Metropolitan Bank Holding Corp. (the “Company”) (NYSE: MCB), the holding company for Metropolitan Commercial Bank (the “Bank”), reported net income of $16.2 million, or $1.77 per diluted common share, for the third quarter of 2021 compared to net income of $10.8 million, or $1.27 per diluted common share, for the third quarter of 2020.

Financial Highlights include:

• Total revenues of $46.7 million, up 29.8% from the prior year period and 8.2% from the prior linked quarter.

• Net income of $16.2 million, up 50.4% from the prior year period and 21.6% from the prior linked quarter.

• Loans totaled $3.6 billion, up 20.5% from September 30, 2020 and up 17.8% annualized from June 30, 2021.

• Deposits were $5.5 billion, up 54.7% from September 30, 2020 and up 12.8% annualized from June 30, 2021.

• Diluted earnings per share of $1.77, up 39.4% from the prior year period and 14.2% from the prior linked quarter.

• Book value per share was $50.46 per share, up 29.5% from September 30, 2020 and tangible book value per share¹ was $49.55, up 31.1% from September 30, 2020.

• Annualized return on average equity of 16.30% and annualized return on average tangible common equity (ROATCE)¹ of 16.95% for the third quarter of 2021.

• Efficiency ratio¹ improved to 49.7% for the first nine months of 2021, compared to 54.0% for the first nine months of 2020.

• Raised $172.5 million of capital through the issuance of 2.3 million shares of our common stock at a price of $75 per share, resulting in net proceeds of approximately $163 million.

Mark DeFazio, President and Chief Executive Officer, commented, “Our strong third quarter performance continues to showcase that we are a top performing growth company with a sustained history of driving net income, ROATCE and shareholder value. We have done this with a laser-focus on the funding side of our balance sheet, while driving high quality loan growth with minimal net charge-offs since our founding 22 years ago. Today, we have grown to over $6 billion in assets and combine a strong commercial bank with a uniquely positioned Global Payments business.

“The success of our follow-on $172.5 million common equity raise adds further support to a high-quality balance sheet with a strong liquidity position. The additional capital will allow us to focus on scaling our businesses while deepening existing commercial banking relationships.

“We are also excited about the opportunities ahead for our Global Payments Group. The banking-as-a-service model to our fintech clients that we have had in place for nearly 20 years now puts us at the forefront of the digital-driven evolution occurring in retail banking today. As our fintech partners begin to accelerate their investments in client acquisition, their success at attracting retail clients to their platforms is a significant tail wind for MCB.

“Our success would not be possible without the enthusiasm and dedication of the entire MCB team. A huge thank you to our employees, our board and to our clients,” Mr. DeFazio concluded.

¹Non-GAAP financial measure. See Reconciliation of Non-GAAP Measures starting on page 13.

Balance Sheet

The Company had total assets of $6.1 billion at September 30, 2021, an increase of 6.1% from June 30, 2021. Total loans, net of deferred fees and unamortized costs, increased $154 million from the prior linked quarter to $3.6 billion, as compared to $3.4 billion at June 30, 2021. The increase in total loans from the prior linked quarter was due primarily to an increase of $147 million in commercial real estate (“CRE”) loans (including construction and multifamily loans) and $10 million in commercial and industrial loans, offset by a decrease in consumer loans and an increase in deferred fees. Loan production was $313 million for the third quarter of 2021, compared to $265 million for the prior linked quarter.

Total assets increased 53.5% from September 30, 2020. Total loans, net of deferred fees and unamortized costs, increased to $3.6 billion at September 30, 2021, as compared to $3.0 billion at September 30, 2020. The increase in total loans from September 30, 2020 was due primarily to an increase of $550 million in CRE loans (including construction and multifamily loans) and $83 million in commercial and industrial loans. Loan production was $814 million year to date at September 30, 2021 compared to $513 million year to date at September 30, 2020.

Total cash and cash equivalents were $1.9 billion at September 30, 2021, an increase of $138 million, or 8.0% from June 30, 2021 and $1.1 billion, or 141.9%, from September 30, 2020. The increase in cash and cash equivalents reflected the strong growth in deposits as well as the cash received from the issuance of common stock during the third quarter of 2021.

Total securities, which are primarily classified as available-for-sale (“AFS”), were $607.5 million at September 30, 2021, an increase of 10.8% from June 30, 2021 and 223.6% from September 30, 2020, due to the deployment of excess liquidity from deposit growth.

Total deposits increased $169 million to $5.5 billion at September 30, 2021, up 3.2% from $5.3 billion at June 30, 2021. The increase in deposits was due primarily to an increase in interest-bearing deposits.

Total deposits increased $1.9 billion, up 54.7% from $3.5 billion at September 30, 2020. The increase in deposits was due to increases of $1.2 billion in non-interest-bearing deposits and $679 million in interest-bearing deposits, resulting from increases across most deposit verticals.

Non-interest-bearing deposits were 51.4% of total deposits at September 30, 2021, as compared to 52.8% and 44.0% at June 30, 2021 and September 30, 2020, respectively.

The Company and the Bank each met all the requirements to be considered “Well-Capitalized” under applicable regulatory guidelines. Total non-owner-occupied commercial real estate loans were 349.1% of total risk-based capital at September 30, 2021, compared to 417.3% of total risk based capital at September 30, 2020.

Income Statement

Financial Highlights

Net Interest Income

Net interest income for the third quarter of 2021 was $40.8 million, an increase of $3.8 million from the prior linked quarter. This increase was primarily due to a higher average balance of $5.9 billion in interest-earning assets, particularly in loans, for the third quarter of 2021, which increased $409 million from the prior linked quarter. This was partially offset by a $186 million increase in the average balance of interest-bearing liabilities for the third quarter of 2021, as compared to the prior linked quarter.

