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METROPOLITAN BANK HOLDING CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)

(Inin thousands, except share data)


	March 31,		December 31,
	2024		2023
Assets
Cash and due from banks	$	34,037	$	31,973
Overnight deposits		500,366		237,492
Total cash and cash equivalents		534,403		269,465
Investment securities available-for-sale, at fair value		497,789		461,207
Investment securities held-to-maturity (estimated fair value of $393.2 million and $404.3 million at March 31, 2024 and December 31, 2023, respectively)		460,249		468,860
Equity investment securities, at fair value		2,115		2,123
Total securities		960,153		932,190
Other investments		32,669		38,966
Loans, net of deferred fees and costs		5,719,218		5,624,797
Allowance for credit losses		(58,538)		(57,965)
Net loans		5,660,680		5,566,832
Receivable from global payments business, net		93,852		87,648
Other assets		171,614		172,571
Total assets	$	7,453,371	$	7,067,672
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing demand deposits	$	1,927,629	$	1,837,874
Interest-bearing deposits		4,309,913		3,899,418
Total deposits		6,237,542		5,737,292
Federal funds purchased		—		99,000
Federal Home Loan Bank of New York advances		300,000		440,000
Trust preferred securities		20,620		20,620
Secured and other borrowings		107,549		7,585
Prepaid third-party debit cardholder balances		18,685		10,178
Other liabilities		95,434		93,976
Total liabilities		6,779,830		6,408,651

Common stock, $0.01 par value, 25,000,000 shares authorized, 11,191,958 and 11,062,729 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively		112		111
Additional paid in capital		393,341		395,871
Retained earnings		332,178		315,975
Accumulated other comprehensive income (loss), net of tax		(52,090)		(52,936)
Total stockholders’ equity		673,541		659,021
Total liabilities and stockholders’ equity	$	7,453,371	$	7,067,672

September 30, 2017 December 31, 2016

Assets

Cash and due from banks $ 267,099 $ 82,931
Investment securities available for sale, at estimated fair value 33,922 37,329
Investment securities held to maturity (estimated fair value of $5,630 at September 30, 2017 and $6,419 at December 31, 2016) 5,681 6,500
Other investments 13,740 12,588
Loans 1,381,649 1,055,706
Deferred loan fees and unamortized costs, net (820 ) (1,160 )
Allowance for loan and lease losses (15,075 ) (11,815 )
Net loans 1,365,754 1,042,731
Accounts receivable, net 3,825 5,420
Receivable from prepaid card programs, net 6,977 7,566
Accrued interest receivable 3,903 2,735
Premises and equipment, net 6,010 5,035
Prepaid expenses and other assets 7,013 7,733
Goodwill 9,733 9,733
Total assets $ 1,723,657 $ 1,220,301

Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand deposits $ 826,345 $ 403,402
Interest-bearing deposits 662,298 590,378
Total deposits 1,488,643 993,780
Borrowed Funds 43,750 78,418
Trust preferred securities 20,620 20,620
Subordinated debts, net of issuance cost 24,468 -
Accounts payable, accrued expenses and other liabilities 20,411 10,901
Accrued interest payable 547 227
Debit cardholder balances 6,259 6,864
Total liabilities $ 1,604,698 $ 1,110,810

Stockholders’ equity:
Class B preferred stock, $0.01 par value, authorized 2,000,000 shares, issued and outstanding 272,636 at September 30, 2017 and 272,636 at December 31, 2016, respectively. 3 3
Common stock, $0.01 par value, authorized 10,000,000 shares, issued and outstanding 4,633,012 at September 30, 2017 and 4,604,563 at December 31, 2016 45 45
Additional paid in capital 96,422 96,116
Retained earnings 22,536 13,492
Accumulated other comprehensive loss, net of tax effect (47 ) (165 )
Total stockholders’ equity 118,959 109,491
Total liabilities and stockholders’ equity $ 1,723,657 $ 1,220,301

See accompanying notes to ~~Consolidated Financial Statements~~unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~INCOME~~OPERATIONS (unaudited)

~~For the three and nine months ended September 30, 2017 and 2016~~

(~~Dollars~~ in thousands, except per share data)


	Three months ended March 31,
	2024		2023
Interest and dividend income
Loans, including fees	$	102,381	$	75,960
Securities		5,144		4,495
Overnight deposits		4,154		2,484
Other interest and dividends		656		324
Total interest income		112,335		83,263
Interest expense
Deposits		46,886		22,373
Borrowed funds		5,361		2,026
Trust preferred securities		379		330
Total interest expense		52,626		24,729

Net interest income		59,709		58,534
Provision for credit losses		528		646
Net interest income after provision for credit losses		59,181		57,888

Non-interest income
Service charges on deposit accounts		1,863		1,456
Global Payments Group revenue		4,069		4,850
Other income		1,072		668
Total non-interest income		7,004		6,974

Non-interest expense
Compensation and benefits		19,827		16,255
Bank premises and equipment		2,343		2,344
Professional fees		5,972		4,187
Technology costs		3,011		1,313
Licensing fees		3,276		2,662
FDIC assessments		2,925		2,814
Regulatory settlement reserve		—		(2,500)
Other expenses		4,546		3,950
Total non-interest expense		41,900		31,025

Net income before income tax expense		24,285		33,837
Income tax expense		8,082		8,761
Net income	$	16,203	$	25,076

Earnings per common share
Basic earnings	$	1.46	$	2.26
Diluted earnings	$	1.46	$	2.25

Three months ended Nine months ended
September 30, September 30,
2017 2016 2017 2016
INTEREST AND DIVIDEND INCOME
Loans, including fees $ 15,537 $ 10,922 $ 40,771 $ 30,874
Securities:
Taxable 201 224 620 708
Tax-exempt 7 8 22 23
Money market funds and commercial paper 82 11 215 54
Other interest and dividends 574 159 1,261 565
Total interest and dividend income 16,401 11,324 42,889 32,224
INTEREST EXPENSE
Deposits 1,588 1,274 4,316 3,620
Borrowed funds 244 110 674 585
Trust Preferred Securities 165 122 469 380
Subordinated debt expense 440 - 918 -
Total interest expense 2,437 1,506 6,377 4,585

Net interest income 13,964 9,818 36,512 27,639
Provision for loan and lease losses 1,200 190 3,560 2,000
Net interest income after provision for loan and lease losses 12,764 9,628 32,952 25,639

NON-INTEREST INCOME
Service charges on deposit accounts 836 223 1,633 627
Other service charges and fees 523 201 939 982
Loan prepayment penalties 27 119 40 388
Debit card income 847 777 2,440 2,098
Net gains on sales of securities - - - 40
Total non-interest income 2,233 1,320 5,052 4,135

NON-INTEREST EXPENSE
Compensation and benefits 4,847 5,640 13,688 13,437
Bank premises and equipment 1,075 987 3,185 2,903
Directors fees 316 183 665 499
Insurance expense 60 88 204 251
Professional fees 976 407 1,865 1,184
FDIC assessment 349 182 624 507
Core processing fees 423 198 953 700
Other expenses 544 741 1,782 1,851
Total non-interest expense 8,590 8,426 22,966 21,332

Income before income taxes 6,407 2,522 15,038 8,442
Income tax expense 2,562 1,072 5,994 3,478
Net income $ 3,845 $ 1,450 $ 9,044 $ 4,964

PER COMMON SHARE DATA
Earnings (Loss) per share – basic $ 0.83 $ (0.52 ) $ 1.95 $ 0.45
Earnings (Loss) per share – diluted 0.82 (0.52 ) 1.94 0.45

See accompanying notes to ~~Consolidated Financial Statements~~unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)

~~For the three and nine months ended September 30, 2017 and 2016~~

(in thousands)


	Three months ended
	March 31,
	2024		2023
Net Income	$	16,203	$	25,076

Other comprehensive income:
Securities available-for-sale:
Unrealized gain (loss) arising during the period		(4,488)		8,233
Tax effect		1,921		(2,514)
Net of tax		(2,567)		5,719


Cash flow hedges:
Unrealized gain (loss) arising during the period		6,087		(1,006)
Reclassification adjustment for gains included in net income		(1,251)		(1,235)
Tax effect		(1,423)		688
Net of tax		3,413		(1,553)

Total other comprehensive income (loss)		846		4,166

Comprehensive Income (Loss)	$	17,049	$	29,242

Three months ended Nine months ended
September 30, September 30,
2017 2016 2017 2016
Net income $ 3,845 $ 1,450 $ 9,044 $ 4,964
Other comprehensive income, net of tax:
Net unrealized gains (losses) on securities 42 (87 ) 204 585
Tax effect (16 ) 31 (86 ) (207 )
Net of tax 26 (56 ) 118 378
Reclassification adjustment for net gains on sales of securities included in net income - - - (40 )
Tax effect - - - 17
Net of tax - - - (23 )
Total other comprehensive income (loss), net of tax 26 (56 ) 118 355
Comprehensive income, net of tax $ 3,871 $ 1,394 $ 9,162 $ 5,319

See accompanying notes to ~~Consolidated Financial Statements~~unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ ~~EQUITY(unaudited)~~

~~For the nine months ended September 30, 2017 and 2016~~EQUITY (unaudited)

(~~Dollars~~ in ~~thousands)~~thousands, except share data)


	Common			Additional		Retained		AOCI (Loss),
	Stock			Paid-in Capital		Earnings		Net		Total
	Shares	Amount
Three Months Ended
Balance at January 1, 2024	11,062,729	$	111	$	395,871	$	315,975	$	(52,936)	$	659,021
Issuance of common stock under stock compensation plans	215,273		1		—		—		—		1
Employee and non-employee stock-based compensation	—		—		1,926		—		—		1,926
Redemption of common stock for exercise of stock options and tax withholdings for restricted stock vesting	(86,044)		—		(4,456)		—		—		(4,456)
Net income	—		—		—		16,203		—		16,203
Other comprehensive income (loss)	—		—		—		—		846		846
Balance at March 31, 2024	11,191,958	$	112	$	393,341	$	332,178	$	(52,090)	$	673,541

Balance at January 1, 2023	10,949,965		109		389,276		240,810		(54,298)		575,897
Cumulative effect of changes in accounting principle	—		—		—		(2,103)		—		(2,103)
Issuance of common stock under stock compensation plans	285,190		3		3,962		—		—		3,965
Employee and non-employee stock-based compensation	—		—		2,222		—		—		2,222
Redemption of common stock for exercise of stock options and tax withholdings for restricted stock vesting	(23,881)		—		(1,336)		—		—		(1,336)
Net income	—		—		—		25,076		—		25,076
Other comprehensive income (loss)	—		—		—		—		4,166		4,166
Balance at March 31, 2023	11,211,274	$	112	$	394,124	$	263,783	$	(50,132)	$	607,887

Preferred Stock,
Class A Preferred Stock,
Class B Common Stock Additional
Paid-in Retained AOCI
(Loss),
Shares Amount Shares Amount Shares Amount Capital Earnings Net Total
Balance at January 1, 2016 391,044 $ 4 60,000 $ 1 3,095,784 $ 30 $ 63,796 $ 12,105 $ 16 $ 75,952
Conversion of preferred stock to common stock - - (60,000 ) (1 ) 60,000 1 - - - -
Purchase and retirement of preferred stock (123,924 ) (1 ) - - - - (1,238 ) (161 ) - (1,400 )
Preferred stock redemption (267,120 ) (3 ) - - - - (2,624 ) (45 ) - (2,672 )
Issuance of preferred stock, net - - 272,636 3 - - 5,519 - - 5,522
Issuance of common stock, net - - - - 1,448,418 14 28,403 - - 28,417
Class A preferred dividend payment - - - - - - - (3,420 ) - (3,420 )
Employee stock-based compensation - - - - - - 2,250 - - 2,250
Net income - - - - - - - 4,964 - 4,964
Other comprehensive income - - - - - - - - 355 355
Balance at September 30, 2016 - $ - 272,636 $ 3 4,604,202 $ 45 $ 96,106 $ 13,443 $ 371 $ 109,968

Balance at January 1, 2017 - $ - 272,636 $ 3 4,604,563 $ 45 $ 96,116 $ 13,492 $ (165 ) 109,491
Restricted stock, net of forfeiture - - - - 28,449 - (7 ) - - (7 )
Employee stock-based compensation - - - - - - 313 - - 313
Net income - - - - - - - 9,044 - 9,044
Other comprehensive income - - - - - - - - 118 118
Balance at September 30, 2017 - $ - 272,636 $ 3 4,633,012 $ 45 $ 96,422 $ 22,536 $ (47 ) $ 118,959

See accompanying notes to ~~Consolidated Financial Statements~~unaudited consolidated financial statements

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METROPOLITAN BANK HOLDING CORP. AND ~~SUBSIDIARY~~SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH ~~FLOW~~FLOWS (unaudited)

~~For the nine months ended September 30, 2017 and 2016~~

(~~Dollars~~ in thousands)


	Three months ended March 31,
	2024		2023
Cash flows from operating activities
Net income	$	16,203	$	25,076
Adjustments to reconcile net income to net cash:
Net depreciation, amortization, and accretion		(3,193)		1,234
Provision for credit losses		528		646
Stock-based compensation		1,926		2,222
Other, net		8		(39)
Net change in:
Receivable from global payments, net		(6,204)		1,818
Third-party debit cardholder balances		8,507		523
Other assets		4,784		(2,645)
Other liabilities		2,437		10,193
Net cash provided by (used in) operating activities		24,996		39,028

Cash flows from investing activities
Loan originations, purchases and payments, net		(90,473)		(11,433)
Redemptions of FRB and FHLB Stock		6,300		53,998
Purchases of FRB and FHLB Stock		(3)		(58,488)
Purchase of securities available-for-sale		(53,306)		—
Proceeds from paydowns and maturities of securities available-for-sale		12,314		9,751
Proceeds from paydowns and maturities of securities held-to-maturity		8,463		8,741
Purchase of premises and equipment, net		(111)		(980)
Net cash provided by (used in) investing activities		(116,816)		1,589

Cash flows from financing activities
Proceeds from (repayments of) federal funds purchased		(99,000)		45,000
Proceeds from (repayments of) FHLB advances, net		(140,000)		100,000
Proceeds from exercise of stock options		—		3,964
Redemption of common stock for tax withholdings for restricted stock vesting		(4,456)		(1,336)
Proceeds from (repayments of) secured and other borrowings, net		99,964		(36)
Net increase (decrease) in deposits		500,250		(146,124)
Net cash provided by (used in) financing activities		356,758		1,468

Increase (decrease) in cash and cash equivalents		264,938		42,085
Cash and cash equivalents at the beginning of the period		269,465		257,418
Cash and cash equivalents at the end of the period	$	534,403	$	299,503

Supplemental information
Cash paid for:
Interest	$	51,874	$	24,768
Income Taxes	$	11,367	$	3,192

2017 2016
Cash flows from operating activities:
Net income $ 9,044 $ 4,964
Adjustments to reconcile net income to net cash:
Depreciation and amortization 695 583
Net accretion on securities (36 ) (476 )
Net gains on sales of securities - (40 )
Provision for loan and lease losses 3,560 2,000
Net change in deferred loan fees (340 ) 242
Deferred income tax benefit 85 263
Stock-based compensation expense 313 2,250
Forfeiture of restricted shares (7 ) -
Net change in:
Accrued interest receivable (1,168 ) (55 )
Accounts payable, accrued expenses and other liabilities 9,829 6,350
Accounts receivable, net 1,595 808
Receivable from prepaid card programs, net 589 (5,591 )
Prepaid expenses and other assets (54 ) (337 )
Net cash provided by operating activities 24,105 10,961

Cash flows from investing activities:
Loan originations and payments, net (326,243 ) (142,886 )
Redemptions of other investments 7,134 3,496
Purchases of other investments (8,286 ) (140 )
Purchase of securities available for sale (1,434 ) (1,533 )
Proceeds from sales of securities available for sale - 2,771
Proceeds from paydowns and maturities of securities available for sale 5,110 6,930
Purchase of securities held to maturity - (2,659 )
Proceeds from paydowns of securities held to maturity 790 715
Purchase of premises and equipment, net (1,671 ) (801 )
Net cash used in investing activities (324,600 ) (134,107 )

Cash flows from financing activities:
Proceeds from issuance of common stock, net - 28,417
Proceeds from issuance of preferred stock, net - 5,522
Purchase redemption and retirement of treasury preferred stock - (4,072 )
Payment of preferred stock dividend - (3,420 )
Proceeds from issuance of subordinated debt, net of issuance cost 24,468 -
Proceeds from FHLB advances 280,000 -
Repayments of FHLB advances (314,668 ) (77,678 )
Net increase in deposits 494,863 157,548
Net cash provided by financing activities 484,663 106,317

Increase (Decrease) in cash and cash equivalents 184,168 (16,829 )
Cash and cash equivalents at the beginning of the period 82,931 65,647
Cash and cash equivalents at the end of the period $ 267,099 $ 48,818

Supplemental information:

Cash paid during the year for:
Interest $ 6,057 $ 4,639
Taxes $ 4,862 $ 3,980

See accompanying notes to ~~Consolidated Financial Statements~~unaudited consolidated financial statements

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~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~NOTE 1 — ORGANIZATION

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

~~Organization~~: Metropolitan Bank Holding Corp. (a, a New York ~~Corporation)~~corporation (the “Company”), is a bank holding company whose principal activity is the ownership and management of Metropolitan Commercial Bank (the “Bank”), its wholly-owned subsidiary. The ~~Bank’s~~Company’s primary market is the New York metropolitan area. The ~~Bank offers~~Company provides a ~~traditional~~broad range of business, commercial and retail banking products and services to ~~individuals,~~small businesses, middle-market enterprises, public entities and ~~others needing banking services. Its~~affluent individuals. See the “Glossary of Common Terms and Acronyms” for the definition of certain terms and acronyms used throughout this Form 10-Q.

The Company’s primary lending products are ~~commercial mortgages~~CRE loans (including multi-family loans) and ~~commercial and industrial~~C&I loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash ~~flow~~flows from the operations of businesses.

The ~~Bank’s~~Company’s primary deposit products are checking, savings, and term deposit accounts, ~~and its deposit accounts~~all of which are insured by the ~~Federal Deposit Insurance Corporation (“FDIC”) under~~FDIC up to the maximum amounts allowed by law. The ~~Bank commenced operations on June 22, 1999.~~

~~The Bank faces competition from numerous existing New York bank holding companies, commercial banks~~Company and savings banks which have been in business for many years and have established customer bases. Competition also comes from a variety of other non-bank businesses that offer financial services. Many of these competitors operate in the same geographic market in which the Bank ~~operates,~~ are ~~well-known with long-standing relationships and businesses and individuals in the communities, and are substantially larger with greater resources than the Bank.~~

~~The Company is~~ subject to the regulations of certain state and federal agencies and, accordingly, isare periodically examined by those regulatory authorities. ~~As a consequence of the extensive regulation of commercial banking activities, the~~The Company’s business is ~~susceptible to being~~ affected by state and federal legislation and regulations.

NOTE 2 — BASIS OF PRESENTATION

~~A summary of the Company’s significant accounting policies consistently applied in the preparation of the accompanying financial statements follows.~~

~~Basis of Presentation~~: The accounting and reporting policies of the Company conform with ~~U.S generally accepted accounting principles~~GAAP and predominant practices within the U.S. banking industry. The ~~consolidated~~Unaudited Consolidated Financial Statements (“unaudited financial ~~statements~~statements”) include the accounts of the Company and the Bank. All intercompany balances and transactions have been eliminated. The ~~Unaudited Consolidated Financial Statements, which include the accounts of the Company and the Bank,~~unaudited financial statements have been prepared in accordance with ~~U.S. generally accepted accounting principles (“GAAP”)~~GAAP for interim financial information and with the instructions to Form 10-Q, ~~and~~ Article 108 of Regulation ~~S-X.~~S-X and predominant practices within the U.S. banking industry. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The ~~Unaudited Consolidated Financial Statements~~unaudited financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim unaudited financial statements in conformity with GAAP, management has made estimates and assumptions ~~that~~based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported ~~periods. The accounting~~periods, and ~~reporting policies~~actual results could differ from those estimated. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the ~~Company~~economy, inflation and its related effects and changes in the financial condition of borrowers.

Some items in the prior year financial statements may have been reclassified to conform ~~with U.S generally accepted accounting principles and predominant practices within the U.S. banking industry.~~

~~Recently Issued Accounting Standards:~~ ~~Pursuant~~ to the ~~Jumpstart Our Business Startups Act (“JOBS Act”), Emerging Growth Company (“EGC”) is permitted~~current presentation. Reclassification had no effect on prior year net income or stockholders’ equity.

The results of operations for the three months ended March 31, 2024 and 2023 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period.

The unaudited financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to ~~elect to adopt new accounting guidance using adoption dates of nonpublic entities. The Company elected delayed effective dates of recently issued accounting standards.~~

~~Accounting Standards Update (ASU) 2014-09, “Revenue from Contracts with Customers (Topic 606)” implements a common revenue standard that clarifies~~ the principles for recognizing revenue. The core principle of ASU 2014-09 is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligationsaudited consolidated financial statements included in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. In August 2016, the (Financial Accounting Standards Board FASB) deferred the effective date of the ASU by one year which means ASU 2014-09 will be effectiveCompany’s Annual Report on Form 10-K for the ~~Company on January 1, 2019. Management is in~~year ended December 31, 2023 as filed with the ~~process of evaluating revenue streams to determine the impact the ASU could have on the Company’s operating results or financial condition.~~

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

SEC.

NOTE ~~1 -~~3 — SUMMARY OF ~~SIGNIFICANT~~RECENT ACCOUNTING ~~POLICIES~~PRONOUNCEMENTS~~(Continued)~~

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). ASU 2016-02 requires companies that lease valuable assets to recognize on their balance sheets the assets and liabilities generated by contracts longer than a year. The amendments in this update are effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020, however, early adoption is permitted. Under ASU 2016-02, the Company will recognize a right-of-use asset and a lease obligation liability on the consolidated balance sheet, which will increase the Company’s assets and liabilities. The Company is evaluating other potential impact of ASU 2016-02 on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses ~~(Topic 326)~~(“ASC 326”), which requires the measurement of all expected credit losses for financial assets held at ~~the reporting date~~amortized cost to be based on historical experience, current condition, and reasonable and supportable forecasts. ~~Financial~~ASC 326 requires that financial institutions and other organizations will ~~now~~ use forward-looking information to better inform their credit loss estimates. This guidance also amends the accounting for credit losses on ~~available-for-sale~~AFS debt securities and purchased financial assets with credit deterioration. ~~For the~~The Company adopted this guidance is effective ~~for fiscal years and interim periods beginning after December 31, 2020.~~January 1, 2023 using a modified retrospective approach. The Company ~~is currently evaluating this guidance to determine the impact on its consolidated financial statements. The Company expects to recognize~~ recorded

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a ~~one-time~~ cumulative ~~increase to~~effect adjustment that increased the allowance for credit losses for loans and loan commitments by $3.0 million, increased deferred tax assets by $777,000 and ~~lease losses as~~decreased retained earnings by $2.1 million, net of ~~the beginning of the reporting period in which the ASU takes effect, but, cannot yet determine the magnitude of the impact on the consolidated financial statements.~~

tax.

In ~~January 2017,~~March 2022, the FASB issued ASU ~~2017-04, Intangibles~~ 2022-02, Financial Instruments - ~~Goodwill~~ Credit Losses (ASC 326): Troubled Debt Restructurings and ~~Other (Topic 350): Simplifying the Test for Goodwill Impairment, which~~Vintage Disclosures. ASU 2022-02 eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit.accounting guidance for TDRs by creditors while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty. The ~~standard is~~Company adopted this guidance effective ~~for the Company beginning~~ January 1, ~~2021, with early adoption permitted for goodwill impairment tests performed after January 1, 2017. Management expects ASU 2017-04 will~~2023, which did not have a ~~significant~~material impact on its consolidated financial statements.

In March ~~2017,~~2020, the FASB issued ASU ~~2017-08, Premium Amortization~~2020-04, Reference Rate Reform (ASC 848): Facilitation of the Effects of Reference Rate Reform on ~~Purchased Callable Debt Securities,~~Financial Reporting, which ~~shortens~~provided optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In December 2022, the ~~amortization period~~FASB issued ASU 2022-06, Reference Rate Reform (ASC 848): Deferral of Sunset Date of Topic 848, which deferred the sunset date of ASC 848 from December 31, 2022, to December 31, 2024 because the current relief in ASC 848 did not cover the June 30, 2023 cessation date for the ~~premium on certain purchased callable debt~~overnight 1-, 3-, 6-, and 12-month tenors of USD LIBOR. The Company’s LIBOR-based instruments included loans and trust preferred security liabilities. The required transition has been implemented successfully and LIBOR is no longer offered to clients as a floating rate loan index. The trust preferred securities have transitioned to the earliest call date. Today, entities generally amortize the premium over the contractual life of the security. The new guidance does not change the accounting for purchased callable debt securities held at a discount as discounts continue to be amortized to maturity. ASU No. 2017-08 is effective for interim and annual reporting periods beginning after December 15, 2019 and early adoption is permitted. The guidance includes a modified retrospective transition approach under which a cumulative-effect adjustment will be made to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. Management expects ASU 2017-08 will not have a significant impact on its consolidated financial statements.SOFR.

