METRO BANCORP, INC. - FORM 10-Q

Attached files

file	filename
EX-32 - EXHIBIT 32 - METRO BANCORP, INC.	exhibit32certificationofco.htm
EX-11 - EXHIBIT 11 - METRO BANCORP, INC.	exhibit11computationofneti.htm
EX-31.1 - EXHIBIT 31.1 - METRO BANCORP, INC.	exhibit311certificationofc.htm
EX-31.2 - EXHIBIT 31.2 - METRO BANCORP, INC.	exhibit312certificationofc.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q



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



For the quarterly period ended		June 30, 2011



[ ]	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)	(IRS Employer Identification No.)



3801 Paxton Street, Harrisburg, PA		17111
(Address of principal executive offices)		(Zip Code)

800-653-6104

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, 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			No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).



Large accelerated filer	Accelerated filer	X
Non-accelerated filer	Smaller Reporting Company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes	No	X



Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:	13,957,134 Common shares outstanding at 7/31/2011

METRO BANCORP, INC.

INDEX



		Page

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets (Unaudited)
	June 30, 2011 and December 31, 2010	3

	Consolidated Statements of Operations (Unaudited)
	Three months and six months ended June 30, 2011 and June 30, 2010	4

	Consolidated Statements of Stockholders' Equity (Unaudited)
	Six months ended June 30, 2011 and June 30, 2010	5

	Consolidated Statements of Cash Flows (Unaudited)
	Six months ended June 30, 2011 and June 30, 2010	6

	Notes to the Interim Consolidated Financial Statements (Unaudited)	7

Item 2.	Management's Discussion and Analysis of Financial Condition
	and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	49

Item 4.	Controls and Procedures	49

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	51

Item 1A.	Risk Factors	51

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults Upon Senior Securities	51

Item 4.	(Removed and Reserved)	51

Item 5.	Other Information	51

Item 6.	Exhibits	51

	Signatures

Part I - FINANCIAL INFORMATION

Item 1. Financial Statements

Metro Bancorp, Inc. and Subsidiaries

Consolidated Balance Sheets (Unaudited)



(in thousands, except share and per share amounts)	June 30, 2011		December 31, 2010
Assets
Cash and due from banks	$	42,271	$	32,858
Federal funds sold	9,675		—
Cash and cash equivalents	51,946		32,858
Securities, available for sale at fair value	488,258		438,012
Securities, held to maturity at cost (fair value 2011: $223,153; 2010: $224,202)	225,386		227,576
Loans, held for sale	8,847		18,605
Loans receivable, net of allowance for loan losses (allowance 2011: $21,723; 2010: $21,618)	1,434,965		1,357,587
Restricted investments in bank stock	18,610		20,614
Premises and equipment, net	84,643		88,162
Other assets	74,351		51,058
Total assets	$	2,387,006	$	2,234,472

Liabilities and Stockholders' Equity
Deposits:
Noninterest-bearing	$	389,992	$	340,956
Interest-bearing	1,501,384		1,491,223
Total deposits	1,891,376		1,832,179
Short-term borrowings	160,000		140,475
Long-term debt	54,400		29,400
Other liabilities	64,168		27,067
Total liabilities	2,169,944		2,029,121
Stockholders' Equity:
Preferred stock - Series A noncumulative; $10.00 par value;
(1,000,000 shares authorized; 40,000 shares issued and outstanding)	400		400
Common stock - $1.00 par value; 25,000,000 shares authorized;
(issued and outstanding shares 2011: 13,926,440; 2010: 13,748,384)	13,926		13,748
Surplus	153,935		151,545
Retained earnings	48,772		45,288
Accumulated other comprehensive income (loss)	29		(5,630		)
Total stockholders' equity	217,062		205,351
Total liabilities and stockholders' equity	$	2,387,006	$	2,234,472

See accompanying notes.

