Metro Bancorp Reports Fourth Quarter Net Income Of $2.5 Million; Core Deposits Up 15%

Metro Bancorp, Inc. (NASDAQ Global Select Market Symbol: METR), parent company of Metro Bank, today reported financial results for the fourth quarter and full year of 2011. The Company recorded net income of $2.5 million, or $0.18 per share, for the fourth quarter of 2011 compared to net income of $1.5 million, or $0.10 per share, for the fourth quarter of 2010. The Company also reported core deposit growth of 15% over the past twelve months.
 

Financial Highlights
(in millions, except per share data)
   
  Quarter Ended   Year Ended
    %   %
    12/31/11   12/31/10   Change   12/31/11   12/31/10   Change
Total assets $ 2,421.2 $ 2,234.5 8 %
 
Total deposits 2,071.6 1,832.2 13 %
 
Total loans (net) 1,415.0 1,357.6 4 %
                         
 
Total revenues $ 28.5 $ 29.0

(2

)%
$ 113.5 $ 109.2 4 %
 
Net income (loss) 2.5 1.5 70 % 0.3 (4.3 ) 107 %
 
Diluted net income (loss) per share $ 0.18 $ 0.10 80

%
$ 0.02 $ (0.33 ) 106 %
                                         

“We are extremely pleased with our 15% annual increase in core deposits for 2011 as well as our recorded net income of $2.5 million, or $0.18 per share, for the fourth quarter of 2011,” said Gary L. Nalbandian, the Company's Chairman and Chief Executive Officer.

"We continue to make progress related to the resolution of asset quality concerns which, in turn, strengthens our balance sheet and future operations. Nonperforming assets trended lower for the sixth consecutive quarter to $41.9 million, or 1.73%, of total assets at December 31, 2011 from a high of $70.6 million, or 3.22%, of total assets at June 30, 2010," said Nalbandian.

Highlights for the Quarter and Year Ended December 31, 2011
  • The Company recorded net income of $2.5 million, or $0.18 per share, for the fourth quarter of 2011 compared to net income of $1.5 million, or $0.10 per share, for the same period one year ago.
  • Total revenues were $28.5 million for the fourth quarter 2011, up $399,000, or 1%, over total revenues for the previous quarter. Total revenues for 2011 increased $4.2 million, or 4%, over 2010.
  • Noninterest expenses for the fourth quarter were down $1.6 million, or 7%, on a linked quarter basis, and were down $2.8 million, or 11%, compared to the fourth quarter one year ago. Total noninterest expenses for the full year 2011 were down $3.1 million, or 3%, from 2010.
  • Metro's capital levels remain strong with a Total Risk-Based Capital ratio of 15.36%, a Tier 1 Leverage ratio of 9.99% and a tangible common equity to tangible assets ratio of 9.05%.
  • Stockholders' equity increased by $14.7 million, or 7%, over the past twelve months to $220.0 million. At December 31, 2011, the Company's book value per share was $15.50.
  • Total deposits increased to $2.07 billion, up $239.4 million, or 13%, over the past twelve months.
  • Core deposits (all deposits excluding public fund time deposits) increased $258.1 million, or 15%, over one year ago and now exceed $2.0 billion.
  • Core noninterest bearing demand deposits grew 17% over the previous twelve months.
  • Net loans grew $57.5 million, or 4%, over the past twelve months and now total $1.42 billion.
  • Nonperforming asset balances declined for the sixth consecutive quarter to 1.73% of total assets from a high of 3.22% of total assets at June 30, 2010.
  • Our allowance for loan losses totaled $21.6 million, or 1.50%, of total loans at December 31, 2011, as compared to the total allowance amount of $21.6 million, or 1.57%, of total loans at December 31, 2010. During the past twelve months the nonperforming loan coverage ratio has increased from 41% to 62%.
  • The Company's net interest margin on a fully-taxable basis for the fourth quarter of 2011 was 3.82%, compared to 3.77% recorded in the third quarter of 2011 and compared to 3.98% for the fourth quarter of 2010. The Company's deposit cost of funds for the fourth quarter was 0.50%, down from 0.58% for the previous quarter and compared to 0.66% for the same period one year ago.

