Metropolitan Bank (MCB) Q3 2024 earnings summary

Executive summary

• Delivered strong core financial performance in Q3 2024, with robust top-line growth, significant net interest margin expansion, and disciplined balance sheet management.

• Net income for Q3 2024 was $12.3 million ($1.08 per share), down from $22.1 million in Q3 2023, impacted by $12.6 million in pre-tax expenses for regulatory reserve, digital transformation, GPG wind down, and remediation costs.

• Asset quality remains strong, with non-performing loans at 0.53% of total loans and healthy credit metrics attributed to pricing discipline and conservative underwriting.

• Demonstrated strong growth with 23% CAGR in loans, 25% CAGR in deposits, and 26% CAGR in revenue since 2017.

• Focused on client-centric, relationship-driven commercial banking with a diversified product suite and digital transformation initiatives.

Financial highlights

• Net interest margin for Q3 2024 was 3.62%, up from 3.27% in Q3 2023, with normalized NIM estimated at 3.5% after adjusting for deferred fees and prepayment penalties.

• Total loans reached $5.9 billion, up $58.2 million from Q2 2024 and $542.6 million year-over-year, with CRE and C&I loans comprising the majority.

• Total deposits increased to $6.3 billion, up $100.2 million from Q2 2024 and 9.3% year-over-year, with non-interest-bearing deposits at 28.4%.

• Non-interest income was stable at $6.2 million, with GPG-related revenue winding down to zero.

• Non-interest expenses totaled $51.3 million in Q3, including $10 million for the settlement reserve and $2.6 million for digital and regulatory costs.

Outlook and guidance

• Expect continued loan growth, primarily in C&I and healthcare, with origination yields between 7.5%-8%.

• NIM forecasted at 3.45%-3.5% for the remainder of 2024, with potential to reach 3.75% by end of 2025, assuming four 25 bps rate cuts in 2025.

• Non-interest expenses expected to decline 1%-3% in Q4, with full-year 2024 OpEx guidance at $164-$166 million, flat into early 2025.

• Digital transformation and regulatory remediation costs to drop off by mid-2025, with a clean OpEx run rate in the low $150 million range by late 2025/2026.

• Deposit growth outlook is robust across EB-5, HOA, municipal, and 1031 verticals.