Net interest income increased $8.5 million for the third quarter of 2021, as compared to the third quarter of 2020. This increase was primarily due to a higher average balance of $5.9 billion in interest-earning assets, particularly in loans and securities, for the third quarter of 2021, which increased $1.9 billion from the third quarter of 2020. This was partially offset by a $588 million increase in the average balance of interest-bearing liabilities for the third quarter of 2021, as compared to the third quarter of 2020.

Net Interest Margin

Net interest margin increased by 2 basis points to 2.70% for the third quarter of 2021, as compared to 2.68% for the prior linked quarter, primarily due to higher yields on purchased securities, combined with a lower cost of interest bearing deposits.

Net interest margin decreased by 48 basis points to 2.70% for the third quarter of 2021, as compared to 3.18% for the third quarter of 2020, primarily due to increased low yielding overnight deposits driven by deposit growth; partially offset by a decrease of 7 basis points in the average cost of interest-bearing liabilities driven by the lower rate environment.

Total cost of funds was 31 basis points for the third quarter of 2021, a decrease of 1 basis point from the prior linked quarter, and a decrease of 9 basis points from the prior year quarter, given the mix shift toward non-interest bearing deposits.

Non-Interest Income

Non-interest income was $5.9 million for the third quarter of 2021, a decrease of $0.3 million from the prior linked quarter driven primarily by a $0.6 million decrease in recognized gains on sales of AFS securities. This was offset by an increase in service charges and fees of $0.3 million, a significant portion of which was driven by an increase in service charges on deposit accounts related to Global Payments Group client activity.

Non-interest income for the third quarter of 2021 increased by $2.3 million, as compared to the third quarter of 2020. The increase was primarily due to an increase of $1.0 million of Global Payments Group revenue and an increase of $1.2 million in service charges and fees.

Non-Interest Expense

Non-interest expense was $22.0 million for the third quarter of 2021, an increase of $0.3 million from the prior linked quarter. The primary driver was an increase in other expense related to higher Federal Deposit Insurance Corporation (“FDIC”) insurance costs, partially offset by a decrease in technology costs.

Non-interest expense increased $3.1 million, as compared to the third quarter of 2020. Drivers included an increase in compensation and benefits costs due to additional full-time employees and increases in professional fees, technology and licensing costs in line with business and volume growth, partially offset by reduced licensing fees given the LIBOR rate reduction.

The annualized estimated effective tax rate for the nine months ended September 30, 2021 was 32.3% compared to 31.9% for the nine months ended September 30, 2020.

Asset Quality

Credit quality remains strong with $0.3 million of net recoveries in the third quarter of 2021, while non-performing loans increased to 0.4% of total loans. During the third quarter of 2021, the Company recorded a provision of $0.5 million, which reflected the impact of net recoveries during the quarter and improving economic conditions. For the nine months ended September 30, 2021, the Company recorded a provision of $3.3 million as compared to a provision of $7.7 million for the nine months ended September 30, 2020. COVID-19 related full payment deferrals remained steady at $11.3 million, or 0.3% of total loans as of September 30, 2021. Principal only deferrals were $39.1 million, or 1.1% of total loans, as of September 30, 2021.

About Metropolitan Bank Holding Corp.

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

Forward Looking Statement Disclaimer

This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include but are not limited to the Company’s future financial condition and capital ratios, results of operations and the Company’s outlook and business. Forward-looking statements are not historical facts. Such statements may be identified by the use of such words as “may,” “believe,” “expect,” “anticipate,” “plan,” “continue” or similar terminology. These statements relate to future events or our future financial performance and involve risks and uncertainties that may cause our actual results, levels of activity, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we caution you not to place undue reliance on these forward-looking statements. Factors which may cause our forward-looking statements to be materially inaccurate include, but are not limited to an unexpected deterioration in our loan or securities portfolios, unexpected increases in our expenses, greater than anticipated growth and our ability to manage our growth, unanticipated regulatory action or changes in regulations, unexpected changes in interest rates, an unanticipated decrease in deposits, an unanticipated loss of key personnel or existing customers, competition from other institutions resulting in unanticipated changes in our loan or deposit rates, unanticipated increases in FDIC costs, changes in regulations, legislation or accounting rules and unanticipated adverse changes in our customers’ economic conditions or general economic conditions, as well as those discussed under the heading “Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.

Further, given its ongoing and dynamic nature, including the rate of vaccine acceptance and the development of new variants, it is difficult to predict the full impact of the COVID-19 outbreak on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and whether the continued reopening of businesses will result in a meaningful increase in economic activity. As the result of the COVID-19 pandemic and the related adverse local and national economic consequences, we could be subject to any of the following risks, any of which could have a material, adverse effect on our business, financial condition, liquidity, and results of operations: the demand for our products and services may decline, making it difficult to grow assets and income; if the economy is unable to substantially reopen, and higher levels of unemployment continue for an extended period of time, loan delinquencies, problem assets, and foreclosures may increase, resulting in increased charges and reduced income; collateral for loans, especially real estate, may decline in value, which could cause loan losses to increase; our allowance for loan losses may increase if borrowers experience financial difficulties, which will adversely affect our net income; the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; our cyber security risks may increase if a significant number of our employees are forced to work remotely; and FDIC premiums may increase if the agency experiences additional resolution costs. Forward-looking statements speak only as of the date of this release. We do not undertake any obligation to update or revise any forward-looking statement.

Consolidated Balance Sheet

Loan Production, Asset Quality & Regulatory Capital

Consolidated Statement of Income (unaudited)

Performance Measures

Interest Margin Analysis