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Form 8-K METRO BANCORP, INC. For: Jul 29

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July 29, 2015 10:48 AM EDT




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)
July 29, 2015
(July 29, 2015)

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 July 29, 2015, Metro Bancorp, Inc. issued a press release reporting financial results for its second quarter and six months ended June 30, 2015. A copy of the press release is attached as Exhibit 99.1 to this report.

Item 8.01. Other Events.

On July 29, 2015, Metro Bancorp, Inc. announced that its board of directors declared a third quarter cash dividend of $0.07 per common share, payable on August 26, 2015 to shareholders of record on August 7, 2015.

Item 9.01. Financial Statements and Exhibits.
Exhibit No.
99.1 Press Release, dated July 29, 2015






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: July 29, 2015              

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






EXHIBIT INDEX



Exhibit No.           Description

99.1
Press Release of Metro Bancorp, Inc. dated July 29, 2015








                                

CONTACTS

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

METRO BANCORP REPORTS NET INCOME OF $4.2 MILLION AND EPS OF $0.29 AFTER ONE-TIME EXPENSES; BALANCE SHEET GROWTH REMAINS STRONG AS LOANS GROW 12% AND DEPOSITS INCREASE 8%

July 29, 2015 - Harrisburg, PA - Metro Bancorp, Inc. (Metro or the Company) (NASDAQ Global Select Market Symbol: METR), parent company of Metro Bank, today reported net income of $4.2 million, or $0.29 per diluted common share, for the quarter ended June 30, 2015 compared to $5.1 million, or $0.35 per diluted common share, for the second quarter of 2014. The results for the quarter were impacted by certain one-time and accelerated expenses totaling $1.8 million after tax, or $0.13 per diluted common share offset partially by after-tax securities gains of $289,000, or $0.02 per diluted common share. The Company also reported net loan growth of $217.0 million, or 12%, over the past twelve months and total deposit growth of $181.7 million, or 8%, for the same period.

Financial Highlights
(in millions, except per share data)
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
 
Six Months Ended
 
 
 
 
 
%
 
 
 
 
%
 
06/30/15
 
06/30/14
 
Change
 
 
06/30/15
06/30/14
Change
Total assets
$
3,001.4

 
$
2,868.9

 
5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans (net)
2,044.6

 
1,827.5

 
12
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total deposits
2,368.7

 
2,187.0

 
8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
34.0

 
$
31.5

 
8
 %
 
 
$
67.6

$
61.9

9
 %
 
 
 
 
 
 
 
 
 
 
 
Net income
4.2

 
5.1

 
(18
)%
 
 
9.9

10.0

(1
)%
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income*
5.7

 
5.1

 
13
 %
 
 
11.7

10.0

16
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net income per common share
$
0.29

 
$
0.35

 
(17
)%
 
 
$
0.68

$
0.70

(3
)%
 
 
 
 
 
 
 
 
 
 
 
Adjusted diluted net income per common share*
0.40

 
0.35

 
14
 %
 
 
0.80

0.70

14
 %
* 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




"We continue to work hard at and are pleased with the strength of our balance sheet as evidenced by solid loan growth of 12% and deposit growth of 8%" said Gary L. Nalbandian, the Company's Chairman and Chief Executive Officer. "While our net income for the quarter was impacted by the acceleration of certain one-time expenses, our revenue growth continues to increase and we continue to focus on disciplined core noninterest expense management."

"As part of our commitment to enhancing shareholder returns, I am pleased to announce that on July 24, 2015, Metro's board of directors declared a third quarter cash dividend of $0.07 per common share, payable August 26, 2015 to shareholders of record on August 7, 2015."

Income Statement Highlights

•
The Company recorded net income of $4.2 million, or $0.29 per diluted common share, for the second quarter of 2015 compared to net income of $5.1 million, or $0.35 per diluted common share for the same period one year ago; a $904,000, or 18%, decrease. Exclusive of net gains on sales of securities and certain nonrecurring expenses, adjusted net income was $5.7 million*, or $0.40 per diluted common share*, for the second quarter of 2015 compared to $5.1 million, or $0.35 per diluted common share, for the same period one year ago. Net income for the first six months of 2015 totaled $9.9 million, or $0.68 per diluted common share; down $126,000, or 1%, from $10.0 million, or $0.70 per diluted common share, recorded for the first half of 2014. Adjusted net income for the first six months of 2015 totaled $11.7 million*, or $0.80 per diluted common share*, compared to $10.0 million, or $0.70 per diluted common share, recorded for the first half of 2014.

•
Net income for the second quarter of 2015 was negatively impacted by several nonrecurring noncash expenses, including (1) $1.4 million of accelerated stock-based compensation expense due to the immediate vesting of all outstanding employee stock options triggered by a provision in the Company's Employee Stock Option and Restricted Stock Plan, (2) a $499,000 write-off of pre-construction costs related to a terminated land lease agreement for a planned future store, and (3) $462,000 of accelerated depreciation expense due to closing two stores (as previously announced). These expenses were partially offset by $444,000 net gains on sales of securities during the second quarter of 2015.

•
Total revenues (net interest income plus noninterest income) for the second quarter of 2015 were $34.0 million, up $2.5 million, or 8%, over total revenues of $31.5 million for the same quarter one year ago and were up $377,000, or 1%, over total revenues of $33.6 million for the previous quarter. Total revenues for the first half of 2015 increased $5.7 million, or 9%, over the first half of 2014.

•
Return on average stockholders' equity (ROE) was 6.21% for the second quarter of 2015 compared to 8.30% for the same period last year and to 8.62% the previous quarter. Exclusive of net gains on sales of securities and certain nonrecurring expenses, adjusted ROE was 8.52%* for the second quarter of 2015 compared to 8.30% for the same period last year. ROE for the first six months of 2015 was 7.41%, compared to 8.36% for the first six months of 2014. Adjusted ROE for the first half of 2015 was 8.73%* compared to 8.35% for the first six months of 2014.