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE ~~2 -~~4 — INVESTMENT SECURITIES

The following ~~table summarizes~~tables summarize the amortized cost and fair value of AFS and HTM debt securities ~~available-for-sale~~ and ~~securities held-to-maturity at September 30, 2017 and December 31, 2016~~equity investments and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses ~~(dollars~~recognized in earnings (in thousands):


			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At March 31, 2024	Cost		Gains		Losses		Fair Value
Available-for-Sale Securities:
U.S. Government agency securities	$	67,998	$	—	$	(6,319)	$	61,679
U.S. State and Municipal securities		11,458		—		(1,870)		9,588
Residential MBS		451,171		653		(71,812)		380,012
Commercial MBS		46,266		—		(2,873)		43,393
Asset-backed securities		3,167		—		(50)		3,117
Total securities available-for-sale	$	580,060	$	653	$	(82,924)	$	497,789

Held-to-Maturity Securities:
U.S. Treasury securities	$	29,906	$	—	$	(1,330)	$	28,576
U.S. State and Municipal securities		15,507		—		(1,746)		13,761
Residential MBS		406,752		—		(62,921)		343,831
Commercial MBS		8,084		—		(1,072)		7,012
Total securities held-to-maturity	$	460,249	$	—	$	(67,069)	$	393,180

Equity Investments:
CRA Mutual Fund	$	2,425	$	—	$	(310)	$	2,115
Total equity investment securities	$	2,425	$	—	$	(310)	$	2,115

Gross Gross
Amortized Unrealized Unrealized Fair
September 30, 2017 Cost Gains Losses Value
Available-for-Sale Securities:
Residential mortgage-backed securities $ 26,145 $ 154 $ (129 ) $ 26,170
Residential collateralized mortgage obligations 3,022 - (72 ) 2,950
Commercial mortgage backed securities guaranteed by U.S. government sponsored agencies 1,591 - (25 ) 1,566
Municipal bond 1,105 21 - 1,126
CRA mutual fund 2,148 - (38 ) 2,110
Total securities available-for-sale $ 34,011 $ 175 $ (264 ) $ 33,922

Held to Maturity Securities:
Residential mortgage-backed securities $ 5,656 $ - $ (51 ) $ 5,605
Foreign government securities 25 - - 25
Total securities held-to-maturity $ 5,681 $ - $ (51 ) $ 5,630

Gross Gross
Amortized Unrealized Unrealized Fair
December 31, 2016 Cost Gains Losses Value
Available-for-Sale Securities:
Residential mortgage-backed securities $ 29,152 $ 165 $ (290 ) $ 29,027
Residential collateralized mortgage obligations 5,233 - (130 ) 5,103
Municipal bond 1,122 14 - 1,136
CRA mutual fund 2,115 - (52 ) 2,063
Total securities available-for-sale $ 37,622 $ 179 $ (472 ) $ 37,329

Held to Maturity Securities:
Residential mortgage-backed securities $ 6,475 $ - $ (81 ) $ 6,394
Foreign government securities 25 - - 25
Total securities held-to-maturity $ 6,500 $ - $ (81 ) $ 6,419

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						��
			Gross		Gross
			Unrealized/		Unrealized/
	Amortized		Unrecognized		Unrecognized
At December 31, 2023	Cost		Gains		Losses		Fair Value
Available-for-Sale Securities:
U.S. Government agency securities	$	67,997	$	—	$	(6,222)	$	61,775
U.S. State and Municipal securities		11,496		—		(1,797)		9,699
Residential MBS		419,331		1,198		(68,609)		351,920
Commercial MBS		36,879		71		(2,366)		34,584
Asset-backed securities		3,287		—		(58)		3,229
Total securities available-for-sale	$	538,990	$	1,269	$	(79,052)	$	461,207

Held-to-Maturity Securities:
U.S. Treasury securities	$	29,895	$	—	$	(1,412)	$	28,483
U.S. State and Municipal securities		15,569		—		(1,574)		13,995
Residential MBS		415,306		—		(60,556)		354,750
Commercial MBS		8,090		—		(1,066)		7,024
Total securities held-to-maturity	$	468,860	$	—	$	(64,608)	$	404,252

Equity Investments:
CRA Mutual Fund	$	2,410	$	—	$	(287)	$	2,123
Total equity investment securities	$	2,410	$	—	$	(287)	$	2,123

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 2 – INVESTMENT SECURITIES~~~~(Continued)~~

~~The~~There were no proceeds from sales ~~and~~or calls of AFS securities ~~and the associated gains and losses are listed below~~ for ~~the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):~~

~~For~~ the three months ended ~~September 30,~~

2017 2016
Proceeds $ - $ -
Gross gains - -
Gross losses - -

~~For the nine months ended September 30,~~

2017 2016
Proceeds $ - $ 2,771
Gross gains - 40
Gross losses - -

March 31, 2024 and 2023.

The ~~tax provision related to~~tables below summarize, by contractual maturity, the ~~net realized gain was $17,000 in 2016.~~

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 2 – INVESTMENT SECURITIES~~~~(Continued)~~

~~The~~ amortized cost and fair value of debt securities. The tables do not include the effect of principal repayments or scheduled principal amortization. Equity securities, ~~at September 30, 2017 and December 31, 2016 are shown by contractual maturity.~~primarily investments in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment ~~penalties. Securities not due at a single maturity date, primarily mutual funds and mortgage-backed securities are shown separately (dollars in~~penalties (in thousands):


	Held-to-Maturity				Available-for-Sale
At March 31, 2024	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	20,021	$	19,299	$	—	$	—
After 1 year through 5 years		17,969		16,289		72,958		67,179
After 5 years through 10 years		1,046		974		19,320		17,724
After 10 years		421,213		356,618		487,782		412,886
Total Securities	$	460,249	$	393,180	$	580,060	$	497,789

Held to Maturity Available for Sale
Amortized Fair Amortized Fair
September 30, 2017 Cost Value Cost Value
Within one year $ - $ - $ - $ -
One to five years 25 25 - -
Five to ten years - - - -
Beyond ten years - - 1,105 1,126
25 25 1,105 1,126

Residential mortgage-backed securities 5,656 5,605 26,145 26,170
Residential collateralized mortgage obligations - - 3,022 2,950
Commercial mortgage backed securities guaranteed by U.S. government sponsored agencies - - 1,591 1,566
CRA mutual fund - - 2,148 2,110
$ 5,681 $ 5,630 $ 34,011 $ 33,922


	Held-to-Maturity				Available-for-Sale
At December 31, 2023	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within 1 year	$	—	$	—	$	—	$	—
After 1 year through 5 years		37,984		35,507		65,822		60,757
After 5 years through 10 years		1,112		1,044		22,163		21,174
After 10 years		429,764		367,701		451,005		379,276
Total Securities	$	468,860	$	404,252	$	538,990	$	461,207

Held to Maturity Available for Sale
Amortized Fair Amortized Fair
December 31, 2016 Cost Value Cost Value
Within one year $ - $ - $ - $ -
One to five years 25 25 - -
Five to ten years - - - -
Beyond ten years - - 1,122 1,136
25 25 1,122 1,136

Residential mortgage-backed securities 6,475 6,394 29,152 29,027
Residential collateralized mortgage obligations - - 5,233 5,103
CRA mutual fund - - 2,115 2,063
$ 6,500 $ 6,419 $ 37,622 $ 37,329

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 2 - INVESTMENT SECURITIES~~~~(Continued)~~

~~There were no~~At March 31, 2024, there was $180.9 million of securities pledged ~~at September 30, 2017~~to support wholesale funding, and to a lesser extent certain other types of deposits, of which $68.1 million was encumbered. At December 31, 2023, there was $845.7 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $60.0 million was encumbered.

At March 31, 2024 and December 31, ~~2016 to secure borrowings.~~

At September 30, 2017 and December 31, 2016, all of the mortgage-backed securities and collateralized mortgage obligations held by the Bank were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support.

Securities with unrealized losses at September 30, 2017 and December 31, 2016, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (dollars in thousands):

Less than 12 Months 12 months or more Total
September 30, 2017 Estimated
Fair Value Unrealized
Losses Estimated
Fair Value Unrealized
Losses Estimated
Fair Value Unrealized
Losses
Residential mortgage-backed securities $ 13,943 $ (129 ) $ - $ - $ 13,943 $ (129 )
Residential collateralized mortgage obligations 1,103 (23 ) 1,847 (49 ) 2,950 (72 )
Commercial mortgage backed securities - - 1,566 (25 ) 1,566 (25 )
CRA mutual fund - - 2,110 (38 ) 2,110 (38 )
Total available for sale $ 15,046 $ (152 ) $ 5,523 $ (112 ) $ 20,569 $ (264 )

Residential mortgage-backed securities 5,605 (51 ) - - 5,605 (51 )
Total held-to-maturity $ 5,605 $ (51 ) $ - $ - $ 5,605 $ (51 )

December 31, 2016
Residential mortgage-backed securities $ 16,733 $ (290 ) $ - $ - $ 16,733 $ (290 )
Residential collateralized mortgage obligations 2,887 (60 ) 2,216 (70 ) 5,103 (130 )
CRA mutual fund - - 2,063 (52 ) 2,063 (52 )
Total available for sale $ 19,620 $ (350 ) $ 4,279 $ (122 ) $ 23,899 $ (472 )

Residential mortgage-backed securities $ 6,394 $ (81 ) $ - $ - $ 6,394 $ (81 )
Total held-to-maturity $ 6,394 $ (81 ) $ - $ - $ 6,394 $ (81 )

Because the decline in fair value is attributable to changes in interest rates and illiquidity, and not credit quality, and because the Company does not have the intent to sell these securities and it is likely that it will not be required to sell the securities before their anticipated recovery, the Company does not consider these securities to be other-than-temporarily impaired at September 30, 2017 and December 31, 2016.

~~At September 30, 2017 and December 31, 2016,~~2023, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity. At March 31, 2024 and December

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31, 2023, all of the residential MBS and commercial MBS held by the Company were issued by U.S. Government-sponsored entities and agencies.

~~METROPOLITAN BANK HOLDING CORP.~~Debt securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, are as follows (in thousands):


	Less than 12 Months				12 Months or More				Total
			Unrealized/				Unrealized/				Unrealized/
	Estimated		Unrecognized		Estimated		Unrecognized		Estimated		Unrecognized
At March 31, 2024	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available-for-Sale Securities:
U.S. Government agency securities	$	—	$	—	$	61,679	$	(6,319)	$	61,679	$	(6,319)
U.S. State and Municipal securities		—		—		9,588		(1,870)		9,588		(1,870)
Residential MBS		51,236		(656)		281,826		(71,156)		333,062		(71,812)
Commercial MBS		30,291		(612)		13,102		(2,261)		43,393		(2,873)
Asset-backed securities		—		—		3,117		(50)		3,117		(50)
Total securities available-for-sale	$	81,527	$	(1,268)	$	369,312	$	(81,656)	$	450,839	$	(82,924)

Held-to-Maturity Securities:
U.S. Treasury securities	$	—	$	—	$	28,576	$	(1,330)	$	28,576	$	(1,330)
U.S. State and Municipal securities		—		—		13,761		(1,746)		13,761		(1,746)
Residential MBS		—		—		343,831		(62,921)		343,831		(62,921)
Commercial MBS		—		—		7,012		(1,072)		7,012		(1,072)
Total securities held-to-maturity	$	—	$	—	$	393,180	$	(67,069)	$	393,180	$	(67,069)


	Less than 12 Months				12 Months or More				Total
			Unrealized/				Unrealized/				Unrealized/
	Estimated		Unrecognized		Estimated		Unrecognized		Estimated		Unrecognized
At December 31, 2023	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses
Available-for-Sale Securities:
U.S. Government agency securities	$	—	$	—	$	61,775	$	(6,222)	$	61,775	$	(6,222)
U.S. State and Municipal securities		—		—		9,699		(1,797)		9,699		(1,797)
Residential MBS		—		—		292,970		(68,609)		292,970		(68,609)
Commercial MBS		10,873		(198)		13,322		(2,168)		24,195		(2,366)
Asset-backed securities		—		—		3,229		(58)		3,229		(58)
Total securities available-for-sale	$	10,873	$	(198)	$	380,995	$	(78,854)	$	391,868	$	(79,052)

Held-to-Maturity Securities:
U.S. Treasury securities	$	—	$	—	$	28,483	$	(1,412)	$	28,483	$	(1,412)
U.S. State and Municipal securities		—		—		13,995		(1,574)		13,995		(1,574)
Residential MBS		—		—		354,750		(60,556)		354,750		(60,556)
Commercial MBS		—		—		7,024		(1,066)		7,024		(1,066)
Total securities held-to-maturity	$	—	$	—	$	404,252	$	(64,608)	$	404,252	$	(64,608)

Except for U.S. State and Municipal securities, the Company has a zero loss expectation for its HTM securities portfolio, and therefore has no ACL related to these securities. At March 31, 2024 and December 31, 2023, Obligations of U.S. State and Municipal securities were rated investment grade and the associated ACL was immaterial.

AFS securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. The unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend, nor would it be required, to sell these investments until there is a full recovery of the unrealized loss, which may be at maturity. As a result, no ACL was recognized during the three months ended March 31, 2024 and 2023.

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NOTE 5 — LOANS AND ~~SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 - LOANS~~

ALLOWANCE FOR CREDIT LOSSES

Loans, net of deferred costs and fees, consist of the following ~~as of September 30, 2017~~(in thousands):


	At		At
	March 31,		December 31,
	2024		2023
Real estate
Commercial	$	3,951,071	$	3,857,711
Construction		150,257		153,512
Multi-family		467,979		467,536
One-to four-family		93,264		94,704
Total real estate loans		4,662,571		4,573,463
Commercial and industrial		1,057,488		1,051,463
Consumer		16,069		17,086
Total loans		5,736,128		5,642,012
Deferred fees, net of origination costs		(16,910)		(17,215)
Loans, net of deferred fees and costs		5,719,218		5,624,797
Allowance for credit losses		(58,538)		(57,965)
Net loans	$	5,660,680	$	5,566,832

Included in C&I loans at March 31, 2024 and December 31, ~~2016 (in thousands):~~2023 were $44,000 and $54,000, respectively, of PPP loans. At March 31, 2024, $3.7 billion of loans were pledged to support wholesale funding, of which $411.9 million were encumbered. At December 31, 2023, $3.3 billion of loans were pledged to support wholesale funding, of which $548.6 million were encumbered.

September 30, 2017 December 31, 2016
Real estate
Commercial $ 736,487 $ 547,711
Construction 37,723 29,447
Multifamily 187,753 117,373
One-to-four family 25,777 26,480
987,740 721,011

Commercial and industrial 346,738 315,870
Consumer 47,171 18,825
Total loans 1,381,649 1,055,706
Deferred fees (820 ) (1,160 )
Allowance for loan and lease losses (15,075 ) (11,815 )
Balance at the end of the period $ 1,365,754 $ 1,042,731

The following ~~table presents~~tables present the activity in the ~~allowance~~ACL for ~~loan and lease losses~~funded loans by ~~segment~~segment. The portfolio segments represent the categories that the Company uses to determine its ACL (in thousands):


							Multi-		One-to four-
Three months ended March 31, 2024	CRE		C&I		Construction		family		family		Consumer		Total
Allowance for credit losses:
Beginning balance	$	35,635	$	11,207	$	1,765	$	8,215	$	663	$	480	$	57,965
Provision/(credit) for credit losses		1,068		(270)		(53)		(44)		(142)		15		574
Loans charged-off		—		—		—		—		—		(3)		(3)
Recoveries		1		—		—		—		—		1		2
Total ending allowance balance	$	36,704	$	10,937	$	1,712	$	8,171	$	521	$	493	$	58,538


							Multi-		One-to four-
Three months ended March 31, 2023	CRE		C&I		Construction		family		family		Consumer		Total
Allowance for credit losses:
Beginning balance	$	29,496	$	10,274	$	1,983	$	2,823	$	105	$	195	$	44,876
Cumulative effect of changes in accounting principle		48		471		424		705		181		421		2,250
Provision/(credit) for credit losses		2,292		12		(1,146)		(657)		121		104		726
Loans charged-off		—		—		—		—		—		(100)		(100)
Recoveries		—		—		—		—		—		—		—
Total ending allowance balance	$	31,836	$	10,757	$	1,261	$	2,871	$	407	$	620	$	47,752

Net charge-offs for the three months ended March 31, 2024 and ~~nine months ending September 30, 2017~~2023 were $1,000 and ~~2016 (dollars~~$100,000, respectively.

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The following tables present the activity in the ACL for unfunded loan commitments (in thousands):


	Three months ended March 31,
	2024		2023
Balance at the beginning of period	$	1,181	$	180
Cumulative effect of changes in accounting principle		—		777
Provision/(credit) for credit losses		(46)		(80)
Total ending allowance balance	$	1,135	$	877

For the three months ended
September 30, 2017 Commercial
Real Estate Commercial
& Industrial Construction Multifamily One-to-
four
Family Consumer Total
Allowance for loan and lease losses:
Beginning balance $ 6,487 $ 5,560 $ 557 $ 958 $ 85 $ 262 $ 13,909
Provision (credit) for loan and lease losses 637 443 (33 ) 34 2 117 1,200
Charge-offs - - - - - (34 ) (34 )
Recoveries - - - - - - -
Total ending allowance balance $ 7,124 $ 6,003 $ 524 $ 992 $ 87 $ 345 $ 15,075

For the three months ended
September 30, 2016 Commercial
Real Estate Commercial
& Industrial Construction Multifamily One-to-
four
Family Consumer Total
Allowance for loan and lease losses:
Beginning balance $ 4,835 $ 5,562 $ 458 $ 404 $ 385 $ 60 $ 11,704
Provision (credit) for loan and lease losses 440 (352 ) 33 35 5 29 190
Charge-offs - (123 ) - - (274 ) - (397 )
Recoveries - - - - - - -
Total ending allowance balance $ 5,275 $ 5,087 $ 491 $ 439 $ 116 $ 89 $ 11,497

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 – LOANS~~~~(Continued)~~

For the nine months ended
September 30, 2017 Commercial
Real Estate Commercial
& Industrial Construction Multifamily One-to-
four
Family Consumer Total
Allowance for loan and lease losses:
Beginning balance $ 5,206 $ 5,364 $ 409 $ 620 $ 109 $ 107 $ 11,815
Provision (credit) for loan and lease losses 1,918 859 115 372 (22 ) 318 3,560
Charge-offs - (220 ) - - - (80 ) (300 )
Recoveries - - - - - - -
Total ending allowance balance $ 7,124 $ 6,003 $ 524 $ 992 $ 87 $ 345 $ 15,075

For the nine months ended
September 30, 2016 Commercial
Real Estate Commercial
& Industrial Construction Multifamily One-to-
four
Family Consumer Total
Allowance for loan and lease losses:
Beginning balance $ 3,650 $ 4,254 $ 589 $ 986 $ 444 $ 19 $ 9,942
Provision (credit) for loan and lease losses 1,625 1,007 (98 ) (547 ) (57 ) 70 2,000
Charge-offs - (174 ) - - (274 ) - (448 )
Recoveries - - - - 3 - 3
Total ending allowance balance $ 5,275 $ 5,087 $ 491 $ 439 $ 116 $ 89 $ 11,497

The following tables present the balance in the ~~allowance for loan and lease losses~~ACL and the recorded investment in loans by portfolio segment based on ~~impairment method as of September 30, 2017 and December 31, 2016 (dollars in thousands):~~

September 30, 2017 Commercial
Real Estate Commercial
&
Industrial Construction Multifamily One-to-
four
Family Consumer Total
Allowance for loan and lease losses:
Individually evaluated for impairment $ - $ 366 $ - $ - $ - $ 63 $ 429
Collectively evaluated for impairment 7,124 5,637 524 992 87 282 14,646
Total ending allowance balance $ 7,124 $ 6,003 $ 524 $ 992 $ 87 $ 345 $ 15,075

Loans:
Individually evaluated for impairment $ 6,299 $ 4,775 $ - $ - $ 3,594 $ 125 $ 14,793
Collectively evaluated for impairment 730,188 341,963 37,723 187,753 22,183 47,046 1,366,856
Total ending loan balance $ 736,487 $ 346,738 $ 37,723 $ 187,753 $ 25,777 $ 47,171 $ 1,381,649

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 - LOANS~~~~(Continued)~~

December 31, 2016 Commercial
Real Estate Commercial
&
Industrial Construction Multifamily One-to-
four
Family Consumer Total
Allowance for loan and lease losses:
Individually evaluated for impairment $ - $ 366 $ - $ - $ 10 $ - $ 376
Collectively evaluated for impairment 5,206 4,998 409 620 99 107 11,439
Total ending allowance balance $ 5,206 $ 5,364 $ 409 $ 620 $ 109 $ 107 $ 11,815

Loans:
Individually evaluated for impairment $ 5,504 $ 4,915 $ - $ - $ 1,130 $ - $ 11,549
Collectively evaluated for impairment 542,207 310,955 29,447 117,373 25,350 18,825 1,044,157
Total ending loan balance $ 547,711 $ 315,870 $ 29,447 $ 117,373 $ 26,480 $ 18,825 $ 1,055,706

~~The following table presents loans individually evaluated for impairment recognized as of September 30, 2017 and December 31, 2016 (dollars in thousands):~~

September 30, 2017
Unpaid Principal
Balance Recorded
Investment Allowance for Loan
and Lease Losses Allocated
With an allowance recorded:
Commercial & industrial $ 8,783 $ 3,660 $ 366
Consumer 125 125 63
Total $ 8,908 $ 3,785 $ 429

Without an allowance recorded:
Commercial real estate $ 6,768 $ 6,299 $ -
Commercial & industrial 1,115 1,115 -
One-to-four family 3,871 3,594 -
Total $ 11,754 $ 11,008 $ -

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 - LOANS~~~~(Continued)~~

December 31, 2016
Unpaid Principal
Balance Recorded
Investment
Allowance for Loan
and Lease Losses
Allocated

With an allowance recorded:
Commercial & industrial $ 8,783 $ 3,660 $ 366
One-to-four family 694 565 10
Total $ 9,477 $ 4,225 $ 376

Without an allowance recorded:
Commercial real estate $ 5,974 $ 5,504 $ -
Commercial & industrial 1,255 1,255 -
One-to-four family 713 565 -
Total $ 7,942 $ 7,324 $ -

The following table presents the average recorded investment and interest income of loans individually evaluated for impairment recognized by class of loans as of and for the three month periods ended September 30, 2017 and 2016allowance measurement methodology (in thousands):


									One-to four-
At March 31, 2024	CRE		C&I		Construction		Multi-family		family		Consumer		Total
Allowance for credit losses:
Individually assessed	$	—	$	—	$	—	$	5,002	$	—	$	190	$	5,192
Collectively assessed		36,704		10,937		1,712		3,169		521		303		53,346
Total ending allowance balance	$	36,704	$	10,937	$	1,712	$	8,171	$	521	$	493	$	58,538
Loans:
Individually assessed	$	24,000	$	6,989	$	—	$	51,239	$	—	$	251	$	82,479
Collectively assessed		3,927,071		1,050,499		150,257		416,740		93,264		15,818		5,653,649
Total ending loan balance	$	3,951,071	$	1,057,488	$	150,257	$	467,979	$	93,264	$	16,069	$	5,736,128

For the three months ended September 30,
2017 2016
Average
Recorded
Investment Interest Income
Recognized Average Recorded
Investment Interest Income
Recognized
With an allowance recorded:
Commercial & industrial $ 3,660 $ - $ - $ -
One-to-four family - - 564 7
Consumer 125 - - -
Total $ 3,785 $ - $ 564 $ 7

Without an allowance recorded:
Commercial real estate $ 6,307 $ 50 $ 11,463 $ 121
Commercial & industrial 1,130 12 1,300 13
One-to-four family 3,604 37 1,087 6
Total $ 11,041 $ 99 $ 13,850 $ 140


									One-to four-
At December 31, 2023	CRE		C&I		Construction		Multi-family		family		Consumer		Total
Allowance for credit losses:
Individually assessed	$	—	$	—	$	—	$	5,002	$	—	$	64	$	5,066
Collectively assessed		35,635		11,207		1,765		3,213		663		416		52,899
Total ending allowance balance	$	35,635	$	11,207	$	1,765	$	8,215	$	663	$	480	$	57,965
Loans:
Individually assessed	$	40,955	$	6,934	$	—	$	20,939	$	—	$	104	$	68,932
Collectively assessed		3,816,756		1,044,529		153,512		446,597		94,704		16,982		5,573,080
Total ending loan balance	$	3,857,711	$	1,051,463	$	153,512	$	467,536	$	94,704	$	17,086	$	5,642,012

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 - LOANS~~~~(Continued)~~

~~The following table presents the average recorded investment and interest income~~Table of ~~loans individually evaluated for impairment recognized by class of loans as of and for the nine month periods ended September 30, 2017 and 2016 (in thousands):~~Contents

For the nine months ended September 30,
2017 2016
Average Recorded
Investment Interest Income
Recognized Average
Recorded
Investment Interest Income
Recognized
With an allowance recorded:
Commercial & industrial $ 3,660 $ - $ - $ -
One-to-four family - - 564 16
Consumer 127 4 - -
Total $ 3,787 $ 4 $ 564 $ 16

Without an allowance recorded:
Commercial real estate $ 6,380 $ 227 $ 11,587 $ 382
Commercial & industrial 1,185 36 1,355 41
One-to-four family 3,616 96 1,087 17
Total $ 11,181 $ 359 $ 14,029 $ 440

Interest on non-accrual loans not recognized was $62,000 and $14,000 for the three months ended September 30, 2017 and September 30, 2016. Interest on non-accrual loans not recognized was $173,000 and $61,000 for the nine months ended September 30, 2017 and September 30, 2016.

~~Non-accrual loans and loans past due 90 days still on accrual include both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.~~

The following tables present the recorded investment in non-accrual loans and loans past due over 90 days and still ~~on accrual~~accruing, by class of loans ~~as of September 30, 2017~~(in thousands):


			Non-accrual		Loans Past Due
			Without an		Over 90 Days
At March 31, 2024	Non-accrual		ACL		Still Accruing
Commercial real estate	$	24,000	$	24,000	$	—
Commercial & industrial		6,989		6,989		—
Multi-family		20,939		—		—
Consumer		—		—		145
Total	$	51,928	$	30,989	$	145


			Non-accrual		Loans Past Due
			Without an		Over 90 Days
At December 31, 2023	Non-accrual		ACL		Still Accruing
Commercial real estate	$	24,000	$	24,000	$	—
Commercial & industrial		6,934		6,934		—
Multi-family		20,939		—		—
Consumer		24		—		—
Total	$	51,897	$	30,934	$	—

Interest income on non-accrual loans recognized on a cash basis for the three months ended March 31, 2024 and ~~December 31, 2016 (dollars in thousands):~~

September 30, 2017 Nonaccrual Loans Past Due Over 90 Days Still
Accruing

Commercial real estate $ 841 $ -
Commercial & industrial 3,660 -
One-to-four family 2,466 -
Consumer 125 -
Total $ 7,092 $ -

December 31, 2016 Nonaccrual Loans Past Due Over 90 Days Still
Accruing

Commercial & industrial $ 3,660 $ -

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 - LOANS~~~~(Continued)~~

2023 was immaterial.

