Metro Bancorp, Inc. (NASDAQ Global Select Market Symbol: METR), parent company of Metro Bank, today reported its financial results for the period ending September 30, 2010.

Total deposits increased by 11% over the past twelve months and total revenues for the third quarter increased 8% over the same quarter of 2009. During the third quarter of 2010, the Company recorded a net loss of $6.2 million, or $0.46 per share, compared to a net loss of $490,000, or $0.08 per share, for the third quarter 2009.
 

Third Quarter Financial Highlights
(in millions, except per share data)
                       

Quarter Ended

Nine Months Ended

09/30/10

09/30/09

% Change

09/30/10

09/30/09

% Change
Total assets $ 2,232.0 $ 2,086.5 7 %
 
Total deposits 1,928.7 1,737.0 11 %
 
Total loans (net) 1,374.7 1,456.6 (6 )%
                                                       
Total revenues $ 27.6 $ 25.5 8 % $ 80.2 $ 74.3 8 %
 
Net loss (6.2 ) (0.5 ) (5.8 ) (1.0 )
 
Diluted net loss per share     $ (0.46 )     $ (0.08 )             $ (0.43 )     $ (0.16 )        
 

Chairman’s Statement

Commenting on the Company’s financial results, Chairman Gary L. Nalbandian stated “our continued focus on community banking in this difficult economy produced an 11% increase in total deposits over the previous twelve months to $1.93 billion. Especially noteworthy was our continued growth in core demand deposits of $203.0 million, or 17%, over the same period. Our third quarter was negatively impacted by an increase in our loan loss reserve and by charge-offs of nonperforming loans necessary to strengthen our future operations” said Nalbandian. “We are encouraged by the stabilization in the asset quality of our loan portfolio and believe our efforts this quarter to reduce our nonperforming assets should allow us to return to a more normalized level of loan loss provisions and therefore improved profitability in future quarters.”

Mr. Nalbandian noted the following highlights from the third quarter ended September 30, 2010:

  • Total deposits increased $191.7 million, or 11%, to $1.93 billion from one year ago.
  • Core deposits increased $163.7 million, or 10%, over the same period.
  • Nonperforming assets decreased by $7.4 million, or 11%, to $63.2 million from $70.6 million at June 30, 2010.
  • Our allowance for loan losses increased from $16.2 million, or 1.12% of total loans at June 30, 2010 to $21.2 million, or 1.52% of total loans at September 30, 2010.
  • Our nonperforming loan coverage increased to 38% at September 30, 2010 from 26% the previous quarter.
  • Stockholders’ equity increased by $14.1 million, or 7%, over the past twelve months to $209.8 million. At September 30, 2010, the Company’s book value per share was $15.29.
  • Metro Bancorp continues to exhibit very strong capital ratios. The Company’s consolidated leverage ratio as of September 30, 2010 was 10.76% and its total risk-based capital ratio was 15.25%.
  • Net loans totaled $1.37 billion, down 6%, over the past twelve months.
  • The Company recorded net loss of $6.2 million, or $(0.46) per share, for the third quarter of 2010 compared to a net loss of $490,000, or $(0.08) per share, for the same period one year ago. Our third quarter results included a $13.4 million provision for loan losses which strengthens our reserves.
  • Total revenues for the third quarter of 2010 were $27.6 million, up $2.1 million, or 8%, over total revenues of $25.5 million for the same quarter one year ago.
  • The Company’s net interest margin on a fully taxable basis for the third quarter of 2010 was 3.98% vs. 4.01% for the second quarter of 2010 and compared to 3.92% for the third quarter of 2009. The Company’s deposit cost of funds for the third quarter was 0.70% as compared to 0.99% for the same period one year ago, while at the same time core deposits grew from $1.72 billion to $1.89 billion over the past twelve months.
  • Noninterest income totaled $7.6 million for the third quarter of 2010, up $787,000, or 11%, over the third quarter of 2009.
  • Noninterest expenses were up $1.4 million, or 6%, over the third quarter one year ago. However, noninterest expenses in the third quarter of 2009 included one time costs associated with the Company’s core computer system conversion and rebranding efforts which were partially offset by a fee from TD Bank to help defray such costs. Excluding the impact of those costs and the fee from TD Bank, total noninterest expenses for the third quarter of 2010 were up $449,000, or 2%, over the third quarter 2009. On a linked quarter basis, total noninterest expenses were down $362,000, or 1%, from the previous quarter.
  • For the 13 th time in the past 14 years, the Central Pennsylvania Business Journal has named Metro Bancorp as one of the 50 Fastest Growing Companies in Central Pennsylvania.
  • Metro Bank has four new sites in various stages of development in Central Pennsylvania: two in York County; one in Lancaster County and one in Cumberland County. The Bank currently has a network of 33 stores in the counties of Berks, Cumberland, Dauphin, Lancaster, Lebanon and York.

