Metro Bancorp Reports Record Quarterly Net Income of $4.7 Million; EPS up 136% and Loans Grow 13%

Business Wire

HARRISBURG, Pa.--(BUSINESS WIRE)--

Metro Bancorp, Inc. (Metro or the Company) (NASDAQ Global Select Market Symbol: METR), parent company of Metro Bank, today reported record quarterly net income of $4.7 million, or $0.33 per common share, for the quarter ended September 30, 2013, compared to net income of $2.0 million, or $0.14 per common share for the third quarter of 2012. The Company also reported net loan growth of $195.9 million, or 13%, over the past twelve months.

 

Financial Highlights

(in millions, except per share data)
           
Quarter Ended Nine Months Ended
% %
    09/30/13   09/30/12   Change 09/30/13   09/30/12   Increase
Total assets $ 2,756.0 $ 2,538.4 9 %
 
Total loans (net) 1,675.3 1,479.4 13 %
 
Total deposits 2,177.1 2,243.9 (3 )%
                       
 
Total revenues $ 30.4 $ 28.9 5 % $ 90.0 $ 87.4 3 %
   
Net income 4.7 2.0 135 % 12.4 7.4 66 %
     
Diluted net income per common share $ 0.33   $ 0.14 136 % $ 0.86 $ 0.52 65 %
                                             
 

“We are very pleased with our record quarterly net income of $4.7 million which reflects our continued progress with increasing revenues and disciplined expense management. Our double digit growth in net loans of 13% demonstrates our ability to successfully grow our loan portfolio in this challenging economic environment. This performance shows our continued commitment to creating long-term shareholder value,” said Gary L. Nalbandian, the Company's Chairman and Chief Executive Officer.

Highlights for the Third Quarter Ended September 30, 2013

  • The Company recorded net income of $4.7 million, or $0.33 per diluted share, for the third quarter of 2013 compared to net income of $2.0 million, or $0.14 per diluted share, for the same period one year ago, a $2.7 million, or 135%, increase. Financial results for the third quarter and first nine months last year included the impact of a one-time non-recurring regulatory expense of $1.5 million. Excluding that expense, net income and diluted earnings per share would have been $3.5 million and $0.25, respectively for the third quarter one year ago. Net income for the first nine months of 2013 totaled $12.4 million, or $0.86 per diluted share, up $4.9 million, or 66%, over $7.4 million, or $0.52 per diluted share recorded for the first nine months of 2012.
  • Total revenues for the third quarter of 2013 were $30.4 million, up $1.5 million, or 5%, over total revenues of $28.9 million for the same quarter one year ago and were up $450,000, or 2%, over total revenues of $29.9 million for the previous quarter. Total revenues for the first nine months of 2013 increased $2.6 million, or 3%, over the first nine months of 2012.
  • Noninterest expenses were basically flat versus the previous quarter and down $610,000, or 3%, from the same quarter one year ago. Total noninterest expenses for the first nine months of 2013 were down $1.5 million, or 2%, compared to the first nine months of 2012.
  • The Company's net interest margin on a fully-taxable basis for the third quarter of 2013 was 3.58%, compared to 3.62% recorded in the second quarter of 2013 and compared to 3.85% for the third quarter of 2012. The Company's deposit cost of funds for the third quarter was 0.28%, down from 0.29% for the previous quarter and compared to 0.35% for the same period one year ago.
  • Net loans grew $69.4 million, or 4%, on a linked quarter basis to $1.68 billion and were up $195.9 million, or 13%, over the third quarter 2012.
  • The provision for loan losses totaled $1.2 million for the third quarter of 2013, compared to $1.8 million for the previous quarter and compared to $2.5 million for the third quarter one year ago. Our allowance for loan losses totaled $27.4 million, or 1.61%, of total loans at September 30, 2013 as compared to $25.6 million, or 1.70%, of total loans at September 30, 2012.
  • Nonperforming assets were 1.71% of total assets at September 30, 2013, compared to 1.81% of total assets for the previous quarter and compared to 1.67% of total assets one year ago.
  • Total deposits at the end of the third quarter of 2013 were $2.18 billion, down $66.9 million, or 3%, compared to third quarter one year ago.
  • Metro's capital levels remain strong with a total risk-based capital ratio of 14.79%, a Tier 1 Leverage ratio of 9.42% and a tangible common equity to tangible assets ratio of 8.34%.
  • Stockholders' equity totaled $230.9 million, or 8.38% of total assets, at the end of the third quarter. At September 30, 2013, the Company's book value per share was $16.25. The market price of Metro's common stock has increased by 66% from $12.67 per share at September 30, 2012 to $21.01 per share at September 30, 2013.
  • Return on average shareholders equity was 8.14% for the third quarter of 2013, compared to 6.90% for the previous quarter and compared to 3.44% for the same period last year.
   

