HOUSTON, July 24, 2008 (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, serving California, today announced the results for the second quarter of 2008.
Second Quarter Highlights
* Net income of $2.3 million for the second quarter of 2008 was down $805,000 or 26.2% compared with $3.1 million for the same quarter in 2007, but was $33,000 or 1.5% higher than the first quarter of 2008. * Diluted earnings per share for second quarter of 2008 were $0.21 compared with $0.28 for the second quarter of 2007, but were the same as the first quarter of 2008. * Net nonperforming assets to total assets at June 30, 2008 of 0.54% were the same as the first quarter of 2008 but slightly higher than 0.46% at December 31, 2007. * A non-cash impairment charge of $1.5 million pre-tax was recognized as a result of an other-than-temporary impairment in the value of the $14.2 million investment in the AMF Ultra Short Mortgage Fund. * Net gains from the sales of other real estate, loans, and securities of $707,000 were recognized. * Total loans increased to $1.31 billion at June 30, 2008, representing a 9.1% increase from December 31, 2007, and a 21.4% increase compared with June 30, 2007. * Total deposits increased to $1.24 billion at June 30, 2008, representing a 4.3% increase from December 31, 2007, and a 3.2% increase compared with June 30, 2007. * New branch in Garland, Texas opened in the second quarter of 2008.
George M. Lee, President and CEO of MetroCorp Bancshares, Inc. stated, "The results achieved by the management team during the second quarter of 2008 have slightly exceeded our target expectations in two primary areas, namely after-tax earnings and credit quality. After-tax earnings for the second quarter of 2008 improved modestly by $33,000 compared with the first quarter, in spite of the non-cash impairment charge of $1.5 million pre-tax. The impairment charge was partially offset by net gains of $707,000 from the sales of other real estate, loans and securities. Our net nonperforming assets to total assets remain unchanged at 0.54% for the first and second quarters of 2008. Net charge offs were $533,000 or 0.04% of total loans during the second quarter, with $292,000 related to charge-offs on loans originated in California. The other aspects of our business remain on track with our strategic plan. In general we are pleased with the Company's performance for the first half of a challenging year."
Interest income and expense
Net interest income before the provision for loan losses for the three months ended June 30, 2008 was $14.5 million, up approximately $252,000 or 1.8% compared with $14.2 million for the same period in 2007. Net interest income before the provision for loan losses for the six months ended June 30, 2008 was $28.5 million, up approximately $611,000 or 2.2% compared with $27.9 million for the same period in 2007. The increase in net interest income for both the three and six months ended June 30, 2008 was due primarily to increased loan volume, partially offset by lower yields. Interest rate cuts by the Federal Reserve resulted in a decrease in all yields and costs for the three and six months ended June 30, 2008 compared with the same period in 2007.
The net interest margin for the three months ended June 30, 2008 was 4.00%, down from 4.47% for the same period in 2007. For the three months ended June 30, 2008 compared with the same period in 2007, the yield on average earning assets decreased 127 basis points, and the cost of average earning assets decreased 80 basis points. The net interest margin for the six months ended June 30, 2008 was 4.04%, down from 4.54% for the same period in 2007. For the six months ended June 30, 2008 compared with the same period in 2007, the yield on average earning assets decreased 98 basis points, and the cost of average earning assets decreased 48 basis points.
Interest income for the three months ended June 30, 2008 was $24.6 million, down approximately $1.1 million or 4.2% compared with $25.7 million for the same period in 2007. Although loan volume increased, interest income for the three months ended June 30, 2008 declined as the result of lower loan yields. Average earning assets grew 14.0% during the second quarter of 2008 compared with the same period in 2007. Average total loans increased 25.2% to $1.29 billion in the second quarter of 2008 compared with $1.03 billion for the second quarter of 2007. The yield on average earning assets for the second quarter of 2008 was 6.80% compared with 8.07% for the second quarter of 2007.
Interest income for the six months ended June 30, 2008 was $49.7 million, up approximately $392,000 or 0.8% compared with $49.3 million for the same period in 2007. Average earning assets grew 14.5% during the six months ended June 30, 2008 compared with the same period in 2007. Average total loans increased 27.5% to $1.25 billion during the six months ended June 30, 2008 compared with $983.1 million for the same period of 2007. The yield on average earning assets for the six months ended June 30, 2008 was 7.06% compared with 8.04% for the same period of 2007.
Interest expense for the three months ended June 30, 2008 was $10.1 million, down approximately $1.4 million or 11.5% compared with $11.5 million for the same period in 2007, primarily due to lower cost of funds. Average interest-bearing deposits were $1.00 billion for the second quarter of 2008 compared with $960.9 million for the second quarter of 2007, an increase of 4.3%. The cost of interest-bearing deposits for the second quarter of 2008 was 3.51% compared with 4.45% for the second quarter of 2007.
