HARRISBURG, Pa.--(BUSINESS WIRE)--Jan. 27, 2012-- 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.

“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

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.

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.

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:

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

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:

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:

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:

Asset Quality

The Company's asset quality ratios are highlighted below:

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:

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:

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.

Source: Metro Bancorp, Inc.

Metro Bancorp, Inc.
Gary L. Nalbandian, Chairman/President
Mark A. Zody, Chief Financial Officer
717-412-6301