Metropolitan Bank Q3 Earnings Call Highlights

Key Points

• Strong third-quarter performance: Metropolitan Bank reported diluted EPS of $2.58, with net interest income up nearly 8% sequentially and more than 25% year over year. Net interest margin expanded to 4.36%, and the quarterly dividend increased 14% to $0.40 per share.
• Balance-sheet growth continued: Loans reached $7.5 billion and deposits $8.3 billion, supported by $1 billion of quarterly loan originations and significant EB-5 deposit growth. Loan growth remains on track toward management’s $1 billion full-year target.
• Future outlook includes margin pressure and new growth initiatives: Management expects fourth-quarter net interest margin of 4.15%–4.20% amid anticipated rate increases and upcoming swap roll-offs, while payments, gaming integrations, branch expansion and share buybacks could support longer-term earnings growth.

Metropolitan Bank NYSE: MCB reported third-quarter 2026 diluted earnings per share of $2.58, supported by loan and deposit growth, lower funding costs and an expanding net interest margin.

President and Chief Executive Officer Mark DeFazio said the bank’s net interest margin reached 4.36% during the quarter, while net interest income rose nearly 8% from the prior quarter and more than 25% from a year earlier. The company also increased its quarterly dividend by 14% to $0.40 per share.

“These results reflected disciplined execution across the franchise and demonstrated the earnings power of our commercial business model,” DeFazio said.

Balance Sheet Growth and Funding

Loans totaled $7.5 billion at quarter-end, up 11% year to date, while deposits reached $8.3 billion, up nearly 13% since year-end, according to DeFazio.

Chief Financial Officer Daniel Dougherty said loans increased about $205 million, or 2.8%, in the third quarter and approximately $724 million, or 10.6%, year to date. The company continues to target $1 billion of loan growth for the full year.

Metropolitan originated nearly $1 billion of loans during the quarter, while payoffs, paydowns and prepayments totaled nearly $800 million. Dougherty said the activity reflected the bank’s selective approach to credit underwriting and pricing rather than an effort to pursue growth at any cost.

The loan pipeline included approximately $700 million in signed term sheets and another $600 million either out for signature or under review. New loan originations in the pipeline carried coupons of about 7.03%, Dougherty said.

Deposit balances increased approximately $589 million from the prior quarter. Non-interest-bearing deposits rose about $200 million, or more than 12%, and interest-bearing deposits rose about $388 million, or more than 6%.

The EB-5 deposit vertical accounted for about 75% of the third-quarter deposit increase, though the company also reported growth in its homeowners association, trustee and retail deposit channels. DeFazio said a cutoff date for certain EB-5 applications contributed to the quarter’s “outsize uptick,” while adding that the bank expects continued growth in the business, potentially at a slower pace.

Metropolitan’s deposit cost declined 8 basis points sequentially to 2.49%, primarily because of product mix. The bank also purchased $400 million of short-term investments, primarily laddered Treasury bills, as deposit growth outpaced lending growth.

Margin Outlook and Credit Trends

The reported net interest margin increased 28 basis points from the prior quarter to 4.36%. However, Dougherty said that after adjusting for elevated prepayment penalties and deferred-fee recognition associated with loan paydowns, normalized margin would have been roughly 4.20% to 4.25%.

For the fourth quarter, management expects net interest margin of about 4.15% to 4.20%, assuming one additional Federal Reserve rate increase in December. The company’s forecast also assumes another rate increase in March 2027. Dougherty said Metropolitan is slightly liability sensitive and is using an effective deposit beta of 65% in its current 2027 forecast model.

Management said roughly $1 billion of swaps are scheduled to roll off in April and August 2027, representing another factor in the margin outlook. DeFazio told analysts the best-case outcome would be to maintain the 4.15% to 4.20% margin range, estimating that each 25-basis-point rate increase would generally result in about 5 basis points of margin compression.

Credit performance showed what Dougherty described as a trend toward normalization. Third-quarter charge-offs were 18 basis points, and nonperforming loans remained below 1% of total loans. He said management did not see emerging systemic issues in the loan portfolio.

DeFazio said the bank expects some recoveries in the fourth quarter on certain legacy nonperforming credits that have progressed through restructuring or legal proceedings. Remaining balances on those credits are expected to amortize under negotiated settlement agreements, he said.

Expenses, Technology and Payments Initiatives

Third-quarter noninterest income increased approximately $400,000, or 15%, from the prior quarter. Dougherty attributed higher service-charge income primarily to strong deposit growth and said the company expects its payments, HUD and other initiatives to generate a more meaningful lift in fee income beginning in the second half of 2027.

Noninterest expense was $49.5 million, down $2.3 million, or 4.5%, sequentially. The efficiency ratio was below 50%, and Dougherty said the bank recorded an initial benefit from an investment tax credit during the quarter.

Management said deposit-related fees, connected to trustee and EB-5 deposits, are expected to rise about 25% in the fourth quarter because the fees are indexed to short-term interest rates and associated deposit balances have increased.

Metropolitan continues to invest in artificial intelligence and branch expansion. The AI team currently has six full-time employees, with at least one additional hire planned. Dougherty said the company expects to begin framing and reporting on the return on its AI investment during 2027.

The bank’s retail operations in the western U.S., Florida and New Jersey are fully operational, while branches in North Carolina, Connecticut and Flushing, Queens are planned to open later in 2026 or early 2027.

Gaming Platform and Capital Actions

Management said the company’s payments platform is being prepared for gaming-industry testing. Dougherty said two gaming operators have signed up for integration and are expected to begin testing within 30 to 45 days, with a potential launch in the first quarter of 2027. A third operator has agreed to move forward but is expected to begin in the first quarter because of competing priorities within that organization.

DeFazio said the re-engagement of the payments platform is expected to add to earnings, diversify revenue and improve deposit liquidity over time.

During September, Metropolitan repurchased about $10 million of its shares at a weighted-average price of roughly 109% of estimated 2026 year-end book value. Dougherty said the bank has $40 million of remaining repurchase authorization and expects further purchases if management believes the shares remain undervalued.

“Our outlook for the earnings growth of our franchise gives us great confidence that additional buybacks make great sense,” Dougherty said.

About Metropolitan Bank (NYSE:MCB)

Metropolitan Bank Holding Corp. is the parent company of Metropolitan Commercial Bank, a full-service commercial bank headquartered in New York. Founded in 1999, the bank provides financial services to businesses, entrepreneurs, institutions and consumers through its branch network and digital banking channels.

Metropolitan Commercial Bank offers commercial and consumer deposit accounts, business and real estate lending, personal loans, cash-management and treasury services, online and mobile banking, and other payment-related solutions.

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