![]() This implies that deposit inflows into MCB could be record breaking for the fourth quarter. Coinbase reported that their user base increased to 11.7 million in October, exceeding even that of Charles Schwab. Net income for 2018 will likely be $18-$20 million, though it could be considerably more as Bitcoin deposits fuel growth. This is 20% cheaper than the peer bank average of 208% of TBV. At $45, shares trade at 166% of estimated pro-forma tangible book value ( TBV ) of $27.05. Analysts estimate that earnings growth will continue strong for the next few years, though they are not even accounting for the Bitcoin initiative at the Bank.įor a bank growing the balance sheet and earnings at such a rapid pace, the current valuation is reasonable, if not cheap. Reports 165% Rise in Third Quarter 2017 Net Income. This is extraordinary performance by any measure. Net income for the bank rose 165% in the third quarter. Banks fund their lending with deposits, and the lower cost of funding leads to higher margins and profitability. This is due to Bitcoin and increasing volume with exchanges like Coinbase. Banks do not exhibit this kind of explosive growth in no-cost deposits in their natural course of business. ![]() Non-interest bearing deposits are up over 100% in only two quarters, to $840 million. MCB’s Visa- branded debit card, Shift, has a direct link to Coinbase Bitcoin Debit Card and is specifically targeted to Bitcoin customers. Deposits are flooding in from customers who are using them to transact in Bitcoin. One of the fastest growing banks in the U.S., MCB’s core deposit growth is directly fueled by Bitcoin-related deposits. ![]() Profitability of this bank is directly tied to this growth in Bitcoin. However, further due diligence led us to the conclusion that this is the only pure play way to trade Bitcoin: Specifically its transaction growth, without being subject to the volatility in the price of Bitcoin itself. Reading through the prospectus we found nothing unusual in the banks fundamentals. While searching for high levels of low cost deposit growth we came across unusual low cost deposit growth at Metropolitan Bank ( NYSE: MCB). Our Hedge Fund(s) have been investing in small cap banks for 20 years. ![]()
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