MetroCity Bankshares lifts Q1 2025 earnings, secures First IC merger amid mixed stock sentiment

MetroCity Bankshares, Inc. (NASDAQ: MCBS), the holding company for Metro City Bank, reported net income of $16.3 million for the first quarter of 2025, maintaining its earnings momentum while progressing toward the acquisition of First IC Corporation. The upcoming merger, expected to close in the fourth quarter, is projected to create a combined entity with $4.8 billion in assets and $4.1 billion in loans—marking a strategic expansion of its regional banking footprint.

Earnings per diluted share stood at $0.63, unchanged from the fourth quarter of 2024 but up from $0.57 in the year-ago period. Net interest margin expanded to 3.67%, up 10 basis points sequentially and 43 basis points year-on-year, driven by improved yields and reduced deposit costs. The company also tightened its efficiency ratio to 38.3%, reflecting disciplined cost control and lower noninterest expenses.

What drove MetroCity’s Q1 earnings growth?

MetroCity’s Q1 2025 performance was underpinned by a $494,000 increase in net interest income and a $527,000 reduction in noninterest expense, partially offset by a $1.2 million rise in tax costs. Compared to Q1 2024, the company recorded an $11.4% increase in net income on the back of a $3.5 million jump in net interest income, despite slightly lower noninterest income and a rise in operational expenses.

Commercial real estate loans expanded by $30.1 million during the quarter, signalling a pivot toward higher-yield lending segments. However, overall loan balances declined modestly due to a $56.4 million drop in residential mortgage lending, reflecting subdued housing activity and tighter underwriting.

How is MetroCity managing risk and returns in its balance sheet?

As of March 31, 2025, MetroCity reported $3.66 billion in total assets, up 1.8% quarter-on-quarter. While loans held for investment dipped to $3.13 billion, the bank saw a notable increase in cash, equity securities, and other assets, strengthening its liquidity profile. Noninterest-bearing deposits ticked up to $540 million, comprising 19.7% of total deposits.

Provisioning for credit losses remained conservative at $135,000, with annualised net charge-offs of just 0.02%. The allowance for credit losses was steady at 0.59% of total loans, and coverage of nonperforming loans stood at 110.52%. Nonperforming assets inched up to $18.5 million or 0.51% of total assets, primarily due to an increase in real estate owned.

What’s the strategic significance of the First IC acquisition?

The acquisition of First IC Corporation, announced on March 16, 2025, is expected to materially increase MetroCity’s scale across key Asian-American banking markets. With First IC holding $1.2 billion in assets and $1 billion in loans, the merger brings complementary loan portfolios and a stronger deposit base.

Structured as a cash and stock transaction, the deal involves $111.9 million in cash and 3.38 million MetroCity shares. Management anticipates greater capacity for technology investments and operational integration across 20 full-service branches spanning Georgia, Texas, New York, and Virginia.

How is the stock market reacting to MetroCity’s performance?

As of April 19, 2025, MetroCity Bankshares’ stock price was $26.99, reflecting a 19.16% gain over the past year but a 14.97% decline over the last three months. The company trades under bearish technical indicators, with the stock falling below its 20-day, 50-day, and 200-day moving averages. The MACD stands at -0.60, and the RSI at 41.29, signalling continued downward pressure and lukewarm buying momentum.

From a valuation perspective, the fundamentals remain strong. The bank’s consistent earnings growth, stable asset quality, and solid dividend payout position it favourably for long-term investors. Analysts expect annual earnings and revenue to grow by over 21%, with EPS rising 13.9% year-over-year.

Institutional and insider activity: What does it signal?

Institutional investors hold nearly 30% of MetroCity’s shares, with major positions reported by BlackRock, Vanguard, and State Street. Insider ownership is significant at 28.4%, indicating strong internal confidence. However, recent insider sales have weighed on sentiment, suggesting that some executives may be hedging against short-term price volatility.

Dividend investors were rewarded with a declared cash payout of $0.23 per share, payable on May 9, 2025. This aligns with MetroCity’s shareholder value proposition as a stable dividend-paying bank stock.

Should investors buy, sell, or hold MetroCity Bankshares?

Based on a synthesis of financial fundamentals, stock performance, and merger potential, MetroCity Bankshares appears best positioned as a ‘Hold’ candidate at present. Long-term investors can appreciate the company’s consistent profitability and growth strategy, while near-term technical signals and insider activity urge caution.

The Q1 2025 earnings report underscores management’s ability to preserve margins and capitalise on commercial real estate lending opportunities despite a high-rate environment. With the First IC merger on the horizon, the enlarged institution may benefit from revenue synergies, diversified funding, and improved operating leverage.

For investors seeking regional banking exposure with solid return metrics and expansion potential, MetroCity remains a name to monitor closely, particularly as the macroeconomic rate cycle begins to shift in the latter half of 2025.