NEW YORK--(BUSINESS WIRE)--Metropolitan Bank Holding Corp. (NYSE:MCB), the holding company (the “Company”) for Metropolitan Commercial Bank (the “Bank”), today reported net income of $5.9 million, or $0.70 per diluted common share, for the second quarter of 2018 compared to $2.7 million, or $0.57 per diluted common share, for the second quarter of 2017.
For the six-month period ended June 30, 2018, the Company reported net income of $12.2 million, or $1.46 per diluted common share, compared to $5.2 million, or $1.11 per diluted common share, for the six-month period ended June 30, 2017.
Financial Highlights for the second quarter of 2018 include:
- Loans increased to $1.6 billion at June 30, 2018, an increase of $179.8 million, or 13%, from December 31, 2017. For the three and six months ended June 30, 2018, the Bank originated loans of $152.2 million and $331.2 million, respectively as compared to $203.8 million and $280.3 million for the same periods in 2017.
- Total deposits increased $136.1 million, or 10%, to $1.5 billion at June 30, 2018 as compared to December 31, 2017 due to increases of $66.2 million in non-interest-bearing demand accounts and $69.9 million in interest-bearing deposits.
- Net interest margin increased 15 basis points to 3.59% for the second quarter of 2018 from 3.44% for the second quarter of 2017. For the six months ended June 30, 2018, net interest margin increased to 3.63% as compared to 3.50% for the same period in 2017.
- Annualized return on average assets for the second quarter of 2018 was 1.20%, an improvement of 45 basis points as compared to 0.75% for the second quarter of 2017.
- Annualized return on average common equity was 9.75% for the second quarter of 2018. The Company completed its initial public offering in November 2017 raising $114.8 million.
- The Company’s efficiency ratio in the second quarter of 2018 was 51.26%, compared to 53.54% for the same quarter in 2017.
- Asset quality remained strong. Non-performing loans were $192,000, or 0.01% of total loans, at June 30, 2018, versus $3.4 million, or 0.24% of total loans, at December 31, 2017.
- Non-interest income increased by $1.0 million to $2.6 million for the second quarter of 2018 as compared to the second quarter of 2017 and decreased by $2.8 million from $5.4 million in the sequential first quarter of 2018. The decrease from the sequential quarter was due primarily to the anticipated decrease in activity in cash management fees associated with our customers in the digital currency business.
Mark DeFazio, the Company’s President and Chief Executive Officer, commented, “I am pleased with the solid results for the second quarter. We are firing on all cylinders and continue to trend ahead of our internal projections. As we leverage our capital, we continue to build a diversified balance sheet primarily comprised of strong earning assets and low cost deposits. The composition of our balance sheet continues to result in a strong and improving efficiency ratio and stable net interest margin. The results for the second quarter also reflect a clearer picture of our core business as the prior two sequential quarters included elevated levels of fee income related to cash management services provided to our customers in the digital currency business.”
Mr. DeFazio concluded, “We are a very focused company. The underpinning of MCB will always be that of a stable middle market bank with a focus on diversification and an enterprise-wide risk management culture. Years ago, we identified the value of technology in delivering products and services and the value of collaborating with technology companies in bringing commercial banking forth through the 21st century. This direction has enabled the Company to drive down its efficiency ratio, generate low cost deposits and fee income and establish a “branch-light” franchise strategy. I am confident that we can continue to maintain our focus and strategy.”
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Earnings Highlights |
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| (dollars in thousands) | Three months ended | |||||||
| June 30, 2018 | June 30, 2017 | Change | ||||||
| Net income | $ | 5,865 | $ | 2,651 | 121% | |||
| Diluted earnings per share | 0.70 | 0.57 | 23% | |||||
| Annualized return on average assets | 1.20% | 0.75% | ||||||
| Annualized return on average equity | 9.53% | 9.33% | ||||||
| Annualized return on average tangible common equity* | 10.16% | 10.77% | ||||||
| (dollars in thousands) | Six months ended | |||||||
| June 30, 2018 | June 30, 2017 | Change | ||||||
| Net income | $ | 12,156 | $ | 5,201 | 134% | |||
| Diluted earnings per share | 1.46 | 1.11 | 31% | |||||
| Annualized return on average assets | 1.28% | 0.78% | ||||||
| Annualized return on average equity | 10.00% | 9.27% | ||||||
| Annualized return on average tangible common equity* | 11.11% | 10.14% | ||||||
*Average tangible common equity equals average common equity less goodwill. See reconciliation to GAAP measures on page 15.
Net income increased $3.2 million to $5.9 million for the three months ended June 30, 2018 as compared to $2.7 million for the same period in 2017. This increase was due primarily to a $5.6 million increase in net interest income and a $1.0 million increase in non-interest income, partially offset by a $3.1 million increase in non-interest expense.
For the six months ended June 30, 2018, net income increased $7.0 million to $12.2 million as compared to $5.2 million for the same period in 2017. This increase was due primarily to an $11.3 million increase in net interest income and a $5.2 million increase in non-interest income, partially offset by a $7.1 million increase in non-interest expense and $2.1 million increase in income tax expense.
