Metro Bancorp Reports Net Income Of $2.0 Million; Asset Quality Continues To Improve

Metro Bancorp, Inc. (NASDAQ Global Select Market Symbol: METR), parent company of Metro Bank, today reported net income of $2.0 million, or $0.14, per share for the quarter ended June 30, 2011. The Company also reported that asset quality improved for the fourth consecutive quarter.
 

Second Quarter Financial Highlights
(in millions, except per share data)
 
  Quarter Ended   Six Months Ended
    %       %
    6/30/2011   6/30/2010   Change   6/30/2011   6/30/2010   Change
Total assets $ 2,387.0 $ 2,195.7 9 %
 
Total deposits 1,891.4 1,833.6 3 %
 
Total loans (net) 1,435.0 1,424.9 1 %
                         
 
Total revenues $ 29.0 $ 27.2 6 % $ 56.9 $ 52.6 8 %
 
Net income 2.0 0.4 453 % 3.5 0.4 863 %
 

Diluted net income per share
$ 0.14 $ 0.02 600 % $ 0.25 $ 0.02 1,150 %
                                         
 

Chairman's Statement

Commenting on the Company's financial results, Chairman Gary L. Nalbandian stated “we are pleased with our continued improvement in net income over the results we recorded in the second quarter of 2010, as well as on a linked quarter basis. We are also pleased with the ongoing improvement in the asset quality of our loan portfolio as evidenced by a decrease in the level of nonperforming assets for the fourth consecutive quarter.”

Mr. Nalbandian noted the following highlights from the second quarter ended June 30, 2011:

  • The Company recorded net income of $2.0 million, or $0.14 per share, compared to net income of $360,000, or $0.02 per share, for the same period one year ago. Net income for the first six months of 2011 totaled $3.5 million, or $0.25 per share, up $3.2 million, or $0.23 per share, over the amount recorded for the first half of 2010.
  • Total revenues were $29.0 million, up $1.7 million, or 6%, over total revenues for the same quarter one year ago. Total revenues for the first half of 2011 increased 8% over the first half of 2010.
  • The Company's net interest margin on a fully-taxable basis for the second quarter of 2011 was 3.87%, compared to 3.86% recorded in the first quarter of 2011 and compared to 4.04% for the second quarter of 2010. The Company's deposit cost of funds for the second quarter was 0.63%, down from 0.66% for the previous quarter and compared to 0.73% for the same period one year ago.
  • Noninterest income totaled $8.2 million for the quarter, up $897,000, or 12%, over the second quarter of 2010, and up $200,000, or 3%, on a linked quarter basis.
  • Noninterest expenses were comparable to the second quarter one year ago, up only $100,000. On a linked quarter basis, total noninterest expenses were up $314,000, or 1%, from the previous quarter. Noninterest expenses for the first half of 2011 were up only 1% over the first six months of 2010, as the Company was able to reduce expenses in several categories from the previous year's levels.
  • Total assets reached $2.4 billion.
  • Total deposits increased to $1.89 billion, up $59.2 million for the first six months of 2011. Core deposits (all deposits excluding public fund time deposits) total $1.84 billion. Core noninterest bearing demand deposits grew 13% over the previous twelve months.
  • Net loans totaled $1.43 billion, up $77.4 million, or 6% (non-annualized) for the first half of 2011.
  • Asset quality improved for the fourth consecutive quarter with nonperforming assets down $17.1 million, or 24%, from one year ago.
  • Our allowance for loan losses totaled $21.7 million, or 1.49%, of total loans at June 30, 2011; up 34% over the total allowance amount of $16.2 million, or 1.12%, of total loans at June 30, 2010. Likewise, during the past twelve months the nonperforming loan coverage ratio has increased from 26% to 48%.
  • Stockholders' equity increased by $8.2 million, or 4%, over the past twelve months to $217.1 million. At June 30, 2011, the Company's book value per share was $15.51.
  • Metro Bancorp continues to exhibit very strong capital ratios. The Company's consolidated leverage ratio as of June 30, 2011 was 10.47% and its total risk-based capital ratio was 15.44%.
  • 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     Six months ended
June 30, June 30,
(dollars in thousands, except per share data)   2011   2010  

%Change
    2011   2010  

%Change
       
Total revenues $ 28,973 $ 27,243 6 % $ 56,946 $ 52,622 8 %
Total non interest expenses 24,621 24,521 48,928 48,396 1
Net income 1,992 360 453 % 3,524 366 863 %
Diluted net income/share   $ 0.14     $ 0.02     600 %     $ 0.25     $ 0.02     1,150 %
 

The Company recorded net income of $2.0 million for the second quarter of 2011 compared to net income of $360,000 for the second quarter of 2010. Earnings per common share for the quarter were $0.14 as compared to $0.02 recorded for the same period a year ago. On a linked quarter basis, net income increased by $460,000, or 30%.

