Why Metropolitan Bank Stock Sank by Nearly 9% Today
Key Points
This, despite both rising on a year-over-year basis.
Investors were more concerned with increases in provisioning and non-interest expenses.
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Wednesday's trading session was one to forget for Metropolitan Bank (NYSE: MCB) investors. The New York-based lender took the wraps off its second-quarter results and, since they fell short of expectations, market players sold out of its stock. The shares closed the day down by almost 9%.
Not quite good enough
For the quarter, Metropolitan's total revenue was slightly over $93 million, well up from $76.3 million in the same period of 2025. Net income under generally accepted accounting principles (GAAP) also rose, albeit not as robustly, by 2% year over year to $19.2 million ($1.54 per share).
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However, analysts tracking Metropolitan stock were expecting better. On average, they were modeling nearly $93.4 million for revenue and $2.31 per share for GAAP net income.
As for other key banking metrics, total loans grew by almost 11% to $7.3 billion, and total deposits rose 14% to $7.7 billion. Metropolitan's provisioning for credit losses also grew sharply, though, more than doubling to $13.3 million. Management attributed the latter to difficulties with a single commercial and industrial loan, plus the charge-off of a commercial real estate loan.
Non-interest expenses also grew substantially, rising by 20% to $51.8 million.
Unfairly punished by Mr. Market?
Metropolitan sounded an optimistic note on the quarter, despite the double miss. It quoted CEO Mark DeFazio as saying that the bank's "balance sheet growth remains consistent with our prior guidance, our lending pipeline remains robust, and loan yields continue to hold."
He added that "on the funding side, our deposit forecast remains in line with guidance, and we continue to expect the momentum in our core operating trends to persist."
One loan gone bad isn't going to break this bank, and while that rise in non-interest expenses is a development to keep an eye on, I'm not seeing either as a reason to head for the exit. Metropolitan feels like a bank in good shape to me, and I'd be a buyer rather than a seller of its stock.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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