MetroCity Bankshares, Inc. ("MetroCity" or the "Company") (NASDAQ: MCBS), holding company for Metro City Bank (the "Bank"), today reported net income of $24.3 million, or $0.84 per diluted share, for the third quarter of 2026, compared to $22.1 million, or $0.76 per diluted share, for the second quarter of 2026, and $17.3 million, or $0.67 per diluted share, for the third quarter of 2025. For the nine months ended September 30, 2026, the Company reported net income of $68.7 million or $2.37 per diluted share, compared to $50.4 million, or $1.96 per diluted share, for the same period in 2025.

Third Quarter 2026 Highlights:

• Annualized return on average assets was 2.12% compared to 1.96% for the second quarter of 2026 and 1.89% for the third quarter of 2025.
• Annualized return on average equity was 16.97%, compared to 16.01% for the second quarter of 2026 and 15.69% for the third quarter of 2025. Adjusted return on average shareholders' equity¹, which excluded average accumulated other comprehensive income and merger-related expenses, was 17.04% for the third quarter of 2026, compared to 16.17% for the second quarter of 2026, and 16.10% for the third quarter of 2025.
• Efficiency ratio was 41.81%, compared to 40.08% for the second quarter of 2026 and 38.65% for the third quarter of 2025. Operating efficiency ratio¹ was 41.56%, compared to 39.54% for the second quarter of 2026 and 37.85% for the third quarter of 2025.
• Net interest margin was 4.07%, compared to 4.11% for the second quarter of 2026 and 3.68% for the third quarter of 2025.

Year-to-Date 2026 Highlights:

• Return on average assets increased to 1.99% for the nine months ended September 30, 2026, compared to 1.87% for the same period in 2025.
• Return on average equity increased to 16.54% for the nine months ended September 30, 2026, compared to 15.70% for the same period in 2025. Adjusted return on average shareholders' equity¹, which, excluded average accumulated other comprehensive income and merger-related expenses, was 16.93% for the nine months ended September 30, 2026, compared to 16.25% for the same period in 2025.
• Efficiency ratio increased to 41.35% for the nine months ended September 30, 2026, compared to 38.06% for the same period in 2025.
• Net interest margin increased by 38 basis points to 4.09% for the nine months ended September 30, 2026, compared to 3.71% for the same period in 2025.

Results of Operations

Net Income

Net income was $24.3 million for the third quarter of 2026, an increase of $2.2 million, or 9.8%, from $22.1 million for the second quarter of 2026. The increase primarily reflected a $4.8 million decrease in income tax expense, including a $4.0 million tax credit benefit, partially offset by a $1.4 million decrease in noninterest income, a $720,000 reduction in the recovery for credit losses, a $483,000 decrease in net interest income, and an $87,000 increase in noninterest expense.  Net income increased by $7.0 million, or 40.7%, compared to $17.3 million for third quarter of 2025.  The year-over-year increase reflected the acquisition of First IC Corporation ("First IC") in the fourth quarter of 2025 and was primarily attributable to a $15.7 million increase in interest income and a decrease in a $2.9 million increase in income tax, offset by a $4.0 million increase in interest expense, a $5.4 million increase in noninterest expenses, a $1.8 million decrease in noninterest income, and a $471,000 reduction in the recovery for credit losses.

Net income was $68.7 million for the nine months ended September 30, 2026, an increase of $18.4 million, or 36.4%, from $50.4 million for same period in 2025. The increase reflected the First IC acquisition in the fourth quarter of 2025, and was primarily attributable to a $37.6 million increase in net interest income and a $1.4 million increase in recovery of credit losses, partially offset by a $18.9 million increase in noninterest expense, an $871,000 decrease in noninterest income and an $885,000 increase in income tax expense.

Net Interest Income and Net Interest Margin

Interest income totaled $69.7 million for the third quarter of 2026, down $678,000, or 1.0%, from the previous quarter, primarily due to a $56.2 million decrease in average gross loans. Compared with the third quarter of 2025, interest income increased by $15.7 million, or 29.1%, primarily due to a $766.9 million increase in the average balance of gross loans, a $44.8 million increase in the average balance of investments, and a 33-basis-point increase in loan yield.

Interest expense totaled $26.2 million for the third quarter of 2026, a decrease of $195,000, or 0.7%, from the previous quarter, primarily due to a $27.9 million decrease in average interest-bearing deposits and a $34.8 million decrease in average borrowings. As compared to the third quarter of 2025, interest expense for the third quarter of 2026 increased by $4.0 million, or 17.8%, primarily due to a $562.8 million increase in average interest-bearing deposits balances and offset by a $49.6 million decrease in average borrowing balances and a three-basis point decrease in interest-bearing deposit costs. The Company currently has interest rate derivative agreements totaling $650.0 million that are designated as cash flow hedges of our deposit accounts indexed to the Effective Federal Funds Rate (3.88% as of September 30, 2026). The weighted average pay rate for these interest rate derivatives is 3.38%. During the third quarter of 2026, we recorded a credit to interest expense of $1.5 million from the benefit received on these interest rate derivatives compared to a credit of $1.4 million and $3.8 million recorded during the second quarter of 2026 and the third quarter of 2025, respectively.