Income Statement
         
  Three months ended   Year ended
  December 31,   December 31,
(dollars in thousands, except per share data)   2011   2010   % Change   2011   2010   % Change
Total revenues $ 28,452   $ 28,981   (2

)%
$ 113,451   $ 109,230   4 %
Total noninterest expenses 21,731   24,548 (11 )

94,014
97,103 (3 )
Net income (loss) 2,483   1,457 70   289 (4,337 ) 107
Diluted net income (loss)/share   $ 0.18     $ 0.10     80

%
  $ 0.02     $ (0.33 )   106 %
 

The Company recorded net income of $2.5 million, or $0.18 per share, for the fourth quarter of 2011 compared to net income of $1.5 million, or $0.10 per share, for the fourth quarter of 2010. Net income totaled $289,000, or $0.02 per share, for the year ended December 31, 2011 as compared to a net loss of $4.3 million, or $0.33 per share, for 2010.

Total revenues (net interest income plus noninterest income) for the fourth quarter of 2011 were $28.5 million, down $529,000, or 2%, from the fourth quarter of 2010. Noninterest expenses for the quarter were down $2.8 million, or 11%, compared to the same period in 2010. On a linked quarter basis, total revenues were up $399,000, or 1%, while total non interest expenses decreased by $1.6 million, or 7%.

Total revenues for the year ended December 31, 2011 were $113.5 million, up $4.2 million, or 4%, over total revenues for 2010. Total noninterest expenses for the year ended December 31, 2011 were $94.0 million, down $3.1 million, or 3% from last year.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2011 totaled $21.4 million, up $944,000, or 5%, over the $20.4 million recorded in the fourth quarter of 2010. Net interest income for the year ended December 31, 2011 totaled $83.0 million, an increase of $3.1 million, or 4%, over the $79.9 million recorded for 2010.

Average interest earning assets for the fourth quarter of 2011 totaled $2.26 billion versus $2.23 billion for the previous quarter and were up $185.0 million, or 9%, over the fourth quarter of 2010. Average interest bearing deposits totaled $1.67 billion for the fourth quarter of 2011, up 5%, over the same quarter of 2010. Average noninterest bearing deposits for the fourth quarter of 2011 were $377.9 million, up $44.4 million, or 13%, over the fourth quarter last year. Total interest expense for the quarter was down $726,000, or 18%, from the fourth quarter of 2010 as a result of a 16 basis points ("bps") reduction in the Bank's deposit cost of funds and a 19 bps reduction in the Company's overall total cost of all funds over the past twelve months.

The net interest margin for the fourth quarter of 2011 was 3.73%, up over the 3.67% recorded for the previous quarter and compared to 3.89% for the fourth quarter of 2010. The net interest margin on a fully-taxable basis for the fourth quarter of 2011 was 3.82%, up 5 bps over the previous quarter and compared to 3.98% for the fourth quarter of 2010.

The Company's deposit cost of funds for the fourth quarter of 2011 was 0.50%, down from 0.58% the previous quarter, and down 16 bps from 0.66% recorded in the fourth quarter one year ago.

The Company's net interest margin was 3.73% for the year ended December 31, 2011 compared to 3.89% for the same period in 2010. On a fully-taxable equivalent basis, the net interest margin was 3.82% for 2011 compared to 4.00% one year ago.

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 fourth quarter of 2011 over the same period of 2010 was due to an increase in the level of interest-earning assets combined with a reduction in the Company's cost of funds, partially offset by lower yields on the Company's earning assets. The rate changes are a direct impact of lower yields earned on the loan and investment portfolios in 2011 as a result of the continued low level of market interest rates on new loan originations and investment purchases.
     
(dollars in thousands)   Net Interest Income
  Volume   Rate   Total   %
2011 vs. 2010   Change   Change   Increase   Increase
4th Quarter $ 1,545 $ (600 ) $ 945 5 %
Year to Date   $ 5,863     $ (2,978 )   $ 2,885     4 %
 

Noninterest Income

Noninterest income for the fourth quarter of 2011 totaled $7.1 million, down $1.5 million, or 17%, from $8.5 million recorded in the fourth quarter one year ago.
         
  Three months ended   Year ended
December 31, December 31,
(dollars in thousands)   2011   2010   % Change   2011   2010   % Change
Service charges, fees and other income $ 6,915   $ 7,015   (1 )% $ 27,773   $ 26,681   4 %
Gains on sales of loans 231 1,329 (83 ) 2,728 2,434 12
Gains on sales/calls of securities 1,765 (100 ) 350 2,801 (88 )
Credit impairment losses on investment securities (9 ) (324 ) (962 ) (66 )
Debt prepayment charge   (75 )   (1,574 )   (95 )   (75 )   (1,574 )   (95 )
Total noninterest income   $ 7,062     $ 8,535     (17 )%   $ 30,452     $ 29,380     4 %
 

Service charges, fees and other income decreased by $100,000, or 1%, from the fourth quarter of 2010. Gains on the sale of loans totaled $231,000 for the fourth quarter of 2011 versus $1.3 million for the same period in 2010. The decrease is primarily attributable to no sales of SBA loans during the fourth quarter of 2011 as compared to gains of $1.0 million recorded in the fourth quarter one year ago on the sale of SBA loans. The Company recorded a $75,000 charge during the fourth quarter to repurchase and retire $5.0 million of 11% fixed rate Trust Capital Securities which had been issued in June 2000. Going forward, this repurchase will save the Company $550,000 of interest expense annually.