•
The Company's net interest margin on a fully-taxable basis for the second quarter of 2015, was 3.66%, compared to 3.70% recorded in the first quarter of 2015 and 3.59% for the second quarter of 2014. The Company's deposit cost of funds for the second quarter was 0.26%, the same as the previous quarter and for the same period one year ago.

•
The provision for loan losses totaled $2.6 million for the second quarter of 2015, compared to $1.5 million for the previous quarter and compared to $1.1 million for the second quarter one year ago. The provision for the first half of 2015 was up $2.1 million, or 105%, over the first half of 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



•
Noninterest expenses for the second quarter of 2015 were $25.0 million, up $1.1 million, or 5%, over the previous quarter and up $1.9 million, or 8%, over the same quarter last year. Total noninterest expenses for the first six months of 2015 were up $3.0 million, or 7%, compared to the first half of 2014. The increase for both the second quarter and the first half of 2015 are primarily related to the three nonrecurring events previously mentioned.

•
The efficiency ratio for the second quarter of 2015 was 73.4% compared to 71.0% for the previous quarter and 73.1% for the second quarter of 2014.

Balance Sheet Highlights

•
Loan growth continues to be strong as net loans grew $66.6 million, or 3% (nonannualized), on a linked quarter basis to $2.04 billion and were up $217.0 million, or 12%, over the second quarter 2014.

•
Nonperforming assets were 1.39% of total assets at June 30, 2015, compared to 1.43% of total assets for the previous quarter and compared to 1.42% of total assets one year ago.

•
Total deposits at June 30, 2015 were $2.37 billion, up $181.7 million, or 8%, compared to same time last year. Total core deposits grew $152.1 million, or 7%, over the past twelve months and totaled $2.19 billion at June 30, 2015.

•
Metro's capital levels remain strong with a Tier 1 Leverage ratio of 9.20%, a common equity tier 1 ratio of 11.82% and a total risk-based capital ratio of 13.02%.

•
Stockholders' equity totaled $267.0 million, or 9% of total assets, at the end of the second quarter 2015, up $18.2 million, or 7%, over the past twelve months. At June 30, 2015, the Company's book value per common share was $18.98, down slightly from $19.04 per common share at March 31, 2015 but up $1.53, or 9%, per common share over June 30, 2014. The market price of Metro's common stock increased by 13%, over the past twelve months from $23.12 per common share at June 30, 2014 to $26.14 per common share at June 30, 2015.

Income Statement Overview
 
Three months ended
June 30,
 
Six months ended
June 30,
(dollars in thousands, except per share data)
2015
 
2014
% Change
 
2015
 
2014
% Change
Total revenues
$
34,003

 
$
31,490

8
 %
 
$
67,629

 
$
61,903

9
 %
Provision for loan losses
2,600

 
1,100

136

 
4,100

 
2,000

105

Total noninterest expenses
24,954

 
23,021

8

 
48,831

 
45,803

7

Net income
4,177

 
5,081

(18
)
 
9,899

 
10,025

(1
)
Adjusted net income*
5,726

 
5,081

13

 
11,658

 
10,018

16

Diluted net income per common share
$
0.29

 
$
0.35

(17
)%
 
$
0.68

 
$
0.70

(3
)%
Adjusted diluted net income per common share*
0.40

 
0.35

14

 
0.80

 
0.70

14

Cash dividends per common share
0.07

 
—

—

 
0.14

 
—

—

Efficiency ratio
73.4
%
 
73.1
%
 
 
72.2
%
 
74.0
%
 

Metro recorded net income of $4.2 million, or $0.29 per diluted common share, for the second quarter of 2015 compared to net income of $5.1 million, or $0.35 per diluted common share, for the second quarter of 2014. Exclusive of net gains on sales of securities and certain nonrecurring expenses, adjusted net income was $5.7 million*, or $0.40 per diluted common share*, for the second quarter of 2015 compared to $5.1 million, or $0.35 per diluted common share, for the same period one year ago.

* 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




Net income for the first six months of 2015 was $9.9 million compared to $10.0 million recorded in the first six months of 2014, down 1%. Earnings per diluted common share for the first half of 2015 were $0.68 compared to $0.70 for the same period last year, a 3% decrease. Adjusted net income for the first six months of 2015 totaled $11.7 million*, or $0.80 per diluted common share*, compared to $10.0 million, or $0.70 per diluted common share, recorded for the first half of 2014.

Total revenues (net interest income plus noninterest income) for the second quarter of 2015 were $34.0 million, up $2.5 million, or 8%, over the second quarter of 2014. Total revenues for the first six months of 2015 were $67.6 million, up $5.7 million, or 9%, over the first half of 2014.

Noninterest expenses for the quarter totaled $25.0 million, up $1.9 million, or 8%, compared to the same period in 2014. On a linked quarter basis, total noninterest expenses were up $1.1 million, or 5%, over the first quarter of 2015. Total noninterest expenses for the first half of 2015 were $48.8 million, up $3.0 million, or 7%, over the same period last year. The increase for both the second quarter and the first half of 2015 are primarily related to the three nonrecurring events previously mentioned.

Net Interest Income and Net Interest Margin

Net interest income for the second quarter of 2015 totaled $25.6 million, up $1.6 million, or 7%, over the second quarter of 2014. For the first six months of 2015, net interest income totaled $51.6 million versus $47.3 million for the same period in 2014, a $4.3 million, or 9%, increase.

Average interest-earning assets for the second quarter of 2015 totaled $2.83 billion versus $2.87 billion for the previous quarter and were up $106.9 million, or 4%, over the second quarter of 2014. Average loans receivable increased by $217.8 million, or 12%, and average investment securities balances decreased by $110.9 million, or 12%, from the second quarter of last year. Average interest-bearing deposits totaled $1.87 billion for the second quarter of 2015, up $181.6 million, or 11%, over the same period of 2014 and average noninterest-bearing deposits for the second quarter 2015 were $532.3 million, up $55.6 million, or 12%, over the second quarter last year. Average interest-earning assets for the first six months of 2015 totaled $2.85 billion versus $2.70 billion for the first six months of 2014, an increase of $149.0 million, or 6%.

