Market Overview

Metropolitan Bank Holding Corp. Achieves Net Income of $12.4 Million for Full Year 2017, Up 147% from $5.0 Million for 2016

Share:

Metropolitan Bank Holding Corp. (NYSE:MCB), the holding company
(the "Company") for Metropolitan Commercial Bank (the "Bank"), today
reported net income of $3.3 million, or $0.49 per diluted common share,
for the fourth quarter of 2017, compared to $49 thousand, or $0.01 per
diluted common share, for the fourth quarter of 2016, and $3.8 million,
or $0.82 per diluted common share, for the third quarter of 2017.

For the year ended December 31, 2017, net income was $12.4 million, an
increase of 147% from $5.0 million for the year ended December 31, 2016.
Diluted earnings per common share for the year ended December 31, 2017
increased to $2.34, compared to $0.43 for the year ended December 31,
2016.

The fourth quarter of 2016 net income included a charge-off of $5.1
million of the Bank's taxi medallion loan portfolio, while fourth
quarter 2017 net income included a write-down of deferred tax assets
related to the recent changes in the tax code of $1.6 million and a
final taxi medallion related charge-off of $3.7 million. Excluding the
impact of the above mentioned charges, the Company's adjusted net income
for the fourth quarter of 2017 was $7.1 million and adjusted diluted
earnings per common share was $1.04. Excluding the impact of the above
mentioned charges, the Company's adjusted net income for the year ended
2017 was $16.1 million and adjusted diluted earnings per common share
was $3.06. (See table of "Reconciliation of GAAP and Non-GAAP Financial
Measures.")

The Company completed an initial public offering ("IPO") of its common
stock on November 10, 2017 and sold 3,100,000 shares of common stock at
$35.00 per share, as well as, 465,000 additional shares of common stock
at $35.00 per share pursuant to the underwriter's overallotment option.
The aggregate net proceeds to the Company from its IPO, including the
overallotment shares, after deducting the underwriting discount and
estimated offering expenses were approximately $115 million.

2017 Highlights (as of, or for the periods ended December 31,
2017, compared to December 31, 2016, and September 30, 2017, except as
noted):

  • Diluted earnings per common share totaled $0.49 for the fourth quarter
    of 2017, compared to $0.01 for the fourth quarter of 2016, and $0.82
    for the third quarter of 2017. Diluted earnings per common share
    decreased in the fourth quarter of 2017 compared to the third quarter
    of 2017 primarily due to the increase in shares resulting from the IPO
    in November 2017, combined with the impact of the write-down of
    deferred tax assets and the aforementioned charge off. For the year
    ended December 31, 2017, diluted earnings per common share increased
    444% to $2.34, compared to $0.43 per diluted common share for the year
    ended December 31, 2016.
  • For the fourth quarter of 2017, the return on average assets ("ROAA")
    was 0.73%, return on average tangible assets ("ROATA") was 0.74%,
    return on average common equity ("ROACE") was 7.68% and the return on
    average tangible common equity ("ROATCE") was 8.14%. For the
    sequential quarter, ROAA was 0.94%, ROATA was 0.95%, ROACE was 13.39%
    and ROATCE was 15.11%. ROATCE for the fourth quarter of 2017 was lower
    than the sequential quarter due to the increase in equity resulting
    from the IPO in November 2017. For the year ended December 31, 2017,
    the ROAA was 0.81%, ROATA was 0.82%, ROACE was 9.67% and ROATCE was
    10.46%, compared to 0.46%. 5.86%. 0.46% and 6.61%, respectively, for
    the year ended December 31, 2016.
  • Excluding the impact of aforementioned charges, the adjusted ROAA for
    the fourth quarter of 2017, was 1.57% and the adjusted ROACE was
    16.40% compared to the adjusted ROAA of 1.13% and adjusted ROACE of
    12.40% for the quarter ended December 2016. For the year ended
    December 2017, the adjusted ROAA was 1.06% and the adjusted ROACE was
    12.62% compared to the adjusted ROAA of 0.75% and the adjusted ROACE
    of 10.84% for the year ended December 31, 2016.
  • Net interest income increased 49% to $15.6 million for the fourth
    quarter of 2017, compared to $10.4 million for the fourth quarter of
    2016, and increased 12% from $14.0 million for the third quarter of
    2017. For the year ended December 31, 2017, net interest income
    increased 37% to $52.1 million, compared to $38.1 million for the year
    ended December 31, 2016. The increase in net interest income was
    mainly attributable to higher volume of loans combined with higher
    yield on loans.
  • Net interest margin ("NIM") contracted in both the fourth quarter of
    2017 and the year ended December 31, 2017 from the comparable periods
    in 2016 primarily due to higher average balances maintained in the fed
    funds accounts, resulting from the IPO and increased average
    non-interest bearing deposit balances in the settlement accounts
    related to digital currency.
  • Loans increased $39.3 million, or 3%, to $1.42 billion at December 31,
    2017, compared to $1.38 billion at September 30, 2017. Loans increased
    $365.3 million, or 35%, to $1.42 billion at December 31, 2017,
    compared to $1.06 billion at December 31, 2016.
  • Credit quality in fourth quarter of 2017 improved with a decrease in
    non-performing assets and classified assets compared to the third
    quarter of 2017 and year end 2016.
    • Nonperforming assets ("NPAs") declined to $3.4 million, or 0.19%
      of total assets, at December 31, 2017, compared to $3.7 million,
      or 0.30% of total assets, at December 31, 2016, and $7.1 million,
      or 0.41% of total assets, at September 30, 2017.
    • Classified assets declined to $4.6 million, or 0.26% of total
      assets, at December 31, 2017, compared to $4.9 million, or 0.40%
      of total assets, at December 31, 2016, and $8.3 million, or 0.48%
      of total assets, at September 30, 2017.
    • Net charge-offs totaled $3.7 million for the fourth quarter of
      2017, compared to $5.7 million for the fourth quarter of 2016, and
      $34,000 for the third quarter of 2017. Net charge-offs during the
      fourth quarter of 2017 included a final charge off related to the
      aforementioned taxi medallion loan for $3.66 million. After the
      charge off, the Company has no further exposure to taxi medallion
      loans.
  • Total deposits increased $410.6 million, or 41%, to $1.4 billion at
    December 31, 2017, compared to $993.8 million at December 31, 2016,
    but decreased $84.3 million, or (6%), from $1.5 billion at September
    30, 2017. Core Deposits, which exclude all time deposits, increased
    $407.0 million, or 44.4%, to $1.32 billion at December 31, 2017, from
    $917 million at December 31, 2016, and decreased $81.3 million, or
    (5.8%), from $1.41 billion at September 30, 2017. The decrease in core
    deposits was largely due to year-end funding needs of corporate
    clients. Average core deposit balances increased by $169 million or
    13.4% compared to the sequential quarter.
  • Due to the Tax Cuts and Jobs Act, which was enacted on December 22,
    2017, the Company revalued its net deferred tax assets on the date of
    enactment based on the reduction in the overall future tax benefit
    expected to be realized at the lower tax rate implemented by the new
    legislation. The Company's estimated write-down of its net deferred
    tax assets is approximately $1.6 million. This write-down is reflected
    in the Company's operating results for the fourth quarter of 2017 as
    an increase in the income tax expense.
  • In addition to the write-down of net deferred tax assets, the Company
    incurred other expenses and charges in connection with certain
    transactions that are considered to be infrequent in nature. The
    following table presents the impact of aforementioned charges on
    reported earnings for the dates presented (in thousands):
 