Income Statement

             
Three months ended Nine months ended
September 30,   September 30,
(dollars in thousands, except per share data)   2013   2012   % Change   2013   2012   % Change
Total revenues $ 30,383   $ 28,926   5 % $ 90,026   $ 87,413   3 %
Provision for loan losses 1,200 2,500 (52 ) 5,300 7,950 (33 )
Total noninterest expenses 22,443   23,053 (3 ) 67,132   68,658 (2 )
Net income 4,676   1,992 135   12,369   7,438 66  
Diluted net income per share   $ 0.33     $ 0.14     136 %   $ 0.86     $ 0.52     65 %
 

Metro recorded net income of $4.7 million, or $0.33 per diluted share, for the third quarter of 2013 compared to net income of $2.0 million, or $0.14 per diluted share, for the third quarter of 2012. On a linked quarter basis, net income increased $628,000, or 16%, and diluted earnings per share were up $0.05, or 18%.

Net income for the first nine months of 2013 was $12.4 million compared to $7.4 million recorded in the first nine months of 2012, up 66%. Diluted earnings per share for the first nine months of 2013 were $0.86 compared to $0.52 for the same period last year, a 65% increase.

Total revenues (net interest income plus noninterest income) for the third quarter of 2013 were $30.4 million, up $1.5 million, or 5%, over the third quarter of 2012. Total revenues for the first nine months of 2013 were $90.0 million, up $2.6 million, or 3%, over the first nine months of 2012.

Noninterest expenses for the quarter totaled $22.4 million, down $610,000, or 3%, compared to the same period in 2012 and were consistent on a linked quarter basis. Total noninterest expenses for the first nine months of 2013 were $67.1 million, down $1.5 million, or 2%, from the same period last year.

Net Interest Income and Net Interest Margin

Net interest income for the third quarter of 2013 totaled $22.9 million, up $1.1 million, or 5%, over the $21.8 million recorded in the third quarter of 2012. For the first nine months of 2013, net interest income totaled $67.8 million versus $65.4 million for the same period in 2012, a 4% increase.

Average interest-earning assets for the third quarter of 2013 totaled $2.59 billion versus $2.55 billion for the previous quarter and were up $297.8 million, or 13%, over the third quarter of 2012. Average interest-bearing deposits totaled $1.69 billion for the third quarter of 2013, up $23.5 million, or 1%, over the same period of 2012 and average noninterest-bearing deposits for the quarter were $431.4 million, up $14.4 million, or 3%, over the third quarter last year. Total interest expense for the quarter was down $478,000, or 19%, from the third quarter of 2012 as a result of a 13 basis points (bps) reduction in the Company's overall total cost of all funds over the past twelve months.

Average interest-earning assets for the first nine months of 2013 totaled $2.54 billion versus $2.28 billion for the first nine months of 2012, an 11% increase. Total interest income on a tax equivalent basis for the first nine months of 2013 was up $961,000, or 1%, over the same period last year. Total interest expense for the first nine months was down $1.7 million, or 22%, from the first nine months of 2012.

The net interest margin for the third quarter of 2013 was 3.49%, down 3 bps from the 3.52% recorded for the previous quarter and down 26 bps from the third quarter one year ago. The net interest margin on a fully-taxable basis for the third quarter of 2013 was 3.58%, down 4 bps from the previous quarter and down 27 bps compared to 3.85% for the third quarter of 2012.

The net interest margin for the first nine months of 2013 was 3.53%, down 25 bps from the 3.78% recorded for the for the first nine months of 2012. On a fully-taxable basis, the net interest margin for the first nine months of 2013 was 3.62%, compared to 3.87% for the first nine months of 2012.

The Bank's deposit cost of funds for the third quarter of 2013 was 0.28%, down from 0.29% the previous quarter, and down 7 bps from 0.35% recorded in the third quarter one year ago. The total cost of all funding sources for the third quarter was 0.32%, compared to 0.33% for the previous quarter and down 13 basis points from the same period in 2012.

Change in Net Interest Income and Rate/Volume Analysis

As shown in the following table, the increase in net interest income on a fully tax-equivalent basis for the third quarter and for the first nine months of 2013 over the same periods of 2012 was primarily due to an increase in the level of interest earning assets. Lower yields on interest earning assets were partially offset by a reduction in the Company's cost of funds.

