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Form 8-K METRO BANCORP, INC. For: Jan 26

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January 26, 2016 11:41 AM EST




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)
January 26, 2016
(January 26, 2016)

Metro Bancorp, Inc.
(Exact name of registrant as specified in its charter)

Pennsylvania
 
000-50961
 
25-1834776
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(IRS Employer Identification No.)

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

Registrant's telephone number, including area code
888-937-0004

N/A
(Former name or former address, if changed since last report)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))





Item 2.02. Results of Operations and Financial Condition.

On January 26, 2016, Metro Bancorp, Inc. issued a press release reporting financial results for its fourth quarter and year ended December 31, 2015. A copy of the press release is attached as Exhibit 99.1 to this report.

Item 9.01. Financial Statements and Exhibits.
Exhibit No.
99.1 Press Release, dated January 26, 2016






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Metro Bancorp, Inc.
-----------------------------------------------
(Registrant)


Date: January 26, 2016              

                                
                        
/s/ Mark A. Zody
-----------------------------------------------
Mark A. Zody
Chief Financial Officer






EXHIBIT INDEX



Exhibit No.           Description

99.1
Press Release of Metro Bancorp, Inc. dated January 26, 2016







                                

CONTACTS

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

METRO BANCORP REPORTS FOURTH QUARTER AND
FULL YEAR 2015 FINANCIAL RESULTS

January 26, 2016 - 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 2015. The Company recorded net income of $5.5 million, or $0.38 per diluted common share, for the quarter ended December 31, 2015 compared to $5.6 million, or $0.38 per diluted common share, for the fourth quarter of 2014. Results for the fourth quarter of 2015 were impacted by $414,000, pre-tax, of merger-related expenses associated with Metro's announcement on August 4, 2015 that it has agreed to be acquired by F.N.B. Corporation. Net income for the full year totaled $20.2 million, or $1.40 per diluted common share, compared to $21.1 million, or $1.46 per diluted common share, for 2014.

Financial Highlights
(in millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
Twelve Months Ended
 
 
 
 
 
%
 
 
 
 
%
 
12/31/15
 
12/31/14
 
Change
 
 
12/31/15
12/31/14
Change
Total assets
$
2,905.4

 
$
2,997.6

 
(3
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans (net)
2,006.6

 
1,973.5

 
2
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total deposits
2,361.9

 
2,380.7

 
(1
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
33.0

 
$
33.1

 
—
 %
 
 
$
134.0

$
127.5

5
 %
 
 
 
 
 
 
 
 
 
 
 
Net income
5.5

 
5.6

 
(1
)%
 
 
20.2

21.1

(4
)%
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income*
5.9

 
5.6

 
5
 %
 
 
23.9

21.1

13
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income per common share
$
0.38

 
$
0.38

 
—
 %
 
 
$
1.40

$
1.46

(4
)%
 
 
 
 
 
 
 
 
 
 
 
Adjusted diluted net income per common share*
0.41

 
0.38

 
8
 %
 
 
1.65

1.46

13
 %
* Non-GAAP financial measure; please refer to the Statement Regarding Non-GAAP Financial Measures included in this document for an explanation of the Company's use of non-GAAP financial measures and their reconciliation to GAAP measures.    


                                                            
1


Income Statement Highlights

•
The Company recorded net income of $5.5 million, or $0.38 per diluted common share, for the fourth quarter of 2015 compared to net income of $5.6 million, or $0.38 per diluted common share for the same period one year ago; a $58,000, or 1%, decrease. Exclusive of net gains (losses) on sales/calls of securities and merger-related expenses, adjusted net income was $5.9 million*, or $0.41 per diluted common share*, for the fourth quarter of 2015 compared to $5.6 million, or $0.38 per diluted common share, for the same period one year ago. Net income for the full year of 2015 totaled $20.2 million, or $1.40 per diluted common share. Exclusive of net gains on sales/calls of securities and certain nonrecurring expenses in 2015, adjusted net income for the full year of 2015 totaled $23.9 million*, or $1.65 per diluted common share*.

•
Total revenues (net interest income plus noninterest income) for the fourth quarter of 2015 were $33.0 million, down $163,000 from total revenues of $33.1 million for the same quarter one year ago. Total revenues for 2015 increased $6.5 million, or 5%, over 2014 to $134.0 million.

•
Return on average stockholders' equity (ROE) was 7.79% for the fourth quarter of 2015 compared to 8.43% for the same period last year and to 7.03% the previous quarter. Exclusive of net gains (losses) on sales/calls of securities and merger-related expenses in the fourth quarter of 2015, adjusted ROE was 8.38%* for the quarter compared to 8.55%* for the same period last year. ROE for the full year of 2015 was 7.41%, compared to 8.46% for 2014. Exclusive of net gains on sales/calls of securities and certain nonrecurring expenses in 2015, adjusted ROE for 2015 was 8.75%* compared to 8.48%* for 2014.

•
The Company's net interest margin on a fully-taxable basis for the fourth quarter of 2015, was 3.57%, compared to 3.60% for the fourth quarter of 2014. The Company's deposit cost of funds for the fourth quarter was 0.27%, compared to 0.27% for the previous quarter and to the same amount for the fourth quarter one year ago.

•
The provision for loan losses totaled $3.0 million for the fourth quarter of 2015, compared to $2.3 million for the previous quarter and compared to $2.7 million for the fourth quarter one year ago. The total provision for 2015 was $9.3 million, up $2.6 million, or 38%, over 2014.

•
Noninterest expenses for the fourth quarter of 2015 were $21.8 million, down $1.8 million, or 8%, from the previous quarter and down $577,000, or 3%, from the same quarter last year. Total noninterest expenses for 2015 were $94.2 million, up $3.7 million, or 4%, compared to 2014.

•
The efficiency ratio for the fourth quarter of 2015 was 66.1% compared to 70.6% for the previous quarter and 67.5% for the fourth quarter of 2014. Excluding net gains (losses) on sales/calls of securities and merger-related expenses, the Company's adjusted efficiency ratio was 64.8%* for the fourth quarter of 2015 compared to 67.3%* for the same period last year. Excluding the same items as previously mentioned, the adjusted efficiency ratio for the full year of 2015 was 66.9%* compared to 71.0%* for 2014.













* Non-GAAP financial measure; please refer to the Statement Regarding Non-GAAP Financial Measures included in this document for an explanation of the Company's use of non-GAAP financial measures and their reconciliation to GAAP measures.

                                                            
2


Balance Sheet Highlights

•
Net loans totaled $2.0 billion, up $33.1 million, or 2%, over the fourth quarter 2014.

