UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2025
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission File No. 001-38282
Metropolitan Bank Holding Corp.
(Exact Name of Registrant as Specified in Its Charter)
New York
13-4042724
(State or Other Jurisdiction of Incorporation or Organization)
(I.R.S. Employer Identification No.)
99 Park Avenue, New York, New York
10016
(Address of Principal Executive Offices)
(Zip Code)
(212) 659-0600
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.01 per share
MCB
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.
YES ☒ NO ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☒
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ☐ NO ☒
There were 10,421,384 shares of the Registrant’s common stock, par value $0.01 per share, outstanding as of July 28, 2025.
Table of Contents
METROPOLITAN BANK HOLDING CORP.
Form 10-Q
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Financial Condition
6
Consolidated Statements of Operations
7
Consolidated Statements of Comprehensive Income
8
Consolidated Statements of Changes in Stockholders’ Equity
9
Consolidated Statements of Cash Flows
10
Notes to Unaudited Consolidated Financial Statements
11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
32
Item 3. Quantitative and Qualitative Disclosures About Market Risk
42
Item 4. Controls and Procedures
44
PART II. OTHER INFORMATION
45
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
46
Item 6. Exhibits
47
Signatures
48
2
GLOSSARY OF COMMON TERMS AND ACRONYMS
ACL
Allowance for credit losses
FHLB
Federal Home Loan Bank
AFS
Available-for-sale
FHLBNY
Federal Home Loan Bank of New York
ALCO
Asset Liability Committee
FRB
Federal Reserve Bank
ALLL
Allowance for loan and lease losses
FRBNY
Federal Reserve Bank of New York
AOCI
Accumulated other comprehensive income
FX
Foreign exchange
ASC
Accounting Standards Codification
GAAP
U.S. Generally accepted accounting principles
ASU
Accounting Standards Update
GPG
Global Payments Group
Bank
Metropolitan Commercial Bank
HTM
Held-to-maturity
BHC Act
Bank Holding Company Act of 1956, as amended
IRR
Interest rate risk
BSA
Bank Secrecy Act
ISO
Incentive stock option
C&I
Commercial and industrial
JOBS Act
The Jumpstart Our Business Startups Act
CARES Act
Coronavirus Aid, Relief, and Economic Security Act
LIBOR
London Inter-Bank Offered Rate
CECL
Current Expected Credit Loss
LTV
Loan-to-value
CFPB
Consumer Financial Protection Bureau
MBS
Mortgage-backed securities
Company
NYSDFS
New York State Department of Financial Services
Coronavirus
COVID-19
OCC
Office of the Comptroller of the Currency
CRA
Community Reinvestment Act
OTTI
Other-than-temporary impairment
CRE
Commercial real estate
PPP
Paycheck Protection Program
CRE Guidance
Commercial Real Estate Lending, Sound Risk Management Practices
PRSU
Performance restricted share units
DIF
Deposit Insurance Fund
ROU
Right of use
EB-5 Program
EB-5 Immigrant Investor Program
SEC
U.S. Securities and Exchange Commission
EGC
Emerging Growth Company
SOFR
Secured Overnight Financing Rate
EVE
Economic value of equity
TDR
Troubled debt restructuring
FASB
Financial Accounting Standards Board
USD
U.S. dollar
FDIC
Federal Deposit Insurance Corporation
3
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “consider,” “should,” “plan,” “estimate,” “predict,” “continue,” “probable,” and “potential” or the negative of these terms or other comparable terminology. Examples of forward-looking statements include, but are not limited to, estimates with respect to the financial condition, results of operations and business of Metropolitan Bank Holding Corp. (the “Company”) and its wholly-owned subsidiary Metropolitan Commercial Bank (the “Bank”), share repurchases under the Company’s share repurchase program, dividend payments and the Company’s strategies, plans, objectives, expectations and intentions, and other statements contained in this Quarterly Report on Form 10-Q that are not historical facts. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors that are difficult to predict and are generally beyond our control and that may cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Factors that may cause actual results to differ from those results expressed or implied include those factors listed under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on February 28, 2025 and in this Quarterly Report on Form 10-Q. In addition, these factors include but are not limited to:
4
The Company’s ability to predict results or the actual effects of its plans or strategies is inherently uncertain. As such, forward-looking statements can be affected by inaccurate assumptions made, or by known or unknown risks and uncertainties. Consequently, no forward-looking statement can be guaranteed. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect conditions only as of the date of this filing. Forward-looking statements speak only as of the date of this document. The Company undertakes no obligation (and expressly disclaims any obligation) to publicly release the results of any revisions which may be made to any forward-looking statements to reflect anticipated or unanticipated events or circumstances occurring after the date of such statements, except as may be required by law.
5
METROPOLITAN BANK HOLDING CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
(in thousands, except share data)
June 30,
December 31,
2025
2024
Assets
Cash and due from banks
$
13,577
13,078
Overnight deposits
138,876
187,190
Total cash and cash equivalents
152,453
200,268
Investment securities available-for-sale, at fair value
551,029
482,085
Investment securities held-to-maturity (estimated fair value of $336.7 million and $366.7 million at June 30, 2025 and December 31, 2024, respectively)
387,901
428,557
Equity investment securities, at fair value
5,276
5,109
Total securities
944,206
915,751
Other investments
27,297
30,636
Loans, net of deferred fees and costs
6,612,789
6,034,076
(74,071)
(63,273)
Net loans
6,538,718
5,970,803
Other assets
191,175
183,291
Total assets
7,853,849
7,300,749
Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing demand deposits
1,427,439
1,334,054
Interest-bearing deposits
5,363,867
4,648,919
Total deposits
6,791,306
5,982,973
Federal funds purchased
50,000
210,000
Federal Home Loan Bank of New York advances
150,000
240,000
Trust preferred securities
20,620
Secured and other borrowings
17,366
7,441
Other liabilities
101,589
109,888
Total liabilities
7,130,881
6,570,922
Common stock, $0.01 par value, 25,000,000 shares authorized, 11,300,191 and 11,197,625 shares issued; and 10,421,384 and 11,197,625 shares outstanding at June 30, 2025 and December 31, 2024, respectively
113
112
Additional paid in capital
401,055
400,188
Retained earnings
417,782
382,661
Accumulated other comprehensive income (loss), net of tax
(45,455)
(53,134)
Treasury stock, at cost, 878,807 and 0 shares at June 30, 2025 and December 31, 2024, respectively
(50,527)
—
Total stockholders’ equity
722,968
729,827
Total liabilities and stockholders’ equity
See accompanying notes to unaudited consolidated financial statements
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
(in thousands, except per share data)
Three months ended June 30,
Six months ended June 30,
Interest and dividend income
Loans, including fees
118,774
104,595
229,639
206,976
Securities
5,775
5,493
11,172
10,637
2,078
5,167
4,003
9,321
Other interest and dividends
416
506
999
1,162
Total interest income
127,043
115,761
245,813
228,096
Interest expense
49,823
50,555
97,001
97,441
Borrowed funds
3,247
3,287
7,563
8,648
326
380
650
759
Total interest expense
53,396
54,222
105,214
106,848
Net interest income
73,647
61,539
140,599
121,248
Provision for credit losses
6,378
1,538
10,884
2,066
Net interest income after provision for credit losses
67,269
60,001
129,715
119,182
Non-interest income
Service charges on deposit accounts
2,131
2,094
4,304
3,957
Global Payments Group revenue
3,686
7,755
Other income
492
359
1,957
1,431
Total non-interest income
2,623
6,139
6,261
13,143
Non-interest expense
Compensation and benefits
20,255
18,532
41,994
38,359
Bank premises and equipment
2,513
2,322
4,976
4,665
Professional fees
3,583
6,916
8,569
12,888
Technology costs
3,653
3,043
5,873
6,054
Licensing fees
3,462
3,180
5,936
6,456
FDIC assessments
2,999
2,925
5,966
5,850
Other expenses
6,644
5,339
12,517
9,885
Total non-interest expense
43,109
42,257
85,831
84,157
Net income before income tax expense
26,783
23,883
50,145
48,168
Income tax expense
8,016
7,084
15,024
15,166
Net income
18,767
16,799
35,121
33,002
Earnings per common share
Basic earnings
1.78
1.50
3.23
2.96
Diluted earnings
1.76
3.20
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited)
(in thousands)
Three months ended
Six months ended
Other comprehensive income (loss), net of tax
Securities available-for-sale:
Unrealized gain (loss) arising during the period, net
3,072
103
10,062
(2,463)
Cash flow hedges:
(1,357)
656
(1,752)
4,935
Reclassification adjustment for gains included in net income, net
(874)
(631)
(1,741)
Total
(218)
(2,383)
3,194
Total other comprehensive income (loss), net
1,715
(115)
7,679
731
Comprehensive income (loss), net
20,482
16,684
42,800
33,733
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (unaudited)
Common
Additional
Retained
AOCI (Loss),
Treasury
Stock
Paid-in Capital
Earnings
Net
Shares
Amount
Three Months Ended
Balance at April 1, 2025
11,066,234
398,823
399,015
(47,170)
(12,935)
737,846
Issuance of common stock under stock compensation plans
10,582
Employee and non-employee stock-based compensation
2,591
Redemption of common stock for exercise of stock options and tax withholdings for restricted stock vesting
(5,551)
(359)
Treasury stock purchased
(649,881)
(37,592)
Other comprehensive income (loss)
Balance at June 30, 2025
10,421,384
Balance at April 1, 2024
11,191,958
393,341
332,178
(52,090)
673,541
1,470
2,200
(492)
(21)
Balance at June 30, 2024
11,192,936
395,520
348,977
(52,205)
692,404
Six Months Ended
Balance at January 1, 2025
11,197,625
160,939
1
4,417
(58,373)
(3,550)
(878,807)
Balance at January 1, 2024
11,062,729
111
395,871
315,975
(52,936)
659,021
216,743
4,126
(86,536)
(4,477)
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Cash flows from operating activities
Adjustments to reconcile net income to net cash:
Net depreciation, amortization, and accretion
(3,414)
(5,737)
Stock-based compensation
Other, net
(167)
Net change in:
Receivable from global payments, net
(2,978)
Third-party debit cardholder balances
12,453
(13,845)
6,571
(6,847)
10,748
Net cash provided by (used in) operating activities
26,149
60,252
Cash flows from investing activities
Loan originations and payments, net
(574,464)
(206,900)
Redemptions of FRB and FHLB Stock
24,195
37,768
Purchases of FRB and FHLB Stock
(20,856)
(25,386)
Purchase of securities available-for-sale
(85,142)
(72,810)
Proceeds from paydowns and maturities of securities available-for-sale
30,801
25,115
Proceeds from paydowns and maturities of securities held-to-maturity
40,385
19,200
Purchase of premises and equipment
(3,064)
(864)
Net cash provided by (used in) investing activities
(588,145)
(223,877)
Cash flows from financing activities
Proceeds from (repayments of) federal funds purchased, net
(160,000)
(99,000)
Proceeds from (repayments of) FHLB advances, net
(90,000)
(290,000)
Redemption of common stock for tax withholdings for restricted stock vesting
Proceeds from (repayments of) other borrowings, net
100,000
Proceeds from (repayments of) secured borrowings, net
9,925
(71)
Net increase (decrease) in deposits
808,333
432,370
Purchase of treasury stock
Net cash provided by (used in) financing activities
514,181
138,822
Increase (decrease) in cash and cash equivalents
(47,815)
(24,803)
Cash and cash equivalents at the beginning of the period
269,465
Cash and cash equivalents at the end of the period
244,662
Supplemental information
Cash paid for:
Interest
103,688
104,866
Income Taxes
15,527
19,415
NOTE 1 — ORGANIZATION
Metropolitan Bank Holding Corp. (the “Company”), a New York corporation, is a bank holding company headquartered in New York, New York and registered under the BHC Act. Through its wholly owned bank subsidiary, Metropolitan Commercial Bank (the “Bank”), a New York state chartered commercial bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and affluent individuals primarily in the New York metropolitan area. See the “GLOSSARY OF COMMON TERMS AND ACRONYMS” for the definition of certain terms and acronyms used throughout this Form 10-Q.
