KBRA Affirms Ratings for Metropolitan Bank Holding Corp.

KBRA affirms the senior secured debt rating of BBB, the subordinated debt rating of BBB-, and the short-term debt rating of K3 for New York, New York-based Metropolitan Bank Holding Corp. (NYSE: MCB or "the company"). In addition, KBRA affirms the deposit and senior unsecured debt ratings of BBB+, the subordinated debt rating of BBB, and the short-term deposit and debt ratings of K2 for its subsidiary, Metropolitan Commercial Bank. The Outlook for all long-term ratings is Stable.

Key Credit Considerations

MCB’s ratings are supported by its solid operating performance, improving funding profile, and relatively contained credit costs. Notably, during the challenging interest rate tightening cycle of 2022–2023, MCB’s reported net interest margin (NIM) remained comparatively stable at approximately 3.5%. Since that period, NIM has trended positively, reaching 4.10% in 4Q25. This performance has been supported by the continuation of above-average loan yields (approximately 7.3% during 2025) and a higher loan-to-average earning asset ratio (around 83% in 2025) relative to most peers. More favorable trends in deposit costs have also benefited NIM during 2025.

Credit quality remains generally favorable, reflecting seemingly disciplined underwriting practices, deep local market expertise in the NYC area, and a relationship-based lending model. While realized credit losses have remained minimal, nonperforming assets increased from historically low levels during 2025, driven primarily by an idiosyncratic borrower situation in 3Q25. Nevertheless, given the level of loan loss reserves, ample capital, and strengthening earnings power, MCB appears well positioned to absorb potential credit challenges should they arise.

Capital ratios have historically tracked above peer levels but have migrated lower over the past year, with the CET1 ratio declining to 10.7% at 4Q25 from 11.9% at 4Q24, reflecting share repurchases and the initiation of a dividend in 3Q25. Despite this decline, capital remains adequate, and we expect capital measures to be managed near current levels, even as MCB may strategically deploy excess capital over time.

Qualitative considerations related to concentration risk remain a relative ratings constraint. MCB’s earnings profile is heavily spread-dependent, while its commercial focus naturally results in a degree of depositor concentration and larger, more concentrated loan relationships. Geographic diversification also remains comparatively limited. Additionally, despite MCB’s demonstrated expertise in its chosen lending verticals, loan portfolio diversification is below peer levels, with sizable concentrations in commercial real estate and healthcare/skilled nursing facility (SNF) lending.

Rating Sensitivities

Diversification within MCB’s loan portfolio and earnings profile—likely supported by a greater contribution from fee income—combined with the maintenance of capital levels at least in line with peers and favorable asset quality, could lead to positive rating momentum over time. MCB’s current ratings and Outlook remain contingent on credit quality performance that is consistent with peers. However, should the company’s CRE-centric loan portfolio experience outsized losses relative to peers, negative rating momentum could emerge. Additionally, the sustained management of capital levels materially below peer levels would be viewed unfavorably.

To access ratings and relevant documents, click here.

Methodologies