Market Overview

Metro Bancorp Reports Fourth Quarter and Full Year 2015 Financial Results

Share:

HARRISBURG, Pa., Jan. 26, 2016 (GLOBE NEWSWIRE) -- Metro Bancorp, Inc. (Metro or the Company) (NASDAQ: 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  12/31/1512/31/14Change
Total assets$2,905.4  $2,997.6  (3)%     
           
Total loans (net)2,006.6  1,973.5  2%     
           
Total deposits2,361.9  2,380.7  (1)%     
           
           
Total revenues$33.0  $33.1  %  $134.0 $127.5 5%
           
Net income5.5  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.      

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.

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 losses2,950  2,650 11  9,300  6,750 38 
Total noninterest expenses21,792  22,369 (3) 94,199  90,548 4 
Net income5,501  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 share0.07     0.28    
Efficiency ratio66.1% 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.

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.

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,
       % Increase          
(dollars in thousands)  2015  2014 (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 loans566 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 equipment2,516 2,726 (8) 11,896 12,370 (4)
Advertising and marketing216 449 (52) 1,410 1,737 (19)
Data processing3,801 3,745 1  14,689 13,538 9 
Regulatory assessments and related costs545 508 7  2,203 2,205  
Loan expense415 237 75  2,496 1,406 78 
Merger-related expenses414    2,105   
Professional services(495)714 (169) 1,264 1,687 (25)
Other expenses3,138 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.

Balance Sheet

 As of December 31, 
   %
(dollars in thousands)20152014Change
Total assets$2,905,373 $2,997,572 (3)%
Total loans (net)2,006,624 1,973,536 2 
Total deposits2,361,902 2,380,672 (1)
Total core deposits2,215,134 2,208,911  
Total stockholders' equity282,972 265,523 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-exempt59,145 3  71,151 4  (12,006)(17) 
Owner occupied real estate307,702 15  332,070 17  (24,368)(7) 
Commercial construction
  and land development
143,086 7  138,064 7  5,022 4  
Commercial real estate635,668 31  594,276 29  41,392 7  
Residential110,262 5  110,951 6  (689)(1) 
Consumer212,888 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 assets1.74% 1.42% 1.44% 
Net loan charge-offs (annualized)/average total loans1.13% 0.26% 0.45% 
Allowance for loan losses/total loans1.17% 1.27% 1.25% 
Nonperforming loan coverage55% 74% 71% 
Nonperforming assets/capital and allowance for loan losses17% 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.

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 market1,020,762  1,052,915  (3) 0.26 
Savings492,446  546,045  (10) 0.28 
  Subtotal2,078,017  2,077,684    0.20 
Time137,117  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)2015Total 2014Total Change 
Consumer$1,112,587 50% $1,016,724 46% 9% 
Commercial761,625 34  707,738 32  8  
Government340,922 16  484,449 22  (30) 
Total$2,215,134 100% $2,208,911 100% % 

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 descriptionAvailable
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 securities52,763  11,375  64,138  
  Agency collateralized mortgage obligations266,171  182,031  448,202  
Municipal securities30,229  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.

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

 12/31/201512/31/2014Regulatory
guidelines "well
capitalized"
Leverage ratio9.73%9.00%5.00%
CET1 capital12.81 n/a 6.50 
Tier 1 capital12.81 12.28 8.00 
Total capital13.91 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.

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;
  • 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 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.

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.

 Three months ended Twelve months ended
 December 31, 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.

                        
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 losses2,950 2,250  31 2,650 11  9,300 6,750 38 
  Noninterest income7,895 7,475  6 7,519 5  31,369 29,721 6 
  Total revenues32,974 33,400  (1)33,137   134,003 127,524 5 
  Noninterest expenses21,792 23,576  (8)22,369 (3) 94,199 90,548 4 
  Net income5,501 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)%
  Diluted0.38 0.33  15 0.38   1.40 1.46 (4)
  Cash dividends per common share0.07 0.07      0.28   
  Book value19.78 19.57  1 18.60 6     
  Weighted-average common shares
  outstanding (in thousands):
          
  Basic14,226 14,067   14,217   14,144 14,191  
  Diluted14,509 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 losses23,808 26,742  (11)24,998 (5)    
  Investment securities724,662 726,988   853,032 (15)    
  Total deposits2,361,902 2,445,487  (3)2,380,672 (1)    
  Core deposits2,215,134 2,279,211  (3)2,208,911      
  Stockholders' equity282,972 277,598  2 265,523 7     
Capital:          
  Total stockholders' equity to assets9.74%9.36%  8.86%     
  Leverage ratio9.73 9.34   9.00      
  Risk-based capital ratios:          
   CET112.81 12.01   n/a     
  Tier 112.81 12.06   12.28      
  Total Capital13.91 13.25   13.42      
Performance Ratios:          
  Deposit cost of funds0.27%0.27%  0.27%  0.27%0.27% 
  Cost of funds0.29 0.29   0.27   0.28 0.30  
  Net interest margin3.50 3.58   3.53   3.57 3.50  
  Return on average assets0.74 0.64   0.74   0.68 0.73  
  Return on average stockholders' equity7.79 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      


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 value382,414  528,038 
Securities, held to maturity at cost (fair value 2015: $338,956;  2014: $319,923)342,248  324,994 
Loans, held for sale27  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 stock13,108  15,223 
Premises and equipment, net71,763  75,182 
Other assets32,128  32,771 
Total assets$2,905,373  $2,997,572 
    