The net interest margin for the second quarter of 2015 was 3.59%, down 4 basis points (bps) from the 3.63% recorded for the previous quarter but up 9 bps over the 3.50% recorded in the second quarter one year ago. The net interest margin on a fully-taxable basis for the second quarter of 2015 was 3.66%, down 4 bps from the previous quarter but up 7 bps compared to the second quarter of 2014. Net interest income and the net interest margin in the first quarter of 2015 were higher due to the receipt by Metro of a special dividend of $555,000 paid in the first quarter by the Federal Home Loan Bank.

The net interest margin for the first half of 2015 was 3.61%, up 12 bps over the 3.49% recorded for the first six months of 2014. On a fully-taxable basis, the net interest margin for the first six months of 2015 was 3.68%, up 10 bps compared to 3.58% for the first half of 2014.

Metro's deposit cost of funds for the second quarter of 2015 was 0.26%, compared to the same amount for the previous quarter, and the second quarter one year ago. Metro's deposit cost of funds of 0.26% stayed the same in the first six months of 2015 compared to the same period in 2014. The total cost of all funding sources for the second quarter of 2015 was 0.28%, compared to the same amount for the previous quarter and 0.31% for the same period in 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.

                                                            
4



Change in Net Interest Income and Rate/Volume Analysis

The increase in net interest income on a fully tax-equivalent basis for the second quarter and for the first six months of 2015 over the same periods of 2014 was primarily due to an increase in the level of interest-earning assets as shown in the table below.

(dollars in thousands)
 
Tax-equivalent net interest income
2015 vs. 2014
 
Volume
Change
Rate
Change
Total
Increase
%
Increase
 
2nd Quarter
 
$1,927
$(409)
$1,518
6%
 
Six Months
 
$4,409
$(209)
$4,200
9%
 

Noninterest Income

Noninterest income for the second quarter of 2015 totaled $8.4 million, up $939,000, or 13%, over the second quarter one year ago. Card, service charges and other noninterest income for the second quarter were $7.5 million, an increase of $159,000, or 2%, over the second quarter last year. Gains on the sale of loans totaled $474,000 for the second quarter of 2015 versus $138,000 for the same period in 2014. Net gains on investment securities totaled $444,000 for the second quarter of 2015. There were no sales or calls of investment securities for the second quarter of 2014.

Noninterest income for the first six months of 2015 increased $1.4 million, or 10%, compared to the first half of 2014. Card, service charges and other noninterest income were $14.6 million, an increase of $350,000, or 2%, compared to the same period in 2014, while gains on sales of loans were $945,000 for the first half of 2015 versus $274,000 for the first six months of 2014, up 245%. Net gains on sales of securities for the first six months of 2015 were $416,000 compared to $11,000 for the first half of 2014.

The breakdown of noninterest income for the second quarter and for the first six months of 2015 and 2014, respectively, is shown in the table below:
 
Three months ended
June 30,
 
Six months ended
June 30,
(dollars in thousands)
2015
2014
% Increase
 
2015
2014
% Increase
Card, service charges and other noninterest income
$
7,516

$
7,357

2
%
 
$
14,638

$
14,288

2
%
Gains on sales of loans
474

138

243

 
945

274

245

Net gains on sales of securities
444

—

—

 
416

11

3,682

Total noninterest income
$
8,434

$
7,495

13
%
 
$
15,999

$
14,573

10
%

Noninterest Expenses

Noninterest expenses for the second quarter of 2015 were $25.0 million, up $1.1 million, or 5%, on a linked quarter basis, and up $1.9 million, or 8%, compared to the second quarter one year ago. For the first six months of 2015, noninterest expense totaled $48.8 million, up $3.0 million, or 7%, over $45.8 million recorded for the first half of 2014.

Due to the immediate vesting of all outstanding options under the 2006 Employee Stock Option and Restricted Stock Plan (the Plan), Metro recorded accelerated stock-based compensation expenses totaling $1.4 million during the second quarter of 2015. A total of $823,000 of this expense is not deductible for federal tax purposes. The accelerated vesting was triggered by a provision in the Plan which provided for such acceleration upon a change in the identity of at least four (4) members of the board of directors or the addition of four (4) or more new members to the board of directors, or any combination of the foregoing, within any two (2) consecutive calendar year periods. As a result of this full acceleration charge, Metro will not recognize any further compensation expense related to these vested options in future periods.


                                                            
5



Metro had previously entered into a land lease for the premises located at the corner of Airport Rd & Rt. 501 (Lititz Pike), Manheim Township, Lancaster County, Pennsylvania, where Metro had planned to construct a full-service store. During the second quarter of 2015, the lease was terminated without penalty.  As a result, Metro wrote off $499,000 of accumulated costs associated with pre-construction activities, including site studies and plans as well as engineering and legal costs. 

As previously announced in April 2015, Metro permanently closed two stores effective June 30, 2015.  As a result of these store closures, Metro accelerated the remaining depreciation on certain assets at these locations during the first and second quarters of 2015.  The accelerated depreciation recognized in occupancy and equipment expense totaled $462,000 during the second quarter of 2015 and $755,000 during the six months ended June 30, 2015. Beginning in the third quarter of 2015, Metro will experience a reduction in total occupancy and equipment expenses as the stores are no longer in operation.

The breakdown of noninterest expenses for the second quarter and for the first six months of 2015 and 2014, respectively, are shown in the table below:
 
Three months ended
June 30,
 
Six months ended
June 30,
(dollars in thousands)
2015
2014
% Change
 
2015
2014
% Change
Salaries and employee benefits
$
12,084

$
11,055

9
 %
 
$
22,963

$
22,482

2
 %
Occupancy and equipment
3,370

3,098

9

 
6,595

6,603

—

Advertising and marketing
398

376

6

 
762

769

(1
)
Data processing
3,692

3,320

11

 
7,230

6,570

10

Regulatory assessments and related costs
556

584

(5
)
 
1,123

1,153

(3
)
Loan expense
206

881

(77
)
 
1,608

1,016

58

Professional services
591

301

96

 
1,459

602

142

Other expenses
4,057

3,406

19

 
7,091

6,608

7

Total noninterest expenses
$
24,954

$
23,021

8
 %
 
$
48,831

$
45,803

7
 %

Excluding the impact of the three above mentioned nonrecurring expenses, total noninterest expenses for the second quarter and first six months of 2015 would have been $22.6 million and $46.2 million, respectively.