The Company’s primary lending products are CRE loans (including multi-family loans) and C&I loans. Substantially all loans are secured by specific items of collateral including business assets, consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flows from the operations of businesses.
The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC up to the maximum amounts allowed by law. In addition to traditional commercial banking products, the Company offers: corporate cash management and retail banking services; customized financial solutions for government entities, municipalities, public institutions and charter schools; specialized services to facilitate secure and efficient real estate transactions and tax-deferred exchanges for title and escrow and Section 1031 exchanges; and EB-5 Program accounts for qualified foreign investors.
The Company and the Bank are subject to the regulations of certain state and federal agencies and, accordingly, are periodically examined by those regulatory authorities. The Company’s business is affected by state and federal legislation and regulations.
NOTE 2 — BASIS OF PRESENTATION
The accounting and reporting policies of the Company conform with GAAP and predominant practices within the U.S. banking industry. The Unaudited Consolidated Financial Statements (“unaudited financial statements”) include the accounts of the Company and the Bank. All intercompany balances and transactions have been eliminated. The unaudited financial statements have been prepared in accordance with GAAP for interim financial information and with the instructions to Form 10-Q, Article 8 of Regulation S-X and predominant practices within the U.S. banking industry. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The unaudited financial statements reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented.
In preparing the interim unaudited financial statements in conformity with GAAP, management has made estimates and assumptions based on available information. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods, and actual results could differ from those estimated. Information available which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, inflation and its related effects and changes in the financial condition of borrowers.
Some items in the prior year financial statements may have been reclassified to conform to the current presentation. Reclassification had no effect on prior year net income or stockholders’ equity.
The results of operations for the three and six months ended June 30, 2025 and 2024 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year or for any other period.
The unaudited financial statements presented in this report should be read in conjunction with the Company’s audited consolidated financial statements and notes to the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the SEC.
NOTE 3 — SUMMARY OF RECENT ACCOUNTING PRONOUNCEMENTS
The Company adopted ASU 2023-07 “Segment Reporting (Topic 280) - Improvement to Reportable Segment Disclosures” on January 1, 2024. The Company has determined that all of its banking divisions meet the aggregation criteria of ASC 280 as its current operating model is structured whereby banking divisions serve a similar base of primarily commercial clients utilizing a company-wide offering of similar products and services managed through similar processes and platforms that are collectively reviewed by the Company’s Chief Executive Officer, who has been identified as the chief operating decision maker.
NOTE 4 — INVESTMENT SECURITIES
The following tables summarize the amortized cost and fair value of AFS and HTM debt securities and equity investments and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and gross unrecognized gains and losses recognized in earnings (in thousands):
Gross
Unrealized/
Amortized
Unrecognized
At June 30, 2025
Cost
Gains
Losses
Fair Value
Available-for-Sale Securities:
U.S. Government agency securities
67,999
(2,896)
65,103
U.S. State and Municipal securities
11,263
(1,820)
9,443
Residential MBS
486,014
2,343
(57,980)
430,377
Commercial MBS
45,839
14
(2,212)
43,641
Asset-backed securities
2,540
(75)
2,465
Total securities available-for-sale
613,655
2,357
(64,983)
Held-to-Maturity Securities:
U.S. Treasury securities
9,967
(156)
9,811
15,193
(2,267)
12,926
354,684
(48,120)
306,564
8,057
(664)
7,393
Total securities held-to-maturity
(51,207)
336,694
Equity Investments:
CRA Mutual Fund
5,584
(308)
Total equity investment securities
12
At December 31, 2024
(4,247)
63,752
11,341
(1,841)
9,500
430,968
854
(68,754)
363,068
46,094
(2,966)
43,128
2,677
(40)
2,637
559,079
(77,848)
29,938
(410)
29,528
15,319
(1,686)
13,633
375,232
(58,866)
316,366
8,068
(876)
7,192
(61,838)
366,719
5,503
(394)
There were no proceeds from sales or calls of AFS securities for the three and six months ended June 30, 2025 and 2024.
The tables below summarize, by contractual maturity, the amortized cost and fair value of debt securities. The tables do not include the effect of principal repayments or scheduled principal amortization. Equity securities, primarily investments in mutual funds, have been excluded from the table. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties (in thousands):
Held-to-Maturity
Available-for-Sale
Amortized Cost
Due within 1 year
47,999
47,407
After 1 year through 5 years
15,000
14,027
After 5 years through 10 years
4,825
3,894
After 10 years
11,438
9,218
Mortgage-backed and Asset-backed Securities
362,741
313,957
534,393
476,483
Total Securities
29,527
38,000
36,954
24,999
23,200
4,827
3,713
11,514
9,385
383,300
323,559
479,739
408,833
At June 30, 2025, there was $779.8 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $106.6 million was encumbered. At December 31, 2024, there were $750.3 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $65.5 million was encumbered.
13
At June 30, 2025 and December 31, 2024, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity. At June 30, 2025 and December 31, 2024, all of the residential MBS and commercial MBS held by the Company were issued by U.S. Government-sponsored entities and agencies.
The following tables present debt securities with unrealized/unrecognized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):
Less than 12 Months
12 Months or More
Estimated
37,453
(299)
251,642
(57,681)
289,095
10,710
(39)
23,503
(2,173)
34,213
48,163
(338)
352,156
(64,645)
400,319
46,859
(1,104)
258,763
(67,650)
305,622
19,624
23,504
(2,556)
66,483
(1,514)
358,156
(76,334)
424,639
Except for U.S. State and Municipal securities, the Company has a zero loss expectation for its HTM securities portfolio, and therefore has no ACL related to these securities. Obligations of U.S. State and Municipal securities were rated investment grade and the associated ACL was immaterial at June 30, 2025 and December 31, 2024
AFS securities in unrealized loss positions are evaluated for impairment related to credit losses on a quarterly basis. The unrealized losses on AFS securities are primarily due to the changes in market interest rates subsequent to purchase. In addition, the Company does not intend, nor would it be required, to sell these investments until there is a full recovery of
the unrealized loss, which may be at maturity. As a result, no ACL was recognized during the three and six months ended June 30, 2025 and 2024.
NOTE 5 — LOANS AND ALLOWANCE FOR CREDIT LOSSES
Loans, net of deferred costs and fees, consist of the following (in thousands):
At
Real estate
Commercial
4,849,152
4,317,361
Construction
251,693
206,960
Multi-family
414,248
376,737
One-to four-family
88,876
90,880
Total real estate loans
5,603,969
4,991,938
1,016,056
1,046,146
Consumer
11,269
12,961
Total loans
6,631,294
6,051,045
Deferred fees, net of origination costs
(18,505)
(16,969)
At June 30, 2025, $3.5 billion of loans were pledged to support wholesale funding, of which $521.0 million were encumbered. At December 31, 2024, $3.3 billion of loans were pledged to support wholesale funding, of which $348.8 million were encumbered.