Liabilities and Stockholders' Equity   
Deposits:   
Noninterest-bearing$564,809  $478,724 
Interest-bearing1,797,093  1,901,948 
  Total deposits2,361,902  2,380,672 
Short-term borrowings214,355  333,475 
Long-term debt25,000   
Other liabilities21,144  17,902 
Total liabilities2,622,401  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 
Surplus169,581  160,588 
Retained earnings110,655  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' equity282,972  265,523 
Total liabilities and stockholders' equity$2,905,373  $2,997,572 


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-exempt658  762  2,694  3,281 
Securities:       
Taxable4,107  5,122  18,052  20,373 
Tax-exempt241  240  962  850 
Total interest income27,010  27,493  110,206  105,782 
Interest Expense       
Deposits1,625  1,579  6,335  5,904 
Short-term borrowings221  296  914  1,136 
Long-term debt85    323  939 
Total interest expense1,931  1,875  7,572  7,979 
Net interest income25,079  25,618  102,634  97,803 
Provision for loan losses2,950  2,650  9,300  6,750 
 Net interest income after provision for loan losses22,129  22,968  93,334  91,053 
Noninterest Income       
Card, service charges and other noninterest income7,329  7,132  29,331  28,769 
Net gains on sales of loans566  506  1,610  1,034 
Net gains (losses) on sales/call of securities  (119) 428  (82)
Total noninterest income7,895  7,519  31,369  29,721 
Noninterest Expenses       
Salaries and employee benefits11,242  10,695  44,686  44,381 
Occupancy and equipment2,516  2,726  11,896  12,370 
Advertising and marketing216  449  1,410  1,737 
Data processing3,801  3,745  14,689  13,538 
Regulatory assessments and related costs545  508  2,203  2,205 
Loan expense415  237  2,496  1,406 
Merger-related expenses414    2,105   
Professional services(495) 714  1,264  1,687 
Other3,138  3,295  13,450  13,224 
Total noninterest expenses21,792  22,369  94,199  90,548 
Income before taxes8,232  8,118  30,504  30,226 
Provision for federal income taxes2,731  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 
Diluted0.38  0.38  1.40  1.46 
Cash Dividends per Common Share0.07    0.28   
Average Common and Common Equivalent Shares Outstanding       
Basic14,226  14,217  14,144  14,191 
Diluted14,509  14,478  14,409  14,414 


Metro Bancorp, Inc. and Subsidiaries Average Balances and Net Interest Income
(Unaudited)
           
 Three months endedTwelve months ended
 December 31, 2015September 30, 2015December 31, 2014December 31, 2015December 31, 2014
 Average Avg.Average Avg.Average Avg.Average Avg.Average Avg.
(dollars in thousands)BalanceInterestRateBalanceInterestRateBalanceInterestRateBalanceInterestRateBalanceInterestRate
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-exempt39,695 370 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 securities739,997 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 loans2,081,892 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 assets2,821,889 $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 assets151,219   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 market1,042,241 694 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 deposits136,648 407 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 deposits154,286 160 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 deposits1,855,993 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 borrowings227,170 221 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 debt25,000 85 1.32 25,000 85 1.32    24,041 323 1.32 11,601 939 8.09 
Total interest-bearing liabilities2,108,163 $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 liabilities21,124   19,678   17,317   20,534   17,038   
Total liabilities2,666,022   2,710,139   2,721,244   2,700,029   2,636,252   
Stockholders' equity280,127   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.


Metro Bancorp, Inc. and Subsidiaries 
Summary of Allowance for Loan Losses and Other Related Data 
(Unaudited) 
     
 Three months endedTwelve 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 expenses2,950 2,650 9,300 6,750 
 29,692 27,190 34,298 29,860 
Recoveries of loans previously charged-off:    
  Commercial and industrial32 82 192 1,468 
  Commercial tax-exempt    
  Owner occupied real estate2 15 5 325 
  Commercial construction and land development 301 2 546 
  Commercial real estate54 27 83 203 
  Residential2  21 20 
  Consumer116 151 160 248 
Total recoveries206 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%


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,
 20152015201520152014
Nonperforming Assets     
Nonaccrual loans:     
  Commercial and industrial$8,506 $10,850 $11,985 $12,375 $11,634 
  Commercial tax-exempt     
  Owner occupied real estate6,863 9,290 7,720 6,210 7,416 
  Commercial construction and land development10,368 3,017 3,226 3,241 3,228 
  Commercial real estate9,388 6,722 6,384 6,362 5,824 
  Residential5,331 5,133 5,336 4,971 4,987 
  Consumer1,400 1,200 1,177 1,573 1,877 
    Total nonaccrual loans41,856 36,212 35,828 34,732 34,966 
Loans past due 90 days or more and still accruing1,602    445 
  Total nonperforming loans43,458 36,212 35,828 34,732 35,411 
Foreclosed assets7,188 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 TDRs10,482 10,608 10,653 10,627 10,712 
Total TDRs$24,344 $25,546 $26,320 $26,899 $25,742 
      
Nonperforming loans to total loans2.14%1.73%1.73%1.73%1.77%
                          
Nonperforming assets to total assets1.74%1.42%1.39%1.43%1.44%
                          
Nonperforming loan coverage55%74%72%74%71%
                          
Allowance for loan losses as a percentage of total period-end loans1.17%1.27%1.25%1.29%1.25%
                          
Nonperforming assets / capital plus allowance for loan losses17%14%14%14%15%

 

Primary Logo

View Comments and Join the Discussion!