Balance Sheet
 
As of June 30,
 
(dollars in thousands)
2015
2014
%
 Increase
Total assets
$
3,001,357

$
2,868,928

5
%
Total loans (net)
2,044,570

1,827,544

12

Total deposits
2,368,688

2,186,980

8

Total core deposits
2,188,381

2,036,308

7

Total stockholders' equity
266,981

248,770

7


Lending

Gross loans receivable totaled $2.1 billion at June 30, 2015, an increase of $218.6 million, or 12%, over June 30, 2014. The composition of the Company's loan portfolio at June 30, 2015 and June 30, 2014 was as follows:


                                                            
6



(dollars in thousands)
June 30, 2015
% of Total
 
June 30, 2014
% of Total
 
$
 Change
% Change
 
Commercial and industrial
$
591,860

28
%
 
$
467,587

25
%
 
$
124,273

27
 %
 
Commercial tax-exempt
58,319

3

 
76,674

4

 
(18,355
)
(24
)
 
Owner occupied real estate
313,377

15

 
308,708

17

 
4,669

2

 
Commercial construction
   and land development
136,354

7

 
130,449

7

 
5,905

5

 
Commercial real estate
625,344

30

 
544,544

29

 
80,800

15

 
Residential
122,838

6

 
103,564

6

 
19,274

19

 
Consumer
222,349

11

 
220,289

12

 
2,060

1

 
Gross loans receivable
$
2,070,441

100
%
 
$
1,851,815

100
%
 
$
218,626

12
 %
 

The Company experienced loan growth in every major category over the past twelve months except for commercial tax-exempt loans which represent the smallest segment of Metro's loan portfolio. On a linked-quarter basis, total net loans increased by $66.7 million, or 3% (nonannualized).

Asset Quality

The Company's asset quality ratios are shown below:

 
Quarter ended
 
June 30, 2015
 
March 31, 2015
 
June 30, 2014
 
Nonperforming assets/total assets
1.39
%
 
1.43
%
 
1.42
%
 
Net loan charge-offs (annualized)/average total loans
0.49
%
 
0.15
%
 
0.17
%
 
Allowance for loan losses/total loans
1.25
%
 
1.29
%
 
1.31
%
 
Nonperforming loan coverage
72
%
 
74
%
 
66
%
 
Nonperforming assets/capital and allowance for loan losses
14
%
 
14
%
 
15
%
 

Nonperforming loans totaled $35.8 million at June 30, 2015, an increase of $1.1 million from March 31, 2015, while foreclosed asset balances decreased by $2.0 million to $6.0 million. Compared to June 30, 2014, nonperforming loans decreased $840,000, or 2%, and foreclosed assets increased $2.0 million, or 49%.

Total nonperforming assets decreased during the second quarter of 2015 by $860,000, or 2%, to $41.8 million, or 1.39%, of total assets at June 30, 2015, compared to $42.7 million, or 1.43%, of total assets at March 31, 2015. Nonperforming assets were up $1.1 million, or 3%, over the past year, compared to $40.7 million, or 1.42% of total assets at June 30, 2014.

At June 30, 2015, foreclosed assets totaling $2.0 million were under contract to be sold with no additional net loss to the Company expected.

Net loan charge-offs totaled $2.5 million for the second quarter of 2015, composed of $2.6 million in gross loan charge-offs offset partially by $82,000 in recoveries. Three different relationships accounted for $1.9 million, or 75%, of the total net charge-offs for the second quarter. Total net loan charge-offs for the first six months of 2015 were $3.2 million, or 0.32%, of average loans outstanding compared to $839,000, or 0.09%, for the first half of 2014.

The Company recorded a provision for loan losses of $2.6 million for the second quarter of 2015 as compared to $1.5 million for the previous quarter and $1.1 million recorded in the second quarter of 2014. The allowance for loan losses (allowance or ALL) totaled $25.9 million as of June 30, 2015, compared to $25.8 million at March 31, 2015 and $24.3 million at June 30, 2014. The allowance represented 1.25% of gross loans outstanding at June 30, 2015, compared to 1.29% at March 31, 2015 and 1.31% at June 30, 2014.

                                                            
7



Deposits

The Company's deposit balances at June 30, 2015 were $2.37 billion, compared to total deposits of $2.19 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)
2015
 
2014
 
%
Change
 
2nd Quarter 2015 Cost of Funds
Demand noninterest-bearing
$
569,663

 
$
508,012

 
12
%
 
0.00
%
Interest checking and money market
989,940

 
931,393

 
6

 
0.26

Savings
497,442

 
474,416

 
5

 
0.27

   Subtotal
2,057,045

 
1,913,821

 
7

 
0.20

Time
131,336

 
122,487

 
7

 
1.11

Total core deposits
$
2,188,381

 
$
2,036,308

 
7
%
 
0.25
%

Total core deposits, excluding time deposits, increased $143.2 million, or 7%, over the past twelve months. The cost of core deposits, excluding time deposits, during the second quarter of 2015 was 0.20%, the same amount as the previous quarter and down 1 basis point (bp) from the second quarter one year ago. The cost of total core deposits for the second quarter of 2015 was 0.25%, down 1 bp from both the previous quarter and the second quarter of 2014.

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

 
June 30,
% of
 
June 30,
% of
 
%
 
(dollars in thousands)
2015
Total
 
2014
Total
 
Change
 
Consumer
$
1,057,058

48
%
 
$
996,772

49
%
 
6
%
 
Commercial
805,433

37

 
725,106

36

 
11

 
Government
325,890

15

 
314,430

15

 
4

 
Total
$
2,188,381

100
%
 
$
2,036,308

100
%
 
7
%
 

Total consumer core deposits increased by $60.3 million, or 6%, and total commercial core deposits grew by $80.3 million, or 11%, over the past twelve months.

