HOUSTON, Jan. 29, 2009 (GLOBE 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 fourth quarter of 2008.
Fourth Quarter Highlights
* Net loss of $2.3 million for the fourth quarter of 2008 compared with net income of $2.8 million for the fourth quarter in 2007. Net income for the year was $4.3 million or $0.40 per diluted share. * Diluted loss per share for fourth quarter of 2008 was $0.21 compared with diluted earnings per share of $0.26 for the fourth quarter of 2007. * Net interest margin stabilized and increased slightly from 3.70% for the third quarter of 2008 to 3.72% for the fourth quarter of 2008. * Net interest income increased slightly from $13.8 million for the third quarter of 2008 to $14.0 million for the fourth quarter of 2008. * Provision for loan losses for the fourth quarter of 2008 was $8.2 million compared with $1.8 million in the third quarter of 2008 and $1.4 million in the fourth quarter of 2007. * Allowance for loan losses was 1.53% of total loans at December 31, 2008, an increase of 44 basis points or $7.5 million compared with 1.09% at December 31 2007. * Net nonperforming assets to total assets at December 31, 2008 were 2.57% compared with 1.69% at September 30, 2008 and 0.46% at December 31, 2007. * Capital remains strong with a total risk-based capital ratio of 10.32% at December 31, 2008 compared with 10.44% at December 31, 2007. The capital ratios of MetroBank, N.A. and Metro United Bank were above the well capitalized level at December 31, 2008. * On January 16, 2009, the Company received $45.0 million from the issuance of preferred stock under the U.S. Treasury Department's Capital Purchase Program.
George M. Lee, President and CEO of MetroCorp Bancshares, Inc. stated, "While the earnings per share of $0.40 for the year ended December 31, 2008 were below what management had set out to accomplish even during a turbulent year, we have taken the opportunity of the down cycle to fine tune our business model. The $0.21 loss per share for the fourth quarter of 2008 was primarily the result of a much higher provision for loan losses due to the current housing market and general economy. Management maintained a conservative and cautious outlook on loan performance in both the Texas and California markets.
"As a result, the Company's provision for loan losses of $8.2 million for the fourth quarter was $6.4 million higher than the third quarter of 2008. Net charge-offs during the fourth quarter were $3.3 million or 0.25% of total loans, and consisted of $864,000 from Texas and $2.5 million from California. The Company also had other real estate expenses of $501,000 during the fourth quarter due to a write down of an other real estate asset and related expenses.
"Additionally, the Company took an impairment charge of $302,000 on its investment portfolio due to rating downgrades on certain private label mortgage backed securities during the fourth quarter. We are, however, pleased to see the core earnings stabilize. Our net interest margin was up slightly for the fourth quarter of 2008 at 3.72% compared with 3.70% for the third quarter 2008, and our net interest income increased from $13.8 million to $14.0 million for the same period.
"Salary and employee benefits expense for the fourth quarter of 2008 was $5.6 million and was 9.5% lower than the third quarter 2008, primarily as a result of lower headcount and reduction in bonuses. Management continued to streamline operations and control expenses in an effort to protect future earnings.
"Loans and deposits remained stable during fourth quarter of 2008, and were up slightly compared with the third quarter of 2008. Total nonperforming assets increased $13.9 million during the fourth quarter to $42.6 million. Approximately $7.2 million of the increase in nonperforming loans was from Texas and $6.2 million was from California. Of the $42.6 million of total nonperforming assets, the largest nonperforming loan relationship of $16 million is related to a health care borrower, which is secured with collateral with a fair market value in excess of the outstanding loan amounts. As a result, the Company does not anticipate an impairment loss related to these loans. Total nonperforming assets were 2.69% of total assets at December 31, 2008 compared with 1.80% of total assets at September 30, 2008.
"In December, we received approval from the U.S. Treasury to issue and sell to the U.S. Treasury under the Capital Purchase Program 45,000 shares of fixed rate preferred stock and a warrant to purchase up to 771,429 shares of common stock at an exercise price of $8.75 per share for a total purchase price of $45.0 million. The Company completed the transaction and received the proceeds from the sale on January 16, 2009.
"With additional capital, adjustments made to our operating platform, additional expense controls, and loan loss provisions adjusted to reflect an ongoing weak economy, the Company is committed and prepared to meet its customers borrowing needs and manage the continuing challenges and opportunities in 2009."
