HOUSTON, Oct. 26, 2006 (PRIMEZONE) -- MetroCorp Bancshares, Inc. (Nasdaq:MCBI), a Texas corporation which provides community banking services through its subsidiaries, MetroBank, N.A., serving Houston and Dallas, Texas, and Metro United Bank ("Metro United"), serving San Diego and Los Angeles, California, today announced net income of $3.5 million for the third quarter of 2006, up approximately $710,000 or 25.0% compared with the same quarter in 2005. Diluted earnings per share for the third quarter 2006 were $0.32 compared with $0.26 for the same quarter in 2005. On September 1, 2006, MetroCorp completed a three-for-two stock split effected in the form of a 50% stock dividend. All prior period share and per share data (other than share data on the balance sheet) have been adjusted to reflect this stock split.
Third Quarter Highlights
-- Record net income of $3.5 million, up 25.0% compared with the
same quarter of 2005
-- Diluted earnings per share of $0.32, an increase of 22.9%
compared with the same quarter of 2005
-- Total loans increased to $840.3 million
-- Total deposits increased to $1.04 billion
-- Return on average equity (ROAE) of 14.05%
-- Return on average assets (ROAA) of 1.17%
-- Irvine, California branch acquired and commenced operations
-- Loan production office in San Mateo, California opened and
expected to become a full-service branch in the fourth quarter of
2006.
-- A three-for-two stock split in the form of a 50% stock dividend
was paid on September 1, 2006
George M. Lee, President and CEO of MetroCorp Bancshares, Inc., stated, "The results indicate how our team has managed in the midst of a challenging interest rate environment and intense competition for loans and deposits during the third quarter. Our average total loans increased from $803 million for the second quarter to $834 million for the third quarter and average deposits increased from $1.01 billion to $1.03 billion while our net interest margin decreased slightly by two basis points from 4.79% to 4.77% for the same period. We are also pleased with the progress we are making in expanding our market presence, especially in the state of California. During the third quarter of 2006, we doubled our number of locations from two to four, completed the integration of the Irvine branch that was acquired from Omni Bank, N.A. and opened a loan production office in San Mateo which we expect to become a full service branch in the fourth quarter of 2006. We have also entered into a lease for a location in the City of Industry, California which will have the capacity to serve as another branch in the future. In addition to California, we have completed the staffing and leasing of office space for our representative office in Xiamen, China, and we expect to commence operations during the fourth quarter of 2006. Technology alliances were also formed with companies that can provide us with the state-of-the-art on-line products to support our growth and set us apart from most of our competitors in terms of new products and customer service. We also expect our asset quality to continue to improve despite the increase in nonperforming assets that resulted primarily from a bankruptcy filed by a customer who was on our watch list."
Interest income and expense. Interest income for the three months ended September 30, 2006 was $22.6 million, up approximately $8.2 million or 57.2% compared with $14.4 million for the same period in 2005. Interest income for the nine months ended September 30, 2006 was $63.3 million, up approximately $22.9 million or 56.7% compared with $40.4 million for the same period in 2005. The increase in interest income for both the three and nine months ended September 30, 2006 was due to increases in both average earning assets and average yield.
Average earning assets increased due primarily to the Metro United acquisition in October 2005 and organic growth in the loan portfolio of approximately 12.0% or $90.2 million. The Irvine branch acquisition had no impact on the increase because loans were excluded from the purchase. Average total loans increased 38.3% in the third quarter of 2006, to $833.9 million compared with $603.2 million for the third quarter of 2005. The yield on average earning assets for the third quarter of 2006 increased to 7.91% compared with 6.47% for the third quarter of 2005 primarily due to the Federal Reserve's six interest rate increases over the last 12 months. The majority of the Company's loan portfolio is comprised of variable and adjustable rate loans that benefit the Company during periods of increases in the prime rate.