   

Three months ended
December 31, 2017

 

Three months ended
December 31, 2016

(in $000's, unaudited)     Pre-tax   After-tax  

Diluted
EPS

Pre-tax   After-tax  

Diluted
EPS

Earnings, as reported $ 8,541   $ 3,325   $ 0.49 $ (384 )   $ 49   $ 0.01
Write-down of net deferred tax assets - 1,581 0.23 - - -
Charge-off medallion loan   3,660     2,196     0.32   5,123       3,202     0.69
Earnings, adjusted $ 12,201   $ 7,102   $ 1.04 $ 4,739     $ 3,251   $ 0.70
 

Year ended
December 31, 2017

Year ended
December 31, 2016

(in $000's, unaudited)     Pre-tax   After-tax  

Diluted
EPS

Pre-tax   After-tax  

Diluted
EPS

Earnings, as reported $ 23,578 $ 12,369 $ 2.34 $ 8,058 $ 5,013 $ 0.43
Write-down of net deferred tax assets - 1,581 0.30 - - -
Charge-off medallion loan   3,660     2,196     0.42   5,123       3,202     0.85
Earnings, adjusted $ 27,238   $ 16,146   $ 3.06 $ 13,181     $ 8,215   $ 1.28
 
  • The Company's consolidated capital ratios exceeded regulatory
    guidelines and the Bank's capital ratios exceeded the regulatory
    requirements for a well-capitalized financial institution at December
    31, 2017.

Management Comments: Increasing Strong Core Performance

Mark DeFazio, the Company's President and CEO stated, "Fourth quarter
operating results reflect increasing strong core performance, with ROACE
at 7.68% and adjusted ROATCE, excluding the impact of final taxi
medallion charges and the tax reform bill, surpassing 16%. Key business
drivers showed continued momentum, with deposit and loan growth
achieving satisfactory levels. Loans increased by $39 million or 3%
during the quarter. We also achieved strong progress in increasing core
deposits. For the current quarter, our average core deposits (total
deposits excluding time deposits) increased by $169 million, or 13%
compared to the sequential quarter. When excluding the previously noted
charges, the adjusted return on tangible assets and return on tangible
common equity were 1.57% and 17.38%, respectively, while our efficiency
ratio improved to 44.82%."

Mr. DeFazio added, "We are also enhancing our efforts to increase retail
deposits through the opening of a new branch located on Lexington Avenue
and 85th street, which is targeted to open in the beginning
of second quarter 2018. The branch office is the Bank's fourth location
in Manhattan and enables the Bank to further provide best in class
service to existing NY-based clients while also establishing new
relationships in our footprint."

Mr. DeFazio concluded, "Looking ahead, we remain focused on driving
shareholder value by executing our key strategic objectives, including
but not limited to, diversified loan growth, core deposit funding,
continuing to be a branch-light franchise and maximizing our operating
leverage. We are carefully building a strong and sustainable company and
year-to-date results demonstrate our commitment to and success in
achieving these goals, serving our clients, and driving growth in
shareholder value."

Operating Results

Net interest income increased 49% to $15.6 million for the fourth
quarter of 2017, compared to $10.4 million for the fourth quarter of
2016, and increased 12% from $14.0 million for the third quarter of
2017. Net interest income increased 37% to $52.1 million for the year
ended December 31, 2017, compared to $38.1 million for the year ended
December 31, 2016. Net interest income increased for the year ended
December 31, 2017, compared to the year ended December 31, 2016,
primarily due to the organic growth in the loan portfolio, and the
impact of increase in the fed funds rate resulting in a higher yield on
floating rate loans.

