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8-K - METRO BANCORP, INC. FORM 8-K - METRO BANCORP, INC.a8-kearningsreleaseq42012.htm


       
                            

CONTACTS

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


METRO BANCORP REPORTS FOURTH QUARTER NET INCOME OF
$3.5 MILLION; LOANS GROW 6% AND DEPOSITS UP 8%


January 25, 2013 - Harrisburg, PA - Metro Bancorp, Inc. (Metro or the Company) (NASDAQ Global Select Market Symbol: METR), parent company of Metro Bank, today reported financial results for the fourth quarter and full year of 2012. The Company recorded net income of $3.5 million, or $0.24 per common share, for the fourth quarter of 2012 compared to net income of $2.5 million, or $0.18 per common share, for the fourth quarter of 2011. Net income for the full year 2012 totaled $10.9 million, or $0.77 per common share, compared to $289,000, or $0.02 per common share for 2011. The Company also reported net loan growth of $88.5 million, or 6%, and an increase in total deposits of $159.7 million, or 8%, over the past twelve months.


Financial Highlights
 
(in millions, except per share data)
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
 
 
%
 
 
 
%
 
 
12/31/12
12/31/11
Increase
 
12/31/12
12/31/11
Increase
 
Total assets
$
2,634.9

$
2,421.2

9
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total deposits
2,231.3

2,071.6

8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans (net)
1,503.5

1,415.0

6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
29.6

$
28.5

4
%
 
$
117.1

$
113.5

3
%
 
 
 
 
 
 
 
 
 
 
Net income
3.5

2.5

39
%
 
10.9

0.3

3,670
%
 
 
 
 
 
 
 
 
 
 
Diluted net income per common share
$
0.24

$
0.18

33
%
 
$
0.77

$
0.02

3,750
%
 
 
 
 
 


                                                            
1



“We are pleased with our fourth quarter results as we were able to achieve our highest quarterly net income results in 4.5 years. Our 2012 performance reflects our continued effort to drive our growth in loans and deposits and returning the Company to profitability. Asset quality continues to improve as shown through the decrease in the level of nonperforming assets,” said Gary L. Nalbandian, the Company's Chairman and Chief Executive Officer.

Highlights for the Quarter and Year Ended December 31, 2012

The Company recorded net income of $3.5 million, or $0.24 per common share, for the fourth quarter of 2012 compared to net income of $2.5 million, or $0.18 per common share, for the same period one year ago.

Net income for the full year 2012 totaled $10.9 million, or $0.77 per common share, up $10.6 million, or $0.75 per common share, over the results for 2011.

Total revenues for the fourth quarter of 2012 were $29.6 million, up $1.2 million, or 4%, over total revenues of $28.4 million for the same quarter one year ago. Total revenues for 2012 increased by $3.6 million, or 3%, over 2011.

The Company's net interest margin on a fully-taxable basis for the fourth quarter of 2012 was 3.71%, compared to 3.85% recorded in the third quarter of 2012 and compared to 3.82% for the fourth quarter of 2011. The Company's deposit cost of funds for the fourth quarter was 0.32%, down from 0.35% for the previous quarter and compared to 0.50% for the same period one year ago.

Noninterest expenses for the fourth quarter 2012 were $22.5 million, down $567,000 compared to the previous quarter and up $755,000, or 3%, over the same quarter last year. Noninterest expenses for 2012 were down $2.9 million, or 3%, from 2011, as the Company was able to significantly reduce expenses in several categories.

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

Core deposits (all deposits excluding public fund time deposits) grew $148.0 million, or 7%, over fourth quarter 2011.

Net loans grew $24.1 million, or 2%, on a linked quarter basis to $1.50 billion and were up $88.5 million, or 6%, over the past twelve months.

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. During the past twelve months the nonperforming loan coverage ratio has increased from 62% to 77%.

Nonperforming assets were 1.33% of total assets at December 31, 2012 compared to 1.73% of total assets one year ago.

Metro's capital levels remain 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 $235.4 million. 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.









