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Metro Bancorp Reports Third Quarter Net Income  of $2.0 Million; Deposits Grow 9%

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.

Financial Highlights
(in millions, except per share data)
   
  Quarter Ended   Nine Months Ended
    %   %
    09/30/12   09/30/11   Increase   09/30/12   09/30/11   Increase
Total assets $ 2,538.4 $ 2,435.1 4 %
 
Total deposits 2,243.9 2,059.4 9 %
 
Total loans (net) 1,479.4 1,421.3 4 %
                         
 
Total revenues $ 28.9 $ 28.1 3 % $ 87.4 $ 85.0 3 %
 
Net income (loss) 2.0 (5.7 ) 135 % 7.4 (2.2 ) 439 %
 
Diluted net income (loss) per common share $ 0.14 $ (0.41 ) 134 % $ 0.52 $ (0.16 ) 425 %

“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

         
  Three months ended

September 30,

  Nine months ended

September 30,

(dollars in thousands, except per share data)   2012   2011   % Change   2012   2011   % Change
Total revenues $ 28,926   $ 28,053   3 %   $ 87,413   $ 84,999   3 %
Total noninterest expenses 23,053 23,355 (1 ) 68,658 72,283 (5 )
Net income (loss) 1,992 (5,718 ) 135 7,438 (2,194 ) 439
Diluted net income (loss) per share   $ 0.14     $ (0.41 )   134 %   $ 0.52     $ (0.16 )   425 %

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.

     
(dollars in thousands)   Tax Equivalent Net Interest Income
2012 vs. 2011   Volume

Change

  Rate

Change

  Total

Increase

  %

Increase

3rd Quarter   $985   $46   $1,031   5 %
Nine Months   $3,761   $(25 )   $3,736   6 %

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.

         
  Three months ended
September 30,
  Nine months ended
September 30,
(dollars in thousands)   2012   2011   % Change   2012   2011   % Change
Service charges, fees and other income $ 6,833   $ 7,109   (4 )% $ 20,786   $ 20,858   %
Gains on sales of loans 352 162 117 953 2,497 (62 )
Net gains (losses) on sales of securities (37 ) 7 (629 ) 959 350 174
Credit impairment losses on investment securities           -   (649 )   (315 )   106  
Total noninterest income   $ 7,148     $ 7,278     (2 )%   $ 22,049     $ 23,390     (6 )%

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:

         
  Three months ended
September 30,
  Nine months ended
September 30,
(dollars in thousands)   2012   2011   % Change   2012   2011   % Change
Salaries and employee benefits $ 10,021   $ 10,113   (1 )%   $ 30,725   $ 30,746   %
Occupancy and equipment 3,265 3,517 (7 ) 9,902 11,069 (11 )
Advertising and marketing 446 491 (9 ) 1,247 1,240 1
Data processing 3,220 3,265 (1 ) 9,883 10,492 (6 )
Regulatory assessments and related costs 1,847 915 102 3,522 2,856 23
Foreclosed real estate 399 975 (59 ) 1,543 2,045 (25 )
Other expenses   3,855     4,079     (5 )   11,836     13,835     (14 )
Total noninterest expenses   $ 23,053     $ 23,355     (1 )%   $ 68,658     $ 72,283     (5 )%

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

         
  As of September 30,  
(dollars in thousands)   2012   2011   %

Increase

Total assets $ 2,538,361   $ 2,435,058 4 %
 
Total loans (net) 1,479,394 1,421,307 4 %
 
Total deposits 2,243,932 2,059,387 9 %
 
Total core deposits 2,185,270 1,994,797 10 %
 
Total stockholders' equity   231,822     219,260     6 %

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:

             
  As of September 30,    
(dollars in thousands) 2012   2011   %

Change

 

3rd Quarter 2012
Cost of Funds

Demand noninterest-bearing $ 451,443   $ 392,597 15% 0.00%
Demand interest-bearing 1,149,453 1,072,163 7 0.34
Savings 436,005     328,516     33   0.36
Subtotal 2,036,901 1,793,276 14 0.27
Time 148,369     201,521     (26)   1.40
Total core deposits $ 2,185,270     $ 1,994,797     10%   0.35%

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:

                     
  September 30,   % of   September 30,   % of   %
(dollars in thousands)   2012   Total   2011   Total   Increase
Consumer $ 942,344 43 % $ 940,610 47 % %
Commercial 668,161 31 584,493 29 14
Government   574,765     26     469,694     24     22  
Total   $ 2,185,270     100 %   $ 1,994,797     100 %   10 %

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:

