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 $5.1 million, or $0.35 per diluted common share, for the quarter ended June 30, 2014, compared to net income of $4.0 million, or $0.28 per diluted common share, for the second quarter of 2013. The Company also reported net loan growth of $221.7 million, or 14%, over the past twelve months.

 

Financial Highlights

(in millions, except per share data)
                       
Quarter Ended Six Months Ended
% %
      06/30/14     06/30/13     Increase 06/30/14     06/30/13     Increase
Total assets $ 2,868.9 $ 2,658.4 8 %
 
Total loans (net) 1,827.5 1,605.8 14 %
 
Total deposits 2,187.0 2,168.8 1 %
                                             
 
Total revenues $ 31.5 $ 29.9 5 % $ 61.9 $ 59.6 4 %
 
Net income 5.1 4.0 26 % 10.0 7.7 30 %
 
Diluted net income per common share $ 0.35 $ 0.28 25 % $ 0.70 $ 0.54 30 %
                                                 
 

“Our continued focus on increasing the Company's profitability is evidenced by another quarter of record net income,” said Gary L. Nalbandian, the Company's Chairman and Chief Executive Officer. "Total revenues grew by 5% for the quarter over the prior year same quarter and we remain diligent with our expense management. We continue to strengthen the Company's balance sheet, as well with 14% net loan growth over the past twelve months and continued improvement in asset quality."

Income Statement Highlights

  • The Company recorded net income of $5.1 million, or $0.35 per diluted common share, for the second quarter of 2014 compared to net income of $4.0 million, or $0.28 per diluted common share, for the same period one year ago; a $1.0 million, or 26%, increase. Net income for the first six months of 2014 totaled $10.0 million, or $0.70 per diluted common share; up $2.3 million, or 30%, over $7.7 million, or $0.54 per diluted common share recorded for the first half of 2013.
  • Total revenues (net interest income plus noninterest income) for the second quarter of 2014 were $31.5 million, up $1.6 million, or 5%, over total revenues of $29.9 million for the same quarter one year ago and were up $1.1 million, or 4%, over total revenues of $30.4 million for the previous quarter. Total revenues for the first half of 2014 increased $2.3 million, or 4%, over the first half of 2013.
  • Return on average stockholders' equity ("ROE") was 8.30% for the second quarter of 2014, compared to 6.90% for the same period last year. ROE for the first six months of 2014 was 8.36%, compared to 6.59% for the first half of 2013.
  • The Company's net interest margin on a fully-taxable basis for the second quarter of 2014 was 3.59%, compared to 3.56% recorded in the first quarter of 2014 and compared to 3.62% for the second quarter of 2013. The Company's deposit cost of funds for the second quarter was 0.26%, compared to 0.27% for the previous quarter and compared to 0.29% for the same period one year ago.
  • The provision for loan losses totaled $1.1 million for the second quarter of 2014, compared to $900,000 for the previous quarter and compared to $1.8 million for the second quarter one year ago. The provision for loan losses for the first half of 2014 was down $2.1 million, or 51%, from the first half of 2013.
  • Noninterest expenses for the second quarter of 2014 were $23.0 million, up $239,000, or 1%, compared to the previous quarter and up $661,000, or 3%, over the same quarter last year. Total noninterest expenses for the first six months of 2014 were up $1.1 million, or 2%, compared to the first six months of 2013.

Balance Sheet Highlights

  • Net loans grew $49.2 million, or 3%, on a linked quarter basis to $1.83 billion and were up $221.7 million, or 14%, over the second quarter 2013.
  • Nonperforming assets were 1.42% of total assets at June 30, 2014, compared to 1.57% of total assets for the previous quarter and compared to 1.81% of total assets one year ago.
  • Total deposits were $2.19 billion, up $18.2 million, or 1%, compared to same quarter last year.
  • Metro's capital levels remain strong with a Tier 1 Leverage ratio of 9.57% and a total risk-based capital ratio of 14.55%.
  • Stockholders' equity totaled $248.8 million, or 8.67% of total assets, at the end of the second quarter 2014. At June 30, 2014, the Company's book value per share was $17.45. The market price of Metro's common stock increased by 15% from $20.03 per common share at June 30, 2013 to $23.12 per common share at June 30, 2014.