                                                            
2





Income Statement

 
Three months ended
December 31,
 
Year ended
December 31,
(dollars in thousands, except per share data)
2012
 
2011
% Change
 
2012
 
2011
% Change
Total revenues
$
29,639

 
$
28,452

4
%
 
$
117,052

 
$
113,451

3
 %
Total noninterest expenses
22,486

 
21,731

3

 
91,144

 
94,014

(3
)
Net income
3,456

 
2,483

39

 
10,894

 
289

3,670

Diluted net income per share
$
0.24

 
$
0.18

33
%
 
$
0.77

 
$
0.02

3,750
 %

The Company recorded net income of $3.5 million, or $0.24 per common share, for the fourth quarter of 2012 compared to net income of $2.5 million, or $0.18 per common share, for the fourth quarter of 2011. Net income totaled $10.9 million, or $0.77 per common share, for the year ended December 31, 2012 as compared to net income of $289,000, or $0.02 per common share, for 2011.

Total revenues (net interest income plus noninterest income) for the fourth quarter of 2012 were $29.6 million, up $1.2 million, or 4%, over the fourth quarter of 2011. Noninterest expenses for the quarter totaled $22.5 million, up $755,000, or 3%, compared to the same period in 2011. On linked quarter basis, total revenues were up $713,000, or 2%, while total noninterest expenses decreased by $567,000, or 2%.

Total revenues for the year ended December 31, 2012 were $117.1 million, up $3.6 million, or 3%, over total revenues for 2011. Total noninterest expenses for the year ended December 31, 2012 were $91.1 million, down $2.9 million, or 3%, from last year.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2012 totaled $21.8 million, up $444,000, or 2%, over the $21.4 million recorded in the fourth quarter of 2011. Net interest income for the year ended December 31, 2012 totaled $87.2 million, an increase of $4.2 million, or 5%, over the $83.0 million recorded for 2011.

Average interest earning assets for the fourth quarter of 2012 totaled $2.38 billion versus $2.29 billion for the previous quarter and were up $120.6 million, or 5%, over the fourth quarter of 2011. Average interest bearing deposits totaled $1.74 billion for the fourth quarter of 2012, up $72.0 million, or 4%, over the same period of 2011. Average noninterest bearing deposits for the quarter were $448.8 million, up $70.9 million, or 19%, over the fourth quarter last year. Total interest expense for the quarter was down $1.1 million, or 32%, from the fourth quarter of 2011 as a result of a 22 basis points ("bps") reduction in the Company's overall total cost of all funds over the past twelve months.

The net interest margin for the fourth quarter of 2012 was 3.62%, down 13 bps from the 3.75% recorded for the previous quarter and down 11 bps from the fourth quarter one year ago. The net interest margin on a fully-taxable basis for the fourth quarter of 2012 was 3.71%, down 14 bps from the previous quarter and down 11 bps compared to 3.82% for the fourth quarter of 2011.

The Bank's deposit cost of funds for the fourth quarter of 2012 was 0.32%, down from 0.35% the previous quarter, and down 18 bps from 0.50% recorded in the fourth quarter one year ago.

The Company's net interest margin was 3.74% for the year ended December 31, 2012 compared to 3.73% for the same period in 2011. On a fully-taxable equivalent basis, the net interest margin was 3.83% for the full year 2012 compared to 3.82% for 2011.


                                                            
3





Change in Net Interest Income and Rate/Volume Analysis

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

(dollars in thousands)
 
Tax Equivalent Net Interest Income
2012 vs. 2011
 
Volume
Change
Rate
Change
Total
Increase
%
Increase
 
4th Quarter
 
$1,468
$(946)
$522
2%
 
Year to Date
 
$5,280
$(957)
$4,323
5%
 

Noninterest Income

Noninterest income for the fourth quarter of 2012 totaled $7.8 million, up $743,000, or 11%, over $7.1 million recorded in the fourth quarter one year ago.
 
Three months ended
December 31,
 
Year ended
December 31,
(dollars in thousands)
2012
2011
% Change
 
2012
2011
% Change
Service charges, fees and other income
$
7,586

$
6,915

10
%
 
$
28,372

$
27,773

2
 %
Gains on sales of loans
267

231

16

 
1,220

2,728

(55
)
Net gains on sales of securities
92



 
1,051

350

200

Credit impairment losses on investment securities

(9
)
-

 
(649
)
(324
)
100

Debt prepayment charge
(140
)
(75
)
87
%
 
(140
)
(75
)
87
 %
Total noninterest income
$
7,805

$
7,062

11
%
 
$
29,854

$
30,452

(2
)%

Service charges, fees and other income increased by $671,000, or 10%, over the fourth quarter of 2011. Gains on the sale of loans totaled $267,000 for the fourth quarter of 2012 versus $231,000 for the same period in 2011. The Company recorded a $140,000 charge during the fourth quarter to repurchase and retire $8.0 million of 10% fixed rate Trust Capital Securities which had been issued in September 2001. The impact on fourth quarter results of this one-time charge was basically offset by a lower level of interest expense as a result of the transaction. Going forward, this repurchase will save the Company $800,000 of interest expense annually, on a pre-tax basis.