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Net Interest Margin Analysis |
Three months ended | ||||||||||||||||
| (dollars in thousands) | June 30, 2018 | June 30, 2017 | |||||||||||||||
|
Average |
Interest | Yield/Rate |
Average |
Interest | Yield/Rate | ||||||||||||
| Assets: | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Loans (1) | $ | 1,532,073 | $ | 17,996 | 4.71% | $ | 1,182,724 | $ | 13,367 | 4.53% | |||||||
| Available-for-sale securities | 30,117 | 158 | 2.10% | 35,315 | 181 | 2.06% | |||||||||||
| Held-to-maturity securities | 5,096 | 27 | 2.09% | 6,104 | 31 | 2.07% | |||||||||||
| Overnight deposits | 340,300 | 1,534 | 1.81% | 117,912 | 293 | 1.00% | |||||||||||
| Other interest-earning assets | 35,932 | 283 | 3.16% | 28,753 | 175 | 2.44% | |||||||||||
| Total interest-earning assets | 1,943,518 | 19,998 | 4.13% | 1,370,808 | 14,047 | 4.11% | |||||||||||
| Non-interest-earning assets | 20,134 | 56,463 | |||||||||||||||
| Allowance for loan and lease losses | (16,742) | (12,669) | |||||||||||||||
| Total assets | $ | 1,946,910 | $ | 1,414,602 | |||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| Money market and savings accounts | $ | 549,950 | $ | 1,428 | 1.04% | $ | 577,296 | $ | 1,221 | 0.85% | |||||||
| Certificates of deposit | 84,636 | 371 | 1.76% | 77,881 | 247 | 1.27% | |||||||||||
| Total interest-bearing deposits | 634,586 | 1,799 | 1.14% | 655,177 | 1,468 | 0.90% | |||||||||||
| Borrowed funds | 80,772 | 804 | 3.99% | 119,069 | 813 | 2.74% | |||||||||||
| Total interest-bearing liabilities | 715,358 | 2,603 | 1.46% | 774,246 | 2,281 | 1.18% | |||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||||
| Non-interest-bearing deposits | 948,021 | 511,793 | |||||||||||||||
| Other non-interest bearing liabilities | 37,422 | 14,917 | |||||||||||||||
| Total liabilities | 1,700,801 | 1,300,956 | |||||||||||||||
| Stockholders' Equity | 246,109 | 113,646 | |||||||||||||||
| Total liabilities and equity | $ | 1,946,910 | $ | 1,414,602 | |||||||||||||
| Net interest income | $ | 17,395 | $ | 11,766 | |||||||||||||
| Net interest rate spread (2) | 2.67% | 2.93% | |||||||||||||||
| Net interest-earning assets | $ | 1,228,160 | $ | 596,562 | |||||||||||||
| Net interest margin (3) | 3.59% | 3.44% | |||||||||||||||
| Ratio of interest earning assets to interest bearing liabilities | 2.72x | 1.77x | |||||||||||||||
| (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 |
Six months ended | ||||||||||||||||
| (dollars in thousands) | June 30, 2018 | June 30, 2017 | |||||||||||||||
|
Average |
Interest | Yield/Rate |
Average |
Interest | Yield/Rate | ||||||||||||
| Assets: | |||||||||||||||||
| Interest-earning assets: | |||||||||||||||||
| Loans (1) | $ | 1,504,695 | $ | 35,143 | 4.71% | $ | 1,125,028 | $ | 25,234 | 4.52% | |||||||
| Available-for-sale securities | 30,970 | 324 | 2.11% | 36,060 | 369 | 2.06% | |||||||||||
| Held-to-maturity securities | 5,207 | 54 | 2.10% | 6,229 | 65 | 2.10% | |||||||||||
| Overnight deposits | 304,686 | 2,577 | 1.71% | 101,461 | 481 | 0.96% | |||||||||||
| Other interest-earning assets | 35,838 | 528 | 2.97% | 30,040 | 340 | 2.28% | |||||||||||
| Total interest-earning assets | 1,881,396 | 38,626 | 4.14% | 1,298,818 | 26,489 | 4.11% | |||||||||||
| Non-interest-earning assets | 34,055 | 46,944 | |||||||||||||||
| Allowance for loan and lease losses | (16,057) | (12,307) | |||||||||||||||
| Total assets | $ | 1,899,394 | $ | 1,333,455 | |||||||||||||
| Liabilities and Stockholders' Equity: | |||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||
| Money market and savings accounts | $ | 532,301 | $ | 2,619 | 0.99% | $ | 555,383 | $ | 2,226 | 0.81% | |||||||
| Certificates of deposit | 78,761 | 619 | 1.58% | 81,012 | 502 | 1.25% | |||||||||||
| Total interest-bearing deposits | 611,062 | 3,238 | 1.07% | 636,395 | 2,728 | 0.86% | |||||||||||
| Borrowed funds | 82,535 | 1,542 | 3.77% | 110,884 | 1,212 | 2.20% | |||||||||||
| Total interest-bearing liabilities | 693,597 | 4,780 | 1.39% | 747,279 | 3,940 | 1.06% | |||||||||||
| Non-interest-bearing liabilities: | |||||||||||||||||
| Non-interest-bearing deposits | 919,990 | 470,987 | |||||||||||||||
| Other non-interest bearing liabilities | 42,608 | 2,942 | |||||||||||||||
| Total liabilities | 1,656,195 | 1,221,208 | |||||||||||||||
| Stockholders' Equity | 243,199 | 112,247 | |||||||||||||||
| Total liabilities and equity | $ | 1,899,394 | $ | 1,333,455 | |||||||||||||
| Net interest income | $ | 33,846 | $ | 22,549 | |||||||||||||
| Net interest rate spread (2) | 2.75% | 3.05% | |||||||||||||||
| Net interest-earning assets | $ | 1,187,799 | $ | 551,539 | |||||||||||||
| Net interest margin (3) | 3.63% | 3.50% | |||||||||||||||
| Ratio of interest earning assets to interest bearing liabilities | 2.71x | 1.74x | |||||||||||||||