The following tables present the activity in the ACL for funded loans by segment. The portfolio segments represent the categories that the Company uses to determine its ACL (in thousands):
Multi-
One-to four-
Three months ended June 30, 2025
family
Allowance for credit losses:
Beginning balance
44,647
12,433
2,518
7,259
602
344
67,803
Provision/(credit) for credit losses
5,808
166
(178)
412
(24)
70
6,254
Loans charged-off
(112)
Recoveries
125
126
Total ending allowance balance
50,455
12,724
2,340
7,671
578
303
74,071
Three months ended June 30, 2024
36,704
10,937
1,712
8,171
521
493
58,538
1,780
345
(344)
(390)
1,486
(16)
38,484
11,282
1,759
7,827
131
525
60,008
15
Six months ended June 30, 2025
42,070
10,991
1,962
7,290
577
383
63,273
8,385
1,428
378
381
150
10,723
(231)
305
306
Six months ended June 30, 2024
35,635
11,207
1,765
8,215
663
480
57,965
2,848
75
(6)
(388)
(532)
62
2,060
(18)
Net recoveries for the three and six months ended June 30, 2025 were $14,000 and $76,000, respectively. Net charge-offs for the three and six months ended June 30, 2024 were $16,000.
The following tables present the activity in the ACL for unfunded loan commitments (in thousands):
Balance at the beginning of period
2,046
1,136
2,008
1,181
124
52
162
2,170
1,188
The following tables present the recorded investment in non-accrual loans and loans past due 90 days and greater and still accruing, by class of loans (in thousands):
Loans Past Due
Non-accrual
90 Days and
Without an
Greater and
Still Accruing
25,926
1,926
Commercial & industrial
8,989
6,989
2,554
One-to-four family
2,469
39,938
13,938
25,087
452
72
32,528
16
Interest income on non-accrual loans recognized on a cash basis for the three and six months ended June 30, 2025 and 2024 was immaterial.
The following tables present the aging of the recorded investment in past due loans by class of loans (in thousands):
Non-accrual or
Total Past
30-59
60-89
Due or
Current
Days
Greater
Loans
15,448
41,374
4,807,778
1,007,067
411,694
86,407
38
11,199
15,480
55,456
6,575,838
7,115
32,202
4,285,159
1,039,157
2,049
2,501
88,379
22
218
12,743
9,288
32,600
41,910
6,009,135
Credit Quality Indicators
The Company aggregates loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. Except for one-to four-family loans and consumer loans, the Company analyzes loans individually by classifying the loans as to credit risk ratings at least annually. For one-to four-family loans and consumer loans, the Company evaluates credit quality based on the aging status of the loan. An analysis is performed on a quarterly basis for loans classified as special mention, substandard or doubtful. The Company uses the following definitions for risk ratings. Loans not meeting these definitions are considered to be pass-rated loans.
Special Mention - Loans classified as special mention have a potential weakness that deserves management’s attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the Company’s credit position at some future date.
Substandard - Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected.
Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values highly questionable and improbable.
17
The following table presents loan balances by credit quality indicator and year of origination at June 30, 2025 and charge-offs for the six months ended June 30, 2025 (in thousands):
2020
2023
2022
2021
& Prior
Revolving
Pass
1,373,024
1,283,281
944,522
727,284
210,968
178,070
50,220
4,767,369
Special Mention
18,400
33,953
52,353
Substandard
1,800
1,087
24,000
839
1,704
29,430
1,393,224
1,318,321
751,284
211,807
179,774
76,160
49,283
86,910
9,419
29,921
127,155
39,155
37,723
69,073
61,356
23,239
2,754
360,455
30,300
20,939
53,793
41,709
99,373
82,295
45,000
3,246
38,161
Past Due
40,630
84,596
180,934
80,630
93,630
57,497
11,597
447,935
956,819
9,095
30,760
4,197
15,185
59,237
89,725
124,390
61,694
463,120
Past due
Pass/Current
1,660,935
1,552,653
1,194,785
902,652
329,821
262,266
530,830
6,433,942
Substandard/Past due
3,641
85,060
25,975
4,243
144,999
1,681,135
1,590,247
1,203,880
987,712
355,796
266,509
546,015
Charge-offs
230
At June 30, 2025, there were $29.4 million, $53.8 million and $2.5 million of CRE, Multi-family and one-to four-family substandard classified collateral dependent loans, respectively.
18
The following table presents loan balances by credit quality indicator and year of origination at December 31, 2024 and charge-offs for the year ended December 31, 2024 (in thousands):
2019
1,613,785
1,114,212
927,851
241,340
125,676
149,727
26,569
4,199,160
73,859
5,000
14,255
93,114
1,688,731
956,851
255,595
104,503
65,231
8,693
28,533
110,440
38,143
74,120
63,086
23,005
13,480
3,224
325,498
51,239
104,420
84,025
3,469
9,531
30,379
32,880
238,850
96,201
119,601
62,865
14,987
1,929
452,477
986,910
1,497
10,246
1,000
7,643
20,968
4,697
13,185
46,493
105,341
150,815
67,562
466,662
2,067,578
1,358,787
1,133,734
367,291
173,199
208,258
510,803
5,819,650
15,246
105,857
75,268
25,636
2,719
125,538
2,142,524
1,367,927
1,224,248
407,182
210,977
524,988
247
At December 31, 2024, there were $24.0 million and $51.2 million of CRE and Multi-family substandard classified collateral dependent loans, respectively.
19
The following tables show the amortized cost basis of modified loans to borrowers experiencing financial difficulty during the periods indicated (in thousands):
Modifications
Interest Rate
as a % of
Extension
Reduction
Loan Class
0.0
%
12.4
4,747
0.4
48,224
3,015
11.6
52,971
55,986
11,736
1.1
59,960
62,975
The following tables describe the types of modifications made to borrowers experiencing financial difficulty:
Types of Modifications
Weighted
Average
Term
Rate
0.0%
6-12 months
20
11-12 months
3.8%
2.9%
4.1%
There were $7.0 million of loans that had a payment default during the three and six months ended June 30, 2025 that were modified in the prior 12 months before default to borrowers experiencing financial difficulty. At June 30, 2025, there were no additional commitments to lend to borrowers experiencing financial difficulty whose loans have been modified. All loans to borrowers experiencing financial difficulty that have been modified during the three and six months ended June 30, 2024, were in compliance with their modified terms.
NOTE 6 — BORROWINGS
Borrowings consisted of the following (in thousands):
Interest Expense
Federal funds purchased and securities sold under agreements to repurchase
1,260
2,670
151
1,829
2,330
4,584
6,719
Secured and other borrowings:
Secured borrowings
Federal Reserve Bank term loan
1,214
2,295
N.A. – not applicable
Federal funds purchased are generally overnight transactions and had a weighted average interest rate of 4.40% at June 30, 2025. The FHLBNY advances are generally short-term transactions and have a fixed weighted average interest rate of 4.43%.
Secured borrowings are loan participation agreements with counterparties where the transfer of the participation interest did not qualify for sale treatment under GAAP.
The Federal Reserve established the Bank Term Funding Program (“BTFP”) on March 12, 2023 as a funding source for eligible depository institutions. The BTFP provided short-term liquidity (up to one year) against the par value of certain high-quality collateral, such as U.S. Treasury securities. The BTFP ceased making new loans as scheduled on March 11, 2024. At June 30, 2025 and December 31, 2024, the Company had no outstanding FRB term loans under the BTFP.
21
At June 30, 2025, the Company had cash on deposit with the Federal Reserve Bank of New York and available secured wholesale funding borrowing capacity of $2.9 billion.
NOTE 7 — STOCKHOLDERS’ EQUITY
In May 2025, the Company used substantially all available capacity under a $50 million share repurchase program authorized on March 12, 2025, resulting in the purchase of 878,807 shares of common stock at an average price of $56.90 per share.
On July 17, 2025, the Company’s Board of Directors approved a new share repurchase plan with authorization to purchase up to an additional $50 million of the Company’s common stock. In aggregate, the Board of Directors has authorized $100 million of share repurchases since March 2025.
NOTE 8 — EARNINGS PER SHARE
The Company uses the two-class method in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. The factors used in the earnings per share calculation are as follows (in thousands, except per share data).
Basic
Net income available to common stockholders
Weighted average common shares outstanding
10,564,275
10,886,120
11,163,127
Basic earnings per common share
Diluted
Net income allocated to common stockholders
Weighted average common shares outstanding for basic earnings per common share
Add: Dilutive effects of assumed vesting of performance based restricted stock units
29,906
24,776
Add: Dilutive effects of assumed vesting of restricted stock units
82,697
6,800
64,535
Average shares and dilutive potential common shares
10,676,878
11,199,736
10,975,431
Dilutive earnings per common share
For the three and six months ended June 30, 2025, all performance based restricted stock units and restricted stock units were considered in computing diluted earnings per common share, respectively. For the three and six months ended June 30, 2024, 24,420 and 12,210 of performance based restricted stock units, respectively, were not considered in the calculation of diluted earnings per share as their inclusion would be anti-dilutive. For the three months ended June 30, 2024, all restricted stock units were considered in computing diluted earnings per common share. For the six months ended June 30, 2024, 293,052 of restricted stock units were not considered in the calculation of diluted earnings per share as their inclusion would be anti-dilutive.
NOTE 9 — STOCK COMPENSATION PLAN
Equity Incentive Plan
At June 30, 2025, the Company maintained two stock compensation plans, the Amended and Restated 2022 Equity Incentive Plan (the “2022 EIP”), and the 2019 Equity Incentive Plan (the “2019 EIP”). The 2019 EIP expired on May 31, 2022 but has outstanding restricted stock awards subject to vesting schedules.
The 2022 EIP was approved on May 31, 2022 by the stockholders of the Company and an amendment and restatement of the 2022 EIP was approved by the stockholders of the Company on May 29, 2024 to increase the number of shares of common stock that may be issued under the plan by 358,000. The stockholders of the Company subsequently approved an amendment to the 2022 EIP on May 28, 2025 to increase the number of shares of common stock that may be issued under the plan by an additional 750,000. Under the 2022 EIP, the remaining maximum number of shares of stock that may be delivered to participants in the form of restricted stock, restricted stock units and stock options, including ISOs and non-qualified stock options is 876,921 at June 30, 2025, subject to adjustment as set forth in the 2022 EIP, plus any awards that are made available under the 2019 EIP after March 15, 2022.