Noninterest income for the year ended December 31, 2012 totaled $29.9 million, down $598,000, or 2%, from 2011. Service charges, fees and other income increased by $599,000, or 2%, for all of 2012 over 2011. Gains on the sales of loans totaled $1.2 million for the year ended 2012 compared to $2.7 million over 2011. Metro did not record any gains on the sale of SBA loans during 2012 compared to $1.9 million of gains on such sales recorded throughout 2011.

Noninterest Expenses

Noninterest expenses for the fourth quarter of 2012 were $22.5 million, down $567,000, or 2%, on a linked quarter basis and up $755,000, or 3%, compared to $21.7 million recorded in the fourth quarter one year ago. Noninterest expenses for the year 2012, totaled $91.1 million, down $2.9 million, or 3%, from $94.0 million recorded in 2011.




                                                            
4



The breakdown of noninterest expenses for the fourth quarter and for the year ended December 31, 2012 and 2011, respectively, are shown in the following table:

 
Three months ended
December 31,
 
Year ended
December 31,
(dollars in thousands)
2012
2011
% Change
 
2012
2011
% Change
Salaries and employee benefits
$
10,516

$
9,572

10
 %
 
$
41,241

$
40,318

2
 %
Occupancy and equipment
3,379

3,551

(5
)
 
13,281

14,620

(9
)
Advertising and marketing
623

776

(20
)
 
1,870

2,016

(7
)
Data processing
3,707

3,719


 
13,590

14,211

(4
)
Regulatory assessments and related costs
541

782

(31
)
 
4,063

3,638

12

Foreclosed real estate
(208
)
230

(190
)
 
1,335

2,275

(41
)
Other expenses
3,928

3,101

27

 
15,764

16,936

(7
)
Total noninterest expenses
$
22,486

$
21,731

3
 %
 
$
91,144

$
94,014

(3
)%
    
The increase in salaries and employee benefits for the fourth quarter of 2012 over the same period of 2011 is a result of higher costs associated with employee health care and other benefit plans. The increase in the other expenses line item was primarily the result of higher costs associated with problem loan workouts, Pennsylvania Shares Tax Expenses and the write-off of a discontinued potential new branch site. There were also higher levels of expenses in several smaller line items included in this category for the fourth quarter of 2012 over the same period of 2011. The Company experienced a lower level of expenses in each of the remaining categories presented in the table above for the fourth quarter of 2012 compared to the same period in 2011.

Balance Sheet

 
As of December 31,
 
(dollars in thousands)
2012
2011
%
 Increase
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
%
 
 
 
 
Total core deposits
2,176,376

2,028,338

7
%
 
 
 
 
Total stockholders' equity
235,387

220,020

7
%

Deposits

The Company's deposit balances continued to grow with total deposits at December 31, 2012 reaching $2.23 billion, a $159.7 million, or 8%, increase over total deposits of $2.07 billion one year ago. Core deposits also increased 7% over the past twelve months by $148.0 million to $2.18 billion.







                                                            
5



Core Deposits

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

 
As of December 31,
 
 
 
 
 
(dollars in thousands)
2012
 
2011
 
%
Change
 
4th Quarter 2012 Cost of Funds
 
Demand noninterest-bearing
$
455,000

 
$
397,251

 
15%
 
0.00%
 
Demand interest-bearing
1,133,765

 
1,038,760

 
9
 
0.31
 
Savings
444,976

 
406,896

 
9
 
0.33
 
   Subtotal
2,033,741

 
1,842,907

 
10
 
0.25
 
Time
142,635

 
185,431

 
(23)
 
1.36
 
Total core deposits
$
2,176,376

 
$
2,028,338

 
7%
 
0.32%
 

Total core demand noninterest bearing deposits increased by $57.7 million, or 15%, over the past twelve months to $455.0 million while core interest-bearing demand deposits grew by $95.0 million, or 9%. Likewise, core saving deposits increased by $38.1 million, or 9%, over the same period. Total core demand and savings deposit growth over the past twelve months was $190.8 million, or 10%. The cost of core deposits, excluding time deposits, during the fourth quarter of 2012 was 0.25% compared to 0.27% for the previous quarter and down 10 bps from the fourth quarter one year ago. The cost of total core deposits for the fourth quarter of 2012 was 0.32%, down 3 bps on a linked quarter basis and down 18 basis points from the same period in 2011.