Income Statement Overview

                               
    Three months ended

June 30,

    Six months ended

June 30,

(dollars in thousands, except per share data)     2014     2013     % Change     2014     2013     % Change
Total revenues $ 31,490     $ 29,933     5 %     $ 61,903     $ 59,643     4 %
Provision for loan losses 1,100 1,800 (39 ) 2,000 4,100 (51 )
Total noninterest expenses   23,021 22,360 3     45,803 44,689 2  
Net income   5,081 4,048 26     10,025 7,693 30  
Diluted net income per common share     $ 0.35     $ 0.28     25 %     $ 0.70     $ 0.54     30 %
 

Metro recorded net income of $5.1 million, or $0.35 per diluted common share, for the second quarter of 2014 compared to net income of $4.0 million, or $0.28 per diluted common share, for the second quarter of 2013. On a linked quarter basis, net income increased $137,000, or 3%.

Net income for the first six months of 2014 was $10.0 million compared to $7.7 million recorded in the first six months of 2013, up 30%. Earnings per diluted common share for the first half of 2014 were $0.70 compared to $0.54 for the same period last year, a 30% increase.

Total revenues (net interest income plus noninterest income) for the second quarter of 2014 were $31.5 million, up $1.6 million, or 5%, over the second quarter of 2013. Total revenues for the first six months of 2014 were $61.9 million, up $2.3 million, up 4%, over the first half of 2013.

Noninterest expenses for the quarter totaled $23.0 million, up $661,000, or 3%, compared to the same period in 2013. On a linked quarter basis, total noninterest expenses were up $239,000. Total noninterest expenses for the first half of 2014 were $45.8 million, up $1.1 million, or 2%, over the same period last year.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2014 totaled $24.0 million, up $1.4 million, or 6%, over the second quarter of 2013. For the first six months of 2014, net interest income totaled $47.3 million versus $44.9 million for same period in 2013, a $2.4 million, or 5%, increase.

Average interest-earning assets for the second quarter of 2014 totaled $2.72 billion versus $2.68 billion for the previous quarter and were up $172.5 million, or 7%, over the second quarter of 2013. Average loans receivable increased by $202.8 million, or 12%, and average investment securities decreased by $30.3 million, or 3%, for the second quarter 2014 compared to the same period one year ago. Average interest-bearing deposits totaled $1.69 billion for the second quarter of 2014, up $37.4 million, or 2%, over the same period of 2013 and average noninterest-bearing deposits for the second quarter 2014 were $476.6 million, up $36.0 million, or 8%, over the second quarter last year. Average interest earning assets for the first six months of 2014 totaled $2.70 billion versus $2.52 billion for the first six months of 2013, an increase of $177.3 million, or 7%.

The net interest margin for the second quarter of 2014 was 3.50%, up 2 bps from the 3.48% recorded for the previous quarter and down 2 bps from the second quarter one year ago. The net interest margin on a fully-taxable basis for the second quarter of 2014 was 3.59%, up 3 bps over the previous quarter and down 3 bps compared to 3.62% for the second quarter of 2013.

The net interest margin for the first half of 2014 was 3.49%, down 6 bps from the 3.55% recorded for the first six months of 2013. On a fully-taxable basis, the net interest margin for the first six months of 2014 was 3.58%, down 6 bps compared to 3.64% for the first half of 2013.

The Company's deposit cost of funds for the second quarter of 2014 was 0.26%, compared to 0.27% for the previous quarter, and down 3 bps from 0.29% recorded in the second quarter one year ago. Metro's deposit cost of funds decreased from 0.30% in the first six months of 2013 to 0.26% for the same period in 2014. The total cost of all funding sources for the second quarter was 0.31%, compared to the same amount for the previous quarter and down 2 basis points from the same period in 2013.

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 second quarter and for the first six months of 2014 over the same periods of 2013 was primarily due to an increase in the level of interest earning assets, offset partially by a slightly lower net interest margin. 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
2014 vs. 2013     Volume

Change

    Rate

Change

    Total

Increase

    %

Increase

2nd Quarter     $ 2,246     $ (885 )     $ 1,361     6 %
Six Months     $ 4,585     $ (2,258 )     $ 2,327     5 %
 

Noninterest Income

Noninterest income for the second quarter of 2014 totaled $7.5 million, up $161,000, or 2%, over the second quarter one year ago. Service charges and fees for the second quarter were $7.4 million, up $264,000, or 4%, over the second quarter last year. Gains on the sale of loans totaled $138,000 for the second quarter of 2014 versus $250,000 for the same period in 2013.