Interest income and expense
Net interest income before the provision for loan losses for the three months ended December 31, 2008 was $14.0 million, down approximately $379,000 or 2.6% compared with $14.4 million for the same period in 2007. For the year ended December 31, 2008, net interest income before the provision for loan losses was $56.3 million, down approximately $607,000 or 1.1% compared with $56.9 million for the same period in 2007. The decrease in net interest income for both the three months and year ended December 31, 2008 was due primarily to lower loan yields partially offset by increased loan volume. Interest rate cuts by the Federal Reserve since December 31, 2007 caused the prime rate to decrease by 4% to 3.25%, which resulted in a decrease in the net interest margin for the three and twelve months ended December 31, 2008 compared with the same periods in 2007.
The net interest margin for the three months ended December 31, 2008 was 3.72%, down 58 basis points compared with 4.30% for the same period in 2007. For the three months ended December 31, 2008 compared with the same period in 2007, the yield on average earning assets decreased 163 basis points, and the cost of average earning assets decreased 105 basis points. For the year ended December 31, 2008, the net interest margin was 3.87%, down 60 basis points compared with 4.47% for the same period in 2007. For the year ended December 31, 2008 compared with the same period in 2007, the yield on average earning assets decreased 136 basis points, and the cost of average earning assets decreased 76 basis points.
Interest income for the three months ended December 31, 2008 was $23.5 million, down approximately $2.8 million or 10.9% compared with $26.3 million for the same period in 2007. Although loan volume increased, interest income for the three months ended December 31, 2008 declined as the result of lower loan yields. Average earning assets grew 12.6% during the fourth quarter of 2008 compared with the same period in 2007. Average total loans increased 16.4% to $1.35 billion in the fourth quarter of 2008 compared with $1.16 billion for the fourth quarter of 2007. The yield on average earning assets for the fourth quarter of 2008 was 6.23% compared with 7.86% for the fourth quarter of 2007.
For the year ended December 31, 2008, interest income was $97.0 million, down approximately $5.3 million or 5.1% compared with $102.3 million for the same period in 2007. Although loan volume increased, interest income for the year ended December 31, 2008 declined as the result of lower loan yields. Average earning assets grew 14.2% during the year ended December 31, 2008 compared with the same period in 2007. Average total loans increased 22.2% to $1.29 billion during the year ended December 31, 2008 compared with $1.06 billion for the same period of 2007. For the year ended December 31, 2008, the yield on average earning assets was 6.67% compared with 8.03% for the same period of 2007.
Interest expense for the three months ended December 31, 2008 was $9.5 million, down approximately $2.4 million or 20.8% compared with $11.9 million for the same period in 2007, primarily due to lower cost of funds. Average interest-bearing deposits were $1.05 billion for the fourth quarter of 2008 compared with $998.9 million for the fourth quarter of 2007, an increase of 5.6%. The cost of interest-bearing deposits for the fourth quarter of 2008 was 3.15% compared with 4.34% for the fourth quarter of 2007. Average other borrowings, consisting primarily of borrowings from the FHLB but excluding junior subordinated debentures, were $141.4 million for the fourth quarter of 2008 compared with $43.6 million for the fourth quarter of 2007. Average other borrowings increased as they were a lower cost funding alternative to interest-bearing deposits. The cost of other borrowings for the fourth quarter of 2008 was 1.60% compared with 4.48% for the fourth quarter of 2007.
For the year ended December 31, 2008, interest expense was $40.7 million, down approximately $4.7 million or 10.3% compared with $45.4 million for the same period in 2007. Average interest-bearing deposits were $1.02 billion for the year ended December 31, 2008 compared with $960.5 million for the same period of 2007, an increase of 5.9%. For the year ended December 31, 2008, the cost of interest-bearing deposits was 3.47% compared with 4.38% for the same period of 2007. Average other borrowings, excluding junior subordinated debentures, were $140.0 million for the year ended December 31, 2008 compared with $26.4 million for the same period of 2007. For the year ended December 31, 2008, the cost of other borrowings was 2.36% compared with 4.72% for the same period of 2007.
