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MetroCity Bankshares, Inc. (MCBS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered a clean beat vs consensus: diluted EPS of $0.65 vs $0.63 estimate (+3.2%), and “revenue” of $37.78M vs $36.10M estimate (+4.7%), driven by 10bps NIM expansion and lower deposit costs; efficiency ratio improved to 37.2% . EPS and revenue estimates per S&P Global; values marked with asterisk below are from S&P Global.*
  • Net interest margin rose to 3.77% from 3.67% in Q1, as loan yields increased and the cost of interest-bearing liabilities fell; derivative hedges contributed a $4.2M credit to interest expense .
  • Asset quality remained strong: NPAs/Assets fell to 0.42% (from 0.51% in Q1), ACL/Loans was steady at 0.60%, and net charge-offs were 0.01% annualized .
  • Total deposits declined 1.7% sequentially; uninsured deposits ticked up to 25.1% (from 24.3% in Q1), a modest watch item .
  • Catalysts: regulatory and shareholder approvals for the First IC merger (expected early Q4 close) and a dividend increase to $0.25 per share payable Aug 8, 2025 .

What Went Well and What Went Wrong

What Went Well

  • NIM/Spread expansion and cost discipline: NIM up 10bps q/q to 3.77%, efficiency ratio improved to 37.2%; ROAA/ROAE stable at 1.87%/15.74% .
  • Noninterest income momentum: Q2 noninterest income rose to $5.7M (+5.1% q/q), supported by higher mortgage sales and originations; SBA sales also increased q/q .
  • Asset quality: NPAs/Assets improved to 0.42% and ACL coverage of NPLs increased to 129.76%; net charge-offs remained de minimis (0.01% annualized) .
  • Strategic progress: “We appreciate our bank regulators' prompt review and approval of the proposed transaction, as well as the support of First IC’s shareholders...” — Nack Y. Paek, Chairman & CEO, on First IC merger approvals .

What Went Wrong

  • Deposit pressure: Total deposits fell $47.5M q/q; uninsured deposit percentage rose to 25.1% (from 24.3% in Q1) .
  • Expense uptick: Noninterest expense increased to $14.1M (+2.3% q/q), including $333K of First IC merger-related costs .
  • Revenue mix yields: Investment yields declined 16bps q/q; the hedge benefit to interest expense ($4.2M) is below prior-year levels ($6.5M), potentially reducing future tailwinds if rates fall further .

Financial Results

Income Components (USD Millions)

MetricQ2 2024Q1 2025Q2 2025
Net Interest Income$30.712 $30.554 $32.178
Noninterest Income$5.559 $5.456 $5.733
Total “Revenue” (SPGI definition)*$36.271*$36.010*$37.782*

Values marked with asterisk retrieved from S&P Global.

EPS

MetricQ2 2024Q1 2025Q2 2025
Diluted EPS ($)$0.66 $0.63 $0.65

Margins and Profitability

MetricQ2 2024Q1 2025Q2 2025
Net Interest Margin %3.66% 3.67% 3.77%
Efficiency Ratio %35.93% 38.32% 37.23%
ROAA %1.89% 1.85% 1.87%
ROAE %17.10% 15.67% 15.74%
Yield on Avg Earning Assets %6.45% 6.31% 6.34%
Cost of Interest-Bearing Deposits %3.63% 3.36% 3.25%

KPIs and Balance Sheet

MetricQ2 2024Q1 2025Q2 2025
SBA Loan Sales ($MM)— $16.579 $20.707
Mortgage Loan Originations ($MM)$94.056 $91.122 $93.156
Mortgage Loan Sales ($MM)$111.424 $40.051 $54.309
NPAs/Total Assets %0.40% 0.51% 0.42%
ACL/Loans %0.58% 0.59% 0.60%
Uninsured Deposits %23.4% 24.3% 25.1%
Noninterest-Bearing Deposits/Total Deposits %20.54% 19.73% 20.41%
Loans HFI/Deposits %112.85% 114.73% 116.34%

Results vs Consensus (Q2 2025)

