Exhibit 99.1

 

 

Metropolitan Bank Holding Corp. Reports Earnings of

$7.1 Million or $0.85 per Diluted Common Share in Third Quarter

 

Results Led by Growth in Loans and Deposits

 

NEW YORK, October 25, 2018 – Metropolitan Bank Holding Corp. (NYSE:MCB), the holding company (the “Company”) for Metropolitan Commercial Bank (the “Bank”), today reported net income of $7.1 million, or $0.85 per diluted common share, for the third quarter of 2018 as compared to $3.8 million, or $0.82 per diluted common share, for the third quarter of 2017.

 

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

 

Financial Highlights for the third quarter of 2018 include:

 

·Net income for the third quarter of 2018 included a loan loss recovery of $1.5 million resulting in a negative provision for loan losses of $453,000. Excluding the loan loss recovery, net of associated legal fees, net income for the quarter was $6.1 million or $0.73 per diluted common share.

 

·The average balance of loans increased 24% to $1.6 billion for the third quarter of 2018, as compared to the third quarter of 2017. For the three and nine months ended September 30, 2018, the Bank originated loans of $146.9 million and $528.2 million, respectively as compared to $137.3 million and $417.6 million for the same periods in 2017.

 

·The average balance of non-interest-bearing demand accounts increased 25% to $850.3 million for the third quarter of 2018 as compared to $682.3 million for the third quarter of 2017.

 

·The average balance of interest-bearing deposits increased 12% to $728.5 million for the 2018 third quarter as compared to $653.1 million for third quarter of 2017.

 

·Net interest margin increased 17 basis points to 3.76% for the third quarter of 2018 from 3.59% for the third quarter of 2017. For the nine months ended September 30, 2018, net interest margin increased to 3.70% as compared to 3.54% for the same period in 2017.

 

·Annualized return on average assets for the third quarter of 2018 was 1.45%, an increase of 51 basis points as compared to 0.94% for the third quarter of 2017.

 

·Annualized return on average equity was 11.22% for the third quarter of 2018 as compared to 13.14% for the third quarter of 2017. The Company completed its initial public offering in November 2017 raising $114.8 million.

 

·The Company’s efficiency ratio in the third quarter of 2018 was 50.85%, compared to 53.03% for the same quarter in 2017.

 

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

 

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

 

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Earnings Highlights

 

   Three months ended 
(dollars in thousands)  Sept. 30, 2018   Sept. 30, 2017   Change 
Net income  $7,113   $3,845    85%
Diluted earnings per share   0.85    0.82    4%
Annualized return on average assets   1.45%   0.94%     
Annualized return on average equity   11.22%   13.14%     
Annualized return on average common equity*   11.47%   13.79%     

 

    Nine months ended 
(dollars in thousands)   Sept. 30, 2018    Sept. 30, 2017    Change 
Net income  $19,268   $9,044    113%
Diluted earnings per share   2.31    1.94    22%
Annualized return on average assets   1.34%   0.84%     
Annualized return on average equity   10.31%   10.56%     
Annualized return on average common equity*   10.67%   10.81%     

 

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

 

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

 

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

 

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Net Interest Margin Analysis  Three months ended September 30, 
   2018   2017 
(dollars in thousands)  Average
Outstanding
Balance
   Interest   Yield/Rate   Average
Outstanding
Balance
   Interest   Yield/Rate 
Assets:                              
Interest-earning assets:                              
Loans (1)  $1,639,958   $20,255    4.90%  $1,326,923   $15,564    4.65%
Available-for-sale securities   30,033    165    2.18%   34,930    178    2.02%
Held-to-maturity securities   4,876    25    2.03%   5,844    30    2.04%
Overnight deposits   240,604    1,233    2.03%   148,756    476    1.27%
Other interest-earning assets   20,794    229    4.37%   29,379    180    2.43%
Total interest-earning assets   1,936,265    21,907    4.49%   1,545,832    16,428    4.22%
Non-interest-earning assets   42,384              102,402           
Allowance for loan and lease losses   (18,331)             (14,301)          
Total assets  $1,960,318             $1,633,933           
                               
Liabilities and Stockholders' Equity:                              
Interest-bearing liabilities:                              
Money market and savings accounts  $633,474   $2,045    1.28%  $576,619   $1,337    0.92%
Certificates of deposit   95,032    520    2.17%   76,506    251    1.30%
Total interest-bearing deposits   728,506    2,565    1.40%   653,125    1,588    0.96%
Borrowed funds   105,403    991    3.73%   112,651    849    2.99%
 Total interest-bearing liabilities   833,909    3,556    1.69%   765,776    2,437    1.26%
Non-interest-bearing liabilities:                              
Non-interest-bearing deposits   850,325              682,303           
Other non-interest bearing liabilities   22,568              68,799           
Total liabilities   1,706,802              1,516,878           
                               
