Is Metropolitan Bank Next? Shares Plummet 28% After Confusing Update
In the midst of banks cratering one after the other, Metropolitan Bank Holding (NYSE: MCB) thought it would be a good idea to give their investors an update on their standing. But, it seemed to have backfired.
On Thursday, the bank reiterated that it remains “well capitalized across all measures of regulatory capital.”
The firm further touted that it has total core deposit verticals of $5.04 billion, and insured deposits account for 66% of total deposits–both figures are up from its December 2022 counterparts.
Thing is: these were figures as of Wednesday, March 29, the day before the report was released. And for some observers, in this shaky environment, a day can mean so much.
In its 10K filing for 2022, the bank said it ended with $5.3 billion in deposits, with an aggregate amount of uninsured deposits at $2.2 billion or roughly 42% of deposits.
The bank also said it has a total risk-based capital of 13.1%, which is above the 10% minimum the insured depository institutions are requiring to qualify as “well-capitalized.” This figure is also as of December 31, 2022.
In the update, it also stated that liquidity “remains strong,” touting $3.1 billion in “cash on deposit with the Federal Reserve Bank of New York and readily accessible secured funding capacity” as of March 29. This is, according to the bank, 170% of uninsured deposit balances.
In its last annual report as of December 31, 2022, the company reported a total of $257.4 million in cash and cash equivalents, which included overnight deposits. The bank also had $150.0 million of Federal funds purchased and $100.0 million of Federal Home Loan Bank of New York advances, as well as available borrowing capacity of $984.4 million at the Federal Home Loan Bank of New York and available borrowing capacity of $137.6 million at the Federal Reserve Bank of New York discount window.
This comes after the bank put out a press release just weeks ago, also claiming it is “well-capitalized and highly liquid.” In that release, they touted that they have $6.3 billion in assets and $5.3 billion in deposits–which confused some observers since the March update used the figures reported as of December 2022.
In addition, the company also updated that its previously stated withdrawal from the crypto vertical is nearly complete, with crypto-related deposits accounting for 4% of total deposits and expected to be near zero by the end of the second quarter of 2023.
However, short seller Vidar Research showed how doubtful that may be. In a report of the crypto exodus announcement in January, it said that the bank’s pullout from the crypto sector will have a minimal financial impact. Reportedly, four active institutional crypto-related clients account for 1.5% of total income and 6% of total deposits at the time.
Further, the said decision “will have no effect on clients’ existing capacity to transfer or receive payments from crypto-asset firms” or on the bank’s service to customers “who do not have crypto-asset-related activities as their primary line of business.”
While the bank predicts its crypto sector is to conclude client ties, it said that “customers’ ability to send or receive payments from crypto firms will not be impacted by the shift away from crypto.”
“Well – what does THAT mean? How can payment to and from crypto firms still be possible if the bank moves away from Crypto?” Vidar said, adding that Metropolitan is “as greedy and badly managed as” Signature Bank.
Following the report, the bank’s shares declined by as much as 37% on the day before inching back to a 28% fall. Year-to-date, the firm has erased around 56% of its share value.
Information for this briefing was found via the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
