Metropolitan Bank Boosts NII as Loan Production Accelerates
Net interest income rose 5.3% sequentially to $90.4 million as the bank expanded its loan book.
Net interest income rose 5.3% sequentially to $90.4 million and 22.8% year-over-year to $90.4 million. The growth followed higher average balances across loans, securities, and overnight deposits, alongside a reduction in the cost of funds. Net interest margin remained flat sequentially at 4.08%, though it expanded 25 basis points from 3.83% a year ago.
Loan production accelerated to $718.9 million in the second quarter of 2026, up from $428.3 million in the prior quarter. Total loans grew 4.0% sequentially to $7.3 billion and 10.8% year-over-year. This growth was primarily driven by a $330.3 million increase in commercial real estate loans, which offset a $69.8 million decrease in commercial and industrial loans.
Funding costs declined as short-term interest rates softened. Total cost of funds fell 4 basis points sequentially to 2.57% and decreased 53 basis points year-over-year from 3.10%. Total deposits remained essentially stable sequentially at $7.7 billion, representing a slight decrease of 0.1%, but rose 13.8% compared to June 30, 2025.
Credit costs shifted as Metropolitan Bank Holding (MCB), a New York-based commercial bank, recorded a $13.3 million provision for credit losses. This followed a $2.3 million reserve release in the prior quarter and was driven by a single C&I loan in a non-core portfolio segment. Annualized net charge-offs as a percentage of average loans rose to 1.95% from 0.73% in the prior quarter.
The non-performing loan ratio improved to 0.91% at June 30, 2026, down from 1.01% in the previous quarter. This improvement reflected the charge-off of an out-of-market commercial real estate loan relationship.
Non-interest expense rose $5.4 million sequentially to $51.8 million. The increase included a $1.8 million one-time legal accrual, $1.4 million in higher professional fees, and $1.2 million in higher compensation. Consequently, the efficiency ratio deteriorated to 55.7% from 52.4% in the prior quarter. Non-interest income fell slightly to $2.6 million.
Capital ratios declined sequentially, with the holding company's total risk-based capital ratio falling to 14.0% and the bank's ratio falling to 13.7%, compared to 14.6% and 14.3% respectively.
The board increased the quarterly cash dividend by $0.10 to $0.35 per share. Additionally, the company approved a new $50.0 million common stock repurchase program on June 19, 2026.