Metro Bancorp, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands, except per share amounts)	2011			2010			2011			2010
Interest Income
Loans receivable, including fees:
Taxable	$	18,070		$	17,589		$	35,583		$	35,126
Tax-exempt	989			1,156			1,975			2,300
Securities:
Taxable	5,599			5,651			10,994			11,050
Tax-exempt	—			—			—			14
Federal funds sold	1			—			2			1
Total interest income	24,659			24,396			48,554			48,491
Interest Expense
Deposits	2,990			3,358			5,987			7,025
Short-term borrowings	127			121			337			187
Long-term debt	725			933			1,396			1,862
Total interest expense	3,842			4,412			7,720			9,074
Net interest income	20,817			19,984			40,834			39,417
Provision for loan losses	1,700			2,600			3,492			5,000
Net interest income after provision for loan losses	19,117			17,384			37,342			34,417
Noninterest Income
Service charges, fees and other operating income	7,025			6,831			13,749			12,875
Gains on sales of loans	1,137			133			2,335			327
Total fees and other income	8,162			6,964			16,084			13,202
Other-than-temporary impairment losses	(315		)	(63		)	(315		)	(4,858		)
Portion recognized in other comprehensive income (before taxes)	—			60			—			3,942
Net impairment loss on investment securities	(315		)	(3		)	(315		)	(916		)
Net gains on sales/calls of securities	309			298			343			919
Total noninterest income	8,156			7,259			16,112			13,205
Noninterest Expenses
Salaries and employee benefits	10,254			10,377			20,633			20,631
Occupancy	2,219			2,151			4,681			4,436
Furniture and equipment	1,536			1,404			2,871			2,548
Advertising and marketing	350			610			749			1,442
Data processing	3,832			3,396			7,227			6,536
Regulatory assessments and related fees	856			1,045			1,941			2,214
Telephone	834			872			1,706			1,795
Loan expense	83			430			407			782
Foreclosed real estate	18			381			1,070			949
Branding	1,720			—			1,747			—
Consulting fees	416			960			823			1,702
Other	2,503			2,895			5,073			5,361
Total noninterest expenses	24,621			24,521			48,928			48,396
Income (loss) before taxes	2,652			122			4,526			(774		)
Provision (benefit) for federal income taxes	660			(238		)	1,002			(1,140		)
Net income	$	1,992		$	360		$	3,524		$	366
Net Income per Common Share
Basic	$	0.14		$	0.02		$	0.25		$	0.02
Diluted	0.14			0.02			0.25			0.02
Average Common and Common Equivalent Shares Outstanding
Basic	13,860			13,509			13,820			13,489
Diluted	13,860			13,514			13,820			13,494

See accompanying notes.

Metro Bancorp, Inc. and Subsidiaries

Consolidated Statements of Stockholders' Equity (Unaudited)



(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
Comprehensive income:
Net income	—		—		—		366			—			366
Other comprehensive income, net of tax impact	—		—		—		—			6,725			6,725
Total comprehensive income													7,091
Dividends declared on preferred stock	—		—		—		(40		)	—			(40		)
Common stock of 11,378 shares issued under stock option plans, including tax benefit of $25	—		12		91		—			—			103
Common stock of 150 shares issued under employee stock purchase plan	—		—		2		—			—			2
Proceeds from issuance of 89,893 shares of common stock in connection with dividend reinvestment and stock purchase plan	—		90		1,042		—			—			1,132
Common stock share-based awards	—		—		527		—			—			527
June 30, 2010	$	400	$	13,550	$	149,002	$	50,031		$	(4,146	)	$	208,837



(in thousands, except share amounts)	Preferred Stock		Common Stock		Surplus		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
January 1, 2011	$	400	$	13,748	$	151,545	$	45,288		$	(5,630	)	$	205,351
Comprehensive income:
Net income	—		—		—		3,524			—			3,524
Other comprehensive income, net of tax impact	—		—		—		—			5,659			5,659
Total comprehensive income													9,183
Dividends declared on preferred stock	—		—		—		(40		)	—			(40		)
Common stock of 50 shares issued under employee stock purchase plan	—		—		1		—			—			1
Proceeds from issuance of 178,006 shares of common stock in connection with dividend reinvestment and stock purchase plan	—		178		1,845		—			—			2,023
Common stock share-based awards	—		—		544		—			—			544
June 30, 2011	$	400	$	13,926	$	153,935	$	48,772		$	29		$	217,062

See accompanying notes.

Metro Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)