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

 
December 31,
% of
 
December 31,
% of
 
%
 
(dollars in thousands)
2012
Total
 
2011
Total
 
Increase
 
Consumer
$
950,383

44
%
 
$
949,094

47
%
 
%
 
Commercial
681,882

31

 
587,123

29

 
16

 
Government
544,111

25

 
492,121

24

 
11

 
Total
$
2,176,376

100
%
 
$
2,028,338

100
%
 
7
%
 

Total consumer core deposits increased by $1.3 million and total commercial core deposits grew by $94.8 million, or 16%, during the past 12 months while government deposits increased by $52.0 million, or 11%. On a linked quarter basis, total consumer core deposits increased by $8.0 million and core commercial deposits grew by $13.7 million, while core government deposits decreased by $30.7 million.















                                                            
6



Lending

Gross loans totaled $1.53 billion at December 31, 2012, an increase of $92.1 million, or 6%, compared to December 31, 2011. On a linked quarter basis, total gross loans increased by $23.8 million, or 2%. The composition of the Company's loan portfolio at December 31, 2012 and December 31, 2011 was as follows:

(dollars in thousands)
December 31, 2012
% of Total
 
December 31, 2011
% of Total
 
$
 Change
% Change
 
Commercial and industrial
$
376,988

25
%
 
$
321,988

22
%
 
$
55,000

17
 %
 
Commercial tax-exempt
92,202

6

 
81,532

6

 
10,670

13

 
Owner occupied real estate
268,372

17

 
279,372

20

 
(11,000
)
(4
)
 
Commercial construction
   and land development
100,399

7

 
103,153

7

 
(2,754
)
(3
)
 
Commercial real estate
394,404

26

 
364,405

25

 
29,999

8

 
Residential
83,899

5

 
83,940

6

 
(41
)

 
Consumer
212,533

14

 
202,278

14

 
10,255

5

 
Gross loans
$
1,528,797

100
%
 
$
1,436,668

100
%
 
$
92,129

6
 %
 

Asset Quality

The Company's asset quality ratios are highlighted below:
 
Quarters Ended
 
December 31, 2012
 
September 30, 2012
 
December 31, 2011
 
Nonperforming assets/total assets
1.33
%
 
1.67
%
 
1.73
%
 
Net loan charge-offs (annualized)/average total loans
0.65
%
 
0.81
%
 
1.39
%
 
Loan loss allowance/total loans
1.65
%
 
1.70
%
 
1.50
%
 
Nonperforming loan coverage
77
%
 
68
%
 
62
%
 
Nonperforming assets/capital and reserves
13
%
 
16
%
 
17
%
 

Nonperforming assets decreased during the fourth quarter by $7.2 million, or 17%, to $35.1 million, or 1.33%, of total assets at December 31, 2012, from $42.3 million, or 1.67%, of total assets at September 30, 2012, and were down $6.8 million, or 16%, from $41.9 million, or 1.73%, of total assets one year ago. On a linked quarter basis, total nonperforming loans decreased by $5.3 million, or 14%, and total other real estate owned decreased by $1.9 million, or 44%. Accruing restructured loans at December 31, 2012 totaled $19.6 million compared to $20.4 million for the previous quarter-end and to $12.8 million one year ago.

The Company recorded a provision for loan losses of $2.2 million for the fourth quarter of 2012 as compared to $2.5 million for the previous quarter and to $3.4 million recorded in the fourth quarter of 2011. The allowance for loan losses totaled $25.3 million as of December 31, 2012 as compared to $25.6 million at September 30, 2012 and to $21.6 million at December 31, 2011. The allowance represented 1.65% of gross loans outstanding at December 31, 2012, compared to 1.70% at September 30, 2012 and 1.50% at December 31, 2011. The provision for loan losses for the year ended December 31, 2012 totaled $10.1 million, down $10.5 million, or 51%, compared to $20.6 million recorded for 2011.