For the fourth quarter of 2017, the net interest margin contracted 22
basis points to 3.49% from 3.71% for the fourth quarter of 2016,
primarily due to large loan payoffs in the fourth quarter of 2016 and
expedited realization of deferred fee income related to the payoff. For
the fourth quarter of 2017, net interest margin was also lower due to
higher balances at the Federal Reserve Bank resulting from the IPO, and
an increase in average deposit balances in the settlement accounts
related to digital currency, partially offset by higher yield on loans
and other earning assets. The net interest margin contracted 13 basis
points for the fourth quarter of 2017, from 3.62% for the third quarter
of 2017, primarily due to higher average balances at the Federal Reserve
Bank. For the year ended December 31, 2017, the net interest margin
contracted 3 basis points to 3.54%, compared to 3.57% for the year ended
December 31, 2016, primarily due to increase in the cost of interest
bearing liabilities partially offset by an increase in the non-interest
bearing deposits.

The provision for loan losses for the fourth quarter of 2017 was $3.5
million, compared to $6.1 million for the fourth quarter of 2016, and
$1.2 million for the third quarter of 2017. The increase in provision in
the fourth quarter of 2017 was due to the final charge off of a
taxi-medallion loan. The provision for loan losses for the year ended
December 31, 2017 was $7.1 million, compared to $8.1 million for the
year ended December 31, 2016.

Non-interest income increased to $6.2 million for the fourth quarter of
2017, compared to $1.3 million for the fourth quarter of 2016, and $2.2
million for the third quarter of 2017. For the fourth quarter of 2017,
noninterest income included an increase in service charges and foreign
exchange conversion fee related to wire transfer activities. For the
year ended December 31, 2017, noninterest income increased by $5.9
million to $11.3 million, from $5.4 million for the year ended December
31, 2016. The increase in noninterest income for the year ended December
31, 2017, compared to the year ended December 31, 2016, was primarily
due to increase in service charges and fees on deposit accounts by $2.5
million, increase in foreign exchange conversion fee by $3.5 million,
and increase in income from debit card issuing business by $443,000.
Non-interest income for the year ended December 31, 2017, included
approximately $6.9 million associated with transaction activities of
digital currency related deposit accounts.

Total non-interest expense for the fourth quarter of 2017 increased to
$9.8 million, compared to $6.0 million for the fourth quarter of 2016,
and $8.6 million for third quarter of 2017. The increase in noninterest
expense in the fourth quarter of 2017, compared to the fourth quarter of
2016, was primarily due to an increase in compensation expense
associated with annual salary increases and newly hired employees to
support the growth of the Company's business and increases in risk
management activities, increase in core processing and FDIC assessment
fees directly related to increased number of transactions and the asset
size of the Bank.

Non-interest expense for the year ended December 31, 2017 increased to
$32.7 million, compared to $27.4 million for the year ended December 31,
2016, primarily due to higher compensation expense and higher
professional fees resulting from public company expenses. Included in
the increase in non-interest expenses are also higher occupancy cost
resulting from renovation of the Company's premises to add space for
more employees, higher FDIC assessment and core processing fees related
to the growth in the Bank's business.

The efficiency ratio for the fourth quarter of 2017 improved to 44.82%,
compared to 51.55% for the fourth quarter of 2016, and 53.03% for the
third quarter of 2017. The efficiency ratio for the year ended December
31, 2017 was 51.66%, compared to 62.94% for the year ended December 31,
2016. The lower efficiency ratio in the fourth quarter of 2017 and year
ended December 31, 2017 is a result of increased operating efficiencies
through economies of scale as the increase in income from the growth of
business outweighed the increase in operating expenses.

Income tax expense for the fourth quarter of 2017 was $5.2 million,
compared to an income tax benefit of ($433,000) for the fourth quarter
of 2016, and $2.6 million for the third quarter of 2017. Income tax
expense for the year ended December 31, 2017 was $11.2 million, compared
to $3.0 million for the year ended December 31, 2016. Income tax expense
for the fourth quarter of 2017 included the impact of the write down of
estimated net deferred tax assets by $1.6 million. The effective tax
rate for the year ended December 31, 2017 was 47.5%, compared to 37.8%
for the year ended December 31, 2016. Excluding the impact of the write
down of deferred tax assets, the effective tax rate for the year ended
2017 would have been 40.8%.

Balance Sheet Review, Capital Management and Credit Quality

Total assets increased to $1.76 billion at December 31, 2017, compared
to $1.22 billion at December 31, 2016, and $1.72 billion at September
30, 2017.

The investment securities available-for-sale portfolio totaled $32.2
million at December 31, 2017, compared to $37.3 million at December 31,
2016, and $33.9 million at September 30, 2017. At December 31, 2017, the
Company's securities available-for-sale portfolio was comprised of $29.2
million of agency mortgage-backed securities (all issued by U.S.
Government sponsored entities), $2.2 million CRA fund and $1.1 million
in municipal securities. The pre-tax unrealized loss on securities
available-for-sale at December 31, 2017 was ($347,000), compared to a
pre-tax unrealized loss on securities available-for-sale of ($292,000)
at December 31, 2016, and a pre-tax unrealized loss on securities
available-for-sale of ($89,000) at September 30, 2017. All else being
equal, when market interest rates are rising, the Company will
experience a higher unrealized loss (or lower unrealized gain) on the
securities available-for-sale portfolio.

At December 31, 2017, investment securities held-to-maturity totaled
$5.4 million, compared to $6.5 million at December 31, 2016, and $5.7
million at September 30, 2017. At December 31, 2017, the Company's
securities held-to-maturity portfolio, at amortized cost, was largely
comprised of $6.5 million of agency mortgage backed securities.

Loan balances increased $365 million, or 35%, to $1.42 billion at
December 31, 2017, compared to $1.06 billion at December 31, 2016, which
included an increase of $335.5 million, in the Company's existing
portfolio, and an increase of $29.5 million in purchased loans. Loans
increased $39.3 million, or 3%, at December 31, 2017, compared to
$1.38 billion at September 30, 2017, which included an increase of $51.8
million, or in the Company's legacy portfolio, and a decrease of $12.5
million of purchased loans.