     
(dollars in thousands)   Tax Equivalent Net Interest Income
2013 vs. 2012   Volume

Change

  Rate

Change

  Total

Increase

  %

Increase

3rd Quarter   $2,649   $(1,526)   $1,123   5%
Nine Months   $7,064   $(4,377)   $2,687   4%
 

Noninterest Income

Noninterest income for the third quarter of 2013 totaled $7.5 million, up $368,000, or 5%, over the third quarter one year ago. Service charges and fees for the third quarter were $7.4 million, an increase of $535,000, or 8%, over the third quarter last year while net gains on the sale of loans totaled $148,000 for the third quarter of 2013 versus $352,000 for the same period in 2012.

Noninterest income for the first nine months of 2013 increased by $176,000, or 1%, compared to the first nine months of 2012. Service charges and fees were up 3% for the first nine months of 2013 compared to 2012 and gains on the sale of loans were $811,000 during the first nine months of 2013 compared to $953,000 for the same period of 2012. Net gains on sales of securities during the first nine months of 2013 were $21,000 compared to net gains of $959,000 in the first nine months of 2012. During the first nine months of 2013 there were no OTTI losses compared to $649,000 in OTTI charges on private-label CMOs in the Bank's investment portfolio for the first nine months of 2012.

The breakdown of noninterest income for the third quarter and for the first nine months of 2013 and 2012, respectively, is shown in the table below:

         
  Three months ended   Nine months ended
September 30, September 30,
(dollars in thousands)   2013   2012   % Change 2013   2012   % Change
Service charges, fees and other income $ 7,368   $ 6,833   8 % $ 21,393   $ 20,786   3 %
Net gains on sales of loans 148 352 (58 ) 811 953 (15 )
Net gains (losses) on sales/calls of securities (37 ) (100 ) 21 959 (98 )
Credit impairment losses on investment securities                 (649 )   (100 )
Total noninterest income   $ 7,516     $ 7,148     5 %   $ 22,225     $ 22,049     1 %
 

Noninterest Expenses

Noninterest expenses for the third quarter of 2013 were $22.4 million, down $610,000, or 3%, compared to $23.1 million recorded in the third quarter one year ago. For the first nine months of 2013, noninterest expenses totaled $67.1 million, down $1.5 million, or 2%, from $68.7 million recorded for the first nine months of 2012.

The breakdown of noninterest expenses for the third quarter and for the first nine months of 2013 and 2012, respectively, are shown in the table below:

         
  Three months ended   Nine months ended
September 30,   September 30,
(dollars in thousands)   2013   2012   % Change   2013   2012   % Change
Salaries and employee benefits $ 10,761   $ 10,021   7 % $ 31,977   $ 30,725   4 %
Occupancy and equipment 3,319 3,265 2 9,864 9,902
Advertising and marketing 610 446 37 1,427 1,247 14
Data processing 3,206 3,220 9,688 9,883 (2 )
Regulatory assessments and related costs 588 1,847 (68 ) 1,673 3,522 (52 )
Foreclosed real estate 54 399 (86 ) 269 1,543 (83 )
Other expenses   3,905     3,855     1     12,234     11,836     3  
Total noninterest expenses   $ 22,443     $ 23,053     (3 )%   $ 67,132     $ 68,658     (2 )%
 

Balance Sheet

         
  As of September 30,  
(dollars in thousands)   2013   2012   %

Increase

Total assets $ 2,755,982   $ 2,538,361 9 %
 
Total loans (net) 1,675,251 1,479,394 13 %
 
Total deposits 2,177,071 2,243,932 (3 )%
 
Total core deposits 2,113,207 2,185,270 (3 )%
 
Total stockholders' equity   230,941     231,822     %
 

Lending

Gross loans totaled $1.70 billion at September 30, 2013, an increase of $197.7 million, or 13%, compared to September 30, 2012. The Company experienced loan growth in all but one category over the past twelve months. The composition of the Company's loan portfolio at September 30, 2013 and September 30, 2012 was as follows:

                         
  September 30,   % of   September 30,   % of   $   %

(dollars in thousands)

  2013   Total   2012   Total   Change   Change
Commercial and industrial $ 435,508 26 % $ 347,099 23 % $ 88,409 25 %
Commercial tax-exempt 82,507 5 88,934 6 (6,427 ) (7 )
Owner occupied real estate 300,555 18 274,235 18 26,320 10

