Executive Summary

Q2 2025 delivered solid profitability with diluted EPS of $1.76 and net income of $18.8M; NIM expanded 15 bps sequentially to 3.83% as loan yields rose and deposit costs fell .
EPS beat S&P Global consensus ($1.76 vs $1.73); S&P’s revenue definition shows a miss ($69.9M vs $72.6M), while company-reported total revenues were $76.3M, highlighting definitional differences; estimates from S&P Global* .
Strong balance sheet growth: loans up 4.3% q/q to $6.6B and deposits up 5.3% q/q to $6.8B; credit metrics stable though NPL ratio ticked up to 0.60% and ACL/loans to 1.12% .
Capital return escalated: first-ever quarterly dividend ($0.15) and new $50M buyback authorization; board has authorized $100M YTD repurchases; management expects repurchases to be limited near book value .
Guidance constructive: CFO now expects FY25 NIM ~3.80% (prior ~3.75%), operating expenses to average $45–$46M per quarter for the rest of 2025, with one-time IT spend of $8–$9M remaining; tax rate ~30% and loan growth potentially >12% for 2025 .

What Went Well and What Went Wrong

What Went Well

Net interest margin expansion to 3.83% (+15 bps q/q; +39 bps y/y) supported by loan repricing and deposit cost decline; net interest income up ~10% q/q .
Broad-based deposit growth (+$342M q/q) and strong loan originations ($492M in Q2), with diversified vertical contributions (municipal, trustee, lending) .
Strategic capital return: completed initial $50M buyback at ~$56.90 average price and initiated a $0.15 dividend; board authorized an additional $50M repurchase .
CEO tone confident on franchise resilience and diversified commercial banking model: “Our healthy balance sheet, together with strong earnings momentum, enables us to opportunistically capitalize on various strategic initiatives to support responsible growth.” .

What Went Wrong

Non-interest income declined to $2.6M (−$1.0M q/q; −$3.5M y/y) driven by absence of BaaS revenue and non-recurring fees recognized in Q1 .
Provision increased to $6.4M (from $4.5M), including a $2.4M reserve on a single non-accrual loan; NPL ratio rose modestly to 0.60% .
CRE concentration increased (non-owner-occupied CRE at 371.9% of risk-based capital vs 367.0% in Q1), primarily due to funding of buybacks at the holding company—an investor watch point amid broader CRE scrutiny .

Financial Results

Core P&L and Margin Metrics (Company-defined “Total revenues” = NII + Non-interest income)

Metric	Q2 2024	Q1 2025	Q2 2025
Total revenues ($USD Thousands)	$67,678	$70,590	$76,270
Net interest income ($USD Thousands)	$61,539	$66,952	$73,647
Non-interest income ($USD Thousands)	$6,139	$3,638	$2,623
Diluted EPS ($USD)	$1.50	$1.45	$1.76
Net interest margin (%)	3.44%	3.68%	3.83%
Total cost of deposits (%)	3.26%	3.09%	3.02%
Efficiency ratio (%)	62.4%	60.5%	56.5%

Q2 2025 Actual vs S&P Global Consensus

Metric	Consensus	Actual
EPS (diluted, $USD)	1.73*	1.76
Revenue ($USD)	72,551,500*	76,270,000

Values retrieved from S&P Global.
Note: S&P Global’s “Revenue” actual for Q2 2025 is 69,892,000*, which differs from the company’s “Total revenues” definition (NII + non-interest income). The table above compares company-reported total revenues to consensus for investor relevance; see Estimates Context for definitional details.

KPIs and Balance Sheet

KPI	Q2 2024	Q1 2025	Q2 2025
Loans ($USD Billions)	$5.86	$6.34	$6.61
Deposits ($USD Billions)	$6.17	$6.45	$6.79
Loan production ($USD Millions)	$290.8	$409.8	$492.0
NPL / Loans (%)	0.53%	0.54%	0.60%
ACL / Loans (%)	1.03%	1.07%	1.12%
CET1 (Holding Co.) (%)	11.7%	11.4%	10.8%
Total Risk-based (Holding Co.) (%)	13.0%	12.8%	12.2%
Liquidity: FRB cash + secured capacity ($USD Billions)	—	$2.9	$2.9
Uninsured deposit coverage ratio (%)	—	179%	178%
TCE / TA (%)	9.4%	9.6%	9.1%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Interest Margin	FY 2025	~3.70%–3.75%	~3.80%	Raised
Operating expenses (quarterly)	H2 2025	Q2 guide ~$44.8M	$45–$46M/quarter for remainder of 2025	Raised
One-time IT/digital transformation costs	Remainder of 2025	~$11M remaining	$8–$9M remaining	Lowered
Effective tax rate	FY 2025	~30%	~30%	Maintained
Loan growth	FY 2025	10%–12%	>12% possible	Raised
Share repurchases	Near-term	—	Limited at/under book; support below current book	Strategy clarified