| (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 15 basis points to 3.59% for the second quarter of 2018 as compared to the second quarter of 2017. This improvement was mainly the result of an 18 basis point increase in average loan yields to 4.71% for the second quarter of 2018 as compared to 4.53% for the same period in 2017 and an increase of 81 basis points in the average yield on overnight deposits to 1.81% as compared to 1.00% 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 second quarter of 2018 as compared to the second quarter of 2017. Average non-interest-bearing deposits increased $436.2 million to $948.0 million in the second quarter of 2018, compared to $511.8 million in the second quarter of 2017 and accounted for 60% of average total deposits during the second quarter of 2018 as compared to 44% during the second quarter of 2017. Average interest-earning assets increased $572.7 million for the second quarter of 2018 as compared to the second quarter of 2017 due primarily to a $349.3 million increase in average loans and a $222.4 million increase in average overnight deposits.
Net interest margin increased 13 basis points to 3.63% for the six months ended June 30, 2018 as compared to 3.50% for the same period in 2017. This increase was primarily the result of an increase of 19 basis points in average loan yields to 4.71% for the six months ended June 30, 2018 as compared to 4.52% 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 June 30, 2018 as compared to the same period in 2017. Average non-interest-bearing deposits increased $449.0 million to $920.0 million at June 30, 2018, compared to $471.0 million for the same period in 2017 and accounted for 60% of average total deposits at June 30, 2018 as compared to 43% for the same period in 2017. Average interest-earning assets increased $582.6 million for the six months ended June 30, 2018 as compared to the same period in 2017 due primarily to an increase of $379.7 million in average loans and a $203.2 million increase in average overnight deposits. Average overnight deposits included approximately $246 million of funds from the settlement accounts of digital currency customer relationships. The Bank’s current policy is to not leverage these funds into other interest-earning assets; however, the Bank may consider changing this policy in the future.
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.
| (dollars in thousands) | |||||||||||||
| As of | |||||||||||||
| June 30, 2018 | June 30, 2017 | ||||||||||||
| Non-performing assets: | |||||||||||||
| Non-accrual loans: | |||||||||||||
| Real Estate: | |||||||||||||
| Commercial |
$ |
- |
$ | 841 | |||||||||
| One-to-four family | - | - | |||||||||||
| Commercial and industrial | - | 3,660 | |||||||||||
| Consumer | 192 | 68 | |||||||||||
| Total non-accrual loans |
$ |
192 |
$ | 4,569 | |||||||||
| Accruing loans 90 days or more past due | - | - | |||||||||||
| Total non-performing assets |
$192 |
$ | 4,569 | ||||||||||
| Nonaccrual loans as % of loans outstanding | 0.01% | 0.36% | |||||||||||
| Allowance for loan losses |
$ |
(17,463) |
$ | (13,909) | |||||||||
| Allowance for loan losses as % of loans outstanding | 1.09% | 1.08% | |||||||||||
|
For the Three Months Ended June 30, |
For the Six Months Ended June 30, |
||||||||||||
| (dollars in thousands) | 2018 | 2017 |
2018 |
2017 |
|||||||||
| Provision for loan losses |
$ |
1,270 |
$ | 1,790 |
$ |
2,747 |
$ |
2,360 |
|||||
| Net charge-offs |
$ |
67 |
$ | 117 | 171 | 266 | |||||||
| Net charge-offs as % of average loans (annualized) | 0.02% | 0.04% |
0.02% |
0.05% |
|||||||||
The provision for loan losses was $1.3 million for the second quarter of 2018 as compared to $1.8 million for the second quarter of 2017. The provision for loan losses for the six months ended June 30, 2018 was $2.7 million as compared to $2.4 million for the same period in 2017.
|
Non-interest Income |
|||||||||||
| (dollars in thousands) | Three months ended | ||||||||||
| June 30, 2018 | June 30, 2017 | Change | |||||||||
| Service charges on deposit accounts | $ | 821 | $ | 505 | 63% | ||||||
| Prepaid debit card income | 1,519 | 805 | 89% | ||||||||
| Other service charges and fees | 346 | 250 | 38% | ||||||||
| Loan prepayment penalties | - | 13 | -100% | ||||||||
| Loss on call of securities | (37) | - | 100% | ||||||||
| Total non-interest income | $ | 2,649 | $ | 1,573 | 68% | ||||||
| Six months ended | |||||||||||
| June 30, 2018 | June 30, 2017 | Change | |||||||||
| Service charges on deposit accounts | $ | 2,731 | $ | 796 | 243% | ||||||
| Prepaid debit card income | 2,427 | 1,593 | 52% | ||||||||
| Other service charges and fees | 2,840 | 416 | 583% | ||||||||
| Loan prepayment penalties | 65 | 13 | 410% | ||||||||
| Loss on call of securities | (37) | - | 100% | ||||||||
| Total non-interest income | $ | 8,026 | $ | 2,818 | 185% | ||||||
Non-interest income increased by $1.0 million to $2.6 million in the second quarter of 2018 as compared to the second quarter of 2017, primarily due to an increase of $316,000 in service charges on deposits and a $714,000 increase in prepaid debit card income.
