Metropolitan Bank Holding Corp. (MCB) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The company's strong financial performance, with significant loan and deposit growth, improved NIM, and EPS, suggests a positive outlook. The digital transformation and AI strategy are promising for future growth, despite increased tech costs. The Q&A reveals stable CRE concentration and cautious optimism in resolving NPAs. Although new branches haven't yet significantly contributed, future growth is anticipated. The absence of M&A focus aligns with organic growth strategy. Overall, the positive financial metrics and strategic initiatives outweigh the uncertainties, indicating a positive stock price movement.
Key Financial Performance
Loan Portfolio Growth Expanded by approximately $775 million, representing a growth of nearly 13% year-over-year. The growth was driven by disciplined underwriting and franchise-wide risk management culture.
Total Loan Originations Reached approximately $1.9 billion for the year. This was supported by strategic funding initiatives, including deepening existing deposit verticals and identifying new opportunities.
Deposits Increased by roughly $1.4 billion or about 23% year-over-year. This growth was attributed to strategic funding initiatives.
Net Interest Margin (NIM) 4.1% in the fourth quarter, up 22 basis points from the prior quarter. The increase was supported by deposit growth and the Fed's easing campaign.
Net Interest Income $85.3 million for the fourth quarter, up more than 10% on a linked quarter basis and up almost 20% for the year. This was driven by methodical balance sheet growth and NIM expansion.
Diluted EPS $2.77 for the fourth quarter. Noncore credits contributed about $4.6 million or $0.30 per share, including elevated loan prepayments, bond sales, insurance claim recovery, and compensation accrual adjustments.
Noninterest Income $3.1 million for the fourth quarter. This included a securities gain of about $675,000, but no further gains are expected going forward.
Noninterest Expense $44.4 million for the fourth quarter, down $1.4 million versus the prior quarter. The decrease was due to reductions in compensation and benefits, professional fees, and legal fees, partially offset by an increase in technology costs.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
New initiatives for 2026: Several new initiatives will enter the market in 2026, expected to generate low-cost deposits and increased fee income.
Branch expansion: Opened a full-service branch in Lakewood, New Jersey, and plans to open two new branches in Florida (Miami and West Palm Beach) in the first half of 2026 to enhance presence in key growth markets.
Loan portfolio growth: Expanded loan portfolio by approximately $775 million in 2025, representing nearly 13% growth. Total loan originations reached $1.9 billion.
Deposit growth: Deposits increased by $1.4 billion (23%) in 2025, supported by strategic funding initiatives.
Net interest margin (NIM): NIM was 4.1% in Q4 2025, up 22 basis points from the prior quarter. Annual NIM for 2026 is forecasted at 4.10%.
Operational efficiency: Efficiency ratio improved, and noninterest expense for Q4 2025 was $44.4 million, down $1.4 million from the prior quarter.
Focus on market share and diversification: Strategy for 2026 includes capturing additional market share through traditional channels and diversifying to enhance long-term shareholder value.
Digital transformation: Invested $3.1 million in Q4 2025 for digital transformation projects to improve operational efficiency.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Loan Prepayments: The fourth quarter experienced elevated loan prepayments of approximately $317 million, which is about $150 million above the trailing 3-quarter run rate. This could impact loan growth and interest income.
Interest Rate Sensitivity: The bank's balance sheet remains modestly liability sensitive, and the impact of rate cuts on deposit costs will only become apparent in the first quarter of 2026. This could affect net interest margin and profitability.
Loan Renewal Pricing: Renewals are expected to reprice at about 25 to 50 basis points below new volume origination rates, potentially impacting interest income.
Operating Expenses: The bank anticipates increased operating expenses in 2026 due to the Modern Banking in Motion project, real estate expansion, and growth in deposit verticals, which could pressure profitability.
Provision for Credit Losses: The final disposition of credits with specific reserves booked in 2025 could result in allowance adjustments outside of usual planning, introducing uncertainty in financial performance.
Technology Costs: Technology costs increased by $668,000 in the fourth quarter, primarily due to the digital transformation project, which could continue to elevate expenses.
Real Estate Expansion: The expansion of real estate footprint in New York City and West Palm Beach, Florida, will add approximately $2.2 million annually to expenses, with $1 million impacting 2026.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
Loan Growth: The company expects to grow loans by approximately $800 million or 12% in 2026, with the new volume loan mix consistent with recent experience.
Deposit Growth: All planned loan growth is expected to be funded with deposits.
Net Interest Margin (NIM): The NIM is expected to expand modestly over the course of 2026, with an annual NIM forecast of about 4.10%. The business model is designed to defend or expand the NIM regardless of additional rate cuts.
Interest Rate Assumptions: The forecast includes two 25 basis point rate cuts, one in June and one in September 2026.
Noninterest Income: A 5% to 10% growth in noninterest income is anticipated, with aspirations to rebuild the fee income line to align with 2024 results.
Operating Expenses: Annual operating expenses are forecasted to total $189 million to $191 million, including unique items such as $3 million for the Modern Banking in Motion project, $1 million for real estate expansion, and a $6 million increase in deposit vertical expenses.
Return on Tangible Common Equity (ROTCE): The forecasted ROTCE is expected to approach 16% by the fourth quarter of 2026.