The net interest margin for the third quarter of 2026 was 4.07%, compared to 4.11% for the previous quarter, a decrease of four basis points. The yield on average interest-earning assets decreased by five basis points to 6.52% from 6.57%, while the cost of average interest-bearing liabilities remained unchanged at 3.36%. Average interest-earning assets decreased by $54.1 million from the previous quarter, primarily due to a $56.2 million decrease in average loan balances. Average interest-bearing liabilities decreased by $62.8 million, reflecting a $27.9 million decrease in average interest-bearing deposits and a $34.8 million decrease in average borrowings.

As compared to the same period in 2025, the net interest margin for the third quarter of 2026 increased by 39 basis points to 4.07% from 3.68%, primarily due to a 28-basis-point increase in the yield on average interest-earning assets of $4.24 billion and a six-basis-point decrease in the cost of average interest-bearing liabilities of $3.09 billion. Average earning assets for the third quarter of 2026 increased by $811.7 million from the third quarter of 2025, due to a $44.8 million increase in average total investments and a $766.9 million increase in average loans. Average interest-bearing liabilities for the third quarter of 2026 increased by $513.1 million from the third quarter of 2025, driven by the increase in average interest-bearing deposits of $562.8 million, offset by a $49.6 million decrease in average borrowings.

Noninterest Income

Noninterest income for third quarter of 2026 was $4.4 million, a decrease of $1.4 million, or 23.8%, from the second quarter of 2026, primarily due to lower gain on sale of SBA loans and other income attributable to a decline in the fair value of the equity securities, reflecting changes in market interest rates during the quarter, offset by an increase in SBA servicing income, net and other service charges, commissions and fees.  SBA loan sales totaled $9.7 million (sales premium of 8.16%) during the third quarter of 2026 compared to $27.1 million (sales premium of 8.21%) during the second quarter of 2026. Mortgage loan originations totaled $85.1 million during the third quarter of 2026 compared to $75.4 million during the second quarter of 2026. There were no mortgage loan sales during the third quarter of 2026 or the second quarter of 2026.  During the third quarter of 2026, the fair value of our SBA servicing asset decreased by $218,000 compared to a decrease in fair value of $86,000 during the second quarter of 2026. We also recorded no fair value impairment change on our mortgage servicing asset during the third quarter of 2026 or the second quarter of 2026. The unrealized losses recognized on our equity securities of $743,000.  These equity securities consist of the Company's investment in a mutual fund holding high-quality fixed income securities, which supports affordable housing in the Company's markets and qualifies under the Community Reinvestment Act. Under GAAP, changes in the fair value of this investment are recognized in earnings, even though the underlying holdings are bonds. This investment remains an important part of the Bank's community development strategy, particularly following the completion of our recent merger.

Compared to the third quarter of 2025, noninterest income for the third quarter of 2026 decreased by $1.8 million or 29.0%, primarily due decreases in servicing income and gain on sale from our residential mortgage loans, servicing income from our SBA loans, other service charges and decline in fair value of equity securities included in other income, offset by increases in gains on sale on SBA loans and service charges on deposit accounts.

Noninterest income for the nine months ended September 30, 2026 totaled $16.5 million, a decrease of $871,000, or 5.0%, from the nine months ended September 30, 2025, primarily due to decreases in gain on sale and servicing income on residential mortgage loans, other service charges, and other income, offset by higher gains on sale and servicing income on SBA loans and service charges on deposit accounts.

Noninterest Expense

Noninterest expense for the third quarter of 2026 totaled $20.0 million, an increase of $87,000, or 0.4%, from $20.0 million for the second quarter of 2026. This increase was primarily attributable to increases in salaries and employee benefits, advertising, occupancy and equipment, and data processing, partially offset by a decrease in merger-related expenses and other expenses.

Compared to the third quarter of 2025, noninterest expense during the third quarter of 2026 increased by $5.4 million, or 36.6%, primarily due to higher salaries and employee benefits, occupancy and equipment expense, data processing expense, security expense, loan expense, core deposit amortization expense, and merger-related expenses from the First IC acquisition that occurred in the fourth quarter of 2025.

Noninterest expense for the nine months ended September 30, 2026 totaled $61.4 million, an increase of $18.9 million, or 44.3%, from $42.6 million for the nine months ended September 30, 2025. This increase was primarily attributable to increases in salaries and employee benefits partially due to higher commissions, employee insurance, and stock-based compensation, as well as higher expenses related to merger-related expenses, depreciation, occupancy, data processing, security, loans, and professional services.

The Company's efficiency ratio was 41.81% for the third quarter of 2026 compared to 40.08% and 38.65% for the second quarter of 2026 and the third quarter of 2025, respectively.

Income Tax Expense

The Company's effective tax rate for the third quarter of 2026 was 13.1%, compared to 27.7% for the second quarter of 2026 and 27.6% for the third quarter of 2025.  The decrease in effective income tax rate for the quarter was primarily driven by the utilization of tax credits during the current period.