Investments

At June 30, 2015, the Company's investment portfolio totaled $765.2 million, down $43.9 million, or 5%, on a linked quarter basis and down $79.6 million, or 9%, compared to June 30, 2014. The Company continues to redirect regular monthly cash flows from its investment portfolio into higher yield loan growth at this time. Detailed below is information regarding the composition and characteristics of the portfolio at June 30, 2015:

                                                            
8



Product description
Available for sale
 
Held to maturity
 
Total
 
(dollars in thousands)
 
 
 
 
 
 
U.S. Government agency securities
$
32,946

 
$
149,122

 
$
182,068

 
Mortgage-backed securities:
 
 
 
 
 
 
  Residential mortgage-backed securities
55,819

 
11,741

 
67,560

 
  Agency collateralized mortgage obligations
296,103

 
174,921

 
471,024

 
Corporate debt securities
—

 
5,000

 
5,000

 
Municipal securities
29,878

 
9,702

 
39,580

 
Total
$
414,746

 
$
350,486

 
$
765,232

 
Duration (in years)
4.8

 
5.4

 
5.1

 
Average life (in years)
5.4

 
6.3

 
5.8

 
Quarterly average yield (annualized)
2.28
%
 
2.50
%
 
2.37
%
 

At June 30, 2015, the after-tax unrealized loss on the Company's available for sale portfolio was $5.6 million, as compared to an after-tax unrealized loss of $3.9 million at December 31, 2014 and compared to an after-tax unrealized loss of $8.8 million at June 30, 2014.

Capital

Stockholders' equity at June 30, 2015 totaled $267.0 million, compared to $248.8 million at June 30, 2014. Return on average stockholders' equity (ROE) for the second quarter of 2015 was 6.21%, compared to 8.62% for the previous quarter and 8.30% for the second quarter last year. Exclusive of net gains on sales of securities and certain nonrecurring expenses, adjusted ROE was 8.52%* for the second quarter of 2015 compared to 8.30% for the same period last year. ROE for the first six months of 2015 was 7.41%, compared to 8.36% for the first half of 2014. Adjusted ROE for the first half of 2015 was 8.73%* compared to 8.35% for the first six months of 2014.

The Company's capital ratios at June 30, 2015 and 2014 were as follows:

 
6/30/2015
6/30/2014
Regulatory guidelines “well capitalized”
Leverage ratio
9.20
%
9.57
%
5.00
%
CET1
11.82

n/a
6.50

Tier 1 (risk-based)
11.86

13.36

8.00

Total capital (risk-based)
13.02

14.55

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.

During the first six months of 2015, the Company repurchased 288,900 shares of its common stock as part of its previously announced stock buyback program which began late in the fourth quarter of 2014. Total shares repurchased to date under this program are 301,200.

At June 30, 2015, the Company's book value per common share was $18.98, compared to $17.45 one year ago, up 9%.


* 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.

                                                            
9



The market price of the Company's common stock increased by 13% from $23.12 per common share at June 30, 2014 to $26.14 per common share at June 30, 2015.


                                                            
10



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 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;
 
 
•
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;

                                                            
11



 
 
•
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 or through acquisitions and successful integration of new or acquired entities 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 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 six months ended June 30, 2015, which the Company believes do not reflect the operating performance of the Company during those periods. These nonrecurring charges include (1) stock-based compensation expense related to the immediate vesting of all outstanding employee stock options during the second quarter of 2015, (2) 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 (3) accelerated depreciation expense recognized during the three and six months ended June 30, 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 these charges are not reasonably likely to recur within two years. Additionally, these reconciliations exclude net gains from the sales 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.
 
Three months ended
June 30,
 
Six months ended
June 30,
(in thousands, except per share amounts)
2015
2014
 
2015
2014
Adjusted net income reconciliation:
 
 
 
 
 
  Net income
$
4,177

$
5,081

 
$
9,899

$
10,025

    Nonrecurring charges, net of tax:
 
 
 
 
 
       Accelerated vesting of employee stock options(1)
1,214

—

 
1,214

—

       Accelerated depreciation expense for two store closures(1)
300

—

 
491

—

       Pre-construction costs of cancelled planned store(1)
324

—

 
324

—

    Total nonrecurring charges, net of tax
1,838

—

 
2,029

—

    Net gains on sales of securities, net of tax(1)
(289
)
—

 
(270
)
(7
)
Adjusted net income(2)
$
5,726

$
5,081

 
$
11,658

$
10,018

 
 
 
 
 
 
Adjusted diluted net income per common share reconciliation:
 
 
 
 
  Diluted net income per common share
$
0.29

$
0.35

 
$
0.68

$
0.70

    Nonrecurring charges, net of tax:
 
 
 
 
 
       Accelerated vesting of employee stock options(1)
0.09

—

 
0.09

—

       Accelerated depreciation expense for two store closures(1)
0.02

—

 
0.03

—

       Pre-construction costs of cancelled planned store(1)
0.02

—

 
0.02

—

    Total nonrecurring charges, net of tax
0.13

—

 
0.14

—

    Net gains on sales of securities, net of tax(1)
(0.02
)
—

 
(0.02
)
—

Adjusted diluted net income per common share(2)
$
0.40

$
0.35

 
$
0.80

$
0.70

 
 
 
 
 
 
Adjusted return on average stockholders' equity reconciliation:
 
 
 
 
 
   Adjusted net income(2)
$
5,726

$
5,081

 
$
11,658

$
10,018

   Average stockholders' equity
269,711

245,650

 
269,429

241,927

   Adjusted return on average stockholders' equity(2)
8.52
%
8.30
%
 
8.73
%
8.35
%

(1) Assumes a 35% tax rate. The accelerated vesting of employee stock options resulted in a pretax expense of $1.4 million during the second quarter of 2015, $823,000 of which is not deductible for federal tax purposes.
(2) Non-GAAP measure.