Earnings Call Themes & Trends

Topic	Previous Mentions (Q4 2024, Q1 2025)	Current Period (Q2 2025)	Trend
Digital transformation & IT spend	Project Phoenix; 2025 completion plan; $17M total est.; minimal Q1 spend	Timeline shifted: full integration by end of Q1 2026; $1.6M Q2 cost; $8–$9M remaining in 2025	Ongoing; spend pacing clarified
Deposit gathering & competition	Broad-based growth across verticals post-BaaS exit; branch-lite model	Municipal, trustee, lending verticals led Q2; management sees lean, diversified franchise shielding from price wars	Constructive; core-funded strategy intact
Margin trajectory & hedging	NIM improved Q4→Q1; guided 3.70–3.75%; noted Fed cuts help NIM	NIM 3.83%; raised FY NIM to ~3.80%; executed $500M pay-fixed OIS at 3.52% to lower funding costs	Improving
Credit quality & provisioning	NPL stable; specific reserve in Q1; ACL/loans ~1.05–1.07%	Provision up to $6.4M; $2.4M reserve on one non-accrual; NPL ratio 0.60%; ACL/loans 1.12%	Slightly cautious; still stable
CRE concentration	CRE concentration 346% of RBC at YE2024	Non-owner-occupied CRE 371.9% of RBC; increase tied to holding company buyback funding	Higher; monitor
Capital return	Discussed dividend potential in Q1 Q&A	Announced $0.15 dividend and new $50M buyback; $100M authorized YTD	Positive shift

Management Commentary

CEO: “Given robust results coupled with confidence in continued business strength, our board has authorized an additional $50 million repurchase program… As part of our multi-pronged approach… our board also approved an initial quarterly cash dividend.” .
CFO: “We expect modest further expansion of the NIM… annual NIM this year will be about 5 bps higher, or approximately 3.80%… operating expenses to average approximately $45–$46 million per quarter for the remainder of 2025… one-time IT costs for the remainder of 2025 are expected to foot to $8–$9 million.” .
CEO on macro/tariffs and asset quality: “We actively engage with our customers… feedback has not indicated any specific areas of concern… asset quality remains excellent.” .

Q&A Highlights

Capital raise vs buybacks: Near-term capital raise unlikely; buybacks to be limited near book and used to support stock below current book value .
Fee income replacement: Management focused on rebuilding fee-based revenues post-BaaS exit; expects progress beginning in 2026 .
Originations mix: Heavy CRE in Q2 originations viewed as timing; expect balanced mix between C&I (incl. healthcare) and CRE for the year .
Provision specifics: Of $6.4M provision, ~$2.4M tied to one existing non-performer .
Deposit verticals: Municipal vertical gaining share nationally; EV-5, title/1031 pipelines strong; strategy remains core-funded .
SNF portfolio/Medicaid: Management does not expect cuts to resident payments; views exposure as resilient .

Estimates Context

Q2 2025 EPS beat: Actual $1.76 vs consensus $1.73*;
Q2 2025 Revenue: S&P Global’s “Revenue” actual $69.9M vs consensus $72.6M*, implying a miss under S&P’s definition. Company-reported “Total revenues” (NII + non-interest income) were $76.3M .
Forward consensus (S&P Global)*:
- EPS: Q3 2025 2.08; Q4 2025 2.20; Q1 2026 2.18; Q2 2026 2.38
- Revenue ($): Q3 2025 78.28M; Q4 2025 83.00M; Q1 2026 84.14M; Q2 2026 87.50M
  Values retrieved from S&P Global.

Key Takeaways for Investors

Margin momentum continues: NIM at 3.83% with CFO raising FY NIM guide to ~3.80%; hedging and deposit mix shifts should further support spreads .
Core-funded growth: Deposits and loans grew strongly and broadly across verticals; management emphasizes lean, diversified sourcing over expensive team lift-outs .
Credit steady but watchpoints: Provision rose and NPL ratio ticked up; ACL coverage strengthened; monitor CRE concentration and individual workout outcomes .
Capital return accelerates: Dividend initiation and new $50M buyback authorization are shareholder-friendly catalysts; repurchases to be opportunistic near/under book .
Expense trajectory transparent: H2 quarters to average $45–$46M OpEx; one-time IT spend lowered to $8–$9M remaining; tax rate ~30% .
Loan growth outlook raised: Pipelines support >12% for FY25 under unchanged underwriting standards .
Estimates likely adjust: EPS beat and revenue definitional differences suggest Street may revisit revenue framing; the NIM guide raise is supportive to out-year margin and earnings expectations .

Footnote: Values marked with * are retrieved from S&P Global.

Metropolitan Bank Holding Corp. (MCB)·Q2 2025 Earnings Summary