	Six Months Ended
		June 30,
(in thousands)		2011			2010
Operating Activities
Net income		$	3,524		$	366
Adjustments to reconcile net income to net cash provided (used) by operating activities:
Provision for loan losses		3,492			5,000
Provision for depreciation and amortization		3,287			3,040
Deferred income taxes (benefit)		(128		)	(1,528		)
Amortization of securities premiums and accretion of discounts (net)		1,041			38
Gains on sales/calls of securities (net)		(343		)	(919		)
Other-than-temporary impairment losses on investment securities		315			916
Proceeds from sales and transfers of SBA loans originated for sale		12,063			7,885
Proceeds from sales of other loans originated for sale		27,972			23,856
Loans originated for sale		(27,942		)	(42,252		)
Gains on sales of loans originated for sale		(2,335		)	(327		)
Loss on write-down on foreclosed real estate		1,018			532
Gains on sales of foreclosed real estate (net)		(86		)	(14		)
Loss on disposal of equipment		1,250			36
Stock-based compensation		544			527
Amortization of deferred loan origination fees and costs (net)		1,234			806
Decrease (increase) in other assets		13,735			2,678
Increase (decrease) in other liabilities		(13,314		)	(6,686		)
Net cash provided (used) by operating activities		25,327			(6,046		)
Investing Activities
Securities available for sale:
Proceeds from principal repayments, calls and maturities		28,215			73,671
Proceeds from sales		86,765			44,315
Purchases		(155,733		)	(152,538		)
Securities held to maturity:
Proceeds from principal repayments, calls and maturities		12,140			12,939
Purchases		—			(10,000		)
Proceeds from sales of foreclosed real estate		1,693			973
Increase in loans receivable (net)		(86,010		)	(2,510		)
Redemption (purchase) of restricted investment in bank stock (net)		2,004			(65		)
Proceeds from sale of premises and equipment		1			25
Purchases of premises and equipment		(1,019		)	(1,335		)
Net cash used by investing activities		(111,944		)	(34,525		)
Financing Activities
Increase in demand, interest checking, money market, and savings deposits (net)		72,097			30,737
Decrease in time deposits (net)		(12,900		)	(11,844		)
Increase in short-term borrowings (net)		19,525			26,325
Proceeds from long-term borrowings		25,000			—
Proceeds from common stock options exercised		—			78
Proceeds from dividend reinvestment and common stock purchase plan		2,023			1,132
Tax benefit on exercise of stock options		—			25
Cash dividends on preferred stock		(40		)	(40		)
Net cash provided by financing activities		105,705			46,413
Increase in cash and cash equivalents		19,088			5,842
Cash and cash equivalents at beginning of year		32,858			40,264
Cash and cash equivalents at end of period		$	51,946		$	46,106
Supplementary cash flow information on noncash activities:
Transfer of loans to foreclosed assets		$	3,905		$	1,177
Trade date accounting settlements for investment sales		38,534			—
Trade date accounting settlements for investment purchases		50,415			—

See accompanying notes.

METRO BANCORP, INC. AND SUBSIDIARIES

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2011

(Unaudited)

Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidated Financial Statements

The consolidated balance sheet at December 31, 2010 has been derived from audited consolidated financial statements and the consolidated interim financial statements included herein have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations. These consolidated financial statements were prepared in accordance with GAAP for interim financial statements and with instructions for Form 10-Q and Regulation S-X Section 210.10-01. Further information on the Company's accounting policies are available in Note 1 (Significant Accounting Policies) of the Notes to Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010. The accompanying consolidated financial statements reflect all adjustments that are, in the opinion of management, necessary to reflect a fair statement of the results for the interim periods presented. Such adjustments are of a normal, recurring nature.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2010. Events occurring subsequent to the date of the balance sheet have been evaluated for potential recognition or disclosure in the consolidated financial statements. The results for the six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

The consolidated financial statements include the accounts of Metro Bancorp, Inc. (the Company) and its consolidated subsidiaries including Metro Bank (Metro or the Bank). All material intercompany transactions have been eliminated. Certain amounts from the prior year have been reclassified to conform to the 2011 presentation. Such reclassifications had no impact on the Company's stockholders' equity or net income.

Use of Estimates

The financial statements are prepared in conformity with 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. 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, impaired loans, the valuation of deferred tax assets, the valuation of securities available for sale and the determination of other-than-temporary impairment (OTTI) on the Bank's investment securities portfolio.

During the third quarter of 2010, as part of the quantitative analysis of the adequacy of the allowance for loan losses, management adjusted its calculation 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 much higher level of loan charge-offs experienced by the Company over the past two years compared to previous years. The change in this estimate would have resulted in an additional $3.6 million of provision in the first six months of 2010. The impact to the net income after taxes would have been a loss of $2.4 million and a decrease of $0.17 to earnings per share.

Note 2. STOCK-BASED COMPENSATION

The fair value of each stock option grant was established at the date of grant using the Black-Scholes option pricing model. The Black-Scholes model used the following weighted-average assumptions for options granted during the six months ended June 30, 2011 and 2010, respectively: risk-free interest rates of 3.0% and 3.3%; volatility factors of the expected market price of the Company's common stock of .46 and .45; weighted-average expected lives of the options of 7.5 years for both June 30, 2011 and June 30, 2010; and no cash dividends. Using these assumptions, the weighted-average fair value of options granted for the six months ended June 30, 2011 and 2010 was $6.43 and $6.47 per option, respectively. In the first six months of 2011, the Company granted 239,350 options to purchase shares of the Company's stock at exercise prices ranging from $11.11 to $12.40 per share.

