HOUSTON, Oct. 30, 2007 (PRIME NEWSWIRE) -- MetroCorp Bancshares, Inc. (Nasdaq:MCBI), a Texas corporation, which provides community banking services through its subsidiaries, MetroBank, N.A., serving Texas, and Metro United Bank ("Metro United"), serving California, today announced net income of $3.2 million for the third quarter of 2007, down approximately 9.5% compared with $3.5 million for the same quarter in 2006. Diluted earnings per share for the third quarter of 2007 were $0.29 compared with $0.32 for the third quarter of 2006. The decrease in earnings is primarily attributed to increased personnel and occupancy costs related to the expansion in California, as well as the increase in the provision for loan losses due to loan growth.
Third Quarter Highlights
* Total loans increased to a record high of $1.13 billion, a 4.9% increase for the third quarter of 2007 compared with the second quarter of 2007 resulting in a cumulative nine month annualized growth rate of 37.3% compared with year end 2006. * Total deposits of $1.21 billion were consistent with the second quarter of 2007. * Net interest income increased to a record high of $14.7 million for the third quarter of 2007. * Net interest margin remained stable at 4.48% compared with the second quarter of 2007. * The Company closed a branch in Houston during September 2007 and expects to open a new branch in Dallas during first quarter of 2008. * The Company announced a stock repurchase plan in third quarter to purchase up to 500,000 shares of its stock. * Asset quality remained stable with net nonperforming assets to total assets of 0.41% as of September 30, 2007 compared with 0.40% as of June 30, 2007, after giving effect to the settlement of a loan on October 5, 2007.
George M. Lee, President and CEO of MetroCorp Bancshares, Inc. stated, "The results of the Company's third quarter performance demonstrated how the management team has been able to execute and manage a well-balanced business model by generating strong asset growth and maintaining solid credit quality, while making some improvement to the efficiency ratio. Total loan growth of $53.3 million or 4.9% in the third quarter of 2007 compared with the second quarter of 2007, brought our total loan volume to a record high. Loans grew by $247.0 million or 27.9% during the first three quarters of 2007. Because of our successful deposit campaign during the second quarter of 2007, which resulted in $113.9 million for new deposits, we managed our deposit growth during the third quarter, and as a result total deposits increased only 0.41% or $4.9 million. Total deposit growth for the first three quarters of 2007 was $127.9 million or 11.8%. Management is especially encouraged to see continued improvement in our revenue in the third quarter, compared with the second quarter of 2007, during which net interest income increased 3.1% and noninterest income increased 10.0%. Our noninterest expense was essentially flat in the third quarter of 2007, with a modest decrease of 1.4%. As a result of these factors, our efficiency ratio of 63.65% for the third quarter improved by 3.5% from 67.13% for the second quarter of 2007.
In an environment whereby financial institutions have to balance asset growth with asset quality, the asset quality of MetroCorp remained stable in terms of net nonperforming assets to total assets. Our ratio of net nonperforming assets to total assets as of September 30, 2007, after giving effect to the settlement of a loan on October 5, 2007 as if it had occurred in the third quarter, was 0.41%, which was similar to our ratio of 0.40%, as of June 30, 2007. Through prudent balance sheet management, our net interest margin remained consistent at 4.48%, the same rate as the second quarter 2007. Management is pleased with our third quarter performance and will continue to execute our strategic plan with caution and commitment."
Interest income and expense. Interest income for the three months ended September 30, 2007 was $26.7 million, up approximately $4.1 million or 18.2% compared with $22.6 million for the same period in 2006. Interest income for the nine months ended September 30, 2007 was $76.0 million, up approximately $12.6 million or 19.9% compared with $63.4 million for the same period in 2006. The increase in interest income for both the three and nine months ended September 30, 2007 was due primarily to loan growth and increases in average yield.
Average earning assets grew 14.8% during the third quarter of 2007 compared with the same period in 2006. Average earning assets grew 14.0% during the nine months ended September 30, 2007 compared with the same period in 2006. The yield on average earning assets for the third quarter of 2007 increased to 8.15% compared with 7.91% for the third quarter of 2006. The yield on average earning assets for the nine months ended September 30, 2007 increased to 8.09% compared with 7.69% for the same period of 2006. The increase in yield for both the three and nine months ended September 30, 2007 was the result of an increase in loans, which had higher yields, and a decline in other interest-earning assets, which had lower yields. Average total loans increased 33.5% to $1.11 billion in the third quarter of 2007 compared with $833.9 million for the third quarter of 2006, while other earning assets declined during the same period. Average total loans increased 27.8% to $1.03 billion for the nine months ended September 30, 2007 compared with $803.6 million for the same period of 2006, while other earning assets declined during the same period.
