MCB - Earnings call transcript Q4 2024 | Metropolitan Bank Holding Corp.

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Operator

Welcome to Metropolitan Commercial Bank's Fourth Quarter and Full Year 2024 Earnings Call. Hosting the call today for Metropolitan Commercial Bank are Mark DeFazio, President and Chief Executive Officer; and Daniel Dougherty, Executive Vice President and Chief Financial Officer. Today's call is being recorded. [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. Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. company's in forward-looking investor the the measures and presentation. to appear that earnings refer notices statements regarding non-GAAP Please release and

to It the Chief pleasure my Officer. Mark over Executive is and DeFazio, to President now floor turn

You may begin.

Mark DeFazio

per you net Thank joining quarter million income the with of our concluded fourth strong $X.XX for a you. $XX.X MCB and very call. share. quarter fourth morning, year Good thank earnings performance, or generating

our annual the Our and quarterly fourth increased versus XX.X% versus interest interest net quarter net full income XX.X% XXXX. increased income XXXX year

a with the reaching still bank commercial had During am MCB which we X past complementary year, the swing. for been the full conclusion. major pleased years. other business initiatives the to exited underway report that business, successfully one the and to XX I its BaaS in had

The years, such economic core there operational the X deposit of demonstrated integrated and report runoff. replacement associated business only one I task a exit took that a timely and to minor through the few MCB are pleased of of technologically remaining. strengths am its

exited we by since year end increased million total by as $XXX million Even BaaS last business, over and XXXX. of the $XXX the we deposits

managed its expect during through the with to associated expansion higher in diversified balances wind continue will down not of NIM expand are that and deposit the verticals replace confident were XXXX. exceed adding We only MCB business. fourth that we that deposit well NIM additional BaaS its quarter its market as to as the share highly the further continue but verticals will fully MCB

remains stack. our in which is flight second in technology our franchise-wide new The investment initiative,

end completed year. the to be of continue full to expect by As planned, this we integration the

on investment We are platform. our within seeing a payments already return

and diversified come. are MCB's confident growing technologies for bank to the scale and commercial years will support that new We

its sustained MCB initiatives, growth While managing strategy. these continued

York, in presence other but our to carefully profitability, while solidifying further only optimize continue not complementary We markets. quality, New banking in manage asset several

traditional laser-focused positioning to and to opportunities advantage still through take beyond. while channels in share shareholder strategic market We ourselves Working value. increase potential stay XXXX to capture additional of

and course that the next was respectively. approach the X.X%. a For XX XX XX.X%, the achieve NIM, confident through supported We core we to full adjusted should ROATCE quarter ROATCE or of which remain XX.X% mid-teens a will by year XXXX, fourth X.XX% robust and months,

Of course, results these subject are to factors conditions control. beyond market are that our

strong. remains quality Asset

segment not identified or in negative have product our sector loan portfolio. any We any trends geography is impacting broad-based that

currently no workouts very nonperforming confident our we have metrics believe be that credit discipline, We and the credits, remain diversity. underwriting that conservative new will pricing We resolved that portfolio result direct in of healthy MCB's a and are in successfully are flight XXXX.

on commercial exclusive relationship-based by focus is and we in Our segments industry our clients banking supported high-quality with performance sponsors also commercial know well.

like whose to of by deliver all the would of shareholders. and thank effort for to our employees I our to Finally, value-added provide to extension to dedication Board and foundation commitment services and continue customers our MCB's the Directors

it turn Dougherty. now over will I to and you, Thank Dan

Daniel Dougherty

Mark, morning, you, Thank and everyone. good

with points basis we by increased to margin X.XX%. in the Quarter-over-quarter, finished a net year interest quarter. Mark said, As fourth the X strong the performance

