MetroCity Profit Rises as Acquisition Lifts Results
Net interest margin widened 34 basis points from a year earlier to 4.11%.
MetroCity Bankshares (MCBS), the bank holding company, reported a 31.5% increase in second-quarter profit as its First IC acquisition lifted results from a year earlier, though earnings edged lower from the first quarter. Net income was $22.1 million, compared with $16.8 million a year earlier and $22.3 million in the preceding quarter.
Diluted earnings rose to $0.76 a share from $0.65 a year earlier but slipped from $0.77 in the first quarter. The sequential decline came as the balance sheet contracted after the acquisition-driven expansion, with total assets falling 3.6% to $4.52 billion while remaining 25.0% above the year-earlier level.
Interest income declined 0.8% from the first quarter to $70.4 million as average loans and investments fell, but it increased 30.3% from a year earlier on a larger loan portfolio and higher loan yields. Interest expense decreased 0.5% sequentially to $26.4 million, even as deposit costs increased 11 basis points and the benefit from cash-flow hedges diminished.
Fee-generating businesses moved in different directions. Small Business Administration loan production more than doubled sequentially to $46.6 million, while loan sales increased to $27.1 million and the sales premium widened. Mortgage originations fell to $75.4 million, and mortgage sales remained at zero for a second consecutive quarter.
Noninterest income fell 9.5% sequentially to $5.8 million, chiefly because of lower SBA and mortgage-servicing income and other fees. Noninterest expense declined 6.9% to $20.0 million as merger-related and operating costs eased, though it remained 41.4% above the year-earlier period because of expenses associated with First IC.
The GAAP efficiency ratio improved to 40.08% from 42.16% in the first quarter. Excluding merger costs, the operating efficiency ratio worsened to 39.54% from 38.87%, while return on average equity declined to 17.52% from 18.28%.
Loans held for investment fell 1.1% to $3.96 billion, and deposits declined 3.8% to $3.49 billion, led by lower money-market and time-deposit balances. Credit-loss results remained a recovery, but nonperforming assets increased to $18.7 million, or 0.41% of assets. Capital strengthened during the quarter, with the common-equity Tier 1 ratio rising to 18.63% and tangible book value increasing to $17.37 a share.