MCB - Earnings call transcript Q1 2022 | Metropolitan Bank Holding Corp.

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Operator

Welcome to Metropolitan Commercial Bank First Quarter 2022 Earnings Call. Hosting the call today from Metropolitan Commercial Bank are Mark DeFazio, President and Chief Executive Officer; and Mark (sic) [Greg] Sigrist, Executive Vice President and Chief Financial Officer. Today’s call is being recorded. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following the prepared remarks. [Operator Instructions] During today’s presentation, reference will be made to the company’s earnings release and investor presentation, copies of which are available at MCBankNY.com. forward-looking that are to may include risks to differ may uncertainties and cause presentation statements subject that certain materially. Today’s actual results and in to measures refer the notices forward-looking Please company’s that earnings the statements appear release. regarding non-GAAP turn It floor Mark Executive over Chief the is and pleasure President to my Officer. now to DeFazio,

begin. may You

Mark DeFazio

I and for to earlier, grow but was interesting challenges, deploying through we be not in my decades is on with into profitability geopolitical Notwithstanding could Brittany. these you, resilience We sheet, times were risk quarter most call. balance and value. information out and MCB the the clients, occurred MCB how readiness will this I we’ve all then seen consistent disruptive Greg that highest that footing is MCB has on in tightening some Who to it, drive out noted and abruptly MCB’s a variant, I its have during the of as to brief Q&A. fed of to Omicron excess breaking inflationary unprepared one of thing we shareholder this and Thank welcome MCBs war event morning a numbers an the hopefully fatal. continued final challenges, the XXXX entered thinking over operations, in get face mind go find only that years. were Good earnings for continuing these stands strategic What due and each in of its the in quarter first robust chapter track through solid faced protect years. those on COVID. quarter two closing liquidity. Ukraine, demonstrated this these After with and that

the I assets. business robust as ability liability side obsession, us the into model deposit scalable say, pay our The low excess and our our liquidity to margin dividends. balance verticals earning and continues embedded higher affords sheet with deploy to to historical manage cost of Our into

no to leverage their our Our their whose returns strategy to than for business is shareholders. clients, business different equity liquidity targeted drive and plan is

a for million We sub-debt XXth, target maintained drag $XX assets X.XXX% MCB and which loans. the March combined quarter, of highlights and interest net In going initiatives. liquidity million $XXX of Now into the XX% few on forward. our deployed was our of of eliminates on NIM investments, income redeemed a

process due acquisitions, the client those investments. living global support MCB to initiatives. MCB a CRE Just cash. some cost our normal exchange that of the company this in forward. reduction its skilled million start had is assisted acquisition establishing outflows acquired retail $XX will million crypto deposit as integrated and operating [ph] and which relationship, we in acquisitions for of is already facilities $XXX low with and highlights benefits client seeing debt acquired deposit Healthcare also related going approximately with in MCB of to most facilities. clients of a which close homes integrating of add The operations strategic of significantly $XXX base nursing million for quarter. will company, this into

non-interest-bearing client thesis million MCBs that has MCB business this building are wealth. come. active was $XXX be should base Commercial to wealth, building assist generational do clients sustaining clients Bank, very had noted of which interest-bearing. of therefore and to and As the a MCB been deposit $XXX in business in also It always was with inflows primarily million $XX a Commercial Bank, for to from embedding years million, new

on This franchise. the leveraging clearly efficiency XX.X% was up ratio long-term dropped non-interest XX%, our up general highlights revenues XX.X%. to focus XX%, some were for for from Now Total shows expense our up operating to were deposits including or $XXX up which quickly. or or investments million were loans drive XX%, billion our $X.X BBAs, leverage billion Total positive were $X up XX%. XX%. Total

quarter XXXX. For our from revenues Payments up Global Group, XX% the of were first

transaction our built. partners. given our the increase fact continues retail XXXX. which quality I’m commercial has XX%, we which capital our since that, to it fintech deposits mention the raise $XX.X million, I’ll volume in also the And what was Since note from first before And $X to average million, million banking-as-a-service loans. business $XX XXXX ended to XXXX, focused XX% are common XXX% the I Greg, very on first initiatives. up while We office, XX quarter tangible quarter just equity growing last $XXX dollar which of to Florida compliance were of volumes quarter we quarter production CRE turn that of upon remarkable, consumer successful our our has this real foundation I quarter up to for high close some that million as signed September the in is is that I’m quarter is pleased billion. just expansion first over had return remain lease the up end roster -- transactions First believe mentioned we over second -- that loan announce estate on in enhancing in was pleased best-in-class the with is

in has million have a of approximately We C&I and loans located closed of million Florida. $XXX $XX pipeline