                         
(dollars in thousands)   September 30, 2012   % of Total   September 30, 2011   % of Total   $

Change

  % Change
Commercial and industrial   $ 347,099   23 %   $ 340,252   23 %   $ 6,847   2 %
Commercial tax-exempt 88,934 6 82,998 6 5,936 7
Owner occupied real estate 274,235 18 266,860 18 7,375 3
Commercial construction

and land development

107,311 7 113,850 8 (6,539 ) (6 )
Commercial real estate 393,182 26 359,068 25 34,114 10
Residential 82,989 6 80,885 6 2,104 3
Consumer   211,240     14     200,701     14     10,539     5  
Gross loans   $ 1,504,990     100 %   $ 1,444,614     100 %   $ 60,376     4 %

Asset Quality

The Company's asset quality ratios are highlighted below:

     
  Quarters Ended
    September 30, 2012   June 30, 2012   September 30, 2011
Nonperforming assets/total assets 1.67 %   1.62 %   1.87 %
Net loan charge-offs (annualized)/average total loans 0.81 % 0.15 % 3.34 %
Loan loss allowance/total loans 1.70 % 1.75 % 1.61 %
Nonperforming loan coverage 68 % 73 % 61 %
Nonperforming assets/capital and reserves   16 %   16 %   19 %

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:

           
Product Description Available for Sale   Held to Maturity   Total
(dollars in thousands)    
U.S. Government agencies/other $ $ 95,987 $ 95,987
Mortgage-backed securities:
Federal government agencies pass through certificates 69,039 26,999 96,038
Agency collateralized mortgage obligations 509,025 32,534 541,559
Private-label collateralized mortgage obligations 2,510 2,510
Corporate debt securities 14,558 15,000 29,558
Municipal securities 24,278     2,979     27,257  
Total $ 619,410     $ 173,499     $ 792,909  
Duration (in years) 2.7 1.1 2.4
Average life (in years) 3.0 1.4 2.6
Quarterly average yield (annualized) 2.61 %   3.13 %   2.73 %

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:

             
    9/30/2012   9/30/2011   Regulatory Guidelines “Well Capitalized”
Leverage ratio   10.18 %   10.15 %   5.00 %
Tier 1 14.50 14.10 6.00
Total capital   15.76     15.35     10.00  

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

At September 30, 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.

Metro Bancorp, Inc.
Selected Consolidated Financial Data
  At or for the   At or for the
    Three Months Ended   Nine Months Ended
September 30,   June 30,   %   September 30,   % September 30,   September 30,   %

(in thousands, except per share amounts)

  2012   2012   Change   2011   Change   2012   2011   Change
Income Statement Data:
Net interest income $ 21,778 $ 21,970 (1 )% $ 20,775 5 % $ 65,364 $ 61,609 6 %
Provision for loan losses 2,500 2,950 (15 ) 13,750 (82 ) 7,950 17,242 (54 )
Noninterest income 7,148 7,460 (4 ) 7,278 (2 ) 22,049 23,390 (6 )
Total revenues 28,926 29,430 (2 ) 28,053 3 87,413 84,999 3
Noninterest operating expenses 23,053 22,674 2 23,355 (1 ) 68,658 72,283 (5 )
Net income 1,992 2,762 (28 ) (5,718 ) 135 7,438 (2,194 ) 439
Per Common Share Data:
Net income per common share:
Basic $ 0.14 $ 0.19 (26 )% $ (0.41 ) 134 % $ 0.52 $ (0.16 ) 425 %
Diluted 0.14 0.19 (26 ) (0.41 ) 134 0.52 (0.16 ) 425
 
Book Value $ 16.07 $ 16.33 $ 15.53 5 %
 
Weighted average common shares

outstanding:

Basic 14,129 14,128 13,959 14,128 13,867
Diluted 14,129 14,128 13,959 14,128 13,867
Balance Sheet Data:
Total assets $ 2,538,361 $ 2,449,801 4 % $ 2,538,361 $ 2,435,058 4 %
Loans (net) 1,479,394 1,466,597 1 1,479,394 1,421,307 4
Allowance for loan losses 25,596 26,158 (2 ) 25,596 23,307 10
Investment securities 792,909 796,268 792,909 820,074 (3 )
Total deposits 2,243,932 2,085,915 8 2,243,932 2,059,387 9
Core deposits 2,185,270 2,026,177 8 2,185,270 1,994,797 10
Stockholders' equity 231,822 228,101 2 231,822 219,260 6
Capital:
Total stockholders' equity to assets 9.31 % 9.13 % 9.00 %
Leverage ratio 10.02 10.18 10.15
Risk based capital ratios:
Tier 1 14.34 14.50 14.10
Total Capital 15.59 15.76 15.35
Performance Ratios:
Cost of funds 0.45 % 0.48 % 0.68 % 0.48 % 0.72 %
Deposit cost of funds 0.35 0.39 0.58 0.39 0.62
Net interest margin 3.75 3.77 3.67 3.78 3.73
Return on average assets 0.32 0.45 (0.95 ) 0.41 (0.13 )
Return on total stockholders'