Stockholders' Equity   253,516              117,055           
Total liabilities and equity  $1,960,318             $1,633,933           
                               
Net interest income       $18,351             $13,991      
Net interest rate spread (2)             2.80%             2.96%
Net interest-earning assets  $1,102,356             $780,056           
Net interest margin (3)             3.76%             3.59%
Ratio of interest earning assets to interest bearing liabilities             2.32x              2.02x 

 

(1)Amount includes deferred loan fees and non-performing loans.
(2)Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.

(3)Determined by dividing annualized net interest income by total average interest-earning assets.

 

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Net Interest Margin Analysis  Nine months ended September 30, 
   2018   2017 
(dollars in thousands)  Average
Outstanding
Balance
   Interest   Yield/Rate   Average
Outstanding
Balance
   Interest   Yield/Rate 
Assets:                        
Interest-earning assets:                              
Loans (1)  $1,550,278   $55,467    4.78%  $1,192,463   $40,811    4.58%
Available-for-sale securities   30,661    489    2.13%   35,782    548    2.05%
Held-to-maturity securities   5,095    80    2.09%   6,099    94    2.06%
Overnight deposits   272,039    3,811    1.87%   117,399    957    1.09%
Other interest-earning assets   30,768    755    3.28%   29,817    519    2.33%
Total interest-earning assets   1,888,841    60,602    4.29%   1,381,560    42,929    4.15%
Non-interest-earning assets   42,084              59,733           
Allowance for loan and lease losses   (16,823)             (12,979)          
Total assets  $1,914,102             $1,428,314           
                               
Liabilities and Stockholders' Equity:                              
Interest-bearing liabilities:                              
Money market and savings accounts  $566,396   $4,663    1.10%  $562,539   $3,562    0.85%
Certificates of deposit   84,244    1,139    1.81%   79,494    754    1.27%
Total interest-bearing deposits   650,640    5,802    1.19%   642,033    4,316    0.90%
Borrowed funds   90,241    2,534    3.75%   111,480    2,061    2.47%
Total interest-bearing liabilities   740,881    8,336    1.50%   753,513    6,377    1.13%
Non-interest-bearing liabilities:                              
Non-interest-bearing deposits   902,495              542,200           
Other non-interest bearing liabilities   22,178              18,704           
Total liabilities   1,665,554              1,314,417           
                               
Stockholders' Equity   248,548              113,897           
Total liabilities and equity  $1,914,102             $1,428,314           
                               
Net interest income       $52,266             $36,552      
Net interest rate spread (2)             2.79%             3.02%
Net interest-earning assets  $1,147,960             $628,047           
Net interest margin (3)             3.70%             3.54%
Ratio of interest earning assets to interest bearing liabilities             2.55x              1.83x 

 

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

(2)Determined by subtracting the annualized weighted average cost of total interest-bearing liabilities from the annualized weighted average yield on total interest-earning assets.

(3)Determined by dividing annualized net interest income by total average interest-earning assets.

 

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

 

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

 

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Asset Quality

 

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

 

   As Of 
(dollars in thousands)  Sept. 30, 2018   December 31, 2017   Sept. 30, 2017 
Non-performing assets:               
 Non-accrual loans:               
 Real Estate:               
 Commercial  $-   $787   $841 
 One-to-four family   -    2,447    2,466 
 Commercial and industrial   -    -    3,660 
 Consumer   79    155    125 
 Total non-accrual loans  $79   $3,389   $7,092 
 Accruing loans 90 days or more past due   328    -    - 
Total non-performing assets   407    3,389    7,092 
Nonaccrual loans as % of loans outstanding   0.00%   0.24%   0.51%
                
Allowance for loan losses  $(18,493)  $(14,887)  $(15,075)
Allowance for loan losses as % of loans outstanding   1.09%   1.05%   1.09%

 

   Three months ended September 30,   Nine months ended September 30, 
(dollars in thousands)  2018   2017   2018   2017 
Provision for loan losses  $(453)  $1,200   $2,294   $3,560 
Charge-offs  $54   $34   $278   $300 
Recoveries  $(1,537)  $-   $(1,590)  $- 
Net recoveries as % of average loans (annualized)   (0.36)%   0.01%   (0.11)%   0.03%

