Metropolitan Bank (US:MCB)2025-10-24 14:00Financial Data and Key Metrics Changes - In Q3 2025, Metropolitan Commercial Bank (MCB) reported loan growth of approximately $170 million, or 2.6% [3] - Year-to-date loan growth reached approximately $750 million, exceeding 12% [4] - Core deposits increased by approximately $280 million, or 4.1% in the quarter, with year-to-date growth over $1 billion, or 18% [4] - The net interest margin (NIM) increased by five basis points to 3.88% from 3.83% in the prior quarter [5][15] - Net interest income for Q3 was $77.3 million, up 5% from the previous quarter and over 18% year-over-year [17] - Diluted EPS for Q3 was reported at $0.67, with a normalized estimate closer to $1.95 after adjustments [17] 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 [4][12] - The bank's non-deposit funding initiative (NDFI) totals approximately $350 million, representing about 5% of the loan portfolio, with no identified credit issues [13] - Noninterest expense for the quarter was approximately $45.8 million, an increase of $2.7 million from the prior quarter, driven by compensation, technology costs, and licensing [19][20] 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 [7] - The provision expense for Q3 was $23.9 million, with $18.7 million related to a specific borrower group [8] Company Strategy and Development Direction - MCB's growth strategy focuses on maintaining and developing existing deposit verticals while exploring new branch openings in strategic markets [4] - The company is advancing its technology stack and has initiated an AI strategy, hiring its first AI director [6] - The bank aims to capture additional market share through traditional channels and strategically position itself for future opportunities [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the bank's position to benefit from favorable tailwinds in the banking industry despite recent market volatility [8] - The bank anticipates modest further expansion of NIM in Q4 due to a decline in the cost of funds and continued deposit growth [16] - Management noted that the recent provision expense is a prudent measure and does not reflect broader credit issues within the portfolio [47] Other Important Information - The board approved a $50 million share repurchase program and the payment of the first common stock dividend, reflecting a commitment to shareholder returns [5] - The effective tax rate for the quarter was approximately 30% [20] Q&A Session Summary Question: Details on the multifamily relationship metrics - Management provided insights on a multifamily relationship involving vacant buildings in Champaign, Illinois, and Ohio, indicating ongoing restructuring efforts [26] Question: Additional details on the $5.2 million provision - The provision was primarily driven by macroeconomic forecasts from Moody's, with a significant portion related to variable forecast deterioration [28] Question: Bank's policy on insider selling prior to earnings releases - Management confirmed that insider trading is governed by 10b5-1 plans, ensuring compliance with blackout periods [30][32] Question: Percentage of CRE loans out of market - Management stated that there are no immediate concerns about other CRE loans beyond those reported in Q3 [34] Question: Future opportunities in deposits - Management indicated that growth is spread evenly across various deposit verticals, with no reliance on a single category for significant growth [39] Question: Digital transformation expenses in Q1 - Management confirmed that there will be a slight tail in digital transformation expenses into Q1, but it will be managed effectively [41] Question: Trends on criticized and classified loans - Management reported no noticeable credit migration movements within the portfolio, indicating stability [45] Question: Near-term growth strategies - Management reassured that the specific reserve taken is an outlier and will not deter near-term growth strategies [47]