HARRISBURG, Pa.--(BUSINESS WIRE)--Oct. 22, 2012-- Metro Bancorp, Inc. (Metro or the Company) (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 September 30, 2012. The Company also reported an increase in total deposits of $184.5 million, or 9%, over the past twelve months.

“We are pleased with our third quarter results as we were able to achieve net income of $2.0 million despite a one-time non-recurring expense during the quarter. We were able to sustain our net interest margin in the face of interest rate market pressure, while continuing to reduce non interest expenses,” said Gary L. Nalbandian, the Company's Chairman and Chief Executive Officer.

Highlights for the Third Quarter Ended September 30, 2012

• The Company recorded net income of $2.0 million, or $0.14 per common share, for the third quarter of 2012 compared to a net loss of $5.7 million, or $0.41 per common share, for the same period one year ago. Third quarter net income of $2.0 million was net of a one-time non-recurring expense of $1.5 million for a civil money penalty assessed against Metro Bank, the Company's subsidiary bank, by the FDIC. The penalty arose out of certain findings related to the Bank Secrecy Act as set forth in regulatory examinations conducted in 2009 and 2010.
• Net income for the first nine months of 2012 totaled $7.4 million, or $0.52 per common share, up $9.6 million, or $0.68 per common share, over the net loss recorded in the first nine months of 2011.
• Total revenues for the third quarter of 2012 were $28.9 million, up $873,000, or 3%, over total revenues of $28.1 million for the same quarter one year ago. Total revenues for the first nine months of 2012 increased by $2.4 million, or 3%, over the same period in 2011.
• The Company's net interest margin on a fully-taxable basis for the third quarter of 2012 was 3.85%, compared to 3.86% recorded in the second quarter of 2012 and compared to 3.77% for the third quarter of 2011. The Company's deposit cost of funds for the third quarter was 0.35%, down from 0.39% for the previous quarter and compared to 0.58% for the same period one year ago.
• Noninterest expenses for the third quarter 2012 were $23.1 million, down $302,000, or 1%, compared to the third quarter one year ago. Noninterest expenses for the first nine months of 2012 were down $3.6 million, or 5%, from the first nine months of 2011, as the Company was able to reduce expenses in almost every category.
• Total deposits increased to $2.24 billion, up $184.5 million, or 9%, over the past twelve months.
• Core deposits (all deposits excluding public fund time deposits) grew $190.5 million, or 10%, over third quarter 2011.
• Net loans grew $12.8 million, or 1%, on a linked quarter basis to $1.48 billion and were also up $58.1 million, or 4%, over the third quarter of 2011.
• Our allowance for loan losses totaled $25.6 million, or 1.70%, of total loans at September 30, 2012 as compared to $23.3 million, or 1.61%, of total loans at September 30, 2011. During the past twelve months the nonperforming loan coverage ratio has increased from 61% to 68%.
• Nonperforming assets were 1.67% of total assets at September 30, 2012 compared to 1.87% of total assets one year ago.
• Metro's capital levels remain strong with a total risk-based capital ratio of 15.76%, a Tier 1 Leverage ratio of 10.18% and a tangible common equity to tangible assets ratio of 9.09%.
• Stockholders' equity increased by $12.6 million, or 6%, over the past twelve months to $231.8 million. At September 30, 2012, the Company's book value per share was $16.33.

Income Statement

Metro recorded net income of $2.0 million, or $0.14 per common share, for the third quarter of 2012 compared to net loss of $5.7 million, or $0.41 per common share, for the third quarter of 2011. Excluding the previously mentioned one-time non-recurring expense incurred during the quarter, net income would have been approximately $3.5 million for the third quarter of 2012.

Net income for the first nine months of 2012 totaled $7.4 million compared to a $2.2 million net loss for the same period in 2011. Earnings per common share for the first nine months of 2012 were $0.52 compared to a loss per common share of $0.16 for the same period last year.

Total revenues (net interest income plus noninterest income) for the third quarter of 2012 were $28.9 million, up $873,000, or 3%, over the third quarter of 2011. Noninterest expenses for the quarter totaled $23.1 million, down $302,000, or 1%, compared to the same period in 2011. Excluding the one-time non-recurring expense incurred during the quarter, total noninterest expenses were $21.6 million; down $1.8 million, or 8%, compared to the third quarter last year.