Restricted Stock Awards and Restricted Stock Units
The Company issued restricted stock awards and restricted stock units under the 2022 EIP and the 2019 EIP (collectively, “restricted stock grants”) to certain key personnel. Each restricted stock grant vests based on the vesting schedule outlined in the restricted stock grant agreement. Restricted stock grants are subject to forfeiture if the holder is not employed by the Company on the vesting date.
In the first quarter of 2025 and 2024, 133,359 and 168,469 restricted stock grants were issued to certain key personnel, respectively. One-third of these shares vest each year for three years beginning on March 1, 2026 and March 1, 2025, respectively. Total compensation cost that has been charged against income for restricted stock grants was $1.5 million and $3.2 million for the three and six months ended June 30, 2025, respectively. Total compensation cost that has been charged against income for restricted stock grants was $1.8 million and $3.4 million for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, there was $11.3 million of total unrecognized compensation expense related to the restricted stock awards. The cost is expected to be recognized over a weighted-average period of 2.16 years.
In January 2025, 27,500 restricted shares were granted to members of the Company’s Board of Directors, which fully vest one-year from the grant date. In January 2024, 27,500 restricted shares were granted to members of the Company’s Board of Directors which vested in January 2025. Total expense for the awards granted to members of the Board of Directors was $452,000 and $905,000 for the three and six months ended June 30, 2025, respectively. Total expense for the awards granted to members of the Board of Directors was $337,000 and $674,000 for the three and six months ended June 30, 2024, respectively. As of June 30, 2025, total unrecognized expense for these awards was $905,000.
The following table summarizes the changes in the Company’s restricted stock grants:
June 30, 2025
Weighted Average
Grant Date
Number of
per Share
Outstanding, beginning of period
277,095
50.59
Granted
160,859
61.10
Forfeited
(1,761)
67.50
Vested
(150,357)
53.44
Outstanding at end of period
285,836
54.90
23
Performance-Based Stock Units
During the second quarter of 2022, the Company established a long-term incentive award program under the 2022 EIP. Under the program, 52,807 PRSUs were awarded in the first quarter of 2025, which vest over a three-year period beginning in March 2026 if certain performance criteria are met. In the second quarter of 2024, 73,260 PRSUs were awarded, of which 31,746 met the performance criteria and will vest in equal installments over a three-year period beginning in June 2025. The weighted average service inception date fair value of the outstanding awarded shares was $4.3 million. Total compensation cost that has been charged/(reversed) against income for these PRSUs was $576,000 and $330,000 for the three and six months ended June 30, 2025, respectively. Total compensation cost that has been charged against income for these PRSUs was $90,000 for the three and six months ended June 30, 2024.
NOTE 10 — FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company uses fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Accounting guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.
Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities, in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflect a reporting entity’s own judgments about the assumptions that market participants would use in pricing an asset or liability.
Assets and Liabilities Measured at Fair Value on a Recurring and Non-Recurring Basis
Assets measured on a recurring basis are limited to the Company’s AFS securities portfolio, equity investments, and derivative contracts. The AFS portfolio is carried at estimated fair value with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income or loss in shareholders’ equity. Equity investments are carried at estimated fair value with changes in fair value reported on the statements of operations. Outstanding derivative contracts designated as cash flow hedges are carried at estimated fair value with changes in fair value reported as accumulated other comprehensive income or loss in shareholders’ equity. Outstanding derivatives not designated as hedges are carried at estimated fair value with changes in fair value reported as non-interest income. The fair values for substantially all of these assets are obtained monthly from an independent nationally recognized pricing service. On a quarterly basis, the Company assesses the reasonableness of the fair values obtained for the AFS portfolio by reference to a second independent nationally recognized pricing service. Based on the nature of these securities, the Company’s independent pricing service provides prices which are categorized as Level 2 since quoted prices in active markets for identical assets are generally not available for the majority of securities in the Company’s portfolio. Various modeling techniques are used to determine pricing for the Company’s mortgage-backed securities, including option pricing and discounted cash flow models. The inputs to these models include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data. On an annual basis, the Company obtains the models, inputs and assumptions utilized by its pricing service and reviews them for reasonableness. Other than derivative contracts, the Company did not have any liabilities that were measured at fair value at June 30, 2025 and December 31, 2024.
From time to time, the Company may be required to record at fair value other assets or liabilities on a non-recurring basis, such as certain loans where the carrying value is based on the fair value of the underlying collateral estimated using Level 3 inputs consisting of individual third-party appraisals that may be adjusted based on certain criteria.
24
Assets and liabilities measured at fair value on a recurring and non-recurring basis are summarized below (in thousands):
Fair Value Measurement using:
Quoted Prices
in Active
Significant
Markets
Other
Carrying
For Identical
Observable
Unobservable
Assets (Level 1)
Inputs (Level 2)
Inputs (Level 3)
Recurring Fair Value Measurements:
Residential mortgage securities
Commercial mortgage securities
Derivative assets
1,094
Liabilities
Derivative liabilities
4,215
Non-Recurring Fair Value Measurements:
Collateral dependent loans
21,600
919
1,539
There were no transfers between Level 1 and Level 2 during the three and six months ended June 30, 2025 and 2024.
Collateral dependent loans with a total amortized cost of $24.0 million at June 30, 2025 were reduced by an allowance for credit losses of $2.4 million for a reported total net carrying amount of $21.6 million. There were no material assets and liabilities held at June 30, 2024 for which non-recurring fair value adjustments were recorded during the three and six months ended June 30, 2024.
25
Assets and Liabilities Not Measured at Fair Value
The Company has engaged independent pricing service providers to provide the fair values of its financial assets and liabilities not measured at fair value. These providers follow FASB’s exit pricing guidelines, as required by ASC 820 Fair Value Measurement, when calculating the fair market value. Cash and cash equivalents include cash and due from banks and overnight deposits. The estimated fair values of cash and cash equivalents are assumed to equal their carrying values, as these financial instruments are either due on demand or have short-term maturities. For securities and the disability fund, if quoted market prices are not available for a specific security, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics, or discounted cash flows. These pricing models primarily use market-based or independently sourced market parameters as inputs, including, but not limited to, yield curves, interest rates, equity or debt prices, and credit spreads. The estimated fair value of loans are measured at amortized cost using an exit price notion. Ownership in equity securities of the FRB and FHLB is generally restricted and there is no established liquid market for their resale. The fair values of deposit liabilities with no stated maturity (i.e., money market and savings deposits, and non-interest-bearing demand deposits) are equal to the carrying amounts payable on demand. Time deposits are valued using a replacement cost of funds approach. Trust preferred securities are valued using a replacement cost of funds approach. For all other assets and liabilities it is assumed that the carrying value equals their current fair value.
Carrying amounts and estimated fair values of financial instruments not carried at fair value were as follows (in thousands):
Fair Value Measurement Using:
Total Fair
Value
Financial Assets:
Securities held-to-maturity
Loans, net
6,605,670
FRB Stock
11,410
FHLB Stock
13,889
Disability Fund
1,500
Time deposits at banks
498
Accrued interest receivable
33,948
2,258
31,690
Financial Liabilities:
Non-interest-bearing demand deposits
Money market and savings deposits
5,240,511
Time deposits
123,356
123,118
150,063
20,001
Accrued interest payable
3,335
941
2,058
336
26
5,878,582
17,228
33,209
2,105
31,104
4,523,522
125,397
125,288
20,024
1,809
1,436
361
NOTE 11 — ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
The following tables presents the tax effects allocated to each component of Other Comprehensive Income (Loss) (in thousands):
June 30, 2024
Before
Tax
After
Effect
Unrealized gain (loss) arising on AFS securities
Unrealized gain (loss) arising during the period
4,386
(1,314)
146
(43)
Unrealized gain (loss) arising on cash flow hedges
(1,937)
580
932
(276)
Reclassification adjustment for gain included in net income
(1,262)
388
Net Change
(330)
Total other comprehensive income (loss)
2,449
(734)
(184)
69
14,368
(4,306)
(4,342)
1,879
(2,501)
749
7,019
(2,084)
(911)
280
(2,513)
772
(3,412)
1,029
4,506
(1,312)
10,956
(3,277)
164
567
27
The following tables presents the after-tax changes in the balances of each component of Accumulated Other Comprehensive Income (Loss) at the dates indicated (in thousands):
Accumulated
Cash Flow
Comprehensive
Hedge
Income (Loss)
(46,341)
(829)
Other comprehensive income (loss) arising during the period, net of tax
(43,269)
(2,186)
(57,251)
5,161
Unrealized gain (loss) arising during the period, net of tax
Reclassification adjustment for gain included in net income, net of tax
(57,148)
4,943
(53,331)
197
8,310
(54,685)
1,749
2,472
Other comprehensive income (loss)arising during the period , net of tax
The following tables shows the amounts reclassified out of AOCI for the realized gain on cash flow hedges (in thousands):
Affected line item in
the Consolidated Statements
of Operations
Realized gain on sale of AFS securities
Gain on Sale of Securities
Income tax (expense) benefit
Total reclassifications, net of income tax
Realized gain (loss) on derivative cash flow hedges
1,262
911
(280)
(772)
874
631
1,741
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NOTE 12 — COMMITMENTS AND CONTINGENCIES
Financial instruments with off-balance-sheet risk
The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its clients. These financial instruments include commitments to extend credit. These instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the financial statements. The Company’s exposure to credit loss in the event of non-performance by the counterparty to the financial instrument for commitments to extend credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.
