Metropolitan Bank Holding Corp. Q1 FY2026 earnings call

Entered the year with momentum, substantial loan and deposit growth in pipeline. iGaming payments and HUD platform in integration stage. Restated MCB business model as continuation of longstanding plan. Loan book growth in line with guidance, current loan pipelines strong. Deposit growth outpaced loan growth, cost of deposits dropped. Net interest margin had normalized improvement. Allowance for credit losses changed due to multiple factors. Core non-interest income flat but new initiatives expected to drive fee income uplift in back half. Non-interest expense had movements in comp and benefits and technology costs.

Loan book increased by about $235 million in the first quarter. Pace of loan growth is in line with $1 billion net growth guidance for 2026. First quarter total originations and draws were approximately $524 million with weighted average coupon net of fees of about 7.24%, payoffs and paydowns totaled approximately $287 million at WAC of 7.37%. Deposit growth outpaced loan growth in Q1, with deposits growing by about $363 million or approximately 5%, cost of deposits dropped by 15 basis points. Net interest margin was 4.08% in Q1, down 2 basis points from prior quarter but normalized NIM increased by about 10 basis points. Interest income down about $2.5 million QoQ, interest expense down about $3 million. Allowance for credit losses reduced in Q1 due to charge-off of $12.3 million loans, provision release of $2.6 million, and macroeconomic variable improvements. Core non-interest income relatively flat, non-interest expense $46.4 million, up $2 million QoQ with comp and benefits up $3.8 million and technology costs down $1.8 million.

Expect at least 20% net interest income growth for full year. NIM expected to press higher toward 4.15% - 4.20% in 2026 with forecast not reliant on rate cuts. Loan net growth guidance $1 billion for 2026, first quarter loan growth in line. Intend to fund all 2026 loan growth with deposits. Payments and HUD initiatives expected to become meaningful contributors to deposit funding platform.

Credit risks related to loan charge-offs and resolution timelines. Potential impact of market interest rate changes on NIM. Uncertainties in integration of iGaming payments and HUD platforms. Macroeconomic variable changes affecting credit quality and business performance.

Q: Looking at the deposit growth, pretty impressive this quarter, give more color on drivers.

A: Deposits from HOAs, EB-5, and munis in specialty deposit opportunities driven by experienced team.

Q: Update on payment side.

A: In integration, expect testing with operators in June - Sept, live end of 3rd - 4th quarter.

Q: Quarterly charge-offs, link to reserve.

A: Three loans charged off, actively seeking recoveries.

Q: Margin lift without rate cuts, dynamics.

A: Margin expansion from repricing of back book loans, deposit cost dependent on mix.

Q: Cash on balance sheet and loan growth.

A: Cash to work down in parallel with loan growth towards normal position.

Q: Loan-to-reserve ratio.

A: Long-run view 115 ratio makes sense, working through NPLs may adjust it.