Interest expense for the three months ended September 30, 2006 was $9.0 million, up approximately $4.8 million or 112.5% compared with $4.2 million for the same period in 2005. Interest expense for the nine months ended September 30, 2006 was $23.8 million, up approximately $12.6 million or 113.4% compared with $11.1 million for the same period in 2005. Interest expense increased for both the three and nine months ended September 30, 2006 primarily due to interest-bearing deposits acquired with Metro United, organic growth in interest-bearing deposits, and the issuance of $36.1 million junior subordinated debentures in October 2005 in connection with the acquisition of Metro United. Average interest-bearing deposits were $833.8 million for the third quarter of 2006 compared with $614.3 million for the third quarter of 2005, an increase of 35.7%. The cost of interest-bearing liabilities for the third quarter of 2006 was 3.97% compared with 2.59% for the third quarter of 2005. The increase in cost primarily reflected the impact of the Federal Reserve's interest rate increases and the increase of interest-bearing liabilities.
The net interest margin for the three months ended September 30, 2006 was 4.77%, up from 4.57% for the same period in 2005. Net interest income before the provision for loan losses for the three months ended September 30, 2006 was $13.6 million, up approximately $3.5 million or 34.3% compared with $10.1 million for the same period in 2005.
The net interest margin for the nine months ended September 30, 2006 was 4.80%, up from 4.49% for the same period in 2005. Net interest income before the provision for loan losses for the nine months ended September 30, 2006 was $39.6 million, up approximately $10.3 million or 35.1% compared with $29.3 million for the same period in 2005.
The increase in net interest margin and net interest income for both the three and nine months ended September 30, 2006 was primarily the result of an increase in the yield on average earning assets that was the result of a higher yield on average loans. The yield on loans increased to 9.09% for the three months ended September 30, 2006 compared with 7.60% for the same period in 2005. For the three months ended September 30, 2006, the increase in the yield on average earning assets of 144 basis points was partially offset by an increase in the cost of average earning assets of 124 basis points. For the nine months ended September 30, 2006, the yield on loans increased to 8.88% compared with 7.21% for the same period in 2005. For the nine months ended September 30, 2006, the increase in the yield on average earning assets of 149 basis points was partially offset by an increase in the cost of average earning assets of 118 basis points.
Noninterest income and expense. Noninterest income for the three months ended September 30, 2006 was $1.9 million, down approximately $184,000 or 8.8% compared with the same period in 2005. Noninterest income for the nine months ended September 30, 2006 was $5.8 million, down approximately $367,000 or 6.0% compared with the same period in 2005. Noninterest income decreased for both the three and nine months ended September 30, 2006 primarily due to reduced service fees, which were partially offset by increases in other loan-related fees and letters of credit commissions and fees. Service fees decreased as a result of fewer NSF service charges, an increase in the earnings credit on commercial demand deposit accounts, and a reduction in check cashing fees.
Noninterest expense for the three months ended September 30, 2006 was $9.8 million, up approximately $2.2 million or 28.5% compared with $7.6 million for the same period in 2005. Noninterest expense for the nine months ended September 30, 2006 was $29.0 million, up approximately $6.4 million or 28.3% compared with $22.6 million for the same period in 2005. The increase in noninterest expense for both the three and nine months ended September 30, 2006 was primarily attributable to new staff hired at Metro United during the third quarter, an increase in lease and equipment expenses incurred with new branches and office space for Metro United during the third quarter, an increase in travel expenses related to the expansion in both California and China, intangible asset amortization, and the addition of noninterest expenses of Metro United.
Salaries and benefits expense for the three months ended September 30, 2006 was $5.4 million, up $1.2 million compared with $4.2 million for the same period in 2005. The increase was primarily due to the staff added in the Metro United acquisition, new staff hired during the third quarter of 2006 at Metro United, and share-based compensation expense incurred in connection with Statement of Financial Accounting Standards No. 123R "Share-Based Payments," ("SFAS No. 123R"). Salaries and benefits expense for the nine months ended September 30, 2006 was $16.1 million, up $3.9 million compared with $12.2 million for the same period in 2005. The increase was primarily due to the staff added in Metro United from both the acquisition and third quarter additions, severance expenses with respect to one executive officer, an increase in bonuses, and share-based compensation expense.