The Company recorded stock-based compensation expense of approximately $544,000 and $527,000 during the six months ended June 30, 2011 and June 30, 2010, respectively. In accordance with Financial Accounting Standards Board (FASB) guidance on

stock-based payments, during the first quarters of 2011 and 2010 the Company reversed $165,000 and $200,000, respectively, of expense (that had been recorded in prior periods) as a result of the reconcilement of projected option forfeitures to actual option forfeitures for all stock options granted during the first quarters of 2007 and 2006, respectively.

Note 3. RECENT ACCOUNTING STANDARDS

In April 2011, the FASB issued guidance that clarifies whether a restructuring constitutes a concession and defines whether or not a debtor is experiencing financial difficulties. The effective date for this guidance for public companies is for interim and annual periods beginning on or after June 15, 2011 and applies retrospectively to restructurings occurring on or after the beginning of 2011. The adoption of this guidance will not have a material impact on our consolidated financial statements.

In May 2011, the FASB amended fair value measurement guidance to clarify the guidance for items such as: the application of the highest and best use concept to non-financial 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, is for interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. We do not believe the adoption of this guidance will 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. Regardless of the presentation selected, the Company will be required to present all reclassifications between other comprehensive and net income on the face of the new statement or statements. The provisions of this update are effective for fiscal years and interim periods beginning after December 31, 2011 for public entities. Early adoption is permitted. The adoption of this guidance will not have a material impact on our consolidated financial statements.

Note 4. COMMITMENTS AND CONTINGENCIES

The Company is 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.

In the normal course of business, there are various outstanding commitments to extend credit, such as letters of credit and unadvanced loan commitments. At June 30, 2011, the Company had $369.9 million in unused commitments. Management does not anticipate any material losses as a result of these transactions.

Aggregate Contractual Obligations

The following table represents our on-and-off balance sheet aggregate contractual obligations to make future payments as of June 30, 2011:



	June 30, 2011
(in thousands)	Less than 1 Year		1 to 3 Years		3 to 5 Years		Over 5 Years		Total
Time deposits	$	177,530	$	65,703	$	14,521	$	—	$	257,754
Long-term debt	—		25,000		—		29,400		54,400
Fiserv obligation	7,307		15,907		13,110		—		36,324
Operating leases	2,522		4,561		4,265		20,944		32,292
Sponsorship obligation	393		677		677		677		2,424
Total	$	187,752	$	111,848	$	32,573	$	51,021	$	383,194

During 2011, the Company entered into a new debt agreement that consisted of one $25.0 million FHLB advance bearing interest at 1.01%, due March 18, 2013.

Future Facilities

The Company has purchased the land at the corner of Carlisle Road and Alta Vista Road in Dover Township, York County, Pennsylvania. The Company plans to construct a full-service store on this property to be opened in the future.

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.

Note 5. 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 other comprehensive income items that the Company presently has are net unrealized gains on securities available for sale and unrealized losses for noncredit-related impairment losses. The federal income tax effect allocated to the net unrealized gains (losses) are presented in the following table:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2011			2010			2011			2010
Net unrealized holding gains arising during the period	$	6,209		$	5,616		$	9,835		$	4,858
Reclassification adjustment on securities	360			650			(1,260		)	1,643
Noncredit related other-than-temporary impairment losses on securities not expected to be sold	—			60			—			3,942
Subtotal	6,569			6,326			8,575			10,443
Income tax impact	(2,234		)	(2,151		)	(2,916		)	(3,718		)
Other comprehensive income, net of tax impact	$	4,335		$	4,175		$	5,659		$	6,725

Note 6. GUARANTEES

The Company does not issue any guarantees that would require liability recognition or disclosure, other than its standby letters of credit. Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Generally, when issued, letters of credit have expiration dates within two years. The credit risk associated with

letters of credit is essentially the same as that of traditional loan facilities. The Company generally requires collateral and/or personal guarantees to support these commitments. The Company had $33.6 million and $32.3 million of standby letters of credit at June 30, 2011 and December 31, 2010, respectively. 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. There was no current amount of liability at June 30, 2011 and December 31, 2010 under standby letters of credit issued.