•
Total deposits at December 31, 2015 were $2.36 billion, and core deposits totaled $2.22 billion at December 31, 2015.

•
Metro's capital levels remain strong with a Tier 1 Leverage ratio of 9.73%, a common equity tier 1 ratio of 12.81% and a total risk-based capital ratio of 13.91%.

•
Stockholders' equity totaled $283.0 million, or 10%, of total assets, at the end of the fourth quarter 2015, up $17.4 million, or 7%, over the past twelve months. At December 31, 2015, the Company's book value per common share was $19.78, up from $19.57 per common share at September 30, 2015 and up $1.18, or 6%, per common share over December 31, 2014. The market price of Metro's common stock increased by 21%, over the past twelve months from $25.92 per common share at December 31, 2014 to $31.38 per common share at December 31, 2015.

Income Statement Overview
 
Three months ended
December 31,
 
Twelve months ended
December 31,
(dollars in thousands, except per share data)
2015
 
2014
% Change
 
2015
 
2014
% Change
Total revenues
$
32,974

 
$
33,137

—
 %
 
$
134,003

 
$
127,524

5
 %
Provision for loan losses
2,950

 
2,650

11

 
9,300

 
6,750

38

Total noninterest expenses
21,792

 
22,369

(3
)
 
94,199

 
90,548

4

Net income
5,501

 
5,559

(1
)
 
20,215

 
21,085

(4
)
Adjusted net income*
5,915

 
5,636

5

 
23,865

 
21,138

13

Diluted net income per common share
$
0.38

 
$
0.38

—
 %
 
$
1.40

 
$
1.46

(4
)%
Adjusted diluted net income per common share*
0.41

 
0.38

8

 
1.65

 
1.46

13

Cash dividends per common share
0.07

 
—

—

 
0.28

 
—

—

Efficiency ratio
66.1
%
 
67.5
%
 
 
70.3
%
 
71.0
%
 
Adjusted efficiency ratio*
64.8
%
 
67.3
%
 
 
66.9
%
 
71.0
%
 

Metro recorded net income of $5.5 million, or $0.38 per diluted common share, for the fourth quarter of 2015 compared to net income of $5.6 million, or $0.38 per diluted common share, for the fourth quarter of 2014. Exclusive of net gains (losses) on sales/calls of securities and merger-related expenses, adjusted net income was $5.9 million*, or $0.41 per diluted common share*, for the fourth quarter of 2015 compared to $5.6 million*, or $0.38* per diluted common share, for the same period one year ago.

Net income for the year ended December 31, 2015 was $20.2 million compared to $21.1 million recorded in 2014, down 4%. Earnings per diluted common share for 2015 were $1.40 compared to $1.46 for the same period last year, a 4% decrease. Exclusive of net gains on sales/calls of securities and certain nonrecurring expenses in 2015, adjusted net income for 2015 totaled $23.9 million*, or $1.65 per diluted common share*, compared to $21.1 million*, or $1.46* per diluted common share, recorded for 2014.







* Non-GAAP financial measure; please refer to the Statement Regarding Non-GAAP Financial Measures included in this document for an explanation of the Company's use of non-GAAP financial measures and their reconciliation to GAAP measures.

                                                            
3


Total revenues (net interest income plus noninterest income) for the fourth quarter of 2015 were $33.0 million, down $163,000 from the fourth quarter of 2014. Total revenues for the year ended December 31, 2015 were $134.0 million, up $6.5 million, or 5%, over last year.

Noninterest expenses for the quarter totaled $21.8 million, down $577,000, or 3%, compared to the same period in 2014. On a linked quarter basis, total noninterest expenses were down $1.8 million, or 8%, from the third quarter of 2015. Total noninterest expenses for the year ended December 31, 2015 were $94.2 million, up $3.7 million, or 4%, over last year.

Net Interest Income and Net Interest Margin

Net interest income for the fourth quarter of 2015 totaled $25.1 million, down $539,000, or 2%, from the fourth quarter of 2014. Net interest income for the year ended December 31, 2015 totaled $102.6 million versus $97.8 million for the year 2014, a $4.8 million, or 5%, increase.

Average interest-earning assets for the fourth quarter of 2015 totaled $2.82 billion versus $2.85 billion for the previous quarter and were down $39.8 million, or 1%, from the fourth quarter of 2014. Average loans receivable increased by $124.2 million, or 6%, and average investment securities balances decreased by $164.0 million, or 18%, from the fourth quarter of last year. Average interest-bearing deposits totaled $1.86 billion for the fourth quarter of 2015, up $13.3 million, or 1%, over the same period of 2014 and average noninterest-bearing deposits for the fourth quarter 2015 were $536.7 million, up $56.3 million, or 12%, over the fourth quarter last year. Average interest-earning assets for the full year 2015 totaled $2.84 billion versus $2.77 billion for 2014, an increase of $74.6 million, or 3%.

The net interest margin for the fourth quarter of 2015 was 3.50%, down 8 basis points (bps) from the 3.58% recorded for the previous quarter and down 3 bps from the 3.53% recorded in the fourth quarter one year ago. The net interest margin on a fully-taxable basis for the fourth quarter of 2015 was 3.57%, down 7 bps from the previous quarter and down 3 bps compared to the fourth quarter of 2014.

The net interest margin for the year 2015 was 3.57%, up 7 bps over the 3.50% recorded in of 2014. On a fully-taxable basis, the net interest margin for the year ended December 31, 2015 was 3.64%, up 6 bps compared to 3.58% for the year ended December 31, 2014.

Metro's deposit cost of funds for the fourth quarter of 2015 was stable at 0.27%, compared to 0.27% for the previous quarter, and the fourth quarter one year ago. Metro's deposit cost of funds for the year ended December 31, 2015 was 0.27% compared to 0.27% for the same period in 2014. The total cost of all funding sources for the fourth quarter of 2015 was 0.29%, compared to 0.29% the previous quarter and 0.27% for the same period in 2014.

Change in Net Interest Income and Rate/Volume Analysis

The change in net interest income on a fully tax-equivalent basis for the fourth quarter and for the full twelve months of 2015 over the same periods of 2014 is shown in the table below.

(dollars in thousands)
 
Tax-equivalent net interest income
2015 vs. 2014
 
Volume
Change
Rate
Change
Total
Change
%
Change
 
4th Quarter
 
$616
$(1,211)
$(595)
(2)%
 
Twelve Months
 
$6,672
$(2,097)
$4,575
5%
 




* Non-GAAP financial measure; please refer to the Statement Regarding Non-GAAP Financial Measures included in this document for an explanation of the Company's use of non-GAAP financial measures and their reconciliation to GAAP measures.