Total revenues for the first nine months of 2012 were $87.4 million, up $2.4 million, or 3%, over the first nine months of 2011. Total noninterest expenses for the first nine months of 2012 were $68.7 million, down $3.6 million, or 5%, from the same period last year.

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2012 totaled $21.8 million, up $1.0 million, or 5%, over the $20.8 million recorded in the third quarter of 2011. For the first nine months of 2012, net interest income totaled $65.4 million versus $61.6 million for the same period in 2011, a 6% increase.

Average interest earning assets for the third quarter of 2012 totaled $2.29 billion versus $2.31 billion for the previous quarter and were up $58.0 million, or 3%, over the third quarter of 2011. Average interest bearing deposits totaled $1.66 billion for the third quarter of 2012, up $66.0 million, or 4%, over the same period of 2011 and average noninterest bearing deposits for the quarter were $417.1 million, up $43.8 million, or 12%, over the third quarter last year. Total interest expense for the quarter was down $1.2 million, or 32%, from the third quarter of 2011 as a result of a 23 basis points ("bps") reduction in the Company's overall total cost of all funds over the past twelve months.

The net interest margin for the third quarter of 2012 was 3.75%, down slightly from the 3.77% recorded for the previous quarter but up 8 bps over the third quarter one year ago. The net interest margin on a fully-taxable basis for the third quarter of 2012 was 3.85%, down 1 bps from the previous quarter and up 8 bps compared to 3.77% for the third quarter of 2011.

The Bank's deposit cost of funds for the third quarter of 2012 was 0.35%, down from 0.39% the previous quarter, and down 23 bps from 0.58% recorded in the third quarter one year ago.

Change in Net Interest Income and Rate/Volume Analysis

As shown in the following table, the increase in net interest income on a fully tax-equivalent basis for the third quarter and the first nine months of 2012 over the same periods of 2011 was primarily due to an increase in the level of interest-earning assets. Lower yields on interest-earning assets in 2012 vs. 2011 were offset by a reduction in the Company's cost of funds.

Noninterest Income

Noninterest income for the third quarter of 2012 totaled $7.1 million, down $130,000, or 2%, from $7.3 million recorded in the third quarter one year ago.

Service charges, fees and other income decreased by $276,000, or 4%, from the third quarter of 2011. Gains on the sale of loans totaled $352,000 for the third quarter of 2012 versus $162,000 for the same period in 2011.

Noninterest income for the first nine months of 2012 totaled $22.0 million, down $1.3 million, or 6%, compared to the first nine months of 2011. Service charges, fees and other income decreased by $72,000 for the first nine months of 2012 from the same period in 2011. Gains on the sales of loans totaled $953,000 for the first nine months of 2012 compared to $2.5 million for the same period in 2011. Metro has not recorded any gains on the sale of SBA loans during the first nine months of 2012 compared to $1.9 million of gains on such sales in the same period of 2011.

Noninterest Expenses

Noninterest expenses for the third quarter of 2012 were $23.1 million, down $302,000, or 1%, compared to $23.4 million recorded in the third quarter one year ago. For the first nine months of 2012, noninterest expenses totaled $68.7 million, down $3.6 million, or 5%, from $72.3 million recorded for the first nine months of 2011.

The breakdown of noninterest expenses for the third quarter and for the first nine months of 2012 and 2011, respectively, are shown in the following table:

The Company experienced a lower level of noninterest expenses in each major category during the third quarter of 2012 compared to the same quarter last year, except for regulatory assessments and related costs . The increase in the regulatory assessment line item was related entirely to the previously mentioned $1.5 million one-time assessment to Metro Bank by the FDIC. Excluding that non-recurring expense, all other noninterest expenses for the third quarter of 2012 totaled $21.6 million, down $1.8 million, or 8%, compared to the third quarter one year ago.

Noninterest expenses for the first nine months of 2012, again excluding the one-time cost of $1.5 million in the third quarter, totaled $67.2 million; down $5.1 million, or 7%, from the same period in 2011.

Balance Sheet

Deposits

The Company's deposit balances continued to grow with total deposits at September 30, 2012 reaching $2.24 billion, a $184.5 million, or 9%, increase over total deposits of $2.06 billion one year ago. Core deposits also increased 10% over the past twelve months by $190.5 million to $2.19 billion.

