Metropolitan Bank (US:MCB)2024-10-18 14:50Financial Data and Key Metrics Changes - The bank reported earnings per share of $1.08, which includes $12.6 million in charges, equating to $0.78 per share [4] - Adjusted Return on Tangible Common Equity (ROTCE) was 12% for the third quarter and 12.1% year-to-date, with expectations to achieve mid-teens ROTCE in the next 12 to 18 months [5] - The net interest margin (NIM) increased by 18 basis points to 3.62% [7] Business Line Data and Key Metrics Changes - Loan growth in the third quarter was $68 million, with total loan originations exceeding $450 million and payoffs around $400 million [7] - Non-interest income remained stable at $6.2 million, with GPG-related revenue at approximately $3.5 million [11] - Non-interest expenses totaled $51.3 million, impacted by a $10 million reserve for regulatory matters [12] Market Data and Key Metrics Changes - Deposits increased by approximately $100 million in the quarter, with interest-bearing deposits up by $200 million and non-interest-bearing deposits down by $100 million [10] - Year-to-date, deposits have increased by over $500 million net of GPG outflows [11] Company Strategy and Development Direction - The bank is focused on relationship-based commercial banking with high-quality clients and plans to grow its loan book through branch-light deposit gathering initiatives [3][6] - The wind down of the GPG business is on track for completion by year-end, with expectations to offset deposit runoff with diverse deposit verticals [5][11] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued growth in the loan book and expects NIM to stabilize around 3.45% to 3.5% for the remainder of the year [8][9] - The effective tax rate is expected to be in the range of 31% to 32% going forward [13] - Management expressed confidence in asset quality, with no broad-based negative trends identified in the loan portfolio [6] Other Important Information - The bank's digital transformation investment incurred $1.9 million in expenses during the quarter [12] - The total accumulated one-time charges related to various matters for the year are approximately $23 million [13] Q&A Session Summary Question: Regulatory reserve concerns - Management clarified that the $10 million reserve is linked to a long-standing matter and does not anticipate additional regulatory costs beyond this quarter [14][15] Question: CRE to risk-based capital ratio - The bank's internal target for the CRE to risk-based capital ratio is above 350%, with no plans to approach the regulatory guidance of 300% [16][17] Question: Loan growth expectations - The bank expects net loan growth of $200 million to $250 million in the fourth quarter, primarily in C&I and healthcare sectors [22][23] Question: GPG revenue outlook - Management confirmed that GPG revenues are expected to cease by the first quarter of next year [19][20] Question: Digital transformation budget - There are no current plans to increase the digital transformation budget, and operating costs post-transformation are expected to align with previous IT expense run rates [34][35]