Note 7. FAIR VALUE DISCLOSURE

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 period-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 period-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 June 30, 2011 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)	June 30, 2011		(Level 1)		(Level 2)		(Level 3)

U.S. Government agency securities	$	21,647	$	—	$	21,647	$	—
Residential mortgage-backed securities	12,397		—		12,397		—
Agency collateralized mortgage obligations	427,287		—		427,287		—
Private-label collateralized mortgage obligations	26,927		—		26,927		—
Securities available for sale	$	488,258	$	—	$	488,258	$	—

For financial assets measured at fair value on a recurring basis at December 31, 2010, 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)	December 31, 2010		(Level 1)		(Level 2)		(Level 3)

U.S. Government agency securities	$	21,409	$	—	$	21,409	$	—
Residential mortgage-backed securities	2,386		—		2,386		—
Agency collateralized mortgage obligations	383,214		—		383,214		—
Private-label collateralized mortgage obligations	31,003		—		31,003		—
Securities available for sale	$	438,012	$	—	$	438,012	$	—

As of June 30, 2011 and December 31, 2010, 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 of the properties, or discounted cash flows based upon the expected proceeds. These assets are included as Level 3 fair values, based upon the lowest level of input that is significant to the fair value measurements. The fair value consists of the loan balances 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 collateral values if the loans are collateral dependent. The collateral values are further reduced by a discount factor specific to the nature of the collateral. At June 30, 2011 the fair value of four related impaired loans with allowance allocations totaled $7.7 million, net of a valuation allowance of $3.2 million. At December 31, 2010, the fair value of impaired loans with allowance allocations and their associated loan relationships totaled $10.4 million, net of a valuation allowance of $3.6 million. The Company's impaired loans are more fully discussed in Note 9.

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

The fair value of real estate acquired through foreclosure was based on independent third party appraisals of the properties, less estimated selling costs. The carrying value of foreclosed assets, with valuation allowances recorded subsequent to initial foreclosure, was $3.6 million at June 30, 2011 and $4.8 million at December 31, 2010, which are net of valuation allowances of $1.0 million and $410,000 that were established in 2011 and 2010, respectively.

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)	June 30, 2011		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	7,652	$	—	$	—	$	7,652
Foreclosed assets	3,559		—		—		3,559
Total	$	11,211	$	—	$	—	$	11,211



			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)	December 31, 2010		(Level 1)		(Level 2)		(Level 3)
Impaired loans	$	10,444	$	—	$	—	$	10,444
Foreclosed assets	4,774		—		—		4,774
Total	$	15,218	$	—	$	—	$	15,218

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 June 30, 2011 and December 31, 2010:

Cash and Cash Equivalents (Carried at Cost)

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.

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 six months ended June 30, 2011 or the year ended December 31, 2010.

Loans Receivable (Carried at Cost)

The fair value of loans, excluding impaired loans with specific loan allowances, are estimated using discounted cash flow analysis, using market rates at the balance sheet date that reflect the credit and interest rate-risk inherent in the 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 Investments 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 Federal Home Loan Bank (FHLB) and Atlantic Central Bankers Bank (ACBB) stock at June 30, 2011 and December 31, 2010.

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, passbook 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 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 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 June 30, 2011 and December 31, 2010:



	June 30, 2011				December 31, 2010
(in thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Cash and cash equivalents	$	51,946	$	51,946	$	32,858	$	32,858
Securities	713,644		711,411		665,588		662,214
Loans, net (including loans held for sale)	1,443,812		1,424,907		1,376,192		1,358,509
Restricted investments in bank stock	18,610		18,610		20,614		20,614
Accrued interest receivable	7,686		7,686		7,347		7,347
Financial liabilities:
Deposits	$	1,891,376	$	1,894,285	$	1,832,179	$	1,835,782
Long-term debt	54,400		44,153		29,400		18,431
Short-term borrowings	160,000		160,000		140,475		140,475
Accrued interest payable	595		595		669		669
Off-balance sheet instruments:
Standby letters of credit	$	—	$	—	$	—	$	—
Commitments to extend credit	—		—		—		—

Note 8. SECURITIES

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



	June 30, 2011
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	22,500	$	—	$	(853	)	$	21,647
Residential mortgage-backed securities	12,407		19		(29		)	12,397
Agency collateralized mortgage obligations	424,709		3,269		(691		)	427,287
Private-label collateralized mortgage obligations	28,598		37		(1,708		)	26,927
Total	$	488,214	$	3,325	$	(3,281	)	$	488,258
Held to Maturity:
U.S. Government agency securities	$	140,000	$	—	$	(5,465	)	$	134,535
Residential mortgage-backed securities	42,890		2,773		(227		)	45,436
Agency collateralized mortgage obligations	32,496		721		(100		)	33,117
Corporate debt securities	10,000		65		—			10,065
Total	$	225,386	$	3,559	$	(5,792	)	$	223,153



