10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2012

or

[    ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from  to .

Commission file number   000-50961

METRO BANCORP, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania	25-1834776
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
3801 Paxton Street, P.O. Box 4999, Harrisburg, PA	17111-0999
(Address of principal executive offices)	(Zip Code)

 Registrant’s telephone number, including area code: (888) 937-0004

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
Common Stock, $1.00 par value	NASDAQ Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act:  None

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 of Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

The aggregate market value of voting stock held by nonaffiliates of the registrant as of the last business day of the Company’s most recently completed second fiscal quarter, June 30, 2012, was $155,594,360.

The number of shares of the registrant’s common stock, par value $1.00 per share, outstanding as of February 28, 2013 was 14,132,065.

DOCUMENTS INCORPORATED BY REFERENCE:

Part II incorporates certain information by reference to the registrant’s Annual Report to Shareholders for the fiscal year ended December 31, 2012 (the Annual Report). Part III incorporates certain information by reference to the registrant’s Proxy Statement for the 2013 Annual Meeting of Stockholders, which the Company plans to file no later than April 30, 2013.

METRO BANCORP, INC.

FORM 10-K CROSS-REFERENCE INDEX

Part I.		Page
Item 1.	Business	1
Item 1A.	Risk Factors	9
Item 1B.	Unresolved Staff Comments	17
Item 2.	Properties	17
Item 3.	Legal Proceedings	17
Item 4.	Mine Safety Disclosures	17
Part II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	18
Item 6.	Selected Financial Data	19
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
	(The information required by this item is incorporated by reference to the Company's 2012 Annual Report.)	20
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk
	(The information required by this item is incorporated by reference to the Company's 2012 Annual Report.)	20
Item 8.	Financial Statements and Supplementary Data
	(The information required by this item is incorporated by reference to the Company's 2012 Annual Report.)	20
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure (This item is omitted since it is not applicable.)	20
Item 9A.	Controls and Procedures	20
Item 9B.	Other Information	22
Part III.
Item 10.	Directors, Executive Officers and Corporate Governance	23
	(The information required by this item is incorporated by reference to the Company's 2013 Proxy Statement.)
Item 11.	Executive Compensation	23
	(The information required by this item is incorporated by reference to the Company's 2013 Proxy Statement.)
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	23
	(The information required by this item is incorporated by reference to the Company's 2013 Proxy Statement.)
Item 13.	Certain Relationships and Related Transactions, and Director Independence	23
	(The information required by this item is incorporated by reference to the Company's 2013 Proxy Statement.)
Item 14.	Principal Accounting Fees and Services	23
	(The information required by this item is incorporated by reference to the Company's 2013 Proxy Statement.)
Part IV.
Item 15.	Exhibits, Financial Statement Schedules	24
	Signatures

Part I.

Item 1. Business

Forward-Looking Statements

This Form 10-K and the documents incorporated by reference contain 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. (Metro or the Company). 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 Form 10-K, 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, including the duration of such policies;

• 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 effects of the "fiscal cliff" deal and related tax increases and their effects on economic and business conditions in general and our customers in particular;

• the effects of the failure of the federal government to reach a deal to raise the debt ceiling and the potential negative results on economic and business conditions;

• 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);

• 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;

• continued levels of loan volume origination;

• the adequacy of the allowance for loan losses;

• 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 or through acquisitions and successful integration of new or acquired entities while controlling costs;

1

• 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;

• other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services;

• 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; 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.

The Company may, from time to time, make written or oral “forward-looking statements”, including statements contained in the Company’s filings with the Securities and Exchange Commission (SEC) (including the annual report on Form 10-K and the exhibits thereto), in its reports to stockholders and in other communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

General

Metro Bancorp, Inc. is a Pennsylvania business corporation, which is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended.  The Company was incorporated as Pennsylvania Commerce Bancorp, Inc. on April 23, 1999 and became an active bank holding company on July 1, 1999 through the acquisition of 100% of the outstanding shares of Commerce Bank/Harrisburg, N.A. The Company is a one-bank holding company head­quartered in Harrisburg, Pennsylvania and provides full banking services through its subsidiary, Metro Bank (the Bank). During the second quarter of 2009, Pennsylvania Commerce Bancorp, Inc. changed its name to Metro Bancorp, Inc. and its subsidiary bank, Commerce Bank/Harrisburg changed its name to Metro Bank.  

On September 28, 2001, the Company issued $8 million of 10.00% Trust Capital Securities through Commerce Harrisburg Capital Trust II, a Delaware business trust subsidiary of the Company.  Proceeds of this offering were invested in the Bank and all $8 million of the Trust Capital Securities qualified as Tier 1 capital for regulatory capital purposes. During the fourth quarter of 2012, the Company repurchased and retired the $8 million of Trust Capital Securities. On September 29, 2006, the Company issued $15 million of 7.75% Trust Capital Securities through Commerce Harrisburg Capital Trust III, a Delaware business trust subsidiary of the Company.  Proceeds of this offering were invested in the Bank and all $15 million of the Trust Capital securities qualifies as Tier 1 Capital for regulatory capital purposes.

In 2009, upon the Bank’s acquisition of a 15% ownership interest in a local commercial property due to a foreclosure on a non-recourse loan, the Company created a new entity, MB Harrisburg Holdings, LLC to hold this property. The only asset held by this nonbanking subsidiary was the Company's percentage ownership in this property which had a fair market value of approximately

2

$2.2 million as of December 31, 2011 and was subsequently sold in the second quarter of 2012 for $1.9 million. MB Harrisburg Holdings, LLC is currently inactive.

As of December 31, 2012, the Company had approximately $2.63 billion in assets, $2.23 billion in deposits, $1.52 billion in total net loans (including loans held for sale) and $235.4 million in stockholders’ equity. The Company’s total revenues (net interest income plus noninterest income) were $117.1 million and the Company recorded net income of $10.9 million for the year ended December 31, 2012.

The Company’s principal executive offices are located at 3801 Paxton Street, Harrisburg, Pennsylvania 17111, and its telephone number is (888) 937-0004. The Company’s internet address is www.mymetrobank.com.

As of December 31, 2012, the Company had 919 employees. Management believes the Company’s relationship with its employees is good.

On March 15, 2010, the Company and Republic First Bancorp, Inc. (Republic First), parent company of Republic First Bank, terminated their November 7, 2008 Agreement and Plan of Merger (Merger Agreement). The Merger Agreement would have merged Republic First into the Company. Except for a few select provisions, such as the continued confidentiality of certain shared information, the provisions of the Merger Agreement are not effective. See the Company's Current Report on Form 8-K dated March 15, 2010 and filed with the SEC on March 15, 2010 announcing the termination of the Merger Agreement.

Metro Bank

The Company has one reportable segment, consisting of Metro Bank, as described in Note 1 of the Notes to Consolidated Financial Statements for the year ended December 31, 2012 included in Item 8 of this Report.

On July 13, 1984, the Bank filed an application to establish a state-chartered banking institution with the Pennsylvania Department of Banking, which in 2012 was renamed the Pennsylvania Department of Banking and Securities (PaDOB). On September 7, 1984, the Bank was granted preliminary approval of its application and on September 11, 1984, was incorporated as a Pennsylvania state-chartered banking institution under the laws of the Commonwealth of Pennsylvania. The Bank opened for business on June 1, 1985.

On October 7, 1994, the Bank was converted from a Pennsylvania state-chartered banking institution to a national banking association under the laws of the United States of America and changed its name to “Commerce Bank/Harrisburg, National Association.”

On June 3, 2008, Metro Bank filed an application to convert from a national charter to a state-chartered banking institution with the PaDOB. On November 7, 2008, the PaDOB approved the application to convert from a national bank charter to a state bank charter. As a result of the conversion to a state-chartered bank, the Bank is supervised jointly by the PaDOB and the FDIC. The Company is supervised by the Federal Reserve Bank (FRB), which supervises all bank holding companies.

The Bank provides a full range of retail and commercial banking services for consumers and small and mid-sized companies. The Bank’s lending and investment activities are funded principally by retail deposits gathered through its retail store office network.

Service Area

The Bank offers its lending and depository services from its main store in Lemoyne, Pennsylvania, and its thirty-two other full-service stores located in Cumberland, Dauphin, York, Berks, Lancaster and Lebanon Counties, Pennsylvania.

Retail and Commercial Banking Activities

The Bank provides a broad range of retail banking services and products including free personal checking accounts and business checking accounts (subject to a minimum balance), regular savings accounts, money market accounts, interest checking accounts, fixed rate certificates of deposit (CDs), individual retirement accounts, club accounts, debit card services, online banking (including bill payment services), credit cards, gift cards, safe deposit facilities and automated teller facilities. Its services also include a full range of lending activities including commercial and industrial, owner occupied real estate, commercial construction and land development and commercial real estate loans, consumer loan programs (including installment loans for home improvement and the purchase of consumer goods and automobiles), home equity, overdraft checking protection, consumer and business credit cards. The Bank also offers construction loans and permanent mortgages for homes. The Bank is a participant in the Small Business Administration (SBA) Loan Program and is an approved lender for qualified applicants.

3

The Bank directs its commercial lending principally toward businesses that require funds within the Bank’s legal lending limit, as determined from time to time and that otherwise do business and/or are depositors with the Bank. The Bank also participates in inter-bank credit arrangements to limit the concentration of lending to any individual. The Company is not dependent on any one or more major customers and its business is not seasonal.

The Company has focused its strategy for growth, profitable primarily on the further development of its community-based retail-banking network. The objective of this corporate strategy is to build earnings growth potential for the future as the retail store network matures. The Company’s store concept uses a prototype or standardized store office building, convenient locations and active marketing, all designed to attract retail deposits. The Company intends to open multiple stores over the next several years, subject to regulatory approval. It has been the Company’s experience that most newly opened store offices incur operating losses during the first 18 to 24 months of operations and become profitable thereafter. The Company’s retail approach to banking emphasizes a combination of long-term customer relationships, quick responses to customer needs, active marketing, convenient locations, free checking for customers maintaining certain minimum balances and extended hours of operation.The Company also is preparing to launch mobile banking.

Competitive Business Conditions / Competitive Position

The Company’s current primary service area, the South Central Pennsylvania area, including portions of Cumberland, Dauphin, York, Berks, Lancaster and Lebanon Counties, is characterized by significant competition for banking business. The Bank competes with local commercial banks as well as numerous regionally based commercial banks, some of which have assets, capital and lending limits larger than that of the Bank. The Bank competes with respect to its lending activities as well as in attracting demand, savings and time deposits with other commercial banks, savings banks, insurance companies, regulated small loan companies, credit unions and with issuers of commercial paper and other securities such as shares in money market funds. Among FDIC insured institutions, the Bank has a share of approximately 6% of the bank deposits in its market area.

Other institutions may have the ability to finance wide-ranging advertising campaigns and to allocate investment assets to regions of highest yield and demand. Many institutions offer services, such as trust services and international banking, which the Bank does not offer. Several institutions, by virtue of their greater total capital, have substantially higher lending limits than the Bank.

In order to compete with other financial institutions the Bank uses, to the fullest extent possible, the flexibility which independent status permits. This includes an emphasis on specialized services for the small businessperson and professional contacts by the Bank’s officers, directors and employees and the greatest possible efforts to understand fully the financial situation of relatively small borrowers. The size of such borrowers, in management’s opinion, often inhibits close attention to their needs by larger institutions. The Bank may seek to participate in loans with other financial institutions for amounts not to exceed the Bank’s legal lending limit (approximately $38.5 million as of December 31, 2012). As of the end of 2012, all participations totaled approximately $53.1 million. Participations are used to limit the Bank's concentration of credit to any individual or business.

In consumer transactions, the Bank believes it is able to compete on a substantially equal basis with larger financial institutions because it offers longer hours of operation, more personalized service and competitive interest rates on savings and time accounts with low minimum deposit requirements.

The Bank endeavors to be competitive with all competing financial institutions with respect to interest rates paid on time and savings deposits, its overdraft charges on deposit accounts and interest rates charged on loans.

Supervision and Regulation

The following discussion sets forth certain of the material elements of the regulatory framework applicable to bank holding companies and their subsidiaries and provides certain specific information relevant to the Company. The regulatory framework is intended primarily for the protection of depositors, other customers and the Federal Deposit Insurance Fund and not for the protection of security holders. To the extent that the following information describes statutory and regulatory provisions, it is qualified in its entirety by reference to the particular statutory and regulatory provisions. A change in applicable statutes, regulations or regulatory policy may have a material effect on the business of the Company.

The Company

The Company is subject to the jurisdiction of the SEC and of state securities commissions for matters relating to the offering and sale of its securities and is subject to the SEC’s rules and regulations relating to periodic reporting, reporting to shareholders, proxy solicitation and insider trading.

4

On April 5, 2012, President Obama signed the Jumpstart Our Business Startups Act (JOBS Act) into law. The JOBS Act is aimed at facilitating capital raising by smaller companies, banks and bank holding companies by implementing the following changes:

• raising the threshold requiring registration under the Securities Exchange Act of 1934 (Exchange Act) for banks and bank holdings companies from 500 to 2,000 holders of record;

• raising the threshold for triggering deregistration under the Exchange Act for banks and bank holding companies from 300 to 1,200 holders of record;

• raising the limit for Regulation A offerings from $5 million to $50 million per year and exempting some Regulation A offerings from state blue sky laws;

• permitting advertising and general solicitation in Rule 506 and Rule 144A offerings;

• allowing private companies to use "crowdfunding" to raise up to $1 million in any 12-month period, subject to certain conditions; and

• creating a new category of issuer, called an "Emerging Growth Company," for companies with less than $1 billion in annual gross revenue, which will benefit from certain changes that reduce the cost and burden of carrying out an equity IPO and complying with public company reporting obligations for up to five years.

While the JOBS Act is not expected to have any immediate application to the Corporation, management will continue to monitor the implementation rules for potential effects which might benefit the Corporation.

The Dodd-Frank Act, became law in 2010 and will effect significant changes to the U.S. financial system. Much of this law is subject to rulemaking by various agencies, including the Federal Reserve Board, the FDIC and the SEC. As these agencies adopt the requisite regulations, the law is progressively being implemented. Among other things, the Dodd-Frank Act:

• Created a Financial Stability Oversight Council to monitor the financial markets in order to identify systemic risks throughout the financial system, promote market discipline and respond promptly to any emerging market threats.

• Created the Bureau of Consumer Financial Protection to ensure compliance with federal consumer protection laws and to adopt rules against unfair, deceptive or abusive practices in the consumer financial services industry. This is an independent bureau within the Federal Reserve System with broad authority. The bureau will consolidate consumer protection powers from other federal agencies, including the FDIC and the FRB, current federal regulators of the Bank and Company, respectively. The rulemaking and enforcement authority of the bureau took effect on July 21, 2011. The bureau has primary rulemaking and enforcement authority with regard to consumer financial protection laws over depository institutions with more than $10 billion in assets. This authority is secondary with respect to depository institutions, such as the Bank, with assets of less than $10 billion. The FDIC will retain primary rulemaking and enforcement authority over the Bank in the area of consumer financial protection even though the bureau will have authority to require reports from and to conduct limited examinations of the Bank.

• Requires the FDIC to increase the Deposit Insurance Fund (DIF) reserve ratio to 1.35% by 2020, with offsets for the effect on banks, such as Metro, that have less than $10 billion in assets.

• Changed the calculation of each bank's FDIC insurance assessment to base the assessment on the difference between average assets and average tangible equity instead of deposits, effective April 1, 2011.

• Made permanent the federal deposit insurance limit of $250,000 which was instituted at the height of the U.S. financial crisis.

• Permits interest-bearing demand deposit accounts for businesses.

• Provides for enhanced supervision of the Company and permits direct examination of the Bank (a nonmember bank) by the Federal Reserve Board.

• Increases the restrictions on interstate bank acquisitions and the purchase of assets from insiders.

• Contains provisions requiring minimum capital levels for bank holding companies that are the same as those required for insured depository institutions, with exceptions for bank holding companies with less than $15 billion in assets as of December 31, 2009. The exceptions will permit the Company's existing trust preferred securities to continue to be treated as Tier 1 capital.

• Requires federal regulators, including the FDIC and SEC, to issue rules prohibiting depository institutions, depository institution holding companies and other financial institutions, as the federal regulators deem appropriate, from providing:

5

(i) executive officers, employees, directors or principal shareholders with excessive compensation, fees, or benefits; or (ii) compensation that could lead to a material financial loss to the covered financial institution. Federal regulators have jointly proposed rules to implement these prohibitions but no final rules have been adopted.

• Implemented several corporate governance requirements applicable to publicly traded companies, including (i) nonbinding, advisory shareholder votes on executive compensation and the frequency at which shareholders will vote on such compensation; (ii) a separate nonbinding, advisory shareholder vote on compensation payments (“golden parachutes”) to executives when a company seeks shareholder approval of an acquisition, merger, or proposed sale when such payments are triggered by the transaction; (iii) authorization for the SEC rules requiring public companies to include in a company's proxy statement certain shareholders' nominations for the board of directors; (iv) new independence requirements for a company's compensation committee; (v) requirements that a public company adopt a policy mandating recovery of incentive compensation from a current or former executive in the event a restatement of the financial statement is required due to material noncompliance with the SEC's financial reporting requirements; and (vi) enhanced disclosure of the compensation paid to a CEO to include such compensation relative to the company's performance and to the median employee compensation. Some of these requirements have become final by the adoption of implementing regulations.

As the various provisions of the Dodd-Frank Act become effective, the Company is adopting the necessary policies and procedures to assure it is in compliance.

The Sarbanes-Oxley Act of 2002 implemented a broad range of corporate governance, accounting and reporting measures for companies that have securities registered under the Securities Exchange Act of 1934, such as the Company. Specifically, the Sarbanes-Oxley Act and the various regulations promulgated thereunder, established, among other things: (i) new requirements for audit committees, including independence, expertise and responsibilities; (ii) additional responsibilities regarding financial statements for the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the reporting company; (iii) new standards for auditors and the regulation of audits, including independence provisions that restrict nonaudit services that accountants may provide to their audit clients; (iv) increased disclosure and reporting obligations for the reporting company and their directors and executive officers, including accelerated reporting of stock transactions and a prohibition on trading during pension blackout periods; (v) a prohibition on personal loans to directors and officers, except certain loans made by insured financial institutions on nonpreferential terms and in compliance with other bank regulatory requirements; and (vi) a range of new and increased civil and criminal penalties for fraud and other violations of the securities laws. The Company has addressed the requirements imposed by regulations relating to the Sarbanes-Oxley Act, including forming a Nominating and Corporate Governance Committee (and establishing its charter), adopting a Code of Ethics applicable to the Company’s CEO, CFO and principal accounting officer (in addition to the Code of Conduct already in place for all employees and Board Members of the Company) and meeting NASDAQ’s and the SEC’s procedural and disclosure requirements.

In 1999, the Gramm-Leach-Bliley Act (better known as the Financial Services Modernization Act of 1999) became law. The law permits bank holding companies to become financial holding companies and thereby affiliate with securities firms and insurance companies and engage in other activities that are financial in nature. A bank holding company may become a financial holding company if each of its subsidiary banks is well-capitalized, is well managed and has at least a satisfactory rating under the Community Reinvestment Act, by filing a declaration that the bank holding company wishes to become a financial holding company. As explained below, the Bank meets these requirements but the Company has not elected to become a financial holding company. No regulatory approval is required for a financial holding company to acquire a company, other than a bank or savings association, engaged in activities that are financial in nature or incidental to activities that are financial in nature, as determined by the Federal Reserve Board. The Financial Services Modernization Act defines "financial in nature" to include: securities underwriting, dealing and market making; sponsoring mutual funds and investment companies; insurance underwriting and agency; merchant banking activities; and activities that the Federal Reserve Board has determined to be closely related to banking. A national bank also may engage, subject to limitations on investment, in activities that are financial in nature, other than insurance underwriting, insurance company portfolio investment, real estate development and real estate investment, through a financial subsidiary of the bank, if the bank is well-capitalized, well-managed and has at least a satisfactory Community Reinvestment Act rating. Banks chartered under the Pennsylvania Banking Code are generally permitted to engage in the same types of activities that are permissible for national banks. We believe the Act and its implementing regulations have had a general effect of increasing competitive pressure in the banking industry and have had a greater impact on large regional and national institutions than on community-based institutions engaged principally in traditional banking activities, such as the Company.  Because the legislation permits bank holding companies to engage in activities previously prohibited altogether or severely restricted because of the risks they posed to the banking system, implementing regulations impose strict and detailed procedural safeguards on affiliations among banking and nonbanking companies in a holding company organization.

The Company is subject to the provisions of the Bank Holding Company Act of 1956, as amended and to supervision and examination by the FRB. Under the Bank Holding Company Act, the Company must secure the prior approval of the FRB before

6

it may own or control, directly or indirectly, more than 5% of the voting shares or substantially all of the assets of any institution, including another bank (unless it already owns a majority of the voting stock of the bank).

Satisfactory financial condition, particularly with regard to capital adequacy and satisfactory Community Reinvestment Act ratings are generally prerequisites to obtaining federal regulatory approval to make acquisitions. The Bank is currently rated “satisfactory” under the Community Reinvestment Act. The Company and the Bank are both subject to various regulatory capital requirements administered by Federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Management believes, as of December 31, 2012, that the Company and the Bank meet all capital adequacy requirements to which they are subject. Also, at December 31, 2012, the consolidated capital levels of the Company and of the Bank met the definition of a “well-capitalized” financial institution. For further discussion regarding capital adequacy, please refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, as well as Note 15 of Notes to Consolidated Financial Statements for the year ended December 31, 2012 included in Item 8 in this annual report on Form 10-K.

The Company is required to file an annual report with the Federal Reserve Board and any additional information that the Federal Reserve Board may require pursuant to the Bank Holding Company Act. The Federal Reserve Board may also make examinations of the Company and any or all of its subsidiaries. Further, a bank holding company and its subsidiaries are prohibited from engaging in certain tying arrangements in connection with the extension of credit or provision for any property or service. Thus, an affiliate of the Company, such as the Bank, may not condition the extension of credit, the lease or sale of property or furnishing of any services on (i) the customer’s obtaining or providing some additional credit, property or services from or to the Bank or other subsidiaries of the Company, or (ii) the customer’s refraining from doing business with a competitor of the Bank, the Company or of its subsidiaries. The Company or the Bank may impose conditions to the extent necessary to reasonably assure the soundness of credit extended.

Subsidiary banks of a bank holding company are subject to certain restrictions imposed by the Federal Reserve Act on (i) any extension of credit to the bank holding company or any of its subsidiaries, (ii) investments in the stock or other securities of the bank holding company and (iii) taking the stock or securities of the bank holding company as collateral for loans to any borrower.

The Bank

The Bank became a state-chartered bank on November 7, 2008, following approval by the PaDOB of the Bank’s application to convert from a national bank charter to a state bank charter. As a nationally chartered bank, the Bank had been subject to regulation, supervision and examination by the Office of the Comptroller of the Currency. The Bank is now supervised jointly by the PaDOB and the FDIC. The Bank’s deposits are insured by the FDIC up to applicable legal limits. Some of the aspects of the lending and deposit business of the Bank that are regulated by these agencies include personal lending, mortgage lending and reserve requirements. The approval of these agencies is required for the establishment of additional store offices. The Bank is also subject to numerous federal, state and local laws and regulations which set forth specific restrictions and procedural requirements with respect to the payment of dividends to the Company, extension of credit, credit practices, the disclosure of credit terms and discrimination in credit transactions. 

Under the Federal Deposit Insurance Act, subject to certain exceptions, no person may acquire control of the Bank without giving at least sixty days’ prior written notice to the FDIC. Under this Act and its regulations, control of the Bank is generally presumed to be the power to vote ten percent (10%) or more of the common stock. The FDIC is empowered to disapprove any such acquisition of control.

The amount of funds that the Bank may lend to a single borrower is limited generally under the Pennsylvania Banking Code of 1965 to 15% of the aggregate of its capital, surplus and undivided profits and capital securities (all as defined by statute and regulation).

The FDIC has authority under the Financial Institutions Supervisory Act to prohibit state banks from engaging in any activity, which, in the FDIC’s opinion, constitutes an unsafe or unsound practice in conducting their businesses. The Federal Reserve Board has similar authority with respect to the Company.

As a consequence of the extensive regulation of commercial banking activities in the United States, the Company’s business is particularly susceptible to the effects of federal and state legislation and regulations, which may affect the cost of doing business.

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA Patriot Act) imposes additional obligations on U.S. financial institutions, including banks, to implement policies, procedures

7

and controls, which are reasonably designed to detect and report instances of money laundering and the financing of terrorism. In addition, provisions of the USA Patriot Act require the federal financial institution regulatory agencies to consider the effectiveness of a financial institution's anti-money laundering activities when reviewing bank applications.

Proposed Regulatory Capital Changes

In June 2012, the Federal Reserve Bank, the FDIC and the OCC issued proposed rules that would revise bank regulatory capital requirements and the risk-weighted asset rules. These rules represent the most extensive changes to bank capital requirements in the recent past. The rules will extend large parts of a regulatory capital administration to all U.S. banks and their holding companies, other than the smallest bank holding companies (generally, those with under $500 million in consolidated assets). The implementation of the rules have been delayed several times and it is uncertain when they will go into effect at this time. Below is a summary:

Proposed rules for capital:

• Revise the definition of regulatory capital components and related calculations, which would include conservative guidelines for determining whether an instrument could qualify as regulatory capital;

• Add common equity tier 1 capital as a new regulatory capital component;

• Increase the minimum tier 1 capital ratio requirement;

• Create a capital conservation buffer that would limit payment of capital distributions and certain discretionary bonus payments to executive officers if the institution does not hold enough common equity tier 1 capital;

• Provide for a transition period for several aspects of the rule; and

• Incorporate the new and revised regulatory capital requirements into the Prompt Corrective Action rules.

Proposed rules for risk-weighted assets:

The proposal would expand the number of risk-weighted categories and increase the required capital for certain categories of assets, including higher-risk residential mortgages and higher-risk construction real estate loans. In addition, the rule would:

• revise risk weights for residential mortgages based on LTV ratios and certain loan characteristics, assigning risk weights between 35% and 200%;

• increase capital requirements for past-due loans from 100% to 150% and set the risk weight for high volatility commercial real estate loans at 150%; and

• revise the risk-weighted percentage for unused commitments with an original maturity of one year or less from 0% to 20% unless the commitment is unconditionally cancelable by the bank.

The risk-weighted asset rule will apply to all U.S. banks and savings banks and almost all of their holding companies, although smaller, “non-complex” banking organizations will not need to comply with some of the rule's requirements. The Company is in the process of assessing the impact of these proposed changes on the regulatory ratios of the Company and the Bank on the capital, operations, liquidity and earnings of the Company and Bank.

Ability-to-Repay and Qualified Mortgage Rule

Pursuant to the Dodd Frank Act, the Consumer Financial Protection Bureau issued a final rule on January 10, 2013 (effective on January 10, 2014), amending Regulation Z as implemented by the Truth in Lending Act, requiring mortgage lenders to make a reasonable and good faith determination based on verified and documented information that a consumer applying for a mortgage loan has a reasonable ability to repay the loan according to its terms. Mortgage lenders are required to determine consumers' ability to repay in one of two ways. The first alternative requires the mortgage lender to consider the following eight underwriting factors when making the credit decision: (1) current or reasonably expected income or assets; (2) current employment status; (3) the monthly payment on the covered transaction; (4) the monthly payment on any simultaneous loan; (5) the monthly payment for mortgage-related obligations; (6) current debt obligations, alimony, and child support; (7) the monthly debt-to-income ratio or residual income; and (8) credit history. Alternatively, the mortgage lender can originate “qualified mortgages,” which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements. In general, a “qualified mortgage” is a mortgage loan without negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years. In addition, to be a qualified mortgage the points and fees paid by a consumer cannot exceed 3% of the total loan amount. Loans

8

which meet these criteria will be considered qualified mortgages, and as a result generally protect lenders from fines or litigation in the event of foreclosure. Qualified mortgages that are “higher-priced” (e.g. subprime loans) garner a rebuttable presumption of compliance with the ability-to-repay rules, while qualified mortgages that are not “higher-priced” (e.g. prime loans) are given a safe harbor of compliance. The final rule, as issued, is not expected to have a material impact on our lending activities and on our statements of income or condition.

National Monetary Policy

In addition to being affected by general economic conditions, the earnings and growth of the Company are affected by the policies of regulatory authorities, including the PaDOB, the FRB and the FDIC. An important function of the FRB is to regulate the money supply and credit conditions. Among the instruments used to implement these objectives are open market operations in U.S. Government securities, setting the discount rate and changes in reserve requirements against bank deposits. These instruments are used in varying combinations to influence overall growth and distribution of credit, bank loans, investments and deposits and their use may also affect interest rates charged on loans or paid on deposits.

The monetary policies and regulations of the FRB have had a significant effect on the operating results of commercial banks in the past and are expected to continue to do so in the future. The effects of such policies upon the future business, earnings and growth of the Company cannot be predicted.

Environmental Laws

The costs and effects of compliance with environmental laws, federal, state and local, on the Company are minimal.

Available Information

The Company makes available (free of charge) under the Investor Relations link on its website, www.mymetrobank.com, its annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after the Company electronically files such material with, or furnishes to, the SEC.  Additionally, the SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at the web address, www.sec.gov. The Company's reports, proxy statements and other information are available for reading and copying at the SEC Public Reference Room at 100 F Street, N.E., Washington, DC, 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

Item 1A. Risk Factors

The Company’s financial results are subject to a number of risks. The factors discussed below highlight risks that management believes are most relevant to the Company’s current operations. This list does not capture all risks associated with the Company’s business. Additional risks, including those that generally affect the banking and financial services industries and those that management currently believes are immaterial may also negatively impact the Company’s liquidity, financial position, or results of operations.

Changes in the credit risk of our borrowers could negatively affect our results of operations and financial condition.

Our results of operations and financial condition are affected by the ability of our borrowers to repay their loans. Lending money is an essential part of the banking business. However, borrowers do not always repay their loans. The risk of nonpayment is affected by changes in economic conditions, the credit risks of a particular borrower, the duration of the loan and in the case of a collateralized loan, uncertainties as to the future value of the collateral and other factors.

Consumer loan collections are dependent on the borrower’s continuing financial stability and thus are more likely to be affected by adverse personal circumstances. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on these loans.

While we intend to maintain a prudent approach to extending credit by undertaking due diligence and credit scoring to determine the risk of each credit application, there can be no guarantee that these measures will be sufficient to mitigate our exposure to credit risk. If we fail to adequately manage our credit risk, we could be materially and adversely affected. 

9

We may be required to make further increases in our provisions for loan losses and to charge off additional loans in the future, which could materially adversely affect us.

There is no precise method of predicting loan losses. We can give no assurance that our allowance for loan losses (ALL) is or will be sufficient to absorb actual loan losses. We maintain an ALL, which is established through a provision for loan losses charged to expense, and which represents management’s best estimate of probable future losses within the Bank's existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. The level of the allowance reflects management’s continuing evaluation of specific credit risks; loan loss experience; current loan portfolio quality; present economic, political and regulatory conditions; industry concentrations and other unidentified losses inherent in the current loan portfolio. The determination of the appropriate level of the ALL inherently involves a high degree of subjectivity and judgment and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes. Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require us to increase our ALL. Increases in nonperforming loans have a significant impact on our ALL.

In addition, bank regulatory agencies periodically review our ALL and may require us to increase the provision for loan losses or to recognize further loan charge-offs, based on judgments that differ from those of management. If loan charge-offs in future periods exceed our ALL, we will need to record additional provisions to increase our ALL. Furthermore, growth in our loan portfolio would generally lead to an increase in the provision for loan losses. Any increases in our ALL will result in a negative impact on net income and capital and may have a material adverse effect on our financial condition, results of operations and cash flows. 

Our high percentage of commercial loans presents a greater risk of nonpayment.

Generally, commercial and industrial, commercial construction and land development and commercial real estate loans present a greater risk of nonpayment by a borrower than other types of loans. These loans comprised 25%, 7% and 26%, respectively, of our loan portfolio at December 31, 2012. The market value of real estate, particularly real estate held for investment, can fluctuate significantly in a relatively short period of time. In addition, the economic downturn has caused several businesses to close. If the value of the real estate or other business assets serving as collateral for our loan portfolio were to decline materially, a significant part of our loan portfolio could become under-collateralized, resulting in a material adverse effect on our provision for loan losses and on our operating results.

Our earnings and financial condition may be negatively impacted by a continued downturn in the economy of South Central Pennsylvania.

Metro’s business is concentrated in South Central Pennsylvania. Our earnings and financial condition are dependent upon the growth in businesses, population, income, deposits and housing in this geographic area. Economic growth in the South Central Pennsylvania area during 2012 was limited as businesses largely kept cash on hand, waiting for the recovery to take hold; and consumers continued to be weighed down by high unemployment and stagnant income growth. Because of the concentration of our business in this region, we are unable to spread the geographic risks over a larger area. While we experienced a 8% growth in our total deposits in 2012, a sluggish economy could slow that growth in 2013 and otherwise adversely affect our earnings and financial condition.

Unfavorable economic and market conditions due to the lingering effects of the recent global financial crisis may materially and adversely affect us.

Economic conditions in the United States stabilized somewhat in 2012 as inflation remained subdued and economic activity expanded at a moderate pace. Amid signs of an improving U.S. economy (e.g., an improved housing sector, increased consumer spending and a rebound in industrial activity), the economic outlook remains subject to high uncertainty and downside risks. Although the European debt crisis and signs of a global slowdown persist, it is the fiscal discord in Washington that poses the greatest threat to the U.S. recovery. Future economic developments could have various effects on us, including insolvency of major customers and a negative impact on the investment income we are able to earn on our investment portfolio. The potential effects of the current global financial crisis are difficult to forecast and mitigate. As a consequence, our operating results for a particular period are difficult to predict. Distress in the credit markets and issues relating to liquidity among financial institutions have resulted in the failure of some financial institutions around the world and others have been forced to seek acquisition partners. The United States and other governments have taken unprecedented steps in efforts to continue or stabilize the financial system, including investing in financial institutions. There can be no assurance that these efforts will succeed. We could be materially adversely affected by: (1) continued or accelerated disruption and volatility in financial markets; (2) continued capital and liquidity concerns regarding financial institutions; (3) limitations resulting from further governmental action in an effort to continue the

10

stabilization or provide additional regulation of the financial system; or (4) recessionary conditions that are deeper or longer lasting than currently anticipated. The Bank cannot be assured that any governmental action would benefit the Bank. 

Failure of Congress to Extend Unlimited FDIC Insurance Coverage on Noninterest-Bearing Accounts Could Have an Adverse Impact on Our Liquidity.

Unlimited FDIC insurance coverage of noninterest-bearing transaction accounts expired on December 31, 2012. This temporary program, which was part of the Dodd-Frank Act, has helped sustain liquidity of banking institutions during the financial crisis. After expiration of this program, only the first $250,000 of a customer's deposits remain insured. Expiration of the temporary program may result in our customers seeking alternatives for deposits in excess of $250,000 in order to diversify their cash portfolios and reduce the exposure to the credit of one banking institution. Such actions could create instability in our deposits and have an adverse impact on our liquidity.

The Basel III capital requirements may require us to maintain higher levels of capital, which could reduce our profitability.

If adopted as proposed, Basel III targets higher levels of base capital, certain capital buffers and a migration toward common equity as the key source of regulatory capital. Although the new capital requirements are phased in over the next decade and may change substantially before final implementation, Basel III signals a growing effort by domestic and international bank regulatory agencies to require financial institutions, including depository institutions, to maintain higher levels of capital. The direction of the Basel III implementation activities or other regulatory viewpoints could require additional capital to support our business risk profile prior to final implementation of the Basel III standards. If the Company and the Bank are required to maintain higher levels of capital, the Company and the Bank may have fewer opportunities to invest capital into interest-earning assets, which could limit the profitable business operations available to the Company and the Bank and adversely impact our financial condition and results of operations.

Future credit downgrades of the United States Government due to issues relating to debt and the deficit may adversely affect the Company.

As a result of the persistent failure of the federal government to reach agreement over the federal budget, the federal debt and the debt ceiling, certain rating agencies placed the United States government's long-term sovereign debt rating on their equivalent of negative watch and announced the possibility of a rating downgrade. This is in addition to the one-level downgrade announced by Standard and Poors in August, 2011. The rating agencies, due to constraints related to the rating of the United States, also placed government-sponsored enterprises in which the Company invests and receives lines of credit on negative watch and another downgrade of the United State's credit rating would trigger a similar downgrade in the credit rating of these government sponsored enterprises.  Furthermore, the credit rating of other entities, such as state and local governments, may also be downgraded should the United States credit rating be downgraded. The impact that a credit rating downgrade may have on the national and local economy could have an adverse effect on the Company's financial condition and results of operations.

Our results of operations may be materially and adversely affected by other-than-temporary impairment (OTTI) charges relating to our investment portfolio.

We may be required to record future impairment charges on our investment securities if they suffer declines in value that we determine are other-than-temporary. Numerous factors, including the lack of liquidity for resales of certain investment securities, the absence of reliable pricing information for investment securities, adverse changes in the business climate, adverse regulatory actions or unanticipated changes in the competitive environment, could have a negative effect on our investment portfolio in future periods. If an impairment charge is significant enough, it could affect the ability of the Bank to pay dividends to the Company, which could materially adversely affect the Company's ability to pay dividends to shareholders. Significant impairment charges could also negatively impact our regulatory capital ratios and result in us not being classified as “well-capitalized” for regulatory purposes. 

We may be required to pay higher FDIC insurance premiums or special assessments which may adversely affect our earnings.

Poor economic conditions and the resulting bank failures over the past few years have increased the costs of the FDIC and depleted its deposit insurance fund. Additional bank failures may prompt the FDIC to increase its premiums above the current levels or to issue special assessments. We generally are unable to control the amount of premiums or special assessments that our subsidiary bank is required to pay for FDIC insurance. Any future changes in the calculation or assessment of FDIC insurance premiums

11

may have a material adverse effect on our results of operations, financial condition, and our ability to continue to pay dividends on our common stock.

We plan to continue to grow rapidly but there are limitations and risks associated with rapid growth.

We experienced significant growth in assets, loans and deposits over the past several years. Our growth continues to be achieved through organic growth. We intend to continue to expand our business and operations in our existing South Central Pennsylvania footprint as well as plan to explore opening new stores in Bucks, Chester and Montgomery counties in South Eastern Pennsylvania. 

Subject to regulatory approvals, we are targeting to open approximately 9 new stores over the next five years. We anticipate the cost to construct and furnish a new store will be approximately $3 million, excluding the cost to lease or purchase the land on which the store is located. Our ability to manage growth successfully will depend on our ability to attract qualified personnel and maintain cost controls and asset quality while attracting additional loans and deposits on favorable terms with our high quality service and low fees, as well as on factors beyond our control, such as economic conditions and competition. If we grow too quickly and are not able to attract qualified personnel, control costs and maintain asset quality, this continued rapid growth could materially adversely affect us. 

Growth may require us to raise additional capital in the future, but that capital may not be available when it is needed and on terms favorable to current shareholders.

We anticipate that our existing capital will satisfy our capital requirements for the foreseeable future. In September 2009, we completed a successful common stock offering which raised nearly $78 million. This additional capital provides the foundation for future de novo store growth. However, we may at some point need to raise additional capital to support continued growth. Our ability to raise additional capital, if needed, will depend on various matters, including our financial condition, liquidity and results of operations, as well as on conditions in the capital markets at that time, which are outside of our control. The current financial crisis affecting the banking system and financial markets, which has resulted in a tightening in the credit markets, could have an adverse effect on our ability to raise additional capital. Accordingly, we cannot assure you of our ability to raise additional capital, if needed, on favorable terms, or at all. If we cannot raise additional capital when needed, our ability to further expand our operations through internal growth, branching and/or acquisitions could be materially impaired. 

If we raise capital through the issuance of additional shares of our common stock or other securities, it would likely dilute the ownership interests of current shareholders and could dilute the per share book value and earnings per share of our common stock. Consequently, a capital raise through issuance of additional shares may have an adverse impact on our stock price. Furthermore, new investors also may have rights, preferences and privileges senior to our current shareholders, which may adversely impact current shareholders.

We must continue to attract and retain qualified personnel and maintain cost controls and asset quality.

Our ability to manage growth successfully will depend on our ability to continue to attract and retain management experienced in banking and financial services and familiar with the communities in our market area. As we grow, we must be able to attract and retain qualified additional management and loan officers with the appropriate level of experience and knowledge about our market areas to implement our operating strategy. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could materially adversely affect us. If we grow too quickly and are not able to attract qualified personnel and maintain cost controls and asset quality, this continued rapid growth could materially adversely affect us. 

We may be adversely affected by lawsuits alleging trademark infringement.

On or about June 15, 2009, we changed our name and the name of the Bank and began using the red “M” logo.  Several companies in the United States, including companies in the banking and financial services industries, use variations of the word “Metro” and the letter “M” as part of a trademark or trade name.  As such, we face potential objections to our use of these marks.

On or about June 19, 2009, Members 1st Federal Credit Union (Members 1st), filed a complaint in the United States District Court for the Middle District of Pennsylvania against Metro Bancorp, Inc. and Metro Bank. Members 1st claimed federal trademark infringement, federal unfair competition and common law trademark infringement and unfair competition by Metro in Metro’s use of a red letter “M” alone, or in conjunction with its trade name “Metro”. Members 1st alleged that such use infringes Members 1st’s federally registered and common law trademark for the mark M1ST (stylized).  On February 25, 2011, the parties to this lawsuit executed and filed with the court a Stipulation and Proposed Order of Dismissal under which the complaint against Metro and the Bank was dismissed without prejudice. While Metro made certain modifications to its logos, we can provide no assurance

12

that the Members 1st lawsuit will not be reinstituted at a later time or that other trademark infringement actions will not be brought against us.

Changes in interest rates could reduce our net income and liquidity.

Our operating income, net income and liquidity depend to a great extent on our net interest margin, i.e., the difference between the interest yields we receive on loans, securities and other interest-earning assets and the interest rates we pay on interest-bearing deposits, borrowings and other liabilities. These rates are highly sensitive to many factors beyond our control, including competition, general economic conditions and monetary and fiscal policies of various governmental and regulatory authorities, including the Board of Governors of the Federal Reserve System. If the rate of interest we pay on our interest-bearing deposits, borrowings and other liabilities increases more than the rate of interest we receive on loans, securities and other interest-earning assets, our net interest income and therefore our earnings and liquidity could be materially adversely affected. Our earnings and liquidity could also be materially adversely affected if the rates on our loans, securities and other investments fall more quickly than those on our deposits, borrowings and other liabilities. Our operations are subject to risks and uncertainties surrounding our exposure to change in the interest rate environment.

Competition from other banks and financial institutions in originating loans, attracting deposits and providing various financial services may adversely affect our profitability and liquidity.

We have substantial competition in originating loans, both commercial and consumer in our market area. This competition comes principally from other banks, savings institutions, mortgage banking companies and other lenders. Several of our competitors enjoy advantages, including greater financial resources and access to capital, higher lending limits, a wider geographic presence, more accessible branch office locations, more aggressive marketing campaigns, better brand recognition, the ability to offer a wider array of services or more favorable pricing alternatives, as well as lower origination and operating costs. This competition could reduce our net income and liquidity by decreasing the number and size of loans that the Bank originates and the interest rates we may charge on these loans. 

The same competitor advantages listed above exist in attempting to attract business and consumer deposits. The Bank faces substantial competition from other insured depository institutions such as banks, savings institutions and credit unions, as well as institutions offering uninsured investment alternatives, including money market funds. These competitors may offer higher interest rates than the Bank, which could decrease the deposits that the Bank attracts or require the Bank to increase its rates to retain existing deposits or attract new deposits. Increased deposit competition could materially adversely affect our ability to generate the funds necessary for lending operations. As a result, we may need to seek other sources of funds that may be more expensive to obtain and could increase our cost of funds. 

Our share price may fluctuate.

The market price of our common stock could be subject to significant fluctuations in response to many factors, including, but not limited to: 

• actual or anticipated variations in our results of operations, liquidity or financial condition;

• changes in our earnings estimates or those of analysts;

• continuing to not pay dividends on common stock;

• publication of research reports about us or the banking industry generally;

• changes in market valuations of similar companies;

• 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;

13

• the impact of the Dodd-Frank Act and other changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance);

• changes resulting from legislative and regulatory actions with respect to the current economic and financial industry environment;

• 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 acquisition and successful integration of new or acquired entities while controlling costs;

• continued levels of loan volume origination;

• the adequacy of the ALL;

• 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;

• 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.

Stock markets, in general, have experienced over the past few years and continue to experience significant price and volume volatility and the market price of our common stock may continue to be subject to similar market fluctuations that may be unrelated to our operating performance or prospects. Increased market volatility could result in a substantial decline in the market price of our common stock.

Our common stock is not insured by any governmental entity and, therefore, an investment in our common stock involves risk.

Our common stock is not a deposit account or other obligation of any bank and is not insured by the FDIC or any other governmental entity and is subject to investment risk, including possible loss.

There may be future sales of our common stock, which may materially and adversely affect the market price of our common stock.

We issued 6.88 million shares of our common stock in a public offering in September 2009. We are not restricted from issuing additional shares of our common stock, including securities that are convertible into or exchangeable or exercisable for shares of our common stock.

Additionally, the sale of substantial amounts of our common stock or securities convertible into or exchangeable or exercisable for our common stock, whether directly by us or by existing common stockholders in the secondary market, the perception that such sales could occur or the availability for future sale of shares of our common stock or securities convertible into or exchangeable

14

or exercisable for our common stock could, in turn, materially and adversely affect the market price of our common stock and our ability to raise capital through future offerings of equity or equity-related securities. In addition, we may issue other equity securities that are senior to our common stock in the future for a number of reasons, including, without limitation, to support operations and growth, to maintain our capital ratios and to comply with any future changes in regulatory standards. 

Our common stock is currently traded on the NASDAQ Global Select Market. During the twelve months ended December 31, 2012, the average daily trading volume for our common stock was approximately 31,000 shares.  As a result, a sale of a substantial number of shares of our common stock may place significant downward pressure on the market price of our common stock. Furthermore, it may be difficult for holders to resell their shares at prices they find attractive. 

Our common stock is subordinate to our existing and future indebtedness and preferred stock and effectively subordinated to all indebtedness and preferred equity claims against our subsidiaries.

Shares of our common stock are common equity interests in us and, as such, will rank junior to all of our existing and future indebtedness and other liabilities. Additionally, holders of our common stock are subject to the prior dividend and liquidation rights of holders of our outstanding preferred stock. Our board of directors is authorized to issue additional classes or series of preferred stock without any action on the part of the holders of our common stock. Furthermore, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors and preferred stockholders.

Our ability to pay dividends depends upon the results of operations of our subsidiaries.

Neither the Company nor the Bank has declared or paid cash dividends on its common stock since the Bank began operations in June 1985. Our board of directors intends to follow a policy of retaining earnings for the purpose of increasing the Company's and the Bank's capital for the foreseeable future. Although the board of directors anticipates establishing a cash dividend policy in the future, no assurance can be given that cash dividends will be paid. 

Holders of our common stock are entitled to receive dividends if, as and when declared from time to time by our board of directors in its sole discretion out of funds legally available for that purpose, after debt service payments and payments of dividends required to be paid on our outstanding preferred stock, if any.  

While we are not subject to certain restrictions on dividends applicable to a bank, our ability to pay dividends to the holders of our common stock will depend to a large extent upon the amount of dividends paid by the Bank to Metro. The Company is a legal entity separate and distinct from its subsidiary, the Bank. There are various legal and regulatory limitations on the extent to which the Bank can, among other things, finance, or otherwise supply funds to, the Company. Specifically, dividends from the Bank are the principal source of the Company's cash funds and there are certain legal restrictions under Pennsylvania law and Pennsylvania banking regulations on the payment of dividends by state-chartered banks. The relevant regulatory agencies also have authority to prohibit the Company and the Bank from engaging in what, in the opinion of such regulatory body, constitutes an unsafe or unsound banking practice. The payment of dividends could, depending upon the financial condition of the Company and the Bank, be deemed to constitute such an unsafe or unsound practice.

“Anti-takeover” provisions may make it more difficult for a third party to acquire control of us, even if the change in control would be beneficial to our shareholders.

We are a Pennsylvania corporation. Anti-takeover provisions in Pennsylvania law and our Articles of Incorporation and Bylaws could make it more difficult for a third party to acquire control of us. These provisions could adversely affect the market price of our common stock and could reduce the amount that shareholders might receive if we are sold. For example, our Articles of Incorporation provide that our board of directors may issue up to an additional 960,000 shares of preferred stock without shareholder approval, subject to the rights of the outstanding shares of preferred stock. In addition, “anti-takeover” provisions in our Articles of Incorporation and federal and state laws, including Pennsylvania law, may restrict a third party’s ability to obtain control of the Company and may prevent shareholders from receiving a premium for their shares of our common stock. 

Our executive officers, directors and other five percent or greater shareholders own a significant percentage of our Company and could influence matters requiring approval by our shareholders.

As of December 31, 2012, our executive officers and directors as a group owned and had the right to vote approximately 8.5% of our outstanding stock and other five percent or greater shareholders, which are institutional holders who have sole or shared voting power with the beneficial owners of the stock, owned and had the right to vote approximately 30.4% of our outstanding common stock. These shareholders, acting together, would be able to influence matters requiring approval by our shareholders, including

15

the election of directors. This concentration of ownership might also have the effect of delaying or preventing a change of control of Metro.

We operate in a highly regulated environment; changes in laws and regulations and accounting principles may materially adversely affect us.

We are subject to extensive regulation, supervision and legislation which govern almost all aspects of our operations. The laws and regulations applicable to the banking industry could change at any time and are primarily intended for the protection of customers, depositors and the deposit insurance funds. Any changes to these laws, regulations or any applicable accounting principles may materially adversely affect us. The Dodd-Frank Act became law on July 21, 2010 and will implement significant changes to the U.S. financial system. Information concerning this law is incorporated by reference to the discussion in this report under "Item 1. Business-Supervision and Regulation." Among the key provisions of the Dodd-Frank Act is the creation of the Bureau of Consumer Financial Protection (Bureau), which is an independent bureau within the Federal Reserve System with broad authority in the consumer finance industry. The Bureau has the authority through rulemaking, orders, policy statements, guidance and enforcement actions to administer and enforce federal consumer financial laws. These laws were previously administered for all banking institutions by different federal agencies, including the FDIC and the Federal Reserve, both current federal regulators of the Bank and Company, respectively. Going forward, the Bureau will administer federal consumer protection laws for all financial institutions with total assets greater than $10 billion. The FDIC will continue to administer such laws for Metro as long as our total assets do not exceed $10 billion. The Bureau's jurisdiction over the Bank will be secondary to the FDIC; however, the Bureau will have authority to require reports from and to conduct limited examinations of the Bank. The impact of the Dodd-Frank Act on the Company's financial position cannot be estimated at this time. As the required regulations are adopted by the applicable federal agencies and the various provisions of the new law are implemented, the Company will adopt the necessary policies and procedures to assure its compliance.

Our internal control systems are inherently limited.

Our systems of internal controls, disclosure controls and corporate governance policies and procedures are inherently limited.  The inherent limitations of our system of internal controls include the use of judgment in decision-making that can be faulty; breakdowns can occur because of human error or mistakes; and controls can be circumvented by individual acts or by collusion of two or more people. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and may not be detected, which may have an adverse effect on our business, results of operations or financial condition. Additionally, any plans of remediation for any identified limitations may be ineffective in improving our internal controls.

Our financial performance may suffer if our information technology is unable to keep pace with growth or industry developments.

Effective and competitive delivery of our products and services is increasingly dependent upon information technology resources and processes, both those provided internally as well as those provided through third party vendors. In addition to better serving customers, the effective use of technology increases efficiency and enables us to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services to enhance customer convenience, as well as to create additional efficiencies in our operations. Many of our competitors have greater resources to invest in technological improvements. Additionally, as technology in the financial services industry changes and evolves, keeping pace becomes increasingly complex and expensive for us.  There can be no assurance that we will be able to effectively implement new technology-driven products and services, which could reduce our ability to compete effectively.

A failure in or a breach of our information systems or infrastructure, including as a result of cyber attacks, could disrupt our business, damage our reputation, and could have a material adverse effect on our business, financial condition and results of operations.

In the ordinary course of the Bank's business activities, including the ongoing maintenance of deposits, loan and other account relationships for the Bank's customers, receiving instructions and effecting transactions for those customers and other users of the Bank's products and services, the Bank regularly collects, processes, transmits and stores significant amounts of confidential information regarding its customers, employees and others. In addition to confidential information regarding the Bank's customers, employees and others, the Company and in some cases a third party, compiles, processes, transmits and stores proprietary, non-public information concerning its own business, operations, plans and strategies.

16

Information security risks for the Bank and other financial institutions have significantly increased in recent years in part because of the proliferation of new technologies, the use of the Internet and telecommunications technologies to conduct financial transactions, and the increased sophistication and activities of organized crime, hackers, terrorists and other external parties. Our Company relies on digital technologies, computer and email systems, software, and networks to conduct secure processing, transmission and storage of confidential information. In addition, to access our products and services, our customers may use personal smart phones, tablet PCs and other mobile devices that are beyond our control systems. Our technologies, systems, networks and our customers' devices have been subject to, and are likely to continue to be the target of, cyber attacks, computer viruses, malicious code, phishing attacks or information security breaches that could result in the unauthorized use, loss or destruction of our or our customers' confidential information, or otherwise disrupt our or our customers' or other third parties' business operations. We believe that it is more likely than not that such attempted attacks may continue.

Although the Company uses a variety of physical, procedural and technological safeguards to protect confidential information from mishandling, misuse or loss, these safeguards do not provide absolute assurance that mishandling, misuse or loss of the information will not occur, and that if mishandling, misuse or loss of the information did occur, those events will be promptly detected and addressed. A failure in or breach of the Company's operational or information security system, or those of a third-party service provider, as a result of cyber-attacks or information security breaches could have a material adverse affect on our business, damage our reputation, increase our costs and/or cause significant losses. Although the Company believes that it currently has adequate information security procedures and other safeguards in place and the Company will continue to make it a priority to develop and enhance controls and processes designed to safeguard our information systems from attacks, damage or unauthorized access, as information security risks and cyber threats continue to evolve, the Company may be required to expend substantial resources to further enhance its information security measures and/or to investigate and remediate any information security vulnerabilities.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

As of December 31, 2012, the Company owned 18 properties and leased 24 other properties. The properties owned are not subject to any material liens, encumbrances, or collateral assignments. The properties primarily represent current stores, future store sites, loan production offices, or other operational support locations. The principal executive office of the Company is owned and is located at 3801 Paxton Street, Harrisburg, Pennsylvania, 17111. The Bank presently has 33 stores located in the following Pennsylvania counties: Cumberland, Dauphin, York, Berks, Lancaster and Lebanon.

Item 3. Legal Proceedings

The Company is subject to certain legal proceedings and claims arising in the ordinary course of business. It is management’s opinion that the ultimate resolution of these claims will not have a material adverse effect on the Company’s financial position and results of operations. In addition, no material proceedings are pending, known to be threatened, or contemplated against the Company by governmental authorities. The Company is not required to make any disclosures pursuant to Section 6707A(e) of the Internal Revenue Code.

Item 4.  Mine Safety Disclosures

None.

17

Part II.

Item 5.  Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Metro Bancorp, Inc. common stock currently trades on the NASDAQ Global Select Market under the symbol METR.  The table below sets forth the prices on the NASDAQ Global Select Market for the period beginning January 1, 2011 through December 31, 2012.  As of December 31, 2012, there were approximately 3,000 holders of record of the Company’s common stock.

	Sales Price
Quarter Ended:	High		Low
December 31, 2012	$	13.40	$	11.69
September 30, 2012	13.17		11.46
June 30, 2012	12.50		10.56
March 31, 2012	11.93		8.48
December 31, 2011	$	9.30	$	7.75
September 30, 2011	11.90		8.30
June 30, 2011	12.90		10.30
March 31, 2011	12.85		10.88

Dividends and Dividend History

The Company distributed to common stockholders 5% common stock dividends in December 1992 and annually from February 1994 through February 2004. The Company also distributed to common stockholders a two-for-one stock split (payable in the form of a 100% stock dividend) on August 7, 1995 and again on February 25, 2005. Neither the Company nor the Bank has declared or paid cash dividends on its common stock since the Bank began operations in June 1985. The board of directors intends to follow a policy of retaining earnings for the purpose of increasing the Company’s and the Bank’s capital for the foreseeable future. Although the board of directors anticipates establishing a cash dividend policy in the future, no assurance can be given that cash dividends will be paid.

The holders of common stock of the Company are entitled to receive dividends as may be declared by the board of directors with respect to the common stock out of funds of the Company. While the Company is not subject to certain restrictions on dividends and stock redemptions applicable to a bank, the ability of the Company to pay dividends to the holders of its common stock will depend to a large extent upon the amount of dividends paid by the Bank to the Company. Regulatory authorities restrict the amount of cash dividends the Bank can declare without prior regulatory approval. Presently, the Bank cannot declare or pay dividends unless it has established a surplus account equal to at least the amount of its capital and the dividend is paid out of retained earnings for the year of the dividend payment subject to risk-based capital requirements. Further, the dividend payment must not result in a reduction of the surplus account.

The ability of the Company to pay dividends on its common stock in the future will depend on the earnings and the financial condition of the Bank and the Company. The Company’s ability to pay dividends will be subject to the prior payment by the Company of principal and interest on any debt obligations it may incur in the future as well as other factors that may exist at the time.

Information concerning securities authorized for issuance under equity compensation plans is set forth in Note 14 to the Consolidated Financial Statements included in the Company’s 2012 Annual Report attached to this Form 10-K as Exhibit 13 and is incorporated herein by reference. Additional information concerning equity compensation plans is included in Part III Item 12 of this Form 10-K. The Company has prepared a graph comparing the cumulative shareholder return on the Company’s common stock as compared to the NASDAQ Bank Index and the NASDAQ Composite Market Index for the years ended December 31, 2008 to December 31, 2012. This graph is included in the Company’s 2012 Annual Report to Shareholders after Table 19 in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

18

Item 6. Selected Financial Data

Metro Bancorp, Inc.

Selected Consolidated Financial Data

		At or For the Year Ended December 31,
(dollars in thousands, except per share data)		2012			2011			2010			2009			2008
Balance Sheet Data:
Total assets		$	2,634,875		$	2,421,219		$	2,234,472		$	2,147,759		$	2,140,527
Loans held for sale		15,183			9,359			18,605			12,712			41,148
Loans receivable (net)		1,503,515			1,415,048			1,357,587			1,429,392			1,423,064
Securities available for sale		675,109			613,459			438,012			388,836			341,656
Securities held to maturity		269,783			196,635			227,576			117,815			152,587
Deposits		2,231,291			2,071,574			1,832,179			1,814,733			1,633,985
Short-term borrowings and long-term debt		154,025			114,200			169,875			105,475			379,525
Stockholders' equity		235,387			220,020			205,351			200,022			114,470
Income Statement Data:
Net interest income		$	87,198		$	82,999		$	79,850		$	75,606		$	78,705
Provision for loan losses		10,100			20,592			21,000			12,425			7,475
Noninterest income		29,854			30,452			29,380			24,457			25,433
Noninterest expenses		91,144			94,014			97,103			91,710			77,909
Income (loss) before income taxes		15,808			(1,155		)	(8,873		)	(4,072		)	18,754
Net income (loss)		10,894			289			(4,337		)	(1,898		)	12,901
Common Share Data:
Net income (loss) per common share:	Basic	$	0.77		$	0.02		$	(0.33	)	$	(0.24	)	$	2.02
	Diluted	0.77			0.02			(0.33		)	(0.24		)	1.97
Book value per share		16.58			15.50			14.86			14.80			17.60
Selected Ratios:
Performance
Return on average assets		0.44		%	0.01		%	(0.20		)%	(0.09		)%	0.64		%
Return on average stockholders' equity		4.76			0.13			(2.09		)	(1.34		)	11.42
Net interest margin		3.74			3.73			3.89			3.80			4.09
Liquidity and Capital
Average loans (including loans HFS) to average   deposits		71.60		%	74.67		%	76.60		%	86.83		%	85.07		%
Average stockholders' equity to average   total assets		9.31			9.18			9.46			6.77			5.57
Risk-based capital:	Total	15.22			15.36			15.83			14.71			10.68
	Tier 1	13.97			14.11			14.58			13.88			9.67
Leverage ratio		9.61			9.99			10.68			11.31			7.44
Asset Quality:
Net charge-offs to average loans   outstanding		0.44		%	1.43		%	0.98		%	1.02		%	0.11		%
Nonperforming loans to total year-end loans		2.13			2.42			3.83			2.61			1.88
Nonperforming assets to total year-end   assets		1.33			1.73			2.67			2.12			1.30
ALL to total year-end loans		1.65			1.50			1.57			1.00			1.16
ALL to year-end nonperforming loans		77			62			41			38			62

19

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information required by this item is incorporated by reference to the Company’s 2012 Annual Report, which is attached to this Form 10-K as Exhibit 13.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

The information required by this item is incorporated by reference to the Company’s 2012 Annual Report, which is attached to this Form 10-K as Exhibit 13.

Item 8. Financial Statements and Supplementary Data

The information required by this item is incorporated by reference to the Company’s 2012 Annual Report, which is attached to this Form 10-K as Exhibit 13.

Item  9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

The Company, under supervision and with the participation of its management, including its principal executive officer and principal financial officer, evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934 (Exchange Act). Based on this evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are adequate and effective as of December 31, 2012 to ensure that material information relating to the Company and its consolidated subsidiaries is made known to them by others within those entities, particularly during the period in which this report was prepared.

During the most recent fiscal quarter, there have been no changes in the Company’s internal control over financial reporting that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting. The Report on Management’s Assessment of Internal Control Over Financial Reporting is provided in the next section.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. The Company conducts periodic evaluations to enhance, where necessary, its procedures and controls.

20

Report on Management’s Assessment of Internal Control over Financial Reporting

Metro Bancorp, Inc. is responsible for the preparation, integrity and fair presentation of the consolidated financial statements included in this annual report. The consolidated financial statements and notes included in this annual report have been prepared in conformity with United States generally accepted accounting principles and necessarily include some amounts that are based on management’s best estimates and judgments.

We, as management of Metro Bancorp, Inc., are responsible for establishing and maintaining effective internal control over financial reporting that is designed to produce reliable financial statements in conformity with United States generally accepted accounting principles.  Internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and disposition of the assets of the Company; provide reasonable assurance that the transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, that receipts and expenditures of the Company are only being made in accordance with authorizations of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for liability through a program of internal audits.  Actions are taken to correct potential deficiencies as they are identified.

Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the Company’s system of internal control over financial reporting as of December 31, 2012, in relation to criteria for effective internal control over financial reporting as described in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as of December 31, 2012, its system of internal control over financial reporting is effective and meets the criteria of Internal Control – Integrated Framework.

ParenteBeard LLC, an independent registered public accounting firm, has audited the consolidated  financial  statements of  the Company for the year ended December 31, 2012, appearing elsewhere in this annual report and has issued an audit report on the effectiveness of  the Company's internal control over financial reporting as of December 31, 2012, as stated in their report, which is included herein.

		/s/ Gary L. Nalbandian
		Gary L. Nalbandian
		Chairman, President and Chief Executive Officer
		(Principal Executive Officer)
		/s/ Mark A. Zody
		Mark A. Zody
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)
Date:	March 15, 2013

21

Item 9B. Other Information

None.

22

Part III.

Item 10 . Directors, Executive Officers and Corporate Governance

Information responsive to this item is incorporated by reference to the Company’s definitive proxy statement for the 2013 Annual Meeting of Shareholders, which we plan to file with the SEC on or before April 30, 2013.

In addition to a Code of Business Conduct and Ethics applicable to all employees and the board of directors, the Company has adopted a Code of Ethics for Senior Financial Officers that is specifically applicable to its CEO, CFO and Principal Accounting Officer.  Both of these codes are posted under the Investor Relations link on the Company’s website, www.mymetrobank.com.

Item 11. Executive Compensation

Information responsive to this item is incorporated by reference to the Company’s definitive proxy statement for the 2013 Annual Meeting of Shareholders, which we plan to file with the SEC on or before April 30, 2013.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Information responsive to this item is incorporated by reference to the Company’s definitive proxy statement for the 2013 Annual Meeting of Shareholders, which we plan to file with the SEC on or before April 30, 2013.

Item 13. Certain Relationships and Related Transactions and Director Independence

Information responsive to this item is incorporated by reference to the Company’s definitive proxy statement for the 2013 Annual Meeting of Shareholders, which we plan to file with the SEC on or before April 30, 2013.

Item 14. Principal Accounting Fees and Services

Information responsive to this item is incorporated by reference to the Company’s definitive proxy statement for the 2013 Annual Meeting of Shareholders, which we plan to file with the SEC on or before April 30, 2013.

23

Part IV.