                                                            
4


Noninterest Income

Noninterest income for the fourth quarter of 2015 totaled $7.9 million, up $376,000, or 5%, over the fourth quarter one year ago. Card, service charges and other noninterest income increased by $197,000, or 3%, for the fourth quarter of 2015 over the same period in 2014. Gains on the sales of loans were up $60,000, or 12%, for the quarter over the same period last year. Noninterest income for the full year 2015 totaled $31.4 million, up $1.6 million, or 6%, compared to the full year 2014. Card, service charges and other noninterest income were $29.3 million, an increase of $562,000, or 2%, compared to the same period in 2014, while gains on sales of loans were $1.6 million for the year ended December 31, 2015 versus $1.0 million for the year ended December 31, 2014, up 56%. Net gains on sales/calls of securities for the year ended December 31, 2015 were $428,000 compared to a net loss of $82,000 in 2014.

The breakdown of noninterest income for the fourth quarter and for the years ended 2015 and 2014, respectively, is shown in the table below:
 
Three months ended
December 31,
 
Twelve months ended
December 31,
(dollars in thousands)
2015
2014
% Increase (Decrease)
 
2015
2014
% Increase
Card, service charges and other noninterest income
$
7,329

$
7,132

3
%
 
$
29,331

$
28,769

2
%
Gains on sales of loans
566

506

12

 
1,610

1,034

56

Net gains (losses) on sales/calls of securities
—

(119
)
—

 
428

(82
)
—

Total noninterest income
$
7,895

$
7,519

5
%
 
$
31,369

$
29,721

6
%

Noninterest Expenses

Noninterest expenses for the fourth quarter of 2015 were $21.8 million, down $1.8 million, or 8%, on a linked quarter basis, and down $577,000, or 3%, compared to the fourth quarter one year ago. Total noninterest expenses for the fourth quarter of 2015 included $414,000 of merger-related costs which were primarily associated with legal and consulting services utilized by Metro. For the year ended December 31, 2015, noninterest expense totaled $94.2 million, up $3.7 million, or 4%, over $90.5 million recorded for year ended December 31, 2014. Excluding the nonrecurring costs, total noninterest expenses for 2015 were $89.4 million*, down $1.1 million, or 1%, compared to 2014.

The breakdown of noninterest expenses for the fourth quarter and for the years ended 2015 and 2014, respectively, are shown in the following table:
 
Three months ended
December 31,
 
Twelve months ended
December 31,
(dollars in thousands)
2015
2014
% Change
 
2015
2014
% Change
Salaries and employee benefits
$
11,242

$
10,695

5
 %
 
$
44,686

$
44,381

1
 %
Occupancy and equipment
2,516

2,726

(8
)
 
11,896

12,370

(4
)
Advertising and marketing
216

449

(52
)
 
1,410

1,737

(19
)
Data processing
3,801

3,745

1

 
14,689

13,538

9

Regulatory assessments and related costs
545

508

7

 
2,203

2,205

—

Loan expense
415

237

75

 
2,496

1,406

78

Merger-related expenses
414

—

—

 
2,105

—

—

Professional services
(495
)
714

(169
)
 
1,264

1,687

(25
)
Other expenses
3,138

3,295

(5
)
 
13,450

13,224

2

Total noninterest expenses
$
21,792

$
22,369

(3
)%
 
$
94,199

$
90,548

4
 %
* Non-GAAP financial measure; please refer to the Statement Regarding Non-GAAP Financial Measures included in this document for an explanation of the Company's use of non-GAAP financial measures and their reconciliation to GAAP measures.
    


                                                            
5


Balance Sheet
 
As of December 31,
 
(dollars in thousands)
2015
2014
%
Change
Total assets
$
2,905,373

$
2,997,572

(3
)%
Total loans (net)
2,006,624

1,973,536

2

Total deposits
2,361,902

2,380,672

(1
)
Total core deposits
2,215,134

2,208,911

—

Total stockholders' equity
282,972

265,523

7


Lending

Gross loans receivable totaled $2.0 billion at December 31, 2015, an increase of $31.9 million, or 2%, over December 31, 2014. The composition of the Company's loan portfolio at December 31, 2015 and December 31, 2014 was as follows:

(dollars in thousands)
December 31, 2015
% of Total
 
December 31, 2014
% of Total
 
$
 Change
% Change
 
Commercial and industrial
$
561,681

28
%
 
$
525,127

26
%
 
$
36,554

7
 %
 
Commercial tax-exempt
59,145

3

 
71,151

4

 
(12,006
)
(17
)
 
Owner occupied real estate
307,702

15

 
332,070

17

 
(24,368
)
(7
)
 
Commercial construction
   and land development
143,086

7

 
138,064

7

 
5,022

4

 
Commercial real estate
635,668

31

 
594,276

29

 
41,392

7

 
Residential
110,262

5

 
110,951

6

 
(689
)
(1
)
 
Consumer
212,888

11

 
226,895

11

 
(14,007
)
(6
)
 
Gross loans receivable
$
2,030,432

100
%
 
$
1,998,534

100
%
 
$
31,898

2
 %
 

Asset Quality

The Company's asset quality ratios are shown below:
 
Quarter ended
 
December 31, 2015
 
September 30, 2015
 
December 31, 2014
 
Nonperforming assets/total assets
1.74
%
 
1.42
%
 
1.44
%
 
Net loan charge-offs (annualized)/average total loans
1.13
%
 
0.26
%
 
0.45
%
 
Allowance for loan losses/total loans
1.17
%
 
1.27
%
 
1.25
%
 
Nonperforming loan coverage
55
%
 
74
%
 
71
%
 
Nonperforming assets/capital and allowance for loan losses
17
%
 
14
%
 
15
%
 

Nonperforming loans totaled $43.5 million at December 31, 2015, an increase of $7.2 million from September 30, 2015, while foreclosed asset balances increased by $1.3 million to $7.2 million during the same period. Compared to December 31, 2014, nonperforming loans at December 31, 2015 increased $8.0 million, or 23%, and foreclosed assets decreased $493,000, or 6%.

Total nonperforming assets increased during the fourth quarter of 2015 by $8.5 million, or 20%, to $50.6 million, or 1.74%, of total assets at December 31, 2015, compared to $42.1 million, or 1.42%, of total assets at September 30, 2015. Nonperforming assets were up $7.6 million, or 18%, over the past year, compared to $43.1 million, or 1.44% of total assets at December 31, 2014.

                                                            
6



At December 31, 2015, foreclosed assets totaling $4.1 million were under contract to be sold with no additional net loss to the Company expected.