Interest expense for the three months ended September 30, 2007 was $12.0 million, up approximately $3.0 million or 34.3% compared with $9.0 million for the same period in 2006. Interest expense for the nine months ended September 30, 2007 was $33.5 million, up approximately $9.7 million or 40.7% compared with $23.8 million for the same period in 2006. Interest expense increased for both the three and nine months ended September 30, 2007 primarily due to growth in money market and time deposits and increases in interest rates paid on deposits. Average interest-bearing deposits were $1.01 billion for the third quarter of 2007 compared with $833.8 million for the third quarter of 2006, an increase of 20.9%. The cost of interest-bearing deposits for the third quarter of 2007 was 4.48% compared with 3.86% for the third quarter of 2006. The increase in cost reflected the higher volume of money market and time deposits and higher interest expense paid on those interest-bearing deposits.
The net interest margin for the three months ended September 30, 2007 was 4.48%, down from 4.77% for the same period in 2006. The decrease in net interest margin for the three months ended September 30, 2007 was primarily the result of higher interest rates incurred on interest-bearing liabilities, which increased to 4.51% compared with 3.97% for the same period in 2006. For the three months ended September 30, 2007, the yield on average earning assets increased 24 basis points, but was offset by an increase in the cost of average earning assets of 53 basis points. The net interest margin for the nine months ended September 30, 2007 was 4.53%, down from 4.81% for the same period in 2006. The decrease in net interest margin for the nine months ended September 30, 2007 was primarily the result of higher interest rates incurred on interest-bearing liabilities, which increased to 4.45% compared with 3.65% for the same period in 2006. For the nine months ended September 30, 2007, the yield on average earning assets increased 40 basis points, which was offset by an increase in the cost of average earning assets of 68 basis points.
Net interest income before the provision for loan losses for the three months ended September 30, 2007 was $14.7 million, up approximately $1.1 million or 7.6% compared with $13.6 million for the same period in 2006. Net interest income before the provision for loan losses for the nine months ended September 30, 2007 was $42.5 million, up approximately $2.9 million or 7.4% compared with $39.6 million for the same period in 2006.
Noninterest income and expense. Noninterest income for the three months ended September 30, 2007 was $2.2 million, up $304,000 compared with the same period in 2006. The increase in noninterest income for the three months ended September 30, 2007 was primarily due to increases in the cash value of bank owned life insurance, which was purchased in the second quarter of 2007. Noninterest income for the nine months ended September 30, 2007 was $5.9 million, up $104,000 or 1.8% compared with the same period in 2006. The increase in noninterest income for the nine months ended September 30, 2007 was primarily due to increases in the cash value of bank owned life insurance and the gain on sale of SBA loans that was partially offset by decreases in service fees and other loan-related fees.
Noninterest expense for the three months ended September 30, 2007 was $10.7 million, up approximately $910,000 or 9.3% compared with $9.8 million for the same period in 2006. Noninterest expense for the nine months ended September 30, 2007 was $31.8 million, up approximately $2.8 million or 9.9% compared with $29.0 million for the same period in 2006. The increase for both the three and nine months ended September 30, 2007 was primarily due to increases in salaries and benefits expense, and occupancy and equipment expense.
Salaries and benefits expense for the three months ended September 30, 2007 was $6.6 million, up $1.1 million compared with $5.5 million for the same period in 2006. Salaries and benefits expense for the nine months ended September 30, 2007 was $18.6 million, up $2.5 million compared with $16.1 million for the same period in 2006. The increase for both the three and nine months ended September 30, 2007 was primarily due to an increase in staffing at Metro United for new branches and supporting personnel.
Occupancy and equipment expense for the three months ended September 30, 2007 was $2.1 million, up $183,000 or 9.6% compared with $1.9 million for the same period in 2006. Occupancy and equipment expense for the nine months ended September 30, 2007 was $6.1 million, up $993,000 or 19.4% compared with $5.1 million for the same period in 2006. The increase for both the three and nine months ended September 30, 2007 was primarily due to the new branches added in California. In an effort to realign its branch network to improve efficiency, MetroBank closed its Clear Lake branch in Houston, Texas in September 2007, and expects to open a new branch in Dallas, Texas during first quarter of 2008.
Other noninterest expense for the three months ended September 30, 2007 was $2.0 million, a decrease of $399,000 or 16.6% compared with $2.4 million for the same period in 2006. The decrease for the three months ended September 30, 2007 was primarily the result of an elimination of the remaining tax liability related to the Texas franchise tax, which is now included in the tax provision. The Texas franchise tax has been replaced by the Texas margin tax. Other noninterest expense for the nine months ended September 30, 2007 was $7.2 million, down $387,000 from $7.6 million at September 30, 2006. The decrease for the nine months ended September 30, 2007 was primarily the result of decreases in professional fees, consultant fees, franchise taxes, and intangible asset amortization, which were partially offset by increases in telecommunications expense, online banking expense, other outside services, and the provision for unfunded loan commitments.