Net income for the first six months of 2011 totaled $3.5 million compared to $366,000 for the first half of 2010. Earnings per common share for the first half of 2011 were $0.25 compared to $0.02 for the same period last year.

Total revenues (net interest income plus noninterest income) for the second quarter increased $1.7 million to $29.0 million, up 6% over the second quarter of 2010 and noninterest expenses were flat compared to the same period in 2010. On a linked quarter basis, total revenues grew $1.0 million, or 4%, while total noninterest expenses were up $314,000, or 1%.

Total revenues for the first six months of 2011 were $56.9 million, up $4.3 million, or 8%, over the first half of 2010. Total noninterest expenses for the first half of 2011 were $48.9 million, up $532,000, or 1%, over the same period last year.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2011 totaled $20.8 million, up $833,000, or 4%, over the $20.0 million recorded in the second quarter of 2010. The increase is primarily the result of growth in the level of interest-earning assets, offset by a slight reduction in the Company's net interest margin. For the first six months of 2011, net interest income totaled $40.8 million versus $39.4 million for the same period in 2010.

The net interest margin for the second quarter of 2011 was 3.77%, the same as the previous quarter, and compared to 3.91% for the second quarter of 2010. Average interest earning assets for the second quarter totaled $2.19 billion versus $2.13 billion for the previous quarter and were up $164.6 million, or 8%, over the second quarter of 2010. The net interest margin on a fully-taxable basis for the second quarter of 2011 was 3.87%, up 1 basis point over the previous quarter and compared to 4.04% for the second quarter of 2010. The decrease is attributable to lower yields earned on the Company's investment portfolio in 2011 as compared to 2010, offset partially by a reduction in the Company's cost of funds.

The Company's total deposit cost of funds for the second quarter of 2011 was 0.63%, down from 0.66% the previous quarter, and down 10 bps from the 0.73% figure recorded in the second quarter one year ago.

The net interest margin on a fully-taxable equivalent basis was 3.86% for the first six months of 2011 compared to 4.03% for the first half of 2010.

Change in Net Interest Income and Rate/Volume Analysis

As shown in the following table, the change in net interest income on a fully tax-equivalent basis for the second quarter of 2011 over the same period of 2010 was due to an increase in the level of interest-earning assets, partially offset by rate changes on the Company's earning assets. The rate changes are a direct impact of lower yields earned on the investment portfolio in 2011 as a result of the continued low level of market interest rates on new investment purchases.
     
(dollars in thousands)   Net Interest Income
2011 vs. 2010   Volume

Change
  Rate

Change
  Total

Increase
 

%Increase
2nd Quarter   $ 1,559   $ (837 )   $ 722   4 %
Six Months   $ 2,714     $ (1,523 )   $ 1,191     3 %
 

Noninterest Income

Noninterest income for the second quarter of 2011 totaled $8.2 million, up $897,000, or 12%, over $7.3 million recorded in the second quarter one year ago.
         
  Three months endedJune 30,   Six months endedJune 30,
(dollars in thousands)   2011   2010   % Change   2011   2010   % Change
Service charges, fees and other income $ 7,025   $ 6,831   3 % $ 13,749   $ 12,875   7 %
Gains on sales of loans 1,137 133 755 2,335 327 614
Gains on sales/calls of securities 309 298 4 343 919 (63 )
Impairment losses on investment securities   (315 )   (3 )       (315 )   (916 )   (66 )
Total noninterest income   $ 8,156     $ 7,259     12 %   $ 16,112     $ 13,205     22 %
 

Service charges, fees and other income increased by $194,000, or 3%, over the second quarter of 2010. Gains on the sale of loans totaled $1.1 million for the second quarter of 2011 versus $133,000 for the same period in 2010. Gains on the sales of loans for both the second quarter and first half of 2011 included sales of both Small Business Administration and Residential loans whereas gains for the same two periods of 2010 were strictly associated with the sales of Residential loans. Net gains on the sales of investment securities during the second quarter of 2011 were $309,000 compared to $298,000 for the same period in 2010. The Company recorded a charge for $315,000 related to other-than-temporary impairment due to credit on its private-label collateralized mortgage-obligation securities (CMO's) in the second quarter of 2011.