Income Statement
 
  Three months ended   Nine months ended
September 30, September 30,
(dollars in thousands, except per share data)   2010   2009   % Change   2010   2009   % Change
Total revenues $ 27,627   $ 25,532   8 % $ 80,249   $ 74,310   8 %
Total expenses 24,159 22,799 6 72,555 66,064 10
Net loss (6,160 ) (490 ) (5,794 ) (1,008 )
Net loss per share   $ (0.46 )   $ (0.08 )         $ (0.43 )   $ (0.16 )      
 

Total revenues (net interest income plus noninterest income) for the third quarter increased $2.1 million to $27.6 million, up 8% over the third quarter of 2009. Net interest income increased $1.3 million, or 7%, while service charges and other fee income (excluding gains, losses or impairment on investment securities) increased by $739,000, or 12%. Gains on the sales of loans totaled $778,000 for the third quarter as compared to $238,000 for the same period last year. The gains were primarily related to sales of Small Business Administration (“SBA”) loans to the secondary market. The Company also recorded net securities gains of $71,000 for the third quarter of 2010 compared to net securities gains of $563,000 for the third quarter one year ago.

Total revenues for the first nine months of 2010 were $80.2 million, up $5.9 million, or 8%, over the first nine months of 2009. On a linked quarter basis, the Company’s total revenues were up $384,000, or 1%, while at the same time, total noninterest expenses were down $362,000, or 1%, from the previous quarter.

The Company recorded a net loss of $6.2 million for the third quarter of 2010 vs. a net loss of $490,000 for the third quarter of 2009. Net loss per share for the quarter was $(0.46) as compared to net loss per share of $(0.08) recorded for the same period a year ago. The net loss for the third quarter of 2010 is a direct result of a $13.4 million provision for loan losses during the quarter. This elevated provision was made not only to support nonperforming loans, but also due to a change in the Company’s quantitative analysis of its loan loss allowance. See further discussion of the provision and the allowance for loan losses under the Asset Quality discussion of this release.

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2010 totaled $20.0 million, up $1.3 million, or 7%, over the $18.7 million recorded in the third quarter of 2009. Net interest income for the first nine months of 2010 totaled $59.4 million vs. $57.0 million for the same period in 2009.

The net interest margin for the third quarter of 2010 was 3.86%, down 3 basis points from the previous quarter but up 7 basis points over the third quarter of 2009. Average interest earning assets for the third quarter totaled $2.04 billion, the same as the previous quarter and up $103.6 million over the third quarter of 2009. The net interest margin on a fully-taxable basis for the third quarter of 2010 was 3.98% vs. 4.01% for the previous quarter and compared to 3.92% for the third quarter of 2009.

Average interest bearing deposits totaled $1.53 billion, up $120.3 million, or 9%, over the third quarter of 2009 while total noninterest bearing deposits averaged $331.9 million for the third quarter of 2010, up $20.4 million, or 7%, over the third quarter last year. At the same time, average borrowings (excluding subordinated debt) for the third quarter of 2010 were $59.3 million compared to $178.6 million for the same period one year ago. Total interest expense for the quarter was down $1.4 million, or 24%, from the third quarter of 2009 as a result of a 32 bps reduction in the Company’s total cost of funds from 1.15% to 0.83% over the past twelve months.

The Company’s net interest margin, on a fully-taxable basis, was 3.99% for the first nine months of 2010 compared to 3.94% for the same period in 2009.

Change in Net Interest Income and Rate/Volume Analysis

As shown below, the change in net interest income on a fully tax-equivalent basis for the third quarter and for the nine months year-to-date was due to a combination of volume as well as rate changes in the Company’s earning assets.
 
(dollars in thousands)     Net Interest Income
    Volume     Rate     Total     %
2010 vs. 2009     Change     Change     Increase     Change
3 rd Quarter $ 87 $ 1,236 $ 1,323 7 %
Nine Months     $ 655     $ 1,811     $ 2,466     4 %
 

Noninterest Income

Noninterest income for the third quarter of 2010 totaled $7.6 million, up $787,000, or 11%, over $6.9 million recorded in the third quarter one year ago.
 
  Three months ended   Nine months ended
September 30, September 30,
(dollars in thousands)   2010   2009   % Change   2010   2009   % Change
Service charges, fees and other income $ 6,791   $ 6,052   12 % $ 19,666   $ 17,740   11 %
Gains on sales of loans 778 238 227 1,105 294 276
Gains on sales of securities 117 1,515 (92 ) 1,036 1,570 (34 )
Impairment losses on investment securities     (46 )     (952 )   95       (962 )     (2,325 )   59  
Total noninterest income   $ 7,640     $ 6,853     11 %   $ 20,845     $ 17,279     21 %
 

Service charges, fees and other income increased by $739,000, or 12%, over the third quarter of 2009. Gains on the sale of loans totaled $778,000 for the third quarter of 2010 vs. $238,000 for the same period in 2009, primarily related to sales of SBA loans to the secondary market. Gains on the sales of investment securities during the third quarter of 2010 were $117,000 as compared to $1.5 million for the same period one year ago. Also, the Company recorded a charge of $46,000 in the quarter for other-than-temporary impairment (“OTTI”) on two private-label collateralized mortgage obligations (“CMO’s”) as compared to a charge of $952,000 for OTTI on three CMO’s in the third quarter last year.

