Metropolitan Bank (US:MCB)2025-10-24 14:00Financial Data and Key Metrics Changes - In Q3 2025, loan growth was approximately $170 million, or 2.6%, with year-to-date growth exceeding $750 million, or more than 12% [3][9] - Core deposits increased by approximately $280 million, or 4.1% in the quarter, with year-to-date growth over $1 billion, or 18% [3][10] - Net interest margin (NIM) rose five basis points to 3.88%, up from 3.83% in the prior quarter [4][12] - Net interest income for Q3 was $77.3 million, up 5% quarter-over-quarter and more than 18% year-over-year [13] - Diluted EPS for Q3 reported at $0.67, with a normalized estimate of approximately $1.95 after adjustments [13][15] Business Line Data and Key Metrics Changes - Total loan originations year-to-date were $1.4 billion, with a mix of approximately 70% fixed and 30% floating rate loans [3][9] - The bank's non-depository financial institution (NDFI) book totals about $350 million, representing around 5% of the loan portfolio, with no identified credit issues [10][12] Market Data and Key Metrics Changes - The bank's asset quality remains strong, with no broad-based negative trends identified across loan segments or geographies [5][6] - The provision expense for Q3 was $23.9 million, with $18.7 million related to three loans extended to a single borrower group [6][10] Company Strategy and Development Direction - The company is focused on expanding its presence in strategic markets, including new branch openings in Lakewood, New Jersey, Miami, and West Palm Beach, Florida [4][8] - The bank is advancing its AI strategy and digital transformation, with full integration expected by the end of Q1 2026 [5][8] - The focus for 2025 and beyond is to capture additional market share and enhance shareholder value through traditional channels [8] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the favorable tailwinds for the banking industry despite recent market volatility [7][8] - The bank anticipates modest further expansion of NIM due to declining costs of funds and continued deposit growth [12][41] - Management indicated that the recent provision expense is an outlier and does not reflect broader credit quality concerns [39][40] Other Important Information - The company approved a $50 million share repurchase program and paid its first common stock dividend, reflecting a commitment to shareholder returns [4][8] - The effective tax rate for the quarter was approximately 30% [15] Q&A Session Summary Question: Details on the CRE multifamily relationship - Management provided insights on a multifamily relationship in Champaign, Illinois, and Ohio, indicating ongoing restructuring efforts [18][19] Question: More detail on the $5.2 million provision - The provision was primarily driven by macroeconomic forecast deterioration and loan growth, with reliance on third-party forecasts [20][22] Question: Bank's policy on insider selling prior to earnings releases - Management confirmed adherence to blackout periods and 10b5-1 agreements for insider trading [21][24] Question: Percentage of CRE loans out of market - Management stated that there are no immediate concerns beyond what was reported, with 19% of the portfolio in Manhattan [26][28] Question: Opportunities for deposit growth - Management indicated a balanced approach across various deposit verticals, with no reliance on a single category for growth [29] Question: Digital transformation expenses in Q1 2026 - Management confirmed a slight tail in expenses for Q1 2026, estimating it to be well under $2 million [31][32] Question: Size of credit and asset quality trends - Management detailed specific loans contributing to credit increases, emphasizing overall static asset quality [34][38] Question: Potential for margin to approach 4% in 2026 - Management expressed optimism about achieving a margin above 4% with continued efforts to control funding costs [41][42]