The loan portfolio remains well-diversified with C&I loans (including
owner occupied business loans) accounting for approximately 37.0% and
residential mortgages and consumer loans consisting of 5.0% of the loan
portfolio at December 31, 2017. CRE loans accounted for 58.0% of the
total loan portfolio.

The yield on the loan portfolio was 4.63% for the fourth quarter of
2017, compared to 4.59% for the fourth quarter of 2016, and 4.65% for
the third quarter of 2017. The increase in the yield on the loan
portfolio for the fourth quarter of 2017, compared to the fourth quarter
of 2016, reflects the impact of increase in the fed funds rate on the
Company's floating rate portfolio. The yield on the loan portfolio
increased to 4.59% for the year ended December 31, 2017, compared to
4.56% for the year ended December 31, 2016, primarily due to increase in
yield of the floating rate portfolio.

At December 31, 2017, NPAs declined to $3.4 million, or 0.19% of total
assets, compared to $3.7 million, or 0.30% of total assets, at December
31, 2016, and $7.1 million, or 0.41% of total assets, at September 30,
2017. The following is a breakout of NPAs at the periods indicated:

 
NONPERFORMING ASSETS
 
  End of Period:
December 31, 2017   September 30, 2017   December 31, 2016
(in $000's, unaudited) Balance  

%
of Total

Balance  

% of
Total

Balance  

% of
Total

Non-accrual loans:
Real Estate:
Commercial $ 787 23 % $ 841 12 % $ - - %
Construction - - % - - % - - %
Multifamily - - % - - % - - %
One-to-four family 2,447 72 % 2,466 34 % - - %
Commercial and industrial - - % 3,660 52 % 3,660 100 %
Consumer   155 5 %   125 2 %   - - %
Total non-performing assets $ 3,389 100 % $ 7,092 100 % $ 3,660 100 %
 

Classified assets declined to $4.6 million at December 31, 2017,
compared to $4.9 million at December 31, 2016, and $8.3 million at
September 30, 2017.

The following table summarizes the allowance for loan and lease losses
("ALLL")

       
ALLOWANCE FOR LOAN LOSSES
 
For the Quarter Ended For the Year Ended
December 31, September 30, December 31, December 31, December 31,
(in $000's, unaudited)   2017 2017 2016 2017 2016
Beginning balance $ 15,075 $ 13,909 $ 11,497 $ 11,815 $ 9,942
Provision (credit) for loan losses 3,499 1,200 6,060 7,059 8,060
Loans charged-off (3,687 ) (34 ) (5,741 ) (3,987 ) (6,189 )
Recoveries   -     -     (1 )   -       2  
Total ending allowance balance $ 14,887 $ 15,075 $ 11,815 $ 14,887 $ 11,815
 
Total loans 1,420,966 1,381,649 1,055,706 1,420,966 1,055,706
Total nonperforming loans 3,389 7,092 3,660 3,389 3,660
 
Allowance for loan losses to total loans 1.05 % 1.09 % 1.12 % 1.05 % 1.12 %
Allowance for loan losses to total nonperforming loans 439.21 % 212.55 % 322.82 % 439.21 % 322.82 %
 

The ALLL at December 31, 2017 was 1.05% of total loans, compared to
1.12% at December 31, 2016, and 1.09% at September 30, 2017. The ALLL to
total nonperforming loans was 439.2% at December 31, 2017, compared to
322.8% at December 31, 2016, and 212.6% at September 30, 2017. Net
charge offs for the fourth quarter of 2017 were $3.7 million or 0.26% of
total loans compared to $5.7 million or 0.54% of total loans for the
fourth quarter of 2016 and $34,000 or 0.002% of total loans for the
third quarter of 2017. Increase in charge offs in the fourth quarter of
2017 resulted from the aforementioned write off of a taxi medallion
loan. After the charge off, the Company has no further exposure to taxi
medallion loans.

Total deposits increased $410.5 million, or 41%, to $1.4 billion at
December 31, 2017, compared to $993.7 million at December 31, 2016, and
decreased $84.3 million, or (6%), compared to $1.49 billion at September
30, 2017. Core Deposits, which exclude all time deposits, increased
$407.0 million, or 44.4%, to $1.32 billion at December 31, 2017, from
$917 million at December 31, 2016, and decreased $81.3 million, or
(5.8%), from $1.41 billion at September 30, 2017. The decrease in core
deposits was largely due to year end funding needs of corporate clients.
Average core deposit balances increased by $169 million or 13.4%
compared to the sequential quarter.

The Bank's deposit gathering initiatives are diversified and include a
number of verticals leading to a solid core deposit base. Along with
lending and non-borrowing retail relationships, the Bank also obtains
deposits through its debit card issuing business and relationships with
digital currency related businesses, which maintain non-interest bearing
corporate and settlement accounts with the Bank. As a policy, these
settlement account balances are not incorporated into the Bank's funding
strategies. The Bank's policy is to keep deposit accounts related to
digital currencies that are used for funding to less than 10% of its
total deposit base.

The total cost of deposits decreased 10 basis points to 0.41% for the
fourth quarter of 2017, from 0.51% for the fourth quarter of 2016, and
decreased 6 basis points from 0.47% for the third quarter of 2017. The
total cost of deposits was at 0.47% for the year ended December 31, 2017
and 0.51% for the year ended December 31, 2016.

Common equity was $231.4 million and tangible equity was $227.2 million
at December 31, 2017, compared to $104 million and $99.8 million
respectively at December 31, 2016. At September 30, 2017, common equity
was $113.5 million and tangible equity was $109.2 million. Tangible book
value per common share was $27.04 at December 31, 2017, compared to
$20.76 at December 31, 2016, and $22.39 at September 30, 2017.