                                                            
13



Metro Bancorp, Inc. and Subsidiaries
Selected Consolidated Financial Data
 
 
 
 
 
 
 
 
 
 
 
 
At or for the
 
For the
 
Three months ended
 
Six months ended
 
June 30,
March 31,
 
%
June 30,
%
 
June 30,
June 30,
%
(dollars in thousands, except per share amounts)
2015
2015
 
Change
2014
Change
 
2015
2014
Change
Income Statement Data:
 
 
 
 
 
 
 
 
 
 
  Net interest income
$
25,569

$
26,061

 
(2
)%
$
23,995

7
 %
 
$
51,630

$
47,330

9
 %
  Provision for loan losses
2,600

1,500

 
73

1,100

136

 
4,100

2,000

105

  Noninterest income
8,434

7,565

 
11

7,495

13

 
15,999

14,573

10

  Total revenues
34,003

33,626

 
1

31,490

8

 
67,629

61,903

9

  Noninterest expenses
24,954

23,877

 
5

23,021

8

 
48,831

45,803

7

  Net income
4,177

5,722

 
(27
)
5,081

(18
)
 
9,899

10,025

(1
)
Per Common Share Data:
 
 
 
 
 
 
 
 
 
 
  Net income per common share:
 
 
 
 
 
 
 
 
 
 
      Basic
$
0.29

$
0.40

 
(28
)%
$
0.36

(19
)%
 
$
0.70

$
0.70

—
 %
      Diluted
0.29

0.39

 
(26
)
0.35

(17
)
 
0.68

0.70

(3
)
  Cash dividends per common share
0.07

0.07

 
—

—

—

 
0.14

—

—

  Book value
18.98

19.04

 
—

17.45

9

 
 
 
 
  Weighted-average common shares
      outstanding:
 
 
 
 
 
 
 
 
 
 
      Basic
14,112

14,168

 
 
14,184

 
 
14,140

14,172

 
      Diluted
14,373

14,437

 
 
14,387

 
 
14,412

14,366

 
Balance Sheet Data:
 
 
 
 
 
 
 
 
 
 
  Total assets
$
3,001,357

$
2,974,615

 
1
 %
$
2,868,928

5
 %
 
 
 
 
  Loans receivable (net)
2,044,570

1,977,955

 
3

1,827,544

12

 
 
 
 
  Allowance for loan losses
25,871

25,755

 
—

24,271

7

 
 
 
 
  Investment securities
765,232

809,107

 
(5
)
844,856

(9
)
 
 
 
 
  Total deposits
2,368,688

2,411,519

 
(2
)
2,186,980

8

 
 
 
 
  Core deposits
2,188,381

2,235,292

 
(2
)
2,036,308

7

 
 
 
 
  Stockholders' equity
266,981

270,764

 
(1
)
248,770

7

 
 
 
 
Capital:
 
 
 
 
 
 
 
 
 
 
  Total stockholders' equity to assets
8.90
%
9.10
%
 
 
8.67
%
 
 
 
 
 
  Leverage ratio
9.20

9.05

 
 
9.57

 
 
 
 
 
  Risk-based capital ratios:
 
 
 
 
 
 
 
 
 
 
      CET1
11.82

12.23

 
 
n/a
 
 
 
 
 
      Tier 1
11.86

12.27

 
 
13.36

 
 
 
 
 
      Total Capital
13.02

13.48

 
 
14.55

 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
  Deposit cost of funds
0.26
%
0.26
%
 
 
0.26
%
 
 
0.26
%
0.26
%
 
  Cost of funds
0.28

0.28

 
 
0.31

 
 
0.28

0.31

 
  Net interest margin
3.59

3.63

 
 
3.50

 
 
3.61

3.49

 
  Return on average assets
0.57

0.77

 
 
0.72

 
 
0.67

0.72

 
  Return on average stockholders' equity
6.21

8.62

 
 
8.30

 
 
7.41

8.36

 
Asset Quality:
 
 
 
 
 
 
 
 
 
 
  Net charge-offs (annualized) to
    average loans outstanding
0.49
%
0.15
%
 
 
0.17
%
 
 
0.32
%
0.09
%
 
  Nonperforming assets to total
    period-end assets
1.39

1.43

 
 
1.42

 
 
 
 
 
  Allowance for loan losses to total
    period-end loans
1.25

1.29

 
 
1.31

 
 
 
 
 
  Allowance for loan losses to
    period-end nonperforming loans
72

74

 
 
66

 
 
 
 
 
  Nonperforming assets to
    capital and allowance for loan losses
14

14

 
 
15

 
 
 
 
 

                                                            
14



Metro Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
 
 
 
 
 
June 30,
 
December 31,
 
2015
 
2014
(in thousands, except share and per share amounts)
(Unaudited)
 
 
 
 
 
 
Assets
 
 
 
Cash and cash equivalents
$
57,678

 
$
42,832

Securities, available for sale at fair value
414,746

 
528,038

Securities, held to maturity at cost (fair value 2015: $345,774; 2014: $319,923)
350,486

 
324,994

Loans, held for sale
5,610

 
4,996

Loans receivable, net of allowance for loan losses
(allowance 2015: $25,871; 2014: $24,998)
2,044,570

 
1,973,536

Restricted investments in bank stock
17,793

 
15,223

Premises and equipment, net
73,318

 
75,182

Other assets
37,156

 
32,771

Total assets
$
3,001,357

 
$
2,997,572

 
 

 
 

Liabilities and Stockholders' Equity
 

 
 

Deposits:
 

 
 

Noninterest-bearing
$
569,663

 
$
478,724

Interest-bearing
1,799,025

 
1,901,948

      Total deposits
2,368,688

 
2,380,672

Short-term borrowings
322,675

 
333,475

Long-term debt
25,000

 
—

Other liabilities
18,013

 
17,902

Total liabilities
2,734,376

 
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)
400

 
400

Common stock - $1.00 par value; 25,000,000 shares authorized;
 
 
 
      (issued shares 2015: 14,310,602;  2014: 14,232,844;
outstanding shares 2015: 14,009,402; 2014: 14,220,544)
14,311