The following off-balance-sheet financial instruments, whose contract amounts represent credit risk, are outstanding (in thousands):
Fixed
Variable
Unused loan commitments
127,415
588,350
108,561
586,821
Standby and commercial letters of credit
27,870
31,920
155,285
140,481
A commitment to extend credit is a legally binding agreement to lend to a client as long as there is no violation of any condition established in the contract. These commitments do not necessarily represent future cash requirements and generally expire within two years. At June 30, 2025, the Company’s fixed rate loan commitments had interest rates ranging from 3.0% to 9.3% and the Company’s variable rate loan commitments had interest rates ranging from 5.5% to 9.6%. At December 31, 2024, the Company’s fixed rate loan commitments had interest rates ranging from 3.0% to 9.3% and the Company’s variable rate loan commitments had interest rates ranging from 6.3% to 11.5%. The amount of collateral obtained, if any, by the Company upon extension of credit is based on management’s credit evaluation of the borrower. Collateral held varies but may include mortgages on commercial and residential real estate, security interests in business assets, equipment, deposit accounts with the Company or other financial institutions and securities.
The Company’s stand-by letters of credit amounted to $27.9 million and $31.9 million as of June 30, 2025 and December 31, 2024, respectively. The Company’s stand-by letters of credit are collateralized by interest-bearing accounts of $22.9 million and $24.1 million as of June 30, 2025 and December 31, 2024, respectively.
Legal and Regulatory Proceedings
There have been investigations by governmental entities concerning a prepaid debit card product program that was offered by the GPG Banking-as-a-Service (“BaaS) business. These include investigations involving the Company and the Bank by the Board of Governors of the FRB and certain state authorities, including the NYSDFS. During the early stages of the COVID-19 pandemic, third parties used this prepaid debit card product to establish unauthorized accounts and to receive unauthorized government benefits payments, including unemployment insurance benefits payments made pursuant to the Coronavirus Aid, Relief, and Economic Security Act from many states. The Company ceased accepting new accounts from this program manager in July 2020 and exited its relationship with this program manager in August 2020. The Company has cooperated in these investigations. In 2023, the Bank entered into separate consensual resolutions with each of the FRB and the NYSDFS with respect to their investigations, each of which investigations is now closed as a result of such orders. In the fourth quarter of 2024, the Company also resolved an investigation by the Attorney General of the State of Washington related to this program.
In addition to the matters described above, the Company is subject to various other pending and threatened legal actions relating to the conduct of its business activities, as well as inquiries and investigations from regulators. While the future outcome of litigation or regulatory matters cannot be determined at this time, in the opinion of management, as of
29
June 30, 2025, the aggregate liability, if any, arising out of any such other pending or threatened matters are not expected to be material to the Company’s financial condition, results of operations, and liquidity.
NOTE 13 — REVENUE FROM CONTRACTS WITH CUSTOMERS
All of the Company’s revenue from contracts with customers that are in the scope of ASC 606, Revenue from Contracts with Customers, are recognized in non-interest income. The following table presents the Company’s revenue from contracts with customers (in thousands):
Other service charges and fees
479
367
1,871
1,462
2,610
6,147
6,175
13,174
A description of the Company’s revenue streams accounted for under the accounting guidance is as follows:
The Company offers business and personal retail products and services, which include, but are not limited to, online banking, mobile banking, Automated Clearing House (“ACH”) transactions, and remote deposit capture. A standard deposit contract exists between the Company and all deposit customers. The Company earns fees from its deposit customers for transaction-based services (such as ATM use fees, stop payment charges, statement rendering, and ACH fees), account maintenance, and overdraft services. Transaction-based fees are recognized at the time the transaction is executed as that is the point in time the Company fulfills the client’s request. Account maintenance fees, which relate primarily to monthly maintenance, are earned over the course of a month, representing the period over which the Company satisfies the performance obligation. Overdraft fees are recognized at the point in time that the overdraft occurs. Service charges on deposits are withdrawn from the client’s account balance.
Global payment group revenue
During 2024, the Company exited the GPG BaaS business, and only residual operational tasks remain to be completed. The Company offered corporate cash management and retail banking services and, through its global payments business, provided services to non-bank financial service companies. The Company received transaction data at the end of each month for services rendered, at which time revenue was recognized. Additionally, service charges specific to GPG customers’ deposits were recognized within GPG revenue.
Other service charges
The primary component of other service charges relates to letter of credit fees and FX conversion fees. The Company outsources FX conversion for foreign currency transactions to correspondent banks. The Company earns a portion of an FX conversion fee that the client charges to process an FX conversion transaction. Revenue is recognized at the end of the month once the client has remitted the transaction information to the Company.
30
NOTE 14 — DERIVATIVES
On occasion, the Company enters into derivative contracts as a part of its asset liability management strategy to help manage its interest rate risk position. At June 30, 2025, these derivatives had a notional amount of $1.6 billion and contractual maturities ranging from August 1, 2025 to August 1, 2027. The notional amount of the derivatives does not represent the amount exchanged by the parties. The derivatives were designated as cash flow hedges of certain deposit liabilities and borrowings of the Company. The hedges were determined to be highly effective during the three and six months ended June 30, 2025. The Company expects the hedges to remain highly effective during the remaining term of the derivatives.
In addition, the Company periodically enters into certain commercial loan interest rate swap agreements to provide commercial loan clients the ability to convert loans from variable to fixed interest rates. Under these agreements, the Company enters into a variable-rate loan agreement with a client in addition to a swap agreement. This swap agreement effectively converts the client’s variable rate loan into a fixed rate loan. The Company then enters into a corresponding swap agreement with a third party to offset its exposure on the variable and fixed components of the client agreement. As the interest rate swap agreements with the clients and third parties are not designated as hedges, the instruments are marked to market in earnings. At June 30, 2025, these interest rate swaps have a notional amount of $69.0 million and a contractual maturity of August 15, 2028.
The following tables reflect the derivatives recorded on the balance sheet (in thousands):
Notional
Derivatives designated as hedges:
Interest rate swaps related to client deposits and borrowings
1,550,000
137
3,258
Derivatives not designated as hedges:
Interest rate swaps
69,000
957
550,000
585
1,205
334
NOTE 15 — SUBSEQUENT EVENTS
On July 17, 2025, the Company publicly announced that its Board of Directors declared a quarterly dividend of $0.15 per share on the Company’s common stock (the “Dividend”), the Company’s first cash dividend since its initial public offering in 2017. The Company expects to continue to distribute regular cash dividends subject to the discretion of the Board of Directors and in accordance with applicable securities, corporate and banking laws, rules, regulations, and guidance. The Dividend is payable on August 11, 2025 to holders of record of the Company’s common stock at the close of business on July 28, 2025.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Company Background
The Company is a bank holding company headquartered in New York, New York and registered under the BHC Act. Through its wholly owned bank subsidiary, Metropolitan Commercial Bank, a New York state-chartered commercial bank, the Company provides a broad range of business, commercial and retail banking products and services to small businesses, middle-market enterprises, public entities and individuals primarily in the New York metropolitan area. See the “GLOSSARY OF COMMON TERMS AND ACRONYMS” for the definition of certain terms and acronyms used throughout this Form 10-Q.
The Company’s primary market includes the New York metropolitan area, specifically Manhattan and the outer boroughs, and Nassau County, New York. This market is well-diversified and represents a large market for middle market businesses (defined as businesses with annual revenue of $5 million to $400 million). The Company’s market area has a diversified economy with the majority of employment provided by services, wholesale/retail trade, finance/insurance/real estate, technology companies and construction. A relationship-led strategy has provided the Company with select opportunities in other U.S. markets, with a particular focus on South Florida.
The Company’s primary lending products are CRE, including multi-family loans, and C&I loans. Substantially all loans are secured by specific items of collateral including business and consumer assets, and commercial and residential real estate. Commercial loans are expected to be repaid from cash flows from operations of commercial enterprises. The Company has developed various deposit gathering strategies, which generate the funding necessary to operate without a large branch network. In addition to traditional commercial banking products, the Company offers: corporate cash management and retail banking services; tailored financial solutions for government entities, municipalities, and public institutions; specialized services to facilitate secure and efficient real estate transactions and tax-deferred exchanges for title and escrow and Section 1031 exchanges; and EB-5 Program accounts for qualified foreign investors. The Company’s primary deposit products are checking, savings, and term deposit accounts, all of which are insured by the FDIC up to the maximum amounts allowed by law. These activities, together with six strategically located banking centers, generate a stable source of deposits to support the growth of our diverse loan portfolio.
Recent Events
In May 2025, the Company used substantially all available capacity under a $50 million share repurchase program authorized on March 12, 2025, resulting in the purchase of 878,807 shares of common stock at an average price of $56.90 per share. On July 17, 2025, the Company’s Board of Directors approved a new share repurchase plan with authorization to purchase up to an additional $50 million of the Company’s common stock. In aggregate, the Board of Directors has authorized $100 million of share repurchases since March 2025.
The Company may repurchase shares of common stock from time to time on the open market or by other means in accordance with applicable securities laws and other restrictions, including, in part, under a Rule 10b5-1 plan. The number of shares to be repurchased and the timing of repurchases, if any, will depend on several factors, including market conditions, prevailing share price, corporate and regulatory requirements, and other considerations. The share repurchase plan has no expiration date, may be discontinued or suspended at any time and does not obligate the Company to acquire any amount of its common stock.
Critical Accounting Policies
Critical accounting estimates are necessary in the application of certain accounting policies and procedures and are particularly susceptible to significant change. Critical accounting policies are defined as those involving significant judgments and assumptions by management that could have a material impact on the carrying value of certain assets or on income under different assumptions or conditions. Management believes the Company’s most critical accounting policy, which involves the most complex or subjective decisions or assessments, is the allowance for credit losses.
