MetroCity Bankshares, Inc. (MCBS)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 delivered resilient profitability: diluted EPS of $0.63 (vs $0.65 in Q3; $0.44 in Q4 2023), net interest margin (NIM) essentially flat at 3.57% QoQ, and ROA of 1.82% with strong ROE of 15.84% . Noninterest income was a sequential drag (-19.6% QoQ) amid lower SBA/mortgage gains and equity mark-to-market, while efficiency ratio rose to 40.5% from 37.0% .
• Loan growth re-accelerated: loans held for investment rose $70.1MM QoQ (+2.3%) to $3.16B; deposits were stable (+0.5% QoQ), and uninsured deposits ended at 24.1% (up modestly QoQ) .
• Funding costs trended lower with deposit costs down 16 bps QoQ; swap benefit credited to interest expense declined to $5.1MM from $6.4MM in Q3 (and $6.5MM in Q2), tempering the rate tailwind as Fed policy shifts .
• Asset quality stayed benign (NCOs 0.01%; ACL/loans 0.59%), though NPAs/total assets ticked up to 0.51% QoQ, and ACL coverage of NPLs moved to ~104% from ~130% in Q3 .
• Catalysts: dividend raised to $0.23 (payable Feb 7, 2025) from $0.20 in prior quarters ; subsequent to quarter-end, announced acquisition of First IC—pro forma ~$4.8B assets and ~26% EPS accretion in first full year on cost saves (closing targeted Q4’25) .

What Went Well and What Went Wrong

• What Went Well

  • Core profitability steady: NIM 3.57% (-1 bp QoQ, +40 bps YoY) and ROA 1.82% with ROE 15.84% .
  • Loan growth resumed (+$70.1MM QoQ; +2.3%), led by residential mortgage, CRE and C&I; deposits edged higher QoQ with stable mix .
  • Funding tailwinds: deposit costs fell 16 bps QoQ; interest rate derivatives provided a $5.1MM credit to interest expense in Q4 (vs $3.1MM in Q4’23) .

• What Went Wrong

  • Fee headwinds: noninterest income fell 19.6% QoQ on lower SBA/mortgage gains and SBA servicing, plus equity security marks; mortgage originations slowed QoQ and no mortgage sales in Q4 .
  • Efficiency erosion: efficiency ratio worsened to 40.5% from 37.0% in Q3 as revenues softened while comp/benefit costs rose with higher commissions and payroll taxes .
  • Asset quality mixed: NPAs/total assets rose to 0.51% (0.44% in Q3), driven by higher nonaccruals; ACL/NPL coverage stepped down to ~104% from ~130% in Q3 .

Financial Results

Note: For banks, “Total revenue” is shown as Net Interest Income + Noninterest Income (see footnote).

Footnote: Total revenue defined as Net Interest Income + Noninterest Income sourced directly from company’s reported line items (citations above).

Segment/Portfolio Mix (Loans Held for Investment)

Key KPIs

Note: Q2 2024 CET1 is shown as 18.25% in the Q4 supplemental table , while the July Q2 release listed 18.00% ; subsequent updates to risk-weighted assets may explain the difference.

Guidance Changes

MCBS did not provide formal quantitative forward guidance in Q4 materials. Dividend action and subsequent M&A are summarized below.

Earnings Call Themes & Trends

Note: No Q4 2024 earnings call transcript was available in our document set; themes below reflect press-release commentary and prior-quarter disclosures.

Management Commentary

• Rate hedging as a core lever: “The Company currently has interest rate derivative agreements totaling $850.0 million... weighted average pay rate... 2.29%. During the fourth quarter of 2024, we recorded a credit to interest expense of $5.1 million...” .
• Funding relief: “Interest expense... decreased by 4.2% from the previous quarter, primarily due to a 16 basis points decrease in deposit costs...” .
• Noninterest income drivers normalized: details on lower SBA/mortgage gains, servicing marks, and no mortgage loan sales in Q4 .

Subsequent strategic update (Mar 17, 2025):

• “The combined bank will have the capacity to service our customers better... and continue offering excellent returns to our shareholders.” — Nack Paek, Chairman & CEO .
• “Combining our two organizations will create a stronger banking institution for our customers, employees and communities.” — Chong Chun, Chairman of First IC .

Q&A Highlights

• No Q4 2024 earnings call transcript was available; as such, no Q&A highlights or clarifications could be sourced from a call in our document set (we searched for an earnings-call-transcript and found none) [ListDocuments result].

Estimates Context

• Wall Street consensus EPS and revenue (S&P Global) for Q4 2024 and Q3 2024 were unavailable at the time of request due to access limitations; therefore, we cannot provide an “actual vs. consensus” comparison for this quarter. We attempted to retrieve: Primary EPS Consensus Mean, Revenue Consensus Mean, and estimate counts for Q4 2024 and Q3 2024, but the SPGI request limit was exceeded (no values returned).

Key Takeaways for Investors

• Stable core spread earnings: NIM held at 3.57% despite a smaller swap benefit; deposit costs declined again, supporting sustainable core NII even as swaps normalize .
• Growth resumed with controlled risk: Loans +2.3% QoQ, deposits +0.5% QoQ; NPAs/Assets moved up to 0.51% but loss content remains very low (NCOs 0.01%) and ACL/loans 0.59% .
• Fee income remains variable: SBA/mortgage activities softened QoQ (no mortgage sales in Q4), which pressured noninterest income and efficiency; monitor volumes/premiums into 2025 .
• Capital is a differentiator: CET1 ~19.2% and strong leverage/risk-based ratios provide flexibility for growth and integration of First IC .
• Dividend momentum: Quarterly dividend raised to $0.23; implies attractive capital return alongside organic growth and pending M&A .
• Near-term trading setup: Watch funding cost trajectory and swap tailwind moderation—faster-than-expected declines in deposit costs could offset swap step-downs; fee normalization (SBA/mortgage) is a swing factor .
• Medium-term thesis: Strategic combination with First IC (target Q4’25 close) enhances scale in core communities with targeted EPS accretion; execution on integration and realized cost saves are the keys to value capture .