The following tables present the aging of the recorded investment in past due loans by class of loans as(in thousands):


					90
	30-59		60-89		Days and		Total past		Current
At March 31, 2024	Days		Days		greater		due		loans		Total
Commercial real estate	$	4,915	$	—	$	24,000	$	28,915	$	3,922,156	$	3,951,071
Commercial & industrial		13		—		6,989		7,002		1,050,486		1,057,488
Construction		—		—		—		—		150,257		150,257
Multi-family		—		—		20,939		20,939		447,040		467,979
One-to four-family		608		2,092		—		2,700		90,564		93,264
Consumer		—		—		145		145		15,924		16,069
Total	$	5,536	$	2,092	$	52,073	$	59,701	$	5,676,427	$	5,736,128


					90
	30-59		60-89		Days and		Total past		Current
At December 31, 2023	Days		Days		greater		due		loans		Total
Commercial real estate	$	—	$	—	$	24,000	$	24,000	$	3,833,711	$	3,857,711
Commercial & industrial		20		18		6,934		6,973		1,044,490		1,051,463
Construction		—		—		—		—		153,512		153,512
Multi-family		—		—		20,939		20,939		446,597		467,536
One-to four-family		612		—		—		612		94,092		94,704
Consumer		—		—		24		24		17,062		17,086
Total	$	632	$	18	$	51,897	$	52,548	$	5,589,464	$	5,642,012

Table of ~~September 30, 2017 and December 31, 2016 (dollars in thousands):~~Contents

September 30, 2017 30-59 Days 60-89 Days Greater than
90 days Total Past
Due Loans not Past
Due Total
Commercial real estate $ - $ - $ 841 $ 841 $ 735,646 $ 736,487
Commercial & industrial 88 - 3,660 3,748 342,990 346,738
Construction - - - - 37,723 37,723
Multifamily - - - - 187,753 187,753
One-to-four family - - - - 25,777 25,777
Consumer 109 - 125 234 46,937 47,171
Total $ 197 $ - $ 4,626 $ 4,823 $ 1,376,826 $ 1,381,649

December 31, 2016 30-59 Days 60-89 Days Greater than
90 days Total Past
Due Loans not Past
Due Total
Commercial real estate $ - $ 958 $ - $ 958 $ 546,753 $ 547,711
Commercial & industrial 14 3,922 - 3,936 311,934 315,870
Construction - - - - 29,447 29,447
Multifamily - - - - 117,373 117,373
One-to-four family - - - - 26,480 26,480
Consumer - 34 - 34 18,791 18,825
Total $ 14 $ 4,914 $ - $ 4,928 $ 1,050,778 $ 1,055,706

~~Troubled Debt Restructurings:~~

Loans for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, are considered troubled debt restructurings and classified as impaired. Included in impaired loans at September 30, 2017 and December 31, 2016, were $7.7 million and $7.9 million of loans modified in troubled debt restructurings. The Bank has not allocated specific reserves to those customers with loans modified in troubled debt restructurings as of September 30, 2017, down from $10 thousand allocated at December 31, 2016. The Bank has not committed to lend additional amounts as of September 30, 2017 and December 31, 2016, to customers with outstanding loans that are classified as troubled debt restructurings. During the three and nine months ended September 30, 2017 and September 30, 2016, there were no loans modified as troubled debt restructurings, and there were no payment defaults on any loans previously identified as troubled debt restructurings for which there was a payment default within twelve months following the modification. A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Bank’s internal underwriting policy.

Credit Quality ~~Indicators:~~

Indicators

The ~~Bank categorizes~~Company aggregates loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. ~~The Bank~~Except for one-to four-family loans and consumer loans, the Company analyzes ~~all~~ loans individually by classifying the loans as to credit risk ratings at least annually. For one-to four-family loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan. An analysis is performed on a quarterly basis for loans classified as special mention, substandard or doubtful. The ~~Bank~~Company uses the following definitions for risk ~~ratings:~~

ratings. Loans not meeting the criteria below are considered to be pass-rated loans.

Special Mention -Loans classified as special mention have a potential weakness that deserves ~~management's close~~management’s attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the ~~institution's~~Company’s credit position at some future date.

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 3 - LOANS~~~~(Continued)~~

Substandard -Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the ~~institution~~Company will sustain some loss if the deficiencies are not corrected.

Doubtful - - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values highly questionable and improbable.

~~Loans not meeting the criteria above that are analyzed individually as part~~18

Table of ~~the above described process are considered to be pass-rated loans. Based on the most recent analysis performed, therisk category of loans by class of loansis as follows (dollars in thousands):~~Contents

September 30, 2017 Pass Special
Mention Substandard Doubtful Total
Commercial real estate $ 727,068 $ 7,399 $ 2,020 $ - $ 736,487
Commercial & industrial 334,663 8,415 3,660 - 346,738
Construction 37,723 - - - 37,723
Multifamily 187,753 - - - 187,753
Total $ 1,287,207 $ 15,814 $ 5,680 $ - $ 1,308,701

December 31, 2016 Pass Special
Mention Substandard Doubtful Total
Commercial real estate $ 542,206 $ 4,293 $ 1,212 $ - $ 547,711
Commercial & industrial 309,295 2,915 3,660 - 315,870
Construction 29,447 - - - 29,447
Multifamily 117,373 - - - 117,373
Total $ 998,321 $ 7,208 $ 4,872 $ - $ 1,010,401

For one-to-four family loans and consumer loans, the Bank evaluates credit quality based on the aging status of the loan, which was previously presented, and by performance status. Non-performing loans are loans past due over 90 days or more still accruing interests and loans on non-accrual status. The following table presents loan balances by credit quality indicator and year of origination at March 31, 2024 (in thousands):


											2019
	2024		2023		2022		2021		2020		& Prior		Revolving		Total
CRE
Pass	$	396,529	$	1,381,085	$	1,239,785	$	421,698	$	127,352	$	235,302	$	34,618	$	3,836,369
Special Mention		—		24,500		38,834		14,484		300		12,584		—		90,702
Substandard		—		—		24,000		—		—		—		—		24,000
Total	$	396,529	$	1,405,585	$	1,302,619	$	436,182	$	127,652	$	247,886	$	34,618	$	3,951,071

Construction
Pass	$	19,416	$	52,463	$	61,125	$	—	$	—	$	—	$	17,253	$	150,257
Total	$	19,416	$	52,463	$	61,125	$	—	$	—	$	—	$	17,253	$	150,257

Multi-family
Pass	$	44,275	$	111,697	$	82,500	$	61,549	$	23,539	$	86,820	$	6,361	$	416,741
Substandard		—		—		30,299		20,939		—		—		—		51,238
Total	$	44,275	$	111,697	$	112,799	$	82,488	$	23,539	$	86,820	$	6,361	$	467,979

One-to four-family
Current	$	—	$	45,000	$	3,680	$	—	$	9,715	$	34,869	$	—	$	93,264
Total	$	—	$	45,000	$	3,680	$	—	$	9,715	$	34,869	$	—	$	93,264

C&I
Pass	$	40,553	$	160,593	$	225,846	$	87,368	$	21,310	$	17,814	$	430,030	$	983,514
Special Mention		—		3,840		33,668		—		2,080		—		27,397		66,985
Substandard		—		3,803		—		—		—		—		3,186		6,989
Total	$	40,553	$	168,236	$	259,514	$	87,368	$	23,390	$	17,814	$	460,613	$	1,057,488

Consumer
Current	$	—	$	—	$	—	$	—	$	—	$	15,924	$	—	$	15,924
Past due		—		—		—		—		—		145		—		145
Total	$	—	$	—	$	—	$	—	$	—	$	16,069	$	—	$	16,069

Total
Pass/Current	$	500,773	$	1,750,838	$	1,612,936	$	570,615	$	181,916	$	390,729	$	488,262	$	5,496,069
Special Mention		—		28,340		72,502		14,484		2,380		12,584		27,397		157,687
Substandard/Past due		—		3,803		54,299		20,939		—		145		3,186		82,372
Total	$	500,773	$	1,782,981	$	1,739,737	$	606,038	$	184,296	$	403,458	$	518,845	$	5,736,128

Charge-offs
C&I	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer		—		—		—		—		—		—		3		3
	$	—	$	—	$	—	$	—	$	—	$	—	$	3	$	3

At March 31, 2024, there were $51.2 million and $24.0 million of Multi-family and CRE substandard classified collateral dependent loans, respectively.

During the ~~recorded investment~~three months ended March 31, 2024, there were $7.0 million of C&I loans modified where the borrower was experiencing financial difficulty. The modifications resulted in ~~one-to-four family~~term extensions of between 11 to 12 months and ~~consumer~~interest rate reductions of 4%. All loans ~~based on performance status as~~to borrowers experiencing financial difficulty that have been modified during the three months ended March 31, 2024, were in compliance with their modified terms. At March 31, 2024, there were no additional commitments to lend to borrowers experiencing financial difficulty whose loans have been modified. There were no modifications where the borrower was experiencing financial difficulty during the three months ended March 31, 2023.

Table of ~~September 30, 2017~~Contents

The following table presents loan balances by credit quality indicator and year of origination at December 31, ~~2016 (dollars~~2023 (in thousands):


											2018
	2023		2022		2021		2020		2019		& Prior		Revolving		Total
CRE
Pass	$	1,500,873	$	1,268,550	$	512,497	$	128,320	$	200,304	$	83,309	$	44,672	$	3,738,525
Special Mention		24,500		38,867		14,561		304		—		—		—		78,232
Substandard		—		40,954		—		—		—		—		—		40,954
Total	$	1,525,373	$	1,348,371	$	527,058	$	128,624	$	200,304	$	83,309	$	44,672	$	3,857,711

Construction
Pass	$	84,881	$	56,065	$	—	$	—	$	—	$	—	$	12,566	$	153,512
Total	$	84,881	$	56,065	$	—	$	—	$	—	$	—	$	12,566	$	153,512

Multi-family
Pass	$	115,761	$	114,652	$	51,768	$	23,655	$	34,533	$	69,510	$	6,415	$	416,294
Special Mention		—		30,303		—		—		—		—		—		30,303
Substandard		—		—		20,939		—		—		—		—		20,939
Total	$	115,761	$	144,955	$	72,707	$	23,655	$	34,533	$	69,510	$	6,415	$	467,536

One-to four-family
Current	$	45,000	$	4,081	$	—	$	9,784	$	12,157	$	23,682	$	—	$	94,704
Total	$	45,000	$	4,081	$	—	$	9,784	$	12,157	$	23,682	$	—	$	94,704

C&I
Pass	$	178,814	$	252,359	$	98,753	$	23,943	$	14,390	$	5,904	$	402,247	$	976,410
Special Mention		3,840		33,918		—		2,080		—		—		28,281		68,119
Substandard		3,435		—		—		—		—		—		3,499		6,934
Total	$	186,089	$	286,277	$	98,753	$	26,023	$	14,390	$	5,904	$	434,027	$	1,051,463

Consumer
Current	$	—	$	—	$	—	$	—	$	—	$	17,062	$	—	$	17,062
Past due		—		—		—		—		—		24		—		24
Total	$	—	$	—	$	—	$	—	$	—	$	17,086	$	—	$	17,086

Total
Pass/Current	$	1,925,329	$	1,695,707	$	663,018	$	185,702	$	261,384	$	199,467	$	465,900	$	5,396,507
Special Mention		28,340		103,088		14,561		2,384		—		—		28,281		176,654
Substandard/Past due		3,435		40,954		20,939		—		—		24		3,499		68,851
Total	$	1,957,104	$	1,839,749	$	698,518	$	188,086	$	261,384	$	199,491	$	497,680	$	5,642,012

Charge-offs
C&I	$	—	$	—	$	915	$	—	$	—	$	31	$	—	$	946
Consumer		—		—		—		—		—		273		—		273
	$	—	$	—	$	915	$	—	$	—	$	304	$	—	$	1,219

At December 31, 2023, there were $41.0 million and $20.9 million of CRE and Multi-family substandard classified collateral dependent loans, respectively.

Table of Contents

NOTE 6 — BORROWINGS

Borrowings consisted of the following (in thousands):


					Interest Expense
	At March 31,		At December 31,		Three Months Ended March 31,
	2024		2023		2024		2023
Federal funds purchased and securities sold under agreements to repurchase	$	—	$	99,000	$	151	$	1,369
Federal Home Loan Bank of New York advances	$	300,000	$	440,000	$	4,129	$	657

Secured and other borrowings:
Secured borrowings	$	7,549	$	7,585	$	N.A.	$	N.A.
Federal Reserve Bank term loan	$	100,000	$	—	$	1,081	$	—

N.A. – not applicable

The FHLBNY advances are generally short-term transactions and at March 31, 2024, had a weighted average interest rate of 5.49%.

Secured borrowings are loan participation agreements with counterparties where the transfer of the participation interest did not qualify for sale treatment under GAAP.

The Federal Reserve established the Bank Term Funding Program (“BTFP”) on March 12, 2023 as a funding source for eligible depository institutions. The BTFP provides short-term liquidity (up to one year) against the par value of certain high-quality collateral, such as U.S. Treasury securities. The BTFP ceased making new loans as scheduled on March 11, 2024. At March 31, 2024, the Company had a $100.0 million FRB term loan under the BTFP that matures in ~~thousands):~~January 2025 and has an interest rate of 4.87%.

September 30, 2017 Performing Non-Performing Total
One-to-four family $ 23,311 $ 2,466 $ 25,777
Consumer 47,046 125 47,171
Total $ 70,357 $ 2,591 $ 72,948

December 31, 2016 Performing Non-Performing Total
One-to-four family $ 26,480 $ - $ 26,480
Consumer 18,825 - 18,825
Total $ 45,305 $ - $ 45,305

At March 31, 2024, the Company had cash on deposit with the Federal Reserve Bank of New York and available secured wholesale funding borrowing capacity of $3.4 billion.

Table of Contents

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE ~~4 –~~7 — EARNINGS PER SHARE

The ~~computation~~Company uses the two-class method in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The factors used in the earnings per share ~~is shown below~~calculation are as follows (in thousands, except per share data):.

Three months ended Nine months ended
September 30, September 30,
2017 2016 2017 2016
Net income $ 3,845 $ 1,450 $ 9,044 $ 4,964
Less: Dividends paid to preferred stockholders - (3,420 ) - (3,420 )
Less: Earnings allocated to participating securities (74 ) (39 ) (174 ) (35 )
Net income (loss) available to common stockholders 3,771 (2,009 ) 8,870 1,509
Common and common equivalent shares:
Weighted average common shares outstanding including participating shares 4,633 3,962 4,632 3,420
Less: Weighted average participating securities (89 ) (78 ) (89 ) (78 )
Weighted average common shares outstanding 4,544 3,884 4,543 3,342
Incremental shares from assumed conversion of options 33 - 33 33
Weighted average common and common equivalent shares 4,577 3,884 4,576 3,375
Basic earnings (loss) per share $ 0.83 $ (0.52 ) $ 1.95 $ 0.45
Diluted earnings (loss) per share 0.82 (0.52 ) 1.94 0.45


	Three months ended March 31,
	2024		2023
Basic
Net income per consolidated statements of income	$	16,203	$	25,076
Less: Earnings allocated to participating securities		—		(84)
Net income available to common stockholders	$	16,203	$	24,992

Weighted average common shares outstanding including participating securities		11,132,989		11,081,924
Less: Weighted average participating securities		—		(37,300)
Weighted average common shares outstanding		11,132,989		11,044,624

Basic earnings per common share	$	1.46	$	2.26

Diluted
Net income allocated to common stockholders	$	16,203	$	24,992

Weighted average common shares outstanding for basic earnings per common share		11,132,989		11,044,624
Add: Dilutive effects of assumed exercise of stock options		—		—
Add: Dilutive effects of assumed vesting of performance based restricted stock		—		58,384
Add: Dilutive effects of assumed vesting of restricted stock units		—		—
Average shares and dilutive potential common shares		11,132,989		11,103,008

Dilutive earnings per common share	$	1.46	$	2.25

~~Stock options for 45,500 shares~~For the three months ended March 31, 2024, 294,744 of ~~common~~restricted stock units were not considered in ~~computing~~the calculation of diluted earnings per ~~common~~ share ~~for three months~~as their inclusion would be anti-dilutive. There were no outstanding stock options and ~~nine months ended September 30, 2017 and 2016 because they were antidilutive.~~performance restricted stock units at March 31, 2024.

NOTE ~~5 -~~8 — STOCK COMPENSATION PLAN

~~The Company has two share-based compensation plans which are described below.~~

~~Stock Option Plan~~

The Company established the 1999 Stock Option Plan (the “1999 Plan”), as amended, under which certain employees and directors may receive stock options. Stock options are generally granted with an exercise price equal to 100% of the fair value of the common stock at the date of grant. As of September 30, 2017 and December 31, 2016, there were no unissued shares of the Company’s common stock authorized for option grants under the Plan.

Equity Incentive Plan

~~In May 2009~~At March 31, 2024, the Company ~~approved~~maintained three stock compensation plans, the 2022 Equity Incentive Plan (the “2022 EIP”), the 2019 Equity Incentive Plan (the “2019 EIP”) and the 2009 Equity Incentive Plan (the “2009 ~~Plan”~~EIP”) ~~as a successor~~. The 2019 EIP expired on May 31, 2022 but has outstanding restricted stock awards subject to ~~the 1999 Plan.~~vesting schedules. The 2009 ~~Plan permits~~EIP has also expired but had outstanding stock options that were exercised in 2023.

The 2022 EIP was approved on May 31, 2022 by stockholders of the ~~granting~~Company. Under the 2022 EIP, the remaining maximum number of shares of stock that may be delivered to participants in the form of restricted ~~shares, incentive~~stock, restricted stock units and stock options, ~~(“ISO”), nonqualified~~including ISOs and non-qualified stock options ~~stock appreciation rights, restricted share units and other stock-based awards~~is 3,133 at March 31, 2024, subject to employees, directors, officers, consultants, advisors, suppliers and any other persons or entity whose services are considered valuable for up to 1,183,000 shares. The authorized shares will be new issues upon exercise of any options granted. Under the terms of the 2009 Plan, each option agreement cannot have an exercise price that is less than 100% of the fair value of the shares covered by the option on the date of grant. In the case of an ISO granted to any 10% stockholder, the exercise price shall not be less than 110% of the fair value of the shares covered by the option on the date of grant.

In no event shall the exercise price of an option be less than the par value of the shares for which the option is exercisable. In no event shall the exercise period exceed ten years from the date of grant of the option, except,adjustment as set forth in the ~~case~~2022 EIP, plus any awards that are forfeited under the 2019 EIP after March 15, 2022.

Table of an ISO granted to a 10% stockholder, the exercise period shall not exceed five years from the date of grant. In the event of a change in control, the Committee may determine that any award then outstanding shall be assumed or an equivalent award shall be substituted by the successor company.Contents

Stock Options

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 5 - STOCK COMPENSATION PLAN~~~~(Continued)~~

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities based on historical volatilities of the Company’s commonAt March 31, 2024 no stock are not significant. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Historically, the Company has not paid a dividend on its common shares and does not expect to do so in the near future. No options were ~~granted~~outstanding. There was no compensation cost related to stock options during the three ~~or nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~2016.~~

~~A summary of the status of the Company’s stock option plan and the change during the nine months ended September 30, 2017 is presented below:~~

For the nine months ended
September 30, 2017
Number of Options Weighted Average
Exercise Price

Outstanding, beginning of period 276,500 $ 19.97
Granted - -
Exercised - -
Cancelled/forfeited - -
Outstanding, end of year 276,500 $ 19.97
Options vested and exercisable at period-end 276,500 $ 19.97

Weighted average fair value of options granted during the year $ -

Weighted average remaining contractual life (years) 5.74

2023. There was no unrecognized compensation cost related to ~~non-vested~~ stock options ~~granted under the Plan during the three~~at March 31, 2024 and ~~nine months ended September 30, 2017~~December 31, 2023.

Restricted Stock Awards and ~~September 30, 2016.~~

There was no compensation cost related to stock option plan for the three and nine months ended September 30, 2017. 178,600 shares of stock options were accelerated to vest as part of restructuring an executive management employment agreement, during the third quarter of 2016. Total compensation cost related to this plan was $528,000 and $621,000 for the three and nine months ended September 30, 2016.

~~The following table summarizes information about stock options outstanding at September 30, 2017:~~

Options Outstanding
Weighted
Range of Average Weighted
Average Number Remaining Average
Exercise Outstanding at Contractual Exercise
Prices September 30, 2017 Life Price
$10 - 20 231,000 6.64 $ 18.00
$21 - 30 45,500 1.15 $ 30.00
$10 - 30 276,500 5.74 $ 19.97

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 5 - STOCK COMPENSATION PLAN~~~~(Continued)~~

Restricted Stock Units

The Company issued restricted stock awards and restricted stock units under the 2022 EIP, 2019 EIP and the 2009 EIP (collectively, “restricted stock grants”) to certain key ~~personnel under the 2009 Equity Incentive Plan.~~personnel. Each restricted stock ~~award~~grant vests based on the vesting schedule outlined in the ~~reward~~restricted stock grant agreement. Restricted stock ~~awards~~grants are subject to forfeiture if the holder is not employed by the Company on the vesting date.

In 2013, stockholders approved an additional 300,000 shares available under the plan, and in 2016, an additional 760,000 shares were authorized. Total shares issuable under the plan are 823,122 at September 30, 2017. There were 31,616 shares issued in the first ~~nine months~~quarter of ~~2017~~2024 and ~~none during~~2023, 168,469 and 170,998 restricted stock grants were issued to certain key personnel, respectively. One-third of these shares vest each year for three years beginning on March 1, 2025 and March 1, 2024, respectively. Total compensation cost that has been charged against income for restricted stock grants was $1.6 million and $1.4 million for the three months ended ~~September 30, 2017. The fair value of the shares granted was estimated on the date of grant based on the most recent equity offering.~~March 31, 2024 and 2023, respectively. As of ~~September 30, 2017,~~March 31, 2024, there was ~~$1.2~~$12.6 million of total unrecognized compensation expense related to the restricted stock awards. The cost is expected to be recognized over a weighted-average period of ~~3.33~~2.17 years.

In January 2024, 27,500 restricted shares were granted to members of the Board of Directors. These shares vest in January 2025. In January 2023, 27,500 restricted shares were granted to members of the Board of Directors. These shares vested in January 2024. Total expense for the awards granted to members of the Board of Directors was $337,000 and $388,000 for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, total unrecognized expense for these awards was $1.0 million.

The following table summarizes the changes in the Company’s restricted stock grants:


	Three months ended
	March 31, 2024
		Weighted Average
		Grant Date
	Number of	Fair Value
	Shares	per Share
Outstanding, beginning of period	233,852	$	63.98
Granted	195,969		42.28
Forfeited	(9,804)		58.32
Vested	(125,273)		61.88
Outstanding at end of period	294,744	$	50.63

Performance-Based Stock Units

During the second quarter of 2021, the Company established a long-term incentive award program under the 2019 EIP. Under the program, 90,000 PRSUs were awarded. During the second quarter of 2022, 20,800 PRSUs were forfeited and reissued pursuant to the 2022 EIP. The weighted average service inception date fair value of the outstanding awarded shares was $6.0 million. At the beginning of 2024, 2023, and 2022, 30,800, 29,200 and 30,000 PRSUs, respectively, vested as all performance criteria were met. All 90,000 vested shares were delivered in the first quarter of 2024. Total compensation cost that has been charged against income for ~~this plan~~the PRSUs was ~~$109,000~~$0 and ~~$306,000 respectively,~~$538,000 for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2024 and ~~$1.5 million and $1.6 million for the three and nine months ending September 30, 2016, reflecting the vesting~~2023, respectively.

Table of 66,667 shares during the third quarter of 2016. After tax amounts charged against income for this plan were $63,000 and $174,000 respectively, for the three and nine months ended September 30, 2017 and $1.2 million and $1.3 million for the three and nine months ending September 30, 2016.Contents

~~The following table summarizes the changes in the Company’s non-vested restricted stock awards for the nine months ended September 30, 2017:~~

Weighted
Number of Average Grant
Shares Date Fair Value
Outstanding, January 1, 2017 64,638 $ 20.42
Granted 31,616 21.00
Forfeited   (3,167) 18.00
Vested   (4,000) 21.00
Outstanding at  September 30, 2017 89,087 $ 20.69

~~The total fair value of shares vested was $84,000 during the nine months ended September 30, 2017, and $1.5 million during the nine months ended September 30, 2016.~~

NOTE ~~6 -~~9 — FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company uses fair value measurements to record fair value adjustments to certain assets and derivative contracts, and to determine fair value disclosures. Other than derivative contracts, the Company did not have any liabilities that were measured at fair value at March 31, 2024 and December 31, 2023. AFS securities are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as certain loans where the carrying value is based on the fair value of the underlying collateral. These non-recurring fair value adjustments generally involve the write-down of individual assets due to impairment losses.

Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or ~~liabilities;~~liabilities, quoted prices in markets that are not ~~active;~~active, or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own ~~assumptions~~judgments about the assumptions that market participants would use in pricing an asset or liability.

~~The Company used the following methods and significant assumptions to estimate fair value.~~

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS~~~~(Continued)~~

~~Investment Securities~~: The fair values for investment securities are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2), using matrix pricing. Matrix pricing is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to the other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3 inputs). A third party is engaged to obtain the discounted cash flows and the resulting fair value. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

~~Impaired Loans~~: The fair value of impaired loans with specific allocations of the allowance for loan and lease losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available for similar loans and collateral underlying such loans. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value. Non-real estate collateral may be valued using an appraisal, net book value per the borrower’s financial statements, or aging reports, adjusted or discounted based on management’s historical knowledge, changes in market conditions from the time of the valuation, and management’s expertise and knowledge of the client and client’s business, resulting in a Level 3 fair value classification. Impaired loans are evaluated on a quarterly basis for additional impairments and adjusted accordingly.

Assets and Liabilities Measured on a Recurring Basis

Assets measured on a recurring basis are limited to the Company’s AFS securities portfolio, equity investments, and derivative contracts. The AFS portfolio is carried at estimated fair value with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in shareholders’ equity. Equity investments are carried at estimated fair value with changes in fair value reported as “unrealized gain/(loss)” on the statements of operations. Outstanding derivative contracts designated as cash flow hedges are carried at estimated fair value with changes in fair value reported as accumulated other comprehensive income or loss in shareholders’ equity. Outstanding derivatives not designated as hedges are carried at estimated fair value with changes in fair value reported as non-interest income. The fair values for substantially all of these assets are obtained monthly from an independent nationally recognized pricing service. On a quarterly basis, the Company assesses the reasonableness of the fair values obtained for the AFS portfolio by reference to a second independent nationally recognized pricing service. Based on the nature of these securities, the Company’s independent pricing service provides prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available for the majority of securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for the Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. On an annual basis, the Company obtains the models, inputs and assumptions utilized by its pricing service and reviews them for reasonableness. Other than derivative contracts, the Company does not have any liabilities that were measured at fair value on a recurring basis.

Table of Contents

Assets measured at fair value on a recurring basis are summarized below ~~(dollars in~~(in thousands):


	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)
At March 31, 2024
U.S. Government agency securities	$	61,679	$	—	$	61,679	$	—
U.S. State and Municipal securities		9,588		—		9,588		—
Residential mortgage securities		380,012		—		380,012		—
Commercial mortgage securities		43,393		—		43,393		—
Asset-backed securities		3,117		—		3,117		—
CRA Mutual Fund		2,115		2,115		—		—
Derivative assets		4,553		—		4,553		—
Derivative liabilities		1,816		—		1,816		—


	Fair Value Measurement using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable
	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)

At December 31, 2023
U.S. Government agency securities	$	61,775	$	—	$	61,775	$	—
U.S. State and Municipal securities		9,699		—		9,699		—
Residential mortgage securities		351,920		—		351,920		—
Commercial mortgage securities		34,584		—		34,584		—
Asset-backed securities		3,229		—		3,229		—
CRA Mutual Fund		2,123		2,123		—		—
Derivative assets		2,687		—		2,687		—
Derivative liabilities		6,037		—		6,037		—

Fair Value Measurement
September 30, 2017 Quoted Prices in
Active Markets For
Identical Assets
(Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable
Inputs (Level 3)
Assets:
Residential mortgage-backed securities $ - $ 26,170 $ -
Residential collateralized mortgage obligation - �� 2,950 -
Commercial mortgage backed securities - 1,566 -
Municipal bond - 1,126 -
CRA mutual fund 2,110 - -

December 31, 2016
Assets:
Residential mortgage-backed securities $ - $ 29,027 $ -
Residential collateralized mortgage obligation - 5,103 -
Municipal bond - 1,136 -
CRA mutual fund 2,063 - -

There were no transfers between Level 1 and Level 2 during the three months ended March 31, 2024 and ~~nine month periods ending September 30, 2017 and 2016.~~2023.