Net loan charge-offs totaled $5.9 million, or 1.13%, of average loans outstanding for the fourth quarter of 2015, and were comprised of $6.1 million in gross loan charge-offs offset partially by $206,000 in recoveries. One loan relationship accounted for $4.1 million, or 69%, of the net charge-offs for the fourth quarter and a second relationship accounted for $1.4 million, or 24%, of total net charge-offs for the fourth quarter. Net loan charge-offs for the fourth quarter of 2014 totaled $2.2 million, or 0.45%, of average loans outstanding. Total net loan charge-offs for the year ended December 31, 2015 were $10.5 million, or 0.51%, of average loans outstanding compared to $4.9 million, or 0.26%, for the year ended December 31, 2014.

The Company recorded a provision for loan losses of $3.0 million for the fourth quarter of 2015 as compared to $2.3 million for the previous quarter and $2.7 million recorded in the fourth quarter of 2014. The allowance for loan losses (allowance or ALL) totaled $23.8 million as of December 31, 2015, compared to $25.0 million at December 31, 2014. The allowance represented 1.17% of gross loans outstanding at December 31, 2015, compared to 1.27% at September 30, 2015 and 1.25% at December 31, 2014.

Deposits

The Company's deposit balances at December 31, 2015 were $2.36 billion, compared to total deposits of $2.38 billion one year ago.

The change in core deposits over the past twelve months by type of account is as follows:
 
As of December 31,
 
 
 
 
(dollars in thousands)
2015
 
2014
 
%
Change
 
4th Quarter 2015 Cost of Funds
Demand noninterest-bearing
$
564,809

 
$
478,724

 
18
 %
 
0.00
%
Interest checking and money market
1,020,762

 
1,052,915

 
(3
)
 
0.26

Savings
492,446

 
546,045

 
(10
)
 
0.28

   Subtotal
2,078,017

 
2,077,684

 
—

 
0.20

Time
137,117

 
131,227

 
4

 
1.18

Total core deposits
$
2,215,134

 
$
2,208,911

 
—
 %
 
0.26
%

Total core deposits, excluding time deposits, increased $333,000 over the past twelve months. The cost of core deposits, excluding time deposits, during the fourth quarter of 2015 was 0.20% unchanged from both the previous quarter and the fourth quarter of 2014. The cost of total core deposits for the fourth quarter of 2015 was 0.26%, the same as the previous quarter and the fourth quarter of 2014.

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

 
December 31,
% of
 
December 31,
% of
 
%
 
(dollars in thousands)
2015
Total
 
2014
Total
 
Change
 
Consumer
$
1,112,587

50
%
 
$
1,016,724

46
%
 
9
 %
 
Commercial
761,625

34

 
707,738

32

 
8

 
Government
340,922

16

 
484,449

22

 
(30
)
 
Total
$
2,215,134

100
%
 
$
2,208,911

100
%
 
—
 %
 


                                                            
7


Total consumer core deposits increased by $95.9 million, or 9%, and total commercial core deposits grew by $53.9 million, or 8%, over the past twelve months.

Investments

At December 31, 2015, the Company's investment portfolio totaled $724.7 million, down $2.3 million, on a linked quarter basis and down $128.4 million, or 15%, compared to December 31, 2014. The Company continues to redirect regular monthly cash flows from its investment portfolio into loan originations and paying down borrowings at this time. Detailed below is information regarding the composition and characteristics of the portfolio at December 31, 2015:
Product description
Available for sale
 
Held to maturity
 
Total
 
(dollars in thousands)
 
 
 
 
 
 
U.S. Government agency securities
$
33,251

 
$
139,143

 
$
172,394

 
Mortgage-backed securities:
 
 
 
 
 
 
  Residential mortgage-backed securities
52,763

 
11,375

 
64,138

 
  Agency collateralized mortgage obligations
266,171

 
182,031

 
448,202

 
Municipal securities
30,229

 
9,699

 
39,928

 
Total
$
382,414

 
$
342,248

 
$
724,662

 
Duration (in years)
4.6

 
5.1

 
4.8

 
Average life (in years)
5.2

 
5.9

 
5.5

 
Quarterly average yield (annualized)
2.27
%
 
2.45
%
 
2.36
%
 

At December 31, 2015, the after-tax unrealized loss on the Company's available for sale portfolio was $4.1 million, as compared to an after-tax unrealized loss of $3.9 million at December 31, 2014. The decrease in the level of government core deposits between December 31, 2014 is primarily related to these deposit customers not receiving their normal government funding as a result of the Commonwealth of Pennsylvania not timely passing a fiscal budget.

Capital

Stockholders' equity at December 31, 2015 totaled $283.0 million, compared to $265.5 million at December 31, 2014. Return on average stockholders' equity (ROE) for the fourth quarter of 2015 was 7.79%, compared to 7.03% for the previous quarter and 8.43% for the fourth quarter last year. Exclusive of net gains (losses) on sales/calls of securities and merger-related expenses, adjusted ROE was 8.38%* for the fourth quarter of 2015 compared to 8.55%* for the same period last year. ROE for the year 2015 was 7.41%, compared to 8.46% for the year 2014. Exclusive of net gains on sales/calls of securities and certain nonrecurring expenses during 2015, adjusted ROE for the year 2015 was 8.75%* compared to 8.48%* for the year 2014.














* Non-GAAP financial measure; please refer to the Statement Regarding Non-GAAP Financial Measures included in this document for an explanation of the Company's use of non-GAAP financial measures and their reconciliation to GAAP measures.

                                                            
8


The Company's risk-based capital ratios and leverage ratios at December 31, 2015 and 2014 were as follows:

 
12/31/2015
12/31/2014
Regulatory guidelines “well capitalized”
Leverage ratio
9.73
%
9.00
%
5.00
%
CET1 capital
12.81

n/a
6.50

Tier 1 capital
12.81

12.28

8.00

Total capital
13.91

13.42

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, 2015, the Company's book value per common share was $19.78, compared to $18.60 one year ago, up 6%.

The market price of the Company's common stock increased by 21% from $25.92 per common share at December 31, 2014 to $31.38 per common share at December 31, 2015.