Noninterest income for the first six months of 2014 decreased $136,000, or 1%, compared to the first half of 2013. Service charges and fees were up 2% for the first half of 2014 compared to 2013 while gains on the sale of loans were $274,000 during the first six months of 2014 compared to $663,000 in the same period of 2013. The decrease in loan sale gains for both second quarter and first six months was the result of a lower level of residential loan sales to the secondary market in 2014 compared to the same periods in 2013. Net gains on sales of securities during the first six months of 2014 were $11,000 compared to net gains of $21,000 in the first six months of 2013.

The breakdown of noninterest income for the second quarter and for the first six months of 2014 and 2013, respectively, is shown in the table below:

                                     
    Three months ended
June 30, 		    Six months ended
June 30,
(dollars in thousands)     2014     2013     % Change 2014     2013     % Change
Service charges, fees and other income $ 7,357     $ 7,093     4 % $ 14,288     $ 14,025     2 %
Gains on sales of loans 138 250 (45 ) 274 663 (59 )
Net gains (losses) on sales/calls of securities       —       (9 )     (100 )   11       21     (48 )
Total noninterest income     $ 7,495     $ 7,334       2 %     $ 14,573     $ 14,709     (1 )%
 

Noninterest Expenses

Noninterest expenses for the second quarter of 2014 were $23.0 million, up $661,000, or 3%, compared to $22.4 million recorded in the second quarter one year ago. For the first six months of 2014, noninterest expenses totaled $45.8 million, up $1.1 million, or 2%, over $44.7 million recorded for the first half of 2013.

The breakdown of noninterest expenses for the second quarter and for the first six months of 2014 and 2013, respectively, are shown in the table below:

                                     
    Three months ended
June 30, 		    Six months ended
June 30,
(dollars in thousands)     2014     2013     % Change     2014     2013     % Change
Salaries and employee benefits $ 11,055     $ 10,391     6 %     $ 22,482     $ 21,216     6 %
Occupancy and equipment 3,098 3,335 (7 ) 6,603 6,545 1
Advertising and marketing 376 389 (3 ) 769 745 3
Data processing 3,320 3,276 1 6,570 6,482 1
Regulatory assessments and related costs 584 551 6 1,153 1,085 6
Other expenses       4,588       4,418     4         8,226       8,616     (5 )
Total noninterest expenses     $ 23,021     $ 22,360     3 %     $ 45,803     $ 44,689     2 %
 

Balance Sheet

               
    As of June 30,    
(dollars in thousands)     2014     2013     %

Increase

Total assets $ 2,868,928     $ 2,658,405 8 %
   
Total loans (net) 1,827,544 1,605,828 14 %
 
Total deposits 2,186,980 2,168,759 1 %
 
Total core deposits 2,119,262 2,102,450 1 %
 
Total stockholders' equity       248,770       228,468     9 %
 

Lending

Gross loans totaled $1.85 billion at June 30, 2014, an increase of $217.9 million, or 13%, over June 30, 2013. The composition of the Company's loan portfolio at June 30, 2014 and June 30, 2013 was as follows:

                                     
(dollars in thousands)     June 30, 2014    

% of

Total

    June 30, 2013    

% of

Total

   

$

Change

   

%

Change

Commercial and industrial     $ 467,587     25 %     $ 415,740     25 %     $ 51,847     12 %
Commercial tax-exempt 76,674 4 82,455 5 (5,781 ) (7 )
Owner occupied real estate 308,708 17 288,702 18 20,006 7
Commercial construction

and land development

130,449 7 105,596 6 24,853 24
Commercial real estate 544,544 29 433,628 27 110,916 26
Residential 103,564 6 90,590 6 12,974 14
Consumer       220,289     12         217,155     13         3,134       1  
Gross loans     $ 1,851,815     100 %     $ 1,633,866     100 %     $ 217,949       13 %
 

Asset Quality

The Company's asset quality ratios are shown below:

       
    Quarters Ended
      June 30, 2014     March 31, 2014     June 30, 2013
Nonperforming assets/total assets 1.42 %     1.57 %     1.81 %
Net loan charge-offs (annualized)/average total loans 0.17 % 0.02 % 0.31 %
Loan loss allowance/total loans 1.31 % 1.33 % 1.72 %
Nonperforming loan coverage 66 % 59 % 64 %
Nonperforming assets/capital and reserves     15 %     17 %     19 %
 

Nonperforming assets decreased during the second quarter of 2014 by $4.2 million, or 9%, to $40.7 million, or 1.42%, of total assets at June 30, 2014, compared to $44.9 million, or 1.57%, of total assets at March 31, 2014, and compared to $48.1 million, or 1.81%, of total assets one year ago. Nonperforming assets were down $7.5 million, or 15%, over the past twelve months.

Nonperforming loans decreased by $4.2 million during the second quarter of 2014, while foreclosed asset balances increased by $30,000. Compared to June 30, 2013, nonperforming loans decreased $6.9 million, or 16%, and foreclosed assets decreased $591,000, or 13%.

Net loan charge-offs totaled $763,000 for the second quarter of 2014, comprised of $1.3 million in gross loan charge-offs offset partially by $535,000 in recoveries. Total net charge-offs for the first six months of 2014 were $839,000, or 0.09%, of average loans outstanding compared to $1.3 million, or 0.17%, for the first half of 2013.

The Company recorded a provision for loan losses of $1.1 million for the second quarter of 2014 as compared to $900,000 for the previous quarter and $1.8 million recorded in the second quarter of 2013. The allowance for loan losses totaled $24.3 million as of June 30, 2014, compared to $23.9 million at March 31, 2014 and to $28.0 million at June 30, 2013. The allowance represented 1.31% of gross loans outstanding at June 30, 2014, compared to 1.33% at March 31, 2014 and 1.72% at June 30, 2013.

Deposits

The Company's deposit balances at June 30, 2014 were $2.19 billion, compared to total deposits of $2.20 billion at March 31, 2014 and compared to $2.17 billion one year ago. The change in core deposits over the past twelve months by type of account is as follows:

                         
    As of June 30,        
(dollars in thousands)     2014     2013     %

Change

   

2nd Quarter 2014

Cost of Funds

Demand noninterest-bearing $ 508,012     $ 463,805 10 % 0.00 %
Demand interest-bearing 1,014,347 1,009,321 — 0.28
Savings       474,416       503,110     (6 )     0.28  
Subtotal 1,996,775 1,976,236 1 0.21  
Time       122,487       126,214     (3 )     1.03  
Total core deposits     $ 2,119,262     $ 2,102,450     1 %     0.26 %
 

Total core deposits, excluding time deposits, increased $20.5 million, over the past twelve months and decreased by $5.6 million, on a linked quarter basis. The cost of core deposits, excluding time deposits, during the second quarter of 2014 was 0.21%, compared to 0.22% for both the previous quarter and the second quarter one year ago. The cost of total core deposits for the second quarter of 2014 was 0.26%, which was down 1 bp from the previous quarter and down 3 bps from second quarter of 2013.

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

                               
    June 30,     % of     June 30,     % of     %
(dollars in thousands)     2014     Total     2013     Total     Change
Consumer $ 996,772 47 % $ 971,156 46 % 3 %
Commercial 725,106 34 664,851 32 9
Government       397,384     19         466,443     22       (15 )
Total     $ 2,119,262     100 %     $ 2,102,450     100 %     1 %
 

Investments

At June 30, 2014, the Company's investment portfolio totaled $844.9 million, down $15.0 million, or 2%, on a linked quarter basis and down $18.6 million, or 2%, compared to June 30, 2013. Detailed below is information regarding the composition and characteristics of the portfolio at June 30, 2014:

                   
Product Description    

Available

for Sale

   

Held to

Maturity

    Total
(dollars in thousands)            
U.S. Government agencies/other $ 31,642 $ 149,105 $ 180,747
Mortgage-backed securities:
Federal government agencies pass through certificates 62,737 7,515 70,252
Agency collateralized mortgage obligations 444,912 112,405 557,317
Corporate debt securities — 5,000 5,000
Municipal securities       27,546         3,994         31,540  
Total     $ 566,837       $ 278,019       $ 844,856  
Duration (in years) 4.7 6.1 5.2
Average life (in years) 5.3 7.1 5.9
Quarterly average yield (annualized)       2.26 %       2.53 %       2.39 %
 

At June 30, 2014, the after-tax unrealized loss on the Bank's available for sale portfolio was $8.8 million, as compared to an after-tax unrealized loss of $16.5 million at December 31, 2013 and compared to an after-tax unrealized loss of $8.0 million at June 30, 2013.