Noninterest income for the year ended December 31, 2011 totaled $30.5 million, up $1.1 million, or 4% , over 2010. Service charges, fees and other income increased by $1.1 million, or 4%, for the year 2011 over 2010. Gains on the sales of loans totaled $2.7 million for 2011 compared to $2.4 million for 2010.

Noninterest Expenses

Noninterest expenses for the fourth quarter of 2011 were $21.7 million, down $1.6 million, or 7%, on a linked quarter basis and down $2.8 million, or 11%, compared to the total of $24.5 million recorded in the fourth quarter one year ago. Noninterest expenses for the year ended 2011 totaled $94.0 million, down $3.1 million, or 3%, from 2010.

The breakdown of noninterest expenses for the fourth quarter and for the years ended December 31, 2011 and 2010, respectively, are shown in the following table:
         
  Three months ended   Year ended
December 31,   December 31,
(dollars in thousands)   2011   2010   % Change   2011   2010   % Change
Salaries and employee benefits $ 9,572   $ 10,397   (8 )% $ 40,318   $ 41,494   (3 )%
Occupancy and equipment 3,551 3,132 13 14,620 13,563 8
Advertising and marketing 776 827 (6 ) 2,016 2,967 (32 )
Data processing 3,719 3,251 14   14,211 13,121 8
Regulatory assessments and related fees 782 1,193 (34 ) 3,638 4,598 (21 )
Foreclosed real estate 230 11 1,991 2,275 1,380 65
Branding 74   1,891
Consulting fees 330 1,841 (82 ) 1,496 4,508 (67 )
Other expenses   2,697     3,896     (31 )   13,549     15,472     (12 )
Total noninterest expenses   $ 21,731     $ 24,548     (11 )%   $ 94,014     $ 97,103     (3 )%
 

The Company experienced a lower level of noninterest expenses in most major categories during the fourth quarter and for the year ended December 31, 2011 compared to the same periods in 2010. Staffing expenses were down compared to the same quarter one year ago as a result of a lower levels of costs associated with the Company's employee benefit plans and its 401(K) Retirement Savings Plan as well as a slightly lower level of full-time equivalent employees during the quarter compared to prior periods. Occupancy and equipment charges were higher during the fourth quarter of 2011 compared to the same period in 2010 as a result of repairs and maintenance for several of the Company's facilities. Data processing costs were higher for the quarter vs. the same period one year ago due to a higher level of license fee costs associated with software implementation and a higher level of debit card transaction processing. Lower FDIC insurance assessment fees, effective April 1, 2011 for most FDIC-insured banks provided the Company's decrease in regulatory expenses. Foreclosed real estate costs for the quarter included $214,000 of write-downs associated with four properties with one property accounting for 53% of the total write-down. Consulting fees were down measurably for the fourth quarter and full year 2011 compared to the respective periods last year as the Company worked on an elevated level of regulatory compliance efforts in 2010. Those efforts, and the costs associated with them, have decreased dramatically over the past two quarters vs. prior periods. Noninterest expenses for the full year of 2011 totaled $94.0 million, down $3.1 million, or 3%, compared to the full year of 2010.

Balance Sheet

         
  As of December 31,  
  %

(dollars in thousands)
  2011   2010   Increase
Total assets $ 2,421,219 $ 2,234,472 8 %
 
Total loans (net) 1,415,048 1,357,587 4 %
 
Total deposits 2,071,574 1,832,179 13 %
 
Total core deposits 2,028,338 1,770,201 15 %
 
Total stockholders' equity   220,020     205,351     7 %
 

Deposits

The Company continued to experience strong deposit growth with total deposits at December 31, 2011 reaching $2.07 billion, a $239.4 million, or 13%, increase over total deposits of $1.83 billion one year ago. At the same time, core deposits increased by $258.1 million to $2.03 billion, a 15% increase over the past twelve months.