Allowance for Credit Losses
The ACL has been determined in accordance with GAAP. The Company is responsible for the timely and periodic determination of the amount of the ACL. Management believes that the ACL for loans and loan commitments is adequate to cover expected credit losses over the life of the loan portfolio. Although management evaluates available information to determine the adequacy of the ACL, the level of allowance is an estimate which is subject to significant judgment and short-term change. Because of uncertainties associated with local and national economic forecasts, the operating and regulatory environment, collateral values and future cash flows from the loan portfolio, it is possible that a material change could occur in the ACL. The evaluation of the adequacy of loan collateral is often based upon estimates and appraisals. Because of uncertain economic conditions, the valuations determined from such estimates and appraisals may change. Accordingly, the Company may ultimately incur losses that vary from management’s current estimates. Adjustments to the ACL will be reported in the period in which such adjustments become apparent and can be reasonably estimated. All loan losses are charged to the ACL when the loss actually occurs or when the collectability of principal is deemed to be unlikely. Recoveries are credited to the allowance at the time of recovery. Various regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL. As a result of such examinations, the Company may need to recognize additions to the ACL based on the regulators’ observations.
In estimating the ACL, the Company relies on models and economic forecasts developed by external parties as the primary driver of the ACL. These external models and forecasts are based on nationwide data sets. Economic forecasts can change significantly over an economic cycle and have a significant level of uncertainty associated with them. The performance of these models is dependent on the variables used in the models being reasonable predictors for the loan portfolio’s performance. However, these variables may not capture all sources of risk within the portfolio. As a result, the Company reviews the results and makes qualitative adjustments to capture potential limitations of the external models as necessary. Such qualitative factors may include adjustments to better capture the imprecision associated with the economic forecasts, and the ability of the models to capture emerging risks within the portfolio that may not be represented in the data. These adjustments are evaluated through the Company’s review process and revised on a quarterly basis to account for changes in forecasts, facts and circumstances.
One of the more significant judgments involved in estimating the Company’s ACL relates to the macroeconomic forecasts used to estimate credit losses and the relative weightings applied to them. To illustrate the impact of changes in these forecasts to the Company’s ACL, the Company performed a hypothetical sensitivity analysis that decreased the weight on the baseline scenario by 33% and equally allocated the difference to increase the weights on the more optimistic and adverse scenarios. All else equal, the impact of this hypothetical forecast would result in a net increase of approximately $6.2 million, or 8.4%, in the Company’s total ACL for loans and loan commitments as of June 30, 2025. This hypothetical analysis is intended to illustrate the impact of adverse changes in the macroeconomic forecasts at a point in time and is not intended to reflect the full nature and extent of potential future change in the ACL. It is difficult to estimate how potential changes in any one of the quantitative inputs or qualitative factors might affect the overall ACL and the Company’s current assessments may not reflect the potential future impact of changes to those inputs or factors.
Discussion of Financial Condition
The Company had total assets of $7.9 billion at June 30, 2025, an increase of $553.1 million, or 7.6%, from December 31, 2024.
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Total cash and cash equivalents were $152.5 million at June 30, 2025, a decrease of $47.8 million, or 23.9%, from December 31, 2024. The decrease from December 31, 2024 primarily reflects an increase in the loan book of $578.7 million and a $250 million decrease in wholesale funding, partially offset by an increase of $808.3 million in deposits.
Investments
Total securities were $944.2 million at June 30, 2025, an increase of $28.5 million or 3.1%, from December 31, 2024. The increase was primarily due to the purchase of $85.1 million of AFS securities, and the $14.5 million unrealized gain on AFS securities during the first six months of 2025, partially offset by the $71.2 million paydown and maturities of AFS and HTM securities.
Total loans, net of deferred fees and unamortized costs, were $6.6 billion at June 30, 2025, an increase of $578.7 million, or 9.6%, from December 31, 2024. The increase in total loans from December 31, 2024 was due primarily to an increase of $252.5 million in CRE loans (including owner-occupied). At June 30, 2025, 77.1% of the CRE and C&I loan portfolio was concentrated in the New York metropolitan area, mainly New York City, and Florida.
As of June 30, 2025, total loans consisted primarily of CRE loans (including multi-family mortgage loans) and C&I loans. The Company’s commercial loan portfolio includes loans to the following industries (dollars in thousands):
% of Total
Balance
CRE (1)
Skilled Nursing Facilities
2,298,043
34.8
6.3
Office
414,126
Mixed use
313,842
4.7
Hospitality
412,727
6.2
Retail
378,091
5.7
Land
226,869
3.4
3.8
Industrial
179,174
2.7
626,280
9.5
Total CRE
5,515,093
83.4
Finance & Insurance
246,492
3.7
244,308
Individuals
171,656
2.6
Healthcare
107,268
1.6
Services
77,132
1.2
Wholesale
72,754
Manufacturing
29,755
66,690
1.0
Total C&I
1,016,055
15.4
(1)CRE, not including one-to four-family loans
The largest concentration in the loan portfolio is to the healthcare industry, which amounted to $2.6 billion, or 40.0% of total loans, at June 30, 2025, including $2.5 billion in loans to skilled nursing facilities.
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Asset Quality
Non-performing loans increased to $39.9 million at June 30, 2025 compared to $32.6 million at December 31, 2024 primarily due to two secured CRE loans, a longstanding secured residential loan and a single unsecured C&I loan. The table below sets forth key asset quality ratios (dollars in thousands):
At or for the
six months ended
year ended
Asset Quality Ratios
Non-performing loans
Non-performing loans to total loans
0.60
0.54
Allowance for credit losses to total loans
1.12
1.05
Non-performing loans to total assets
0.51
0.45
Allowance for credit losses to non-performing loans
185.5
194.1
Ratio of net charge-offs (recoveries) to average loans outstanding in aggregate
Allowance for Credit Losses – Loans and Loan Commitments
The ACL was $74.1 million at June 30, 2025, as compared to $63.3 million at December 31, 2024. The Company recorded a $10.8 million provision for credit losses for the six months ended June 30, 2025, which primarily reflects loan growth, provisioning for a commercial real estate loan and an unsecured C&I loan, and changes in the outlook for certain macroeonomic variables.
Total deposits were $6.8 billion at June 30, 2025, an increase of $808.3 million, or 13.5%, from December 31, 2024. The increase from December 31, 2024 was due primarily to increases across most of the Company’s various deposit verticals. Non-interest-bearing demand deposits were 21.0% of total deposits at June 30, 2025, compared to 22.3% at December 31, 2024.
The table below summarizes the Company’s deposit composition by segment for the periods indicated (dollars in thousands):
DollarChange
PercentageChange
93,385
7.0
Money market
5,231,672
4,514,579
717,093
15.9
Savings accounts
8,839
8,943
(104)
(1.2)
(2,041)
(1.6)
13.5
At June 30, 2025, the aggregate estimated amount of FDIC uninsured deposits was $1.8 billion, and the aggregate estimated amount of uninsured time deposits was $29.5 million. The following table presents the scheduled maturities of time deposits greater than $250,000 (in thousands):
Three months or less
12,718
Over three months through six months
4,166
Over six months through one-year
11,822
Over one-year
769
29,475
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Borrowings
To support the balance sheet, the Company may at times utilize FHLB advances or other funding sources. At June 30, 2025, the Company had $50.0 million of Federal funds purchased and $150.0 million of FHLBNY advances. At December 31, 2024, the Company had $210.0 million of Federal funds purchased and $240.0 million of FHLBNY advances.
Accumulated Other Comprehensive Income
Accumulated other comprehensive loss, net of tax, was $45.5 million at June 30, 2025, a decrease of $7.7 million from December 31, 2024. The decrease from December 31, 2024 was primarily due to unrealized gains on AFS securities, as a result of changes in prevailing market interest rates.
Results of Operations
Net Income
Net income was $18.8 million for the second quarter of 2025, an increase of $2.0 million as compared to $16.8 million for the second quarter of 2024. This increase was due primarily to a $12.1 million increase in net interest income and a $3.3 million decrease in professional fees, partially offset by a $4.8 million increase in the provision for credit losses, the absence of $3.7 million of GPG revenue as a result of the exit from that business, and a $1.7 million increase in compensation and benefits related to the increase in the number of employees.
Net income was $35.1 million for the six months ended June 30, 2025, an increase of $2.1 million as compared to $33.0 million for the six months ended June 30, 2024. This increase was due primarily to a $19.4 million increase in net interest income and a $4.3 million decrease in professional fees, partially offset by an $8.8 million increase in the provision for credit losses, the absence of $7.8 million of GPG revenue as a result of the exit from that business, and a $3.6 million increase in compensation and benefits related to the increase in the number of employees.
Net Interest Income and Net Interest Margin
Net interest income is the difference between interest earned on assets and interest incurred on liabilities. The following table presents an analysis of net interest income by each major category of interest-earning assets and interest-bearing liabilities. The table presents the average yield on interest-earning assets and the average cost of interest-bearing liabilities. Yields and costs were derived by dividing income or expense by the average balance of interest-earning assets and interest-bearing liabilities, respectively, for the periods shown. Average balances were derived from daily balances over the periods indicated. Interest income includes fees that management considers to be adjustments to yields. Yields on tax-exempt obligations were not computed on a tax-equivalent basis. Non-accrual loans were included in the computation of average balances. The yields set forth below include the effect of deferred loan origination fees and costs, and purchase discounts and premiums that are amortized or accreted to interest income.
