Market Overview

Metropolitan Bank Holding Corp. Reports Earnings of $7.1 Million or $0.85 per Diluted Common Share in Third Quarter

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Results Led by Growth in Loans and Deposits

Metropolitan Bank Holding Corp. (NYSE:MCB), the holding company (the
"Company") for Metropolitan Commercial Bank (the "Bank"), today reported
net income of $7.1 million, or $0.85 per diluted common share, for the
third quarter of 2018 as compared to $3.8 million, or $0.82 per diluted
common share, for the third quarter of 2017.

For the nine-months ended September 30, 2018, the Company reported net
income of $19.3 million, or $2.31 per diluted common share, as compared
to $9.0 million, or $1.94 per diluted common share, for the nine months
ended September 30, 2017.

Financial Highlights for the third quarter of 2018 include:

  • Net income for the third quarter of 2018 included a loan loss recovery
    of $1.5 million resulting in a negative provision for loan losses of
    $453,000. Excluding the loan loss recovery, net of associated legal
    fees, net income for the quarter was $6.1 million or $0.73 per diluted
    common share.
  • The average balance of loans increased 24% to $1.6 billion for the
    third quarter of 2018, as compared to the third quarter of 2017. For
    the three and nine months ended September 30, 2018, the Bank
    originated loans of $146.9 million and $528.2 million, respectively as
    compared to $137.3 million and $417.6 million for the same periods in
    2017.
  • The average balance of non-interest-bearing demand accounts increased
    25% to $850.3 million for the third quarter of 2018 as compared to
    $682.3 million for the third quarter of 2017.
  • The average balance of interest-bearing deposits increased 12% to
    $728.5 million for the 2018 third quarter as compared to $653.1
    million for third quarter of 2017.
  • Net interest margin increased 17 basis points to 3.76% for the third
    quarter of 2018 from 3.59% for the third quarter of 2017. For the nine
    months ended September 30, 2018, net interest margin increased to
    3.70% as compared to 3.54% for the same period in 2017.
  • Annualized return on average assets for the third quarter of 2018 was
    1.45%, an increase of 51 basis points as compared to 0.94% for the
    third quarter of 2017.
  • Annualized return on average equity was 11.22% for the third quarter
    of 2018 as compared to 13.14% for the third quarter of 2017. The
    Company completed its initial public offering in November 2017 raising
    $114.8 million.
  • The Company's efficiency ratio in the third quarter of 2018 was
    50.85%, compared to 53.03% for the same quarter in 2017.

Mark DeFazio, the Company's President and Chief Executive Officer,
commented, "We are pleased with the accomplishments we have achieved as
we approach the first anniversary of our IPO. Year-over-year, total
assets increased 12% fueled by growth in our loan portfolio which was
the result of our steadfast commitment to our relationship banking
model. This growth in our balance sheet will yield a more consistent and
sustainable net interest margin over time. Our balance sheet improvement
translated into strong earnings for the quarter and for the first nine
months of 2018. We more than doubled our net income – to $19.3 million
for the first nine months of 2018 as compared to $9.0 million for the
same period in 2017."

Mr. DeFazio continued, "I am pleased with the successes of the past year
but am keenly aware of the challenges and opportunities that face banks
in 2019. A flat yield curve and competition for loans and deposits are
challenges facing the industry but I am confident that our
"branch-light" franchise and deposit funding strategy differentiate us
from our peers. Our strategy combined with deposit platforms that cater
to institutional clients with discretion over large sums of money
provides the Bank with an efficient source of funding. As we prepare for
2019 and our second year as a public company, we are well-positioned for
the opportunities that the future holds for our business."

Earnings Highlights

         
(dollars in thousands) Three months ended
Sept. 30, 2018   Sept. 30, 2017   Change
Net income $ 7,113 $ 3,845 85 %
Diluted earnings per share 0.85 0.82 4 %
Annualized return on average assets 1.45 % 0.94 %
Annualized return on average equity 11.22 % 13.14 %
Annualized return on average common equity* 11.47 % 13.79 %
 
(dollars in thousands) Nine months ended
Sept. 30, 2018   Sept. 30, 2017   Change
Net income $ 19,268 $ 9,044 113 %
Diluted earnings per share 2.31 1.94 22 %
Annualized return on average assets 1.34 % 0.84 %
Annualized return on average equity 10.31 % 10.56 %
Annualized return on average common equity* 10.67 % 10.81 %
 

*Common equity excludes Class B preferred stock. See
reconciliation to GAAP measures on page 16.