Noninterest income for the first nine months of 2010 totaled $20.8 million, up $3.6 million, or 21%, over the first nine months of 2009. Service charges, fees and other income increased by $1.9 million, or 11%, for the first nine months of 2010 over the same period in 2009. Gains on the sales of loans totaled $1.1 million compared to $294,000 for the first nine months of 2009. The impact on noninterest income related to the investment securities portfolio for the first nine months of 2010 was a $74,000 net gain as compared to a net charge of $755,000 for the first nine months of 2009.

Noninterest Expenses

Noninterest expenses for the third quarter of 2010 were $24.2 million, up $1.4 million, or 6%, over $22.8 million recorded one year ago but down $362,000, or 1%, on a linked quarter basis. The breakdown of noninterest expenses for the third quarter and for the first nine months of 2010 and 2009, respectively, are shown in the following table:
         
  Three months ended   Nine months ended
September 30,   September 30,
(dollars in thousands)   2010   2009   % Change   2010   2009   % Change
Salaries and employee benefits $ 10,466   $ 10,643   (2 )% $ 31,097   $ 31,941   (3 )%
Occupancy and equipment 3,447 3,228 7 10,431 9,375 11
Advertising and marketing 698 830 (16 ) 2,140 1,875 14
Data processing 3,334 2,537 31 9,870 6,739 46
Regulatory assessments and related fees 1,191 830 43 3,405 3,256 5
Foreclosed real estate 420 94 347 1,369 289 374
Consulting fees 965 161 499 2,667 342 680
Core system conversion/branding (net) - (911 ) - (523 )
Merger/acquisition - 250 17 655 (97 )
Other expenses     3,638     5,137     (29 )     11,559     12,115     (5 )
Total non-interest expenses   $ 24,159   $ 22,799     6 %   $ 72,555   $ 66,064     10 %
 

The increases in data processing expenses are primarily the result of the transition of certain services away from TD Bank to new service providers during the second quarter of 2009. Advertising and marketing expenses for the third quarter of 2010 represent a normal level of marketing activity and were lower than the same period in 2009 due to a large marketing effort in the second half of last year to promote our name and brand change which occurred in June 2009. Regulatory assessments for the third quarter and first nine months of 2010 are higher primarily due to a higher level of FDIC deposit insurance premiums incurred by the Bank in 2010 as compared to 2009. Consulting fees for the third quarter and first nine months of 2010 are higher than the same periods of 2009, respectively, for services related to regulatory compliance efforts. Total “other noninterest expenses” were down $1.5 million, or 29%, from the third quarter last year. Included in this figure for 2009 were higher than normal telephone and call center support costs utilized to assist customers with post-system conversion and brand change questions.

Total noninterest expenses for the third quarter of 2009 and for the first nine months of last year included one time costs associated with the Company’s core computer system conversion and rebranding efforts. Total noninterest expenses for the three months and nine months ended September 30, 2009 were offset by the recognition of $2.75 million and $6.0 million, respectively, of fees paid to Metro Bank by TD Bank to partially defray the costs of the conversion and re-branding. Excluding the net impact of these expenses and the offsetting fee, total noninterest expenses for the third quarter this year were up only $449,000, or 2%, over the same period in 2009. Likewise, total noninterest expenses for the first nine months of 2010 are up $6.0 million, or 9%, over the same period last year after netting out the one time costs and the $6.0 million fee.

Balance Sheet
               
    As of September 30,    

 

(dollars in thousands)
   

2010
   

2009
   

% Change
Total assets $ 2,232,021     $ 2,086,495 7 %
 
Total loans (net) 1,374,743 1,456,636 (6 )%
 
Total deposits 1,928,684 1,736,961 11 %
 
Total core deposits 1,885,510 1,721,859 10 %
 
Total borrowings and debt 69,000 138,050 (50 )%
 
Total stockholders’ equity       209,796       195,722     7 %
 

Deposits

The Company continued its deposit growth with total deposits at September 30, 2010 reaching $1.93 billion, a $191.7 million, or 11%, increase over total deposits of $1.74 billion one year ago. Core deposits grew by $163.7 million, or 10%, over the previous twelve months.
                                 
(dollars in thousands)       09/30/10       09/30/09       $ Increase       % Increase
                       
Total Deposits $ 1,928,684 $ 1,736,961 $ 191,723 11 %
 
Core Deposits         1,885,510         1,721,859         163,651       10 %
 

Core Deposits

Change in core deposits by type of account is as follows:
                       
    As of September 30,        
(dollars in thousands)     2010     2009    

%

Change
   

3 rd Quarter

2010 Cost of

Funds
Demand non-interest-bearing $ 341,029     $ 307,192 11 % 0.00 %
Demand interest-bearing 1,025,558 856,360

20
0.65
Savings       303,720       304,542     0       0.46  
Subtotal 1,670,307 1,468,094

14
0.48
Time       215,203       253,765     (15 )     2.35  
Total core deposits     $ 1,885,510     $ 1,721,859     10 %     0.70 %
 

Total core demand and savings deposits increased by $202.2 million, or 14%, over the past twelve months to $1.67 billion. The total cost of these deposits during the third quarter of 2010 was 0.48% as compared to 0.64% for the third quarter one year ago. The third quarter of 2010 cost of total core deposits was 0.70%, down 29 basis points, or 29%, from the third quarter of 2009 and down 3 basis points on a linked quarter basis.