Interest expense for the six months ended June 30, 2008 was $21.2 million, down approximately $219,000 or 1.0% compared with $21.4 million for the same period in 2007. Average interest-bearing deposits were $991.4 million for the six months ended June 30, 2008 compared with $916.7 million for the same period of 2007, an increase of 8.2%. The cost of interest-bearing deposits for the six months ended June 30, 2008 was 3.73% compared with 4.35% for the same period of 2007.
Noninterest income and expense
Noninterest income for the three months ended June 30, 2008 was $2.4 million, up $379,000 or 19.0% compared with the same period in 2007. Noninterest income for the six months ended June 30, 2008 was $4.5 million, up $842,000 or 23.0% compared with the same period in 2007. The increase for three and six months ended June 30, 2008 was primarily due to an increase in the cash value of bank owned life insurance, which is a component of other noninterest income, the net gain on sale of securities, and an increase in letter of credit commissions and fees.
Noninterest expense for the three months ended June 30, 2008 was $11.8 million, up approximately $912,000 or 8.4% compared with $10.9 million for the same period in 2007. Noninterest expense for the six months ended June 30, 2008 was $22.8 million, up approximately $1.7 million or 7.8% compared with $21.1 million for the same period in 2007. The increase for the three and six months ended June 30, 2008 was primarily the result of the $1.5 million other-than-temporary impairment charge on the AMF Ultra Short Mortgage Fund held in our investment securities portfolio, which was partially offset by the $389,000 net gain on sale of other real estate.
Salaries and benefits expense for the three months ended June 30, 2008 was $5.9 million, a decrease of $320,000 compared with $6.3 million for the same period in 2007 primarily due to decreases in employee health care benefits, bonus accrual, and salary expense due to a reduction in headcount in both Texas and California, partially offset by an increase in stock-based compensation expense.
Salaries and benefits expense for the six months ended June 30, 2008 was $12.4 million, an increase of $420,000 compared with $12.0 million for the same period in 2007 primarily due to increases in bonus accrual, stock-based compensation expense, and severance expenses.
Impairment Charge
A non-cash impairment charge of $1.5 million was recognized as a result of an other-than-temporary impairment in the value of the $14.2 million investment in the AMF Ultra Short Mortgage Fund (the "Fund"). In May 2008, the asset manager of the Fund advised the Company that it had activated the redemption in kind provisions. In July 2008, the Company redeemed its shares in the Fund for approximately $2.1 million in cash, with the remaining value of approximately $10.6 million distributed in the form of securities held by the Fund that equals the Company's respective interest in each of the underlying securities.
Provision for loan losses
The following table summarizes the provision for loan losses and net charge offs/recoveries for the quarters indicated:
As of and for the three months ended
--------------------------------------
June 30, March 31, Dec. 31, June 30,
2008 2008 2007 2007
-------- -------- -------- --------
Allowance for Loan Losses
-------------------------
Balance at beginning of
quarter $ 14,588 $ 13,125 $ 12,865 $ 11,900
Provision for loan losses
for quarter 1,465 1,584 1,372 468
Net (charge offs)/
recoveries for quarter (533) (121) (1,112) 293
-------- -------- -------- --------
Balance at end of quarter $ 15,520 $ 14,588 $ 13,125 $ 12,661
======== ======== ======== ========
Allowance for loan losses
to total loans 1.18% 1.17% 1.09% 1.17%
Net (charge-offs)/
recoveries to total loans (0.04%) (0.01%) (0.09%) 0.03%
The provision for loan losses for the three months ended June 30, 2008 was $1.5 million, an increase of $997,000 compared with $468,000 for the same period in 2007. The increase was primarily due to loan growth and to increase the allowance for loan losses following recent charge-offs. The allowance for loan losses as a percent of total loans was 1.18% at June 30, 2008, up compared with 1.17% at June 30, 2007 and 1.09% at December 31, 2007.
Net charge-offs for the three months ended June 30, 2008 were $533,000 or 0.04% of total loans compared with net recoveries of $293,000 for the three months ended June 30, 2007. The second quarter 2008 net charge-offs were primarily the result of a $292,000 charge-off of a commercial loan in California and a $210,000 charge-off of a real estate loan in Texas.