                                                            
9


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 based on the information available to us at the time, 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 inability to complete the proposed merger with FNB in a timely manner or at all;
 
 
•
the possibility that any of the anticipated benefits of the proposed merger will not be realized;
 
 
•
the effect of the announcement of the merger on Metro’s, FNB’s or the combined company’s respective business relationships, operating results and business generally;
 
 
•
diversion of management’s attention from ongoing business operations and opportunities;
 
 
•
difficulties and delays in integrating Metro's businesses with those of FNB;
 
 
•
the effects of and changes in, trade, monetary and fiscal policies, including in particular 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;
 
 
•
federal budget and tax negotiations and their effects on economic and business conditions in general and our customers in particular;
 
 
•
the federal government’s inability 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 laws and regulations affecting the financial services industry (including laws concerning taxes, banking, securities and insurance as well as enhanced expectations of regulators);
 
 
•
possible impacts of the capital and liquidity requirements of the Basel III standards as implemented or to be implemented by the Federal Reserve and other US regulators, as well as other regulatory pronouncements and prudential standards;
 
 
•
changes in regulatory policies on positions relating to capital distributions;
 
 
•
our ability to generate sufficient earnings to justify capital distributions;
 
 
•
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;
 
 

                                                            
10


•
the adequacy of the allowance for loan losses or any provisions;
 
 
•
the views and actions of the Consumer Financial Protection Bureau regarding 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, including regulatory expectations regarding enhanced compliance programs;
 
 
•
our ability to continue to grow our business internally while controlling costs;
 
 
•
deposit flows;
 
 
•
the inability to achieve anticipated cost savings in the amount of time expected, and the emergence of unexpected offsetting costs in the compliance or risk management areas or otherwise;
 
 
•
changes in consumer spending and saving habits relative to the financial services we provide;
 
 
•
the ability to hedge certain risks economically and effectively;
 
 
•
the loss of key officers or other personnel;
 
 
•
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;
 
 
•
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;
 
 
•
other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services;
 
 
•
rapidly changing technology;
 
 
•
our continued relationships with major customers;
 
 
•
the effect of terrorist attacks and threats of actual war;
 
 
•
interruption or breach in security of our information systems, including cyber-attacks, resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit systems or disclosure of confidential information;
 
 
•
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

                                                            
11


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.

Management considers subsequent events occurring after the balance sheet date for matters which may require adjustment to, or disclosure in, the consolidated financial statements.  The review period for subsequent events extends up to and including the filing date of a public company’s consolidated financial statements when filed with the Securities and Exchange Commission (SEC).  Accordingly, the financial information in this announcement is subject to change.  The statements are valid only as of the date hereof and the Company disclaims any obligation to update this information.   


                                                            
12


Statement Regarding Non-GAAP Financial Measures

This document contains supplemental financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (GAAP). The tables that follow present reconciliations of certain non-GAAP measures to the most directly comparable GAAP measures. These reconciliations exclude certain nonrecurring charges incurred during the three and twelve months ended December 31, 2015, which the Company believes do not reflect the operating performance of the Company during those periods. These nonrecurring charges include (1) merger-related expenses during the third and fourth quarters of 2015 (which will continue to be incurred through the first quarter of 2016, when the merger is planned to occur), (2) stock-based compensation expense related to the immediate vesting of all outstanding employee stock options during the second quarter of 2015, (3) a write-off during the second quarter of 2015 of pre-construction costs related to a terminated land lease agreement for a planned future store, and (4) accelerated depreciation expense recognized during the first half of 2015 due to closing two stores. There have not been similar nonrecurring charges within the prior two years and, based on current information, the Company believes the nature of each nonrecurring charge is such that it is not reasonably likely to recur within two years. Additionally, these reconciliations exclude net gains from the sales/calls of securities for all periods presented. The Company’s management uses these non-GAAP measures to evaluate the performance of the Company and believes this presentation also increases the comparability of period-to-period results.
The Company believes these non-GAAP measures, in addition to GAAP measures, provide useful information for investors to evaluate the Company’s results. These non-GAAP measures should not be considered a substitute for GAAP measures, nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.

                                                            
13


 
Three months ended
December 31,
 
Twelve months ended
December 31,
(in thousands, except per share amounts)
2015
2014
 
2015
2014
Adjusted net income reconciliation:
 
 
 
 
 
  Net income
$
5,501

$
5,559

 
$
20,215

$
21,085

    Nonrecurring charges, net of tax:
 
 
 
 
 
       Merger-related expenses(1)
414

—

 
1,934

—

       Accelerated vesting of employee stock options(1)
—

—

 
1,179

—

       Accelerated depreciation expense for two store closures(1)
—

—

 
491

—

       Pre-construction costs of cancelled planned store(1)
—

—

 
324

—

    Total nonrecurring charges, net of tax
414

—

 
3,928

—

    Net (gains) losses on sales/calls of securities, net of tax(1)
—

77

 
(278
)
53

Adjusted net income(2)
$
5,915

$
5,636

 
$
23,865

$
21,138

 
 
 
 
 
 
Adjusted diluted net income per common share reconciliation:
 
 
 
 
 
  Diluted net income per common share
$
0.38

$
0.38

 
$
1.40

$
1.46

    Nonrecurring charges, net of tax:
 
 
 
 
 
       Merger-related expenses(1)
0.03

—

 
0.13

—

       Accelerated vesting of employee stock options(1)
—

—

 
0.09

—

       Accelerated depreciation expense for two store closures(1)
—

—

 
0.03

—

       Pre-construction costs of cancelled planned store(1)
—

—

 
0.02

—

    Total nonrecurring charges, net of tax
0.03

—

 
0.27

—

    Net gains on sales/calls of securities, net of tax(1)
—

—

 
(0.02
)
—

Adjusted diluted net income per common share(2)
$
0.41

$
0.38

 
$
1.65

$
1.46

 
 
 
 
 
 
Adjusted operating efficiency ratio reconciliation:
 
 
 
 
 
   Total revenues
$
32,974

$
33,137

 
$
134,003

$
127,524

   Net (gains) losses on sales/calls of securities, pretax
—

119

 
(428
)
82

   Adjusted total revenues(2)
$
32,974

$
33,256

 
$
133,575

$
127,606

   Total noninterest expenses
$
21,792

$
22,369

 
$
94,199

$
90,548

     Nonrecurring charges, pretax:
 
 
 
 
 
       Merger-related expenses
(414
)
—

 
(2,105
)
—

       Accelerated vesting of employee stock options
—

—

 
(1,424
)
—

       Accelerated depreciation expense for two store closures
—

—

 
(755
)
—

       Pre-construction costs of cancelled planned store
—

—

 
(499
)
—

     Total nonrecurring charges, pretax
(414
)
—

 
(4,783
)
—

   Adjusted total noninterest expenses(2)
$
21,378

$
22,369

 
$
89,416

$
90,548

   Adjusted operating efficiency ratio(2)
64.83
%
67.26
%
 
66.94
%
70.96
%
 
 
 
 
 
 
Adjusted return on average assets reconciliation:
 
