Metropolitan Bank (NYSE:MCB) executives highlighted a strong finish to 2025 on the company’s fourth-quarter earnings call, pointing to growth in net interest margin, net interest income, deposits, and loans, alongside continued progress on operating efficiency. President and CEO Mark DeFazio said the fourth-quarter momentum “sets a solid foundation for meaningful progress in 2026 and beyond,” while stressing disciplined underwriting and a franchise-wide risk management culture.
2025 loan and deposit growth, with Q4 loan balances held back by prepayments
DeFazio said the bank expanded its loan portfolio by approximately $775 million in 2025, representing nearly 13% growth, with total loan originations of about $1.9 billion. Deposits increased by roughly $1.4 billion, or about 23%, which management attributed to strategic funding initiatives aimed at deepening existing deposit verticals and diversifying the funding base.
Looking ahead, Dougherty said the bank has about $1.1 billion of maturities over the next six months with a weighted average coupon of 6.94%, and the company assumes it will retain about 75% to 80% of those cash flows. In the company’s forecast model, renewals are assumed to reprice about 25 to 50 basis points below new origination rates, with coupons still “well above 7%” based on current spread assumptions.
Margin expansion, deposit costs, and wholesale funding payoff
The bank reported a fourth-quarter net interest margin of 4.1%, up 22 basis points from the prior quarter. Dougherty attributed the improvement to a combination of balance sheet growth and pricing dynamics as rates began to ease. He said that across the 75 basis points of rate cuts to date in the most recent easing cycle, deposit beta for unhedged interest-bearing deposits has been about 75%, and management expects it can “replicate this performance for the next 50 basis points of rate cuts at the minimum.”
Deposits increased $304 million in the fourth quarter, or about 4.3%. On a spot basis, the cost of interest-bearing deposits declined 43 basis points quarter over quarter. Dougherty said more than $2 billion of the bank’s indexed deposits reprice on the first business day of the month following a rate change, meaning the benefit of the mid-December Fed funds target rate reduction should be more visible in the first quarter.
Management also said deposit growth helped the company eliminate wholesale funding during 2025. Dougherty stated the bank paid off all wholesale funding—$450 million—over the course of the year.
Earnings drivers: higher net interest income and notable non-core items
Net interest income in the fourth quarter was $85.3 million, up more than 10% from the linked quarter and up almost 20% for the year, according to Dougherty. He also discussed factors affecting quarterly profitability, including a diluted EPS result of $2.77.
Dougherty said elevated loan prepayments boosted prepayment penalty and deferred fee income by about $1.7 million above a normal run rate. He also noted the bank sold bonds and realized a gain of about $675,000. In addition, the quarter included an insurance claim recovery related to a discontinued business line and a compensation accrual adjustment totaling about $2 million. In total, Dougherty estimated non-core credits of about $4.6 million, or approximately $0.30 per share.
Excluding above-normal prepayment penalty and fee income, Dougherty said fourth-quarter net interest margin would have been approximately 4.02%. He added that adjusted return on tangible common equity (ROTCE), excluding the cited income items, was “just north of 14%.”
Non-interest income for the quarter was $3.1 million. Dougherty said the company does not expect to recognize further securities gains going forward, but management continues to pursue initiatives to grow fee income.
Non-interest expense totaled $44.4 million, down $1.4 million from the prior quarter. Dougherty attributed the quarter-over-quarter movements to:
- a $1.3 million decrease in compensation and benefits, tied primarily to reduced bonus accrual and restricted stock expense,
- a $649,000 decline in professional fees, largely due to reduced legal and other fees, and
- a $668,000 increase in technology costs related to the bank’s digital transformation project.
Dougherty said digital project costs were about $3.1 million in aggregate for the quarter. The effective tax rate was about 30%.
Asset quality and capital: stable trends, ongoing workouts
DeFazio said asset quality remains solid with no broad-based negative trends across loan segments, geographies, or sectors, and that client engagement has not indicated areas of concern.
During Q&A, management addressed an analyst question about nonperforming assets and specific credits. DeFazio said two loans were in-market multifamily credits tied to properties that were up for sale, and the bank expects “little or no loss” upon sale. He also said the company continues to work through workouts tied to specific reserves booked in 2025 and remained “cautiously optimistic,” aiming for resolution by the end of the current quarter, while emphasizing that “workouts take time.”
On capital, DeFazio discussed focusing on tangible common equity (TCE), stating the bank expects TCE to trend from the “current high 8, 8.8 or so to about low 9s,” which he characterized as a comfortable operating range for the institution.
2026 outlook: loan growth target, modest NIM expansion, and expense guidance
For 2026, Dougherty said the company’s forecast assumes two 25 basis point rate cuts—one in June and one in September—while noting the timing reduces their impact on the year’s financial results. The bank expects loan growth of about $800 million, or roughly 12%, funded entirely with deposits. The securities portfolio is expected to remain about 10% to 12% of balance sheet “footings.”
On net interest margin, Dougherty said the bank expects modest expansion through 2026 and forecast an annual net interest margin of about 4.10%. He added that the business model is “well equipped to defend or even expand the NIM with or without additional rate cuts,” while also assuming some modest loan spread tightening as a function of loan growth demand.
For non-interest income, Dougherty suggested a 5% to 10% growth assumption as “reasonable,” while reiterating an aspiration to rebuild fee income over time with 2024 results serving as a benchmark.
Operating expense guidance for 2026 was $189 million to $191 million. Dougherty said this includes several unique items, including:
- $3 million of first-quarter spend tied to the Modern Banking in Motion project due to an extended conversion timeline,
- premises expense increases tied to expanding the real estate footprint in New York City and West Palm Beach, Florida (about $1 million impact in 2026 due to timing, with a $2.2 million annual run-rate), and
- approximately $6 million of increased annual run-rate fees related to growth in deposit verticals expensed below the line.
Based on the forecast, Dougherty said the company’s ROTCE approaches 16% by the fourth quarter of 2026.
Separately, management discussed branch expansion, noting a full-service branch opened in Lakewood, New Jersey in the fourth quarter through conversion of an administrative office. DeFazio said the bank expects to open two branches in Florida in the first half of 2026—one in Miami and one in West Palm Beach. In response to a question about deposit growth contributions, DeFazio said New Jersey has helped municipal deposit growth due to its head start, while Florida has not yet contributed meaningfully but is expected to become a significant contributor over time.
On strategic direction, DeFazio downplayed near-term M&A interest, saying the bank does not currently see “a lot of value” in available franchises and is focused on organic growth. He also said “team lift-outs” are not a core part of the bank’s cultural approach, though the company would consider an opportunity if it were uniquely well-aligned.
Finally, the company announced it will host an Investor Day at its New York headquarters on Tuesday, March 3, with senior leaders presenting.
About Metropolitan Bank (NYSE:MCB)
Metropolitan Bank (NYSE:MCB), through its principal subsidiary Metropolitan Commercial Bank, operates as a New York–based regional financial institution providing a range of commercial and consumer banking services. The company offers deposit products including checking, savings and money market accounts, as well as business and personal certificates of deposit. On the lending side, Metropolitan Bank extends commercial real estate financing, equipment loans, working capital lines of credit and consumer installment loans tailored to the needs of small- and medium-sized enterprises and individual customers.
In addition to traditional deposit and lending services, Metropolitan Bank provides specialized treasury and cash-management solutions, foreign exchange services and letters of credit for both domestic businesses and multinational clients.
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