Metropolitan Bank Holding Corp. (MCB) Earnings Call Transcript & Summary

Welcome to Metropolitan Commercial Bank's First Quarter 2023 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. [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.

Thank you. Good morning, and welcome to MCB's first quarter earnings call, and thank you for accommodating a call a few days earlier than usual. Many have heard me say for some time now that the next crisis in banking would be about liquidity. MCB was well prepared when the recently -- when this recently became obvious across the industry. For nearly 24 years now, MCB has maintained a steady hand at managing liquidity and interest rate risk. That is evident when looking at our diversified loan and deposit verticals, the expansion of our net interest margin as interest rates rose dramatically off of record lows and the strength of our liquidity position currently. Our client base and financial positions are strong and growing. Core deposits grew in the first quarter, net of expected outflows. Greg will take you through a key metrics around our liquidity position us shortly. MCB's current financial position did not happen by accident. We have worked very hard since our founding to build a strong and diversified funding base, which is the underpinning of our disciplined approach to margin management. We were well positioned as rates rose dramatically in 2022, and we continue to be well positioned for the rate environment to correct downward. The Commercial Bank's performance and credit quality remains strong. While net loan growth in the quarter was modest, we remain focused on pricing in this volatile rate environment. If we cannot lend at spreads that are within our disciplined approach to margin management, we will remain patient. We stand ready, however, to support our clients as there continues to be quality opportunities across our lending verticals. I am very confident that net loan growth will be strong in 2023 and beyond. We have added a slide in our first quarter 2023 IR deck that provides additional details on our office exposure, which is modest at 7% of our total loan portfolio. As you can see, the office portfolio is well diversified geographically with loans collateralized within Manhattan office buildings representing just 37% of the office vertical. Substantially, all of the Manhattan office loans were originated in the last 12 months. Our Global Payments business continues to grow prudently with revenues up 12% in the quarter. As a reminder, through our Global Payments business, MCB provides basic banking services, including deposit accounts and payment rail access to nonbank financial service companies engaged in both retail and commercial-oriented activities. MCB does not extend credit to the Global Payments clients or to their customers. We are excited to accelerate our entrance into the EB-5 space. We have -- we were very fortunate to recruit a fantastic and experienced team and are confident this will be an additional pillar strengthening our low-cost core funding. We are very pleased with the progress we made this quarter in exiting our crypto space. The exit materially started years ago by not growing the business and ring-fencing the deposits, allowing for a smooth transition off balance sheet, and we expect to complete our exit by the end of the second quarter. The past quarter was a very telling one for the banking industry. I think if you look close enough, no one should be surprised at what caused the failure of a few banks. Management teams in this industry that were well prepared for a shock to liquidity and interest rates demonstrated their resilience as a going concern. No one gets the pleasure out of disruption, but it does give some the opportunity to stand out. In my opinion, the unfortunate conversation regarding uninsured deposits will abate over time. The thought that the preferred flight to safety for middle market growth companies can be money-centered banks is materially misplaced. Middle market companies with revenue of $400 million or less rely heavily on true commercial banks, not money-centered banks or converted thrifts. Coming out of this nonsystemic mini bank crisis, in my opinion, I believe we'll see -- we will see the true value of a well-funded, diversified commercial bank like MCB. Our first quarter operating performance demonstrates the resilience and sustainability of our business. We have effectively managed through a challenging environment and are in a strong position to support our clients with enhanced resilience and strong capital levels. I will now turn the call over to Greg.