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Yield /
(dollars in thousands)
Rate (1)
Assets:
Interest-earning assets:
Loans (2)
6,486,667
7.34
5,754,283
7.31
Available-for-sale securities
607,363
3,884
2.57
589,825
3,353
2.29
Held-to-maturity securities
394,374
1,849
1.88
456,078
2,124
1.87
Equity investments
5,556
3.02
2,431
2.59
184,054
4.53
369,169
5.63
Other interest-earning assets
27,682
6.03
27,301
7.45
Total interest-earning assets
7,705,696
6.61
7,199,087
6.47
Non-interest-earning assets
138,469
182,234
(68,966)
(58,841)
7,775,199
7,322,480
Liabilities and Stockholders' Equity:
Interest-bearing liabilities:
Money market and savings accounts
5,125,850
48,454
3.79
4,319,340
50,237
4.68
Certificates of deposit
133,495
1,369
4.11
37,084
318
3.45
Total interest-bearing deposits
5,259,345
3.80
4,356,424
4.67
298,843
3,573
4.79
287,104
3,667
5.14
Total interest-bearing liabilities
5,558,188
3.85
4,643,528
4.70
Non-interest-bearing liabilities:
Non-interest-bearing deposits
1,358,029
1,879,213
Other non-interest-bearing liabilities
135,008
119,675
7,051,225
6,642,416
Stockholders' equity
723,974
680,064
Total liabilities and equity
Net interest rate spread (3)
2.76
1.77
Net interest margin (4)
3.83
3.44
Total cost of deposits (5)
3.26
Total cost of funds (6)
3.10
3.34
(1)
Annualized.
(2)
Amount includes deferred loan fees and non-performing loans.
(3)
Determined by subtracting the annualized average cost of total interest-bearing liabilities from the annualized average yield on total interest-earning assets.
(4)
Determined by dividing annualized net interest income by total average interest-earning assets.
(5)
Determined by dividing annualized interest expense on deposits by total average interest-bearing and non-interest bearing deposits.
Determined by dividing annualized interest expense by the sum of total average interest-bearing liabilities and total average non-interest-bearing deposits.
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6,345,274
7.30
5,725,562
7.27
592,357
7,299
2.48
577,558
6,311
2.20
405,787
3,792
460,674
4,296
Equity investments - non-trading
5,536
81
2,423
2.53
169,287
4.77
333,580
5.62
29,291
6.88
30,365
7.69
7,547,532
6.57
7,130,162
6.43
132,675
182,635
(66,787)
(58,679)
7,613,420
7,254,118
4,937,693
94,298
4,209,403
96,848
4.63
130,002
2,703
4.19
35,674
593
5,067,695
3.86
4,245,076
4.62
345,982
8,213
362,246
9,407
5.22
5,413,677
3.92
4,607,323
4.66
1,338,964
1,857,290
130,644
115,974
6,883,285
6,580,587
730,135
673,531
2.65
3.76
3.42
3.05
3.21
3.14
3.32
Net interest margin for the second quarter of 2025 was 3.83% compared to 3.44% for the second quarter of 2024. Net interest margin for the six months ended June 30, 2025 was 3.76% compared to 3.42% for the six months ended June 30, 2024. For the six months ended June 30, 2025, the 34 basis point increase in net interest margin is supported by rigorous loan and deposit pricing initiatives and an 18 basis point decrease in the total cost of funds which reflects the reduction in short-term interest rates.
Interest Income
Interest income increased $11.3 million to $127.0 million for the second quarter of 2025 as compared to $115.8 million for the second quarter of 2024, primarily due to the increase in the average balance of loans. The average balance of loans increased $732.4 million for the second quarter of 2025 as compared to the second quarter of 2024.
Interest income increased $17.7 million to $245.8 million for the six months ended June 30, 2025 as compared to $228.1 million for the six months ended June 30, 2024, primarily due to the increase in the average balance of loans. The average balance of loans increased $619.7 million for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Interest expense decreased $826,000 to $53.4 million for the second quarter of 2025 as compared to $54.2 million for the second quarter of 2024 due primarily to the 24 basis point decrease in total cost of funds that reflects the reduction in short- term interest rates, partially offset by the $902.9 million increase in the average balance of interest-bearing deposits for the second quarter of 2025 as compared to the second quarter of 2024.
Interest expense decreased $1.6 million to $105.2 million for the six months ended June 30, 2025 as compared to $106.8 million for the six months ended June 30, 2024, due primarily to the 18 basis point decrease in the total cost of funds, partially offset by the $822.6 million increase in the average balance of interest-bearing deposits for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024.
Provision for Credit Losses – Loans and Loan Commitments
The provision for credit losses for the three months ended June 30, 2025 was $6.4 million, which reflects loan growth and provisioning for a CRE loan. The provision for credit losses for the six months ended June 30, 2025 was $10.9 million, which reflects loan growth and provisioning for a CRE loan and an unsecured C&I loan.
Non-Interest Income
Non-interest income decreased $3.5 million to $2.6 million for the second quarter of 2025, as compared to the second quarter of 2024 driven primarily by the absence of GPG revenue due to the exit from that business. Non-interest income decreased $6.9 million to $6.2 million for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024 driven primarily by the absence of GPG revenue due to the exit from that business.
Non-Interest Expense
Non-interest expense increased $852,000 to $43.1 million for the second quarter of 2025, compared to the second quarter of 2024 due primarily to a $1.7 million increase in compensation and benefits related to the increase in the number of employees, a $1.7 million increase in deposit program related fees, and a $610,000 increase in technology costs, partially offset by decreases of $3.3 million in professional fees.
Non-interest expense increased $1.6 million to $85.8 million for the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, due primarily to an increase of $3.6 million in compensation and benefits due to the increase in the number of employees and a $2.6 million increase in deposit program related fees, partially offset by decreases of $4.3 million in professional fees.
Income Tax Expense
The estimated effective tax rate for the second quarter of 2025 was 29.9% as compared to 29.7% for the second quarter of 2024.
Off-Balance Sheet Arrangements
The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit, which involve elements of credit and interest rate risk in excess of the amount recognized in the consolidated statements of financial condition. Exposure to credit loss is represented by the contractual amount of the instruments. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments.
At June 30, 2025, the Company had $715.8 million in unused loan commitments and $27.9 million in standby and commercial letters of credit. At December 31, 2024, the Company had $695.4 million in unused commitments and $31.9 million in standby and commercial letters of credit.
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Liquidity and Capital Resources
Liquidity
Liquidity is the ability to economically meet current and future financial obligations. The Company’s primary sources of funds consist of deposit inflows, loan repayments and maturities, securities cash flows and borrowings. While maturities and scheduled amortization of loans, securities, and borrowings are predictable sources of funds, deposit flows, mortgage prepayments and securities cash flows may be greatly influenced by the general level of interest rates and changes thereto, economic conditions and competition.
The Company regularly reviews the need to adjust investments in liquid assets based upon its assessment of: (1) expected loan demand, (2) expected deposit flows, (3) yields available on interest-earning deposits and securities, and (4) the objectives of its asset/liability program. Excess liquidity is generally invested in interest earning deposits and short- and intermediate-term securities.
The Company’s most liquid assets are cash and cash equivalents. The levels of these assets are dependent on the Company’s operating, financing, lending and investing activities during any given period. At June 30, 2025 and December 31, 2024, cash and cash equivalents totaled $152.5 million and $200.3 million, respectively. Securities, which provide an additional source of liquidity, totaled $944.2 million at June 30, 2025 and $915.8 million at December 31, 2024. At June 30, 2025, there were $779.8 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $106.6 million were encumbered. At December 31, 2024, there were $750.3 million of securities pledged to support wholesale funding, and to a lesser extent certain other types of deposits, of which $65.5 million were encumbered.
The Company’s primary investing activities are the origination and to a lesser extent, purchase of loans and securities. For the three and six months ended June 30, 2025, the Company’s loan production was $492.0 million and $901.8 million as compared to $290.8 million and $560.4 million, respectively, for the three and six months ended June 30, 2024.
Financing activities consisted primarily of activity in deposit accounts and borrowings. The Company gathers deposits from businesses and individuals through client referrals and other relationships and through its retail presence. The Company has established deposit concentration thresholds to avoid the possibility of dependence on any single depositor base for funds. Total deposits were $6.8 billion at June 30, 2025, an increase of $808.3 million, or 13.5%, from December 31, 2024.
At June 30, 2025, interest-bearing deposits were comprised of $5.2 billion of money market accounts and $123.4 million of time deposits. Time deposits due within one year of June 30, 2025 totaled $120.2 million, or 1.8%, of total deposits. At June 30, 2025, the aggregate estimated amount of FDIC uninsured deposits was $1.8 billion. At December 31, 2024, interest-bearing deposits were comprised of $4.5 billion of money market accounts and $125.4 million of time deposits. Time deposits due within one year of December 31, 2024 totaled $118.1 million or 2.0% of total deposits. Non-interest-bearing deposits were 21.0% of total deposits at June 30, 2025, as compared to 22.3% at December 31, 2024. At December 31, 2024, the aggregate estimated amount of FDIC uninsured deposits was $1.6 billion.
The Company has no material commitments or demands that are likely to affect its liquidity other than as set forth below. In the event loan demand were to increase faster than expected, or any other unforeseen demand or commitment were to occur, the Company could access its borrowing capacity with the FHLB or obtain additional funds through alternative funding sources, including the brokered deposit market. At June 30, 2025, the Company had $50.0 million of Federal funds purchased and $150.0 million of FHLBNY advances. At December 31, 2024, the Company had $210.0 million of Federal funds purchased and $240.0 million of FHLBNY advances. At June 30, 2025 and December 31, 2024, the Company had cash on deposit with the FRBNY and available secured wholesale funding borrowing capacity of $2.9 billion.