 

Net income increased $3.3 million to $7.1 million for the three months
ended September 30, 2018 as compared to $3.8 million for the same period
in 2017. This increase was due primarily to a $4.4 million increase in
net interest income and a $1.7 million decrease in the provision for
loan losses partially offset by a $1.8 million increase in non-interest
expense. Net income for the third quarter of 2018 included a loan loss
recovery of $1.5 million resulting in a negative provision for loan
losses of $453,000. Excluding the loan loss recovery, net of associated
legal fees, net income for the quarter was $6.1 million or $0.73 per
diluted common share.

For the nine months ended September 30, 2018, net income increased $10.3
million to $19.3 million as compared to $9.0 million for the same period
in 2017. This increase was due primarily to a $15.7 million increase in
net interest income, a $1.3 million decrease in the provision for loan
losses and a $5.0 million increase in non-interest income, partially
offset by an $8.9 million increase in non-interest expense and a $2.8
million increase in income tax expense. Excluding the loan loss
recovery, net of associated legal fees, net income for the nine months
ended September 30, 2018 was $18.4 million or $2.20 per diluted common
share.

Net Interest Margin Analysis

    Three months ended September 30,
(dollars in thousands) 2018     2017

Average

Outstanding

Balance

  Interest   Yield/Rate

Average

Outstanding

Balance

  Interest   Yield/Rate
Assets:        
Interest-earning assets:
Loans (1) $ 1,639,958 $ 20,255 4.90 % $ 1,326,923 $ 15,564 4.65 %
Available-for-sale securities 30,033 165 2.18 % 34,930 178 2.02 %
Held-to-maturity securities 4,876 25 2.03 % 5,844 30 2.04 %
Overnight deposits 240,604 1,233 2.03 % 148,756 476 1.27 %
Other interest-earning assets   20,794     229 4.37 %   29,379     180 2.43 %
Total interest-earning assets 1,936,265 21,907 4.49 % 1,545,832 16,428 4.22 %
Non-interest-earning assets 42,384 102,402
Allowance for loan and lease losses   (18,331 )   (14,301 )
Total assets $ 1,960,318   $ 1,633,933  
 
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market and savings accounts $ 633,474 $ 2,045 1.28 % $ 576,619 $ 1,337 0.92 %
Certificates of deposit   95,032     520 2.17 %   76,506     251 1.30 %
Total interest-bearing deposits 728,506 2,565 1.40 % 653,125 1,588 0.96 %
Borrowed funds   105,403     991 3.73 %   112,651     849 2.99 %
Total interest-bearing liabilities 833,909 3,556 1.69 % 765,776 2,437 1.26 %
Non-interest-bearing liabilities:
Non-interest-bearing deposits 850,325 682,303
Other non-interest bearing liabilities   22,568     68,799  
Total liabilities   1,706,802     1,516,878  
 
Stockholders' Equity   253,516     117,055  
Total liabilities and equity $ 1,960,318   $ 1,633,933  
 
Net interest income $ 18,351 $ 13,991
Net interest rate spread (2) 2.80 % 2.96 %
Net interest-earning assets $ 1,102,356   $ 780,056  
Net interest margin (3) 3.76 % 3.59 %
Ratio of interest earning assets to interest bearing liabilities 2.32x 2.02x
   
(1) Amount includes deferred loan fees and non-performing loans.
(2) Determined by subtracting the annualized weighted average cost of
total interest-bearing liabilities from the annualized weighted
average yield on total interest-earning assets.
(3) Determined by dividing annualized net interest income by total
average interest-earning assets.
 
   

Net Interest Margin Analysis

Nine months ended September 30,
(dollars in thousands) 2018     2017

Average

Outstanding

Balance

  Interest   Yield/Rate

Average

Outstanding

Balance

  Interest   Yield/Rate
Assets:        
Interest-earning assets:
Loans (1) $ 1,550,278 $ 55,467 4.78 % $ 1,192,463 $ 40,811 4.58 %
Available-for-sale securities 30,661 489 2.13 % 35,782 548 2.05 %
Held-to-maturity securities 5,095 80 2.09 % 6,099 94 2.06 %
Overnight deposits 272,039 3,811 1.87 % 117,399 957 1.09 %
Other interest-earning assets   30,768     755 3.28 %   29,817     519 2.33 %
Total interest-earning assets 1,888,841 60,602 4.29 % 1,381,560 42,929 4.15 %
Non-interest-earning assets 42,084 59,733
Allowance for loan and lease losses   (16,823 )   (12,979 )
Total assets $ 1,914,102   $ 1,428,314  
 