Thank you, Mark, and good morning, everyone. MCB reported strong first quarter results, including a return on average tangible common equity of 17.4%. Importantly, core deposits were up by $69 million in the quarter on the strength of new account volumes across our retail deposit franchise, and that includes deposits with loan customers. The majority of which occurred since the middle of March. The increase in core deposits is net of a modest decline in Global Payment deposits from nonbank financial service companies, given normal flows at the end of the quarter and expected outflows from bankruptcy trustees. Crypto-related deposits also declined as expected to $278 million at March 31. Included in this balance is $218 million related to the remaining active exchanges, which are subject to our announced wind down with the remaining balance largely representing commercial operating accounts for a variety of companies. At March 31, insured deposits were 71% of total deposits and MCB had $3.1 billion combined in cash on deposit with the Federal Reserve Bank of New York and in readily available secured funding capacity, which represents 208% of uninsured deposits. Our available collateralized off-balance sheet liquidity includes facilities with the FHLB, FRB and securities repo facilities. And to provide some context, MCB has had actionable repurchase contracts in place for quite some time now and has active collateral monitoring and posting programs supporting the FHLB and FRB facilities. All facilities are subject to periodic testing. As Mark has said, we have been and remain well prepared. We did utilize Fed fund purchases and, to a much lesser degree, FHLB advances during the quarter with balances a bit elevated at quarter end, reflecting the timing of normal deposit flows right at quarter end. As we have said, we will use these wholesale funding sources in advance of executing strategic core deposit initiatives. The pace and magnitude of interest rate increases have been a headwind as it does take some time for the 175 basis points of rate increases since September 30 of last year to work their way through the financials. Total cost of funds were up and more muted 66 basis points in the quarter and at 183 basis points, remained low, particularly given where our branch-light franchise. We were able to absorb much of the cost of funds impact through the increase in loan yields. Looking ahead, we do see the headwind from rates abating as short-term rates find their peak. We will also benefit as we execute our funding strategies, including new deposit verticals such as EB-5. Turning for a moment to loans. We maintained a prudent approach to lending in the quarter. We did have robust loan origination volumes of $265 million, which was partially offset by net payoff and paydowns of $254 million, which when combined with credit metrics, remained strong, demonstrates the resilience of our loan portfolio. The impact of adopting CECL effective January 1 was, as expected, muted with a day 1 increase in the allowance for loan losses of approximately $2.3 million. As you know, this increase went directly to retained earnings net of taxes. Changes in the macroeconomic environment drove most of the credit provision for the first quarter. Operating expenses continue to be well managed. There were a number of discrete items in the quarter that impacted expenses. Compensation and benefits did include the seasonal first quarter increase related to employer taxes of approximately $800,000, while professional fees did moderate in the quarter, legal fees remained a bit elevated. We do see legal fees normalizing lower in the second quarter. FDIC assessments were elevated given the higher assessment rate and there was also a true-up of approximately $1.5 million that is not expected to recur. We were also able to release $2.5 million of the settlement reserve, which reflects our best estimate given discussions during the quarter. The effective tax rate was positively impacted by discrete tax benefits that came through in the quarter related to the conversion of employee stock-based awards and the revision to the regulatory settlement reserve. Going forward, we would expect the effective tax rate to be in the range of 31% to 32%, excluding discrete items. Our capital levels remained strong, particularly with the 17.4% ROATCE this quarter, which further strengthened our capital base. Lastly, it should be clear given the strength of our liquidity position that we do not need to sell securities. However, if hypothetically, we did sell our entire portfolio, inclusive of available-for-sale and held to maturity securities, we would remain well capitalized across all measures of regulatory capital. I will now turn the call back to our operator for Q&A.

[Operator Instructions] Our first question is coming from Chris O'Connell with KBW.

I was hoping to start off on the credit side and see if you guys could give some color around the uptick in CRE NPLs.

Yes, sure. Not too much color I can give there. It's one particular loan that we are very comfortable with we're adequately collateralized, and we have a very strong recourse behind the loan. I can't get into details. We started litigation around this one particular loan, but we have very, very little risk of loss here on this loan.

Okay. Got it. And can you guys give the -- what the specific reserve is assigned against that?

Again, given that we're well collateralized with a personal guarantee on it, we went through the ringer, Chris, but we did not put up a reserve on it, just given the couple of collateralization levels.

Okay. Got it. And can you guys give any color around maybe just the industry or the market in general that the loan is in or the latest LTV?

The LTV is in the low 70s, and it's an out-of-market deal. And actually, it's public record. We started a lawsuit on it. It's a foreclosure in Kansas City, Kansas and Mission, Kansas, it's public record.

So yes. But beyond that, if the question is, is it indicative of other credits in the portfolio, now, this is a bespokish loan that as we're working through.

All right. Got it. And just more broadly on the credit side. I mean, given the current market environment, it looks like originations were prudently downward. And I guess what areas are you pulling back from or more cautious on at this point in the cycle? And what are the areas or lending segments that you're most comfortable with at this point?

Well, Chris, we did have over $200 million of new originations in the quarter, so that's fairly robust. What we tried to point out is our portfolio is pristine and of high quality. That's why the refinancing of the portfolio is very viable. As many banks are concerned about rollover risk, as you can see, a good part of the loans came due this quarter that we chose to either not refinance because of rate or they would just mean to get paid off for whatever structural reason. So we're not any more careful than we have been. We've been very cautious about lending. It's a core competency of ours. We're not any more concerned today. We have elevated concerns about certain industries, of course. But as you saw in the office building slide in my commentary, most of the office building loans that we made in -- were in 2022 in Manhattan. So it's not that we're not concerned about the office building market, but there are really good opportunities out there to support clients today. So we are going to continue to stay a well-diversified company when it comes to our asset classes that we lend to.