	December 31, 2010
(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available for Sale:
U.S. Government agency securities	$	22,500	$	—	$	(1,091	)	$	21,409
Residential mortgage-backed securities	2,383		3		—			2,386
Agency collateralized mortgage obligations	388,414		2,025		(7,225		)	383,214
Private-label collateralized mortgage obligations	33,246		—		(2,243		)	31,003
Total	$	446,543	$	2,028	$	(10,559	)	$	438,012
Held to Maturity:
U.S. Government agency securities	$	140,000	$	—	$	(6,408	)	$	133,592
Residential mortgage-backed securities	48,497		2,727		(311		)	50,913
Agency collateralized mortgage obligations	29,079		878		(209		)	29,748
Corporate debt securities	10,000		—		(51		)	9,949
Total	$	227,576	$	3,605	$	(6,979	)	$	224,202

The amortized cost and fair value of debt securities by contractual maturity at June 30, 2011 are shown in the following table. 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	$	—	$	—	$	—	$	—
Due after one year through five years	—		—		10,000		10,065
Due after five years through ten years	—		—		50,000		48,798
Due after ten years	22,500		21,647		90,000		85,737
	22,500		21,647		150,000		144,600
Residential mortgage-backed securities	12,407		12,397		42,890		45,436
Agency collateralized mortgage obligations	424,709		427,287		32,496		33,117
Private-label collateralized mortgage obligations	28,598		26,927		—		—
Total	$	488,214	$	488,258	$	225,386	$	223,153

During the second quarter of 2011 the Company sold a total of two securities with a combined fair market value of $38.5 million and realized a net pretax gain of $309,000. Both securities sold had been classified as available for sale. During the second quarter of 2010, the Company sold three mortgage-backed securities (MBSs) with a fair market value of $19.9 million. All of the securities had been classified as available for sale and the Company realized a pretax gross gain of $298,000.

During the first six months of 2011, the Company sold a total of 12 securities with a combined fair market value of $125.3 million. All of the securities were U.S. agency collateralized mortgage obligations (CMOs), had been classified as available for sale and had a combined amortized cost of $125.0 million. The Company realized net pretax gains of $343,000 on the combined sales. During the first six months of 2010, the Company sold 15 MBSs with a fair market value of $44.9 million. All of the securities had been classified as available for sale and the Company realized a pretax gross gain of $919,000. The securities sold included 11 private-label MBSs with a fair market value of $21.7 million.

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

At June 30, 2011 securities with a carrying value of $438.5 million 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 of debt securities and credit losses recognized for the OTTI of investments:



(in thousands)	Gross Realized Gains		Gross Realized (Losses)			OTTI Credit Losses			Net Gains (Losses)
Three Months Ended:
June 30, 2011	$	309	$	—		$	(315	)	$	(6	)
June 30, 2010	298		—			(3		)	295
Six Months Ended:
June 30, 2011	976		(633		)	(315		)	28
June 30, 2010	919		—			(916		)	3

In determining fair market values for its portfolio holdings, the Company has consistently relied upon a third-party provider. Under the current guidance, these values are considered Level 2 inputs, based upon 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 table shows 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:



	June 30, 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:
U.S. Government agency securities	$	21,647	$	(853	)	$	—	$	—		$	21,647	$	(853	)
Residential MBSs	10,236		(29		)	—		—			10,236		(29		)
Agency CMOs	147,919		(691		)	—		—			147,919		(691		)
Private-label CMOs	2,092		(45		)	19,744		(1,663		)	21,836		(1,708		)
Total	$	181,894	$	(1,618	)	$	19,744	$	(1,663	)	$	201,638	$	(3,281	)
Held to Maturity:
U.S. Government agency securities	$	134,535	$	(5,465	)	$	—	$	—		$	134,535	$	(5,465	)
Residential MBSs	7,286		(227		)	—		—			7,286		(227		)
Agency CMOs	5,706		(100		)	—		—			5,706		(100		)
Total	$	147,527	$	(5,792	)	$	—	$	—		$	147,527	$	(5,792	)



	December 31, 2010
	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	$	21,409	$	(1,091	)	$	—	$	—		$	21,409	$	(1,091	)
Agency CMOs	261,330		(7,216		)	9,092		(9		)	270,422		(7,225		)
Private-label CMOs	2,644		(9		)	28,359		(2,234		)	31,003		(2,243		)
Total	$	285,383	$	(8,316	)	$	37,451	$	(2,243	)	$	322,834	$	(10,559	)
Held to Maturity:
U.S. Government agency securities	$	133,592	$	(6,408	)	$	—	$	—		$	133,592	$	(6,408	)
Residential MBSs	7,287		(311		)	—		—			7,287		(311		)
Agency CMOs	7,957		(209		)	—		—			7,957		(209		)
Corporate debt securities	9,949		(51		)	—		—			9,949		(51		)
Total	$	158,785	$	(6,979	)	$	—	$	—		$	158,785	$	(6,979	)

The Company's investment securities portfolio consists primarily of U.S. Government agency securities, U.S. Government sponsored agency mortgage-backed obligations and private-label CMOs. The securities of the U.S. Government sponsored agencies and the U.S. Government MBSs have little credit risk because their principal and interest payments are backed by an agency of the U.S. Government.