Commercial construction and land development

124,376 7 107,311 7 17,065 16
Commercial real estate 450,611 26 393,182 26 57,429 15
Residential 94,227 5 82,989 6 11,238 14

Consumer

  214,892     13     211,240     14     3,652     2  
Gross loans   $ 1,702,676     100 %   $ 1,504,990     100 %   $ 197,686     13 %
 

Asset Quality

The Company's asset quality ratios are highlighted below:

     
  Quarters Ended
September 30,   June 30,   September 30,
    2013   2013   2012
Nonperforming assets/total assets 1.71 % 1.81 % 1.67 %
Net loan charge-offs (annualized)/average total loans 0.43 % 0.31 % 0.81 %
Loan loss allowance/total loans 1.61 % 1.72 % 1.70 %
Nonperforming loan coverage 63 % 64 % 68 %
Nonperforming assets/capital and reserves   18 %   19 %   16 %
 

Nonperforming assets decreased during the third quarter by $1.1 million, to $47.1 million, or 1.71%, of total assets at September 30, 2013, from $48.1 million, or 1.81%, of total assets at June 30, 2013, and compared to $42.3 million, or 1.67%, of total assets one year ago. The primary reason for the overall decrease during the third quarter of 2013 was the result of the sale of three foreclosed asset properties which totaled $993,000 combined with net charge-offs of $1.8 million. A total of $1.4 million, or 79%, of the total net charge-offs for the third quarter of 2013 was associated with one loan relationship which originated in 2006.

Total net charge-offs for the third quarter of 2013 were $1.8 million, versus $1.2 million for the previous quarter and compared to $3.1 million for the third quarter of 2012. Net charge-offs for the first nine months of 2013 totaled $3.2 million, down $817,000, or 21%, from 2012.

The Company recorded a provision for loan losses of $1.2 million for the third quarter of 2013 as compared to $1.8 million for the previous quarter and to $2.5 million recorded in the third quarter of 2012. The allowance for loan losses totaled $27.4 million as of September 30, 2013 as compared to $28.0 million at June 30, 2013 and to $25.6 million at September 30, 2012. The allowance represented 1.61% of gross loans outstanding at September 30, 2013, compared to 1.72% at June 30, 2013 and 1.70% at September 30, 2012.

Deposits

The Company's deposit balances at September 30, 2013 were $2.18 billion, compared to total deposits of $2.24 billion one year ago. Change in core deposits by type of account is as follows:

             
  As of September 30,    
  % 3rd Quarter 2013

(dollars in thousands)

  2013   2012   Change   Cost of Funds
Demand noninterest-bearing $ 436,013 $ 451,443 (3 )% 0.00 %
Demand interest-bearing 1,140,569 1,149,453 (1 ) 0.28
Savings   416,681     436,005     (4 )   0.30  
Subtotal 1,993,263 2,036,901 (2 ) 0.22  
Time   119,944     148,369     (19 )   1.19  
Total core deposits   $ 2,113,207     $ 2,185,270     (3 )%   0.28 %
 

Total core deposits (excluding time deposits) decreased $43.6 million, or 2%, over the past twelve months. The cost of core deposits, excluding time deposits, during the third quarter of 2013 was 0.22%, the same as the previous quarter and down 5 bps from the third quarter one year ago. The cost of total core deposits for the third quarter of 2013 was 0.28%, down 1 bps on a linked quarter basis and down 7 bps from the same period in 2012.

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

                     
  September 30,   % of   September 30,   % of   %
(dollars in thousands)   2013   Total   2012   Total   Increase
Consumer $ 935,166 44 % $ 942,344 43 % (1 )%
Commercial 648,963 31 668,161 31 (3 )
Government   529,078     25     574,765     26     (8 )
Total   $ 2,113,207     100 %   $ 2,185,270     100 %   (3 )%
 

Investments

At September 30, 2013, the Company's investment portfolio totaled $889.4 million, up $25.9 million, or 3%, on a linked quarter basis and up $96.5 million, or 12%, compared to September 30, 2012. Detailed below is information regarding the composition and characteristics of the portfolio at September 30, 2013:

             
  Available   Held to  
Product Description   for Sale   Maturity   Total
(dollars in thousands)
U.S. Government agencies/other $ 30,372 $ 149,093 $ 179,465
Mortgage-backed securities:
Federal government agencies pass through certificates 65,061 16,793 81,854
Agency collateralized mortgage obligations 491,032 103,361 594,393
Corporate debt securities 5,000 5,000
Municipal securities   25,686     2,977     28,663  
Total   $ 612,151     $ 277,224     $ 889,375  
Duration (in years) 5.0 6.6 5.5
Average life (in years) 5.6 7.7 6.3
Quarterly average yield (annualized)   2.22 %   2.62 %   2.33 %
 

At September 30, 2013, after-tax unrealized losses on the Bank's available for sale portfolio were $10.6 million, as compared to after-tax unrealized gains of $7.4 million at September 30, 2012. This change is a direct result of the steep decline in market prices for fixed rate investments which has occurred over the past two quarters.