 

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

 

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Non-interest Income

 

   Three months ended September 30, 
(dollars in thousands)  2018   2017   Change 
Service charges on deposit accounts  $693   $836    -17%
Prepaid debit card income   1,080    847    28%
Other service charges and fees   239    523    -54%
 Total non-interest income  $2,012   $2,206    -9%

 

   Nine months ended September 30, 
   2018   2017   Change 
Service charges on deposit accounts  $3,422   $1,633    110%
Prepaid debit card income   3,506    2,440    44%
Other service charges and fees   3,076    939    228%
Losses on call of securities   (37)   -    NM%
 Total non-interest income  $9,967   $5,012    99%

 

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

 

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

 

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

 

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Non-interest Expense

 

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

 

   Nine months ended September 30, 
  2018   2017   Change 
Compensation and benefits  $18,696   $13,688    37%
Bank premises and equipment   3,739    3,185    17%
Insurance expense   253    204    24%
Professional fees   2,207    1,800    23%
Data processing fees   2,961    987    200%
Other expenses   4,012    3,102    29%
Total non-interest expense  $31,868   $22,966    39%

 

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

 

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

 

Balance Sheet

 

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

 

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

 

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

 

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Regulatory Capital Ratios

 

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

 

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

 

About Metropolitan Bank Holding Corporation

 

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

 

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Forward Looking Statement Disclaimer

 

This release contains certain “forward-looking statements” about the Company which, to the extent applicable, are intended to be covered by the safe harbor for forward-looking statements provided under Federal securities laws and, regardless of such coverage, you are cautioned about. Examples of forward-looking statements include but are not limited to the Company’s financial condition and capital ratios, results of operations and the Company’s outlook and business. Forward-looking statements are not historical facts. Such statements may be identified by the use of such words as “may”, “believe”, “expect”, “anticipate”, “plan”, “continue”, or similar terminology. These statements relate to future events or our future financial performance and involve risks and uncertainties that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we caution you not to place undue reliance on these forward-looking statements. Factors which may cause our forward-looking statements to be materially inaccurate include, but are not limited to those discussed under the heading “Risk Factors” in our Annual Report on Form 10-K, as well as an unexpected deterioration in our loan portfolio, unexpected increases in our expenses, greater than anticipated growth and our ability to manage such growth, unanticipated regulatory action, unexpected changes in interest rates, an unanticipated decrease in deposits, an unanticipated loss of key personnel, an unanticipated loss of existing customers, competition from other institutions resulting in unanticipated changes in our loan or deposit rates, unanticipated increases in Federal Deposit Insurance Corporation costs and unanticipated adverse changes in our customers’ economic conditions or economic conditions in our local area in general.

 

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

 

Contacts for Metropolitan Bank Holding Corp.

 

Investor Relations Department 212-365-6721
Investors: IR@MetropolitanBankNY.com

 

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Consolidated Balance Sheet

 

(dollars in thousands)  Sept. 30, 2018
(unaudited)
   December 31,
2017
   Change 
Assets               
Cash and due from banks  $6,165   $6,790    -9%
Overnight deposits   148,260    254,441    -42%
Total cash and cash equivalents   154,425    261,231    -41%
Investment securities available for sale   27,490    32,157    -15%
Investment securities held to maturity   4,757    5,428    -12%
Total securities   32,247    37,585    -14%
Other investments   16,645    13,677    22%
Loans, net of deferred fees and unamortized costs   1,698,929    1,419,896    20%
Allowance for loan losses   (18,493)   (14,887)   24%
Net loans   1,680,436    1,405,009    20%
Receivable from prepaid card programs, net   14,297    9,579    49%
Accrued interest receivable   5,239    4,421    19%
Premises and equipment, net   6,918    6,268    10%
Prepaid expenses and other assets   7,813    5,751    36%
Goodwill   9,733    9,733    - 
Accounts receivable, net   2,961    6,601    -55%
Total assets  $1,930,714   $1,759,855    10%
Liabilities and Stockholders' Equity               
Deposits:               
Noninterest-bearing demand deposits  $777,494   $812,616    -4%
Interest-bearing deposits   761,177    591,739    29%
Total deposits   1,538,671    1,404,355    10%
Federal Home Loan Bank of New York advances   60,000    42,198    42%
Trust preferred securities   20,620    20,620    - 
Subordinated debts, net of issuance cost   24,531    24,489    - 
Accounts payable, accrued expenses and other liabilities   14,894    21,678    -31%
Accrued interest payable   918    749    23%
Prepaid debit cardholder balances   13,811    8,882    55%
Total liabilities   1,673,445    1,522,971    10%
                