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS~~~~(Continued)~~

Assets and Liabilities Not Measured on a ~~Non-Recurring~~Recurring Basis

~~Assets~~The Company has engaged independent pricing service providers to provide the fair values of its financial assets and liabilities not measured at fair value. These providers follow FASB’s exit pricing guidelines, as required by ASC 820 Fair Value Measurement, when calculating the fair market value. Cash and cash equivalents include cash and due from banks and overnight deposits. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities. For securities and the disability fund, if quoted market prices are not available for a specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. The estimated fair value of loans are measured at amortized cost using an exit price notion. Ownership in equity securities of the FRB and FHLB is generally restricted and there is no established liquid market for their resale. The fair values of deposit liabilities with no stated maturity (i.e., money market and savings deposits, and non-interest-bearing demand deposits) are equal to the carrying amounts payable on demand. Time deposits

Table of Contents

are valued using a ~~non-recurring basis~~replacement cost of funds approach. Trust preferred securities are ~~summarized below (dollars in thousands):~~

Fair Value Measurement
December 31, 2016 Quoted Prices in Active
Markets For Identical
Assets (Level 1) Significant Other
Observable Inputs
(Level 2) Significant
Unobservable Inputs
(Level 3)
Assets:
Impaired loans:
Commercial and industrial $ - $ - $ 3,294

valued using a replacement cost of funds approach. For all other assets and liabilities it is assumed that the carrying value equals their current fair value.

There were no ~~transfers between level 1 and level 2 during the three or nine month periods ended September 30, 2017 and 2016.~~

~~The following table presents quantitative information about level 3 fair value measurements for~~material assets measured at fair value on a non-recurring basis at ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016:~~

Fair Value Valuation Technique Unobservable Input Range
(Weighted
Average)
September 30, 2017
Impaired loans – Commercial and industrial $ 3,294 Market approach Adjustments for the difference in comparable sales 10.0 %

December 31, 2016
Impaired loans – Commercial and industrial $ 3,294 Market approach Adjustments for the difference in comparable sales 10.0 %

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS~~~~(Continued)~~

As of September 30, 2017, impaired loans with allocated allowance for loan and lease losses, which are assets measured at fair value on a non-recurring basis, using the fair value of the collateral (Level 3 inputs), had a carrying amount of $3,660,000 with a valuation allowance of $366,000.

As of December 31, 2016, impaired loans with allocated allowance for loan and lease losses, which are assets measured at fair value on a non-recurring basis, using the fair value of the collateral (Level 3 inputs), had a carrying amount of $3,660,000 with a valuation allowance of $366,000, resulting in an increase of provision for loan and lease losses of $42,000 for the year then ended.

2023.

Carrying ~~amount~~amounts and estimated fair values of financial instruments not carried at ~~year end~~fair value were as follows ~~(dollars in~~(in thousands):


			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At March 31, 2024	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	34,037	$	34,037	$	—	$	—	$	34,037
Overnight deposits		500,366		500,366		—		—		500,366
Securities held-to-maturity		460,249		—		393,180		—		393,180
Loans, net		5,660,680		—		—		5,517,142		5,517,142
Other investments
FRB Stock		11,410		N/A		N/A		N/A		N/A
FHLB Stock		19,261		N/A		N/A		N/A		N/A
Disability Fund		1,500		—		1,500		—		1,500
Time deposits at banks		498		498		—		—		498
Receivable from global payments business, net		93,852		—		—		93,852		93,852
Accrued interest receivable		33,196		—		1,922		31,274		33,196

Financial Liabilities:
Non-interest-bearing demand deposits	$	1,927,629	$	1,927,629	$	—	$	—	$	1,927,629
Money market and savings deposits		4,271,827		4,271,827		—		—		4,271,827
Time deposits		38,086		—		37,720		—		37,720
Federal funds purchased		—		—		—		—		—
Federal Home Loan Bank of New York advances		300,000		—		300,000		—		300,000
Trust preferred securities payable		20,620		—		—		20,009		20,009
Prepaid debit cardholder balances		18,685		—		—		18,685		18,685
Accrued interest payable		2,646		692		1,563		391		2,646
Secured and other borrowings		107,549		—		7,549		99,907		107,456

September 30, 2017
Fair Value Measurement Using:
Carrying
Amount Quoted Prices In
Active Markets
for Identical
Assets
(Level 1) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Fair Value

Financial assets:
Cash and due from banks $ 267,099 $ 267,099 $ - $ - $ 267,099
Securities available for sale 33,922 2,110 31,812 - 33,922
Securities held to maturity 5,681 - 5,630 - 5,630
Loans, net 1,365,754 - - 1,381,158 1,381,158
Other investments 13,740 N/A N/A N/A N/A
Accrued interest receivable 3,903 2 135 3,766 3,903

Financial liabilities:
Deposits without stated maturities 1,405,458 1,405,458 - - 1,405,458
Deposits with stated maturities 83,185 - 83,278 - 83,278
Borrowed funds 43,750 - 43,794 - 43,794
Trust preferred securities 20,620 - - 20,005 20,005
Subordinated debt, net of issuance cost 24,468 - 25,000 - 25,000
Accrued interest payable 547 17 360 170 547

Table of Contents


			Fair Value Measurement Using:
			Quoted Prices
			in Active		Significant
			Markets		Other		Significant
	Carrying		For Identical		Observable		Unobservable		Total Fair
At December 31, 2023	Amount		Assets (Level 1)		Inputs (Level 2)		Inputs (Level 3)		Value
Financial Assets:
Cash and due from banks	$	31,973	$	31,973	$	—	$	—	$	31,973
Overnight deposits		237,492		237,492		—		—		237,492
Securities held-to-maturity		468,860		—		404,252		—		404,252
Loans, net		5,566,832		—		—		5,474,238		5,474,238
Other investments
FRB Stock		11,410		N/A		N/A		N/A		N/A
FHLB Stock		25,558		N/A		N/A		N/A		N/A
Disability Fund		1,500		—		1,500		—		1,500
Time deposits at banks		498		498		—		—		498
Receivable from global payments business, net		87,648		—		—		87,648		87,648
Accrued interest receivable		31,948		—		2,007		29,941		31,948

Financial Liabilities:
Non-interest-bearing demand deposits	$	1,837,874	$	1,837,874	$	—	$	—	$	1,837,874
Money market and savings deposits		3,864,018		3,864,018		—		—		3,864,018
Time deposits		35,400		—		35,011		—		35,011
Federal funds purchased		99,000		—		99,000		—		99,000
Federal Home Loan Bank of New York advances		440,000		—		440,000		—		440,000
Trust preferred securities payable		20,620		—		—		20,007		20,007
Prepaid debit cardholder balances		10,178		—		—		10,178		10,178
Accrued interest payable		1,894		1,028		475		391		1,894
Secured and other borrowings		7,585		—		7,585		—		7,585

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

NOTE ~~6 - FAIR VALUE OF FINANCIAL INSTRUMENTS~~~~(Continued)~~

December 31, 2016
Fair Value Measurement Using:
Carrying Amount Quoted Prices In
Active Markets for
Identical Assets
(Level 1) Significant
Other
Observable
Inputs (Level 2) Significant
Unobservable
Inputs
(Level 3) Total
Fair Value

Financial assets:
Cash and due from banks $ 82,931 $ 82,931 $ - $ - $ 82,931
Securities available for sale 37,329 2,063 35,266 - 37,329
Securities held to maturity 6,500 - 6,419 - 6,419
Loans, net 1,042,731 - - 1,059,333 1,059,333
Other investments 12,588 N/A N/A N/A N/A
Accrued interest receivable 2,735 - 157 2,578 2,735

Financial liabilities:
Deposits without stated maturities 903,267 903,267 - - 903,267
Deposits with stated maturities 90,513 - 90,559 - 90,559
Borrowed funds 78,418 - 78,872 - 78,872
Trust preferred securities 20,620 - - 19,998 19,998
Accrued interest payable 227 19 62 146 227

~~The methods and assumptions used to estimate fair value are described as follows:~~

~~Cash and Due from Banks:~~ ~~Carrying amounts of cash approximate fair value, since these instruments are either payable on demand or have short-term maturities and as such are classified as Level 1.~~

~~Securities Available for Sale and Held to Maturity:~~ If available, the estimated fair values are based on independent dealer quotations on nationally recognized securities exchanges and are classified as Level 1. For securities where quoted prices are not available, fair value is based on matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities resulting in a Level 2 classification.

~~Other Investments:~~ ~~It is not practicable to determine the fair value of FHLB and FRB stock, and investments in Solomon Hess SBA Loan Fund, due to restrictions placed on transferability.~~

~~Loans:~~ Fair values of loans, excluding loans held for sale are estimated as follows: For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality establishing discount factors for these types of loans and resulting in a Level 3 classification. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

~~Deposits without stated maturities:~~ The fair values disclosed for demand deposits (e.g. interest and non-interest checking, savings and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the recording date (i.e., their carrying amount) resulting in a Level 1 price.

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 6 - FAIR VALUE OF FINANCIAL INSTRUMENTS (~~~~Continued)~~

~~Deposits with stated maturities~~: The estimated fair values of certificates of deposit are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for certificate of deposit maturities resulting in a Level 2 classification.

~~Borrowed funds:~~ Represents FHLB advances for which the estimated fair values are based on discounted cash flow calculations that use a replacement cost of funds approach to establishing discount rates for funding maturities resulting in a Level 2 classification for all other maturity terms.

~~Trust Preferred Securities:~~ The estimated fair value is based on estimates using market data for similarly risk weighted items and takes into consideration the features of the debentures which is an unobservable input resulting in a Level 3 classification.

~~Subordinated Debt, net of debt issuance costs:~~The fair value of subordinated debt is estimated using discounted cash flow analyses based on then current borrowing rates for similar types of borrowing arrangements (deemed a Level 2 valuation), and is provided to the Company independently by a market maker in the underlying security.

~~Accrued Interest Receivable and Payable:~~For these short-term instruments, the carrying amount is a reasonable estimate of the fair value resulting in a Level 1, 2 or 3 classification consistent with the underlying asset or liability the interest is associated with.

~~Off-Balance-Sheet Liabilities:~~ The fair value of off-balance-sheet commitments to extend credit is estimated using fees currently charged to enter into similar agreements. The fair value is immaterial as of September 30, 2017 and December 31, 2016.

Fair value estimates are made at specific points in time and are based on existing on-and off-balance sheet financial instruments. These estimates are subjective in nature and dependent on a number of significant assumptions associated with each financial instrument or group of financial instruments, including estimates of discount rates, risks associated with specific financial instruments, estimates of future cash flows, and relevant available market information. Changes in assumptions could significantly affect the estimates. In addition, fair value estimates do not reflect the value of anticipated future business, premiums or discounts that could result from offering for sale at one time the Company’s entire holdings of a particular financial instrument, or the tax consequences of realizing gains or losses on the sale of financial instruments.

~~NOTE 7 -~~10 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following ~~tables present~~table summarizes the changes in Accumulated Other Comprehensive Income (Loss), balances, net of tax ~~for~~effects at the ~~three and nine months ended September 30, 2017 and 2016:~~dates indicated (in thousands):


					Total
					Accumulated
					Other
	AFS		Cash Flow		Comprehensive
	Securities		Hedge		Income (Loss)
Balance at January 1, 2024	$	(54,684)	$	1,748	$	(52,936)
Unrealized gain (loss) arising during the period, net of tax		(2,567)		4,280		1,713
Reclassification adjustment for gain included in net income, net of tax		—		(867)		(867)
Other comprehensive income (loss), net of tax		(2,567)		3,413		846
Balance at March 31, 2024	$	(57,251)	$	5,161	$	(52,090)

Balance at January 1, 2023	$	(61,833)	$	7,535	$	(54,298)
Unrealized gain (loss) arising during the period, net of tax		5,719		(695)		5,024
Reclassification adjustment for gain included in net income, net of tax		—		(858)		(858)
Other comprehensive income (loss), net of tax		5,719		(1,553)		4,166
Balance at March 31, 2023	$	(56,114)	$	5,982	$	(50,132)

For the three months ended September 30, Available for sale securities
(In thousands) 2017 2016

Beginning balance $ (73 ) $ 427

Net change in other comprehensive income (loss) before reclassification, net of tax 26 (56 )

Amounts reclassified from accumulated other comprehensive income - -

Net current period other comprehensive income (loss) 26 (56 )
Ending balance $ (47 ) $ 371

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The following table presents the tax effects allocated to each component of Accumulated Other Comprehensive Income (Loss) at the dates indicated (in thousands):

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~


	Gross		Tax
	Amount		Component		Total
At March 31, 2024
Unrealized gain (loss) on AFS Securities	$	(82,271)	$	25,020	$	(57,251)
Unrealized gain (loss) on Cash Flow Hedges		7,409		(2,248)		5,161
Total ending other comprehensive income (loss)	$	(74,862)	$	22,772	$	(52,090)

At December 31, 2023
Unrealized gain (loss) on AFS Securities	$	(77,783)	$	23,098	$	(54,685)
Unrealized gain (loss) on Cash Flow Hedges		2,574		(825)		1,749
Total ending other comprehensive income (loss)	$	(75,209)	$	22,273	$	(52,936)

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 7 - ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)~~~~(continued)~~

For the nine months ended September 30, Available for sale securities
(In thousands) 2017 2016

Beginning balance $ (165 ) $ 16

Net change in other comprehensive income before
reclassification, net of tax 118 378

Amounts reclassified from accumulated other comprehensive loss - (23 )

Net current period other comprehensive income 118 355
Ending balance $ (47 ) $ 371

The following ~~represents~~table shows the ~~reclassifications~~amounts reclassified out of ~~accumulated other comprehensive income (loss)~~AOCI for the ~~nine months ended September 30, 2017,~~sale and/or calls of AFS securities and ~~2016. There were no reclassifications out~~realized gain on cash flow hedges (in thousands):


					Affected line item in
	Three months ended				the Consolidated Statements
	March 31,				of Operations
	2024		2023
Realized gain (loss) on cash flow hedges	$	1,251	$	1,235	Licensing fees
Income tax (expense) benefit		(384)		(377)	Income tax expense
Total reclassifications, net of income tax	$	867	$	858

Table of ~~accumulated other comprehensive income (loss) for the three months ended September 30, 2017.~~Contents

NOTE 11 — COMMITMENTS AND CONTINGENCIES

For the nine months ended September 30,
(In thousands) 2017 2016 Affected Line item in the Consolidated Statements of Income
Realized gain on sale of available for sale securities $ - $ 40 Net gains on sales of securities
Income tax expense - (17 ) Income tax expense
Total reclassifications, net of income tax $ - $ 23

~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 8 - FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK~~

Financial instruments with off-balance-sheet risk

The ~~Bank~~Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its ~~customers.~~clients. These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. The ~~Bank’s~~Company’s exposure to credit loss in the event of ~~nonperformance~~non-performance by the ~~other party~~counterparty to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The ~~Bank~~Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

The ~~Bank had outstanding the~~ following off-balance-sheet financial instruments, whose contract amounts represent credit risk, ~~as of September 30, 2017 and December 31, 2016 (dollars in~~are outstanding (in thousands):


	At March 31, 2024				At December 31, 2023
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate
Unused commitments	$	64,935	$	534,372	$	67,418	$	527,730
Standby and commercial letters of credit		40,126		—		59,532		—
	$	105,061	$	534,372	$	126,950	$	527,730

September 30, 2017 December 31, 2016
Fixed Variable Fixed Variable
Rate Rate Rate Rate

Undrawn lines of credit $ 47,333 $ 26,386 $ 60,984 $ 9,890
Undrawn letters of credit 22,716 - 9,808 -

A commitment to extend credit is a legally binding agreement to lend to a ~~customer~~client as long as there is no violation of any condition established in the contract. Commitments generally expire within two years. At ~~September 30, 2017,~~March 31, 2024, the ~~Bank’s~~Company’s fixed rate loan commitments ~~are to make loans with~~had interest rates ranging from ~~3.75%~~3.0% to ~~9.25%~~9.5% and ~~maturities of one year or more.~~the Company’s variable rate loan commitments had interest rates ranging from 6.0% to 12.5%. At December 31, ~~2016,~~2023, the ~~Bank’s~~Company’s fixed rate loan commitments ~~are to make loans with~~had interest rates ranging from ~~3.75%~~3.0% to ~~8.75%~~9.5% and the Company’s variable rate loan commitments had interest rates ranging from 6.0% to 12.5%. The amount of collateral obtained, if any, by the ~~Bank~~Company upon extension of credit is based on management’s credit evaluation of the borrower. Collateral held varies but may include mortgages on commercial and residential real estate, security interests in business assets, equipment, deposit accounts with the ~~Bank~~Company or other financial institutions and securities.

The ~~Bank has~~Company’s stand-by letters of credit ~~in the amount of $22.7~~amounted to $40.1 million and ~~$9.8~~$59.5 million ~~included above~~ as of ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016, respectively, for which the Bank has pledged interest-bearing accounts of $1.7 million and $4.0 million as of September 30, 2017 and December 31, 2016,~~2023, respectively. The Company’s stand-by letters of credit are collateralized by interest-bearing accounts of $31.3 million and $36.2 million as of March 31, 2024 and December 31, 2023, respectively.

Legal and Regulatory Proceedings

There have been and continue to be ongoing investigations by governmental entities concerning a prepaid debit card product program that was offered by GPG. During the early stages of the COVID-19 pandemic, third parties used this prepaid debit card product to establish unauthorized accounts and to receive unauthorized government benefits payments, including unemployment insurance benefits payments made pursuant to the Coronavirus Aid, Relief, and Economic Security Act from many states. The Company ceased accepting new accounts from this program manager in July 2020 and exited its relationship with this program manager in August 2020. The Company has cooperated and continues to cooperate in these investigations and continues to review this matter. In 2023, the Bank entered into separate consensual resolutions with each of the FRB and the NYSDFS with respect to their investigations, each of which is now closed as a result of such orders.

In addition to the matters described above, the Company is subject to various other pending and threatened legal actions relating to the conduct of its business activities, as well as inquiries and investigations from regulators. While the future outcome of litigation or regulatory matters cannot be determined at this time, in the opinion of management, as of March 31, 2024, the aggregate liability, if any, arising out of any such other pending or threatened matters are not expected to be material to the Company’s financial condition, results of operations, and liquidity.

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NOTE 12 — REVENUE FROM CONTRACTS WITH CUSTOMERS

All of the Company’s revenue from contracts with customers that are in the scope of ASC 606, Revenue from Contracts with Customers, are recognized in non-interest income. The following table presents the Company’s revenue from contracts with customers (in thousands):



	Three months ended March 31,
	2024		2023
Service charges on deposit accounts	$	1,863	$	1,456
Global Payments Group revenue		4,069		4,850
Other service charges and fees		1,095		642
Total	$	7,027	$	6,948

A description of the Company’s revenue streams accounted for under the accounting guidance is as follows:

Service charges on deposit accounts

The Company offers business and personal retail products and services, which include, but are not limited to, online banking, mobile banking, Automated Clearing House (“ACH”) transactions, and remote deposit capture. A standard deposit contract exists between the Company and all deposit clients. The Company earns fees from its deposit clients for transaction-based services (such as ATM use fees, stop payment charges, statement rendering, and ACH fees), account maintenance, and overdraft services. Transaction-based fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the client’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits ~~mature~~are withdrawn from the client’s account balance.

Global payment group revenue

The Company offers corporate cash management and retail banking services and, through its global payments business, provides services to non-bank financial service companies. The Company earns initial set-up fees for these programs as well as fees for transactions processed. The Company receives transaction data at the end of each month for services rendered, at which time revenue is recognized. Additionally, service charges specific to GPG clients’ deposits are recognized within ~~one year.~~GPG revenue.

Other service charges

The primary component of other service charges relates to letter of credit fees and FX conversion fees. The Company outsources FX conversion for foreign currency transactions to correspondent banks. The Company earns a portion of an FX conversion fee that the client charges to process an FX conversion transaction. Revenue is recognized at the end of the month once the client has remitted the transaction information to the Company.

NOTE ~~9 – SUBORDINATED DEBT~~

13 — DERIVATIVES

On ~~March 8, 2017, Metropolitan Bank Holding Corp. (“MBHC”) closed~~occasion, the ~~issuance~~Company enters into derivative contracts as a part of its ~~$25 million subordinated notes at 100% issue price~~asset liability management strategy to ~~accredited institutional investors. The notes mature on March 15, 2027 and bear an~~help manage its interest rate risk position. At March 31, 2024, these derivatives had a notional amount of ~~6.25% per annum.~~$700.0 million and contractual maturities ranging from August 1, 2025 to March 23, 2026. The ~~interests are paid semi-annually on March 15 and September 15 of each year through March 15, 2022 and quarterly thereafter on March 15, June 15, September 15 and December 15 of each year.~~

Interest rate from March 15, 2022 to the maturity date shall reset quarterly to an interest rate per annum equal to the then current three month LIBOR (not less than zero) plus 426 basis points, payable quarterly in arrears.

MBHC may redeem the subordinated notes beginning with the interest payment date of March 15, 2022 and on any scheduled interest payment date thereafter. The subordinated notes may be redeemed in whole or in part, at a redemption price equal to 100% of the principalnotional amount of the ~~subordinated notes plus any accrued~~derivatives does not represent the amount exchanged by the parties. The derivatives were designated as cash flow hedges of certain deposit liabilities and ~~unpaid interest.~~borrowings of the Company. The hedges were determined to be highly effective during the three months ended March 31, 2024. The Company expects the hedges to remain highly effective during the remaining term of the derivatives.

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~~METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARY~~

~~NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS~~

~~NOTE 10 – SUBSEQUENT EVENTS~~

~~On November 8, 2017,~~In addition, the Company ~~completed an initial public offering (“IPO”) of its common stock and sold 3,100,000 shares of common stock at~~periodically enters into certain commercial loan interest rate swap agreements to provide commercial loan clients the ~~public offering price of $35.00 per share.~~ability to convert loans from variable to fixed interest rates. Under these agreements, the Company enters into a variable-rate loan agreement with a client in addition to a swap agreement. This swap agreement effectively converts the client’s variable rate loan into a fixed rate loan. The Company ~~received aggregate net proceeds~~then enters into a corresponding swap agreement with a third party to offset its exposure on the variable and fixed components of ~~approximately $99.9 million after deducting underwriting discount and other offering related expenses.~~

~~On November 10, 2017,~~ the ~~Company sold 465,000 additional shares of common stock at~~client agreement. As the public offering price of $35.00 per share pursuant to the underwriter’s overallotment option. The net proceeds to the Company, after deducting the underwriting discount and estimated offering expensesinterest rate swap agreements with the ~~overallotment option, were approximately $15.1 million.~~ clients and third parties are not designated as hedges, the instruments are marked to market in earnings. At March 31, 2024, these interest rate swaps have a notional amount of $69.0 million and a contractual maturity of August 15, 2028.

The ~~aggregate net proceeds to Metropolitan Bank Holding Corp. from its IPO, including~~following tables reflect the ~~overallotment shares, after deducting~~derivatives recorded on the ~~underwriting discount and estimated offering expenses were approximately $115 million.~~balance sheet (in thousands):


			Fair Value
		Notional		Other		Other
		Amount		Assets		Liabilities
At March 31, 2024
Derivatives designated as hedges:
Interest rate swaps related to client deposits and borrowings	$	700,000	$	4,137	$	1,400

Derivatives not designated as hedges:
Interest rate swaps	$	69,000	$	416	$	416

At December 31, 2023
Derivatives designated as hedges:
Interest rate swaps related to client deposits and borrowings	$	700,000	$	1,530	$	4,880

Derivatives not designated as hedges:
Interest rate swaps	$	69,000	$	1,157	$	1,157

The effect of cash flow hedge accounting on accumulated other comprehensive income is as follows (in thousands):



	Three months ended March 31,
	2024		2023
Interest rate swaps and caps related to client deposits and borrowings
Amount of gain (loss) recognized in OCI, net of tax	$	4,279	$	(1,553)
Amount of gain (loss) reclassified from OCI into income	$	1,251	$	1,235
Location of gain (loss) reclassified from OCI into income		Licensing fees		Licensing fees

N/A - not applicable

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Company Background

~~PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT~~

~~This Quarterly Report on Form 10-Q~~The Company is a bank holding company headquartered in New York, New York and oral statements made from time-to-time by our representatives contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. You should not place undue reliance on such statements because they are subject to numerous risks and uncertainties relating to our operations and the business environment in which we operate, all of which are difficult to predict and many of which are beyond our control. Forward-looking statements include information concerning our possible or assumed future results of operations, including descriptions of our business strategy, expectations, beliefs, projections, anticipated events or trends, growth prospects, financial performance, and similar expressions concerning matters that are not historical facts. These statements often include words such as “may,” “believe,” “expect,” “anticipate,” “potential,” “opportunity,” “intend,” “plan,” “estimate,” “could,” “project,” “seek,” “should,” “will,” or “would,” or the negative of these words and phrases or similar words and phrases.