Core Deposits

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

Total core demand noninterest bearing deposits increased by $58.8 million, or 15%, over the past twelve months to $451.4 million while core interest-bearing demand deposits grew by $77.3 million, or 7%. Likewise, core saving deposits increased by $107.5 million, or 33%, over the same period. Total core demand and savings deposit growth over the past twelve months was $243.6 million, or 14%. The total cost of core deposits, excluding time deposits, during the third quarter of 2012 was 0.27% compared to 0.30% for the previous quarter and down 13 bps from the third quarter one year ago. The cost of total core deposits for the third quarter of 2012 was 0.35%, down 4 bps on a linked quarter basis and down 23 basis points from the same period in 2011.

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

Total consumer core deposits increased by $1.7 million and total commercial core deposits grew by $83.7 million, or 14%, during the past 12 months while government deposits increased by $105.1 million, or 22%.

Lending

Gross loans totaled $1.50 billion at September 30, 2012, an increase of $60.4 million, or 4%, compared to September 30, 2011. The composition of the Company's loan portfolio at September 30, 2012 and September 30, 2011 was as follows:

Asset Quality

The Company's asset quality ratios are highlighted below:

Nonperforming assets increased slightly for the quarter by $2.7 million to $42.3 million, or 1.67%, of total assets at September 30, 2012, from $39.6 million, or 1.62%, of total assets at June 30, 2012 but were down $3.2 million, or 7%, from $45.5 million, or 1.87%, of total assets one year ago. Total delinquent loans, including nonaccrual loans, as a percentage of total gross loans outstanding, were 2.51% at September 30, 2012, down from 2.57% at the previous quarter end and compared to 2.34% at September 30, 2011. Accruing restructured loans at September 30, 2012 totaled $20.4 million compared to $17.8 million for the previous quarter-end.

The Company recorded a provision for loan losses of $2.5 million for the third quarter of 2012 as compared to $3.0 million for the previous quarter and to $13.8 million recorded in the third quarter of 2011. The allowance for loan losses totaled $25.6 million as of September 30, 2012 as compared to $26.2 million at June 30, 2012 and to $23.3 million at September 30, 2011. The allowance represented 1.70% of gross loans outstanding at September 30, 2012, compared to 1.75% at June 30, 2012 and 1.61% at September 30, 2011.

Total net charge-offs for the third quarter of 2012 were $3.1 million, versus $551,000 for the previous quarter and compared to $12.2 million for the third quarter of 2011. A total of $1.5 million, or 50%, of the total net charge-offs for the third quarter of 2012 were associated with one relationship which originated in 2006. Total net charge-offs for the first nine months of 2012 were $4.0 million, down $11.6 million, or 74%, from the first nine months of 2011.

Investments

At September 30, 2012, the Company's investment portfolio totaled $792.9 million. Detailed below is information regarding the composition and characteristics of the portfolio at September 30, 2012:

At September 30, 2012, after-tax unrealized gains on the Bank's available for sale portfolio were $7.4 million, as compared to $6.5 million at September 30, 2011 and to $3.8 million at December 31, 2011.

Capital

Stockholders' equity at September 30, 2012 totaled $231.8 million, an increase of $12.6 million, or 6%, over stockholders' equity of $219.3 million at September 30, 2011. Return on average stockholders' equity (ROE) for the third quarters of 2012 and 2011, was 3.44% and (10.24)%, respectively. Return on average stockholders' equity for the first nine months of 2012 was 4.37% compared to (1.37)% for the same period last year.

The Company's capital ratios at September 30, 2012 and 2011 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 September 30, 2012, the Company's book value per common share was $16.33.

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;
• continued effects of the aftermath of recessionary conditions and the impacts on the economy in general and our customers in particular, including adverse impacts on loan utilization rates as well as delinquencies, defaults and customers' ability to meet credit obligations;
• our ability to manage current levels of impaired assets;
• 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);
• the impact of changes in Regulation Z and other consumer credit protection laws and regulations;
• changes resulting from legislative and regulatory actions with respect to the current economic and financial industry environment;
• 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;
• the results of the regulatory examination and supervision process;
• unanticipated regulatory or legal 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 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;
• continued compliance with the April 29, 2010 FDIC consent order may result in increased noninterest expenses;
• other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services; and
• interruption or breach in security of our information systems resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit systems;
• 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
(717) 412-6301
or
Mark A. Zody
Chief Financial Officer
(717) 412-6301