Balance Sheet

Total assets were $4.60 billion at September 30, 2026, an increase of $77.9 million, or 1.7%, from $4.52 billion at June 30, 2026, and an increase of $968.4 million or 26.7%, from $3.63 billion at September 30, 2025. The $77.9 million increase in total assets at September 30, 2026 compared to June 30, 2026 was primarily due to increases of $50.3 million in cash and cash equivalents and $36.4 million increase in other assets, primarily related increase in income taxes receivable resulting from the utilization of tax credits during the quarter. The increase in liabilities and equity was $72.7 million in deposits and $15.9 million in increase in retained earnings. The $968.4 million increase in total assets at September 30, 2026 compared to September 30, 2025 was primarily due to the First IC acquisition that occurred in the fourth quarter of 2025, with increases in gross loans of $987.0 million, goodwill and core deposit intangible of $67.7 million, securities of $6.9 million, operating lease right-of-use asset of $5.6 million, servicing asset of $3.5 million, and premises and equipment of $8.3 million partially offset by a decrease in interest rate derivatives of $5.2 million.

Investment Securities

Our investment securities portfolio made up only 0.89% of our total assets at September 30, 2026, compared to 0.99% and 0.94% at June 30, 2026 and September 30, 2025, respectively.

Loans

Gross loans held for investment were $3.98 billion at September 30, 2026, a decrease of $3.8 million, or 0.1%, compared to $3.98 billion at June 30, 2026, and an increase of $1.00 billion, or 33.8%, compared to $2.97 billion at September 30, 2025. The decrease in loans at September 30, 2026 compared to June 30, 2026 was due to a $28.7 million decrease in residential real estate loans, a $3.3 million decrease in commercial and industrial loans, offset by a $16.0 million increase in commercial real estate, and a $12.3 million increase in construction and development loans.  Loans classified as held for sale totaled $0, $1.4 million, and $231.3 million at September 30, 2026, June 30, 2026, and September 30, 2025, respectively.

Deposits

Deposits were $3.56 billion at September 30, 2026, an increase of $72.7 million, or 2.1%, compared to total deposits of $3.49 billion at June 30, 2026, and an increase of $869.0 million, or 32.3%, compared to total deposits of $2.69 billion at September 30, 2025. The increase in total deposits at September 30, 2026 compared to June 30, 2026 was due to a $45.3 million increase in noninterest-bearing deposits, a $6.6 million increase in time deposits, an $18.6 million increase in money market accounts, and an increase of $2.8 million in interest-bearing demand deposits offset by a $566,000 decrease in savings accounts.

Noninterest-bearing deposits were $828.3 million at September 30, 2026, compared to $783.0 million at June 30, 2026 and $544.4 million at September 30, 2025. Noninterest-bearing deposits constituted 23.3% of total deposits at September 30, 2026, compared to 22.4% at June 30, 2026 and 20.2% at September 30, 2025. Interest-bearing deposits were $2.73 billion at September 30, 2026, compared to $2.71 billion at June 30, 2026 and $2.15 billion at September 30, 2025. Interest-bearing deposits constituted 76.7% of total deposits at September 30, 2026, compared to 77.6% at June 30, 2026 and 79.8% at September 30, 2025.

Uninsured deposits were 34.7% of total deposits at September 30, 2026, compared to 33.1% and 26.1% at June 30, 2026 and September 30, 2025, respectively. As of September 30, 2026, we had a $1.66 billion available borrowing capacity consisting of $964.7 million at the Federal Home Loan Bank, $629.5 million at the Federal Reserve Discount Window, and $67.5 million under fed funds lines with various other financial institutions.

Asset Quality

The Company recorded a recovery for credit losses of $72,000 during the third quarter of 2026, compared to recoveries of $792,000 during the second quarter of 2026 and $543,000 during the third quarter of 2025. The third-quarter recovery primarily reflected lower loan balances. Annualized net recoveries to average loans were 0.00% for the third quarter of 2026, compared to recoveries of 0.01% for the second quarter of 2026 and net charge-offs of 0.03% for the third quarter of 2025.

Nonperforming assets totaled $20.6 million, or 0.45% of total assets, at September 30, 2026 (which comprised of $16.1 million in nonperforming loans and $4.5 million in other real estate owned, including $3.4 million of branches taken out of service) a decrease of $3.2 million, from $23.8 million, of 0.53% of total assets, at June 30, 2026, and an increase of $6.7 million from $14.0 million, or 0.38% of total assets, at September 30, 2025.  The decrease in nonperforming assets at September 30, 2026 compared to June 30, 2026 was due to a $6.4 million decrease in nonperforming loans offset by an increase in other real estate owned of $3.2 million.

Allowance for credit losses as a percentage of total loans was 0.65% at September 30, 2026, compared to 0.65% at June 30, 2026 and 0.60% at September 30, 2025. Allowance for credit losses as a percentage of nonperforming loans was 159.78% at September 30, 2026, compared to 114.63% and 137.66% at June 30, 2026 and September 30, 2025, respectively.