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Capital Resources
The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. At June 30, 2025 and December 31, 2024, the Company and the Bank met all applicable regulatory capital requirements to be considered “well capitalized” under regulatory guidelines. The Company and the Bank manage their capital to comply with their internal planning targets and regulatory capital standards administered by federal banking agencies. The Company and the Bank review capital levels on a monthly basis. Below is a table of the Company’s and Bank’s capital ratios for the periods indicated:
Minimum
Minimum Ratio
Ratio to be
Required for
Capital
“Well
Capital Adequacy
Conservation
Capitalized”
Purposes
Buffer
The Company
Tier 1 leverage ratio
10.0
10.8
4.0
Common equity tier 1
11.9
4.5
2.5
Tier 1 risk-based capital ratio
11.1
12.3
6.0
Total risk-based capital ratio
12.2
13.3
8.0
The Bank
9.8
10.6
5.00
10.9
12.0
6.50
8.00
13.0
10.00
At June 30, 2025 and December 31, 2024, total non-owner-occupied CRE loans were 371.9% and 346.1% of risk-based capital, respectively. The increased CRE concentration ratio is primarily the result of the Bank funding the share repurchase program and the anticipated quarterly dividends at the holding company. See “—Recent Events” above for more information on the Company’s quarterly dividend and share repurchase program.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
General
The principal objective of the Company’s asset and liability management function is to evaluate the interest rate risk within the balance sheet and pursue a controlled assumption of IRR while maximizing net income and preserving adequate levels of liquidity and capital. The Board of Directors bears the ultimate oversight responsibility for the Company’s asset and liability management function. The Company’s ALCO is responsible for assisting the Board of Directors with this oversight. The ALCO has further assigned responsibility for the day-to-day management of IRR to the CFO, or their designee. The ALCO meets regularly to review, among other things, the sensitivity of earnings and the market value of assets and liabilities to market interest rate changes and local and national market conditions and market interest rates. That group also reviews liquidity, capital, deposit mix, loan mix and investment positions. Based upon the nature of its operations, the Company is not subject to FX or commodity price risk.
Interest Rate Risk
As a financial institution, the Company’s primary market risk exposure is IRR. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on most assets and liabilities, and the fair value of all interest-earning assets and interest-bearing liabilities, other than those which have a short term to maturity. IRR is the potential for economic losses due to future interest rate changes. These economic losses can be reflected as a loss of future net interest income and/or a loss of current fair values. The objective is to measure the effect on net interest income and to adjust, as deemed appropriate, the balance sheet to manage the inherent risk while at the same time maximizing income.
The Company manages its exposure to interest rates primarily by prudently structuring its balance sheet in the ordinary course of business. The Company generally originates fixed and floating rate loans with maturities of less than five years. The IRR on these loans is offset to some degree by the mix and structure of the deposit portfolio. On occasion, the Company enters into derivative contracts as a part of its asset liability management strategy to help manage its IRR position.
Net Interest Income At-Risk
The Company analyzes its net interest income sensitivity to changes in interest rates through a simulation model, which estimates what net interest income would be for a one-year period based on current interest rates, and then calculates what the net interest income would be for the same period under different interest rate assumptions.
The following table shows the estimated impact on net interest income for the one-year period beginning June 30, 2025 resulting from potential changes in interest rates, expressed in basis points. These estimates require certain assumptions to be made, including loan and mortgage-related investment prepayment speeds, reinvestment rates, and deposit maturities and decay rates. These assumptions are inherently uncertain. As a result, no simulation model can precisely predict the impact of changes in interest rates on net interest income.
Although the net interest income table below provides an indication of the Company’s IRR exposure at a particular point in time, such estimates are not intended to, and do not, provide a precise forecast of the effect of changes in market interest rates on net interest income and may differ from actual results. The following table indicates the sensitivity of projected annualized net interest income to the interest rate movements described above (dollars in thousands):
Change in
Year 1
Change
Rates
Income Year 1
from
(basis points)
Forecast
Level
+200
306,325
(0.67)
+100
307,796
(0.19)
308,386
-100
310,531
0.70
-200
314,708
2.05
The table above indicates that at June 30, 2025, in the event of an instantaneous and sustained parallel upward shift of 200 basis points in interest rates, the Company would experience a 0.67% decrease in net interest income. In the event of an instantaneous and sustained parallel downward shift of 200 basis points in interest rates, it would experience a 2.05% increase in net interest income.
Economic Value of Equity Analysis
The Company also analyzes the sensitivity of its financial condition to changes in interest rates through an EVE model. This analysis measures the difference between predicted changes in the fair value of assets and predicted changes in the present value of liabilities assuming various changes in current interest rates. The table below represents an analysis of IRR as measured by the estimated changes in EVE, resulting from instantaneous and sustained parallel shifts in the yield curve (+100, +200, and -100, -200, basis points) at June 30, 2025 (dollars in thousands):
Increase (Decrease) in
Interest Rates
(basis points) (1)
EVE (2)
Dollars
Percent
1,011,890
(42,273)
(4.01)
1,035,735
(18,428)
(1.75)
1,054,163
1,060,588
6,425
0.61
1,057,118
2,955
0.28
The table above indicates that at June 30, 2025, in the event of an immediate upward shift of 200 basis points in interest rates, the Company would experience a 4.01% decrease in its EVE. In the event of an immediate downward shift of 200 basis points in interest rates, the Company would experience a 0.28% increase in its EVE.
The preceding simulation analyses do not represent a forecast of actual results and should not be relied upon as being indicative of expected operating results. These hypothetical estimates are based upon numerous assumptions, which are subject to change, including: the nature and timing of interest rate levels including the yield curve shape, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, reinvestment/replacement of asset and liability cash flows, and others. Also, as market conditions vary, prepayment/refinancing levels, the varying impact of
43
interest rate changes on caps and floors embedded in adjustable-rate loans, early withdrawal of deposits, changes in product preferences, and other internal/external variables will likely deviate from those assumed.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of its Chief Executive Officer, who is the Company’s principal executive officer, and the Chief Financial Officer, who is the Company’s principal financial officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures as of June 30, 2025, pursuant to Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based upon that evaluation, the principal executive officer and principal financial officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2025. In addition, there have been no changes in the Company’s internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Disclosure controls and procedures are designed with the objective of ensuring that information required to be disclosed in reports filed by the Company under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. Disclosure controls and procedures are also designed with the objective of ensuring that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.
ITEM 1. LEGAL PROCEEDINGS
In the ordinary course of business, the Company is subject to various pending and threatened legal actions. There have been no material changes in the legal proceedings, if any, previously disclosed under Part I, Item 3 in our 2024 Form 10-K. While the future outcome of litigation or regulatory matters cannot be determined at this time, in the opinion of management, as of June 30, 2025, the aggregate liability, if any, arising out of any such pending or threatened legal actions are not expected to be material to the Company’s financial condition, results of operations, and liquidity. For additional information regarding certain legal proceedings, see “Legal and Regulatory Proceedings” in NOTE 12 — COMMITMENTS AND CONTINGENCIES to the Company’s consolidated financial statements in this Form 10-Q.
ITEM 1A. RISK FACTORS
There are risks, many beyond our control, which could cause our results to differ significantly from management’s expectations. For a description of these risks, please see the risk factors previously described in Part I, “Item 1A. Risk Factors” in our 2024 Form 10-K. There have been no material changes to our risk factors since the date of that filing. Any of the risks described in our 2024 Form 10-K could by itself or together with one or more other factors, materially and adversely affect our business, results of operations or financial condition. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, results of operations or financial condition.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
The following table sets forth information regarding the shares of common stock repurchased by the Company during the three months ended June 30, 2025
Dollar
Value of
Purchased as
Shares That
Part of
May Yet Be
Publicly
Purchased
Price Paid
Announced
Under
Period
Per Share
Plans
the Plans
April 1, 2025 to April 30, 2025
453,152
54.30
12,572,035
May 1, 2025 to May 31, 2025
196,729
63.91
June 1, 2025 to June 30, 2025
649,881
57.24
The Company used substantially all available capacity under a $50 million share repurchase program authorized on March 12, 2025, resulting in the purchase of 878,807 shares of common stock at an average price of $56.90 per share.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
On June 6, 2025, Nick Rosenberg, Executive Vice President and Chief Business Development Officer, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 8,250 shares of the Company’s common stock, commencing on September 17, 2025 and continuing until all shares are sold or September 16, 2026, whichever comes first.
ITEM 6. EXHIBITS
3.1
Certificate of Incorporation of Metropolitan Bank Holding Corp, as amended (incorporated by reference to Exhibit 3.1 to the Registration Statement on Form S-1 filed with the Securities and Exchange Commission on October 4, 2017 (File No. 333-220805)).
3.2
Certificate of Amendment to the Certificate of Incorporation of Metropolitan Bank Holding Corp. (incorporated by reference to Exhibit 3.2 to the Registration Statement on Form S-3 filed with the Securities and Exchange Commission on March 12, 2021 (File No. 333-254197)).
3.3
Amended and Restated Bylaws of Metropolitan Bank Holding Corp. (incorporated by reference to Exhibit 3.3 to the Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 8, 2024 (File No. 001-38282)).
31.1
Certification of the Principal Executive Officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a).
31.2
Certification of the Principal Financial Officer of the Company, pursuant to Securities Exchange Act Rule 13a-14(a).
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Principal Executive Officer of the Company and the Principal Financial Officer of the Company.
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INS XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
SCH XBRL Taxonomy Extension Schema
CAL XBRL Taxonomy Extension Calculation Linkbase
DEF XBRL Taxonomy Extension Definition Linkbase
LAB XBRL Taxonomy Extension Label Linkbase
PRE XBRL Taxonomy Extension Presentation Linkbase
104
The cover page from Metropolitan Bank Holding Corp.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in Inline XBRL
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 1, 2025By: /s/ Mark R. DeFazio
Mark R. DeFazio
President and Chief Executive Officer
Date: August 1, 2025By:/s/ Daniel F. Dougherty
Daniel F. Dougherty
Executive Vice President and Chief Financial Officer