 
14,233

Surplus
163,248

 
160,588

Retained earnings
102,369

 
94,496

Accumulated other comprehensive loss
(5,616
)
 
(3,875
)
Treasury stock, at cost (common shares 2015: 301,200; 2014: 12,300)
(7,731
)
 
(319
)
Total stockholders' equity
266,981

 
265,523

Total liabilities and stockholders' equity
$
3,001,357

 
$
2,997,572



                                                            
15



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)
2015
 
2014
 
2015
 
2014
Interest Income
 
 
 
 
 
 
 
Loans receivable, including fees:
 
 
 
 
 
 
 
Taxable
$
22,124

 
$
19,938

 
$
43,727

 
$
39,148

Tax-exempt
680

 
834

 
1,409

 
1,695

Securities:
 
 
 
 
 
 
 
Taxable
4,362

 
5,018

 
9,707

 
10,064

Tax-exempt
241

 
191

 
481

 
381

Total interest income
27,407

 
25,981

 
55,324

 
51,288

Interest Expense
 
 
 
 
 

 
 

Deposits
1,560

 
1,401

 
3,107

 
2,835

Short-term borrowings
195

 
278

 
434

 
509

Long-term debt
83

 
307

 
153

 
614

Total interest expense
1,838

 
1,986

 
3,694

 
3,958

Net interest income
25,569

 
23,995

 
51,630

 
47,330

Provision for loan losses
2,600

 
1,100

 
4,100

 
2,000

 Net interest income after provision for loan losses
22,969

 
22,895

 
47,530

 
45,330

Noninterest Income
 
 
 
 
 

 
 

Card, service charges and other noninterest income
7,516

 
7,357

 
14,638

 
14,288

Net gains on sales of loans
474

 
138

 
945

 
274

Net gains on sales of securities
444

 
—

 
416

 
11

Total noninterest income
8,434

 
7,495


15,999


14,573

Noninterest Expenses
 
 
 
 
 

 
 

Salaries and employee benefits
12,084

 
11,055

 
22,963

 
22,482

Occupancy and equipment
3,370

 
3,098

 
6,595

 
6,603

Advertising and marketing
398

 
376

 
762

 
769

Data processing
3,692

 
3,320

 
7,230

 
6,570

Regulatory assessments and related costs
556

 
584

 
1,123

 
1,153

Loan expense
206

 
881

 
1,608

 
1,016

Professional services
591

 
301

 
1,459

 
602

Other
4,057

 
3,406

 
7,091

 
6,608

Total noninterest expenses
24,954

 
23,021

 
48,831

 
45,803

Income before taxes
6,449

 
7,369

 
14,698

 
14,100

Provision for federal income taxes
2,272

 
2,288

 
4,799

 
4,075

Net income
$
4,177

 
$
5,081

 
$
9,899

 
$
10,025

Net Income per Common Share
 
 
 
 
 

 
 

Basic
$
0.29

 
$
0.36

 
$
0.70

 
$
0.70

Diluted
0.29

 
0.35

 
0.68

 
0.70

Cash Dividends per Common Share
0.07

 
—

 
0.14

 
—

Average Common and Common Equivalent Shares Outstanding
 
 
 
 
 

 
 

Basic
14,112

 
14,184

 
14,140

 
14,172

Diluted
14,373

 
14,387

 
14,412

 
14,366



                                                            
16



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

 
Three months ended
Six months ended
 
June 30, 2015
March 31, 2015
June 30, 2014
June 30, 2015
June 30, 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
$
738,552

$
4,362

2.36
%
$
813,682

$
5,345

2.63
%
$
858,174

$
5,018

2.34
%
$
775,909

$
9,707

2.50
%
$
867,161

$
10,064

2.32
%
Tax-exempt
39,692

370

3.73

39,690

370

3.73

30,941

293

3.79

39,691

740

3.73

30,934

586

3.79

Total securities
778,244

4,732

2.43

853,372

5,715

2.68

889,115

5,311

2.39

815,600

10,447

2.56

898,095

10,650

2.37

Total loans
2,048,652

23,171

4.49

2,021,214

22,724

4.51

1,830,846

21,222

4.60

2,035,009

45,895

4.50

1,803,564

41,756

4.62

Total interest-earning assets
2,826,896

$
27,903

3.92
%
2,874,586

$
28,439

3.96
%
2,719,961

$
26,533

3.88
%
2,850,609

$
56,342

3.94
%
2,701,659

$
52,406

3.87
%
Allowance for loan losses
(25,920
)
 
 
(25,406
)
 
 
(24,533
)
 
 
(25,665
)
 
 
(24,154
)
 
 
Other noninterest earning assets
158,235

 
 
155,070

 
 
138,188

 
 
156,662

 
 
137,138

 
 
Total assets
$
2,959,211

 
 
$
3,004,250

 
 
$
2,833,616

 
 
$
2,981,606

 
 
$
2,814,643

 
 
Liabilities and Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  Regular savings
$
543,196

$
372

0.27
%
$
533,365

$
363

0.28
%
$
464,780

$
319

0.28
%
$
538,308

$
736

0.28
%
$
462,564

$
654

0.29
%
  Interest checking and money market
1,019,471

667

0.26

1,030,095

677

0.27

950,215

642

0.27

1,024,753

1,344

0.26

967,239

1,300

0.27

  Time deposits
132,235

365

1.11

128,671

355

1.12

124,209

318

1.03

130,463

720

1.11

125,325

647

1.04

  Public time and other noncore deposits
178,360

156

0.35

176,377

152

0.35

152,421

122

0.32

177,374

307

0.35

151,382

234

0.31

Total interest-bearing deposits
1,873,262

1,560

0.33

1,868,508

1,547

0.34

1,691,625

1,401

0.33

1,870,898

3,107

0.33

1,706,510

2,835

0.34

Short-term borrowings
238,083

195

0.32

315,913

239

0.30

387,611

278

0.28

276,783

434

0.31

372,168

509

0.27

Long-term debt
25,000

83

1.32

21,111

70

1.32

15,800

307

7.77

23,066

153

1.32

15,800

614

7.77

Total interest-bearing liabilities
2,136,345

$
1,838

0.34
%
2,205,532

$
1,856

0.34
%
2,095,036

$
1,986

0.38
%
2,170,747

$
3,694

0.34
%
2,094,478

$
3,958

0.38
%
Demand deposits (noninterest-bearing)
532,252

 
 