Yes. And I think the other dynamic too is just loan pricing, Chris. And we started this conversation last quarter. We've been very much sticking to our disciplines around margin management. So the other part of this conversation is making sure we're getting compensated for the risk we're taking. And I think that's the other side of this equation is making sure we're getting paid on the loan spread. So that's been part of the dynamic too, and we stuck to our guns. I think in Mark's comments, he also made the point we still see quality across all of our lending verticals. It's really just a matter of being patient and being there to support our clients on the quality projects we're working on.

Got it. Appreciate the color there. And so as you're looking at the rest of the year and your origination pipelines, typically, the bogey has been double-digit loan growth. Is that still the case for 2023? Or is this more of a tepid year? Just any color around kind of how you're thinking about loan growth for the remainder of the year.

When I -- looking at the pipeline and looking at the opportunities in markets that are correcting like the one we're working through today, opportunities do present themselves. So I would not be surprised if we end the year in mid-teens net loan growth as if I wouldn't be surprised if we ended up with a 10% loan growth. It's all about quality. It's going to be about quality and pricing. So that's been our core competency for a career and never mind just the last 23 years.

Great. And I appreciate the comments around the update on the crypto exit expected for 2Q. And any thoughts around exactly how that plays out with the flows on the balance sheet? I mean, it's $200 million plus coming out of the deposit side. I guess you guys have AFS and cash kind of available there as well as the ability to increase borrowings or bring on new deposits. Just any thoughts around exactly kind of how that plays out on the balance sheet and kind of where we're at from a starting point in 3Q?

Yes. I would -- for context, I mean, the majority of what's left in the crypto, the exchanges, the $218 million is related to FBL balances. So that will be subject to a [ BEN ] transfer. So from a timing perspective, other than just flows during the quarter, which can be up or down, and I think that will be a onetime event. During the quarter, we would expect other funding initiatives to really start to kick in and that includes EB-5 and some others that we can probably start talking about here in the near term. To the extent those new initiatives and just normal the existing deposit vertical flows put us in a position where we need to borrow, we would borrow short term. But again, when you look out over a slightly longer horizon, and I think we're talking a quarter or if not just 1 month or 2, into the third quarter, I would expect core deposits to more than fill that gap.

Yes. And Chris, if you look historically, we had much higher crypto balances on balance sheet even in the last 12 months, and we replaced them efficiently with core funding. So our core funding is up today, notwithstanding the reduction in crypto just over the last quarter. So they -- we have no concerns about replacing the remaining balances of crypto in core funding.

Got it. And on that point, could you just talk a little bit more about the EB-5 team you brought on and just that overall business line and maybe what you see the long-term deposit opportunity is there?

Well, I'll work backwards. I just -- I want to be a bit cautious on what our projections could be. We were -- we had stood up our own EB-5 group here. It was a modest start. And with the disruption at Signature Bank, we were fortunate to recruit the team from Signature Bank and anybody who had paid attention to Signature knows that, that team was and considered the best-in-class in the country in developing in the EB-5 business. So we're fortunate to hear, they're working with us and why it's a natural for us and why we wanted to do this even on our own they are now clearly going to accelerate our market share is because of our exposure to commercial real estate. This is just another product offering. To date, they've been here just for a couple of weeks, and we've already introduced them to 2 very large developers and 1 deal has already been agreed to, which would be substantial in deposits regarding EB-5 coming through MCB. So it's a natural for us to, again, deepen relationships with -- we have relationships with some of the largest developers in the country. And clearly, because of the size of our bank, we could never provide construction financing for those deals. But today, we can play a meaningful role in the construction or the capital stack as it relates to very large construction loans happening around the country. And we have a seat at the table with the best developers in New York and across the country. So this is a natural expansion for us. And it came at a very good time, and the team is a pleasure to work with.

Great. And for those deposits related to that segment, like what do you expect those to come on in terms of the pricing?

Pricing is low. Let's put it that way. We'll give you some more color. The pricing is very low on those deposits.

Great. And then just in general, how are you guys thinking about overall deposit pricing going forward? And I guess, post the crypto exit, do you guys have a sense as to maybe where a NIM range would be following that exit?