Accumulated other comprehensive loss was ($206) thousand at December 31,
2017, compared to ($165) thousand at December 31, 2016, and ($47)
thousand at September 30, 2017.

About Metropolitan Bank Holding Corporation

Metropolitan Bank Holding Corp. (NYSE:MCB) is the holding company for
Metropolitan Commercial Bank®, The Entrepreneurial Bank. The
Bank provides a broad range of business, commercial and personal banking
products and services to small and middle-market businesses, public
entities and affluent individuals in the New York metropolitan area.
Founded in 1999, the Bank is headquartered in New York City and operates
five locations in Manhattan, Brooklyn and Great Neck, Long Island. The
Bank is also an active issuer of debit cards for third-party debit card
programs. Metropolitan Commercial Bank is a New York State chartered
commercial bank, an FDIC member and an equal opportunity lender. For
more information, please visit www.metropolitanbankny.com.

Forward Looking Statement Disclaimer

This release contains certain "forward-looking statements" about the
Company which, to the extent applicable, are intended to be covered by
the safe harbor for forward-looking statements provided under Federal
securities laws and, regardless of such coverage, you are cautioned
about. Examples of forward-looking statements include but are not
limited to the Company's financial condition and capital ratios, results
of operations and the Company's outlook and business. Forward-looking
statements are not historical facts. Such statements may be identified
by the use of such words as "may", "believe", "expect", "anticipate",
"plan", "continue", or similar terminology. These statements relate to
future events or our future financial performance and involve risks and
uncertainties that may cause our actual results, levels of activity,
performance or achievements to differ materially from those expressed or
implied by these forward-looking statements. Although we believe that
the expectations reflected in the forward-looking statements are
reasonable, we caution you not to place undue reliance on these
forward-looking statements. Factors which may cause our forward-looking
statements to be materially inaccurate include, but are not limited to,
an unexpected deterioration in our loan portfolio, unexpected increases
in our expenses, greater than anticipated growth, unanticipated
regulatory action, unexpected changes in interest rates, an
unanticipated loss of key personnel, an unanticipated loss of existing
customers, competition from other institutions resulting in
unanticipated changes in our loan or deposit rates, unanticipated
increases in Federal Deposit Insurance Corporation costs and
unanticipated adverse changes in our customers' economic conditions or
economic conditions in our local area in general.

Forward-looking statements speak only as of the date of this release. We
do not undertake any obligation to update or revise any forward-looking
statement, whether the result of new information, future events or
otherwise.

 
CONSOLIDATED BALANCE SHEETS
     
End of Period:
December 31, 2017 September 30, 2017 December 31, 2016
(in $000's, unaudited)      
Assets
Cash and cash equivalents:
Cash and due from banks $ 261,231 $ 267,099 $ 82,931
Investment securities available for sale 32,157 33,922 37,329
Investment securities held to maturity 5,428 5,681 6,500
Other investments 13,677 13,740 12,588
Loans 1,420,966 1,381,649 1,055,706
Deferred loan fees and unamortized costs, net (1,070 ) (820 ) (1,160 )
Allowance for loan losses   (14,887 )   (15,075 )   (11,815 )
Net loans 1,405,009 1,365,754 1,042,731
Accounts receivable, net 6,601 3,825 5,420
Receivable from prepaid card programs, net 9,579 6,977 7,566
Accrued interest receivable 4,421 3,903 2,735
Premises and equipment, net 6,268 6,010 5,035
Prepaid expenses and other assets 5,751 7,013 7,733
Goodwill   9,733     9,733     9,733  
Total assets $ 1,759,855   $ 1,723,657   $ 1,220,301  
 
Liabilities
Deposits:
Noninterest-bearing demand deposits $ 812,497 $ 826,345 $ 403,402
Interest-bearing deposits   591,858     662,298     590,378  
Total deposits 1,404,355 1,488,643 993,780
Borrowed Funds 42,198 43,750 78,418
Trust preferred securities 20,620 20,620 20,620
Subordinated debts, net of issuance cost 24,489 24,468 -
Accounts payable, accrued expenses and other liabilities 21,678 20,411 10,901
Accrued interest payable 749 547 227
Debit cardholder balances   8,882     6,259     6,864  
Total liabilities 1,522,971 1,604,698 1,110,810
 
Stockholders' equity
Class B preferred stock 3 3 3
Common stock 81 45 45
Additional paid in capital 211,145 96,422 96,116
Retained earnings 25,861 22,536 13,492
Accumulated other comprehensive (loss)   (206 )   (47 )   (165 )
Total stockholders' equity   236,884     118,959     109,491  
Total liabilities and stockholders' equity $ 1,759,855   $ 1,723,657   $ 1,220,301  
 
 
CONSOLIDATED INCOME STATEMENTS
         
For the Quarter Ended: For the Year Ended:
December 31, September 30, December 31, December 31, December 31,
(in $000's, unaudited) 2017 2017 2016 2017   2016
Interest and dividend income:
Loans, including fees $ 16,304 $ 15,537 $ 42,360 $ 57,075 $ 42,360
Securities:
Taxable 193 201 886 813 886
Tax-exempt 7 7 30 30 30
Money market funds and commercial paper 100 82 142 315 142
Other interest and dividends   1,260   574   737   2,520     737
Total interest income 17,864 16,401 44,155 60,753 44,155
Interest expense:
Deposits 1,557 1,588 4,877 5,873 4,877
Borrowed funds 166 244 673 840 673
Trust preferred securities interest expense 166 165 539 636 539
Subordinated debt interest expense   404   440   -   1,322     -
Total interest expense 2,293 2,437 6,089 8,671 6,089
 