Noninterest income for the first six months of 2011 totaled $16.1 million, up $2.9 million, or 22% , over the first half of 2010. Service charges, fees and other income increased by $874,000, or 7%, for the first six months of 2011 over the same period in 2010. Gains on the sales of loans totaled $2.3 million for the first half of 2011 compared to $327,000 for the same period in 2010.

Noninterest Expenses

Noninterest expenses for the second quarter of 2011 were $24.6 million, up $314,000, or 1%, on a linked quarter basis and basically flat compared to the total of $24.5 million recorded in the second quarter one year ago. The breakdown of noninterest expenses for the second quarter and for the first six months of 2011 and 2010, respectively, are shown in the following table:
         
  Three months endedJune 30,   Six months endedJune 30,
(dollars in thousands)   2011   2010   % Change   2011   2010   % Change
         
Salaries and employee benefits $ 10,254 $ 10,377 (1 )% $ 20,633 $ 20,631 %
Occupancy and equipment 3,755 3,555 6 7,552 6,984 8
Advertising and marketing 350 610 (43 ) 749 1,442 (48 )
Data processing 3,832 3,396 13 7,227 6,536 11
Regulatory assessments and related fees 856 1,045 (18 ) 1,941 2,214 (12 )
Foreclosed real estate 18 381 (95 ) 1,070 949 13
Branding 1,720 1,747
Consulting fees 416 960 (57 ) 823 1,702 (52 )
Other expenses   3,420     4,197     (19 )   7,186     7,938     (9 )
Total noninterest expenses   $ 24,621     $ 24,521     %   $ 48,928     $ 48,396     1 %
 

The Company experienced a lower level of noninterest expenses in most major categories during the second quarter to 2011 compared to the same period in 2010. Costs associated with foreclosed real estate as well as problem loans, which are included in the "other expenses" line, were down significantly compared to the second quarter of 2010. Consulting fees as well as legal expenses were also down measurably for the quarter compared to the same period last year. Lower FDIC insurance assessment fees, effective April 1, 2011 for most FDIC-insured banks provided the Company's decrease in regulatory expenses.

The Company expensed $1.7 million during the second quarter of 2011 associated with modifications to its logos and with overall brand enhancement. The logo modifications were related to the settlement reached during the first quarter of 2011 with another financial institution which dismissed a trademark infringement action brought against Metro Bank in June 2009. The large majority of logo modification-related expenses have been recorded in the second quarter and any remaining future costs related to this issue incurred during the second half of 2011 are not expected to be material. Lower levels of general advertising and marketing expenses during the second quarter as well as the first six months of 2011 offset a portion of the one-time modification costs.

Balance Sheet
         
  As of June 30,  
(dollars in thousands)   2011   2010   %

Change
Total assets $ 2,387,006   $ 2,195,666 9 %
 
Total loans (net) 1,434,965 1,424,919 1 %
 
Total deposits 1,891,376 1,833,626 3 %
 
Total core deposits 1,842,366 1,786,413 3 %
 
Total stockholders' equity   217,062     208,837     4 %
 

Deposits

The Company continued its deposit growth with total deposits at June 30, 2011 reaching $1.89 billion, a $57.8 million, or 3%, increase over total deposits of $1.83 billion one year ago. Excluding time deposits, core checking and savings deposits increased by $58.9 million to $1.63 billion, a 4% change.

Core Deposits

Change in core deposits by type of account is as follows:
             
  As of June 30,    
(dollars in thousands)   2011   2010  

%

Change
 

2nd Quarter 2011Cost of Funds
Demand noninterest-bearing $ 389,992   $ 345,883 13 % 0.00 %
Demand interest-bearing 916,413 919,645 0.63
Savings   327,218     309,229     6     0.44  
Subtotal 1,633,623 1,574,757 4 0.45
Time   208,743     211,656     (1 )   2.10  
Total core deposits   $ 1,842,366     $ 1,786,413     3 %   0.64 %
 

Total core demand noninterest bearing deposits increased by $44.1 million, or 13%, over the past twelve months to $390.0 million. Likewise, core saving deposits increased by $18.0 million, or 6%, over the same period. The total cost of core deposits, excluding time deposits, during the second quarter of 2011 was 0.45%, compared to 0.51% for the second quarter one year ago. The cost of total core deposits for the second quarter of 2011 was 0.64%, down 9 basis points, or 12%, from the same period in 2010.