Change in core deposits by type of customer is as follows:

                               
    September 30,     % of     September 30,     % of     %
(dollars in thousands)     2010     Total     2009     Total     Increase
Consumer $ 870,629 46 % $ 817,995 48 % 6 %
Commercial 546,900 29 517,007 30 6
Government       467,981     25         386,857     22       21  
Total     $ 1,885,510     100 %     $ 1,721,859     100 %     10 %
 

Lending

Gross loans totaled $1.40 billion at September 30, 2010, down $75.3 million, or 5%, from one year ago. The composition of the Company’s loan portfolio is as follows:
                         
  September 30,   % of   September 30,   % of   $   %
(dollars in thousands)   2010   Total   2009   Total   Change   Change
Commercial $ 426,902 31 % $ 493,261 33 % $ (66,359 ) (13 )%
Owner occupied     234,823   17       275,353   19       (40,530 )   (15 )
Total commercial 661,725 48 768,614 52 (106,889 ) (14 )
Consumer/residential 287,654 21 309,146 21 (21,492 ) (7 )
Commercial real estate     446,533   31       393,494   27       53,039     13  
Gross loans   $ 1,395,912   100 %   $ 1,471,254   100 %   $ (75,342 )   (5 ) %
 

Asset Quality

The Company’s asset quality ratios are highlighted below:
   
Quarters Ended
September 30,     June 30,     September 30,
      2010     2010     2009
Non-performing assets/total assets 2.83 % 3.22 % 1.53 %
Net loan charge-offs (annualized)/avg total loans 2.35 % 0.45 % 2.29 %
Loan loss allowance/total loans 1.52 % 1.12 % 0.99 %
Non-performing loan coverage 38 % 26 % 58 %
Non-performing assets/capital and reserves     27 %     31 %     15 %
 

Non-performing assets at September 30, 2010 totaled $63.2 million, or 2.83%, of total assets, down $7.4 million, or 11%, from $70.6 million, or 3.22%, of total assets, at June 30, 2010 and as compared to $32.0 million, or 1.53%, of total assets one year ago. The Company recorded a provision for loan losses of $13.4 million for the third quarter of 2010 as compared to $2.6 million for the previous quarter and to $3.7 million recorded in the third quarter of 2009. During the quarter, management refined the quantitative analysis portion of its determination of the level of the allowance for loan losses to account for current appraisal values on collateral associated with performing and nonperforming loans as well as the continued state of the overall economy. This refinement resulted in an additional provision for the quarter of $3.4 million to the general reserve portion of the allowance for loan losses. The balance of the provision was to replenish the allowance for net charge-offs incurred during the third quarter as well as specific allocations for nonperforming loans. The allowance for loan losses totaled $21.2 million as of September 30, 2010 as compared to $16.2 million at June 30, 2010 and to $14.6 million at September 30, 2009. As of September 30, 2010, $1.8 million, representing 9% of the total allowance for loan losses, was specifically allocated to nonperforming loans and $19.4 million, representing 91% of the allowance for loan losses was in the general reserve. The allowance represented 1.52% of gross loans outstanding at September 30, 2010, up from 1.12% at June 30, 2010 and compared to 0.99% at September 30, 2009.

Total net charge-offs for the third quarter of 2010 were $8.4 million, vs. $1.6 million for the previous quarter and compared to $8.4 million for the third quarter of 2009. Approximately $7.9 million, or 94%, of total net loan charge-offs for the third quarter of 2010 were associated with a total of six different relationships.

Total net charge-offs for the first nine months of 2010 were $11.6 million, or 1.09% (annualized), of average loans outstanding compared to $12.7 million, or 1.17% (annualized), of average loans outstanding for the first nine months of 2009.

Investments

At September 30, 2010, the Company’s investment portfolio totaled $635.9 million. Detailed below is information regarding the composition and characteristics of the portfolio at September 30, 2010:
                   
    Available     Held to    
Product Description     for Sale     Maturity     Total
(dollars in thousands)
U.S. Government agencies/other $ 17,577 $ 134,995 $ 152,572
Mortgage-backed securities:
Federal government agencies pass through certificates 19,347 44,860 64,207
Agency collateralized mortgage obligations 317,390 33,866 351,256
Private-label collateralized mortgage obligations 54,753 3,142 57,895
Corporate debt securities       -         10,000         10,000  
Total     $ 409,067       $ 226,863       $ 635,930  
Duration (in years) 2.6 5.3 3.6
Average life (in years) 3.1 6.7 4.4
Quarterly average yield       3.58 %       4.11 %       3.73 %
 

At September 30, 2010, the after-tax unrealized gain on the Bank’s available for sale portfolio was $1.6 million as compared to an unrealized loss of $10.9 million at December 31, 2009 and an unrealized loss of $8.3 million at September 30, 2009. The Company recorded a $46,000 charge against 2010 third quarter earnings for other-than-temporary credit losses on two CMO’s held in the Bank’s portfolio. The Company continues to reduce its holdings of private-label CMO’s as the balance of such investments decreased by $15.7 million, or 21%, through sales and the receipt of pay downs during the third quarter. The average life of the total investment securities portfolio increased from 3.8 years at December 31, 2009 to 4.4 years at September 30, 2010, and the total duration increased from 3.3 years to 3.6 years during the same period.