Net interest income 15,571 13,964 38,066 52,082 38,066
Provision for loan losses   3,499   1,200   8,060   7,059     8,060
Net interest income after provision for loan losses 12,072 12,764 30,006 45,023 30,006
 
Non-interest income:
Service charges on deposit accounts 1,820 836 876 3,452 876
Other service charges and fees 3,429 523 1,179 4,368 1,179
Loan prepayment penalties 71 27 402 111 402
Debit card income 929 847 2,926 3,369 2,926
Net gains on securities transactions   -   -   40   -     40
Total non-interest income 6,249 2,233 5,423 11,300 5,423
 
Non-interest expense:
Compensation and benefits 5,478 4,847 17,010 19,165 17,010
Bank premises and equipment 1,200 1,075 3,985 4,385 3,985
Directors Fees 229 316 611 894 611
Insurance Expense 77 60 333 281 333
Professional fees 771 976 1,595 2,636 1,595
FDIC assessment 444 349 675 1,067 675
Core processing fees 542 423 862 1,495 862
Other expenses   1,038   544   2,300   2,821     2,300
Total non-interest expense 9,779 8,590 27,371 32,744 27,371
 
Net income before income tax expense 8,542 6,407 8,058 23,578 8,058
Income tax expense   5,216   2,562   3,045   11,209     3,045
Net Income $ 3,326 $ 3,845 $ 5,013 $ 12,369   $ 5,013
 
PER COMMON SHARE DATA
(unaudited)
Earnings per share – basic 0.50 0.83 0.01 2.40 0.43
Earnings per share – diluted 0.49 0.82 0.01 2.34 0.43
 
Average common shares outstanding for Diluted EPS 6,768,753 4,576,925 4,574,525 5,202,234 3,673,026
 

Use of Non-GAAP Financial Measures

In addition to the results presented in accordance with Generally
Accepted Accounting Principles ("GAAP"), the Company supplements its
evaluation with an analysis of certain non-GAAP/adjusted financial
measures including an adjusted net income available to common
shareholders. We believe these non-GAAP financial measures, in addition
to the related GAAP measures, provide meaningful information to
investors in understanding our operating performance and trends. These
non-GAAP measures have inherent limitations and are not required to be
uniformly applied and are not audited. They should not be considered in
isolation or as a substitute for an analysis of results reported under
GAAP. These non-GAAP measures may not be comparable to similarly titled
measures reported by other companies.

Reconciliations of non-GAAP/adjusted financial measures disclosed in
this earnings release to the comparable GAAP measures are provided in
the accompanying tables.

 
SUPPLEMENTAL GAAP AND NON-GAAP FINANCIAL MEASURES
         
As of
(in $000's, unaudited) Dec. 31, Sept. 30, Jun. 30 Mar. 31 Dec. 31,
2017   2017   2017   2017   2016

Selected Financial Data

Total assets $ 1,759,855 $ 1,723,657 $ 1,586,773 $ 1,268,365 $ 1,220,301
Loans receivable:
Commercial real estate 783,745 736,487 669,963 600,429 547,711
Commercial and industrial 340,001 346,738 332,291 284,009 315,870
Multifamily 190,097 187,753 179,245 131,097 117,373
Construction 36,960 37,723 40,386 36,137 29,447
One-to-four family 25,568 25,777 25,976 26,267 26,480
Consumer   44,595     47,171     38,115     20,959     18,825  
Gross loans 1,420,966 1,381,649 1,285,976 1,098,898 1,055,706
Unearned net origination fees (1,070 ) (820 ) (823 ) (1,056 ) (1,160 )
Allowance for loan losses   (14,887 )   (15,075 )   (13,909 )   (12,236 )     (11,815 )
Loans receivable, net $ 1,405,009 $ 1,365,754 $ 1,271,244 $ 1,085,606 $ 1,042,731
 
Securities available-for-sale $ 32,157 $ 33,922 $ 35,610 $ 41,927 $ 37,329
Goodwill and other intangible assets 9,733 9,733 9,733 9,733 9,733
 
Deposits:
Noninterest-bearing demand 812,497 826,345 698,874 385,984 403,402
Interest-bearing deposits   591,858     662,298     630,424     630,693     590,378  
Total Deposits $ 1,404,355 $ 1,488,643 $ 1,329,298 $ 1,016,677 $ 993,780
 
Borrowings 42,198 43,750 73,802 73,854 78,418
Trust preferred securities 20,620 20,620 20,620 20,620 20,620
Subordinated debentures (net of issuance costs) 24,489 24,468 24,453 25,000 -
Total stockholders' equity $ 236,884 $ 118,959 $ 114,979 $ 112,207 $ 109,491
 
 
Three Months Ended
Dec. 31,   Sept. 30,   Jun. 30   Mar. 31   Dec. 31,
2017   2017   2017   2017   2016
 
Net interest income $ 15,571 $ 13,964 $ 11,766 $ 10,783 $ 10,427
Provision for loan losses   3,499   1,200   1,790   570   6,060  
Net interest income after provision for loan losses 12,072 12,764 9,976 10,213 4,367

Noninterest income

Service charges on deposit accounts

  1,820   836   505   291   249  
Other service charges and fees 3,429 523 250 166 197
Loan prepayment penalties 71 27 13 - 14
Debit card income 929 847 805 788 828
Net gains on sales of securities - - - - -
Total noninterest income   6,249   2,233   1,573   1,245   1,288  

Noninterest expenses

Compensation and benefits $ 5,478 $ 4,847 $ 4,264 $ 4,577 $ 3,573

Bank premises and equipment

  1,200   1,075   1,037   1,073   1,082  
Directors fees $ 229 $ 316 $ 175 $ 174 $ 112
Insurance expense 77 60 65 79 82
Professional fees 771 976 480 410 411
FDIC assessment 444 349 105 170 168
Core processing fees 542 423 279 251 162
Other expenses 1,038 544 736 502 449
Total noninterest expenses 9,779 8,590 7,141 7,236 6,039
 