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

                     
  June 30,   % of   June 30,   % of   %
(dollars in thousands)   2011   Total   2010   Total   Change
Consumer $ 927,985 51 % $ 885,800 50 % 5 %
Commercial 597,879 32 559,473 31 7
Government   316,502     17     341,140     19     (7 )
Total   $ 1,842,366     100 %   $ 1,786,413     100 %   3 %
 

Total consumer core deposits increased by $42.2 million, or 5%, and commercial core deposits grew by $38.4 million, or 7%, during the past 12 months while government deposits decreased by $24.6 million.

Lending

Gross loans totaled $1.46 billion at June 30, 2011, an increase of $15.6 million, or 1%, compared to June 30, 2010. Gross loans grew $10.0 million on a linked quarter basis, which was net of maturities/pay-offs on three large relationships totaling approximately $25.0 million during the second quarter. One of the relationships, totaling $4.2 million, was a non-performing loan. The composition of the Company's loan portfolio is as follows:
                         
(dollars in thousands)   June 30, 2011  

% ofTotal
  June 30, 2010  

% ofTotal
  $

Change
 

%Change
Commercial and industrial   $ 357,652   24 %   $ 364,931   25 %   $ (7,279 )   (2 )%
Commercial tax-exempt 83,711 6 102,270 7 (18,559 ) (18 )
Owner occupied real estate 269,637 19 251,759 17 17,878 7

Commercial construction and land development
122,308 8 122,551 9 (243 )
Commercial real estate 341,961 23 308,889 22 33,072 11
Residential 80,481 6 85,533 6 (5,052 ) (6 )
Consumer   200,938     14     205,164     14     (4,226 )   (2 )
Gross loans   $ 1,456,688     100 %   $ 1,441,097     100 %   $ 15,591     1 %
 

Asset Quality

The Company's asset quality ratios are highlighted below:
     
  Quarters Ended
    June 30, 2011   March 31, 2011   June 30, 2010
Nonperforming assets/total assets 2.24 %   2.51 %   3.22 %
Net loan charge-offs (annualized)/average total loans 0.50 % 0.45 % 0.45 %
Loan loss allowance/total loans 1.49 % 1.51 % 1.12 %
Nonperforming loan coverage 48 % 42 % 26 %
Nonperforming assets/capital and reserves   22 %   25 %   31 %
 

The Company continued to experience improvement in its asset quality during the second quarter. Nonperforming assets trended lower for the fourth consecutive quarter to $53.5 million, or 2.24%, of total assets at June 30, 2011, down $4.6 million, or 8%, from $58.1 million, or 2.51%, of total assets at March 31, 2011 and down $17.1 million, or 24%, from $70.6 million, or 3.22%, of total assets one year ago. Total delinquent loans, including all nonaccrual loans, as a percentage of total gross loans outstanding, were 3.48% at June 30, 2011 compared to 4.05% at March 31, 2011.

The Company recorded a provision for loan losses of $1.7 million for the second quarter of 2011 as compared to $1.8 million for the previous quarter and to $2.6 million recorded in the second quarter of 2010. The allowance for loan losses totaled $21.7 million as of June 30, 2011 as compared to $21.9 million at March 31, 2011 and to $16.2 million at June 30, 2010. The allowance represented 1.49% of gross loans outstanding at June 30, 2011, compared to 1.51% at March 31, 2011 and compared to 1.12% at June 30, 2010. As of June 30, 2011, $3.2 million, or 15%, of the total allowance for loan losses was specifically allocated to nonperforming loans and $18.5 million, or 85%, was in the general allowance.

Total net charge-offs for the second quarter of 2011 were $1.8 million, versus $1.6 million for the previous quarter and compared to $1.6 million for the second quarter of 2010. Included in total net charge-offs for the second quarter of 2011 was $1.0 million for one loan relationship which had been specifically allocated for in prior periods.

The provision for loan losses for the first six months of 2011 totaled $3.5 million, down $1.5 million, or 30%, compared to $5.0 million recorded in the first half of 2010. Total net charge-offs for the first six months of 2011 were $3.4 million compared to $3.2 million for the first half of 2010.