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market and savings accounts $ 566,396 $ 4,663 1.10 % $ 562,539 $ 3,562 0.85 %
Certificates of deposit   84,244     1,139 1.81 %   79,494     754 1.27 %
Total interest-bearing deposits 650,640 5,802 1.19 % 642,033 4,316 0.90 %
Borrowed funds   90,241     2,534 3.75 %   111,480     2,061 2.47 %
Total interest-bearing liabilities 740,881 8,336 1.50 % 753,513 6,377 1.13 %
Non-interest-bearing liabilities:
Non-interest-bearing deposits 902,495 542,200
Other non-interest bearing liabilities   22,178     18,704  
Total liabilities   1,665,554     1,314,417  
 
Stockholders' Equity   248,548     113,897  
Total liabilities and equity $ 1,914,102   $ 1,428,314  
 
Net interest income $ 52,266 $ 36,552
Net interest rate spread (2) 2.79 % 3.02 %
Net interest-earning assets $ 1,147,960   $ 628,047  
Net interest margin (3) 3.70 % 3.54 %
Ratio of interest earning assets to interest bearing liabilities 2.55x 1.83x
   
(1) Amount includes deferred loan fees and non-performing loans.
(2) Determined by subtracting the annualized weighted average cost of
total interest-bearing liabilities from the annualized weighted
average yield on total interest-earning assets.
(3) Determined by dividing annualized net interest income by total
average interest-earning assets.
 

Net interest margin improved by 17 basis points to 3.76% for the third
quarter of 2018 as compared to the third quarter of 2017. This
improvement was mainly the result of a 25 basis point increase in
average loan yields to 4.90% for the third quarter of 2018 as compared
to 4.65% for the same period in 2017, and an increase of 76 basis points
in the average yield on overnight deposits to 2.03% as compared to 1.27%
for the same period in 2017. Net interest margin also benefited from the
effect of an increase in average non-interest-bearing deposits as a
percentage of total average deposits in the third quarter of 2018 as
compared to the third quarter of 2017. Average non-interest-bearing
deposits increased $168.0 million to $850.3 million in the third quarter
of 2018, compared to $682.3 million in the third quarter of 2017 and
accounted for 54% of average total deposits during the third quarter of
2018 as compared to 51% during the third quarter of 2017. Average
interest-earning assets increased $390.4 million for the third quarter
of 2018 as compared to the third quarter of 2017, due primarily to a
$313.0 million increase in average loans and a $91.8 million increase in
average overnight deposits.

Net interest margin increased 16 basis points to 3.70% for the nine
months ended September 30, 2018 as compared to 3.54% for the same period
in 2017. This increase was primarily the result of an increase of 20
basis points in average loan yields to 4.78% for the nine months ended
September 30, 2018 as compared to 4.58% for the same period in 2017. Net
interest margin also benefited from the effect of an increase in average
non-interest-bearing deposits as a percentage of total average deposits
at September 30, 2018 as compared to the same period in 2017. Average
non-interest-bearing deposits increased $360.3 million to $902.5 million
at September 30, 2018, compared to $542.2 million for the same period in
2017 and accounted for 58% of average total deposits at September 30,
2018 as compared to 46.0% for the same period in 2017. Average
interest-earning assets increased $507.3 million for the nine months
ended September 30, 2018 as compared to the same period in 2017 due
primarily to an increase of $357.8 million in average loans and a $154.6
million increase in average overnight deposits. Average overnight
deposits included approximately $227.1 million of funds from the
settlement accounts of digital currency customer relationships.

Asset Quality

Non-performing assets consist of non-accrual loans, accruing loans that
are 90 days or more past due, non-accrual troubled debt restructurings
and other real estate owned that has been acquired in partial or full
satisfaction of loan obligations or upon foreclosure.