Capital

Stockholders’ equity at September 30, 2010 totaled $209.8 million, an increase of $14.1 million, or 7%, over stockholders’ equity of $195.7 million at September 30, 2009. Return on average stockholders’ equity (ROE) for the third quarter of September 30, 2010 and 2009, respectively, was (11.54)% and (1.47)%.

The Company’s capital ratios at September 30, 2010 and 2009 were as follows:
                   
            Regulatory Guidelines
9/30/10     9/30/09     “Well Capitalized”
Leverage Ratio 10.76 % 11.10 % 5.00 %
Tier 1 14.00 13.07 6.00
Total Capital     15.25       13.89       10.00  
 

Both the Company and its subsidiary bank continue to maintain strong capital ratios and are well capitalized under various regulatory capital guidelines as required by federal banking agencies.

At September 30, 2010, the Company’s book value per common share was $15.29.

Forward-Looking Statements

This document contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the Securities Act and Section 21E of the Securities Exchange Act of 1934, which we refer to as the Exchange Act, with respect to the financial condition, liquidity, results of operations, future performance and business of Metro Bancorp, Inc. These forward-looking statements are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. These forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond our control). The words “may,” “could,” “should,” “would,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan” and similar expressions are intended to identify forward-looking statements.

While we believe our plans, objectives, goals, expectations, anticipations, estimates and intentions as reflected in these forward-looking statements are reasonable, we can give no assurance that any of them will be achieved. You should understand that various factors, in addition to those discussed elsewhere in this document, could affect our future results and could cause results to differ materially from those expressed in these forward-looking statements, including:
  • the effects of, and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System;
  • the Federal Deposit Insurance Corporation (FDIC) deposit fund is continually being used due to increased bank failures and existing financial institutions are being assessed higher premiums in order to replenish the fund;
  • the impact of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act and other changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance);
  • general economic or business conditions, either nationally, regionally or in the communities in which we do business, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and loan performance or a reduced demand for credit;
  • continued levels of loan quality and volume origination;
  • the adequacy of loan loss reserves;
  • the willingness of customers to substitute competitors’ products and services for our products and services and vice versa, based on price, quality, relationship or otherwise;
  • unanticipated regulatory or judicial proceedings and liabilities and other costs;
  • interest rate, market and monetary fluctuations;
  • the timely development of competitive new products and services by us and the acceptance of such products and services by customers;
  • changes in consumer spending and saving habits relative to the financial services we provide;
  • the loss of certain key officers;
  • continued relationships with major customers;
  • our ability to continue to grow our business internally and through acquisition and successful integration of new or acquired entities while controlling costs;
  • compliance with laws and regulatory requirements of federal, state and local agencies;
  • the ability to hedge certain risks economically;
  • effect of terrorist attacks and threats of actual war;
  • deposit flows;
  • changes in accounting principles, policies and guidelines;
  • rapidly changing technology;
  • other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services; and
  • our success at managing the risks involved in the foregoing.

Because such forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. The foregoing list of important factors is not exclusive and you are cautioned not to place undue reliance on these factors or any of our forward-looking statements, which speak only as of the date of this document. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of us except as required by applicable law.
 
Metro Bancorp, Inc.
Selected Consolidated Financial Data
               
At or for the At or for the
Three Months Ended Nine Months Ended
   
September 30, June 30, September 30, September 30, September 30,
(in thousands, except per share amounts) 2010 2010 Change 2009 Change 2010 2009 Change
 
Income Statement Data:
 
Net interest income $ 19,987 $ 19,984 0 % $ 18,679 7 % $ 59,404 $ 57,031 4 %
Provision for loan losses 13,400 2,600 415 3,725 260 18,400 10,625 73
Noninterest income 7,640 7,259 5 6,853 11 20,845 17,279 21
Total revenues 27,627 27,243 1 25,532 8 80,249 74,310 8
Noninterest operating expenses 24,159 24,521 (1 ) 22,799 6 72,555 66,064 10
Net income (loss) (6,160 ) 360 (490 ) (5,794 ) (1,008 ) (475 )
 
 
Per Common Share Data:
 
Net income (loss): Basic $ (0.46 ) 0.02 $ (0.08 ) $ (0.43 ) $ (0.16 ) (169 )%
Net income (loss): Diluted (0.46 ) 0.02 (0.08 ) (0.43 ) (0.16 ) (169 )
 
Book Value $ 15.29 $ 15.22 0
 
Weighted average shares outstanding:
Basic 13,581 13,509 6,591 13,520 6,520
Diluted 13,581 13,514 6,591 13,520 6,520
 
 
Balance Sheet Data:
 