Item 15. Exhibits, Financial Statement Schedules

(a)(1)	The following financial statements are incorporated by reference in Part II, Item 8 hereof:
	Consolidated Balance Sheets as of December 31, 2012 and 2011
	Consolidated Statements of Operations for the years ended December 31, 2012, 2011 and 2010
	Consolidated Statements of Comprehensive Income for the years ended December 31, 2012, 2011 and 2010
	Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2012, 2011 and 2010
	Consolidated Statements of Cash Flows for the years ended December 31, 2012, 2011 and 2010
	Notes to Consolidated Financial Statements
	Reports of Independent Registered Public Accounting Firm
(a)(2)	Financial Statement Schedules (This item is omitted since information required is either not applicable or is included in the footnotes to the Annual Financial Statements.)
(a)(3)	List of Exhibits:
3.1	Articles of Incorporation of Metro Bancorp, Inc. (incorporated by reference to Appendix A to the Company’s 2011 Proxy Statement, filed with the SEC on April 22, 2011)
3.2	Amended and Restated Bylaws of Metro Bancorp, Inc. (incorporated by reference to Exhibit 3(ii) to the Company’s Current Report on Form 8-K, filed with the SEC on October 25, 2011)
4.1	Description of the Metro Bancorp, Inc. Dividend Reinvestment and Stock Purchase Plan, as amended (incorporated by reference to the description of the Plan contained in the prospectus filed with the Company's Registration Statement No. 333-178371 on Form S-3D filed with the SEC on December 7, 2011)
10.1	Master Agreement dated as of November 7, 2008 between Fiserv Solutions, Inc. and Commerce Bank/Harrisburg, N.A. (now Metro Bank, incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the SEC on November 13, 2008)
10.2	Stipulation and Consent to the Issuance of an Order to Pay Civil Money Penalty dated September 21, 2012 between the FDIC and Metro Bank (incorporated by reference to Exhibit 10.2 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on November 9, 2012)
10.3	Termination of consent order dated October 16, 2012 issued by the FDIC to Metro Bank
10.4	The Company’s 1996 Employee Stock Option Plan, as amended November 21, 2008 (incorporated by reference to Exhibit 10.4 to the Company’s 2008 Annual Report on Form 10-K filed with the SEC on March 16, 2009)*
10.5	The Company’s 2001 Directors Stock Option Plan, as amended October 15, 2010 (incorporated by reference to Exhibit 10.7 to the Company's 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011)*
10.6	The Company's 2011 Directors Stock Option Plan, as amended October 15, 2010 (incorporated by reference to Exhibit 10.8 to the Company's 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011)*
10.7	The Company's 2006 Employee Stock Option and Restricted Stock Plan, as amended and restated (incorporated by reference to Appendix B to the Company's 2010 Proxy Statement, filed with the SEC on June 7, 2010)*
10.8	Amended and Restated Employment Agreement effective December 17, 2010 with Gary L. Nalbandian (incorporated by reference to Exhibit 10.11 to the Company's 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011)*
10.9	Form of Amended and Restated Employment Agreement effective December 17, 2010 with James R. Ridd (incorporated by reference to Exhibit 10.13 to the Company's 2010 Annual Report on Form 10-K filed with the SEC on March 16, 2011)*
10.10	Employment Agreement effective June 1, 2012 with Percival B. Moser, III (incorporated by reference to Exhibit 10.2 to the Company's Form 8-K filed with the SEC on June 6, 2012)*
10.11	Amended and Restated Employment Agreement effective June 1, 2012 with Mark A. Zody (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the SEC on June 6, 2012)*
10.12	Employment Agreement effective September 17, 2012 with Adam L. Metz (incorporated by reference to Exhibit 10.1 to the Company's Form 8-K filed with the SEC on September 20, 2012)*
11	Calculation of EPS
	(The information required by this item appears in Note 13 of the Consolidated Financial Statements of the Company’s 2012 Annual Report to Stockholders and is incorporated by reference herein.)
13	Metro Bancorp, Inc. 2012 Annual Report to Shareholders
21	Subsidiaries of the Company

24

23	Consent of ParenteBeard LLC.
24.1	Powers of Attorney executed by the Company’s Directors (included on Signature Page of this Annual Report on Form 10-K)
31.1	Certification of CEO, required by SEC Rule 13a-14(a)/15d-14(a)
31.2	Certification of CFO, required by SEC Rule 13a-14(a)/15d-14(a)
32	Section 1350 Certification by CEO and CFO
99	Agreement to Furnish Debt Instruments
(b)	Exhibits – The exhibits required to be filed as part of this report are submitted as a separate section of this report.
(c)	Financial Statement Schedules – None required.
101	Interactive data file containing the following financial statements formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets at December 31, 2012 and 2011; (ii) the Consolidated Statements of Income for the twelve months ended December 31, 2012, 2011 and 2010; (iii) the Consolidated Statements of Comprehensive Income for the twelve months ended December 31, 2012, 2011 and 2010; (iv) the Consolidated Statements of Stockholders' Equity for the twelve months ended December 31, 2012, 2011 and 2010; (v) the Consolidated Statements of Cash Flows for the twelve months ended December 31, 2012, 2011 and 2010; and (vi) the Notes to Consolidated Financial Statements. As provided in Rule 406T of Regulation S-T, this interactive data file shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, and shall not be deemed "filed" or part of any registration statement or prospectus for purposes of Section 11 or 12 under the Securities Act of 1933, or otherwise subject to liability under those sections.

* Denotes a compensatory plan or arrangement

25

Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

		Metro Bancorp, Inc. (Registrant)
Date:	March 15, 2013	By	/s/ Gary L. Nalbandian
			Gary L. Nalbandian
			Chairman and President
Date:	March 15, 2013	By	/s/ Mark A. Zody
			Mark A. Zody
			Chief Financial Officer
			(Principal Accounting Officer)

Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

KNOW ALL MEN BY THESE PRESENTS, that each Director whose signature appears below constitutes and appoints Gary L. Nalbandian, Chairman, President and Chief Executive Officer and Mark A. Zody, Chief Financial Officer and Treasurer and each of them, his true and lawful attorney-in-fact, as agent with full power of substitution and resubstitution for him and in his name, place and stead, in any and all capacities, to sign any and all amendments to this Metro Bancorp, Inc. Annual Report on Form 10-K for the year ending December 31, 2012, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully and to all intents and purposes as they might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

26

Signature	Title	Date
/s/ Gary L. Nalbandian	Chairman of the Board, President and Director (Principal Executive Officer)	March 15, 2013
Gary L. Nalbandian
/s/ Mark A. Zody	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	March 15, 2013
Mark A. Zody
/s/ James R. Adair	Director	March 15, 2013
James R. Adair
/s/ John J. Cardello	Director	March 15, 2013
John J. Cardello
/s/ Douglas S. Gelder	Director	March 15, 2013
Douglas S. Gelder
/s/ Alan R. Hassman	Director	March 15, 2013
Alan R. Hassman
/s/ J. Rodney Messick	Director	March 15, 2013
J. Rodney Messick
/s/ Howell C. Mette	Director	March 15, 2013
Howell C. Mette
/s/ Michael A. Serluco	Director	March 15, 2013
Michael A. Serluco
/s/ Samir J. Srouji, M.D.	Director	March 15, 2013
Samir J. Srouji, M.D.

27

EX-13

Exhibit 13

Management's Discussion and Analysis of Financial Condition and Results of Operation

Management's Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our consolidated balance sheets and statements of operations. This section should be read in conjunction with our Consolidated Financial Statements and accompanying Notes.

Executive Summary

For Metro Bancorp, Inc. (Metro or the Company) 2012 proved to be a turning point year. By remaining true to our model of AMAZING our customers through unparalleled conveniences and services designed to help them realize their financial goals, Metro was able to achieve strong growth in loans, deposits, net income and net income per share.

Our solid 2012 performance is reflected in our net income of $10.9 million, a significant improvement over the $289,000 we recorded for net income in 2011. Metro was able to reduce not only its level of nonperforming assets, which translated into lower loan loss provisions, but also its level of noninterest expenses by 3% for the second consecutive year. The stock market reacted positively to the Company's progress and, as a result, the market price of Metro's common stock increased 58% in 2012.

Metro also made great progress with respect to resolving regulatory matters in 2012 and, as a result, the Pennsylvania Department of Banking and the Federal Deposit Insurance Corporation (FDIC) both terminated their respective consent orders with Metro's subsidiary bank in 2012.

This certainly is a pivotal time for Metro. At the core of this progress are our Team Members - the heart of our brand. No matter how hard our competitors try to replicate the services we forged 28 years ago, none have been capable of providing the Metro experience. Our Team Members go above and beyond what Customers would ever expect. Well-trained, experienced and enthusiastic, it is our people that differentiate Metro from other banks and are helping to lead us to an even stronger tomorrow.

Our goal for 2013 is to build upon the achievements and momentum of 2012 as we strive to maintain accelerated and profitable growth in both loans and deposits by attracting, retaining and deepening customer relationships in the markets we serve. Our 2012 highlights are summarized below.

Income Statement Highlights:

• Net income for the year 2012 totaled $10.9 million, or $0.77 per common share, compared to $289,000, or $0.02 per common share for 2011.

• Total revenues for 2012 were $117.1 million, up $3.6 million, or 3%, compared to 2011.

• The Company's net interest margin on a fully tax-equivalent basis for 2012 was 3.83%, up over 3.82% for 2011.

• The provision for loan losses was $10.1 million, down 51% from $20.6 million for the prior year.

• Noninterest expense decreased $2.9 million, or 3%, compared to the prior year as the Company was able to significantly reduce expenses in several categories.

Balance Sheet Highlights:

• Total assets reached $2.63 billion, a 9% increase, over one year ago.

• Total deposits increased to $2.23 billion, up $159.7 million, or 8%, over the past twelve months.

• Core deposits grew $148.0 million, or 7%, over the previous twelve months and total $2.2 billion at December 31, 2012.

• Investment securities grew $134.8 million, or 16.6%, during 2012, to $944.9 million.

• Net loans grew $88.5 million, or 6%, over the past twelve months to $1.50 billion.

1

• Our allowance for loan losses totaled $25.3 million, or 1.65%, of total loans at December 31, 2012 as compared to $21.6 million, or 1.50%, of total loans at December 31, 2011.

• Nonperforming asset balances declined $6.8 million in 2012 to 1.33% of total assets at December 31, 2012 compared to 1.73% at December 31, 2011. During the past twelve months, the allowance for loan losses (allowance or ALL) to nonperforming loan coverage ratio has increased from 62% to 77%.

• The Company's consolidated capital levels remained strong with a total risk-based capital ratio of 15.22%, a Tier 1 leverage ratio of 9.61% and a tangible common equity to tangible assets ratio of 8.90%.

• Stockholders' equity increased by $15.4 million, or 7%, over the past twelve months to a total of $235.4 million at December 31, 2012. At December 31, 2012, the Company's book value per share was $16.58. The market price of Metro common stock increased 58% throughout 2012 from $8.38 per share to $13.22 per share.

Key financial highlights for 2012 compared to 2011 are summarized in the following table:

TABLE 1

	December 31,				%
(dollars in thousands)	2012		2011		Change
Total assets	$	2,634,875	$	2,421,219	9	%
Total loans (net)	1,503,515		1,415,048		6
Total deposits	2,231,291		2,071,574		8
Stockholders' equity	235,387		220,020		7
	Years Ended December 31,				%
(dollars in thousands, except per share data)	2012		2011		Change
Total revenues	$	117,052	$	113,451	3	%
Provision for loan losses	10,100		20,592		(51	)
Noninterest expenses	91,144		94,014		(3	)
Net income	10,894		289		3,670
Diluted net income per common share	0.77		0.02		3,750

Application of Critical Accounting Policies

Our accounting policies are fundamental to understanding Management's Discussion and Analysis of Financial Condition and Results of Operations. Our accounting policies are more fully described in Note 1 of the Notes to Consolidated Financial Statements for December 31, 2012 included herein. Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). These principles require our management to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and accompanying notes. Since future events and their effects cannot be determined with absolute certainty, actual results may differ from those estimates. Management makes adjustments to its assumptions and estimates when facts and circumstances dictate. We evaluate our estimates and assumptions on an ongoing basis and predicate those estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Management believes the following critical accounting policies encompass the more significant assumptions and estimates used in preparation of our consolidated financial statements.

Allowance for Loan Losses. The ALL represents the amount available for estimated probable losses embedded in our loan portfolio. While the ALL is maintained at a level believed to be adequate by management for estimated probable losses in the loan portfolio, the determination of the allowance is inherently subjective, as it involves significant estimates by management, all of which may be susceptible to significant change.

While management uses available information to make such evaluations, future adjustments to the allowance and the provision for loan losses may be necessary if economic conditions or loan credit quality differ materially from the estimates and assumptions used in making the evaluations. The use of different assumptions could materially impact the level of the allowance and, therefore, the provision for loan losses to be charged against earnings. Such changes could impact future financial results.

2

Monthly, systematic reviews of our loan portfolios are performed to identify probable losses and assess the overall probability of collection. These reviews include an analysis of historical loss experience, which results in the identification and quantification of loss factors. These loss factors are used in determining the appropriate level of allowance to cover the estimated probable losses in specific loan types. The estimates of loss factors can be impacted by many variables, such as the number of years of actual loss history included in the evaluation.

As part of the quantitative analysis of the adequacy of the ALL, management bases its calculation of probable future loan losses on those loans collectively reviewed for impairment on a two-year period of actual historical losses. Metro Bank (the Bank) may adjust the number of months used in the historical loss calculation.

Significant estimates are involved in the determination of any loss related to impaired loans. The evaluation of an impaired loan is based on either (1) discounted cash flows using the loan's effective interest rate, (2) the fair value of the collateral for collateral-dependent loans, or (3) the observable market price of the impaired loan. Each of these estimates involves management's judgment.

In addition to calculating the loss factors, we may periodically adjust the factors for changes in levels and trends of charge-offs, delinquencies and nonaccrual loans; material changes in the mix, volume, or duration of the loan portfolio; changes in lending policies and procedures including underwriting standards; changes in the experience, ability and depth of lending management and other relevant staff; the existence and effect of any concentrations of credit and changes in the level of such concentrations; and changes in national and local economic trends and conditions, among other things. Management judgment is exercised at many levels in making these evaluations.

An integral aspect of our risk management process is allocating the ALL to various components of the loan portfolio based upon an analysis of risk characteristics, demonstrated losses, industry and other segmentations and other judgmental factors.

Other-than-Temporary Impairment (OTTI) of Investment Securities. We perform no less than quarterly reviews of the fair value of the securities in the Company's investment portfolio and evaluate individual securities for declines in fair value that may be other-than-temporary. If declines are deemed other-than-temporary, an impairment loss is recognized against earnings for the portion of the impairment deemed to be related to credit.  The remaining portion of the impairment that is not related to credit is written down to its current fair value through other comprehensive income.

Stock-Based Compensation. The Company recognizes compensation costs related to share-based payment transactions in the income statement based on the grant-date fair value of the stock-based compensation issued. Compensation costs are recognized over the period that an employee provides service in exchange for the award. The grant-date fair value and ultimately, the amount of compensation expense recognized, are dependent upon certain assumptions we make such as the expected term the options will remain outstanding, the dividend yield and the volatility of our Company stock price and a risk free interest rate. This critical accounting policy is more fully described in Note 1 and Note 14 of the Notes to Consolidated Financial Statements included elsewhere in this annual report for the year ended December 31, 2012.

Fair Value Measurements.The Company is required to disclose the fair value of its financial instruments that are measured at fair value within a fair value hierarchy. The  fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value, giving the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable inputs (level 3 measurements). These disclosures appear in Note 17 of the Notes to Consolidated Financial Statements for the year ended December 31, 2012. Judgment is involved not only with deriving the estimated fair values but also with classifying the particular assets recorded at fair value in the fair value hierarchy. Estimating the fair value of impaired loans or the value of collateral securing foreclosed assets requires the use of significant unobservable inputs (level 3 measurements). At December 31, 2012, the fair value of assets based on level 3 measurements constituted 2% of the total assets measured at fair value. The fair value of collateral securing impaired loans or constituting foreclosed assets is generally determined based upon independent third party appraisals of the properties, recent offers, or prices on comparable properties in the proximate vicinity. Such estimates can differ significantly from the amounts the Company would ultimately realize from the loan or disposition of underlying collateral.

The Company's available for sale (AFS) investment security portfolio constitutes 98% of the total assets measured at fair value and all securities are classified as a level 2 fair value measurement (quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability). Management utilizes third party service providers to aid in the determination of the fair value of the portfolio. Most securities are not quoted on an exchange, but are traded in active markets and fair values were obtained from matrix pricing on similar securities.

Deferred Taxes.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.  Deferred tax assets and liabilities

3

are measured using tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be used.  

The Company assesses whether or not the deferred tax assets would be realized in the future if the Company would not have future taxable income to use as an offset. If future taxable income is not expected to be available to use, a valuation allowance is required to be recognized. A valuation allowance would result in additional income tax expense in the period. The Company assesses if it is more likely than not that a deferred tax asset will not be realized. The determination of a valuation allowance is subjective and dependent upon judgment concerning both positive and negative evidence to support the net deferred tax assets will be utilized. In order to evaluate whether or not a valuation allowance is necessary, the Company uses current forecasts of future income, reviews possible tax planning strategies and assesses current and future economic and business conditions. Negative evidence utilized would include any cumulative losses in previous years and general business and economic trends. At December 31, 2012, the Company conducted such an analysis to determine if a valuation allowance was required and concluded that a valuation allowance was not necessary. A valuation allowance, if required, could have a significant impact on the Company's future earnings.

Results of Operations

We derive total revenues (net interest income plus noninterest income) from various sources, including:

• Our loan portfolio;

• Our securities portfolio;

• Fees associated with customer deposit accounts;

• Loan servicing;

• Sales of loans and securities; and

• Electronic banking services.

We also earn fees from issuing loan commitments, standby letters of credit and from various cash management services.

For the year 2012, total revenues were $117.1 million, up $3.6 million, or 3%, compared to $113.5 million earned in 2011.

Average Balances and Average Interest Rates

Table 2 that follows sets forth balance sheet items on a daily average basis for the years ended December 31, 2012, 2011 and 2010 and presents the daily average interest rates earned on assets and the daily average interest rates paid on liabilities for such periods. During 2012, average interest-earning assets were $2.31 billion, an increase of $104.8 million, or 5%, over 2011. This was the result of an increase in the average balance of investment securities of $69.6 million, or 9%, and an increase in the average balance of loans receivable (including loans held for sale) of $41.7 million, or 3%. The growth in the average balance of interest-earning assets was funded, primarily by a $94.8 million, or 6%, increase in the average balance of interest-bearing deposits as well as an increase in the average balance of noninterest-bearing demand deposits of $46.7 million, or 13%, partially offset by a decrease in the average balance of short-term borrowings of $41.6 million, or 33%.

The tax-equivalent yield on total interest-earning assets decreased by 22 basis points (bps), from 4.49% in 2011 to 4.27% in 2012.  This decrease resulted from lower yields on our loan and securities portfolios during 2012. Floating rate loans represent approximately 58% of our total loans receivable portfolio at December 31, 2012 compared to 52% at December 31, 2011. The interest rates charged on the majority of these loans are tied to the New York prime lending rate of 3.25% and are much lower than the interest rates associated with the fixed rate loans in our portfolio. Based on the amortized cost, approximately 98% of our investment securities have a fixed interest rate, however, yields received on most new investment securities purchased in 2012 were lower than yields earned on the existing portfolio due to the overall low level of market interest rates present throughout 2012. As loans which we originated and investment securities we purchased in prior years with higher fixed interest rates continued to amortize and/or mature throughout 2012, we reinvested these cash flows in new loan originations and purchases of investment securities at much lower yields given the current continued low interest rate environment. This has constrained our growth in interest income and reduced our interest-earning asset yields despite our 5% growth in average earning assets in 2012 over 2011. Given the continued low level of general market interest rates and the Federal Reserve Open Market Committee's stated intention to keep such rates low for an indefinite future period, we expect the yields we receive on our interest-earning assets will continue to remain at their current levels, or even lower, until interest rates begin to increase.

Our average deposit cost of funds decreased from 0.59% in 2011 to 0.37% for 2012. The decrease in the Company's deposit cost of funds is primarily related to the combination of time deposits that matured and renewed at lower interest rates as well as lower interest rates paid in 2012 on many of our interest checking, savings and money market deposit accounts. For time deposits, the average rate paid in 2012 was 1.44%, down 63 bps from 2.07% in 2011. Time deposits that were originated in previous years at much higher interest rates and matured in 2012 were either renewed into new certificates of deposit (CDs) with much lower interest rates or shifted by our customers to their checking and/or savings accounts which typically pay even lower rates of interest than CDs. The average interest rate paid on

4

our interest checking and money market accounts decreased by 20 bps from 0.56% in 2011 to 0.36% in 2012. Interest rates paid on these deposits were reduced as part of our asset/liability management strategy to offset the impact of lower yields on our interest-earning assets and to preserve our level of net interest income. The average interest rate paid on public fund time deposits decreased by 13 bps from 0.53% in 2011 to 0.40% in 2012. At December 31, 2012, approximately 30% of our total deposits were those of local municipalities, school districts, not-for-profit organizations or corporate cash management customers where the interest rates paid are indexed to either a published rate such as London Interbank Offered Rate (LIBOR) or to an internally managed index rate.

Average short-term borrowings decreased by $41.7 million from $128.0 million in 2011 to $86.3 million in 2012. The average cost of this nondeposit funding source in 2012 was 0.23%, a decrease of 11 bps compared to 2011. The average outstanding balance of long-term debt decreased slightly from $48.9 million in 2011 to $47.7 million in 2012. In December 2011 the Company repurchased and retired $5.0 million of 11% fixed rate Trust Capital Securities that were issued in June 2000 and scheduled to mature in June 2030. For 2012 and in future years this will serve to reduce the Company's pretax interest expense by $550,000 annually. On October 26, 2012, the Company repurchased and retired $8.0 million of 10% fixed rate Trust Capital Securities that were issued in September 2001 and had a maturity date of September 2031. The Company recorded a one-time pretax charge of $140,000 to retire this debt which was basically offset by a reduction of the Company's interest expense of $149,000 for the fourth quarter of 2012 associated with this transaction. Going forward, the Company's interest expense associated with this Trust Capital Securities will be lower by $800,000 annually, on a pretax basis.See Note 10 of Notes to Consolidated Financial Statements for the year ended December 31, 2012 included herein for further discussion regarding long-term debt.

In Table 2, nonaccrual loans have been included in the average loan balances. Securities include securities available for sale, securities held to maturity and restricted investments in bank stock. Securities available for sale are carried at amortized cost for purposes of calculating the average rate received on taxable securities. Yields on tax-exempt securities and loans are computed on a tax-equivalent basis, assuming a 35% tax rate for the year ending 2012 and assuming a 34% tax rate for the years ending 2011 and 2010.

5

TABLE 2

	Years Ended December 31,
(dollars in thousands)	2012						2011						2010
Earning Assets	Average Balance		Interest		Average Rate		Average Balance		Interest		Average Rate		Average  Balance		Interest		Average Rate
Securities:
Taxable	$	796,306	$	21,468	2.70	%	$	744,903	$	22,362	3.00	%	$	595,378	$	22,275	3.74	%
Tax-exempt	18,189		693		3.81		39		2		4.26		334		20		6.09
Total securities	814,495		22,161		2.72		744,942		22,364		3.00		595,712		22,295		3.74
Federal funds sold	2,696		1		0.05		9,176		5		0.05		11,106		14		0.12
Total loans receivable	1,489,787		77,342		5.13		1,448,056		77,398		5.29		1,426,225		77,274		5.36
Total earning assets	$	2,306,978	$	99,504	4.27	%	$	2,202,174	$	99,767	4.49	%	$	2,033,043	$	99,583	4.86	%
Sources of Funds
Interest-bearing deposits:
Regular savings	$	398,242	$	1,422	0.36	%	$	336,720	$	1,446	0.43	%	$	324,698	$	1,514	0.47	%
Interest checking and money market	1,050,664		3,799		0.36		967,982		5,433		0.56		946,982		6,501		0.69
Time deposits	157,238		2,262		1.44		206,178		4,272		2.07		216,434		5,189		2.40
Public funds time	54,333		218		0.40		54,824		292		0.53		41,608		263		0.63
Total interest-bearing deposits	1,660,477		7,701		0.46		1,565,704		11,443		0.73		1,529,722		13,467		0.88
Short-term borrowings	86,333		203		0.23		127,975		439		0.34		52,170		317		0.60
Long-term debt	47,662		2,206		4.62		48,935		2,814		5.74		51,660		3,613		6.99
Total interest-bearing liabilities	1,794,472		10,110		0.56		1,742,614		14,696		0.84		1,633,552		17,397		1.06
Demand deposits (noninterest- bearing)	420,181						373,494						332,099
Sources to fund earning assets	2,214,653		10,110		0.46	%	2,116,108		14,696		0.69	%	1,965,651		17,397		0.88	%
Noninterest-bearing funds (net)	92,325						86,066						67,392
Total sources to fund earning assets	$	2,306,978	$	10,110	0.44	%	$	2,202,174	$	14,696	0.67	%	$	2,033,043	$	17,397	0.85	%
Net interest income and margin on a tax-equivalent basis			$	89,394	3.83	%			$	85,071	3.82	%			$	82,186	4.00	%
Tax-exempt adjustment			2,196						2,072						2,336
Net interest income and margin			$	87,198	3.74	%			$	82,999	3.73	%			$	79,850	3.89	%
Other Balances:
Cash & due from banks	$	52,825					$	43,868					$	44,583
Other assets	97,580						103,474						114,281
Total assets	2,457,383						2,349,516						2,191,907
Other liabilities	13,958						17,750						18,804
Stockholders' equity	228,772						215,658						207,452

Net Interest Income and Net Interest Margin

Net interest income is the difference between interest income earned on loans, investment securities and other interest-earning assets and the interest expense paid on deposits, borrowed funds and long-term debt. Changes in net interest income and net interest margin result from the interaction between the volume and composition of interest-earning assets and their related yields; and the volume and composition of interest bearing liabilities and their associated funding costs. Net interest income is our primary source of earnings. There are several factors that affect net interest income, including:

• the volume, pricing, mix and maturity of interest-earning assets and interest-bearing liabilities;

• market interest rate fluctuations; and

• the level of nonperforming loans.

6

Net interest income on a fully tax-equivalent basis (which adjusts for the tax-exempt status of income earned on certain loans and investment securities in order to show such income as if it were taxable) increased $4.3 million, or 5%, to $89.4 million for 2012 over $85.1 million in 2011.  Interest income on a tax-equivalent basis for 2012 totaled $99.5 million, a slight decrease of $263,000, from 2011. This decrease was related to lower yields on our interest-earning assets due to the continued low interest rate environment throughout 2012 as discussed earlier, offset by a volume increase in the level of interest-earning assets. Interest expense for 2012 decreased $4.6 million, or 31%, from $14.7 million in 2011 to $10.1 million in 2012. This decrease was related to the lower interest rates paid on most all interest-bearing liabilities as well as a volume decrease in short-term borrowings and the reduction of Trust Capital Securities, offset by a volume increase in the level of deposits. The average rate paid on interest-bearing deposits in 2012 was 27 bps less than in 2011 and the average rate paid on short-term borrowings and long-term debt decreased by 11 bps and 112 bps, respectively, compared to 2011.

Changes in net interest income are frequently measured by two statistics: net interest rate spread and net interest margin. Net interest rate spread is the difference between the average rate earned on interest-earning assets and the average rate incurred on interest-bearing liabilities. Net interest margin represents the difference between interest income, including net loan fees earned and interest expense, reflected as a percentage of average interest-earning assets. Our net interest rate spread increased to 3.71% in 2012 from 3.65% in 2011 on a fully tax-equivalent basis. The net interest margin (nontax-equivalent) increased 1 bp from 3.73% in 2011 to 3.74% in 2012. The net interest rate spread and net interest margin increases in 2012 primarily were the result of continued efforts to manage the cost of funds downward through the Company's strategic deposit pricing process, combined with the positive impact of higher rate CDs maturing and renewing into new term CDs at lower current rates or being deposited by customers into lower cost checking and savings accounts. This impact was partially offset by a shift in the mix of interest-earning assets as well as a decrease in the yield on those earning assets due to the continued low interest rate environment that has existed over the past several years.

Table 3 demonstrates the relative impact on net interest income of changes in the volume of earning assets and interest-bearing liabilities and changes in rates earned and paid by us on such assets and liabilities. For purposes of this table, nonaccrual loans have been included in the average loan balances and tax-exempt loans and securities are reported on a fully-taxable equivalent basis.

TABLE 3

	2012 v. 2011									2011 v. 2010
	Increase (Decrease)									Increase (Decrease)
	Due to Changes in (1) (2)									Due to Changes in (1)
(in thousands)	Volume			Rate			Total			Volume			Rate			Total
Interest on securities:
Taxable	$	1,248		$	(2,142	)	$	(894	)	$	4,853		$	(4,766	)	$	87
Tax-exempt	380			311			691			(18		)	—			(18		)
Federal funds sold	(4		)	—			(4		)	(1		)	(8		)	(9		)
Interest on loans receivable	2,504			(2,560		)	(56		)	1,286			(1,162		)	124
Total interest income	4,128			(4,391		)	(263		)	6,120			(5,936		)	184
Interest on deposits:
Regular savings	247			(271		)	(24		)	101			(169		)	(68		)
Interest checking and money market	153			(1,787		)	(1,634		)	(29		)	(1,039		)	(1,068		)
Time deposits	(910		)	(1,100		)	(2,010		)	(89		)	(828		)	(917		)
Public funds time	(2		)	(72		)	(74		)	70			(41		)	29
Short-term borrowings	(121		)	(115		)	(236		)	260			(138		)	122
Long-term debt	(519		)	(89		)	(608		)	(56		)	(743		)	(799		)
Total interest expense	(1,152		)	(3,434		)	(4,586		)	257			(2,958		)	(2,701		)
Net increase (decrease)	$	5,280		$	(957	)	$	4,323		$	5,863		$	(2,978	)	$	2,885

(1) Changes due to both volume and rate have been allocated on a pro rata basis to either rate or volume.

(2) Changes due to the difference in the number of days (2012 was a leap year) are divided between Rate and Volume columns based on each categories percent of the total difference.

Provision for Loan Losses

Management undertakes a rigorous and consistently applied process in order to evaluate the ALL and to determine the level of provision for loan losses, as stated in the Application of Critical Accounting Policies section in this Management's Discussion and Analysis. During

7

the third quarter of 2010, as part of the quantitative analysis of the adequacy of the ALL, management adjusted its projection of probable loan losses based upon a much shorter and more recent period of actual historical losses. This was done as a result of the higher level of loan charge-offs experienced by the Company over the preceding two years as compared to the previous years. Management continuously assesses the quality of the Company's loan portfolio in conjunction with the current state of the economy and its impact on our borrowers repayment ability and on loan collateral values in order to determine the appropriate probable loss period to use in our quantitative analysis. Considering these factors, management continued to use a two year probable loss period throughout 2012 in determining the adequacy of the ALL.

We recorded $10.1 million as a total provision for loan losses in 2012 compared to $20.6 million in 2011. The decrease in the provision for loan losses in 2012 was a direct result of significantly lower write-downs of nonperforming loans throughout the year. Net charge-offs during 2012 were $6.4 million, or 0.44%, of average loans outstanding as compared to $20.6 million, or 1.43%, of average loans outstanding in 2011. Approximately $1.5 million, or 24%, of total net charge-offs for 2012 were associated with one specific relationship which were commercial real estate loans. The level of nonperforming loans decreased from $34.8 million, or 2.42%, of total loans outstanding at December 31, 2011 to $32.6 million, or 2.13%, of total loans outstanding at December 31, 2012. See the Nonperforming Loans and Assets section later in this Management's Discussion and Analysis of Financial Condition and Results of Operations for further discussion regarding the decrease in nonperforming loans. Also, see the Application of Critical Accounting Policies section in this Management's Discussion and Analysis regarding the ALL as well as Note 1 in the Notes to Consolidated Financial Statements for the year ended December 31, 2012 included herein for further discussion regarding additional important factors and our methodology for determining the provision for loan losses. In addition see our Forward-Looking Statements in this Management's Discussion and Analysis and risk factors associated with the provision for loan losses in Item 1A of our annual report on Form 10-K.

Noninterest Income

Noninterest income decreased by $598,000, or 2%, from $30.5 million in 2011 to $29.9 million in 2012. The main component of noninterest income, service charges, fees and other operating income is comprised primarily of deposit and loan service charges and interchange fees. Income from these sources increased $599,000, or 2%, in 2012 over 2011 to a total of $28.4 million. The majority of the increase relates to loan service charges. In 2012, total gains on sales of loans were $1.2 million compared to $2.7 million in 2011. Metro did not record any gains on the sale of Small Business Administration (SBA) loans during 2012 compared to $1.9 million in 2011.

Included in noninterest income are net gains on sales of investment securities totaling $1.1 million for 2012 and $350,000 for 2011. These gains were partially offset by net OTTI charges on private-label collateralized mortgage obligations (CMOs) totaling $649,000 in 2012 and $324,000 in 2011. The Company no longer holds any private-label CMOs in its portfolio. See the Securities section in Note 3 in the Notes to Consolidated Financial Statements for further discussion regarding OTTI.

Netted against noninterest income was a $140,000 charge during 2012 compared to a similar $75,000 charge in 2011 to repurchase and retire Trust Capital Securities. The Company still has issued and outstanding, $15.0 million of 7.75% fixed rate Trust Capital Securities which may be redeemed at par at any time in the future.

Noninterest Expenses

Noninterest expenses totaled $91.1 million for 2012, a decrease of $2.9 million, or 3%, from 2011. Decreases were experienced in multiple categories compared to the prior year as the Company was able to reduce expenses for the second consecutive year. A comparison of noninterest expenses for certain categories for 2012 and 2011 is discussed below.

Salary expenses and employee benefits, which represent the largest component of our noninterest expenses, increased $923,000, or 2%, in 2012 over 2011. Primarily, there was an increase in health care plan costs and other benefits for employees in 2012 over 2011.

Occupancy expenses were $716,000, or 8%, lower in 2012 compared to 2011.  This was primarily due to lower levels of costs associated with building maintenance, landscaping and snow removal as compared to 2011. Also, the Company recaptured $124,000 of land rent expense during the second quarter of 2012 which had been expensed in previous years. This was associated with the Bank's purchase of the land that one of its stores is built on and the coinciding cancellation of the lease associated with this land. Going forward, the Company will no longer have lease expense associated with this land.

Furniture and equipment expenses decreased by $623,000, or 11%, from 2011 as a result of certain equipment the Bank had fully depreciated in the first quarter of 2012 resulting in less depreciation expense for the year. Additionally, during the second quarter of 2011 there was a $219,000 loss on the disposal of certain fixed assets which were no longer being utilized and were disposed of.

Data processing expenses totaled $13.6 million in 2012, a $621,000, or 4%, decrease from 2011. During 2011, the Company experienced one-time service charges from a third party vendor for license fees and costs associated with software implementation which it did not

8

have in 2012. Additionally, Metro obtained lower pricing for item processing costs during the second quarter of 2012 and going forward for various electronic transactions.

Regulatory assessments and related fees of $4.1 million in 2012 reflected a 12% increase, or $425,000, over 2011. The increase was the result of a one-time expense of $1.5 million for a civil money penalty assessed against the Bank by the FDIC during the third quarter of 2012, partially offset by lower FDIC insurance assessment fees in 2012 versus 2011. See the Regulatory Matters section in Note 15 in the Notes to Consolidated Financial Statements for further discussion regarding the civil monetary penalty.

Loan expenses totaled $1.4 million in 2012, an increase of $286,000, or 26%, over 2011. The Bank experienced an increase in residential mortgage and credit card expenses as a result of a credit card promotion and a home equity loan promotion offered by the Bank in 2012 compared to 2011, therefore increasing credit report and other application-related expenses. In addition, there was a higher level of legal expenses related to certain problem loans in 2012 compared to that experienced in 2011. The Company anticipates loan expenses to continue to show increases as we promote loan products and strive for higher levels of loan growth.

Foreclosed real estate expenses of $1.3 million for 2012 decreased by $940,000, or 41%, compared to 2011. The decrease was primarily the result of write-downs of foreclosed assets totaling $257,000 in 2012 compared to $2.1 million of write-downs in 2011. During 2011, the Company wrote down one particular foreclosed asset by a total of $1.6 million and subsequently incurred a $537,000 pretax loss on the sale of that same property during 2012. Metro's foreclosed real estate portfolio totaled $2.5 million at December 31, 2012.

Branding expense decreased $1.9 million, or 98%, from 2011 as a result of significant expenses incurred in 2011 related to the Company's rebranding and logo modifications and minimal comparable expenses in 2012. Metro does not anticipate any additional expenses related to its logo modifications in future periods.

Consulting fees totaled $1.1 million in 2012, down $392,000, or 26%, from 2011. The decrease is related to the much lower need for consulting services in 2012 compared to the level utilized in 2011 when the Bank requested assistance with its procedures and controls to ensure compliance with the Bank Secrecy Act (BSA).

Pennsylvania bank shares tax expense of $1.8 million increased $282,000, or 19%, over 2011 as a result of the growth of the Bank's balance sheet which is used in the bank shares tax assessment calculation.

Other expenses increased $467,000, or 6%, year over year primarily due to a combination of an increase in stationery and supplies, an increase in loan review services, additional noncredit losses and the write-off of a discontinued potential new branch site.

One key measure used to monitor progress in controlling overhead expenses is the ratio of net noninterest expenses to average assets. For purposes of this calculation, net noninterest expenses equal total noninterest expenses less nonrecurring expenses minus noninterest income. This ratio equaled 2.43% for 2012, compared to 2.62% for 2011. Another productivity measure is the operating efficiency ratio. This ratio expresses the relationship of noninterest expenses to net interest income plus noninterest income (excluding gains or losses on sales of investment securities). For 2012, the Company's operating efficiency ratio was 76.56% compared to 81.20% for 2011. The improvement of this ratio was the result of a higher level of net interest income in 2012 combined with a lower level of noninterest expenses (excluding nonrecurring), both of which were partially offset by a decrease in noninterest income.

Provision (Benefit) for Federal Income Taxes

The provision for federal income taxes was $4.9 million for 2012 compared to a tax benefit realized for federal income taxes of $1.4 million for 2011. The effective tax rate, which is the ratio of income tax expense to income before taxes was 31.1% in 2012 compared to an income tax benefit rate, which is the ratio of income tax benefit to loss before taxes, of (125.1%) in 2011. The increase in the effective rate was the result of a pretax income in 2012 versus a pretax loss in 2011 as well as an increase in the Company's statutory tax rate from 34% in 2011 to 35% in 2012. The Company had a greater proportion of tax free income to earnings (loss) before taxes during 2011 compared to 2012; therefore a greater benefit was recognized in 2011.  Also, the Company paid a $1.5 million civil money penalty in 2012 which was not deductible for tax purposes, further expanding the increase in the effective tax rate. See Note 11 of the Notes to Consolidated Financial Statements for the year ended December 31, 2012, included herein, for an additional analysis of the provision for income taxes for the years ended December 31, 2012 and 2011.

Income taxes are accounted for under the liability method whereby deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement and tax bases of existing assets and liabilities.

At December 31, 2012, deferred tax assets amounted to $11.7 million and deferred tax liabilities totaled $8.7 million. Deferred tax assets are realizable primarily through future reversals of existing taxable temporary differences. Management currently anticipates the Company's future earnings will be adequate to utilize all of its net deferred tax assets. The Company used current forecasts of future

9

expected income, possible tax planning strategies, current and future economic and business conditions (such as the possibility of a decrease in real estate value for properties the Bank holds as collateral on loans), the probability that taxable income will continue to be generated in future periods and the current year's tax liability to make the determination. See Note 11 of the Notes to Consolidated Financial Statements for the year ended December 31, 2012, included herein, for an additional analysis of the provision for income taxes for the years ended December 31, 2012 and 2011.

Net Income and Net Income per Common Share

The Company recorded net income of $10.9 million for 2012, an increase of $10.6 million over the $289,000 net income recorded in 2011. This increase in 2012 was due to an increase in net interest income of $4.2 million, a decrease in the provision for loan losses of $10.5 million and a decrease in noninterest expenses of $2.9 million, all of which were partially offset by a decrease in noninterest income of $598,000 and an increase in federal income taxes of $6.4 million.

Basic and fully-diluted net income per common share was $0.77 for 2012 compared to basic and diluted net income per common share of $0.02 in 2011. See Note 13 in the Notes to Consolidated Financial Statements for the year ended December 31, 2012, included herein, for an analysis of earnings per share.

Return on Average Assets and Average Equity

Return on average assets (ROA) measures our net income in relation to our total average assets. Our ROA was 0.44% for 2012 compared to 0.01% for 2011. Return on average equity (ROE) indicates how effectively we can generate net income on the capital invested by our shareholders. ROE is calculated by dividing net income by average stockholders' equity. ROE for 2012 was 4.76%, compared to 0.13% for 2011.

2011 versus 2010

Net income for 2011 was $289,000, compared to a net loss of $4.3 million recorded in 2010.

Basic and fully-diluted net income per common share was $0.02 for 2011 compared to a basic and fully-diluted loss per common share of $(0.33) in 2010.

Net interest income on a tax-equivalent basis for 2011 was $85.1 million, an increase of $2.9 million, or 4%, over 2010. Interest income on earnings assets on a tax-equivalent basis totaled $99.8 million, an increase of $184,000 over 2010. Interest expense for 2011 was $14.7 million, a decrease of $2.7 million, or 16%, from 2010.

Our net interest rate spread decreased to 3.65% in 2011 from 3.80% in 2010 on a fully tax-equivalent basis. The net interest margin decreased 16 bps from 3.89% in 2010 to 3.73% in 2011 on a nontax-equivalent basis.

The provision for loan losses totaled $20.6 million in 2011 compared to $21.0 million in 2010. The level of nonperforming loans decreased from $52.8 million, or 3.83%, of total loans outstanding at December 31, 2010 to $34.8 million, or 2.42%, of total loans outstanding at December 31, 2011. Net charge-offs in 2011 totaled $20.6 million, or 1.43%, of average loans outstanding as compared to $13.8 million, or 0.98%, of average loans outstanding in 2010.

Noninterest income for 2011 increased by $1.1 million, or 4%, over 2010 to $30.5 million.  Included in total noninterest income in 2011 were net gains of $2.7 million on the sale of residential loans and SBA loans and a $350,000 gain on the sale of investment securities, partially offset by $324,000 of net impairment charges on investment securities. Comparably, included in total noninterest income in 2010 were gains of $2.4 million on the sale of residential loans and SBA loans and a $2.8 million gain on the sale of investment securities, offset by $962,000 of net impairment charges on investment securities. In addition, netted against 2010 noninterest income was a $1.6 million charge for the early retirement of Federal Home Loan Bank (FHLB) borrowing debt compared to a $75,000 charge in 2011 associated with the repurchase and retirement of $5 million of 11% fixed rate Trust Capital Securities.

Noninterest expenses totaled $94.0 million for 2011, a decrease of $3.1 million, or 3%, from 2010. This overall decrease was primarily the result of significantly lower consulting costs, advertising and marketing and regulatory fees in 2011 from those incurred in 2010 as well as lower levels of salaries and employee benefits and loan processing expenses, all partially offset by higher foreclosed real estate and rebranding costs incurred during 2011.

Salary expenses and employee benefits decreased by $1.2 million, or 3%, in 2011 from 2010. The Company experienced a reduction in total salary expense through natural attrition which was partially offset by an increase in employee benefits costs.

10

Occupancy expenses for 2011 were $726,000, or 9%, higher in 2011 compared to 2010 and furniture and equipment expenses increased by $331,000, or 6%, to $5.5 million.

Advertising and marketing expenses were $2.0 million for 2011, an increase of 32%, over 2010. Data processing expenses increased by $1.1 million, or 8%, in 2011 over 2010, primarily related to license fees and costs associated with software implementation. Regulatory expenses of $3.6 million in 2011 were $960,000, or 21%, lower than 2010.

Loan expenses totaled $1.1 million in 2011, a decrease of $560,000, or 34%, from 2010.

Foreclosed real estate expenses of $2.3 million in 2011 were $895,000, or 65%, higher than 2010.

The Company expensed $1.9 million of costs during 2011 associated with modification to its logo and overall brand enhancement with no comparable expenses in 2010.

Consulting fees decreased $3.0 million to $1.5 million in 2011 compared to $4.5 million in 2010. This decrease was due to the much lower need for consulting services in 2011 as compared to 2010 to assist the Bank with procedures and controls to ensure compliance with the BSA and the Office of Foreign Assets Control (OFAC).

Other noninterest expenses totaled $7.5 million for 2011, compared to $8.9 million for 2010, a decrease of $1.4 million, or 16%.

Financial Condition

Securities

Securities are purchased and sold as part of our overall asset and liability management function. The classification of all securities is determined at the time of purchase. Securities expected to be held for an indefinite period of time are classified as securities available for sale and are carried at fair value. Decisions by management to purchase or sell these securities are based on an assessment of financial and economic conditions, including changes in prepayment risks and interest rates, liquidity needs, capital adequacy, collateral requirements for pledging, alternative asset and liability management strategies, tax considerations and regulatory requirements.

Securities are classified as held to maturity (HTM) if, at the time of purchase, management has both the intent and ability to hold the securities until maturity. Securities held to maturity are carried at amortized cost. Sales of securities in this portfolio should only occur in unusual and rare situations where significant unforeseeable changes in circumstances may cause a change in intent. Examples of such instances would include deterioration in the issuer's creditworthiness that is evidently supportable and significant or a change in tax law that eliminates or reduces the tax-exempt status of interest (but not the revision of marginal tax rates applicable to interest income). HTM securities cannot be sold based upon any of the decisions used to sell securities available for sale as listed above. See Note 3 in the Notes to Consolidated Financial Statements for the year ended December 31, 2012, included herein, for further analysis of our securities portfolio.

Based on the amortized cost, approximately 98% of our investment securities carry fixed rate coupons that do not change over the life of the securities. Since many of the amortizing securities are purchased at premiums or discounts, their yield and average life will change depending on any change in the estimated rate of prepayments. We amortize premiums and accrete discounts over the estimated average life of the amortizing securities. Premiums and discounts on nonamortizing securities, such as government and municipal bonds, are amortized or accreted to their maturity date. Changes in the estimated average life of the securities portfolio will lengthen or shorten the period in which the premium or discount must be amortized or accreted, thus affecting the yields we recognize. At December 31, 2012, the taxable equivalent yield on our total investment securities portfolio was 2.45%, down 40 bps from 2.85% at December 31, 2011. This decrease was due to prepayments, calls and maturities of securities with higher interest rates combined with purchases of new securities in 2012 at lower yields than those purchased in previous years, due to the low level of general market interest rates present in 2012 as compared to previous years.

At December 31, 2012, the weighted-average life and duration of our total securities portfolio was approximately 4.1 years and 3.7 years, respectively, as compared to 2.5 years and 2.1 years, respectively, at December 31, 2011. The weighted-average life of the portfolio is calculated by estimating the average rate of repayment of the underlying collateral of each security. Mortgage-backed obligations historically experience repayment rates in excess of the scheduled repayments, causing a shorter weighted-average life of the security. Our securities portfolio contained no derivatives as of December 31, 2012 or 2011.

The fair value of the Bank's AFS securities portfolio increased by $61.7 million in 2012, primarily as a result of purchases of $518.4 million offset partially by $299.3 million of sales and $157.4 million of principal repayments, calls, maturities, premium and discount amortization, changes in market pricing and excluding net gains on sales. At December 31, 2012, the unrealized gain on securities available

11

for sale included in stockholders' equity as accumulated other comprehensive income totaled $7.2 million, net of tax, compared to a $3.8 million unrealized gain on securities available for sale, net of tax, at December 31, 2011. The AFS portfolio is comprised of U.S. Government agency securities, agency residential mortgage-backed securities (MBSs), agency CMOs and municipal securities. The market prices for certain securities held in the Company's portfolio improved in 2012 and management believes that the unrealized gains on these securities at December 31, 2012 were primarily the result of changes in general market interest rates and prices. At December 31, 2012, the weighted-average life, duration and taxable equivalent yield of our AFS portfolio was approximately 3.6 years, 3.4 years and 2.31%, respectively, as compared to 2.8 years, 2.5 years and 2.62%, respectively, at December 31, 2011.

During 2012, the carrying value of securities in the HTM portfolio increased by $73.1 million, as purchases of $225.4 million were partially offset by $152.3 million of principal repayments, sales, calls, maturities and premium and discount amortization and excluding net gains on sales. The securities held in this portfolio include U.S. Government agency securities, agency residential MBSs, agency CMOs, corporate debt securities and municipal securities. At December 31, 2012, the weighted-average life, duration and taxable equivalent yield of our HTM portfolio was approximately 5.3 years, 4.5 years and 2.78%, respectively, as compared to 1.4 years, 1.1 years and 3.56%, respectively, at December 31, 2011.

Purchase and sale activity during 2012 was higher than normal for the Company due in large part to a portfolio strategy designed to remove some of the lower-yielding bonds from the investment portfolio and/or capture value on accelerating prepayments. Implementing this strategy helped to somewhat mitigate the overall impact from generally falling interest rates.

The Company sold a total of 48 securities with a combined fair market value of $305.4 million and realized net pretax gains of $1.1 million during 2012. The securities sold included 28 agency CMOs; eight agency residential MBSs; eight private-label CMOs; two corporate securities; and two municipal bonds. Of this total, 41 securities with a combined fair market value of $299.3 million had been classified as available for sale. Seven agency MBSs with a fair market value of $6.1 million had been classified as held to maturity, however, in each case the current par value had fallen to less than 15% of its original par value and could be sold without tainting the remaining HTM portfolio. The Company uses the specific identification method to record security sales. In addition, the Company had a total of $160.3 million of agency debentures called, at par, by their issuing agencies during 2012. The called securities were carried at par, therefore no gain or loss was recognized as a result of the calls.

Fourth quarter 2012 investment activity included security purchases of $245.5 million intended to replace current period cash flows and to pre-purchase expected early-2013 investment cash flows. This pre-purchase strategy resulted in a lengthening of both the portfolio's average life and duration, however, these impacts are expected to be temporary in nature and are expected to reverse themselves as securities are called away from the Bank in early 2013 as anticipated. Also during the fourth quarter of 2012, the Company sold $48.0 million of securities, realizing a net pretax gain of $92,000. The primary driver of the sales was the reduction of credit risk within the portfolio including the sale of the Company's last remaining private-label CMO, the Company's only municipal revenue bonds, and $15.0 million of high-grade corporate notes.

No investment in securities of a single non-U.S. Government or government agency issuer exceeded ten percent of shareholders' equity at December 31, 2012.

12

The amortized cost of AFS and HTM securities are summarized below in Table 4 as of December 31, for each of the years 2010 through 2012:

TABLE 4

	December 31,
(in thousands)	2012		2011		2010
Available for Sale:
U.S. Government agency securities	$	33,994	$	22,500	$	22,500
Residential MBSs	55,614		21,087		2,383
Agency CMOs	547,641		519,167		388,414
Private-label CMOs	—		24,974		33,246
Corporate debt securities	—		19,952		—
Municipal securities	26,890		—		—
Total available for sale	$	664,139	$	607,680	$	446,543
Held to Maturity:
U.S. Government agency securities	$	178,926	$	97,750	$	140,000
Residential MBSs	23,827		37,658		48,497
Agency CMOs	49,051		45,122		29,079
Corporate debt securities	15,000		15,000		10,000
Municipal securities	2,979		1,105		—
Total held to maturity	$	269,783	$	196,635	$	227,576

The contractual maturity distribution and weighted-average yield of our AFS and HTM portfolios at December 31, 2012 are summarized in Table 5. For mortgage-backed obligations, the contractual maturities may be significantly different than actual maturities. Changes in payment patterns and prepayments may occur depending on the market conditions and other economic variables. Weighted-average yield is calculated by multiplying the book yield times the book value for each security within each maturity range. Tax-exempt obligations have been tax effected, assuming a tax rate of 35%.

TABLE 5

December 31, 2012	Due Under 1 Year				Due 1-5 Years				Due 5-10 Years				Due Over 10 Years				Total
(dollars in thousands)	Amount/Yield				Amount/Yield				Amount/Yield				Amount/Yield				Amount/Yield
Available for Sale:
U.S. Government agency securities	$	—	—	%	$	—	—	%	$	8,994	2.07	%	$	25,000	2.00	%	$	33,994	2.02	%
Residential MBSs	—		—		—		—		—		—		55,614		2.41		55,614		2.41
Agency CMOs	—		—		—		—		—		—		547,641		2.25		547,641		2.25
Municipal securities	—		—		—		—		10,373		2.91		16,517		4.29		26,890		3.76
Total available for sale	$	—	—	%	$	—	—	%	$	19,367	2.52	%	$	644,772	2.31	%	$	664,139	2.31	%
Held to Maturity:
U.S. Government agency securities	$	—	—	%	$	—	—	%	$	60,000	2.08	%	$	118,926	2.91	%	$	178,926	2.63	%
Residential MBSs	—		—		—		—		1,425		4.24		22,402		4.45		23,827		4.44
Agency CMOs	—		—		—		—		—		—		49,051		2.72		49,051		2.72
Corporate debt securities	10,000		1.31		5,000		2.95		—		—		—		—		15,000		1.86
Municipal securities	—		—		—		—		—		—		2,979		4.13		2,979		4.13
Total held to maturity	$	10,000	1.31	%	$	5,000	2.95	%	$	61,425	2.13	%	$	193,358	3.06	%	$	269,783	2.78	%

Note: Securities available for sale are carried at amortized cost in the table above for purposes of calculating the weighted-average yield received on such securities.

13

Loans Held for Sale

Loans held for sale are comprised of student loans and selected residential mortgage loans the Company originates with the intention of selling in the future. Prior to September 30, 2011, loans held for sale also included SBA loans the Company originated with the intention of selling. Occasionally, loans held for sale also includes business and industry loans that the Company decides to sell. Loans held for sale are carried at the lower of cost or estimated fair value, calculated in the aggregate. At the present time, the majority of the Company's residential loans are originated with the intent to sell to the secondary market unless the loan is nonconforming to secondary market standards or if we agree not to sell the loan due to a customer's request. The residential mortgage loans that are designated as held for sale are sold to other financial institutions in correspondent relationships and the Bank does not retain the servicing. The sale of these loans takes place typically within 30-45 days of funding. 

During 2010 and the first half of 2011, the Company was originating SBA loans with the intent to sell the guaranteed portions of the loans. The Bank recognized total gains of $1.9 million and $1.5 million in 2011 and 2010, respectively, on the sales of SBA loans. During the second quarter of 2011, the Company's management made the decision to hold SBA loans in the Company's loan receivable portfolio unless or until the Company's management determines a sale of certain loans is appropriate. At the time such a decision would be made, the SBA loans will be moved from the loans receivable portfolio to the loans held for sale portfolio. There were no sales of SBA loans in 2012.

Total loans held for sale were $15.2 million and $9.4 million at December 31, 2012 and 2011, respectively. At December 31, 2012, loans held for sale were comprised of $3.8 million of student loans and $11.4 million of residential mortgages as compared to $5.2 million of student loans and $4.2 million of residential mortgages at December 31, 2011. The increase was primarily the result of a higher level of residential loan demand and origination activity during the fourth quarter of 2012 due to a better rate environment and improved housing market related to residential mortgage loan sales partially offset by the decrease in student loans as a result of pay downs. Loans held for sale, as a percentage of total consolidated assets, were less than 1% at December 31, 2012 and 2011. At December 31, 2012 and December 31, 2011, no residential mortgage loans held for sale were past due or impaired. At December 31, 2012, 2011 and 2010 there was $408,000, $567,000 and $367,000, respectively, of student loans held for sale that were past due.

Loans Receivable

Total gross loans receivable increased by $92.1 million, or 6%, from December 31, 2011 to December 31, 2012. Loan originations in 2012 totaled $488.0 million and exceeded those in 2011 by approximately $30.2 million, or 7%. As the economy continues to improve, we expect loan demand to increase and, therefore, expect the level of originations to continue to grow in 2013 as compared to 2012. During 2012, commercial and industrial loans increased $55.0 million, or 17%, commercial tax-exempt loans increased $10.7 million, or 13%, commercial real estate loans increased $30.0 million, or 8%, and consumer loans increased $10.3 million, or 5%, while owner occupied real estate loans decreased $11.0 million, or 4%, and commercial construction and land development loans decreased $2.8 million, or 3%. Also included in gross loans are deposit accounts that are reclassified as loans as a result of overdrawn deposit account balances. The total of overdrawn deposit accounts reclassified as loans aggregated $626,000 at December 31, 2012 compared to $497,000 at December 31, 2011.

Total loans outstanding represented 69% of total deposits and 58% of total assets at December 31, 2012, excluding the loans held for sale, compared to 69% and 59%, respectively, at December 31, 2011.

Commercial loans outstanding are comprised of commercial and industrial, tax-exempt, owner occupied real estate, commercial construction and land development and commercial real estate loans. Consumer loans consist of residential real estate mortgages, home equity loans, consumer lines of credit and other consumer-related loans. We manage risk associated with our loan portfolio in part through diversification, with what we believe are sound policies and underwriting procedures that are reviewed, updated and approved at least annually, as well as through our ongoing loan monitoring efforts. Additionally, we monitor concentrations of loans or loan relationships by purpose, collateral or industry.

14

The following table summarizes the composition of our loan portfolio by segment as of December 31, for each of the years 2008 through 2012.

TABLE 6

	December 31,
(in thousands)	2012		2011		2010		2009		2008
Commercial and industrial	$	376,988	$	321,988	$	337,398	$	401,759	$	369,496
Commercial tax-exempt	92,202		81,532		85,863		102,218		79,404
Owner occupied real estate	268,372		279,372		241,553		263,413		269,280
Commercial construction and land   development	100,399		103,153		112,094		115,013		104,122
Commercial real estate	394,404		364,405		313,194		265,655		291,816
Residential	83,899		83,940		81,124		85,035		91,775
Consumer	212,533		202,278		207,979		210,690		233,890
Total loans outstanding	$	1,528,797	$	1,436,668	$	1,379,205	$	1,443,783	$	1,439,783

Our commercial and industrial loans are typically made to small and medium-sized businesses and represented 25% of our total loans outstanding at December 31, 2012. The average loan size originated in 2012 in this category was approximately $347,000. Our underwriting policy has maximum terms for these loans depending on the loan type within the commercial and industrial loans category. The primary source of repayment is the cash flow from the ongoing operations and activities conducted by the business. Collateral for these types of loans varies depending upon the type and purpose of the loans as well as management's credit evaluations of the respective borrowers and generally includes business assets and/or personal assets of the borrower. The value of the collateral in this category may vary depending on market conditions. The Company maintains advance rate guidelines for particular collateral categories to mitigate the risk that, upon default, the collateral is insufficient to cover the outstanding loan balance.

Commercial tax exempt loans represented 6% of our total loans at December 31, 2012 and are made primarily to municipalities and school districts and rely on the cash flows of the borrowing entity for repayment. The average loan size originated in 2012 in this category was $4.1 million. We underwrite these loans based upon our established underwriting guidelines and our analysis of the cash flow, operating results and financial condition of the borrower.

Owner occupied real estate loans represented 17% of our total loans at December 31, 2012 and are for commercial properties and are typically made to small and medium-sized businesses. The primary source of repayment is the cash flow from the ongoing operations and activities conducted by the business or a related interest of the business or an affiliate of the party who owns the property. Based on our underwriting standards, loans in this category are secured by real property and typically require owner guarantees. The average loan size originated in 2012 in this category was approximately $506,000.

Our commercial real estate and our construction and land development loans are typically made to small and medium-sized investors, builders and developers and made up 26% and 7%, respectively, of our total loans outstanding at December 31, 2012. These loans are secured by mortgages on real property (principally one to four family rental, multi-family rental, office and other commercial properties) located primarily in South Central Pennsylvania. The average loan size originated in 2012 in these categories was approximately $412,000 and $531,000, respectively. Our underwriting guidelines establish maximum terms and advanced rates depending on the type of loan within the commercial real estate category. A five-year call option is standard on commercial mortgages. Our underwriting guidelines also establish maximum loan-to-value ratios depending upon the type of primary collateral, typically require owner guarantees and may require other collateral depending on our assessment of the overall risk. 

Residential real estate mortgage loans represented approximately 5% of our total loans at December 31, 2012. Loans in this category are collateralized by first mortgages on residential properties located primarily in South Central Pennsylvania. We underwrite these loans based upon our established underwriting guidelines.

Consumer term loans and consumer lines of credit represented 14% of our total loans outstanding at December 31, 2012 and are secured by first and second mortgages, personal assets of the borrower, or may be unsecured. As of December 31, 2012, approximately $203.1 million, or 96%, of the total for this category were secured by real estate, 18% of which were secured by second mortgages, $1.2 million were loans collateralized by personal assets of the borrower and $8.2 million were unsecured. Our underwriting policy sets limitations on the terms of the loans, defines allowable collateral and the method of valuation of the collateral, outlines acceptable debt to income ratios as well as acceptable credit sources to determine if the applicant meets our standards. We review lines of credit annually and remove

15

availability if the borrower is no longer compliant with our underwriting standards or is delinquent. As of December 31, 2012, unused commitments under consumer lines of credit were $98.9 million.

The maturity ranges of the loan portfolio and the amounts of loans with fixed interest rates and floating interest rates in each maturity range, as of December 31, 2012, are presented in the following table:

TABLE 7

	December 31, 2012
(in thousands)	Due Within One Year		Due 1-5  Years		Due Over  Five Years		Total
Commercial and industrial	$	172,301	$	154,546	$	50,141	$	376,988
Commercial tax exempt	43,179		36,485		12,538		92,202
Owner occupied real estate	20,953		74,234		173,185		268,372
Commercial construction and land development	63,886		20,432		16,081		100,399
Commercial real estate	53,181		118,708		222,515		394,404
Residential	12,907		16,356		54,636		83,899
Consumer	47,378		43,998		121,157		212,533
Total loans	$	413,785	$	464,759	$	650,253	$	1,528,797
Interest rates:
Fixed	$	119,420	$	266,772	$	457,747	$	843,939
Floating	294,365		197,987		192,506		684,858
Total loans	$	413,785	$	464,759	$	650,253	$	1,528,797

Concentrations of Credit Risk

The Bank manages risk associated with its loan portfolio in part through diversification and through what management believes are sound policies and underwriting procedures that are reviewed, updated and approved at least annually, as well as through our ongoing loan monitoring efforts. Additionally, the Bank monitors and manages concentrations of loans or loan relationships by purpose, collateral or industry. Management reviews various concentration reports regularly and reports areas of risk in the portfolio and quantifies, if any, exceptions made to policies and procedures to its board of directors no less than quarterly. At December 31, 2012, there was no concentration to any one borrower, or group of borrowers with similar economic characteristics.

Commercial real estate and commercial construction and land development loans, including tax exempt commercial real estate loans aggregated $494.8 million at December 31, 2012, compared to $467.6 million at December 31, 2011. These loans were 32% of total loans outstanding and made up the largest portion of loans on the Company's balance sheet at December 31, 2012. The commercial real estate loan portfolio is principally to borrowers throughout Cumberland, Dauphin, York, Berks, Lancaster and Lebanon counties of Pennsylvania where the Bank has full-service store locations.

Commercial and industrial loans represented 25% of total loans, owner occupied real estate loans collateralized by real estate equaled 17% of total loans and consumer loans comprised 14% of total loans at December 31, 2012.

Loan and Asset Quality

Nonperforming Assets

Nonperforming assets include nonperforming loans, loans past due 90 days or more and still accruing interest and foreclosed assets. Nonaccruing troubled debt restructurings (TDRs) are included in nonperforming loans. A TDR is a loan in which the contractual terms have been modified resulting in the Bank granting a concession to a borrower who is experiencing financial difficulties in order for the Bank to have a greater opportunity of collecting the indebtedness from the borrower. 

The following table presents information regarding the Bank's nonperforming assets at December 31, 2008 through 2012. Nonaccruing as well as accruing TDRs are broken out at the bottom portion of the table. TDRs increased from $23.1 million at December 31, 2011 to $32.8 million at December 31, 2012. This $9.9 million, or 43%, increase is discussed in detail later in this Loan and Asset Quality section. Additionally, asset quality ratios are presented at the bottom of the table as well as details on the interest income related to nonaccrual loans.

16

TABLE 8

	December 31,
(dollars in thousands)	2012			2011			2010			2009			2008
Nonperforming Assets
Nonaccrual loans:
Commercial and industrial	$	11,289		$	10,162		$	23,103		$	14,254		$	6,863
Commercial tax-exempt	—			—			—			—			—
Owner occupied real estate	3,119			2,895			4,318			3,201			—
Commercial construction and land development	6,300			8,511			14,155			11,771			6,915
Commercial real estate	5,659			7,820			5,424			5,497			9,893
Residential	3,203			2,912			3,609			2,368			2,959
Consumer	2,846			1,829			1,579			654			492
Total nonaccrual loans	32,416			34,129			52,188			37,745			27,122
Loans past due 90 days or more and still accruing	220			692			650			—			—
Total nonperforming loans	32,636			34,821			52,838			37,745			27,122
Foreclosed assets	2,467			7,072			6,768			7,821			743
Total nonperforming assets	$	35,103		$	41,893		$	59,606		$	45,566		$	27,865
Troubled Debt Restructurings
Nonaccruing TDRs	$	13,247		$	10,282		$	—		$	—		$	—
Accruing TDRs	19,559			12,835			177			—			—
Total TDRs	$	32,806		$	23,117		$	177		$	—		$	—
Nonperforming loans to total loans	2.13		%	2.42		%	3.83		%	2.61		%	1.88		%
Nonperforming assets to total assets	1.33		%	1.73		%	2.67		%	2.12		%	1.30		%
Interest income recognized on nonaccrual loans	$	551		$	586		$	340		$	976		$	1,268
Interest income that would have been recorded under   the original terms of the loans	$	3,099		$	2,880		$	3,363		$	1,880		$	1,776

Nonperforming assets at December 31, 2012, were $35.1 million, or 1.33%, of total assets, as compared to $41.9 million, or 1.73%, of total assets, at December 31, 2011. This decrease of $6.8 million was the result of a $4.6 million decrease in foreclosed assets and a $2.2 million decrease in nonperforming loans. The Company continues to manage nonperforming assets to either exit the relationship, work with the borrower to return the relationship to a performing status, or sell the collateral in the case of foreclosed real estate.