Core Deposits

Change in core deposits by type of account is as follows:
             
  As of December 31,    
  % 4th Quarter 2011 Cost of

(dollars in thousands)
  2011   2010   Change   Funds
Demand noninterest-bearing $ 397,251 $ 340,956 17 % 0.00 %
Demand interest-bearing 1,038,760 927,575 12 0.45
Savings   406,896     292,995     39     0.40  
Subtotal 1,842,907 1,561,526 18   0.35  
Time   185,431     208,675     (11 )   1.94  
Total core deposits   $ 2,028,338     $ 1,770,201     15 %   0.50 %
 

Total core demand noninterest bearing deposits increased by $56.3 million, or 17%, over the past twelve months to $397.3 million. Likewise, core saving deposits increased by $113.9 million, or 39%, over the same period. The total cost of core deposits, excluding time deposits, during the fourth quarter of 2011 was 0.35%, compared to 0.40% for the previous quarter and to 0.45% for the fourth quarter one year ago. The cost of total core deposits for the fourth quarter of 2011 was 0.50%, down 16 basis points, or 24%, from the same period in 2010.

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

                     
  December 31,   % of   December 31,   % of   %
(dollars in thousands)   2011   Total   2010   Total   Increase
Consumer $ 949,094 47 % $ 894,994 51 % 6 %
Commercial 587,123 29 552,244 31 6
Government   492,121     24     322,963     18     52  
Total   $ 2,028,338     100 %   $ 1,770,201     100 %   15 %
 

Total consumer core deposits increased by $54.1 million, or 6%, and total commercial core deposits grew by $34.9 million, or 6%, during the past 12 months while government deposits increased by $169.2 million.

Lending

Gross loans totaled $1.44 billion at December 31, 2011, an increase of $57.5 million, or 4%, compared to December 31, 2010. The composition of the Company's loan portfolio is as follows:
                         
  December 31,   % of   December 31,   % of   $   %

(dollars in thousands)
  2011   Total   2010   Total   Change   Change
Commercial and industrial $ 321,988 22 % $ 337,398 24 % $ (15,410 ) (5 )%
Commercial tax-exempt 81,532 6 85,863 6 (4,331 ) (5 )
Owner occupied real estate 279,372 20 241,553 18 37,819 16

Commercial construction and land development
103,153 7 112,094 8 (8,941 ) (8 )
Commercial real estate 364,405 25 313,194 23 51,211 16
Residential 83,940 6 81,124 6 2,816 3
Consumer   202,278     14     207,979     15     (5,701 )   (3 )
Gross loans   $ 1,436,668     100 %   $ 1,379,205     100 %   $ 57,463     4

%
 

Asset Quality

The Company's asset quality ratios are highlighted below:
     
  Quarters Ended
December 31,  

September 30,
  December 31,
    2011   2011   2010
Nonperforming assets/total assets 1.73 % 1.87 % 2.67 %
Net loan charge-offs (annualized)/average total loans 1.39 % 3.34 % 0.62 %
Loan loss allowance/total loans 1.50 % 1.61 % 1.57 %
Nonperforming loan coverage 62 % 61 % 41 %
Nonperforming assets/capital and reserves   17 %   19 %   26 %
 

Nonperforming assets trended lower for the sixth consecutive quarter to $41.9 million, or 1.73%, of total assets at December 31, 2011, down $3.6 million, or 8%, from $45.5 million, or 1.87%, of total assets at September 30, 2011 and down $17.7 million, or 30%, from $59.6 million, or 2.67%, of total assets one year ago. Total delinquent loans, including all nonaccrual loans, as a percentage of total gross loans outstanding, were 2.62% at December 31, 2011, compared to 4.35% at December 31, 2010. Accruing restructured loans at December 31, 2011 totaled $12.8 million compared to $15.0 million for the previous quarter-end and to $177,000 one year ago.

The Company recorded a provision for loan losses of $3.4 million for the fourth quarter of 2011 as compared to $13.8 million for the previous quarter and to $2.6 million recorded in the fourth quarter of 2010. The allowance for loan losses totaled $21.6 million as of December 31, 2011 as compared to $23.3 million at September 30, 2011 and to $21.6 million at December 31, 2010. The allowance represented 1.50% of gross loans outstanding at December 31, 2011, compared to 1.61% at September 30, 2011 and 1.57% at December 31, 2010.

Total net charge-offs for the fourth quarter of 2011 were $5.0 million, versus $12.2 million for the previous quarter and compared to $2.2 million for the fourth quarter of 2010. Approximately $4.4 million, or 88%, of total net loan charge-offs for the fourth quarter of 2011 were associated with a total of three relationships, all of which were originated prior to 2008 and had been specifically reserved for in prior quarters.