Asset Quality
The following table summarizes nonperforming assets for the quarters indicated:
As of As of As of
June 30, March 31, Dec. 31,
2008 2008 2007
-------- -------- --------
(dollars in thousands)
Nonperforming Assets
--------------------
Nonaccrual loans $ 7,696 $ 9,264 $ 6,336
Accruing loans 90 days or more
past due 801 131 1,284
Other real estate ("ORE") 2,230 1,264 1,474
-------- -------- --------
Total nonperforming assets 10,727 10,659 9,094
Less nonperforming loans
guaranteed by the SBA,
Ex-Im Bank, or the OCCGF (2,255) (2,467) (2,309)
-------- -------- --------
Net nonperforming assets $ 8,472 $ 8,192 $ 6,785
======== ======== ========
Net nonperforming assets to total
assets 0.54% 0.54% 0.46%
Total nonperforming assets increased $1.6 million to $10.7 million at June 30, 2008 from $9.1 million at December 31, 2007. On a linked-quarter basis, total nonperforming assets remained unchanged at $10.7 million at June 30, 2008.
On a linked-quarter basis, other real estate increased by approximately $966,000 compared with March 31, 2008. The increase was the result of the foreclosure of two loans secured by a $1.2 million property in Texas and a $1.0 million property in California, which was partially offset by the sale of two properties in Texas totaling $1.3 million.
Nonaccrual loans decreased $1.6 million from March 31, 2008 to June 30, 2008. The decrease was primarily due to the foreclosure of the two loans noted above, a related charge-off of $210,000 on the Texas property, and an $810,000 partial payoff on a California loan. The decrease however, was partially offset by the addition of two nonaccrual relationships in Texas totaling $1.7 million, and a $292,000 loan in California.
At June 30, 2008, total nonperforming assets consisted of $7.7 million in nonaccrual loans, $801,000 in accruing loans that were 90 days or more past due, and $2.2 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 June 30, 2008, were $8.5 million compared with $6.8 million at December 31, 2007. Approximately $4.2 million of the nonaccrual loans are collateralized by real estate, which represented 54.1% of total nonaccrual loans at June 30, 2008. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program.
Management conference call. On Friday, July 25, 2008, the Company will hold a conference call at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss the second quarter 2008 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 thirteen 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 June 30, 2008, the Company had consolidated assets of $1.6 billion. For more information, visit the Company's web site at www.metrobank-na.com.
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; (7) a deterioration or downgrade in the credit quality and credit agency ratings of the securities in the Company's securities portfolio; and (8) 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. These and other risks and factors are further described from time to time in the Company's 2007 annual report on Form 10-K and other reports and other documents filed with the Securities and Exchange Commission.
The MetroCorp Bancshares Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2894
MetroCorp Bancshares, Inc.
(In thousands, except share amounts)
(Unaudited)
Consolidated Balance Sheets
--------------------------- June 30, December 31,
2008 2007
---------- ----------
Assets
Cash and due from banks $ 32,190 $ 28,889
Federal funds sold and other investments 37,473 17,381
---------- ----------
Total cash and cash equivalents 69,663 46,270
Securities available-for-sale, at fair value 115,600 137,749
Other investments 9,204 6,886
Loans, net of allowance for loan losses
of $15,520 and $13,125, respectively 1,296,045 1,188,786
Accrued interest receivable 6,054 6,462
Premises and equipment, net 8,223 8,795
Goodwill 21,827 21,827
Core deposit intangibles 631 756
Customers' liability on acceptances 11,813 5,967
Foreclosed assets, net 2,230 1,474
Cash value of bank owned life insurance 26,400 25,737
Other assets 10,788 8,997
---------- ----------
Total assets $1,578,478 $1,459,706
========== ==========
Liabilities and
Shareholders' Equity
Deposits:
Noninterest-bearing $ 224,935 $ 209,223
Interest-bearing 1,017,766 981,820
---------- ----------
Total deposits 1,242,701 1,191,043
Junior subordinated debentures 36,083 36,083
Subordinated debentures and other borrowings 156,598 99,796
Accrued interest payable 1,344 1,727
Acceptances outstanding 11,813 5,967
Other liabilities 8,195 7,680
---------- ----------
Total liabilities 1,456,734 1,342,296
Commitments and contingencies -- --
Shareholders' Equity:
Common stock, $1.00 par value,
50,000,000 shares authorized;
10,994,965 shares issued and
10,851,496 shares and
10,825,837 shares outstanding
at June 30, 2008 and December
31, 2007, respectively 10,995 10,995
Additional paid-in-capital 27,832 27,386
Retained earnings 85,848 82,211
Accumulated other comprehensive loss (949) (786)
Treasury stock, at cost (1,982) (2,396)
---------- ----------
Total shareholders' equity 121,744 117,410
---------- ----------
Total liabilities and
shareholders' equity $1,578,478 $1,459,706
========== ==========
Nonperforming Assets and
Asset Quality Ratios
------------------------
Nonaccrual loans $ 7,696 $ 6,336
Accruing loans 90 days or more past due 801 1,284
Other real estate ("ORE") 2,230 1,474
---------- ----------
Total nonperforming assets 10,727 9,094
Less nonperforming loans guaranteed
by the SBA, Ex-Im Bank, or the OCCGF (2,255) (2,309)
---------- ----------
Net nonperforming assets $ 8,472 $ 6,785
========== ==========
Net nonperforming assets
to total assets 0.54% 0.46%
Net nonperforming assets
to total loans and ORE 0.64% 0.56%
Allowance for loan losses
to total loans 1.18% 1.09%
Allowance for loan losses
to net nonperforming loans 248.64% 247.13%
Total loans to total deposits 105.54% 100.91%
MetroCorp Bancshares, Inc.