Total net charge-offs for the fourth quarter of 2012 were $2.5 million, versus $3.1 million for the previous quarter and compared to $5.0 million for the fourth quarter of 2011. Total net charge-offs for the year ended December 31, 2012 were $6.4 million, or 0.44% of average loans outstanding, compared to $20.6 million, or 1.43% of average loans outstanding for 2011.




                                                            
7



Investments

At December 31, 2012, the Company's investment portfolio totaled $944.9 million. Detailed below is information regarding the composition and characteristics of the portfolio at December 31, 2012:
Product Description
Available for Sale
 
Held to Maturity
 
Total
 
(dollars in thousands)
 
 
 
 
 
 
U.S. Government agencies/other
$
33,761

 
$
178,926

 
$
212,687

 
Mortgage-backed securities:
 
 
 
 
 
 
  Federal government agencies pass through certificates
57,210

 
23,827

 
81,037

 
  Agency collateralized mortgage obligations
556,867

 
49,051

 
605,918

 
Corporate debt securities

 
15,000

 
15,000

 
Municipal securities
27,271

 
2,979

 
30,250

 
Total
$
675,109

 
$
269,783

 
$
944,892

 
Duration (in years)
3.4

 
4.5

 
3.7

 
Average life (in years)
3.6

 
5.3

 
4.1

 
Quarterly average yield (annualized)
2.38
%
 
2.89
%
 
2.51
%
 

At December 31, 2012, after-tax unrealized gains on the Bank's available for sale portfolio were $7.2 million, as compared to $3.8 million at December 31, 2011.

Capital

Stockholders' equity at December 31, 2012 totaled $235.4 million, an increase of $15.4 million, or 7%, over stockholders' equity of $220.0 million at December 31, 2011. Return on average stockholders' equity (ROE) for the fourth quarters of 2012 and 2011, was 5.89% and 4.48%, respectively.

The Company's capital ratios at December 31, 2012 and 2011 were as follows:

 
12/31/2012
12/31/2011
Regulatory Guidelines “Well Capitalized”
Leverage ratio
9.61
%
9.99
%
5.00
%
Tier 1
13.97

14.11

6.00

Total capital
15.22

15.36

10.00


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

At December 31, 2012, the Company's book value per common 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.

                                                            
8



Forward-Looking Statements
 
This document contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the Securities Act and Section 21E of the Securities Exchange Act of 1934, which we refer to as the Exchange Act, with respect to the financial condition, liquidity, results of operations, future performance and business of Metro Bancorp, Inc. These forward-looking statements are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. These forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond our control).   The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements. 
 
While we believe our plans, objectives, goals, expectations, anticipations, estimates and intentions as reflected in these forward-looking statements are reasonable, we can give no assurance that any of them will be achieved.  You should understand that various factors, in addition to those discussed elsewhere in this document, could affect our future results and could cause results to differ materially from those expressed in these forward-looking statements, including: 
 
the effects of and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System, 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;
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;
continued levels of loan volume origination;
the adequacy of the allowance for loan losses;

                                                            
9



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.





                                                            
10



Metro Bancorp, Inc.
Selected Consolidated Financial Data
 
 
 
 
 
At or for the
 
At or for the
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
September 30,
 
%
 
December 31,
 
%
 
December 31,
 
December 31,
 
%
(in thousands, except per share amounts)
2012
 
2012
 
Change
 
2011
 
Change
 
2012
 
2011
 
Change
Income Statement Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net interest income
$
21,834

 
$
21,778

 
 %
 
$
21,390

 
2
 %
 
$
87,198

 
$
82,999

 
5
 %
  Provision for loan losses
2,150

 
2,500

 
(14
)
 
3,350

 
(36
)
 
10,100

 
20,592

 
(51
)
  Noninterest income
7,805

 
7,148

 
9

 
7,062

 
11

 
29,854

 
30,452

 
(2
)
  Total revenues
29,639

 
28,926

 
2

 
28,452

 
4

 
117,052

 
113,451

 
3

  Noninterest expenses
22,486

 
23,053

 
(2
)
 
21,731

 
3

 
91,144

 
94,014

 
(3
)
  Net income
3,456

 
1,992

 
73

 
2,483

 
39

 
10,894

 
289

 
3,670

Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net income per common share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Basic
$
0.24

