It wasn’t a good day for Metropolitan Bank Holding (NYSE:MCB) for a while there. A short report on Thursday sent investors fleeing and took the stock down by 28%. But just a day later, investors came back in droves, sending the stock up over 25% to nearly wipe out Thursday’s losses. What caused the turnaround? A couple key points brought investors back to the table.
Metropolitan Bank led the way back up with a rebuttal to the short report, noting that it was well-capitalized and prepared for a bank run. Metropolitan Bank said that it had funding capacity on hand that represented 170% of its uninsured deposit balances. Not that that would be so difficult; Metropolitan Bank also pointed out that 66% of its deposits were insured by the FDIC. That’s up from 60% in the previous quarter.
Further, Metropolitan Bank went out of its way to note that the quality of its investments wasn’t a problem either. A substantial portion of its investments are commercial real estate (CRE). While many investors might be running to fly a red flag or two at that—especially given the less-than-successful nature of the back-to-the-office phenomenon—this time, it’s not so bad. Metropolitan Banks CRE holdings are only about 10% offices, so the impact there should be limited.
That’s a point that hedge funds are willing to agree with, at least provisionally. Hedge fund sentiment is on the high side of Neutral, as they bought 10,300 shares of Metropolitan Bank last quarter. What’s particularly noteworthy is that this is the first time in five quarters that hedge funds increased their holdings in the bank.