         
(dollars in thousands) As Of
    Sept. 30, 2018   December 31, 2017   Sept. 30, 2017
Non-performing assets:
Non-accrual loans:
Real Estate:
Commercial $ - $ 787 $ 841
One-to-four family - 2,447 2,466
Commercial and industrial - - 3,660
Consumer   79       155       125  
Total non-accrual loans $ 79 $ 3,389 $ 7,092
Accruing loans 90 days or more past due   328       -       -  
Total non-performing assets   407       3,389       7,092  
Nonaccrual loans as % of loans outstanding 0.00 % 0.24 % 0.51 %
 
Allowance for loan losses $ (18,493 ) $ (14,887 ) $ (15,075 )
Allowance for loan losses as % of loans outstanding 1.09 % 1.05 % 1.09 %
 
 
Three months ended September 30,   Nine months ended September 30,
(dollars in thousands)     2018   2017   2018   2017
Provision for loan losses $ (453 ) $ 1,200 $ 2,294 $ 3,560
Charge-offs $ 54 $ 34 $ 278 $ 300
Recoveries $ (1,537 ) $ - $ (1,590 ) $ -
Net recoveries as % of average loans (annualized) (0.36 )% 0.01 % (0.11 )% 0.03 %
 

The provision for loan losses was $(453,000) for the third quarter of
2018 as compared to $1.2 million for the third quarter of 2017. This
decrease was due to a recovery of $1.5 million related to previously
written-off loans. The provision for loan losses for the nine months
ended September 30, 2018 was $2.3 million as compared to $3.6 million
for the same period in 2017. This decrease was due primarily to the loan
loss recovery.

           

Non-interest Income

Three months ended September 30,
(dollars in thousands) 2018   2017     Change
Service charges on deposit accounts $ 693 $ 836 -17 %
Prepaid debit card income 1,080 847 28 %
Other service charges and fees   239     523 -54 %
Total non-interest income $ 2,012   $ 2,206 -9 %
 
Nine months ended September 30,
2018   2017     Change
Service charges on deposit accounts $ 3,422 $ 1,633 110 %
Prepaid debit card income 3,506 2,440 44 %
Other service charges and fees 3,076 939 228 %
Losses on call of securities   (37 )   - NM
Total non-interest income $ 9,967   $ 5,012 99 %
 

Non-interest income decreased by $200,000 to $2.0 million in the third
quarter of 2018 as compared to the third quarter of 2017, primarily due
to decreases of $143,000 in service charges on deposits and $284,000 in
other charges and fees, offset by an increase in debit card income of
$233,000. The decrease in service charges on deposits was primarily due
to a decline of $130,000 in wire fees related to transactions by digital
currency customers. The decrease in other service charges and fees was
due to the receipt in 2017 of a $100,000 recovery of a charge-off
related to a deposit customer.

For the nine months ended September 30, 2018, non-interest income
increased by $5.0 million from the same period in 2017. This increase
was primarily due to increases of $1.8 million in service charges on
money market accounts, $1.1 million in prepaid debit card income and
$2.1 million in other service charges and fees when compared to the same
period in 2017. The increase in service charges on money market accounts
was due primarily to an increase in the number and balance of these
deposits. The increase in the prepaid debit card income is a reflection
of the growth in the debit card business and a termination fee of
$500,000 received in 2018 for a discontinued relationship.

The increase in other service charges and fees for the nine months ended
September 30, 2018 is primarily due to an increase of $2.0 million in
foreign currency conversion fees related to our customers in the digital
currency industry. Foreign currency conversion fees were at an elevated
level during the fourth quarter of 2017 and the first quarter of 2018,
as customers, particularly those in the digital currency business, were
transferring funds from their global corporate accounts back into their
U.S. dollar accounts with the Bank.

         

Non-interest Expense

(dollars in thousands) Three months ended September 30,
2018   2017   Change
Compensation and benefits $ 6,253 $ 4,847 29 %
Bank premises and equipment 1,273 1,075 18 %
Insurance expense 104 60 73 %
Professional fees 587 951 -38 %
Data processing fees 847 437 94 %
Other expenses   1,291     1,220 6 %
Total non-interest expense $ 10,355   $ 8,590 21 %
 
 
Nine months ended September 30,
2018  

2017

  Change
Compensation and benefits $ 18,696 $ 13,688 37 %
Bank premises and equipment 3,739 3,185 17 %
Insurance expense 253 204 24 %
Professional fees 2,207 1,800 23 %
Data processing fees 2,961 987 200 %
Other expenses   4,012     3,102 29 %
Total non-interest expense $ 31,868   $ 22,966 39 %
 

Non-interest expense increased $1.8 million to $10.4 million during the
third quarter of 2018 as compared to $8.6 million for the third quarter
of 2017. Compensation and benefits increased $1.5 million to $6.3
million for the third quarter of 2018 as compared to $4.8 million for
the third quarter of 2017. This increase was due primarily to an
increase of 16 full-time equivalent employees for the third quarter of
2018 as compared to the third quarter of 2017. Data processing fees
increased $410,000 to $847,000 for the third quarter of 2018 as compared
to the third quarter of 2017, primarily due to costs to support our
balance sheet growth.

