Metro must implement measures to ensure full compliance with the U.S. Bank Secrecy Act and the U.S. Treasury’s Office of Foreign Assets Control, according to a document the bank filed late Tuesday with the U.S. Securities and Exchange Commission. The bank also must reduce the risky assets in its portfolio, the filing said.
The Federal Deposit Insurance Corp., Metro’s federal regulator, detailed the allegations in an examination report issued last summer, the filing said. Such reports are not made public.
Metro said it consented April 29 to the orders issued by the FDIC and the Pennsylvania Department of Banking. Deadlines for compliance on various provisions range from 30 days to 210 days. Metro neither admitted nor denied any wrongdoing.
Metro will not comment further on the matter, said Gary Nalbandian, Metro’s president, chairman and CEO, citing disclosure guidelines.
The FDIC will not release the order publicly until the end of the month, spokeswoman LaJuan Williams-Young said.
The state Department of Banking does not make its consent orders public, but Metro’s is “essentially parallel” to the FDIC order, spokesman Dan Egan said.
In a note to investors, analyst Joe Fenech, a managing director of Sandler O’Neill in New York City, said the order “was not altogether unexpected,” and expressed relief that regulators’ concerns regarding credit quality seemed comparatively minor.
Fenech speculated the alleged violations were legacies of Metro’s previous incarnation as Commerce Bank of Harrisburg, when it was operating under a consent order with its then-regulator, the Office of the Comptroller of the Currency. Metro switched its charter in late 2008, coming under the FDIC’s purview and nullifying the order.
Metro is partly owned by entrepreneur and Commerce Bank of New Jersey founder Vernon Hill, who came under OCC investigation in the mid-2000s. No charges were filed, but the New Jersey bank signed a consent order in 2007 and Hill stepped down as CEO.
Regulators’ concerns about Hill may have contributed to their reluctance to approve a merger proposed in 2008 between Metro and Republic First Bancorp of Philadelphia, where Hill is the largest shareholder, Fenech told the Business Journal when the merger was called off in March.
Also Tuesday, Metro’s parent company, Metro Bancorp, released its first-quarter results. Metro reported net income of $6,000, or zero cents per diluted share, for the period, compared with $837,000 or 13 cents per share in the same period in 2009.
In 2009, Metro lost $1.9 million, or 24 cents per diluted share.
Despite the consent order, Metro has very strong capitalization, modest credit quality issues and an attractive stock price, Fenech said, rating the stock a “buy.”
Metro Bancorp shares are traded on the Nasdaq under the ticker symbol METR. The stock dropped from $13.87 to $13.21 this morning, but had rebounded to $13.50 shortly before noon, according to Yahoo Finance.
This item was modified from its previous version to add comment from Metro Bank, the state Department of Banking, the FDIC and a financial analyst.