Total assets $ 2,232,021 $ 2,195,666 2 % $ 2,232,021 $ 2,086,495 7 %
Loans (net) 1,374,743 1,424,919 (4 ) 1,374,743 1,456,636 (6 )
Allowance for loan losses 21,169 16,178 31 21,169 14,618 45
Investment securities 635,930 548,670 16 635,930 393,820 61
Total deposits 1,928,684 1,833,626 5 1,928,684 1,736,961 11
Core deposits 1,885,510 1,786,413 6 1,885,510 1,721,859 10
Stockholders' equity 209,796 208,837 0 209,796 195,722 7
 
 
Capital:
 
Stockholders' equity to total assets 9.51

%

 
9.40 % 9.38 %
Leverage ratio 10.99 10.76 11.10
Risk based capital ratios:
Tier 1 13.75 14.00 13.07
Total Capital 14.67 15.25 13.89
 
 
Performance Ratios:
 
Cost of funds 0.83 % 0.87

%

 
1.15 % 0.88 % 1.19 %
Deposit cost of funds 0.70 0.73 0.99 0.75 1.04
Net interest margin 3.86 3.89 3.79 3.87 3.82
Return on average assets (1.11 ) 0.07 (0.09 ) (0.36 ) (0.06 )
Return on average total stockholders' equity (11.54 ) 0.70 (1.47 ) (3.75 ) (1.10 )
 
 
Asset Quality:
 
Net charge-offs (annualized) to average loans outstanding 0.45

%

 
1.09 % 1.17 %
Nonperforming assets to total period-end assets 3.22 2.83 1.53
Allowance for loan losses to total period-end loans 1.12 1.52 0.99
Allowance for loan losses to nonperforming loans 26 38 58
Nonperforming assets to capital and reserves 31 27 15
 
 
Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (unaudited)
 
           
 
September 30, December 31,
     

(dollars in thousands, except share and per share amounts)
    2010     2009
Assets Cash and cash equivalents $ 43,299 $ 40,264
Federal funds sold       -       -  
Cash and cash equivalents 43,299 40,264
Securities, available for sale at fair value 409,067 388,836

Securities, held to maturity at cost (fair value 2010: $230,607; 2009: $119,926)
226,863 117,815
Loans, held for sale 18,867 12,712

Loans receivable, net of allowance for loan losses (allowance 2010: $21,169 & 2009: $14,391)
1,374,743 1,429,392
Restricted investments in bank stock 21,695 21,630
Premises and equipment, net 90,451 93,780
Other assets       47,036       43,330  
      Total assets     $ 2,232,021     $ 2,147,759  
 
Liabilities Deposits:
Noninterest-bearing $ 341,029 $ 319,850
Interest-bearing       1,587,655       1,494,883  
Total deposits 1,928,684 1,814,733
Short-term borrowings and repurchase agreements 14,600 51,075
Long-term debt 54,400 54,400
Other liabilities       24,541       27,529  
Total liabilities 2,022,225 1,947,737
 
Stockholders' Preferred stock - Series A noncumulative; $10.00 par value
Equity

1,000,000 shares authorized; 40,000 shares issued and outstanding
400 400

Common stock - $1.00 par value; 25,000,000 shares authorized; issued and outstanding shares - 2010: 13,650,356 & 2009: 13,448,447
13,650 13,448
Surplus 150,296 147,340
Retained earnings 43,851 49,705
Accumulated other comprehensive income (loss )       1,599       (10,871 )
Total stockholders' equity       209,796       200,022  
      Total liabilities and stockholders' equity     $ 2,232,021     $ 2,147,759  
 
 
Metro Bancorp, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
 
         
Three Months Nine Months
Ending September 30,   Ending September 30,
    (dollars in thousands, except per share amounts)   2010   2009   2010   2009
 
Interest Loans receivable, including fees :
Income Taxable $ 17,712 $ 18,548 $ 52,838 $ 56,334
Tax - exempt 1,206 1,108 3,506 3,147
Securities :
Taxable 5,320 4,638 16,370 15,031
Tax - exempt - 16 14 49
Federal funds sold     10       -       11       -  
    Total interest income     24,248       24,310       72,739       74,561  
 
Interest Deposits 3,271 4,314 10,296 13,038
Expense Short-term borrowings 55 226 242 976
Long-term debt     935       1,091       2,797       3,516  
Total interest expense     4,261       5,631       13,335       17,530  
Net interest income 19,987 18,679 59,404 57,031
Provision for loan losses     13,400       3,725       18,400       10,625  
    Net interest income after provision for loan losses     6,587       14,954       41,004       46,406  
 
Noninterest Service charges, fees and other operating income 6,791 6,052 19,666 17,740
Income Gains on sales of loans     778       238       1,105       294  
Total fees and other income     7,569       6,290       20,771       18,034  
Other-than-temporary impairment losses (1,908 )

(6,819
) (1,463 )

(4,912
)
Portion of loss recognized in other comprehensive income (before taxes)     1,862      

5,867
      501      

2,587
 
Net impairment loss on investment securities     (46 )     (952 )     (962 )     (2,325 )
Gains on sales/call of securities     117       1,515       1,036       1,570  
    Total noninterest income     7,640       6,853       20,845       17,279  
 