Provision for loan losses. The provision for loan losses for the three months ended September 30, 2007 was $1.2 million, an increase of $1.1 million compared with $114,000 for the same period in 2006. The provision for loan losses for the nine months ended September 30, 2007 was $1.8 million, a $1.2 million increase compared with $560,000 for the same period in 2006. Although asset quality improved with a $6.6 million or 41.3% reduction in total nonperforming assets since September 30, 2006, the provision for loan losses increased as a result of the $293.3 million or 34.9% growth in total loans since September 30, 2006. The allowance for loan losses as a percent of total loans at September 30, 2007 and 2006 was 1.13% and 1.41%, respectively. The allowance for loan losses as a percent of total loans at December 31, 2006 was 1.29%.
Net charge offs for the three months ended September 30, 2007 were $964,000 compared with net charge offs of $1.2 million for the same period in 2006. Net charge offs for the three months ended September 30, 2007 were primarily the result of a charge off of approximately $894,000 on a loan to an infrastructure construction company. Net charge offs for the nine months ended September 30, 2007 were $344,000 compared with net charge offs of $1.9 million for the same period in 2006.
Asset Quality. Total nonperforming assets decreased $2.8 million from $12.2 million at December 31, 2006 to $9.4 million at September 30, 2007. The ratio of net nonperforming assets to total assets was reduced to 0.47% at September 30, 2007, compared with 0.74% at December 31, 2006. On October 5, 2007, an accruing loan that was 90 days or more past due was settled which reduced total nonperforming assets to $8.5 million. Had this settlement occurred during the third quarter, the ratio of net nonperforming assets to total assets would have been reduced to 0.41%. Net nonperforming assets increased by approximately $1.1 million from June 30, 2007 due to one credit to a warranty repair company in the amount of $1.9 million moving to nonperforming status, which was offset by $964,000 in net charge-offs.
At September 30, 2007, total nonperforming assets consisted of $6.1 million in nonaccrual loans, $1.0 million in accruing loans that were 90 days or more past due, and $2.3 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, 2007, were $6.7 million compared with $9.3 million at December 31, 2006. Approximately $3.6 million of the nonaccrual loans are collateralized by real estate, which represented 59.7% of total nonaccrual loans at September 30, 2007. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program.
Management conference call. On Wednesday, October 31, 2007, the Company will hold a conference call at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss the third quarter 2007 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 twelve full-service banking locations in the greater Houston, and Dallas, Texas metropolitan areas, and six full service banking locations in the greater San Diego, Los Angeles and San Francisco, California metropolitan areas. As of September 30, 2007, the Company had consolidated assets of $1.4 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.primenewswire.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 share amounts)
(Unaudited)
September 30, December 31,
2007 2006
---------- ----------
Consolidated Balance Sheets
---------------------------
Assets
Cash and due from banks $ 23,463 $ 25,709
Federal funds sold and other investments 23,520 125,649
---------- ----------
Total cash and cash equivalents 46,983 151,358
Securities - available-for-sale, at fair
value 158,475 181,543
Other investments 5,558 4,932
Loans, net of allowance for loan losses of
$12,865 and $11,436 respectively 1,120,722 875,120
Accrued interest receivable 6,616 5,841
Premises and equipment, net 9,115 7,585
Goodwill 21,827 21,827
Core deposit intangibles 843 1,103
Customers' liability on acceptances 6,211 7,693
Foreclosed assets, net 2,266 2,747
Cash value of bank owned life insurance
("BOLI") 25,407 --
Other assets 9,744 8,685
---------- ----------
Total assets $1,413,767 $1,268,434
========== ==========
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 196,581 $ 208,750
Interest-bearing 1,012,987 872,914
---------- ----------
Total deposits 1,209,568 1,081,664
Junior subordinated debentures 36,083 36,083
Other borrowings 36,029 26,316
Accrued interest payable 1,876 1,822
Acceptances outstanding 6,211 7,693
Other liabilities 8,549 8,908
---------- ----------
Total liabilities 1,298,316 1,162,486
Commitments and contingencies -- --
Shareholders' Equity:
Common stock, $1.00 par value, 50,000,000
shares authorized; 10,994,965 shares
issued and 10,950,156 shares and
10,946,135 shares outstanding at September
30, 2007 and December 31, 2006 respectively 10,995 10,995
Additional paid-in-capital 27,063 25,974
Retained earnings 79,839 71,783
Accumulated other comprehensive income
(loss) (1,773) (2,421)
Treasury stock, at cost (673) (383)
---------- ----------
Total shareholders' equity 115,451 105,948
---------- ----------
Total liabilities and shareholders'
equity $1,413,767 $1,268,434
========== ==========
Nonperforming Assets and Asset
Quality Ratios
------------------------------
Nonaccrual loans $ 6,079 $ 9,414
Accruing loans 90 days or more past due 1,036 29
Other real estate ("ORE") 2,266 2,747
---------- ----------
Total nonperforming assets 9,381 12,190
Less nonperforming loans guaranteed by the
SBA, Ex-Im Bank, or the OCCGF (2,667) (2,857)
---------- ----------
Net nonperforming assets $ 6,714 $ 9,333
========== ==========
Net nonperforming assets to total assets 0.47% 0.74%
Net nonperforming assets to total loans and
ORE 0.59% 1.05%
Allowance for loan losses to total loans 1.13% 1.29%
Allowance for loan losses to net
nonperforming loans 289.23% 173.64%
Net charge-offs to total loans 0.03% 0.26%
Net charge-offs $ 344 $ 2,344
Total loans to total deposits 93.72% 81.96%
MetroCorp Bancshares, Inc.