Capital

Stockholders' equity at September 30, 2013 totaled $230.9 million, compared to $231.8 million at September 30, 2012. The decrease is primarily the net result of recorded net income over the past twelve months offset by the after-tax net decrease in the fair market value of the Company's investment securities available for sale portfolio. Return on average stockholders' equity (ROE) for the third quarter of 2013 was 8.14%, compared to 6.90% for the previous quarter and up over the 3.44% for the third quarter last year.

The Company's capital ratios at September 30, 2013 and 2012 were as follows:

             
      Regulatory
Guidelines “Well
    9/30/2013   9/30/2012   Capitalized”
Leverage ratio 9.42 % 10.18 % 5.00 %
Tier 1 13.54 14.50 6.00
Total capital   14.79     15.76     10.00  
 

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

At September 30, 2013, the Company's book value per common share was $16.25.

The market price of Metro's common stock increased by 66% from $12.67 per common share at September 30, 2012 to $21.01 per common share at September 30, 2013.

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 ongoing short and long-term federal budget and tax negotiations 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 permanently 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);
  • possible impacts of the capital and liquidity requirements of the Basel III standards and other regulatory pronouncements;
  • continued effects of the aftermath of recessionary conditions and the impacts on the economy in general and our customers in particular, including adverse impacts on loan utilization rates as well as delinquencies, defaults and customers' ability to meet credit obligations;
  • our ability to manage current levels of impaired assets;
  • continued levels of loan volume origination;
  • the adequacy of the allowance for loan losses (allowance or ALL);
  • the impact of changes in Regulation Z and other consumer credit protection laws and regulations;
  • changes resulting from legislative and regulatory actions with respect to the current economic and financial industry environment;
  • changes in the 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;
  • 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.

 
Metro Bancorp, Inc.
Selected Consolidated Financial Data
   
At or for the At or for the
    Three Months Ended   Nine Months Ended
September 30,   June 30,   %   September 30,   % September 30,   September 30,   %
(in thousands, except per share amounts)   2013   2013   Change   2012   Change   2013   2012   Change
Income Statement Data:
Net interest income $ 22,867 $ 22,599 1 % $ 21,778 5 % $ 67,801 $ 65,364 4 %
Provision for loan losses 1,200 1,800 (33 ) 2,500 (52 ) 5,300 7,950 (33 )
Noninterest income 7,516 7,334 2 7,148 5 22,225 22,049 1
Total revenues 30,383 29,933 2 28,926 5 90,026 87,413 3
Noninterest expenses 22,443 22,360 23,053 (3 ) 67,132 68,658 (2 )
Net income 4,676 4,048 16 1,992 135 12,369 7,438 66
Per Common Share Data:
Net income per common share:
Basic $ 0.33 $ 0.28 18 % $ 0.14 136 % $ 0.87 $ 0.52 67 %
Diluted 0.33 0.28 18 0.14 136 0.86 0.52 65
 
Book Value $ 16.09 $ 16.25 $ 16.33
 

Weighted average common shares outstanding:

Basic 14,145 14,137 14,129 14,138 14,128
Diluted 14,315 14,243 14,129 14,248 14,128
Balance Sheet Data:
Total assets $ 2,755,982 $ 2,658,405 4 % $ 2,755,982 $ 2,538,361 9 %
Loans (net) 1,675,251 1,605,828 4 1,675,251 1,479,394 13

Allowance for loan losses

27,425 28,038 (2 ) 27,425 25,596 7
Investment securities 889,375 863,462 3 889,375 792,909 12
Total deposits 2,177,071 2,168,759 2,177,071 2,243,932 (3 )
Core deposits 2,113,207 2,102,450 1 2,113,207 2,185,270 (3 )
Stockholders' equity 230,941 228,468 1 230,941 231,822
Capital:
Total stockholders' equity to assets 8.59 % 8.38 % 9.13 %
Leverage ratio 9.37 9.42 10.18
Risk based capital ratios:
Tier 1 13.63 13.54 14.50
Total Capital 14.89 14.79 15.76
Performance Ratios:
Deposit cost of funds 0.28 % 0.29 % 0.35 % 0.29 % 0.39 %
Cost of funds 0.32 0.33 0.45 0.34 0.48
Net interest margin 3.49 3.52 3.75 3.53 3.78
Return on average assets 0.69 0.60 0.32 0.62 0.41
Return on average stockholders' equity 8.14 6.90 3.44 7.10 4.37
Asset Quality:

Net charge-offs (annualized) to average loans outstanding

0.43 % 0.31 % 0.81 % 0.26 % 0.36 %

Nonperforming assets to total period-end assets

1.71 1.81 1.71 1.67

Allowance for loan losses to total period-end loans

1.61 1.72 1.61 1.70

Allowance for loan losses to period-end nonperforming loans

63 64 63 68

Nonperforming assets to capital and allowance

  18     19                 18     16      
 
Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
         
  September 30,   December 31,
2013 2012
(in thousands, except share and per share amounts)   (Unaudited)    
 
Assets        
Cash and cash equivalents $ 59,382 $ 56,582
Securities, available for sale at fair value 612,151 675,109
Securities, held to maturity at cost (fair value 2013: $262,976; 2012: $273,671) 277,224 269,783
Loans, held for sale 5,011 15,183

Loans receivable, net of allowance for loan losses (allowance 2013: $27,425; 2012: $25,282)

1,675,251 1,503,515
Restricted investments in bank stock 18,538 15,450
Premises and equipment, net 76,447 78,788
Other assets   31,978     20,465
Total assets   $ 2,755,982     $ 2,634,875
 
Liabilities and Stockholders' Equity        
Deposits:
Noninterest-bearing $ 436,013 $ 455,000
Interest-bearing   1,741,058     1,776,291
Total deposits 2,177,071 2,231,291
Short-term borrowings 316,225 113,225
Long-term debt 15,800 40,800
Other liabilities   15,945     14,172

Total liabilities

2,525,041 2,399,488
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 2013: 14,150,737; 2012: 14,131,263)

14,151 14,131
Surplus 158,415 157,305
Retained earnings 68,620 56,311
Accumulated other comprehensive income (loss)   (10,645 )   7,240
Total stockholders' equity   230,941     235,387
Total liabilities and stockholders' equity   $ 2,755,982     $ 2,634,875
       
Metro Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
                 
Three Months Ended Nine Months Ended
September 30, September 30,
(in thousands, except per share amounts)   2013   2012   2013   2012
Interest Income                
Loans receivable, including fees:
Taxable $ 18,752 $ 18,084 $ 55,239 $ 53,919
Tax-exempt 908 929 2,744 2,693
Securities:
Taxable 5,021 5,094 15,387 16,332
Tax-exempt 185 148 553 267
Federal funds sold               1  
Total interest income   24,866     24,255     73,923     73,212  
Interest Expense                
Deposits 1,503 1,842 4,647 5,924
Short-term borrowings 189 43 501 170
Long-term debt   307     592     974     1,754  
Total interest expense   1,999     2,477     6,122     7,848  
Net interest income 22,867 21,778 67,801 65,364
Provision for loan losses   1,200     2,500     5,300     7,950  
Net interest income after provision for loan losses   21,667     19,278     62,501     57,414  
Noninterest Income                
Service charges, fees and other operating income 7,368 6,833 21,393 20,786
Net gains on sales of loans   148     352     811     953  
Total fees and other income 7,516 7,185 22,204 21,739
Net impairment loss on investment securities (649 )
Net gains (losses) on sales/calls of securities       (37 )   21     959  
Total noninterest income   7,516     7,148     22,225     22,049  
Noninterest Expenses                
Salaries and employee benefits 10,761 10,021 31,977 30,725
Occupancy and equipment 3,319 3,265 9,864 9,902
Advertising and marketing 610 446 1,427 1,247
Data processing 3,206 3,220 9,688 9,883
Regulatory assessments and related costs 588 1,847 1,673 3,522
Foreclosed real estate 54 399 269 1,543
Other   3,905     3,855     12,234     11,836  
Total noninterest expenses   22,443     23,053     67,132     68,658  
Income before taxes 6,740 3,373 17,594 10,805
Provision for federal income taxes   2,064     1,381     5,225     3,367  
Net income   $ 4,676     $ 1,992     $ 12,369     $ 7,438  
Net Income per Common Share
Basic $ 0.33 $ 0.14 $ 0.87 $ 0.52
Diluted   0.33     0.14     0.86     0.52  
Average Common and Common Equivalent Shares Outstanding
Basic 14,145 14,129 14,138 14,128
Diluted   14,315     14,129     14,248     14,128  
 
Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
                             
    Quarter ended,   Year-to-date,
 
    September 30, 2013   June 30, 2013   September 30, 2012   September 30, 2013   September 30, 2012
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 $ 881,068 $ 5,021 2.28 % $ 889,510 $ 5,007 2.25 % $ 755,138 $ 5,094 2.70 % $ 895,782 $ 15,387 2.29 % $ 784,101 $ 16,332 2.78 %
Tax-exempt   29,873     284     3.80     29,871     284     3.80     24,572     225     3.67     29,871     851     3.80     14,285     405     3.78  
Total securities 910,941 5,305 2.33 919,381 5,291 2.30 779,710 5,319 2.73 925,653 16,238 2.34 798,386 16,737 2.80
Federal funds sold 3,601 1 0.05
Total loans receivable   1,674,334     20,150     4.73     1,628,073     19,908     4.85     1,507,731     19,491     5.08     1,619,215     59,460     4.86     1,480,517     57,999     5.17  
Total earning assets   $ 2,585,275     $ 25,455     3.88 %   $ 2,547,454     $ 25,199     3.93 %   $ 2,287,441     $ 24,810     4.28 %   $ 2,544,868     $ 75,698     3.94 %   $ 2,282,504     $ 74,737     4.33 %
Sources of Funds
Interest-bearing deposits:
Regular savings $ 458,105 $ 348 0.30 % $ 424,474 $ 335 0.32 % $ 408,213 $ 367 0.36 % $ 432,453 $ 1,009 0.31 % $ 394,997 $ 1,088 0.37 %
Interest checking and money market 1,039,800 735 0.28 1,039,872 733 0.28 1,043,502 889 0.34 1,052,330 2,270 0.29 1,023,718 2,903 0.38
Time deposits 123,044 368 1.19 130,015 397 1.22 151,313 533 1.40 130,506 1,212 1.24 161,071 1,763 1.46
Public time and other noncore deposits   65,145     52     0.32     59,894     60     0.40     59,610     53     0.36     60,026     156     0.35     53,551     170     0.42  
Total interest-bearing deposits 1,686,094 1,503 0.35 1,654,255 1,525 0.37 1,662,638 1,842 0.44 1,675,315 4,647 0.37 1,633,337 5,924 0.48
Short-term borrowings 329,868 189 0.22 325,044 181 0.22 69,041 43 0.24 294,978 501 0.22 95,041 170 0.23
Long-term debt   15,800     307     7.77     15,800     307     7.77     49,200     592     4.80     22,760     974     5.70     49,200     1,754     4.75  
Total interest-bearing liabilities 2,031,762 1,999 0.39 1,995,099 2,013 0.40 1,780,879 2,477 0.55 1,993,053 6,122 0.41 1,777,578 7,848 0.59
Demand deposits (noninterest-bearing)   431,438             440,573             417,079             435,026             410,572          
Sources to fund earning assets 2,463,200 1,999 0.32 2,435,672 2,013 0.33 2,197,958 2,477 0.45 2,428,079 6,122 0.34 2,188,150 7,848 0.48
Noninterest-bearing funds (net)   122,075             111,782             89,483             116,789             94,354          
Total sources to fund earning assets   $ 2,585,275     $ 1,999     0.31 %   $ 2,547,454     $ 2,013     0.32 %   $ 2,287,441     $ 2,477     0.43 %   $ 2,544,868     $ 6,122     0.32 %   $ 2,282,504     $ 7,848     0.46 %
 

Net interest income and margin on a tax-equivalent basis

$ 23,456 3.58 % $ 23,186 3.62 % $ 22,333 3.85 % $ 69,576 3.62 % $ 66,889 3.87 %
Tax-exempt adjustment 589   587   555   1,775   1,525  
Net interest income and margin       $ 22,867     3.49 %       $ 22,599     3.52 %       $ 21,778     3.75 %       $ 67,801     3.53 %       $ 65,364     3.78 %
 
Other Balances:
Cash and due from banks $ 50,839 $ 50,801 $ 56,959 $ 48,182 $ 47,485
Other assets 71,101 90,398 96,105 84,412 99,118
Total assets 2,707,215 2,688,653 2,440,505 2,677,462 2,429,107
Other liabilities 16,157 17,725 12,128 16,558 13,719
Stockholders' equity   227,858             235,256             230,419             232,825             227,238          
         
