EX-99.1 2 exhibit991pressreleaseq420.htm EXHIBIT 99.1 Exhibit 99.1 Press Release Q4 2011


       
                            

CONTACTS

Gary L. Nalbandian
Mark A. Zody
Chairman/President
Chief Financial Officer
(717) 412-6301


METRO BANCORP REPORTS FOURTH QUARTER
NET INCOME OF $2.5 MILLION; CORE DEPOSITS UP 15%


January 27, 2012 - Harrisburg, PA - 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
%
 
 
 
 
 
 








                                                            
1


“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.



                                                            
2


Income Statement

 
Three months ended
December 31,
Year ended
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.





                                                            
3


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
2011 vs. 2010
 
Volume
Change
Rate
Change
Total
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
December 31,
 
Year ended
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.






                                                            
4


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
December 31,
 
Year ended
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
%

                                                            
5



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,
 
 
 
 
 
(dollars in thousands)
2011
 
2010
 
%
Change
 
4th Quarter 2011 Cost of 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.












                                                            
6


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:

(dollars in thousands)
December 31, 2011
% of Total
 
December 31, 2010
% of 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, 2011
 
September 30
2011
 
December 31, 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.

                                                            
7



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:

Product Description
Available for Sale
 
Held to 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:

 
12/31/2011
12/31/2010
Regulatory Guidelines “Well 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.

                                                            
8


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;

                                                            
9


•
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.





                                                            
10


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

 
 

                                                            
11


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

 
 
 
 
 
 
 
 


                                                            
12


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



                                                            
13


                                        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

 
 

                                                            
14



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
%


                                                            
15


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
%



                                                            
16