Income (loss) before income tax expense $ 8,542 $ 6,407 $ 4,408 $ 4,222 $ (384 )
Income tax expense (benefit) 5216 2562 1757 1674 -433
Net income available to common stockholders $ 3,326 $ 3,845 $ 2,651 $ 2,548 $ 49
         
Net income (loss) available to common stockholders $ 3,326 $ 3,845 $ 2,651 $ 2,548 $ 49
 
 

Reconciliation of GAAP Earnings to Earnings Excluding Writedown
of Net Deferred Tax Assets and Taxi Medallion Loan

Charge-off

  Three Months Ended
Dec. 31,   Sept. 30,   Jun. 30   Mar. 31   Dec. 31,
(in $000's, unaudited) 2017   2017   2017   2017   2016
 
Net income (loss) available to common stockholders $ 3,326 $ 3,845 $ 2,651 $ 2,548 $ 49
Writedown of Net Deferred Tax Assets 1,581 - - - -
Charge-off related to taxi medallion loan (after taxes)   2,196   -   -   -   3,202
Net income available to common stockholders-adjusted $ 7,103 $ 3,845 $ 2,651 $ 2,548 $ 3,251
Weighted average diluted shares outstanding 6,637,564 4,543,925 4,543,925 4,541,525 4,527,918
Diluted EPS (GAAP) 0.49 0.82 0.57 0.55 0.01
Diluted EPS-adjusted (non-GAAP) (1) 1.04 0.82 0.57 0.55 0.70
 

(1) Adjusted net income available to common stockholders divided
by weighted average diluted shares outstanding.

 
         
Three Months Ended
Dec. 31, Sept. 30, Jun. 30 Mar. 31 Dec. 31,

(in $000's, unaudited)

  2017   2017   2017   2017   2016

Return on Assets Measures

Net income available to common stockholders-adjusted
 
Average assets $ 1,813,785 $ 1,633,543 $ 1,414,602 $ 1,236,036 $ 1,153,420
Less: average intangible assets   9,733     9,733     9,733     9,733     9,733  
Average tangible assets 1,804,052 1,623,810 1,404,869 1,226,303 1,143,687
 
Return on avg. assets (GAAP) 0.73 % 0.94 % 0.75 % 0.83 % 0.02 %
Return on avg. assets-adjusted (non-GAAP) (2) 1.57 % 0.94 % 0.75 % 0.82 % 1.13 %
Return on avg. tangible assets (non-GAAP) (3) 0.74 % 0.95 % 0.75 % 0.83 % 0.02 %
Return on avg. tangible assets-adjusted (non-GAAP) (4) 1.57 % 0.95 % 0.75 % 0.83 % 1.14 %
 
(2) Adjusted net income available to common stockholders divided by
average assets.
(3) Net income available to common stockholders excluding
amortization of intangible assets divided by average tangible assets.
(4) Adjusted net income available to common stockholders excluding
amortization of intangible assets divided by average tangible assets.
 
         
Three Months Ended
Dec. 31, Sept. 30, Jun. 30 Mar. 31 Dec. 31,
(in $000's, unaudited)   2017   2017   2017   2017   2016

Return on Equity Measures

Net income available to common stockholders-adjusted
 
Average common equity $ 173,245 $ 111,553 $ 108,144 $ 105,336 $ 104,898
Less: average intangible assets   9,733     9,733     9,733     9,733     9,733  
Average tangible common equity 163,512 101,820 98,411 95,603 95,165
 
 
Return on avg. common equity (GAAP) 7.68 % 13.79 % 9.80 % 9.68 % 0.19 %
Return on avg. common equity-adjusted (non-GAAP) (5) 16.40 % 13.79 % 9.80 % 9.68 % 12.40 %
Return on avg. tangible common equity (non-GAAP) (6) 8.14 % 15.11 % 10.77 % 10.66 % 0.21 %
Return on avg. tangible common equity-adjusted (non-GAAP) (7) 17.38 % 15.11 % 10.77 % 10.66 % 13.66 %
 
(5) Adjusted net income available to common stockholders divided by
average common equity.
(6) Net income available to common stockholders divided by average
tangible common equity.
(7) Adjusted net income available to common stockholders divided by
average tangible common equity.
 
       
Three Months Ended
Dec. 31,   Sept. 30, Jun. 30 Mar. 31 Dec. 31,
2017   2017   2017   2017   2016

Efficiency Measures

Total noninterest expenses 9,779 8,590 7,141 7,236 6,039
 
Net interest income 15,571 13,964 11,766 10,783 10,427
Noninterest income 6,249   2,233   1,573   1,245   1,288  
Operating revenue 21,820 16,197 13,339 12,028 11,715
 
Operating efficiency ratio (non-GAAP) (8) 44.82 % 53.03 % 53.53 % 60.16 % 51.55 %
 
(8) Operating noninterest expense divided by operating revenue.
 