Noninterest Salaries and employee benefits 10,466 10,643 31,097 31,941
Expenses Occupancy and equipment 3,447 3,228 10,431 9,375
Advertising and marketing 698 830 2,140 1,875
Data processing 3,334 2,537 9,870 6,739
Regulatory assessments and related fees 1,191 830 3,405 3,256
Foreclosed real estate 420 94 1,369 289
Consulting fees 965 161 2,667 342
Core system conversion/branding (net) - (911 ) - (523 )
Mergers/acquisition - 250 17 655
Other     3,638       5,137       11,559       12,115  
Total noninterest expenses     24,159       22,799       72,555       66,064  
Income (loss) before taxes (9,932 ) (992 ) (10,706 ) (2,379 )
Benefit for federal income taxes     (3,772 )     (502 )     (4,912 )     (1,371 )
    Net income (loss)   $ (6,160 )   $ (490 )   $ (5,794 )   $ (1,008 )
Net income (loss) per common share :
Basic $ (0.46 ) $ (0.08 ) $ (0.43 ) $ (0.16 )
    Diluted     (0.46 )     (0.08 )     (0.43 )     (0.16 )
Average Common and Common Equivalent Shares Outstanding:
Basic 13,581 6,591 13,520 6,520
    Diluted     13,581       6,591       13,520       6,520  
 
 
Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
                             
    Quarter ending,   Year-to-date,
 
    September 2010   June 2010   September 2009   September 2010   September 2009
Average Average Average Average Average Average Average Average Average Average
Balance   Interest   Rate Balance   Interest   Rate Balance   Interest   Rate Balance   Interest   Rate Balance   Interest   Rate
(dollars in thousands)
Earning Assets
Investment securities:
Taxable $ 571,177 $ 5,320 3.73 % $ 594,251 $ 5,651 3.80 % $ 460,538 $ 4,638 4.03 % $ 578,793 $ 16,370 3.77 $ 487,017 $ 15,031 4.12 %
Tax-exempt     -     -   -       -     -   -       1,624     25   6.19       446     20   6.07       1,623     74   6.19  
Total securities 571,177 5,320 3.73 594,251 5,651 3.80 462,162 4,663 4.04 579,239 16,390 3.77 488,640 15,105 4.12
Federal funds sold 32,518 10 0.13 557 - 0.12 - - - 12,804 11 0.12 - - -
Loans receivable:
Mortgage and construction 742,825 10,362 5.47 724,186 10,111 5.53 744,218 10,673 5.63 730,576 30,737 5.56 748,641 32,197 5.68
Commercial loans and lines of credit 363,524 4,582 4.94 393,584 4,689 4.72 393,545 4,837 4.82 376,929 13,735 4.81 382,866 14,381 4.96
Consumer 212,168 2,768 5.17 212,117 2,789 5.27 229,160 3,038 5.25 213,125 8,366 5.24 253,068 9,756 5.15
Tax-exempt     119,778     1,827   6.02       115,544     1,778   6.12       109,348     1,705   6.14       116,807     5,312   6.03       102,719     4,841   6.26  
Total loans receivable     1,438,295     19,539   5.34       1,445,431     19,367   5.32       1,476,271     20,253   5.39       1,437,437     58,150   5.35       1,487,294     61,175   5.47  
Total earning assets   $ 2,041,990   $ 24,869   4.80 %   $ 2,040,239   $ 25,018   4.88 %   $ 1,938,433   $ 24,916   5.07 %   $ 2,029,480   $ 74,551   4.87 %   $ 1,975,934   $ 76,280   5.13 %
 
Sources of Funds
Interest-bearing deposits:
Regular savings $ 316,626 $ 367 0.46 % $ 340,056 $ 404 0.48 % $ 329,348 $ 464 0.56 % $ 326,618 $ 1,158 0.47 $ 336,821 $ 1,495 0.59 %
Interest checking and money market 960,166 1,570 0.65 913,655 1,619 0.71 811,911 1,877 0.92 932,112 4,985 0.71 764,587 5,339 0.93
Time deposits 212,490 1,259 2.35 213,819 1,282 2.41 256,835 1,923 2.97 218,151 3,971 2.43 255,461 6,006 3.14
Public funds time     44,743     75   0.67       30,142     53   0.71       15,606     50   1.28       34,715     182   0.70       13,259     198   1.99  
Total interest-bearing deposits 1,534,025 3,271 0.85 1,497,672 3,358 0.90 1,413,700 4,314 1.21 1,511,596 10,296 0.91 1,370,128 13,038 1.27
Short-term borrowings 34,262 55 0.63 76,388 121 0.63 140,009 226 0.63 53,900 242 0.59 217,583 976 0.59
Other borrowed money 25,000 274 4.29 25,000 271 4.29 38,587 430 4.36 25,000 813 4.29 46,154 1,532 4.38
Junior subordinated debt     29,400     661   9.00       29,400     662   9.00       29,400     661   9.00       29,400     1,984   9.00       29,400     1,984   9.00  
Total interest-bearing liabilities 1,622,687 4,261 1.04 1,628,460 4,412 1.09 1,621,696 5,631 1.38 1,619,896 13,335 1.10 1,663,265 17,530 1.41
Demand deposits (noninterest-bearing)     331,925                 337,524                 311,506                 331,627                 303,227            
Sources to fund earning assets 1,954,612 4,261 0.86 1,965,984 4,412 0.90 1,933,202 5,631 1.15 1,951,523 13,335 0.91 1,966,492 17,530 1.19
Noninterest-bearing funds (net)     87,378                 74,255                 5,231                 77,957                 9,442            
Total sources to fund earning assets   $ 2,041,990   $ 4,261   0.83 %   $ 2,040,239   $ 4,412   0.87 %   $ 1,938,433   $ 5,631   1.15 %   $ 2,029,480   $ 13,335   0.88 %   $ 1,975,934   $ 17,530   1.19 %