Investments

At June 30, 2011, the Company's investment portfolio totaled $713.6 million. Detailed below is information regarding the composition and characteristics of the portfolio at June 30, 2011:
             
Product Description  

Availablefor Sale
 

Held toMaturity
  Total
(dollars in thousands)      
U.S. Government agencies/other $ 21,647 $ 140,000 $ 161,647
Mortgage-backed securities:
Federal government agencies pass through certificates 12,397 42,890 55,287
Agency collateralized mortgage obligations 427,287 32,496 459,783
Private-label collateralized mortgage obligations 26,927 26,927
Corporate debt securities       10,000     10,000  
Total   $ 488,258     $ 225,386     $ 713,644  
Duration (in years) 3.8 6.9 4.8
Average life (in years) 4.5 8.8 5.9
Quarterly average yield   2.86 %   3.72 %   3.12 %
 

At June 30, 2011, the after-tax unrealized loss on the Bank's available for sale portfolio was $29,000, as compared to unrealized losses of $5.6 million at December 31, 2010 and $4.1 million at June 30, 2010. The Company recorded a $315,000 charge against 2011 second quarter earnings for other-than-temporary impairment due to credit on its private-label collateralized mortgage obligations held in the investment portfolio. This impairment was offset by $309,000 of gains on the sale of investments held in the available-for-sale portfolio.

Capital

Stockholders' equity at June 30, 2011 totaled $217.1 million, an increase of $8.2 million, or 4%, over stockholders' equity of $208.8 million at June 30, 2010. Return on average stockholders' equity (ROE) for the second quarter of 2011 and 2010, was 3.74% and 0.70%, respectively.

The Company's capital ratios at June 30, 2011 and 2010 were as follows:
             
      Regulatory
Guidelines “Well
    6/30/2011   6/30/2010   Capitalized”
Leverage ratio 10.47 % 10.99 % 5.00 %
Tier 1 14.19 13.75 6.00
Total capital   15.44     14.67     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 June 30, 2011, the Company's book value per common share was $15.51.

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;
  • 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;
  • the impact of the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and other changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance);
  • 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;
  • interest rate, market and monetary fluctuations;
  • unanticipated regulatory or judicial proceedings and liabilities and other costs;
  • compliance with laws and regulatory requirements of federal, state and local agencies;
  • our ability to continue to grow our business internally and through acquisition and successful integration of new or acquired entities while controlling costs;
  • continued levels of loan quality and volume origination;
  • the adequacy of the allowance for loan losses;
  • deposit flows;
  • 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;
  • changes in consumer spending and saving habits relative to the financial services we provide;
  • the ability to hedge certain risks economically;
  • the loss of certain key officers;
  • changes in accounting principles, policies and guidelines;
  • the timely development of competitive new products and services by us and the acceptance of such products and services by customers;
  • rapidly changing technology;
  • continued relationships with major customers;
  • effect of terrorist attacks and threats of actual war;
  • compliance with the April 29, 2010 consent order may result in continued increased noninterest expenses;
  • expenses associated with modifications we are making to our logos in response to the Members 1st litigation and dismissal order;
  • 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 or, in the case of documents incorporated by reference, the dates of those documents. 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   Six Months Ended
June 30,   March 31,   %   June 30,   % June 30,   June 30,   %
(in thousands, except per share amounts)   2011   2011   Change   2010   Change   2011   2010   Change
Income Statement Data:
Net interest income $ 20,817 $ 20,017 4 % $ 19,984 4 % $ 40,834 $ 39,417 4 %
Provision for loan losses 1,700 1,792 (5 ) 2,600 (35 ) 3,492 5,000 (30 )
Noninterest income 8,156 7,956 3 7,259 12 16,112 13,205 22
Total revenues 28,973 27,973 4 27,243 6 56,946 52,622 8
Noninterest operating expenses 24,621 24,307 1 24,521 48,928 48,396 1
Net income 1,992 1,532 30 360 453 3,524 366 863
Per Common Share Data:
Net income per share:
Basic $ 0.14 $ 0.11 26 % $ 0.02 600 % $ 0.25 $ 0.02 1,150 %
Diluted 0.14 0.11 27 0.02 600 0.25 0.02 1,150
 
Book Value $ 15.06 $ 15.51 $ 15.34 1 %
 
Weighted average shares outstanding:
Basic 13,860 13,779 13,509 13,820 13,489
Diluted 13,860 13,779 13,514 13,820 13,494
Balance Sheet Data:
Total assets $ 2,387,006 $ 2,320,631 3 % $ 2,387,006 $ 2,195,666 9 %
Loans (net) 1,434,965 1,424,827 1 1,434,965 1,424,919 1
Allowance for loan losses 21,723 21,850 (1 ) 21,723 16,178 34
Investment securities 713,644 691,806 3 713,644 548,670 30
Total deposits 1,891,376 1,884,970 1,891,376 1,833,626 3
Core deposits 1,842,366 1,837,443 1,842,366 1,786,413 3
Stockholders' equity 217,062 209,436 4 217,062 208,837 4
Capital:

Tangible common equity to tangible assets
8.98 % 9.05 % 9.47 %
Leverage ratio 10.58 10.47 10.99
Risk based capital ratios:
Tier 1 14.30 14.19 13.75
Total Capital 15.55 15.44 14.67
Performance Ratios:
Cost of funds 0.70 % 0.74 % 0.87 % 0.72 % 0.90 %
Deposit cost of funds 0.63 0.66 0.73 0.65 0.77
Net interest margin 3.77 3.77 3.91 3.77 3.90
Return on average assets 0.34 0.27 0.07 0.31 0.03
Return on avg total stockholders' equity 3.74 3.00 0.70 3.38 0.36
Asset Quality:

Net charge-offs (annualized) to average loans outstanding
0.50 % 0.45 % 0.45 % 0.48 % 0.45 %

Nonperforming assets to total period-end assets
2.51 2.24 3.22

Allowance for loan losses to total period-end loans
1.51 1.49 1.12

Allowance for loan losses to nonperforming loans
42 48 26

Nonperforming assets to capital and allowance
      25                 22     31      
 
Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
         
(in thousands, except share and per share amounts)   June 30, 2011  

December 31,2010
   
Assets        
Cash and cash equivalents $ 42,271 $ 32,858
Federal funds sold   9,675      
Cash and cash equivalents 51,946 32,858
Securities, available for sale at fair value 488,258 438,012
Securities, held to maturity at cost (fair value 2011: $223,153; 2010: $224,202) 225,386 227,576
Loans, held for sale 8,847 18,605

Loans receivable, net of allowance for loan losses (allowance 2011: $21,723; 2010: $21,618)
1,434,965 1,357,587
Restricted investments in bank stock 18,610 20,614
Premises and equipment, net 84,643 88,162
Other assets   74,351     51,058  
Total assets   $ 2,387,006     $ 2,234,472  
 
Liabilities and Stockholders' Equity        
Deposits:
Noninterest-bearing $ 389,992 $ 340,956
Interest-bearing   1,501,384     1,491,223  
Total deposits 1,891,376 1,832,179
Short-term borrowing and repurchase agreements 185,000 140,475
Long-term debt 29,400 29,400
Other liabilities   64,168     27,067  
Total liabilities 2,169,944 2,029,121
Stockholders' Equity:
Preferred stock - Series A noncumulative; $10.00 par value;
(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 2011: 13,926,440; 2010: 13,748,384) 13,926 13,748
Surplus 153,935 151,545
Retained earnings 48,772 45,288
Accumulated other comprehensive income (loss)   29     (5,630 )
Total stockholders' equity   217,062     205,351  
Total liabilities and stockholders' equity   $ 2,387,006     $ 2,234,472  
       
Metro Bancorp, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
                 
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share amounts)   2011   2010   2011   2010
Interest Income                
Loans receivable, including fees:
Taxable $ 18,070 $ 17,589 $ 35,583 $ 35,126
Tax-exempt 989 1,156 1,975 2,300
Securities:
Taxable 5,599 5,651 10,994 11,050
Tax-exempt 14
Federal funds sold   1         2     1  
Total interest income   24,659     24,396     48,554     48,491  
Interest Expense                
Deposits 2,990 3,358 5,987 7,025
Short-term borrowings 191 121 411 187
Long-term debt   661     933     1,322     1,862  
Total interest expense   3,842     4,412     7,720     9,074  
Net interest income 20,817 19,984 40,834 39,417
Provision for loan losses   1,700     2,600     3,492     5,000  
Net interest income after provision for loan losses   19,117     17,384     37,342     34,417  
Noninterest Income                
Service charges, fees and other operating income 7,025 6,831 13,749 12,875
Gains on sales of loans   1,137     133     2,335     327  
Total fees and other income 8,162 6,964 16,084 13,202
Net impairment loss on investment securities (315 ) (3 ) (315 ) (916 )
Net gains on sales/calls of securities   309     298     343     919  
Total noninterest income   8,156     7,259     16,112     13,205  
Noninterest Expenses                
Salaries and employee benefits 10,254 10,377 20,633 20,631
Occupancy and equipment 3,755 3,555 7,552 6,984
Advertising and marketing 350 610 749 1,442
Data processing 3,832 3,396 7,227 6,536
Regulatory assessments and related fees 856 1,045 1,941 2,214
Foreclosed real estate 18 381 1,070 949
Branding 1,720 1,747
Consulting fees 416 960 823 1,702
Other   3,420     4,197     7,186     7,938  
Total noninterest expenses   24,621     24,521     48,928     48,396  
Income (loss) before taxes 2,652 122 4,526 (774 )
Provision (benefit) for federal income taxes   660     (238 )   1,002     (1,140 )
Net income   $ 1,992     $ 360     $ 3,524     $ 366  
Net Income per Common Share                
Basic $ 0.14 $ 0.02 $ 0.25 $ 0.02
Diluted   0.14     0.02     0.25     0.02  
Average Common and Common Equivalent Shares Outstanding
Basic 13,860 13,509 13,820 13,489
Diluted   13,860     13,514     13,820     13,494  
                             
Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
 
    Quarter ending,   Year-to-date,
 
    June 30, 2011   March 31, 2011   June 30, 2010   June 30, 2011   June 30, 2010
Average Avg. Average Avg. Average Avg. Average Avg. Average Avg.
Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate   Balance   Interest   Rate
(dollars in thousands)
Earning Assets
Investment securities:
Taxable $ 717,315 $ 5,599 3.12 % $ 698,429 $ 5,395 3.09 % $ 582,558 $ 5,651 3.88 % $ 707,924 $ 10,994 3.11 % $ 571,928 $ 11,050 3.86 %
Tax-exempt                                                     673     20   6.13  
Total securities 717,315 5,599 3.12 698,429 5,395 3.09 582,558 5,651 3.88 707,924 10,994 3.11 572,601 11,070 3.87
Federal funds sold 5,441 1 0.09 3,076 1 0.11 557 0.12 4,265 2 0.10 2,784 1 0.10
Total loans receivable     1,469,086     19,570   5.29       1,424,914     19,008   5.35       1,444,145     19,367   5.32       1,447,121     38,576   5.32       1,437,000     38,664   5.37  
Total earning assets   $ 2,191,842   $ 25,170   4.57 %   $ 2,126,419   $ 24,404   4.60 %   $ 2,027,260   $ 25,018   4.91 %   $ 2,159,310   $ 49,572   4.58 %   $ 2,012,385   $ 49,735   4.93 %
Sources of Funds
Interest-bearing deposits:
Regular savings $ 334,035 $ 370 0.44 % $ 320,344 $ 358 0.45 % $ 340,056 $ 404 0.48 % $ 327,228 $ 728 0.45 % $ 331,696 $ 791 0.48 %
Interest checking and money market 918,908 1,447 0.63 901,124 1,429 0.64 913,655 1,619 0.71 910,065 2,875 0.64 917,853 3,415 0.75
Time deposits 212,913 1,113 2.10 210,049 1,142 2.21 213,819 1,282 2.41 211,489 2,256 2.15 221,029 2,712 2.47
Public funds time     45,245     60   0.54       51,880     68   0.53       30,142     53   0.71       48,545     128   0.53       29,618     107   0.73  
Total interest-bearing deposits 1,511,101 2,990 0.79 1,483,397 2,997 0.82 1,497,672 3,358 0.90 1,497,327 5,987 0.81 1,500,196 7,025 0.94
Short-term borrowings 183,061 191 0.41 174,030 220 0.51 76,388 121 0.63 178,570 411 0.46 63,882 187 0.58
Long-term debt     29,400     661   9.00       29,400     661   9.00       54,400     933   6.83       29,400     1,322   9.00       54,400     1,862   6.83  
Total interest-bearing liabilities 1,723,562 3,842 0.89 1,686,827 3,878 0.93 1,628,460 4,412 1.09 1,705,297 7,720 0.91 1,618,478 9,074 1.13
Demand deposits (noninterest-bearing)     382,951             359,653             337,524             371,367             331,476        
Sources to fund earning assets 2,106,513 3,842 0.73 2,046,480 3,878 0.77 1,965,984 4,412 0.90 2,076,664 7,720 0.75 1,949,954 9,074 0.94
Noninterest-bearing funds (net)     85,329             79,939             61,276             82,646             62,431        
Total sources to fundearning assets   $ 2,191,842   $ 3,842   0.70 %   $ 2,126,419   $ 3,878   0.74 %   $ 2,027,260   $ 4,412   0.87 %   $ 2,159,310   $ 7,720   0.72 %   $ 2,012,385   $ 9,074   0.90 %
 

Net interest income and margin on a tax-equivalent basis
$ 21,328 3.87 % $ 20,526 3.86 % $ 20,606 4.04 % $ 41,852 3.86 % $ 40,661 4.03 %
Tax-exempt adjustment   511   509   622   1,018   1,244
Net interest income and margin       $ 20,817   3.77 %       $ 20,017   3.77 %       $ 19,984   3.91 %       $ 40,834   3.77 %       $ 39,417   3.90 %
 