For the nine months ended September 30, 2018, non-interest expense
increased $8.9 million to $31.9 million as compared to the same period
in 2017. Compensation and benefits increased $5.0 million to $18.7
million for the nine months ended September 30, 2018 as compared to
$13.7 million for the same period in 2017. For those same periods, data
processing fees increased $2.0 million to $3.0 million due primarily to
costs related to wire transfer activity as well as costs to support our
balance sheet growth.

Balance Sheet

The Company had total assets of $1.93 billion at September 30, 2018,
compared with $1.76 billion on December 31, 2017. Loans, net of deferred
fees and unamortized costs increased to $1.7 billion at September 30,
2018 as compared to $1.4 billion at December 31, 2017. For the three and
nine months ended September 30, 2018, the Bank originated loans of
$146.9 million and $528.2 million, respectively, as compared to $137.3
million and $417.6 million for the same periods in 2017.

Total deposits increased $134.3 million, or 9.6%, to $1.5 billion at
September 30, 2018 as compared to $1.4 billion at December 31, 2017.
This was due to an increase of $169.4 million in interest-bearing demand
deposits partially offset by a decrease of $35.1 million in
non-interest-bearing deposits.

Total stockholders' equity was $257.3 million on September 30, 2018
compared to $236.9 million at December 31, 2017. The Company completed
an Initial Public Offering (IPO) in November 2017 resulting in 8,196,310
shares outstanding at December 31, 2017. Total proceeds from the IPO,
net of issuance costs, were $114.8 million. There were 8,207,234 shares
outstanding at September 30, 2018.

             

Regulatory Capital Ratios

                 

Capital Ratios

Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Tier 1 Leverage:
Metropolitan Bank Holding Corp. 13.8 % 13.5 % 13.7 % 13.7 % 8.0 %
Metropolitan Commercial Bank 14.8 14.5 14.7 14.7 9.3
 
Common Equity Tier 1 Risk-Based:
Metropolitan Bank Holding Corp. 13.9 14.3 14.9 15.3 7.4
Metropolitan Commercial Bank 16.5 17.0 17.7 18.4 10.8
 
Tier 1 Risk-Based:
Metropolitan Bank Holding Corp. 15.4 15.8 16.5 17.1 9.2
Metropolitan Commercial Bank 16.5 17.0 17.7 18.4 10.8
 
Total Risk-Based:
Metropolitan Bank Holding Corp. 17.9 18.4 19.2 19.9 12.0
Metropolitan Commercial Bank 17.6 18.1 18.8 19.4 11.9
 

Metropolitan Commercial Bank meets all the requirements to be considered
"Well-Capitalized" under applicable regulatory guidelines. At September
30, 2018, total Commercial Real Estate Loans (CRE) were 291.8% of
risk-based capital, compared to 267.7% at December 31, 2017.

About Metropolitan Bank Holding Corporation

Metropolitan Bank Holding Corp. (NYSE:MCB) is the holding company for
Metropolitan Commercial 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 six 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.mcbankny.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
those discussed under the heading "Risk Factors" in our Annual Report on
Form 10-K, as well as an unexpected deterioration in our loan portfolio,
unexpected increases in our expenses, greater than anticipated growth
and our ability to manage such growth, unanticipated regulatory action,
unexpected changes in interest rates, an unanticipated decrease in
deposits, 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 Sheet

             

(dollars in thousands)

Sept. 30, 2018

(unaudited)

 

December 31,

2017

 