The unrealized losses in the Company's investment portfolio at June 30, 2011 were associated with two distinct types of securities. The first type, those backed by the U.S. Government or one of its agencies, includes nine agency debentures, four residential MBSs and 13 government agency sponsored CMOs. Management believes that the unrealized losses on these investments were primarily caused by the sharp rise in mid-term to long-term interest rates that occurred towards the end of 2010 and notes the contractual cash flows of those investments are guaranteed by an agency of the U.S. Government. Accordingly, it is expected that the securities would not be settled at a price less than the amortized cost of the Company's investment. Because management believes the declines in fair value of these securities are attributable to changes in interest rates and not credit quality and because the Company has the ability and intent to hold those investments until a recovery of fair value, which may be maturity, the Company does not consider any of these investments to be other-than-temporarily impaired at June 30, 2011.

Private-label CMOs were the second type of security in the Company's investment portfolio with unrealized losses at June 30, 2011. Private-label CMOs are not backed by the full faith and credit of the U.S. Government nor are their principal and interest payments guaranteed. Historically, most private-label CMOs have carried a AAA bond rating on the underlying issuer, however, the subprime mortgage problems and the decline in the residential housing market in the U.S. in recent years have led to ratings downgrades and subsequent OTTI of many CMOs. As of June 30, 2011, Metro owned seven such non-agency CMO securities in its investment portfolio with unrealized losses and one non-agency CMO in an unrealized gain position. The total book value for all eight securities was $28.6 million. Management performs no less than quarterly assessments of these securities for OTTI to determine what, if any, portion of the impairment may be credit related. As part of this process, management asserts that (a) we do not have the intent to sell the securities and (b) it is more likely than not we will not be required to sell the securities before recovery of the Company's cost basis. This assertion is based, in part, upon the most recent liquidity analysis prepared for the Company's Asset/Liability Committee (ALCO) which indicates if the Company has sufficient excess funds to consider the potential purchase of investment securities and sufficient unused borrowing capacity available to meet any potential outflows. Furthermore, the Company knows of no contractual or regulatory obligations that would require these bonds to be sold.

Next, in order to bifurcate the impairment into its components, the Company uses the Bloomberg analytical service to analyze each individual security. The Company looks at the overall bond ratings as well as specific, underlying characteristics such as pool factor, weighted-average coupon, weighted-average maturity, weighted-average life, loan to value, delinquencies, credit score, prepayment speeds, geographic concentration, etc. Using reported data for prepayment speeds, default rates, loss severity rates and lag times, the Company analyzes each bond under a variety of scenarios. As the results may vary depending upon the historic time period analyzed, the Company uses this information for the purpose of managing the investment portfolio and its inherent risk. However, the Company reports its findings based upon the three month data points for Constant Prepayment Rate (CPR) speed, default rate and loss severity as it believes this time point best captures both current and historic trends. For management purposes, the Company also analyzes each bond using an assumed, projected default rate based upon each pool's most recent level of 90-day delinquencies, bankruptcies and foreclosed real estate. This projected analysis also assumes loss severity percentages subjectively assigned to each pool based upon credit ratings. When the analysis shows a bond to have no projected loss, there is considered to be no credit-related loss. When the analysis shows a bond to have a projected loss, a cash flow projection is created, including the projected loss, for the duration of the bond. This projection is then used to calculate the present value of the cash flows expected to be collected and compared to the amortized cost basis. The difference between these two figures is recognized as the amount of OTTI due to credit loss. The difference between the total impairment and this credit loss portion is determined to be the amount related to all other factors. The amount of impairment related to credit loss is to be recognized in current earnings while the amount of impairment related to all other factors is to be recognized in other comprehensive income. Using this method, the Company determined that during the first six months of 2011, a total of six private-label CMOs had losses attributable to credit from prior years and two private-label CMOs have never had losses attributable to credit. Of these six bonds with credit losses, one was no longer projected to be in a loss position as of June 30, 2011. Losses were projected for the remaining five bonds as of June 30, 2011, however, the present value of the cash flows for one of these bonds was greater than its carrying value so that no further write-down was required on it. The remaining four bonds had combined losses attributable to credit of $315,000 at June 30, 2011.