Real Estate Expansion: The company plans to expand its real estate footprint in New York City and West Palm Beach, Florida, with an associated new expense run rate of about $2.2 million annually.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
The selected topic was not discussed during the call.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Will C&I loans start to grow again after a couple of quarters of decline?
A:No, core C&I loans are not expected to grow substantially. However, there will be growth in C&I loans with a medical implication as the company expands its healthcare practices.
Q:Will CRE concentration remain stable as owner-occupied CRE grows?
A:Yes, the concentration in CRE to risk-based capital is expected to remain fairly stable going forward.
Q:How much have new branches in New Jersey and South Florida contributed to municipal deposit growth?
A:New Jersey branches have contributed slightly due to the administrative office conversion. Florida has not yet contributed significantly as the Miami office was just converted and West Palm Beach is under construction. Significant contributions are expected in the future.
Q:What is the status of the two loans that increased NPAs by $5 million?
A:The two loans are in-market multifamily loans with properties up for sale. Little or no loss is expected upon the sale of these assets. The company is cautiously optimistic about resolving these loans by the end of the quarter.
Q:What are the CET1 ratio targets as the balance sheet grows?
A:The CET1 ratio is currently about 10.7%. The company focuses on TCE, expecting it to trend from the current 8.8% to the low 9s, which aligns with their comfort level.
Q:When will the digital transformation costs be fully completed?
A:The digital transformation is expected to be completed by the first quarter, specifically by President's Day weekend. The $3 million spend will be finalized by then.
Q:Was there any interest recovery in NII this quarter?
A:No, there was no interest recovery in NII this quarter.
Q:Which verticals drove demand deposit growth this quarter?
A:The largest contributors were municipal deposits, property managers, borrowing customers, new deposits, and EB5 investments. Munis were the standout contributor.
Q:Is M&A more likely now given the current environment?
A:No, the company does not see much value in the franchises in their markets and is focused on organic growth and new opportunities instead of M&A.
Q:Is a team lift-out in a new geographic area a possibility for growth?
A:Unlikely, as it is not part of the company's cultural DNA. They prefer acquiring independent talent in their existing markets rather than taking the financial and cultural risks of team lift-outs.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the specific timing and details of resolving the two loans that increased NPAs by $5 million, as they only expressed cautious optimism and mentioned the need for patience and maturity in the workout process.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Beach presence
Florida Miami
Jersey conversion
MCB success
New
Officer underwriting
appreciation employee
approach loan
base service
branch Florida
branch Lakewood
center market
channel franchise
client market
commitment excellence
commitment institution
concern reflection
condition feedback
contribution commitment
conversion office
culture safety
dedication contribution
deposit fee
director dedication
efficiency ratio
effort commitment
employee director
excellence MCB
form cost
foundation progress
franchise opportunity
franchise risk
funding base
improvement efficiency
income deposit
income effort
institution appreciation
loan improvement
margin interest
MCB Transcript
Metropolitan Bank Holding Corp. (MCB) Q4 2025 Earnings Call Transcript
Positive1-21
The company's strong financial performance, with significant loan and deposit growth, improved NIM, and EPS, suggests a positive outlook. The digital transformation and AI strategy are promising for future growth, despite increased tech costs. The Q&A reveals stable CRE concentration and cautious optimism in resolving NPAs. Although new branches haven't yet significantly contributed, future growth is anticipated. The absence of M&A focus aligns with organic growth strategy. Overall, the positive financial metrics and strategic initiatives outweigh the uncertainties, indicating a positive stock price movement.
Metropolitan Bank Holding Corp. (MCB) Q3 2025 Earnings Call Transcript
Positive10-24
The earnings report indicates strong financial performance with significant loan growth and core deposit increases. The $50 million share repurchase program reflects a commitment to shareholder returns. Despite some provisioning related to macroeconomic factors, the bank's overall financial health appears robust. The Q&A section reveals cautious optimism about resolving specific loan issues and continued growth. The management's avoidance of certain specifics is a concern, but not enough to offset the overall positive sentiment. Given the strong financial metrics and optimistic guidance, the stock price is likely to see a positive movement.
Metropolitan Bank Holding Corp. (MCB) Q2 2025 Earnings Call Transcript
Positive7-18
The earnings call reveals strong financial performance with record EPS, net income, and revenue growth. The announcement of a dividend and a new share repurchase program are positive indicators of shareholder returns. Despite increased provisioning and sensitivity to interest rates, the company's diverse deposit verticals and strategic focus on fee-based revenues provide stability. Management's clear responses in the Q&A further bolster confidence. The combination of strong earnings, optimistic guidance, and shareholder initiatives suggests a likely positive stock price movement in the near term.
Metropolitan Bank Holding Corp. (MCB) Q1 2025 Earnings Call Transcript
Unknown4-22
The earnings call presents mixed signals. Positive aspects include deposit growth, a share buyback program, and plans for loan growth and market share expansion. However, EPS and net income declines, increased non-interest expenses, and unclear guidance on certain programs present concerns. The Q&A reveals some uncertainties, particularly regarding the Gold Card program and deposit vertical opportunities. Despite these challenges, the company's strategic investments and guidance for ROTCE and NIM provide a stable outlook. The lack of market cap data limits the prediction's accuracy, but overall, the sentiment remains neutral.
MCB Slides
MCB Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