Occupancy and equipment expense for the three months ended September 30, 2006 was $1.9 million up $483,000 or 33.9% compared with $1.4 million for the same period in 2005. Occupancy and equipment expense for the nine months ended September 30, 2006 was $5.1 million up $949,000 or 22.8% compared with $4.2 million for the same period in 2005. The increase for both periods was due to lease and equipment expenses incurred with the Metro United acquisition, the opening of a branch in Plano, Texas, and the opening of new branches and offices in California.
Other noninterest expense for the three months ended September 30, 2006 was $2.4 million, up $348,000 compared with $2.1 million for the same period in 2005 primarily due to an increase in legal fees, travel expenses related to the activities in California and the China representative office, and intangible asset amortization. Other noninterest expense for the nine months ended September 30, 2006 was $7.6 million, up $1.7 million compared with $5.9 million for the same period in 2005 primarily due to the impact of the Metro United acquisition, an increase in legal fees, travel expenses, and intangible asset amortization.
Provision for loan losses. The provision for loan losses for the three months ended September 30, 2006 was $114,000, a $354,000 decrease compared with $468,000 for the same period in 2005. The provision for loan losses for the nine months ended September 30, 2006 was $560,000, an $836,000 decrease compared with $1.4 million for the same period in 2005. The provision for loan losses decreased for both the three and nine months ended September 30, 2006 primarily due to improvement in asset quality as indicated by the increase in the ratio of allowance for loan losses to net nonperforming loans from 61.61% at September 30, 2005 to 157.02% at September 30, 2006. The allowance for loan losses as a percent of total loans at September 30, 2006 and 2005 was 1.41% and 1.76%, respectively. At December 31, 2005, the allowance for loan losses as a percent of total loans was 1.71%.
Net charge-offs for the three months ended September 30, 2006 were $1.2 million compared with net charge-offs of $34,000 for the same period in 2005, and resulted from the partial write-down of approximately $605,000 on a wholesale business loan and the partial write-down of approximately $525,000 on loans related to an office building. The partial write-downs had been specifically reserved in a prior period to adjust the collateral to fair value. Net charge-offs for the nine months ended September 30, 2006 were $1.9 million compared with $1.1 million for the same period in 2005.
Asset Quality. Total nonperforming assets decreased $3.5 million from $19.5 million at December 31, 2005 to $16.0 million at September 30, 2006. The decrease was primarily due to the partial write-down of loans to a wholesale business and an office building, the payoff of a hospitality loan, and payments received on a loan to a shrimp processing business and its related charge-off.
At September 30, 2006, nonperforming assets consisted of $9.8 million in nonaccrual loans, $128,000 in accruing loans that were 90 days or more past due, and $6.0 million in other real estate. Net nonperforming assets, which are total nonperforming assets net of the portion of loans guaranteed by the Small Business Administration, the Export Import Bank of the United States, or the Overseas Chinese Community Guaranty Fund, at September 30, 2006, were $13.6 million compared with $17.3 million at December 31, 2005. Approximately $6.5 million of such nonaccrual loans are collateralized by real estate, which represented 66.5% of total nonaccrual loans at September 30, 2006. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program.
Management conference call. On Friday, October 27, 2006, the Company will hold a conference call at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss the third quarter 2006 results. A brief management presentation will be followed by a question and answer period. To participate by phone, U.S. callers may dial 1.877.407.8291 (International callers may dial 1.201.689.8345) and ask for the MetroCorp conference. The call will be webcast by Thomson/CCBN and can be accessed at MetroCorp's web site at www.metrobank-na.com. An audio archive of the call will be available approximately one hour after the call and will be accessible at www.metrobank-na.com in the Investor Relations section.
