Metro Bancorp (METR) in Harrisburg, Pa., reported its most profitable quarter in nearly four years in the three months that ended June 30 as the company saw a modest increase in loans and revenues and continued to reduce its overhead.

The $2.4 billion-asset company said Monday that it earned $2.8 million in the second quarter, up 39% from the same period in 2011. Top-line revenues and loans each climbed 2% year over year, but the results were largely driven by an 8% decline in its net interest expense as the company continued to cut costs across the board.

The expense cuts helped offset a 9% drop in fee income stemming from reduced proceeds from sales of loans and securities. The company sold no Small Business Administration loans during the quarter after recording close to a $1 million gain on sales of SBA loans in last year's second quarter.

Credit quality improved year over year but weakened somewhat since March 31. Nonperforming assets equaled 1.62% of total assets at June 30, down from 2.24% in last year's second quarter but up four basis points from the prior quarter. The company attributed slight increase in problem loans to move two loan relationships to nonaccrual status.

Metro's shares were down 1.6% in early trading Monday.

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