | :--- | :--- | | June 30, 2025 | $3.12 billion | | March 31, 2025 | $3.13 billion | | June 30, 2024 | $3.09 billion | - The quarter-over-quarter decrease in loans was driven by a $26.7 million decrease in residential mortgage loans, offset by increases in commercial real estate ($11.2 million) and commercial and industrial loans ($2.3 million)[25] Deposits Total deposits decreased by 1.7% quarter-over-quarter to $2.69 billion, driven by outflows from interest-bearing demand, money market, and time deposits. In contrast, noninterest-bearing deposits grew by $8.9 million. Uninsured deposits constituted 25.1% of total deposits, up from 24.3% in the prior quarter. The bank maintained significant liquidity with $1.31 billion in available borrowing capacity Total Deposits | Period End | Total Deposits | | :--- | :--- | | June 30, 2025 | $2.69 billion | | March 31, 2025 | $2.74 billion | | June 30, 2024 | $2.75 billion | - Noninterest-bearing deposits increased to $548.9 million, representing 20.4% of total deposits, up from 19.7% in Q1 2025[27] - Uninsured deposits were 25.1% of total deposits at June 30, 2025. The company had $1.31 billion of available borrowing capacity[28] Asset Quality This section assesses the company's credit risk management, including provisions for credit losses and trends in nonperforming assets Credit Loss Provision and Nonperforming Assets The company recorded a provision for credit losses of $129,000 in Q2 2025, a slight decrease from the previous quarter. Asset quality improved, with nonperforming assets (NPAs) falling to $15.2 million, or 0.42% of total assets, from $18.5 million (0.51%) in Q1 2025. The allowance for credit losses (ACL) to total loans remained stable at 0.60%, while the ACL coverage of nonperforming loans increased significantly to 129.76% - A provision for credit losses of $129,000 was recorded in Q2 2025, compared to $135,000 in Q1 2025 and a credit provision of $128,000 in Q2 2024[29] Nonperforming Assets | Metric | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Nonperforming Assets | $15.2 million | $18.5 million | $14.5 million | | NPAs to Total Assets | 0.42% | 0.51% | 0.40% | Allowance for Credit Losses Ratios | Ratio | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | ACL to Total Loans | 0.60% | 0.59% | 0.58% | | ACL to Nonperforming Loans | 129.76% | 110.52% | 138.11% | Financial Tables This section provides comprehensive financial data, including income statements, balance sheets, performance ratios, and detailed loan and asset quality metrics Selected Financial Data This table provides a summary of key financial data, including income statements, per share data, performance ratios, asset quality metrics, and balance sheet ratios for the last five quarters and the six-month periods ended June 30, 2025, and 2024 Selected Financial Data (Dollars in thousands, except per share data) | (Dollars in thousands, except per share data) | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net income | $16,826 | $16,297 | $16,937 | $33,123 | $31,567 | | Diluted income per share | $0.65 | $0.63 | $0.66 | $1.29 | $1.24 | | Return on average assets | 1.87% | 1.85% | 1.89% | 1.86% | 1.77% | | Net interest margin | 3.77% | 3.67% | 3.66% | 3.72% | 3.45% | | Efficiency ratio | 37.23% | 38.32% | 35.93% | 37.76% | 36.84% | | ACL to loans held for investment | 0.60% | 0.59% | 0.58% | 0.60% | 0.58% | Consolidated Balance Sheets This table presents the unaudited consolidated balance sheets, detailing assets, liabilities, and shareholders' equity as of the end of the last five quarters Consolidated Balance Sheets (Dollars in thousands) | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Total assets | $3,615,688 | $3,659,725 | $3,615,370 | | Loans less allowance | $3,102,786 | $3,113,943 | $3,072,538 | | Total deposits | $2,689,493 | $2,737,030 | $2,745,860 | | Total liabilities | $3,179,588 | $3,231,756 | $3,208,142 | | Total shareholders' equity | $436,100 | $427,969 | $407,228 | Consolidated Statements of Income This table provides the unaudited consolidated statements of income, showing detailed revenue and expense items for the last five quarters and the six-month periods ended June 30, 2025, and 2024 Consolidated Statements of Income (Dollars in thousands) | (Dollars in thousands) | Q2 2025 | Q1 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net interest income | $32,178 | $30,554 | $30,712 | $62,732 | $57,797 | | Provision for credit losses | $129 | $135 | $(128) | $264 | $(268) | | Total noninterest income | $5,733 | $5,456 | $5,559 | $11,189 | $11,127 | | Total noninterest expense | $14,113 | $13,799 | $13,032 | $27,912 | $25,393 | | Net income | $16,826 | $16,297 | $16,937 | $33,123 | $31,567 | QTD Average Balances and Yields/Rates This table details the average balances, interest income/expense, and annualized yields/rates for various categories of earning assets and interest-bearing liabilities for the quarters ended June 30, 2025, March 31, 2025, and June 30, 2024 QTD Average Balances and Yields/Rates (For the Three Months Ended) | (For the Three Months Ended) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Yield on total earning assets | 6.34% | 6.31% | 6.45% | | Cost of total interest-bearing liabilities | 3.39% | 3.48% | 3.68% | | Net interest spread | 2.95% | 2.83% | 2.77% | | Net interest margin | 3.77% | 3.67% | 3.66% | YTD Average Balances and Yields/Rates This table presents the year-to-date average balances, interest income/expense, and annualized yields/rates for earning assets and interest-bearing liabilities for the six-month periods ended June 30, 2025, and June 30, 2024 YTD Average Balances and Yields/Rates (For the Six Months Ended) | (For the Six Months Ended) | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Yield on total earning assets | 6.33% | 6.36% | | Cost of total interest-bearing liabilities | 3.43% | 3.81% | | Net interest spread | 2.90% | 2.55% | | Net interest margin | 3.72% | 3.45% | Loan Portfolio Composition This table provides a breakdown of the loan portfolio by category (Construction, Commercial Real Estate, Commercial & Industrial, Residential Real Estate, and Consumer) for the last five quarter-ends, showing both dollar amounts and percentage of total loans Loan Portfolio Composition (Dollars in thousands) | (Dollars in thousands) | June 30, 2025 | % of Total | | :--- | :--- | :--- | | Construction and development | $30,149 | 1.0% | | Commercial real estate | $803,384 | 25.7% | | Commercial and industrial | $73,832 | 2.3% | | Residential real estate | $2,221,316 | 71.0% | | Gross loans held for investment | $3,128,881 | 100.0% | Nonperforming Assets This table details the components of nonperforming assets, including nonaccrual loans and other real estate owned (OREO), for the last five quarter-ends. It also includes key asset quality ratios Nonperforming Assets (Dollars in thousands) | (Dollars in thousands) | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | Nonaccrual loans | $14,448 | $16,823 | $13,004 | | Other real estate owned | $744 | $1,707 | $1,452 | | Total non-performing assets | $15,192 | $18,530 | $14,456 | | Nonperforming assets to total assets | 0.42% | 0.51% | 0.40% | Allowance for Loan Losses Reconciliation This table provides a reconciliation of the allowance for loan losses, showing the beginning balance, net charge-offs by loan category, provision expense, and the ending balance for the last five quarters and the six-month periods ended June 30, 2025, and 2024 Allowance for Loan Losses Reconciliation (Dollars in thousands, for Q2 2025) | (Dollars in thousands, for Q2 2025) | Amount | | :--- | :--- | | Balance, beginning of period | $18,592 | | Total net charge-offs | $60 | | Provision for loan losses | $216 | | Balance, end of period | $18,748 |