Nonaccrual Loans

The Bank generally places a loan on nonaccrual status and ceases accruing interest when loan payment performance is deemed unsatisfactory and the loan is past due 90 days or more, unless the loan is both well-secured and in the process of collection.

The Bank has experienced a decline in the level of total nonaccrual loan balances over the past two years, much like most of the banking industry. The decline is attributable in part to the improvement of economic conditions allowing some borrowers to experience stabilized or improved cash flow. The remainder of the decline is the result of the Bank charging down balances of nonaccrual loans where necessary and the pay off of loans through the sale of the business and/or collateral.

Loans which have been partially charged off and have updated appraisal values remain on nonaccrual status and are subject to the Bank's standard recovery policies and procedures, including, but not limited to, foreclosure proceedings, a forbearance agreement, or restructuring that results in classification as a TDR, unless collectibility of the entire balance of principal and interest is no longer in doubt and the loan is current or will be brought current within a short period of time.

Total nonaccrual loans were $32.4 million at December 31, 2012, down from $34.1 million at December 31, 2011. The following table details the change in total nonaccrual loan balances during 2012:

17

TABLE 9

	Twelve Months Ended
(in thousands)	December 31, 2012
Nonaccrual loans beginning balance	$	34,129
Additions	24,364
Principal charge-offs	(7,340		)
Pay downs	(15,194		)
Upgrades to accruing status	(765		)
Transfers to foreclosed assets	(2,778		)
Nonaccrual loans ending balance	$	32,416

During 2012, the additions to nonaccrual status consisted of 67 commercial loans averaging $321,000 each and 59 consumer loans averaging $48,000 each. The largest relationship totaled $4.5 million and consisted of commercial and industrial and owner occupied loans. Of the $15.2 million in paydowns, approximately $11.4 million, or 75%, related to seven loan relationships.

The table and discussion that follow provide additional details of the components of our nonaccrual commercial and industrial loans, commercial construction and land development loans and commercial real estate loans, our three largest nonaccrual categories.

TABLE 10

	December 31,
(dollars in thousands)	2012		2011
Commercial and Industrial:
Number of loans	50		44
Number of loans greater than $1 million	4		3
Average outstanding balance of those loans:
Greater than $1 million	$	2,024	$	2,229
Less than $1 million	$	70	$	85
Commercial Construction and Land Development:
Number of loans	10		19
Number of loans greater than $1 million	2		3
Average outstanding balance of those loans:
Greater than $1 million	$	2,484	$	1,261
Less than $1 million	$	168	$	295
Commercial Real Estate:
Number of loans	24		25
Number of loans greater than $1 million	1		1
Average outstanding balance of those loans:
Greater than $1 million	$	2,129	$	3,719
Less than $1 million	$	155	$	171

At December 31, 2012, there were 50 loans in the nonaccrual commercial and industrial category with outstanding balances ranging from $200 to $3.0 million. Of the 50 loans, four loans were in excess of $1.0 million each and aggregated $8.1 million, of which there is a $2.4 million specific reserve for loan loss. The average recorded investment of these loans was $2.0 million per loan. The remaining 46 loans account for the difference at an average recorded investment of $70,000 per loan.

There were ten loans in the nonaccrual commercial construction and land development category with recorded investments ranging from $83,000 to $3.5 million. Of the ten loans, two loans were in excess of $1.0 million each and aggregated $5.0 million, of which there is a $2.2 million specific reserve for loan loss. The average recorded investment of these loans was $2.5 million per loan. The remaining eight loans account for the difference at an average recorded investment of $168,000 per loan.

18

There were 24 loans in the nonaccrual commercial real estate category with recorded investments ranging from $2,000 to $2.1 million. Of the 24 loans, one loan was in excess of $1.0 million and totaled $2.1 million, or 37%, of total nonaccrual commercial real estate loans. The remaining 23 loans account for the difference at an average recorded investment of $155,000 per loan.

Foreclosed Assets

Foreclosed assets totaled $2.5 million at December 31, 2012 compared to $7.1 million at December 31, 2011. The total comprised of 14 properties at December 31, 2012, with the largest property balance valued at $1.4 million compared to 27 properties at December 31, 2011, with the largest property balance valued at $2.2 million. During 2012, that $2.2 million property was sold at a pretax loss of $537,000 on the sale. The decrease in the total balance of foreclosed real estate during 2012 is the result of the sale of 34 properties for a total of $6.8 million, write-downs of $257,000 on eight properties and a pay down of $288,000, partially offset by the transfer of 21 properties into this category totaling approximately $2.8 million.

The Company obtains third party appraisals by one of several Board pre-approved certified general appraisers on nonperforming loans secured by real estate at the time a loan is determined to be nonperforming to support the fair market value of the collateral. Appraisals are ordered by the Company's Real Estate Loan Administration Department which is independent of both the loan workout and loan production functions. The Company charges down loans based on the fair value of the collateral as determined by the current appraisal less any costs to sell before the properties are transferred to foreclosed real estate. Subsequent to transferring the property to foreclosed real estate, the Company may incur additional write-down expense based on updated appraisals, recent offers, or prices on comparable properties in the proximate vicinity.

Troubled Debt Restructurings

As mentioned previously, a TDR is a loan in which the contractual terms have been modified resulting in the Bank granting a concession to a borrower who is experiencing financial difficulties in order for the Bank to have a greater opportunity of collecting the indebtedness from the borrower. Concessions could include, but are not limited to, interest rate reductions below current market interest rates, atypical maturity extensions and principal forgiveness. An additional benefit to the Company in granting a concession is to avoid foreclosure or repossession of collateral in attempt to minimize losses.

As of December 31, 2012, TDRs totaled $32.8 million, of which $13.2 million were included in total nonaccruing loans. The remaining $19.6 million of TDRs were accruing at December 31, 2012. Total TDR balances increased by $9.7 million, or 42%, during 2012. TDR loans totaled $23.1 million at December 31, 2011, of which $10.3 million were included in total nonaccruing loans. The remaining $12.8 million of TDRs at December 31, 2011 were accruing.

The following table details the change in total TDR loan balances during 2012:

TABLE 11

	Twelve Months Ended
(in thousands)	December 31, 2012
TDR loans beginning balance	$	23,117
Additions	20,765
Advances	689
Charge-offs	(1,967		)
Pay downs	(9,116		)
Transfers to foreclosed asset	(682		)
TDR loans ending balance	$	32,806

There were 22 loans totaling $20.7 million which were restructured during 2012. The majority of this balance was comprised of commercial and industrial and commercial construction and land development loans which totaled $7.9 million and $6.9 million, respectively. The loans considered to be TDRs by management during 2012 were as a result of a combination of reasons, a material extension of time, or an interest rate adjustment and totaled $11.9 million, $5.5 million and $3.4 million, respectively. See Note 4 of Notes to Consolidated Financial Statements for the year ended December 31, 2012, included herein, for further detail regarding TDR loans.

Nonaccrual TDRs may be reclassified as accruing TDRs when the borrower has consistently made full payments of principal and interest for at least six consecutive months and the Bank expects full repayment of the modified loan's principal and interest. The loan will no longer be considered a TDR when the interest rate is equal to or greater than the rate that the Bank was willing to accept at the time of

19

the restructuring for a new loan with comparable risk and the loan is no longer impaired based on the terms specified by the restructuring agreement.

Impaired and Other Problem Loans

Impaired loans include nonaccrual loans in addition to loans which the Company, based on current information, does not expect to receive both the principal and interest amounts due from a borrower according to the contractual terms of the original loan agreement. These loans totaled $56.6 million at December 31, 2012 with an aggregate specific allocation of $7.1 million compared to impaired loans totaling $63.5 million at December 31, 2011 with a $3.6 million aggregate specific allocation. The specific allocations at December 31, 2012 related to six relationships versus three relationships at December 31, 2011.

Impaired loans have been evaluated as to risk exposure in determining the adequacy of the ALL. See Note 4 of Notes to Consolidated Financial Statements for the year ended December 31, 2012, included herein, for an age analysis of loans receivable and for further detail regarding impaired loans.

The Bank obtains third party appraisals ordered by the Real Estate Loan Administration Department on nonperforming loans secured by real estate at the time the loan is determined to be impaired. The Bank properly charges down loans based on the fair value of the collateral as determined by the current appraisal or other collateral valuations less any costs to sell. The charge-down of any impaired loan is done upon receipt and satisfactory review of the appraisal or other collateral valuation and, in no event, later than the end of the quarter in which the appraisal or valuation was accepted by the Bank. No significant time lapses during this process have occurred for any period presented.

The Bank also considers the volatility of the fair value of the collateral, timing and reliability of the appraisal, timing of the third party's inspection of the collateral, confidence in the Bank's lien on the collateral, historical losses on similar loans and other factors based on the type of real estate securing the loan. As deemed necessary, the Bank will perform inspections of the collateral to determine if an adjustment of the value of the collateral is necessary.

The Bank may create a specific allowance for all or a part of a particular loan in lieu of a charge-off as a result of management's evaluation of the impaired loan. In these instances, the Bank has determined that a loss is probable but not imminent based upon available information surrounding the credit at the time of the analysis, however, management believes an allowance is appropriate to acknowledge the potential risk of loss.

Management's Allowance for Loan Loss Committee has performed a detailed review of the impaired loans and of the collateral related to these credits and believes, to the best of its knowledge, that the ALL remains adequate for the level of risk inherent in these loans at December 31, 2012.

Any criticized or classified loan not considered impaired is reviewed to determine if it is a potential problem loan. Such loan classifications totaled $46.9 million at December 31, 2012 compared to $44.4 million at December 31, 2011 and were comprised of $12.5 million of special mention rated loans and $34.3 million of substandard accruing loans which were not deemed impaired. These problem loans were included in the general pool of loans to determine the adequacy of the ALL at December 31, 2012.

While it is difficult to forecast impaired loans due to numerous variables, the Bank, through its credit risk management tools and other credit metrics, believes it has currently identified the material problem loans in the portfolio.

As a result of continued economic uncertainty affecting unemployment, consumer spending, home sales and collateral values, it is possible that the Company may experience increased levels of nonperforming assets and additional losses in the foreseeable future.

Allowance for Loan Losses

The ALL is established in the form of a provision expense for loan losses and is reduced by loan charge-offs, net of recoveries. When loans are deemed to be uncollectible, they are charged off. When a loss is not imminent but the potential for a loss is a concern, a specific allowance may be created for that particular loan. Management has established a reserve that it believes is adequate for estimated losses in the loan portfolio. In conjunction with an outsourced third party loan review function that operates independently of the lending function, management monitors the loan portfolio to identify risks on a timely basis so that an appropriate allowance is maintained. Based on an evaluation of the loan portfolio, management presents a quarterly review of the ALL to the board of directors, indicating any changes in the allowance since the last review. In making the evaluation, management considers the results of recent regulatory examinations, which typically include a review of the ALL as an integral part of the examination process.

In establishing the allowance, management evaluates, on a quantitative basis, impaired loans to determine a reserve for those loans based on that review. In addition, an allowance for the remainder of the loan portfolio is determined based on historical loss experience within

20

certain components of the portfolio. These allocations may be modified if current conditions indicate that loan losses may differ from historical experience. In addition, a portion of the allowance is established for losses inherent in the loan portfolio, which have not been identified by the quantitative processes described above. This determination inherently involves a higher degree of subjectivity and considers risk factors that may not have yet manifested themselves in historical loss experience. These factors include:

• Changes in lending policies and procedures, including changes in underwriting standards;

• Changes in levels and trends of collection, charge-off and recovery practices;

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans;

• Material changes in the mix, volume or duration of the portfolio;

• Changes in the value of underlying collateral for collateral-dependent loans;

• Changes in the quality of our loan review system;

• Changes in the experience, ability and depth of lending management and other relevant staff;

• The existence and effect of any concentrations of credit and changes in the level of such concentrations; and

• Changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments and the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our existing portfolio.

More specifically, the methodology utilized to assess the adequacy of the allowance includes:

• Identifying loans for individual review under current guidance as required by GAAP. Generally, the loans identified for individual review consist of larger balance commercial business loans and commercial mortgages;

• Assessing whether the loans identified for review are “impaired” based on the probability that all amounts due under the loan will not be collected according to the contractual terms of the loan agreement;

• For loans identified as impaired, calculating the estimated fair value of the loans, using one of the following methods, a) observable market price, b) discounted cash flow or c) the value of the underlying collateral;

• Identifying other loans for evaluation collectively as required by GAAP. In general, these other loans include residential mortgages and consumer loans;

• Segmenting loans into groups with similar characteristics and allocating an ALL to each segment based on recent loss history and other relevant information; and

• Reviewing the results to determine the appropriate amount of the ALL.

While the ALL is maintained at a level believed to be adequate by management to cover estimated losses in the loan portfolio, determination of the allowance is inherently subjective, as it requires estimates, all of which may be susceptible to significant change. Changes in these estimates may impact the provisions charged to expense in future periods.

The Company recorded provisions of $10.1 million to the ALL in 2012, compared to $20.6 million for 2011. During 2012, net charge-offs for the year totaled $6.4 million, or 0.44%, of average loans outstanding, excluding loans held for sale, compared to $20.6 million, or 1.43%, of average loans outstanding for 2011. Of the total net charge-offs during 2012, $2.2 million were included in nonaccrual loans at December 31, 2011. Approximately $3.2 million, or 49%, of total net charge-offs for 2012 were concentrated in 4 loan relationships. Comparatively, approximately $16.5 million, or 80% of total net charge-offs for 2011 were concentrated in a total of 7 different loan relationships. Of the $6.4 million of net loan charge-offs for 2012, approximately $2.1 million, or 32%, was associated with commercial and industrial loans, $1.8 million, or 27%, was associated with commercial real estate loans, $981,000, or 16%, was associated with consumer and residential loans, $861,000, or 13%, was associated with commercial construction and land development loans and $765,000, or 12%, was associated with owner occupied real estate loans.

The ALL as a percentage of loans receivable increased from 1.50% of total loans outstanding at December 31, 2011, to 1.65% of total loans outstanding at December 31, 2012. The allowance at December 31, 2012 provided coverage of 77% of total nonperforming loans compared with 62% of nonperforming loans at December 31, 2011. See the Application of Critical Accounting Policies section in this Management's Discussion and Analysis regarding the ALL as well as Notes 1 and 4 in the Notes to Consolidated Financial Statements for the year ended December 31, 2012 included herein for further discussion regarding our ALL.

21

Table 12 summarizes the transactions in the ALL for the twelve months ended December 31, 2012 and each of the preceding four years.

TABLE 12

				Years Ended December 31,
(dollars in thousands)	2012			2011			2010			2009			2008
Balance at beginning of year	$	21,620		$	21,618		$	14,391		$	16,719		$	10,742
Provisions charged to operating expenses	10,100			20,592			21,000			12,425			7,475
	31,720			42,210			35,391			29,144			18,217
Recoveries of loans previously charged-off:
Commercial and industrial	227			156			407			92			145
Commercial tax-exempt	—			—			—			—			—
Owner occupied real estate	7			60			3			—			—
Commercial construction and land development	517			11			58			1			—
Commercial real estate	97			15			25			121			—
Residential	4			68			5			87			—
Consumer	67			135			24			7			25
Total recoveries	919			445			522			308			170
Loans charged-off:
Commercial and industrial	(2,302		)	(7,945		)	(5,995		)	(6,807		)	(1,426		)
Commercial tax-exempt	—			—			—			—			—
Owner occupied real estate	(772		)	(254		)	(614		)	(342		)	—
Commercial construction and land development	(1,378		)	(10,629		)	(3,779		)	(3,652		)	—
Commercial real estate	(1,853		)	(852		)	(2,138		)	(3,634		)	—
Residential	(308		)	(188		)	(705		)	(299		)	(69		)
Consumer	(744		)	(1,167		)	(1,064		)	(327		)	(173		)
Total charged-off	(7,357		)	(21,035		)	(14,295		)	(15,061		)	(1,668		)
Net charge-offs	(6,438		)	(20,590		)	(13,773		)	(14,753		)	(1,498		)
Balance at end of year	$	25,282		$	21,620		$	21,618		$	14,391		$	16,719
Net charge-offs to average loans outstanding	0.44		%	1.43		%	0.98		%	1.02		%	0.11		%
ALL to year-end loans	1.65		%	1.50		%	1.57		%	1.00		%	1.16		%

Allocation of the ALL

The allocation of the ALL is made for analytical purposes and it is not necessarily indicative of the categories in which future credit losses may occur. The total allowance is available to absorb losses from any segment of loans. The allocations in the following table were determined by a combination of the following factors: specific allocations made on loans considered impaired as determined by management and the loan review committee, a general allocation on certain other impaired loans and historical losses in each loan type category combined with a weighting of the current loan composition. The following table details the allocation of the ALL to the various categories.

22

TABLE 13

	December 31,
	2012				2011				2010				2009				2008
(dollars in thousands)	Amount		% Gross Loans		Amount		% Gross Loans		Amount		% Gross Loans		Amount		% Gross Loans		Amount		% Gross Loans
Commercial and industrial	$	9,959	25	%	$	8,400	22	%	$	9,679	24	%	$	5,002	28	%	$	5,750	26	%
Commercial tax-exempt	83		6		79		6		86		6		1,258		7		852		6
Owner occupied real estate	2,129		17		729		20		910		18		2,419		18		2,020		19
Commercial construction and land development	7,222		7		7,840		7		5,420		8		914		8		2,231		7
Commercial real estate	3,983		26		3,241		25		4,002		23		2,343		18		2,890		20
Residential	324		5		435		6		442		6		738		6		1,002		6
Consumer	793		14		831		14		702		15		1,687		15		1,899		16
Unallocated	789		—		65		—		377		—		30		—		75		—
Total	$	25,282	100	%	$	21,620	100	%	$	21,618	100	%	$	14,391	100	%	$	16,719	100	%

Deposits

Total deposits at December 31, 2012, were $2.23 billion, an increase of $159.7 million, or 8%, over total deposits one year ago.  We regard core deposits as all deposits other than public time deposits. Core deposits increased by $148.0 million, or 7%, from $2.03 billion at December 31, 2011 to $2.18 billion at December 31, 2012. Total core demand noninterest-bearing deposits increased by $57.7 million, or 15%, core demand interest-bearing deposits increased by $95.0 million, or 9%, and core savings account balances increased by $38.1 million, or 9%, year over year. Commercial core deposits grew by $94.8 million, or 16%, in 2012 to $681.9 million and governmental core deposits increased by $52.0 million, or 11%, to $544.1 million. Core consumer deposits totaled $950.4 million at December 31, 2012 and comprise 44% of our total core deposits. Total average deposits for 2012 were $2.08 billion, an increase of $141.5 million, or 7%, over the 2011 average of $1.94 billion.

The average balances and weighted-average rates paid on deposits for 2012, 2011 and 2010 are presented below:

TABLE 14

	Years Ended December 31,
	2012				2011				2010
(dollars in thousands)	Average Balance/Rate				Average Balance/Rate				Average Balance/Rate
Demand deposits:
Noninterest-bearing	$	420,181			$	373,494			$	332,099
Interest-bearing (money market and checking)	1,050,664		0.36	%	967,982		0.56	%	946,982		0.69	%
Savings	398,242		0.36		336,720		0.43		324,698		0.47
Time	211,571		1.17		261,002		1.75		258,042		2.11
Total deposits	$	2,080,658	0.37	%	$	1,939,198	0.59	%	$	1,861,821	0.72	%

The decrease in the average rates paid on deposits over the past three years are a direct result of the general level of short-term market interest rates and the Company's pricing of its deposit rates paid in accordance with such market rates. See the Results of Operations section earlier in this Management's Discussion and Analysis regarding the Company's cost of deposits.

The remaining maturities for time deposits with balances of $100,000 or more as of December 31, 2012 are presented in Table 15.

23

TABLE 15

	December 31,
(in thousands)	2012
3 months or less	$	23,398
3 to 6 months	50,324
6 to 12 months	12,957
Over 12 months	17,301
Total	$	103,980

Short-Term Borrowings

Short-term borrowings used to meet temporary funding needs consist of overnight federal funds purchased as well as overnight and short-term advances from the FHLB. For 2012, short-term borrowings averaged $86.3 million, a $41.6 million, or 33%, decrease from 2011. The decrease in 2012 was the result of deposit growth that outpaced increases in average loan and investment balances.Rates paid by the Company on short-term borrowings are set by the respective creditors and are directly related to the level of overall general market interest rates. Therefore, due to the lower level of market rates prevalent throughout 2012 compared to 2011 and 2010, the average rate paid on such borrowings by Metro decreased by 11 bps in 2012 compared to 2011. The following table details the above discussion:

TABLE 16

	Years Ended December 31,
(dollars in thousands)	2012			2011			2010
Outstanding balance	$	113,225		$	65,000		$	140,475
Weighted-average interest rate at period-end	0.22		%	0.15		%	0.60		%
Maximum amount outstanding at any one month-end	$	164,175		$	206,275		$	140,475
Average outstanding balance	$	86,333		$	127,975		$	52,170
Weighted-average interest rate on average outstanding balances	0.23		%	0.34		%	0.60		%

Long-Term Debt

Long-term debt totaled $40.8 million at December 31, 2012 compared to $49.2 million at December 31, 2011. The change in long-term debt is due to the repurchase and retirement of $8.0 million of 10% fixed rate Trust Capital Securities during the fourth quarter of 2012. For 2013 and going forward, this will serve to reduce the Company's pretax interest expense by $800,000, annually. This transaction was similar to the repurchase and retirement of $5.0 million of 11% fixed rate Trust Capital Securities which occurred during the fourth quarter 2011. The Company incurred a $140,000 and $75,000 repayment charge during 2012 and 2011, respectively, to repurchase and retire these Trust Capital Securities. The remaining long-term debt consists of $15.8 million of Trust Capital Securities through Commerce Harrisburg Capital Trust III, our Delaware business trust subsidiaries and a FHLB fixed rate borrowing product of $25.0 million with a two year maturity and interest rate of 1.01%. The entire $25.0 million was outstanding at December 31, 2012 and 2011 and expires on March 18, 2013. At December 31, 2012, the Capital Trust Securities qualified as Tier I capital for regulatory capital purposes. Proceeds of the trust capital securities were used for general corporate purposes, including additional capitalization of our wholly-owned banking subsidiary. See Note 10 in the Notes to Consolidated Financial Statements for the year ended December 31, 2012 for further analysis of our long-term debt.

Stockholders' Equity

At December 31, 2012, stockholders' equity totaled $235.4 million, up $15.4 million, or 7%, over total stockholders' equity at December 31, 2011. The increase in stockholders' equity increase was primarily driven by the earnings of the Company. Additionally, the increase in the unrealized gain of the investment portfolio contributed $3.4 million of the increase. Average stockholders' equity to average assets for the year 2012 was 9.31% compared to 9.18% in 2011. See Note 12 of Notes to Consolidated Financial Statements for the year ended December 31, 2012 included herein, for additional discussion regarding Stockholders' Equity.

On August 6, 2009, Metro Bancorp, Inc. filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC) which will allow the Company, from time to time, to offer and sell up to a total aggregate of $250.0 million of common stock, preferred stock, debt securities, or warrants, either separately or together in any combination. The shelf registration statement also registered trust preferred securities, however, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) excludes from

24

regulatory capital the inclusion of trust preferred securities issued after May 19, 2010. Consequently, the Company has no foreseeable plans to issue additional trust preferred securities. The Company has always been well-capitalized under federal regulatory guidelines, however the shelf registration better positions us to take advantage of potential opportunities for growth and to address current economic conditions.

The Company offers a Dividend Reinvestment and Stock Purchase Plan and received proceeds from stock purchases through this plan of $44,000 during 2012 and $3.8 million during 2011. Beginning January 1, 2012, the voluntary cash payments maximum was reduced from $25,000 to $10,000 per month and the 3% discount on such purchases was eliminated. These changes reduced the voluntary cash payments the Company received in 2012 and may in future periods, as well.

Supplemental Reporting of Non-GAAP Based Financial Measures

Tangible common equity to tangible assets is a non-GAAP based financial measure calculated using non-GAAP based amounts. Total stockholders' equity to total assets is the most directly comparable measure, which is calculated using GAAP-based amounts. The Company calculates the tangible common equity to tangible assets by excluding the balance of preferred stock and any intangible assets; however, the Company did not have any intangible assets at either December 31, 2012 or December 31, 2011. Management believes that tangible common equity to tangible assets has been a focus for some investors and assists in analyzing Metro's capital position without regard to the effect of preferred stock. Although this non-GAAP financial measure is frequently used by investors to evaluate a company, non-GAAP financial measurements have inherent limitations as analytical tools, and should not be considered in isolation, or as a substitute for analyses of results as reported under GAAP. A reconciliation of tangible common equity to tangible assets is set forth in the table that follows:

TABLE 17

	December 31, 2012		December 31, 2011
Total stockholders' equity to assets (GAAP)	8.93	%	9.09	%
Less: Effect of excluding preferred stock	0.03	%	0.04	%
Tangible common equity to tangible assets	8.90	%	9.05	%

Capital Adequacy

Risk-based capital provides the basis for which all banks are evaluated in terms of capital adequacy. The risk-based capital standards require all banks to have Tier 1 capital of at least 4% and total capital, including Tier 1 capital, of at least 8% of risk-adjusted assets. Tier 1 capital includes common stockholders' equity and qualifying perpetual preferred stock together with related surpluses and retained earnings. Total capital may be comprised of total Tier 1 capital plus limited life preferred stock, qualifying debt instruments and the ALL.

The following table provides a comparison of the Company's risk-based capital ratios and leverage ratios to the minimum regulatory requirements for the periods indicated:

TABLE 18

	Company				Bank				Minimum Regulatory Requirements		Well-Capitalized Threshold
	December 31,				December 31,
	2012		2011		2012		2011				(Bank Only)
Total Capital	15.22	%	15.36	%	14.59	%	14.12	%	8.00	%	10.00	%
Tier 1 Capital	13.97		14.11		13.34		12.87		4.00		6.00
Leverage ratio (to total average assets)	9.61		9.99		9.18		9.10		4.00		5.00

At December 31, 2012, the capital levels of the Bank met the regulatory definition of a “well-capitalized” financial institution, which is defined by a leverage capital ratio exceeding 5%, a Tier 1 risk-based capital ratio exceeding 6% and a total risk-based capital ratio exceeding 10%.

Our common stock trades on the NASDAQ Global Select Market under the symbol METR. The table below sets forth the prices on the NASDAQ Global Select Market known to us for the period beginning January 1, 2011 through December 31, 2012. As of December 31,

25

2012, there were approximately 3,000 holders of record of the Company's common stock. The market price of Metro common stock increased 58% throughout 2012 from $8.38 per share at December 31, 2011 to $13.22 per share at December 31, 2012.

TABLE 19

	Sales Price
Quarter Ended:	High		Low
December 31, 2012	$	13.40	$	11.69
September 30, 2012	13.17		11.46
June 30, 2012	12.50		10.56
March 31, 2012	11.93		8.48
December 31, 2011	$	9.30	$	7.75
September 30, 2011	11.90		8.30
June 30, 2011	12.90		10.30
March 31, 2011	12.85		10.88

The following graph shows the yearly percentage change in the Company's cumulative total shareholder return on its common stock from December 31, 2007 to December 31, 2012 compared with the cumulative total return of the NASDAQ Bank Index and the NASDAQ Composite Market Index.

Interest Rate Sensitivity

The management of interest rate sensitivity seeks to avoid fluctuating net interest margins and to provide consistent net interest income through periods of changing interest rates.

Our risk of loss arising from adverse changes in the fair value of financial instruments, or market risk, is composed primarily of interest

26

rate risk. The primary objective of our asset/liability management activities is to maximize net interest income while maintaining acceptable levels of interest rate risk. Our Asset/Liability Committee (ALCO) is responsible for establishing policies to limit exposure to interest rate risk and to ensure procedures are established to monitor compliance with those policies. Our board of directors reviews the guidelines established by ALCO.

An interest rate sensitive asset or liability is one that, within a defined time period, either matures or experiences an interest rate change in line with general market interest rates. Historically, the most common method of estimating interest rate risk was to measure the maturity and repricing relationships between interest-earning assets and interest-bearing liabilities at specific points in time, referred to as “GAP,” typically one year. Under this method, a company is considered liability sensitive when the amount of its interest-bearing liabilities exceeds the amount of its interest-earning assets within the one-year horizon. However, assets and liabilities with similar repricing characteristics may not reprice at the same time or to the same degree. As a result, our GAP does not necessarily predict the impact of changes in general levels of interest rates on net interest income. Table 20 shows our GAP position as of December 31, 2012. The repricing assumptions used in the table are as follows:

• Fixed rate loans receivable are scheduled according to their contractual amortization and payment schedules specific to each loan. A market consensus Constant Prepayment Rate (CPR) based on historical actual experience is applied to fixed rate commercial and consumer loans;

• Floating rate loans receivable are tied to a floating index such as the New York Prime lending rate and are scheduled according to their repricing characteristics;

• Securities with pre-payment characteristics such as MBSs and CMOs are scheduled based upon their remaining weighted-average lives as calculated utilizing a market consensus CPR. Securities with call options are analyzed in the context of the existing interest rate environment to estimate the likelihood of their call and to project their resulting payment schedule. All other securities are assumed to reprice at their contractual maturity;

• Fixed rate deposit transaction accounts are scheduled to reprice in accordance with their estimated decay rates as determined in a core deposit study produced by an independent consultant. Floating rate deposit transaction accounts are scheduled in the 1-90 day category as they are tied to a floating index such as the 91-Day Treasury bill; and

• Time deposit accounts, short-term borrowings and trust capital securities are scheduled based upon their contractual maturity dates.

TABLE 20

	December 31, 2012
(dollars in thousands)	1 - 90 Days			91 - 180 Days			181 - 365 Days			1 - 5 Years			Beyond 5 Years			Total
Interest-earning assets:
Loans receivable, including loans held for sale	$	736,695		$	55,186		$	97,872		$	513,884		$	140,343		$	1,543,980
Securities	172,712			57,085			108,349			332,831			274,467			945,444
Total interest-earning assets	909,407			112,271			206,221			846,715			414,810			2,489,424
Interest-bearing liabilities:
Transaction accounts, excluding noninterest-bearing demand	372,066			57,192			57,892			302,605			788,986			1,578,741
Time deposits	47,252			66,635			32,127			51,536			—			197,550
Short-term borrowings	113,225			—			—			—			—			113,225
Long-term debt	25,000			—			—			—			15,800			40,800
Total interest-bearing liabilities	557,543			123,827			90,019			354,141			804,786			1,930,316
Period GAP	351,864			(11,556		)	116,202			492,574			(389,976		)	$	559,108
Cumulative GAP	$	351,864		$	340,308		$	456,510		$	949,084		$	559,108
Cumulative RSA / RSL	163.11		%	149.94		%	159.18		%	184.32		%	128.96		%

Notes: Securities are reported at face value for purposes of this table. Securities include restricted investments in bank stock for purposes of this table. RSA means rate sensitive assets; RSL means rate sensitive liabilities.

27

Shortcomings are inherent in any GAP analysis since certain assets and liabilities may not move proportionately as interest rates change. As the interest rate environment has become more dynamic, we have continued to place greater reliance on interest income sensitivity modeling and less on GAP reporting.

Our management understands that the preparation of GAP reports can only provide a guide to the impact of the movement of interest rates. Modeling is the best means to predict the movement in interest rates. This is true because even with the achievement of a perfectly matched balance sheet (per a GAP report), we may be subject to interest rate risk due to: differences in the timing of repricing, basis risk, market risk, customer ability to prepay loans or withdraw funds and yield curve risk.

Our management believes the simulation of net interest income in different interest rate environments provides a more meaningful measure of interest rate risk. Income simulation analysis captures not only the potential of all assets and liabilities to mature or reprice, but also the probability that they will do so. Income simulation also attends to the relative interest rate sensitivities of these items and projects their behavior over an extended period of time. Finally, income simulation permits management to assess the probable effects on the balance sheet not only of changes in interest rates, but also of proposed strategies for responding to them.

Our income simulation model analyzes interest rate sensitivity by projecting net interest income over the next 24 months in a flat rate scenario versus net interest income in alternative interest rate scenarios. Our management continually reviews and refines its interest rate risk management process in response to the changing economic climate. Currently, our model projects up to a plus 500 bp increase and a 100 bp decrease during the next year, with rates remaining constant in the second year. The minus100 bp scenario is not considered very likely, given the low absolute level of short-term interest rates. 

Our ALCO policy has established that income sensitivity will be considered acceptable in the 100 bp and 200 bp scenarios if overall net interest income volatility is within 4% of forecasted net interest income in the first year and within 5% using a two-year time frame. In the 300 bp and 400 bp scenarios income sensitivity will be considered acceptable if net interest income volatility is within 5% of forecasted net interest income in the first year and within 6% using a two-year time frame. In the 500 bp scenario income sensitivity will be considered acceptable if net interest income volatility is within 6% of forecasted net interest income in the first year and within 7% using a two-year time frame.

The following table compares the impact on forecasted net income at December 31, 2012 and 2011 of a plus 300, plus 200 and plus 100 bp change in interest rates.

TABLE 21

	Plus 300		Plus 200		Plus 100
December 31, 2012
Twelve Months	0.99	%	1.19	%	1.31	%
Twenty-Four Months	3.49	%	3.05	%	2.33	%
December 31, 2011
Twelve Months	(0.04	)%	0.04	%	0.08	%
Twenty-Four Months	2.39	%	1.66	%	0.79	%

Management continues to evaluate strategies in conjunction with the Company's ALCO to effectively manage the interest rate risk position. Such strategies could include the sale of a portion of our AFS investment portfolio, purchasing floating rate securities, altering the mix of our deposits by type and therefore rate paid, the use of risk management tools such as interest rate swaps and caps, adjusting the investment leverage position funded by short-term borrowings, extending the maturity structure of the Bank's short-term borrowing position or fixing the cost of our short-term borrowings.

Management uses many assumptions to calculate the impact of changes in interest rates. Actual results may not be similar to our projections due to several factors including the timing and frequency of rate changes, market conditions and the shape of the yield curve. In general, a flattening of the interest rate yield curve would result in reduced net interest income compared to a normal-shaped interest rate curve scenario and proportionate rate shift assumptions. Actual results may also differ due to management's actions, if any, in response to the changing rates.

Management also monitors interest rate risk by utilizing a market value of equity model. The model assesses the impact of a change in interest rates on the market value of all our assets and liabilities, as well as any off balance sheet items. Market value of equity is defined as the market value of assets less the market value of liabilities plus the market value of off-balance sheet items. The model calculates the market value of equity in the current rate scenario and then compares the market value of equity given immediate increases and

28

decreases in rates.  Our ALCO policy indicates that the level of interest rate risk is unacceptable in the 100 bp immediate interest rate change scenarios if there is a resulting loss of more than 15% of the market value calculated in the current rate scenario. In the 200 bp immediate interest rate change scenario a loss of more than 25% loss of market value is deemed unacceptable. A loss of more than 35% is defined as unacceptable in the 300 bp immediate rate change scenario, while a loss of more than 40% is unacceptable in immediate rate change scenarios of 400 bps or more. At December 31, 2012 the market value of equity calculation indicated acceptable levels of interest rate risk in all scenarios per the policies established by our ALCO.

The market value of equity model reflects certain estimates and assumptions regarding the impact on the market value of our assets and liabilities given immediate changes in rates. One of the key assumptions is the market value assigned to our core deposits, or the core deposit premiums. Using an independent consultant, we have completed and updated comprehensive core deposit studies in order to assign our own core deposit premiums as permitted by regulation. The studies have consistently confirmed management's assertion that our core deposits have stable balances over long periods of time, are generally insensitive to changes in interest rates and have significantly longer average lives and durations than our loans and investment securities. Thus, these core deposit balances provide an internal hedge to market fluctuations in our fixed rate assets. The most recent study calculates an average life of our core deposit transaction accounts of 9.2 years. Management believes the core deposit premiums produced by its market value of equity model at December 31, 2012 provide an accurate assessment of our interest rate risk.  

Liquidity

The objective of liquidity risk management is to ensure our ability to meet our financial obligations. These obligations include the payment of deposits on demand at their contractual maturity; the repayment of borrowings as they mature; the payment of lease obligations as they become due; the ability to fund new and existing loans and other funding commitments; and the ability to take advantage of new business opportunities. There are two fundamental risks in our liquidity risk management. The first is if we are unable to meet our funding requirements at a reasonable and profitable cost. The second is the potential inability to operate our business because adequate contingency liquidity is not available in a stressed environment or under adverse conditions.

We manage liquidity risk at both the bank and the holding company of Metro Bank (the Parent) levels to help ensure that we can obtain cost-effective funding to meet current and future obligations and to help ensure that we maintain an appropriate level of contingent liquidity. The board of directors is responsible for approving our Liquidity Policy to be managed by the ALCO and management.

Liquidity is measured and monitored daily, allowing management to better understand and react to balance sheet trends. On a quarterly basis, a comprehensive liquidity analysis is reviewed by our board of directors. The analysis provides a summary of the current liquidity measurements, projections and future liquidity positions given various levels of liquidity stress. Management also maintains a detailed Liquidity Contingency Plan designed to respond to an overall decline in the financial condition of the banking industry or a problem specific to the Company.

Bank Level Liquidity - Uses

At the bank level, primary liquidity obligations include funding loan commitments, satisfying deposit withdrawal requests and maturities and debt service related to bank borrowings. We also maintain adequate bank liquidity to meet future potential loan demand, purchase investment securities and provide for other business needs as necessary.

Bank Level Liquidity - Sources

Liquidity sources are found on both sides of the balance sheet. Our single largest source of bank liquidity is the deposit base that comes from our retail, commercial business and government deposit customers. Liquidity is also provided on a continuous basis through scheduled and unscheduled principal reductions and interest payments on outstanding loans and investments, maturing short-term assets, the ability to sell marketable securities and from borrowings.

Our investment portfolio consists mainly of U.S. Government agency CMOs and MBSs. Cash flows from such investments are dependent upon the performance of the underlying mortgage loans and are generally influenced by the level of interest rates. As rates increase, cash flows generally decrease as prepayments on the underlying mortgage loans slow. As rates decrease, cash flows generally increase as prepayments increase. The current market environment has positively impacted the fair market value of certain securities in the Company's investment portfolio, however, the Company is not inclined to act on a sale of such securities for liquidity purposes at this time.  With interest rates near record-lows, the Company would more likely be inclined to borrow from one of the sources discussed in the following paragraph.

We also maintain secondary sources of liquidity which can be drawn upon if needed. These secondary sources of liquidity include a $15.0 million line of credit through a correspondent bank, a $20.0 million line of credit through another correspondent bank and $545.8 million

29

of borrowing capacity at the FHLB. Metro Bank is a member of the FHLB-Pittsburgh and, as such, has access to advances secured generally by residential mortgage and other mortgage-related loans. In addition we have the ability to borrow at the Federal Reserve Bank of Philadelphia's (FRB) Discount Window to meet short-term liquidity requirements. The FRB, however, is not viewed as the primary source of our borrowings, but rather as a potential source of liquidity under certain circumstances, in a stressed environment or during a market disruption. This potential source is secured by agency residential MBSs and CMOs, as well as agency debentures. At December 31, 2012, our total potential liquidity through FHLB and other secondary sources was $580.8 million, of which $442.6 million was available, as compared to $460.5 million available out of our total potential liquidity of $550.5 million at December 31, 2011. The $30.3 million increase in potential liquidity was mainly due to an increase in the bank's borrowing capacity as a result of a higher level of qualifying collateral as well as increases to some collateral weightings by the FHLB. FHLB borrowing capacity is determined based on asset levels on a quarterly lag.

In previous years, the Bank opted to remain in the FDIC-sponsored Temporary Liquidity Guarantee Program which provided 100% federal deposit insurance coverage for any individual noninterest-bearing demand checking account and for low-interest negotiable order of withdrawal (NOW) checking accounts whose balance exceeded $250,000. The original program expired on December 31, 2010. The Dodd-Frank Act provided temporary unlimited coverage for noninterest-bearing transaction accounts at all FDIC-insured depository institutions. The separate coverage for these accounts became effective on December 31, 2010 and terminated on December 31, 2012. Upon such expiration, customer deposit and withdrawal behavior for such accounts may fluctuate materially and, as a result, have an adverse impact on our liquidity position. Prior to the program's December 31, 2012 expiration, the Bank entered into a deposit placement agreement with a national firm. The agreement allows customers the ability to place certain deposits with other member institutions on a reciprocal basis, thereby achieving additional FDIC insurance coverage. The Bank believes this will help mitigate any potential adverse impact on its liquidity position, however it does not anticipate a material level of customer demand for this program.

The Parent Company Liquidity - Uses

The Parent and the Bank's liquidity are managed separately. At the parent level, primary liquidity obligations include debt service related to parent company long-term debt or borrowings, unallocated corporate expenses, funding its subsidiaries, and could also include paying dividends to Metro shareholders, common stock or preferred stock share repurchases or acquisitions if Metro chose to do so.

The Parent Company Liquidity - Sources

The principal source of the Parent's liquidity is dividends it receives from the subsidiary Bank, which may be impacted by: Bank-level capital needs, laws and regulations, corporate policies, or other factors. Although the Bank did not issue dividends to the Parent in 2012, or 2011, the Parent has sufficient cash on hand to support its normal operating needs for the foreseeable future. A common stock share repurchase program, if implemented, could require us to dividend additional cash from the subsidiary Bank up to the Parent Company, depending upon the size of the repurchase program. The Bank is subject to regulatory restrictions on its ability to pay dividends to the Parent. See Note 15 Regulatory Matters in the Notes to the Consolidated Financial Statements for December 31, 2012, included herein, for additional information regarding dividend restrictions.

In addition to dividends from Metro Bank, other sources of liquidity for the parent company include proceeds from common stock options exercised as well as proceeds from the issuance of common stock under Metro's stock purchase plan. We can also generate liquidity for Metro and its subsidiaries through the issuance of debt and equity securities. Metro has an effective shelf registration statement, as previously discussed, whereby we can issue additional debt and equity securities. See Notes 10 and 12 in the Notes to the Consolidated Financial Statements for December 31, 2012, included herein, for additional information regarding capital securities.

The Consolidated Statements of Cash Flows included herein, provide additional information on our sources and uses of funds. From a funding standpoint, we have been able to rely over the years on a stable base of strong “core” deposit growth. Cash from operating activities during 2012 decreased to $31.6 million from $47.9 million during 2011. This decrease was primarily attributable to a lower provision for loan losses as compared to 2011, a smaller decrease in other assets, and a smaller decrease in other liabilities partially offset by an increase in net income in 2012 and an increase in originations of loans held for sale. Investing activities resulted in a net cash outflow of $229.5 million during 2012 compared to $213.1 million in 2011, primarily due to an increase in loans receivable in 2012 as compared to 2011. Financing activities resulted in net cash of $199.4 million provided in 2012 compared to a net cash of $187.4 million in 2011. The net cash inflow in 2012 was mostly from an increase in short-term borrowings partially offset by an increase in deposits of $159.7 million compared to a $239.4 million increase in 2011. Much of the increase in short-term borrowings occurred during the fourth quarter of 2012 when the Company opted to pre-purchase expected early-2013 cash flows, temporarily funding the purchases with short-term FHLB borrowings. The Company expects the level of borrowings to fall again as normal principal pre-payments occur and as securities are called away from the Bank in early 2013 as anticipated.

30

Aggregate Contractual Obligations

The following table represents our on-and-off balance sheet aggregate contractual obligations to make future payments as of December 31, 2012:

TABLE 22

	December 31, 2012
(in thousands)	Less than 1 Year		1 to 3 Years		3 to 5 Years		Over 5 Years		Total
Time deposits	$	146,014	$	43,983	$	7,553	$	—	$	197,550
Long-term debt	25,000		—		—		15,800		40,800
Fiserv Solutions, Inc. obligation	7,178		15,714		4,047		—		26,939
Operating leases	2,504		4,603		4,084		17,000		28,191
Sponsorship obligation	338		677		677		338		2,030
Total	$	181,034	$	64,977	$	16,361	$	33,138	$	295,510

For further discussion regarding our commitments and contingencies, please see Notes 7 and 18 in the Notes to Consolidated Financial Statements for December 31, 2012, included herein.

Off-Balance Sheet Arrangements

During the conduct of ordinary business operations we routinely enter into contracts for services. These contracts may require payment for services to be provided in the future and may also contain penalty clauses for the early termination of the contract. Management is not aware of any additional commitments or contingent liabilities, which may have a material adverse impact on our liquidity or capital resources.

We are also party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of our customers. These financial instruments include commitments to extend credit and standby letters of credit. See Note 5 in the Notes to the Consolidated Financial Statements for December 31, 2012, included herein, for additional information.

Forward-Looking Statements

This annual report on Form 10-K and the documents incorporated by reference contain 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 annual report on Form 10-K and incorporated by reference in this annual report on Form 10-K, 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, including the duration of such policies;

• 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 effects of the "fiscal cliff" deal and related tax increases and their effects on economic and business conditions in general and our customers in particular;

31

• the effects of the failure of the federal government to reach a deal to raise the debt ceiling and the potential negative results on economic and business conditions;

• the impact of the Dodd-Frank Act and other changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance);

• 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;

• continued levels of loan volume origination;

• the adequacy of the ALL;

• 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 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 or through acquisitions and successful integration of new or acquired entities while controlling costs;

• 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;

• other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services;

• 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; 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.

The Company may, from time to time, make written or oral “forward-looking statements”, including statements contained in the Company's filings with the SEC (including the annual report on Form 10-K and the exhibits thereto), in its reports to stockholders and in other

32

communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

Impact of Inflation and Changing Prices

Interest rates, which may be affected by inflation, have a more significant impact on our performance than do the effects of general levels of inflation, since most of our assets and liabilities are monetary in nature. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services as measured by Personal Consumption Expenditures price index. The liquidity and maturity structure of our assets and liabilities are critical to the maintenance of acceptable performance levels.

Quantitative and Qualitative Disclosures about Market Risk

Our exposure to market risk principally includes interest rate risk, which was previously discussed. Historically, our net interest margin has remained fairly stable. Our net interest margin for the year ended December 31, 2012 was 3.74%, an increase of 1 bp from 3.73% for the year ended December 31, 2011. See the section titled “Net Interest Income and Net Interest Margin” in this Management's Discussion and Analysis for further discussion regarding our net interest margin performance.

Currently, we have 98% of our deposits in accounts which we consider core deposits. These accounts, which have a relatively low interest cost, have historically contributed significantly to our net interest margin.

33

Metro Bancorp, Inc.

Report on Management's Assessment of Internal Control Over

Financial Reporting

Metro Bancorp, Inc. is responsible for the preparation, integrity, and fair presentation of the consolidated financial statements included in this annual report. The consolidated financial statements and notes included in this annual report have been prepared in conformity with United States generally accepted accounting principles and necessarily include some amounts that are based on management's best estimates and judgments.

We, as management of Metro Bancorp, Inc., are responsible for establishing and maintaining effective internal control over financial reporting that is designed to produce reliable financial statements in conformity with United States generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of the assets of the Company; provide reasonable assurance that the transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, that receipts and expenditures of the Company are only being made in accordance with authorizations of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. The system of internal control over financial reporting as it relates to the financial statements is evaluated for effectiveness by management and tested for liability through a program of internal audits. Actions are taken to correct potential deficiencies as they are identified.

Any system of internal control, no matter how well designed, has inherent limitations, including the possibility that a control can be circumvented or overridden and misstatements due to error or fraud may occur and not be detected. Also, because of changes in conditions, internal control effectiveness may vary over time. Accordingly, even an effective system of internal control will provide only reasonable assurance with respect to financial statement preparation.

Management assessed the Company's system of internal control over financial reporting as of December 31, 2012, in relation to criteria for effective internal control over financial reporting as described in Internal Control - Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concludes that, as of December 31, 2012, its system of internal control over financial reporting is effective and meets the criteria of Internal Control - Integrated Framework.

ParenteBeard LLC, an independent registered public accounting firm, has audited the consolidated financial statements of the Company for the year ended December 31, 2012, appearing elsewhere in this annual report, and has issued an audit report on the effectiveness of the Company's internal control over financial reporting as of December 31, 2012, as stated in their report, which is included herein.

	/s/ Gary L. Nalbandian
	Gary L. Nalbandian
	Chairman, President and Chief Executive Officer
	(Principal Executive Officer)
	/s/ Mark A. Zody
	Mark A. Zody
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)
March 15, 2013

34

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

of Metro Bancorp, Inc.

Harrisburg, Pennsylvania

We have audited Metro Bancorp, Inc.'s (the “Company”) internal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Metro Bancorp, Inc.'s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report on Management's Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the consolidated financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Metro Bancorp, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2012 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets and the related consolidated statements of operations, stockholders' equity, and cash flows of Metro Bancorp, Inc. and subsidiaries, and our report dated March 15, 2013 expressed an unqualified opinion.

/s/ParenteBeard LLC

Harrisburg, Pennsylvania

March 15, 2013

35

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders

of Metro Bancorp, Inc.

Harrisburg, Pennsylvania

We have audited the accompanying consolidated balance sheets of Metro Bancorp, Inc. and subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2012. Metro Bancorp, Inc.'s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Metro Bancorp, Inc. and its subsidiaries as of December 31, 2012 and 2011, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Metro Bancorp, Inc.'sinternal control over financial reporting as of December 31, 2012, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 15, 2013 expressed an unqualified opinion.

/s/ParenteBeard LLC                        

Harrisburg, Pennsylvania

March 15, 2013

36

Metro Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets

	December 31,
(in thousands, except share and per share amounts)	2012		2011
Assets
Cash and due from banks	$	56,582	$	46,998
Federal funds sold	—		8,075
Cash and cash equivalents	56,582		55,073
Securities, available for sale at fair value	675,109		613,459
Securities, held to maturity at cost (fair value 2012: $273,671; 2011: $199,857 )	269,783		196,635
Loans, held for sale	15,183		9,359
Loans receivable, net of allowance for loan losses (allowance 2012: $25,282; 2011: $21,620)	1,503,515		1,415,048
Restricted investments in bank stock	15,450		16,802
Premises and equipment, net	78,788		82,114
Other assets	20,465		32,729
Total assets	$	2,634,875	$	2,421,219
Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$	455,000	$	397,251
Interest-bearing	1,776,291		1,674,323
Total deposits	2,231,291		2,071,574
Short-term borrowing	113,225		65,000
Long-term debt	40,800		49,200
Other liabilities	14,172		15,425
Total liabilities	2,399,488		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: 14,131,263;  2011: 14,125,346)	14,131		14,125
Surplus	157,305		156,184
Retained earnings	56,311		45,497
Accumulated other comprehensive income	7,240		3,814
Total stockholders' equity	235,387		220,020
Total liabilities and stockholders' equity	$	2,634,875	$	2,421,219

See accompanying notes.

37

Metro Bancorp, Inc. and Subsidiaries

Consolidated Statements of Operations

	Years Ended December 31,
(in thousands, except per share amounts)	2012			2011			2010
Interest Income
Loans receivable, including fees:
Taxable	$	71,760		$	71,307		$	70,423
Tax-exempt	3,628			4,020			4,521
Securities:
Taxable	21,468			22,362			22,275
Tax-exempt	451			1			14
Federal funds sold	1			5			14
Total interest income	97,308			97,695			97,247
Interest Expense
Deposits	7,701			11,443			13,467
Short-term borrowings	203			439			317
Long-term debt	2,206			2,814			3,613
Total interest expense	10,110			14,696			17,397
Net interest income	87,198			82,999			79,850
Provision for loan losses	10,100			20,592			21,000
Net interest income after provision for loan losses	77,098			62,407			58,850
Noninterest Income
Service charges, fees and other operating income	28,372			27,773			26,681
Gains on sales of loans	1,220			2,728			2,434
Total fees and other income	29,592			30,501			29,115
Other-than-temporary impairment (OTTI) losses	(649		)	(324		)	(4,904		)
Portion recognized in other comprehensive income (before taxes)	—			—			3,942
Net impairment loss on investment securities	(649		)	(324		)	(962		)
Net gains on sales/calls of securities	1,051			350			2,801
Debt prepayment charge	(140		)	(75		)	(1,574		)
Total noninterest income	29,854			30,452			29,380
Noninterest Expenses
Salaries and employee benefits	41,241			40,318			41,494
Occupancy	8,439			9,155			8,429
Furniture and equipment	4,842			5,465			5,134
Advertising and marketing	1,870			2,016			2,967
Data processing	13,590			14,211			13,121
Regulatory assessments and related fees	4,063			3,638			4,598
Telephone	3,480			3,434			3,492
Loan expense	1,384			1,098			1,658
Foreclosed real estate	1,335			2,275			1,380
Branding	30			1,891			—
Consulting fees	1,104			1,496			4,508
Pennsylvania shares tax	1,789			1,507			1,379
Other	7,977			7,510			8,943
Total noninterest expenses	91,144			94,014			97,103
Income (loss) before taxes	15,808			(1,155		)	(8,873		)
Provision (benefit) for federal income taxes	4,914			(1,444		)	(4,536		)
Net income (loss)	$	10,894		$	289		$	(4,337	)
Net Income (Loss) per Common Share
Basic	$	0.77		$	0.02		$	(0.33	)
Diluted	0.77			0.02			(0.33		)
Average Common and Common Equivalent Shares Outstanding
Basic	14,128			13,919			13,563
Diluted	14,128			13,919			13,563

See accompanying notes.

38

Metro Bancorp, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income

	Years Ended December 31,
(in thousands)	2012			2011			2010
Net income (loss)	$	10,894		$	289		$	(4,337	)
Other comprehensive income, net of tax:
Net unrealized holding gains arising during the period	3,413			9,457			3,830
(net of taxes 2012: $1,758; 2011: $4,872; 2010: $2,227)
Reclassification adjustment for net realized gains on securities recorded in income	(409		)	(227		)	(1,826		)
(net of taxes 2012: ($220); 2011: ($117); 2010: ($941))
Reclassification for OTTI credit losses recorded in income	422			214			635
(net of taxes 2012: $227; 2011: $110; 2010: $327)
Noncredit related OTTI losses on securities not expected to be sold	—			—			2,602
(net of taxes 2012: $0; 2011: $0; 2010: $1,340)
Other comprehensive income	3,426			9,444			5,241
Total comprehensive income	$	14,320		$	9,733		$	904

See accompanying notes.

39

Metro Bancorp, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity

(in thousands, except share amounts)	Preferred Stock		Common Stock		Surplus		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
January 1, 2010	$	400	$	13,448	$	147,340	$	49,705		$	(10,871	)	$	200,022
Net loss	—		—		—		(4,337		)	—			(4,337		)
Other comprehensive income	—		—		—		—			5,241			5,241
Dividends declared on preferred stock	—		—		—		(80		)	—			(80		)
Common stock of 11,378 shares issued under stock option plans, including tax benefit of $25	—		12		91		—			—			103
Common stock of 210 shares issued under employee stock purchase plan	—		—		2		—			—			2
Proceeds from issuance of 288,349 shares of common stock in connection with dividend reinvestment and stock purchase plan	—		288		2,868		—			—			3,156
Common stock share-based awards	—		—		1,244		—			—			1,244
December 31, 2010	400		13,748		151,545		45,288			(5,630		)	205,351
Net income	—		—		—		289			—			289
Other comprehensive income	—		—		—		—			9,444			9,444
Dividends declared on preferred stock	—		—		—		(80		)	—			(80		)
Common stock of 100 shares issued under employee stock purchase plan	—		—		1		—			—			1
Proceeds from issuance of 376,862 shares of common stock in connection with dividend reinvestment and stock purchase plan	—		377		3,425		—			—			3,802
Common stock share-based awards	—		—		1,213		—			—			1,213
December 31, 2011	400		14,125		156,184		45,497			3,814			220,020
Net income	—		—		—		10,894			—			10,894
Other comprehensive income	—		—		—		—			3,426			3,426
Dividends declared on preferred stock	—		—		—		(80		)	—			(80		)
Common stock of 40 shares issued under employee stock purchase plan	—		—		1		—			—			1
Proceeds from issuance of 5,877 shares of common stock in connection with dividend reinvestment and stock purchase plan	—		6		38		—			—			44
Common stock share-based awards	—		—		1,082		—			—			1,082
December 31, 2012	$	400	$	14,131	$	157,305	$	56,311		$	7,240		$	235,387

See accompanying notes.

40

Metro Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows 

	Years Ended December 31,
(in thousands)	2012			2011			2010
Operating Activities
Net income (loss)	$	10,894		$	289		$	(4,337	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses	10,100			20,592			21,000
Provision for depreciation and amortization	5,824			6,476			6,142
Deferred income tax (benefit) expense	118			(1,511		)	(4,772		)
Amortization of securities premiums and accretion of discounts (net)	1,635			2,506			122
Net gains on sales of available for sales securities	(629		)	(343		)	(2,762		)
Gains on sales/calls of held to maturity securities	(422		)	(7		)	(39		)
Other-than-temporary impairment losses on investment securities	649			324			962
Proceeds from sales and transfers of SBA loans originated for sale	—			12,063			30,573
Proceeds from sales of other loans originated for sale	70,448			52,492			65,892
Loans originated for sale	(75,052		)	(52,581		)	(98,994		)
Gains on sales of loans originated for sale	(1,220		)	(2,728		)	(2,434		)
Loss on write-down on foreclosed real estate	257			2,060			860
(Gains) losses on sales of foreclosed real estate (net)	649			(116		)	(51		)
(Gains) losses on disposal of furniture and equipment (net)	(45		)	1,254			89
Stock-based compensation	1,082			1,250			1,244
Amortization of deferred loan origination fees and costs (net)	2,647			2,069			1,928
Debt prepayment charge	140			75			1,574
Decrease (increase) in other assets	5,782			15,437			(6,856		)
Decrease in other liabilities	(1,253		)	(11,679		)	(1,392		)
Net cash provided by operating activities	31,604			47,922			8,749
Investing Activities
Securities available for sale:
Proceeds from principal repayments, calls and maturities	161,013			79,695			153,786
Proceeds from sales	299,338			125,299			292,899
Purchases	(518,375		)	(368,537		)	(485,985		)
Securities held to maturity:
Proceeds from principal repayments, calls and maturities	146,503			87,074			64,481
Proceeds from sales	6,101			852			3,327
Purchases	(225,420		)	(57,059		)	(177,535		)
Proceeds from sales of foreclosed real estate	6,472			2,930			3,513
(Increase) decrease in loans receivable (net)	(103,992		)	(85,458		)	45,505
Redemption of restricted investments in bank stock (net)	1,352			3,812			1,016
Proceeds from sale of premises and equipment	931			2			25
Purchases of premises and equipment	(3,384		)	(1,684		)	(638		)
Net cash used by investing activities	(229,461		)	(213,074		)	(99,606		)
Financing Activities
Increase in demand, interest checking, money market, and savings deposits (net)	190,834			281,381			17,505
Decrease in time deposits (net)	(31,117		)	(41,986		)	(59		)
Increase (decrease) in short-term borrowings (net)	48,225			(75,475		)	89,400
Repayment of long-term borrowings	(8,540		)	(5,275		)	(26,574		)
Proceeds from long-term borrowings	—			25,000			—
Proceeds from common stock options exercised	—			—			78
Proceeds from dividend reinvestment and common stock purchase plan	44			3,802			3,156
Tax benefit on exercise of stock options	—			—			25
Cash dividends on preferred stock	(80		)	(80		)	(80		)
Net cash provided by financing activities	199,366			187,367			83,451
Increase (decrease) in cash and cash equivalents	1,509			22,215			(7,406		)
Cash and cash equivalents at beginning of year	55,073			32,858			40,264
Cash and cash equivalents at year-end	$	56,582		$	55,073		$	32,858
Supplementary cash flow information:
Transfer of loans to foreclosed assets	$	2,778		$	5,336		$	3,372

See accompanying notes.

41

Notes to Consolidated Financial Statements

NOTE 1. Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

Metro Bancorp, Inc. (Metro or the Company) is a Pennsylvania business corporation, which is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. The Company was incorporated on April 23, 1999 and became an active bank holding company on July 1, 1999. The Company is a one-bank holding company headquartered in Harrisburg, Pennsylvania and provides full banking services through its subsidiary, Metro Bank (the Bank). The Company is subject to regulation by the Federal Reserve Bank (FRB). Metro Bank is the Company's operating entity and is headquartered in Lemoyne, Pennsylvania. The Bank became a state-chartered bank on November 7, 2008, following approval by the Pennsylvania Department of Banking of the Bank's application to convert from a national bank charter to a state bank charter. As a Pennsylvania state-chartered bank, Metro Bank is supervised jointly by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation (FDIC). The Bank is a financial services retailer with 33 stores in the counties of Berks, Cumberland, Dauphin, Lancaster, Lebanon and York, Pennsylvania.

The consolidated financial statements presented include the accounts of Metro Bancorp, Inc. and its wholly-owned subsidiary Metro Bank. All material intercompany transactions have been eliminated. Events occurring subsequent to the date of the balance sheet have been evaluated for potential recognition or disclosure in the consolidated financial statements.

Use of Estimates

The consolidated financial statements are prepared in conformity with generally accepted accounting principles (GAAP).  GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and require disclosure of contingent assets and liabilities. In the opinion of management, all adjustments considered necessary for fair presentation have been included and are of a normal, recurring nature. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses (allowance or ALL), impaired loans, the valuation of foreclosed assets, the valuation of securities available for sale, the valuation of deferred tax assets, the determination of other-than-temporary impairment (OTTI) on the Company's investment securities portfolio and fair value measurements.

Other Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale (AFS) securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income are components of comprehensive income. The only comprehensive income items that the Company presently has other than net income are net unrealized gains on securities available for sale and unrealized losses for noncredit-related losses on debt securities. These items are presented net of tax in the Statement of Comprehensive Income.

Significant Group Concentrations of Credit Risk

Most of the Company's activities are with customers located within the South Central Pennsylvania Region. Note 3 discusses the types of securities that the Company invests in. Notes 4 and 6 discuss the types of lending that the Company engages in as well as loan concentrations. The Company does not have any significant concentrations to any one customer, or group of customers with similar economic characteristics.

Securities

Securities classified as held to maturity are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. These securities are carried at cost adjusted for amortization of premium and accretion of discount, computed by the interest method over the estimated average life of the securities.

Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Securities available for sale are carried at fair value. Unrealized gains or losses are reported in other comprehensive income, net of the related deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method

42

over the estimated average life of the securities. Management determines the appropriate classification of debt securities at the time of purchase.

Other-Than-Temporary Impairment

The Company follows the fair value measurement guidance which clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. For debt securities, management assesses whether we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to its anticipated recovery. The Company forecasts recovery of the value of the security through either cash flows or market price.

In instances when a determination is made that an OTTI exists but we do not intend to sell the debt security and it is not likely that we will be required to sell the debt security prior to its anticipated recovery, the OTTI is separated into (a) the amount of the total OTTI related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount related to all other factors. The amount of the OTTI related to the credit loss is recognized in earnings and the amount of the OTTI related to all other factors is recognized in other comprehensive income.

Loans Held for Sale

Loans held for sale are comprised of student loans and selected residential mortgage loans the Company originates with the intention of selling in the future. Prior to September 30, 2011, loans held for sale also included Small Business Administration (SBA) loans the Company originated with the intention of selling. Occasionally, loans held for sale also include selected business and industry loans that the Company decides to sell. Held for sale loans are carried at the lower of cost or estimated fair value, calculated in the aggregate. At the present time, the majority of the Company's residential loans are originated with the intent to sell to the secondary market unless a loan is nonconforming to the secondary market standards or if we agree not to sell the loan due to a customer's request. The residential mortgage loans that are designated as held for sale are sold to other financial institutions in correspondent relationships. The sale of these loans takes place typically within 30 days of funding. The Bank does not retain the servicing on its residential mortgage loans or its student loans.

The Company holds SBA loans in the Company's loan receivable portfolio unless or until the Company's management determines a sale of certain loans is appropriate. At the time such a decision would be made, the SBA loans will be moved from the loans receivable portfolio to the loans held for sale portfolio. In previous years, as well as for the first half of 2011, the Company was originating SBA loans with the intent to sell the guaranteed portion of the loans. The Company received proceeds of $12.1 million on sales of SBA loans in 2011 and recognized a gain of $1.9 million on those sales. There were no such sales in 2012.

Total loans held for sale were $15.2 million and $9.4 million at December 31, 2012 and 2011, respectively.  At December 31, 2012, loans held for sale were comprised of $3.8 million of student loans and $11.4 million of residential mortgages as compared to $5.2 million of student loans and $4.2 million of residential mortgages at December 31, 2011. 

Loans Receivable

Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are stated at their outstanding unpaid principal balances, net of an ALL and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan.

A loan is considered past due or delinquent if payment is not received on or before the due date. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the ALL. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. If a loan is substandard and accruing, interest is recognized as accrued. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt.

Allowance for Loan Losses

The ALL is established through provisions for loan losses charged against income. Loans, or portions thereof, deemed to be uncollectible are charged against the ALL and subsequent recoveries, if any, are credited to the allowance. The evaluation is inherently subjective as

43

it requires estimates that are susceptible to significant revision as more information becomes available. Loans are evaluated for impairment once the loan has been internally risk rated substandard or lower or has been modified as a troubled debt restructuring (TDR).

