HARRISBURG, Pa. -- (Business Wire)

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

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

Highlights for the Quarter and Year Ended December 31, 2012

• The Company recorded net income of $3.5 million, or $0.24 per common share, for the fourth quarter of 2012 compared to net income of $2.5 million, or $0.18 per common share, for the same period one year ago.
• Net income for the full year 2012 totaled $10.9 million, or $0.77 per common share, up $10.6 million, or $0.75 per common share, over the results for 2011.
• Total revenues for the fourth quarter of 2012 were $29.6 million, up $1.2 million, or 4%, over total revenues of $28.4 million for the same quarter one year ago. Total revenues for 2012 increased by $3.6 million, or 3%, over 2011.
• The Company's net interest margin on a fully-taxable basis for the fourth quarter of 2012 was 3.71%, compared to 3.85% recorded in the third quarter of 2012 and compared to 3.82% for the fourth quarter of 2011. The Company's deposit cost of funds for the fourth quarter was 0.32%, down from 0.35% for the previous quarter and compared to 0.50% for the same period one year ago.
• Noninterest expenses for the fourth quarter 2012 were $22.5 million, down $567,000 compared to the previous quarter and up $755,000, or 3%, over the same quarter last year. Noninterest expenses for 2012 were down $2.9 million, or 3%, from 2011, as the Company was able to significantly reduce expenses in several categories.
• Total deposits increased to $2.23 billion, up $159.7 million, or 8%, over the past twelve months.
• Core deposits (all deposits excluding public fund time deposits) grew $148.0 million, or 7%, over fourth quarter 2011.
• Net loans grew $24.1 million, or 2%, on a linked quarter basis to $1.50 billion and were up $88.5 million, or 6%, over the past twelve months.
• Our allowance for loan losses totaled $25.3 million, or 1.65%, of total loans at December 31, 2012 as compared to $21.6 million, or 1.50%, of total loans at December 31, 2011. During the past twelve months the nonperforming loan coverage ratio has increased from 62% to 77%.
• Nonperforming assets were 1.33% of total assets at December 31, 2012 compared to 1.73% of total assets one year ago.
• Metro's capital levels remain strong with a total risk-based capital ratio of 15.22%, a Tier 1 Leverage ratio of 9.61% and a tangible common equity to tangible assets ratio of 8.90%.
• Stockholders' equity increased by $15.4 million, or 7%, over the past twelve months to $235.4 million. At December 31, 2012, the Company's book value per share was $16.58. The market price of Metro common stock increased 58% throughout 2012 from $8.38 per share to $13.22 per share.

Income Statement

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

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

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

Net Interest Income and Net Interest Margin

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

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

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

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

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

Change in Net Interest Income and Rate/Volume Analysis

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

Noninterest Income

Noninterest income for the fourth quarter of 2012 totaled $7.8 million, up $743,000, or 11%, over $7.1 million recorded in the fourth quarter one year ago.

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

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

Noninterest Expenses

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

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

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

Balance Sheet

Deposits

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

Core Deposits

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

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

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

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

Lending

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

Asset Quality

The Company's asset quality ratios are highlighted below:

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

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

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

Investments

At December 31, 2012, the Company's investment portfolio totaled $944.9 million. Detailed below is information regarding the composition and characteristics of the portfolio at December 31, 2012:

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

Capital

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

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

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

At December 31, 2012, the Company's book value per common share was $16.58.

The market price of Metro common stock increased 58% throughout 2012 from $8.38 per share to $13.22 per share.

Forward-Looking Statements

This document contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to as the Securities Act and Section 21E of the Securities Exchange Act of 1934, which we refer to as the Exchange Act, with respect to the financial condition, liquidity, results of operations, future performance and business of Metro Bancorp, Inc. These forward-looking statements are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that are not historical facts. These forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, anticipations, estimates and intentions that are subject to significant risks and uncertainties and are subject to change based on various factors (some of which are beyond our control). The words "may," "could," "should," "would," "believe," "anticipate," "estimate," "expect," "intend," "plan" and similar expressions are intended to identify forward-looking statements.

While we believe our plans, objectives, goals, expectations, anticipations, estimates and intentions as reflected in these forward-looking statements are reasonable, we can give no assurance that any of them will be achieved. You should understand that various factors, in addition to those discussed elsewhere in this document, could affect our future results and could cause results to differ materially from those expressed in these forward-looking statements, including:

• the effects of and changes in, trade, monetary and fiscal policies, including interest rate policies of the Board of Governors of the Federal Reserve System, including the duration of such policies;
• general economic or business conditions, either nationally, regionally or in the communities in which we do business, may be less favorable than expected, resulting in, among other things, a deterioration in credit quality and loan performance or a reduced demand for credit;
• the effects of the "fiscal cliff" deal and related tax increases and their effects on economic and business conditions in general and our customers in particular;
• the effects of the failure of the federal government to reach a deal to raise the debt ceiling and the potential negative results on economic and business conditions;
• the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and other changes in financial services’ laws and regulations (including laws concerning taxes, banking, securities and insurance);
• continued effects of the aftermath of recessionary conditions and the impacts on the economy in general and our customers in particular, including adverse impacts on loan utilization rates as well as delinquencies, defaults and customers' ability to meet credit obligations;
• our ability to manage current levels of impaired assets;
• the impact of changes in Regulation Z and other consumer credit protection laws and regulations;
• changes resulting from legislative and regulatory actions with respect to the current economic and financial industry environment;
• changes in the Federal Deposit Insurance Corporation (FDIC) deposit fund and the associated premiums that banks pay to the fund;
• interest rate, market and monetary fluctuations;
• the results of the regulatory examination and supervision process;
• unanticipated regulatory or legal proceedings and liabilities and other costs;
• compliance with laws and regulatory requirements of federal, state and local agencies;
• our ability to continue to grow our business internally or through acquisitions and successful integration of new or acquired entities while controlling costs;
• continued levels of loan volume origination;
• the adequacy of the allowance for loan losses;
• deposit flows;
• the willingness of customers to substitute competitors’ products and services for our products and services and vice versa, based on price, quality, relationship or otherwise;
• changes in consumer spending and saving habits relative to the financial services we provide;
• the ability to hedge certain risks economically;
• the loss of certain key officers;
• changes in accounting principles, policies and guidelines;
• the timely development of competitive new products and services by us and the acceptance of such products and services by customers;
• rapidly changing technology;
• continued relationships with major customers;
• effect of terrorist attacks and threats of actual war;
• other economic, competitive, governmental, regulatory and technological factors affecting the Company’s operations, pricing, products and services;
• interruption or breach in security of our information systems resulting in failures or disruptions in customer account management, general ledger processing and loan or deposit systems; and
• our success at managing the risks involved in the foregoing.

Because such forward-looking statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such statements. The foregoing list of important factors is not exclusive and you are cautioned not to place undue reliance on these factors or any of our forward-looking statements, which speak only as of the date of this document or, in the case of documents incorporated by reference, the dates of those documents. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of us except as required by applicable law.