Metropolitan Bank (MCB) - 2025 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - In Q1 2025, the company reported a loan growth of $308 million, or 5.1%, and a deposit growth of $465 million, or 7.8% [7][18] - The net interest margin (NIM) expanded by two basis points to 3.68% from 3.66% in the prior quarter, marking the sixth consecutive quarter of margin expansion [7][20] - Earnings per share (EPS) was reported at $1.45, down $0.43 from the prior period, while tangible book value per share increased by more than 2.3% to $65.80, marking the ninth consecutive quarter of book value accretion [9][21] Business Line Data and Key Metrics Changes - Total loan originations and draws were approximately $490 million at a weighted average coupon (WAC) of about 7.84%, while payoffs and paydowns totaled approximately $185 million at a WAC of 7.44% [16] - The company maintained a disciplined approach to loan and deposit pricing, with a decline in the cost of interest-bearing deposits by 32 basis points [18][20] Market Data and Key Metrics Changes - The company experienced a net outflow of $35 million in GPG deposits, primarily related to the return of reserve balances and check clearing [20] - The company reported that asset quality remains strong, with no broad-based negative trends identified in any loan segment, geography, or sector [11] Company Strategy and Development Direction - The company is focused on capturing additional market share through traditional channels while positioning itself for potential strategic opportunities to increase shareholder value [14] - The ongoing investment in a franchise-wide new technology stack is expected to be fully integrated by the end of 2025, supporting the bank's growth [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainties, citing strong liquidity, capital, and earnings [6][5] - The company anticipates loan growth of 10% to 12% for the year, with a full-year NIM expected to be between 3.70% and 3.75% [28][29] Other Important Information - The effective tax rate for the quarter was approximately 30% [28] - Non-interest expenses increased by $4.5 million compared to the prior quarter, primarily due to seasonal increases in compensation and benefits [26][27] Q&A Session Summary Question: Clarification on total operating expenses for Q2 - Management indicated that total operating expenses for Q2 are expected to be closer to $45 million, including adjustments for IT spending [35] Question: Remaining GPT-related expense or income items - Management confirmed that there will be no remaining fee-related income or expenses from the GPT business going forward [37] Question: Implications of the gold card program on EB-5 business - Management believes the gold card program could be a complementary product to existing EB-5 offerings, but does not expect it to disrupt core business [40][41] Question: Seasonal patterns in deposit growth - Management stated there are no seasonal patterns affecting deposit growth, even in municipal deposits [42][44] Question: Discussion on potential dividends - Management confirmed that discussions regarding the possibility of introducing a small dividend are ongoing [46] Question: Trends in non-owner occupied CRE customer occupancy - Management reported that the non-owner occupied CRE portfolio remains stable and diversified [50] Question: Incremental competitive pressures on loans or deposits - Management indicated that there are no significant competitive pressures in New York City [55] Question: Loan pipeline status and potential dampening in Q2 - Management stated that the loan pipeline is strong and in line with historical performance, with no expected dampening in Q2 [61] Question: Opportunities within various deposit verticals - Management emphasized the importance of diversification across deposit verticals and the potential for continued growth [62] Question: Capital ratio targets - Management expressed a desire to maintain a capital ratio above 9% while being open to approaching that threshold [70]