The provision for loan losses for the year ended December 31, 2011 totaled $20.6 million, down $408,000, or 2%, compared to $21.0 million recorded for the same period in 2010. Total net charge-offs for the full year of 2011 were $20.6 million, or 1.43%, of average loans outstanding compared to $13.8 million, or 0.98%, of average loans outstanding for 2010.

Investments

The Company's investment portfolio grew $144.5 million, or 22%, from $665.6 million at December 31, 2010 to $810.1 million at December 31, 2011. Detailed below is information regarding the composition and characteristics of the portfolio at December 31, 2011:
             
  Available   Held to  
Product Description   for Sale   Maturity   Total
(dollars in thousands)
U.S. Government agencies/other $ 22,558 $ 97,750 $ 120,308
Mortgage-backed securities:
Federal government agencies pass through certificates 21,412 37,658 59,070
Agency collateralized mortgage obligations 528,163 45,122 573,285
Private-label collateralized mortgage obligations 23,006 23,006
Corporate debt securities 18,320 15,000 33,320
Municipal securities       1,105     1,105  
Total   $ 613,459     $ 196,635     $ 810,094  
Duration (in years) 2.5 1.1 2.1
Average life (in years) 2.8 1.4 2.5
Quarterly average yield (annualized)   2.62 %   3.56 %   2.86 %
 

At December 31, 2011, the after-tax unrealized gains on the Bank's available for sale portfolio was $3.8 million, as compared to unrealized losses of $5.6 million at December 31, 2010.

Capital

Stockholders' equity at December 31, 2011 totaled $220.0 million, an increase of $14.7 million, or 7%, over stockholders' equity of $205.4 million at December 31, 2010. Return on average stockholders' equity (ROE) for the fourth quarters of 2011 and 2010, was 4.48% and 2.75%, respectively.

During the month of December 2011, the Company repurchased and retired $5.0 million of 11% fixed rate Trust Capital Securities. These securities were issued in June 2000 and had a maturity date of June 2030. The Company recorded a one-time charge of $75,000 related to this transaction. Going forward, this will result in an annual savings of $550,000 of interest expense for the Company. The $5.0 million decrease in total capital resulting from this transaction reduced the Company's leverage ratio by 21 bps and its Tier 1 and Total Risk-Based Capital ratios by 29 bps each.

The Company's capital ratios at December 31, 2011 and 2010 were as follows:
             
      Regulatory
Guidelines “Well
    12/31/2011   12/31/2010   Capitalized”
Leverage ratio 9.99 % 10.68 % 5.00 %
Tier 1 14.11 14.58 6.00
Total capital   15.36     15.83     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 December 31, 2011, the Company's book value per common share was $15.50.

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 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);
  • changes in the Federal Deposit Insurance Corporation (FDIC) deposit fund and the associated premiums that banks pay to 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 acquisitions 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 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   Twelve Months Ended
December 31,   September 30,   %   December 31,   % December 31,   December 31,   %
(in thousands, except per share amounts)   2011   2011   Change   2010   Change   2011   2010   Change
Income Statement Data:
Net interest income $ 21,390 $ 20,775 3

%
$ 20,446 5 % $ 82,999 $ 79,850 4 %
Provision for loan losses 3,350 13,750 (76 ) 2,600 29 20,592 21,000 (2 )
Noninterest income 7,062 7,278 (3 ) 8,535 (17 ) 30,452 29,380 4
Total revenues 28,452 28,053 1 28,981 (2 ) 113,451 109,230 4
Noninterest operating expenses 21,731 23,355 (7 ) 24,548 (11 ) 94,014 97,103 (3 )
Net income (loss) 2,483 (5,718 ) 143 1,457 70 289 (4,337 ) 107
Per Common Share Data:
Net income (loss) per share:
Basic $ 0.18 $ (0.41 ) 144

%
$ 0.10 80 % $ 0.02 $ (0.33 ) 106 %
Diluted 0.18 (0.41 ) 144 0.10 80 0.02 (0.33 ) 106
 
Book Value $ 15.53 $ 15.50 $ 14.86 4 %
 
Weighted average shares outstanding:
Basic 14,075 13,959 13,690 13,919 13,563
Diluted 14,075 13,959 13,690 13,919 13,563
Balance Sheet Data:
Total assets $ 2,421,219 $ 2,435,058 (1 )% $ 2,421,219 $ 2,234,472 8 %
Loans (net) 1,415,048 1,421,307 1,415,048 1,357,587 4
Allowance for loan losses 21,620 23,307 (7 ) 21,620 21,618
Investment securities 810,094 820,074 (1 ) 810,094 665,588 22
Total deposits 2,071,574 2,059,387 1 2,071,574 1,832,179 13
Core deposits 2,028,338 1,994,797 2 2,028,338 1,770,201 15
Stockholders' equity 220,020 219,260 220,020 205,351 7
Capital:
Tangible common equity to tangible