Class B preferred stock   3    3    - 
Common stock   81    81    - 
Additional paid in capital   212,759    211,145    1%
Retained earnings   45,129    25,861    75%
Accumulated other comprehensive loss   (703)   (206)   241%
Total stockholders’ equity   257,269    236,884    9%
Total liabilities and stockholders’ equity  $1,930,714   $1,759,855    10%

 

 11 

 

 

 

Consolidated Statement of Income (unaudited)

 

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

 

 12 

 

 

 

Financial Highlights, Five Quarter Trend (unaudited)

(dollars in thousands, except per share data)

 

   At or for the three months ended 
   Sept. 30, 2018   June 30, 2018   Mar. 31, 2018   Dec. 31, 2017   Sept. 30, 2017 
Performance Measures                         
Net income   7,113    5,865    6,291    3,326    3,845 
Net income available to common shareholders   7,057    5,816    6,238    3,143    3,771 
Per common share:                         
Basic earnings  $0.87   $0.72   $0.77   $0.50   $0.83 
Diluted earnings  $0.85   $0.70   $0.75   $0.49   $0.82 
Common shares outstanding:                         
Average - diluted   8,292,385    8,290,048    8,275,243    6,768,753    4,576,925 
Period end   8,207,234    8,205,234    8,194,925    8,196,310    4,633,012 
Return on (annualized):                         
Average total assets   1.45%   1.20%   1.35%   0.73%   0.94%
Average common equity   11.47%   9.75%   10.78%   7.68%   13.79%
Yield on average earning assets   4.49%   4.13%   4.17%   4.02%   4.22%
Cost of interest-bearing liabilities   1.69%   1.46%   1.31%   1.25%   1.26%
Net interest spread   2.80%   2.67%   2.85%   2.77%   2.96%
Net interest margin   3.76%   3.59%   3.68%   3.51%   3.59%
Net charge-offs as % of average loans (annualized)   (0.36)%   0.02%   0.04%   1.06%   0.01%
Efficiency ratio   50.85%   51.26%   51.48%   44.82%   53.03%
                          
Loan quality                         
Non-performing assets:                         
Non-accrual loans:                         
Real estate                         
Commercial  $-   $-   $-   $787   $841 
One-to-four family   -    -    -    2,447    2,466 
Commercial and industrial   -    -    -    -    3,660 
Consumer   79    192    85    155    125 
 Total non-accrual loans  $79   $192   $85   $3,389   $7,092 
Accruing loans past due 90 days or more   328    -    -    -    - 
 Total non-performing assets  $407   $192   $85    3,389   $7,092 
                          
Non-accrual loans to total loans   0.00%   0.01%   0.01%   0.24%   0.51%
Non-performing loans to total loans   0.02%   0.01%   0.01%   0.24%   0.51%
Allowance for loan losses to total loans   1.09%   1.09%   1.07%   1.05%   1.09%

 

 13 

 

 

 

Consolidated Statement of Income, Five Quarter Trend (unaudited)

 

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

 

 14 

 

 

 

Consolidated Balance Sheet, Five Quarter Trend (unaudited)

 

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

 

 15 

 

 

 

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

 

In addition to the results presented in accordance with Generally Accepted Accounting Principles ("GAAP"), this earnings release includes certain non-GAAP financial measures. Management believes these non-GAAP financial measures provide meaningful information to investors in understanding the Company’s operating performance and trends. These non-GAAP measures have inherent limitations and are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for an analysis of results reported under GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies. Reconciliations of non-GAAP/adjusted financial measures disclosed in this earnings release to the comparable GAAP measures are provided in the accompanying tables.

 

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

 

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

 

Income Data

 

   Quarter Ended
September 30, 2018
   Nine Months Ended
September 30, 2018
 
         
Net income, as reported (GAAP)  $7,113   $19,268 
Loan loss recovery   (1,537)   (1,537)
Legal fees   41    254 
Tax effect   479    402 
Net income excluding the loan loss recovery   6,096    18,387 
Income on participating securities   (56)   (152)
Income available to common stockholders   6,040    18,235 
Diluted shares   8,292,385    8,285,374 
Diluted earnings per share excluding the loan loss recovery  $0.73   $2.20 

 

 16 

 

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