Capital

Stockholders' equity at June 30, 2014 totaled $248.8 million, compared to $228.5 million at June 30, 2013. Return on average stockholders' equity (ROE) for the second quarter of 2014 was 8.30%, compared to 8.42% for the previous quarter and up over 6.90% for the second quarter last year. ROE for the first six months of 2014 was 8.36%, compared to 6.59% for the first half of 2013.

The Company's capital ratios at June 30, 2014 and 2013 were as follows:

                   
      6/30/2014     6/30/2013    

Regulatory

Guidelines “Well

Capitalized”

Leverage ratio     9.57 %     9.37 %     5.00 %
Tier 1 13.36 13.63 6.00
Total capital     14.55       14.89       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 June 30, 2014, the Company's book value per common share was $17.45 compared to $16.09 one year ago.

The market price of Metro's common stock increased by 15% from $20.03 per common share at June 30, 2013 to $23.12 per common share at June 30, 2014.

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;
  • 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 as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board (FASB), and other accounting standards setters;
  • 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;
  • our ability to maintain compliance with the exchange rules of The Nasdaq Stock Market, Inc.;
  • our ability to maintain the value and image of our brand and protect our intellectual property rights;
  • disruptions due to flooding, severe weather or other natural disasters or Acts of God; 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. and Subsidiaries
Selected Consolidated Financial Data
                               
At or for the At or for the
      Three Months Ended     Six Months Ended
(dollars in thousands, except per share amounts)     June 30,
2014		     March 31,
2014 		    %
Change 		    June 30,
2013 		    %
Change 		    June 30,
2014		     June 30,
2013 		    %
Change
Income Statement Data:
Net interest income $ 23,995 $ 23,335 3 % $ 22,599 6 % $ 47,330 $ 44,934 5 %
Provision for loan losses 1,100 900 22 1,800 (39 ) 2,000 4,100 (51 )
Noninterest income 7,495 7,078 6 7,334 2 14,573 14,709 (1 )
Total revenues 31,490 30,413 4 29,933 5 61,903 59,643 4
Noninterest expenses 23,021 22,782 1 22,360 3 45,803 44,689 2
Net income 5,081 4,944 3 4,048 26 10,025 7,693 30
Per Common Share Data:
Net income per common share:
Basic $ 0.36 $ 0.35 3 % $ 0.28 29 % $ 0.70 $ 0.54 30 %
Diluted 0.35 0.34 3 0.28 25 0.70 0.54 30
 
Book Value $ 17.45 $ 16.92 $ 16.09 $ 17.45 $ 16.09 8
 

Weighted average common shares outstanding:

Basic 14,184 14,161 14,137 14,172 14,134
Diluted 14,387 14,344 14,256 14,366 14,209
Balance Sheet Data:
Total assets $ 2,868,928 $ 2,850,039 1 % $ 2,868,928 $ 2,658,405 8 %
Loans (net) 1,827,544 1,778,311 3 1,827,544 1,605,828 14
Allowance for loan losses 24,271 23,934 1 24,271 28,038 (13 )
Investment securities 844,856 859,887 (2 ) 844,856 863,462 (2 )
Total deposits 2,186,980 2,195,272 — 2,186,980 2,168,759 1
Core deposits 2,119,262 2,128,101 — 2,119,262 2,102,450 1
Stockholders' equity 248,770 240,787 3 248,770 228,468 9
Capital:
Total stockholders' equity to assets 8.45 % 8.67 % 8.59 %
Leverage ratio 9.48 9.57 9.37
Risk based capital ratios:
Tier 1 13.39 13.36 13.63
Total Capital 14.59 14.55 14.89
Performance Ratios:
Deposit cost of funds 0.26 % 0.27 % 0.29 % 0.26 % 0.30 %
Cost of funds 0.31 0.31 0.33 0.31 0.34
Net interest margin 3.50 3.48 3.52 3.49 3.55
Return on average assets 0.72 0.72 0.60 0.72 0.58
Return on average stockholders' equity 8.30 8.42 6.90 8.36 6.59
Asset Quality:

Net charge-offs (annualized) to average loans outstanding

0.17 % 0.02 % 0.31 % 0.09 % 0.17 %

Nonperforming assets to total period-end assets

1.42 1.57 1.42 1.81

Allowance for loan losses to total period-end loans

1.31 1.33 1.31 1.72

Allowance for loan losses to period-end nonperforming loans

66 59 66 64

Nonperforming assets to capital and allowance

      15         17                                   15         19          
 
       
Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
                     
June 30, December 31,
2014 2013
(in thousands, except share and per share amounts)     (Unaudited)          
 
Assets                    
Cash and cash equivalents $ 59,203 $ 44,996
Securities, available for sale at fair value 566,837 585,923
Securities, held to maturity at cost (fair value 2014: $268,243; 2013: $263,697) 278,019 283,814
Loans, held for sale 5,881 6,225

Loans receivable, net of allowance for loan losses (allowance 2014: $24,271; 2013: $23,110)

1,827,544 1,727,762
Restricted investments in bank stock 23,955 20,564
Premises and equipment, net 74,393 75,783
Other assets       33,096         36,051  
Total assets     $ 2,868,928       $ 2,781,118  
 
Liabilities and Stockholders' Equity                    
Deposits:
Noninterest-bearing $ 508,012 $ 443,287
Interest-bearing       1,678,968         1,796,334  
Total deposits 2,186,980 2,239,621
Short-term borrowings 401,675 277,750
Long-term debt 15,800 15,800
Other liabilities       15,703         17,764  
Total liabilities 2,620,158 2,550,935
Stockholders' Equity:

Preferred stock - Series A noncumulative; $10.00 par value; $1,000 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 2014: 14,193,513; 2013: 14,157,219)

14,194 14,157
Surplus 159,476 158,650
Retained earnings 83,476 73,491
Accumulated other comprehensive loss       (8,776 )       (16,515 )
Total stockholders' equity       248,770         230,183  
Total liabilities and stockholders' equity     $ 2,868,928       $ 2,781,118  
 
               
Metro Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
                                   
Three Months Ended Six Months Ended
June 30, June 30,
(in thousands, except per share amounts)     2014     2013     2014     2013
Interest Income                                  
Loans receivable, including fees:
Taxable $ 19,938 $ 18,516 $ 39,148 $ 36,487
Tax-exempt 834 905 1,695 1,836
Securities:
Taxable 5,018 5,007 10,064 10,366
Tax-exempt       191       184         381       368
Total interest income       25,981       24,612         51,288       49,057
Interest Expense                                  
Deposits 1,401 1,525 2,835 3,144
Short-term borrowings 278 181 509 312
Long-term debt       307       307         614       667
Total interest expense       1,986       2,013         3,958       4,123
Net interest income 23,995 22,599 47,330 44,934
Provision for loan losses       1,100       1,800         2,000       4,100
Net interest income after provision for loan losses       22,895       20,799         45,330       40,834
Noninterest Income                                  
Service charges, card and other income 7,357 7,093 14,288 14,025
Gains on sales of loans       138       250         274       663
Total fees and other income       7,495       7,343         14,562       14,688
Net gains (losses) on sales/calls of securities       —       (9 )       11       21
Total noninterest income       7,495       7,334         14,573       14,709
Noninterest Expenses                                  
Salaries and employee benefits 11,055 10,391 22,482 21,216
Occupancy and equipment 3,098 3,335 6,603 6,545
Advertising and marketing 376 389 769 745
Data processing 3,320 3,276 6,570 6,482
Regulatory assessments and related costs 584 551 1,153 1,085
Other       4,588       4,418         8,226       8,616
Total noninterest expenses       23,021       22,360         45,803       44,689
Income before taxes 7,369 5,773 14,100 10,854
Provision for federal income taxes       2,288       1,725         4,075       3,161
Net income     $ 5,081     $ 4,048       $ 10,025     $ 7,693
Net Income per Common Share
Basic $ 0.36 $ 0.28 $ 0.70 $ 0.54
Diluted       0.35       0.28         0.70       0.54
Average Common and Common Equivalent Shares Outstanding
Basic 14,184 14,137 14,172 14,134
Diluted       14,387       14,256         14,366       14,209
 