MetricReported Q2 2025Consensus Q2 2025Surprise
Diluted EPS ($)$0.65 $0.63*+$0.02 (+3.2%)*
“Revenue” ($MM)$37.782*$36.100*+$1.682 (+4.7%)*

Values marked with asterisk retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Quarterly Dividend per SharePayable Aug 8, 2025$0.23 (Q1/Q2 run-rate) $0.25 declared Jul 16, 2025 Raised
First IC Merger TimingClosing timelineExpected Q4 2025 subject to approvals/shareholder vote Approvals and First IC shareholder vote obtained; expected early Q4 2025 Progressed toward close

Earnings Call Themes & Trends

Note: No Q2 2025 earnings call transcript was available in our document catalog; analysis reflects press releases and filings.

TopicPrevious Mentions (Q4 2024 / Q1 2025)Current Period (Q2 2025)Trend
Deposit costs & NIMDeposit costs fell; NIM 3.57% (Q4) → 3.67% (Q1) Deposit costs fell further; NIM 3.77% Improving
Interest rate hedgesHedge credit to interest expense: $5.1M (Q4) → $4.3M (Q1) $4.2M in Q2 Easing tailwind vs prior year
Mortgage/SBA activityQ4 mortgage sales paused; SBA sales lower vs Q3 Mortgage originations/sales improved; SBA sales up q/q Recovering sequentially
M&A (First IC)Signed definitive merger agreement (Mar 16, 2025) Approvals + shareholder vote secured; early Q4 close expected Advancing
Technology/cyber/AIRisks cited including cybersecurity and generative AI Continued emphasis on tech/cyber and AI-related operational risks Ongoing risk management focus

Management Commentary

  • Strategic positioning and merger approvals: “We appreciate our bank regulators' prompt review and approval of the proposed transaction, as well as the support of First IC’s shareholders by voting in favor...” — Nack Y. Paek, Chairman & CEO .
  • Combined scale: Pro forma assets ~$4.8B, deposits ~$3.7B, loans ~$4.1B expected post-merger, enabling investments in technology and growth .
  • Operating focus: Company highlights improving NIM and efficiency ratio while maintaining conservative asset quality metrics (NPAs/Assets 0.42%; ACL/Loans 0.60%) .

Q&A Highlights

  • No Q2 2025 earnings call transcript was found; Q&A themes were not available in our document catalog. We rely on press releases and SEC filings for qualitative insights.

Estimates Context

  • The quarter beat consensus on EPS and “revenue”; EPS $0.65 vs $0.63 estimate; “revenue” $37.78M vs $36.10M estimate, with only one estimate contributor in each case [GetEstimates].*
  • Drivers of the beat: 10bps NIM expansion, lower deposit costs, and improved noninterest income mix (mortgage and SBA activity); hedge credit of $4.2M aided interest expense .
  • Forward considerations: With hedge benefits moderating vs prior year and deposits down sequentially, consensus may reassess NIM trajectory and funding dynamics as merger integration and rate path evolve .

Values marked with asterisk retrieved from S&P Global.

Key Takeaways for Investors

  • NIM expansion and efficiency improvement supported an EPS beat; watch sustainability as hedge contributions normalize and competition for deposits persists .
  • Deposit trends mixed: total deposits down 1.7% q/q and uninsured deposits up to 25.1%—monitor funding mix and potential pricing actions .
  • Asset quality remains a strength (NPAs/Assets 0.42%, net charge-offs 0.01% annualized), supporting stable capital deployment .
  • Mortgage and SBA momentum improved sequentially; continued execution can bolster noninterest income in a stabilizing rate backdrop .
  • Dividend raised to $0.25 (payable Aug 8), signaling capital return confidence alongside high CET1/Tier 1 ratios (CET1 19.91%) .
  • First IC merger approvals are a near-term catalyst; early Q4 close could enhance scale and earnings capacity, with integration execution critical .
  • Near-term trading: positive beat and dividend increase are supportive; medium-term thesis hinges on NIM/funding discipline, credit stability, and merger synergies realization .