assets
8.96 % 9.05 % 9.15 %
Leverage ratio 10.15 9.99 10.68
Risk based capital ratios:
Tier 1 14.10 14.11 14.58
Total Capital 15.35 15.36 15.83
Performance Ratios:
Cost of funds 0.61 % 0.68 % 0.80 % 0.69 % 0.88 %
Deposit cost of funds 0.50 0.58 0.66 0.59 0.72
Net interest margin 3.73 3.67 3.89 3.73 3.89
Return on average assets 0.41 (0.95 ) 0.26 0.01 (0.20 )
Return on avg total stockholders'

equity
4.48 (10.24 ) 2.75 0.13 (2.09 )
Asset Quality:
Net charge-offs (annualized) to

average loans outstanding
1.39 % 3.34 % 0.62 % 1.43 % 0.98 %
Nonperforming assets to total

period-end assets
1.87 1.73 2.67
Allowance for loan losses to total

period-end loans
1.61 1.50 1.57
Allowance for loan losses to

period-end nonperforming loans
61 62 41
Nonperforming assets to capital and

allowance
      19                 17     26      
 
Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
         
  December 31,
(in thousands, except share and per share amounts)   2011   2010
 
Assets        
Cash and due from banks 46,998 32,858
Federal funds sold   8,075      
Cash and cash equivalents 55,073 32,858
Securities, available for sale at fair value 613,459 438,012
Securities, held to maturity at cost (fair value 2011: $199,857; 2010: $224,202) 196,635 227,576
Loans, held for sale 9,359 18,605
Loans receivable, net of allowance for loan losses (allowance 2011: $21,620; 2010: $21,618) 1,415,048 1,357,587
Restricted investments in bank stock 16,802 20,614
Premises and equipment, net 82,114 88,162
Other assets   32,729     51,058  
Total assets   $ 2,421,219     $ 2,234,472  
 
Liabilities and Stockholders' Equity        
Deposits:
Noninterest-bearing $ 397,251 $ 340,956
Interest-bearing   1,674,323     1,491,223  
Total deposits 2,071,574 1,832,179
Short-term borrowings 65,000 140,475
Long-term debt 49,200 29,400
Other liabilities   15,425     27,067  
Total liabilities 2,201,199 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: 14,125,346; 2010: 13,748,384) 14,125 13,748
Surplus 156,184 151,545
Retained earnings 45,497 45,288
Accumulated other comprehensive income (loss)   3,814     (5,630 )
Total stockholders' equity   220,020     205,351  
Total liabilities and stockholders' equity   $ 2,421,219     $ 2,234,472  
       
Metro Bancorp, Inc. and Subsidiaries
Consolidated Statements of Operations (unaudited)
                 
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands, except per share amounts)   2011   2010   2011   2010
Interest Income                
Loans receivable, including fees:
Taxable $ 17,951 $ 17,585 $ 71,307 $ 70,423
Tax-exempt 1,018 1,015 4,020 4,521
Securities:
Taxable 5,755 5,905 22,362 22,275
Tax-exempt 1 1 14
Federal funds sold   1     3     5     14  
Total interest income   24,726     24,508     97,695     97,247  
Interest Expense                
Deposits 2,599 3,171 11,443 13,467
Short-term borrowings 45 75 439 317
Long-term debt   692     816     2,814     3,613  
Total interest expense   3,336     4,062     14,696     17,397  
Net interest income 21,390 20,446 82,999 79,850
Provision for loan losses   3,350     2,600     20,592     21,000  
Net interest income after provision for loan losses   18,040     17,846     62,407     58,850  
Noninterest Income                
Service charges, fees and other operating income 6,915 7,015 27,773 26,681
Gains on sales of loans   231     1,329     2,728     2,434  
Total fees and other income 7,146 8,344 30,501 29,115
Net impairment loss on investment securities (9 ) (324 ) (962 )
Net gains on sales/calls of securities 1,765 350 2,801
Debt prepayment charge   (75 )   (1,574 )   (75 )   (1,574 )
Total noninterest income   7,062     8,535     30,452     29,380  
Noninterest Expenses                
Salaries and employee benefits 9,572 10,397 40,318 41,494
Occupancy and equipment 3,551 3,132 14,620 13,563
Advertising and marketing 776 827 2,016 2,967
Data processing 3,719 3,251 14,211 13,121
Regulatory assessments and related fees 782 1,193 3,638 4,598
Foreclosed real estate 230 11 2,275 1,380
Branding 74 1,891
Consulting fees 330 1,841 1,496 4,508
Other   2,697     3,896     13,549     15,472  
Total noninterest expenses   21,731     24,548     94,014     97,103  
Income (loss) before taxes 3,371 1,833 (1,155 ) (8,873 )
Provision (benefit) for federal income taxes   888     376     (1,444 )   (4,536 )
Net income (loss)   $ 2,483     $ 1,457     $ 289     $ (4,337 )
Net Income (Loss) per Common Share
Basic $ 0.18 $ 0.10 $ 0.02 $ (0.33 )
Diluted   0.18     0.10     0.02     (0.33 )
Average Common and Common Equivalent Shares Outstanding
Basic 14,075 13,690 13,919 13,563
Diluted   14,075     13,690     13,919     13,563  
 