For the six months ended June 30, 2018, non-interest income increased by $5.2 million from the same period in 2017. This increase was due primarily to an increase of $1.9 million in service charges on money market accounts, $834,000 in prepaid debit card income and $2.4 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 other service charges and fees for the six months ended June 30, 2018 is primarily due to an increase of $2.1 million in foreign currency conversion fees related to our customers in the digital currency industry. Notwithstanding this increase, foreign currency conversion fees decreased $2.2 million from the sequential first quarter of 2018. Foreign currency conversion fees were at an elevated level during the fourth quarter of 2017 and continuing into 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 |
|||||||||||
| (dollars in thousands) | Three months ended | ||||||||||
| June 30, 2018 | June 30, 2017 | Change | |||||||||
| Compensation and benefits | $ | 6,126 | $ | 4,264 | 44% | ||||||
| Bank premises and equipment | 1,288 | 1,037 | 24% | ||||||||
| Director fees | 210 | 175 | 20% | ||||||||
| Insurance expense | 73 | 65 | 13% | ||||||||
| Professional fees | 841 | 480 | 75% | ||||||||
| Data processing fees | 747 | 279 | 168% | ||||||||
| Other expenses | 990 | 841 | 18% | ||||||||
| Total non-interest expense | $ | 10,275 | $ | 7,141 | 44% | ||||||
| (dollars in thousands) | Six months ended | ||||||||||
| June 30, 2018 | June 30, 2017 | Change | |||||||||
| Compensation and benefits | $ | 12,443 | $ | 8,841 | 41% | ||||||
| Bank premises and equipment | 2,468 | 2,110 | 17% | ||||||||
| Director fees | 571 | 349 | 63% | ||||||||
| Insurance expense | 149 | 144 | 4% | ||||||||
| Professional fees | 1,619 | 890 | 82% | ||||||||
| Data processing fees | 2,115 | 530 | 299% | ||||||||
| Other expenses | 2,148 | 1,511 | 42% | ||||||||
| Total non-interest expense | $ | 21,513 | $ | 14,375 | 50% | ||||||
Non-interest expense increased $3.2 million to $10.3 million during the second quarter of 2018 as compared to $7.1 million for the second quarter of 2017. Compensation and benefits increased $1.8 million to $6.1 million for the second quarter of 2018 as compared to $4.3 million for the second quarter of 2017. This increase was due primarily to an increase of 21 full-time equivalent employees. Data processing fees increased $468,000 to $747,000 for the second quarter of 2018 as compared to the second quarter of 2017 primarily due to costs to support our balance sheet growth as well as increased wire transfer costs.
For the six months ended June 30, 2018, non-interest expense increased $7.1 million to $21.5 million as compared to the same period in 2017. Compensation and benefits increased $3.6 million to $12.4 million for the six months ended June 30, 2018 as compared to $8.8 million for the same period in 2017. For those same periods, data processing fees increased $1.6 million to $2.1 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 $1.92 billion at June 30, 2018, compared with $1.76 billion on December 31, 2017. Loans, net of deferred fees and unamortized costs increased to $1.6 billion at June 30, 2018 as compared to $1.4 billion at December 31, 2017. For the three and six months ended June 30, 2018, the Bank originated loans of $152.2 million and $331.2 million, respectively as compared to $203.8 million and $280.3 million for the same periods in 2017.
Total deposits increased $136.1 million, or 10%, to $1.5 billion at June 30, 2018, due to increases of $66.2 million in non-interest-bearing demand deposits and $69.9 million in interest-bearing deposits.
Total stockholders’ equity was $249.6 million on June 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 8,205,234 shares outstanding at June 30, 2018.
|
Regulatory Capital Ratios |
|||||||||||||||
| June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | June 30, 2017 | |||||||||||
| Tier 1 Leverage: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 13.5 | % | 13.7 | % | 13.7 | % | 8.0 | % | 8.9 | % | |||||
| Metropolitan Commercial Bank | 14.5 | 14.7 | 14.7 | 9.3 | 10.2 | ||||||||||
| Common Equity Tier 1 Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 14.3 | 14.9 | 15.3 | 9.2 | 7.7 | ||||||||||
| Metropolitan Commercial Bank | 17.0 | 17.7 | 18.4 | 10.8 | 11.3 | ||||||||||
| Tier 1 Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 15.8 | 16.5 | 17.1 | 7.4 | 9.6 | ||||||||||
| Metropolitan Commercial Bank | 17.0 | 17.7 | 18.4 | 10.8 | 11.3 | ||||||||||
| Total Risk-Based: | |||||||||||||||
| Metropolitan Bank Holding Corp. | 18.4 | 19.2 | 19.9 | 12.0 | 12.6 | ||||||||||
| Metropolitan Commercial Bank | 18.1 | 18.8 | 19.4 | 11.9 | 12.4 | ||||||||||
Metropolitan Commercial Bank meets all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. At June 30, 2018, total Commercial Real Estate (CRE) was 278.1% 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.