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired. For such loans, an allowance is established when the discounted cash flows, net collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors. These qualitative factors represent a portion of the allowance established for losses inherent in the loan portfolio, which have not been identified by the quantitative processes. This determination inherently involves a higher degree of subjectivity and considers risk factors that may not have yet manifested themselves in historical loss experience. These factors include:

• Changes in lending policies and procedures, including changes in underwriting standards;

• Changes in levels and trends of collection, charge-off and recovery practices;

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans;

• Material changes in the mix, volume or duration of the portfolio;

• Changes in the value of underlying collateral for collateral-dependent loans;

• Changes in the quality of our loan review system;

• Changes in the experience, ability and depth of lending management and other relevant staff;

• The existence and effect of any concentrations of credit and changes in the level of such concentrations; and

• Changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments and the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our existing portfolio.

Additionally, the general component factors in uncertainties that could affect management's estimates of probable losses.

The ALL is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management's periodic evaluation of the adequacy of the allowance is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. During the third quarter of 2010, as part of the quantitative analysis of the adequacy of the ALL, management adjusted its projection of probable loan losses based upon a much shorter and more recent period of actual historical losses. This was done as a result of the higher level of loan charge-offs experienced by the Company over the preceding two years as compared to the previous years. The change in this estimate resulted in an additional $3.6 million of provision for loan losses in the third quarter of 2010. The impact of this additional provision for 2010 was an additional after tax loss of $2.4 million, or $0.17 per common share.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, borrower's financial condition, market conditions for the borrowers' type of industry and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay and the borrower's prior payment record. Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent.

All nonaccrual loansare evaluated individually to determine whether a charge-off is necessary due to a collateral deficiency.

Restricted Investments in Bank Stock

Restricted investments in bank stock consists of stock of the Federal Home Loan Bank (FHLB) of Pittsburgh and the Atlantic Central Bankers Bank (ACBB). Federal law requires a member institution of the FHLB system to hold stock of its district FHLB according to a predetermined formula.  At December 31, 2012, the Company held $15.4 million of FHLB stock and $65,000 of ACBB stock. Of this amount, $4.5 million was required for membership, $6.9 million was required to cover the Company's borrowing level at the FHLB and the remaining $4.0 million was excess that the FHLB has not repurchased at this time due to a repurchase suspension the FHLB put in

44

place in December of 2008. The suspension was partially lifted where the Company received a fraction of its excess stock three times during 2011 and during each of the four quarters of 2012. The stock is carried at cost.

Management evaluates the restricted stock for impairment in accordance with Financial Accounting Standards Board (FASB) guidance on Accounting by Certain Entities (including Entities with Trade Receivables that Lend to or Finance the Activities of Others). Management determines whether this investment is impaired based on an assessment of the ultimate recoverability of the cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of the cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB. Management believes no impairment charge is necessary related to the FHLB restricted stock as of December 31, 2012.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is charged to operations over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. Depreciation and amortization are determined on the straight-line method for financial reporting purposes and accelerated methods for income tax purposes.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosures are held for sale and are initially recorded at fair value less estimated costs to sell the assets at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value, less estimated costs to sell the asset. Revenue and expenses from operations, changes in the valuation allowance and gains/losses on sales of foreclosed real estate are included in foreclosed real estate expense. Foreclosed assets are included in other assets and totaled $2.5 million as of December 31, 2012 as compared to $7.1 million as of December 31, 2011.

Net expenses associated with foreclosed assets are detailed below:

	Years Ended December 31,
(in thousands)	2012		2011			2010
Operating expenses, net of rental income	$	429	$	331		$	571
Loss on write-down on foreclosed real estate	257		2,060			860
Net (gain) loss on sales of real estate	649		(116		)	(51		)
Total	$	1,335	$	2,275		$	1,380

Income Taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted through the provision for income taxes for the effects of changes in tax laws and rates on the date of enactment. The Company analyzes each tax position taken in its tax returns and determines the likelihood that the position will be realized. Only tax positions that are "more likely than not" to be realized can be recognized in the Company's financial statements. For tax positions that do not meet this recognition threshold, the Company will record an unrecognized tax benefit for the difference between the position taken on the tax return and the amount recognized in the financial statements. The Company does not have any material unrecognized tax benefits or accrued interest or penalties at December 31, 2012 or 2011 or during the years then ended. No unrecognized tax benefits are expected to arise within the next twelve months. The Company's policy is to account for interest as a component of interest expense and penalties, if any, as a component of other expenses.

Transfers of Financial Assets

Transfers of financial assets, including sales of loans and loan participations, are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company,

45

(2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Per Share Data

Basic net income (loss) per common share represents income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued as well as any adjustments to income (loss) that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding common stock options and are determined using the treasury stock method.

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit and standby letters of credit. Such financial instruments are recorded on the balance sheet when they become payable by the borrower to the Company.

Cash Flow Information

For purposes of the statements of cash flows, the Company considers cash and due from banks, interest-bearing deposits and federal funds sold as cash and cash equivalents. Generally, federal funds, a component of cash and cash equivalents are purchased and sold for one-day periods. Cash paid during the years ended December 31, 2012, 2011 and 2010 for interest expense on deposits, borrowings and debt was $10.3 million, $14.9 million and $17.6 million, respectively. Income taxes paid totaled $3.3 million, $700,000 and $0 in 2012, 2011 and 2010, respectively.

Stock-Based Compensation

The Company recognizes compensation costs related to share-based payment transactions in the income statement based on the grant-date fair value of the stock-based compensation issued. Compensation costs are recognized over the period that an employee provides service in exchange for the award.

The cash flows resulting from the tax benefits due to deductions in excess of the compensation cost recognized for options (excess tax benefits) are classified as financing cash flows.

Advertising Costs

The Company follows the policy of charging the costs of advertising to expense as incurred.

Recent Accounting Standards

In May 2011, the FASB amended fair value measurement guidance to clarify its previous guidance for items such as: the application of the highest and best use concept to nonfinancial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity's stockholders' equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets. The update also creates an exception to fair value measurement guidance for entities which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. In addition, the update allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy. Lastly, the updated standard contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes. The effective date of this update for public entities was for interim and annual periods beginning after December 15, 2011. Early adoption was not permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2011, the FASB updated the guidance on Comprehensive Income. The update prohibits the presentation of the components of comprehensive income in the statements of stockholders' equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate statements of net income and other comprehensive income. Under previous GAAP, all three presentations were acceptable. In December of 2011, the FASB amended this

46

guidance to defer the implementation date for the requirement to present all reclassifications between other comprehensive and net income on the face of the new statement or statements. The other provisions of this update were effective for fiscal years and interim periods beginning after December 31, 2011 for public entities. Early adoption was not permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Segment Reporting

The Bank acts as an independent community financial services provider and offers traditional banking and related financial services to individual consumer, business and government customers. Through its stores, the Company offers a full array of commercial and retail financial services.

Management does not separately allocate expenses, including the cost of funding loan demand, between the commercial and retail operations of the Company. As such, discrete financial information is not available and segment reporting would not be meaningful.

Reclassifications

Certain amounts in the 2011 and 2010 financial statements have been reclassified to conform to the 2012 presentation format. Such reclassifications had no impact on the Company's net operations and stockholders' equity.

NOTE 2. Restrictions on Cash and Due from Bank Accounts

The Bank is required to maintain average reserves, in the form of cash and balances with the FRB, against its deposit liabilities. The average amount of these reserve balances maintained for 2012 and 2011 was approximately $3.6 million and $10.9 million, respectively.  The Company has no due from balances with institutions in excess of FDIC insurance limitations.

NOTE 3. Securities

The amortized cost and fair value of securities are summarized in the following tables:

	December 31, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	33,994	$	19	$	(252	)	$	33,761
Residential mortgage-backed securities	55,614		1,596		—			57,210
Agency collateralized mortgage obligations	547,641		9,971		(745		)	556,867
Municipal securities	26,890		381		—			27,271
Total	$	664,139	$	11,967	$	(997	)	$	675,109
Held to Maturity:
U.S. Government agency securities	$	178,926	$	700	$	(363	)	$	179,263
Residential mortgage-backed securities	23,827		1,889		—			25,716
Agency collateralized mortgage obligations	49,051		1,587		—			50,638
Corporate debt securities	15,000		13		—			15,013
Municipal securities	2,979		62		—			3,041
Total	$	269,783	$	4,251	$	(363	)	$	273,671

47

	December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	22,500	$	58	$	—		$	22,558
Residential mortgage-backed securities	21,087		325		—			21,412
Agency collateralized mortgage obligations	519,167		9,171		(175		)	528,163
Private-label collateralized mortgage obligations	24,974		—		(1,968		)	23,006
Corporate debt securities	19,952		—		(1,632		)	18,320
Total	$	607,680	$	9,554	$	(3,775	)	$	613,459
Held to Maturity:
U.S. Government agency securities	$	97,750	$	88	$	—		$	97,838
Residential mortgage-backed securities	37,658		2,769		—			40,427
Agency collateralized mortgage obligations	45,122		840		(1		)	45,961
Corporate debt securities	15,000		—		(484		)	14,516
Municipal securities	1,105		10		—			1,115
Total	$	196,635	$	3,707	$	(485	)	$	199,857

The amortized cost and fair value of debt securities by contractual maturity at December 31, 2012 are shown in the table that follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations.

	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	10,000	$	10,002
Due after one year through five years	—		—		5,000		5,011
Due after five years through ten years	19,367		19,510		60,000		60,001
Due after ten years	41,517		41,522		121,905		122,303
	60,884		61,032		196,905		197,317
Residential mortgage-backed securities	55,614		57,210		23,827		25,716
Agency collateralized mortgage obligations	547,641		556,867		49,051		50,638
Total	$	664,139	$	675,109	$	269,783	$	273,671

During 2012, the Company sold a total of 48 securities with a combined fair market value of $305.4 million. The Company realized net pretax gains of $1.1 million, with a related tax expense of $368,000. Of the total, 41 securities with a combined fair market value of $299.3 million had been classified as available for sale. Seven agency mortgage-backed securities (MBSs) with a fair market value of $6.1 million had been classified as held to maturity, however, in each case the current par value had paid down to less than 15% of its original par value so they could be sold without tainting the remaining held to maturity (HTM) portfolio. Securities sold from available for sale included eight private-label collateralized mortgage obligations (CMOs) with a combined fair market value of $20.1 million. The Company no longer owns any private-label CMOs. In addition to its sales, the Company had a total of 11 agency debentures and one corporate debenture called during 2012. The combined par value was $160.3 million and the Company realized no gain or loss on the calls.

During 2011, the Company sold a total of 13 securities with a combined fair market value of $126.2 million . All of the securities were U.S. agency CMOs. The Company realized net pretax gains of $350,000, with related tax expense of $119,000, on the combined sales. Of this total, 12 securities with a combined fair market value of $125.3 million had been classified as available for sale. One agency MBS with a fair market value of $852,000 had been classified as held to maturity, however, its current par value had paid down to less than 9% of its original par value, below the 15% threshold, so it could be sold without tainting the remaining HTM portfolio. Also during 2011, the Company had three agency debentures totaling $60.0 million called at par. The bonds had a combined market value of $60.0 million and no gain or loss was realized.

48

In 2010, the Company sold a total of 56 securities with a combined fair market value of $296.2 million and realized a net pretax gain of $2.8 million. Of this total, 53 securities with a combined fair market value of $292.9 million had been classified as available for sale. Two agency MBSs with a combined fair market value of $440,000 had been classified as held to maturity, however, their current par value had fallen to less than 15% of their original par value and could be sold without tainting the remaining HTM portfolio. One private-label CMO with a fair market value of $2.9 million had been classified as held to maturity. Previously, the Company had recognized an OTTI charge due to a projected credit loss of $3,000 and this deterioration in creditworthiness was the basis for selling the security without tainting the remaining HTM portfolio. Also during 2010, the Company had ten agency debentures and four municipal bonds called at par. The bonds had a combined market value of $106.6 million.

The Company does not maintain a trading portfolio and there were no transfers of securities between the AFS and HTM portfolios. The Company uses the specific identification method to record security sales.

At December 31, 2012 and 2011, securities with a carrying value of $713.6 million and $621.6 million, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

The following table summarizes the Company's gains and losses on the sales or calls of debt securities and losses recognized for the OTTI of investments:

(in thousands)	Gross Realized Gains		Gross Realized (Losses)			OTTI Credit Losses			Net Gains (Losses)
Years Ended:
December 31, 2012	$	2,889	$	(1,838	)	$	(649	)	$	402
December 31, 2011	983		(633		)	(324		)	26
December 31, 2010	6,690		(3,889		)	(962		)	1,839

In determining fair market values for its portfolio holdings, the Company receives information from a third party provider which management evaluates and corroborates using amounts from one of its securities brokers. Under the current guidance, these values are considered Level 2 inputs, based upon mathematically derived matrix pricing and observed data from similar assets. They are not Level 1 direct quotes, nor do they reflect Level 3 inputs that would be derived from internal analysis or judgment. As the Company does not manage a trading portfolio and typically only sells from its AFS portfolio in order to manage interest rate risk or credit exposure, direct quotes, or street bids, are warranted on an as-needed basis only.

The following tables show the fair value and gross unrealized losses associated with the Company's investment portfolio, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2012
	Less than 12 months					12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for Sale:
U.S. Government agency securities	$	24,748	$	(252	)	$	—	$	—	$	24,748	$	(252	)
Agency CMOs	53,274		(745		)	—		—		53,274		(745		)
Total	$	78,022	$	(997	)	$	—	$	—	$	78,022	$	(997	)
Held to Maturity:
U.S. Government agency securities	$	57,572	$	(363	)	$	—	$	—	$	57,572	$	(363	)
Total	$	57,572	$	(363	)	$	—	$	—	$	57,572	$	(363	)

49

	December 31, 2011
	Less than 12 months					12 months or more					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available for Sale:
Agency CMOs	$	49,793	$	(175	)	$	—	$	—		$	49,793	$	(175	)
Private-label CMOs	6,017		(268		)	16,989		(1,700		)	23,006		(1,968		)
Corporate debt securities	18,320		(1,632		)	—		—			18,320		(1,632		)
Total	$	74,130	$	(2,075	)	$	16,989	$	(1,700	)	$	91,119	$	(3,775	)
Held to Maturity:
Agency CMOs	$	1,312	$	(1	)	$	—	$	—		$	1,312	$	(1	)
Corporate debt securities	14,516		(484		)	—		—			14,516		(484		)
Total	$	15,828	$	(485	)	$	—	$	—		$	15,828	$	(485	)

The Company's investment securities portfolio consists primarily of U.S. Government agency securities, U.S. Government sponsored agency MBSs, agency CMOs, municipal bonds and corporate bonds of the financial sector. The Company considers securities of the U.S. Government sponsored agencies and the U.S. Government MBSs/CMOs to have little credit risk because their principal and interest payments are backed by an agency of the U.S. Government.

As of December 31, 2012, the Company owned 12 securities that were in an unrealized loss position. These included five agency debentures and seven agency CMOs. All are backed by a government sponsored entity (GSE) and any unrealized losses are assumed to be related to a combination of the general level of interest rates and accelerating prepayments. The full and timely payment of all principal and interest is expected.

As previously mentioned, the Company sold eight private-label CMOs from its AFS portfolio during 2012. Two of the securities had never incurred an OTTI loss due to credit and, as such, there was never a stated intent to hold the securities until fair market value recovered. They were sold at a combined $84,000 pretax loss in an effort to reduce the Company's credit exposure. Three private-label CMOs that were sold had previously incurred OTTI losses due to credit and the Company had a stated intent to hold until recovery of fair market value. The recovery did occur and they were sold, realizing a combined pretax gain of $28,000. The three remaining private-label CMOs had previously incurred OTTI losses due to credit and the Company had intended to hold the bonds until recovery of fair market value, however, all of their respective credit positions had deteriorated significantly. Two of the bonds began to incur actual losses and were downgraded to default status. Because of the deterioration in status, it was predetermined the Company could sell the positions without tainting its assertion to hold until recovery. The three bonds were sold at a combined pretax loss of $1.2 million. As mentioned above, the Company's investment portfolio no longer contains any private-label CMOs.

The tables below rolls forward the cumulative life to date credit losses which have been recognized in earnings for the private-label CMOs previously mentioned for the years ended December 31, 2012, 2011 and 2010, respectively:

	Private-label CMOs
(in thousands)	Available for Sale			Held to Maturity		Total
Cumulative OTTI credit losses at January 1, 2012	$	2,949		$	—	$	2,949
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	649			—		649
Reduction due to credit impaired securities sold	(3,598		)	—		(3,598		)
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2012	$	—		$	—	$	—

50

	Private-label CMOs
(in thousands)	Available for Sale		Held to Maturity		Total
Cumulative OTTI credit losses at January 1, 2011	$	2,625	$	—	$	2,625
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	324		—		324
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2011	$	2,949	$	—	$	2,949

	Private-label CMOs
(in thousands)	Available for Sale			Held to Maturity			Total
Cumulative OTTI credit losses at January 1, 2010	$	2,338		$	3		$	2,341
Additions for which OTTI was not previously recognized	675			—			675
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	287			—			287
Reduction due to credit impaired security sold	(675		)	(3		)	(678		)
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2010	$	2,625		$	—		$	2,625

NOTE 4. Loans Receivable and Allowance for Loan Losses

Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are stated at their outstanding unpaid principal balances, net of an allowance for loan losses (allowance or ALL) and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan or to the first review date if the loan is on demand. Certain qualifying loans of the Bank totaling $319.0 million at December 31, 2012, collateralize a letter of credit, a line of credit commitment and a long-term borrowing the Bank has with the FHLB. 

A summary of the Bank's loans receivable at December 31, 2012 and 2011 is as follows:

	December 31,
(in thousands)	2012		2011
Commercial and industrial	$	376,988	$	321,988
Commercial tax-exempt	92,202		81,532
Owner occupied real estate	268,372		279,372
Commercial construction and land development	100,399		103,153
Commercial real estate	394,404		364,405
Residential	83,899		83,940
Consumer	212,533		202,278
	1,528,797		1,436,668
Less: allowance for loan losses	25,282		21,620
Net loans receivable	$	1,503,515	$	1,415,048

Certain directors and executive officers of the Company, including their associates and companies, have loans with the Bank. Such loans were made in the ordinary course of business at the Bank's normal credit terms including interest rates and collateralization, as those prevailing at the time for comparable loans with persons not related to the lender and do not represent more than a normal risk of collection. Total loans to these persons and companies amounted to approximately $14.2 million and $11.4 million at December 31, 2012 and 2011, respectively. During 2012, $6.9 million of new advances were made and repayments totaled $4.1 million.

51

The following table summarizes nonaccrual loans by loan type at December 31, 2012 and 2011:

	December 31,
(in thousands)	2012		2011
Nonaccrual loans:
Commercial and industrial	$	11,289	$	10,162
Commercial tax-exempt	—		—
Owner occupied real estate	3,119		2,895
Commercial construction and land development	6,300		8,511
Commercial real estate	5,659		7,820
Residential	3,203		2,912
Consumer	2,846		1,829
Total nonaccrual loans	$	32,416	$	34,129

Generally, the Bank's policy is to move a loan to nonaccrual status when it becomes 90 days past due or when the Company does not believe it will collect all of its principal and interest payments. In addition, when a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the ALL. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. If a loan is substandard and accruing, accrued interest is recognized as income. Once a loan is on nonaccrual status, it is not returned to accrual status unless the loan has been current for at least six consecutive months and the borrower and/or any guarantors demonstrate the ability to repay the loan. Under certain circumstances such as bankruptcy, if a loan is under collateralized, or if the borrower and/or guarantors do not show evidence of the ability to pay, the loan may be placed on nonaccrual status even though it is not past due by 90 days or more. Therefore, the total nonaccrual loan balance of $32.4 million exceeds the balance of total loans that are 90 days past due of $15.0 million at December 31, 2012 as presented in the aging analysis tables that follow.

No additional funds were committed on nonaccrual loans including restructured loans that were nonaccruing. Typically, commitments are canceled and no additional advances are made when a loan is placed on nonaccrual.

The following table is an age analysis of past due loan receivables as of December 31, 2012 and 2011:

			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
December 31, 2012
Commercial and industrial	$	368,769	$	1,096	$	3,256	$	3,867	$	8,219	$	376,988	$	30
Commercial tax-exempt	92,202		—		—		—		—		92,202		—
Owner occupied real estate	265,817		610		353		1,592		2,555		268,372		—
Commercial construction and land development	89,250		4,251		4,318		2,580		11,149		100,399		188
Commercial real estate	386,821		3,846		78		3,659		7,583		394,404		—
Residential	76,587		4,303		1,252		1,757		7,312		83,899		—
Consumer	208,335		2,277		410		1,511		4,198		212,533		2
Total	$	1,487,781	$	16,383	$	9,667	$	14,966	$	41,016	$	1,528,797	$	220

52

			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
December 31, 2011
Commercial and industrial	$	317,016	$	696	$	1,083	$	3,193	$	4,972	$	321,988	$	—
Commercial tax-exempt	81,532		—		—		—		—		81,532		—
Owner occupied real estate	274,720		2,423		328		1,901		4,652		279,372		—
Commercial construction and land development	94,160		470		219		8,304		8,993		103,153		—
Commercial real estate	354,818		2,191		1,272		6,124		9,587		364,405		—
Residential	75,841		4,587		607		2,905		8,099		83,940		621
Consumer	199,671		1,314		350		943		2,607		202,278		71
Total	$	1,397,758	$	11,681	$	3,859	$	23,370	$	38,910	$	1,436,668	$	692

The past due portfolio is constantly moving through collection efforts, restructuring when appropriate, foreclosure or ultimately charged off. During 2012, $18.9 million of past due loans at December 31, 2011 either improved to current status or were paid off by December 31, 2012.  Additionally, $4.4 million of those loans past due at December 31, 2011, were charged off and another $2.7 million were moved to foreclosed real estate. Conversely, $28.6 million of current loans as of December 31, 2011, became delinquent and were reported as past due at December 31, 2012. Out of this $28.6 million total, $6.1 million were 90 days past due or greater, $9.1 million were 60-89 days past due while the remainder, or $13.4 million, were 30-59 days past due at December 31, 2012.

The commercial and industrial loan category had the most significant increase in past due status since December 31, 2011. Included in this change from current to past due status, was a $2.5 million commercial and industrial loan that was past due and impaired with a specific reserve of $1.0 million at December 31, 2012. The increase in commercial construction and land development was primarily the result of 3 related impaired loans that moved from current at December 31, 2011 to between 30 and 89 days past due at December 31, 2012. A specific reserve of $300,000 was established for the relationship. The decreases in total past due of the owner occupied and commercial real estate categories were largely the result of $1.3 million and $1.7 million of loans that were past due at December 31, 2011 and were charged off or moved to foreclosed real estate during 2012, respectively.

A summary of the ALL and balance of loans receivable by loan class and by impairment method as of December 31, 2012 and 2011 is detailed in the tables that follow.

(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construc-tion and land devel-opment		Comm. real estate		Resi-dential		Con-sumer		Unallo-cated		Total
December 31, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	2,399	$	—	$	1,451	$	2,470	$	800	$	—	$	—	$	—	$	7,120
Collectively evaluated for impairment	7,560		83		678		4,752		3,183		324		793		789		18,162
Total ALL	$	9,959	$	83	$	2,129	$	7,222	$	3,983	$	324	$	793	$	789	$	25,282
Loans receivable:
Loans evaluated   individually	$	13,082	$	—	$	3,380	$	15,549	$	17,136	$	4,163	$	3,331	$	—	$	56,641
Loans evaluated   collectively	363,906		92,202		264,992		84,850		377,268		79,736		209,202		—		1,472,156
Total loans receivable	$	376,988	$	92,202	$	268,372	$	100,399	$	394,404	$	83,899	$	212,533	$	—	$	1,528,797

53

(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construction and land devel-opment		Comm. real estate		Resi-dential		Con-sumer		Unallo-cated		Total
December 31, 2011
Allowance for loan losses:
Individually evaluated for impairment	$	1,000	$	—	$	30	$	2,600	$	—	$	—	$	—	$	—	$	3,630
Collectively evaluated for impairment	7,400		79		699		5,240		3,241		435		831		65		17,990
Total ALL	$	8,400	$	79	$	729	$	7,840	$	3,241	$	435	$	831	$	65	$	21,620
Loans receivable:
Loans evaluated   individually	$	15,504	$	—	$	7,492	$	23,216	$	12,117	$	3,346	$	1,829	$	—	$	63,504
Loans evaluated   collectively	306,484		81,532		271,880		79,937		352,288		80,594		200,449		—		1,373,164
Total loans receivable	$	321,988	$	81,532	$	279,372	$	103,153	$	364,405	$	83,940	$	202,278	$	—	$	1,436,668

The Bank may create a specific allowance for all of or a part of a particular loan in lieu of a charge-off or charge-down as a result of management's evaluation of impaired loans. In these instances, the Bank has determined that a loss is not imminent based upon available information surrounding the credit at the time of the analysis including, but not limited to, unresolved legal matters; however, management believes an allowance is appropriate to acknowledge the probable risk of loss.

Typically, commercial and industrial, commercial construction and land development and commercial real estate loans present a greater risk of nonpayment by a borrower than other types of loans.

Within the commercial loan portfolio, construction and land development and commercial real estate loans generally present the greatest risk of nonpayment by a borrower. The market value and cash flow of real estate, particularly real estate held for investment, can fluctuate significantly in a relatively short period of time. Commercial and industrial, tax-exempt and owner occupied real estate loans generally carry a lower risk factor because the repayment of these loans relies primarily on the cash flow from a business which is more stable and predictable. However, the significance and duration of the economic downturn caused the Bank to experience an elevated level of charge-offs in the commercial and industrial loan category in 2011.

Consumer loan collections are dependent on the borrower's continued financial stability and thus are more likely to be affected by adverse personal circumstances. Consumer and residential loans are also impacted by the market value of real estate. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on these loans. The risk of nonpayment is affected by changes in economic conditions, the credit risks of a particular borrower, the duration of the loan and, in the case of a collateralized loan, uncertainties as to the value of the collateral and other factors.

Management bases its quantitative analysis of probable future loan losses (when determining the ALL) on those loans collectively reviewed for impairment on a two-year period of actual historical losses. Management may increase or decrease the historical loss period at some point in the future based on the state of the economy and other circumstances.

The qualitative factors such as changes in levels and trends of charge-offs and delinquencies; material changes in the mix, volume or duration of the loan portfolio; changes in lending policies and procedures including underwriting standards; changes in the experience, ability and depth of lending management and other relevant staff; the existence and effect of any concentrations of credit; changes in the overall values of collateral; changes in the quality of the loan review program and changes in national and local economic trends and conditions among other things, are factors which have not been identified by the quantitative processes. The determination of qualitative factors inherently involves a higher degree of subjectivity and considers risk factors that may not have yet manifested themselves in historical loss experience.

54

The following tables summarize the transactions in the ALL for the twelve months ended December 31, 2012 and 2011:

(in thousands)	Comm. and industrial			Comm. tax-exempt		Owner occupied real estate			Comm. construction and land development			Comm. real estate			Resi-dential			Consumer			Unallo-cated		Total
2012
Balance at January 1	$	8,400		$	79	$	729		$	7,840		$	3,241		$	435		$	831		$	65	$	21,620
Provision charged to operating expenses	3,634			4		2,165			243			2,498			193			639			724		10,100
Recoveries of loans previously charged-off	227			—		7			517			97			4			67			—		919
Loans charged-off	(2,302		)	—		(772		)	(1,378		)	(1,853		)	(308		)	(744		)	—		(7,357		)
Balance at December 31	$	9,959		$	83	$	2,129		$	7,222		$	3,983		$	324		$	793		$	789	$	25,282

(in thousands)	Comm. and industrial			Comm. tax-exempt			Owner occupied real estate			Comm. construction and land development			Comm. real estate			Resi-dential			Consumer			Unallo-cated			Total
2011
Balance at January 1	$	9,679		$	86		$	910		$	5,420		$	4,002		$	442		$	702		$	377		$	21,618
Provision charged to operating expenses	6,510			(7		)	13			13,038			76			113			1,161			(312		)	20,592
Recoveries of loans previously charged-off	156			—			60			11			15			68			135			—			445
Loans charged-off	(7,945		)	—			(254		)	(10,629		)	(852		)	(188		)	(1,167		)	—			(21,035		)
Balance at December 31	$	8,400		$	79		$	729		$	7,840		$	3,241		$	435		$	831		$	65		$	21,620

The following table summarizes the transactions in the ALL for the twelve months ended December 31, 2010. The table is presented in summary as the FASB guidance issued in July 2010 related to an entity's allowance for credit losses and the credit quality of its financing receivables required the activity by portfolio segment be disclosed only for periods beginning on or after December 15, 2010.

	Year Ended December 31,
(in thousands)	2010
Balance at beginning of year	$	14,391
Provision charged to expense	21,000
Recoveries	522
Loans charged off	(14,295		)
Balance at end of year	$	21,618

55

The following table presents information regarding the Company's impaired loans as of December 31, 2012 and 2011:

	December 31, 2012						December 31, 2011
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans with no related allowance:
Commercial and industrial	$	7,426	$	11,746	$	—	$	14,504	$	19,672	$	—
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	1,929		2,301		—		7,000		8,845		—
Commercial construction and land development	7,716		8,500		—		11,203		19,756		—
Commercial real estate	12,965		14,619		—		12,117		12,390		—
Residential	4,163		4,423		—		3,346		3,729		—
Consumer	3,331		3,547		—		1,829		2,168		—
Total impaired loans with no related allowance	37,530		45,136		—		49,999		66,560		—
Loans with an allowance recorded:
Commercial and industrial	5,656		6,526		2,399		1,000		1,000		1,000
Owner occupied real estate	1,451		1,451		1,451		492		659		30
Commercial construction and land development	7,833		7,833		2,470		12,013		12,013		2,600
Commercial real estate	4,171		4,172		800		—		—		—
Total impaired loans with an allowance recorded	19,111		19,982		7,120		13,505		13,672		3,630
Total impaired loans:
Commercial and industrial	13,082		18,272		2,399		15,504		20,672		1,000
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	3,380		3,752		1,451		7,492		9,504		30
Commercial construction and land development	15,549		16,333		2,470		23,216		31,769		2,600
Commercial real estate	17,136		18,791		800		12,117		12,390		—
Residential	4,163		4,423		—		3,346		3,729		—
Consumer	3,331		3,547		—		1,829		2,168		—
Total impaired loans	$	56,641	$	65,118	$	7,120	$	63,504	$	80,232	$	3,630

Total impaired loans decreased by $6.9 million as of December 31, 2012 compared to December 31, 2011. Of those loans deemed to be impaired at December 31, 2011, $7.5 million were either charged off or transferred to foreclosed assets in 2012. Impaired loans without a specific reserve at December 31, 2011 totaling $22.8 million remained impaired without a specific reserve at December 31, 2012, while $4.3 million of impaired loans with specific reserves at December 31, 2011 remained impaired with a specific reserve at December 31, 2012.  A total of $18.8 million of loans were downgraded in 2012 and deemed to be impaired subsequent to December 31, 2011 while $7.3 million in loans had credit improvements in 2012 and were no longer considered impaired at December 31, 2012. Of the $18.8 million downgraded loans, $6.7 million had a specific reserve as of December 31, 2012. Impaired loans totaling $9.2 million as of December 31, 2011, subsequently paid off in 2012.

In addition, a portion of one loan totaling approximately $7.7 million with a specific allowance at December 31, 2011 was recategorized from the commercial construction and land development category to the commercial real estate category as a result of a portion of the loan converting to permanent mortgage status. This change accounts for the decrease in the commercial construction and land development category with a specific allowance.

56

The following table presents additional information regarding the Company's impaired loans for the twelve months ended December 31, 2012 and 2011:

	December 31, 2012				December 31, 2011
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Loans with no related allowance:
Commercial and industrial	$	11,567	$	171	$	12,901	$	141
Commercial tax-exempt	—		—		—		—
Owner occupied real estate	3,846		150		5,333		191
Commercial construction and      land development	10,319		510		11,803		231
Commercial real estate	12,434		319		9,500		192
Residential	3,994		43		3,557		6
Consumer	2,539		18		1,945		—
Total impaired loans with no   related allowance	44,699		1,211		45,039		761
Loans with an allowance recorded:
Commercial and industrial	5,258		—		7,974		—
Owner occupied real estate	1,571		—		453		—
Commercial construction and      land development	11,375		—		4,637		—
Commercial real estate	655		—		—		—
Total impaired loans with an   allowance recorded	18,859		—		13,064		—
Total impaired loans:
Commercial and industrial	16,825		171		20,875		141
Commercial tax-exempt	—		—		—		—
Owner occupied real estate	5,417		150		5,786		191
Commercial construction and      land development	21,694		510		16,440		231
Commercial real estate	13,089		319		9,500		192
Residential	3,994		43		3,557		6
Consumer	2,539		18		1,945		—
Total impaired loans	$	63,558	$	1,211	$	58,103	$	761

Impaired loans averaged approximately $63.6 million, $58.1 million and $74.6 million during 2012, 2011 and 2010, respectively. All nonaccrual loans are considered impaired and interest income is handled as discussed earlier in the nonaccrual section of this Note. Interest income continued to accrue on impaired loans that were still accruing and totaled $1.2 million, $761,000 and $1.3 million during 2012, 2011 and 2010, respectively.

The Bank assigns loan risk ratings as credit quality indicators of its loan portfolio: pass, special mention, substandard accrual, substandard nonaccrual and doubtful. Monthly, we track commercial loans that are no longer pass rated. We review the cash flow, operating results and financial condition of the borrower and any guarantors, as well as the collateral position against established policy guidelines as a means of providing a targeted list of loans and loan relationships that require additional attention within the loan portfolio. Special mention loans are those loans that are currently adequately protected, but potentially weak. The potential weaknesses may, if not corrected, weaken the loan's credit quality or inadvertently jeopardize our credit position in the future.  Substandard accrual and substandard nonaccrual assets are characterized by well-defined weaknesses that jeopardize the liquidation of the debt and by the possibility that the Bank will sustain some loss if the weaknesses are not corrected. Substandard accrual loans would move from accrual to nonaccrual when the Bank does not believe it will collect all of its contractual principal and interest payments. Some identifiers used to determine the collectibility are as follows: when the loan is 90 days past due in principal or interest, there are triggering events in the borrower's or any guarantor's financial statements that show continuing deterioration, the borrower's or any guarantor's source of repayment is depleting, or if bankruptcy or other legal matters are present, regardless if the loan is 90 days past due or not. Doubtful loans have all of the weaknesses inherent in those classified as substandard accrual and substandard nonaccrual with the added characteristic that the weaknesses make collection or

57

liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. Pass rated loans are reviewed throughout the year through the recurring review process of an independent loan review function and through the application of other credit metrics.

Credit quality indicators for commercial loans broken out by loan type are presented in the following tables for the years ended December 31, 2012 and 2011. There were no loans classified as doubtful for the years ended December 31, 2012 or December 31, 2011.

	December 31, 2012
(in thousands)	Pass		Special Mention		Substandard Accrual		Substandard Nonaccrual		Doubtful		Total
Commercial credit exposure:
Commercial and industrial	$	335,463	$	6,120	$	24,116	$	11,289	$	—	$	376,988
Commercial tax-exempt	92,202		—		—		—		—		92,202
Owner occupied real estate	253,338		4,160		7,755		3,119		—		268,372
Commercial construction and land development	81,219		5,046		7,834		6,300		—		100,399
Commercial real estate	379,313		574		8,858		5,659		—		394,404
Total	$	1,141,535	$	15,900	$	48,563	$	26,367	$	—	$	1,232,365

	December 31, 2011
(in thousands)	Pass		Special Mention		Substandard Accrual		Substandard Nonaccrual		Doubtful		Total
Commercial credit exposure:
Commercial and industrial	$	280,884	$	9,176	$	21,766	$	10,162	$	—	$	321,988
Commercial tax-exempt	77,657		3,875		—		—		—		81,532
Owner occupied real estate	263,001		2,887		10,589		2,895		—		279,372
Commercial construction and land development	76,374		3,071		15,197		8,511		—		103,153
Commercial real estate	349,786		794		6,005		7,820		—		364,405
Total	$	1,047,702	$	19,803	$	53,557	$	29,388	$	—	$	1,150,450

Loans, other than pass rated loans, totaling $28.4 million at December 31, 2011, improved their credit quality rating during 2012 while an additional $4.6 million of such loans were charged off or transferred to foreclosed assets in 2012. Pass rated loans totaling $34.4 million at December 31, 2011 were downgraded during 2012.

Consumer credit exposures are rated as performing or nonperforming as detailed below at December 31, 2012 and 2011:

	December 31, 2012
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	80,696	$	3,203	$	83,899
Consumer	209,687		2,846		212,533
Total	$	290,383	$	6,049	$	296,432

	December 31, 2011
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	81,028	$	2,912	$	83,940
Consumer	200,449		1,829		202,278
Total	$	281,477	$	4,741	$	286,218

58

A TDR is a loan of which the contractual terms have been modified, resulting in the Bank granting a concession to a borrower who is experiencing financial difficulties, in order for the Bank to have a greater chance of collecting the indebtedness from the borrower.  An additional benefit to the Bank in granting a concession is to possibly avoid foreclosure or repossession of loan collateral at a time when collateral values are low.

The following table presents the recorded investment at the time of restructure of new TDRs and their concession, modified during the twelve month periods ended December 31, 2012 and 2011. The recorded investment at the time of restructure was the same pre-modification and post-modification, therefore there was no financial effect of the modification on the recorded investment. The loans included are considered TDRs as a result of the Bank implementing one or more of the following concessions: granting a material extension of time, entering into a forbearance agreement, adjusting the interest rate, accepting interest only payments for an extended period of time, a change in the amortization period or a combination of any of these concessions.

New TDRs with Concession Type:	Twelve Months Ended
	December 31, 2012			December 31, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment at Time of Restructure		Number of Contracts	Recorded Investment at Time of Restructure
Commercial and industrial:
Material extension of time	1	$	1,262	2	$	629
Forbearance agreement	—	—		4	12,456
Interest rate adjustment	1	3,404		—	—
Change in amortization period	—	—		4	405
Combination of concessions	2	3,231		—	—
Total commercial and industrial	4	7,897		10	13,490
Owner occupied real estate:
Forbearance agreement	—	—		1	87
Combination of concessions	1	1,451		—	—
Total owner occupied real estate	1	1,451		1	87
Commercial construction and land development:
Material extension of time	5	3,396		16	10,932
Forbearance agreement	—	—		1	231
Combination of concessions	1	3,546		—	—
Total commercial construction and land development	6	6,942		17	11,163
Commercial real estate:
Material extension of time	1	68		—	—
Forbearance agreement	—	—		1	93
Interest rate adjustment	—	—		1	1,194
Change in amortization period	—	—		3	3,081
Combination of concessions	1	3,275		—	—
Total commercial real estate	2	3,343		5	4,368
Residential:
Material extension of time	2	329		—	—
Interest rate adjustment	—	—		1	195
Change in amortization period	—	—		1	355
Combination of concessions	1	195		1	78
Total residential	3	524		3	628
Consumer:
Material extension of time	4	426		—	—
Combination of concessions	2	182		—	—
Total consumer	6	608		—	—
Total	22	$	20,765	36	$	29,736

59

Two commercial construction and land development relationships identified as accruing TDRs had additional unused commitments totaling $14,000 at December 31, 2012 as compared to six commercial construction and land development relationships identified as accruing TDRs that had additional unused commitments totaling $778,000 and one commercial relationship that had an additional unused commitment available of $329,000 at December 31, 2011.

The following table represents loans receivable modified as TDRs within the twelve months previous to December 31, 2012 and 2011, respectively, which subsequently defaulted during the 12 month periods ended December 31, 2012 and 2011, respectively. The Bank's policy is to consider a loan past due or delinquent if payment is not received on or before the due date.

Troubled Debt Restructurings That Subsequently Payment Defaulted:	Twelve Months Ended
	December 31, 2012			December 31, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial and industrial	3	$	3,901	4	$	5,531
Commercial tax-exempt	—	—		—	—
Owner occupied real estate	—	—		—	—
Commercial construction      and land development	6	6,169		11	9,162
Commercial real estate	1	66		2	747
Residential	2	258		3	617
Consumer	4	308		—	—
Total	16	$	10,702	20	$	16,057

Of the 16 contracts that subsequently payment defaulted during the year ended December 31, 2012, 13 contracts totaling $6.1 million were still in payment default at December 31, 2012. Seven of the 13 contracts totaling $1.3 million were less than 30 days past due.

All TDRs are considered impaired and, therefore, are individually evaluated for impairment in the calculation of the ALL. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the ALL. 

NOTE 5. Loan Commitments and Standby Letters of Credit

Loan commitments are made to accommodate the financial needs of the Company's customers. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. They primarily are issued to facilitate the customers' normal course of business transactions. Standby performance letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Historically, almost all of the Company's standby letters of credit expire unfunded.

The credit risk associated with letters of credit is essentially the same as that of traditional loan facilities and are subject to the Company's normal credit policies. Since the majority of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future funding requirements. Commitments generally have fixed expiration dates or other termination clauses. Management believes that the proceeds obtained through a liquidation of collateral, the enforcement of guarantees and normal collection activities against the borrower would be sufficient to cover the potential amount of future payment required under the corresponding letters of credit. The amount of the liability for guarantees under standby letters of credit issued was $48,000 and $0 as of December 31, 2012 and December 31, 2011, respectively.

The Company's maximum exposure to credit loss for loan commitments (unfunded loans and unused lines of credit, including home equity lines of credit) and standby letters of credit outstanding were as follows:

60

	December 31,
(in thousands)	2012		2011
Unfunded commitments of existing commercial loans	$	308,721	$	269,180
Unfunded commitments of existing consumer/residential loans	98,903		86,273
Standby letters of credit	34,052		36,455
Commitments to grant loans	4,862		11,658
Total	$	446,538	$	403,566

NOTE 6. Concentrations of Credit Risk

The Company's loan portfolio is principally to borrowers throughout Cumberland, Dauphin, York, Lebanon, Lancaster and Berks counties of Pennsylvania where it has full-service stores. Commercial real estate loans and loan commitments for commercial real estate projects aggregated $548.2 million at December 31, 2012. Owner occupied real estate loans and loan commitments for commercial properties aggregated $274.0 million at December 31, 2012.

Commercial real estate loans are collateralized by the related project (principally multi-family residential, office building, lodging, land development and other properties) and typically require owner guarantees.  Maximum terms and maximum advance rates are established according to our underwriting guidelines based on our assessment of the overall risk of the project being financed.

NOTE 7. Premises, Equipment and Leases

Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense for 2012, 2011 and 2010 was $5.8 million, $6.5 million and $6.1 million, respectively, and is computed on the straight-line method over the estimated useful lives of the related assets as listed in the table below. The estimated life for leasehold improvements is based on the shorter of the useful life or the lease term.

	Years
Buildings and leasehold improvements	1 - 40
Furniture, fixtures and equipment	1 - 10
Computer equipment and software	3 - 8

A summary of premises and equipment is as follows:

	December 31,
(in thousands)	2012		2011
Land	$	16,736	$	15,386
Buildings	67,047		66,913
Construction in process	1,199		1,535
Leasehold improvements	2,677		2,583
Furniture, fixtures and equipment	32,938		32,073
	120,597		118,490
Less accumulated depreciation and amortization	41,809		36,376
Total	$	78,788	$	82,114

Land, buildings and equipment are leased under noncancelable operating lease agreements that expire at various dates through 2032. Total rental expense for operating leases in 2012, 2011 and 2010 was $2.9 million, $3.1 million and $3.0 million, respectively. At December 31, 2012 future minimum lease payments for noncancelable operating leases are payable as follows:

61

(in thousands)
2013	$	2,504
2014	2,341
2015	2,262
2016	2,126
2017	1,958
Thereafter	17,000
Total minimum lease payments	$	28,191

NOTE 8. Deposits

The composition of the Bank's deposits at December 31, 2012 and 2011 is as follows:

	December 31,
(in thousands)	2012		2011
Noninterest-bearing demand	$	455,000	$	397,251
Interest checking and money market	1,133,765		1,038,760
Savings	444,976		406,896
Time certificates of $100,000 or more	103,980		105,751
Other time certificates	93,570		122,916
Total	$	2,231,291	$	2,071,574

At December 31, 2012, the scheduled maturities of time deposits are as follows:

(in thousands)
2013	$	146,014
2014	31,681
2015	12,302
2016	3,735
2017	3,818
Thereafter	—
Total	$	197,550

NOTE 9. Short-term Borrowings 

Short-term borrowings consist of one borrowing facility. The Bank has a line of credit commitment from the FHLB for borrowings up to $545.8 million and certain qualifying assets of the Bank collateralize the line. There was $113.2 million outstanding at December 31, 2012 and $65.0 million outstanding at December 31, 2011 on this line of credit. At December 31, 2012, $191.0 million of loans collateralized the outstanding balance. In addition, the Bank has available a $15.0 million federal funds line of credit with one correspondent bank and a $20.0 million federal funds line of credit with another correspondent bank as of December 31, 2012 and 2011 of which $0 was outstanding on both lines.

NOTE 10. Long-term Debt

As part of the Company's Asset/Liability management strategy, management utilized a FHLB fixed borrowing product during the second quarter of 2011 when it obtained $25.0 million in borrowings with a two year maturity due March 18, 2013 and an interest rate of 1.01%. There was $25.0 million outstanding on this borrowing at December 31, 2012 which was collateralized by $42.2 million of loans of the Bank.

On June 15, 2000, the Company issued $5.0 million of 11% fixed rate Trust Capital Securities to Commerce Bancorp LLC through Trust I, a Delaware business trust subsidiary. The Trust Capital Securities evidenced a preferred ownership interest in the Trust, of which the

62

Company owned 100% of the common equity. During the fourth quarter of 2011, the Company repurchased and retired the $5.0 million of Trust Capital Securities and incurred a $75,000 early repayment charge.

On September 28, 2001, the Company issued $8.0 million of 10% fixed rate Trust Capital Securities to Commerce Bancorp LLC through Trust II, a Delaware business trust subsidiary. The Trust Capital Securities evidenced a preferred ownership interest in Trust II of which the Company owned 100% of the common equity. The proceeds from the issuance of the Trust Capital Securities were invested in substantially similar Junior Subordinated Debt of the Company. The Company unconditionally guaranteed the Trust Capital Securities. Interest on the debt was payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. The Trust Capital Securities were scheduled to mature on September 28, 2031. The Company had the option to redeem in whole or in part beginning on or after September 28, 2011 at a premium to the principal amount plus accrued interest, with the redemption price set to decline annually until September 2021, at which time the securities could be redeemed at 100% of the principal. During the fourth quarter of 2012, the Company repurchased and retired the $8.0 million of Trust Capital Securities and incurred a $140,000 early repayment charge.

On September 29, 2006, the Company issued $15.0 million of 7.75% fixed rate Trust Capital Securities to TD Bank, N.A. through Trust III, a Delaware business trust subsidiary. The issuance of the Trust Capital Securities has similar properties as Trust II. The Trust Capital Securities evidence a preferred ownership interest in Trust III of which the Company owns 100% of the common equity. The proceeds from the issuance of the Trust Capital Securities were invested in substantially similar Junior Subordinated Debt of the Company. The Company unconditionally guarantees the Trust Capital Securities. Interest on the debt is payable quarterly with similar terms as in Trust II. The Trust Capital Securities are scheduled to mature on September 29, 2036. The Trust Capital Securities may be redeemed in whole or in part at the option of the Company on or after September 29, 2011 at 100% of the principal plus accrued interest, if any. All $15.0 million of the Trust Capital Securities qualifies as Tier 1 capital for regulatory capital purposes.

The remaining $800,000 in long-term debt represents the Company's ownership interest in the one remaining nonbank subsidiary Trust.

The scheduled maturities for long-term debt over the next five years and thereafter are as follows:

(in thousands)
2013-2017	$	25,000
Thereafter	15,800
Total	$	40,800

NOTE 11. Income Taxes

A reconciliation of the provision (benefit) for income taxes and the amount that would have been provided at statutory rates is as follows:

	Years Ended December 31,
(in thousands)	2012			2011			2010
Provision (benefit) at statutory rate on pretax income (loss)	$	5,533		$	(392	)	$	(3,017	)
Tax-exempt income on loans and investments	(1,390		)	(1,314		)	(1,446		)
Exercise of nonqualified stock options	—			—			(25		)
Stock-based compensation	203			222			209
Merger related expenses	—			—			(358		)
Civil money penalty	525			—			—
Other	43			40			101
Total	$	4,914		$	(1,444	)	$	(4,536	)

The statutory tax rate used to calculate the provision in 2012 was 35%, and used to calculate the benefit in 2011 and 2010 was 34%.

63

The components of income tax expense (benefit) are as follows: 

	Years Ended December 31,
(in thousands)	2012		2011			2010
Current expense	$	4,796	$	67		$	236
Deferred expense (benefit)	118		(1,511		)	(4,772		)
Total	$	4,914	$	(1,444	)	$	(4,536	)

The components of the net deferred tax asset were as follows:

	December 31,
(in thousands)	2012			2011
Deferred tax assets:
Allowance for loan losses	$	8,596		$	7,351
Other-than-temporary losses	—			1,003
Stock-based compensation	1,094			923
Nonaccrual interest	1,605			2,002
Foreclosed real estate write-downs	—			703
Income from LLC subsidiary	—			254
Other	447			486
Total deferred tax assets	11,742			12,722
Deferred tax liabilities:
Premises and equipment	(3,762		)	(4,486		)
Unrealized gains on securities	(3,730		)	(1,965		)
Prepaid expenses	(254		)	(395		)
Deferred loan fees	(971		)	(968		)
Total deferred tax liabilities	(8,717		)	(7,814		)
Net deferred tax asset	$	3,025		$	4,908

At December 31, 2012, the Company had a net deferred tax asset of $3.0 million. An analysis was conducted to determine if a valuation allowance against its deferred tax assets was required. The Company used current forecasts of future expected income, possible tax planning strategies, current and future economic and business conditions (such as the possibility of a decrease in real estate value for properties the Bank holds as collateral on loans), the probability that taxable income will continue to be generated in future periods and the cumulative losses in previous years to make the assessment. Management concluded that a valuation allowance was not necessary at December 31, 2012.

Tax expense of $368,000, $119,000 and $952,000 was recognized on net securities gains during 2012, 2011 and 2010, respectively. For 2010, the Company received a tax benefit on its federal income tax return totaling $25,000 related to the exercise of nonqualified stock options and disqualified dispositions of employee stock from options exercised. It did not receive such a tax benefit during 2012 and 2011. The Company, or one of its subsidiaries, files income tax returns in the U.S. Federal jurisdiction and various states. The Company is no longer subject to U.S. Federal, state and local examinations by tax authorities for years before 2009.

NOTE 12. Stockholders' Equity

At December 31, 2012 and 201140,000 shares of the Company's Series A $10 par value noncumulative nonvoting preferred stock was issued and outstanding. The preferred stock is redeemable at the option of the Company at the price of $25 per share plus any unpaid dividends. Dividends on the preferred stock are payable quarterly at a rate of $2 per share per annum.

The Company has a dividend reinvestment and stock purchase plan (the Plan). Holders of the Company's common stock may participate in the Plan in which reinvested dividends and voluntary cash payments of not less than $100 per month and not more than $10,000 per month may be reinvested in additional common shares. Officers are eligible to participate immediately and employees who have been

64

continuously employed for at least one year are also eligible to participate in the Plan. The minimum investment is $25 per month for employees and $50 for officers with a maximum of $10,000 per month. Prior to January 1, 2012 the maximum monthly purchase amount was $25,000. During 2011, 500,000 additional shares were registered to the Plan. A total of 5,917, 376,962 and 288,559 common shares were issued pursuant to this Plan in 2012, 2011 and 2010, respectively. At December 31, 2012, the Company had reserved approximately 516,000 common shares to be issued in connection with the Plan.

On August 6, 2009, Metro filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC) which will allow the Company, from time to time, to offer and sell up to a total aggregate of $250.0 million of common stock, preferred stock, debt securities, or warrants, either separately or together in any combination. The shelf registration statement also registered trust preferred securities. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) excludes from regulatory capital trust preferred securities issued after May 19, 2010. Consequently, Metro has no plans to issue additional trust preferred securities. While Metro has always been well-capitalized under federal regulatory guidelines, the shelf registration better positions the Company to take advantage of potential opportunities for growth and to address current economic conditions. See the table for risk-based and leverage capital amounts and ratios in Note 15.

NOTE 13. Earnings (Loss) per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share:

	For the Years Ended December 31,
	2012						2011						2010
(in thousands, except per share amounts)	Income			Weighted-average Shares	Per Share Amount		Income			Weighted-average Shares	Per Share Amount		Loss			Weighted-average Shares	Per Share Amount
Basic earnings (loss) per share:
Net income (loss)	$	10,894					$	289					$	(4,337	)
Preferred stock dividends	(80		)				(80		)				(80		)
Income (loss) available to common stockholders	10,814			14,128	$	0.77	209			13,919	$	0.02	(4,417		)	13,563	$	(0.33	)
Effect of dilutive securities:
Stock options				—						—						—
Diluted earnings (loss) per share:
Income (loss) available to common stockholders plus assumed conversions	$	10,814		14,128	$	0.77	$	209		13,919	$	0.02	$	(4,417	)	13,563	$	(0.33	)

There were 1,273,731 common stock options excluded from the computation of diluted earnings per share for the year ended December 31, 2012 which were exercisable between the prices of $8.46 and $33.50 per option. For the year ended December 31, 2011 there were 1,076,067 options excluded from the computation of diluted earnings per share which were exercisable between the prices of $8.46 and $33.50 per option. There were 1,069,774 options excluded from the computation of diluted loss per share for the year ended December 31, 2010 which were exercisable between the prices of $11.55 and $33.50 per option. These options were excluded because of their anti-dilutive impact.

NOTE 14. Stock Option Plans

In 2005, the board of directors adopted and the Company's stockholders approved the adoption of the 2006 Employee Stock Option Plan (the Plan) for the officers and employees of the Company. The Plan commenced January 1, 2006 and replaced the 1996 Employee Stock Option Plan, which expired December 31, 2005. The Plan covers 1,000,000 authorized shares of common stock reserved for issuance upon the exercise of options granted or available for grant to employees and will expire on December 31, 2015. The Plan provides that the option price of qualified incentive stock options will be fixed by the board of directors, but will not be less than 100% of the fair market value of the stock at the date of grant. In addition, the Plan provides that the option price of nonqualified stock options (NQSO's) also will be fixed by the board of directors, however for NQSO's the option price may be less than 100% of the fair market value of the stock at the date of grant. Options granted are exercisable one year after the grant date, will vest over a four-year period and expire ten years after the grant date.

65

In 2000, the board of directors adopted and the Company's stockholders approved the adoption of the 2001 Directors' Stock Option Plan(the Directors' Plan). The Directors' Plan commenced January 1, 2001 and replaced the 1990 Directors' Stock Option Plan, which expired December 31, 2000. The stock Plan covered 343,100 authorized shares of common stock reserved for issuance upon exercise of options granted or available for grant to nonemployee directors and expired on December 31, 2010. In 2010, the Company's stockholders approved the adoption of the 2011 Directors' Stock Option Plan (the Directors Plan). The Directors' Plan commenced January 1, 2011 and replaced the 2001 Directors' Plan which expired December 31, 2010. The Directors' Plan covers 200,000 authorized shares of common stock reserved for issuance upon exercise of options granted or available for grant to directors,  directors emeritus, advisory directors, consultants and others with outstanding abilities to help the Company and will expire on December 31, 2020. Under the Company's Directors' Plan, nonemployee directors of the Company, consultants and others who are not regularly employed on a salaried basis by the Company may be entitled to an option to acquire shares, as determined by the board of directors, of the Company's common stock during each year in which the director serves on the board. The Directors' Plan provides that the option price will be fixed by the board of directors, but will not be less than 100% of the fair market value of the stock on the date of the grant.

As of December 31, 2012, there was $2.1 million of total unrecognized compensation cost related to nonvested stock option awards. The expense will be incurred over the next four year period with a weighted-average period of 2.4 years. Cash received from the exercise of options for both 2012 and 2011 was $0 and was $78,000 for 2010.

The fair value of each option grant was established at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company's stock options. The Company used the Black-Scholes model and the following weighted-average assumptions for 2012, 2011 and 2010, respectively: risk-free interest rates of 1.7%, 3.0% and 3.3%; volatility factors of the expected market price of the Company's common stock of 48%, 46% and 45%; assumed forfeiture rates of 9.04%, 1.67% and 1.72%; weighted-average expected lives of the options of 7.5 years for the three years presented and no cash dividends. Based upon these assumptions, the weighted-average fair value of options granted was $5.99, $6.42 and $6.47 per option share for the years ended December 31, 2012, 2011 and 2010, respectively.

The Company recorded compensation expense of approximately $1.1 million for the year ended December 31, 2012 compared to $1.2 million for both the years ended December 31, 2011 and 2010, respectively. The tax benefit associated with compensation expense was $171,000, $203,000 and $214,000 for 2012, 2011 and 2010, respectively.

Combined stock option transactions under both Plans were as follows:

	Years Ended December 31,
	2012				2011				2010
	Options		Weighted Avg. Exercise Price		Options		Weighted Avg. Exercise Price		Options		Weighted Avg. Exercise Price
Outstanding at beginning of year	1,076,067		$	20.86	1,069,774		$	21.74	1,030,267		$	22.92
Granted	241,575		11.50		242,300		12.01		192,900		12.31
Exercised	—		—		—		—		(13,508	)	7.92
Forfeited/expired	(43,911	)	17.25		(236,007	)	15.76		(139,885	)	18.75
Outstanding at end of year	1,273,731		$	19.21	1,076,067		$	20.86	1,069,774		$	21.74
Exercisable at December 31	789,129		$	23.58	670,258		$	25.08	663,259		$	24.63
Options available for grant at December 31	327,184				549,003				511,525
Weighted-average fair value of options   granted during the year			$	5.99			$	6.42			$	6.47

Options exercisable and outstanding at December 31, 2012 had an intrinsic value of $125,000. There were no options exercised in 2012 and 2011. The intrinsic value of options exercised was $77,000 in 2010.

The Company allows for option exercises to be paid for in cash or in whole or in part with Metro stock owned by the optionee. The value of the stock used to exercise the options is the fair market value on the date of exercise. Stock option exercises paid for with the Company's stock was 2,130 shares for the year ended December 31, 2010.

66

Exercise prices for options outstanding as of December 31, 2012 are presented in the following table:

	Options Outstanding	Weighted Avg. Exercise  Price		Weighted Avg. Remaining Contractual Life	Options Exercisable	Weighted Avg. Exercise Price
Options with exercise prices ranging from     $8.46 to $16.41	704,241	$	12.68	7.9 years	220,016	$	13.99
Options with exercise prices ranging from     $16.42 to $25.38	170,835	21.86		0.7 years	170,458	21.86
Options with exercise prices ranging from     $25.39 to $33.50	398,655	29.61		3.8 years	398,655	29.61
Total options outstanding with exercise     prices ranging from $8.46 to $33.50	1,273,731	$	19.21	5.6 years	789,129	$	23.58

The remaining weighted-average contractual life for options exercisable at December 31, 2012 is 4.0 years.

The following table represents nonvested options as of December 31, 2012:

		Number of Shares		Weighted Avg. Grant Date Fair Value
Nonvested options,	December 31, 2011	405,809		$	6.84
Granted		241,575		5.99
Vested		(149,200	)	7.49
Forfeited		(13,582	)	6.10
Nonvested options,	December 31, 2012	484,602		$	6.24

NOTE 15. Regulatory Matters

The Company is a legal entity separate and distinct from its subsidiary, the Bank. There are various legal and regulatory limitations on the extent to which the Bank can, among other things, finance, or otherwise supply funds to, the Company. Specifically, dividends from the Bank are the principal source of the Company's cash funds and there are certain legal restrictions under Pennsylvania law and Pennsylvania banking regulations on the payment of dividends by state-chartered banks. The relevant regulatory agencies also have authority to prohibit the Company and the Bank from engaging in what, in the opinion of such regulatory body, constitutes an unsafe or unsound banking practice. The payment of dividends could, depending upon the financial condition of the Company and the Bank, be deemed to constitute such an unsafe or unsound practice.

The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets and of Tier 1 capital to average assets. Management believes, as of December 31, 2012, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2012 the Bank was categorized as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank's category.

67

The following table presents the risk-based and leverage capital amounts and ratios at December 31, 2012 and 2011 for the Company and the Bank:

	Actual					For Capital  Adequacy Purposes						To Be Well-Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio			Amount			Ratio			Amount			Ratio
Company as of December 31, 2012
Risk-based capital ratios:
Total capital	$	264,944	15.22	%	≥	$	139,227	≥	8.0	%	≥	N/A		≥	N/A
Tier 1 capital	243,147		13.97		≥	69,614		≥	4.0		≥	N/A		≥	N/A
Leverage ratio	243,147		9.61		≥	101,172		≥	4.0		≥	N/A		≥	N/A
Bank as of December 31, 2012
Risk-based capital ratios:
Total capital	$	253,852	14.59	%	≥	$	139,160	≥	8.0	%	≥	$	173,950	≥	10.0	%
Tier 1 capital	232,065		13.34		≥	69,580		≥	4.0		≥	104,370		≥	6.0
Leverage ratio	232,065		9.18		≥	101,167		≥	4.0		≥	126,459		≥	5.0
Company as of December 31, 2011
Risk-based capital ratios:
Total capital	$	260,405	15.36	%	≥	$	135,637	≥	8.0	%	≥	N/A		≥	N/A
Tier 1 capital	239,206		14.11		≥	67,818		≥	4.0		≥	N/A		≥	N/A
Leverage ratio	239,206		9.99		≥	95,797		≥	4.0		≥	N/A		≥	N/A
Bank as of December 31, 2011
Risk-based capital ratios:
Total capital	$	238,919	14.12	%	≥	$	135,358	≥	8.0	%	≥	$	169,197	≥	10.0	%
Tier 1 capital	217,764		12.87		≥	67,679		≥	4.0		≥	101,518		≥	6.0
Leverage ratio	217,764		9.10		≥	95,747		≥	4.0		≥	119,684		≥	5.0

On April 29, 2010, the Bank consented and agreed to the issuance of a Consent Order (Order) by the FDIC, the Bank's federal banking regulator and a substantially similar consent order by the Pennsylvania Department of Banking, which in 2012 was renamed the Pennsylvania Department of Banking and Securities (PaDOB). The Order required the Bank to take all necessary steps, consistent with the Order and sound banking practices, to correct and prevent certain unsafe or unsound banking practices and violations of law or regulation alleged by the FDIC to have been committed by the Bank. Among other things, the Order required certain analyses and assessments, including an analysis and assessment of the Bank Secrecy Act (BSA) and Office of Foreign Assets Control (OFAC) staffing needs and qualifications and an analysis and assessment of the independence and performance of the Company's directors and senior executive officers. It also required the development, adoption and implementation of a system of internal controls designed to ensure full compliance with BSA and OFAC provisions; training programs to ensure that all appropriate personnel are aware of and can comply with applicable requirements of BSA and OFAC provisions; periodic reviews by internal and external auditors of compliance with BSA and OFAC provisions; and a review by an independent third party of the Bank's compliance with the Order. The Bank paid a nonrecurring $1.5 million civil money penalty assessed by the FDIC during the third quarter of 2012 associated with alleged deficiencies as noted in the Order. The expense impact of the civil money penalty is included in the regulatory assessments line on the consolidated statement of operations for the year ended December 31, 2012. Most of the Order remediation related expenses were captured under the consulting fees line item and made up the majority of this line item on the consolidated statement of operations for the years ended December 31, 2011 and 2010. The Bank was informed on October 19, 2012 that the FDIC had terminated the Order effective October 16, 2012. Earlier in the year, the Bank was informed on May 30, 2012 that the PaDOB had terminated their substantially similar order effective April 12, 2012.

NOTE 16. Employee Benefit Plan

The Company has established a 401(k) Retirement Savings Plan for all of its employees who meet eligibility requirements. Employees may contribute up to 15% of their salary to the Plan. The Company currently provides a Safe Harbor matching contribution of 100% of the amount of the employee contribution up to 3% of the employee's salary and 50% of the amount of the employee contribution that exceeds 3% of the employee's salary for up to 5% of the employee's salary. In 2010, the Company's matching contribution was discretionary,

68

not a Safe Harbor matching contribution and was set at 50% of the employee's salary deferral up to a maximum of 6% of the employee's salary. The amount charged to expense for employer matching contributions and administrative fees was $785,000, $703,000 and $490,000 in 2012, 2011 and 2010, respectively.

NOTE 17. Fair Value Measurements

The Company uses its best judgment in estimating the fair value of its financial instruments and certain nonfinancial assets; however, there are inherent weaknesses in any estimation technique due to assumptions that are susceptible to significant change. Therefore, for substantially all financial instruments and certain nonfinancial assets, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective year-ends and have not been reevaluated or updated for purposes of these financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments and certain nonfinancial assets subsequent to the respective reporting dates may be different than the amounts reported at each year-end.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following fair value hierarchy in selecting inputs with the highest priority given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements): 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

As required, financial and certain nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company's financial assets that were measured at fair value on a recurring basis at December 31, 2012 and December 31, 2011, respectively, by level within the fair value hierarchy:

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2012
U.S. Government agency securities	$	33,761	$	—	$	33,761	$	—
Residential MBSs	57,210		—		57,210		—
Agency CMOs	556,867		—		556,867		—
Municipal securities	27,271		—		27,271		—
Securities available for sale	$	675,109	$	—	$	675,109	$	—

69

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2011
U.S. Government agency securities	$	22,558	$	—	$	22,558	$	—
Residential MBSs	21,412		—		21,412		—
Agency CMOs	528,163		—		528,163		—
Private-label CMOs	23,006		—		23,006		—
Corporate debt securities	18,320		—		18,320		—
Securities available for sale	$	613,459	$	—	$	613,459	$	—

As of December 31, 2012 and December 31, 2011, the Company did not have any liabilities that were measured at fair value on a recurring basis.