Well, working backwards, I mean we're more focused on NIM and frankly, more on net interest income, Chris, as you know, and just dropping the economics to the bottom line. I think, as we kind of work through the transition with the rest of crypto, I think -- if we have to go out and borrow funds short term, which I think is 50-50 at best, I think -- but if we did, I would see some modest NIM contraction, which means just a slight uptick in cost of funds as we went into the wholesale market short term. When you look out over a couple of -- to the end of the year and you look along -- slightly longer horizon just quarter-on-quarter, I think we get back to the same NIM level we're at, frankly. The question marks are really going to be around short-term rates, are we looking at 1 more increase or not? Obviously, that would be a headwind to us, given we are modestly liability sensitive. But again, I think that would be a modest impact. I'm not really seeing any significant pressure -- rate pressure on the rest of the deposit base. We continue to model out at the 70% deposit beta on interest-bearing deposits, which I think through the cycle so far, that's been a fairly conservative assumption. I think it still is, particularly as we get to the tail end here. So hopefully, that gives you some context on how we're thinking about it.

Yes. That's helpful. And then just on the expense run rate going forward, I know the professional or legal fees were a bit elevated here at the onetime CECL unfunded commitment within other expenses. I guess just kind of backing that out and looking ahead, how are you guys thinking about the operating expense range on a go-forward basis?

Yes. Two things. The CECL impact for the off-balance sheet commitments that actually went to retained earnings, not to the other expense, Chris. So I know that other expenses were slightly elevated in the quarter, and that's frankly just a combination of a lot of little stuff that I think there are just some one-off stuff in the quarter that settles back down. But we're always more focused on return on tangible common equity, which, again, in the quarter at 17.4% was very, very strong. We're going to continue to invest in the business. That's the wildcard for us. This is just about a run rate and maintaining what we've got. I would tell you that our -- the efficiency ratio would stay in a range in the mid-40s. For us, though, we're standing up the EB-5 team, we've got some other initiatives that are standing up that are going to impact that run rate, but they're going to -- as we always say, they're going to have some immediate returns to them. So to me, the operating expenses that we're going to try and keep them in that efficiency ratio in that mid-40% range as we kind of work through these things because we feel like we can continue to self-fund the investments as we work through standing up any new programs.

Got it. And last one for me. Given your capital position and kind of overall balance sheet liquidity as well as where the stock is trading on valuation, have you guys considered a share repurchase plan? And any color or thoughts around whether that is being considered?

I mean I'll start; Mark can fill in the gaps. I mean, we've absolutely considered it and had that discussion with the Board over the balance of the quarter. If we were a much more mature bank that couldn't grow loans the way we couldn't grow organically the way we could, I think we would give a lot more consideration to it. The reality is we are at an inflection point, I think, across the industry. We really feel confident in our business model and in our ability to continue to organically grow our businesses. So it just seems a bit counterintuitive. We appreciate and understand what the share price is. We think that's going to right size itself as we continue to execute on our business plan, but we still feel that the highest and best use of our capital is supporting the growth of our businesses, which will drive more shareholder value as we go through time.

And we'll take our next question from Alex Lau with JPMorgan.

Could you talk about what you saw in terms of deposit flows in the month of March following the closing of SVB and Signature? Were you opening accounts, given that you're in the same market as Signature? Or were you seeing clients move funds out to diversify for deposit churn?

We actually -- unfortunately, we were opening up accounts starting as early as the Wednesday before the weekend when the announcement happened. So we had opened up hundreds and hundreds of accounts, primarily coming from Signature Bank, a little bit coming from First Republic as well. And remember, in many ways, Signature and MCB share a lot of the same clients as it relates to commercial real estate and commercial lending. So we already had a relationship, I would say, with about 80% of the clients that moved accounts over. So yes, we didn't see any -- from the Commercial Bank, I don't -- I'm sure we had some, but it doesn't resonate to me that we had any major outflows from the Commercial Bank at all.

Yes, to Mark's point, we really started opening up the accounts. I think the Wednesday was the March 8. And as we kind of roll through to Friday and then into the Monday, the 13, we saw net deposit growth really every day as we went through that following week. And it was really, frankly, for us as a business as usual, putting the entire time. We clearly were sensitive to the potential impacts of liquidity that you can't predict. But we probably at the margin lost a couple of deposits here and there, 2 or 3, pulled some corporate uninsured deposits out, but that was more than offset by the inflows from what we saw new account openings we saw. So again, I kind of embedded in my comments, but when you think about where we were beginning to middle of March versus where we ended March, and you look at our retail and the deposits with retail deposits with our loan customers, a lot of that growth really came from March 8 to the end of the month.