 
Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(unaudited)
                                                           
                                                                                                                         
Quarters ended, Year-to-date,
      June 30, 2014     March 31, 2014     June 30, 2013     June 30, 2014     June 30, 2013
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 $ 858,174 $ 5,018 2.34 % $ 876,249 $ 5,046 2.30 % $ 889,510 $ 5,007 2.25 % $ 867,161 $ 10,064 2.32 % $ 903,261 $ 10,366 2.30 %
Tax-exempt       30,941       293     3.79         30,927       293     3.79         29,871       284     3.80         30,934       586     3.79         29,870       567     3.80  
Total securities 889,115 5,311 2.39 907,176 5,339 2.35 919,381 5,291 2.30 898,095 10,650 2.37 933,131 10,933 2.34
Total loans receivable       1,830,846       21,222     4.60         1,775,981       20,534     4.63         1,628,073       19,908     4.85         1,803,564       41,756     4.62         1,591,199       39,311     4.93  
Total earning assets     $ 2,719,961     $ 26,533     3.88 %     $ 2,683,157     $ 25,873     3.86 %     $ 2,547,454     $ 25,199     3.93 %     $ 2,701,659     $ 52,406     3.87 %     $ 2,524,330     $ 50,244     3.97 %
Sources of Funds
Interest-bearing deposits:
Regular savings $ 464,780 $ 319 0.28 % $ 460,324 $ 336 0.30 % $ 424,474 $ 335 0.32 % $ 462,564 $ 654 0.29 % $ 419,414 $ 661 0.32 %
Interest checking and money market 1,033,565 709 0.28 1,070,068 719 0.27 1,039,872 733 0.28 1,051,715 1,429 0.27 1,058,702 1,535 0.29
Time deposits 124,209 318 1.03 126,453 329 1.06 130,015 397 1.22 125,325 647 1.04 134,298 844 1.27
Public time and other noncore deposits       69,071       55     0.32         64,717       50     0.32         59,894       60     0.40         66,906       105     0.32         57,423       104     0.37  
Total interest-bearing deposits 1,691,625 1,401 0.33 1,721,562 1,434 0.34 1,654,255 1,525 0.37 1,706,510 2,835 0.34 1,669,837 3,144 0.38
Short-term borrowings 387,611 278 0.28 356,554 231 0.26 325,044 181 0.22 372,168 509 0.27 277,243 312 0.22
Long-term debt       15,800       307     7.77         15,800       307     7.77         15,800       307     7.77         15,800       614     7.77         26,297       667     5.07  
Total interest-bearing liabilities 2,095,036 1,986 0.38 2,093,916 1,972 0.38 1,995,099 2,013 0.40 2,094,478 3,958 0.38 1,973,377 4,123 0.42
Demand deposits (noninterest-bearing)       476,605                       446,131                       440,573                       461,452                       436,850                
Sources to fund earning assets 2,571,641 1,986 0.31 2,540,047 1,972 0.31 2,435,672 2,013 0.33 2,555,930 3,958 0.31 2,410,227 4,123 0.34
Noninterest-bearing funds (net)       148,320                       143,110                       111,782                       145,729                       114,103                
Total sources to fund earning assets     $ 2,719,961     $ 1,986     0.29 %     $ 2,683,157     $ 1,972     0.30 %     $ 2,547,454     $ 2,013     0.32 %     $ 2,701,659     $ 3,958     0.29 %     $ 2,524,330     $ 4,123     0.33 %
 
Net interest income and margin on a tax-equivalent basis $ 24,547 3.59 % $ 23,901 3.56 % $ 23,186 3.62 % $ 48,448 3.58 % $ 46,121 3.64 %
Tax-exempt adjustment   552   566   587   1,118   1,187
Net interest income and margin             $ 23,995     3.50 %             $ 23,335     3.48 %             $ 22,599     3.52 %             $ 47,330     3.49 %             $ 44,934     3.55 %
 
Other Balances:
Cash and due from banks $ 42,777 $ 43,752 $ 50,801 $ 43,262 $ 46,831
Other assets 70,878 68,553 90,398 69,722 91,178
Total assets 2,833,616 2,795,462 2,688,653 2,814,643 2,662,339
Other liabilities 16,325 17,253 17,725 16,786 16,763
Stockholders' equity       245,650                       238,162                       235,256                       241,927                       235,349                
 