Impaired Loans (Generally Carried at Fair Value)

Impaired loans are those that the Company has measured impairment of based on the fair value of the loan's collateral. Fair value is generally determined based upon independent third party appraisals or valuations of the collateral properties. The discount rates used on collateral dependent loans vary based on the type of collateral. The range of discount rates used for real estate collateral ranges from 15% to 35%; inventory and equipment is generally discounted at 50% and accounts receivable are generally discounted by 20%. These assets are included as Level 3 fair values, based upon the lowest level of unobservable input that is significant to the fair value measurements. The fair value consists of the loan balance less any valuation allowance. The valuation allowance amount is calculated as the difference between the recorded investment in a loan and the present value of expected future cash flows or it is calculated based on discounted collateral values if the loan is collateral dependent.

At December 31, 2012, the cumulative fair value of seven impaired loans with individual allowance allocations totaled $12.0 million, net of valuation allowances of $7.1 million and the fair value of impaired loans that were partially charged off during 2012 totaled $4.2 million, net of charge-offs of $2.6 million. At December 31, 2011, the cumulative fair value of four impaired loans with individual allowance allocations totaled $9.9 million, net of valuation allowances of $3.6 million and impaired loans that were partially charged off during 2011 totaled $1.2 million, net of charge-offs of $10.1 million. The Company's impaired loans are more fully discussed in Note 4.

Foreclosed Assets (Carried at Lower of Cost or Fair Value)

The fair value of real estate acquired through foreclosure is based on independent third party appraisals of the properties, less estimated selling costs. A standard discount rate of 15%, to cover estimated costs to sell the property, is generally used on the most recent appraisal to determine the fair value of the real estate. These assets are included as Level 3 fair values, based upon the lowest level of unobservable input that is significant to the fair value measurements. There were no foreclosed assets with valuation allowances recorded subsequent to initial foreclosure at December 31, 2012. At December 31, 2011, the carrying value of foreclosed assets, with valuation allowances recorded subsequent to initial foreclosure was $3.0 million which was net of a valuation allowance of $1.8 million.

The determination of the fair value of assets measured on a nonrecurring basis is sensitive to changes in economic conditions and can fluctuate in a relatively short period of time. For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used were as follows:

70

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used were as follows:

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2012
Impaired loans with specific allocation	$	11,991	$	—	$	—	$	11,991
Impaired loans net of partial charge-offs	4,227		—		—		4,227
Foreclosed assets	—		—		—		—
Total	$	16,218	$	—	$	—	$	16,218

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2011
Impaired loans with specific allocation	$	9,875	$	—	$	—	$	9,875
Impaired loans net of partial charge-offs	1,151		—		—		1,151
Foreclosed assets	3,041		—		—		3,041
Total	$	14,067	$	—	$	—	$	14,067

The Company's policy is to recognize transfers between levels as of the beginning of the period. There were no transfers between levels 1 and 2 or between levels 2 and 3 for the twelve months ended December 31, 2012.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful. The following valuation techniques were used to estimate the fair values of the Company's financial instruments at December 31, 2012 and 2011:

Cash and Cash Equivalents (Carried at Cost)

Cash and cash equivalents include cash, balances due from banks and federal funds sold, all of which have original maturities of 90 days or less. The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets' fair values.

Securities

The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities' relationship to other benchmark prices. In determining fair market values for its portfolio holdings, the Company receives information from a third party provider which management evaluates and corroborates. Under the current guidance, these values are considered Level 2 inputs, based upon mathematically derived matrix pricing and observed data from similar assets. They are not Level 1 direct quotes, nor do they reflect Level 3 inputs that would be derived from internal analysis or judgment. As the Company does not manage a trading portfolio and typically only sells from its AFS portfolio in order to manage interest rate risk or credit exposure, direct quotes, or street bids, are warranted on an as-needed basis only.

71

Loans Held for Sale (Carried at Lower of Cost or Fair Value)

The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices.  If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for the specific attributes of that loan. The Company did not write down any loans held for sale during the years ended December 31, 2012 and 2011.

Loans Receivable (Carried at Cost)

The fair value of loans receivable, excluding all nonaccrual loans and accruing loans deemed impaired with specific loan allowances, are estimated using a discounted cash flow analysis, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the respective loans. Projected future cash flows are calculated based upon contractual maturity, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Restricted Investment in Bank Stock (Carried at Cost)

The carrying amount of restricted investments in bank stock approximates fair value and considers the limited marketability of such securities. The restricted investments in bank stock consisted of FHLB and ACBB stock at December 31, 2012 and 2011.

Accrued Interest Receivable and Payable (Carried at Cost)

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit Liabilities (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposits (CDs) are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings (Carried at Cost)

The carrying amounts of short-term borrowings approximate their fair values.

Long-Term Debt (Carried at Cost)

Long-term debt was estimated using a discounted cash flow analysis, based on quoted prices from a third party broker for new debt with similar characteristics, terms and remaining maturity. The price for the certain long-term debt was obtained in an inactive market where these types of instruments are not traded regularly. 

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair values for the Company's off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties' credit standing.

72

The estimated fair values of the Company's financial instruments were as follows at December 31, 2012 and 2011:

Fair Value Measurements at December 31, 2012
					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Carrying Amount		Fair  Value		(Level 1)		(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	56,582	$	56,582	$	56,582	$	—	$	—
Securities	944,892		948,780		—		948,780		—
Loans, held for sale	15,183		15,415		—		—		15,415
Loans receivable, net	1,503,515		1,516,839		—		—		1,516,839
Restricted investments in bank stock	15,450		15,450		—		—		15,450
Accrued interest receivable	7,206		7,206		7,206		—		—
Financial liabilities:
Deposits	$	2,231,291	$	2,232,789	$	—	$	—	$	2,232,789
Short-term borrowings	113,225		113,225		113,225		—		—
Long-term debt	40,800		35,629		—		—		35,629
Accrued interest payable	308		308		308		—		—
Off-balance sheet instruments:
Standby letters of credit	$	—	$	—	$	—	$	—	$	—
Commitments to extend credit	—		—		—		—		—

Fair Value Measurements at December 31, 2011
(in thousands)	Carrying Amount		Fair  Value
Financial assets:
Cash and cash equivalents	$	55,073	$	55,073
Securities	810,094		813,316
Loans, held for sale	9,359		9,474
Loans receivable, net	1,415,048		1,436,328
Restricted investments in bank stock	16,802		16,802
Accrued interest receivable	7,378		7,378
Financial liabilities:
Deposits	$	2,071,574	$	2,074,139
Short-term borrowings	65,000		65,000
Long-term debt	49,200		39,773
Accrued interest payable	487		487
Off-balance sheet instruments:
Standby letters of credit	$	—	$	—
Commitments to extend credit	—		—

73

NOTE 18. Commitments and Contingencies

In January 2005, the Company entered into an agreement for naming rights to Metro Bank Park located on Harrisburg City Island, Harrisburg, Pennsylvania. Metro Bank Park is home of the Harrisburg Senators, an AA team affiliated with Major League Baseball. The term of the naming rights agreement is 15 years with a total obligation of $3.5 million spread over the term.

The Company has entered into a land lease for the premises located at 2121 Lincoln Highway East, East Lampeter Township, Lancaster County, Pennsylvania. The Company plans to construct a full-service store on this property to be opened in the future.

The Company has purchased land at 105 N. George Street, York City, York County, Pennsylvania. The Company plans to open a store on this property to be opened in the future.

On November 10, 2008, Metro announced it had entered into a services agreement with Fiserv Solutions, Inc. (Fiserv). The agreement, effective November 7, 2008, is for a period of seven years, following the date Fiserv Services are first used by Client in live production, subject to automatic renewal for additional terms of two years unless either party gives the other written notice of nonrenewal at least 180 days prior to the expiration date of the term. The initial investment with Fiserv was $3.4 million with a remaining expected obligation for support, license fees and processing services of $26.9 million over the next 3.5 years. The various services include: core system hosting, item processing, deposit and loan processing, electronic banking, data warehousing and other banking functions.

In addition, the Company is also subject to certain routine legal proceedings and claims arising in the ordinary course of business. It is management's opinion that the ultimate resolution of these claims will not have a material adverse effect on the Company's financial position and results of operations.

NOTE 19. Related Party Transactions

The Company has engaged in certain transactions with entities which are considered related parties. Payments for goods and services, including legal services, to these related parties totaled $907,000, $841,000 and $699,000 in 2012, 2011 and 2010, respectively. Management believes disbursements made to related parties were substantially equivalent to those that would have been paid to unaffiliated companies for similar goods and services.

74

NOTE 20. Quarterly Financial Data (unaudited)

The following represents summarized unaudited quarterly financial data of the Company which, in the opinion of management, reflects adjustments (comprising only normal recurring accruals) necessary for fair presentation, note that certain balances may not cross foot due to rounding:

	Three Months Ended
(in thousands, except per share amounts)	December 31		September 30			June 30		March 31
2012
Interest income	$	24,096	$	24,255		$	24,625	$	24,332
Interest expense	2,262		2,477			2,655		2,716
Net interest income	21,834		21,778			21,970		21,616
Provision for loan losses	2,150		2,500			2,950		2,500
Noninterest income	7,805		7,148			7,460		7,441
Net gains (loss) on sales of securities	92		(37		)	12		984
Noninterest expense	22,486		23,053			22,674		22,931
Provision for federal income taxes	1,547		1,381			1,044		942
Net income	3,456		1,992			2,762		2,684
Net income per share:
Basic	$	0.24	$	0.14		$	0.19	$	0.19
Diluted	0.24		0.14			0.19		0.19
2011
Interest income	$	24,726	$	24,415		$	24,659	$	23,895
Interest expense	3,336		3,640			3,842		3,878
Net interest income	21,390		20,775			20,817		20,017
Provision for loan losses	3,350		13,750			1,700		1,792
Noninterest income	7,062		7,278			8,156		7,956
Net gains on sales of securities	—		7			309		34
Noninterest expense	21,731		23,355			24,621		24,307
Provision (benefit) for federal income taxes	888		(3,334		)	660		342
Net income (loss)	2,483		(5,718		)	1,992		1,532
Net income (loss) per share:
Basic	$	0.18	$	(0.41	)	$	0.14	$	0.11
Diluted	0.18		(0.41		)	0.14		0.11

75

NOTE 21. Condensed Financial Statements of Parent Company

Balance Sheets

	December 31,
(in thousands)	2012		2011
Assets
Cash	$	11,765	$	19,641
Investment in subsidiaries:
Banking subsidiary	239,305		221,578
Nonbanking subsidiaries	800		1,200
Other assets	54		2,321
Total assets	$	251,924	$	244,740
Liabilities
Long-term debt	$	15,800	$	24,200
Other liabilities	737		520
Total liabilities	16,537		24,720
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: 14,131,263;  2011: 14,125,346)	14,131		14,125
Surplus	157,305		156,184
Retained earnings	56,311		45,497
Accumulated other comprehensive income	7,240		3,814
Total stockholders' equity	235,387		220,020
Total liabilities and stockholders' equity	$	251,924	$	244,740

Statements of Operations

	Years Ended December 31,
(in thousands)	2012			2011			2010
Income
Dividends from bank subsidiary	$	—		$	—		$	—
Interest income	95			122			124
Debt prepayment charge	(140		)	(75		)	—
	(45		)	47			124
Expenses
Interest expense	1,949			2,611			2,645
Other	1,441			2,293			1,149
	3,390			4,904			3,794
Loss before income tax benefit and equity in undistributed net income of subsidiaries	(3,435		)	(4,857		)	(3,670		)
Income tax benefit	1,168			1,651			1,248
	(2,267		)	(3,206		)	(2,422		)
Equity in undistributed net income (loss) of bank subsidiary	13,161			3,495			(1,915		)
Net income (loss)	$	10,894		$	289		$	(4,337	)

76

Statements of Cash Flows

	Years Ended December 31,
(in thousands)	2012			2011			2010
Operating Activities
Net income (loss)	$	10,894		$	289		$	(4,337	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Amortization of financing costs	29			8			8
Stock-based compensation	1,082			1,250			1,244
Debt prepayment charge	140			75			—
Increase (decrease) in other liabilities	217			(108		)	(4,742		)
Decrease in other assets	2,625			1,990			610
Equity in undistributed net (income) loss of bank subsidiary	(13,161		)	(3,495		)	1,915
Net cash provided by (used in) operating activities	1,826			9			(5,302		)
Investing Activities
Investment in bank subsidiary	(1,126		)	(5,052		)	(4,478		)
Net cash used by investing activities	(1,126		)	(5,052		)	(4,478		)
Financing Activities
Proceeds from common stock options exercised	—			—			78
Proceeds from issuance of common stock under stock purchase plan	44			3,802			3,156
Repayment of long-term debt	(8,540		)	(5,275		)	—
Cash dividends on preferred stock	(80		)	(80		)	(80		)
Net cash (used in) provided by financing activities	(8,576		)	(1,553		)	3,154
Decrease in cash and cash equivalents	(7,876		)	(6,596		)	(6,626		)
Cash and cash equivalents at beginning of the year	19,641			26,237			32,863
Cash and cash equivalents at end of year	$	11,765		$	19,641		$	26,237

77

EX-21

Exhibit 21

Subsidiaries of Metro Bancorp, Inc.

Name of Business	Doing Business As	State of Incorporation
Metro Bank	Metro Bank	Pennsylvania
Commerce Harrisburg Capital Trust III	Commerce Harrisburg Capital Trust III	Delaware

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

Metro Bancorp, Inc.

Harrisburg, Pennsylvania

We hereby consent to the incorporation by reference in the Registration Statements on Form S‑3 (No. 333-87329, No. 333-161114, and No. 333-169683) and Form S-3D (333-178371) and Form S-8 (No. 333-82083, No. 333-82085, No. 333-87313, No. 333-61634, No. 333-61636, No. 333-122490, No. 333-128382, No. 333-155930, No. 333-155931, No. 333-169684, and No. 333-169712) of Metro Bancorp, Inc. (the “Company”) of our reports dated March 15, 2013 relating to the Company's consolidated financial statements and the effectiveness of the Company's internal control over financial reporting, which appear in the Annual Report to Shareholders, which is incorporated by reference in this Annual Report on Form 10-K.

/s/ ParenteBeard LLC

Harrisburg, Pennsylvania

March 15, 2013

EX-31.1

Exhibit 31.1

Certification of Chief Executive Officer

I, Gary L. Nalbandian, certify that:

1. I have reviewed this Annual Report on Form 10-K of Metro Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f)) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2013

/s/ Gary L. Nalbandian

Gary L. Nalbandian

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification of Chief Financial Officer

I, Mark A. Zody, certify that:

1. I have reviewed this Annual Report on Form 10-K of Metro Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2013

/s/ Mark A. Zody

Mark A. Zody

Chief Financial Officer

EX-32

Exhibit 32

Certification of Metro Bancorp, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Metro Bancorp, Inc. (the “Company”) does hereby certify with respect to the Annual Report of the Company on Form 10-K for the period ended December 31, 2012 (the “Report”), that:

• The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended and

• To my knowledge, the information contained in the Report fairly represents, in all material respects, the Company's financial condition and results of operations as of and for the period covered by this Report.

/s/ Gary L. Nalbandian             

Gary L. Nalbandian,

Chief Executive Officer

/s/ Mark A. Zody                     

Mark A. Zody,

Chief Financial Officer

Dated:   March 15, 2013

The foregoing certification is being furnished solely pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and is not being filed as part of the Report or as a separate disclosure document.

EX-99

Exhibit 99

AGREEMENT TO FURNISH DEBT INSTRUMENTS

Pursuant to Instruction 3(b)(4)(iii) to Item 601 of Regulation S-K, the Company has not included as an Exhibit any instrument with respect to long-term debt if the total amount of debt authorized by such instrument does not exceed 10% of the consolidated assets of the Company and its subsidiaries. The Company agrees, pursuant to this Instruction, to furnish a copy of any such instrument to the Securities and Exchange Commission upon request of the Commission.

Metro Bancorp, Inc.

/s/ Mark A. Zody

Mark A. Zody,

Chief Financial Officer

Dated: March 15, 2013

XML

Income Taxes Income Taxes (Tables)

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Reconciliation of Income Tax Provision (Benefit)

A reconciliation of the provision (benefit) for income taxes and the amount that would have been provided at statutory rates is as follows:

	Years Ended December 31,
(in thousands)	2012			2011			2010
Provision (benefit) at statutory rate on pretax income (loss)	$	5,533		$	(392	)	$	(3,017	)
Tax-exempt income on loans and investments	(1,390		)	(1,314		)	(1,446		)
Exercise of nonqualified stock options	—			—			(25		)
Stock-based compensation	203			222			209
Merger related expenses	—			—			(358		)
Civil money penalty	525			—			—
Other	43			40			101
Total	$	4,914		$	(1,444	)	$	(4,536	)

Components of Income Tax Expense (Benefit)

The components of income tax expense (benefit) are as follows: 

	Years Ended December 31,
(in thousands)	2012		2011			2010
Current expense	$	4,796	$	67		$	236
Deferred expense (benefit)	118		(1,511		)	(4,772		)
Total	$	4,914	$	(1,444	)	$	(4,536	)

Schedule of Deferred Tax Assets and Liabilities

The components of the net deferred tax asset were as follows:

	December 31,
(in thousands)	2012			2011
Deferred tax assets:
Allowance for loan losses	$	8,596		$	7,351
Other-than-temporary losses	—			1,003
Stock-based compensation	1,094			923
Nonaccrual interest	1,605			2,002
Foreclosed real estate write-downs	—			703
Income from LLC subsidiary	—			254
Other	447			486
Total deferred tax assets	11,742			12,722
Deferred tax liabilities:
Premises and equipment	(3,762		)	(4,486		)
Unrealized gains on securities	(3,730		)	(1,965		)
Prepaid expenses	(254		)	(395		)
Deferred loan fees	(971		)	(968		)
Total deferred tax liabilities	(8,717		)	(7,814		)
Net deferred tax asset	$	3,025		$	4,908

XML

Securities (Narrative) (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012 Securities	Dec. 31, 2011	Dec. 31, 2010 Securities
Investment Securities [Line Items]
Number of securities sold									48		56
Investment securities, fair value	$ 305,400,000								$ 305,400,000		$ 296,200,000
Proceeds from sale of available-for-sale securities									299,338,000	125,299,000	292,899,000
Other than Temporary Impairment Losses, Investments									649,000	324,000	4,904,000
Net gains on sales/calls of securities	92,000	(37,000)	12,000	984,000	0	7,000	309,000	34,000	1,051,000	350,000	2,801,000
Gain (Loss) on Sale of Securities, Tax									368,000	119,000
Held to maturity securities, fair value	273,671,000								273,671,000
Gross realized gains on available-for-sale securities											2,800,000
Available-for-sale securities, amortized cost basis	664,139,000				607,680,000				664,139,000	607,680,000
Available-for-sale securities, fair value	675,109,000								675,109,000
Realized pre-tax gain on sale of available-for-sale securities									629,000	343,000	2,762,000
Agency CMOs [Member]
Investment Securities [Line Items]
Number of securities sold										13
Investment securities, fair value					126,200,000					126,200,000
Available-for-sale securities, amortized cost basis	547,641,000				519,167,000				547,641,000	519,167,000
Available-for-sale securities, fair value	556,867,000								556,867,000
Private-label CMOs [Member]
Investment Securities [Line Items]
Number of securities sold									8
Gross realized gains on available-for-sale securities									28,000
Government Agency Debentures [Member]
Investment Securities [Line Items]
Investment securities, value called by issuing agency										60,000,000
Number of Securities Called at Par									11	3	10
Municipal Bonds [Member]
Investment Securities [Line Items]
Number of Securities Called at Par											4
Corporate debentures [Member]
Investment Securities [Line Items]
Number of Securities Called at Par									1
Available-for-sale securities, amortized cost basis					19,952,000					19,952,000
Agency and Corporate Debentures [Member]
Investment Securities [Line Items]
Investment securities, value called by issuing agency									160,300,000
Residential mortgage-backed securities [Member]
Investment Securities [Line Items]
Available-for-sale securities, amortized cost basis	55,614,000				21,087,000				55,614,000	21,087,000
Available-for-sale securities, fair value	57,210,000								57,210,000
No Losses Attributable to Credit [Member] | Private-label CMOs [Member]
Investment Securities [Line Items]
Number of securities sold									2
Realized loss on available for sale securities									84,000
Previous Losses Due to Credit, Held to Recovery [Member] | Private-label CMOs [Member]
Investment Securities [Line Items]
Number of securities sold									3
Previous Losses Due to Credit, Not Held to Recovery [Member] | Private-label CMOs [Member]
Investment Securities [Line Items]
Number of securities sold									3
Realized loss on available for sale securities									1,200,000
Available-for-sale Securities [Member]
Investment Securities [Line Items]
Number of securities sold									41	12	53
Investment securities, fair value	299,300,000				125,300,000				299,300,000	125,300,000	292,900,000
Available-for-sale Securities [Member] | Private-label CMOs [Member]
Investment Securities [Line Items]
Number of securities sold									8
Held to maturity securities, fair value	20,100,000								20,100,000
Held-to-maturity Securities [Member] | Mortgage Backed Securities, Other [Member]
Investment Securities [Line Items]
Number of securities sold									7	1	2
Held to maturity securities, fair value	6,100,000				852,000				6,100,000	852,000	440,000
Held-to-maturity Securities [Member] | Private-label CMOs [Member]
Investment Securities [Line Items]
Number of securities sold											1
Other than Temporary Impairment Losses, Investments											3,000
Held to maturity securities, fair value											2,900,000
Actual [Member]
Investment Securities [Line Items]
Held to maturity securities, ratio of remaining par value to original purchases par value										9.00%
Threshold [Member]
Investment Securities [Line Items]
Held to maturity securities, ratio of remaining par value to original purchases par value									15.00%	15.00%	15.00%
Fair Value [Member] | Government Agency Debentures [Member]
Investment Securities [Line Items]
Held to maturity securities, fair value					60,000,000					60,000,000
Fair Value [Member] | Bonds [Member]
Investment Securities [Line Items]
Investment securities, value called by issuing agency											106,600,000
Securities Pledged as Collateral [Member]
Investment Securities [Line Items]
Securities pledged to secure public deposits and other	$ 713,600,000				$ 621,600,000				$ 713,600,000	$ 621,600,000
Unrealized Loss Position [Member]
Investment Securities [Line Items]
Number of securities, type									12
Unrealized Loss Position [Member] | Agency CMOs [Member]
Investment Securities [Line Items]
Number of securities, type									7
Unrealized Loss Position [Member] | Government Agency Debentures [Member]
Investment Securities [Line Items]
Number of securities, type									5
Downgraded to Default Status [Member] | Previous Losses Due to Credit, Not Held to Recovery [Member] | Private-label CMOs [Member]
Investment Securities [Line Items]
Number of securities sold									2

XML

Restrictions on Cash and Due from Bank Accounts (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Restricted Cash and Investments [Abstract]
Average reserve balances with FRB	$ 3.6	$ 10.9

XML

Premises, Equipment and Leases (Premises and Equipment) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 120,597	$ 118,490
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	41,809	36,376
Property, Plant and Equipment, Net	78,788	82,114
Land [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	16,736	15,386
Buildings [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	67,047	66,913
Construction in Progress [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	1,199	1,535
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	2,677	2,583
Furniture, Fixtures and Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 32,938	$ 32,073

XML

Loans Receivable and Allowance for Loan Losses Loans Receivable and Allowance for Loan Losses (Summary of Loans Receivable) (Details) (USD $)					12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2012 Directors and Executive Officers [Member]	Dec. 31, 2011 Directors and Executive Officers [Member]	Dec. 31, 2012 Commercial and industrial [Member]	Dec. 31, 2011 Commercial and industrial [Member]	Dec. 31, 2010 Commercial and industrial [Member]	Dec. 31, 2012 Commercial tax-exempt [Member]	Dec. 31, 2011 Commercial tax-exempt [Member]	Dec. 31, 2010 Commercial tax-exempt [Member]	Dec. 31, 2012 Owner occupied real estate [Member]	Dec. 31, 2011 Owner occupied real estate [Member]	Dec. 31, 2010 Owner occupied real estate [Member]	Dec. 31, 2012 Commercial construction and land development [Member]	Dec. 31, 2011 Commercial construction and land development [Member]	Dec. 31, 2010 Commercial construction and land development [Member]	Dec. 31, 2012 Commercial real estate [Member]	Dec. 31, 2011 Commercial real estate [Member]	Dec. 31, 2010 Commercial real estate [Member]	Dec. 31, 2012 Residential [Member]	Dec. 31, 2011 Residential [Member]	Dec. 31, 2010 Residential [Member]	Dec. 31, 2012 Consumer [Member]	Dec. 31, 2011 Consumer [Member]	Dec. 31, 2010 Consumer [Member]
Bank Loans Receivable, Net:
Qualifying loans pledged as FHLB collateral	$ 319,000,000
Total loans receivable	1,528,797,000	1,436,668,000					376,988,000	321,988,000		92,202,000	81,532,000		268,372,000	279,372,000		100,399,000	103,153,000		394,404,000	364,405,000		83,899,000	83,940,000		212,533,000	202,278,000
Bank loans receivable, Allowance for loan losses	(25,282,000)	(21,620,000)	(21,618,000)	(14,391,000)			(9,959,000)	(8,400,000)	(9,679,000)	(83,000)	(79,000)	(86,000)	(2,129,000)	(729,000)	(910,000)	(7,222,000)	(7,840,000)	(5,420,000)	(3,983,000)	(3,241,000)	(4,002,000)	(324,000)	(435,000)	(442,000)	(793,000)	(831,000)	(702,000)
Loans receivable, net of allowance for loan losses (allowance 2012: $25,282; 2011: $21,620)	1,503,515,000	1,415,048,000
Loans receivable, related parties					14,200,000	11,400,000
Loans receivable, advances to related parties					6,900,000
Loans receivable, proceeds from related parties					$ 4,100,000

XML

Income Taxes Income Taxes (Reconciliation) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Provision (benefit) at statutory rate on pretax income (loss)									$ 5,533	$ (392)	$ (3,017)
Tax-exempt income on loans and investments									(1,390)	(1,314)	(1,446)
Exercise of nonqualified stock options									0	0	(25)
Stock-based compensation									203	222	209
Merger related expenses									0	0	(358)
Civil money penalty									525	0	0
Other									43	40	101
Total	$ 1,547	$ 1,381	$ 1,044	$ 942	$ 888	$ (3,334)	$ 660	$ 342	$ 4,914	$ (1,444)	$ (4,536)

XML

Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended	12 Months Ended
	Sep. 30, 2010	Dec. 31, 2012 bank store	Dec. 31, 2011 partially_lifted_suspension	Dec. 31, 2010
Accounts, Notes, Loans and Financing Receivable [Line Items]
Period of Actual Historical Losses Used to Project Probable Loan Losses		2 years
Number of banks		1
Number of financial services retailer stores		33
Proceeds from sale of loans held for sale		$ 70,448,000	$ 52,492,000	$ 65,892,000
Gain on sales of loans		1,220,000	2,728,000	2,434,000
Loans, held for sale		15,183,000	9,359,000
Loans Held-for-sale, Consumer, Installment, Student		3,800,000	5,200,000
Loans Held-for-sale, Mortgages		11,400,000	4,200,000
Provision for loan losses expensed	3,600,000	10,100,000	20,592,000	21,000,000
Provision for loan losses expensed, net of tax	2,400,000
Provision for loan losses expensed, net of tax, in dollars per share	$ 0.17
Federal Home Loan Bank Stock, Membership Requirement		4,500,000
Federal Home Loan Bank Stock, Borrowing Requirement		6,900,000
Federal Home Loan Bank Stock, Excess Not yet Repurchased		4,000,000
Number of times FHLB repurchase suspensions are lifted during period			3
Interest paid		10,300,000	14,900,000	17,600,000
Income taxes paid		3,300,000	700,000	0
Other Assets [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Foreclosed assets		2,500,000	7,100,000
SBA Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Proceeds from sale of loans held for sale		0	12,100,000
Gain on sales of loans			1,900,000
Maximum [Member] | Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Sale of loans held for sale, period from funding date to sale date		30 days
Federal Home Loan Bank Certificates and Obligations (FHLB) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Restricted investments in bank stock		15,400,000
Atlantic Central Bankers Bank (ACBB) Stock [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Restricted investments in bank stock		$ 65,000

XML

Securities (Tables)

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Schedule of available for sale and held to maturity securities reconciliation

The amortized cost and fair value of securities are summarized in the following tables:

	December 31, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	33,994	$	19	$	(252	)	$	33,761
Residential mortgage-backed securities	55,614		1,596		—			57,210
Agency collateralized mortgage obligations	547,641		9,971		(745		)	556,867
Municipal securities	26,890		381		—			27,271
Total	$	664,139	$	11,967	$	(997	)	$	675,109
Held to Maturity:
U.S. Government agency securities	$	178,926	$	700	$	(363	)	$	179,263
Residential mortgage-backed securities	23,827		1,889		—			25,716
Agency collateralized mortgage obligations	49,051		1,587		—			50,638
Corporate debt securities	15,000		13		—			15,013
Municipal securities	2,979		62		—			3,041
Total	$	269,783	$	4,251	$	(363	)	$	273,671

	December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	22,500	$	58	$	—		$	22,558
Residential mortgage-backed securities	21,087		325		—			21,412
Agency collateralized mortgage obligations	519,167		9,171		(175		)	528,163
Private-label collateralized mortgage obligations	24,974		—		(1,968		)	23,006
Corporate debt securities	19,952		—		(1,632		)	18,320
Total	$	607,680	$	9,554	$	(3,775	)	$	613,459
Held to Maturity:
U.S. Government agency securities	$	97,750	$	88	$	—		$	97,838
Residential mortgage-backed securities	37,658		2,769		—			40,427
Agency collateralized mortgage obligations	45,122		840		(1		)	45,961
Corporate debt securities	15,000		—		(484		)	14,516
Municipal securities	1,105		10		—			1,115
Total	$	196,635	$	3,707	$	(485	)	$	199,857

Amortized cost and fair value of debt securities by contractrual maturity

The amortized cost and fair value of debt securities by contractual maturity at December 31, 2012 are shown in the table that follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations.

	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	10,000	$	10,002
Due after one year through five years	—		—		5,000		5,011
Due after five years through ten years	19,367		19,510		60,000		60,001
Due after ten years	41,517		41,522		121,905		122,303
	60,884		61,032		196,905		197,317
Residential mortgage-backed securities	55,614		57,210		23,827		25,716
Agency collateralized mortgage obligations	547,641		556,867		49,051		50,638
Total	$	664,139	$	675,109	$	269,783	$	273,671

Gains (losses) on the sales of debt securities and credit losses for OTTI of investments

The following table summarizes the Company's gains and losses on the sales or calls of debt securities and losses recognized for the OTTI of investments:

(in thousands)	Gross Realized Gains		Gross Realized (Losses)			OTTI Credit Losses			Net Gains (Losses)
Years Ended:
December 31, 2012	$	2,889	$	(1,838	)	$	(649	)	$	402
December 31, 2011	983		(633		)	(324		)	26
December 31, 2010	6,690		(3,889		)	(962		)	1,839

Fair value and gross unrealized losses

The following tables show the fair value and gross unrealized losses associated with the Company's investment portfolio, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2012
	Less than 12 months					12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for Sale:
U.S. Government agency securities	$	24,748	$	(252	)	$	—	$	—	$	24,748	$	(252	)
Agency CMOs	53,274		(745		)	—		—		53,274		(745		)
Total	$	78,022	$	(997	)	$	—	$	—	$	78,022	$	(997	)
Held to Maturity:
U.S. Government agency securities	$	57,572	$	(363	)	$	—	$	—	$	57,572	$	(363	)
Total	$	57,572	$	(363	)	$	—	$	—	$	57,572	$	(363	)

	December 31, 2011
	Less than 12 months					12 months or more					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available for Sale:
Agency CMOs	$	49,793	$	(175	)	$	—	$	—		$	49,793	$	(175	)
Private-label CMOs	6,017		(268		)	16,989		(1,700		)	23,006		(1,968		)
Corporate debt securities	18,320		(1,632		)	—		—			18,320		(1,632		)
Total	$	74,130	$	(2,075	)	$	16,989	$	(1,700	)	$	91,119	$	(3,775	)
Held to Maturity:
Agency CMOs	$	1,312	$	(1	)	$	—	$	—		$	1,312	$	(1	)
Corporate debt securities	14,516		(484		)	—		—			14,516		(484		)
Total	$	15,828	$	(485	)	$	—	$	—		$	15,828	$	(485	)

Cumulative life credit losses recognized in earnings

The tables below rolls forward the cumulative life to date credit losses which have been recognized in earnings for the private-label CMOs previously mentioned for the years ended December 31, 2012, 2011 and 2010, respectively:

	Private-label CMOs
(in thousands)	Available for Sale			Held to Maturity		Total
Cumulative OTTI credit losses at January 1, 2012	$	2,949		$	—	$	2,949
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	649			—		649
Reduction due to credit impaired securities sold	(3,598		)	—		(3,598		)
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2012	$	—		$	—	$	—

	Private-label CMOs
(in thousands)	Available for Sale		Held to Maturity		Total
Cumulative OTTI credit losses at January 1, 2011	$	2,625	$	—	$	2,625
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	324		—		324
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2011	$	2,949	$	—	$	2,949

	Private-label CMOs
(in thousands)	Available for Sale			Held to Maturity			Total
Cumulative OTTI credit losses at January 1, 2010	$	2,338		$	3		$	2,341
Additions for which OTTI was not previously recognized	675			—			675
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	287			—			287
Reduction due to credit impaired security sold	(675		)	(3		)	(678		)
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2010	$	2,625		$	—		$	2,625

XML

Income Taxes Income Taxes (Components) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Income Tax Disclosure [Abstract]
Current expense									$ 4,796	$ 67	$ 236
Deferred expense (benefit)									118	(1,511)	(4,772)
Total	$ 1,547	$ 1,381	$ 1,044	$ 942	$ 888	$ (3,334)	$ 660	$ 342	$ 4,914	$ (1,444)	$ (4,536)

XML

Deposits (Maturities of Time Deposits) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012
Deposits [Abstract]
2013	$ 146,014
2014	31,681
2015	12,302
2016	3,735
2017	3,818
Thereafter	0
Total	$ 197,550

XML

Employee Benefit Plan Employee Benefit Plan (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Maximum annual contribution per employee	15.00%
Annual contributions by employer	$ 785,000	$ 703,000	$ 490,000
Up to 3% of Employee Salary [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Employer matching contribution	100.00%
Contribution per employee	3.00%
From 3% to 5% of Employee Salary [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Employer matching contribution	50.00%
From 3% to 5% of Employee Salary [Member] | Minimum [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Contribution per employee	3.00%
From 3% to 5% of Employee Salary [Member] | Maximum [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Contribution per employee	5.00%
Up to 6% of Employee Salary [Member]
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Employer matching contribution			50.00%
Contribution per employee			6.00%

XML

Loans Receivable and Allowance for Loan Losses Loans Receivable and Allowance for Loan Losses (Age Analysis of Past Due Loan Receivables) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012 Impaired_Loans	Dec. 31, 2011 Impaired_Loans	Dec. 31, 2010
Financing Receivable, Recorded Investment [Line Items]
Current	$ 1,487,781,000	$ 1,397,758,000
30-59 Days Past Due	16,383,000	11,681,000
60-89 Days Past Due	9,667,000	3,859,000
90 Days Past Due and Greater	14,966,000	23,370,000
Total Past Due	41,016,000	38,910,000
Total loans receivable	1,528,797,000	1,436,668,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	220,000	692,000
Transfer of loans to foreclosed assets	2,778,000	5,336,000	3,372,000
Loan receivables, transitioned from current to past-due	19,111,000	13,505,000
Reserve for loan receivables	7,120,000	3,630,000
Number of impaired loans	7	4
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	368,769,000	317,016,000
30-59 Days Past Due	1,096,000	696,000
60-89 Days Past Due	3,256,000	1,083,000
90 Days Past Due and Greater	3,867,000	3,193,000
Total Past Due	8,219,000	4,972,000
Total loans receivable	376,988,000	321,988,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	30,000	0
Loan receivables, transitioned from current to past-due	5,656,000	1,000,000
Reserve for loan receivables	2,399,000	1,000,000
Commercial tax-exempt [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	92,202,000	81,532,000
30-59 Days Past Due	0	0
60-89 Days Past Due	0	0
90 Days Past Due and Greater	0	0
Total Past Due	0	0
Total loans receivable	92,202,000	81,532,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	0	0
Reserve for loan receivables	0	0
Owner occupied real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	265,817,000	274,720,000
30-59 Days Past Due	610,000	2,423,000
60-89 Days Past Due	353,000	328,000
90 Days Past Due and Greater	1,592,000	1,901,000
Total Past Due	2,555,000	4,652,000
Total loans receivable	268,372,000	279,372,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	0	0
Loan receivables, transitioned from current to past-due	1,451,000	492,000
Reserve for loan receivables	1,451,000	30,000
Commercial construction and land development [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	89,250,000	94,160,000
30-59 Days Past Due	4,251,000	470,000
60-89 Days Past Due	4,318,000	219,000
90 Days Past Due and Greater	2,580,000	8,304,000
Total Past Due	11,149,000	8,993,000
Total loans receivable	100,399,000	103,153,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	188,000	0
Loan receivables, transitioned from current to past-due	7,833,000	12,013,000
Reserve for loan receivables	2,470,000	2,600,000
Commercial real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	386,821,000	354,818,000
30-59 Days Past Due	3,846,000	2,191,000
60-89 Days Past Due	78,000	1,272,000
90 Days Past Due and Greater	3,659,000	6,124,000
Total Past Due	7,583,000	9,587,000
Total loans receivable	394,404,000	364,405,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	0	0
Loan receivables, transitioned from current to past-due	4,171,000	0
Reserve for loan receivables	800,000	0
Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	76,587,000	75,841,000
30-59 Days Past Due	4,303,000	4,587,000
60-89 Days Past Due	1,252,000	607,000
90 Days Past Due and Greater	1,757,000	2,905,000
Total Past Due	7,312,000	8,099,000
Total loans receivable	83,899,000	83,940,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	0	621,000
Reserve for loan receivables	0	0
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	208,335,000	199,671,000
30-59 Days Past Due	2,277,000	1,314,000
60-89 Days Past Due	410,000	350,000
90 Days Past Due and Greater	1,511,000	943,000
Total Past Due	4,198,000	2,607,000
Total loans receivable	212,533,000	202,278,000
Recorded Investment in Loans 90 Days and Greater and Still Accruing	2,000	71,000
Reserve for loan receivables	0	0
Improvement to Current Status [Member]
Financing Receivable, Recorded Investment [Line Items]
Current	18,900,000
Current at Previous Fiscal Year End [Member]
Financing Receivable, Recorded Investment [Line Items]
30-59 Days Past Due	13,400,000
60-89 Days Past Due	9,100,000
90 Days Past Due and Greater	6,100,000
Total Past Due	28,600,000
Number of impaired loans	3
Current at Previous Fiscal Year End [Member] | Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loan receivables, transitioned from current to past-due	2,500,000
Reserve for loan receivables	1,000,000
Current at Previous Fiscal Year End [Member] | Commercial construction and land development [Member]
Financing Receivable, Recorded Investment [Line Items]
Reserve for loan receivables	300,000
Charged Off [Member]
Financing Receivable, Recorded Investment [Line Items]
Write-off of financing receivable	4,400,000
Transition to Foreclosed Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Transfer of loans to foreclosed assets	2,700,000
Charged off or Transferred to Foreclosed Assets [Member] | Owner occupied real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Write-off of financing receivable	1,300,000
Charged off or Transferred to Foreclosed Assets [Member] | Commercial real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Write-off of financing receivable	$ 1,700,000

XML

Long-term Debt (Future Maturities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Debt Disclosure [Abstract]
2013-2017	$ 25,000
Thereafter	15,800
Total	$ 40,800	$ 49,200

XML

Stock Option Plans (Exercise Prices) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock options outstanding, exercise price range, lower range limit	$ 8.46	$ 8.46	$ 11.55
Stock options outstanding, exercise price range, upper range limit	$ 33.50	$ 33.5	$ 33.5
Stock Options [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Options Outstanding	1,273,731.000
Options Outstanding, Weighted Average Exercise Price	$ 19.21
Weighted Avg. Remaining Contractual Life	5 years 7 months 6 days
Options Exercisable	789,129.000
Options Exercisable, Weighted Average Exercise Price	$ 23.58
Stock Options [Member] | Exercise Price Range $8.46 to $16.41 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock options outstanding, exercise price range, lower range limit	$ 8.46
Stock options outstanding, exercise price range, upper range limit	$ 16.41
Options Outstanding	704,241
Options Outstanding, Weighted Average Exercise Price	$ 12.68
Weighted Avg. Remaining Contractual Life	7 years 10 months 24 days
Options Exercisable	220,016
Options Exercisable, Weighted Average Exercise Price	$ 13.99
Stock Options [Member] | Exercise Price Range $16.42 to $25.38 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock options outstanding, exercise price range, lower range limit	$ 16.42
Stock options outstanding, exercise price range, upper range limit	$ 25.38
Options Outstanding	170,835
Options Outstanding, Weighted Average Exercise Price	$ 21.86
Weighted Avg. Remaining Contractual Life	8 months 12 days
Options Exercisable	170,458
Options Exercisable, Weighted Average Exercise Price	$ 21.86
Stock Options [Member] | Exercise Price Range $25.39 to $33.50 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock options outstanding, exercise price range, lower range limit	$ 25.39
Stock options outstanding, exercise price range, upper range limit	$ 33.50
Options Outstanding	398,655
Options Outstanding, Weighted Average Exercise Price	$ 29.61
Weighted Avg. Remaining Contractual Life	3 years 9 months 18 days
Options Exercisable	398,655
Options Exercisable, Weighted Average Exercise Price	$ 29.61

XML

Stockholders' Equity Stockholders' Equity (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Aug. 06, 2009
Class of Stock [Line Items]
Preferred stock, shares outstanding	40,000	40,000
Preferred stock, par value (in dollars per share)	$ 10	$ 10
Common stock, shares issued in connection with dividend reinvestment and stock purchase plan	5,877	376,862	288,349
Public Offering, Maximum Amount Authorized				$ 250,000,000.0
Preferred stock, shares issued	40,000	40,000
Series A Preferred Stock [Member]
Class of Stock [Line Items]
Preferred stock, shares outstanding	40,000	40,000
Preferred stock, par value (in dollars per share)	$ 10	$ 10
Preferred Stock, Redemption Price Per Share	$ 25
Dividends Payable, Amount Per Share	$ 2
Preferred stock, shares issued	40,000	40,000
Dividend Reinvestment and Stock Purchase Plan [Member]
Class of Stock [Line Items]
Increase (Decrease) in Shares Authorized for Dividend Reinvestment Plan		500,000
Common stock, shares issued in connection with dividend reinvestment and stock purchase plan	5,917.000	376,962	288,559
Dividend Reinvestment Plan, Shares Authorized	516,000
Dividend Reinvestment and Stock Purchase Plan [Member] | Minimum [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, Dividend Reinvestment Plan, Monthly Limitations	100
Dividend Reinvestment and Stock Purchase Plan [Member] | Maximum [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, Dividend Reinvestment Plan, Monthly Limitations	10,000	25,000
Dividend Reinvestment and Stock Purchase Plan [Member] | Employees [Member] | Minimum [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, Dividend Reinvestment Plan, Monthly Limitations		25
Dividend Reinvestment and Stock Purchase Plan [Member] | Officers [Member] | Minimum [Member]
Class of Stock [Line Items]
Stock Issued During Period, Value, Dividend Reinvestment Plan, Monthly Limitations		$ 50

XML

Stock Option Plans (Nonvested Options) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Nonvested options, Granted	241,575	242,300	192,900
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Number of Shares [Roll Forward]
Nonvested options, Number of Shares, beginning balance	405,809
Nonvested options, Granted	241,575
Nonvested options, Vested	(149,200)
Nonvested options, Forfeited	(13,582)
Nonvested options, Number of Shares, ending balance	484,602.000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Nonvested options, Weighted Average Grant Date Fair Value, beginning balance		6.84
Nonvested options, Granted, Weighted Average Grant Date Fair Value	5.99	6.42	6.47
Nonvested options, Vested, Weighted Average Grant Date Fair Value	7.49
Nonvested options, Forfeited, Weighted Average Grant Date Fair Value	6.10
Nonvested options, Weighted Average Grant Date Fair Value, ending balance	6.24

XML

Income Taxes (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Loss Carryforwards [Line Items]
Federal statutory income tax rate	35.00%	34.00%	34.00%
Net deferred tax asset	$ 3,025,000	$ 4,908,000
Tax expense recognized on net securities gains	368,000	119,000
Recognized on Net Securities Gains [Member]
Operating Loss Carryforwards [Line Items]
Tax expense recognized on net securities gains	368,000	119,000	952,000
Exercise of Non-qualified Stock Options and Disqualified Dispositions of Employee Stock from Options Exercised [Member]
Operating Loss Carryforwards [Line Items]
Tax benefit related to exercise of stock options	$ 0	$ 0	25,000

XML

Premises, Equipment and Leases (Future Minimum Lease Payments) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Leases [Abstract]
Rent expense, operating leases	$ 2,900,000	$ 3,100,000	$ 3,000,000
2013	2,504,000
2014	2,341,000
2015	2,262,000
2016	2,126,000
2017	1,958,000
Thereafter	17,000,000
Total minimum lease payments	$ 28,191,000

XML

Employee Benefit Plan

12 Months Ended

Dec. 31, 2012

Postemployment Benefits [Abstract]

Employee Benefit Plan

Employee Benefit Plan

The Company has established a 401(k) Retirement Savings Plan for all of its employees who meet eligibility requirements. Employees may contribute up to 15% of their salary to the Plan. The Company currently provides a Safe Harbor matching contribution of 100% of the amount of the employee contribution up to 3% of the employee's salary and 50% of the amount of the employee contribution that exceeds 3% of the employee's salary for up to 5% of the employee's salary. In 2010, the Company's matching contribution was discretionary, not a Safe Harbor matching contribution and was set at 50% of the employee's salary deferral up to a maximum of 6% of the employee's salary. The amount charged to expense for employer matching contributions and administrative fees was $785,000, $703,000 and $490,000 in 2012, 2011 and 2010, respectively.

XML

Securities (Amortized cost and fair value of debt securities by contractrual maturity) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Available-for-sale Securities
Securities available for sale, amortized cost	$ 664,139	$ 607,680
Available-for-sale securities, fair value	675,109
Held-to-maturity Securities
Securities held to maturity, amortized cost	269,783	196,635
Securities held to maturity, fair value	273,671
Debt Securities [Member]
Held-to-maturity Securities
Due in one year or less, amortized cost	10,000
Due after one year through five years, amortized cost	5,000
Due after five years through ten years, amortized cost	60,000
Due after ten years, amortized cost	121,905
Securities held to maturity, amortized cost	196,905
Due in one year or less, fair value	10,002
Due after one year through five years, fair value	5,011
Due after five years through ten years, fair value	60,001
Due after ten years, amortized cost	122,303
Securities held to maturity, fair value	197,317
Residential mortgage-backed securities [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	23,827	37,658
Securities held to maturity, fair value	25,716
Agency CMOs [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	49,051	45,122
Securities held to maturity, fair value	50,638
Debt Securities [Member]
Available-for-sale Securities
Due in one year or less, amortized cost	0
Due after one year through five years, amortized cost	0
Due after five years through ten years, amortized cost	19,367
Due after ten years, amortized cost	41,517
Securities available for sale, amortized cost	60,884
Due in one year or less, fair value	0
Due after one year through five years, fair value	0
Due after five years through ten years, fair value	19,510
Due after ten years, fair value	41,522
Available-for-sale securities, fair value	61,032
Residential mortgage-backed securities [Member]
Available-for-sale Securities
Securities available for sale, amortized cost	55,614	21,087
Available-for-sale securities, fair value	57,210
Agency CMOs [Member]
Available-for-sale Securities
Securities available for sale, amortized cost	547,641	519,167
Available-for-sale securities, fair value	556,867
Private-label CMOs [Member]
Available-for-sale Securities
Securities available for sale, amortized cost		$ 24,974

XML

Regulatory Matters Regulatory Matters (Tables)

12 Months Ended

Dec. 31, 2012

Regulatory Matters [Abstract]

Schedule of Compliance with Regulatory Capital Requirements Under Banking Regulations

The following table presents the risk-based and leverage capital amounts and ratios at December 31, 2012 and 2011 for the Company and the Bank:

	Actual					For Capital  Adequacy Purposes						To Be Well-Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio			Amount			Ratio			Amount			Ratio
Company as of December 31, 2012
Risk-based capital ratios:
Total capital	$	264,944	15.22	%	≥	$	139,227	≥	8.0	%	≥	N/A		≥	N/A
Tier 1 capital	243,147		13.97		≥	69,614		≥	4.0		≥	N/A		≥	N/A
Leverage ratio	243,147		9.61		≥	101,172		≥	4.0		≥	N/A		≥	N/A
Bank as of December 31, 2012
Risk-based capital ratios:
Total capital	$	253,852	14.59	%	≥	$	139,160	≥	8.0	%	≥	$	173,950	≥	10.0	%
Tier 1 capital	232,065		13.34		≥	69,580		≥	4.0		≥	104,370		≥	6.0
Leverage ratio	232,065		9.18		≥	101,167		≥	4.0		≥	126,459		≥	5.0
Company as of December 31, 2011
Risk-based capital ratios:
Total capital	$	260,405	15.36	%	≥	$	135,637	≥	8.0	%	≥	N/A		≥	N/A
Tier 1 capital	239,206		14.11		≥	67,818		≥	4.0		≥	N/A		≥	N/A
Leverage ratio	239,206		9.99		≥	95,797		≥	4.0		≥	N/A		≥	N/A
Bank as of December 31, 2011
Risk-based capital ratios:
Total capital	$	238,919	14.12	%	≥	$	135,358	≥	8.0	%	≥	$	169,197	≥	10.0	%
Tier 1 capital	217,764		12.87		≥	67,679		≥	4.0		≥	101,518		≥	6.0
Leverage ratio	217,764		9.10		≥	95,747		≥	4.0		≥	119,684		≥	5.0

XML

Long-term Debt (Narrative) (Details) (USD $)	12 Months Ended						3 Months Ended		3 Months Ended		12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2012 Federal Home Loan Bank Advances [Member]	Mar. 18, 2011 Federal Home Loan Bank Advances [Member]	Dec. 31, 2012 Ownership Interest in Nonbank Subsidiary Trusts [Member]	Dec. 31, 2011 Wholly-owned subsidiary, Trust I [Member] Commerce Bancorp LLC [Member] Trust Capital Securities [Member]	Jun. 15, 2000 Wholly-owned subsidiary, Trust I [Member] Commerce Bancorp LLC [Member] Trust Capital Securities [Member]	Dec. 31, 2012 Wholly-owned subsidiary, Trust II [Member] Commerce Bancorp LLC [Member] Trust Capital Securities [Member]	Sep. 28, 2001 Wholly-owned subsidiary, Trust II [Member] Commerce Bancorp LLC [Member] Trust Capital Securities [Member]	Dec. 31, 2012 Wholly-owned subsidiary, Trust III [Member] TD Bank [Member] Trust Capital Securities [Member]	Sep. 29, 2006 Wholly-owned subsidiary, Trust III [Member] TD Bank [Member] Trust Capital Securities [Member]
Debt Instrument [Line Items]
Face amount of long-term debt					$ 25,000,000.0			$ 5,000,000.0		$ 8,000,000.0		$ 15,000,000.0
Debt instrument, term to maturity				2 years
Fixed percentage rate					1.01%			11.00%		10.00%		7.75%
Long-term debt	40,800,000	49,200,000		25,000,000.0
Loans pledged as collateral on long-term debt				42,200,000
Debt repurchased and retired							5,000,000.0		8,000,000.0
Debt prepayment charge	140,000	75,000	1,574,000				75,000		140,000
Debt redemption price (percent)									100.00%		100.00%
Debt qualified as Tier 1 capital											15,000,000.0
Other Long-term Debt						$ 800,000

XML

Condensed Financial Statements of Parent Company (Balance Sheets) (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Condensed Financial Statements, Captions [Line Items]
Other assets	$ 20,465,000	$ 32,729,000
Total assets	2,634,875,000	2,421,219,000
Long-term debt	40,800,000	49,200,000
Other liabilities	14,172,000	15,425,000
Total liabilities	2,399,488,000	2,201,199,000
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)	400,000	400,000
Common stock - $1.00 par value; 25,000,000 shares authorized; (issued and outstanding shares 2012: 14,131,263; 2011: 14,125,346)	14,131,000	14,125,000
Surplus	157,305,000	156,184,000
Retained earnings	56,311,000	45,497,000
Accumulated other comprehensive income	7,240,000	3,814,000
Total stockholders' equity	235,387,000	220,020,000	205,351,000	200,022,000
Total liabilities and stockholders' equity	2,634,875,000	2,421,219,000
Metro Bancorp, Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Cash	11,765,000	19,641,000
Other assets	54,000	2,321,000
Total assets	251,924,000	244,740,000
Long-term debt	15,800,000	24,200,000
Other liabilities	737,000	520,000
Total liabilities	16,537,000	24,720,000
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)	400,000	400,000
Common stock - $1.00 par value; 25,000,000 shares authorized; (issued and outstanding shares 2012: 14,131,263; 2011: 14,125,346)	14,131,000	14,125,000
Surplus	157,305,000	156,184,000
Retained earnings	56,311,000	45,497,000
Accumulated other comprehensive income	7,240,000	3,814,000
Total stockholders' equity	235,387,000	220,020,000
Total liabilities and stockholders' equity	251,924,000	244,740,000
Metro Bancorp, Inc. [Member] | Banking Subsidiary [Member]
Condensed Financial Statements, Captions [Line Items]
Investments in subsidiaries	239,305,000	221,578,000
Metro Bancorp, Inc. [Member] | Non-banking Subsidiaries [Member]
Condensed Financial Statements, Captions [Line Items]
Investments in subsidiaries	$ 800,000	$ 1,200,000

XML

Deposits (Tables)

12 Months Ended

Dec. 31, 2012

Deposits [Abstract]

Deposit Liabilities

The composition of the Bank's deposits at December 31, 2012 and 2011 is as follows:

	December 31,
(in thousands)	2012		2011
Noninterest-bearing demand	$	455,000	$	397,251
Interest checking and money market	1,133,765		1,038,760
Savings	444,976		406,896
Time certificates of $100,000 or more	103,980		105,751
Other time certificates	93,570		122,916
Total	$	2,231,291	$	2,071,574

Scheduled Maturities of Time Deposits

At December 31, 2012, the scheduled maturities of time deposits are as follows:

(in thousands)
2013	$	146,014
2014	31,681
2015	12,302
2016	3,735
2017	3,818
Thereafter	—
Total	$	197,550

XML

Securities (Fair value and gross unrealized losses) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Available-for-sale Securities
Less than 12 months, fair value	$ 78,022	$ 74,130
Less than 12 months, unrealized (losses)	(997)	(2,075)
12 months or more, fair value	0	16,989
12 months or more, unrealized (losses)	0	(1,700)
Total, fair value	78,022	91,119
Total, unrealized (losses)	(997)	(3,775)
Held-to-maturity Securities
Less than 12 months, fair value	57,572	15,828
Less than 12 months, unrealized (losses)	(363)	(485)
12 months or more, fair value	0	0
12 months or more, unrealized (losses)	0	0
Total, fair value	57,572	15,828
Total, unrealized (losses)	(363)	(485)
U.S. Government agency securities [Member]
Available-for-sale Securities
Less than 12 months, fair value	24,748
Less than 12 months, unrealized (losses)	(252)
12 months or more, fair value	0
12 months or more, unrealized (losses)	0
Total, fair value	24,748
Total, unrealized (losses)	(252)
Held-to-maturity Securities
Less than 12 months, fair value	57,572
Less than 12 months, unrealized (losses)	(363)
12 months or more, fair value	0
12 months or more, unrealized (losses)	0
Total, fair value	57,572
Total, unrealized (losses)	(363)
Agency CMOs [Member]
Held-to-maturity Securities
Less than 12 months, fair value		1,312
Less than 12 months, unrealized (losses)		(1)
12 months or more, fair value		0
12 months or more, unrealized (losses)		0
Total, fair value		1,312
Total, unrealized (losses)		(1)
Corporate debt securities [Member]
Held-to-maturity Securities
Less than 12 months, fair value		14,516
Less than 12 months, unrealized (losses)		(484)
12 months or more, fair value		0
12 months or more, unrealized (losses)		0
Total, fair value		14,516
Total, unrealized (losses)		(484)
Agency CMOs [Member]
Available-for-sale Securities
Less than 12 months, fair value	53,274	49,793
Less than 12 months, unrealized (losses)	(745)	(175)
12 months or more, fair value	0	0
12 months or more, unrealized (losses)	0	0
Total, fair value	53,274	49,793
Total, unrealized (losses)	(745)	(175)
Private-label CMOs [Member]
Available-for-sale Securities
Less than 12 months, fair value		6,017
Less than 12 months, unrealized (losses)		(268)
12 months or more, fair value		16,989
12 months or more, unrealized (losses)		(1,700)
Total, fair value		23,006
Total, unrealized (losses)		(1,968)
Corporate debt securities [Member]
Available-for-sale Securities
Less than 12 months, fair value		18,320
Less than 12 months, unrealized (losses)		(1,632)
12 months or more, fair value		0
12 months or more, unrealized (losses)		0
Total, fair value		18,320
Total, unrealized (losses)		$ (1,632)

XML

Loan Commitments and Standby Letters of Credit (Details) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Guarantor Obligations [Line Items]
Maximum exposure to credit loss for loan commitments	$ 446,538,000	$ 403,566,000
Commercial Loans [Member]
Guarantor Obligations [Line Items]
Maximum exposure to credit loss for loan commitments	308,721,000	269,180,000
Consumer and Residential Loans [Member]
Guarantor Obligations [Line Items]
Maximum exposure to credit loss for loan commitments	98,903,000	86,273,000
Standby Letters of Credit [Member]
Guarantor Obligations [Line Items]
Liability related to guarantees under standby letters of credit	48,000	0
Maximum exposure to credit loss for loan commitments	34,052,000	36,455,000
Commitments to Grant Loans [Member]
Guarantor Obligations [Line Items]
Maximum exposure to credit loss for loan commitments	$ 4,862,000	$ 11,658,000

XML

Loans Receivable and Allowance for Loan Losses (Schedule of Impaired Loan Receivables) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012 Impaired_Loans	Dec. 31, 2011 Impaired_Loans
Loans With No Related Allowance:
Recorded Investment	$ 37,530,000	$ 49,999,000
Unpaid Principal Balance	45,136,000	66,560,000
Loans With An Allowance Recorded:
Recorded Investment	19,111,000	13,505,000
Unpaid Principal Balance	19,982,000	13,672,000
Total Impaired Loans:
Recorded Investment	56,641,000	63,504,000
Unpaid Principal Balance	65,118,000	80,232,000
Related Allowance	7,120,000	3,630,000
Decrease in impaired financing receivable with related allowance recorded investment	(6,900,000)
Bank loans receivable, Gross	1,528,797,000	1,436,668,000
Number of impaired loans	7	4
Commercial and industrial [Member]
Loans With No Related Allowance:
Recorded Investment	7,426,000	14,504,000
Unpaid Principal Balance	11,746,000	19,672,000
Loans With An Allowance Recorded:
Recorded Investment	5,656,000	1,000,000
Unpaid Principal Balance	6,526,000	1,000,000
Total Impaired Loans:
Recorded Investment	13,082,000	15,504,000
Unpaid Principal Balance	18,272,000	20,672,000
Related Allowance	2,399,000	1,000,000
Bank loans receivable, Gross	376,988,000	321,988,000
Commercial tax-exempt [Member]
Loans With No Related Allowance:
Recorded Investment	0	0
Unpaid Principal Balance	0	0
Total Impaired Loans:
Recorded Investment		0
Unpaid Principal Balance	0	0
Related Allowance	0	0
Bank loans receivable, Gross	92,202,000	81,532,000
Owner occupied real estate [Member]
Loans With No Related Allowance:
Recorded Investment	1,929,000	7,000,000
Unpaid Principal Balance	2,301,000	8,845,000
Loans With An Allowance Recorded:
Recorded Investment	1,451,000	492,000
Unpaid Principal Balance	1,451,000	659,000
Total Impaired Loans:
Recorded Investment		7,492,000
Unpaid Principal Balance	3,752,000	9,504,000
Related Allowance	1,451,000	30,000
Bank loans receivable, Gross	268,372,000	279,372,000
Commercial construction and land development [Member]
Loans With No Related Allowance:
Recorded Investment	7,716,000	11,203,000
Unpaid Principal Balance	8,500,000	19,756,000
Loans With An Allowance Recorded:
Recorded Investment	7,833,000	12,013,000
Unpaid Principal Balance	7,833,000	12,013,000
Total Impaired Loans:
Recorded Investment		23,216,000
Unpaid Principal Balance	16,333,000	31,769,000
Related Allowance	2,470,000	2,600,000
Bank loans receivable, Gross	100,399,000	103,153,000
Commercial real estate [Member]
Loans With No Related Allowance:
Recorded Investment	12,965,000	12,117,000
Unpaid Principal Balance	14,619,000	12,390,000
Loans With An Allowance Recorded:
Recorded Investment	4,171,000	0
Unpaid Principal Balance	4,172,000	0
Total Impaired Loans:
Recorded Investment		12,117,000
Unpaid Principal Balance	18,791,000	12,390,000
Related Allowance	800,000	0
Bank loans receivable, Gross	394,404,000	364,405,000
Residential [Member]
Loans With No Related Allowance:
Recorded Investment	4,163,000	3,346,000
Unpaid Principal Balance	4,423,000	3,729,000
Total Impaired Loans:
Recorded Investment		3,346,000
Unpaid Principal Balance	4,423,000	3,729,000
Related Allowance	0	0
Bank loans receivable, Gross	83,899,000	83,940,000
Consumer [Member]
Loans With No Related Allowance:
Recorded Investment	3,331,000	1,829,000
Unpaid Principal Balance	3,547,000	2,168,000
Total Impaired Loans:
Recorded Investment		1,829,000
Unpaid Principal Balance	3,547,000	2,168,000
Related Allowance	0	0
Bank loans receivable, Gross	212,533,000	202,278,000
Consumer [Member]
Total Impaired Loans:
Recorded Investment	3,331,000
Bank loans receivable, Gross	212,533,000	202,278,000
Residential [Member]
Total Impaired Loans:
Recorded Investment	4,163,000
Bank loans receivable, Gross	83,899,000	83,940,000
Commercial real estate [Member]
Total Impaired Loans:
Recorded Investment	17,136,000
Bank loans receivable, Gross	394,404,000	364,405,000
Commercial construction and land development [Member]
Total Impaired Loans:
Recorded Investment	15,549,000
Bank loans receivable, Gross	100,399,000	103,153,000
Owner occupied real estate [Member]
Total Impaired Loans:
Recorded Investment	3,380,000
Bank loans receivable, Gross	268,372,000	279,372,000
Commercial tax-exempt [Member]
Total Impaired Loans:
Recorded Investment	0
Bank loans receivable, Gross	92,202,000	81,532,000
Charged off or Transferred to Foreclosed Assets [Member]
Total Impaired Loans:
Decrease in impaired financing receivable with related allowance recorded investment	(7,500,000)
No Transition From Prior Year [Member]
Loans With An Allowance Recorded:
Recorded Investment	22,800,000
Remained Impaired and Incurred a Specific Reserve During the Period [Member]
Loans With An Allowance Recorded:
Recorded Investment	4,300,000
Downgraded as Impaired During the Period [Member]
Total Impaired Loans:
Recorded Investment	18,800,000
Related Allowance	6,700,000
Subsequently Collected [Member]
Total Impaired Loans:
Recorded Investment		9,200,000
Upgraded as No Longer Impaired During the Period [Member]
Total Impaired Loans:
Bank loans receivable, Gross	7,300,000
Recategorized From Commercial Construction and Land Development to Commercial Real Estate [Member]
Total Impaired Loans:
Recorded Investment	$ 7,700,000
Number of impaired loans	1

XML

Summary of Significant Accounting Policies (Expenses Associated with Foreclosed Assets) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Real Estate Properties [Line Items]
Net (gain) loss on sales of real estate	$ 649	$ (116)	$ (51)
Total foreclosed real estate expense	1,335	2,275	1,380
Foreclosed [Member]
Real Estate Properties [Line Items]
Real Estate Operating Income (Expense), Net	429	331	571
Loss on write-down on foreclosed real estate	257	2,060	860
Net (gain) loss on sales of real estate	649	(116)	(51)
Total foreclosed real estate expense	$ 1,335	$ 2,275	$ 1,380