|
Consolidated Balance Sheet |
|||||||||
| (dollars in thousands) | |||||||||
|
June 30, 2018 |
December 31, |
Change | |||||||
| Assets | |||||||||
| Cash and due from banks | $ | 10,148 | $ | 6,790 | 49% | ||||
| Overnight deposits | 240,994 | 254,441 | -5% | ||||||
| Total cash and cash equivalents | 251,142 | 261,231 | -4% | ||||||
| Investment securities available for sale | 28,989 | 32,157 | -10% | ||||||
| Investment securities held to maturity | 4,985 | 5,428 | -8% | ||||||
| Total securities | 33,974 | 37,585 | -10% | ||||||
| Other investments | 16,770 | 13,677 | 23% | ||||||
| Loans, net of deferred fees and unamortized costs | 1,599,647 | 1,419,896 | 13% | ||||||
| Allowance for loan losses | (17,463) | (14,887) | 17% | ||||||
| Net loans | 1,582,184 | 1,405,009 | 13% | ||||||
| Receivable from prepaid card programs, net | 7,589 | 9,579 | -21% | ||||||
| Accrued interest receivable | 4,449 | 4,421 | 1% | ||||||
| Premises and equipment, net | 7,012 | 6,268 | 12% | ||||||
| Prepaid expenses and other assets | 7,715 | 5,751 | 34% | ||||||
| Goodwill | 9,733 | 9,733 | - | ||||||
| Accounts receivable, net | 3,927 | 6,601 | -41% | ||||||
| Total assets | $ | 1,924,495 | $ | 1,759,855 | 9% | ||||
| Liabilities and Stockholders' Equity | |||||||||
| Deposits: | |||||||||
| Non-interest-bearing demand deposits | $ | 878,703 | $ | 812,497 | 8% | ||||
| Interest-bearing deposits | 661,779 | 591,858 | 12% | ||||||
| Total deposits | 1,540,482 | 1,404,355 | 10% | ||||||
| Federal Home Loan Bank of New York advances | 63,000 | 42,198 | 49% | ||||||
| Trust preferred securities | 20,620 | 20,620 | - | ||||||
| Subordinated debts, net of issuance cost | 24,517 | 24,489 | - | ||||||
| Accounts payable, accrued expenses and other liabilities | 18,111 | 21,678 | -16% | ||||||
| Accrued interest payable | 1,019 | 749 | 36% | ||||||
| Prepaid debit cardholder balances | 7,162 | 8,882 | -19% | ||||||
| Total liabilities | 1,674,911 | 1,522,971 | 10% | ||||||
| Class B preferred stock | 3 | 3 | - | ||||||
| Common stock | 81 | 81 | - | ||||||
| Additional paid in capital | 212,100 | 211,145 | - | ||||||
| Retained earnings | 38,017 | 25,861 | 47% | ||||||
| Accumulated other comprehensive loss | (617) | (206) | 200% | ||||||
| Total stockholders’ equity | 249,584 | 236,884 | 5% | ||||||
| Total liabilities and stockholders’ equity | $ | 1,924,495 | $ | 1,759,855 | 9% | ||||
| Consolidated Statement of Income (unaudited) | ||||||||||||||||||
| (dollars in thousands) | Three months ended June 30 | Change | Six months ended June 30 | Change | ||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||||
| Total interest income | $ | 19,998 | $ | 14,047 | 42% | $ | 38,626 | $ | 26,489 | 46% | ||||||||
| Total interest expense | 2,603 | 2,281 | 14% | 4,780 | 3,940 | 21% | ||||||||||||
| Net interest income | 17,395 | 11,766 | 48% | 33,846 | 22,549 | 50% | ||||||||||||
| Provision for loan losses | 1,270 | 1,790 | -29% | 2,747 | 2,360 | 16% | ||||||||||||
| Net interest income after provision for loan losses | 16,125 | 9,976 | 62% | 31,099 | 20,189 | 54% | ||||||||||||
| Non-interest income: | ||||||||||||||||||
| Service charges on deposit accounts | 821 | 505 | 63% | 2,731 | 796 | 243% | ||||||||||||
| Prepaid debit card income | 1,519 | 805 | 89% | 2,427 | 1,593 | 52% | ||||||||||||
| Other service charges and fees | 346 | 250 | 38% | 2,840 | 416 | 583% | ||||||||||||
| Loan prepayment penalties | - | 13 | -100% | 65 | 13 | 400% | ||||||||||||
| Loss on call of securities | (37) | - | 100% | (37) | - | 100% | ||||||||||||
| Total non-interest income | $ | 2,649 | $ | 1,573 | 68% | $ | 8,026 | $ | 2,818 | 185% | ||||||||
| Non-interest expense: | ||||||||||||||||||
| Compensation and benefits | $ | 6,126 | $ | 4,264 | 44% | $ | 12,443 | $ | 8,841 | 41% | ||||||||
| Bank premises and equipment | 1,288 | 1,037 | 24% | 2,468 | 2,110 | 17% | ||||||||||||