All forward-looking statements may be impacted by a number of risks and uncertainties. These statements are based on assumptions that we have made in light of our industry experience as well as our perception of historical trends, current conditions, expected future developments and other factors we believe are appropriateregistered under the ~~circumstances including, without limitation, those related to:~~

~~earnings growth;~~

~~revenue growth;~~

~~net interest margin;~~

~~deposit growth, including short-term escrow deposits, brokered deposits and off-balance sheet deposits;~~

~~future acquisitions;~~

~~performance, credit quality and liquidity of investments made by us, including our investments in certain mortgage-backed and similar securities;~~

~~loan and lease origination volume;~~

~~the interest rate environment;~~

~~non-interest income levels, including fees from product sales;~~

~~credit performance on loans made by us;~~

~~monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Board of Governors of the Federal Reserve System;~~

~~our ability to maintain, generate and/or raise capital;~~

~~changes in the regulatory environment and government intervention in the banking industry, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act;~~

~~Federal Deposit Insurance Corporation insurance assessments;~~

~~margins on sales or securitizations of loans;~~

~~market share;~~

~~expense levels;~~

~~hiring of new private client banking teams;~~

~~results from new business initiatives;~~

~~other business operations and strategies;~~

~~changes in federal, state, or local tax laws; and~~

~~the impact of new accounting pronouncements.~~

As you read and consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions and can change as a result of many possible events or factors, not all of which are known to us or in our control. Although we believe that these forward-looking statements are based on reasonable assumptions, beliefs, and expectations, if a change occurs or our beliefs, assumptions, or expectations were incorrect, our business, financial condition, liquidity or results of operations may vary materially from those expressed in our forward-looking statements. You should be aware that many factors could affect our actual financial results or results of operations and could cause actual results to differ materially from those in the forward-looking statements. These factors include those described under the heading “Risk Factors” in our prospectus dated November 7, 2017 filed with the SEC pursuant to securities act rule 424(b)(7) on November 8, 2017, and without limitation, the following additional factors:

~~disruption and volatility in global financial markets;~~

~~difficult market conditions adversely affecting our industry;~~

~~monetary and currency fluctuations;~~

~~local, national and global political and macroeconomic uncertainty and volatility;~~

~~our inability to successfully implement our business strategy;~~

~~our inability to successfully integrate new business lines into our existing operations;~~

~~changes to existing statutes and regulations or the way in which they are interpreted and applied by courts or governmental agencies;~~

~~our vulnerability to changes in interest rates;~~

~~our vulnerability to changes in inflation;~~

~~competition with many larger financial institutions which have substantially greater financial and other resources than we have;~~

~~government intervention in the banking industry, new legislation and government regulation;~~

~~illiquid market conditions and downgrades in credit ratings;~~

~~adverse developments in the residential mortgage market;~~

~~inability of U.S. agencies or U.S. government-sponsored enterprises to pay or to guarantee payments on their securities in which we invest;~~

~~material risks involved in commercial lending;~~

~~a downturn in the economy of the New York metropolitan area;~~

~~a downturn in the economy of the United States;~~

~~under-collateralization of our loan portfolio due to a material decline in the value of real estate;~~

~~risks associated with our loan portfolio growth;~~

~~our failure to effectively manage our credit risk;~~

~~lack of seasoning of mortgage loans underlying our investment portfolio;~~

~~our allowance for loan and lease losses (“ALLL”) may not be sufficient to absorb actual losses;~~

~~our reliance on the Federal Home Loan Bank of New York for secondary and contingent liquidity sources;~~

~~our dependence upon key personnel;~~

~~our inability to acquire suitable private client banking teams or manage our growth;~~

~~our charter documents and regulatory limitations may delay or prevent our acquisition by a third party;~~

~~curtailment of government guaranteed loan programs could affect our SBA business;~~

~~our use of brokered deposits and continuing to be “well-capitalized”;~~

~~our extensive reliance on outsourcing to provide cost-effective operational support;~~

~~system failures or breaches of our network security;~~

~~decreases in trading volumes or prices;~~

~~exposure to legal claims and litigation;~~

~~potential responsibility for environmental claims;~~

~~downgrades of our credit rating;~~

~~our inability to raise additional funding needed for our operations;~~

~~inflation or deflation;~~

~~misconduct of employees or their failure to abide by regulatory requirements;~~

~~fraudulent or negligent acts on the part of our clients or third parties;~~

~~failure of our brokerage clients to meet their margin requirements;~~

~~severe weather;~~

~~acts of war or terrorism;~~

~~technological changes;~~

~~work stoppages, financial difficulties, fire, earthquakes, flooding or other natural disasters;~~

~~changes in federal, state or local tax laws;~~

changes in accounting standards, policies, and practices or interpretation of new or existing standards, policies, and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, or the Securities and Exchange Commission (the “SEC”);

~~changes in our reputation and negative public opinion;~~

~~increases in FDIC insurance premiums;~~

~~regulatory net capital requirements that constrain our brokerage business;~~

~~soundness of other financial institutions;~~

~~our ability to enter new markets successfully and capitalize on growth opportunities;~~

~~changes in consumer spending, borrowing and savings habits;~~

~~changes in our organization, compensation and benefit plans; and~~

~~changes in the financial condition or future prospects of issuers of securities that we own.~~

You should keep in mind that any forward-looking statement made by us speaks only as of the date on which we make it. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We have no duty to, and do not intend to, and disclaim any obligation to, update or revise any industry information or forward-looking statements after the date on which they are made. In light of these risks and uncertainties, you should keep in mind that any forward-looking statement made in this document or elsewhere might not reflect actual results.

~~Company Background~~

~~We are a New York-based registered bank holding company.~~BHC Act. Through ~~our~~its wholly owned bank subsidiary, Metropolitan Commercial Bank (the “Bank”), ~~with five~~a New York state chartered commercial bank, the Company provides a broad range of business, commercial and retail ~~offices located~~banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals primarily in the New York metropolitan area. See the “Glossary of Common Terms and Acronyms” for the definition of certain terms and acronyms used throughout this Form 10-Q.

The Company’s primary market includes the New York metropolitan area, ~~we offer~~specifically Manhattan and the outer boroughs, and Nassau County, New York. This market is well-diversified and represents a ~~wide variety~~large market for middle market businesses (defined as businesses with annual revenue of ~~business~~$5 million to $400 million). The Company’s market area has a diversified economy typical of most urban population centers, with the majority of employment provided by services, wholesale/retail trade, finance/insurance/real estate, technology companies and ~~personal banking products and services.~~ construction. A relationship-led strategy has provided the Company with select opportunities in other U.S. markets, with a particular focus on South Florida.

The ~~Bank offers a traditional range of services to individuals, businesses and others needing banking services. Its~~Company’s primary lending products are ~~commercial mortgages~~CRE, including multi-family loans, and ~~commercial and industrial~~C&I loans. Substantially all loans are secured by specific items of collateral including business ~~assets,~~and consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash ~~flow~~flows from operations of ~~businesses. There are no significant concentrations of loans to any one industry or customer.~~commercial enterprises. The ~~Bank’s~~Company’s primary deposit products are checking, savings, and term deposit accounts, ~~and its deposit accounts~~all of which are insured by the ~~Federal Deposit Insurance Corporation (“FDIC”)~~FDIC under the maximum amounts allowed by law.

The Company has developed various deposit gathering strategies, which generate the funding necessary to operate without a large branch network. These activities, together with six strategically located banking centers, generate a stable source of deposits and a diverse loan portfolio with attractive risk-adjusted yields.

The ~~accompanying Unaudited Consolidated Financial Statements, which include the accounts~~Company operates six banking centers strategically located within close proximity to target clients. The strength of the ~~Company~~Company’s deposit franchise comes from its long-standing relationships with clients and the ~~Bank, have been prepared~~strong ties it has in ~~accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information~~its market area. The Company has also developed a diversified funding strategy, which enables it to be less reliant on branches. Deposit funding is provided by the following core deposit verticals: (i) borrowing clients; (ii) non-borrowing retail clients; (iii) corporate cash management clients; and ~~with the instructions to Form 10-Q~~(iv) municipal and Article 10 of Regulation S-X. The Unaudited Consolidated Financial Statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the three and nine months ended September 30, 2017 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”).

other local entities.

Critical Accounting Policies

~~A summary of our accounting policies is described in Note 1 to the consolidated financial statements included in this report.~~ Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Management believes that the most critical accounting ~~policies,~~policy, which ~~involve~~involves the most complex or subjective decisions or assessments, ~~are~~is as follows:

Allowance for ~~Loan~~Credit Losses

The ACL has been determined in accordance with GAAP. The Company is responsible for the timely and ~~Lease Losses.~~periodic determination of the amount of the ACL. Management believes that the ACL for loans and loan commitments is adequate to cover expected credit losses over the life of the loan portfolio. Although management evaluates available information to determine the adequacy of the ~~allowance for loan and lease losses,~~ACL, the level of ~~allowances~~allowance is an estimate which is subject to significant ~~judgement~~judgment and ~~short term~~short-term change. Because of uncertainties associated with local and national economic ~~conditions,~~forecasts, the operating and regulatory environment, collateral values and future cash flows onfrom the loan portfolio, it is ~~reasonably~~ possible that a material change could occur in the allowance for loan and lease losses in the near term due to economic, operating, regulatory and other conditions beyond the Company’s control. However, the amount of the change that is reasonably possible cannot be estimated.ACL. The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals. Because of changing economic conditions, the valuations determined from such estimates and appraisals may also change. Accordingly, wethe Company may ultimately incur losses that vary from management’s current estimates. Adjustments to the ~~allowance for loan and lease losses~~ACL will be reported in the period in which such adjustments become known orand can be reasonably estimated. All

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loan losses are charged to the ~~allowance for loan and lease losses~~ACL when the loss actually occurs or when the collectability of ~~the~~ principal is deemed to be unlikely. Recoveries are credited to the allowance at the time of recovery.

~~Emerging Growth Company.~~~~Pursuant~~ Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL. As a result of such examinations, the Company may need to recognize additions to the ~~JOBS Act,~~ACL based on the regulators’ judgments.

In estimating the ACL, the Company relies on models and economic forecasts developed by external parties as the primary driver of the ACL. These models and forecasts are based on nationwide data sets. Economic forecasts can change significantly over an economic cycle and have a significant level of uncertainty associated with them. The performance of the models is dependent on the variables used in the models being reasonable predictors for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio. As a result, the Company reviews the results and makes qualitative adjustments to the models to capture potential limitations of the models as necessary. Such qualitative factors may include adjustments to better capture the imprecision associated with the economic forecasts, and the ability of the models to capture emerging ~~growth company is provided~~risks within the ~~option to adopt new or revised accounting standards~~portfolio that may not be ~~issued~~represented in the data. These judgments are evaluated through the Company’s review process and revised on a quarterly basis to account for changes in forecasts, facts and circumstances.

One of the more significant judgments involved in estimating the Company’s ACL relates to the macroeconomic forecasts used to estimate credit losses and the relative weightings applied to them. To illustrate the impact of changes in these forecasts to the Company’s ACL, the Company performed a hypothetical sensitivity analysis that decreased the weight on the baseline scenario by 33% and equally allocated the difference to increase the weights on the more optimistic and adverse scenarios. All else equal, the impact of this hypothetical forecast would result in a net increase of approximately $7.0 million, or 11.9%, in the Company’s total ACL for loans and loan commitments as of March 31, 2024. This hypothetical analysis is intended to illustrate the impact of adverse changes in the macroeconomic environment at a point in time and is not intended to reflect the full nature and extent of potential future change in the ACL. It is difficult to estimate how potential changes in any one of the quantitative inputs or qualitative factors might affect the overall ACL and the Company’s current assessments may not reflect the potential future impact of changes to those inputs or factors.

Discussion of Financial Condition

The Company had total assets of $7.5 billion at March 31, 2024, an increase of $385.7 million, or 5.5%, from December 31, 2023.

Total cash and cash equivalents were $534.4 million at March 31, 2024, an increase of $264.9 million, or 98.3%, from December 31, 2023. The increase primarily reflected the $500.3 million increase in deposits, partially offset by the ~~Financial Accounting Standards Board~~$139.0 million decrease in wholesale funding and $94.4 million net deployment into loans.

Investments

Total securities were $960.2 million at March 31, 2024, an increase of $28.0 million, or 3.0%, from December 31, 2023. The increase was primarily due to the purchase of $53.3 million of AFS securities, partially offset by the $20.8 million paydown and maturities of AFS and HTM securities.

Loans

Total loans, net of deferred fees and unamortized costs, were $5.7 billion at March 31, 2024, an increase of $94.4 million, or 1.7%, from December 31, 2023. The increase in total loans was due primarily to an increase of $93.4 million in commercial real estate (“~~FASB”~~CRE”) loans (including owner-occupied). At March 31, 2024, 80.8% of the CRE and C&I loan portfolio is concentrated in the New York Metropolitan Area (mainly New York City) and Florida.

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As of March 31, 2024, total loans consisted primarily of CRE loans (including multi-family mortgage loans) and C&I loans. The Company’s commercial loan portfolio includes loans to the following industries (dollars in thousands):


	At March 31, 2024
			% of Total
		Balance	Loans
CRE⁽¹⁾
Skilled Nursing Facilities	$	1,589,906	28.2	%
Multi-family		467,979	8.3
Office		377,658	6.7
Mixed use		372,942	6.6
Hospitality		347,115	6.2
Retail		293,450	5.2
Land		258,702	4.6
Warehouse / industrial		170,088	3.0
Construction		150,257	2.7
Other		541,210	9.5
Total CRE	$	4,569,307	80.9	%

C&I
Finance & Insurance	$	265,403	4.7	%
Skilled Nursing Facilities		235,670	4.2
Individuals		125,002	2.2
Healthcare		125,544	2.2
Services		74,518	1.3
Wholesale		55,666	1.0
Manufacturing		42,101	0.7
Other		133,584	2.3
Total C&I	$	1,057,488	18.7	%

(1)CRE, not including one-to-four family loans

The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $1.8 billion, or ~~the SEC either (i) within the same periods~~32.2% of total loans, at March 31, 2024, including $1.7 billion in loans to skilled nursing facilities.

Asset Quality

Non-performing loans were $51.9 million at March 31, 2024 and December 31, 2023. The table below sets forth key asset quality ratios (dollars in thousands):


	At or for the			At or for the
	three months ended			year ended
	March 31,			December 31,
	2024			2023
Asset Quality Ratios
Non-performing loans	$	51,928		$	51,897
Non-performing loans to total loans		0.91	%		0.92	%
Allowance for credit losses to total loans		1.02	%		1.03	%
Non-performing loans to total assets		0.70	%		0.73	%
Allowance for credit losses to non-performing loans		112.7	%		111.7	%
Ratio of net charge-offs (recoveries) to average loans outstanding in aggregate		—	%		0.02	%

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Allowance for Credit Losses – Loans and Loan Commitments

The ACL was $58.5 million at March 31, 2024, as ~~those otherwise applicable~~compared to ~~non-emerging growth companies or (ii) within the same time periods as private companies.~~$58.0 million at December 31, 2023. The Company ~~elected delayed effective dates~~recorded a $528,000 provision for credit losses for the first quarter of ~~recently issued accounting standards.~~2024, primarily driven by loan growth.

Deposits

~~Although we are still evaluating~~Total deposits were $6.2 billion at March 31, 2024, an increase of $500.3 million, or 8.7%, from December 31, 2023. The increase from December 31, 2023, was due primarily to an increase of $136.3 million in retail deposits, $101.9 million in municipal deposits, $98.7 million in property manager deposits and an aggregate net increase of $163.4 million across other deposit verticals. Non-interest-bearing demand deposits were 30.9% of total deposits at March 31, 2024, compared to 32.0% at December 31, 2023.

The table below summarizes the ~~JOBS Act, we may take advantage~~Company’s deposit composition by segment for the periods indicated (dollars in thousands):


	At March 31, 2024		At December 31, 2023		Dollar Change		Percentage Change
Non-interest-bearing demand deposits	$	1,927,629	$	1,837,874	$	89,755	4.9	%
Money market		4,265,134		3,856,975		408,159	10.6
Savings accounts		6,693		7,043		(350)	(5.0)
Time deposits		38,086		35,400		2,686	7.6
Total	$	6,237,542	$	5,737,292	$	500,250	8.7	%

At March 31, 2024, the aggregate estimated amount of ~~some~~FDIC uninsured deposits was $1.6 billion and the aggregate estimated amount of the ~~reduced regulatory~~Company’s uninsured time deposits was $25.1 million. The following table presents the scheduled maturities of time deposits greater than $250,000 (in thousands):


	At March 31, 2024
Three months or less	$	15,194
Over three months through six months		2,579
Over six months through one year		6,918
Over one year		429
Total	$	25,120

Borrowings

To support the balance sheet, the Company may at times utilize FHLB advances or other funding sources. At March 31, 2024, the Company had $300.0 million of FHLBNY advances. At December 31, 2023, the Company had $99.0 million of Federal funds purchased and ~~reporting requirements that are available~~$440.0 million of FHLBNY advances.

At March 31, 2024, the Company had a $100.0 million FRB term loan under the Bank Term Funding Program (“BTFP”). The Federal Reserve established the BTFP on March 12, 2023, as a funding source for eligible depository institutions. Advances can no longer be requested under the program. The BTFP provides short-term liquidity (up to ~~it so long~~one year) against the par value of certain high-quality collateral, such as ~~we qualify as~~U.S. Treasury securities.

Accumulated Other Comprehensive Income

Accumulated other comprehensive loss, net of tax, was $52.1 million at March 31, 2024, a decrease of $0.8 million from December 31, 2023. The decrease from December 31, 2023 was due to net unrealized gains on outstanding cash flow hedges, partially offset by an ~~emerging growth company, including, but not limited~~increase in unrealized losses on AFS securities due to ~~not being required~~changes in prevailing interest rates and the reclassification to ~~comply with the auditor attestation requirements~~net income of ~~Section 404(b)~~gains on a terminated cash flow hedge.

Table of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation, and exemptions from the requirements of holding non-binding advisory votes on executive compensation and golden parachute payments.Contents

Results of Operations

Three months ended Nine months ended
September 30, September 30,
(in thousands, except ratios and per share amounts) 2017 2016 2017 2016
PER COMMON SHARE
Net income (loss) - basic $ 0.83 $ (0.52 ) $ 1.95 $ 0.45
Net income (loss) - diluted 0.82 (0.52 ) 1.94 0.45
Weighted average shares outstanding - basic 4,544 3,884 4,543 3,342
Weighted average shares outstanding - diluted 4,577 3,884 4,576 3,375
Book value $ 24.49 $ 23.08 $ 24.49 $ 23.08
SELECTED FINANCIAL DATA
Return on average total assets 0.94 % 0.52 % 0.84 % 0.62 %
Return on average shareholders' equity 13.14 6.14 10.59 7.87
Efficiency ratio⁽¹⁾ 53.04 75.65 55.26 67.14
Yield on interest-earning assets 4.21 4.15 4.15 4.13
Cost of funds 0.67 0.59 0.66 0.62
Cost of deposits 0.47 0.51 0.49 0.53
Net interest margin 3.62 3.56 3.57 3.52

⁽¹⁾

The efficiency ratio is considered a non-GAAP financial measure and is calculated by dividing non-interest expense by the sum of net interest income before provision for loan and lease losses and non-interest income. This ratio is a metric used by management to evaluate the performance of the Bank's business activities. A decrease in our efficiency ratio represents improvement.

Net Income

Net income ~~for the third quarter of 2017~~ was ~~$3.8million comparedto $1.5~~$16.2 million for the ~~third~~first quarter of ~~2016. Earnings per fully diluted share~~2024, a decrease of $8.9 million as compared to $25.1 million for the ~~third~~first quarter of ~~2017~~2023. This decrease was ~~$0.82. Loss per basic share for~~due primarily to an increase of $10.9 million in non-interest expense, partially offset by the ~~third quarter of 2016 was $0.52, resulting from the distribution of approximately $3.4~~$1.2 million ~~of dividends paid to preferred stockholders~~increase in August of 2016. Net income for the nine months ended September 30, 2017 was $9.0 million, or $1.94 diluted earnings per share, compared to $5.0 million, or $0.45 diluted earnings per share, for the nine months ended September 30, 2016.

Returns on average stockholders’ equity and average total assets for the third quarter of 2017 were 13.14% and 0.94%, respectively, compared to 6.14% and 0.52% for the third quarter last year. Returns on average stockholders’ equity and average total assets for the nine months ended September 30, 2017 were 10.59% and 0.84%, respectively, compared to 7.87% and 0.62%, for the same period last year.

net interest income.

Net Interest Income

Analysis

Net interest income is the difference between interest earned on assets and interest incurred on liabilities. The following table presents an analysis of net interest income by each major category of interest-earning assets and interest-bearing ~~liabilities for the quarters ended September 30, 2017 and 2016:~~

For the three months ended September 30,
2017 2016
Average Outstanding Balance Interest Yield/ Rate⁽¹⁾ Average Outstanding Balance Interest Yield/ Rate⁽¹⁾

Interest-earning assets:
Loans $ 1,326,923 $ 15,537 4.65 % $ 958,004 $ 10,922 4.54 %
Available-for-sale securities 34,930 178 2.04 39,553 198 2.00
Held-to-maturity securities 5,844 30 2.05 7,083 34 1.92
Other interest-earning assets 178,635 656 1.46 82,011 170 0.84
Total interest-earning assets 1,546,332 16,401 4.21 1,086,651 11,324 4.15
Noninterest-earning assets 101,512 44,094
Allowance for loan and lease losses (14,301 ) (11,709 )
Total assets $ 1,633,543 $ 1,119,036

Interest-bearing liabilities:
Money market and savings accounts $ 576,619 $ 1,337 0.92 % $ 530,170 $ 978 0.73 %
Certificates of deposit 76,506 251 1.30 99,260 296 1.19
Total interest-bearing deposits 653,125 1,588 0.96 629,430 1,274 0.81
Borrowed funds 112,651 849 2.95 49,128 232 1.88
Total interest-bearing liabilities 765,776 2,437 1.26 678,558 1,506 0.88
Noninterest-bearing deposits 682,303 324,103
Other non-interest bearing liabilities 68,409 21,992
Total liabilities 1,516,488 1,024,653
Equity 117,055 94,383
Total liabilities and equity $ 1,633,543 $ 1,119,036

Net interest income $ 13,964 $ 9,818
Net interest rate spread⁽²⁾ 2.95 % 3.27 %
Net interest-earning assets⁽³⁾ $ 780,556 $ 408,093
Net interest margin⁽⁴⁾ 3.62 % 3.56 %
Average interest-earning assets to average interest-bearing liabilities 201.93 % 160.14 %

⁽¹⁾

~~Yields and rates are annualized for the three months ended September 30, 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 average interest-earning assets less total average interest-bearing liabilities.~~

⁽⁴⁾

~~Represents net interest income divided by total average interest-earning assets.~~

liabilities. The ~~following~~ table presents ~~an analysis~~the average yield on interest-earning assets and the average cost of ~~net interest~~interest-bearing liabilities. Yields and costs were derived by dividing income or expense by ~~each major category~~the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the ~~nine months ended September 30, 2017~~periods shown. Average balances were derived from daily balances over the periods indicated. Interest income included fees that management considers to be adjustments to yields. Yields on tax-exempt obligations were not computed on a tax-equivalent basis. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred loan origination fees and ~~2016:~~costs, and purchase discounts and premiums that are amortized or accreted to interest income.

For the nine months ended September 30,
2017 2016
Average Outstanding Balance Interest Yield/ Rate⁽¹⁾ Average Outstanding Balance Interest Yield/ Rate⁽¹⁾

Interest-earning assets:
Loans $ 1,192,463 $ 40,771 4.57 % $ 904,874 $ 30,874 4.56 %
Available-for-sale securities 35,782 548 2.04 42,900 643 2.00
Held-to-maturity securities 6,099 94 2.06 5,945 88 1.97
Other interest-earning assets 147,385 1,476 1.34 89,636 619 0.92
Total interest-earning assets 1,381,729 42,889 4.15 1,043,355 32,224 4.13
Noninterest-earning assets 59,408 41,811
Allowance for loan and lease losses (12,979 ) (11,000 )
Total assets $ 1,428,158 $ 1,074,166

Interest-bearing liabilities:
Money market and savings accounts $ 562,539 $ 3,562 0.84 % $ 496,176 $ 2,697 0.73 %
Certificates of deposit 79,494 754 1.27 105,226 923 1.17
Total interest-bearing deposits 642,033 4,316 0.90 601,402 3,620 0.80
Borrowed funds 111,480 2,061 2.44 71,067 965 1.81
Total interest-bearing liabilities 753,513 6,377 1.13 672,469 4,585 0.91
Noninterest-bearing deposits 542,200 298,911
Other non-interest bearing liabilities 18,548 18,676
Total liabilities 1,314,261 990,056
Equity 113,897 84,110
Total liabilities and equity $ 1,428,158 $ 1,074,166

Net interest income $ 36,512 $ 27,639
Net interest rate spread⁽²⁾ 3.02 % 3.22 %
Net interest-earning assets⁽³⁾ $ 628,216 $ 370,886
Net interest margin⁽⁴⁾ 3.57 % 3.52 %
Average interest-earning assets to average interest-bearing liabilities 183.37 % 155.15 %

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	Three Months Ended
	March 31, 2024						March 31, 2023
	Average				Yield /		Average				Yield /
(dollars in thousands)	Balance		Interest		Rate ⁽¹⁾		Balance		Interest		Rate ⁽¹⁾
Assets:
Interest-earning assets:
Loans ⁽²⁾	$	5,696,841	$	102,381	7.23	%	$	4,838,336	$	75,960	6.34	%
Available-for-sale securities		565,292		2,957	2.10			530,503		2,106	1.59
Held-to-maturity securities		465,270		2,172	1.88			506,655		2,377	1.88
Equity investments		2,416		15	2.47			2,362		12	2.08
Overnight deposits		297,992		4,154	5.61			207,917		2,484	4.78
Other interest-earning assets		33,428		656	7.89			20,163		324	6.42
Total interest-earning assets		7,061,239		112,335	6.40			6,105,936		83,263	5.51
Non-interest-earning assets		183,046						152,302
Allowance for credit losses		(58,517)						(45,614)
Total assets	$	7,185,768					$	6,212,624
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market and savings accounts	$	4,099,466		46,611	4.57		$	2,840,271		22,030	3.15
Certificates of deposit		34,264		275	3.22			52,912		343	2.63
Total interest-bearing deposits		4,133,730		46,886	4.56			2,893,183		22,373	3.14
Borrowed funds		437,389		5,740	5.28			188,230		2,356	5.01
Total interest-bearing liabilities		4,571,119		52,626	4.63			3,081,413		24,729	3.26
Non-interest-bearing liabilities:
Non-interest-bearing deposits		1,835,368						2,390,840
Other non-interest-bearing liabilities		112,272						147,850
Total liabilities		6,518,759						5,620,103
Stockholders' equity		667,009						592,521
Total liabilities and equity	$	7,185,768					$	6,212,624
Net interest income			$	59,709					$	58,534
Net interest rate spread ⁽³⁾					1.77	%					2.25	%
Net interest margin ⁽⁴⁾					3.40	%					3.86	%
Total cost of deposits ⁽⁵⁾					3.16	%					1.72	%
Total cost of funds ⁽⁶⁾					3.30	%					1.83	%

(1)

⁽¹⁾

~~Yields and rates are annualized for the nine months ended September 30, 2017 and 2016.~~

Annualized.

(2)	⁽²⁾ Amount includes deferred loan fees and non-performing loans.

(3)	~~Represents~~ Determined by subtracting the ~~difference between~~annualized average cost of total interest-bearing liabilities from the annualized average yield on ~~average~~total interest-earning ~~assets and the cost of average interest-bearing liabilities.~~assets.

(4)

⁽³⁾

~~Represents total average interest-earning assets less total average interest-bearing liabilities.~~

⁽⁴⁾

~~Represents~~

Determined by dividing annualized net interest income ~~divided~~ by total average interest-earning assets.

(5)	Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits.

(6)	Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits.

~~Rate/Volume Analysis~~

The following table presents the effects of changing rates and volumes on our net interest income for the periods indicated. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately, based on the changes due to rate and the changes due to volume.