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Operating Activities
Net income (loss)	$ 10,894	$ 289	$ (4,337)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses	10,100	20,592	21,000
Provision for depreciation and amortization	5,824	6,476	6,142
Deferred income tax (benefit) expense	118	(1,511)	(4,772)
Amortization of securities premiums and accretion of discounts (net)	1,635	2,506	122
Net gains on sales of available for sales securities	(629)	(343)	(2,762)
Gains on sales/calls of held to maturity securities	(422)	(7)	(39)
Other-than-temporary impairment losses on investment securities	649	324	962
Proceeds from sales and transfers of SBA loans originated for sale	0	12,063	30,573
Proceeds from sales of other loans originated for sale	70,448	52,492	65,892
Loans originated for sale	(75,052)	(52,581)	(98,994)
Gains on sales of loans originated for sale	(1,220)	(2,728)	(2,434)
Loss on write-down on foreclosed real estate	257	2,060	860
(Gains) losses on sales of foreclosed real estate (net)	649	(116)	(51)
(Gains) losses on disposal of furniture and equipment (net)	(45)	1,254	89
Stock-based compensation	1,082	1,250	1,244
Amortization of deferred loan origination fees and costs (net)	2,647	2,069	1,928
Debt prepayment charge	140	75	1,574
Decrease (increase) in other assets	5,782	15,437	(6,856)
Decrease in other liabilities	(1,253)	(11,679)	(1,392)
Net cash provided by operating activities	31,604	47,922	8,749
Securities available for sale:
Proceeds from principal repayments, calls and maturities	161,013	79,695	153,786
Proceeds from sales	299,338	125,299	292,899
Purchases	(518,375)	(368,537)	(485,985)
Securities held to maturity:
Proceeds from principal repayments, calls and maturities	146,503	87,074	64,481
Proceeds from sales	6,101	852	3,327
Purchases	(225,420)	(57,059)	(177,535)
Proceeds from sales of foreclosed real estate	6,472	2,930	3,513
(Increase) decrease in loans receivable (net)	(103,992)	(85,458)	45,505
Redemption of restricted investments in bank stock (net)	1,352	3,812	1,016
Proceeds from sale of premises and equipment	931	2	25
Purchases of premises and equipment	(3,384)	(1,684)	(638)
Net cash used by investing activities	(229,461)	(213,074)	(99,606)
Financing Activities
Increase in demand, interest checking, money market, and savings deposits (net)	190,834	281,381	17,505
Decrease in time deposits (net)	(31,117)	(41,986)	(59)
Increase (decrease) in short-term borrowings (net)	48,225	(75,475)	89,400
Repayment of long-term borrowings	(8,540)	(5,275)	(26,574)
Proceeds from long-term borrowings	0	25,000	0
Proceeds from common stock options exercised	0	0	78
Proceeds from dividend reinvestment and common stock purchase plan	44	3,802	3,156
Tax benefit on exercise of stock options	0	0	25
Cash dividends on preferred stock	(80)	(80)	(80)
Net cash provided by financing activities	199,366	187,367	83,451
Increase (decrease) in cash and cash equivalents	1,509	22,215	(7,406)
Cash and cash equivalents at beginning of year	55,073	32,858	40,264
Cash and cash equivalents at year-end	56,582	55,073	32,858
Supplementary cash flow information:
Transfer of loans to foreclosed assets	$ 2,778	$ 5,336	$ 3,372

XML

Loans Receivable and Allowance for Loan Losses (Schedule of Impaired Loan Receivables, Average) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Loans With No Related Allowance:
Average Recorded Investment	$ 44,699	$ 45,039
Interest Income Recognized	1,211	761
Loans With An Allowance Recorded:
Average Recorded Investment	18,859	13,064
Interest Income Recognized	0	0
Total Impaired Loans:
Average Recorded Investment	63,558	58,103	74,600
Interest Income Recognized	1,211	761	1,300
Commercial and industrial [Member]
Loans With No Related Allowance:
Average Recorded Investment	11,567	12,901
Interest Income Recognized	171	141
Loans With An Allowance Recorded:
Average Recorded Investment	5,258	7,974
Interest Income Recognized	0	0
Total Impaired Loans:
Average Recorded Investment	16,825	20,875
Interest Income Recognized	171	141
Commercial tax-exempt [Member]
Loans With No Related Allowance:
Average Recorded Investment	0	0
Interest Income Recognized	0	0
Total Impaired Loans:
Average Recorded Investment	0	0
Interest Income Recognized	0	0
Owner occupied real estate [Member]
Loans With No Related Allowance:
Average Recorded Investment	3,846	5,333
Interest Income Recognized	150	191
Loans With An Allowance Recorded:
Average Recorded Investment	1,571	453
Interest Income Recognized	0	0
Total Impaired Loans:
Average Recorded Investment	5,417	5,786
Interest Income Recognized	150	191
Commercial construction and land development [Member]
Loans With No Related Allowance:
Average Recorded Investment	10,319	11,803
Interest Income Recognized	510	231
Loans With An Allowance Recorded:
Average Recorded Investment	11,375	4,637
Interest Income Recognized	0	0
Total Impaired Loans:
Average Recorded Investment	21,694	16,440
Interest Income Recognized	510	231
Commercial real estate [Member]
Loans With No Related Allowance:
Average Recorded Investment	12,434	9,500
Interest Income Recognized	319	192
Loans With An Allowance Recorded:
Average Recorded Investment	655	0
Interest Income Recognized	0	0
Total Impaired Loans:
Average Recorded Investment	13,089	9,500
Interest Income Recognized	319	192
Residential [Member]
Loans With No Related Allowance:
Average Recorded Investment	3,994	3,557
Interest Income Recognized	43	6
Total Impaired Loans:
Average Recorded Investment	3,994	3,557
Interest Income Recognized	43	6
Consumer [Member]
Loans With No Related Allowance:
Average Recorded Investment	2,539	1,945
Interest Income Recognized	18	0
Total Impaired Loans:
Average Recorded Investment	2,539	1,945
Interest Income Recognized	$ 18	$ 0

XML

Fair Value Measurements (Tables)

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Financial Assets Measured at Fair Value on Recurring Basis

The following table sets forth the Company's financial assets that were measured at fair value on a recurring basis at December 31, 2012 and December 31, 2011, respectively, by level within the fair value hierarchy:

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2012
U.S. Government agency securities	$	33,761	$	—	$	33,761	$	—
Residential MBSs	57,210		—		57,210		—
Agency CMOs	556,867		—		556,867		—
Municipal securities	27,271		—		27,271		—
Securities available for sale	$	675,109	$	—	$	675,109	$	—

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2011
U.S. Government agency securities	$	22,558	$	—	$	22,558	$	—
Residential MBSs	21,412		—		21,412		—
Agency CMOs	528,163		—		528,163		—
Private-label CMOs	23,006		—		23,006		—
Corporate debt securities	18,320		—		18,320		—
Securities available for sale	$	613,459	$	—	$	613,459	$	—

Financial Assets Measured at Fair Value on Nonrecurring Basis

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used were as follows:

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2012
Impaired loans with specific allocation	$	11,991	$	—	$	—	$	11,991
Impaired loans net of partial charge-offs	4,227		—		—		4,227
Foreclosed assets	—		—		—		—
Total	$	16,218	$	—	$	—	$	16,218

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2011
Impaired loans with specific allocation	$	9,875	$	—	$	—	$	9,875
Impaired loans net of partial charge-offs	1,151		—		—		1,151
Foreclosed assets	3,041		—		—		3,041
Total	$	14,067	$	—	$	—	$	14,067

Estimated Fair Values of Financial Instruments

The estimated fair values of the Company's financial instruments were as follows at December 31, 2012 and 2011:

Fair Value Measurements at December 31, 2012
					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Carrying Amount		Fair  Value		(Level 1)		(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	56,582	$	56,582	$	56,582	$	—	$	—
Securities	944,892		948,780		—		948,780		—
Loans, held for sale	15,183		15,415		—		—		15,415
Loans receivable, net	1,503,515		1,516,839		—		—		1,516,839
Restricted investments in bank stock	15,450		15,450		—		—		15,450
Accrued interest receivable	7,206		7,206		7,206		—		—
Financial liabilities:
Deposits	$	2,231,291	$	2,232,789	$	—	$	—	$	2,232,789
Short-term borrowings	113,225		113,225		113,225		—		—
Long-term debt	40,800		35,629		—		—		35,629
Accrued interest payable	308		308		308		—		—
Off-balance sheet instruments:
Standby letters of credit	$	—	$	—	$	—	$	—	$	—
Commitments to extend credit	—		—		—		—		—

Fair Value Measurements at December 31, 2011
(in thousands)	Carrying Amount		Fair  Value
Financial assets:
Cash and cash equivalents	$	55,073	$	55,073
Securities	810,094		813,316
Loans, held for sale	9,359		9,474
Loans receivable, net	1,415,048		1,436,328
Restricted investments in bank stock	16,802		16,802
Accrued interest receivable	7,378		7,378
Financial liabilities:
Deposits	$	2,071,574	$	2,074,139
Short-term borrowings	65,000		65,000
Long-term debt	49,200		39,773
Accrued interest payable	487		487
Off-balance sheet instruments:
Standby letters of credit	$	—	$	—
Commitments to extend credit	—		—

XML

Quarterly Financial Data (unaudited)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Data (unaudited)

Quarterly Financial Data (unaudited)

The following represents summarized unaudited quarterly financial data of the Company which, in the opinion of management, reflects adjustments (comprising only normal recurring accruals) necessary for fair presentation, note that certain balances may not cross foot due to rounding:

	Three Months Ended
(in thousands, except per share amounts)	December 31		September 30			June 30		March 31
2012
Interest income	$	24,096	$	24,255		$	24,625	$	24,332
Interest expense	2,262		2,477			2,655		2,716
Net interest income	21,834		21,778			21,970		21,616
Provision for loan losses	2,150		2,500			2,950		2,500
Noninterest income	7,805		7,148			7,460		7,441
Net gains (loss) on sales of securities	92		(37		)	12		984
Noninterest expense	22,486		23,053			22,674		22,931
Provision for federal income taxes	1,547		1,381			1,044		942
Net income	3,456		1,992			2,762		2,684
Net income per share:
Basic	$	0.24	$	0.14		$	0.19	$	0.19
Diluted	0.24		0.14			0.19		0.19
2011
Interest income	$	24,726	$	24,415		$	24,659	$	23,895
Interest expense	3,336		3,640			3,842		3,878
Net interest income	21,390		20,775			20,817		20,017
Provision for loan losses	3,350		13,750			1,700		1,792
Noninterest income	7,062		7,278			8,156		7,956
Net gains on sales of securities	—		7			309		34
Noninterest expense	21,731		23,355			24,621		24,307
Provision (benefit) for federal income taxes	888		(3,334		)	660		342
Net income (loss)	2,483		(5,718		)	1,992		1,532
Net income (loss) per share:
Basic	$	0.18	$	(0.41	)	$	0.14	$	0.11
Diluted	0.18		(0.41		)	0.14		0.11

XML

Related Party Transactions

12 Months Ended

Dec. 31, 2012

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

The Company has engaged in certain transactions with entities which are considered related parties. Payments for goods and services, including legal services, to these related parties totaled $907,000, $841,000 and $699,000 in 2012, 2011 and 2010, respectively. Management believes disbursements made to related parties were substantially equivalent to those that would have been paid to unaffiliated companies for similar goods and services.

XML

Loans Receivable and Allowance for Loan Losses Loans Receivable and Allowance for Loan Losses (Summary of Nonaccrual Loans, by Type) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	$ 32,416	$ 34,129
Period used to determine when a loan receivable is moved to nonaccrual status	90 days
Loans receivable, equal to greater than 90 days past due	14,966	23,370
Commercial and industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	11,289	10,162
Loans receivable, equal to greater than 90 days past due	3,867	3,193
Commercial tax-exempt [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	0	0
Loans receivable, equal to greater than 90 days past due	0	0
Owner occupied real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	3,119	2,895
Loans receivable, equal to greater than 90 days past due	1,592	1,901
Commercial construction and land development [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	6,300	8,511
Loans receivable, equal to greater than 90 days past due	2,580	8,304
Commercial real estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	5,659	7,820
Loans receivable, equal to greater than 90 days past due	3,659	6,124
Residential [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	3,203	2,912
Loans receivable, equal to greater than 90 days past due	1,757	2,905
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Nonaccrual loans	2,846	1,829
Loans receivable, equal to greater than 90 days past due	$ 1,511	$ 943

XML

Quarterly Financial Data (unaudited) (Tables)

12 Months Ended

Dec. 31, 2012

Quarterly Financial Information Disclosure [Abstract]

Schedule of Quarterly Financial Information [Table Text Block]

The following represents summarized unaudited quarterly financial data of the Company which, in the opinion of management, reflects adjustments (comprising only normal recurring accruals) necessary for fair presentation, note that certain balances may not cross foot due to rounding:

	Three Months Ended
(in thousands, except per share amounts)	December 31		September 30			June 30		March 31
2012
Interest income	$	24,096	$	24,255		$	24,625	$	24,332
Interest expense	2,262		2,477			2,655		2,716
Net interest income	21,834		21,778			21,970		21,616
Provision for loan losses	2,150		2,500			2,950		2,500
Noninterest income	7,805		7,148			7,460		7,441
Net gains (loss) on sales of securities	92		(37		)	12		984
Noninterest expense	22,486		23,053			22,674		22,931
Provision for federal income taxes	1,547		1,381			1,044		942
Net income	3,456		1,992			2,762		2,684
Net income per share:
Basic	$	0.24	$	0.14		$	0.19	$	0.19
Diluted	0.24		0.14			0.19		0.19
2011
Interest income	$	24,726	$	24,415		$	24,659	$	23,895
Interest expense	3,336		3,640			3,842		3,878
Net interest income	21,390		20,775			20,817		20,017
Provision for loan losses	3,350		13,750			1,700		1,792
Noninterest income	7,062		7,278			8,156		7,956
Net gains on sales of securities	—		7			309		34
Noninterest expense	21,731		23,355			24,621		24,307
Provision (benefit) for federal income taxes	888		(3,334		)	660		342
Net income (loss)	2,483		(5,718		)	1,992		1,532
Net income (loss) per share:
Basic	$	0.18	$	(0.41	)	$	0.14	$	0.11
Diluted	0.18		(0.41		)	0.14		0.11

XML

Condensed Financial Statements of Parent Company

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Statements of Parent Company

Condensed Financial Statements of Parent Company

Balance Sheets

	December 31,
(in thousands)	2012		2011
Assets
Cash	$	11,765	$	19,641
Investment in subsidiaries:
Banking subsidiary	239,305		221,578
Nonbanking subsidiaries	800		1,200
Other assets	54		2,321
Total assets	$	251,924	$	244,740
Liabilities
Long-term debt	$	15,800	$	24,200
Other liabilities	737		520
Total liabilities	16,537		24,720
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: 14,131,263;  2011: 14,125,346)	14,131		14,125
Surplus	157,305		156,184
Retained earnings	56,311		45,497
Accumulated other comprehensive income	7,240		3,814
Total stockholders' equity	235,387		220,020
Total liabilities and stockholders' equity	$	251,924	$	244,740

Statements of Operations

	Years Ended December 31,
(in thousands)	2012			2011			2010
Income
Dividends from bank subsidiary	$	—		$	—		$	—
Interest income	95			122			124
Debt prepayment charge	(140		)	(75		)	—
	(45		)	47			124
Expenses
Interest expense	1,949			2,611			2,645
Other	1,441			2,293			1,149
	3,390			4,904			3,794
Loss before income tax benefit and equity in undistributed net income of subsidiaries	(3,435		)	(4,857		)	(3,670		)
Income tax benefit	1,168			1,651			1,248
	(2,267		)	(3,206		)	(2,422		)
Equity in undistributed net income (loss) of bank subsidiary	13,161			3,495			(1,915		)
Net income (loss)	$	10,894		$	289		$	(4,337	)

Statements of Cash Flows

	Years Ended December 31,
(in thousands)	2012			2011			2010
Operating Activities
Net income (loss)	$	10,894		$	289		$	(4,337	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Amortization of financing costs	29			8			8
Stock-based compensation	1,082			1,250			1,244
Debt prepayment charge	140			75			—
Increase (decrease) in other liabilities	217			(108		)	(4,742		)
Decrease in other assets	2,625			1,990			610
Equity in undistributed net (income) loss of bank subsidiary	(13,161		)	(3,495		)	1,915
Net cash provided by (used in) operating activities	1,826			9			(5,302		)
Investing Activities
Investment in bank subsidiary	(1,126		)	(5,052		)	(4,478		)
Net cash used by investing activities	(1,126		)	(5,052		)	(4,478		)
Financing Activities
Proceeds from common stock options exercised	—			—			78
Proceeds from issuance of common stock under stock purchase plan	44			3,802			3,156
Repayment of long-term debt	(8,540		)	(5,275		)	—
Cash dividends on preferred stock	(80		)	(80		)	(80		)
Net cash (used in) provided by financing activities	(8,576		)	(1,553		)	3,154
Decrease in cash and cash equivalents	(7,876		)	(6,596		)	(6,626		)
Cash and cash equivalents at beginning of the year	19,641			26,237			32,863
Cash and cash equivalents at end of year	$	11,765		$	19,641		$	26,237

XML

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Consolidated Financial Statements

The consolidated financial statements presented include the accounts of Metro Bancorp, Inc. and its wholly-owned subsidiary Metro Bank. All material intercompany transactions have been eliminated. Events occurring subsequent to the date of the balance sheet have been evaluated for potential recognition or disclosure in the consolidated financial statements.

Use of Estimates

Use of Estimates

The consolidated financial statements are prepared in conformity with generally accepted accounting principles (GAAP).  GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and require disclosure of contingent assets and liabilities. In the opinion of management, all adjustments considered necessary for fair presentation have been included and are of a normal, recurring nature. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses (allowance or ALL), impaired loans, the valuation of foreclosed assets, the valuation of securities available for sale, the valuation of deferred tax assets, the determination of other-than-temporary impairment (OTTI) on the Company's investment securities portfolio and fair value measurements.

Other Comprehensive Income

Other Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale (AFS) securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income are components of comprehensive income. The only comprehensive income items that the Company presently has other than net income are net unrealized gains on securities available for sale and unrealized losses for noncredit-related losses on debt securities. These items are presented net of tax in the Statement of Comprehensive Income.

Significant Group Concentrations of Credit Risk

Significant Group Concentrations of Credit Risk

Most of the Company's activities are with customers located within the South Central Pennsylvania Region. Note 3 discusses the types of securities that the Company invests in. Notes 4 and 6 discuss the types of lending that the Company engages in as well as loan concentrations. The Company does not have any significant concentrations to any one customer, or group of customers with similar economic characteristics.

Securities and Other-Than-Temporary Impairment

Securities

Securities classified as held to maturity are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. These securities are carried at cost adjusted for amortization of premium and accretion of discount, computed by the interest method over the estimated average life of the securities.

Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Securities available for sale are carried at fair value. Unrealized gains or losses are reported in other comprehensive income, net of the related deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the estimated average life of the securities. Management determines the appropriate classification of debt securities at the time of purchase.

Other-Than-Temporary Impairment

The Company follows the fair value measurement guidance which clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. For debt securities, management assesses whether we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to its anticipated recovery. The Company forecasts recovery of the value of the security through either cash flows or market price.

In instances when a determination is made that an OTTI exists but we do not intend to sell the debt security and it is not likely that we will be required to sell the debt security prior to its anticipated recovery, the OTTI is separated into (a) the amount of the total OTTI related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount related to all other factors. The amount of the OTTI related to the credit loss is recognized in earnings and the amount of the OTTI related to all other factors is recognized in other comprehensive income.

Loans Held for Sale

Loans Held for Sale

Loans held for sale are comprised of student loans and selected residential mortgage loans the Company originates with the intention of selling in the future. Prior to September 30, 2011, loans held for sale also included Small Business Administration (SBA) loans the Company originated with the intention of selling. Occasionally, loans held for sale also include selected business and industry loans that the Company decides to sell. Held for sale loans are carried at the lower of cost or estimated fair value, calculated in the aggregate. At the present time, the majority of the Company's residential loans are originated with the intent to sell to the secondary market unless a loan is nonconforming to the secondary market standards or if we agree not to sell the loan due to a customer's request. The residential mortgage loans that are designated as held for sale are sold to other financial institutions in correspondent relationships. The sale of these loans takes place typically within 30 days of funding. The Bank does not retain the servicing on its residential mortgage loans or its student loans.

The Company holds SBA loans in the Company's loan receivable portfolio unless or until the Company's management determines a sale of certain loans is appropriate. At the time such a decision would be made, the SBA loans will be moved from the loans receivable portfolio to the loans held for sale portfolio. In previous years, as well as for the first half of 2011, the Company was originating SBA loans with the intent to sell the guaranteed portion of the loans. The Company received proceeds of $12.1 million on sales of SBA loans in 2011 and recognized a gain of $1.9 million on those sales. There were no such sales in 2012.

Total loans held for sale were $15.2 million and $9.4 million at December 31, 2012 and 2011, respectively.  At December 31, 2012, loans held for sale were comprised of $3.8 million of student loans and $11.4 million of residential mortgages as compared to $5.2 million of student loans and $4.2 million of residential mortgages at December 31, 2011. 

Loans Receivable

Loans Receivable

Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are stated at their outstanding unpaid principal balances, net of an ALL and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan.

A loan is considered past due or delinquent if payment is not received on or before the due date. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the ALL. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. If a loan is substandard and accruing, interest is recognized as accrued. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt.

Allowance for Loan Losses

Allowance for Loan Losses

The ALL is established through provisions for loan losses charged against income. Loans, or portions thereof, deemed to be uncollectible are charged against the ALL and subsequent recoveries, if any, are credited to the allowance. The evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Loans are evaluated for impairment once the loan has been internally risk rated substandard or lower or has been modified as a troubled debt restructuring (TDR).

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired. For such loans, an allowance is established when the discounted cash flows, net collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors. These qualitative factors represent a portion of the allowance established for losses inherent in the loan portfolio, which have not been identified by the quantitative processes. This determination inherently involves a higher degree of subjectivity and considers risk factors that may not have yet manifested themselves in historical loss experience. These factors include:

• Changes in lending policies and procedures, including changes in underwriting standards;

• Changes in levels and trends of collection, charge-off and recovery practices;

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans;

• Material changes in the mix, volume or duration of the portfolio;

• Changes in the value of underlying collateral for collateral-dependent loans;

• Changes in the quality of our loan review system;

• Changes in the experience, ability and depth of lending management and other relevant staff;

• The existence and effect of any concentrations of credit and changes in the level of such concentrations; and

• Changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments and the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our existing portfolio.

Additionally, the general component factors in uncertainties that could affect management's estimates of probable losses.

The ALL is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management's periodic evaluation of the adequacy of the allowance is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. During the third quarter of 2010, as part of the quantitative analysis of the adequacy of the ALL, management adjusted its projection of probable loan losses based upon a much shorter and more recent period of actual historical losses. This was done as a result of the higher level of loan charge-offs experienced by the Company over the preceding two years as compared to the previous years. The change in this estimate resulted in an additional $3.6 million of provision for loan losses in the third quarter of 2010. The impact of this additional provision for 2010 was an additional after tax loss of $2.4 million, or $0.17 per common share.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, borrower's financial condition, market conditions for the borrowers' type of industry and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay and the borrower's prior payment record. Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent.

All nonaccrual loansare evaluated individually to determine whether a charge-off is necessary due to a collateral deficiency.

Restricted Investments in Bank Stock

Restricted Investments in Bank Stock

Restricted investments in bank stock consists of stock of the Federal Home Loan Bank (FHLB) of Pittsburgh and the Atlantic Central Bankers Bank (ACBB). Federal law requires a member institution of the FHLB system to hold stock of its district FHLB according to a predetermined formula.  At December 31, 2012, the Company held $15.4 million of FHLB stock and $65,000 of ACBB stock. Of this amount, $4.5 million was required for membership, $6.9 million was required to cover the Company's borrowing level at the FHLB and the remaining $4.0 million was excess that the FHLB has not repurchased at this time due to a repurchase suspension the FHLB put in place in December of 2008. The suspension was partially lifted where the Company received a fraction of its excess stock three times during 2011 and during each of the four quarters of 2012. The stock is carried at cost.

Management evaluates the restricted stock for impairment in accordance with Financial Accounting Standards Board (FASB) guidance on Accounting by Certain Entities (including Entities with Trade Receivables that Lend to or Finance the Activities of Others). Management determines whether this investment is impaired based on an assessment of the ultimate recoverability of the cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of the cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB. Management believes no impairment charge is necessary related to the FHLB restricted stock as of December 31, 2012.

Premises and Equipment

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is charged to operations over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. Depreciation and amortization are determined on the straight-line method for financial reporting purposes and accelerated methods for income tax purposes.

Foreclosed Assets

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosures are held for sale and are initially recorded at fair value less estimated costs to sell the assets at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value, less estimated costs to sell the asset. Revenue and expenses from operations, changes in the valuation allowance and gains/losses on sales of foreclosed real estate are included in foreclosed real estate expense. Foreclosed assets are included in other assets and totaled $2.5 million as of December 31, 2012 as compared to $7.1 million as of December 31, 2011.

Income Taxes

Income Taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted through the provision for income taxes for the effects of changes in tax laws and rates on the date of enactment. The Company analyzes each tax position taken in its tax returns and determines the likelihood that the position will be realized. Only tax positions that are "more likely than not" to be realized can be recognized in the Company's financial statements. For tax positions that do not meet this recognition threshold, the Company will record an unrecognized tax benefit for the difference between the position taken on the tax return and the amount recognized in the financial statements. The Company does not have any material unrecognized tax benefits or accrued interest or penalties at December 31, 2012 or 2011 or during the years then ended. No unrecognized tax benefits are expected to arise within the next twelve months. The Company's policy is to account for interest as a component of interest expense and penalties, if any, as a component of other expenses.

Transfers of Financial Assets

Transfers of Financial Assets

Transfers of financial assets, including sales of loans and loan participations, are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Per Share Data

Per Share Data

Basic net income (loss) per common share represents income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued as well as any adjustments to income (loss) that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding common stock options and are determined using the treasury stock method.

Off-Balance Sheet Financial Instruments

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit and standby letters of credit. Such financial instruments are recorded on the balance sheet when they become payable by the borrower to the Company.

Cash Flow Information

Cash Flow Information

For purposes of the statements of cash flows, the Company considers cash and due from banks, interest-bearing deposits and federal funds sold as cash and cash equivalents. Generally, federal funds, a component of cash and cash equivalents are purchased and sold for one-day periods. Cash paid during the years ended December 31, 2012, 2011 and 2010 for interest expense on deposits, borrowings and debt was $10.3 million, $14.9 million and $17.6 million, respectively. Income taxes paid totaled $3.3 million, $700,000 and $0 in 2012, 2011 and 2010, respectively.

Stock-Based Compensation

Stock-Based Compensation

The Company recognizes compensation costs related to share-based payment transactions in the income statement based on the grant-date fair value of the stock-based compensation issued. Compensation costs are recognized over the period that an employee provides service in exchange for the award.

The cash flows resulting from the tax benefits due to deductions in excess of the compensation cost recognized for options (excess tax benefits) are classified as financing cash flows.

Advertising Costs

Advertising Costs

The Company follows the policy of charging the costs of advertising to expense as incurred.

Segment Reporting

Segment Reporting

The Bank acts as an independent community financial services provider and offers traditional banking and related financial services to individual consumer, business and government customers. Through its stores, the Company offers a full array of commercial and retail financial services.

Management does not separately allocate expenses, including the cost of funding loan demand, between the commercial and retail operations of the Company. As such, discrete financial information is not available and segment reporting would not be meaningful.

Reclassifications

Reclassifications

Certain amounts in the 2011 and 2010 financial statements have been reclassified to conform to the 2012 presentation format. Such reclassifications had no impact on the Company's net operations and stockholders' equity.

XML

Consolidated Statements of Stockholders' Equity (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Common stock, shares issued under stock option plans			11,378
Tax benefit, stock option plans	$ 0	$ 0	$ 25
Common stock, shares issued under employee stock purchase plan	40	100	210
Common stock, shares issued in connection with dividend reinvestment and stock purchase plan	5,877	376,862	288,349

XML

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Schedule of Net Expenses Associated with Foreclosed Assets

Net expenses associated with foreclosed assets are detailed below:

	Years Ended December 31,
(in thousands)	2012		2011			2010
Operating expenses, net of rental income	$	429	$	331		$	571
Loss on write-down on foreclosed real estate	257		2,060			860
Net (gain) loss on sales of real estate	649		(116		)	(51		)
Total	$	1,335	$	2,275		$	1,380

XML

Earnings (Loss) per Share (Anti-dilutive Securities) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share [Line Items]
Shares authorized under stock option plans, exercise price range, lower range limit	$ 8.46	$ 8.46	$ 11.55
Shares authorized under stock option plans, exercise price range, upper range limit	$ 33.50	$ 33.5	$ 33.5
Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings (Loss) Per Share [Line Items]
Antidilutive securities excluded from computation of earnings (loss) per share	1,273,731	1,076,067	1,069,774

XML

Earnings (Loss) per Share (Tables)

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Schedule of Earnings (Loss) Per Share, Basic and Diluted

The following table sets forth the computation of basic and diluted earnings (loss) per share:

	For the Years Ended December 31,
	2012						2011						2010
(in thousands, except per share amounts)	Income			Weighted-average Shares	Per Share Amount		Income			Weighted-average Shares	Per Share Amount		Loss			Weighted-average Shares	Per Share Amount
Basic earnings (loss) per share:
Net income (loss)	$	10,894					$	289					$	(4,337	)
Preferred stock dividends	(80		)				(80		)				(80		)
Income (loss) available to common stockholders	10,814			14,128	$	0.77	209			13,919	$	0.02	(4,417		)	13,563	$	(0.33	)
Effect of dilutive securities:
Stock options				—						—						—
Diluted earnings (loss) per share:
Income (loss) available to common stockholders plus assumed conversions	$	10,814		14,128	$	0.77	$	209		13,919	$	0.02	$	(4,417	)	13,563	$	(0.33	)

XML

Securities (Cumulative life credit losses recognized in earnings) (Details) (Private-label CMOs [Member], USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Cumulative OTTI credit losses, beginning balance	$ 2,949	$ 2,625	$ 2,341
Additions for which OTTI was not previously recognized			675
Additional increases for OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis	649	324	287
Reduction due to credit impaired securities sold	(3,598)		(678)
Cumulative OTTI credit losses recognized for securities still held, ending balance	0	2,949	2,625
Available-for-sale Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Cumulative OTTI credit losses, beginning balance	2,949	2,625	2,338
Additions for which OTTI was not previously recognized			675
Additional increases for OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis	649	324	287
Reduction due to credit impaired securities sold	(3,598)		(675)
Cumulative OTTI credit losses recognized for securities still held, ending balance	0	2,949	2,625
Held-to-maturity Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Cumulative OTTI credit losses, beginning balance	0	0	3
Additions for which OTTI was not previously recognized			0
Additional increases for OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis	0	0	0
Reduction due to credit impaired securities sold	0		(3)
Cumulative OTTI credit losses recognized for securities still held, ending balance	$ 0	$ 0	$ 0

XML

Deposits (Deposit Liabilities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Deposits [Abstract]
Noninterest-bearing demand	$ 455,000	$ 397,251
Interest checking and money market	1,133,765	1,038,760
Savings	444,976	406,896
Time certificates of $100,000 or more	103,980	105,751
Other time certificates	93,570	122,916
Total	$ 2,231,291	$ 2,071,574

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Assets
Cash and due from banks	$ 56,582	$ 46,998
Federal funds sold	0	8,075
Cash and cash equivalents	56,582	55,073
Securities, available for sale at fair value	675,109	613,459
Securities, held to maturity at cost (fair value 2012: $273,671; 2011: $199,857 )	269,783	196,635
Loans, held for sale	15,183	9,359
Loans receivable, net of allowance for loan losses (allowance 2012: $25,282; 2011: $21,620)	1,503,515	1,415,048
Restricted investments in bank stock	15,450	16,802
Premises and equipment, net	78,788	82,114
Other assets	20,465	32,729
Total assets	2,634,875	2,421,219
Liabilities and Stockholders' Equity
Noninterest-bearing	455,000	397,251
Interest-bearing	1,776,291	1,674,323
Total	2,231,291	2,071,574
Short-term borrowing	113,225	65,000
Long-term debt	40,800	49,200
Other liabilities	14,172	15,425
Total liabilities	2,399,488	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: 14,131,263; 2011: 14,125,346)	14,131	14,125
Surplus	157,305	156,184
Retained earnings	56,311	45,497
Accumulated other comprehensive income	7,240	3,814
Total stockholders' equity	235,387	220,020
Total liabilities and stockholders' equity	$ 2,634,875	$ 2,421,219

XML

Condensed Financial Statements of Parent Company (Tables)

12 Months Ended

Dec. 31, 2012

Condensed Financial Information of Parent Company Only Disclosure [Abstract]

Condensed Financial Statements of Parent Company

Balance Sheets

	December 31,
(in thousands)	2012		2011
Assets
Cash	$	11,765	$	19,641
Investment in subsidiaries:
Banking subsidiary	239,305		221,578
Nonbanking subsidiaries	800		1,200
Other assets	54		2,321
Total assets	$	251,924	$	244,740
Liabilities
Long-term debt	$	15,800	$	24,200
Other liabilities	737		520
Total liabilities	16,537		24,720
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: 14,131,263;  2011: 14,125,346)	14,131		14,125
Surplus	157,305		156,184
Retained earnings	56,311		45,497
Accumulated other comprehensive income	7,240		3,814
Total stockholders' equity	235,387		220,020
Total liabilities and stockholders' equity	$	251,924	$	244,740

Statements of Operations

	Years Ended December 31,
(in thousands)	2012			2011			2010
Income
Dividends from bank subsidiary	$	—		$	—		$	—
Interest income	95			122			124
Debt prepayment charge	(140		)	(75		)	—
	(45		)	47			124
Expenses
Interest expense	1,949			2,611			2,645
Other	1,441			2,293			1,149
	3,390			4,904			3,794
Loss before income tax benefit and equity in undistributed net income of subsidiaries	(3,435		)	(4,857		)	(3,670		)
Income tax benefit	1,168			1,651			1,248
	(2,267		)	(3,206		)	(2,422		)
Equity in undistributed net income (loss) of bank subsidiary	13,161			3,495			(1,915		)
Net income (loss)	$	10,894		$	289		$	(4,337	)

Statements of Cash Flows

	Years Ended December 31,
(in thousands)	2012			2011			2010
Operating Activities
Net income (loss)	$	10,894		$	289		$	(4,337	)
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:
Amortization of financing costs	29			8			8
Stock-based compensation	1,082			1,250			1,244
Debt prepayment charge	140			75			—
Increase (decrease) in other liabilities	217			(108		)	(4,742		)
Decrease in other assets	2,625			1,990			610
Equity in undistributed net (income) loss of bank subsidiary	(13,161		)	(3,495		)	1,915
Net cash provided by (used in) operating activities	1,826			9			(5,302		)
Investing Activities
Investment in bank subsidiary	(1,126		)	(5,052		)	(4,478		)
Net cash used by investing activities	(1,126		)	(5,052		)	(4,478		)
Financing Activities
Proceeds from common stock options exercised	—			—			78
Proceeds from issuance of common stock under stock purchase plan	44			3,802			3,156
Repayment of long-term debt	(8,540		)	(5,275		)	—
Cash dividends on preferred stock	(80		)	(80		)	(80		)
Net cash (used in) provided by financing activities	(8,576		)	(1,553		)	3,154
Decrease in cash and cash equivalents	(7,876		)	(6,596		)	(6,626		)
Cash and cash equivalents at beginning of the year	19,641			26,237			32,863
Cash and cash equivalents at end of year	$	11,765		$	19,641		$	26,237

XML

Quarterly Financial Data (unaudited) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Effect of Fourth Quarter Events [Line Items]
Interest income	$ 24,096	$ 24,255	$ 24,625	$ 24,332	$ 24,726	$ 24,415	$ 24,659	$ 23,895	$ 97,308	$ 97,695	$ 97,247
Interest expense	2,262	2,477	2,655	2,716	3,336	3,640	3,842	3,878	10,110	14,696	17,397
Net interest income	21,834	21,778	21,970	21,616	21,390	20,775	20,817	20,017	87,198	82,999	79,850
Provision for loan losses	2,150	2,500	2,950	2,500	3,350	13,750	1,700	1,792	10,100	20,592	21,000
Noninterest income	7,805	7,148	7,460	7,441	7,062	7,278	8,156	7,956	29,854	30,452	29,380
Net gains (loss) on sales of securities	92	(37)	12	984	0	7	309	34	1,051	350	2,801
Noninterest expense	22,486	23,053	22,674	22,931	21,731	23,355	24,621	24,307	91,144	94,014	97,103
Provision (benefit) for federal income taxes	1,547	1,381	1,044	942	888	(3,334)	660	342	4,914	(1,444)	(4,536)
Net income (loss)	$ 3,456	$ 1,992	$ 2,762	$ 2,684	$ 2,483	$ (5,718)	$ 1,992	$ 1,532	$ 10,894	$ 289	$ (4,337)
Earnings per share, basic (in dollars per share)	$ 0.24	$ 0.14	$ 0.19	$ 0.19	$ 0.18	$ (0.41)	$ 0.14	$ 0.11	$ 0.77	$ 0.02	$ (0.33)
Earnings per share, diluted (in dollars per share)	$ 0.24	$ 0.14	$ 0.19	$ 0.19	$ 0.18	$ (0.41)	$ 0.14	$ 0.11	$ 0.77	$ 0.02	$ (0.33)

XML

Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Taxes, unrealized holding gains arising during the period	$ 1,758	$ 4,872	$ 2,227
Taxes, reclassification adjustment for net realized gains (losses) on securities recorded in income	(220)	(117)	(941)
Taxes, reclassification for OTTI credit losses recorded in income	227	110	327
Taxes, noncredit related OTTI losses on securities not expected to be sold	$ 0	$ 0	$ 1,340

XML

Commitments and Contingencies Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2008
Metro Bank Park [Member]
Long-term Purchase Commitment [Line Items]
Term of naming rights agreement	15 years
Naming rights agreement, commitment amount	3.5
Fiserv Service Agreement [Member]
Long-term Purchase Commitment [Line Items]
Service agreement, term	7 years
Service agreement, renewal period	2 years
Service agreement, period prior to expiration to terminate agreement	180 days
Service agreement, initial payment		3.4
Service Agreement, remaining amount		$ 26.9
Service agreement, remaining term	3 years 6 months

XML

Loans Receivable and Allowance for Loan Losses (Summary of Allowances on Loans Receivable, by Class) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Sep. 30, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		$ 21,620	$ 21,618	$ 14,391
Provision charged to operating expenses	3,600	10,100	20,592	21,000
Recoveries of loans previously charged-off		919	445	522
Loans charged-off		(7,357)	(21,035)	(14,295)
Allowance for loan losses, ending		25,282	21,620	21,618
Commercial and industrial [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		8,400	9,679
Provision charged to operating expenses		3,634	6,510
Recoveries of loans previously charged-off		227	156
Loans charged-off		(2,302)	(7,945)
Allowance for loan losses, ending		9,959	8,400
Commercial tax-exempt [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		79	86
Provision charged to operating expenses		4	(7)
Recoveries of loans previously charged-off		0	0
Loans charged-off		0	0
Allowance for loan losses, ending		83	79
Owner occupied real estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		729	910
Provision charged to operating expenses		2,165	13
Recoveries of loans previously charged-off		7	60
Loans charged-off		(772)	(254)
Allowance for loan losses, ending		2,129	729
Commercial construction and land development [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		7,840	5,420
Provision charged to operating expenses		243	13,038
Recoveries of loans previously charged-off		517	11
Loans charged-off		(1,378)	(10,629)
Allowance for loan losses, ending		7,222	7,840
Commercial real estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		3,241	4,002
Provision charged to operating expenses		2,498	76
Recoveries of loans previously charged-off		97	15
Loans charged-off		(1,853)	(852)
Allowance for loan losses, ending		3,983	3,241
Residential [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		435	442
Provision charged to operating expenses		193	113
Recoveries of loans previously charged-off		4	68
Loans charged-off		(308)	(188)
Allowance for loan losses, ending		324	435
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		831	702
Provision charged to operating expenses		639	1,161
Recoveries of loans previously charged-off		67	135
Loans charged-off		(744)	(1,167)
Allowance for loan losses, ending		793	831
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		65	377
Provision charged to operating expenses		724	(312)
Recoveries of loans previously charged-off		0	0
Loans charged-off		0	0
Allowance for loan losses, ending		$ 789	$ 65

XML

Condensed Financial Statements of Parent Company Condensed Financial Statements of Parent Company (Statements of Cash Flows) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
Net income (loss)	$ 10,894,000	$ 289,000	$ (4,337,000)
Stock-based compensation	1,082,000	1,250,000	1,244,000
Debt prepayment charge	140,000	75,000	1,574,000
Decrease in other liabilities	(1,253,000)	(11,679,000)	(1,392,000)
Decrease in other assets	5,782,000	15,437,000	(6,856,000)
Net cash provided by (used in) operating activities	31,604,000	47,922,000	8,749,000
Net cash used by investing activities	(229,461,000)	(213,074,000)	(99,606,000)
Proceeds from common stock options exercised	0	0	78,000
Proceeds from issuance of common stock under stock purchase plan	(1,000)	(1,000)	(2,000)
Repayment of long-term debt	(8,540,000)	(5,275,000)	(26,574,000)
Cash dividends on preferred stock	80,000	80,000	80,000
Net cash (used in) provided by financing activities	199,366,000	187,367,000	83,451,000
Decrease in cash and cash equivalents	1,509,000	22,215,000	(7,406,000)
Metro Bancorp, Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Net income (loss)	10,894,000	289,000	(4,337,000)
Amortization of financing costs	29,000	8,000	8,000
Stock-based compensation	1,082,000	1,250,000	1,244,000
Debt prepayment charge	140,000	75,000	0
Decrease in other liabilities	217,000	(108,000)	(4,742,000)
Decrease in other assets	2,625,000	1,990,000	610,000
Equity in undistributed net (income) loss of bank subsidiary	(13,161,000)	(3,495,000)	1,915,000
Net cash provided by (used in) operating activities	1,826,000	9,000	(5,302,000)
Net cash used by investing activities	(1,126,000)	(5,052,000)	(4,478,000)
Proceeds from common stock options exercised	0	0	78,000
Proceeds from issuance of common stock under stock purchase plan	44,000	3,802,000	3,156,000
Repayment of long-term debt	(8,540,000)	(5,275,000)	0
Cash dividends on preferred stock	(80,000)	(80,000)	(80,000)
Net cash (used in) provided by financing activities	(8,576,000)	(1,553,000)	3,154,000
Decrease in cash and cash equivalents	(7,876,000)	(6,596,000)	(6,626,000)
Cash and cash equivalents at beginning of the year	19,641,000	26,237,000	32,863,000
Cash and cash equivalents at end of year	11,765,000	19,641,000	26,237,000
Banking Subsidiary [Member] | Metro Bancorp, Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Investment in bank subsidiary	$ (1,126,000)	$ (5,052,000)	$ (4,478,000)

XML

Loan Commitments and Standby Letters of Credit (Tables)

12 Months Ended

Dec. 31, 2012

Guarantees [Abstract]

Schedule of Exposure to Credit Loss for Loan Commitments and Standby Letters of Credit

The Company's maximum exposure to credit loss for loan commitments (unfunded loans and unused lines of credit, including home equity lines of credit) and standby letters of credit outstanding were as follows:

	December 31,
(in thousands)	2012		2011
Unfunded commitments of existing commercial loans	$	308,721	$	269,180
Unfunded commitments of existing consumer/residential loans	98,903		86,273
Standby letters of credit	34,052		36,455
Commitments to grant loans	4,862		11,658
Total	$	446,538	$	403,566

XML

Loans Receivable and Allowance for Loan Losses (Troubled Debt Restructurings on Loan Receivables) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012 concession	Dec. 31, 2012 TDR by Concession Type [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial and industrial [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial and industrial [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial and industrial [Member] Material Extension of Time [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial and industrial [Member] Material Extension of Time [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial and industrial [Member] Forbearance Agreement [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial and industrial [Member] Forbearance Agreement [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial and industrial [Member] Combination of Concessions [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial and industrial [Member] Combination of Concessions [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial and industrial [Member] Interest Rate Adjustment [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial and industrial [Member] Interest Rate Adjustment [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial and industrial [Member] Change in Amortization Period [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial and industrial [Member] Change in Amortization Period [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Owner occupied real estate [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Owner occupied real estate [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Owner occupied real estate [Member] Forbearance Agreement [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Owner occupied real estate [Member] Forbearance Agreement [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Owner occupied real estate [Member] Combination of Concessions [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Owner occupied real estate [Member] Combination of Concessions [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial construction and land development [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial construction and land development [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial construction and land development [Member] Material Extension of Time [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial construction and land development [Member] Material Extension of Time [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial construction and land development [Member] Forbearance Agreement [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial construction and land development [Member] Forbearance Agreement [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial construction and land development [Member] Combination of Concessions [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial construction and land development [Member] Combination of Concessions [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial real estate [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial real estate [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial real estate [Member] Material Extension of Time [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial real estate [Member] Material Extension of Time [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial real estate [Member] Forbearance Agreement [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial real estate [Member] Forbearance Agreement [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial real estate [Member] Combination of Concessions [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial real estate [Member] Combination of Concessions [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial real estate [Member] Interest Rate Adjustment [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial real estate [Member] Interest Rate Adjustment [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Commercial real estate [Member] Change in Amortization Period [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Commercial real estate [Member] Change in Amortization Period [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Residential [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Residential [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Residential [Member] Material Extension of Time [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Residential [Member] Material Extension of Time [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Residential [Member] Combination of Concessions [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Residential [Member] Combination of Concessions [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Residential [Member] Interest Rate Adjustment [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Residential [Member] Interest Rate Adjustment [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Residential [Member] Change in Amortization Period [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Residential [Member] Change in Amortization Period [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Consumer [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Consumer [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Consumer [Member] Material Extension of Time [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Consumer [Member] Material Extension of Time [Member] contract	Dec. 31, 2012 TDR by Concession Type [Member] Consumer [Member] Combination of Concessions [Member] contract	Dec. 31, 2011 TDR by Concession Type [Member] Consumer [Member] Combination of Concessions [Member] contract	Dec. 31, 2012 TDR with Additional Unused Commitments [Member] Commercial construction and land development [Member] contract	Dec. 31, 2011 TDR with Additional Unused Commitments [Member] Commercial construction and land development [Member] contract	Dec. 31, 2011 TDR with Additional Unused Commitments [Member] Commercial real estate [Member] contract
Financing Receivable, Modifications [Line Items]
Number of concessions for classifying loans receivable as TDR	1
Number of Contracts		22	36	4	10	1	2	0	4	2	0	1	0	0	4	1	1	0	1	1	0	6	17	5	16	0	1	1	0	2	5	1	0	0	1	1	0	0	1	0	3	3	3	2	0	1	1	0	1	0	1	6	0	4	0	2	0	2	6	1
Recorded Investment at Time of Restructure		$ 20,765,000	$ 29,736,000	$ 7,897,000	$ 13,490,000	$ 1,262,000	$ 629,000	$ 0	$ 12,456,000	$ 3,231,000	$ 0	$ 3,404,000	$ 0	$ 0	$ 405,000	$ 1,451,000	$ 87,000	$ 0	$ 87,000	$ 1,451,000	$ 0	$ 6,942,000	$ 11,163,000	$ 3,396,000	$ 10,932,000	$ 0	$ 231,000	$ 3,546,000	$ 0	$ 3,343,000	$ 4,368,000	$ 68,000	$ 0	$ 0	$ 93,000	$ 3,275,000	$ 0	$ 0	$ 1,194,000	$ 0	$ 3,081,000	$ 524,000	$ 628,000	$ 329,000	$ 0	$ 195,000	$ 78,000	$ 0	$ 195,000	$ 0	$ 355,000	$ 608,000	$ 0	$ 426,000	$ 0	$ 182,000	$ 0
Unused commitments																																																										$ 14,000	$ 778,000	$ 329,000

XML

Earnings (Loss) per Share

12 Months Ended

Dec. 31, 2012

Earnings Per Share [Abstract]

Earnings (Loss) per Share

Earnings (Loss) per Share

The following table sets forth the computation of basic and diluted earnings (loss) per share:

	For the Years Ended December 31,
	2012						2011						2010
(in thousands, except per share amounts)	Income			Weighted-average Shares	Per Share Amount		Income			Weighted-average Shares	Per Share Amount		Loss			Weighted-average Shares	Per Share Amount
Basic earnings (loss) per share:
Net income (loss)	$	10,894					$	289					$	(4,337	)
Preferred stock dividends	(80		)				(80		)				(80		)
Income (loss) available to common stockholders	10,814			14,128	$	0.77	209			13,919	$	0.02	(4,417		)	13,563	$	(0.33	)
Effect of dilutive securities:
Stock options				—						—						—
Diluted earnings (loss) per share:
Income (loss) available to common stockholders plus assumed conversions	$	10,814		14,128	$	0.77	$	209		13,919	$	0.02	$	(4,417	)	13,563	$	(0.33	)

There were 1,273,731 common stock options excluded from the computation of diluted earnings per share for the year ended December 31, 2012 which were exercisable between the prices of $8.46 and $33.50 per option. For the year ended December 31, 2011 there were 1,076,067 options excluded from the computation of diluted earnings per share which were exercisable between the prices of $8.46 and $33.50 per option. There were 1,069,774 options excluded from the computation of diluted loss per share for the year ended December 31, 2010 which were exercisable between the prices of $11.55 and $33.50 per option. These options were excluded because of their anti-dilutive impact.

XML

Premises, Equipment and Leases (Tables)

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Premises and Equipment

Depreciation and amortization expense for 2012, 2011 and 2010 was $5.8 million, $6.5 million and $6.1 million, respectively, and is computed on the straight-line method over the estimated useful lives of the related assets as listed in the table below. The estimated life for leasehold improvements is based on the shorter of the useful life or the lease term.

	Years
Buildings and leasehold improvements	1 - 40
Furniture, fixtures and equipment	1 - 10
Computer equipment and software	3 - 8

A summary of premises and equipment is as follows:

	December 31,
(in thousands)	2012		2011
Land	$	16,736	$	15,386
Buildings	67,047		66,913
Construction in process	1,199		1,535
Leasehold improvements	2,677		2,583
Furniture, fixtures and equipment	32,938		32,073
	120,597		118,490
Less accumulated depreciation and amortization	41,809		36,376
Total	$	78,788	$	82,114

Schedule of Future Minimum Rental Payments for Operating Leases

At December 31, 2012 future minimum lease payments for noncancelable operating leases are payable as follows:

(in thousands)
2013	$	2,504
2014	2,341
2015	2,262
2016	2,126
2017	1,958
Thereafter	17,000
Total minimum lease payments	$	28,191

XML

Condensed Financial Statements of Parent Company Condensed Financial Statements of Parent Company (Statements of Operations) (Details) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Condensed Financial Statements, Captions [Line Items]
Debt prepayment charge									$ (140,000)	$ (75,000)	$ (1,574,000)
Interest expense	2,262,000	2,477,000	2,655,000	2,716,000	3,336,000	3,640,000	3,842,000	3,878,000	10,110,000	14,696,000	17,397,000
Income tax benefit	(1,547,000)	(1,381,000)	(1,044,000)	(942,000)	(888,000)	3,334,000	(660,000)	(342,000)	(4,914,000)	1,444,000	4,536,000
Net income (loss)	3,456,000	1,992,000	2,762,000	2,684,000	2,483,000	(5,718,000)	1,992,000	1,532,000	10,894,000	289,000	(4,337,000)
Metro Bancorp, Inc. [Member]
Condensed Financial Statements, Captions [Line Items]
Dividends from bank subsidiary									0	0	0
Interest income									95,000	122,000	124,000
Debt prepayment charge									(140,000)	(75,000)	0
Total income									(45,000)	47,000	124,000
Interest expense									1,949,000	2,611,000	2,645,000
Other									1,441,000	2,293,000	1,149,000
Total expenses									3,390,000	4,904,000	3,794,000
Loss before income tax benefit and equity in undistributed net income of subsidiaries									(3,435,000)	(4,857,000)	(3,670,000)
Income tax benefit									1,168,000	1,651,000	1,248,000
Loss before equity in undistributed net income (loss) of subsidiary									(2,267,000)	(3,206,000)	(2,422,000)
Equity in undistributed net income (loss) of bank subsidiary									13,161,000	3,495,000	(1,915,000)
Net income (loss)									$ 10,894,000	$ 289,000	$ (4,337,000)

XML

Regulatory Matters

12 Months Ended

Dec. 31, 2012

Regulatory Matters [Abstract]

Regulatory Matters

Regulatory Matters

The Company is a legal entity separate and distinct from its subsidiary, the Bank. There are various legal and regulatory limitations on the extent to which the Bank can, among other things, finance, or otherwise supply funds to, the Company. Specifically, dividends from the Bank are the principal source of the Company's cash funds and there are certain legal restrictions under Pennsylvania law and Pennsylvania banking regulations on the payment of dividends by state-chartered banks. The relevant regulatory agencies also have authority to prohibit the Company and the Bank from engaging in what, in the opinion of such regulatory body, constitutes an unsafe or unsound banking practice. The payment of dividends could, depending upon the financial condition of the Company and the Bank, be deemed to constitute such an unsafe or unsound practice.

The Company and the Bank are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios (set forth below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets and of Tier 1 capital to average assets. Management believes, as of December 31, 2012, that the Company and the Bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2012 the Bank was categorized as well-capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized the Bank must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table below. There are no conditions or events since that notification that management believes have changed the Bank's category.

The following table presents the risk-based and leverage capital amounts and ratios at December 31, 2012 and 2011 for the Company and the Bank:

	Actual					For Capital  Adequacy Purposes						To Be Well-Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio			Amount			Ratio			Amount			Ratio
Company as of December 31, 2012
Risk-based capital ratios:
Total capital	$	264,944	15.22	%	≥	$	139,227	≥	8.0	%	≥	N/A		≥	N/A
Tier 1 capital	243,147		13.97		≥	69,614		≥	4.0		≥	N/A		≥	N/A
Leverage ratio	243,147		9.61		≥	101,172		≥	4.0		≥	N/A		≥	N/A
Bank as of December 31, 2012
Risk-based capital ratios:
Total capital	$	253,852	14.59	%	≥	$	139,160	≥	8.0	%	≥	$	173,950	≥	10.0	%
Tier 1 capital	232,065		13.34		≥	69,580		≥	4.0		≥	104,370		≥	6.0
Leverage ratio	232,065		9.18		≥	101,167		≥	4.0		≥	126,459		≥	5.0
Company as of December 31, 2011
Risk-based capital ratios:
Total capital	$	260,405	15.36	%	≥	$	135,637	≥	8.0	%	≥	N/A		≥	N/A
Tier 1 capital	239,206		14.11		≥	67,818		≥	4.0		≥	N/A		≥	N/A
Leverage ratio	239,206		9.99		≥	95,797		≥	4.0		≥	N/A		≥	N/A
Bank as of December 31, 2011
Risk-based capital ratios:
Total capital	$	238,919	14.12	%	≥	$	135,358	≥	8.0	%	≥	$	169,197	≥	10.0	%
Tier 1 capital	217,764		12.87		≥	67,679		≥	4.0		≥	101,518		≥	6.0
Leverage ratio	217,764		9.10		≥	95,747		≥	4.0		≥	119,684		≥	5.0

On April 29, 2010, the Bank consented and agreed to the issuance of a Consent Order (Order) by the FDIC, the Bank's federal banking regulator and a substantially similar consent order by the Pennsylvania Department of Banking, which in 2012 was renamed the Pennsylvania Department of Banking and Securities (PaDOB). The Order required the Bank to take all necessary steps, consistent with the Order and sound banking practices, to correct and prevent certain unsafe or unsound banking practices and violations of law or regulation alleged by the FDIC to have been committed by the Bank. Among other things, the Order required certain analyses and assessments, including an analysis and assessment of the Bank Secrecy Act (BSA) and Office of Foreign Assets Control (OFAC) staffing needs and qualifications and an analysis and assessment of the independence and performance of the Company's directors and senior executive officers. It also required the development, adoption and implementation of a system of internal controls designed to ensure full compliance with BSA and OFAC provisions; training programs to ensure that all appropriate personnel are aware of and can comply with applicable requirements of BSA and OFAC provisions; periodic reviews by internal and external auditors of compliance with BSA and OFAC provisions; and a review by an independent third party of the Bank's compliance with the Order. The Bank paid a nonrecurring $1.5 million civil money penalty assessed by the FDIC during the third quarter of 2012 associated with alleged deficiencies as noted in the Order. The expense impact of the civil money penalty is included in the regulatory assessments line on the consolidated statement of operations for the year ended December 31, 2012. Most of the Order remediation related expenses were captured under the consulting fees line item and made up the majority of this line item on the consolidated statement of operations for the years ended December 31, 2011 and 2010. The Bank was informed on October 19, 2012 that the FDIC had terminated the Order effective October 16, 2012. Earlier in the year, the Bank was informed on May 30, 2012 that the PaDOB had terminated their substantially similar order effective April 12, 2012.

XML

Concentrations of Credit Risk (Details) (USD $) In Millions, unless otherwise specified	Dec. 31, 2012
Commercial real estate [Member]
Concentration Risk [Line Items]
Commercial real estate loans and loan commitments	$ 548.2
Owner occupied real estate [Member]
Concentration Risk [Line Items]
Commercial real estate loans and loan commitments	$ 274.0

XML

Consolidated Statements of Stockholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Preferred Stock	Common Stock	Surplus	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Dec. 31, 2009	$ 200,022	$ 400	$ 13,448	$ 147,340	$ 49,705	$ (10,871)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	(4,337)				(4,337)
Other comprehensive income	5,241					5,241
Dividends declared on preferred stock	(80)				(80)
Common stock issued under stock options plans	103		12	91
Common stock issued under employee stock purchase plan	2			2
Proceeds from issuance of common stock in connection with dividend reinvestment and stock purchase plan	3,156		288	2,868
Common stock share-based awards	1,244			1,244
Ending balance at Dec. 31, 2010	205,351	400	13,748	151,545	45,288	(5,630)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	289				289
Other comprehensive income	9,444					9,444
Dividends declared on preferred stock	(80)				(80)
Common stock issued under employee stock purchase plan	1			1
Proceeds from issuance of common stock in connection with dividend reinvestment and stock purchase plan	3,802		377	3,425
Common stock share-based awards	1,213			1,213
Ending balance at Dec. 31, 2011	220,020	400	14,125	156,184	45,497	3,814
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	10,894				10,894
Other comprehensive income	3,426					3,426
Dividends declared on preferred stock	(80)				(80)
Common stock issued under employee stock purchase plan	1			1
Proceeds from issuance of common stock in connection with dividend reinvestment and stock purchase plan	44		6	38
Common stock share-based awards	1,082			1,082
Ending balance at Dec. 31, 2012	$ 235,387	$ 400	$ 14,131	$ 157,305	$ 56,311	$ 7,240

XML

Consolidated Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2012	Dec. 31, 2011
Current Assets:
Securities, held to maturity fair value	$ 273,671,000	$ 199,857,000
Allowance for loan losses	25,282,000	21,620,000
Stockholders' Equity:
Preferred stock, par value (in dollars per share)	$ 10	$ 10
Preferred stock, liquidation preference	$ 1,000,000	$ 1,000,000
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	40,000	40,000
Preferred stock, shares outstanding	40,000	40,000
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, shares authorized	25,000,000	25,000,000
Common stock, shares issued	14,131,263	14,125,346
Common stock, shares outstanding	14,131,263	14,125,346

XML

Deposits

12 Months Ended

Dec. 31, 2012

Deposits [Abstract]

Deposits

Deposits

The composition of the Bank's deposits at December 31, 2012 and 2011 is as follows:

	December 31,
(in thousands)	2012		2011
Noninterest-bearing demand	$	455,000	$	397,251
Interest checking and money market	1,133,765		1,038,760
Savings	444,976		406,896
Time certificates of $100,000 or more	103,980		105,751
Other time certificates	93,570		122,916
Total	$	2,231,291	$	2,071,574

At December 31, 2012, the scheduled maturities of time deposits are as follows:

(in thousands)
2013	$	146,014
2014	31,681
2015	12,302
2016	3,735
2017	3,818
Thereafter	—
Total	$	197,550

XML

Fair Value Measurements (Narrative) (Details) (USD $)							12 Months Ended
	Dec. 31, 2012 Impaired_Loans	Dec. 31, 2011 Impaired_Loans	Dec. 31, 2012 Fair value measurements, nonrecurring [Member]	Dec. 31, 2011 Fair value measurements, nonrecurring [Member]	Dec. 31, 2012 Fair value measurements, nonrecurring [Member] Fair value inputs, Level 3 [Member]	Dec. 31, 2011 Fair value measurements, nonrecurring [Member] Fair value inputs, Level 3 [Member]	Dec. 31, 2012 Real Estate [Member] Minimum [Member]	Dec. 31, 2012 Real Estate [Member] Maximum [Member]	Dec. 31, 2012 Inventory and Equipment [Member]	Dec. 31, 2012 Accounts Receivable [Member]	Dec. 31, 2012 Foreclosed [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impaired loans, collateral, discount rate							15.00%	35.00%	50.00%	20.00%	15.00%
Number of impaired loans	7	4
Impaired loans with specific allocation			$ 11,991,000	$ 9,875,000	$ 11,991,000	$ 9,875,000
Allowance related to impaired loans	7,120,000	3,630,000	7,100,000	3,600,000
Impaired loans net of partial charge-offs			4,227,000	1,151,000	4,227,000	1,151,000
Impaired loans, charge-offs		10,100,000	2,600,000
Foreclosed assets, carrying value			0	3,041,000	0	3,041,000
Valuation allowances						$ 1,800,000

XML

Fair Value Measurements (Financial Assets Measured at Fair Value on Nonrecurring Basis) (Details) (Fair value measurements, nonrecurring [Member], USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Impaired loans with specific allocation	$ 11,991	$ 9,875
Impaired loans net of partial charge-offs	4,227	1,151
Foreclosed assets	0	3,041
Total	16,218	14,067
Quoted Prices in Active Markets for Identical Assets, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Impaired loans with specific allocation	0	0
Impaired loans net of partial charge-offs	0	0
Foreclosed assets	0	0
Total	0	0
Significant Other Observable Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Impaired loans with specific allocation	0	0
Impaired loans net of partial charge-offs	0	0
Foreclosed assets	0	0
Total	0	0
Significant Unobservable Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Impaired loans with specific allocation	11,991	9,875
Impaired loans net of partial charge-offs	4,227	1,151
Foreclosed assets	0	3,041
Total	$ 16,218	$ 14,067

XML

Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2012	Feb. 28, 2013	Jun. 30, 2012
Entity Information [Line Items]
Entity Registrant Name	METRO BANCORP, INC.
Entity Central Index Key	0001085706
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Document Type	10-K
Document Period End Date	Dec. 31, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Amendment Flag	false
Entity Common Stock, Shares Outstanding		14,132,065
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Public Float			$ 155,594,360

XML

Short-term Borrowings

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Short-term Borrowings

Short-term Borrowings 

Short-term borrowings consist of one borrowing facility. The Bank has a line of credit commitment from the FHLB for borrowings up to $545.8 million and certain qualifying assets of the Bank collateralize the line. There was $113.2 million outstanding at December 31, 2012 and $65.0 million outstanding at December 31, 2011 on this line of credit. At December 31, 2012, $191.0 million of loans collateralized the outstanding balance. In addition, the Bank has available a $15.0 million federal funds line of credit with one correspondent bank and a $20.0 million federal funds line of credit with another correspondent bank as of December 31, 2012 and 2011 of which $0 was outstanding on both lines.