 
Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
                             
    Quarter ended,   Year-to-date,
 
    December 31, 2011   September 30, 2011   December 31, 2010   December 31, 2011   December 31, 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 $   805,467   $   5,754   2.86 % $   757,090   $   5,613   2.97 % $   675,262   $   5,905   3.50 % $   744,903   $   22,362   3.00 % $   595,378   $   22,275   3.74 %
Tax-exempt   156       2       4.29                                     39       2       4.26     334       20       6.09  
Total securities 805,623 5,756 2.86 757,090 5,613 2.97 675,262 5,905 3.50 744,942 22,364 3.00 595,712 22,295 3.74
Federal funds sold 7,547 0.02 20,468 2 0.05 6,066 3 0.13 9,176 5 0.05 11,106 14 0.12
Total loans receivable   1,446,084       19,494       5.30     1,451,863       19,327       5.23     1,392,955       19,123       5.39     1,448,056       77,398       5.29     1,426,225       77,274       5.36  
Total earning assets   $   2,259,254       $   25,250       4.41 %   $   2,229,421       $   24,942       4.41 %   $   2,074,283       $   25,031       4.76 %   $   2,202,174       $   99,767       4.49 %   $   2,033,043       $   99,583       4.86 %
Sources of Funds
Interest-bearing deposits:
Regular savings $ 359,966 $ 364 0.40 % $ 332,147 $ 355 0.42 % $ 319,000 $ 356 0.44 % $ 336,720 $ 1,446 0.43 % $ 324,698 $ 1,514 0.47 %

Interest checking and money market
1,056,840 1,202 0.45 993,068 1,355 0.54 991,108 1,516 0.61 967,982 5,433 0.56 946,982 6,501 0.69
Time deposits 196,431 960 1.94 205,478 1,056 2.04 211,339 1,218 2.29 206,178 4,272 2.07 216,434 5,189 2.40
Public funds time   56,057       73       0.51     65,946       91       0.55     62,061       81       0.52     54,824       292       0.53     41,608       263       0.63  
Total interest-bearing deposits 1,669,294 2,599 0.62 1,596,639 2,857 0.71 1,583,508 3,171 0.79 1,565,704 11,443 0.73 1,529,722 13,467 0.88
Short-term borrowings 74,279 45 0.24 110,935 57 0.20 47,036 75 0.63 127,975 439 0.34 52,170 317 0.60
Long-term debt   53,100       692       5.20     54,400       726       5.33     43,530       816       5.74     48,935       2,814       5.74     51,660       3,613       6.99  
Total interest-bearing liabilities 1,796,673 3,336 0.74 1,761,974 3,640 0.82 1,674,074 4,062 0.96 1,742,614 14,696 0.84 1,633,552 17,397 1.06
Demand deposits (noninterest-bearing)   377,942               373,232               333,499               373,494               332,099            
Sources to fund earning assets 2,174,615 3,336 0.61 2,135,206 3,640 0.68 2,007,573 4,062 0.80 2,116,108 14,696 0.69 1,965,651 17,397 0.88
Noninterest-bearing funds (net)   84,639               94,215               66,710               86,066               67,392            
Total sources to fund earning assets   $   2,259,254       $   3,336       0.59 %   $   2,229,421       $   3,640       0.65 %   $   2,074,283       $   4,062       0.78 %   $   2,202,174       $   14,696       0.67 %   $   2,033,043       $   17,397       0.85 %
 

Net interest income and margin on a tax-equivalent basis
$ 21,914 3.82 % $ 21,302 3.77 % $ 20,969 3.98 % $ 85,071 3.82 % $ 82,186 4.00 %
Tax-exempt adjustment 524 527 523 2,072 2,336
Net interest income and margin       $   21,390       3.73 %       $   20,775       3.67 %       $   20,446       3.89 %       $   82,999       3.73 %       $   79,850       3.89 %
 