Change

Assets

   
Cash and due from banks $ 6,165 $ 6,790 -9 %
Overnight deposits   148,260       254,441   -42 %
Total cash and cash equivalents 154,425 261,231 -41 %
Investment securities available for sale 27,490 32,157 -15 %
Investment securities held to maturity   4,757       5,428   -12 %
Total securities 32,247 37,585 -14 %
Other investments 16,645 13,677 22 %
Loans, net of deferred fees and unamortized costs 1,698,929 1,419,896 20 %
Allowance for loan losses   (18,493 )     (14,887 ) 24 %
Net loans 1,680,436 1,405,009 20 %
Receivable from prepaid card programs, net 14,297 9,579 49 %
Accrued interest receivable 5,239 4,421 19 %
Premises and equipment, net 6,918 6,268 10 %
Prepaid expenses and other assets 7,813 5,751 36 %
Goodwill 9,733 9,733 -
Accounts receivable, net   2,961       6,601   -55 %
Total assets $ 1,930,714     $ 1,759,855   10 %
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand deposits $ 777,494 $ 812,616 -4 %
Interest-bearing deposits   761,177       591,739   29 %
Total deposits 1,538,671 1,404,355 10 %
Federal Home Loan Bank of New York advances 60,000 42,198 42 %
Trust preferred securities 20,620 20,620 -
Subordinated debts, net of issuance cost 24,531 24,489 -
Accounts payable, accrued expenses and other liabilities 14,894 21,678 -31 %
Accrued interest payable 918 749 23 %
Prepaid debit cardholder balances   13,811       8,882   55 %
Total liabilities 1,673,445 1,522,971 10 %
 
Class B preferred stock 3 3 -
Common stock 81 81 -
Additional paid in capital 212,759 211,145 1 %
Retained earnings 45,129 25,861 75 %
Accumulated other comprehensive loss   (703 )     (206 ) 241 %
Total stockholders' equity   257,269       236,884   9 %
Total liabilities and stockholders' equity $ 1,930,714     $ 1,759,855   10 %
               
 

Consolidated Statement of Income
(unaudited)

(dollars in thousands) Quarter ended Sept. 30, Change Nine months ended Sept. 30, Change
2018     2017 2018     2017
Total interest income $ 21,907 $ 16,428 33 % $ 60,602 $ 42,929 41 %
Total interest expense   3,556       2,437 46 %   8,336       6,377 31 %
Net interest income 18,351 13,991 31 % 52,266 36,552 43 %
Provision for loan losses   (453 )     1,200 -138 %   2,294       3,560 -36 %
Net interest income after provision for loan losses 18,804 12,791 47 % 49,972 32,992 51 %
 
Non-interest income:
Service charges on deposit accounts 693 836 -17 % 3,422 1,633 110 %
Prepaid debit card income 1,080 847 28 % 3,506 2,440 44 %
Other service charges and fees 239 523 -54 % 3,076 939 228 %
Losses on call of securities   -       - NM   (37 )     - NM
Total non-interest income $ 2,012 $ 2,206 -9 % $ 9,967 $ 5,012 99 %
 
Non-interest expense:
Compensation and benefits 6,253 4,847 29 % 18,696 13,688 37 %
Bank premises and equipment 1,273 1,075 18 % 3,739 3,185 17 %
Insurance expense 104 60 73 % 253 204 24 %
Professional fees 587 951 -38 % 2,207 1,800 23 %
Data processing fees 847 437 94 % 2,961 987 200 %
Other expenses   1,291       1,220 6 %   4,012       3,102 29 %
Total non-interest expense 10,355 8,590 21 % 31,868 22,966 39 %
 
Net income before income tax expense 10,461 6,407 63 % 28,071 15,038 87 %
Income tax expense   3,348       2,562 31 %   8,803       5,994 47 %
Net income $ 7,113     $ 3,845 85 % $ 19,268     $ 9,044 113 %
 
Earnings per common share:
Basic earnings 0.87 0.83 5 % 2.35 1.95 21 %
Diluted earnings 0.85 0.82 4 % 2.31 1.94 19 %
 
 
Financial Highlights, Five Quarter Trend (unaudited)
(dollars in thousands, except per share data)      
At or for the three months ended
Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017

Performance Measures

       
Net income 7,113 5,865 6,291 3,326 3,845
Net income available to common shareholders 7,057 5,816 6,238 3,143 3,771
Per common share:
Basic earnings $ 0.87 $ 0.72 $ 0.77 $ 0.50 $ 0.83
Diluted earnings $ 0.85 $ 0.70 $ 0.75 $ 0.49 $ 0.82
Common shares outstanding:
Average - diluted 8,292,385 8,290,048 8,275,243 6,768,753 4,576,925
Period end 8,207,234 8,205,234 8,194,925 8,196,310 4,633,012
Return on (annualized):
Average total assets 1.45 % 1.20 % 1.35 % 0.73 % 0.94 %
Average common equity 11.47 % 9.75 % 10.78 % 7.68 % 13.79 %
Yield on average earning assets 4.49 % 4.13 % 4.17 % 4.02 % 4.22 %
Cost of interest-bearing liabilities 1.69 % 1.46 % 1.31 % 1.25 % 1.26 %
Net interest spread 2.80 % 2.67 % 2.85 % 2.77 % 2.96 %
Net interest margin 3.76 % 3.59 % 3.68 % 3.51 % 3.59 %
Net charge-offs as % of average loans (annualized) (0.36 )% 0.02 % 0.04 % 1.06 % 0.01 %
Efficiency ratio 50.85 % 51.26 % 51.48 % 44.82 % 53.03 %
 

