[Management View]
Metropolitan Bank Holding Corp. reported strong balance sheet growth driven by core funding strategies, with no acquisitions involved. The company emphasized its commitment to risk management and announced new market branch expansions in Lakewood, Miami, and West Palm Beach. Investment in digital and AI technology continues, with full integration expected by the end of Q1 2026.

[Outlook]
The bank anticipates further net interest margin (NIM) expansion in Q4 2025, with potential to surpass 4% in 2026. Loan pipelines remain robust, projecting $100 million–$200 million in additional loan growth for the remainder of 2025. The focus remains on capturing market share and enhancing shareholder value.

[Financial Performance]
Loan balances increased by $170 million (2.6%) in Q3 2025, with year-to-date growth exceeding 12%. Core deposits rose by $280 million (4.1%), and total deposits increased by over $1 billion (18%) year-to-date. Net interest margin expanded to 3.88%, marking the eighth consecutive quarter of growth. Net interest income reached $77.3 million, up 5% from the prior quarter and over 18% year-over-year. Diluted EPS was $0.67, with an adjusted estimate of $1.95 excluding specific provisioning.

[Q&A Highlights]
Question 1: Could you provide details on the One Cream multi-relationship, including metrics like debt service coverage, LTV, size, and geography?
Answer: The properties are located in Champaign, Illinois, and a city in Ohio. They are vacant buildings intended for renovation and stabilization. The bank is working on restructuring with the client, optimistic about reversing a material part of the specific reserve.

Question 2: Can you elaborate on the $5.2 million provisioning related to the CECL model?
Answer: The provisioning is driven by macroeconomic variable forecasts from Moody's, particularly the CRE price index. Approximately $3.5 million is related to forecast deterioration, with the remainder due to loan growth.

Question 3: What is the bank's policy on insider selling prior to earnings releases?
Answer: Insider trading is governed by 10b5-1 plans, ensuring no violations during blackout periods. The reporting date shift was due to operational factors, not insider trading.

Question 4: How many other CRE loans are out of market, and what percentage of the book do they represent?
Answer: 19% of the loan portfolio is in Manhattan, with the rest spread across other markets. The bank follows New York sponsors into new geographies, ensuring competitive advantage.

Question 5: Where do you see the most opportunities for deposit growth?
Answer: Opportunities are spread across multiple verticals, with no reliance on a single channel. The bank expects continued contribution from all categories.

Question 6: Will digital transformation expenses ramp up in Q1 2026?
Answer: Approximately $3 million is expected in Q4 2025, with less than $2 million anticipated in Q1 2026.

Question 7: What was the size of the creditor related to the $41 million increase in Sierra EPA?
Answer: Three loans totaled around $34 million, with a 55% allocated reserve, indicating a conservative provision.

Question 8: Could the margin approach 4% in 2026 with multiple rate cuts?
Answer: Yes, the bank is slightly liability sensitive, and with forecasted rate cuts, the margin could surpass 4%.

[Sentiment Analysis]
Analysts and management maintained a positive tone, focusing on strategic growth and risk management. Management expressed confidence in overcoming current challenges and achieving future growth targets.

[Quarterly Comparison]
| Metric | Q3 2025 | Q2 2025 | YoY Change |
|-------------------------|---------|---------|------------|
| Loan Growth | $170M | N/A | 12% |
| Core Deposit Growth | $280M | N/A | 18% |
| Net Interest Margin | 3.88% | 3.83% | N/A |
| Net Interest Income | $77.3M | N/A | 18% |
| Diluted EPS | $0.67 | N/A | N/A |

[Risks and Concerns]
Key risks include a specific provision expense of $18.7 million for out-of-state multifamily loans and macroeconomic model volatility affecting the CECL model. Elevated non-interest expenses and a high tax rate also pose challenges.

[Final Takeaway]
Metropolitan Bank Holding Corp. demonstrated strong financial performance in Q3 2025, driven by strategic growth and core funding strategies. The bank remains focused on digital transformation and market expansion, with a positive outlook for NIM growth and loan pipeline strength. Despite some provisioning challenges, management is optimistic about reversing specific reserves and maintaining robust asset quality. The bank's diversified deposit model and strategic initiatives position it well for continued success in 2025 and beyond.