Three months ended September 30, Nine months ended September 30,
2017 vs. 2016 2017 vs. 2016
Increase (Decrease) Total Increase (Decrease) Total
Due to Increase Due to Increase
Volume Rate (Decrease) Volume Rate (Decrease)
(In thousands)

Interest-earning assets:
Loans $ 4,342 $ 273 $ 4,615 $ 9,830 $ 67 $ 9,897
Available-for-sale securities (24 ) 4 (20 ) (108 ) 13 (95 )
Held-to-maturity securities (6 ) 2 (4 ) 2 4 6
Other interest-earning assets 301 185 486 502 355 857
Total interest-earning assets 4,613 464 5,077 10,226 439 10,665

Interest-bearing liabilities:
Money market and savings accounts 90 269 359 406 460 866
Certificates of deposit (75 ) 30 (45 ) (261 ) 91 (170 )
Total deposits 15 299 314 145 551 696

Borrowed funds 428 189 617 680 416 1,096

Total interest-bearing liabilities 443 488 931 825 967 1,792

Change in net interest income $ 4,170 $ (24 ) $ 4,146 $ 9,401 $ (528 ) $ 8,873

Net interest ~~income~~margin for the ~~third~~first quarter of ~~2017~~2024 was ~~$14.0 million, an increase of $4.1 million, or 42.2%,~~3.40% compared to ~~$9.8 million~~3.86% for the ~~third~~first quarter of ~~2016. Net interest income for the nine months ended September 30, 2017~~2023. The 46 basis point decrease was ~~$36.5 million, an increase of $8.9 million, or 32.1%, compared to $27.6 million in the first nine months of 2016. The increases in net interest income were~~due primarily ~~due to increases in average interest-earning assets, which, when compared~~ to the same periods in 2016, increased $459.7 million for the third quarter of 2017 and $338.4 million for the nine months ended September 30, 2017. The increases in average interest earning assets were primarily dueshift from non-interest bearing deposits to ~~increases in loans. These increases were partially offset by increases in average~~ interest bearing ~~liabilities of $87.2 million and $81.0 million for the three and nine month periods ended September 30, 2017, respectively compared~~deposits related to the ~~same periods in 2016. Net interest margin increased six basis points to 3.62% in the three month period ended September 30, 2017,~~exit from the ~~third quarter of 2016. For~~crypto-related deposit vertical, the ~~nine months ended September 30, 2017, net interest margin was 3.57%, an increase of five basis points when compared with the same period prior year.~~

Total available for sale securities averaged $34.9 million in the quarter ended September 30, 2017, compared to $39.6 million for the third quarter of 2016. The overall yield on our investment securities portfolio was 2.0% in the current quarter, an increase of 38 basis points when compared to the third quarter of last year, primarily due to improved reinvestment rates. At September 30, 2017 and December 31, 2016, our securities portfolio primarily consisted of highly-rated mortgage-backed securities and collateralized mortgage obligations issued by government agencies.

For the quarter ended September 30, 2017, average total loans were $1.3 billion, or 85.8% of average interest earning assets, compared to $958.0 million, or 88.2% of average interest earning assets, at September 30, 2016. Average commercial and industrial loans increased $29.7 million, or 8.7%, to $369.1 million at September 30, 2017 from $339.4 million at September 30, 2016. Average multifamily loans increased $119.3 million, or 193.0%, to 181.0 million at September 30, 2017 from $61.8 million at September 30, 2016. Average consumer loans increased $32.7 million, or 245%, to $46.1 million at September 30, 2017 from $13.3 million at September 30, 2016. Average construction loans decreased by $100,000, or 0.4%, to $37.5 million at September 30, 2017 from $37.7 million at September 30, 2016. Average one-to-four family residential loans decreased $4.4 million, or 14.6%, to $25.8 million at September 30, 2017 from $30.3 million at September 30, 2016. Average commercial real estate loans increased by $186.7 million, or 45.4%, to $598.2 million at September 30, 2017 from $411.4 million at September 30, 2016.

For the nine months ended September 30, 2017, average total loans were $1.2 billion, or 83.5% of average total assets, compared to $904.9 million, or 84.2% of average total assets, at September 30, 2016. Average commercial and industrial loans increased $28.8 million, or 9.0%, to $346.6 million at September 30, 2017 from $317.8 million at September 30, 2016. Average multifamily loans increased $94.3 million, or 158.7%, to $153.8 million at September 30, 2017 from $59.4 million at September 30, 2016. Average consumer loans increased $20.9 million, or 228.1%, to $30.1 million at September 30, 2017 from $9.2 million at September 30, 2016. Average construction loans decreased by $2.6 million, or 7.1%, to $33.8 million at September 30, 2017 from $36.4 million at September 30, 2016. Average one-to-four family residential loans decreased $6.5 million, or 19.8%, to $26.1 million at September 30, 2017 from $32.6 million at September 30, 2016. Average commercial real estate loans increased by $145.6 million, or 37.8%, to $530.6 million at September 30, 2017 from $385.0 million at September 30, 2016.

Average non-interest-bearing demand deposits for the third quarter of 2017 were $682.3 million, an increase of $358.2 million, or 110.5%, when compared to the third quarter of 2016. For the nine months ended September 30, 2017, average non-interest bearing demand deposits increased $243.3 million, or 81.4%. Non-interest-bearing demand deposits continue to comprise a significant component of our deposit mix, representing 56% of all deposits at September 30, 2017. Additionally, average NOW and interest-bearing demand and money market accounts totaled $576.6 million for the third quarter of 2017, an increase of $46.4 million, or 8.8%, when compared to the third quarter of 2016. Core deposits have provided us with a source of stable and relatively low cost funding, which has positively affected our net interest margin and income. As a result of the current competitive environment, our funding cost for money market and savings accounts increased to 0.92% for the quarter ended September 30 2017 compared to 0.73% for the third quarter of 2016 and increased to 0.84% for the nine months ended September 30, 2017 from 0.73% during the first nine months of 2016.

For the third quarter of 2017, average total borrowings increased $63.5 million, or 129.3%, to $112.7 million compared to $49.1 million for the third quarter of 2016. The increase in average total borrowings, when compared to the third quarter of 2016, was primarily due to growth in earning-assets. The average cost of total borrowings was 3.0% and 1.9% for the third quarters of 2017 and 2016, respectively. The increase in the average balance of borrowed funds and, moreover, the increase in the cost of ~~borrowings~~funds, partially offset by loan growth and the increase in loan yields.

Total cost of funds for the first quarter of 2024 was 330 basis points compared to 183 basis points for the first quarter of 2023, which reflects the ~~effect~~continued effects of high short-term interest rates, intense competition for deposits, and the ~~issuance~~shift from non-interest bearing deposits to interest bearing funding related to the exit from the crypto-related deposit vertical.

Interest Income

Interest income increased $29.1 million to $112.3 million for the first quarter of 2024 as compared to $83.3 million for the first quarter of 2023, primarily due to the increase in ~~March 2017~~the average balance of ~~$25.0~~loans and increase in yields for loans. The average balance of loans increased $858.5 million for the first quarter of 2024 as compared to the first quarter of 2023. The yields on loans increased 89 basis points for the first quarter of 2024 as compared to the first quarter of 2023 due to the increase in ~~subordinated notes~~prevailing market interest rates and a disciplined approach to loan pricing.

Table of Contents

Interest Expense

Interest expense increased $27.9 million to $52.6 million for the first quarter of 2024 as compared to $24.7 million for the first quarter of 2023 due primarily to the increase in the average balance of interest-bearing deposits and the increase in the cost of funds. The average balance of interest-bearing deposits increased $1.2 billion for the first quarter of 2024 as compared to the first quarter of 2023, which reflects deposit growth and the shift from non-interest bearing andeposits to interest ~~rate~~bearing deposits primarily related to the exit from the crypto-related deposit vertical. Total cost of ~~6.3%.~~

funds for the first quarter of 2024 increased 147 basis points compared to the first quarter of 2023, which reflects the continued effects of high short-term interest rates, intense competition for deposits, and the shift from non-interest bearing deposits to interest bearing funding primarily related to the exit from the crypto-related deposit vertical.

Provision for Credit Losses – Loans and Loan ~~and Lease Losses~~Commitments

~~Our~~The provision for ~~loan and lease~~credit losses for the first quarter of 2024 was $528,000 compared to $646,000 for the first quarter of 2023. The provision for credit losses was $1.2 million for the quarter ended September 30, 2017, compared to $200,000 for the third quarter last year, an increase of $1.0 million or over 530.0%. For the nine months ended September 30, 2017, our provision forprimarily driven by loan and lease losses was $3.6 million, compared to $2.0 million for the same period last year, an increase of $1.6 million, or 78.0%. The allowance for loan and lease losses as a percentage of loans was 1.1%, 1.1% and 1.2% as of September 30, 2017, December 31, 2016 and September 30, 2016, respectively. The decreasegrowth in the allowance percentage from September 30, 2016 to December 31, 2016 to September 30, 2017 was primarily due to changes in the composition of the loan portfolio, including the charge off of $5.1 million of our taxi medallion portfolio in December of 2016, which decreased our total exposure to taxi medallion loans to $3.7 million at September 30, 2017.

For additional information about the provision for loan and lease losses, see the discussion of asset quality and the Allowance for Loan and Lease Losses later in this report, as well as in Note 3 in this report.

both periods.

Non-Interest Income

~~For~~Non-interest income increased $30,000 to $7.0 million for the first quarter ~~ended September 30, 2017, non-interest income was $2.2 million, an increase~~ of ~~$913,000 or 69.1%, when~~2024, as compared to the ~~third~~first quarter of ~~last year. The increase was due to a $613,000~~2023 driven primarily by an increase in service charges on deposit accounts ~~a $322,000 increase in~~and other service ~~fees~~charges and ~~a $70,000 increase in debit card income. These increases were~~fees, partially offset by ~~a $92,000 decline in loan prepayment penalties.~~lower GPG revenue. At the beginning of 2024, the Company announced it will exit all GPG Banking-as-a-Service relationships, which is expected to be completed during 2024.

Non-Interest Expense

~~For~~Non-interest expense increased $10.9 million to $41.9 million for the ~~nine months ended September 30, 2017, non-interest income was $5.1 million, an increase~~first quarter of ~~$916,000, or 22.2%, when~~2024, compared to the ~~same period last year. The increase was~~first quarter of 2023 due primarily to $3.6 million in compensation and benefits due to ~~a $1.0 million~~severance expenses related to the GPG wind down, as well as the increase in ~~service charges on deposit accounts, a $342,000 increase~~number of employees, the $2.5 million reversal of the regulatory settlement reserve recorded in ~~debit card income and~~ the ~~effect~~first quarter of ~~a $40,000 net gain on sales of securities in 2016, partially offset by a $348,000 decrease in loan prepayment penalties.~~

~~Non-Interest Expense~~

For the quarter ended September 30, 2017 non-interest expense was $8.6 million, an increase of $200,000, or 1.9%, when compared to the same period last year. The increased non-interest expense reflects increases in professional fees of $600,000, core processing fees of $200,000 and deposit insurance assessments of $200,000, partially offset by an $800,000 decrease in employee expense (including salaries and benefits).

~~For the nine months ended September 30, 2017, non-interest expense was $23.0 million,~~2023, an increase of $1.7 million ~~or 7.7%, when compared~~in technology costs mainly related to the ~~same period last year. The increase reflects increases in professional fees of $700,000, bank premises~~digital transformation project, and ~~equipment expense of $300,000, salaries and employee benefits of $300,000, and core processing fees of $300,000.~~

~~FINANCIAL CONDITION~~

~~Our total assets were $1.7 billion at September 30, 2017,~~ an increase of ~~$503.4~~$1.8 million ~~from $1.2 billion at December 31, 2016. The increase was primarily due~~in professional fees. At the beginning of 2024, the Company began implementing an innovative digital transformation project to ~~an increase in net loans of $323.1 million or 31.0%,~~improve its capabilities and ~~an increase in cash~~efficiencies for both client facing and ~~cash equivalents of $184.2 million or 222.0%, which was partially offset by a decrease in securities available-for-sale and held-for-maturity of $4.2 million or 9.6%.~~internal processes.

Cash and cash equivalents increased $184.2 million, or 222%, to $267.1 million at September 30, 2017 from $82.9 million at December 31, 2016. The increase in cash and cash equivalents resulted from an increase in demand deposits and the subordinated debt issuance during the nine months ended September 30, 2017.

~~Securities~~

~~Marketable securities are classified as Available for Sale~~,~~while investments in obligations qualifying under the Community Reinvestment Act, that are intended to be held till the end of their term are generally classified as Held to Maturity~~.The following table sets forth the amortized cost and fair value of our securities portfolio (excluding Federal Home Loan Bank of New York) at the dates indicated. At September 30, 2017 and December 31, 2016 all of the mortgage-backed securities and collateralized mortgage obligations we held were issued by U.S. government-sponsored entities and agencies, primarily Fannie Mae and Freddie Mac, institutions which the government has affirmed its commitment to support.

September 30, 2017 December 31, 2016
Amortized Fair Percentage of Amortized Fair Percentage of
Cost Value Fair Value Cost Value Fair Value
(Dollars in thousands)
Available for sale
Residential mortgage-backed securities $ 26,145 $ 26,170 77.1 % $ 29,152 $ 29,027 77.5 %
Residential collateralized mortgage obligations 3,022 2,950 8.7 5,233 5,103 13.9
Commercial mortgage backed securities guaranteed by U.S. government sponsored agencies 1,591 1,566 4.7 - - -
Municipal bonds 1,105 1,126 3.3 1,122 1,136 3.0
CRA mutual fund 2,148 2,110 6.2 2,115 2,063 5.6
Total securities available for sale $ 34,011 $ 33,922 100.0 % $ 37,622 $ 37,329 100.0 %

~~Loans~~

At September 30, 2017, gross loans were $1.4 billion, or 80.2% of total assets, compared to $1.0 billion, or 85.4% of total assets, at December 31, 2016. Commercial and industrial loans increased $30.9 million, or 9.8%, to $346.7 million at September 30, 2017 from $315.9 million at December 31, 2016. Multifamily loans increased $70.4 million, or 60.0%, to $187.8 million at September 30, 2017 from $117.4 million at December 31, 2016. Consumer loans increased $28.3 million, or 150.6%, to $47.2 million at September 30, 2017 from $18.8 million at December 31, 2016. One-to-four family residential loans decreased $700,000 or 2.7%, to $25.8 million at September 30, 2017 from $26.5 million at December 31, 2016. Construction loans also increased by $8.2 million, or 28.1%, to $37.7 million at September 30, 2017 from $29.4 million at December 31, 2016. Commercial real estate loans increased by $188.8 million, or 34.5%, to $736.5 million at September 30, 2017 from $547.7 million at December 31, 2016.

Income Tax Expense

The ~~following table sets forth the composition of our loan portfolio, by type of loan at the dates indicated, and the dollar and percentage change (dollars in thousands):~~

September 30, December 31, Dollar Percentage
2017 2016 Change Change
Real Estate:
Commercial $ 736,487 $ 547,711 $ 188,776 34.5 %
Construction 37,723 29,447 8,276 28.1
Multifamily 187,753 117,373 70,380 60.0
One-to-four family 25,777 26,480 (703 ) (2.7 )
Commercial and industrial 346,738 315,870 30,868 9.8
Consumer 47,171 18,825 28,346 150.6

Total loans receivable $ 1,381,649 $ 1,055,706 $ 325,943 30.9 %

~~Non-Performing Assets~~

Non-performing assets consist of non-accrual loans, 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. Past due status on all loans is based on the contractual terms of the loan. It is generally the Company’s policy that a loan 90 days past due be placed in non-accrual status unless factors exist that would eliminate the need to place a loan in this status. A loan may also be designated as non-accrual at any time if payment of principal or interest in full is not expected due to deterioration in the financial condition of the borrower. At the time loans are placed in non-accrual status, the accrual of interest is discontinued and previously accrued interest is reversed. All payments received on non-accrual loans are applied to principal. Loans are considered for return to accrual status when they become current as to principal and interest and remain current for a period of six consecutive months or when, in the opinion of management, the Company expects to receive all of its original principal and interest. In the case of non-accrual loans where a portion of the loan has been charged off, the remaining balance is kept in non-accrual status until the entire principal balance has been recovered.

~~The table below sets forth the amounts and categories of our non-performing assets at the dates indicated.~~

September 30, December 31,
2017 2016
Non-accrual loans:
Real Estate:
Commercial $ 841 $ -
Construction - -
Multifamily - -
One-to-four family 2,466 -
Commercial and industrial 3,660 3,660
Consumer 125 -
Total non-performing assets $ 7,092 $ 3,660

Troubled debt restructurings:
Real Estate:
Commercial $ 5,458 $ 5,504
Construction - -
Multifamily - -
One-to-four family 1,128 1,130
Commercial and industrial 1,115 1,255
Consumer - -
Total $ 7,701 $ 7,889

Ratios:
Total non-performing loans to total loans 0.51 % 0.35 %
Total non-performing loans to total assets 0.41 % 0.30 %
Total non-performing assets to total assets 0.41 % 0.30 %

~~Non-Performing Loans~~

Non-performing loans totaled $7.1 million at September 30, 2017, or 0.51% of total loans, compared with $3.7 million at December 31, 2016, or 0.35% of total loans. The increase in non-performing loans at September 30, 2017 was primarily in residential real estate, in particular one large, well collateralized 1-4 family loan. Non-performing assets was 0.41% of total assets, at September 30, 2017, compared with 0.30% of total assets, at December 31, 2016. As noted above, the increase in non-performing assets was primarily due to the residential real estate segment of the loan portfolio.

~~Accruing Loans Past due 90 Days or More~~

~~There was no recorded investment in accruing loans past due 90 days or more at September 30, 2017, or December 31, 2016.~~

~~Troubled Debt Restructurings~~

The Company works closely with borrowers that have financial difficulties to identify viable solutions that minimize the potential for loss. In that regard, the Company modified the terms of select loans to maximize their collectability. The modified loans are considered TDRs under current accounting guidance. Modifications generally involve short-term deferrals of principal and/or interest payments, reductions of scheduled payment amounts, interest rates or principal of the loan, and forgiveness of accrued interest. The Company had no non-accrual TDRs at September 30, 2017 or December 31, 2016. As of September 30, 2017, the Company had $7.7 million of accruing TDRs compared with $7.9 million as of December 31, 2016.

~~Impaired Loans~~

A loan is classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect both the principal and interest due under the contractual terms of the loan agreement. Impaired loans at September 30, 2017 totaled $14.8 million, including TDRs of $7.7 million, compared to $11.5 million at December 31, 2016, including TDRs of $7.9 million. The increase in impaired loans was due primarily to an increase in impaired one to four family loans. Included in the recorded investment of impaired loans at September 30, 2017, are loans totaling $4.3 million for which impairment allowances of $0.4 million have been specifically allocated to the allowance for loan and lease losses. As of December 31, 2016, the impaired loan total included $4.2 million of loans for which specific impairment allowances of $0.4 million were allocated to the allowance for loan and lease losses.

The majority of the Company's impaired loans are secured and measured for impairment based on collateral evaluations. It is the Company's policy to obtain updated appraisals, by independent third parties, on loans secured by real estate at the time a loan is determined to be impaired. An impairment measurement is performed based upon the most recent appraisal on file to determine the amount of any specific allocation or charge-off. In determining the amount of any specific allocation or charge-off, the Company will make adjustments to reflect the estimated costs to sell the property. Upon receipt and review of the updated appraisal, an additional measurement is performed to determine if any adjustments are necessary to reflect the proper provisioning or charge-off. Impaired loans are reviewed on a quarterly basis to determine if any changes in credit quality or market conditions would require any additional allocation or recognition of additional charge-offs. Real estate values in the Company's market area have been holding steady. Non-real estate collateral may be valued using (i) an appraisal, (ii) net book value of the collateral per the borrower’s financial statements, or (iii) accounts receivable aging reports, that may be adjusted based on management’s knowledge of the client and client’s business. If market conditions warrant, future appraisals are obtained for both real estate and non-real estate collateral.

~~Allowance for Loan and Lease Losses~~

The allowance is an amount that management believes will be adequate to absorb probable incurred losses on existing loans. The allowance is established based on management’s evaluation of the probable incurred losses inherent in our portfolio in accordance with GAAP, and is comprised of both specific valuation allowances and general valuation allowances.

A loan is classified as impaired when, based on current information and events, it is probable that the Company will be unable to collect both the principal and interest due under the contractual terms of the loan agreement. Specific valuation allowances are established based on management’s analysis of individually impaired loans. Factors considered by management in determining impairment include payment status, evaluations of the underlying collateral, expected cash flows, delinquent or unpaid property taxes, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. If a loan is determined to be impaired and is placed on non-accrual status, all future payments received are applied to principal and a portion of the allowance is allocated so that the loan is reported, net, at the present value of estimated future cash flows using the loan’s existingeffective tax rate ~~or at the fair value of collateral if repayment is expected solely from the collateral.~~

The general component covers non-impaired loans and is based on historical loss experience adjusted for current qualitative factors. Loans not impaired but classified as substandard and special mention use a historical loss factor on a rolling five-year history of net losses. For all other unclassified loans, the historical loss experience is determined by portfolio class and is based on the actual loss history experienced by the Company over the most recent two years. This actual loss experience is supplemented with other qualitative factors based on the risks present for each portfolio class. These qualitative factors include consideration of the following: (1) lending policies and procedures, including underwriting standards and collection, charge-off and recovery policies, (2) national and local economic and business conditions and developments, including the condition of various market segments, (3) loan profiles and volume of the portfolio, (4) the experience, ability, and depth of lending management and staff, (5) the volume and severity of past due, classified and watch-list loans, non-accrual loans, troubled debt restructurings, and other modifications (6) the quality of the Bank’s loan review system and the degree of oversight by the Bank’s Board of Directors, (7) collateral related issues: secured vs. unsecured, type, declining valuation environment and trend of other related factors, (8) the existence and effect of any concentrations of credit, and changes in the level of such concentrations, (9) the effect of external factors, such as competition and legal and regulatory requirements, on the level of estimated credit losses in the Bank’s current portfolio and (10) the impact of the global economy.

The allowance for loan and lease losses is increased through a provision for loan and lease losses charged to operations. Loans are charged against the allowance for loan and lease losses when management believes that the collectability of all or a portion of the principal is unlikely. Management's evaluation of the adequacy of the allowance for loan and lease losses is performed on a periodic basis and takes into consideration such factors as the credit risk grade assigned to the loan, historical loan loss experience and review of specific impaired loans. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company's allowance for loan and lease losses. Such agencies may require the Company to recognize additions to the allowance based on their judgments about information available to them at the time of their examination.

The allowance for loan and lease losses was $15.1 million at September 30, 2017, up from $11.8 million at December 31, 2016. The ratio of allowance for loan and lease losses to total loans was 1.09% at September 30, 2017, down from 1.12% at December 31, 2016, respectively. Net charge-offs for the three months ended September 30, 2017 and September 30, 2016 were $34 thousand and $397 thousand respectively. Net charge-offs for the nine months ended September 30, 2017 and 2016 were $300 thousand and $445 thousand, respectively.

~~Summary of Loan Loss Experience~~

~~The following tables present a summary by loan portfolio segment of our ALLL, loan loss experience, and provision for loan and lease losses for the periods indicated:~~

For the three months ended September 30,
2017 2016
Balance at beginning of period $ 13,909 $ 11,704
Charge-offs:
Real Estate:
Commercial - -
Construction - -
Multifamily - -
One-to-four family - (274 )
Commercial and industrial - (123 )
Consumer (34 ) -
Total charge-offs (34 ) (397 )
Recoveries:
Real Estate:
Commercial - -
Construction - -
Multifamily - -
One-to-four family - -
Commercial and industrial - -
Consumer - -
Total recoveries - -
Net charge-offs (34 ) (397 )
Provision for loan and lease losses 1,200 190
Balance at end of period $ 15,075 $ 11,497
Ratio of net charge-offs to average loans outstanding 0.00 % 0.17 %
Ratio of allowance for loan and lease losses to total loans outstanding 1.09 % 1.19 %

For the nine months ended September 30,
2017 2016
Balance at beginning of period $ 11,815 $ 9,942
Charge-offs:
Real Estate:
Commercial - -
Construction - -
Multifamily - -
One-to-four family - (274 )
Commercial and industrial (220 ) (174 )
Consumer (80 ) -
Total charge-offs (300 ) (448 )
Recoveries:
Real Estate:
Commercial - -
Construction - -
Multifamily - -
One-to-four family - 3
Commercial and industrial - -
Consumer - -
Total recoveries - 3
Net charge-offs (300 ) (445 )
Provision for loan and lease losses 3,560 2,000
Balance at end of period $ 15,075 $ 11,497
Ratio of net charge-offs to average loans outstanding 0.03 % 0.07 %
Ratio of allowance for loan and lease losses to total loans outstanding 1.09 % 1.19 %

~~Deposits~~

~~The table below summarizes the Company’s deposit composition by segment for the periods indicated, and the dollar and percent change from December 31, 2016 to September 30, 2017 (in thousands):~~

September 30, December 31, Dollar Percentage
2017 2016 Change Change
Non-interest-bearing demand deposits $ 826,345 $ 403,402 $ 422,943 104.8 %
Money market and other savings accounts 579,113 499,865 79,248 15.9 %
Time deposits 83,185 90,513 (7,328 ) (8.1 )%
Total $ 1,488,643 $ 993,780 $ 494,863 49.8 %

Total deposits increased $494.9 million, or 49.8%, to $1.5 billion at September 30, 2017 from $993.8 million at December 31, 2016. The increase was attributable primarily to increases of $422.9 million in non-interest bearing demand deposits, and $79.2 million in money market accounts and other savings. These increases were partially offset by a decrease of $7.3 million in time deposits. We continue to focus on the acquisition and expansion of core deposit relationships, which we define as all deposits except for certificates of deposit. Core deposits totaled $1.4 billion at September 30, 2017, or 94.4% of total deposits at that date, compared with 90.9% at December 31, 2016.

The Company’s deposit strategy is to fund the Bank with stable, low-cost deposits, primarily checking account deposits and other low interest-bearing deposit accounts. A checking account is the driver of a banking relationship and consumers consider the bank where they have their checking account as their primary bank. These customers will typically turn to their primary bank first when in need of other financial services. Strategies that have been developed and implemented to generate these deposits include: (i) acquire deposits by deepening existing relationships and entering new markets through de novo branching or branch acquisitions, (ii) training branch employees to identify and meet client financial needs with Bank products and services, (iii) link business loans to the customer's primary checking account at the Bank, (v) continue to develop debit card issuing business that generates non-interest bearing deposits, and (vi) constantly monitor the Company’s pricing strategies to ensure competitive products and services.

~~Borrowings~~

At September 30, 2017, we had the ability to borrow a total of $261.5 million from the Federal Home Loan Bank of New York, subject to pledging additional collateral. We also had an available line of credit with the Federal Reserve Bank of New York discount window of $93.8 million. At December 31, 2016, we had the ability to borrow a total of $204.4 million from the Federal Home Loan Bank of New York. At December 31, 2016, we also had an available line of credit with the Federal Reserve Bank of New York discount window of $67.9 million.