XML

Income Taxes Income Taxes (Deferred Tax Assets) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Income Tax Disclosure [Abstract]
Allowance for loan losses	$ 8,596	$ 7,351
Other-than-temporary losses	0	1,003
Stock-based compensation	1,094	923
Nonaccrual interest	1,605	2,002
Foreclosed real estate write-downs	0	703
Income from LLC subsidiary	0	254
Other	447	486
Total deferred tax assets	11,742	12,722
Premises and equipment	(3,762)	(4,486)
Unrealized gains on securities	(3,730)	(1,965)
Prepaid expenses	(254)	(395)
Deferred loan fees	(971)	(968)
Total deferred tax liabilities	(8,717)	(7,814)
Net deferred tax asset	$ 3,025	$ 4,908

XML

Fair Value Measurements (Financial Assets Measured at Fair Value on Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	$ 675,109
Residential MBSs [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	57,210
Fair value measurements, recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	675,109	613,459
Fair value measurements, recurring [Member] | U.S. Government agency securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	33,761	22,558
Fair value measurements, recurring [Member] | Residential MBSs [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	57,210	21,412
Fair value measurements, recurring [Member] | Corporate debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		18,320
Fair value measurements, recurring [Member] | Municipal securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	27,271
Fair value measurements, recurring [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Fair value measurements, recurring [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | U.S. Government agency securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Fair value measurements, recurring [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Residential MBSs [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Fair value measurements, recurring [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Corporate debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		0
Fair value measurements, recurring [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Municipal securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0
Fair value measurements, recurring [Member] | Significant Other Observable Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	675,109	613,459
Fair value measurements, recurring [Member] | Significant Other Observable Inputs, Level 2 [Member] | U.S. Government agency securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	33,761	22,558
Fair value measurements, recurring [Member] | Significant Other Observable Inputs, Level 2 [Member] | Residential MBSs [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	57,210	21,412
Fair value measurements, recurring [Member] | Significant Other Observable Inputs, Level 2 [Member] | Corporate debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		18,320
Fair value measurements, recurring [Member] | Significant Other Observable Inputs, Level 2 [Member] | Municipal securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	27,271
Fair value measurements, recurring [Member] | Significant Unobservable Inputs, Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Fair value measurements, recurring [Member] | Significant Unobservable Inputs, Level 3 [Member] | U.S. Government agency securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Fair value measurements, recurring [Member] | Significant Unobservable Inputs, Level 3 [Member] | Residential MBSs [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Fair value measurements, recurring [Member] | Significant Unobservable Inputs, Level 3 [Member] | Corporate debt securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		0
Fair value measurements, recurring [Member] | Significant Unobservable Inputs, Level 3 [Member] | Municipal securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0
Agency Securities [Member] | Fair value measurements, recurring [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	556,867	528,163
Agency Securities [Member] | Fair value measurements, recurring [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Agency Securities [Member] | Fair value measurements, recurring [Member] | Significant Other Observable Inputs, Level 2 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	556,867	528,163
Agency Securities [Member] | Fair value measurements, recurring [Member] | Significant Unobservable Inputs, Level 3 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale	0	0
Private-Label Securities [Member] | Fair value measurements, recurring [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		23,006
Private-Label Securities [Member] | Fair value measurements, recurring [Member] | Quoted Prices in Active Markets for Identical Assets, Level 1 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		0
Private-Label Securities [Member] | Fair value measurements, recurring [Member] | Significant Other Observable Inputs, Level 2 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		23,006
Private-Label Securities [Member] | Fair value measurements, recurring [Member] | Significant Unobservable Inputs, Level 3 [Member] | Collateralized Mortgage Obligations [Member]
Fair Value, Assets and Liabilities Measured on Recurring Basis [Line Items]
Securities available for sale		$ 0

XML

Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Loans receivable, including fees:
Taxable	$ 71,760	$ 71,307	$ 70,423
Tax-exempt	3,628	4,020	4,521
Securities:
Taxable	21,468	22,362	22,275
Tax-exempt	451	1	14
Federal funds sold	1	5	14
Total interest income	97,308	97,695	97,247
Interest Expense
Deposits	7,701	11,443	13,467
Short-term borrowings	203	439	317
Long-term debt	2,206	2,814	3,613
Total interest expense	10,110	14,696	17,397
Net interest income	87,198	82,999	79,850
Provision for loan losses	10,100	20,592	21,000
Net interest income after provision for loan losses	77,098	62,407	58,850
Noninterest Income
Service charges, fees and other operating income	28,372	27,773	26,681
Gains on sales of loans	1,220	2,728	2,434
Total fees and other income	29,592	30,501	29,115
Other-than-temporary impairment (OTTI) losses	(649)	(324)	(4,904)
Portion recognized in other comprehensive income (before taxes)	0	0	3,942
Net impairment loss on investment securities	(649)	(324)	(962)
Net gains on sales/calls of securities	1,051	350	2,801
Debt prepayment charge	(140)	(75)	(1,574)
Total noninterest income	29,854	30,452	29,380
Noninterest Expenses
Salaries and employee benefits	41,241	40,318	41,494
Occupancy	8,439	9,155	8,429
Furniture and equipment	4,842	5,465	5,134
Advertising and marketing	1,870	2,016	2,967
Data processing	13,590	14,211	13,121
Regulatory assessments and related fees	4,063	3,638	4,598
Telephone	3,480	3,434	3,492
Loan expense	1,384	1,098	1,658
Foreclosed real estate	1,335	2,275	1,380
Branding	30	1,891	0
Consulting fees	1,104	1,496	4,508
Pennsylvania shares tax	1,789	1,507	1,379
Other	7,977	7,510	8,943
Total noninterest expenses	91,144	94,014	97,103
Income (loss) before taxes	15,808	(1,155)	(8,873)
Provision (benefit) for federal income taxes	4,914	(1,444)	(4,536)
Net income (loss)	$ 10,894	$ 289	$ (4,337)
Net Income (Loss) per Common Share
Basic (in dollars per share)	$ 0.77	$ 0.02	$ (0.33)
Diluted (in dollars per share)	$ 0.77	$ 0.02	$ (0.33)
Average Common and Common Equivalent Shares Outstanding
Basic (in shares)	14,128	13,919	13,563
Diluted (in shares)	14,128	13,919	13,563

XML

Securities

12 Months Ended

Dec. 31, 2012

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The amortized cost and fair value of securities are summarized in the following tables:

	December 31, 2012
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	33,994	$	19	$	(252	)	$	33,761
Residential mortgage-backed securities	55,614		1,596		—			57,210
Agency collateralized mortgage obligations	547,641		9,971		(745		)	556,867
Municipal securities	26,890		381		—			27,271
Total	$	664,139	$	11,967	$	(997	)	$	675,109
Held to Maturity:
U.S. Government agency securities	$	178,926	$	700	$	(363	)	$	179,263
Residential mortgage-backed securities	23,827		1,889		—			25,716
Agency collateralized mortgage obligations	49,051		1,587		—			50,638
Corporate debt securities	15,000		13		—			15,013
Municipal securities	2,979		62		—			3,041
Total	$	269,783	$	4,251	$	(363	)	$	273,671

	December 31, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	22,500	$	58	$	—		$	22,558
Residential mortgage-backed securities	21,087		325		—			21,412
Agency collateralized mortgage obligations	519,167		9,171		(175		)	528,163
Private-label collateralized mortgage obligations	24,974		—		(1,968		)	23,006
Corporate debt securities	19,952		—		(1,632		)	18,320
Total	$	607,680	$	9,554	$	(3,775	)	$	613,459
Held to Maturity:
U.S. Government agency securities	$	97,750	$	88	$	—		$	97,838
Residential mortgage-backed securities	37,658		2,769		—			40,427
Agency collateralized mortgage obligations	45,122		840		(1		)	45,961
Corporate debt securities	15,000		—		(484		)	14,516
Municipal securities	1,105		10		—			1,115
Total	$	196,635	$	3,707	$	(485	)	$	199,857

The amortized cost and fair value of debt securities by contractual maturity at December 31, 2012 are shown in the table that follows. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations.

	Available for Sale				Held to Maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	—	$	—	$	10,000	$	10,002
Due after one year through five years	—		—		5,000		5,011
Due after five years through ten years	19,367		19,510		60,000		60,001
Due after ten years	41,517		41,522		121,905		122,303
	60,884		61,032		196,905		197,317
Residential mortgage-backed securities	55,614		57,210		23,827		25,716
Agency collateralized mortgage obligations	547,641		556,867		49,051		50,638
Total	$	664,139	$	675,109	$	269,783	$	273,671

During 2012, the Company sold a total of 48 securities with a combined fair market value of $305.4 million. The Company realized net pretax gains of $1.1 million, with a related tax expense of $368,000. Of the total, 41 securities with a combined fair market value of $299.3 million had been classified as available for sale. Seven agency mortgage-backed securities (MBSs) with a fair market value of $6.1 million had been classified as held to maturity, however, in each case the current par value had paid down to less than 15% of its original par value so they could be sold without tainting the remaining held to maturity (HTM) portfolio. Securities sold from available for sale included eight private-label collateralized mortgage obligations (CMOs) with a combined fair market value of $20.1 million. The Company no longer owns any private-label CMOs. In addition to its sales, the Company had a total of 11 agency debentures and one corporate debenture called during 2012. The combined par value was $160.3 million and the Company realized no gain or loss on the calls.

During 2011, the Company sold a total of 13 securities with a combined fair market value of $126.2 million . All of the securities were U.S. agency CMOs. The Company realized net pretax gains of $350,000, with related tax expense of $119,000, on the combined sales. Of this total, 12 securities with a combined fair market value of $125.3 million had been classified as available for sale. One agency MBS with a fair market value of $852,000 had been classified as held to maturity, however, its current par value had paid down to less than 9% of its original par value, below the 15% threshold, so it could be sold without tainting the remaining HTM portfolio. Also during 2011, the Company had three agency debentures totaling $60.0 million called at par. The bonds had a combined market value of $60.0 million and no gain or loss was realized.

In 2010, the Company sold a total of 56 securities with a combined fair market value of $296.2 million and realized a net pretax gain of $2.8 million. Of this total, 53 securities with a combined fair market value of $292.9 million had been classified as available for sale. Two agency MBSs with a combined fair market value of $440,000 had been classified as held to maturity, however, their current par value had fallen to less than 15% of their original par value and could be sold without tainting the remaining HTM portfolio. One private-label CMO with a fair market value of $2.9 million had been classified as held to maturity. Previously, the Company had recognized an OTTI charge due to a projected credit loss of $3,000 and this deterioration in creditworthiness was the basis for selling the security without tainting the remaining HTM portfolio. Also during 2010, the Company had ten agency debentures and four municipal bonds called at par. The bonds had a combined market value of $106.6 million.

The Company does not maintain a trading portfolio and there were no transfers of securities between the AFS and HTM portfolios. The Company uses the specific identification method to record security sales.

At December 31, 2012 and 2011, securities with a carrying value of $713.6 million and $621.6 million, respectively, were pledged to secure public deposits and for other purposes as required or permitted by law.

The following table summarizes the Company's gains and losses on the sales or calls of debt securities and losses recognized for the OTTI of investments:

(in thousands)	Gross Realized Gains		Gross Realized (Losses)			OTTI Credit Losses			Net Gains (Losses)
Years Ended:
December 31, 2012	$	2,889	$	(1,838	)	$	(649	)	$	402
December 31, 2011	983		(633		)	(324		)	26
December 31, 2010	6,690		(3,889		)	(962		)	1,839

In determining fair market values for its portfolio holdings, the Company receives information from a third party provider which management evaluates and corroborates using amounts from one of its securities brokers. Under the current guidance, these values are considered Level 2 inputs, based upon mathematically derived matrix pricing and observed data from similar assets. They are not Level 1 direct quotes, nor do they reflect Level 3 inputs that would be derived from internal analysis or judgment. As the Company does not manage a trading portfolio and typically only sells from its AFS portfolio in order to manage interest rate risk or credit exposure, direct quotes, or street bids, are warranted on an as-needed basis only.

The following tables show the fair value and gross unrealized losses associated with the Company's investment portfolio, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

	December 31, 2012
	Less than 12 months					12 months or more				Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Available for Sale:
U.S. Government agency securities	$	24,748	$	(252	)	$	—	$	—	$	24,748	$	(252	)
Agency CMOs	53,274		(745		)	—		—		53,274		(745		)
Total	$	78,022	$	(997	)	$	—	$	—	$	78,022	$	(997	)
Held to Maturity:
U.S. Government agency securities	$	57,572	$	(363	)	$	—	$	—	$	57,572	$	(363	)
Total	$	57,572	$	(363	)	$	—	$	—	$	57,572	$	(363	)

	December 31, 2011
	Less than 12 months					12 months or more					Total
(in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
Available for Sale:
Agency CMOs	$	49,793	$	(175	)	$	—	$	—		$	49,793	$	(175	)
Private-label CMOs	6,017		(268		)	16,989		(1,700		)	23,006		(1,968		)
Corporate debt securities	18,320		(1,632		)	—		—			18,320		(1,632		)
Total	$	74,130	$	(2,075	)	$	16,989	$	(1,700	)	$	91,119	$	(3,775	)
Held to Maturity:
Agency CMOs	$	1,312	$	(1	)	$	—	$	—		$	1,312	$	(1	)
Corporate debt securities	14,516		(484		)	—		—			14,516		(484		)
Total	$	15,828	$	(485	)	$	—	$	—		$	15,828	$	(485	)

The Company's investment securities portfolio consists primarily of U.S. Government agency securities, U.S. Government sponsored agency MBSs, agency CMOs, municipal bonds and corporate bonds of the financial sector. The Company considers securities of the U.S. Government sponsored agencies and the U.S. Government MBSs/CMOs to have little credit risk because their principal and interest payments are backed by an agency of the U.S. Government.

As of December 31, 2012, the Company owned 12 securities that were in an unrealized loss position. These included five agency debentures and seven agency CMOs. All are backed by a government sponsored entity (GSE) and any unrealized losses are assumed to be related to a combination of the general level of interest rates and accelerating prepayments. The full and timely payment of all principal and interest is expected.

As previously mentioned, the Company sold eight private-label CMOs from its AFS portfolio during 2012. Two of the securities had never incurred an OTTI loss due to credit and, as such, there was never a stated intent to hold the securities until fair market value recovered. They were sold at a combined $84,000 pretax loss in an effort to reduce the Company's credit exposure. Three private-label CMOs that were sold had previously incurred OTTI losses due to credit and the Company had a stated intent to hold until recovery of fair market value. The recovery did occur and they were sold, realizing a combined pretax gain of $28,000. The three remaining private-label CMOs had previously incurred OTTI losses due to credit and the Company had intended to hold the bonds until recovery of fair market value, however, all of their respective credit positions had deteriorated significantly. Two of the bonds began to incur actual losses and were downgraded to default status. Because of the deterioration in status, it was predetermined the Company could sell the positions without tainting its assertion to hold until recovery. The three bonds were sold at a combined pretax loss of $1.2 million. As mentioned above, the Company's investment portfolio no longer contains any private-label CMOs.

The tables below rolls forward the cumulative life to date credit losses which have been recognized in earnings for the private-label CMOs previously mentioned for the years ended December 31, 2012, 2011 and 2010, respectively:

	Private-label CMOs
(in thousands)	Available for Sale			Held to Maturity		Total
Cumulative OTTI credit losses at January 1, 2012	$	2,949		$	—	$	2,949
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	649			—		649
Reduction due to credit impaired securities sold	(3,598		)	—		(3,598		)
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2012	$	—		$	—	$	—

	Private-label CMOs
(in thousands)	Available for Sale		Held to Maturity		Total
Cumulative OTTI credit losses at January 1, 2011	$	2,625	$	—	$	2,625
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	324		—		324
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2011	$	2,949	$	—	$	2,949

	Private-label CMOs
(in thousands)	Available for Sale			Held to Maturity			Total
Cumulative OTTI credit losses at January 1, 2010	$	2,338		$	3		$	2,341
Additions for which OTTI was not previously recognized	675			—			675
Additional increases for OTTI previously recognized when there is    no intent to sell and no requirement to sell before recovery of    amortized cost basis	287			—			287
Reduction due to credit impaired security sold	(675		)	(3		)	(678		)
Cumulative OTTI credit losses recognized for securities still held    at December 31, 2010	$	2,625		$	—		$	2,625

XML

Restrictions on Cash and Due from Bank Accounts

12 Months Ended

Dec. 31, 2012

Restricted Cash and Investments [Abstract]

Restrictions on Cash and Due from Bank Accounts

Restrictions on Cash and Due from Bank Accounts

The Bank is required to maintain average reserves, in the form of cash and balances with the FRB, against its deposit liabilities. The average amount of these reserve balances maintained for 2012 and 2011 was approximately $3.6 million and $10.9 million, respectively.  The Company has no due from balances with institutions in excess of FDIC insurance limitations.

XML

Stock Option Plans

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Option Plans

Stock Option Plans

In 2005, the board of directors adopted and the Company's stockholders approved the adoption of the 2006 Employee Stock Option Plan (the Plan) for the officers and employees of the Company. The Plan commenced January 1, 2006 and replaced the 1996 Employee Stock Option Plan, which expired December 31, 2005. The Plan covers 1,000,000 authorized shares of common stock reserved for issuance upon the exercise of options granted or available for grant to employees and will expire on December 31, 2015. The Plan provides that the option price of qualified incentive stock options will be fixed by the board of directors, but will not be less than 100% of the fair market value of the stock at the date of grant. In addition, the Plan provides that the option price of nonqualified stock options (NQSO's) also will be fixed by the board of directors, however for NQSO's the option price may be less than 100% of the fair market value of the stock at the date of grant. Options granted are exercisable one year after the grant date, will vest over a four-year period and expire ten years after the grant date.

In 2000, the board of directors adopted and the Company's stockholders approved the adoption of the 2001 Directors' Stock Option Plan(the Directors' Plan). The Directors' Plan commenced January 1, 2001 and replaced the 1990 Directors' Stock Option Plan, which expired December 31, 2000. The stock Plan covered 343,100 authorized shares of common stock reserved for issuance upon exercise of options granted or available for grant to nonemployee directors and expired on December 31, 2010. In 2010, the Company's stockholders approved the adoption of the 2011 Directors' Stock Option Plan (the Directors Plan). The Directors' Plan commenced January 1, 2011 and replaced the 2001 Directors' Plan which expired December 31, 2010. The Directors' Plan covers 200,000 authorized shares of common stock reserved for issuance upon exercise of options granted or available for grant to directors,  directors emeritus, advisory directors, consultants and others with outstanding abilities to help the Company and will expire on December 31, 2020. Under the Company's Directors' Plan, nonemployee directors of the Company, consultants and others who are not regularly employed on a salaried basis by the Company may be entitled to an option to acquire shares, as determined by the board of directors, of the Company's common stock during each year in which the director serves on the board. The Directors' Plan provides that the option price will be fixed by the board of directors, but will not be less than 100% of the fair market value of the stock on the date of the grant.

As of December 31, 2012, there was $2.1 million of total unrecognized compensation cost related to nonvested stock option awards. The expense will be incurred over the next four year period with a weighted-average period of 2.4 years. Cash received from the exercise of options for both 2012 and 2011 was $0 and was $78,000 for 2010.

The fair value of each option grant was established at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company's stock options. The Company used the Black-Scholes model and the following weighted-average assumptions for 2012, 2011 and 2010, respectively: risk-free interest rates of 1.7%, 3.0% and 3.3%; volatility factors of the expected market price of the Company's common stock of 48%, 46% and 45%; assumed forfeiture rates of 9.04%, 1.67% and 1.72%; weighted-average expected lives of the options of 7.5 years for the three years presented and no cash dividends. Based upon these assumptions, the weighted-average fair value of options granted was $5.99, $6.42 and $6.47 per option share for the years ended December 31, 2012, 2011 and 2010, respectively.

The Company recorded compensation expense of approximately $1.1 million for the year ended December 31, 2012 compared to $1.2 million for both the years ended December 31, 2011 and 2010, respectively. The tax benefit associated with compensation expense was $171,000, $203,000 and $214,000 for 2012, 2011 and 2010, respectively.

Combined stock option transactions under both Plans were as follows:

	Years Ended December 31,
	2012				2011				2010
	Options		Weighted Avg. Exercise Price		Options		Weighted Avg. Exercise Price		Options		Weighted Avg. Exercise Price
Outstanding at beginning of year	1,076,067		$	20.86	1,069,774		$	21.74	1,030,267		$	22.92
Granted	241,575		11.50		242,300		12.01		192,900		12.31
Exercised	—		—		—		—		(13,508	)	7.92
Forfeited/expired	(43,911	)	17.25		(236,007	)	15.76		(139,885	)	18.75
Outstanding at end of year	1,273,731		$	19.21	1,076,067		$	20.86	1,069,774		$	21.74
Exercisable at December 31	789,129		$	23.58	670,258		$	25.08	663,259		$	24.63
Options available for grant at December 31	327,184				549,003				511,525
Weighted-average fair value of options   granted during the year			$	5.99			$	6.42			$	6.47

Options exercisable and outstanding at December 31, 2012 had an intrinsic value of $125,000. There were no options exercised in 2012 and 2011. The intrinsic value of options exercised was $77,000 in 2010.

The Company allows for option exercises to be paid for in cash or in whole or in part with Metro stock owned by the optionee. The value of the stock used to exercise the options is the fair market value on the date of exercise. Stock option exercises paid for with the Company's stock was 2,130 shares for the year ended December 31, 2010.

Exercise prices for options outstanding as of December 31, 2012 are presented in the following table:

	Options Outstanding	Weighted Avg. Exercise  Price		Weighted Avg. Remaining Contractual Life	Options Exercisable	Weighted Avg. Exercise Price
Options with exercise prices ranging from     $8.46 to $16.41	704,241	$	12.68	7.9 years	220,016	$	13.99
Options with exercise prices ranging from     $16.42 to $25.38	170,835	21.86		0.7 years	170,458	21.86
Options with exercise prices ranging from     $25.39 to $33.50	398,655	29.61		3.8 years	398,655	29.61
Total options outstanding with exercise     prices ranging from $8.46 to $33.50	1,273,731	$	19.21	5.6 years	789,129	$	23.58

The remaining weighted-average contractual life for options exercisable at December 31, 2012 is 4.0 years.

The following table represents nonvested options as of December 31, 2012:

		Number of Shares		Weighted Avg. Grant Date Fair Value
Nonvested options,	December 31, 2011	405,809		$	6.84
Granted		241,575		5.99
Vested		(149,200	)	7.49
Forfeited		(13,582	)	6.10
Nonvested options,	December 31, 2012	484,602		$	6.24

XML

Long-term Debt

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Long-term Debt

Long-term Debt

As part of the Company's Asset/Liability management strategy, management utilized a FHLB fixed borrowing product during the second quarter of 2011 when it obtained $25.0 million in borrowings with a two year maturity due March 18, 2013 and an interest rate of 1.01%. There was $25.0 million outstanding on this borrowing at December 31, 2012 which was collateralized by $42.2 million of loans of the Bank.

On June 15, 2000, the Company issued $5.0 million of 11% fixed rate Trust Capital Securities to Commerce Bancorp LLC through Trust I, a Delaware business trust subsidiary. The Trust Capital Securities evidenced a preferred ownership interest in the Trust, of which the Company owned 100% of the common equity. During the fourth quarter of 2011, the Company repurchased and retired the $5.0 million of Trust Capital Securities and incurred a $75,000 early repayment charge.

On September 28, 2001, the Company issued $8.0 million of 10% fixed rate Trust Capital Securities to Commerce Bancorp LLC through Trust II, a Delaware business trust subsidiary. The Trust Capital Securities evidenced a preferred ownership interest in Trust II of which the Company owned 100% of the common equity. The proceeds from the issuance of the Trust Capital Securities were invested in substantially similar Junior Subordinated Debt of the Company. The Company unconditionally guaranteed the Trust Capital Securities. Interest on the debt was payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. The Trust Capital Securities were scheduled to mature on September 28, 2031. The Company had the option to redeem in whole or in part beginning on or after September 28, 2011 at a premium to the principal amount plus accrued interest, with the redemption price set to decline annually until September 2021, at which time the securities could be redeemed at 100% of the principal. During the fourth quarter of 2012, the Company repurchased and retired the $8.0 million of Trust Capital Securities and incurred a $140,000 early repayment charge.

On September 29, 2006, the Company issued $15.0 million of 7.75% fixed rate Trust Capital Securities to TD Bank, N.A. through Trust III, a Delaware business trust subsidiary. The issuance of the Trust Capital Securities has similar properties as Trust II. The Trust Capital Securities evidence a preferred ownership interest in Trust III of which the Company owns 100% of the common equity. The proceeds from the issuance of the Trust Capital Securities were invested in substantially similar Junior Subordinated Debt of the Company. The Company unconditionally guarantees the Trust Capital Securities. Interest on the debt is payable quarterly with similar terms as in Trust II. The Trust Capital Securities are scheduled to mature on September 29, 2036. The Trust Capital Securities may be redeemed in whole or in part at the option of the Company on or after September 29, 2011 at 100% of the principal plus accrued interest, if any. All $15.0 million of the Trust Capital Securities qualifies as Tier 1 capital for regulatory capital purposes.

The remaining $800,000 in long-term debt represents the Company's ownership interest in the one remaining nonbank subsidiary Trust.

The scheduled maturities for long-term debt over the next five years and thereafter are as follows:

(in thousands)
2013-2017	$	25,000
Thereafter	15,800
Total	$	40,800

XML

Stock Option Plans (Narrative) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Proceeds from stock options exercised	$ 0	$ 0	$ 78,000
Share-based compensation expense	1,082,000	1,200,000	1,244,000
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total compensation cost not yet recognized	2,100,000
Total compensation cost not yet recognized, period for recognition, upper limit	4 years
Total compensation cost not yet recognized, period for recognition, weighted average	2 years 4 months 24 days
Proceeds from stock options exercised	0	0	78,000
Fair value assumptions, risk-free interest rate	1.70%	3.00%	3.30%
Fair value assumptions, expected volatility rate	48.00%	46.00%	45.00%
Fair value assumptions, expected forfeiture rate	9.04%	1.67%	1.72%
Fair value assumptions, weighted average expected term	7 years 6 months
Weighted average grant date fair value	$ 5.99	$ 6.42	$ 6.47
Tax benefit from share-based compensation expense	171,000	203,000	214,000
Stock options exercisable, intrinsic value	125,000	0	77,000
Stock options outstanding, intrinsic value	$ 0	$ 0
Stock options exercised, paid with stock			2,130
Stock options exercisable, weighted average remaining contractual life	4 years
2006 Employee Stock Option Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under stock option plan	1,000,000
Requisite service period under stock option plan	1 year
Award vesting period under stock option plan	4 years
Period from grant date to expiration under stock option plan	10 years
2006 Employee Stock Option Plan [Member] | Qualified Incentive Stock Options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price of stock options, percent of fair market value	100.00%
2006 Employee Stock Option Plan [Member] | Nonqualified Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price of stock options, percent of fair market value	100.00%
2001 Directors' Stock Option Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under stock option plan	343,100
2011 Directors' Stock Option Plan [Member] | Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized under stock option plan	200,000
2011 Directors' Stock Option Plan [Member] | Stock Options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price of stock options, percent of fair market value	100.00%

XML

Concentrations of Credit Risk

12 Months Ended

Dec. 31, 2012

Risks and Uncertainties [Abstract]

Concentrations of Credit Risk

Concentrations of Credit Risk

The Company's loan portfolio is principally to borrowers throughout Cumberland, Dauphin, York, Lebanon, Lancaster and Berks counties of Pennsylvania where it has full-service stores. Commercial real estate loans and loan commitments for commercial real estate projects aggregated $548.2 million at December 31, 2012. Owner occupied real estate loans and loan commitments for commercial properties aggregated $274.0 million at December 31, 2012.

Commercial real estate loans are collateralized by the related project (principally multi-family residential, office building, lodging, land development and other properties) and typically require owner guarantees.  Maximum terms and maximum advance rates are established according to our underwriting guidelines based on our assessment of the overall risk of the project being financed.

XML

Loans Receivable and Allowance for Loan Losses (Allowance for Credit Losses) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Sep. 30, 2010	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan losses, beginning		$ 21,620	$ 21,618	$ 14,391
Provision charged to expense	3,600	10,100	20,592	21,000
Recoveries		919	445	522
Loans charged off		(7,357)	(21,035)	(14,295)
Allowance for loan losses, ending		$ 25,282	$ 21,620	$ 21,618

XML

Loans Receivable and Allowance for Loan Losses Loans Receivable and Allowance for Loan Losses

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Loans Receivable and Allowance For Loan Losses

Loans Receivable and Allowance for Loan Losses

Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are stated at their outstanding unpaid principal balances, net of an allowance for loan losses (allowance or ALL) and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan or to the first review date if the loan is on demand. Certain qualifying loans of the Bank totaling $319.0 million at December 31, 2012, collateralize a letter of credit, a line of credit commitment and a long-term borrowing the Bank has with the FHLB. 

A summary of the Bank's loans receivable at December 31, 2012 and 2011 is as follows:

	December 31,
(in thousands)	2012		2011
Commercial and industrial	$	376,988	$	321,988
Commercial tax-exempt	92,202		81,532
Owner occupied real estate	268,372		279,372
Commercial construction and land development	100,399		103,153
Commercial real estate	394,404		364,405
Residential	83,899		83,940
Consumer	212,533		202,278
	1,528,797		1,436,668
Less: allowance for loan losses	25,282		21,620
Net loans receivable	$	1,503,515	$	1,415,048

Certain directors and executive officers of the Company, including their associates and companies, have loans with the Bank. Such loans were made in the ordinary course of business at the Bank's normal credit terms including interest rates and collateralization, as those prevailing at the time for comparable loans with persons not related to the lender and do not represent more than a normal risk of collection. Total loans to these persons and companies amounted to approximately $14.2 million and $11.4 million at December 31, 2012 and 2011, respectively. During 2012, $6.9 million of new advances were made and repayments totaled $4.1 million.

The following table summarizes nonaccrual loans by loan type at December 31, 2012 and 2011:

	December 31,
(in thousands)	2012		2011
Nonaccrual loans:
Commercial and industrial	$	11,289	$	10,162
Commercial tax-exempt	—		—
Owner occupied real estate	3,119		2,895
Commercial construction and land development	6,300		8,511
Commercial real estate	5,659		7,820
Residential	3,203		2,912
Consumer	2,846		1,829
Total nonaccrual loans	$	32,416	$	34,129

Generally, the Bank's policy is to move a loan to nonaccrual status when it becomes 90 days past due or when the Company does not believe it will collect all of its principal and interest payments. In addition, when a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the ALL. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. If a loan is substandard and accruing, accrued interest is recognized as income. Once a loan is on nonaccrual status, it is not returned to accrual status unless the loan has been current for at least six consecutive months and the borrower and/or any guarantors demonstrate the ability to repay the loan. Under certain circumstances such as bankruptcy, if a loan is under collateralized, or if the borrower and/or guarantors do not show evidence of the ability to pay, the loan may be placed on nonaccrual status even though it is not past due by 90 days or more. Therefore, the total nonaccrual loan balance of $32.4 million exceeds the balance of total loans that are 90 days past due of $15.0 million at December 31, 2012 as presented in the aging analysis tables that follow.

No additional funds were committed on nonaccrual loans including restructured loans that were nonaccruing. Typically, commitments are canceled and no additional advances are made when a loan is placed on nonaccrual.

The following table is an age analysis of past due loan receivables as of December 31, 2012 and 2011:

			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
December 31, 2012
Commercial and industrial	$	368,769	$	1,096	$	3,256	$	3,867	$	8,219	$	376,988	$	30
Commercial tax-exempt	92,202		—		—		—		—		92,202		—
Owner occupied real estate	265,817		610		353		1,592		2,555		268,372		—
Commercial construction and land development	89,250		4,251		4,318		2,580		11,149		100,399		188
Commercial real estate	386,821		3,846		78		3,659		7,583		394,404		—
Residential	76,587		4,303		1,252		1,757		7,312		83,899		—
Consumer	208,335		2,277		410		1,511		4,198		212,533		2
Total	$	1,487,781	$	16,383	$	9,667	$	14,966	$	41,016	$	1,528,797	$	220

			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
December 31, 2011
Commercial and industrial	$	317,016	$	696	$	1,083	$	3,193	$	4,972	$	321,988	$	—
Commercial tax-exempt	81,532		—		—		—		—		81,532		—
Owner occupied real estate	274,720		2,423		328		1,901		4,652		279,372		—
Commercial construction and land development	94,160		470		219		8,304		8,993		103,153		—
Commercial real estate	354,818		2,191		1,272		6,124		9,587		364,405		—
Residential	75,841		4,587		607		2,905		8,099		83,940		621
Consumer	199,671		1,314		350		943		2,607		202,278		71
Total	$	1,397,758	$	11,681	$	3,859	$	23,370	$	38,910	$	1,436,668	$	692

The past due portfolio is constantly moving through collection efforts, restructuring when appropriate, foreclosure or ultimately charged off. During 2012, $18.9 million of past due loans at December 31, 2011 either improved to current status or were paid off by December 31, 2012.  Additionally, $4.4 million of those loans past due at December 31, 2011, were charged off and another $2.7 million were moved to foreclosed real estate. Conversely, $28.6 million of current loans as of December 31, 2011, became delinquent and were reported as past due at December 31, 2012. Out of this $28.6 million total, $6.1 million were 90 days past due or greater, $9.1 million were 60-89 days past due while the remainder, or $13.4 million, were 30-59 days past due at December 31, 2012.

The commercial and industrial loan category had the most significant increase in past due status since December 31, 2011. Included in this change from current to past due status, was a $2.5 million commercial and industrial loan that was past due and impaired with a specific reserve of $1.0 million at December 31, 2012. The increase in commercial construction and land development was primarily the result of 3 related impaired loans that moved from current at December 31, 2011 to between 30 and 89 days past due at December 31, 2012. A specific reserve of $300,000 was established for the relationship. The decreases in total past due of the owner occupied and commercial real estate categories were largely the result of $1.3 million and $1.7 million of loans that were past due at December 31, 2011 and were charged off or moved to foreclosed real estate during 2012, respectively.

A summary of the ALL and balance of loans receivable by loan class and by impairment method as of December 31, 2012 and 2011 is detailed in the tables that follow.

(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construc-tion and land devel-opment		Comm. real estate		Resi-dential		Con-sumer		Unallo-cated		Total
December 31, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	2,399	$	—	$	1,451	$	2,470	$	800	$	—	$	—	$	—	$	7,120
Collectively evaluated for impairment	7,560		83		678		4,752		3,183		324		793		789		18,162
Total ALL	$	9,959	$	83	$	2,129	$	7,222	$	3,983	$	324	$	793	$	789	$	25,282
Loans receivable:
Loans evaluated   individually	$	13,082	$	—	$	3,380	$	15,549	$	17,136	$	4,163	$	3,331	$	—	$	56,641
Loans evaluated   collectively	363,906		92,202		264,992		84,850		377,268		79,736		209,202		—		1,472,156
Total loans receivable	$	376,988	$	92,202	$	268,372	$	100,399	$	394,404	$	83,899	$	212,533	$	—	$	1,528,797

(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construction and land devel-opment		Comm. real estate		Resi-dential		Con-sumer		Unallo-cated		Total
December 31, 2011
Allowance for loan losses:
Individually evaluated for impairment	$	1,000	$	—	$	30	$	2,600	$	—	$	—	$	—	$	—	$	3,630
Collectively evaluated for impairment	7,400		79		699		5,240		3,241		435		831		65		17,990
Total ALL	$	8,400	$	79	$	729	$	7,840	$	3,241	$	435	$	831	$	65	$	21,620
Loans receivable:
Loans evaluated   individually	$	15,504	$	—	$	7,492	$	23,216	$	12,117	$	3,346	$	1,829	$	—	$	63,504
Loans evaluated   collectively	306,484		81,532		271,880		79,937		352,288		80,594		200,449		—		1,373,164
Total loans receivable	$	321,988	$	81,532	$	279,372	$	103,153	$	364,405	$	83,940	$	202,278	$	—	$	1,436,668

The Bank may create a specific allowance for all of or a part of a particular loan in lieu of a charge-off or charge-down as a result of management's evaluation of impaired loans. In these instances, the Bank has determined that a loss is not imminent based upon available information surrounding the credit at the time of the analysis including, but not limited to, unresolved legal matters; however, management believes an allowance is appropriate to acknowledge the probable risk of loss.

Typically, commercial and industrial, commercial construction and land development and commercial real estate loans present a greater risk of nonpayment by a borrower than other types of loans.

Within the commercial loan portfolio, construction and land development and commercial real estate loans generally present the greatest risk of nonpayment by a borrower. The market value and cash flow of real estate, particularly real estate held for investment, can fluctuate significantly in a relatively short period of time. Commercial and industrial, tax-exempt and owner occupied real estate loans generally carry a lower risk factor because the repayment of these loans relies primarily on the cash flow from a business which is more stable and predictable. However, the significance and duration of the economic downturn caused the Bank to experience an elevated level of charge-offs in the commercial and industrial loan category in 2011.

Consumer loan collections are dependent on the borrower's continued financial stability and thus are more likely to be affected by adverse personal circumstances. Consumer and residential loans are also impacted by the market value of real estate. Furthermore, the application of various federal and state laws, including bankruptcy and insolvency laws, may limit the amount that can be recovered on these loans. The risk of nonpayment is affected by changes in economic conditions, the credit risks of a particular borrower, the duration of the loan and, in the case of a collateralized loan, uncertainties as to the value of the collateral and other factors.

Management bases its quantitative analysis of probable future loan losses (when determining the ALL) on those loans collectively reviewed for impairment on a two-year period of actual historical losses. Management may increase or decrease the historical loss period at some point in the future based on the state of the economy and other circumstances.

The qualitative factors such as changes in levels and trends of charge-offs and delinquencies; material changes in the mix, volume or duration of the loan portfolio; changes in lending policies and procedures including underwriting standards; changes in the experience, ability and depth of lending management and other relevant staff; the existence and effect of any concentrations of credit; changes in the overall values of collateral; changes in the quality of the loan review program and changes in national and local economic trends and conditions among other things, are factors which have not been identified by the quantitative processes. The determination of qualitative factors inherently involves a higher degree of subjectivity and considers risk factors that may not have yet manifested themselves in historical loss experience.

The following tables summarize the transactions in the ALL for the twelve months ended December 31, 2012 and 2011:

(in thousands)	Comm. and industrial			Comm. tax-exempt		Owner occupied real estate			Comm. construction and land development			Comm. real estate			Resi-dential			Consumer			Unallo-cated		Total
2012
Balance at January 1	$	8,400		$	79	$	729		$	7,840		$	3,241		$	435		$	831		$	65	$	21,620
Provision charged to operating expenses	3,634			4		2,165			243			2,498			193			639			724		10,100
Recoveries of loans previously charged-off	227			—		7			517			97			4			67			—		919
Loans charged-off	(2,302		)	—		(772		)	(1,378		)	(1,853		)	(308		)	(744		)	—		(7,357		)
Balance at December 31	$	9,959		$	83	$	2,129		$	7,222		$	3,983		$	324		$	793		$	789	$	25,282

(in thousands)	Comm. and industrial			Comm. tax-exempt			Owner occupied real estate			Comm. construction and land development			Comm. real estate			Resi-dential			Consumer			Unallo-cated			Total
2011
Balance at January 1	$	9,679		$	86		$	910		$	5,420		$	4,002		$	442		$	702		$	377		$	21,618
Provision charged to operating expenses	6,510			(7		)	13			13,038			76			113			1,161			(312		)	20,592
Recoveries of loans previously charged-off	156			—			60			11			15			68			135			—			445
Loans charged-off	(7,945		)	—			(254		)	(10,629		)	(852		)	(188		)	(1,167		)	—			(21,035		)
Balance at December 31	$	8,400		$	79		$	729		$	7,840		$	3,241		$	435		$	831		$	65		$	21,620

The following table summarizes the transactions in the ALL for the twelve months ended December 31, 2010. The table is presented in summary as the FASB guidance issued in July 2010 related to an entity's allowance for credit losses and the credit quality of its financing receivables required the activity by portfolio segment be disclosed only for periods beginning on or after December 15, 2010.

	Year Ended December 31,
(in thousands)	2010
Balance at beginning of year	$	14,391
Provision charged to expense	21,000
Recoveries	522
Loans charged off	(14,295		)
Balance at end of year	$	21,618

The following table presents information regarding the Company's impaired loans as of December 31, 2012 and 2011:

	December 31, 2012						December 31, 2011
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans with no related allowance:
Commercial and industrial	$	7,426	$	11,746	$	—	$	14,504	$	19,672	$	—
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	1,929		2,301		—		7,000		8,845		—
Commercial construction and land development	7,716		8,500		—		11,203		19,756		—
Commercial real estate	12,965		14,619		—		12,117		12,390		—
Residential	4,163		4,423		—		3,346		3,729		—
Consumer	3,331		3,547		—		1,829		2,168		—
Total impaired loans with no related allowance	37,530		45,136		—		49,999		66,560		—
Loans with an allowance recorded:
Commercial and industrial	5,656		6,526		2,399		1,000		1,000		1,000
Owner occupied real estate	1,451		1,451		1,451		492		659		30
Commercial construction and land development	7,833		7,833		2,470		12,013		12,013		2,600
Commercial real estate	4,171		4,172		800		—		—		—
Total impaired loans with an allowance recorded	19,111		19,982		7,120		13,505		13,672		3,630
Total impaired loans:
Commercial and industrial	13,082		18,272		2,399		15,504		20,672		1,000
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	3,380		3,752		1,451		7,492		9,504		30
Commercial construction and land development	15,549		16,333		2,470		23,216		31,769		2,600
Commercial real estate	17,136		18,791		800		12,117		12,390		—
Residential	4,163		4,423		—		3,346		3,729		—
Consumer	3,331		3,547		—		1,829		2,168		—
Total impaired loans	$	56,641	$	65,118	$	7,120	$	63,504	$	80,232	$	3,630

Total impaired loans decreased by $6.9 million as of December 31, 2012 compared to December 31, 2011. Of those loans deemed to be impaired at December 31, 2011, $7.5 million were either charged off or transferred to foreclosed assets in 2012. Impaired loans without a specific reserve at December 31, 2011 totaling $22.8 million remained impaired without a specific reserve at December 31, 2012, while $4.3 million of impaired loans with specific reserves at December 31, 2011 remained impaired with a specific reserve at December 31, 2012.  A total of $18.8 million of loans were downgraded in 2012 and deemed to be impaired subsequent to December 31, 2011 while $7.3 million in loans had credit improvements in 2012 and were no longer considered impaired at December 31, 2012. Of the $18.8 million downgraded loans, $6.7 million had a specific reserve as of December 31, 2012. Impaired loans totaling $9.2 million as of December 31, 2011, subsequently paid off in 2012.

In addition, a portion of one loan totaling approximately $7.7 million with a specific allowance at December 31, 2011 was recategorized from the commercial construction and land development category to the commercial real estate category as a result of a portion of the loan converting to permanent mortgage status. This change accounts for the decrease in the commercial construction and land development category with a specific allowance.

The following table presents additional information regarding the Company's impaired loans for the twelve months ended December 31, 2012 and 2011:

	December 31, 2012				December 31, 2011
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Loans with no related allowance:
Commercial and industrial	$	11,567	$	171	$	12,901	$	141
Commercial tax-exempt	—		—		—		—
Owner occupied real estate	3,846		150		5,333		191
Commercial construction and      land development	10,319		510		11,803		231
Commercial real estate	12,434		319		9,500		192
Residential	3,994		43		3,557		6
Consumer	2,539		18		1,945		—
Total impaired loans with no   related allowance	44,699		1,211		45,039		761
Loans with an allowance recorded:
Commercial and industrial	5,258		—		7,974		—
Owner occupied real estate	1,571		—		453		—
Commercial construction and      land development	11,375		—		4,637		—
Commercial real estate	655		—		—		—
Total impaired loans with an   allowance recorded	18,859		—		13,064		—
Total impaired loans:
Commercial and industrial	16,825		171		20,875		141
Commercial tax-exempt	—		—		—		—
Owner occupied real estate	5,417		150		5,786		191
Commercial construction and      land development	21,694		510		16,440		231
Commercial real estate	13,089		319		9,500		192
Residential	3,994		43		3,557		6
Consumer	2,539		18		1,945		—
Total impaired loans	$	63,558	$	1,211	$	58,103	$	761

Impaired loans averaged approximately $63.6 million, $58.1 million and $74.6 million during 2012, 2011 and 2010, respectively. All nonaccrual loans are considered impaired and interest income is handled as discussed earlier in the nonaccrual section of this Note. Interest income continued to accrue on impaired loans that were still accruing and totaled $1.2 million, $761,000 and $1.3 million during 2012, 2011 and 2010, respectively.

The Bank assigns loan risk ratings as credit quality indicators of its loan portfolio: pass, special mention, substandard accrual, substandard nonaccrual and doubtful. Monthly, we track commercial loans that are no longer pass rated. We review the cash flow, operating results and financial condition of the borrower and any guarantors, as well as the collateral position against established policy guidelines as a means of providing a targeted list of loans and loan relationships that require additional attention within the loan portfolio. Special mention loans are those loans that are currently adequately protected, but potentially weak. The potential weaknesses may, if not corrected, weaken the loan's credit quality or inadvertently jeopardize our credit position in the future.  Substandard accrual and substandard nonaccrual assets are characterized by well-defined weaknesses that jeopardize the liquidation of the debt and by the possibility that the Bank will sustain some loss if the weaknesses are not corrected. Substandard accrual loans would move from accrual to nonaccrual when the Bank does not believe it will collect all of its contractual principal and interest payments. Some identifiers used to determine the collectibility are as follows: when the loan is 90 days past due in principal or interest, there are triggering events in the borrower's or any guarantor's financial statements that show continuing deterioration, the borrower's or any guarantor's source of repayment is depleting, or if bankruptcy or other legal matters are present, regardless if the loan is 90 days past due or not. Doubtful loans have all of the weaknesses inherent in those classified as substandard accrual and substandard nonaccrual with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently known facts, conditions and values, highly questionable and improbable. Pass rated loans are reviewed throughout the year through the recurring review process of an independent loan review function and through the application of other credit metrics.

Credit quality indicators for commercial loans broken out by loan type are presented in the following tables for the years ended December 31, 2012 and 2011. There were no loans classified as doubtful for the years ended December 31, 2012 or December 31, 2011.

	December 31, 2012
(in thousands)	Pass		Special Mention		Substandard Accrual		Substandard Nonaccrual		Doubtful		Total
Commercial credit exposure:
Commercial and industrial	$	335,463	$	6,120	$	24,116	$	11,289	$	—	$	376,988
Commercial tax-exempt	92,202		—		—		—		—		92,202
Owner occupied real estate	253,338		4,160		7,755		3,119		—		268,372
Commercial construction and land development	81,219		5,046		7,834		6,300		—		100,399
Commercial real estate	379,313		574		8,858		5,659		—		394,404
Total	$	1,141,535	$	15,900	$	48,563	$	26,367	$	—	$	1,232,365

	December 31, 2011
(in thousands)	Pass		Special Mention		Substandard Accrual		Substandard Nonaccrual		Doubtful		Total
Commercial credit exposure:
Commercial and industrial	$	280,884	$	9,176	$	21,766	$	10,162	$	—	$	321,988
Commercial tax-exempt	77,657		3,875		—		—		—		81,532
Owner occupied real estate	263,001		2,887		10,589		2,895		—		279,372
Commercial construction and land development	76,374		3,071		15,197		8,511		—		103,153
Commercial real estate	349,786		794		6,005		7,820		—		364,405
Total	$	1,047,702	$	19,803	$	53,557	$	29,388	$	—	$	1,150,450

Loans, other than pass rated loans, totaling $28.4 million at December 31, 2011, improved their credit quality rating during 2012 while an additional $4.6 million of such loans were charged off or transferred to foreclosed assets in 2012. Pass rated loans totaling $34.4 million at December 31, 2011 were downgraded during 2012.

Consumer credit exposures are rated as performing or nonperforming as detailed below at December 31, 2012 and 2011:

	December 31, 2012
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	80,696	$	3,203	$	83,899
Consumer	209,687		2,846		212,533
Total	$	290,383	$	6,049	$	296,432

	December 31, 2011
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	81,028	$	2,912	$	83,940
Consumer	200,449		1,829		202,278
Total	$	281,477	$	4,741	$	286,218

A TDR is a loan of which the contractual terms have been modified, resulting in the Bank granting a concession to a borrower who is experiencing financial difficulties, in order for the Bank to have a greater chance of collecting the indebtedness from the borrower.  An additional benefit to the Bank in granting a concession is to possibly avoid foreclosure or repossession of loan collateral at a time when collateral values are low.

The following table presents the recorded investment at the time of restructure of new TDRs and their concession, modified during the twelve month periods ended December 31, 2012 and 2011. The recorded investment at the time of restructure was the same pre-modification and post-modification, therefore there was no financial effect of the modification on the recorded investment. The loans included are considered TDRs as a result of the Bank implementing one or more of the following concessions: granting a material extension of time, entering into a forbearance agreement, adjusting the interest rate, accepting interest only payments for an extended period of time, a change in the amortization period or a combination of any of these concessions.

New TDRs with Concession Type:	Twelve Months Ended
	December 31, 2012			December 31, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment at Time of Restructure		Number of Contracts	Recorded Investment at Time of Restructure
Commercial and industrial:
Material extension of time	1	$	1,262	2	$	629
Forbearance agreement	—	—		4	12,456
Interest rate adjustment	1	3,404		—	—
Change in amortization period	—	—		4	405
Combination of concessions	2	3,231		—	—
Total commercial and industrial	4	7,897		10	13,490
Owner occupied real estate:
Forbearance agreement	—	—		1	87
Combination of concessions	1	1,451		—	—
Total owner occupied real estate	1	1,451		1	87
Commercial construction and land development:
Material extension of time	5	3,396		16	10,932
Forbearance agreement	—	—		1	231
Combination of concessions	1	3,546		—	—
Total commercial construction and land development	6	6,942		17	11,163
Commercial real estate:
Material extension of time	1	68		—	—
Forbearance agreement	—	—		1	93
Interest rate adjustment	—	—		1	1,194
Change in amortization period	—	—		3	3,081
Combination of concessions	1	3,275		—	—
Total commercial real estate	2	3,343		5	4,368
Residential:
Material extension of time	2	329		—	—
Interest rate adjustment	—	—		1	195
Change in amortization period	—	—		1	355
Combination of concessions	1	195		1	78
Total residential	3	524		3	628
Consumer:
Material extension of time	4	426		—	—
Combination of concessions	2	182		—	—
Total consumer	6	608		—	—
Total	22	$	20,765	36	$	29,736

Two commercial construction and land development relationships identified as accruing TDRs had additional unused commitments totaling $14,000 at December 31, 2012 as compared to six commercial construction and land development relationships identified as accruing TDRs that had additional unused commitments totaling $778,000 and one commercial relationship that had an additional unused commitment available of $329,000 at December 31, 2011.

The following table represents loans receivable modified as TDRs within the twelve months previous to December 31, 2012 and 2011, respectively, which subsequently defaulted during the 12 month periods ended December 31, 2012 and 2011, respectively. The Bank's policy is to consider a loan past due or delinquent if payment is not received on or before the due date.

Troubled Debt Restructurings That Subsequently Payment Defaulted:	Twelve Months Ended
	December 31, 2012			December 31, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial and industrial	3	$	3,901	4	$	5,531
Commercial tax-exempt	—	—		—	—
Owner occupied real estate	—	—		—	—
Commercial construction      and land development	6	6,169		11	9,162
Commercial real estate	1	66		2	747
Residential	2	258		3	617
Consumer	4	308		—	—
Total	16	$	10,702	20	$	16,057

Of the 16 contracts that subsequently payment defaulted during the year ended December 31, 2012, 13 contracts totaling $6.1 million were still in payment default at December 31, 2012. Seven of the 13 contracts totaling $1.3 million were less than 30 days past due.

All TDRs are considered impaired and, therefore, are individually evaluated for impairment in the calculation of the ALL. Prior to their classification as TDRs, certain of these loans had been collectively evaluated for impairment in the calculation of the ALL.

XML

Loan Commitments and Standby Letters of Credit

12 Months Ended

Dec. 31, 2012

Guarantees [Abstract]

Loan Commitments and Standby Letters of Credit

Loan Commitments and Standby Letters of Credit

Loan commitments are made to accommodate the financial needs of the Company's customers. Standby letters of credit commit the Company to make payments on behalf of customers when certain specified future events occur. They primarily are issued to facilitate the customers' normal course of business transactions. Standby performance letters of credit are written conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Historically, almost all of the Company's standby letters of credit expire unfunded.

The credit risk associated with letters of credit is essentially the same as that of traditional loan facilities and are subject to the Company's normal credit policies. Since the majority of the commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future funding requirements. Commitments generally have fixed expiration dates or other termination clauses. Management believes that the proceeds obtained through a liquidation of collateral, the enforcement of guarantees and normal collection activities against the borrower would be sufficient to cover the potential amount of future payment required under the corresponding letters of credit. The amount of the liability for guarantees under standby letters of credit issued was $48,000 and $0 as of December 31, 2012 and December 31, 2011, respectively.

The Company's maximum exposure to credit loss for loan commitments (unfunded loans and unused lines of credit, including home equity lines of credit) and standby letters of credit outstanding were as follows:

	December 31,
(in thousands)	2012		2011
Unfunded commitments of existing commercial loans	$	308,721	$	269,180
Unfunded commitments of existing consumer/residential loans	98,903		86,273
Standby letters of credit	34,052		36,455
Commitments to grant loans	4,862		11,658
Total	$	446,538	$	403,566

XML

Premises, Equipment and Leases

12 Months Ended

Dec. 31, 2012

Property, Plant and Equipment [Abstract]

Premises, Equipment and Leases

Premises, Equipment and Leases

Premises and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense for 2012, 2011 and 2010 was $5.8 million, $6.5 million and $6.1 million, respectively, and is computed on the straight-line method over the estimated useful lives of the related assets as listed in the table below. The estimated life for leasehold improvements is based on the shorter of the useful life or the lease term.

	Years
Buildings and leasehold improvements	1 - 40
Furniture, fixtures and equipment	1 - 10
Computer equipment and software	3 - 8

A summary of premises and equipment is as follows:

	December 31,
(in thousands)	2012		2011
Land	$	16,736	$	15,386
Buildings	67,047		66,913
Construction in process	1,199		1,535
Leasehold improvements	2,677		2,583
Furniture, fixtures and equipment	32,938		32,073
	120,597		118,490
Less accumulated depreciation and amortization	41,809		36,376
Total	$	78,788	$	82,114

Land, buildings and equipment are leased under noncancelable operating lease agreements that expire at various dates through 2032. Total rental expense for operating leases in 2012, 2011 and 2010 was $2.9 million, $3.1 million and $3.0 million, respectively. At December 31, 2012 future minimum lease payments for noncancelable operating leases are payable as follows:

(in thousands)
2013	$	2,504
2014	2,341
2015	2,262
2016	2,126
2017	1,958
Thereafter	17,000
Total minimum lease payments	$	28,191

XML

Loans Receivable and Allowance for Loan Losses (Consumer Loan Credit Exposures, Performing or Nonperforming) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	$ 296,432	$ 286,218
Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	83,899	83,940
Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	212,533	202,278
Performing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	290,383	281,477
Performing [Member] | Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	80,696	81,028
Performing [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	209,687	200,449
Nonperforming [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	6,049	4,741
Nonperforming [Member] | Residential [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	3,203	2,912
Nonperforming [Member] | Consumer [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Consumer loans receivable	$ 2,846	$ 1,829

XML

Stock Option Plans (Option Activity) (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Options Outstanding [Roll Forward]
Outstanding at beginning of year	1,076,067	1,069,774	1,030,267
Granted	241,575	242,300	192,900
Exercised	0	0	(13,508)
Forfeited/expired	(43,911)	(236,007)	(139,885)
Outstanding at end of year	1,273,731	1,076,067	1,069,774
Options exercisable	789,129	670,258	663,259
Options available for grant	327,184	549,003	511,525
Options, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning of year	$ 20.86	$ 21.74	$ 22.92
Granted	$ 11.50	$ 12.01	$ 12.31
Exercised	$ 0.00	$ 0.00	$ 7.92
Forfeited/expired	$ 17.25	$ 15.76	$ 18.75
Outstanding at end of year	$ 19.21	$ 20.86	$ 21.74
Options exercisable, Weighted Average Exercise Price	$ 23.58	$ 25.08	$ 24.63
Stock Options [Member]
Options Outstanding [Roll Forward]
Granted	241,575
Options, Weighted Average Exercise Price [Roll Forward]
Weighted-average fair value of options granted during the year	$ 5.99	$ 6.42	$ 6.47

XML

Loans Receivable and Allowance for Loan Losses (Loans Receivable Modified as Troubled Debt Restructurings, Previous 12 Months) (Details) (TDR's, Subsequently Defaulted [Member], USD $) In Thousands, unless otherwise specified																		12 Months Ended
	Dec. 31, 2012 Contracts	Dec. 31, 2011 Contracts	Dec. 31, 2012 Still in Payment Default at Year End [Member] Contracts	Dec. 31, 2012 Commercial and industrial [Member] Contracts	Dec. 31, 2011 Commercial and industrial [Member] Contracts	Dec. 31, 2012 Commercial tax-exempt [Member] Contracts	Dec. 31, 2011 Commercial tax-exempt [Member] Contracts	Dec. 31, 2012 Owner occupied real estate [Member] Contracts	Dec. 31, 2011 Owner occupied real estate [Member] Contracts	Dec. 31, 2012 Commercial construction and land development [Member] Contracts	Dec. 31, 2011 Commercial construction and land development [Member] Contracts	Dec. 31, 2012 Commercial real estate [Member] Contracts	Dec. 31, 2011 Commercial real estate [Member] Contracts	Dec. 31, 2012 Residential [Member] Contracts	Dec. 31, 2011 Residential [Member] Contracts	Dec. 31, 2012 Consumer [Member] Contracts	Dec. 31, 2011 Consumer [Member] Contracts	Dec. 31, 2012 Less Than 30 Days Past Due [Member] Contracts
Financing Receivable, Modifications [Line Items]
Number of Contracts	16	20	13	3	4	0	0	0	0	6	11	1	2	2	3	4	0	7
Recorded Investment	$ 10,702	$ 16,057	$ 6,100	$ 3,901	$ 5,531	$ 0	$ 0	$ 0	$ 0	$ 6,169	$ 9,162	$ 66	$ 747	$ 258	$ 617	$ 308	$ 0	$ 1,300
TDR contracts in payment default, period																		30 days

XML

Loans Receivable and Allowance for Loan Losses (Credit Quality Indicators for Commercial Loans, by Loan Type) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2012 Commercial and industrial [Member]	Dec. 31, 2011 Commercial and industrial [Member]	Dec. 31, 2012 Commercial tax-exempt [Member]	Dec. 31, 2011 Commercial tax-exempt [Member]	Dec. 31, 2012 Owner occupied real estate [Member]	Dec. 31, 2011 Owner occupied real estate [Member]	Dec. 31, 2012 Commercial construction and land development [Member]	Dec. 31, 2011 Commercial construction and land development [Member]	Dec. 31, 2012 Commercial real estate [Member]	Dec. 31, 2011 Commercial real estate [Member]	Dec. 31, 2012 Pass [Member]	Dec. 31, 2011 Pass [Member]	Dec. 31, 2012 Pass [Member] Commercial and industrial [Member]	Dec. 31, 2011 Pass [Member] Commercial and industrial [Member]	Dec. 31, 2012 Pass [Member] Commercial tax-exempt [Member]	Dec. 31, 2011 Pass [Member] Commercial tax-exempt [Member]	Dec. 31, 2012 Pass [Member] Owner occupied real estate [Member]	Dec. 31, 2011 Pass [Member] Owner occupied real estate [Member]	Dec. 31, 2012 Pass [Member] Commercial construction and land development [Member]	Dec. 31, 2011 Pass [Member] Commercial construction and land development [Member]	Dec. 31, 2012 Pass [Member] Commercial real estate [Member]	Dec. 31, 2011 Pass [Member] Commercial real estate [Member]	Dec. 31, 2012 Special Mention [Member]	Dec. 31, 2011 Special Mention [Member]	Dec. 31, 2012 Special Mention [Member] Commercial and industrial [Member]	Dec. 31, 2011 Special Mention [Member] Commercial and industrial [Member]	Dec. 31, 2012 Special Mention [Member] Commercial tax-exempt [Member]	Dec. 31, 2011 Special Mention [Member] Commercial tax-exempt [Member]	Dec. 31, 2012 Special Mention [Member] Owner occupied real estate [Member]	Dec. 31, 2011 Special Mention [Member] Owner occupied real estate [Member]	Dec. 31, 2012 Special Mention [Member] Commercial construction and land development [Member]	Dec. 31, 2011 Special Mention [Member] Commercial construction and land development [Member]	Dec. 31, 2012 Special Mention [Member] Commercial real estate [Member]	Dec. 31, 2011 Special Mention [Member] Commercial real estate [Member]	Dec. 31, 2012 Substandard Accrual [Member]	Dec. 31, 2011 Substandard Accrual [Member]	Dec. 31, 2012 Substandard Accrual [Member] Commercial and industrial [Member]	Dec. 31, 2011 Substandard Accrual [Member] Commercial and industrial [Member]	Dec. 31, 2012 Substandard Accrual [Member] Commercial tax-exempt [Member]	Dec. 31, 2011 Substandard Accrual [Member] Commercial tax-exempt [Member]	Dec. 31, 2012 Substandard Accrual [Member] Owner occupied real estate [Member]	Dec. 31, 2011 Substandard Accrual [Member] Owner occupied real estate [Member]	Dec. 31, 2012 Substandard Accrual [Member] Commercial construction and land development [Member]	Dec. 31, 2011 Substandard Accrual [Member] Commercial construction and land development [Member]	Dec. 31, 2012 Substandard Accrual [Member] Commercial real estate [Member]	Dec. 31, 2011 Substandard Accrual [Member] Commercial real estate [Member]	Dec. 31, 2012 Substandard Nonaccrual [Member]	Dec. 31, 2011 Substandard Nonaccrual [Member]	Sep. 30, 2012 Substandard Nonaccrual [Member] Commercial and industrial [Member]	Dec. 31, 2011 Substandard Nonaccrual [Member] Commercial and industrial [Member]	Sep. 30, 2012 Substandard Nonaccrual [Member] Commercial tax-exempt [Member]	Dec. 31, 2011 Substandard Nonaccrual [Member] Commercial tax-exempt [Member]	Sep. 30, 2012 Substandard Nonaccrual [Member] Owner occupied real estate [Member]	Dec. 31, 2011 Substandard Nonaccrual [Member] Owner occupied real estate [Member]	Sep. 30, 2012 Substandard Nonaccrual [Member] Commercial construction and land development [Member]	Dec. 31, 2011 Substandard Nonaccrual [Member] Commercial construction and land development [Member]	Sep. 30, 2012 Substandard Nonaccrual [Member] Commercial real estate [Member]	Dec. 31, 2011 Substandard Nonaccrual [Member] Commercial real estate [Member]	Dec. 31, 2012 Doubtful [Member]	Dec. 31, 2011 Doubtful [Member]	Dec. 31, 2012 Doubtful [Member] Commercial and industrial [Member]	Dec. 31, 2011 Doubtful [Member] Commercial and industrial [Member]	Dec. 31, 2012 Doubtful [Member] Commercial tax-exempt [Member]	Dec. 31, 2011 Doubtful [Member] Commercial tax-exempt [Member]	Dec. 31, 2012 Doubtful [Member] Owner occupied real estate [Member]	Dec. 31, 2011 Doubtful [Member] Owner occupied real estate [Member]	Dec. 31, 2012 Doubtful [Member] Commercial construction and land development [Member]	Dec. 31, 2011 Doubtful [Member] Commercial construction and land development [Member]	Dec. 31, 2012 Doubtful [Member] Commercial real estate [Member]	Dec. 31, 2011 Doubtful [Member] Commercial real estate [Member]	Dec. 31, 2011 Improved Credit Quality During the Period [Member] Other Than Pass Rated Loans [Member]	Dec. 31, 2011 Charged off or Transferred to Foreclosed Assets [Member] Other Than Pass Rated Loans [Member]	Dec. 31, 2011 Downgraded Credit Quality During the Period [Member] Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Credit exposure for commercial loans	$ 1,232,365	$ 1,150,450	$ 376,988	$ 321,988	$ 92,202	$ 81,532	$ 268,372	$ 279,372	$ 100,399	$ 103,153	$ 394,404	$ 364,405	$ 1,141,535	$ 1,047,702	$ 335,463	$ 280,884	$ 92,202	$ 77,657	$ 253,338	$ 263,001	$ 81,219	$ 76,374	$ 379,313	$ 349,786	$ 15,900	$ 19,803	$ 6,120	$ 9,176	$ 0	$ 3,875	$ 4,160	$ 2,887	$ 5,046	$ 3,071	$ 574	$ 794	$ 48,563	$ 53,557	$ 24,116	$ 21,766	$ 0	$ 0	$ 7,755	$ 10,589	$ 7,834	$ 15,197	$ 8,858	$ 6,005	$ 26,367	$ 29,388	$ 11,289	$ 10,162	$ 0	$ 0	$ 3,119	$ 2,895	$ 6,300	$ 8,511	$ 5,659	$ 7,820	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 28,400	$ 4,600	$ 34,400

XML

Fair Value Measurements (Estimated Fair Values of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Financial liabilities:
Deposits	$ 2,231,291
Carrying Amount [Member]
Financial assets:
Cash and cash equivalents	56,582	55,073
Securities	944,892	810,094
Loans Held-for-sale, Fair Value Disclosure	15,183	9,359
Loans, net	1,503,515	1,415,048
Restricted investments in bank stock	15,450	16,802
Accrued interest receivable	7,206	7,378
Financial liabilities:
Deposits		2,071,574
Short-term borrowings	113,225	65,000
Long-term debt	40,800	49,200
Accrued interest payable	308	487
Carrying Amount [Member] | Commitments to Extend Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0	0
Carrying Amount [Member] | Standby Letters of Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0	0
Fair Value [Member]
Financial assets:
Cash and cash equivalents	56,582	55,073
Securities	948,780	813,316
Loans Held-for-sale, Fair Value Disclosure	15,415	9,474
Loans, net	1,516,839	1,436,328
Restricted investments in bank stock	15,450	16,802
Accrued interest receivable	7,206	7,378
Financial liabilities:
Deposits	2,232,789	2,074,139
Short-term borrowings	113,225	65,000
Long-term debt	35,629	39,773
Accrued interest payable	308	487
Fair Value [Member] | Commitments to Extend Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0	0
Fair Value [Member] | Standby Letters of Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0	0
Fair Value [Member] | Fair Value, Inputs, Level 1 [Member]
Financial assets:
Cash and cash equivalents	56,582
Securities	0
Loans Held-for-sale, Fair Value Disclosure	0
Loans, net	0
Restricted investments in bank stock	0
Accrued interest receivable	7,206
Financial liabilities:
Deposits	0
Short-term borrowings	113,225
Long-term debt	0
Accrued interest payable	308
Fair Value [Member] | Fair Value, Inputs, Level 1 [Member] | Commitments to Extend Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0
Fair Value [Member] | Fair Value, Inputs, Level 1 [Member] | Standby Letters of Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0
Fair Value [Member] | Fair Value, Inputs, Level 2 [Member]
Financial assets:
Cash and cash equivalents	0
Securities	948,780
Loans Held-for-sale, Fair Value Disclosure	0
Loans, net	0
Restricted investments in bank stock	0
Accrued interest receivable	0
Financial liabilities:
Deposits	0
Short-term borrowings	0
Long-term debt	0
Accrued interest payable	0
Fair Value [Member] | Fair Value, Inputs, Level 2 [Member] | Commitments to Extend Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0
Fair Value [Member] | Fair Value, Inputs, Level 2 [Member] | Standby Letters of Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0
Fair Value [Member] | Fair value inputs, Level 3 [Member]
Financial assets:
Cash and cash equivalents	0
Securities	0
Loans Held-for-sale, Fair Value Disclosure	15,415
Loans, net	1,516,839
Restricted investments in bank stock	15,450
Accrued interest receivable	0
Financial liabilities:
Deposits	2,232,789
Short-term borrowings	0
Long-term debt	35,629
Accrued interest payable	0
Fair Value [Member] | Fair value inputs, Level 3 [Member] | Commitments to Extend Credit [Member]
Financial liabilities:
Off-balance sheet instruments	0
Fair Value [Member] | Fair value inputs, Level 3 [Member] | Standby Letters of Credit [Member]
Financial liabilities:
Off-balance sheet instruments	$ 0

XML

Loans Receivable and Allowance for Loan Losses Loans Receivable and Allowance for Loan Losses (Tables)

12 Months Ended

Dec. 31, 2012

Receivables [Abstract]

Summary of Loans Receivable

A summary of the Bank's loans receivable at December 31, 2012 and 2011 is as follows:

	December 31,
(in thousands)	2012		2011
Commercial and industrial	$	376,988	$	321,988
Commercial tax-exempt	92,202		81,532
Owner occupied real estate	268,372		279,372
Commercial construction and land development	100,399		103,153
Commercial real estate	394,404		364,405
Residential	83,899		83,940
Consumer	212,533		202,278
	1,528,797		1,436,668
Less: allowance for loan losses	25,282		21,620
Net loans receivable	$	1,503,515	$	1,415,048

Summary of Nonaccrual Loans, by Type

The following table summarizes nonaccrual loans by loan type at December 31, 2012 and 2011:

	December 31,
(in thousands)	2012		2011
Nonaccrual loans:
Commercial and industrial	$	11,289	$	10,162
Commercial tax-exempt	—		—
Owner occupied real estate	3,119		2,895
Commercial construction and land development	6,300		8,511
Commercial real estate	5,659		7,820
Residential	3,203		2,912
Consumer	2,846		1,829
Total nonaccrual loans	$	32,416	$	34,129

Age Analysis of Past Due Loan Receivables

The following table is an age analysis of past due loan receivables as of December 31, 2012 and 2011:

			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
December 31, 2012
Commercial and industrial	$	368,769	$	1,096	$	3,256	$	3,867	$	8,219	$	376,988	$	30
Commercial tax-exempt	92,202		—		—		—		—		92,202		—
Owner occupied real estate	265,817		610		353		1,592		2,555		268,372		—
Commercial construction and land development	89,250		4,251		4,318		2,580		11,149		100,399		188
Commercial real estate	386,821		3,846		78		3,659		7,583		394,404		—
Residential	76,587		4,303		1,252		1,757		7,312		83,899		—
Consumer	208,335		2,277		410		1,511		4,198		212,533		2
Total	$	1,487,781	$	16,383	$	9,667	$	14,966	$	41,016	$	1,528,797	$	220

			Past Due Loans										Recorded Investment in Loans 90 Days and Greater and Still Accruing
(in thousands)	Current		30-59 Days Past Due		60-89 Days Past Due		90 Days Past Due and Greater		Total Past Due		Total Loan Receivables
December 31, 2011
Commercial and industrial	$	317,016	$	696	$	1,083	$	3,193	$	4,972	$	321,988	$	—
Commercial tax-exempt	81,532		—		—		—		—		81,532		—
Owner occupied real estate	274,720		2,423		328		1,901		4,652		279,372		—
Commercial construction and land development	94,160		470		219		8,304		8,993		103,153		—
Commercial real estate	354,818		2,191		1,272		6,124		9,587		364,405		—
Residential	75,841		4,587		607		2,905		8,099		83,940		621
Consumer	199,671		1,314		350		943		2,607		202,278		71
Total	$	1,397,758	$	11,681	$	3,859	$	23,370	$	38,910	$	1,436,668	$	692

Summary of Allowances on Loan Receivables, by Class

A summary of the ALL and balance of loans receivable by loan class and by impairment method as of December 31, 2012 and 2011 is detailed in the tables that follow.