NIM I favorably outsized amount results which with However, loan On estimate third was from included basis, normalized quarter, similar X.XX%, that quarter. to the performance accretion. the compares a approximately that the prior and normalized fee the of quarter deferred fourth

little forward later. for I'll NIM financial cover the other full metrics year XXXX a guidance and

period. back much of weighted would toward end like that however, the was the now, approximately of offloading fourth I low-cost to GPG deposits note quarter $XXX of the For million very

approximately weighted growth the was our Loan coupon $XXX in X print the million. Despite a million, new quarter on the above while first margin a balance points was expect As quarter. to million the December XX the funding that approximately normalized was headwind, $XXX X.X%. for average quarter, fourth balance $XXX the was volume NIM of million, average quarter basis result, is $XXX the I originations of wholesale of this

weighted of maturities the second X.XX%. forward, average XX%. approximately Looking of the coupon about running the at has totaling that is average maturities totaling $XXX maturities are X.XX%. million about of quarter, quarter for The And first is million been renewed weighted coupon $XXX portion our

were year. closings Our loan as very anticipated pipelines currently this some are full pushed December into

to that support continue pricing loan expansion. manage and further monitor will in manner We a NIM

million EB-X total million, Primarily and by as while the growth million. fourth $XXX quarter. experienced deposits municipal retail $XXX by bulk by a The deposits Interest-bearing result of approximately of deposits declined verticals the the exit, deposit of in noninterest-bearing the decreased the GPG increased $XXX quarter. in the completion about approximately

For were the than $XXX million outflows. year, of deposits up more net GPG

growth robust. our outlook title ] for deposit vertical HOA, verticals escrow is across Importantly, EB-X, the and XXXX [ stack, especially muni

trends of No decline $X.X asset no of contemplated growth. in the going quarter the portfolio. $X.X provision negative million third the a revenue million mentioned, revenue quarter approximately quarter, linked was $X.X loan for Mark versus in fourth with million was primarily GPG GPG remains $X.X related The was decline forward. quarter. GPG related income. within the million. decline the to the aligned is quarter strong with income was quality identifiable As in fourth Noninterest The

quarter Noninterest quarter, the in quarter. reserve quarter, reserve, third the expenses impact settlement the million in settlement established the decline of of fourth third a the of about X.X% impact about 'XX. million excluding increased Again, the the the noninterest expenses $XX.X of from totaled excluding fourth from $X.X

$XXX,XXX. fourth initiative onetime other the the approximately and transformation quarter, totaled costs For digital related to expenses

for rate deck, year, million highlights of million, down you $X.X the a settlement In adjusted XXXX. The that. operating performance. tax expenses We GAAP excluding our recommend look $XXX.X effective for at take the reserve. was of XX.X%. guidance, totaled we For walk approximately a quarter again the have financial a versus couple XXXX investor

the XX% to all, a of or we're fourth at near XXXX. of First expecting [indiscernible] be quarter core by of

loan year-end Our XX% to versus X% growth planned XXXX. is

be year The is funding we expected XXX that generic July loan NIM is assuming growth in for cut assumption forecast. full point deposit XXX. and Fed that generally to in X.X% are funds at to a basis priced X.XX%, The growth rate minus

We the non-GPG X%, $XX.X X% million expect to for noninterest growth income over in income recorded fee of XXXX.

Finally, annual main me to increased we expect noninterest OpEx through $XXX of you forecast. of $XXX Allow the million. the million expenses walk to drivers

into to for approximately our Our Banking completion IT million initiatives to the XXXX noninterest includes expense The related transformation year. previous to expense year. work essentially more planned effect, and 'XX is of than completed for This was timing, in is this in digital million other that guidance Modern initiative because costs expected $X project and $X million been onetime guidance million. $X.X related that slated new originally $XX in this be approximately motion has, pushed to

million. also project $X.X million We $X to other of expenses IT forecast

expenses a second, continuing data greater security and The framework new data centers, initiatives. implementation onetime first, infrastructure with and main current and And aligned capacity to these initiatives primarily with secure resiliency. governance tools regulatory expectations. major the driving of state-of-the-art X update our redesign are allowing network complete governance data These are: a a enhance of data initiatives for related our expansion of

an what an expense noninterest increase expense. item licensing in effect is is Further, noteworthy another

a was guidance. $X.XX as a in income in quarterly We that million this accretion of It's of will gain my was noteworthy approximately August on the see million accretion any increase contemplated cease -- previous $X will an adjustment cap XXXX, from total annually that of in income extinguished that February. about is not

XXXX, XX% for and line benefits the the increase about common the [ ]. year-over-year for comp On consensus to equates for benefits

actual much effective is Our expected to rate larger to staff institution. The to experience and tax between and continue is as team a expected a be closer we build to management prepared be XX% support to XX%. is that year-over-year XX%

answers. to At this turn call back the for time, operator will our and I questions

Operator

with Instructions] Our Chris first from question [Operator O'Connell comes KBW.

