Crypto Firm Deposits Jump 24% in Q1 at Metropolitan Commercial Bank

Deposits from digital currency customers at New York-based Metropolitan Commercial Bank – one of the few U.S. banks openly serving the crypto industry – increased for the first time in more than a year.

While the $3.6 billion-asset bank more than doubled its loan loss provisions to $4.8 million in the first quarter, the bank’s overall deposit base grew by $231 million quarter over quarter, including a $25 million increase from the crypto sector, according to its earnings release. The level of digital currency deposits is 24 percent higher than last quarter but 40 percent lower than the same quarter last year.

The share of those deposits that were crypto customers also grew from 3.7 percent of total deposits in the fourth quarter of 2019 to 4.2 percent of total deposits, or $129 million, in this last quarter.

While the steady decline in the bank’s crypto business has stopped, Metropolitan Commercial will likely keep the business line steady at around 4 percent of total deposits, said Christopher O’Connell, a bank stock analyst at investment firm Keefe, Bruyette & Woods.

“It’s still something that they’re maintaining, but it’s not a primary driver of growth,” O’Connell told CoinDesk. Metropolitan Commercial declined to comment for this story and did not talk about its digital currency business on its first-quarter earnings call Monday.

The bank saw the greatest decrease in its corporate cash management deposits, which fell by $155 million. The bank more than doubled its loan loss provisions to $4.8 million in the first quarter as a response to the COVID-19 pandemic.

The size of its digital currency deposits is still lower than historical averages. In Q1 2019, the bank had $210 million from the crypto sector. Metropolitan’s digital currency banking peak came in the second quarter of 2018, at $369 million in deposits from the sector.

On the lending side, the bank continues to look like a traditional bank, with more than half of its loans going to…

Source Link