 
$
0.14

 
71
 %
 
$
0.18

 
33
 %
 
$
0.77

 
$
0.02

 
3,750
 %
      Diluted
0.24

 
0.14

 
71

 
0.18

 
33

 
0.77

 
0.02

 
3,750

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Book Value
 
 
$
16.33

 
 
 
 
 
 
 
$
16.58

 
$
15.50

 
7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Weighted average common shares
      outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Basic
14,129

 
14,129

 
 
 
14,075

 
 
 
14,128

 
13,919

 
 
      Diluted
14,129

 
14,129

 
 
 
14,075

 
 
 
14,128

 
13,919

 
 
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Total assets
$
2,634,875

 
$
2,538,361

 
4
 %
 
 
 
 
 
$
2,634,875

 
$
2,421,219

 
9
 %
  Loans (net)
1,503,515

 
1,479,394

 
2

 
 
 
 
 
1,503,515

 
1,415,048

 
6

  Allowance for loan losses
25,282

 
25,596

 
(1
)
 
 
 
 
 
25,282

 
21,620

 
17

  Investment securities
944,892

 
792,909

 
19

 
 
 
 
 
944,892

 
810,094

 
17

  Total deposits
2,231,291

 
2,243,932

 
(1
)
 
 
 
 
 
2,231,291

 
2,071,574

 
8

  Core deposits
2,176,376

 
2,185,270

 

 
 
 
 
 
2,176,376

 
2,028,338

 
7

  Stockholders' equity
235,387

 
231,822

 
2

 
 
 
 
 
235,387

 
220,020

 
7

Capital:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Total stockholders' equity to assets
 
 
9.13
%
 
 
 
 
 
 
 
8.93
%
 
9.09
%
 
 
  Leverage ratio
 
 
10.18

 
 
 
 
 
 
 
9.61

 
9.99

 
 
  Risk based capital ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
      Tier 1
 
 
14.50

 
 
 
 
 
 
 
13.97

 
14.11

 
 
      Total Capital
 
 
15.76

 
 
 
 
 
 
 
15.22

 
15.36

 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Cost of funds
0.39
%
 
0.45
%
 
 
 
0.61
%
 
 
 
0.46
%
 
0.69
%
 
 
  Deposit cost of funds
0.32

 
0.35

 
 
 
0.50

 
 
 
0.37

 
0.59

 
 
  Net interest margin
3.62

 
3.75

 
 
 
3.73

 
 
 
3.74

 
3.73

 
 
  Return on average assets
0.54

 
0.32

 
 
 
0.41

 
 
 
0.44

 
0.01

 
 
  Return on total stockholders'
     average equity
5.89

 
3.44

 
 
 
4.48

 
 
 
4.76

 
0.13

 
 
Asset Quality:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Net charge-offs (annualized) to
      average loans outstanding
0.65
%
 
0.81
%
 
 
 
1.39
%
 
 
 
0.44
%
 
1.43
%
 
 
  Nonperforming assets to total
      period-end assets
1.33

 
1.67

 
 
 
 
 
 
 
1.33

 
1.73

 
 
  Allowance for loan losses to total
      period-end loans
1.65

 
1.70

 
 
 
 
 
 
 
1.65

 
1.50

 
 
  Allowance for loan losses to
      period-end nonperforming loans
77

 
68

 
 
 
 
 
 
 
77

 
62

 
 
  Nonperforming assets to capital
      and allowance
13

 
16

 
 
 
 
 
 
 
13

 
17

 
 

                                                            
11



Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
 
 
 
 
 
December 31,
 
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 borrowings
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



                                                            
12



Metro Bancorp, Inc. and Subsidiaries
 
 
 
 
 
 
 
Consolidated Statements of Income (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
December 31,
 
December 31,
(in thousands, except per share amounts)
2012
 
2011
 
2012
 
2011
Interest Income
 
 
 
 
 
 
 
Loans receivable, including fees:
 
 
 
 
 
 
 
Taxable
$
17,841

 
$
17,951

 
$
71,760

 
$
71,307

Tax-exempt
935

 
1,018

 
3,628

 
4,020

Securities:
 
 
 
 
 
 
 
Taxable
5,136

 
5,755

 
21,468

 
22,362

Tax-exempt
184

 
1

 
451

 
1

Federal funds sold

 
1

 
1

 
5

Total interest income
24,096

 
24,726

 
97,308

 
97,695

Interest Expense
 
 
 