(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construc-tion and land devel-opment		Comm. real estate		Resi-dential		Con-sumer		Unallo-cated		Total
December 31, 2012
Allowance for loan losses:
Individually evaluated for impairment	$	2,399	$	—	$	1,451	$	2,470	$	800	$	—	$	—	$	—	$	7,120
Collectively evaluated for impairment	7,560		83		678		4,752		3,183		324		793		789		18,162
Total ALL	$	9,959	$	83	$	2,129	$	7,222	$	3,983	$	324	$	793	$	789	$	25,282
Loans receivable:
Loans evaluated   individually	$	13,082	$	—	$	3,380	$	15,549	$	17,136	$	4,163	$	3,331	$	—	$	56,641
Loans evaluated   collectively	363,906		92,202		264,992		84,850		377,268		79,736		209,202		—		1,472,156
Total loans receivable	$	376,988	$	92,202	$	268,372	$	100,399	$	394,404	$	83,899	$	212,533	$	—	$	1,528,797

(in thousands)	Comm. and industrial		Comm. tax-exempt		Owner occupied real estate		Comm. construction and land devel-opment		Comm. real estate		Resi-dential		Con-sumer		Unallo-cated		Total
December 31, 2011
Allowance for loan losses:
Individually evaluated for impairment	$	1,000	$	—	$	30	$	2,600	$	—	$	—	$	—	$	—	$	3,630
Collectively evaluated for impairment	7,400		79		699		5,240		3,241		435		831		65		17,990
Total ALL	$	8,400	$	79	$	729	$	7,840	$	3,241	$	435	$	831	$	65	$	21,620
Loans receivable:
Loans evaluated   individually	$	15,504	$	—	$	7,492	$	23,216	$	12,117	$	3,346	$	1,829	$	—	$	63,504
Loans evaluated   collectively	306,484		81,532		271,880		79,937		352,288		80,594		200,449		—		1,373,164
Total loans receivable	$	321,988	$	81,532	$	279,372	$	103,153	$	364,405	$	83,940	$	202,278	$	—	$	1,436,668

The following tables summarize the transactions in the ALL for the twelve months ended December 31, 2012 and 2011:

(in thousands)	Comm. and industrial			Comm. tax-exempt		Owner occupied real estate			Comm. construction and land development			Comm. real estate			Resi-dential			Consumer			Unallo-cated		Total
2012
Balance at January 1	$	8,400		$	79	$	729		$	7,840		$	3,241		$	435		$	831		$	65	$	21,620
Provision charged to operating expenses	3,634			4		2,165			243			2,498			193			639			724		10,100
Recoveries of loans previously charged-off	227			—		7			517			97			4			67			—		919
Loans charged-off	(2,302		)	—		(772		)	(1,378		)	(1,853		)	(308		)	(744		)	—		(7,357		)
Balance at December 31	$	9,959		$	83	$	2,129		$	7,222		$	3,983		$	324		$	793		$	789	$	25,282

(in thousands)	Comm. and industrial			Comm. tax-exempt			Owner occupied real estate			Comm. construction and land development			Comm. real estate			Resi-dential			Consumer			Unallo-cated			Total
2011
Balance at January 1	$	9,679		$	86		$	910		$	5,420		$	4,002		$	442		$	702		$	377		$	21,618
Provision charged to operating expenses	6,510			(7		)	13			13,038			76			113			1,161			(312		)	20,592
Recoveries of loans previously charged-off	156			—			60			11			15			68			135			—			445
Loans charged-off	(7,945		)	—			(254		)	(10,629		)	(852		)	(188		)	(1,167		)	—			(21,035		)
Balance at December 31	$	8,400		$	79		$	729		$	7,840		$	3,241		$	435		$	831		$	65		$	21,620

The following table summarizes the transactions in the ALL for the twelve months ended December 31, 2010. The table is presented in summary as the FASB guidance issued in July 2010 related to an entity's allowance for credit losses and the credit quality of its financing receivables required the activity by portfolio segment be disclosed only for periods beginning on or after December 15, 2010.

	Year Ended December 31,
(in thousands)	2010
Balance at beginning of year	$	14,391
Provision charged to expense	21,000
Recoveries	522
Loans charged off	(14,295		)
Balance at end of year	$	21,618

Schedule of Impaired Loan Receivables

The following table presents information regarding the Company's impaired loans as of December 31, 2012 and 2011:

	December 31, 2012						December 31, 2011
(in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans with no related allowance:
Commercial and industrial	$	7,426	$	11,746	$	—	$	14,504	$	19,672	$	—
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	1,929		2,301		—		7,000		8,845		—
Commercial construction and land development	7,716		8,500		—		11,203		19,756		—
Commercial real estate	12,965		14,619		—		12,117		12,390		—
Residential	4,163		4,423		—		3,346		3,729		—
Consumer	3,331		3,547		—		1,829		2,168		—
Total impaired loans with no related allowance	37,530		45,136		—		49,999		66,560		—
Loans with an allowance recorded:
Commercial and industrial	5,656		6,526		2,399		1,000		1,000		1,000
Owner occupied real estate	1,451		1,451		1,451		492		659		30
Commercial construction and land development	7,833		7,833		2,470		12,013		12,013		2,600
Commercial real estate	4,171		4,172		800		—		—		—
Total impaired loans with an allowance recorded	19,111		19,982		7,120		13,505		13,672		3,630
Total impaired loans:
Commercial and industrial	13,082		18,272		2,399		15,504		20,672		1,000
Commercial tax-exempt	—		—		—		—		—		—
Owner occupied real estate	3,380		3,752		1,451		7,492		9,504		30
Commercial construction and land development	15,549		16,333		2,470		23,216		31,769		2,600
Commercial real estate	17,136		18,791		800		12,117		12,390		—
Residential	4,163		4,423		—		3,346		3,729		—
Consumer	3,331		3,547		—		1,829		2,168		—
Total impaired loans	$	56,641	$	65,118	$	7,120	$	63,504	$	80,232	$	3,630

The following table presents additional information regarding the Company's impaired loans for the twelve months ended December 31, 2012 and 2011:

	December 31, 2012				December 31, 2011
(in thousands)	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Loans with no related allowance:
Commercial and industrial	$	11,567	$	171	$	12,901	$	141
Commercial tax-exempt	—		—		—		—
Owner occupied real estate	3,846		150		5,333		191
Commercial construction and      land development	10,319		510		11,803		231
Commercial real estate	12,434		319		9,500		192
Residential	3,994		43		3,557		6
Consumer	2,539		18		1,945		—
Total impaired loans with no   related allowance	44,699		1,211		45,039		761
Loans with an allowance recorded:
Commercial and industrial	5,258		—		7,974		—
Owner occupied real estate	1,571		—		453		—
Commercial construction and      land development	11,375		—		4,637		—
Commercial real estate	655		—		—		—
Total impaired loans with an   allowance recorded	18,859		—		13,064		—
Total impaired loans:
Commercial and industrial	16,825		171		20,875		141
Commercial tax-exempt	—		—		—		—
Owner occupied real estate	5,417		150		5,786		191
Commercial construction and      land development	21,694		510		16,440		231
Commercial real estate	13,089		319		9,500		192
Residential	3,994		43		3,557		6
Consumer	2,539		18		1,945		—
Total impaired loans	$	63,558	$	1,211	$	58,103	$	761

Credit Quality Indicators for Commercial Loans, by Loan Type

Consumer credit exposures are rated as performing or nonperforming as detailed below at December 31, 2012 and 2011:

	December 31, 2012
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	80,696	$	3,203	$	83,899
Consumer	209,687		2,846		212,533
Total	$	290,383	$	6,049	$	296,432

	December 31, 2011
(in thousands)	Performing		Nonperforming		Total
Consumer credit exposure:
Residential	$	81,028	$	2,912	$	83,940
Consumer	200,449		1,829		202,278
Total	$	281,477	$	4,741	$	286,218

Credit quality indicators for commercial loans broken out by loan type are presented in the following tables for the years ended December 31, 2012 and 2011. There were no loans classified as doubtful for the years ended December 31, 2012 or December 31, 2011.

	December 31, 2012
(in thousands)	Pass		Special Mention		Substandard Accrual		Substandard Nonaccrual		Doubtful		Total
Commercial credit exposure:
Commercial and industrial	$	335,463	$	6,120	$	24,116	$	11,289	$	—	$	376,988
Commercial tax-exempt	92,202		—		—		—		—		92,202
Owner occupied real estate	253,338		4,160		7,755		3,119		—		268,372
Commercial construction and land development	81,219		5,046		7,834		6,300		—		100,399
Commercial real estate	379,313		574		8,858		5,659		—		394,404
Total	$	1,141,535	$	15,900	$	48,563	$	26,367	$	—	$	1,232,365

	December 31, 2011
(in thousands)	Pass		Special Mention		Substandard Accrual		Substandard Nonaccrual		Doubtful		Total
Commercial credit exposure:
Commercial and industrial	$	280,884	$	9,176	$	21,766	$	10,162	$	—	$	321,988
Commercial tax-exempt	77,657		3,875		—		—		—		81,532
Owner occupied real estate	263,001		2,887		10,589		2,895		—		279,372
Commercial construction and land development	76,374		3,071		15,197		8,511		—		103,153
Commercial real estate	349,786		794		6,005		7,820		—		364,405
Total	$	1,047,702	$	19,803	$	53,557	$	29,388	$	—	$	1,150,450

Troubled Debt Restructurings on Loan Receivables, by Concession Type

The following table presents the recorded investment at the time of restructure of new TDRs and their concession, modified during the twelve month periods ended December 31, 2012 and 2011. The recorded investment at the time of restructure was the same pre-modification and post-modification, therefore there was no financial effect of the modification on the recorded investment. The loans included are considered TDRs as a result of the Bank implementing one or more of the following concessions: granting a material extension of time, entering into a forbearance agreement, adjusting the interest rate, accepting interest only payments for an extended period of time, a change in the amortization period or a combination of any of these concessions.

New TDRs with Concession Type:	Twelve Months Ended
	December 31, 2012			December 31, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment at Time of Restructure		Number of Contracts	Recorded Investment at Time of Restructure
Commercial and industrial:
Material extension of time	1	$	1,262	2	$	629
Forbearance agreement	—	—		4	12,456
Interest rate adjustment	1	3,404		—	—
Change in amortization period	—	—		4	405
Combination of concessions	2	3,231		—	—
Total commercial and industrial	4	7,897		10	13,490
Owner occupied real estate:
Forbearance agreement	—	—		1	87
Combination of concessions	1	1,451		—	—
Total owner occupied real estate	1	1,451		1	87
Commercial construction and land development:
Material extension of time	5	3,396		16	10,932
Forbearance agreement	—	—		1	231
Combination of concessions	1	3,546		—	—
Total commercial construction and land development	6	6,942		17	11,163
Commercial real estate:
Material extension of time	1	68		—	—
Forbearance agreement	—	—		1	93
Interest rate adjustment	—	—		1	1,194
Change in amortization period	—	—		3	3,081
Combination of concessions	1	3,275		—	—
Total commercial real estate	2	3,343		5	4,368
Residential:
Material extension of time	2	329		—	—
Interest rate adjustment	—	—		1	195
Change in amortization period	—	—		1	355
Combination of concessions	1	195		1	78
Total residential	3	524		3	628
Consumer:
Material extension of time	4	426		—	—
Combination of concessions	2	182		—	—
Total consumer	6	608		—	—
Total	22	$	20,765	36	$	29,736

Loans Receivable Modified as Troubled Debt Restructurings, Previous 12 Months, Subsequently Defaulted

The following table represents loans receivable modified as TDRs within the twelve months previous to December 31, 2012 and 2011, respectively, which subsequently defaulted during the 12 month periods ended December 31, 2012 and 2011, respectively. The Bank's policy is to consider a loan past due or delinquent if payment is not received on or before the due date.

Troubled Debt Restructurings That Subsequently Payment Defaulted:	Twelve Months Ended
	December 31, 2012			December 31, 2011
(dollars in thousands)	Number of Contracts	Recorded Investment		Number of Contracts	Recorded Investment
Commercial and industrial	3	$	3,901	4	$	5,531
Commercial tax-exempt	—	—		—	—
Owner occupied real estate	—	—		—	—
Commercial construction      and land development	6	6,169		11	9,162
Commercial real estate	1	66		2	747
Residential	2	258		3	617
Consumer	4	308		—	—
Total	16	$	10,702	20	$	16,057

XML

Securities (Gains (Losses) on the sales of debt securities and credit losses for OTTI of investments) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Gain (Loss) on Investments [Line Items]
Gross Realized Gains			$ 2,800
OTTI Credit Losses	(649)	(324)	(962)
Net Gains (Losses)	629	343	2,762
Debt Securities [Member]
Gain (Loss) on Investments [Line Items]
Gross Realized Gains	2,889	983	6,690
Gross Realized (Losses)	(1,838)	(633)	(3,889)
OTTI Credit Losses	(649)	(324)	(962)
Net Gains (Losses)	$ 402	$ 26	$ 1,839

XML

Stockholders' Equity

12 Months Ended

Dec. 31, 2012

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

At December 31, 2012 and 201140,000 shares of the Company's Series A $10 par value noncumulative nonvoting preferred stock was issued and outstanding. The preferred stock is redeemable at the option of the Company at the price of $25 per share plus any unpaid dividends. Dividends on the preferred stock are payable quarterly at a rate of $2 per share per annum.

The Company has a dividend reinvestment and stock purchase plan (the Plan). Holders of the Company's common stock may participate in the Plan in which reinvested dividends and voluntary cash payments of not less than $100 per month and not more than $10,000 per month may be reinvested in additional common shares. Officers are eligible to participate immediately and employees who have been continuously employed for at least one year are also eligible to participate in the Plan. The minimum investment is $25 per month for employees and $50 for officers with a maximum of $10,000 per month. Prior to January 1, 2012 the maximum monthly purchase amount was $25,000. During 2011, 500,000 additional shares were registered to the Plan. A total of 5,917, 376,962 and 288,559 common shares were issued pursuant to this Plan in 2012, 2011 and 2010, respectively. At December 31, 2012, the Company had reserved approximately 516,000 common shares to be issued in connection with the Plan.

On August 6, 2009, Metro filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission (SEC) which will allow the Company, from time to time, to offer and sell up to a total aggregate of $250.0 million of common stock, preferred stock, debt securities, or warrants, either separately or together in any combination. The shelf registration statement also registered trust preferred securities. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) excludes from regulatory capital trust preferred securities issued after May 19, 2010. Consequently, Metro has no plans to issue additional trust preferred securities. While Metro has always been well-capitalized under federal regulatory guidelines, the shelf registration better positions the Company to take advantage of potential opportunities for growth and to address current economic conditions. See the table for risk-based and leverage capital amounts and ratios in Note 15.

XML

Fair Value Measurements

12 Months Ended

Dec. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

The Company uses its best judgment in estimating the fair value of its financial instruments and certain nonfinancial assets; however, there are inherent weaknesses in any estimation technique due to assumptions that are susceptible to significant change. Therefore, for substantially all financial instruments and certain nonfinancial assets, the fair value estimates herein are not necessarily indicative of the amounts the Company could have realized in a sale transaction on the dates indicated. The estimated fair value amounts have been measured as of their respective year-ends and have not been reevaluated or updated for purposes of these financial statements subsequent to those respective dates.  As such, the estimated fair values of these financial instruments and certain nonfinancial assets subsequent to the respective reporting dates may be different than the amounts reported at each year-end.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses the following fair value hierarchy in selecting inputs with the highest priority given to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements): 

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;

Level 2: Quoted prices in markets that are not active, or inputs that are observable either directly or indirectly, for substantially the full term of the asset or liability;

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported with little or no market activity).

As required, financial and certain nonfinancial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The following table sets forth the Company's financial assets that were measured at fair value on a recurring basis at December 31, 2012 and December 31, 2011, respectively, by level within the fair value hierarchy:

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2012
U.S. Government agency securities	$	33,761	$	—	$	33,761	$	—
Residential MBSs	57,210		—		57,210		—
Agency CMOs	556,867		—		556,867		—
Municipal securities	27,271		—		27,271		—
Securities available for sale	$	675,109	$	—	$	675,109	$	—

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2011
U.S. Government agency securities	$	22,558	$	—	$	22,558	$	—
Residential MBSs	21,412		—		21,412		—
Agency CMOs	528,163		—		528,163		—
Private-label CMOs	23,006		—		23,006		—
Corporate debt securities	18,320		—		18,320		—
Securities available for sale	$	613,459	$	—	$	613,459	$	—

As of December 31, 2012 and December 31, 2011, the Company did not have any liabilities that were measured at fair value on a recurring basis.

Impaired Loans (Generally Carried at Fair Value)

Impaired loans are those that the Company has measured impairment of based on the fair value of the loan's collateral. Fair value is generally determined based upon independent third party appraisals or valuations of the collateral properties. The discount rates used on collateral dependent loans vary based on the type of collateral. The range of discount rates used for real estate collateral ranges from 15% to 35%; inventory and equipment is generally discounted at 50% and accounts receivable are generally discounted by 20%. These assets are included as Level 3 fair values, based upon the lowest level of unobservable input that is significant to the fair value measurements. The fair value consists of the loan balance less any valuation allowance. The valuation allowance amount is calculated as the difference between the recorded investment in a loan and the present value of expected future cash flows or it is calculated based on discounted collateral values if the loan is collateral dependent.

At December 31, 2012, the cumulative fair value of seven impaired loans with individual allowance allocations totaled $12.0 million, net of valuation allowances of $7.1 million and the fair value of impaired loans that were partially charged off during 2012 totaled $4.2 million, net of charge-offs of $2.6 million. At December 31, 2011, the cumulative fair value of four impaired loans with individual allowance allocations totaled $9.9 million, net of valuation allowances of $3.6 million and impaired loans that were partially charged off during 2011 totaled $1.2 million, net of charge-offs of $10.1 million. The Company's impaired loans are more fully discussed in Note 4.

Foreclosed Assets (Carried at Lower of Cost or Fair Value)

The fair value of real estate acquired through foreclosure is based on independent third party appraisals of the properties, less estimated selling costs. A standard discount rate of 15%, to cover estimated costs to sell the property, is generally used on the most recent appraisal to determine the fair value of the real estate. These assets are included as Level 3 fair values, based upon the lowest level of unobservable input that is significant to the fair value measurements. There were no foreclosed assets with valuation allowances recorded subsequent to initial foreclosure at December 31, 2012. At December 31, 2011, the carrying value of foreclosed assets, with valuation allowances recorded subsequent to initial foreclosure was $3.0 million which was net of a valuation allowance of $1.8 million.

The determination of the fair value of assets measured on a nonrecurring basis is sensitive to changes in economic conditions and can fluctuate in a relatively short period of time. For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used were as follows:

For assets measured at fair value on a nonrecurring basis, the fair value measurements by level within the fair value hierarchy used were as follows:

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2012
Impaired loans with specific allocation	$	11,991	$	—	$	—	$	11,991
Impaired loans net of partial charge-offs	4,227		—		—		4,227
Foreclosed assets	—		—		—		—
Total	$	16,218	$	—	$	—	$	16,218

			Fair Value Measurements at Reporting Date Using
Description			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
December 31, 2011
Impaired loans with specific allocation	$	9,875	$	—	$	—	$	9,875
Impaired loans net of partial charge-offs	1,151		—		—		1,151
Foreclosed assets	3,041		—		—		3,041
Total	$	14,067	$	—	$	—	$	14,067

The Company's policy is to recognize transfers between levels as of the beginning of the period. There were no transfers between levels 1 and 2 or between levels 2 and 3 for the twelve months ended December 31, 2012.

The following information should not be interpreted as an estimate of the fair value of the entire Company since a fair value calculation is only provided for a limited portion of the Company's assets and liabilities. Due to a wide range of valuation techniques and the degree of subjectivity used in making the estimates, comparisons between the Company's disclosures and those of other companies may not be meaningful. The following valuation techniques were used to estimate the fair values of the Company's financial instruments at December 31, 2012 and 2011:

Cash and Cash Equivalents (Carried at Cost)

Cash and cash equivalents include cash, balances due from banks and federal funds sold, all of which have original maturities of 90 days or less. The carrying amounts reported in the balance sheet for cash and short-term instruments approximate those assets' fair values.

Securities

The fair value of securities available for sale (carried at fair value) and held to maturity (carried at amortized cost) are determined by matrix pricing (Level 2), which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted market prices for the specific securities but rather by relying on the securities' relationship to other benchmark prices. In determining fair market values for its portfolio holdings, the Company receives information from a third party provider which management evaluates and corroborates. Under the current guidance, these values are considered Level 2 inputs, based upon mathematically derived matrix pricing and observed data from similar assets. They are not Level 1 direct quotes, nor do they reflect Level 3 inputs that would be derived from internal analysis or judgment. As the Company does not manage a trading portfolio and typically only sells from its AFS portfolio in order to manage interest rate risk or credit exposure, direct quotes, or street bids, are warranted on an as-needed basis only.

Loans Held for Sale (Carried at Lower of Cost or Fair Value)

The fair value of loans held for sale is determined, when possible, using quoted secondary-market prices.  If no such quoted prices exist, the fair value of a loan is determined using quoted prices for a similar loan or loans, adjusted for the specific attributes of that loan. The Company did not write down any loans held for sale during the years ended December 31, 2012 and 2011.

Loans Receivable (Carried at Cost)

The fair value of loans receivable, excluding all nonaccrual loans and accruing loans deemed impaired with specific loan allowances, are estimated using a discounted cash flow analysis, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the respective loans. Projected future cash flows are calculated based upon contractual maturity, projected repayments and prepayments of principal. Generally, for variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values.

Restricted Investment in Bank Stock (Carried at Cost)

The carrying amount of restricted investments in bank stock approximates fair value and considers the limited marketability of such securities. The restricted investments in bank stock consisted of FHLB and ACBB stock at December 31, 2012 and 2011.

Accrued Interest Receivable and Payable (Carried at Cost)

The carrying amount of accrued interest receivable and accrued interest payable approximates its fair value.

Deposit Liabilities (Carried at Cost)

The fair values disclosed for demand deposits (e.g., interest and noninterest checking, savings and money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amounts). Fair values for fixed-rate certificates of deposits (CDs) are estimated using a discounted cash flow calculation that applies interest rates currently being offered in the market on certificates to a schedule of aggregated expected monthly maturities on time deposits.

Short-Term Borrowings (Carried at Cost)

The carrying amounts of short-term borrowings approximate their fair values.

Long-Term Debt (Carried at Cost)

Long-term debt was estimated using a discounted cash flow analysis, based on quoted prices from a third party broker for new debt with similar characteristics, terms and remaining maturity. The price for the certain long-term debt was obtained in an inactive market where these types of instruments are not traded regularly. 

Off-Balance Sheet Financial Instruments (Disclosed at Cost)

Fair values for the Company's off-balance sheet financial instruments (lending commitments and letters of credit) are based on fees currently charged in the market to enter into similar agreements, taking into account, the remaining terms of the agreements and the counterparties' credit standing.

The estimated fair values of the Company's financial instruments were as follows at December 31, 2012 and 2011:

Fair Value Measurements at December 31, 2012
					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(in thousands)	Carrying Amount		Fair  Value		(Level 1)		(Level 2)		(Level 3)
Financial assets:
Cash and cash equivalents	$	56,582	$	56,582	$	56,582	$	—	$	—
Securities	944,892		948,780		—		948,780		—
Loans, held for sale	15,183		15,415		—		—		15,415
Loans receivable, net	1,503,515		1,516,839		—		—		1,516,839
Restricted investments in bank stock	15,450		15,450		—		—		15,450
Accrued interest receivable	7,206		7,206		7,206		—		—
Financial liabilities:
Deposits	$	2,231,291	$	2,232,789	$	—	$	—	$	2,232,789
Short-term borrowings	113,225		113,225		113,225		—		—
Long-term debt	40,800		35,629		—		—		35,629
Accrued interest payable	308		308		308		—		—
Off-balance sheet instruments:
Standby letters of credit	$	—	$	—	$	—	$	—	$	—
Commitments to extend credit	—		—		—		—		—

Fair Value Measurements at December 31, 2011
(in thousands)	Carrying Amount		Fair  Value
Financial assets:
Cash and cash equivalents	$	55,073	$	55,073
Securities	810,094		813,316
Loans, held for sale	9,359		9,474
Loans receivable, net	1,415,048		1,436,328
Restricted investments in bank stock	16,802		16,802
Accrued interest receivable	7,378		7,378
Financial liabilities:
Deposits	$	2,071,574	$	2,074,139
Short-term borrowings	65,000		65,000
Long-term debt	49,200		39,773
Accrued interest payable	487		487
Off-balance sheet instruments:
Standby letters of credit	$	—	$	—
Commitments to extend credit	—		—

XML

Related Party Transactions Related Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Related Party Transactions [Abstract]
Payments for goods and services, related parties	$ 907	$ 841	$ 699

XML

Securities (Amortized cost and fair value of securities) (Details) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2012	Dec. 31, 2011
Available-for-sale Securities
Available-for-sale securities, amortized cost basis	$ 664,139	$ 607,680
Securities available for sale, gross unrealized gains	11,967	9,554
Securities available for sale, gross unrealized losses	(997)	(3,775)
Securities available for sale, fair value	675,109	613,459
Held-to-maturity Securities
Securities held to maturity, amortized cost	269,783	196,635
Securities held to maturity, gross unrealized gains	4,251	3,707
Securities held to maturity, gross unrealized losses	(363)	(485)
Securities held to maturity, fair value	273,671	199,857
Debt Securities [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	196,905
U.S. Government agency securities [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	178,926	97,750
Securities held to maturity, gross unrealized gains	700	88
Securities held to maturity, gross unrealized losses	(363)	0
Securities held to maturity, fair value	179,263	97,838
Residential mortgage-backed securities [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	23,827	37,658
Securities held to maturity, gross unrealized gains	1,889	2,769
Securities held to maturity, gross unrealized losses	0	0
Securities held to maturity, fair value	25,716	40,427
Agency CMOs [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	49,051	45,122
Securities held to maturity, gross unrealized gains	1,587	840
Securities held to maturity, gross unrealized losses	0	(1)
Securities held to maturity, fair value	50,638	45,961
Corporate debt securities [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	15,000	15,000
Securities held to maturity, gross unrealized gains	13	0
Securities held to maturity, gross unrealized losses	0	(484)
Securities held to maturity, fair value	15,013	14,516
Municipal securities [Member]
Held-to-maturity Securities
Securities held to maturity, amortized cost	2,979	1,105
Securities held to maturity, gross unrealized gains	62	10
Securities held to maturity, gross unrealized losses	0	0
Securities held to maturity, fair value	3,041	1,115
Debt Securities [Member]
Available-for-sale Securities
Available-for-sale securities, amortized cost basis	60,884
U.S. Government agency securities [Member]
Available-for-sale Securities
Available-for-sale securities, amortized cost basis	33,994	22,500
Securities available for sale, gross unrealized gains	19	58
Securities available for sale, gross unrealized losses	(252)	0
Securities available for sale, fair value	33,761	22,558
Residential mortgage-backed securities [Member]
Available-for-sale Securities
Available-for-sale securities, amortized cost basis	55,614	21,087
Securities available for sale, gross unrealized gains	1,596	325
Securities available for sale, gross unrealized losses	0	0
Securities available for sale, fair value	57,210	21,412
Agency CMOs [Member]
Available-for-sale Securities
Available-for-sale securities, amortized cost basis	547,641	519,167
Securities available for sale, gross unrealized gains	9,971	9,171
Securities available for sale, gross unrealized losses	(745)	(175)
Securities available for sale, fair value	556,867	528,163
Private-label CMOs [Member]
Available-for-sale Securities
Available-for-sale securities, amortized cost basis		24,974
Securities available for sale, gross unrealized gains		0
Securities available for sale, gross unrealized losses		(1,968)
Securities available for sale, fair value		23,006
Corporate debt securities [Member]
Available-for-sale Securities
Available-for-sale securities, amortized cost basis		19,952
Securities available for sale, gross unrealized gains		0
Securities available for sale, gross unrealized losses		(1,632)
Securities available for sale, fair value		18,320
Municipal securities [Member]
Available-for-sale Securities
Available-for-sale securities, amortized cost basis	26,890
Securities available for sale, gross unrealized gains	381
Securities available for sale, gross unrealized losses	0
Securities available for sale, fair value	$ 27,271

XML

Stock Option Plans (Tables)

12 Months Ended

Dec. 31, 2012

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Options, Activity

Combined stock option transactions under both Plans were as follows:

	Years Ended December 31,
	2012				2011				2010
	Options		Weighted Avg. Exercise Price		Options		Weighted Avg. Exercise Price		Options		Weighted Avg. Exercise Price
Outstanding at beginning of year	1,076,067		$	20.86	1,069,774		$	21.74	1,030,267		$	22.92
Granted	241,575		11.50		242,300		12.01		192,900		12.31
Exercised	—		—		—		—		(13,508	)	7.92
Forfeited/expired	(43,911	)	17.25		(236,007	)	15.76		(139,885	)	18.75
Outstanding at end of year	1,273,731		$	19.21	1,076,067		$	20.86	1,069,774		$	21.74
Exercisable at December 31	789,129		$	23.58	670,258		$	25.08	663,259		$	24.63
Options available for grant at December 31	327,184				549,003				511,525
Weighted-average fair value of options   granted during the year			$	5.99			$	6.42			$	6.47

Shares Authorized under Stock Option Plans, by Exercise Price Range

Exercise prices for options outstanding as of December 31, 2012 are presented in the following table:

	Options Outstanding	Weighted Avg. Exercise  Price		Weighted Avg. Remaining Contractual Life	Options Exercisable	Weighted Avg. Exercise Price
Options with exercise prices ranging from     $8.46 to $16.41	704,241	$	12.68	7.9 years	220,016	$	13.99
Options with exercise prices ranging from     $16.42 to $25.38	170,835	21.86		0.7 years	170,458	21.86
Options with exercise prices ranging from     $25.39 to $33.50	398,655	29.61		3.8 years	398,655	29.61
Total options outstanding with exercise     prices ranging from $8.46 to $33.50	1,273,731	$	19.21	5.6 years	789,129	$	23.58

Schedule of Nonvested Share Activity

The following table represents nonvested options as of December 31, 2012:

		Number of Shares		Weighted Avg. Grant Date Fair Value
Nonvested options,	December 31, 2011	405,809		$	6.84
Granted		241,575		5.99
Vested		(149,200	)	7.49
Forfeited		(13,582	)	6.10
Nonvested options,	December 31, 2012	484,602		$	6.24

XML

Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Net income (loss)	$ 10,894	$ 289	$ (4,337)
Other comprehensive income, net of tax:
Net unrealized holding gains arising during the period (net of taxes 2012: $1,758; 2011 $4,872; 2010 $2,227)	3,413	9,457	3,830
Reclassification adjustment for net realized losses on securities recorded in income (net of taxes 2012: ($220); 2011 ($117); 2010 ($941)	(409)	(227)	(1,826)
Reclassification for OTTI credit losses recorded in income (net of taxes 2012: $227; 2011 $110; 2010 $327)	422	214	635
Noncredit related OTTI loss on securities not expected to be sold (net of taxes 2012: $0; 2011 $0; 2010 $1,340)	0	0	2,602
Other comprehensive income	3,426	9,444	5,241
Total comprehensive income	$ 14,320	$ 9,733	$ 904

XML

Regulatory Matters Regulatory Matters (Details) (USD $)	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2012 Metro Bancorp, Inc. [Member]	Dec. 31, 2011 Metro Bancorp, Inc. [Member]	Dec. 31, 2012 Metro Bank [Member]	Dec. 31, 2011 Metro Bank [Member]
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital, Actual Amount		$ 264,944,000	$ 260,405,000	$ 253,852,000	$ 238,919,000
Total capital, Actual Ratio		15.22%	15.36%	14.59%	14.12%
Total capital, For Capital Adequacy Purposes, Amount		139,227,000	135,637,000	139,160,000	135,358,000
Total capital, For Capital Adequacy Purposes, Ratio		8.00%	8.00%	8.00%	8.00%
Total capital, To Be Well-Capitalized Under Prompt Corrective Action Provisions, Amount				173,950,000	169,197,000
Total capital, To Be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio				10.00%	10.00%
Tier 1 capital, Actual Amount		243,147,000	239,206,000	232,065,000	217,764,000
Tier 1 capital, Actual Ratio		13.97%	14.11%	13.34%	12.87%
Tier 1 capital, For Capital Adequacy Purposes, Amount		69,614,000	67,818,000	69,580,000	67,679,000
Tier 1 capital, For Capital Adequacy Purposes, Ratio		4.00%	4.00%	4.00%	4.00%
Tier 1 capital, To Be Well-Capitalized Under Prompt Corrective Action Provisions, Amount				104,370,000	101,518,000
Tier 1 capital, To Be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio				6.00%	6.00%
Leverage ratio, Actual Amount		243,147,000	239,206,000	232,065,000	217,764,000
Leverage ratio, Actual Ratio		9.61%	9.99%	9.18%	9.10%
Leverage ratio, For Capital Adequacy Purposes, Amount		101,172,000	95,797,000	101,167,000	95,747,000
Leverage ratio, For Capital Adequacy Purposes, Ratio		4.00%	4.00%	4.00%	4.00%
Leverage ratio, To Be Well-Capitalized Under Prompt Corrective Action Provisions, Amount				126,459,000	119,684,000
Leverage ratio, To Be Well-Capitalized Under Prompt Corrective Action Provisions, Ratio				5.00%	5.00%
Civil money penalty, nonrecurring	$ 1,500,000.0

XML

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2012

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Nature of Operations and Basis of Presentation

Metro Bancorp, Inc. (Metro or the Company) is a Pennsylvania business corporation, which is registered as a bank holding company under the Bank Holding Company Act of 1956, as amended. The Company was incorporated on April 23, 1999 and became an active bank holding company on July 1, 1999. The Company is a one-bank holding company headquartered in Harrisburg, Pennsylvania and provides full banking services through its subsidiary, Metro Bank (the Bank). The Company is subject to regulation by the Federal Reserve Bank (FRB). Metro Bank is the Company's operating entity and is headquartered in Lemoyne, Pennsylvania. The Bank became a state-chartered bank on November 7, 2008, following approval by the Pennsylvania Department of Banking of the Bank's application to convert from a national bank charter to a state bank charter. As a Pennsylvania state-chartered bank, Metro Bank is supervised jointly by the Pennsylvania Department of Banking and Securities and the Federal Deposit Insurance Corporation (FDIC). The Bank is a financial services retailer with 33 stores in the counties of Berks, Cumberland, Dauphin, Lancaster, Lebanon and York, Pennsylvania.

The consolidated financial statements presented include the accounts of Metro Bancorp, Inc. and its wholly-owned subsidiary Metro Bank. All material intercompany transactions have been eliminated. Events occurring subsequent to the date of the balance sheet have been evaluated for potential recognition or disclosure in the consolidated financial statements.

Use of Estimates

The consolidated financial statements are prepared in conformity with generally accepted accounting principles (GAAP).  GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and require disclosure of contingent assets and liabilities. In the opinion of management, all adjustments considered necessary for fair presentation have been included and are of a normal, recurring nature. Actual results could differ from these estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses (allowance or ALL), impaired loans, the valuation of foreclosed assets, the valuation of securities available for sale, the valuation of deferred tax assets, the determination of other-than-temporary impairment (OTTI) on the Company's investment securities portfolio and fair value measurements.

Other Comprehensive Income

Accounting principles generally require that recognized revenue, expenses, gains and losses be included in net income. Although certain changes in assets and liabilities, such as unrealized gains and losses on available for sale (AFS) securities, are reported as a separate component of the equity section of the balance sheet, such items, along with net income are components of comprehensive income. The only comprehensive income items that the Company presently has other than net income are net unrealized gains on securities available for sale and unrealized losses for noncredit-related losses on debt securities. These items are presented net of tax in the Statement of Comprehensive Income.

Significant Group Concentrations of Credit Risk

Most of the Company's activities are with customers located within the South Central Pennsylvania Region. Note 3 discusses the types of securities that the Company invests in. Notes 4 and 6 discuss the types of lending that the Company engages in as well as loan concentrations. The Company does not have any significant concentrations to any one customer, or group of customers with similar economic characteristics.

Securities

Securities classified as held to maturity are those debt securities that the Company has both the intent and ability to hold to maturity regardless of changes in market conditions, liquidity needs, or general economic conditions. These securities are carried at cost adjusted for amortization of premium and accretion of discount, computed by the interest method over the estimated average life of the securities.

Securities classified as available for sale are those debt securities that the Company intends to hold for an indefinite period of time, but not necessarily to maturity. Any decision to sell a security classified as available for sale would be based on various factors, including significant movements in interest rates, changes in the maturity mix of the Company's assets and liabilities, liquidity needs, regulatory capital considerations and other similar factors. Securities available for sale are carried at fair value. Unrealized gains or losses are reported in other comprehensive income, net of the related deferred tax effect. Realized gains or losses, determined on the basis of the cost of the specific securities sold, are included in earnings. Premiums and discounts are recognized in interest income using the interest method over the estimated average life of the securities. Management determines the appropriate classification of debt securities at the time of purchase.

Other-Than-Temporary Impairment

The Company follows the fair value measurement guidance which clarifies the interaction of the factors that should be considered when determining whether a debt security is other-than-temporarily impaired. For debt securities, management assesses whether we have the intent to sell the security or it is more likely than not that we will be required to sell the security prior to its anticipated recovery. The Company forecasts recovery of the value of the security through either cash flows or market price.

In instances when a determination is made that an OTTI exists but we do not intend to sell the debt security and it is not likely that we will be required to sell the debt security prior to its anticipated recovery, the OTTI is separated into (a) the amount of the total OTTI related to a decrease in cash flows expected to be collected from the debt security (the credit loss) and (b) the amount related to all other factors. The amount of the OTTI related to the credit loss is recognized in earnings and the amount of the OTTI related to all other factors is recognized in other comprehensive income.

Loans Held for Sale

Loans held for sale are comprised of student loans and selected residential mortgage loans the Company originates with the intention of selling in the future. Prior to September 30, 2011, loans held for sale also included Small Business Administration (SBA) loans the Company originated with the intention of selling. Occasionally, loans held for sale also include selected business and industry loans that the Company decides to sell. Held for sale loans are carried at the lower of cost or estimated fair value, calculated in the aggregate. At the present time, the majority of the Company's residential loans are originated with the intent to sell to the secondary market unless a loan is nonconforming to the secondary market standards or if we agree not to sell the loan due to a customer's request. The residential mortgage loans that are designated as held for sale are sold to other financial institutions in correspondent relationships. The sale of these loans takes place typically within 30 days of funding. The Bank does not retain the servicing on its residential mortgage loans or its student loans.

The Company holds SBA loans in the Company's loan receivable portfolio unless or until the Company's management determines a sale of certain loans is appropriate. At the time such a decision would be made, the SBA loans will be moved from the loans receivable portfolio to the loans held for sale portfolio. In previous years, as well as for the first half of 2011, the Company was originating SBA loans with the intent to sell the guaranteed portion of the loans. The Company received proceeds of $12.1 million on sales of SBA loans in 2011 and recognized a gain of $1.9 million on those sales. There were no such sales in 2012.

Total loans held for sale were $15.2 million and $9.4 million at December 31, 2012 and 2011, respectively.  At December 31, 2012, loans held for sale were comprised of $3.8 million of student loans and $11.4 million of residential mortgages as compared to $5.2 million of student loans and $4.2 million of residential mortgages at December 31, 2011. 

Loans Receivable

Loans receivable that management has the intent and ability to hold for the foreseeable future, or until maturity or payoff, are stated at their outstanding unpaid principal balances, net of an ALL and any deferred fees and costs. Interest income is accrued on the unpaid principal balance. Loan origination fees and costs are deferred and recognized as an adjustment of the yield (interest income) of the related loans. The Company is generally amortizing these amounts over the contractual life of the loan.

A loan is considered past due or delinquent if payment is not received on or before the due date. The accrual of interest is generally discontinued when the contractual payment of principal or interest has become 90 days past due or management has serious doubts about further collectibility of principal or interest, even though the loan may be currently performing. A loan may remain on accrual status if it is in the process of collection and is either guaranteed or well secured. When a loan is placed on nonaccrual status, unpaid interest credited to income in the current year is reversed and unpaid interest accrued in prior years is charged against the ALL. Interest received on nonaccrual loans generally is either applied against principal or reported as interest income, according to management's judgment as to the collectibility of principal. If a loan is substandard and accruing, interest is recognized as accrued. Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time and the ultimate collectibility of the total contractual principal and interest is no longer in doubt.

Allowance for Loan Losses

The ALL is established through provisions for loan losses charged against income. Loans, or portions thereof, deemed to be uncollectible are charged against the ALL and subsequent recoveries, if any, are credited to the allowance. The evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. Loans are evaluated for impairment once the loan has been internally risk rated substandard or lower or has been modified as a troubled debt restructuring (TDR).

The allowance consists of specific and general components. The specific component relates to loans that are classified as impaired. For such loans, an allowance is established when the discounted cash flows, net collateral value or observable market price of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical loss experience adjusted for qualitative factors. These qualitative factors represent a portion of the allowance established for losses inherent in the loan portfolio, which have not been identified by the quantitative processes. This determination inherently involves a higher degree of subjectivity and considers risk factors that may not have yet manifested themselves in historical loss experience. These factors include:

• Changes in lending policies and procedures, including changes in underwriting standards;

• Changes in levels and trends of collection, charge-off and recovery practices;

• Changes in the volume and severity of past due loans, the volume of nonaccrual loans and the volume and severity of adversely classified or graded loans;

• Material changes in the mix, volume or duration of the portfolio;

• Changes in the value of underlying collateral for collateral-dependent loans;

• Changes in the quality of our loan review system;

• Changes in the experience, ability and depth of lending management and other relevant staff;

• The existence and effect of any concentrations of credit and changes in the level of such concentrations; and

• Changes in international, national, regional and local economic and business conditions and developments that affect the collectibility of the portfolio, including the condition of various market segments and the effect of other external factors such as competition and legal and regulatory requirements on the level of estimated credit losses in our existing portfolio.

Additionally, the general component factors in uncertainties that could affect management's estimates of probable losses.

The ALL is maintained at a level considered adequate to provide for losses that can be reasonably anticipated. Management's periodic evaluation of the adequacy of the allowance is based on the Company's past loan loss experience, known and inherent risks in the portfolio, adverse situations that may affect the borrower's ability to repay, the estimated value of any underlying collateral, composition of the loan portfolio, current economic conditions and other relevant factors. During the third quarter of 2010, as part of the quantitative analysis of the adequacy of the ALL, management adjusted its projection of probable loan losses based upon a much shorter and more recent period of actual historical losses. This was done as a result of the higher level of loan charge-offs experienced by the Company over the preceding two years as compared to the previous years. The change in this estimate resulted in an additional $3.6 million of provision for loan losses in the third quarter of 2010. The impact of this additional provision for 2010 was an additional after tax loss of $2.4 million, or $0.17 per common share.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, borrower's financial condition, market conditions for the borrowers' type of industry and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays generally are not classified as impaired. Management determines the significance of payment delays on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay and the borrower's prior payment record. Impairment is measured on a loan-by-loan basis for commercial loans by either the present value of expected future cash flows discounted at the loan's effective interest rate, the loan's obtainable market price or the fair value of the collateral if the loan is collateral dependent.

All nonaccrual loansare evaluated individually to determine whether a charge-off is necessary due to a collateral deficiency.

Restricted Investments in Bank Stock

Restricted investments in bank stock consists of stock of the Federal Home Loan Bank (FHLB) of Pittsburgh and the Atlantic Central Bankers Bank (ACBB). Federal law requires a member institution of the FHLB system to hold stock of its district FHLB according to a predetermined formula.  At December 31, 2012, the Company held $15.4 million of FHLB stock and $65,000 of ACBB stock. Of this amount, $4.5 million was required for membership, $6.9 million was required to cover the Company's borrowing level at the FHLB and the remaining $4.0 million was excess that the FHLB has not repurchased at this time due to a repurchase suspension the FHLB put in place in December of 2008. The suspension was partially lifted where the Company received a fraction of its excess stock three times during 2011 and during each of the four quarters of 2012. The stock is carried at cost.

Management evaluates the restricted stock for impairment in accordance with Financial Accounting Standards Board (FASB) guidance on Accounting by Certain Entities (including Entities with Trade Receivables that Lend to or Finance the Activities of Others). Management determines whether this investment is impaired based on an assessment of the ultimate recoverability of the cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of the cost is influenced by criteria such as (1) the significance of the decline in net assets of the FHLB as compared to the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB and (3) the impact of legislative and regulatory changes on institutions and, accordingly, on the customer base of the FHLB. Management believes no impairment charge is necessary related to the FHLB restricted stock as of December 31, 2012.

Premises and Equipment

Premises and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is charged to operations over the estimated useful lives of the respective assets. Leasehold improvements are amortized over the terms of the respective leases or the estimated useful lives of the improvements, whichever is shorter. Depreciation and amortization are determined on the straight-line method for financial reporting purposes and accelerated methods for income tax purposes.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosures are held for sale and are initially recorded at fair value less estimated costs to sell the assets at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value, less estimated costs to sell the asset. Revenue and expenses from operations, changes in the valuation allowance and gains/losses on sales of foreclosed real estate are included in foreclosed real estate expense. Foreclosed assets are included in other assets and totaled $2.5 million as of December 31, 2012 as compared to $7.1 million as of December 31, 2011.

Net expenses associated with foreclosed assets are detailed below:

	Years Ended December 31,
(in thousands)	2012		2011			2010
Operating expenses, net of rental income	$	429	$	331		$	571
Loss on write-down on foreclosed real estate	257		2,060			860
Net (gain) loss on sales of real estate	649		(116		)	(51		)
Total	$	1,335	$	2,275		$	1,380

Income Taxes

Deferred income taxes are provided using the liability method whereby deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets and liabilities are adjusted through the provision for income taxes for the effects of changes in tax laws and rates on the date of enactment. The Company analyzes each tax position taken in its tax returns and determines the likelihood that the position will be realized. Only tax positions that are "more likely than not" to be realized can be recognized in the Company's financial statements. For tax positions that do not meet this recognition threshold, the Company will record an unrecognized tax benefit for the difference between the position taken on the tax return and the amount recognized in the financial statements. The Company does not have any material unrecognized tax benefits or accrued interest or penalties at December 31, 2012 or 2011 or during the years then ended. No unrecognized tax benefits are expected to arise within the next twelve months. The Company's policy is to account for interest as a component of interest expense and penalties, if any, as a component of other expenses.

Transfers of Financial Assets

Transfers of financial assets, including sales of loans and loan participations, are accounted for as sales when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Per Share Data

Basic net income (loss) per common share represents income (loss) available to common stockholders divided by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per common share reflect additional common shares that would have been outstanding if dilutive potential common shares had been issued as well as any adjustments to income (loss) that would result from the assumed issuance. Potential common shares that may be issued by the Company relate solely to outstanding common stock options and are determined using the treasury stock method.

Off-Balance Sheet Financial Instruments

In the ordinary course of business, the Company has entered into off-balance sheet financial instruments consisting of commitments to extend credit, commercial letters of credit and standby letters of credit. Such financial instruments are recorded on the balance sheet when they become payable by the borrower to the Company.

Cash Flow Information

For purposes of the statements of cash flows, the Company considers cash and due from banks, interest-bearing deposits and federal funds sold as cash and cash equivalents. Generally, federal funds, a component of cash and cash equivalents are purchased and sold for one-day periods. Cash paid during the years ended December 31, 2012, 2011 and 2010 for interest expense on deposits, borrowings and debt was $10.3 million, $14.9 million and $17.6 million, respectively. Income taxes paid totaled $3.3 million, $700,000 and $0 in 2012, 2011 and 2010, respectively.

Stock-Based Compensation

The Company recognizes compensation costs related to share-based payment transactions in the income statement based on the grant-date fair value of the stock-based compensation issued. Compensation costs are recognized over the period that an employee provides service in exchange for the award.

The cash flows resulting from the tax benefits due to deductions in excess of the compensation cost recognized for options (excess tax benefits) are classified as financing cash flows.

Advertising Costs

The Company follows the policy of charging the costs of advertising to expense as incurred.

Recent Accounting Standards

In May 2011, the FASB amended fair value measurement guidance to clarify its previous guidance for items such as: the application of the highest and best use concept to nonfinancial assets and liabilities; the application of fair value measurement to financial instruments classified in a reporting entity's stockholders' equity; and disclosure requirements regarding quantitative information about unobservable inputs used in the fair value measurements of level 3 assets. The update also creates an exception to fair value measurement guidance for entities which carry financial instruments within a portfolio or group, under which the entity is now permitted to base the price used for fair valuation upon a price that would be received to sell the net asset position or transfer a net liability position in an orderly transaction. In addition, the update allows for the application of premiums and discounts in a fair value measurement if the financial instrument is categorized in level 2 or 3 of the fair value hierarchy. Lastly, the updated standard contains new disclosure requirements regarding fair value amounts categorized as level 3 in the fair value hierarchy such as: disclosure of the valuation process used; effects of and relationships between unobservable inputs; usage of nonfinancial assets for purposes other than their highest and best use when that is the basis of the disclosed fair value; and categorization by level of items disclosed at fair value, but not measured at fair value for financial statement purposes. The effective date of this update for public entities was for interim and annual periods beginning after December 15, 2011. Early adoption was not permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

In June 2011, the FASB updated the guidance on Comprehensive Income. The update prohibits the presentation of the components of comprehensive income in the statements of stockholders' equity. Reporting entities are allowed to present either: a statement of comprehensive income, which reports both net income and other comprehensive income; or separate statements of net income and other comprehensive income. Under previous GAAP, all three presentations were acceptable. In December of 2011, the FASB amended this guidance to defer the implementation date for the requirement to present all reclassifications between other comprehensive and net income on the face of the new statement or statements. The other provisions of this update were effective for fiscal years and interim periods beginning after December 31, 2011 for public entities. Early adoption was not permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Segment Reporting

The Bank acts as an independent community financial services provider and offers traditional banking and related financial services to individual consumer, business and government customers. Through its stores, the Company offers a full array of commercial and retail financial services.

Management does not separately allocate expenses, including the cost of funding loan demand, between the commercial and retail operations of the Company. As such, discrete financial information is not available and segment reporting would not be meaningful.

Reclassifications

Certain amounts in the 2011 and 2010 financial statements have been reclassified to conform to the 2012 presentation format. Such reclassifications had no impact on the Company's net operations and stockholders' equity.

XML

Loans Receivable and Allowance for Loan Losses (Summary of Loans, Allowances and Impairment Balances, by Class and Impairment Method) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011
Allowance for loan losses:
Individually evaluated for impairment	$ 7,120	$ 3,630
Collectively evaluated for impairment	18,162	17,990
Total allowance for loan losses	25,282	21,620
Loans receivable:
Loans evaluated individually	56,641	63,504
Loans evaluated collectively	1,472,156	1,373,164
Total loans receivable	1,528,797	1,436,668
Period used to analyze future loan losses	2 years
Commercial and industrial [Member]
Allowance for loan losses:
Individually evaluated for impairment	2,399	1,000
Collectively evaluated for impairment	7,560	7,400
Total allowance for loan losses	9,959	8,400
Loans receivable:
Loans evaluated individually	13,082	15,504
Loans evaluated collectively	363,906	306,484
Total loans receivable	376,988	321,988
Commercial tax-exempt [Member]
Allowance for loan losses:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	83	79
Total allowance for loan losses	83	79
Loans receivable:
Loans evaluated individually	0	0
Loans evaluated collectively	92,202	81,532
Total loans receivable	92,202	81,532
Owner occupied real estate [Member]
Allowance for loan losses:
Individually evaluated for impairment	1,451	30
Collectively evaluated for impairment	678	699
Total allowance for loan losses	2,129	729
Loans receivable:
Loans evaluated individually	3,380	7,492
Loans evaluated collectively	264,992	271,880
Total loans receivable	268,372	279,372
Commercial construction and land development [Member]
Allowance for loan losses:
Individually evaluated for impairment	2,470	2,600
Collectively evaluated for impairment	4,752	5,240
Total allowance for loan losses	7,222	7,840
Loans receivable:
Loans evaluated individually	15,549	23,216
Loans evaluated collectively	84,850	79,937
Total loans receivable	100,399	103,153
Commercial real estate [Member]
Allowance for loan losses:
Individually evaluated for impairment	800	0
Collectively evaluated for impairment	3,183	3,241
Total allowance for loan losses	3,983	3,241
Loans receivable:
Loans evaluated individually	17,136	12,117
Loans evaluated collectively	377,268	352,288
Total loans receivable	394,404	364,405
Residential [Member]
Allowance for loan losses:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	324	435
Total allowance for loan losses	324	435
Loans receivable:
Loans evaluated individually	4,163	3,346
Loans evaluated collectively	79,736	80,594
Total loans receivable	83,899	83,940
Consumer [Member]
Allowance for loan losses:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	793	831
Total allowance for loan losses	793	831
Loans receivable:
Loans evaluated individually	3,331	1,829
Loans evaluated collectively	209,202	200,449
Total loans receivable	212,533	202,278
Unallocated [Member]
Allowance for loan losses:
Individually evaluated for impairment	0	0
Collectively evaluated for impairment	789	65
Total allowance for loan losses	789	65
Loans receivable:
Loans evaluated individually	0	0
Loans evaluated collectively	0	0
Total loans receivable	0	0
Consumer [Member]
Loans receivable:
Total loans receivable	212,533	202,278
Residential [Member]
Loans receivable:
Total loans receivable	83,899	83,940
Commercial real estate [Member]
Loans receivable:
Total loans receivable	394,404	364,405
Commercial construction and land development [Member]
Loans receivable:
Total loans receivable	100,399	103,153
Owner occupied real estate [Member]
Loans receivable:
Total loans receivable	268,372	279,372
Commercial tax-exempt [Member]
Loans receivable:
Total loans receivable	$ 92,202	$ 81,532

XML

Earnings (Loss) per Share (Table) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2011	Jun. 30, 2011	Mar. 31, 2011	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Earnings Per Share [Abstract]
Net income (loss)	$ 3,456	$ 1,992	$ 2,762	$ 2,684	$ 2,483	$ (5,718)	$ 1,992	$ 1,532	$ 10,894	$ 289	$ (4,337)
Preferred stock dividends									(80)	(80)	(80)
Net income (loss) available to common stockholders, basic									10,814	209	(4,417)
Weighted average number of shares outstanding, basic									14,128,000	13,919,000	13,563,000
Earnings per share, basic (in dollars per share)	$ 0.24	$ 0.14	$ 0.19	$ 0.19	$ 0.18	$ (0.41)	$ 0.14	$ 0.11	$ 0.77	$ 0.02	$ (0.33)
Effect of dilutive securities, stock options									0	0	0
Net income (loss) available to common stockholders, diluted									$ 10,814	$ 209	$ (4,417)
Weighted average number of shares outstanding, diluted									14,128,000	13,919,000	13,563,000
Earnings per share, diluted (in dollars per share)	$ 0.24	$ 0.14	$ 0.19	$ 0.19	$ 0.18	$ (0.41)	$ 0.14	$ 0.11	$ 0.77	$ 0.02	$ (0.33)

XML

Premises, Equipment and Leases (Depreciation and Useful Lives) (Details) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2012	Dec. 31, 2011	Dec. 31, 2010
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 5,824	$ 6,476	$ 6,142
Buildings and Leasehold Improvements [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, estimated useful life	1 year
Buildings and Leasehold Improvements [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, estimated useful life	40 years
Furniture, Fixtures and Equipment [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, estimated useful life	1 year
Furniture, Fixtures and Equipment [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, estimated useful life	10 years
Computer Equipment and Software [Member] | Minimum [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, estimated useful life	3 years
Computer Equipment and Software [Member] | Maximum [Member]
Property, Plant and Equipment [Line Items]
Premises and equipment, estimated useful life	8 years

XML

Commitments and Contingencies

12 Months Ended

Dec. 31, 2012

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

In January 2005, the Company entered into an agreement for naming rights to Metro Bank Park located on Harrisburg City Island, Harrisburg, Pennsylvania. Metro Bank Park is home of the Harrisburg Senators, an AA team affiliated with Major League Baseball. The term of the naming rights agreement is 15 years with a total obligation of $3.5 million spread over the term.

The Company has entered into a land lease for the premises located at 2121 Lincoln Highway East, East Lampeter Township, Lancaster County, Pennsylvania. The Company plans to construct a full-service store on this property to be opened in the future.

The Company has purchased land at 105 N. George Street, York City, York County, Pennsylvania. The Company plans to open a store on this property to be opened in the future.

On November 10, 2008, Metro announced it had entered into a services agreement with Fiserv Solutions, Inc. (Fiserv). The agreement, effective November 7, 2008, is for a period of seven years, following the date Fiserv Services are first used by Client in live production, subject to automatic renewal for additional terms of two years unless either party gives the other written notice of nonrenewal at least 180 days prior to the expiration date of the term. The initial investment with Fiserv was $3.4 million with a remaining expected obligation for support, license fees and processing services of $26.9 million over the next 3.5 years. The various services include: core system hosting, item processing, deposit and loan processing, electronic banking, data warehousing and other banking functions.

In addition, the Company is also subject to certain routine legal proceedings and claims arising in the ordinary course of business. It is management's opinion that the ultimate resolution of these claims will not have a material adverse effect on the Company's financial position and results of operations.

XML

Short-term Borrowings (Details) (USD $)	12 Months Ended
	Dec. 31, 2012 bank	Dec. 31, 2011
Short-term Debt [Line Items]
Number of banks	1
FHLB [Member]
Short-term Debt [Line Items]
Number of borrowing facilities	1
Line of credit facility, maximum borrowing capacity	$ 545,800,000
Line of credit facility, amount outstanding	113,200,000	65,000,000
Loans pledged as collateral on line of credit facility	191,000,000
Correspondent Bank 1, Federal Funds [Member]
Short-term Debt [Line Items]
Line of credit facility, maximum borrowing capacity	15,000,000
Line of credit facility, amount outstanding	0	0
Number of banks	1
Correspondent Bank 2, Federal Funds [Member]
Short-term Debt [Line Items]
Line of credit facility, maximum borrowing capacity	20,000,000
Line of credit facility, amount outstanding	$ 0	$ 0

XML

Long-term Debt (Tables)

12 Months Ended

Dec. 31, 2012

Debt Disclosure [Abstract]

Schedule of Maturities of Long-term Debt

The scheduled maturities for long-term debt over the next five years and thereafter are as follows:

(in thousands)
2013-2017	$	25,000
Thereafter	15,800
Total	$	40,800

XML

Income Taxes

12 Months Ended

Dec. 31, 2012

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

A reconciliation of the provision (benefit) for income taxes and the amount that would have been provided at statutory rates is as follows:

	Years Ended December 31,
(in thousands)	2012			2011			2010
Provision (benefit) at statutory rate on pretax income (loss)	$	5,533		$	(392	)	$	(3,017	)
Tax-exempt income on loans and investments	(1,390		)	(1,314		)	(1,446		)
Exercise of nonqualified stock options	—			—			(25		)
Stock-based compensation	203			222			209
Merger related expenses	—			—			(358		)
Civil money penalty	525			—			—
Other	43			40			101
Total	$	4,914		$	(1,444	)	$	(4,536	)

The statutory tax rate used to calculate the provision in 2012 was 35%, and used to calculate the benefit in 2011 and 2010 was 34%.

The components of income tax expense (benefit) are as follows: 

	Years Ended December 31,
(in thousands)	2012		2011			2010
Current expense	$	4,796	$	67		$	236
Deferred expense (benefit)	118		(1,511		)	(4,772		)
Total	$	4,914	$	(1,444	)	$	(4,536	)

The components of the net deferred tax asset were as follows:

	December 31,
(in thousands)	2012			2011
Deferred tax assets:
Allowance for loan losses	$	8,596		$	7,351
Other-than-temporary losses	—			1,003
Stock-based compensation	1,094			923
Nonaccrual interest	1,605			2,002
Foreclosed real estate write-downs	—			703
Income from LLC subsidiary	—			254
Other	447			486
Total deferred tax assets	11,742			12,722
Deferred tax liabilities:
Premises and equipment	(3,762		)	(4,486		)
Unrealized gains on securities	(3,730		)	(1,965		)
Prepaid expenses	(254		)	(395		)
Deferred loan fees	(971		)	(968		)
Total deferred tax liabilities	(8,717		)	(7,814		)
Net deferred tax asset	$	3,025		$	4,908

At December 31, 2012, the Company had a net deferred tax asset of $3.0 million. An analysis was conducted to determine if a valuation allowance against its deferred tax assets was required. The Company used current forecasts of future expected income, possible tax planning strategies, current and future economic and business conditions (such as the possibility of a decrease in real estate value for properties the Bank holds as collateral on loans), the probability that taxable income will continue to be generated in future periods and the cumulative losses in previous years to make the assessment. Management concluded that a valuation allowance was not necessary at December 31, 2012.

Tax expense of $368,000, $119,000 and $952,000 was recognized on net securities gains during 2012, 2011 and 2010, respectively. For 2010, the Company received a tax benefit on its federal income tax return totaling $25,000 related to the exercise of nonqualified stock options and disqualified dispositions of employee stock from options exercised. It did not receive such a tax benefit during 2012 and 2011. The Company, or one of its subsidiaries, files income tax returns in the U.S. Federal jurisdiction and various states. The Company is no longer subject to U.S. Federal, state and local examinations by tax authorities for years before 2009.