average equity

3.44 4.88 (10.24 ) 4.37 (1.37 )
Asset Quality:
Net charge-offs (annualized) to

average loans outstanding

0.81 % 0.15 % 3.34 % 0.36 % 1.45 %
Nonperforming assets to total

period-end assets

1.67 1.62 1.67 1.87
Allowance for loan losses to total

period-end loans

1.70 1.75 1.70 1.61
Allowance for loan losses to

period-end nonperforming loans

68 73 68 61
Nonperforming assets to capital

and allowance

  16     16                 16     19      
Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
         
  September 30,   December 31,
(in thousands, except share and per share amounts)   2012   2011
 
Assets        
Cash and due from banks $ 138,468 $ 46,998
Federal funds sold       8,075
Cash and cash equivalents 138,468 55,073
Securities, available for sale at fair value 619,410 613,459
Securities, held to maturity at cost (fair value 2012: $177,950; 2011: $199,857 ) 173,499 196,635
Loans, held for sale 8,851 9,359
Loans receivable, net of allowance for loan losses
(allowance 2012: $25,596; 2011: $21,620)
1,479,394 1,415,048
Restricted investments in bank stock 13,725 16,802
Premises and equipment, net 80,698 82,114
Other assets   24,316     32,729
Total assets   $ 2,538,361     $ 2,421,219
 
Liabilities and Stockholders' Equity        
Deposits:
Noninterest-bearing $ 451,443 $ 397,251
Interest-bearing   1,792,489     1,674,323
Total deposits 2,243,932 2,071,574
Short-term borrowings 65,000
Long-term debt 49,200 49,200
Other liabilities   13,407     15,425
Total liabilities 2,306,539 2,201,199
Stockholders' Equity:
Preferred stock - Series A noncumulative; $10.00 par value; $1,000,000 liquidation preference;
(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 2012: 14,128,809; 2011: 14,125,346) 14,128 14,125
Surplus 156,983 156,184
Retained earnings 52,875 45,497
Accumulated other comprehensive income   7,436     3,814
Total stockholders' equity   231,822     220,020
Total liabilities and stockholders' equity   $ 2,538,361     $ 2,421,219
Metro Bancorp, Inc. and Subsidiaries        
Consolidated Statements of Operations (unaudited)
                 
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except per share amounts)   2012   2011   2012   2011
Interest Income                
Loans receivable, including fees:
Taxable $ 18,084 $ 17,773 $ 53,919 $ 53,356
Tax-exempt 929 1,027 2,693 3,002
Securities:
Taxable 5,094 5,613 16,332 16,607
Tax-exempt 148 267
Federal funds sold       2     1     4  
Total interest income   24,255     24,415     73,212     72,969  
Interest Expense                
Deposits 1,842 2,857 5,924 8,844
Short-term borrowings 43 57 170 394
Long-term debt   592     726     1,754     2,122  
Total interest expense   2,477     3,640     7,848     11,360  
Net interest income 21,778 20,775 65,364 61,609
Provision for loan losses   2,500     13,750     7,950     17,242  
Net interest income after provision for loan losses   19,278     7,025     57,414     44,367  
Noninterest Income                
Service charges, fees and other operating income 6,833 7,109 20,786 20,858
Gains on sales of loans   352     162     953     2,497  
Total fees and other income 7,185 7,271 21,739 23,355
Net impairment loss on investment securities (649 ) (315 )
Net gains (losses) on sales of securities   (37 )   7     959     350  
Total noninterest income   7,148     7,278     22,049     23,390  
Noninterest Expenses                
Salaries and employee benefits 10,021 10,113 30,725 30,746
Occupancy and equipment 3,265 3,517 9,902 11,069
Advertising and marketing 446 491 1,247 1,240
Data processing 3,220 3,265 9,883 10,492
Regulatory assessments and related costs 1,847 915 3,522 2,856
Foreclosed real estate 399 975 1,543 2,045
Other   3,855     4,079     11,836     13,835  
Total noninterest expenses   23,053     23,355     68,658     72,283  
Income before taxes 3,373 (9,052 ) 10,805 (4,526 )
Provision for federal income taxes   1,381     (3,334 )   3,367     (2,332 )
Net income   $ 1,992     $ (5,718 )   $ 7,438     $ (2,194 )
Net Income per Common Share
Basic $ 0.14 $ (0.41 ) $ 0.52 $ (0.16 )
Diluted   0.14     (0.41 )   0.52     (0.16 )
Average Common and Common Equivalent Shares Outstanding
Basic 14,129 13,959 14,128 13,867
Diluted   14,129     13,959     14,128     13,867  
Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
                             