Noninterest income and expense
Noninterest income for the three months ended December 31, 2008 was $1.9 million, down $538,000 or 22.2% compared with the same period in 2007. For the year ended December 31, 2008, noninterest income was $8.4 million, up $138,000 or 1.7% compared with the same period in 2007. The decrease for the three months ended December 31, 2008 was primarily due to a decrease in service fees and the gain on the sale of a branch that occurred in fourth quarter of 2007. The increase for the year ended December 31, 2008 was primarily due to an increase in the cash value of bank owned life insurance and an increase in letter of credit commissions and fees, partially offset by a decrease in service fees.
Noninterest expense for the three months ended December 31, 2008 was $11.4 million, an increase of $322,000 or 2.9% compared with the same period in 2007. Decreases in salaries and employee benefit expenses further described below, were offset by increases in other noninterest expense, an other-than-temporary impairment ("OTTI") charge of $302,000 realized on various private label securities, and expenses related to foreclosed assets. At December 31, 2008, after recording the $302,000 OTTI charge, the private label mortgage backed securities that were rated less than investment grade had a book value of $984,000 and fair value of $992,000 or 0.97% of the fair value of total securities available for sale.
For the year ended December 31, 2008, noninterest expense was $44.9 million, up approximately $2.0 million or 4.6% compared with $42.9 million for the same period in 2007. The increase for the year ended December 31, 2008 was primarily the result of $2.0 million in OTTI charges on securities and increases in other noninterest expense, which was partially offset by a decrease in salaries and employee benefit expense.
Salaries and employee benefits expense for the three months ended December 31, 2008 was $5.6 million, a decrease of $610,000 compared with $6.3 million for the same period in 2007 primarily due to a decrease in the number of employees and amount of bonus accrual. For the year ended December 31, 2008, salaries and employee benefits expense was $24.3 million, a decrease of $548,000 compared with $24.8 million for the same period in 2007, primarily due to a reduction in the number of employees and amount of bonus accrual, partially offset by an increase in severance expenses, employee health care benefits, and stock-based compensation expense. The number of full-time equivalent employees at December 31, 2008 was 320, a decrease of 29 or 8.0% from 349 at December 31, 2007.
Provision for loan losses
The following table summarizes the provision for loan losses and net charge-offs as of and for the quarters indicated:
December 31, September 30, December 31, 2008 2008 2007 ---------------------------------------- (dollars in thousands) Allowance for Loan Losses ------------------------- Balance at beginning of quarter $ 15,723 $ 15,520 $ 12,865 Provision for loan losses for quarter 8,188 1,754 1,372 Net charge-offs for quarter (3,334) (1,551) (1,112) ------------ ------------ ------------ Balance at end of quarter $ 20,577 $ 15,723 $ 13,125 ============ ============ ============ Total loans $ 1,346,047 $ 1,341,647 $ 1,201,911 Allowance for loan losses to total loans 1.53% 1.17% 1.09% Net charge-offs to total loans 0.25% 0.12% 0.09%
The provision for loan losses for the three months ended December 31, 2008 was $8.2 million, an increase of $6.8 million compared with $1.4 million for the same period in 2007. The provision for loan losses for the year ended December 31, 2008 was $13.0 million, an increase of $9.9 million compared with $3.1 million for the same period in 2007. The increase was primarily due to concerns of deteriorating economic conditions in both Texas and California, combined with higher net charge-offs for the fourth quarter of 2008. The allowance for loan losses as a percent of total loans was 1.53% at December 31, 2008, up compared with 1.17% at September 30, 2008 and 1.09% at December 31, 2007.
Net charge-offs for the three months ended December 31, 2008 were $3.3 million or 0.25% of total loans compared with net charge-offs of $1.1 million or 0.09% of total loans for the three months ended December 31, 2007. The charge-offs primarily consisted of $864,000 in loans from Texas and $2.5 million in loans from California. The largest charge-off was a partial charge-off of approximately $1.6 million related to residential land loan in California. Net charge-offs for the year ended December 31, 2008 were $5.5 million or 0.41% of total loans compared with net charge-offs of $1.5 million or 0.12% of total loans for the year ended December 31, 2007.