Christopher O'Connell

just make XXX wanted the I on [ deals? sure quarter heard were to right. say new I coming on the at that ] Do coming you fourth in originations So

Daniel Dougherty

manage of Correct. And that we towards continue to level. spread sort the

that reasonable So of a place that's being is originations. reasonable all $XXX a kind million kind expecting probably for forward-looking $XXX to of equal, million else

Christopher O'Connell

as with the the -- quarterly rates to the the Okay. XX quarter. difficult the far with How as just a quarter the bit it's out from little Great. are GPG benefit basis just this impact cuts isolating a single the then Fed a exit go-forward parcel on the about now? And cut you from because point margin thinking guys on basis

Daniel Dougherty

it's more. But XX X usually let's equates a be Each per as cut. basis I little points point basis rate basis a placeholder. about use to XX might X -- cut point

Christopher O'Connell

the side upon and if opportunities course be? done and maybe the about time. then Okay. verticals in seeing recent on? the the verticals talked are XXXX perhaps additional expand that those over you the opportunities there Great. new what help initiatives that around on where Can GPG going to any runoff color are And might over new some you deposit you're ones replace the Just just you guys of have largest guys there,

Mark DeFazio

that growth confident existing good point, new Well, look a across deck and that deposits, core through we take our of really the runway opportunities see we've We're that our in and will you do will think job We the XXXX. for GPG this loan still investor on at are. all XXXX working and replace initiatives are them Chris, have in always I demonstrated We're initiative. with of remaining existing now a already a just verticals our with lot new XXXX very fund deposits franchise. we deposit what we for and to

new in XXXX come as on now, But sense focused on and So them as to right initiatives. 'XX far new more we're here. things no and profiling

Christopher O'Connell

you interest-bearing December? costs, I . the did number for wondering for the was And it. Got if have deposit spot deposit

Daniel Dougherty

be I the base it's the I for that, smart don't it as a have get of happy -- X.XX% that have I'll for don't don't quarter, but for Chris, I December. but have to you. quarter,

Christopher O'Connell

-- then And a we're mean XXXX? for $XX expenses I on the guess, is -- run as kind expenses we rate million, additional of into run million about just of the thinking to build rate All should into I with the of course if XXXX. the the -- expense up so be take quarterly think off where exit good that trying ends XXXX right. on a of over onetime just you going side, basis, the $XX

Daniel Dougherty

bit rate. that growth scope a OpEx about go be X% And with, [ back I'm a at in little million plan XX much little that's think have focused start ] and hoping totality I you call $XXX a high. But ], to again, lower XXX to bit it, [ that, going going run got very the forward is that. on you we've than managing off you

going plan the once that's very -- these one-timers we behind that's much all forward. So get us,

Christopher O'Connell

for wondering little Okay. one helpful. you I bit guys the color around type there? back headed is of time being into And of perhaps loose made credit of where That's what gave around 'XX. then was last just a is me end and they're assumptions over if just are ROATCE even -- just the

Mark DeFazio

Credit assumptions.

Daniel Dougherty

as don't -- the Mark or course such negative that them over that nonperforming credits don't we we go We of said, deteriorating are any detect to trends expect XXXX.

within credit forecast. assumptions As charge-off such, we have no the

Operator

And next we from Piper question Sandler. take Fitzgibbon Mark our with will

Mark Fitzgibbon

year of Dan, tech includes to take million $XXX Investments? the charges this to so to the you to of $XX expect operating just million expenses, million $XXX that clarify, related

Daniel Dougherty

correct. That's

Mark Fitzgibbon

Okay.