 
 
 
 
   Adjusted net income(2)
$
5,915

$
5,636

 
$
23,865

$
21,138

   Average assets
2,946,149

2,982,765

 
2,972,769

2,885,576

   Adjusted return on average assets(2)
0.80
%
0.75
%
 
0.80
%
0.73
%
 
 
 
 
 
 
Adjusted return on average stockholders' equity reconciliation:
 
 
 
 
 
   Adjusted net income(2)
$
5,915

$
5,636

 
$
23,865

$
21,138

   Average stockholders' equity
280,127

261,521

 
272,740

249,324

   Adjusted return on average stockholders' equity(2)
8.38
%
8.55
%
 
8.75
%
8.48
%

(1) Assumes a 35% tax rate. Merger-related expenses resulted in a pretax expense of $2.1 million during the second half of 2015, of which $1.6 million is not deductible for federal tax purposes. The accelerated vesting of employee stock options resulted in a pretax expense of $1.4 million during the second quarter of 2015, $724,000 of which is not deductible for federal tax purposes.
(2) Non-GAAP measure.


                                                            
14


Metro Bancorp, Inc. and Subsidiaries
Selected Consolidated Financial Data
 
 
 
 
 
 
 
 
 
 
 
 
At or for the
 
For the
 
Three months ended
 
Twelve months ended
 
December 31,
September 30,
 
%
December 31,
%
 
December 31,
December 31,
%
(dollars in thousands, except per share amounts)
2015
2015
 
Change
2014
Change
 
2015
2014
Change
Income Statement Data:
 
 
 
 
 
 
 
 
 
 
  Net interest income
$
25,079

$
25,925

 
(3
)%
$
25,618

(2
)%
 
$
102,634

$
97,803

5
 %
  Provision for loan losses
2,950

2,250

 
31

2,650

11

 
9,300

6,750

38

  Noninterest income
7,895

7,475

 
6

7,519

5

 
31,369

29,721

6

  Total revenues
32,974

33,400

 
(1
)
33,137

—

 
134,003

127,524

5

  Noninterest expenses
21,792

23,576

 
(8
)
22,369

(3
)
 
94,199

90,548

4

  Net income
5,501

4,815

 
14

5,559

(1
)
 
20,215

21,085

(4
)
Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
  Net income per common share:
 
 
 
 
 
 
 
 
 
 
      Basic
$
0.39

$
0.34

 
15
 %
$
0.39

—
 %
 
$
1.42

$
1.48

(4
)%
      Diluted
0.38

0.33

 
15

0.38

—

 
1.40

1.46

(4
)
  Cash dividends per common share
0.07

0.07

 
—

—

—

 
0.28

—

—

  Book value
19.78

19.57

 
1

18.60

6

 
 
 
 
  Weighted-average common shares
outstanding (in thousands):
 
 
 
 
 
 
 
 
 
 
      Basic
14,226

14,067

 
 
14,217

 
 
14,144

14,191

 
      Diluted
14,509

14,350

 
 
14,478

 
 
14,409

14,414

 
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
  Total assets
$
2,905,373

$
2,966,160

 
(2
)%
$
2,997,572

(3
)%
 
 
 
 
  Loans receivable (net)
2,006,624

2,070,962

 
(3
)
1,973,536

2

 
 
 
 
  Allowance for loan losses
23,808

26,742

 
(11
)
24,998

(5
)
 
 
 
 
  Investment securities
724,662

726,988

 
—

853,032

(15
)
 
 
 
 
  Total deposits
2,361,902

2,445,487

 
(3
)
2,380,672

(1
)
 
 
 
 
  Core deposits
2,215,134

2,279,211

 
(3
)
2,208,911

—

 
 
 
 
  Stockholders' equity
282,972

277,598

 
2

265,523

7

 
 
 
 
Capital:
 
 
 
 
 
 
 
 
 
 
  Total stockholders' equity to assets
9.74
%
9.36
%
 
 
8.86
%
 
 
 
 
 
  Leverage ratio
9.73

9.34

 
 
9.00

 
 
 
 
 
  Risk-based capital ratios:
 
 
 
 
 
 
 
 
 
 
      CET1
12.81

12.01

 
 
n/a
 
 
 
 
 
      Tier 1
12.81

12.06

 
 
12.28

 
 
 
 
 
      Total Capital
13.91

13.25

 
 
13.42

 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
  Deposit cost of funds
0.27
%
0.27
%
 
 
0.27
%
 
 
0.27
%
0.27
%
 
  Cost of funds
0.29

0.29

 
 
0.27

 
 
0.28

0.30

 
  Net interest margin
3.50

3.58

 
 
3.53

 
 
3.57

3.50

 
  Return on average assets
0.74

0.64

 
 
0.74

 
 
0.68

0.73

 
  Return on average stockholders' equity
7.79

7.03

 
 
8.43

 
 
7.41

8.46

 
Asset Quality:
 
 
 
 
 
 
 
 
 
 
  Net charge-offs (annualized) to
    average loans outstanding
1.13
%
0.26
%
 
 
0.45
%
 
 
0.51
%
0.26
%
 
  Nonperforming assets to total
    period-end assets
1.74

1.42

 
 
1.44

 
 
 
 
 
  Allowance for loan losses to total
    period-end loans
1.17

1.27

 
 
1.25

 
 
 
 
 
  Allowance for loan losses to
    period-end nonperforming loans
55

74

 
 
71

 
 
 
 
 
  Nonperforming assets to
    capital and allowance for loan losses
17

14

 
 
15

 
 
 
 
 

                                                            
15


Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
 
 
 
 
 
December 31,
 
December 31,
 
2015
 
2014
(in thousands, except share and per share amounts)
(Unaudited)
 
 
 
 
 
 
Assets
 
 
 
Cash and cash equivalents
$
57,061

 
$
42,832

Securities, available for sale at fair value
382,414

 
528,038

Securities, held to maturity at cost (fair value 2015: $338,956; 2014: $319,923)
342,248

 
324,994

Loans, held for sale
27

 
4,996

Loans receivable, net of allowance for loan losses
(allowance 2015: $23,808; 2014: $24,998)
2,006,624

 
1,973,536

Restricted investments in bank stock
13,108

 
15,223

Premises and equipment, net
71,763

 
75,182

Other assets
32,128

 
32,771

Total assets
$
2,905,373

 
$
2,997,572

 
 

 
 

Liabilities and Stockholders' Equity
 

 
 

Deposits:
 

 
 