Trust Preferred Securities: On December 7, 2005, the Company established MetBank Capital Trust I, a Delaware statutory trust (“Trust I”). The Company owns all of the common capital securities of Trust I in exchange for contributed capital of $310,000. Trust I issued $10 million of preferred capital securities to investors in a private transaction and invested the proceeds, combined with the proceeds from the sale of Trust I’s common capital securities, in the Company through the purchase of $10.310 million aggregate principal amount of Floating Rate Junior Subordinated Debentures (the “Debentures”) issued by the Company. The Debentures, the sole assets of Trust I, mature on December 9, 2035 and bear interest at a fixed rate of 6.82% for the first ~~five years, then at a floating rate~~quarter of ~~3-month LIBOR plus 1.85%. The Debentures are callable after five years.~~

On July 14, 2006, the Company established MetBank Capital Trust II, a Delaware statutory trust (“Trust II”). The Company owns all of the common capital securities of Trust II in exchange for contributed capital of $310,000. Trust II issued $10 million of preferred capital securities2024 was 33.3% as compared to investors in a private transaction and invested the proceeds, combined with the proceeds from the sale of Trust II’s common capital securities, in the Company through the purchase of $10.310 million aggregate principal amount of Floating Rate Junior Subordinated Debentures (the “Debentures”) issued by the Company. The Debentures, the sole assets of Trust II, mature on October 7, 2036, and bear interest at a fixed rate of 7.61%25.9% for the first ~~five years, then at~~quarter of 2023. The effective tax rate for the first quarter of 2024 reflects unfavorable discrete items related to employee stock compensation. The effective tax rate for the prior year period includes a ~~floating rate of three-month LIBOR plus 2.00%. The Debentures are callable after five years.~~

Subordinated Notes: On March 8, 2017, the Company closed the issuance of its $25 million subordinated notes at 100% issue price to accredited institutional investors. The notes mature on March 15, 2027 and bear an interest rate of 6.25% per annum. The interests are paid semi-annually on March 15^th ~~and September 15~~^th ~~of each year through March 15, 2022 and quarterly thereafter on March 15~~^th~~, June 15~~^th~~, September 15~~^th ~~and December 15~~^th ~~of each year.~~

~~Interest rate from March 15, 2022~~favorable discrete benefit related to the maturity date shall reset quarterly to an interest rate per annum equal to the then current three month LIBOR (not less than zero) plus 426 basis points, payable quarterly in arrears. The Company may redeem the subordinated notes beginning with the interest payment dateconversion of March 15, 2022 and on any scheduled interest payment date thereafter. The subordinated notes may be redeemed in whole or in part, at a redemption price equal to 100% of the principal amount of the subordinated notes plus any accrued and unpaid interest.stock awards.

~~Stockholders’ Equity~~

Total stockholders’ equity increased $9.5 million, or 8.6%, to $119.0 million at September 30, 2017, from $109.5 million at December 31, 2016. The increase for the nine months ended September 30, 2017 was primarily due to $9.0 million in net income.

~~Contractual Obligations and~~ Off-Balance Sheet Arrangements

~~Contractual Obligations.~~~~In the ordinary course of our operations, we enter into certain contractual obligations.~~ The following table presents our contractual obligations as of September 30, 2017 and December 31, 2016, respectively, excluding FHLB advances. As of September 30, 2017 total outstanding FHLB borrowings were $43.8 million, all of which had a maturity of less than one year. As of December 31, 2016 total outstanding FHLB borrowings were $78.4 million out of which $66.0 million had a maturity of less than one year and $12.4 million had a maturity of more than one year through three years.

Contractual Maturities
Less Than
One Year More Than One
Year Through
Three Years More Than Three
Years Through
Five Years Over Five
Years Total
(In thousands)
September 30, 2017
Operating lease obligations $ 2,102 $ 4,372 $ 3,270 $ 4,930 $ 14,674
Trust preferred securities - - - 20,620 20,620
Subordinated notes - - - 24,468 24,468
Time deposits 65,215 17,657 313 - 83,185
Total $ 67,317 $ 22,029 $ 3,583 $ 50,018 $ 142,947

December 31, 2016
Operating lease obligations $ 2,142 $ 4,297 $ 3,763 $ 6,059 $ 16,261
Trust preferred securities - - - 20,620 20,620
Time deposits 56,363 33,801 349 - 90,513
Total $ 58,505 $ 38,098 $ 4,112 $ 26,679 $ 127,394

~~Off-Balance Sheet Arrangements.~~~~We are~~Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of ~~our customers.~~its clients. These financial instruments include commitments to extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated ~~balance sheets. Our exposure~~statements of financial condition. Exposure to credit loss is represented by the contractual amount of the instruments. ~~We use~~The Company uses the same credit policies in making commitments as ~~we do~~it does for on-balance sheet instruments.

At March 31, 2024, the Company had $599.3 million in unused commitments and $40.1 million in standby and commercial letters of credit. At December 31, 2023, the Company had $595.1 million in unused commitments and $59.5 million in standby and commercial letters of credit.

Table of Contents

Liquidity and Capital Resources

Liquidity is the ability to economically meet current and future financial ~~obligations of a short-term nature. Our~~obligations. The Company’s primary sources of funds consist of deposit inflows, loan repayments and maturities, securities cash flows and ~~sales of securities.~~borrowings. While maturities and scheduled amortization of loans and securities and borrowings are predictable sources of funds, deposit flows, ~~and~~ mortgage prepayments and securities sales are greatly influenced by the general level of interest rates and changes thereto, economic conditions and competition.

WeThe Company regularly ~~review~~reviews the need to adjust ~~our~~ investments in liquid assets based upon ~~our~~its assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on ~~interest earning~~interest-earning deposits and securities, and (4) the objectives of ~~our~~its asset/liability ~~management~~ program. Excess ~~liquid assets are~~liquidity is generally invested ~~generally~~ in interest earning deposits and short- and intermediate-term securities.

~~Our~~The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on ~~our~~its operating, financing, lending and investing activities during any given period. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016,~~2023, cash and cash equivalents totaled ~~$267.1~~$534.4 million and ~~$82.9~~$269.5 million, respectively. Securities, ~~classified as available-for-sale,~~ which provide additional sources of liquidity, totaled ~~$33.9~~$960.2 million at ~~September 30, 2017~~March 31, 2024 and ~~$37.3~~$932.2 million at December 31, ~~2016.~~

2023. At ~~September 30, 2017, we had the ability~~March 31, 2024, there were $180.9 million of securities pledged to ~~borrow~~support wholesale funding, and to a ~~total~~lesser extent certain other types of ~~$261.5~~deposits, of which $68.1 million from the Federal Home Loan Bank of New York, subject to pledging additional collateral. We also had an available line of credit with the Federal Reserve Bank of New York discount window of $93.8 million.

were encumbered. At December 31, ~~2016, we had the ability~~2023 there were $845.7 million of securities pledged to ~~borrow~~support wholesale funding, and to a ~~total~~lesser extent certain other types of ~~$204.4~~deposits, of which $60.0 million ~~from the Federal Home Loan Bank of New York. We also had an available line of credit with the Federal Reserve Bank of New York discount window of $67.9 million.~~were encumbered.

~~We have~~The Company has no material commitments or demands that are likely to affect ~~our~~its liquidity other than as set forth below. In the event loan demand were to increase faster than expected, or any other unforeseen demand or commitment were to occur, wethe Company could access ~~our~~its borrowing capacity with the ~~Federal Home Loan Bank of New York~~FHLB or obtain additional funds through alternative funding sources, including the brokered ~~certificates of deposit.~~

deposit market.

At ~~September 30, 2017, we~~March 31, 2024, the Company had ~~$73.7~~$300.0 million inof FHLBNY advances and a $100.0 million FRB term loan ~~commitments outstanding. We also~~under the BTFP. The Company had ~~$22.7 million in standby letters~~$2.9 billion and $2.8 billion of ~~credit~~available secured wholesale funding capacity at ~~September 30, 2017. At~~March 31, 2024 and December 31, ~~2016, we had $70.8 million~~2023, respectively. The increase in secured funding capacity is due to the Company optimizing its liquidity resources through the pledge of additional eligible loan ~~commitments outstanding. We also had $9.8 million in standby letters of credit at December 31, 2016.~~collateral.

Certificates of deposit due within one year of September 30, 2017 totaled $65.2 million, or 4.4% of total deposits. Total certificates of deposit were $83.2 million or 5.6% of total deposits at September 30, 2017. Certificates of deposit due within one year of December 31, 2016 totaled $56.4 million, or 5.7% of total deposits. Total certificates of deposit were $90.5 million or 9.1% of total deposits at December 31, 2016.

~~Our~~The Company’s primary investing activities are the origination of loans, and to a lesser extent, the purchase of loans and securities. For the ~~purchase of securities. During the nine~~three months ended ~~September 30, 2017, we originated or purchased $475.5~~March 31, 2024, the Company’s loan production was $269.6 million ~~of loans and $1.5~~as compared to $265.4 million ~~of securities. During~~for the ~~nine~~three months ended ~~September 30, 2016, we originated or purchased $397.6 million of loans and purchased $4.2 million in securities. During the year ended December~~March 31, ~~2016, we originated or purchased $533.6 million of loans and $4.2 million of securities.~~

2023.

Financing activities ~~consist~~consisted primarily of activity in deposit ~~accounts. We experienced an increase in total deposits of $494.9 million~~accounts and ~~$158.5 million for the nine months ended September 30, 2017 and 2016, respectively. We generate~~borrowings. The Company generates deposits from businesses and individuals through client referrals and other relationships and through ~~our~~its retail presence. We believe we have a very stable core deposit base due primarily to our cash management solutions for middle-market businesses as we strongly encourage and are generally successful in having our business borrowers maintain their entire banking relationship with us. The ~~high level of transaction accounts is expected to be maintained. We have~~Company has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor base for funds. ~~Since inception, we have not had~~Total deposits were $6.2 billion at March 31, 2024, an increase of $500.3 million, or 8.7%, from December 31, 2023.

At March 31, 2024, interest-bearing deposits were comprised of $4.3 billion of money market accounts and $38.1 million of time deposits. Time deposits due within one year of March 31, 2024 totaled $35.5 million, or 0.6% of total deposits. At March 31, 2024, the ~~need~~aggregate estimated amount of FDIC uninsured deposits was $1.6 billon. At December 31, 2023, interest-bearing deposits were comprised of $3.9 billion of money market accounts and $35.4 million of time deposits. Time deposits due within one year of December 31, 2023 totaled $37.6 million, or 0.7% of total deposits. Non-interest-bearing deposits were 30.9% of total deposits at March 31, 2024, as compared to ~~borrow significantly from~~32.0% at December 31, 2023. At December 31, 2023, the ~~Federal Home Loan Bank~~aggregate estimated amount of ~~New York. We have been able to use the cash generated from the increases in~~FDIC uninsured deposits ~~to fund loan growth in recent periods.~~was $1.6 billion.

On November 8, 2017, the Company completed its initial public offering. The net proceeds from the stock offering will initially increase our liquidity and capital resources. Over time, the initial level of liquidity will be reduced as net proceeds from the stock offering are used for general corporate purposes, including the funding of loans. Our financial condition and results of operations will be enhanced by the net proceeds from the stock offering, resulting in increased net interest earning assets and net interest income. However, due to the increase in equity resulting from the net proceeds raised in the stock offering, as well as other factors associated with the stock offering, our return on equity will be adversely affected following the stock offering.

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Regulation

The Company and ~~Metropolitan Commercial~~the Bank are subject to various regulatory capital requirements administered by the ~~Federal~~federal banking agencies. At ~~September 30, 2017~~March 31, 2024 and December 31, ~~2016, Metropolitan Commercial~~2023, the Company and the Bank ~~exceeded~~met all applicable regulatory capital requirements ~~and was~~to be considered “well capitalized” under regulatory guidelines. The Company and ~~Metropolitan Commercial~~the Bank manage their capital to comply with ~~our~~their internal planning targets and regulatory capital standards administered by federal banking agencies. The Company and the Bank ~~reviews~~review capital levels on a monthly basis.

At September 30, 2017 At December 31, Minimum
Ratio to be
“Well
Capitalized”
under Prompt
Corrective
Action Rules Minimum
Ratio
Required for
Capital
Adequacy
Purposes
2016 2015
The Company:
Tier 1 leverage ratio 7.96 % 10.49 % 9.34 % N/A 4.0 %
Common equity tier 1 7.38 % 10.80 % 10.44 % N/A 4.5 %
Total risk-based capital ratio 12.01 % 12.45 % 11.98 % N/A 6.0 %
Tier 1 risk-based capital ratio 9.19 % 11.32 % 10.93 % N/A 8.0 %

Metropolitan Commercial Bank:
Tier 1 leverage ratio 9.32 % 10.41 % 9.26 % 5.0 % 4.0 %
Common equity tier 1 10.77 % 11.25 % 10.83 % 6.5 % 4.5 %
Tier 1 risk-based capital ratio 10.77 % 11.25 % 10.83 % 8.0 % 6.0 %
Total risk-based capital ratio 11.85 % 12.38 % 12.08 % 10.0 % 8.0 %

Basel III revised the capital adequacy requirements and the Prompt Corrective Action Framework effective January 1, 2015 for Metropolitan Commercial Bank. When fully phased in on January 1, 2019, the Basel Rules will require the Company and Metropolitan Commercial Bank to maintain Below is a ~~2.5% “capital conservation buffer” on top~~table of the ~~minimum risk-weighted asset ratios. The~~Company’s and Bank’s capital ~~conservation buffer is designed to absorb losses during~~ratios for the periods indicated:


							Minimum Ratio
					Minimum		Required		Minimum
	At		At		Ratio to be		for Capital		Capital
	March 31,		December 31,		“Well		Adequacy		Conservation
	2024		2023		Capitalized”		Purposes		Buffer
The Company
Tier 1 leverage ratio	10.3	%	10.6	%	N/A		4.0	%	—	%
Common equity tier 1	11.6	%	11.5	%	N/A		4.5	%	2.5	%
Tier 1 risk-based capital ratio	11.9	%	11.8	%	N/A		6.0	%	2.5	%
Total risk-based capital ratio	12.9	%	12.8	%	N/A		8.0	%	2.5	%

The Bank
Tier 1 leverage ratio	10.1	%	10.3	%	5.00	%	4.0	%	—	%
Common equity tier 1	11.7	%	11.5	%	6.50	%	4.5	%	2.5	%
Tier 1 risk-based capital ratio	11.7	%	11.5	%	8.00	%	6.0	%	2.5	%
Total risk-based capital ratio	12.6	%	12.5	%	10.00	%	8.0	%	2.5	%

At March 31, 2024 and December 31, 2023, total non-owner-occupied CRE loans were 363.3% and 368.1% of ~~economic stress. Banking institutions with a (i) CET1 to risk-weighted assets, (ii) Tier 1~~risk-based capital, to risk-weighted assets or (iii) total capital to risk-weighted assets above the respective minimum but below the capital conservation buffer will face constraints on dividends, equity repurchases and discretionary bonus payments to executive officers based on the amountrespectively.

Table of the shortfall. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will increase by 0.625% on each subsequent January 1, until it reaches 2.5% on January 1, 2019.Contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

General

~~General~~. The principal objective of ~~our~~the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of ~~interest rate risk~~IRR while maximizing net income and preserving adequate levels of liquidity and capital. The ~~board~~Board of ~~directors of our bank has~~Directors provides oversight of ~~our~~the Company’s asset and liability management function, which is managed by ~~our Asset/Liability Management Committee. Our Asset/Liability Management Committee~~the Company’s ALCO. The ALCO has further assigned responsibility for the day-to-day management of IRR to the CFO, or his designee. The ALCO meets regularly to review, among other things, the sensitivity of ~~our~~ assets and liabilities to market interest rate changes, local and national market conditions and market interest rates. That group also reviews ~~our~~ liquidity, capital, deposit mix, loan mix and investment positions. Based upon the nature of its operations, the Company is not subject to FX or commodity price risk.

Interest Rate Risk.

As a financial institution, ~~our~~the Company’s primary ~~component of~~ market risk exposure is ~~interest rate volatility.~~IRR. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most ~~of our~~ assets and liabilities, and the fair value of all ~~interest earning~~interest-earning assets and ~~interest bearing~~interest-bearing liabilities, other than those which have a short term to maturity. ~~Interest rate risk~~IRR is the potential offor economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values. The objective is to measure the effect on net interest income and to adjust, as deemed appropriate, the balance sheet to ~~minimize~~manage the inherent risk while at the same time maximizing income.

~~We manage our~~The Company manages its exposure to interest rates primarily by prudently structuring ~~our~~its balance sheet in the ordinary course of business. ~~We do not typically enter~~The Company generally originates fixed and floating rate loans with maturities of less than five years. The IRR on these loans is offset to some degree by the mix and structure of the deposit portfolio. On occasion, the Company enters into derivative contracts ~~for the purpose~~as a part of ~~managing interest rate risk, but we may do so in the future. Based upon the nature of our operations, we are not subject~~its asset liability management strategy to ~~foreign exchange or commodity price risk. We do not own any trading assets.~~help manage its IRR position.

Net Interest Income ~~At-Risk.~~ ~~We analyze our~~At-Risk

The Company analyzes its net interest income sensitivity to changes in interest rates through ~~our net interest income~~a simulation ~~model. We estimate~~model, which estimates what ~~our~~ net interest income would be for a one-year period based on current interest ~~rates. We~~rates, and then ~~calculate~~calculates what the net interest income would be for the same period under different interest rate assumptions.

The following table shows the estimated impact on net interest income for the one-year period beginning ~~September 30, 2017~~March 31, 2024 resulting from potential changes in interest rates, expressed in basis points. These estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain. As a result, no simulation model can precisely predict the impact of changes in interest rates on ~~our~~ net interest income.

Although the net interest income table below provides an indication of ~~our interest rate risk~~the Company’s IRR exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest

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rates on ~~our~~ net interest income and will differ from actual results. The following table indicates the sensitivity of projected annualized net interest income to the interest rate movements described above ~~at September 30, 2017:~~(dollars in thousands):


At March 31, 2024
Change in	Net		Year 1
Interest	Interest		Change
Rates	Income Year 1		from
(basis points)	Forecast		Level
+400	$	226,185	(8.30)	%
+300		230,860	(6.41)
+200		235,553	(4.51)
+100		241,617	(2.05)
—		246,666	—
-100		250,448	1.53
-200		254,277	3.09
-300		258,717	4.89
-400		263,631	6.88

Change in Interest Rates (basis points) Net Interest Income Year 1 Forecast Year 1 Change from Level
(Dollars in thousands)

+400 $ 72,727 26.4 %
+300 68,902 19.8 %
+200 65,074 13.1 %
+100 61,332 6.6 %
— 57,536 — %
-100 54,968 (4.5 )%

The table above indicates that at ~~September 30, 2017,~~March 31, 2024, in the event of aan instantaneous and sustained parallel upward shift of 200 basis ~~point increase~~points in interest rates, wethe Company would experience a ~~13.1% increase~~4.51% decrease in net interest income. In the event of ~~a 100~~an instantaneous and sustained parallel downward shift of 200 basis ~~point decrease~~points in interest rates, weit would experience a ~~4.5% decrease~~3.09% increase in net interest income.

Economic Value of Equity ~~Analysis.~~ ~~We analyze~~Analysis

The Company also analyzes the sensitivity of ~~our~~its financial condition to changes in interest rates through ~~our economic value of equity~~an EVE model. This analysis measures the difference between predicted changes in the fair value of ~~our~~ assets and predicted changes in the present value of ~~our~~ liabilities assuming various changes in current interest rates.

The table below represents an analysis of ~~our interest rate risk~~IRR as measured by the estimated changes in ~~our economic value of equity,~~EVE, resulting from an instantaneous and sustained parallel ~~shift~~shifts in the yield curve (+100, +200, +300 and +400 basis points and -100, -200, -300 and -400 basis points) at ~~September 30, 2017.~~March 31, 2024 (dollars in thousands):

Estimated Increase (Decrease) in
EVE EVE as a Percentage of Fair Value of Assets
⁽³⁾
Change in Interest
Rates (basis points) ⁽¹⁾ Estimated EVE ⁽²⁾ Amount Percent EVE Ratio ⁽⁴⁾ Increase
(Decrease) (basis
points)
(Dollars in thousands)

+400 $ 188,114 $ 26,737 16.6 % 11.05 % 1.57
+300 182,114 20,737 12.9 % 10.70 % 1.22
+200 174,908 13,531 8.4 % 10.27 % 0.79
+100 170,594 9,217 5.7 % 10.02 % 0.54
- 161,377 - - 9.48 % -
-100 147,103 (14,274 ) (8.9 )% 8.64 % (0.84 )


			Estimated
			Increase (Decrease) in
			EVE
Change in
Interest Rates	Estimated
(basis points) ⁽¹⁾	EVE ⁽²⁾		Dollars		Percent
+400	$	379,857	$	(150,322)	(28.35)	%
+300		418,159		(112,020)	(21.13)
+200		456,420		(73,759)	(13.91)
+100		502,658		(27,521)	(5.19)
—		530,179		—	—
-100		560,196		30,017	5.66
-200		569,886		39,707	7.49
-300		570,028		39,849	7.52
-400		553,220		23,041	4.35

(1)

⁽¹⁾

Assumes an immediate uniform change in interest rates at all maturities.

(2)

⁽²⁾

EVE is the fair value of expected cash flows from assets, less the fair value of the expected cash flows arising from ~~our~~the Company’s liabilities adjusted for the value of off-balance sheet contracts.

⁽³⁾

~~Fair value of assets represents the amount at which an asset could be exchanged between knowledgeable and willing parties in an arms-length transaction.~~

⁽⁴⁾

~~EVE Ratio represents EVE divided by the fair value of assets.~~

The table above indicates that at ~~September 30, 2017,~~March 31, 2024, in the event of ~~a 100~~an immediate upward shift of 200 basis ~~point decrease~~points in interest rates, wethe Company would experience a ~~0.8%~~13.91% decrease in ~~our economic value of equity.~~its EVE. In the event of aan immediate downward shift of 200 basis points ~~increase~~ in interest rates, wethe Company would experience ana 7.49% increase in its EVE.

Table of ~~0.8% in economic value of equity.~~Contents

The preceding ~~income~~ simulation ~~analysis does~~analyses do not represent a forecast of actual results and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions, which are subject to change, including: the nature and timing of interest rate levels including the yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. Also, as market conditions vary, prepayment/refinancing levels, the varying impact of interest rate changes on caps and floors embedded in adjustable-rate loans, early withdrawal of deposits, changes in product preferences, and other internal/external variables will likely deviate from those assumed.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The ~~Company's~~Company’s management, with the participation of its Chief Executive Officer, who is the ~~Company's~~Company’s principal executive officer, and ~~its~~the Chief Financial Officer, who is the ~~Company's~~Company’s principal financial officer, have evaluated the effectiveness of the ~~Company's~~Company’s disclosure controls and procedures as of ~~September 30, 2017~~March 31, 2024, pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as ~~amended.~~amended (the “Exchange Act”). Based upon that evaluation, the principal executive officer and principal financial officer have concluded that the ~~Company's~~Company’s disclosure controls and procedures ~~are~~were effective as of ~~September 30, 2017.~~March 31, 2024. In addition, there have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in reports filed by the Company under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~We are~~In the ordinary course of business, the Company is subject to various pending and threatened legal ~~actions relating to~~actions. There have been no material changes in the ~~conduct~~legal proceedings, if any, previously disclosed under Part I, Item 3 in our 2023 Form 10-K. While the future outcome of ~~our normal business activities. In~~litigation or regulatory matters cannot be determined at this time, in the opinion of management, as of March 31, 2024, the ~~ultimate~~ aggregate liability, if any, arising out of any such pending or threatened legal actions ~~will~~are not expected to be material to ~~our~~the Company’s financial condition, results of operations, and liquidity.

ITEM 1A. RISK FACTORS

~~In addition~~There are risks, many beyond our control, which could cause our results to the other information set forth in this quarterly report, you should carefully consider the factors discussed under the heading “Risk Factors” in the Company’s prospectus dated November 7, 2017 as filed with the SEC pursuant to Securities Act Rule 424(b)(4) on November 8, 2017 (the “Prospectus”). The Company’s evaluationdiffer significantly from management’s expectations. For a description of these risks, please see the risk factors ~~applicable~~included below and see the risk factors previously described in Part I, “Item 1A. Risk Factors” in our 2023 Form 10-K. There have been no material changes to ~~it has~~our risk factors since the date of that filing. Any of the risks described in our 2023 Form 10-K could by itself or together with one or more other factors, materially and adversely affect our business, results of operations or financial condition. Additional risks and uncertainties not ~~changed~~currently known to us or that we currently deem to be immaterial also may materially ~~from those disclosed in the Prospectus.~~and adversely affect our business, results of operations or financial condition.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

In response to the recent articles published in certain investor websites regarding the impact of cryptocurrencies on our financial statements, we are providing further details regarding our involvement in this area. Metropolitan Commercial Bank maintains a diversified approach to generating deposits through a number of verticals including borrowing relationships, retail relationships and debit card issuing relationships. As a part of this strategy, we also have a relationship with a cryptocurrency exchange. This customer maintains two different types of accounts with us. One account is for its general corporate purposes and the other account is for settlement activities for the benefit of its customers. The funds deposited by this customer consist of U.S. dollars, not cryptocurrency.

~~During the three months ended September 30, 2017, this customer maintained an average balance~~Table of ~~$108 million in its corporate non-interest bearing account with us. We use these funds in the normal course of business and realize a net interest margin on them.~~Contents

During the three months ended September 30, 2017, the customer maintained an average balance of approximately $137 million in its non-interest bearing settlement account with us. We do not use funds in the settlement account for our general funding purposes. These balances are transactional in nature and are kept in the overnight funds with the Federal Reserve Bank. Income realization on these funds is limited to the overnight Fed Funds rate.

As of September 30, 2017, Metropolitan Commercial Bank had total deposits of $1.5 billion. Deposit balances related to the cryptocurrency corporate account represents roughly 7% of our total deposit base while that of the settlement account represents 9% of our total deposit base. Since the settlement account is not used for funding purposes, it does not constitute a material source of income or, we believe, liquidity risk for Metropolitan Commercial Bank.

In addition, in the normal course of its business, we provide cash management solutions to our customers including wire transfers, ACH and foreign exchange conversion which are also offered to the cryptocurrency exchange customer. These solutions are provided at the normal fee that is charged to all other customers. An increase in transactions results in an increase in our non-interest income.

ITEM 6. EXHIBITS

~~See Index of Exhibits that follows~~

	52
3.1		Certificate of Incorporation of Metropolitan Bank Holding Corp, as amended (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 4, 2017 (File No. 333-220805)).

3.2		Certificate of Amendment to the Certificate of Incorporation of Metropolitan Bank Holding Corp. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-3 filed with the Securities and Exchange Commission on March 12, 2021 (File No. 333-254197)).

3.3		Amended and Restated Bylaws of Metropolitan Bank Holding Corp. (incorporated by reference to Exhibit 3.3 to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 3, 2023 (File No. 001-38282)).

31.1		Certification of the Principal Executive Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).

31.2		Certification of the Principal Financial Officer of the Corporation, pursuant to Securities Exchange Act Rule 13a-14(a).

32		Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Principal Executive Officer of the Corporation and the Principal Financial Officer of the Corporation.