Okay. Great.

bit and deposits obviously like year looked fourth in it of the quarter. fee you had and of GPG end million $XX of Secondly, at like little the had a the income

You're gone the X in deposits be fee first will quarter and essentially all of they'll saying be those income.

Daniel Dougherty

correct. That's

Mark Fitzgibbon

-- Okay, ahead. great. I sorry, I'm go wondered

Daniel Dougherty

no are it'd they cost wonderful basically. I say if out there XX days, was as deposits, within we the modeling be are around door stuck but next to going them because the

Mark Fitzgibbon

the Okay. impact you're you any it wondered on may give that nursing given the space, on -- any that it there or And update us major in change in facility business? new maybe could skilled thoughts next, an trends comments with how I administrations, if seeing any

Mark DeFazio

higher them in lot any has -- of feeling performance spend new a of 'XX, a time been of generally result lot heard talking as of with operators. the one no which a or in extraordinary. their speaking, optimistic, about recently Other our time seen haven't with We've been we than factoring returns administration. spending just We

good footprint. more all other their and tied to tackling more . about blocking feeling and the about and excited and share, specifically new expanding grabbing market it's building they're But it. nothing administration than Now

Operator

from Strickland take we And Hovde Group. with will our next Feddie question

Feddie Strickland

to margin wanted on Just clarify the guy.

than think rates. points the higher mean think that you the I would X basis first be to way said about I normalized core the quarter

the expect the -- year, in XXX-ish midyear. cut ] by of that around quarter break end we am of inclusive Is to does first from XXX So mean margin understanding that one the [ go correctly? kind towards of I the . that

Daniel Dougherty

All right.

the to So X parts question.

normalized X above quarter, First bps fourth quarter.

to So that X.X%. gets the of you context

the to $XXX $XXX million, For we rate $XXX million we million. closer again, that, figured end which in, probably X year cut penciled north in year, July. the to means of that's,

Feddie Strickland

trends Got ask I to in it. different seeing particularly any in And office. just if wanted you're occupancy,

seems office to like accelerated little have if customers? among I'm just it you're return seeing your a bit. that Just curious

Mark DeFazio

little in are been more broader A on a recent specific in or is depending now bit, Class office is downtown? it its discussion building, But recent But it's office Midtown it building. they leaves the South? type months. it's location. quarters than Midtown, Is in building in is answer have of tea positive but it is So the a yes. the different about A If office it the

Feddie Strickland

And been get competitive seems good that, a loans. lower do on it. could faster? for pressures, yield anything any last you pricing or in like to that just But new interns different or one yields able be bit Got little It me. one terms of like see pretty anything you've

Mark DeFazio

We grow banks of really stagnation continuing any sheet. balance see trying all stuck pressures lot to are here don't competitive their in like business, seems at it and No. restructure in to A our

sales, So in wind have wealth. clients a we commercial of who we looking service to to continue build lot are our and

have those So, no, of don't pressures. competitive we kind

Daniel Dougherty

weekly out pricing set a basis, an add lenders. the there I a anecdote guidance to that on can I

to this got to And no so office. I that. my do year, far come I've said one had we about something

pressures spreads no the time so far, for to So cause least at being. tighten so good, obvious that would us

Operator

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

Mark DeFazio

they've services, in every I of new are the one And than business in for ever. than last time be financial years successful After just operating you we not of technologies I'm the many With that's there's -- operating feeling and and support of are XXXX, stagnation, and we're glad an ever to into exciting your as looking opportunities and banking. that to want been. more years. Board. over to today today confidence really celebrating The properly management in a coming result grow thank our and continued managing each your greater in I'm history, XX optimistic

the also So years. in the we positioned are to to well create continue take to share very advantage of dislocation couple of our over continue sector market next and

you So meeting. thank and forward at and you talking to and one every of next again, the look quarterly each to

Operator

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

Metropolitan Bank Holding (MCB) 24 Jan 252024 Q4 Earnings call transcript