And the one other thing, Alex, you should know that during that period of time, it was an extraordinary effort because the type of accounts that we were opening were real operating accounts that needed a whole suite of financial services, not just a reserve account or a single one operating account. So we've now expanded and deepened the relationships substantially with a lot of clients within entire their franchise from a commercial perspective.

And when you go through a dislocation, liquidity issue across the industry that we have, you really figure out whether or not you've got a quality deposit franchise, especially as a Commercial Bank, and we feel really, really comfortable with the relationships we've got. And I think as you kind of see what happened to our deposit base during the quarter and then particularly in March, to me, it just signifies the strength of our deposit franchise, which is fantastic.

That's great color. As a follow-up on the EB-5 team news, are you active in adding any more talent that may be available from market disruption?

Well, I mean, we're a growth company. So we're always looking for talent. We -- historically, we haven't really benefited from something like this before, but we're always out there. People are reaching out to us, and of course, we would keep an open mind to it. But it's not a focus of us. We don't believe in poaching. But if there's a disruption or if there's an opportunity, we surely consider it.

Got it. And then on the FinTech-related deposits being down in the quarter after growing in 3Q and 4Q. You mentioned some outflows at the end of the quarter. How confident are you in growing this segment in 2023 on a year-over-year basis?

Yes. I'm very confident. And I think, as Greg mentioned, a good part of that is normal outflows because remember, those companies are in the payment space. So that funds flow that we are very used to and we understand the behaviors of those deposits. So we expect those deposits come back. And I think you'll see -- I know you'll see net growth out of the GPG deposits year-over-year.

And do you think you can grow noninterest-bearing deposits, excluding crypto in the year? Or is there still some balances that are at risk of moving to higher cost alternatives?

Yes to all of the above. So we will continue to address some clients that want to go into treasuries, and that's -- there's nothing we can do with that. But I think that conversation is abating quite a bit. We're not having as much discussions about interest rates with clients of late. So that's a good thing. Noninterest-bearing accounts, we will definitely continue to grow because we're a Commercial Bank. And we -- as we grow the loan portfolio, you will be bringing on noninterest-bearing operating accounts. So there's no doubt. Again, as you know, we're obsessed with net interest margin. So it's not necessarily the cost of funds, but it's about NIM to drive top line net interest income. So I think you're going to see starting in the second quarter and throughout the rest of the year. And of course, where we're looking well beyond '23. Right now, '23 is sort of baked into the cake. We're really working on '24 and '25 right now in many different ways. So the answer is yes to all of the above.

And on the interest-bearing deposit costs for 1Q being above 3% now, what are the spot rates that you're paying for interest-bearing deposits?

Well, we typically don't publish rate sheet, Alex. I'd rather not get into it. I think a lot of what we've done, though, is we are willing to pay up for incremental new deposits coming in from either existing customers and new relationships, which again, we're trying to stay well inside of effective Fed funds when we price anything of that nature. I think that's also been influenced. Actually -- strike that last part. I'll put a period after what I said previously.

Yes. So I'll just expand a little bit. Similar to the loan pricing, we don't have a history of putting out like Greg suggested, like a rate sheet. Same thing on the liability side. We are relationship oriented. We're talking to clients all the time. And I guess you can say we negotiate rates on a client-by-client basis or on a transaction-by-transaction basis, actually on an account-by-account basis. So it's hard to say there is no absolute rate that is set for money market, if that's what you're looking for.

And then on expenses, last quarter, you mentioned there were about $2 million in legal fees expected to moderate in 1Q levels. But you also mentioned that it's still a little bit elevated. What is a good run rate for the professional fees line for 2Q?

Yes. I mean my crystal ball is a little broken just because as we stand up some of these new programs, it is going to add to those lines. So I think with the legacy, both the Voyager bankruptcy as well as the work on the settlement, that's really winding down. In the quarter, that was probably elevated by about $1 million, Alex. So I think that as we kind of find that new normal in the second quarter, which is going to, again, include a bit of some new spend, which I think is going to be modest. If I was going to reduce or assume there was $1 million of just elevation in the quarter, that's probably not far off.

But we do have some legal expense associated with setting up EB-5 and so on.

Exactly.

So again, look well beyond -- look at results and look at operating leverage and where we end at the end of the quarter as far as earnings and return on tangible common equity is really at the end of the day what we strive for.