| Directors fees | 210 | 175 | 20% | 571 | 349 | 64% | ||||||||||||
| Insurance expense | 73 | 65 | 12% | 149 | 144 | 3% | ||||||||||||
| Professional fees | 841 | 480 | 75% | 1,619 | 890 | 82% | ||||||||||||
| FDIC assessment | 123 | 105 | 17% | 263 | 275 | -4% | ||||||||||||
| Data processing fees | 747 | 279 | 168% | 2,115 | 530 | 299% | ||||||||||||
| Other expenses | 867 | 736 | 18% | 1,885 | 1,236 | 53% | ||||||||||||
| Total non-interest expense | 10,275 | 7,141 | 44% | 21,513 | 14,375 | 50% | ||||||||||||
| Net income before income tax expense | 8,499 | 4,408 | 93% | 17,612 | 8,632 | 104% | ||||||||||||
| Income tax expense | 2,634 | 1,757 | 50% | 5,456 | 3,431 | 59% | ||||||||||||
| Net income | $ | 5,865 | $ | 2,651 | 121% | $ | 12,156 | $ | 5,201 | 134% | ||||||||
| Earnings per share: | ||||||||||||||||||
| Basic earnings | $ | 0.72 | $ | 0.57 | $ | 1.48 | $ | 1.12 | ||||||||||
| Diluted earnings | $ | 0.70 | $ | 0.57 | $ | 1.46 | $ | 1.11 | ||||||||||
| Financial Highlights, Five Quarter Trend (unaudited) | |||||||||||||||
| (dollars in thousands, except per share data) | At or for the three months ended | ||||||||||||||
| June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | June 30, 2017 | |||||||||||
| Performance | |||||||||||||||
| Net interest income | $ | 17,395 | $ | 16,451 | $ | 15,571 | $ | 13,964 | $ | 11,766 | |||||
| Provision for loan losses | 1,270 | 1,477 | 3,499 | 1,200 | 1,790 | ||||||||||
| Non-interest income | 2,649 | 5,377 | 6,249 | 2,233 | 1,573 | ||||||||||
| Non-interest expense | 10,275 | 11,238 | 9,779 | 8,590 | 7,141 | ||||||||||
| Income before income tax expense | 8,499 | 9,113 | 8,542 | 6,407 | 4,408 | ||||||||||
| Income tax expense | 2,634 | 2,822 | 5,216 | 2,562 | 1,757 | ||||||||||
| Net income | 5,865 | 6,291 | 3,326 | 3,845 | 2,651 | ||||||||||
| Net income available to common shareholders | 5,816 | 6,238 | 3,143 | 3,671 | 2,551 | ||||||||||
| Per common share: | |||||||||||||||
| Basic earnings | $ | 0.72 | $ | 0.77 | $ | 0.50 | $ | 0.83 | $ | 0.57 | |||||
| Diluted earnings | $ | 0.70 | $ | 0.75 | $ | 0.49 | $ | 0.82 | $ | 0.57 | |||||
| Common shares outstanding: | |||||||||||||||
| Average - diluted | 8,286,321 | 8,275,243 | 6,768,753 | 4,576,925 | 4,576,925 | ||||||||||
| Period end | 8,205,234 | 8,194,925 | 8,196,310 | 4,633,012 | 4,633,012 | ||||||||||
| Return on (annualized): | |||||||||||||||
| Average total assets | 1.20% | 1.35% | 0.73% | 0.94% | 0.75% | ||||||||||
| Average common equity | 9.75% | 10.47% | 7.68% | 13.79% | 9.80% | ||||||||||
| Yield on average earning assets | 4.13% | 4.15% | 3.97% | 4.21% | 4.11% | ||||||||||
| Cost of interest-bearing liabilities | 1.46% | 1.31% | 1.25% | 1.26% | 1.18% | ||||||||||
| Net interest spread | 2.67% | 2.84% | 2.72% | 2.95% | 2.93% | ||||||||||
| Net interest margin | 3.59% | 3.67% | 3.49% | 3.62% | 3.44% | ||||||||||
| Net charge-offs as a % of average loans (annualized) | 0.02% | 0.04% | 1.06% | 0.01% | 0.04% | ||||||||||
| Efficiency ratio | 51.26% | 51.48% | 44.82% | 53.03% | 53.54% | ||||||||||
| Loan quality | |||||||||||||||
| Non-performing assets: | |||||||||||||||
| Non-accrual loans: | |||||||||||||||
| Real estate | |||||||||||||||
| Commercial | $ | - | $ | - | $ | 787 | $ | 841 | $ | 841 | |||||
| One-to-four family | - | - | 2,447 | 2,466 | - | ||||||||||
| Commercial and industrial | - | - | - | 3,660 | 3,660 | ||||||||||
| Consumer | 192 | 85 | 155 | 125 | 68 | ||||||||||
| Total non-accrual loans | $ | 192 | $ | 85 | $ | 3,389 | $ | 7,092 | $ | 4,569 | |||||
| Accruing loans past due 90 days or more | - | - | - | - | - | ||||||||||
| Total non-performing assets | $ | 192 | $ | 85 | $ | 3,389 | $ | 7,092 | $ | 4,569 | |||||
| Non-accrual loans to total loans | 0.01% | 0.01% | 0.24% | 0.52% | 0.36% | ||||||||||