101		INS XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101		SCH XBRL Taxonomy Extension Schema

101		CAL XBRL Taxonomy Extension Calculation Linkbase

101		DEF XBRL Taxonomy Extension Definition Linkbase

101		LAB XBRL Taxonomy Extension Label Linkbase

101		PRE XBRL Taxonomy Extension Presentation Linkbase

104	The cover page from Metropolitan Bank Holding Corp.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, formatted in Inline XBRL

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

~~Date: December 19, 2017~~	~~Metropolitan Bank Holding Corp. and Subsidiary~~

	~~/s/ Mark R. DeFazio~~

	~~Mark R. DeFazio~~

	~~President and Chief Executive Officer~~

	~~/s/ Sangeeta Kishore~~

	~~Sangeeta Kishore~~

	~~Executive Vice President and Chief Financial Officer~~

Metropolitan Bank Holding Corp.

Date: May 3, 2024By: /s/ Mark R. DeFazio

Mark R. DeFazio

President and Chief Executive Officer

Date: May 3, 2024By:/s/ Daniel F. Dougherty

Daniel F. Dougherty

Executive Vice President and Chief Financial Officer

~~EXHIBIT INDEX~~

~~Exhibit Number~~		~~Description of Exhibit~~

~~31.1~~		~~Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

~~31.2~~		~~Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002~~

32		~~Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002~~

~~101.0~~		The following materials for the quarter ended September 30, 2017, formatted in XBRL (Extensible Business Reporting Language): (i) Balance Sheets, (ii) Statements of Income, (iii) Statements of Comprehensive Income, (iv) Statements of Cash Flows, and (v) Notes to Financial Statements.

~~101.INS~~		~~XBRL Instance Document~~

~~101.SCH~~		~~XBRL Taxonomy Extension Schema Document~~

~~101.CAL~~		~~XBRL Taxonomy Calculation Linkbase Document~~

~~101.DEF~~		~~XBRL Taxonomy Extension Definition Linkbase Document~~

~~101.LAB~~		~~XBRL Taxonomy Label Linkbase Document~~

~~101.PRE~~		~~XBRL Taxonomy Presentation Linkbase Document~~

~~New York~~		~~13-4042724~~
New York		13-4042724
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer ~~Incorporation or~~Identification No.)
~~Incorporation or Organization)~~		~~Identification No.)~~
99 Park Avenue, New York, New York		10016
(Address of Principal Executive Offices)		(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	MCB	New York Stock Exchange


Large accelerated filer☐	¨	Accelerated filer	¨☒
Non-accelerated filer☐	x	Smaller reporting company	¨☐
~~(Do not check if a smaller reporting company)~~	Emerging ~~growth company~~	xGrowth Company ☐

	~~Page~~
	Page

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)	3

Consolidated Statements of Financial Condition ~~as of September 30, 2017 and December 31, 2016~~	3 6

Consolidated Statements of ~~Income for the Three and Nine Months ended September 30, 2017 and 2016~~Operations	4 7

Consolidated Statements of Comprehensive Income ~~for the Three and Nine Months ended September 30, 2017 and 2016~~	5 8

Consolidated Statements of Changes in Stockholders’ Equity ~~for the Nine Months ended September 30, 2017 and 2016~~	6 9

Consolidated Statements of Cash Flows ~~for the Nine months ended September 30, 2017 and 2016~~	7 10

Notes to Unaudited Consolidated Financial Statements	8 11

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49 41

Item 4.	Controls and Procedures	51 43

PART II. OTHER INFORMATION	44

Item 1.	Legal Proceedings	51 44

Item 1A.	Risk Factors	51 44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51 44

Item 3.	Defaults Upon Senior Securities	51 44

Item 4.	Mine Safety Disclosures	51 44

Item 5.	Other Information	51 44

Item 6.	Exhibits	52 45

Signatures	46


ACL	Allowance for Credit Losses	FHLBNY	Federal Home Loan Bank of New York
AFS	Available-for-sale	FRB	Federal Reserve Bank
ALCO	Asset Liability Committee	FRBNY	Federal Reserve Bank of New York
ALLL	Allowance for loan and lease losses	FX	Foreign exchange
AOCI	Accumulated Other Comprehensive Income	GAAP	U.S. Generally accepted accounting principles
ASC	Accounting Standards Codification	GPG	Global Payments Group
ASU	Accounting Standards Update	HTM	Held-to-maturity
Bank	Metropolitan Commercial Bank	IRR	Interest rate risk
BHC Act	Bank Holding Company Act of 1956, as amended	ISO	Incentive stock option
BSA	Bank Secrecy Act	JOBS Act	The Jumpstart Our Business Startups Act
C&I	Commercial and Industrial	LIBOR	London Inter-Bank Offered Rate
CARES Act	Coronavirus Aid, Relief, and Economic Security Act	LTV	Loan-to-value
CECL	Current Expected Credit Loss	MBS	Mortgage-backed securities
CFPB	Consumer Financial Protection Bureau	NYSDFS	New York State Department of Financial Services
Company	Metropolitan Bank Holding Corp.	OCC	Office of the Comptroller of the Currency
Coronavirus	COVID-19	OTTI	Other-than-temporary impairment
CRA	Community Reinvestment Act	PPP	Paycheck Protection Program
CRE	Commercial real estate	PRSU	Performance Restricted Share Units
CRE Guidance	Commercial Real Estate Lending, Sound Risk Management Practices	ROU	Right of Use
DIF	Deposit Insurance Fund	SEC	U.S. Securities and Exchange Commission
EGC	Emerging Growth Company	SOFR	Secured Overnight Financing Rate
EVE	Economic value of equity	TDR	Troubled debt restructuring
FASB	Financial Accounting Standards Board	USD	U.S. Dollar
FDIC	Federal Deposit Insurance Corporation
FHLB	Federal Home Loan Bank


	☒QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	☐TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	September 30, 2017			December 31, 2016

Assets

Cash and due from banks	$	267,099		$	82,931
Investment securities available for sale, at estimated fair value		33,922			37,329
Investment securities held to maturity (estimated fair value of $5,630 at September 30, 2017 and $6,419 at December 31, 2016)		5,681			6,500
Other investments		13,740			12,588
Loans		1,381,649			1,055,706
Deferred loan fees and unamortized costs, net		(820	)		(1,160	)
Allowance for loan and lease losses		(15,075	)		(11,815	)
Net loans		1,365,754			1,042,731
Accounts receivable, net		3,825			5,420
Receivable from prepaid card programs, net		6,977			7,566
Accrued interest receivable		3,903			2,735
Premises and equipment, net		6,010			5,035
Prepaid expenses and other assets		7,013			7,733
Goodwill		9,733			9,733
Total assets	$	1,723,657		$	1,220,301

Liabilities and Stockholders’ Equity
Deposits:
Noninterest-bearing demand deposits	$	826,345		$	403,402
Interest-bearing deposits		662,298			590,378
Total deposits		1,488,643			993,780
Borrowed Funds		43,750			78,418
Trust preferred securities		20,620			20,620
Subordinated debts, net of issuance cost		24,468			-
Accounts payable, accrued expenses and other liabilities		20,411			10,901
Accrued interest payable		547			227
Debit cardholder balances		6,259			6,864
Total liabilities	$	1,604,698		$	1,110,810

Stockholders’ equity:
Class B preferred stock, $0.01 par value, authorized 2,000,000 shares, issued and outstanding 272,636 at September 30, 2017 and 272,636 at December 31, 2016, respectively.		3			3
Common stock, $0.01 par value, authorized 10,000,000 shares, issued and outstanding 4,633,012 at September 30, 2017 and 4,604,563 at December 31, 2016		45			45
Additional paid in capital		96,422			96,116
Retained earnings		22,536			13,492
Accumulated other comprehensive loss, net of tax effect		(47	)		(165	)
Total stockholders’ equity		118,959			109,491
Total liabilities and stockholders’ equity	$	1,723,657		$	1,220,301

	Three months ended					Nine months ended
	September 30,					September 30,
	2017		2016			2017		2016
INTEREST AND DIVIDEND INCOME
Loans, including fees	$	15,537	$	10,922		$	40,771	$	30,874
Securities:
Taxable		201		224			620		708
Tax-exempt		7		8			22		23
Money market funds and commercial paper		82		11			215		54
Other interest and dividends		574		159			1,261		565
Total interest and dividend income		16,401		11,324			42,889		32,224
INTEREST EXPENSE
Deposits		1,588		1,274			4,316		3,620
Borrowed funds		244		110			674		585
Trust Preferred Securities		165		122			469		380
Subordinated debt expense		440		-			918		-
Total interest expense		2,437		1,506			6,377		4,585

Net interest income		13,964		9,818			36,512		27,639
Provision for loan and lease losses		1,200		190			3,560		2,000
Net interest income after provision for loan and lease losses		12,764		9,628			32,952		25,639

NON-INTEREST INCOME
Service charges on deposit accounts		836		223			1,633		627
Other service charges and fees		523		201			939		982
Loan prepayment penalties		27		119			40		388
Debit card income		847		777			2,440		2,098
Net gains on sales of securities		-		-			-		40
Total non-interest income		2,233		1,320			5,052		4,135

NON-INTEREST EXPENSE
Compensation and benefits		4,847		5,640			13,688		13,437
Bank premises and equipment		1,075		987			3,185		2,903
Directors fees		316		183			665		499
Insurance expense		60		88			204		251
Professional fees		976		407			1,865		1,184
FDIC assessment		349		182			624		507
Core processing fees		423		198			953		700
Other expenses		544		741			1,782		1,851
Total non-interest expense		8,590		8,426			22,966		21,332

Income before income taxes		6,407		2,522			15,038		8,442
Income tax expense		2,562		1,072			5,994		3,478
Net income	$	3,845	$	1,450		$	9,044	$	4,964

PER COMMON SHARE DATA
Earnings (Loss) per share – basic	$	0.83	$	(0.52	)	$	1.95	$	0.45
Earnings (Loss) per share – diluted		0.82		(0.52	)		1.94		0.45

	Preferred Stock, Class A						Preferred Stock, Class B						Common Stock				Additional Paid-in			Retained			AOCI (Loss),
	Shares			Amount			Shares			Amount			Shares		Amount		Capital			Earnings			Net			Total
Balance at January 1, 2016		391,044		$	4			60,000		$	1			3,095,784	$	30	$	63,796		$	12,105		$	16		$	75,952
Conversion of preferred stock to common stock		-			-			(60,000	)		(1	)		60,000		1		-			-			-			-
Purchase and retirement of preferred stock		(123,924	)		(1	)		-			-			-		-		(1,238	)		(161	)		-			(1,400	)
Preferred stock redemption		(267,120	)		(3	)		-			-			-		-		(2,624	)		(45	)		-			(2,672	)
Issuance of preferred stock, net		-			-			272,636			3			-		-		5,519			-			-			5,522
Issuance of common stock, net		-			-			-			-			1,448,418		14		28,403			-			-			28,417
Class A preferred dividend payment		-			-			-			-			-		-		-			(3,420	)		-			(3,420	)
Employee stock-based compensation		-			-			-			-			-		-		2,250			-			-			2,250
Net income		-			-			-			-			-		-		-			4,964			-			4,964
Other comprehensive income		-			-			-			-			-		-		-			-			355			355
Balance at September 30, 2016		-		$	-			272,636		$	3			4,604,202	$	45	$	96,106		$	13,443		$	371		$	109,968

Balance at January 1, 2017		-		$	-			272,636		$	3			4,604,563	$	45	$	96,116		$	13,492		$	(165	)		109,491
Restricted stock, net of forfeiture		-			-			-			-			28,449		-		(7	)		-			-			(7	)
Employee stock-based compensation		-			-			-			-			-		-		313			-			-			313
Net income		-			-			-			-			-		-		-			9,044			-			9,044
Other comprehensive income		-			-			-			-			-		-		-			-			118			118
Balance at September 30, 2017		-		$	-			272,636		$	3			4,633,012	$	45	$	96,422		$	22,536		$	(47	)	$	118,959

	2017			2016
Cash flows from operating activities:
Net income	$	9,044		$	4,964
Adjustments to reconcile net income to net cash:
Depreciation and amortization		695			583
Net accretion on securities		(36	)		(476	)
Net gains on sales of securities		-			(40	)
Provision for loan and lease losses		3,560			2,000
Net change in deferred loan fees		(340	)		242
Deferred income tax benefit		85			263
Stock-based compensation expense		313			2,250
Forfeiture of restricted shares		(7	)		-
Net change in:
Accrued interest receivable		(1,168	)		(55	)
Accounts payable, accrued expenses and other liabilities		9,829			6,350
Accounts receivable, net		1,595			808
Receivable from prepaid card programs, net		589			(5,591	)
Prepaid expenses and other assets		(54	)		(337	)
Net cash provided by operating activities		24,105			10,961

Cash flows from investing activities:
Loan originations and payments, net		(326,243	)		(142,886	)
Redemptions of other investments		7,134			3,496
Purchases of other investments		(8,286	)		(140	)
Purchase of securities available for sale		(1,434	)		(1,533	)
Proceeds from sales of securities available for sale		-			2,771
Proceeds from paydowns and maturities of securities available for sale		5,110			6,930
Purchase of securities held to maturity		-			(2,659	)
Proceeds from paydowns of securities held to maturity		790			715
Purchase of premises and equipment, net		(1,671	)		(801	)
Net cash used in investing activities		(324,600	)		(134,107	)

Cash flows from financing activities:
Proceeds from issuance of common stock, net		-			28,417
Proceeds from issuance of preferred stock, net		-			5,522
Purchase redemption and retirement of treasury preferred stock		-			(4,072	)
Payment of preferred stock dividend		-			(3,420	)
Proceeds from issuance of subordinated debt, net of issuance cost		24,468			-
Proceeds from FHLB advances		280,000			-
Repayments of FHLB advances		(314,668	)		(77,678	)
Net increase in deposits		494,863			157,548
Net cash provided by financing activities		484,663			106,317

Increase (Decrease) in cash and cash equivalents		184,168			(16,829	)
Cash and cash equivalents at the beginning of the period		82,931			65,647
Cash and cash equivalents at the end of the period	$	267,099		$	48,818

Supplemental information:

Cash paid during the year for:
Interest	$	6,057		$	4,639
Taxes	$	4,862		$	3,980

			Gross		Gross
	Amortized		Unrealized		Unrealized			Fair
September 30, 2017	Cost		Gains		Losses			Value
Available-for-Sale Securities:
Residential mortgage-backed securities	$	26,145	$	154	$	(129	)	$	26,170
Residential collateralized mortgage obligations		3,022		-		(72	)		2,950
Commercial mortgage backed securities guaranteed by U.S. government sponsored agencies		1,591		-		(25	)		1,566
Municipal bond		1,105		21		-			1,126
CRA mutual fund		2,148		-		(38	)		2,110
Total securities available-for-sale	$	34,011	$	175	$	(264	)	$	33,922

Held to Maturity Securities:
Residential mortgage-backed securities	$	5,656	$	-	$	(51	)	$	5,605
Foreign government securities		25		-		-			25
Total securities held-to-maturity	$	5,681	$	-	$	(51	)	$	5,630

	Held to Maturity				Available for Sale
	Amortized		Fair		Amortized		Fair
September 30, 2017	Cost		Value		Cost		Value
Within one year	$	-	$	-	$	-	$	-
One to five years		25		25		-		-
Five to ten years		-		-		-		-
Beyond ten years		-		-		1,105		1,126
		25		25		1,105		1,126

Residential mortgage-backed securities		5,656		5,605		26,145		26,170
Residential collateralized mortgage obligations		-		-		3,022		2,950
Commercial mortgage backed securities guaranteed by U.S. government sponsored agencies		-		-		1,591		1,566
CRA mutual fund		-		-		2,148		2,110
	$	5,681	$	5,630	$	34,011	$	33,922

	Less than 12 Months					12 months or more					Total
September 30, 2017	Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses			Estimated Fair Value		Unrealized Losses
Residential mortgage-backed securities	$	13,943	$	(129	)	$	-	$	-		$	13,943	$	(129	)
Residential collateralized mortgage obligations		1,103		(23	)		1,847		(49	)		2,950		(72	)
Commercial mortgage backed securities		-		-			1,566		(25	)		1,566		(25	)
CRA mutual fund		-		-			2,110		(38	)		2,110		(38	)
Total available for sale	$	15,046	$	(152	)	$	5,523	$	(112	)	$	20,569	$	(264	)


Residential mortgage-backed securities		5,605		(51	)		-		-			5,605		(51	)
Total held-to-maturity	$	5,605	$	(51	)	$	-	$	-		$	5,605	$	(51	)

December 31, 2016
Residential mortgage-backed securities	$	16,733	$	(290	)	$	-	$	-		$	16,733	$	(290	)
Residential collateralized mortgage obligations		2,887		(60	)		2,216		(70	)		5,103		(130	)
CRA mutual fund		-		-			2,063		(52	)		2,063		(52	)
Total available for sale	$	19,620	$	(350	)	$	4,279	$	(122	)	$	23,899	$	(472	)


Residential mortgage-backed securities	$	6,394	$	(81	)	$	-	$	-		$	6,394	$	(81	)
Total held-to-maturity	$	6,394	$	(81	)	$	-	$	-		$	6,394	$	(81	)

For the three months ended September 30, 2017	Commercial Real Estate		Commercial & Industrial		Construction			Multifamily		One-to- four Family		Consumer			Total
Allowance for loan and lease losses:
Beginning balance	$	6,487	$	5,560	$	557		$	958	$	85	$	262		$	13,909
Provision (credit) for loan and lease losses		637		443		(33	)		34		2		117			1,200
Charge-offs		-		-		-			-		-		(34	)		(34	)
Recoveries		-		-		-			-		-		-			-
Total ending allowance balance	$	7,124	$	6,003	$	524		$	992	$	87	$	345		$	15,075

September 30, 2017	Commercial Real Estate		Commercial & Industrial		Construction		Multifamily		One-to- four Family		Consumer		Total
Allowance for loan and lease losses:
Individually evaluated for impairment	$	-	$	366	$	-	$	-	$	-	$	63	$	429
Collectively evaluated for impairment		7,124		5,637		524		992		87		282		14,646
Total ending allowance balance	$	7,124	$	6,003	$	524	$	992	$	87	$	345	$	15,075

Loans:
Individually evaluated for impairment	$	6,299	$	4,775	$	-	$	-	$	3,594	$	125	$	14,793
Collectively evaluated for impairment		730,188		341,963		37,723		187,753		22,183		47,046		1,366,856
Total ending loan balance	$	736,487	$	346,738	$	37,723	$	187,753	$	25,777	$	47,171	$	1,381,649

	September 30, 2017
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan and Lease Losses Allocated
With an allowance recorded:
Commercial & industrial	$	8,783	$	3,660	$	366
Consumer		125		125		63
Total	$	8,908	$	3,785	$	429

Without an allowance recorded:
Commercial real estate	$	6,768	$	6,299	$	-
Commercial & industrial		1,115		1,115		-
One-to-four family		3,871		3,594		-
Total	$	11,754	$	11,008	$	-

	For the nine months ended September 30,
	2017				2016
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With an allowance recorded:
Commercial & industrial	$	3,660	$	-	$	-	$	-
One-to-four family		-		-		564		16
Consumer		127		4		-		-
Total	$	3,787	$	4	$	564	$	16

Without an allowance recorded:
Commercial real estate	$	6,380	$	227	$	11,587	$	382
Commercial & industrial		1,185		36		1,355		41
One-to-four family		3,616		96		1,087		17
Total	$	11,181	$	359	$	14,029	$	440

September 30, 2017	Nonaccrual		Loans Past Due Over 90 Days Still Accruing

Commercial real estate	$	841	$	-
Commercial & industrial		3,660		-
One-to-four family		2,466		-
Consumer		125		-
Total	$	7,092	$	-

September 30, 2017	30-59 Days		60-89 Days		Greater than 90 days		Total Past Due		Loans not Past Due		Total
Commercial real estate	$	-	$	-	$	841	$	841	$	735,646	$	736,487
Commercial & industrial		88		-		3,660		3,748		342,990		346,738
Construction		-		-		-		-		37,723		37,723
Multifamily		-		-		-		-		187,753		187,753
One-to-four family		-		-		-		-		25,777		25,777
Consumer		109		-		125		234		46,937		47,171
Total	$	197	$	-	$	4,626	$	4,823	$	1,376,826	$	1,381,649

September 30, 2017	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate	$	727,068	$	7,399	$	2,020	$	-	$	736,487
Commercial & industrial		334,663		8,415		3,660		-		346,738
Construction		37,723		-		-		-		37,723
Multifamily		187,753		-		-		-		187,753
Total	$	1,287,207	$	15,814	$	5,680	$	-	$	1,308,701

September 30, 2017	Performing		Non-Performing		Total
One-to-four family	$	23,311	$	2,466	$	25,777
Consumer		47,046		125		47,171
Total	$	70,357	$	2,591	$	72,948

	For the nine months ended
	September 30, 2017
	Number of Options		Weighted Average Exercise Price

Outstanding, beginning of period		276,500	$	19.97
Granted		-		-
Exercised		-		-
Cancelled/forfeited		-		-
Outstanding, end of year		276,500	$	19.97
Options vested and exercisable at period-end		276,500	$	19.97

Weighted average fair value of options granted during the year			$	-

Weighted average remaining contractual life (years)				5.74

	Options Outstanding
			Weighted
Range of			Average		Weighted
Average	Number		Remaining		Average
Exercise	Outstanding at		Contractual		Exercise
Prices	September 30, 2017		Life		Price
$10 - 20		231,000		6.64	$	18.00
$21 - 30		45,500		1.15	$	30.00
$10 - 30		276,500		5.74	$	19.97

			Weighted
	Number of		Average Grant
	Shares		Date Fair Value
Outstanding, January 1, 2017		64,638	$	20.42
Granted		31,616		21.00
Forfeited		(3,167)		18.00
Vested		(4,000)		21.00
Outstanding at September 30, 2017		89,087	$	20.69

	Fair Value Measurement
September 30, 2017	Quoted Prices in Active Markets For Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Residential mortgage-backed securities	$	-		$	26,170	$	-
Residential collateralized mortgage obligation		-	��		2,950		-
Commercial mortgage backed securities		-			1,566		-
Municipal bond		-			1,126		-
CRA mutual fund		2,110			-		-

December 31, 2016
Assets:
Residential mortgage-backed securities	$	-		$	29,027	$	-
Residential collateralized mortgage obligation		-			5,103		-
Municipal bond		-			1,136		-
CRA mutual fund		2,063			-		-

	Fair Value Measurement
September 30, 2017	Quoted Prices in Active Markets For Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Impaired loans:
Commercial and industrial	$	-	$	-	$	3,294

	Fair Value		Valuation Technique	Unobservable Input	Range (Weighted Average)
September 30, 2017
Impaired loans – Commercial and industrial	$	3,294	Market approach	Adjustments for the difference in comparable sales		10.0	%

December 31, 2016
Impaired loans – Commercial and industrial	$	3,294	Market approach	Adjustments for the difference in comparable sales		10.0	%

	September 30, 2017
			Fair Value Measurement Using:
	Carrying Amount		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value

Financial assets:
Cash and due from banks	$	267,099	$	267,099	$	-	$	-	$	267,099
Securities available for sale		33,922		2,110		31,812		-		33,922
Securities held to maturity		5,681		-		5,630		-		5,630
Loans, net		1,365,754		-		-		1,381,158		1,381,158
Other investments		13,740		N/A		N/A		N/A		N/A
Accrued interest receivable		3,903		2		135		3,766		3,903

Financial liabilities:
Deposits without stated maturities		1,405,458		1,405,458		-		-		1,405,458
Deposits with stated maturities		83,185		-		83,278		-		83,278
Borrowed funds		43,750		-		43,794		-		43,794
Trust preferred securities		20,620		-		-		20,005		20,005
Subordinated debt, net of issuance cost		24,468		-		25,000		-		25,000
Accrued interest payable		547		17		360		170		547

	December 31, 2016
			Fair Value Measurement Using:
	Carrying Amount		Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Fair Value

Financial assets:
Cash and due from banks	$	82,931	$	82,931	$	-	$	-	$	82,931
Securities available for sale		37,329		2,063		35,266		-		37,329
Securities held to maturity		6,500		-		6,419		-		6,419
Loans, net		1,042,731		-		-		1,059,333		1,059,333
Other investments		12,588		N/A		N/A		N/A		N/A
Accrued interest receivable		2,735		-		157		2,578		2,735

Financial liabilities:
Deposits without stated maturities		903,267		903,267		-		-		903,267
Deposits with stated maturities		90,513		-		90,559		-		90,559
Borrowed funds		78,418		-		78,872		-		78,872
Trust preferred securities		20,620		-		-		19,998		19,998
Accrued interest payable		227		19		62		146		227

For the three months ended September 30,	Available for sale securities
(In thousands)	2017			2016

Beginning balance	$	(73	)	$	427

Net change in other comprehensive income (loss) before reclassification, net of tax		26			(56	)

Amounts reclassified from accumulated other comprehensive income		-			-

Net current period other comprehensive income (loss)		26			(56	)
Ending balance	$	(47	)	$	371

For the nine months ended September 30,	Available for sale securities
(In thousands)	2017			2016

Beginning balance	$	(165	)	$	16

Net change in other comprehensive income before reclassification, net of tax		118			378

Amounts reclassified from accumulated other comprehensive loss		-			(23	)

Net current period other comprehensive income		118			355
Ending balance	$	(47	)	$	371

	September 30, 2017				December 31, 2016
	Fixed		Variable		Fixed		Variable
	Rate		Rate		Rate		Rate

Undrawn lines of credit	$	47,333	$	26,386	$	60,984	$	9,890
Undrawn letters of credit		22,716		-		9,808		-

	Three months ended September 30,									Nine months ended September 30,
	2017 vs. 2016									2017 vs. 2016
	Increase (Decrease)						Total			Increase (Decrease)						Total
	Due to						Increase			Due to						Increase
	Volume			Rate			(Decrease)			Volume			Rate			(Decrease)
	(In thousands)

Interest-earning assets:
Loans	$	4,342		$	273		$	4,615		$	9,830		$	67		$	9,897
Available-for-sale securities		(24	)		4			(20	)		(108	)		13			(95	)
Held-to-maturity securities		(6	)		2			(4	)		2			4			6
Other interest-earning assets		301			185			486			502			355			857
Total interest-earning assets		4,613			464			5,077			10,226			439			10,665

Interest-bearing liabilities:
Money market and savings accounts		90			269			359			406			460			866
Certificates of deposit		(75	)		30			(45	)		(261	)		91			(170	)
Total deposits		15			299			314			145			551			696

Borrowed funds		428			189			617			680			416			1,096

Total interest-bearing liabilities		443			488			931			825			967			1,792

Change in net interest income	$	4,170		$	(24	)	$	4,146		$	9,401		$	(528	)	$	8,873

	September 30,		December 31,		Dollar			Percentage
	2017		2016		Change			Change
Real Estate:
Commercial	$	736,487	$	547,711	$	188,776			34.5	%
Construction		37,723		29,447		8,276			28.1
Multifamily		187,753		117,373		70,380			60.0
One-to-four family		25,777		26,480		(703	)		(2.7	)
Commercial and industrial		346,738		315,870		30,868			9.8
Consumer		47,171		18,825		28,346			150.6

Total loans receivable	$	1,381,649	$	1,055,706	$	325,943			30.9	%