Metro Phoenix Bank Reports Earnings of $1,402,000, or $0.37 per Diluted Share in 2Q 2020 after additional $700,000 COVID-19 Related Loan Reserve Build Up; Non-PPP Related Allowance for Loan & Lease Losses Increased to 1.49%

PHOENIX, Aug. 4, 2020 /PRNewswire/ -- Metro Phoenix Bank (OTCPink:MPHX)("Bank") announced net income for quarter ending June 30, 2020 increased to $1,402,000, or $0.37 per diluted share, from $733,000, or $0.19 per diluted share in the first quarter of 2020.  Net income increased 59.86% from $877,000 in the second quarter of 2019. 

Stephen P. Haggard, Bank President and Chief Executive Officer stated, "As expected, the quarter was dominated by strategic efforts pertaining to the COVID-19 pandemic.  These efforts ranged from addressing employee health and wellness, managing operational logistics, implementing tools to enhance balance sheet preservation, and actively participating in SBA Paycheck Protection Program (PPP) lending activities.  In an effort to reduce exposure in the office and while maintaining sufficient capacity on-site to carry out our day-to-day operational requirements, we adopted a 'limited' work-from-home strategy to help mitigate risk.  We will continue to assess this issue indefinitely, and when feasible, try to assign additional employees outside of the office. 

"Although we experienced modest organic growth this quarter, Bank personnel had been extremely busy working with customers participating in the SBA Paycheck Protection Program.  Through June 30^th, Metro Phoenix Bank originated approximately $42.2 million in relief loans for small businesses throughout Arizona.  More importantly, all of these PPP loans were sourced by MPB and directly underwritten by Bank personnel with nearly a 100% deposit capture rate of these new customers.  We are proud to participate in the Program as these loans directly benefited over 4,900 employees within our community who may have been displaced without the assistance of these funds.  Even though the mechanics of the Program have been choppy at times, the spirit and intent are much appreciated by community banks and numerous small businesses.

"Additionally, Bank personnel had been proactive in working with existing creditworthy loan customers with Section 4013 payment deferrals.  These payment deferrals of three or six months are an important cash flow source for many of the hardest hit industries.  Through June 30^th, the Bank has made qualified Section 4013 full payment accommodations for approximately $40.0 million in loans.  In conjunction with the lending tools that are available, the Bank has undertaken proactive stress test efforts in asset classes it deems COVID-19 higher risk.

"Notwithstanding pandemic related events occurring in the second quarter, the Bank's core operation remains remarkably sound.  Excluding the outsized impact of Q2 COVID-19 financial entries, which include the large non-recurring PPP processing fees and the aggressive loan reserve build up, the Bank estimates its adjusted core earnings in the range of $0.25 to $0.27 per diluted share for the quarter.  By all accounts, this would have been another strong quarter.  However, earnings results are not currently a primary objective as we work to ensure employee health and make decisions to bolster our balance sheet.  The only thing we can expect over the next two quarters is a lot of virus and political uncertainty and a lot of hard work, anything else at this stage is merely a guess." 

Second Quarter 2020 Highlights

• Net Income for the quarter was $1,402,000 or $0.37 per diluted share.
• ROA of 1.84% for the quarter.
• ROE of 11.04% for the quarter.
• NIM of 5.36% for the quarter, with the cost of funds declining to 0.41%; a favorable trend when compared to the linked quarter cost of funds of 0.70%.
• SBA Gains on Sale of $167,000 for the quarter.
• Provision Expense of $700,000 for the quarter.
• Efficiency Ratio of 39.50% for the quarter.
• Loan growth of 27.89% for the quarter.
• Adjusted Loan growth of 5.86% for the quarter (excluding PPP loans).
• Deposit growth of 24.05% for the quarter.
• Adjusted Deposit growth of 5.52% for the quarter (excluding PPP related deposits).
• Non-Performing Asset Ratio is stable at 0.00%, no change from the linked quarter.

Balance Sheet
Total assets grew by 21.22% to $323.82 million at June 30, 2020 and increased 48.81% compared to $217.61 million a year ago.  Total loans increased by 27.89% to $245.12 million at June 30, 2020 and increased 40.47% compared to $174.50 million a year ago. Total deposits grew by 24.05% to $282.61 million at June 30, 2020 and increased 55.91% compared to $181.27 million a year ago. 

The allowance for loan losses totaled $3.03 million at June 30, 2020, or 1.23% of total loans.  Excluding the PPP loan balance of $42.2 million, an adjusted allowance for loan losses equates to 1.49% of total loans.  No material changes have occurred in the reported credit quality of the loan portfolio since the preceding quarter.  However, the Bank has adjusted upwards the qualitative factors in its Allowance for Loan and Lease Losses (ALLL) given the uncertainty surrounding the long-term impact of the COVID-19 crisis.  As data becomes available, the Bank could see additional build-up of its reserves throughout the year.

Shareholders' equity increased to $35.76 million at June 30, 2020, from $34.35 million the preceding quarter and increased 8.86% compared to $32.85 million a year ago.  At June 30, 2020, book value and tangible book value were $10.27 per share compared to $9.87 per share at March 31, 2020 and $9.57 per share a year ago.

Capital Management
The Bank's capital ratio exceeded the regulatory guidelines established under Section 201 of the Economic Regulatory Relief and Consumer Protection Act.  Effective January 2020, community banks are tested for capital health based on a single capital ratio, the Community Bank Leverage Ratio (CBLR).  The Bank reported the following capital ratio:

About the Company
Metro Phoenix Bank, Inc., established in 2007 and headquartered in Phoenix, Arizona, is a full-service community bank that caters to small- to mid-sized businesses and real estate professionals.  MPB offers commercial clients a variety of services ranging from Commercial Real Estate Lending, Outdoor Media Lending, SBA financing solutions, and a robust treasury management platform that includes a Homeowners Association (HOA)/Property Management specialty program.  The company is traded over-the-counter as MPHX.  For additional information, visit: www.metrophoenixbank.com.

Forward-looking Statements
This press release may include forward-looking statements about Metro Phoenix Bank.  These statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements.  Such risks and uncertainties include, but are not limited to, the following factors: competition, fluctuations in interest rates, dependency on key individuals, loan defaults, geographical concentration, litigation and changes in federal laws, regulations, and interpretations thereof.  All forward-looking statements included in this press release are based on information available at the time of the release, and Metro Phoenix Bank assumes no obligation to update any forward-looking statement.

SOURCE Metro Phoenix Bank

Related Links

http://www.metrophoenixbank.com