(In thousands, except per share amounts)
(Unaudited)
For the three months For the nine months
ended September 30 ended September 30
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Average Balance
Sheet Data
---------------
Total assets $1,397,456 $1,206,300 $1,337,002 $1,172,986
Securities 161,475 203,086 169,903 214,683
Total loans 1,113,551 833,943 1,027,092 803,553
Allowance for loan
losses (12,949) (12,603) (12,365) (13,437)
Net loans 1,100,602 821,340 1,014,727 790,116
Total interest-
earning assets 1,299,425 1,131,990 1,255,271 1,101,023
Total deposits 1,214,051 1,024,993 1,151,257 997,874
FHLB and other
borrowings 49,588 61,752 56,684 62,104
Total shareholders'
equity 114,572 100,133 111,487 97,202
Income Statement Data
---------------------
Interest income:
Loans $ 24,583 $ 19,112 $ 68,112 $ 53,382
Securities:
Taxable 1,708 2,047 5,340 6,386
Tax-exempt 73 179 234 572
Federal funds sold
and other
investments 322 1,237 2,278 3,017
---------- ---------- ---------- ----------
Total interest
income 26,686 22,575 75,964 63,357
Interest expense:
Time deposits 8,335 6,665 24,098 17,493
Demand and savings
deposits 3,054 1,442 7,082 3,750
Other borrowings 638 850 2,272 2,534
---------- ---------- ---------- ----------
Total interest
expense 12,027 8,957 33,452 23,777
Net interest income 14,659 13,618 42,512 39,580
Provision for loan
losses 1,168 114 1,773 560
---------- ---------- --------- ----------
Net interest income
after provision for
loan losses 13,491 13,504 40,739 39,020
Noninterest income:
Service fees 1,379 1,397 3,857 4,303
Other loan-related
fees 183 187 511 622
Letters of credit
commissions and
fees 230 219 637 597
Gain on sale of
securities, net -- 10 -- 12
Gain on sale of
loans, net 21 -- 272 --
Gain on cash value of
bank owned life
insurance 330 -- 407 --
Other noninterest
income 55 81 179 225
---------- ---------- ---------- ----------
Total noninterest
income 2,198 1,894 5,863 5,759
Noninterest expense:
Salaries and employee
benefits 6,594 5,455 18,591 16,077
Occupancy and
equipment 2,090 1,907 6,102 5,109
Foreclosed assets,
net 39 52 (51) 213
Other noninterest
expense 2,007 2,406 7,199 7,586
---------- ---------- ---------- ----------
Total noninterest
expense 10,730 9,820 31,841 28,985
Income before
provision for income
taxes 4,959 5,578 14,761 15,794
Provision for income
taxes 1,751 2,032 5,390 5,625
---------- ---------- ---------- ----------
Net income $ 3,208 $ 3,546 $ 9,371 $ 10,169
========== ========== ========== ==========
Per Share Data
--------------
Earnings per share
- basic $ 0.29 $ 0.32 $ 0.86 $ 0.93
Earnings per share
- diluted 0.29 0.32 0.84 0.92
Weighted average
shares outstanding:
Basic 10,962 10,924 10,959 10,895
Diluted 11,132 11,153 11,161 11,097
Dividends per common
share $ 0.04 $ 0.04 $ 0.12 $ 0.12
Performance Ratio Data
----------------------
Return on average
assets 0.91% 1.17% 0.94% 1.16%
Return on average
shareholders' equity 11.11% 14.05% 11.24% 13.99%
Net interest margin 4.48% 4.77% 4.53% 4.81%
Efficiency ratio 63.65% 63.31% 65.82% 63.93%
Equity to assets
(average) 8.20% 8.30% 8.34% 8.29%