509,140

 
 
476,605

 
 
520,760

 

 

461,452

 

 

Other liabilities
20,903

 
 
20,434

 
 
16,325

 
 
20,670

 
 
16,786

 
 
Total liabilities
2,689,500

 
 
2,735,106

 
 
2,587,966

 
 
2,712,177

 
 
2,572,716

 
 
Stockholders' equity
269,711

 
 
269,144

 
 
245,650

 
 
269,429

 
 
241,927

 

 

Total liabilities and stockholders' equity
$
2,959,211

 
 
$
3,004,250

 
 
$
2,833,616

 
 
$
2,981,606

 
 
$
2,814,643

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income and margin on a tax-equivalent basis
 
$
26,065

3.66
%
 
$
26,583

3.70
%
 
$
24,547

3.59
%
 
$
52,648

3.68
%
 
$
48,448

3.58
%
Tax-exempt adjustment
 
496

 
 
522

 
 
552

 
 
1,018

 
 
1,118

 
Net interest income and margin
 
$
25,569

3.59
%
 
$
26,061

3.63
%
 
$
23,995

3.50
%
 
$
51,630

3.61
%
 
$
47,330

3.49
%

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.


                                                            
17



Metro Bancorp, Inc. and Subsidiaries
 
 
 
 
 
Summary of Allowance for Loan Losses and Other Related Data
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
Six months ended
Year ended
 
June 30,
June 30,
December 31,
(dollars in thousands)
2015
2014
2015
2014
2014
 
 
 
 
 
 
Balance at beginning of period
$
25,755

$
23,934

$
24,998

$
23,110

$
23,110

Provisions charged to operating expenses
2,600

1,100

4,100

2,000

6,750

 
28,355

25,034

29,098

25,110

29,860

Recoveries of loans previously charged-off:
 
 
 
 
 
   Commercial and industrial
53

244

107

1,249

1,468

   Commercial tax-exempt
—

—

—

—

—

   Owner occupied real estate
3

43

3

286

325

   Commercial construction and land development
—

111

2

211

546

   Commercial real estate
10

101

17

174

203

   Residential
1

20

2

20

20

   Consumer
15

16

27

39

248

Total recoveries
82

535

158

1,979

2,810

Loans charged-off:
 
 
 
 
 
   Commercial and industrial
(1,646
)
(501
)
(1,925
)
(855
)
(1,754
)
   Commercial tax-exempt
—

—

—

—

—

   Owner occupied real estate
(65
)
(171
)
(118
)
(196
)
(775
)
   Commercial construction and land development
—

(527
)
—

(539
)
(1,293
)
   Commercial real estate
(238
)
—

(695
)
(716
)
(1,105
)
   Residential
(69
)
(19
)
(83
)
(302
)
(1,466
)
   Consumer
(548
)
(80
)
(564
)
(210
)
(1,279
)
Total charged-off
(2,566
)
(1,298
)
(3,385
)
(2,818
)
(7,672
)
Net charge-offs
(2,484
)
(763
)
(3,227
)
(839
)
(4,862
)
Balance at end of period
$
25,871

$
24,271

$
25,871

$
24,271

$
24,998

Net charge-offs (annualized) as a percentage of
   average loans outstanding
0.49
%
0.17
%
0.32
%
0.09
%
0.26
%
Allowance for loan losses as a percentage of
   period-end loans
1.25
%
1.31
%
1.25
%
1.31
%
1.25
%


                                                            
18



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, 2015 and for the preceding four quarters (dollar amounts in thousands).
 
 
 
 
 
 
 
June 30,
March 31,
December 31,
September 30,
June 30,
 
2015
2015
2014
2014
2014
Nonperforming Assets
 
 
 
 
 
Nonaccrual loans:
 
 
 
 
 
   Commercial and industrial
$
11,985

$
12,375

$
11,634

$
7,974

$
4,291

   Commercial tax-exempt
—

—

—

—

—

   Owner occupied real estate
7,720

6,210

7,416

6,954

6,401

   Commercial construction and land development
3,226

3,241

3,228

3,254

9,028

   Commercial real estate
6,384

6,362

5,824

6,407

5,793

   Residential
5,336

4,971

4,987

6,157

6,341

   Consumer
1,177

1,573

1,877

2,421

2,479

       Total nonaccrual loans
35,828

34,732

34,966

33,167

34,333

Loans past due 90 days or more
   and still accruing
—

—

445

8

2,335

   Total nonperforming loans
35,828

34,732

35,411

33,175

36,668

Foreclosed assets
5,981

7,937

7,681

7,162

4,020

Total nonperforming assets
$
41,809

$
42,669

$
43,092

$
40,337

$
40,688

 
 
 
 
 
 
Troubled Debt Restructurings (TDRs)
 
 
 
 
 
Nonaccruing TDRs (included in nonaccrual
  loans above)
$
15,667

$
16,272

$
15,030

$
12,495

$
17,748

Accruing TDRs
10,653

10,627

10,712

10,791

11,309

Total TDRs
$
26,320

$
26,899

$
25,742

$
23,286

$
29,057

 
 
 
 
 
 
Nonperforming loans to total loans
1.73
%
1.73
%
1.77
%
1.73
%
1.98
%
 
 
 
 
 
 
Nonperforming assets to total assets
1.39
%
1.43
%
1.44
%
1.36
%
1.42
%
 
 
 
 
 
 
Nonperforming loan coverage
72
%
74
%
71
%
74
%
66
%
 
 
 
 
 
 
Allowance for loan losses as a percentage
   of total period-end loans
1.25
%
1.29
%
1.25
%
1.28
%
1.31
%
 
 
 
 
 
 
Nonperforming assets / capital plus allowance for
   loan losses
14
%
14
%
15
%
15
%
15
%



                                                            
19

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