Metropolitan Bank Holding Corp. Q3 FY2025 earnings call

• Loan growth: $170 million in Q3, YTD $750 million (12%), total originations YTD $1.4 billion.
• Core deposits: $280 million Q3, YTD over $1 billion (18%).
• Net interest margin: Increased to 3.88% in Q3, 5 basis points higher than prior quarter.
• Share repurchase: $50 million program approved, first common stock dividend paid.
• Technology: Full integration of new franchise-wide technology stack expected by end of Q1 2026.
• AI strategy: Hired first AI Director, aligning with regulatory expectations.
• Asset quality: Very strong, no broad-based negative trends in loan segments, geography, or sectors.
• Provision expense: $23.9 million, $18.7 million related to 3 out-of-state multifamily loans, $5.2 million due to macroeconomic factors and loan growth.
• Branch openings: New branches in Lakewood, NJ; Miami and West Palm Beach, FL.

In the third quarter, loan growth was approximately $170 million or 2.6%. Year-to-date, loan book grew by approximately $750 million or more than 12%, with total loan originations year-to-date at $1.4 billion. Core deposits were up approximately $280 million or 4.1% in the quarter, and year-to-date grew by over $1 billion or 18%. The net interest margin increased 5 basis points to 3.88% in Q3. Net interest income for the third quarter was $77.3 million, up 5% on a linked-quarter basis and up more than 18% versus the same quarter last year. Diluted EPS for the third quarter was $0.67, with normalized diluted EPS estimated at approximately $1.95.

• NIM: Expected to modestly expand in Q4, between 3.90% and 3.95%, annual NIM north of 3.80%. Each 25 basis point Fed funds cut drives ~5 basis points NIM expansion annually.
• Loan growth: Projected $100-200 million additional growth for remainder of 2025, strong Q1 2026 pipeline.
• FDIC assessment: Quarterly run rate ~$1.5 million, scaling with risk-weighted asset growth.
• Digital transformation: Full integration by end of Q1 2026, Q4 NIM expansion expected.

• Macro factors: Impact on CECL model due to forecasted negative trends in CRE price index and other macroeconomic variables.
• Credit risk: Specific reserve for out-of-state multifamily loans, but overall asset quality remains strong.
• Insider trading: Compliance with 10b5-1 plans and blackout periods to avoid insider trading.

Q: Could you provide additional details on the CRE multi-family relationship?

A: Geographies are Champagne, Illinois and a city in Ohio; working on restructuring, cautiously optimistic reserve reversal in Q4 or Q1 2026.

Q: What's the detail on the $5.2 million provisioning?

A: $5.2 million, ~$3.5 million related to macroeconomic variable forecast deterioration, rest due to growth.

Q: What's the bank's policy on insider selling prior to earnings releases?

A: Insiders under 10b5-1 agreements, no insider trading during blackout periods.

Q: What percentage of the book is out of market for CRE loans?

A: No other noticeable concerns, follow good sponsors expanding outside original footprint.

Q: Where's the most opportunity for deposit growth?

A: Spread evenly across verticals, working on new opportunities to be discussed in early 2026.

Q: Expectations for digital transformation expenses?

A: ~$3 million in Q4, tail in Q1, less than $2 million total.

Q: Size of the CRE credit?

A: ~$34 million, specific reserve conservative, no impact on near-term growth strategies.

Q: Feasibility of margin approaching 4% in 2026?

A: Very feasible with multiple rate cuts, working on deposit opportunities to drive lower cost of funds