MetroCorp Bancshares, Inc., provides a full range of commercial and consumer banking services through its wholly owned subsidiaries, MetroBank, N.A. and Metro United Bank. The Company has 13 full-service banking locations in the greater Houston, and Dallas, Texas metropolitan areas, and three full service banking locations in the greater San Diego and Los Angeles, California metropolitan areas and one loan production office in San Mateo, California. As of September 30, 2006, the Company had consolidated assets of $1.2 billion. For more information, visit the Company's web site at www.metrobank-na.com.
The MetroCorp Bancshares Inc. logo is available at http://www.primezone.com/newsroom/prs/?pkgid=2894
The statements contained in this release that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe the Company's future plans, projections, strategies and expectations, are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the Company's control. Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) general business and economic conditions in the markets the Company serves may be less favorable than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; (2) changes in the interest rate environment which could reduce the Company's net interest margin; (3) changes in management's assumptions regarding the adequacy of the allowance for loan losses; (4) legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry; (5) the effects of competition from other financial institutions operating in the Company's market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; (6) changes in accounting principles, policies or guidelines; and (7) the Company's ability to adapt successfully to technological changes to meet customers' needs and developments in the market place. All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements. Please also read the additional risks and factors described from time to time in the Company's reports and other documents filed with the Securities and Exchange Commission.
MetroCorp Bancshares, Inc.
(In thousands, except per share amounts)
(Unaudited)
For the three months For the nine months
ended September 30, ended September 30,
--------------------- -----------------------
2006 2005 2006 2005
---------- -------- ---------- --------
Average Balance
Sheet Data
------------------
Total assets $1,206,300 $919,616 $1,172,986 $908,291
Securities 207,950 252,333 219,141 257,794
Total loans 833,943 603,225 803,553 598,577
Allowance for
loan losses (12,603) (10,631) (13,437) (10,977)
Net loans 821,340 592,594 790,116 587,600
Total interest-
earning assets 1,131,990 880,217 1,101,023 871,711
Total deposits 1,024,993 788,259 997,874 763,639
FHLB and other
borrowings 61,752 31,026 62,104 48,213
Total shareholders'
equity 100,133 90,153 97,202 88,390
Income Statement
Data
------------------
Interest income:
Loans $ 19,103 $ 11,552 $ 53,357 $ 32,279
Securities:
Taxable 2,113 2,382 6,573 7,163
Tax-exempt 179 211 572 641
Federal funds
sold and other
investments 1,171 207 2,830 343
---------- -------- ---------- --------
Total interest
income 22,566 14,352 63,332 40,426
Interest expense:
Time deposits 6,665 3,214 17,493 8,274
Demand and savings
deposits 1,442 636 3,750 1,449
Other borrowings 850 365 2,534 1,420
---------- -------- ---------- --------
Total interest
expense 8,957 4,215 23,777 11,143
Net interest income 13,609 10,137 39,555 29,283
Provision for loan
losses 114 468 560 1,396
---------- -------- ---------- --------
Net interest income
after provision
for loan losses 13,495 9,669 38,995 27,887
Noninterest income:
Service fees 1,397 1,711 4,303 4,972
Other loan-related
fees 212 168 647 485
Letters of credit
commissions and
fees 219 145 597 420
Other noninterest
income 75 63 237 274
---------- -------- ---------- --------
Total noninterest
income 1,903 2,087 5,784 6,151
Noninterest expense:
Salaries and
employee benefits 5,455 4,225 16,077 12,229
Occupancy and
equipment 1,907 1,424 5,109 4,160
Foreclosed assets,
net 52 (67) 213 357
Other noninterest
expense 2,406 2,066 7,586 5,851
---------- -------- ---------- --------
Total noninterest
expense 9,820 7,648 28,985 22,597
Income before
provision for
income taxes 5,578 4,108 15,794 11,441
Provision for
income taxes 2,032 1,272 5,625 3,575
---------- -------- ---------- --------
Net income $ 3,546 $ 2,836 $ 10,169 $ 7,866
========== ======== ========== ========
Per Share Data
--------------
Earnings per share
- basic $ 0.32 $ 0.26(a) $ 0.93(a) $ 0.73(a)
Earnings per share
- diluted 0.32 0.26(a) 0.92(a) 0.72(a)
Weighted average
shares outstanding:
Basic 10,924 10,814(a) 10,895(a) 10,805(a)
Diluted 11,153 10,968(a) 11,097(a) 10,938(a)
Dividends per
common share $ 0.04 $ 0.04(a) $ 0.12(a) $ 0.12(a)
Performance Ratio
Data
-----------------
Return on average
assets 1.17% 1.22% 1.16% 1.16%
Return on average
shareholders'
equity 14.05% 12.48% 13.99% 11.90%
Net interest margin 4.77% 4.57% 4.80% 4.49%
Efficiency ratio 63.36% 62.57% 63.95% 63.77%
Equity to assets
(Average) 8.30% 9.80% 8.29% 9.73%
(a) The share and per share information is computed after giving
the retroactive effect of a 3-for-2 stock split in the form of a
50% stock dividend paid on September 1, 2006.
