Metropolitan Bank Holding's Margin Expansion Resumes

The Tip Desk · October 22, 2026 · 3 min read

Net interest margin reached 4.36% in the third quarter after holding at 4.08%, lifting net interest income to $97.6 million.

Metropolitan Bank Holding Corp. (MCB), the New York City–based commercial-bank holding company, reported a net interest margin of 4.36% for the third quarter of 2026, a 28-basis-point expansion after the ratio had been unchanged at 4.08% in the second quarter.

The company said the move was driven largely by higher yields on average loan and securities balances, elevated prepayment penalties and deferred fee recognition from loan payoffs, and a lower cost of funds. Total cost of funds fell to 250 basis points from 257 basis points, which the company attributed primarily to improvements in the deposit mix.

Net interest income was $97.6 million, up 7.9% from the prior linked quarter, a faster sequential increase than the 5.3% rise to $90.4 million in the second quarter. The company said the sequential increase was due primarily to higher average balances of loans and, to a lesser extent, securities, a lower average balance of interest-bearing deposits and a lower cost of funds, partially offset by a decrease in overnight deposits. Diluted earnings were $2.58 a share, compared with $1.54 in the second quarter.

Total loans were $7.5 billion at September 30, 2026, up 2.8% from June 30, a slower sequential pace than the 4.0% increase to $7.3 billion in the prior quarter. The company said the increase from June was due primarily to a $164.5 million rise in commercial real estate loans including owner-occupied, $24.3 million in commercial and industrial loans and $19.7 million in construction loans. Total securities rose 36.7% to $1.5 billion as excess cash was deployed into short-term securities.

Deposits reversed a period of little change. Total deposits were $8.3 billion, up 7.6% from June 30 after being essentially stable in the prior quarter. The company said the increase was driven primarily by its EB-5 immigrant-investor program, home-owners-association banking and retail deposit verticals. Non-interest-bearing demand deposits rose to $1.79 billion from $1.59 billion.

The provision for credit losses fell to $5.1 million from $13.3 million, after the second-quarter provision was driven primarily by a single non-core C&I loan. Non-performing loans to total loans ticked up to 0.95% from 0.91%, which the company attributed primarily to a single CRE loan placed on non-accrual. The allowance for credit losses was $64.2 million, up from $62.0 million, reflecting a modest increase in specific reserves and loan growth.

Non-interest expense declined $2.3 million to $49.5 million, with lower other operating expenses, professional fees and technology costs more than offsetting a $1.7 million increase in deposit-related program fees. Non-interest income was $3.0 million.

Total risk-based capital ratios were 13.9% for the company and 13.5% for the bank, down from 14.0% and 13.7% at June 30. Non-owner-occupied CRE loans were 301.1% of total risk-based capital. Cash on deposit with the Federal Reserve Bank of New York and available secured funding capacity totaled $4.2 billion, which the company said represented 185% of estimated uninsured deposits.

On October 19, 2026, the board declared a quarterly cash dividend of $0.40 a share, up from $0.35 in the prior quarter. President and Chief Executive Officer Mark DeFazio said the increase in the quarterly dividend reflected the company’s confidence in performance and long-term outlook.