Net Interest Margin

Average interest-earning assets 1,785,784 1,546,332 1,357,189 1,213,217 1,134,562
 
Net interest margin (GAAP) 3.49 % 3.62 % 3.48 % 3.60 % 3.71 %
 
                   
Three Months Ended
Dec. 31,   Sept. 30,   Jun. 30   Mar. 31   Dec. 31,
(in $000's, unaudited)   2017   2017   2017   2017   2016

Capital Ratios and Book Value per Share

Common equity $ 231,381 $ 113,457 $ 109,477 $ 106,704 $ 103,988
Less: intangible assets   9,733     9,733     9,733     9,733     9,733  
Tangible common equity 221,648 103,724 99,744 96,971 94,255
 
Total assets 1,759,855 1,723,657 1,586,773 1,268,365 1,220,301
Less: intangible assets   9,733     9,733     9,733     9,733     9,733  
Tangible assets 1,750,122 1,713,924 1,577,040 1,258,632 1,210,568
 
Common shares outstanding 8,196,310 4,633,012 4,633,012 4,633,012 4,539,925
 
Regulatory capital ratios (The Company):
Tier 1 leverage 13.71 % 7.96 % 8.91 % 9.54 % 10.49 %
Tier 1 risk-based capital 17.09 % 7.38 % 9.62 % 10.72 % 11.32 %
Total risk-based capital 19.84 % 12.01 % 12.63 % 14.14 % 12.45 %
Common equity tier 1 capital 15.33 % 9.19 % 7.67 % 8.89 % 10.80 %
 
Book value per share (GAAP) 28.23 24.49 23.63 23.03 22.91
Tangible book value per share (non-GAAP) (9) 27.04 22.39 21.53 20.93 20.76
 
(9) Tangible common equity divided by common shares outstanding at
period-end.
 
 
NET INTEREST INCOME AND NET INTEREST MARGIN
           

For the three months ended December 31,

2017 2016
(in $000's, unaudited)

Average
Outstanding
Balance

  Interest  

Yield/ Rate (1)

Average
Outstanding
Balance

  Interest  

Yield/ Rate (1)

Interest-earning assets:
Loans $ 1,397,700 $ 16,304 4.63 % $ 1,000,187 $ 11,533 4.59 %
Available-for-sale securities 33,322 172 2.06 % 38,729 199 2.06 %

Held-to-maturity securities

5,559 28 2.01 % 6,723 33 1.96 %
Other interest-earning assets   349,203     1,360 1.55 %   88,922     196 0.88 %
Total interest-earning assets 1,785,784 17,864 3.97 % 1,134,561 11,961 4.19 %
Noninterest-earning assets 43,323 30,280
Allowance for loan and lease losses   (15,322 )   (11,421 )
Total assets $ 1,813,785   $ 1,153,420  
78.27 % 88.16 %
Interest-bearing liabilities:
Money market and savings accounts $ 559,339 $ 1,277 0.91 % $ 524,923 $ 975 0.74 %
Certificates of deposit   82,020     280 1.35 %   91,485     282 1.23 %
Total interest-bearing deposits 641,359 1,557 0.96 % 616,408 1,257 0.81 %
Borrowed funds   88,488     736 3.30 %   48,403     235 1.93 %
Total interest-bearing liabilities 729,847 2,293 1.25 % 664,811 1,492 0.89 %
Noninterest-bearing deposits 868,117 371,871
Other non-interest bearing liabilities   37,074     6,350  
Total liabilities   1,635,038     1,043,032  
Equity   178,747     110,388  
Total liabilities and equity $ 1,813,785   $ 1,153,420  
 
Net interest income $ 15,571 $ 10,469
Net interest rate spread (2) 2.72 % 3.30 %
Net interest-earning assets (3) $ 1,055,937   $ 469,750  
Net interest margin (4) 3.49 % 3.71 %
Average interest-earning assets to interest-bearing liabilities 244.68 % 170.66 %
 
Cost of Funds 0.57 % 0.57 %
 
(1) Yields and rates are annualized for the three months ended
December 31, 2017 and 2016.
(2) Represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(3) Represents total interest-earning assets less total
interest-bearing liabilities.
(4) Represents net interest income divided by total interest-earning
assets.
 
 
NET INTEREST INCOME AND NET INTEREST MARGIN
           

For the twelve months ended December 31,

2017 2016
(in $000's, unaudited)

Average
Outstanding
Balance

  Interest   Yield/ Rate

Average
Outstanding
Balance

  Interest   Yield/ Rate
Interest-earning assets:
Loans $ 1,244,194 $ 57,075 4.59% $ 931,207 $ 42,360 4.56%
Available-for-sale securities 37,649 720 1.91% 41,836 842 2.01%

Held-to-maturity securities

3,399 123 3.61% 6,215 121 2.01%
Other interest-earning assets 195,805 2,835 1.45% 85,186 832 1.01%
Total interest-earning assets 1,481,047 60,753 4.10% 1,064,444 44,155 4.16%
Noninterest-earning assets 58,477.48 43,918
Allowance for loan and lease losses (15,322) (11,131)
Total assets $ 1,524,202 $ 1,097,231
81.63% 84.87%
Interest-bearing liabilities:
Money market and savings accounts $561,733 $ 4,840 0.86% $501,619 $ 3,674 0.73%
Certificates of deposit 80,130 1,033 1.29% 101,950 1,203 1.18%
Total interest-bearing deposits 641,863 5,873 0.91% 603,569 4,877 0.80%
Borrowed funds 105,684 2,798 2.61% 69,840 1,212 1.74%
Total interest-bearing liabilities 747,547 8,671 1.16% 673,409 6,089 0.90%
Noninterest-bearing deposits 607,743 313,594
Other non-interest bearing liabilities 35,450 20,022
Total liabilities 1,390,740 1,007,025
Equity 133,462 90,206
Total liabilities and equity $ 1,524,202 $ 1,097,231
 
Net interest income $ 52,082 $ 38,066
Net interest rate spread (1) 2.94% 3.26%
Net interest-earning assets (2) $ 733,500 $ 391,035
Net interest margin (3) 3.54% 3.57%
Average interest-earning assets to interest-bearing liabilities 198.12% 158.07%
 
 
Cost of Funds 0.64% 0.61%
 
(1) Represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(2) Represents total interest-earning assets less total
interest-bearing liabilities.
(3) Represents net interest income divided by total interest-earning
assets.
 

View Comments and Join the Discussion!