| Non-performing loans to total loans | 0.01% | 0.01% | 0.24% | 0.52% | 0.36% | ||||||||||
| Allowance for loan losses to total loans | 1.09% | 1.07% | 1.05% | 1.09% | 1.08% | ||||||||||
|
Consolidated Statement of Income, Five Quarter Trend (unaudited) |
|||||||||||||||
| (dollars in thousands) | Three months ended | ||||||||||||||
| June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | June 30, 2017 | |||||||||||
| Total interest income | $ | 19,998 | $ | 18,628 | $ | 17,864 | $ | 16,401 | $ | 14,047 | |||||
| Total interest expense | 2,603 | 2,177 | 2,293 | 2,437 | 2,281 | ||||||||||
| Net interest income | 17,395 | 16,451 | 15,571 | 13,964 | 11,766 | ||||||||||
| Provision for loan losses | 1,270 | 1,477 | 3,499 | 1,200 | 1,790 | ||||||||||
| Net interest income after provision for loan losses | 16,125 | 14,974 | 12,072 | 12,764 | 9,976 | ||||||||||
| Non-interest income: | |||||||||||||||
| Service charges on deposit accounts | 821 | 1,910 | 1,820 | 836 | 505 | ||||||||||
| Prepaid debit card income | 1,519 | 908 | 929 | 847 | 805 | ||||||||||
| Other service charges and fees | 346 | 2,494 | 3,429 | 523 | 250 | ||||||||||
| Loan prepayment penalties | - | 65 | 71 | 27 | 13 | ||||||||||
| Loss on call of securities | (37) | - | - | - | - | ||||||||||
| Total non-interest income | $ | 2,649 | $ | 5,377 | $ | 6,249 | $ | 2,233 | $ | 1,573 | |||||
| Non-interest expense: | |||||||||||||||
| Compensation and benefits | $ | 6,126 | $ | 6,317 | $ | 5,478 | $ | 4,847 | $ | 4,264 | |||||
| Bank premises and equipment | 1,288 | 1,180 | 1,200 | 1,075 | 1,037 | ||||||||||
| Directors Fees | 210 | 361 | 229 | 316 | 175 | ||||||||||
| Insurance Expense | 73 | 76 | 77 | 60 | 65 | ||||||||||
| Professional fees | 841 | 778 | 771 | 976 | 480 | ||||||||||
| FDIC assessment | 123 | 140 | 444 | 349 | 105 | ||||||||||
| Data processing fees | 747 | 1,368 | 542 | 423 | 279 | ||||||||||
| Other expenses | 867 | 1,018 | 1,038 | 544 | 736 | ||||||||||
| Total non-interest expense | 10,275 | 11,238 | 9,779 | 8,590 | 7,141 | ||||||||||
| Net income before income tax expense | 8,499 | 9,113 | 8,542 | 6,407 | 4,408 | ||||||||||
| Income tax expense | 2,634 | 2,822 | 5,216 | 2,562 | 1,757 | ||||||||||
| Net income | $ | 5,865 | $ | 6,291 | $ | 3,326 | $ | 3,845 | $ | 2,651 | |||||
| Earnings per share: | |||||||||||||||
| Basic earnings | $ | 0.72 | $ | 0.77 | $ | 0.50 | $ | 0.83 | $ | 0.57 | |||||
| Diluted earnings | $ | 0.70 | $ | 0.75 | $ | 0.49 | $ | 0.82 | $ | 0.57 | |||||
|
Consolidated Balance Sheet, Five Quarter Trend (unaudited) |
|||||||||||||||
| (dollars in thousands) | |||||||||||||||
| June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | June 30, 2017 | |||||||||||
| Assets | |||||||||||||||
| Cash and due from banks | $ | 10,148 | $ | 7,063 | $ | 6,790 | $ | 8,902 | $ | 8,657 | |||||
| Overnight deposits | 240,994 | 363,887 | 254,441 | 258,197 | 218,896 | ||||||||||
| Total cash and cash equivalents | 251,142 | 370,950 | 261,231 | 267,099 | 227,553 | ||||||||||
| Investment securities available for sale | 28,989 | 30,276 | 32,157 | 33,922 | 35,610 | ||||||||||
| Investment securities held to maturity | 4,985 | 5,212 | 5,428 | 5,681 | 5,968 | ||||||||||
| Total securities | 33,974 | 35,488 | 37,585 | 39,603 | 41,578 | ||||||||||
| Other investments | 16,770 | 16,566 | 13,677 | 13,740 | 13,266 | ||||||||||
| Loans, net of deferred fees and unamortized costs | 1,599,647 | 1,526,166 | 1,419,896 | 1,380,829 | 1,285,153 | ||||||||||
| Allowance for loan losses | (17,463) | (16,260) | (14,887) | (15,075) | (13,909) | ||||||||||
| Net loans | 1,582,184 | 1,509,906 | 1,405,009 | 1,365,754 | 1,271,244 | ||||||||||
| Receivable from prepaid card programs, net | 7,589 | 7,523 | 9,579 | 6,977 | 7,577 | ||||||||||
| Accrued interest receivable | 4,449 | 4,366 | 4,421 | 3,903 | 3,059 | ||||||||||