 
 

 
 

Deposits
1,777

 
2,599

 
7,701

 
11,443

Short-term borrowings
33

 
45

 
203

 
439

Long-term debt
452

 
692

 
2,206

 
2,814

Total interest expense
2,262

 
3,336

 
10,110

 
14,696

Net interest income
21,834

 
21,390

 
87,198

 
82,999

Provision for loan losses
2,150

 
3,350

 
10,100

 
20,592

 Net interest income after provision for loan losses
19,684

 
18,040

 
77,098

 
62,407

Noninterest Income
 
 
 
 
 

 
 

Service charges, fees and other operating income
7,586

 
6,915

 
28,372

 
27,773

Gains on sales of loans
267

 
231

 
1,220

 
2,728

Total fees and other income
7,853

 
7,146

 
29,592

 
30,501

Net impairment loss on investment securities

 
(9
)
 
(649
)
 
(324
)
Net gains on sales of securities
92

 

 
1,051

 
350

Debt prepayment charge
(140
)
 
(75
)
 
(140
)
 
(75
)
Total noninterest income
7,805

 
7,062


29,854


30,452

Noninterest Expenses
 
 
 
 
 

 
 

Salaries and employee benefits
10,516

 
9,572

 
41,241

 
40,318

Occupancy and equipment
3,379

 
3,551

 
13,281

 
14,620

Advertising and marketing
623

 
776

 
1,870

 
2,016

Data processing
3,707

 
3,719

 
13,590

 
14,211

Regulatory assessments and related costs
541

 
782

 
4,063

 
3,638

Foreclosed real estate
(208
)
 
230

 
1,335

 
2,275

Other
3,928

 
3,101

 
15,764

 
16,936

Total noninterest expenses
22,486

 
21,731

 
91,144

 
94,014

Income (loss) before taxes
5,003

 
3,371

 
15,808

 
(1,155
)
Provision (benefit) for federal income taxes
1,547

 
888

 
4,914

 
(1,444
)
Net income
$
3,456

 
$
2,483

 
$
10,894

 
$
289

Net Income per Common Share
 
 
 
 
 

 
 

Basic
$
0.24

 
$
0.18

 
$
0.77

 
$
0.02

Diluted
0.24

 
0.18

 
0.77

 
0.02

Average Common and Common Equivalent Shares Outstanding
 
 
 
 
 

 
 

Basic
14,129

 
14,075

 
14,128

 
13,919

Diluted
14,129

 
14,075

 
14,128

 
13,919



                                                            
13



Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Quarter ended,
Year-to-date,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
September 30, 2012
December 31, 2011
December 31, 2012
December 31, 2011
 
Average
 
Avg.
Average
 
Avg.
Average
 
Avg.
Average
 
Avg.
Average
 
Avg.
 
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
(dollars in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earning Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
$
832,655

$
5,136

2.47
%
$
755,138

$
5,094

2.70
%
$
805,467

$
5,754

2.86
%
$
796,306

$
21,468

2.70
%
$
744,903

$
22,362

3.00
%
Tax-exempt
29,818

283

3.78

24,572

225

3.67

156

2

4.29

18,189

693

3.81

39

2

4.26

Total securities
862,473

5,419

2.51

779,710

5,319

2.73

805,623

5,756

2.86

814,495

22,161

2.72

744,942

22,364

3.00

Federal funds sold






7,547


0.02

2,696

1

0.05

9,176

5

0.05

Total loans receivable
1,517,395

19,279

4.99

1,507,731

19,491

5.08

1,446,084

19,494

5.30

1,489,787

77,342

5.13

1,448,056

77,398

5.29

Total earning assets
$
2,379,868

$
24,698

4.09
%
$
2,287,441

$
24,810

4.28
%
$
2,259,254

$
25,250

4.41
%
$
2,306,978

$
99,504

4.27
%
$
2,202,174

$
99,767

4.49
%
Sources of Funds
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Regular savings
$
407,906