And then on GPG fee income, you saw some strong growth in the quarter to $4.9 million. Can you talk about the drivers of growth in the FinTech segment quarter-over-quarter? And also, can you grow this segment every quarter for the rest of the year? Or just more of a volatile line item driven by volumes?

Well, just to address first the growth in the quarter, I mean, that's really -- it's a broad-based increase across the client base. So it's not 1 or 2 of our partners that are clients that are really driving that. It's really much more broad-based than that. A lot of the fintechs and that we're working with in nonbank financial service companies are really hitting their stride. So that's a bit more broad based. And then the forward look, I don't know, Mark, do you have any thoughts on that?

Yes, I think that's exactly right. These companies are spending a significant amount of money on client acquisition strategies. So there -- the pipeline is full. These companies are becoming more mature in providing retail financial services, so they're grabbing more market share. The market share is fairly sticky. Their client base is sticky. So you'll start to see some scale there and some operating efficiencies among those companies, which has to run through our franchise. So we see the benefits of it. But at the moment, I think the most important thing Greg said to notice is that it's not 1 client. It's across that whole franchise. Many clients are building for scale, and we're benefiting from it as well. But we like a slow and modest pace to growth there. We don't mind taking its time because that's true retail banking. And it's in a marathon as opposed to a hockey stick approach.

And last one for me. So in that GPG fee income line, there's about $1.3 million from the crypto-related business, also up in the quarter. When do you expect this amount to be reduced? I know you said you're finishing up deposits run off by the end of 2Q. But how much do you expect of that fee income to be in 2Q?

I would expect -- it's hard to predict. It depends on the timing of when these relationships get transferred. So I would imagine that would abate entirely between the second and third quarter.

Yes, I agree. It's not going to be a gradual wind down on the revenue side, Alex. I think the revenue, the transaction volumes and the fees are going to be associated with the [ BEN ] that hold. The accounts was going to be an on/off switch. So whatever that revenue level is should be there through the -- up and to the point that we actually transferred to [ BEN ].

This concludes the allotted time for questions. I would like to turn the call over to Mark DeFazio for any additional or closing remarks.

And I would like to have -- make a few additional comments if you would allow. In the current turbulent banking environment, it's not surprising to see uninformed speculation and people looking to profit from the turmoil. This has caused some significant volatility in our stock in recent weeks. In that context, I want to reiterate a few key facts that are important about MCB. Crypto. In the fall of 2017, MCB materially started its exit from banking crypto-related businesses, and this process continued through 2019. In 2019, we maintained a relationship with 4 crypto-related exchange companies and stated clearly many times that we would not be increasing our relationship with others. Over the course of our relationship with Voyager, MCB did not allow the use of consumer funds for corporate purposes. Through the bankruptcy of Voyager, MCB demonstrated that we clearly knew how to manage the risk associated with banking a crypto exchange. MCB safe kept consumer funds, maintain the integrity of pass-through FDIC insurance related to the FBO account, representing consumer funds as well. Once the bankruptcy stay was lifted, MCB managed the efficient release of all consumer funds held at MCB, Voyager-related balances today are at 0 and all accounts are closed. MCB recouped $900,000 toward reimbursement of legal fees out of $1.2 million that we spent. Today, MCB has 3 of these crypto relationships left with an aggregate deposit balance of $218 million. We are winding these down and expect the related balances to be at or close to 0 at the end of the second quarter. Because we clearly understood this business, we were able to execute an orderly exit without putting MCB's balance sheet at risk. Liquidity and interest rate risk. MCB has demonstrated over the past 2 decades just how important it is to manage interest rate risk and liquidity risk. Developing diversified low-cost deposit verticals enabled MCB to maintain its competitive edge in loan pricing, while insulating adequate NIM. Through 2 decades of organic balance sheet growth, MCB has maintained its net interest margin with positive operating leverage, enabling year-over-year net income growth and therefore, driving franchise value. Alongside of having a steadfast discipline on liquidity and interest rate risk is having a robust, readily available contingency funding plan. MCB has developed and expanded our contingency funding plan as our balance sheet expanded. We have proven that the preparedness and discipline in is table stakes for sustainability and staying relevant. In the current environment, transparency is important than ever. What I can offer to my shareholders and all stakeholders is that we will make ourselves available for questions. We are confident in the soundness and resilience of our business model and the rigor of our governance and risk management. And we are happy to talk to all of our shareholders and stakeholders at any time. . Thank you for participating in this call. I will now turn the call back over to the operator.

This does conclude today's conference call and webcast. A webcast archive of this call can be found at www.mcbankny.com. Please disconnect your line at this time, and have a wonderful day.