    Quarter ended,   Year-to-date,
 
    September 30, 2012   June 30, 2012   September 30, 2011   September 30, 2012   September 30, 2011
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 $ 755,138 $ 5,094 2.70 % $ 809,219 $ 5,567 2.75 % $ 757,090 $ 5,613 2.97 % $ 784,101 $ 16,332 2.78 % $ 724,493 $ 16,607 3.06 %
Tax-exempt   24,572     225     3.67     13,696     131     3.80                 14,285     405     3.78              
Total securities 779,710 5,319 2.73 822,915 5,698 2.77 757,090 5,613 2.97 798,386 16,737 2.80 724,493 16,607 3.06
Federal funds sold 20,468 2 0.05 3,601 1 0.05 9,725 4 0.06
Total loans receivable   1,507,731     19,491     5.08     1,492,052     19,436     5.17     1,451,863     19,327     5.23     1,480,517     57,999     5.17     1,448,720     57,902     5.29  
Total earning assets   $ 2,287,441     $ 24,810     4.28 %   $ 2,314,967     $ 25,134     4.32 %   $ 2,229,421     $ 24,942     4.41 %   $ 2,282,504     $ 74,737     4.33 %   $ 2,182,938     $ 74,513     4.52 %
Sources of Funds
Interest-bearing deposits:
Regular savings $ 408,213 $ 367 0.36 % $ 398,407 $ 371 0.37 % $ 332,147 $ 355 0.42 % $ 394,997 $ 1,088 0.37 % $ 328,885 $ 1,083 0.44 %
Interest checking and money market 1,043,502 889 0.34 1,015,165 984 0.39 993,068 1,355 0.54 1,023,718 2,903 0.38 938,037 4,230 0.60
Time deposits 151,313 533 1.40 162,437 588 1.46 205,478 1,056 2.04 161,071 1,763 1.46 209,463 3,312 2.11
Public funds time   59,610     53     0.36     52,089     57     0.44     65,946     91     0.55     53,551     170     0.42     54,409     219     0.54  
Total interest-bearing deposits 1,662,638 1,842 0.44 1,628,098 2,000 0.49 1,596,639 2,857 0.71 1,633,337 5,924 0.48 1,530,794 8,844 0.77
Short-term borrowings 69,041 43 0.24 116,620 74 0.25 110,935 57 0.20 95,041 170 0.23 146,070 394 0.36
Long-term debt   49,200     592     4.80     49,200     581     4.72     54,400     726     5.33     49,200     1,754     4.75     47,532     2,122     5.95  
Total interest-bearing liabilities 1,780,879 2,477 0.55 1,793,918 2,655 0.59 1,761,974 3,640 0.82 1,777,578 7,848 0.59 1,724,396 11,360 0.88
Demand deposits (noninterest-bearing)   417,079             420,807             373,232             410,572             371,995          
Sources to fund earning assets 2,197,958 2,477 0.45 2,214,725 2,655 0.48 2,135,206 3,640 0.68 2,188,150 7,848 0.48 2,096,391 11,360 0.72
Noninterest-bearing funds (net)   89,483             100,242             94,215             94,354             86,547          
Total sources to fund earning assets   $ 2,287,441     $ 2,477     0.43 %   $ 2,314,967     $ 2,655     0.46 %   $ 2,229,421     $ 3,640     0.65 %   $ 2,282,504     $ 7,848     0.46 %   $ 2,182,938     $ 11,360     0.69 %
 
Net interest income and margin on a tax-

equivalent basis

$ 22,333 3.85 % $ 22,479 3.86 % $ 21,302 3.77 % $ 66,889 3.87 % $ 63,153 3.83 %
Tax-exempt adjustment 555   509   527   1,525   1,544  
Net interest income and margin       $ 21,778     3.75 %       $ 21,970     3.77 %       $ 20,775     3.67 %       $ 65,364     3.78 %       $ 61,609     3.73 %
 