Now I’ll over turn to Greg. it

Greg Sigrist

certainly per Thank of income XXXX over million net you, $X.XX $XX.XX into first or of with earnings Mark. The diluted of momentum quarter fully share. the carried has

the million take through the a driven production lending. year XX% the was GPG-related the being though That particularly deposit off ago. clients so quality a CRE strong on a across strong. in $XXX in level. all does CRE for verticals. in was later quarter paid by those quarter, pipeline by across full and January. touched in which remain nominal I year Net Nursing. note a or the $X.X in strong the of strength fourth had on non-performing quarter, verticals very reminder, in up The given were key Credit one deposits, provision moves. that charge-offs that, originations XXX% and are that made growth non-accrual will leaves come Mark’s quarter. had just in our flows from our quarter. at Let of our We of down loan credit loans million approximately effectively were start impact strategic the investments already Volumes $XXX a quarter. no from did the With loan elevated loan end And Skilled was for at zero, to quarter the strategic is XX.X% million robust there as few me remarkable Loan you drivers the this year a

However, fourth average quarter. up XX% GPG were deposits from the

deposits diversified Our XX does deposits deposit declined a Total The debt. funds base well but quarter points, remained earlier of at X the remains steady of basis in basis the the that XX total recognized in points points, of with cost selective subordinated certain basis deferred redeemed cost impact issuance core of to deposits. cost include re-pricing mix quarter. the when of we

of to Importantly, from our the did were into basis growth, our points part in well of deposits overnight to benefit the rising the large liquidity our assets. interest strength basis position remainder up remains liquidity business, XX total is the strong, quarter of long-term to liquidity deployment securities. due shareholder points in basis in X.XX%, revenues off Net at loans X.X%. is to XXX are floors, and And additional by time XXX increase lifting sheet managed up of Non-interest with loan the X.X% XXX deck, very loan margin income in XX% banking-as-a-service are the our up Global course our from points up are With and up. have of investor value. the on with in portfolio as you XX% Expenses points, were the the the off seen ratably which loan the and will time subject subject quarter. an to and by XX% positioned rate floating sensitivity, of would position asset was lift rates XX% drive rates Payments rates quarter well basis balance of that

seasonal see and employer of impact taxes we expected, benefits. As did

we’ve operating do so. in as expect particularly continue past, capital quite and investments, to remain we mentioned leverage the human focused we positive in maintaining As do making on

in quarter in Our the one-time significantly for of million, expect XX% higher be grant than date, effective fair rate of XX%. the fair impact to would of rate the items to which tax included the impact including of values benefits discrete the date totaling excluding We full the $X.X vesting tax of values. range employee were XX% stock-based year tax effective comp,

ratios Our strong, capital very with above capitalized significantly remain all levels capital levels. well

the call and Q&A. Our years now reflecting off to Tier was our Operator the our businesses. the turn I’ll March at XXst. ratio leverage a start great to And growth X.X% performance across X sustained for back Overall,

Operator

you. [Operator Instructions] Thank

with first We question KBW. O’Connell will take our Chris from

line now is Your open.

Chris O’Connell

deposit gentlemen. some guys morning, to the just similar of new time? this ramp Nice I Good onboarding of up or in client immediately second going the flows with deposits to be over quarter. that recapture that the or to off impact that lost you that quarter. a quarter mentioned, going and wanted that now acquisition client more regarding Is start is

Mark DeFazio

and in case, say, specific be morning, Chris, would time. good that would I over

company. new for We’re a go company integrating that The will It’s acquired cryptocurrency. with live. exchange

three into flows fee we coming of coming well to So the back, over see quarters. deposit next and course, as expect income bank the

Chris O’Connell

Understood.

we should of any the is of And next first fees a loss expect or the quarter deposits quarter related XQ kind the from levels? that, the pullback over good of to still the pretty so GPG trajectory coming rate run from the course on [ph] it