MetroCorp Bancshares, Inc.
(In thousands, except share amounts)
(Unaudited)
September 30, December 31,
2006 2005
Consolidated Balance Sheets ----------- -----------
---------------------------
Assets
Cash and due from banks $ 24,870 $ 28,213
Federal funds sold and
other investments 122,507 53,599
----------- -----------
Total cash and cash equivalents 147,377 81,812
Securities available-for-sale,
at fair value 194,037 236,100
Loans, net of allowance for loan
losses of $11,852 and
$13,169 respectively 828,420 758,304
Accrued interest receivable 5,000 4,835
Premises and equipment, net 7,283 6,196
Goodwill 21,827 21,607
Core deposit intangibles 1,238 1,428
Customers' liability on acceptances 5,894 3,148
Foreclosed assets, net 6,038 3,866
Other assets 8,987 10,908
----------- -----------
Total assets $ 1,226,101 $ 1,128,204
=========== ===========
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 190,228 $ 195,422
Interest-bearing 854,003 766,328
----------- -----------
Total deposits 1,044,231 961,750
Junior subordinated debentures 36,083 36,083
Other borrowings 26,032 26,054
Accrued interest payable 1,405 1,126
Acceptances outstanding 5,894 3,148
Other liabilities 10,370 7,815
----------- -----------
Total liabilities 1,124,015 1,035,976
Commitments and contingencies -- --
Shareholders' equity:
Common stock, $1.00 par value,
50,000,000 shares authorized;
10,994,965 shares and
7,329,977 shares issued and
10,927,155 shares and
7,232,239 shares outstanding at
September 30, 2006 and December
31, 2005 respectively 10,995 7,330
Additional paid-in-capital 25,759 28,576
Retained earnings 68,885 60,023
Accumulated other comprehensive loss (3,027) (2,783)
Treasury stock, at cost (526) (918)
----------- -----------
Total shareholders' equity 102,086 92,228
----------- -----------
Total liabilities and
shareholders' equity $ 1,226,101 $ 1,128,204
=========== ===========
Nonperforming Assets and
Asset Quality Ratios
------------------------
Nonaccrual loans $ 9,820 $ 15,606
Accruing loans 90 days or more past due 128 32
Other real estate ("ORE") 6,038 3,866
----------- -----------
Total nonperforming assets 15,986 19,504
Less nonperforming loans guaranteed
by the SBA, Ex-Im Bank, or
the OCCGF (2,400) (2,210)
----------- -----------
Net nonperforming assets $ 13,586 $ 17,294
=========== ===========
Net nonperforming assets
to total assets 1.11% 1.53%
Net nonperforming assets
to total loans and ORE/OAR 1.61% 2.23%
Allowance for loan losses
to total loans 1.41% 1.71%
Allowance for loan losses
to net nonperforming loans 157.02% 98.07%
Net charge-offs to total loans 0.22% 0.20%
Net charge-offs $ 1,877 $ 1,575
Total loans to total deposits 80.47% 80.22%
Total loans $ 840,272 $ 771,473
Allowance for loan losses $ 11,852 $ 13,169