Noninterest-bearing
$
564,809

 
$
478,724

Interest-bearing
1,797,093

 
1,901,948

      Total deposits
2,361,902

 
2,380,672

Short-term borrowings
214,355

 
333,475

Long-term debt
25,000

 
—

Other liabilities
21,144

 
17,902

Total liabilities
2,622,401

 
2,732,049

Stockholders' Equity:
 

 
 

Preferred stock - Series A noncumulative; $10.00 par value; $1,000 aggregate liquidation preference;
 
 
 
      (1,000,000 shares authorized; 40,000 shares issued and outstanding 2014)
—

 
400

Common stock - $1.00 par value; 25,000,000 shares authorized;
 
 
 
      (issued shares 2015: 14,610,641;  2014: 14,232,844;
outstanding shares 2015: 14,309,441; 2014: 14,220,544)
14,611

 
14,233

Surplus
169,581

 
160,588

Retained earnings
110,655

 
94,496

Accumulated other comprehensive loss
(4,144
)
 
(3,875
)
Treasury stock, at cost (common shares 2015: 301,200; 2014: 12,300)
(7,731
)
 
(319
)
Total stockholders' equity
282,972

 
265,523

Total liabilities and stockholders' equity
$
2,905,373

 
$
2,997,572



                                                            
16


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)
2015
 
2014
 
2015
 
2014
Interest Income
 
 
 
 
 
 
 
Loans receivable, including fees:
 
 
 
 
 
 
 
Taxable
$
22,004

 
$
21,369

 
$
88,498

 
$
81,278

Tax-exempt
658

 
762

 
2,694

 
3,281

Securities:
 
 
 
 
 
 
 
Taxable
4,107

 
5,122

 
18,052

 
20,373

Tax-exempt
241

 
240

 
962

 
850

Total interest income
27,010

 
27,493

 
110,206

 
105,782

Interest Expense
 
 
 
 
 

 
 

Deposits
1,625

 
1,579

 
6,335

 
5,904

Short-term borrowings
221

 
296

 
914

 
1,136

Long-term debt
85

 
—

 
323

 
939

Total interest expense
1,931

 
1,875

 
7,572

 
7,979

Net interest income
25,079

 
25,618

 
102,634

 
97,803

Provision for loan losses
2,950

 
2,650

 
9,300

 
6,750

 Net interest income after provision for loan losses
22,129

 
22,968

 
93,334

 
91,053

Noninterest Income
 
 
 
 
 

 
 

Card, service charges and other noninterest income
7,329

 
7,132

 
29,331

 
28,769

Net gains on sales of loans
566

 
506

 
1,610

 
1,034

Net gains (losses) on sales/call of securities
—

 
(119
)
 
428

 
(82
)
Total noninterest income
7,895

 
7,519


31,369


29,721

Noninterest Expenses
 
 
 
 
 

 
 

Salaries and employee benefits
11,242

 
10,695

 
44,686

 
44,381

Occupancy and equipment
2,516

 
2,726

 
11,896

 
12,370

Advertising and marketing
216

 
449

 
1,410

 
1,737

Data processing
3,801

 
3,745

 
14,689

 
13,538

Regulatory assessments and related costs
545

 
508

 
2,203

 
2,205

Loan expense
415

 
237

 
2,496

 
1,406

Merger-related expenses
414

 
—

 
2,105

 
—

Professional services
(495
)
 
714

 
1,264

 
1,687

Other
3,138

 
3,295

 
13,450

 
13,224

Total noninterest expenses
21,792

 
22,369

 
94,199

 
90,548

Income before taxes
8,232

 
8,118

 
30,504

 
30,226

Provision for federal income taxes
2,731

 
2,559

 
10,289

 
9,141

Net income
$
5,501

 
$
5,559

 
$
20,215

 
$
21,085

Net Income per Common Share
 
 
 
 
 

 
 

Basic
$
0.39

 
$
0.39

 
$
1.42

 
$
1.48

Diluted
0.38

 
0.38

 
1.40

 
1.46

Cash Dividends per Common Share
0.07

 
—

 
0.28

 
—

Average Common and Common Equivalent Shares Outstanding
 
 
 
 
 

 
 

Basic
14,226

 
14,217

 
14,144

 
14,191

Diluted
14,509

 
14,478

 
14,409

 
14,414



                                                            
17


Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
Three months ended
Twelve months ended
 
December 31, 2015
September 30, 2015
December 31, 2014
December 31, 2015
December 31, 2014
 
Average
 
Avg.
Average
 
Avg.
Average
 
Avg.
Average
 
Avg.
Average
 
Avg.
(dollars in thousands)
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Balance
Interest
Rate
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Taxable
$
700,302

$
4,107

2.34
%
$
726,097

$
4,238

2.33
%
$
864,259

$
5,122

2.37
%
$
744,297

$
18,052

2.43
%
$
870,984

$
20,373

2.34
%
Tax-exempt
39,695

370

3.73

39,694

370

3.73

39,688

369

3.73

39,693

1,480

3.73

34,889

1,308

3.75

Total securities
739,997

4,477

2.42

765,791

4,608

2.41

903,947

5,491

2.43

783,990

19,532

2.49

905,873

21,681

2.39

Total loans
2,081,892

23,017

4.34

2,085,290

23,731

4.47

1,957,786

22,542

4.52

2,059,499

92,643

4.45

1,862,978

86,326

4.58

Total interest-earning assets
2,821,889

$
27,494

3.84
%
2,851,081

$
28,339

3.91
%
2,861,733

$
28,033

3.86
%
2,843,489

$
112,175

3.91
%
2,768,851

$
108,007

3.87
%
Allowance for loan losses
(26,959
)
 
 
(25,986
)
 
 
(25,138
)
 
 
(26,072
)
 
 
(24,381
)
 
 
Other noninterest earning assets
151,219

 
 
156,910

 
 
146,170

 
 
155,352

 
 
141,106

 
 
Total assets
$
2,946,149

 
 
$
2,982,005

 
 
$
2,982,765

 
 
$
2,972,769

 
 