Greg Sigrist

you their on by acquisition it’d or build, purposes, Yeah. it an mean what revenue. If for no pullback, leveraging impact whether immediate has I be strategic understand technology clients liquidity

revenue they’re as clients should well are their predict, -- continue doing its expanding core can to GPG of So and its all drive franchises. business, we

revenue, So has you current what the if correlation with investment that’s no of liquidity ask. direct

Chris O’Connell

bit first it. other of year, mean, interest, you moderation change strong little loan bit growth to growth, expect outlook for can growth this Got a some strong And more talk on and a a Okay. really little or you the Florida or loan some particularly I about the the do the business given deposit start C&I and coming quarter, in strong the drivers quarters? the quarter then

Mark DeFazio

there. backwards working We’re

can’t to going our off. it’s that, current pipeline, at I suggest level Looking

We’re out there working.

different We’re markets. in

of originations the for rest So quality I year. would and asset loan to the expect strong robust have

Greg Sigrist

only think The at robust. thing happen. really payoffs the see would with I I Mark and some pipeline mean, Yeah. agree point you’re going some add, to I is I

quarter of I trajectory first wouldn’t for the think balance the I in year. keep place the

I over some will be but There balance the a going be us. year. for strong growth very to it’s moderation, think year of the they’re still

Chris O’Connell

Can a pull in little you just bit on or pretty in funded being cash And are loans what about of cash maybe the then but Got balance. it. for that late the hard to the pull Understood. quarter, the given redemption the came lot the a looks talk -- side, NIM you the average like know and seeing XQ? project, quarter the guys between NIM the longer late term down I down sub-debt cash

Mark DeFazio

know, that Chris, to But quarter. helpful. itself. Converting a full don’t until of NIM drag, sub-debt, the repaying couple which we’re we drivers, the liquidity a see loans, on hit away Yeah. the give into in quarter as guidance not second obviously the really bit key on you the the going a of of benefit takes obviously, the first you is

loan really side, the pretty side. healthy going just to to continue we on the NIM as see expect some onto loan expansion to on you’re So deploy

balance environment. I We floating. think the portfolio a and driver year of of healthy over pretty it’s the maybe part have is mark the loan the do rate is question big the the that

you’re in some as going from to So that portfolio over see securities to loan re-pricings and both uplift time, And the well. have you’re going these obviously, portfolio.

of So, I got from out. able see you’re you’ve margin you that think, to should I kind to with going model here and the expansion input be mean, to

Chris O’Connell

right. for I’ll step it. Got Thanks. All now. out

Greg Sigrist

Yeah.

Mark DeFazio

Chris. Thanks,

Operator

Thanks. We’ll Morgan. take with next Lau Alex our from JP question

open. Your line is now

Alex Lau

Good Hey. morning.

Mark DeFazio

morning. Good

Greg Sigrist

Hi.

Mark DeFazio

Good morning, Alex.

Alex Lau

Is thing you Can more throughout business the or this In year? this clients release acquisition? a very investments think you you quarter? strong getting continue expand on what will touched the loan in XQ the in on press active originations the drove do and

Mark DeFazio

think on going as This year. continue I a it’s around that’s very was us touched really going interesting to on quarter. sort well. of the everything throughout I

area, So not York other clients sense was a here active the bit well. only surreal our New how markets it in of in in as were but a

out working teams engaged, very lending professionals teams just lending all running the busy. and we all Our of hopping we’re best-in-class over and not that these working out are we’re are York, we there, cities, out not also New And of the we’re are we’re just very Laholm.

alongside acquisitions, our tell We we the And on strategic have are I our site, Bank. effort I at Remember, client at. think Commercial we the a initiatives looking actually looking it’s looking just that base you, to are have. at of strategic clients nature of are

So and we’re to build our clients XXxX active. They’re generational aligned, it professionals up very wealth and them for aligned we with helping just achieve are that. and here sustain step all

Alex Lau

which Thanks the optimistic When at you for year, for are the deposit growth? driving that. most you on deposit look growth vertical

Mark DeFazio

I try partners. think way. GPG the of and not of rate our that to it sheer because could of scale fintech explode, just conversion

Commercial really I’m and Commercial say GPG, retail Lending up hand, clients. the just the Lending about well. So But I and and of General on healthcare Group excited, because the nature are other Group our could doing of or stepping teams really possibilities optimistic, you our Corporate guess, practice our is our Finance of those

in including basically deposits, this of saw, you we As quarter. not brought core $XXX GPG million

optimistic I’m So all the verticals. about

Greg Sigrist

Yeah.

strength the franchise that really our just think I and shows I with verticals, of Mark. yeah, agree the deposit and

Alex Lau

Thanks for for and last cycle? the are rising betas, year to what that. betas deposit does compare On rate your that the how expectations deposits for so

Mark DeFazio

Deposit bases.