Other Balances:
Cash and due from banks $ 44,164 $ 43,048 $ 44,736 $ 43,609 $ 43,780
Other assets 101,111 105,622 109,203 103,354 110,408
Total assets 2,337,117 2,275,089 2,181,199 2,306,273 2,166,573
Other liabilities 16,807 21,579 9,932 19,177 12,972
Stockholders' equity     213,797             207,030             205,283             210,432             203,647        
 
         
Metro Bancorp, Inc. and Subsidiaries
Summary of Allowance for Loan Losses and Other Related Data
(unaudited)
                     
Three Months Ended Year Ended Six Months Ended
(dollars in thousands)   June 30, 2011   June 30, 2010  

December 31,

2010
  June 30, 2011   June 30, 2010
 
Balance at beginning of period $ 21,850 $ 15,178 $ 14,391 $ 21,618 $ 14,391
Provisions charged to operating expenses     1,700       2,600       21,000       3,492       5,000  
23,550 17,778 35,391 25,110 19,391
Recoveries of loans previously charged-off:
Commercial and industrial 15 216 407 53 247
Commercial tax-exempt
Owner occupied real estate 1 3 1
Commercial construction and land development 58 3
Commercial real estate 2 5 25 8 11
Residential 29 2 5 29 2
Consumer     32       7       24       34       12  
Total recoveries     78       231       522       124       276  
Loans charged-off:
Commercial and industrial (659 ) (408 ) (5,995 ) (913 ) (1,752 )
Commercial tax-exempt
Owner occupied real estate (101 ) (614 ) (2 ) (101 )
Commercial construction and land development (1,000 ) (485 ) (1,249 ) (1,382 ) (510 )
Commercial real estate (42 ) (675 ) (4,668 ) (478 ) (702 )
Residential (21 ) (705 ) (101 ) (52 )
Consumer     (204 )     (141 )     (1,064 )     (635 )     (372 )
Total charged-off     (1,905 )     (1,831 )     (14,295 )     (3,511 )     (3,489 )
Net charge-offs     (1,827 )     (1,600 )     (13,773 )     (3,387 )     (3,213 )
Balance at end of period   $ 21,723     $ 16,178     $ 21,618     $ 21,723     $ 16,178  

Net charge-offs (annualized) as a percentage of average loans outstanding
0.50 % 0.45 % 0.98 % 0.48 % 0.45 %

Allowance for loan losses as a percentage of period-end loans
1.49 % 1.12 % 1.57 % 1.49 % 1.12 %
 
         
Metro Bancorp, Inc. and Subsidiaries
Summary of Nonperforming Loans and Assets
(unaudited)
 
The following table presents information regarding nonperforming loans and assets as of June 30, 2011 and for the preceding four quarters (dollar amounts in thousands).
                     
June 30, March 31, December 31, September 30, June 30,
    2011   2011   2010   2010   2010
Nonaccrual loans:
Commercial and industrial $ 19,312 $ 22,454 $ 23,103 $ 21,536 $ 25,327
Commercial tax-exempt
Owner occupied real estate 2,450 4,552 4,318 7,311 7,653
Commercial construction and land development 12,629 13,674 14,155 15,120 17,879
Commercial real estate 5,125 5,043 5,424 6,016 7,166
Residential 3,663 3,833 3,609 3,694 2,904
Consumer     2,310       2,357       1,579       1,871       1,437  
Total nonaccrual loans 45,489 51,913 52,188 55,548 62,366

Loans past due 90 days or more and still accruing
90 650 628 687
Renegotiated loans                 177       178       171  
Total nonperforming loans 45,489 52,003 53,015 56,354 63,224
Foreclosed real estate     8,048       6,138       6,768       6,815       7,367  
Total nonperforming assets   $ 53,537     $ 58,141     $ 59,783     $ 63,169     $ 70,591  
 
Nonperforming loans to total loans 3.12 % 3.59 % 3.84 % 4.04 % 4.39 %
 
Nonperforming assets to total assets 2.24 % 2.51 % 2.68 % 2.83 % 3.22 %
 
Nonperforming loan coverage 48 % 42 % 41 % 38 % 26 %
 

Allowance for loan losses as a percentage of total period-end loans
1.49 % 1.51 % 1.57 % 1.52 % 1.12 %
 

Nonperforming assets / capital plus allowance for loan losses
    22 %     25 %     26 %     27 %     31 %
 

Copyright Business Wire 2010

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