The tables below roll forward the cumulative life to date credit losses which have been recognized in earnings for the private-label CMOs previously mentioned for the three months ended June 30, 2011 and June 30, 2010:



	Private-label CMOs
(in thousands)	Available for Sale		Held to Maturity		Total
Cumulative OTTI credit losses at April 1, 2011	$	2,625	$	—	$	2,625
Additions for which OTTI was not previously recognized	—		—		—
Additional increases for OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis	315		—		315
Cumulative OTTI credit losses recognized for securities still held at June 30, 2011	$	2,940	$	—	$	2,940



	Private-label CMOs
(in thousands)	Available for Sale		Held to Maturity		Total
Cumulative OTTI credit losses at April 1, 2010	$	3,251	$	3	$	3,254
Additions for which OTTI was not previously recognized	3		—		3
Additional increases for OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis	—		—		—
Cumulative OTTI credit losses recognized for securities still held at June 30, 2010	$	3,254	$	3	$	3,257

The tables below roll forward the cumulative life to date credit losses which have been recognized in earnings for the private-label CMOs previously mentioned for the six months ended June 30, 2011 and June 30, 2010:



	Private-label CMOs
(in thousands)	Available for Sale		Held to Maturity		Total
Cumulative OTTI credit losses at January 1, 2011	$	2,625	$	—	$	2,625
Additions for which OTTI was not previously recognized	—		—		—
Additional increases for OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis	315		—		315
Cumulative OTTI credit losses recognized for securities still held at June 30, 2011	$	2,940	$	—	$	2,940



	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	650		—		650
Additional increases for OTTI previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis	266		—		266
Cumulative OTTI credit losses recognized for securities still held at June 30, 2010	$	3,254	$	3	$	3,257

Note 9. 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 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 loan's call date. The Bank has a line of credit commitment from the FHLB and certain qualifying assets of the Bank collateralize the line including loans held at the Bank.

During the first quarter of 2011, certain types of loans were reclassified due to their purpose and overall risk characteristics. Therefore, certain loan balances as of December 31, 2010 balances were reclassified to conform to the 2011 presentation.

A summary of loans receivable is as follows:



(in thousands)	June 30, 2011		December 31, 2010
Commercial and industrial	$	357,652	$	337,398
Commercial tax-exempt	83,711		85,863
Owner occupied real estate	269,637		241,553
Commercial construction and land development	122,308		112,094
Commercial real estate	341,961		313,194
Residential	80,481		81,124
Consumer	200,938		207,979
	1,456,688		1,379,205
Less: allowance for loan losses	21,723		21,618
Net loans receivable	$	1,434,965	$	1,357,587

Generally, the Company's policy is to move a loan to nonaccrual status as soon as it becomes 90 days past due or when the Company does not believe it will collect all of its principal and interest payments. Typically commitments are canceled and no additional advances are made when a loan is placed on nonaccrual. 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 allowance for loan losses. 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. 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 evidence of 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 nonaccrual loan balance of $45.5 million exceeds the balance of total loans that are 90 days past due of $29.6 million at June 30, 2011 as presented in the aging analysis.

The Company 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 before the properties are transferred to foreclosed real estate.

A loan is considered past due or delinquent if payment is not received on or before the due date. The following table summarizes nonperforming loans by loan type at June 30, 2011 and December 31, 2010:



(in thousands)	June 30, 2011		December 31, 2010
Nonaccrual loans:
Commercial and industrial	$	19,312	$	23,103
Commercial tax-exempt	—		—
Owner occupied real estate	2,450		4,318
Commercial construction and land development	12,629		14,155
Commercial real estate	5,125		5,424
Residential	3,663		3,609
Consumer	2,310		1,579
Total nonaccrual loans	45,489		52,188
Loans past due 90 days or more and still accruing	—		650
Renegotiated loan	—		177
Total nonperforming loans	$	45,489	$	53,015

The following tables are an age analysis of past due loan receivables as of June 30, 2011 and December 31, 2010:



			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
June 30, 2011
Commercial and industrial	$	345,278	$	851	$	4,558	$	6,965	$	12,374	$	357,652	$	—
Commercial tax-exempt	83,711		—		—		—		—		83,711		—
Owner occupied real estate	265,650		909		834		2,244		3,987		269,637		—
Commercial construction and land development	107,760		794		1,125		12,629		14,548		122,308		—
Commercial real estate	329,448		1,177		6,628		4,708		12,513		341,961		—
Residential	77,220</

METRO BANCORP, INC. - FORM 10-Q - August 9, 2011

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