Loan quality

Non-performing assets:
Non-accrual loans:
Real estate
Commercial $ - $ - $ - $ 787 $ 841
One-to-four family - - - 2,447 2,466
Commercial and industrial - - - - 3,660
Consumer   79       192       85       155       125  
Total non-accrual loans $ 79 $ 192 $ 85 $ 3,389 $ 7,092
Accruing loans past due 90 days or more   328       -       -       -       -  
Total non-performing assets $ 407     $ 192     $ 85       3,389     $ 7,092  
 
Non-accrual loans to total loans 0.00 % 0.01 % 0.01 % 0.24 % 0.51 %
Non-performing loans to total loans 0.02 % 0.01 % 0.01 % 0.24 % 0.51 %
Allowance for loan losses to total loans 1.09 % 1.09 % 1.07 % 1.05 % 1.09 %
 
 

Consolidated Statement of Income, Five
Quarter Trend

(unaudited)

(dollars in thousands)     Three months ended
Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Total interest income $ 21,907   $ 19,998   $ 18,693   $ 17,935   $ 16,428
Total interest expense   3,556       2,603       2,177     2,293     2,437
Net interest income 18,351 17,395 16,516 15,642 13,991
Provision for loan losses   (453 )     1,270       1,477     3,499     1,200
Net interest income after provision for loan losses 18,804 16,125 15,039 12,143 12,791
 
Non-interest income:
Service charges on deposit accounts 693 821 1,910 1,820 836
Prepaid debit card income 1,080 1,519 908 929 847
Other service charges and fees 239 346 2,494 3,429 523
Losses on call of securities   -       (37 )     -     -     -
Total non-interest income $ 2,012 $ 2,649 $ 5,312 $ 6,178 $ 2,206
 
Non-interest expense:
Compensation and benefits $ 6,253 $ 6,126 $ 6,317 $ 5,478 $ 4,847
Bank premises and equipment 1,273 1,288 1,180 1,200 1,075
Insurance expense 104 73 76 77 60
Professional fees 587 866 753 744 951
Data processing fees 847 609 1,506 605 437
Other expenses   1,291       1,313       1,406     1,675     1,220
Total non-interest expense 10,355 10,275 11,238 9,779 8,590
 
Net income before income tax expense 10,461 8,499 9,113 8,542 6,407
Income tax expense   3,348       2,634       2,822     5,216     2,562
Net Income $ 7,113     $ 5,865     $ 6,291   $ 3,326   $ 3,845
 
Earnings per common share:
Basic earnings $ 0.87 $ 0.72 $ 0.77 $ 0.50 $ 0.83
Diluted earnings $ 0.85 $ 0.70 $ 0.75 $ 0.49 $ 0.82
 
 

Consolidated Balance Sheet, Five Quarter
Trend

(unaudited)

(dollars in thousands)    
Sept. 30, 2018   June. 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Assets        
Cash and due from banks $ 6,165 $ 10,148 $ 7,063 $ 6,790 $ 8,902
Overnight deposits   148,260       240,994       363,887       254,441       258,197  
Total cash and cash equivalents 154,425 251,142 370,950 261,231 267,099
Investment securities available for sale 27,490 28,989 30,276 32,157 33,922
Investment securities held to maturity   4,757       4,985       5,212       5,428       5,681  
Total securities 32,247 33,974 35,488 37,585 39,603
Other investments 16,645 16,770 16,566 13,677 13,740
Loans, net of deferred fees and unamortized costs 1,698,929 1,599,647 1,526,166 1,419,896 1,380,829
Allowance for loan losses   (18,493 )     (17,463 )     (16,260 )     (14,887 )     (15,075 )
Net loans 1,680,436 1,582,184 1,509,906 1,405,009 1,365,754
Receivable from prepaid card programs, net 14,297 7,589 7,523 9,579 6,977
Accrued interest receivable 5,239 4,449 4,366 4,421 3,903
Premises and equipment, net 6,918 7,012 6,688 6,268 6,010
Prepaid expenses and other assets 7,813 7,715 5,993 5,751 7,013
Goodwill 9,733 9,733 9,733 9,733 9,733
Accounts receivable, net   2,961       3,927       1,673       6,601       3,825  
Total assets $ 1,930,714     $ 1,924,495     $ 1,968,886     $ 1,759,855     $ 1,723,657  
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing demand deposits $ 777,494 $ 878,703 $ 1,012,250 $ 812,616 $ 827,220
Interest-bearing deposits   761,177       661,779       604,866       591,739       661,423  
Total deposits 1,538,671 1,540,482 1,617,116 1,404,355 1,488,643
Federal Home Loan Bank of New York advances 60,000 63,000 33,000 42,198 43,750
Trust preferred securities 20,620 20,620 20,620 20,620 20,620
Subordinated debts, net of issuance cost 24,531 24,517 24,503 24,489 24,468
Accounts payable, accrued expenses and other liabilities 14,894 18,111 23,338 21,678 20,411
Accrued interest payable 918 1,019 454 749 547
Prepaid debit cardholder balances   13,811       7,162       6,814       8,882       6,259  
Total liabilities 1,673,445 1,674,911 1,725,845 1,522,971 1,604,698
 
