Metropolitan Bank (US:MCB)2022-07-22 18:22Financial Data and Key Metrics Changes - The company reported record quarterly earnings with a return on average tangible common equity of 16.7% [4] - Revenues increased by 44% year-over-year, while non-interest expenses rose by 21%, resulting in an efficiency ratio improvement from 50.3% to 42.2% [8] - Total loans reached $926 million, up 27%, and total deposits increased by $890 million, or 17%, with demand deposit accounts (DDAs) rising by $676 million, or 24% [8] Business Line Data and Key Metrics Changes - The Global Payments Group (GPG) saw revenues increase by 36% compared to Q2 2021, with transaction volumes up 29% to 29.1 million and dollar volume of transactions rising 47% to over $8 billion [9] - Loan originations reached a record $513 million in the quarter, up 5% from Q1 and 93% year-over-year [16] - Credit quality remained strong with no charge-offs in 2022 and nonperforming loans effectively at zero [17] Market Data and Key Metrics Changes - Retail deposits, including those with loan customers, increased by $175.6 million, reflecting strong client engagement [18] - The company maintained a robust liquidity position with 19% of total assets in overnight deposits and total on-balance sheet liquidity at nearly 34% of total assets [20] Company Strategy and Development Direction - The company focuses on assisting clients in building generational wealth, which has been the foundation of its growth and success [4] - MCB is strategically limiting crypto-related deposits to 50% of total available for investment or lending, maintaining 100% of crypto-related deposits in Federal Reserve accounts due to volatility [6] - The company aims to build a scalable and profitable digital retail platform within a commercial bank, emphasizing the importance of choosing the right clients and regulatory partnerships [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong loan growth pipeline and the ability to manage asset quality while being opportunistic [30] - The company is cautious about potential paydowns and amortization affecting loan growth in the second half of the year [31] - Management noted that the GPG business is traditional retail banking and is not immune to economic slowdowns, but they expect consistent contributions from GPG month-over-month and year-over-year [42] Other Important Information - The company held $455 million in Voyager-related deposits as of June 30, with $272 million currently in the FBO account [12] - Voyager's bankruptcy represents less than 3% of GPG's revenue, indicating minimal impact on overall company performance [13] - The effective tax rate for the remainder of the year is expected to be in the range of 31% to 32% [24] Q&A Session Summary Question: Loan growth expectations - Management indicated that while they are focused on asset quality, they are optimistic about maintaining strong loan growth, potentially exceeding 20% for the year [30] Question: Impact of paydowns on loan growth - Management acknowledged that they expect a fair amount of amortization and payoffs throughout the second half of the year [31] Question: Voyager-related deposits and their impact - Management clarified that the current FBO balance is $272 million, and if the stay is lifted, these funds could leave the bank over time [38] Question: Non-Voyager crypto deposits trends - Management expressed confidence in the stability of non-Voyager crypto deposits, noting that clients are managing their businesses effectively in the current environment [42] Question: Expense growth outlook - Management indicated that they will continue to invest in human capital and technology, expecting some uptick in expenses but focusing on positive operating leverage [69]