 
Metro Bancorp, Inc. and Subsidiaries
Summary of Allowance for Loan Losses and Other Related Data
(Unaudited)
 
    Three Months Ended     Year Ended     Six Months Ended
June 30, December 31, June 30,
(dollars in thousands)     2014     2013     2013     2014     2013
       
Balance at beginning of period $ 23,934 $ 27,472 $ 25,282 $ 23,110 $ 25,282
Provisions charged to operating expenses       1,100         1,800         6,875         2,000         4,100  
25,034 29,272 32,157 25,110 29,382
Recoveries of loans previously charged-off:
Commercial and industrial 244 194 1,122 1,249 332
Commercial tax-exempt — — — — —
Owner occupied real estate 43 — 3 286 3
Commercial construction and land development 111 12 490 211 498
Commercial real estate 101 — — 174 —
Residential 20 — 10 20 3
Consumer       16         22         76         39         58  
Total recoveries       535         228         1,701         1,979         894  
Loans charged-off:
Commercial and industrial (501 ) (1,228 ) (3,427 ) (855 ) (1,264 )
Commercial tax-exempt — — — — —
Owner occupied real estate (171 ) (52 ) (295 ) (196 ) (236 )
Commercial construction and land development (527 ) (8 ) (2,844 ) (539 ) (25 )
Commercial real estate — (141 ) (2,773 ) (716 ) (223 )
Residential (19 ) (14 ) (332 ) (302 ) (130 )
Consumer       (80 )       (19 )       (1,077 )       (210 )       (360 )
Total charged-off       (1,298 )       (1,462 )       (10,748 )       (2,818 )       (2,238 )
Net charge-offs       (763 )       (1,234 )       (9,047 )       (839 )       (1,344 )
Balance at end of period     $ 24,271       $ 28,038       $ 23,110       $ 24,271       $ 28,038  

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

0.17 % 0.31 % 0.55 % 0.09 % 0.17 %

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

1.31 % 1.72 % 1.32 % 1.31 % 1.72 %
 
                   
Metro Bancorp, Inc. and Subsidiaries
Summary of Nonperforming Loans and Assets
(Unaudited)
 
The following table presents information regarding nonperforming loans and assets as of June 30, 2014 and for the preceding four quarters (dollar amounts in thousands).
                                                   
June 30, March 31, December 31, September 30, June 30,
      2014     2014     2013     2013     2013
Nonperforming Assets
Nonaccrual loans:
Commercial and industrial $ 4,291 $ 9,014 $ 10,217 $ 9,967 $ 12,053
Commercial tax-exempt — — — — —
Owner occupied real estate 6,401 6,005 4,838 4,924 4,999
Commercial construction and land development 9,028 10,734 8,587 11,723 12,027
Commercial real estate 5,793 6,043 6,705 6,904 3,893
Residential 6,341 6,551 7,039 7,316 7,133
Consumer       2,479         2,524         2,577         2,541         3,422  
Total nonaccrual loans 34,333 40,871 39,963 43,375 43,527

Loans past due 90 days or more and still accruing

      2,335         —         369         119         —  
Total nonperforming loans 36,668 40,871 40,332 43,494 43,527
Foreclosed assets       4,020         3,990         4,477         3,556         4,611  
Total nonperforming assets     $ 40,688       $ 44,861       $ 44,809       $ 47,050       $ 48,138  
 
Troubled Debt Restructurings (TDRs)

Nonaccruing TDRs (included in nonaccrual loans above)

$ 17,748 $ 19,862 $ 17,149 $ 23,621 $ 18,817
Accruing TDRs       11,309         9,970         12,091         11,078         14,888  
Total TDRs     $ 29,057       $ 29,832       $ 29,240       $ 34,699       $ 33,705  
 
Nonperforming loans to total loans 1.98 % 2.27 % 2.30 % 2.55 % 2.66 %
 
Nonperforming assets to total assets 1.42 % 1.57 % 1.61 % 1.71 % 1.81 %
 
Nonperforming loan coverage 66 % 59 % 57 % 63 % 64 %
 

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

1.31 % 1.33 % 1.32 % 1.61 % 1.72 %
 

Nonperforming assets / capital plus allowance for loan losses

      15 %       17 %       18 %       18 %       19 %