| Premises and equipment, net | 7,012 | 6,688 | 6,268 | 6,010 | 5,744 | ||||||||||
| Prepaid expenses and other assets | 7,715 | 5,993 | 5,751 | 7,013 | 6,961 | ||||||||||
| Goodwill | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | ||||||||||
| Accounts receivable, net | 3,927 | 1,673 | 6,601 | 3,825 | 58 | ||||||||||
| Total assets | $ | 1,924,495 | $ | 1,968,886 | $ | 1,759,855 | $ | 1,723,657 | $ | 1,586,773 | |||||
| Liabilities and Stockholders' Equity | |||||||||||||||
| Deposits: | |||||||||||||||
| Non-interest-bearing demand deposits | $ | 878,703 | $ | 1,012,165 | $ | 812,497 | $ | 826,345 | $ | 698,874 | |||||
| Interest-bearing deposits | 661,779 | 604,951 | 591,858 | 662,298 | 630,424 | ||||||||||
| Total deposits | 1,540,482 | 1,617,116 | 1,404,355 | 1,488,643 | 1,329,298 | ||||||||||
| Federal Home Loan Bank of New York advances | 63,000 | 33,000 | 42,198 | 43,750 | 73,802 | ||||||||||
| Trust preferred securities | 20,620 | 20,620 | 20,620 | 20,620 | 20,620 | ||||||||||
| Subordinated debts, net of issuance cost | 24,517 | 24,503 | 24,489 | 24,468 | 24,453 | ||||||||||
| Accounts payable, accrued expenses and other liabilities | 18,111 | 23,338 | 21,678 | 20,411 | 15,799 | ||||||||||
| Accrued interest payable | 1,019 | 454 | 749 | 547 | 912 | ||||||||||
| Prepaid debit cardholder balances | 7,162 | 6,814 | 8,882 | 6,259 | 6,910 | ||||||||||
| Total liabilities | 1,674,911 | 1,725,845 | 1,522,971 | 1,604,698 | 1,471,794 | ||||||||||
| Stockholders’ Equity: | |||||||||||||||
| Class B preferred stock | 3 | 3 | 3 | 3 | 3 | ||||||||||
| Common stock | 81 | 81 | 81 | 45 | 45 | ||||||||||
| Additional paid in capital | 212,100 | 211,333 | 211,145 | 96,422 | 96,313 | ||||||||||
| Retained earnings | 38,017 | 32,152 | 25,861 | 22,536 | 18,691 | ||||||||||
| Accumulated other comprehensive loss | (617) | (528) | (206) | (47) | (73) | ||||||||||
| Total stockholders’ equity | 249,584 | 243,041 | 236,884 | 118,959 | 114,979 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 1,924,495 | $ | 1,968,886 | $ | 1,759,855 | $ | 1,723,657 | $ | 1,586,773 | |||||
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 |
|||||||||||||||
| June 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sept. 30, 2017 | June 30, 2017 | |||||||||||
| Average assets | $ | 1,946,910 | $ | 1,869,251 | $ | 1,813,785 | $ | 1,633,543 | $ | 1,414,602 | |||||
| Less: average intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | ||||||||||
| Average tangible assets | $ | 1,937,177 | $ | 1,859,518 | $ | 1,804,052 | $ | 1,623,810 | $ | 1,404,869 | |||||
| Average common equity | $ | 240,606 | $ | 234,748 | $ | 173,245 | $ | 111,553 | $ | 108,144 | |||||
| Less: average intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | ||||||||||
| Average tangible common equity | $ | 230,873 | $ | 225,015 | $ | 163,512 | $ | 101,820 | $ | 98,411 | |||||
| Total assets | $ | 1,924,495 | $ | 1,968,886 | $ | 1,759,855 | $ | 1,723,657 | $ | 1,586,773 | |||||
| Less: intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | ||||||||||
| Tangible assets | $ | 1,914,762 | $ | 1,959,153 | $ | 1,750,122 | $ | 1,713,924 | $ | 1,577,040 | |||||
| Common equity | $ | 244,081 | $ | 237,537 | $ | 231,381 | $ | 113,457 | $ | 109,477 | |||||
| Less: intangible assets | 9,733 | 9,733 | 9,733 | 9,733 | 9,733 | ||||||||||
| Tangible common equity (book value) | $ | 234,348 | $ | 227,804 | $ | 221,648 | $ | 103,724 | $ | 99,744 | |||||
| Common shares outstanding | 8,205,234 | 8,194,925 | 8,196,310 | 4,633,012 | 4,633,012 | ||||||||||
| Book value per share (GAAP) | $ | 29.75 | $ | 29.23 | $ | 28.23 | $ | 24.49 | $ | 23.63 | |||||
| Tangible book value per common share (non-GAAP)* | 28.56 | 28.03 | 27.04 | 22.39 | 21.53 | ||||||||||
|
* Tangible book value divided by common shares outstanding at period-end. |
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