Metropolitan Bank Holding Corp. (MCB) SEC Filing 8-K Material Event for the period ending Thursday, October 25, 2018

 

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.”

 

 

 

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.

 

 

 

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.

 

 

 

 

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.

 

 

 

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

 

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

 

 

 

 

Asset Quality

 

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

 

		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.

 

 

 

Non-interest Income

 

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

 

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

 

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

 

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

 

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

 

 

 

Non-interest Expense

 

		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.

 

 

 

Regulatory Capital Ratios

 

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

 

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

 

About Metropolitan Bank Holding Corporation

 

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

 

 

 

Forward Looking Statement Disclaimer

 

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

 

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

 

Contacts for Metropolitan Bank Holding Corp.

 

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

 

 

 

Consolidated Balance Sheet

 

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

 

 

 

Consolidated Statement of Income (unaudited)

 

		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	%

 

 

 

Financial Highlights, Five Quarter Trend (unaudited)

(dollars in thousands, except per share data)

 

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

 

 

 

Consolidated Statement of Income, Five Quarter Trend (unaudited)

 

		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

 

 

 

Consolidated Balance Sheet, Five Quarter Trend (unaudited)

 

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

 

 

 

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

 

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

 

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

 

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

 

Income Data

 

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