Metropolitan Bank Holding Corp. (NYSE:MCB) Q4 2022 Earnings Conference Call January 20, 2023 9:00 AM ET
Company Participants
Mark DeFazio - President and Chief Executive Officer
Greg Sigrist - Executive Vice President and Chief Financial Officer
Conference Call Participants
Alex Lau - J.P. Morgan
Chris O'Connell - KBW
Operator
Welcome to Metropolitan Commercial Bank's Fourth Quarter and Full Year 2022 Earnings Call. Hosting the call today from Metropolitan Commercial Bank are Mark DeFazio, President and Chief Executive Officer; and Greg Sigrist, Executive Vice President and Chief Financial Officer.
Today's call is being recorded. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the prepared remarks. [Operator Instructions]
During today's presentation, reference will be made to the company's earnings release and investor presentation, copies of which are available at mcbankny.com.
Today's presentation may include forward-looking statements that are subject to risks and uncertainties that may cause actual results to differ materially. Please refer to the company's notices regarding forward-looking statements and non-GAAP measures that appear in the earnings release.
It is now my pleasure to turn the floor over to Mark DeFazio, President and Chief Executive Officer. You may begin.
Mark DeFazio
Thank you, and good morning, and welcome to MCB's fourth quarter earnings call.
On an operating basis, MCB had a record year with adjusted net income of $94.4 million, up from $38.4 million in 2021, and adjusted efficiency ratio of 44.5% versus 48.2% in 2021. Our fourth quarter net interest margin of 4.05% versus 2.59% in the prior year quarter.
The commercial bank along with our banking-as-a-service initiatives saw growth along all lines of business contributing to our operating results. While 2022 was a challenging year for our industry, we worked through rising interest rates, increased cost of funds, fierce competition for deposit, a material correction in the digital asset industry and, with that, increased regulatory scrutiny.
Our early intuition that we should pivot away from crypto -- the crypto industry has served us well. Our minimum exposure coming into 2022 allowed us to efficiently replace the deposits we have foregone to-date, along with generate efficient liquidity to sustain loan growth. As we previously announced, we will fully exit the industry in 2023 with minimal impact to earnings and liquidity.
We are also very close to bringing closure to ongoing investigation from the DFS and the New York Fed regarding a fintech client MCB banked in 2020. As a result of the investigation, MCB has reserved $35 million toward a joint settlement. MCB's decision to settle was a conscious effort to move forward with the business of MCB and reduce our professional fees to a more normalized run rate. There were lessons learned here throughout the experience and we have implemented improved oversight of consumer compliance for our banking-as-a-service business. This was an unfortunate situation that occurred during an unprecedented time.