(In thousands, except per share amounts)
(Unaudited)
For the three months For the six months
ended June 30 ended June 30
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Average Balance Sheet
Data
---------------------
Total assets $1,549,537 $1,350,510 $1,510,000 $1,306,274
Securities 124,774 173,884 129,617 177,784
Total loans 1,291,494 1,031,921 1,253,615 983,146
Allowance for loan
losses (15,065) (12,490) (14,499) (12,068)
Net loans 1,276,429 1,019,431 1,239,116 971,078
Total interest-earning
assets 1,455,224 1,276,435 1,415,503 1,236,425
Total deposits 1,221,175 1,163,947 1,200,961 1,119,339
Other borrowings and
junior subordinated
debt 186,219 57,831 167,950 60,291
Total shareholders'
equity 122,208 111,675 120,934 109,919
Income Statement Data
---------------------
Interest income:
Loans $ 23,020 $ 22,908 $ 46,420 $ 43,529
Securities:
Taxable 1,276 1,768 2,648 3,632
Tax-exempt 64 76 137 161
Federal funds sold and
other short-term
investments 241 920 465 1,956
---------- ---------- ---------- ----------
Total interest income 24,601 25,672 49,670 49,278
Interest expense:
Time deposits 6,830 8,162 14,431 15,763
Demand and savings
deposits 1,902 2,503 3,967 4,028
Other borrowings 1,400 790 2,808 1,634
---------- ---------- ---------- ----------
Total interest
expense 10,132 11,455 21,206 21,425
Net interest income 14,469 14,217 28,464 27,853
Provision for loan
losses 1,465 468 3,049 605
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 13,004 13,749 25,415 27,248
Noninterest income:
Service fees 1,206 1,262 2,449 2,478
Other loan-related fees 183 151 364 328
Letters of credit
commissions and fees 295 203 562 407
Gain on sale of
securities, net 124 -- 148 --
Gain on sale of loans,
net 194 251 245 251
Other noninterest
income 376 132 739 201
---------- ---------- ---------- ----------
Total noninterest
income 2,378 1,999 4,507 3,665
Noninterest expense:
Salaries and employee
benefits 5,931 6,251 12,417 11,997
Occupancy and equipment 1,982 2,042 3,941 4,012
Foreclosed assets, net (389) (132) (332) (90)
Impairment write-down on
securities 1,540 -- 1,540 --
Other noninterest
expense 2,734 2,725 5,195 5,192
---------- ---------- ---------- ----------
Total noninterest
expense 11,798 10,886 22,761 21,111
Income before provision
for income taxes 3,584 4,862 7,161 9,802
Provision for income
taxes 1,316 1,789 2,658 3,639
---------- ---------- ---------- ----------
Net income $ 2,268 $ 3,073 $ 4,503 $ 6,163
========== ========== ========== ==========
Per Share Data
--------------
Earnings per share
- basic $ 0.21 $ 0.28 $ 0.42 $ 0.56
Earnings per share
- diluted 0.21 0.28 0.41 0.55
Weighted average shares
outstanding:
Basic 10,819 10,962 10,815 10,957
Diluted 10,899 11,171 10,900 11,167
Dividends per common
share $ 0.04 $ 0.04 $ 0.08 $ 0.08
Performance Ratio Data
----------------------
Return on average assets 0.59% 0.91% 0.60% 0.95%
Return on average
shareholders' equity 7.46% 11.04% 7.49% 11.31%
Net interest margin 4.00% 4.47% 4.04% 4.54%
Efficiency ratio (1) 60.89% 67.13% 64.36% 66.98%
Equity to assets (average) 7.89% 8.27% 8.01% 8.41%
(1) Calculated by dividing total noninterest expense, excluding
credit loss provisions and impairment write-down on available for
sale securities, by net interest income plus noninerest income.