I here. fairly think be going to diligent we’re

think, I Bank Commercial a again. we’re

for capital to working their businesses. providing we’re run companies So,

rates, doesn’t bank and run in businesses. that operating flows to of it coming out a bring the raise So tremendous pressure to these because are are cash their

rising prepared in the thing I more up. So, environment. long the liabilities, decline tell is one when that as rates. we major diligent, lenders will were prepared are rate in as cycle, time were a higher is we well and a very great don’t costs a some experiencing expect The and liabilities for are very a we is, of getting environment increase We moving our you ago, floors last result which the our

focused on we’re that yields think on we’re think loan today more our sure floors, then off are about concerned focused am that lifting So cost it’s rising, floors. I I lifting we’re of increasing. funds -- I the as making more

Alex Lau

year slide Thank quarter-over-quarter. On volumes some ago, on but you. have XX, what shows transaction this? driving a from is client how it down you give increased color Can

Greg Sigrist

I to year remember, the think we the Omicron. with have you entered

made. just those lot other drivers, And inflationary behind travel-related -- the don’t transactions, to think think it. there’s points, Mark’s think, I it. behind goes of this it is So some think a geopolitical of magic just really back and I I part Alex, also of environment already macro I any and than broad

We is revenues, on and continue to the see quick just so not the underneath though, it. stuff strong the There’s matters mix which -- so surface other it’s fees.

is I the thesis going because think to side. focused what’s what trajectory, we’re that’s really term out on prove on fintech the that longer

Alex Lau

rest securities for target, me target your XX% are And one Thanks. on last maintaining the year? for total to this you the of assets,

Greg Sigrist

to, intending Absolutely Yeah. Alex.

Alex Lau

guys. Thanks, me. That’s from it

Mark DeFazio

Yeah.

welcome. are You

Operator

And we have with a follow-up KBW. --

now is Your line open.

Chris O’Connell

Hi.

rates of that remind side tied Can expense? those deposits? of you Just want interest of the to on can to the unfortunately, just flows deposit are of beta and us short-term deposits the follow-up the you dynamics discussion. around, And us the statement how and dynamics through versus expense of the just income on some remind balance

Mark DeFazio

think, the interest majority expense. Well, through of frog exposure, I obviously, our flows rate interest

rising of tied rates. there is as I I’m very it million component notional rates in question, your think think that’s a rise, place you is But small as that. expense right, to if on through probably fee understanding that how licensing $XXX derivative terms Chris, our recall, in I of flows a there’s

the that basis So that XXX up LIBOR but see fees one which derivative, cap to to up you’re month on only points, to rate point. licensing to going subject is

Chris O’Connell

Okay. Great.

large least the like comp fee at in in couple of see immediate next quarters licensing on. shouldn’t a the So

Greg Sigrist

No.

to you feds raise another May You’ll again, see assume XX basis it, June. in points the in to going have and XX

any you in. after you’re of effect the market logic see quarter pull-through that, to in that and is If then kick the follow going second that cash that to going

Chris O’Connell

it. the Thanks for it. Appreciate Okay. Got color.

Mark DeFazio

welcome. are You

Operator

And Lau Morgan. we will with take from a Alex JP follow-up

Your line now open. is

Alex Lau

from questions guys. me other No

Operator

from we KBW. with have O’Connell follow do any ups And Chris

Chris O’Connell

am Thank I all set. you.

Operator

Mark back time over the closing for like allotted for would remarks. turn additional to to now the concludes call DeFazio This I questions. or

Mark DeFazio

your with forward you. Thank to and just to look want weekend. very MCB. And you for the thank interest and any quarter Thank speaking again support look and to you of next our you much forward say in earnings I during I have nice a release.

Operator

This does have day. and at this conclude webcast A found call today’s Please your disconnect wonderful at a can conference webcast. of call www.MCBankNY.com. line and archive this time be

Metropolitan Bank Holding (MCB) 22 Apr 222022 Q1 Earnings call transcript