Other Balances:
Cash and due from banks $ 43,925 $ 44,322 $ 46,052 $ 43,868 $ 44,583
Other assets 103,391 103,794 119,821 103,474 114,281
Total assets 2,406,570 2,377,537 2,240,156 2,349,516 2,191,907
Other liabilities 11,833 20,855 22,020 17,750 18,804
Stockholders' equity   220,122               221,476               210,563               215,658               207,452            
 
       
Metro Bancorp, Inc. and Subsidiaries
Summary of Allowance for Loan Losses and Other Related Data
(unaudited)
                 
Three Months Ended Twelve Months Ended
December 31, December 31,
(dollars in thousands)   2011   2010   2011   2010
 
Balance at beginning of period $ 23,307 $ 21,169 $ 21,618 $ 14,391
Provisions charged to operating expenses   3,350     2,600     20,592     21,000  
26,657 23,769 42,210 35,391
Recoveries of loans previously charged-off:
Commercial and industrial 82 22 156 407
Commercial tax-exempt
Owner occupied real estate 59 2 60 3
Commercial construction and land development 11 50 11 58
Commercial real estate 5 1 15 25
Residential 39 3 68 5
Consumer   82     6     135     24  
Total recoveries   278     84     445     522  
Loans charged-off:
Commercial and industrial (3,123 ) (533 ) (7,945 ) (5,995 )
Commercial tax-exempt
Owner occupied real estate (489 ) (254 ) (614 )
Commercial construction and land development (1,715 ) (468 ) (10,629 ) (3,779 )
Commercial real estate (175 ) (252 ) (852 ) (2,138 )
Residential (41 ) (171 ) (188 ) (705 )
Consumer   (261 )   (322 )   (1,167 )   (1,064 )
Total charged-off   (5,315 )   (2,235 )   (21,035 )   (14,295 )
Net charge-offs   (5,037 )   (2,151 )   (20,590 )   (13,773 )
Balance at end of period   $ 21,620     $ 21,618     $ 21,620     $ 21,618  

Net charge-offs (annualized) as a percentage of average loans outstanding
1.39 % 0.62 % 1.43 % 0.98 %

Allowance for loan losses as a percentage of period-end loans
1.50 % 1.57 % 1.50 % 1.57 %
 
 

Metro Bancorp, Inc. and Subsidiaries

Summary of Nonperforming Loans and Assets

(unaudited)
 
The following table presents information regarding nonperforming loans and assets as of December 31, 2011 and for the preceding four quarters (dollar amounts in thousands).

 
                     
  December 31,   September 30,   June 30,   March 31,   December 31,
    2011   2011   2011   2011   2010
Nonperforming Assets

 
Nonaccrual loans:
Commercial and industrial $ 10,162 $ 12,175 $ 19,312 $ 22,454 $ 23,103
Commercial tax-exempt
Owner occupied real estate 2,895 3,482 2,450 4,552 4,318
Commercial construction and land development 8,511 6,309 12,629 13,674 14,155
Commercial real estate 7,820 10,400 5,125 5,043 5,424
Residential 2,912 3,125 3,663 3,833 3,609
Consumer   1,829     2,009     2,310     2,357     1,579  
Total nonaccrual loans 34,129 37,500 45,489 51,913 52,188

Loans past due 90 days or more and still accruing
  692     567         90     650  
Total nonperforming loans 34,821 38,067 45,489 52,003 52,838
Foreclosed real estate   7,072     7,431     8,048     6,138     6,768  
Total nonperforming assets   $ 41,893     $ 45,498     $ 53,537     $ 58,141     $ 59,606  
Troubled Debt Restructurings (TDRs)
Nonaccruing TDRs $ 10,075 $ 10,129 $ 10,054 $ 8,373 $
Accruing TDRs   12,835     14,979             177  
Total TDRs   $ 22,910     $ 25,108     $ 10,054     $ 8,373     $ 177  
 
Nonperforming loans to total loans 2.42 % 2.64 % 3.12 % 3.59 % 3.83 %
 
Nonperforming assets to total assets 1.73 % 1.87 % 2.24 % 2.51 % 2.67 %
 
Nonperforming loan coverage 62 % 61 % 48 % 42 % 41 %
 

Allowance for loan losses as a percentage of total period-end loans
1.50 % 1.61 % 1.49 % 1.51 % 1.57 %
 

Nonperforming assets / capital plus allowance for loan losses

 
  17 %   19 %   22 %   25 %   26 %
 

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