Stockholders' Equity:
Class B preferred stock 3 3 3 3 3
Common stock 81 81 81 81 45
Additional paid in capital 212,759 212,100 211,333 211,145 96,422
Retained earnings 45,129 38,017 32,152 25,861 22,536
Accumulated other comprehensive loss   (703 )     (617 )     (528 )     (206 )     (47 )
Total stockholders' equity   257,269       249,584       243,041       236,884       118,959  
Total liabilities and stockholders' equity $ 1,930,714     $ 1,924,495     $ 1,968,886     $ 1,759,855     $ 1,723,657  
 
 

Reconciliation of Quarterly GAAP to Non-GAAP
Measures, Five Quarter Trend

In addition to the results presented in accordance with Generally
Accepted Accounting Principles ("GAAP"), this earnings release includes
certain non-GAAP financial measures. Management believes these non-GAAP
financial measures provide meaningful information to investors in
understanding the Company's 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.

         
Balance sheet data                  
Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017
Average assets $ 1,960,318 $ 1,946,910 $ 1,869,251 $ 1,813,785 $ 1,633,543
Less: average intangible assets   9,733     9,733     9,733     9,733     9,733
Average tangible assets $ 1,950,585 $ 1,937,177 $ 1,859,518 $ 1,804,052 $ 1,623,810
 
Average equity $ 253,516 $ 246,109 $ 239,017 $ 178,747 $ 117,055
Less: Average preferred equity   5,502     5,502     5,502     5,502     5,502
Average common equity $ 248,014 $ 240,607 $ 233,515 $ 173,245 $ 111,553
Less: average intangible assets   9,733     9,733     9,733     9,733     9,733
Average tangible common equity $ 238,281 $ 230,874 $ 223,782 $ 163,512 $ 101,820
 
Total assets $ 1,930,714 $ 1,924,495 $ 1,968,886 $ 1,759,855 $ 1,723,657
Less: intangible assets   9,733     9,733     9,733     9,733     9,733
Tangible assets $ 1,920,981 $ 1,914,762 $ 1,959,153 $ 1,750,122 $ 1,713,924
 
Common equity $ 251,767 $ 244,081 $ 237,537 $ 231,381 $ 113,457
Less: intangible assets   9,733     9,733     9,733     9,733     9,733
Tangible common equity (book value) $ 242,034 $ 234,348 $ 227,804 $ 221,648 $ 103,724
 
Common shares outstanding 8,207,234 8,205,234 8,194,925 8,196,310 4,633,012
 
Book value per share (GAAP) $ 30.68 $ 29.75 $ 29.23 $ 28.23 $ 24.49
Tangible book value per common share (non-GAAP)* 29.49 28.56 28.03 27.04 22.39
 

* Tangible book value divided by common shares outstanding at
period-end.

 

Income Data

         
        Quarter Ended

September 30, 2018

    Nine Months Ended

September 30, 2018

 
Net income, as reported (GAAP) $ 7,113 $ 19,268
Loan loss recovery (1,537 ) (1,537 )
Legal fees 41 254
Tax effect   479 402  
Net income excluding the loan loss recovery 6,096 18,387
Income on participating securities   (56 )       (152 )
Income available to common stockholders 6,040 18,235
Diluted shares   8,292,385         8,285,374  
Diluted earnings per share excluding the loan loss recovery       $ 0.73       $ 2.20
 

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