Other Balances:
Cash and due from banks $ 56,959 $ 42,507 $ 44,322 $ 47,485 $ 43,849
Other assets 96,105 98,686 103,794 99,118 103,503
Total assets 2,440,505 2,456,160 2,377,537 2,429,107 2,330,290
Other liabilities 12,128 13,754 20,855 13,719 19,745
Stockholders' equity   230,419             227,681             221,476             227,238             214,154          
Metro Bancorp, Inc. and Subsidiaries          
Summary of Allowance for Loan Losses and Other Related Data
(unaudited)
                     
Three Months Ended Year Ended Nine Months Ended
September 30, December 31, September 30,
(dollars in thousands)   2012   2011   2011   2012   2011
 
Balance at beginning of period $ 26,158 $ 21,723 $ 21,618 $ 21,620 $ 21,618
Provisions charged to operating expenses   2,500     13,750     20,592     7,950     17,242  
28,658 35,473 42,210 29,570 38,860
Recoveries of loans previously charged-off:
Commercial and industrial 15 21 156 216 74
Commercial tax-exempt
Owner occupied real estate 1 60 8 1
Commercial construction and land development 64 11 513
Commercial real estate 55 2 15 85 10
Residential 3 68 4 29
Consumer   20     19     135     65     53  
Total recoveries   157     43     445     891     167  
Loans charged-off:
Commercial and industrial (487 ) (3,909 ) (7,945 ) (947 ) (4,822 )
Commercial tax-exempt
Owner occupied real estate (252 ) (254 ) (92 ) (254 )
Commercial construction and land development (625 ) (7,532 ) (10,629 ) (1,223 ) (8,914 )
Commercial real estate (1,580 ) (199 ) (852 ) (1,852 ) (677 )
Residential (198 ) (46 ) (188 ) (263 ) (147 )
Consumer   (329 )   (271 )   (1,167 )   (488 )   (906 )
Total charged-off   (3,219 )   (12,209 )   (21,035 )   (4,865 )   (15,720 )
Net charge-offs   (3,062 )   (12,166 )   (20,590 )   (3,974 )   (15,553 )
Balance at end of period   $ 25,596     $ 23,307     $ 21,620     $ 25,596     $ 23,307  
Net charge-offs (annualized) as a percentage of

average loans outstanding

0.81 % 3.34 % 1.43 % 0.36 % 1.45 %
Allowance for loan losses as a percentage of

period-end loans

1.70 % 1.61 % 1.50 % 1.70 % 1.61 %
Metro Bancorp, Inc. and Subsidiaries
Summary of Nonperforming Loans and Assets        
(unaudited)  
 
The following table presents information regarding nonperforming loans and assets as of September 30, 2012 and for the preceding four quarters (dollar amounts in thousands).
                     
September 30, June 30, March 31, December 31, September 30,
    2012   2012   2012   2011   2011
Nonperforming Assets
Nonaccrual loans:
Commercial and industrial $ 17,133 $ 16,631 $ 9,689 $ 10,162 $ 12,175
Commercial tax-exempt
Owner occupied real estate 3,230 3,275 2,920 2,895 3,482
Commercial construction and land development 6,826 4,002 6,623 8,511 6,309
Commercial real estate 4,571 6,174 7,771 7,820 10,400
Residential 3,149 3,233 3,412 2,912 3,125
Consumer   2,304     2,123     2,055     1,829     2,009  
Total nonaccrual loans 37,213 35,438 32,470 34,129 37,500
Loans past due 90 days or more

and still accruing

  704     154     8     692     567  
Total nonperforming loans 37,917 35,592 32,478 34,821 38,067
Foreclosed assets   4,391     4,032     6,668     7,072     7,431  
Total nonperforming assets   $ 42,308     $ 39,624     $ 39,146     $ 41,893     $ 45,498  
                     
Troubled Debt Restructurings (TDRs)
Nonaccruing TDRs $ 14,283 $ 7,924 $ 10,295 $ 10,075 $ 10,129
Accruing TDRs   20,424     17,818     15,899     12,835     14,979  
Total TDRs   $ 34,707     $ 25,742     $ 26,194     $ 22,910     $ 25,108  
 
Nonperforming loans to total loans 2.52 % 2.38 % 2.21 % 2.42 % 2.64 %
 
Nonperforming assets to total assets 1.67 % 1.62 % 1.58 % 1.73 % 1.87 %
 
Nonperforming loan coverage 68 % 73 % 73 % 62 % 61 %
 
Allowance for loan losses as a percentage

of total period-end loans

1.70 % 1.75 % 1.61 % 1.50 % 1.61 %
 
Nonperforming assets / capital plus allowance for

loan losses

  16 %   16 %   16 %   17 %   19 %

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