$
2,885,576

 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Regular savings
$
522,818

$
364

0.28
%
$
521,504

$
360

0.27
%
$
475,799

$
336

0.28
%
$
530,168

$
1,459

0.28
%
$
465,620

$
1,314

0.28
%
  Interest checking and money market
1,042,241

694

0.26

1,014,035

677

0.27

1,055,778

710

0.27

1,026,460

2,715

0.26

992,072

2,671

0.27

  Time deposits
136,648

407

1.18

133,210

391

1.16

131,888

376

1.13

132,714

1,518

1.14

128,037

1,386

1.08

  Public time and other noncore deposits
154,286

160

0.41

172,781

175

0.40

179,234

157

0.35

170,397

643

0.38

161,044

533

0.33

Total interest-bearing deposits
1,855,993

1,625

0.35

1,841,530

1,603

0.35

1,842,699

1,579

0.34

1,859,739

6,335

0.34

1,746,773

5,904

0.34

Short-term borrowings
227,170

221

0.38

295,301

259

0.34

380,762

296

0.30

268,945

914

0.34

388,518

1,136

0.29

Long-term debt
25,000

85

1.32

25,000

85

1.32

—

—

—

24,041

323

1.32

11,601

939

8.09

Total interest-bearing liabilities
2,108,163

$
1,931

0.36
%
2,161,831

$
1,947

0.36
%
2,223,461

$
1,875

0.33
%
2,152,725

$
7,572

0.35
%
2,146,892

$
7,979

0.37
%
Demand deposits (noninterest-bearing)
536,735

 
 
528,630

 
 
480,466

 
 
526,770

 

 

472,322

 

 

Other liabilities
21,124

 
 
19,678

 
 
17,317

 
 
20,534

 
 
17,038

 
 
Total liabilities
2,666,022

 
 
2,710,139

 
 
2,721,244

 
 
2,700,029

 
 
2,636,252

 
 
Stockholders' equity
280,127

 
 
271,866

 
 
261,521

 
 
272,740

 
 
249,324

 

 

Total liabilities and stockholders' equity
$
2,946,149

 
 
$
2,982,005

 
 
$
2,982,765

 
 
$
2,972,769

 
 
$
2,885,576

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income and margin on a tax-equivalent basis
 
$
25,563

3.57
%
 
$
26,392

3.64
%
 
$
26,158

3.60
%
 
$
104,603

3.64
%
 
$
100,028

3.58
%
Tax-exempt adjustment
 
484

 
 
467

 
 
540

 
 
1,969

 
 
2,225

 
Net interest income and margin
 
$
25,079

3.50
%
 
$
25,925

3.58
%
 
$
25,618

3.53
%
 
$
102,634

3.57
%
 
$
97,803

3.50
%

Securities include securities available for sale, securities held to maturity and restricted investments in bank stock. Securities available for sale are carried at amortized cost for purposes of calculating the average rate received on taxable securities. Yields on tax-exempt securities and loans are computed on a tax-equivalent basis, assuming a 35% tax rate.


                                                            
18


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)
2015
2014
2015
2014
 
 
 
 
 
Balance at beginning of period
$
26,742

$
24,540

$
24,998

$
23,110

Provisions charged to operating expenses
2,950

2,650

9,300

6,750

 
29,692

27,190

34,298

29,860

Recoveries of loans previously charged-off:
 
 
 
 
   Commercial and industrial
32

82

192

1,468

   Commercial tax-exempt
—

—

—

—

   Owner occupied real estate
2

15

5

325

   Commercial construction and land development
—

301

2

546

   Commercial real estate
54

27

83

203

   Residential
2

—

21

20

   Consumer
116

151

160

248

Total recoveries
206

576

463

2,810

Loans charged-off:
 
 
 
 
   Commercial and industrial
(2,454
)
(599
)
(5,700
)
(1,754
)
   Commercial tax-exempt
—

—

—

—

   Owner occupied real estate
(1,473
)
(392
)
(1,591
)
(775
)
   Commercial construction and land development
(2,125
)
—

(2,125
)
(1,293
)
   Commercial real estate
—

(34
)
(711
)
(1,105
)
   Residential
(38
)
(1,126
)
(144
)
(1,466
)
   Consumer
—

(617
)
(682
)
(1,279
)
Total charged-off
(6,090
)
(2,768
)
(10,953
)
(7,672
)
Net charge-offs
(5,884
)
(2,192
)
(10,490
)
(4,862
)
Balance at end of period
$
23,808

$
24,998

$
23,808

$
24,998

Net charge-offs (annualized) as a percentage of
   average loans outstanding
1.13
%
0.45
%
0.51
%
0.26
%
Allowance for loan losses as a percentage of
   period-end loans
1.17
%
1.25
%
1.17
%
1.25
%


                                                            
19


Metro Bancorp, Inc. and Subsidiaries
 
 
 
 
 
Summary of Nonperforming Loans and Assets
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
The following table presents information regarding nonperforming loans and assets as of December 31, 2015 and for the preceding four quarters (dollar amounts in thousands).
 
 
 
 
 
 
 
December 31,
September 30,
June 30,
March 31,
December 31,
 
2015
2015
2015
2015
2014
Nonperforming Assets
 
 
 
 
 
Nonaccrual loans:
 
 
 
 
 
   Commercial and industrial
$
8,506

$
10,850

$
11,985

$
12,375

$
11,634

   Commercial tax-exempt
—

—

—

—

—

   Owner occupied real estate
6,863

9,290

7,720

6,210

7,416

   Commercial construction and land development
10,368

3,017

3,226

3,241

3,228

   Commercial real estate
9,388

6,722

6,384

6,362

5,824

   Residential
5,331

5,133

5,336

4,971

4,987

   Consumer
1,400

1,200

1,177

1,573

1,877

       Total nonaccrual loans
41,856

36,212

35,828

34,732

34,966

Loans past due 90 days or more
   and still accruing
1,602

—

—

—

445

   Total nonperforming loans
43,458

36,212

35,828

34,732

35,411

Foreclosed assets
7,188

5,898

5,981

7,937

7,681

Total nonperforming assets
$
50,646

$
42,110

$
41,809

$
42,669

$
43,092

 
 
 
 
 
 
Troubled Debt Restructurings (TDRs)
 
 
 
 
 
Nonaccruing TDRs (included in nonaccrual
  loans above)
$
13,862

$
14,938

$
15,667

$
16,272

$
15,030

Accruing TDRs
10,482

10,608

10,653

10,627

10,712

Total TDRs
$
24,344

$
25,546

$
26,320

$
26,899

$
25,742

 
 
 
 
 
 
Nonperforming loans to total loans
2.14
%
1.73
%
1.73
%
1.73
%
1.77
%
 
 
 
 
 
 
Nonperforming assets to total assets
1.74
%
1.42
%
1.39
%
1.43
%
1.44
%
 
 
 
 
 
 
Nonperforming loan coverage
55
%
74
%
72
%
74
%
71
%
 
 
 
 
 
 
Allowance for loan losses as a percentage
   of total period-end loans
1.17
%
1.27
%
1.25
%
1.29
%
1.25
%
 
 
 
 
 
 
Nonperforming assets / capital plus allowance for
   loan losses
17
%
14
%
14
%
14
%
15
%



                                                            
20

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