Net interest income and margin on a tax-equivalent basis
$ 20,608 3.98 % $ 20,606 4.01 % $ 19,285 3.92 % $ 61,216 3.99 % $ 58,750 3.94 %
Tax-exempt adjustment   621   622   606   1,812   1,719
Net interest income and margin         $ 19,987   3.86 %         $ 19,984   3.89 %         $ 18,679   3.79 %         $ 59,404   3.87 %         $ 57,031   3.82 %
 
 
 
Other Balances:
Cash and due from banks $ 44,695 $ 44,736 $ 47,805 $ 44,088 $ 42,641
Other assets 106,814 96,224 84,074 100,596 79,879
Total assets 2,193,499 2,181,199 2,070,312 2,174,164 2,098,454
Other liabilities 27,062 9,932 4,487 16,238 9,689
Stockholders' equity     211,825                 205,283                 132,623                 206,403                 122,273            
 
 
Metro Bancorp, Inc. and Subsidiaries
Summary of Allowance for Loan Losses and Other Related Data
(unaudited)
 
 
 
  Three Months Ended  

Year-ended

12/31/2009
  Nine Months Ended
(dollar amounts in thousands)   9/30/2010   9/30/2009     9/30/2010   9/30/2009
   
Balance at beginning of period $ 16,178 $ 19,337 $ 16,719 $ 14,391 $ 16,719
Provisions charged to operating expense     13,400       3,725       12,425       18,400       10,625  
29,578 23,062 29,144 32,791 27,344
 
Recoveries on loans charged-off:
Commercial 143 19 92 391 139
Consumer 5 0 6 7 5
Real estate     14       35       210       40       41  
Total recoveries 162 54 308 438 185
 
Loans charged-off:
Commercial (3,786 ) (3,878 ) (7,405 ) (5,540 ) (6,224 )
Consumer (36 ) (2 ) (21 ) (117 ) (21 )
Real estate     (4,749 )     (4,618 )     (7,635 )     (6,403 )     (6,666 )
 
Total charged-off     (8,571 )     (8,498 )     (15,061 )     (12,060 )     (12,911 )
 
Net charge-offs     (8,409 )     (8,444 )     (14,753 )     (11,622 )     (12,726 )
 
Balance at end of period   $ 21,169     $ 14,618     $ 14,391     $ 21,169     $ 14,618  
 

Net charge-offs (annualized) as a percentage of average loans outstanding
2.35 % 2.29 % 1.02 % 1.09 % 1.17 %
 

Allowance for loan losses as a percentage of period-end loans
1.52 % 0.99 % 1.00 % 1.52 % 0.99 %
 
 
Metro Bancorp, Inc. and Subsidiaries
Summary of Nonperforming Loans and Assets
(unaudited)
         
The following table presents information regarding nonperforming loans and assets as of September 30, 2010 and for the preceding four quarters
(dollar amounts in thousands).
 
September 30, June 30, March 31, December 31, September 30,
2010   2010   2010   2009   2009
Nonaccrual loans:
Commercial $ 21,536 $ 25,327 $ 13,142 $ 14,254 $ 8,683
Consumer 1,871 1,437 1,064 654 984
Real Estate:
Construction 15,120 17,879 17,424 11,771 7,605
Mortgage   17,021       17,723       14,419       11,066       7,819  
Total nonaccrual loans 55,548 62,366 46,049 37,745 25,091

Loans past due 90 days or more and still accruing
628 687 249 0 5
Renegotiated loans   178       171       0       0       0  
Total nonperforming loans 56,354 63,224 46,298 37,745 25,096
 
Foreclosed real estate   6,815       7,367       7,154       7,821       6,875  
 
Total nonperforming assets $ 63,169     $ 70,591     $ 53,452     $ 45,566     $ 31,971  
 
 
Nonperforming loans to total loans 4.04 % 4.39 % 3.28 % 2.61 % 1.71 %
 
Nonperforming assets to total assets 2.83 % 3.22 % 2.46 % 2.12 % 1.53 %
 
Nonperforming loan coverage 38 % 26 % 33 % 38 % 58 %
 

Allowance for loan losses as a percentage of total period-end loans
1.52 % 1.12 % 1.08 % 1.00 % 0.99 %
 
Nonperforming assets / capital plus allowance for loan losses 27 % 31 % 24 % 21 % 15 %
 

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