Metropolitan Bank Holding Corp. (MCB)·Q1 2025 Earnings Summary

Executive Summary

• Q1 2025 printed steady core performance amid balance sheet expansion: net income $16.4M ($1.45 diluted EPS), NIM 3.68% (+2 bps q/q), loans +5.1% q/q to $6.34B, deposits +7.8% q/q to $6.45B, NPLs flat at 0.54% .
• Against Wall Street consensus, EPS modestly missed (actual $1.45 vs $1.53*) and revenue modestly missed (actual $66.08M* vs $67.58M*); note S&P’s revenue definition may differ from company “total revenues” ($70.59M company-reported) .
• Management raised 2025 loan growth guidance to 10–12%, maintained full‑year NIM outlook at 3.70–3.75%, and guided Q2 noninterest expense to ~ $44.8–$45.0M as digital transformation costs ramp; potential dividend under Board discussion .
• Capital/liquidity remain robust (CET1 11.4%, TCE/TA 9.6%, liquidity covering 179% of uninsured deposits) and the company repurchased $12.9M of stock (~2% of shares) in March, supporting book value accretion .

What Went Well and What Went Wrong

• What Went Well

  • Balance sheet momentum: Loans +$308M q/q (+5.1%) on $409.8M in production; deposits +$466M q/q (+7.8%) with broad-based contributions (municipal, EB‑5, lending customers), despite ~$35M residual GPG outflows .
  • NIM expanded for a sixth straight quarter to 3.68% and came in above prior internal guidance (3.64%), aided by pricing discipline and lower cost of funds (3.19%) .
  • Asset quality stable: NPLs at 0.54% (flat q/q, down y/y); ACL/loans 1.07%; management sees no broad negative trends by segment/region and expects successful workouts during 2025 .

  Quote: “MCB continues to deliver strong financial results… exceptional loan and deposit growth… NIM improvement for the sixth consecutive quarter.” — CEO Mark DeFazio .

• What Went Wrong

  • Modest headline miss vs consensus: EPS $1.45 vs $1.53* and revenue $66.08M* vs $67.58M*, with noninterest income down on BaaS wind‑down (partly offset by $0.8M one‑time program fees) .
  • Expenses stepped up: Noninterest expense rose to $42.7M (+$4.6M q/q) on seasonal comp/benefits and higher professional fees; efficiency ratio worsened to 60.5% from 53.7% .
  • Provision increased to $4.5M (from $1.5M) largely for loan growth and a $1M specific reserve on a $2M unsecured line; CRE concentration to TRBC rose to 367%, partly reflecting holdco funding of buybacks (a watch item) .

Financial Results

• Core P&L and return metrics

• Consensus vs actual (S&P Global)

Values marked with * retrieved from S&P Global.

• Balance sheet and credit KPIs

• Revenue mix “segments”

• Deposit composition (Q1 2025)

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategy and tone: “MCB operates from a position of strength and robust levels of liquidity, capital and earnings… sixth consecutive quarter of margin expansion.” — CEO Mark DeFazio .
• Growth and pricing: Loan originations/draws ~$490M at ~7.84% WAC vs ~$185M paydowns at ~7.44%; renewal coupons +40 bps to 7.31% supporting NIM .
• Deposits: “Every deposit vertical contributed… top three were municipal, EB‑5, and lending customers.” — CFO Daniel Dougherty .
• Expense framework: ~$11M IT spend recognized over remaining three quarters; Q2 OpEx ~ $44.8M; ~$1.5M of Q1 OpEx inflation was seasonal/onetime (FICA/401k, legal) .
• Dividend: “We have been having a very active discussion on that” — CEO (on initiating a dividend) .

Q&A Highlights

• OpEx cadence: Q2 total noninterest expense guided to ~$44.8–$45.0M as milestone IT contracts hit; ~ $11M IT spend spread across Q2–Q4 .
• Residual GPG: No further fee income/expense expected; only residual balances to settle over time .
• EB‑5 outlook: Management sees “non‑event” risk from potential “gold card” proposals; EB‑5 deposits ~$400–$500M, up ~$100M in Q1; diversified funding strategy limits concentration risk .
• Loan pipeline: Remains strong; loan growth guidance raised to 10–12% for 2025 .
• Capital targets: TCE/TA comfortably >9%; management “not opposed to approaching 9%” as growth/buybacks balance .

Estimates Context

• Q1 2025 vs S&P Global consensus: EPS $1.45 vs $1.53* (miss); revenue $66.08M* vs $67.58M* (miss). Company-reported “total revenues” were $70.59M (NII + noninterest income), reflecting definitional differences; we compare to S&P’s convention consistently for consensus .
• Potential estimate revisions:
  • Upward bias to loan growth (10–12% FY guide) and resilient NIM (3.70–3.75% FY) could lift out‑quarter NII assumptions .
  • Higher run‑rate OpEx (digital transformation) and a more conservative funding assumption (FF –80/–85 bps) may cap near‑term EPS upgrades .
  • Provision likely to track balance growth and macro overlays (Q1 provision of $4.5M included $1M specific) .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

• Core engine healthy: accelerating loan/deposit growth with disciplined pricing expanded NIM to 3.68% and kept ROAA/ROATCE within a stable range .
• Short‑term trading drivers: Watch Q2 OpEx ramp (~$45M) and any deposit mix shifts; a cleaner expense line or continued NIM outperformance vs 3.70–3.75% could be catalysts .
• Medium‑term thesis: Raised loan growth (10–12%) plus stable asset quality and capital support multi‑year book value compounding; dividend initiation would broaden shareholder base .
• Risk checks: CRE concentration (367% TRBC) ticked up; monitor office/multi‑family performance and watchdog reserve trajectory as growth accelerates .
• Funding/lambda: Liquidity covers 179% of uninsured deposits; deposit vertical diversification (municipal, EB‑5, property managers, etc.) underpins core funding .
• Capital return: $12.9M buyback executed at ~80% of tangible book; more to come within authorization; dividend under evaluation .