Metro Bancorp, Inc. and Subsidiaries
Summary of Allowance for Loan Losses and Other Related Data
(Unaudited)
                     
Three Months Ended Year Ended Nine Months Ended
September 30, December 31, September 30,
(dollars in thousands)   2013   2012   2012   2013   2012
 
Balance at beginning of period $ 28,038 $ 26,158 $ 21,620 $ 25,282 $ 21,620
Provisions charged to operating expenses   1,200     2,500     10,100     5,300     7,950  
29,238 28,658 31,720 30,582 29,570
Recoveries of loans previously charged-off:
Commercial and industrial 613 15 227 945 216
Commercial tax-exempt
Owner occupied real estate 7 3 8
Commercial construction and land development (21 ) 64 517 477 513
Commercial real estate 55 97 85
Residential 7 3 4 10 4
Consumer   11     20     67     69     65  
Total recoveries   610     157     919     1,504     891  
Loans charged-off:
Commercial and industrial (1,462 ) (487 ) (2,302 ) (2,726 ) (947 )
Commercial tax-exempt
Owner occupied real estate (34 ) (772 ) (270 ) (92 )
Commercial construction and land development (267 ) (625 ) (1,378 ) (292 ) (1,223 )
Commercial real estate (109 ) (1,580 ) (1,853 ) (332 ) (1,852 )
Residential (36 ) (198 ) (308 ) (166 ) (263 )
Consumer   (515 )   (329 )   (744 )   (875 )   (488 )
Total charged-off   (2,423 )   (3,219 )   (7,357 )   (4,661 )   (4,865 )
Net charge-offs   (1,813 )   (3,062 )   (6,438 )   (3,157 )   (3,974 )
Balance at end of period   $ 27,425     $ 25,596     $ 25,282     $ 27,425     $ 25,596  

Net charge-offs (annualized) as a percentage of average loans outstanding

0.43 % 0.81 % 0.44 % 0.26 % 0.36 %

Allowance for loan losses as a percentage of period-end loans

1.61 % 1.70 % 1.65 % 1.61 % 1.70 %
 
Metro Bancorp, Inc. and Subsidiaries
Summary of Nonperforming Loans and Assets
(Unaudited)
 
The following table presents information regarding nonperforming loans and assets as of September 30, 2013 and for the preceding four quarters (dollar amounts in thousands).
                     
  September 30,   June 30,   March 31,   December 31,   September 30,
    2013   2013   2013   2012   2012
Nonperforming Assets
Nonaccrual loans:
Commercial and industrial $ 9,967 $ 12,053 $ 12,451 $ 11,289 $ 17,133
Commercial tax-exempt
Owner occupied real estate 4,924 4,999 3,428 3,119 3,230
Commercial construction and land development 11,723 12,027 12,024 6,300 6,826
Commercial real estate 6,904 3,893 5,575 5,659 4,571
Residential 7,316 7,133 3,295 3,203 3,149
Consumer   2,541     3,422     2,517     2,846     2,304  
Total nonaccrual loans 43,375 43,527 39,290 32,416 37,213

Loans past due 90 days or more and still accruing

  119         1,726     220     704  
Total nonperforming loans 43,494 43,527 41,016 32,636 37,917
Foreclosed assets   3,556     4,611     2,675     2,467     4,391  
Total nonperforming assets   $ 47,050     $ 48,138     $ 43,691     $ 35,103     $ 42,308  
 
Troubled Debt Restructurings (TDRs)
Nonaccruing TDRs $ 23,621 $ 18,817 $ 18,927 $ 13,247 $ 14,283
Accruing TDRs   11,078     14,888     14,308     19,559     20,424  
Total TDRs   $ 34,699     $ 33,705     $ 33,235     $ 32,806     $ 34,707  
 
Nonperforming loans to total loans 2.55 % 2.66 % 2.61 % 2.13 % 2.52 %
 
Nonperforming assets to total assets 1.71 % 1.81 % 1.67 % 1.33 % 1.67 %
 
Nonperforming loan coverage 63 % 64 % 67 % 77 % 68 %
 

Allowance for loan losses as a percentage of total period-end loans

1.61 % 1.72 % 1.74 % 1.65 % 1.70 %
 

Nonperforming assets / capital plus allowance for loan losses

  18 %   19 %   17 %   13 %   16 %

Contact:
Metro Bancorp, Inc.
Gary L. Nalbandian
Chairman/President
717-412-6301
or
Mark A. Zody
Chief Financial Officer
717-412-6301

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