$
334

0.33
%
$
408,213

$
367

0.36
%
$
359,966

$
364

0.40
%
$
398,242

$
1,422

0.36
%
$
336,720

$
1,446

0.43
%
  Interest checking and money market
1,130,917

896

0.31

1,043,502

889

0.34

1,056,840

1,202

0.45

1,050,664

3,799

0.36

967,982

5,433

0.56

  Time deposits
145,820

499

1.36

151,313

533

1.40

196,431

960

1.94

157,238

2,262

1.44

206,178

4,272

2.07

  Public funds time
56,661

48

0.34

59,610

53

0.36

56,057

73

0.51

54,333

218

0.40

54,824

292

0.53

Total interest-bearing deposits
1,741,304

1,777

0.41

1,662,638

1,842

0.44

1,669,294

2,599

0.62

1,660,477

7,701

0.46

1,565,704

11,443

0.73

Short-term borrowings
60,398

33

0.22

69,041

43

0.24

74,279

45

0.24

86,333

203

0.23

127,975

439

0.34

Long-term debt
43,083

452

4.18

49,200

592

4.80

53,100

692

5.20

47,662

2,206

4.62

48,935

2,814

5.74

Total interest-bearing liabilities
1,844,785

2,262

0.49

1,780,879

2,477

0.55

1,796,673

3,336

0.74

1,794,472

10,110

0.56

1,742,614

14,696

0.84

Demand deposits (noninterest-bearing)
448,799

 
 
417,079

 
 
377,942

 
 
420,181

 

 

373,494

 

 

Sources to fund earning assets
2,293,584

2,262

0.39

2,197,958

2,477

0.45

2,174,615

3,336

0.61

2,214,653

10,110

0.46

2,116,108

14,696

0.69

Noninterest-bearing funds (net)
86,284

 
 
89,483

 
 
84,639

 
 
92,325

 

 

86,066

 

 

Total sources to fund earning assets
$
2,379,868

$
2,262

0.38
%
$
2,287,441

$
2,477

0.43
%
$
2,259,254

$
3,336

0.59
%
$
2,306,978

$
10,110

0.44
%
$
2,202,174

$
14,696

0.67
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income and margin on a tax-
   equivalent basis
 
$
22,436

3.71
%
 
$
22,333

3.85
%
 
$
21,914

3.82
%
 
$
89,394

3.83
%
 
$
85,071

3.82
%
Tax-exempt adjustment
 
602

 
 
555

 
 
524

 
 
2,196

 
 
2,072

 
Net interest income and margin
 
$
21,834

3.62
%
 
$
21,778

3.75
%
 
$
21,390

3.73
%
 
$
87,198

3.74
%
 
$
82,999

3.73
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Balances:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
$
68,727

 
 
$
56,959

 
 
$
43,925

 
 
$
52,825

 
 
$
43,868

 
 
Other assets
92,832

 
 
96,105

 
 
103,391

 
 
97,580

 
 
103,474

 
 
Total assets
2,541,427

 
 
2,440,505

 
 
2,406,570

 
 
2,457,383

 
 
2,349,516

 
 
Other liabilities
14,504

 
 
12,128

 
 
11,833

 
 
13,958

 
 
17,750

 
 
Stockholders' equity
233,339

 
 
230,419

 
 
220,122

 
 
228,772

 
 
215,658

 
 

                                                            
14



Metro Bancorp, Inc. and Subsidiaries
 
 
 
 
Summary of Allowance for Loan Losses and Other Related Data
 
 
(unaudited)
 
 
 
 
 
 
 
 
 
 
Three Months Ended
Twelve Months Ended
 
December 31,
December 31,
(dollars in thousands)
2012
2011
2012
2011
 
 
 
 
 
Balance at beginning of period
$
25,596

$
23,307

$
21,620

$
21,618

Provisions charged to operating expenses
2,150

3,350

10,100

20,592

 
27,746

26,657

31,720

42,210

Recoveries of loans previously charged-off:
 
 
 
 
   Commercial and industrial
11

82

227

156

   Commercial tax-exempt




   Owner occupied real estate

59

7

60

   Commercial construction and land development
3

11

517

11

   Commercial real estate
12

5

97

15

   Residential

39

4

68

   Consumer
2

82

67

135

Total recoveries
28

278

919

445

Loans charged-off:
 
 
 
 
   Commercial and industrial
(1,354
)
(3,123
)
(2,302
)
(7,945
)
   Commercial tax-exempt




   Owner occupied real estate
(680
)

(772
)
(254
)
   Commercial construction and land development
(155
)
(1,715
)
(1,378
)
(10,629
)
   Commercial real estate
(2
)