Asset Quality
The following table summarizes nonperforming assets as of the dates indicated:
As of As of As of December 31, September 30, December 31, 2008 2008 2007 ------------ ------------ ------------ (dollars in thousands) Nonperforming Assets Nonaccrual loans $ 37,471 $ 24,119 $ 6,336 Accruing loans 90 days or more past due 287 1,248 1,284 Other real estate 4,825 3,315 1,474 ------------ ------------ ------------ Total nonperforming assets 42,583 28,682 9,094 Less nonperforming loans guaranteed by the SBA, Ex-Im Bank, or the OCCGF (1,843) (1,665) (2,309) ------------ ------------ ------------ Net nonperforming assets $ 40,740 $ 27,017 $ 6,785 ============ ============ ============ Net nonperforming assets to total assets 2.57% 1.69% 0.46%
Total nonperforming assets increased $33.5 million to $42.6 million at December 31, 2008 compared with $9.1 million at December 31, 2007. On a linked-quarter basis, total nonperforming assets increased $13.9 million from $28.7 million at September 30, 2008. The increase in nonperforming loans consists primarily of $7.2 million from Texas and $6.2 million from California. The increase in Texas is primarily composed of a $3.1 million commercial land loan, a $2.4 million loan for a restaurant property, and a $1.5 million loan for a retail center. The increase in California is related to four residential land loans totaling $3.6 million and one loan relationship with two single-family residences in the amount of $2.7 million.
On a linked-quarter basis, other real estate ("ORE") increased by approximately $1.5 million compared with September 30, 2008. Two loans in Texas, a $750,000 multi-family property and approximately $985,000 in two residential properties, were transferred to ORE, and there was a $225,000 write-down on ORE in California.
At December 31, 2008, total nonperforming assets consisted of $37.5 million in nonaccrual loans, $287,000 in accruing loans that were 90 days or more past due, and $4.8 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 December 31, 2008, were $40.7 million compared with $6.8 million at December 31, 2007. Approximately $32.7 million of the nonaccrual loans are collateralized by real estate, which represented 87.3% of total nonaccrual loans at December 31, 2008. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program.
Management conference call. On Friday, January 30, 2009, the Company will hold a conference call at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss the fourth 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 December 31, 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 MetroCorp Bancshares Inc. logo is available at http://www.globenewswire.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) the failure of or 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) changes in the availability of funds which could increase costs or decrease liquidity; (6) 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; (7) changes in accounting principles, policies or guidelines; (8) a deterioration or downgrade in the credit quality and credit agency ratings of the securities in the Company's securities portfolio; and (9) the Company's ability to adapt successfully to technological changes to meet customers' needs and developments in the marketplace. 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.
MetroCorp Bancshares, Inc. (In thousands, except share amounts) (Unaudited) December 31, December 31, 2008 2007 ------------ ------------ Consolidated Balance Sheets --------------------------- Assets Cash and due from banks $ 26,383 $ 28,889 Federal funds sold and other investments 11,718 17,381 ------------ ------------ Total cash and cash equivalents 38,101 46,270 Securities - available-for-sale, at fair value 102,104 137,749 Other investments 29,220 6,886 Loans, net of allowance for loan losses of $20,577 and $13,125 respectively 1,325,470 1,188,786 Accrued interest receivable 5,946 6,462 Premises and equipment, net 7,368 8,795 Goodwill 21,827 21,827 Core deposit intangibles 506 756 Customers' liability on acceptances 8,012 5,967 Foreclosed assets, net 4,825 1,474 Cash value of bank owned life insurance 27,090 25,737 Other assets 12,096 8,997 ------------ ------------ Total assets $ 1,582,565 $ 1,459,706 ============ ============ Liabilities and Shareholders' Equity Deposits: Noninterest-bearing $ 204,107 $ 209,223 Interest-bearing 1,065,046 981,820 ------------ ------------ Total deposits 1,269,153 1,191,043 Junior subordinated debentures 36,083 36,083 Subordinated debentures and other borrowings 139,046 99,796 Accrued interest payable 1,279 1,727 Acceptances outstanding 8,012 5,967 Other liabilities 7,363 7,680 ------------ ------------ Total liabilities 1,460,936 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 10,885,081 shares and 10,825,837 shares outstanding at December 31, 2008 and December 31, 2007 respectively 10,995 10,995 Additional paid-in-capital 28,222 27,386 Retained earnings 84,781 82,211 Accumulated other comprehensive loss (910) (786) Treasury stock, at cost (1,459) (2,396) ------------ ------------ Total shareholders' equity 121,629 117,410 ------------ ------------ Total liabilities and shareholders' equity $ 1,582,565 $ 1,459,706 ============ ============ Nonperforming Assets and Asset Quality Ratios -------------------------------------- Nonaccrual loans $ 37,471 $ 6,336 Accruing loans 90 days or more past due 287 1,284 Other real estate ("ORE") 4,825 1,474 ------------ ------------ Total nonperforming assets 42,583 9,094 Less nonperforming loans guaranteed by the SBA, Ex-Im Bank, or the OCCGF (1,843) (2,309) ------------ ------------ Net nonperforming assets $ 40,740 $ 6,785 ============ ============ Net nonperforming assets to total assets 2.57% 0.46% Net nonperforming assets to total loans and ORE 3.02% 0.56% Allowance for loan losses to total loans 1.53% 1.09% Allowance for loan losses to net nonperforming loans 57.29% 247.13% Total loans to total deposits 106.06% 100.91% MetroCorp Bancshares, Inc. (In thousands, except per share amounts) (Unaudited) For the three months For the twelve months ended December 31 ended December 31 ----------------------- ---------------------- 2008 2007 2008 2007 ---------- ---------- ---------- ---------- Average Balance Sheet Data --------------------- Total assets $1,587,810 $1,421,984 $1,546,618 $1,358,422 Securities 105,997 151,854 119,233 158,590 Total loans 1,345,502 1,156,278 1,294,744 1,059,654 Allowance for loan losses (16,687) (13,293) (15,447) (12,599) Net loans 1,328,815 1,142,985 1,453,910 1,273,430 Total interest-earning assets 1,497,309 1,329,398 1,273,430 1,276,674 Total deposits 1,269,146 1,205,396 1,229,246 1,164,903 Other borrowings and junior subordinated debt 177,455 79,703 176,076 62,486 Total shareholders' equity 124,772 117,494 122,609 113,001 Income Statement Data --------------------- Interest income: Loans $ 22,000 $ 24,444 $ 90,715 $ 92,556 Securities: Taxable 1,151 $ 1,569 5,006 6,909 Tax-exempt 47 $ 73 231 307 Federal funds sold and other short-term investments 268 $ 248 1,078 2,526 ---------- ---------- ---------- ---------- Total interest income 23,466 26,334 97,030 102,298 Interest expense: Time deposits 6,019 8,042 26,690 32,140 Demand and savings deposits 2,345 2,885 8,653 9,967 Other borrowings 1,087 1,013 5,388 3,285 ---------- ---------- ---------- ---------- Total interest expense 9,451 11,940 40,731 45,392 Net interest income 14,015 14,394 56,299 56,906 Provision for loan losses 8,188 1,372 12,991 3,145 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 5,827 13,022 43,308 53,761 Noninterest income: Service fees 1,149 1,318 4,839 5,175 Other loan-related fees 149 132 687 643 Letters of credit commissions and fees 208 231 1,034 868 Gain on sale of securities, net -- 2 91 2 Gain on sale of loans, net -- 5 288 277 Other noninterest income 381 737 1,487 1,323 ---------- ---------- ---------- ---------- Total noninterest income 1,887 2,425 8,426 8,288 Noninterest expense: Salaries and employee benefits 5,645 6,255 24,298 24,846 Occupancy and equipment 2,096 2,055 8,128 8,157 Foreclosed assets, net 501 329 289 278 Impairment write-down on securities 302 -- 1,961 -- Other noninterest expense 2,872 2,455 10,218 9,654 ---------- ---------- ---------- ---------- Total noninterest expense 11,416 11,094 44,894 42,935 Income (loss) before provision for income taxes (3,702) 4,353 6,840 19,114 Provision (benefit) for income taxes (1,428) 1,549 2,535 6,939 ---------- ---------- ---------- ---------- Net income (loss) $ (2,274) $ 2,804 $ 4,305 $ 12,175 ========== ========== ========== ========== Per Share Data -------------- Earnings (loss) per share - basic $ (0.21) $ 0.26 $ 0.40 $ 1.11 Earnings (loss) per share - diluted (0.21) 0.26 0.40 1.10 Weighted average shares outstanding: Basic 10,861 10,865 10,833 10,935 Diluted 10,887 10,961 10,897 11,110 Dividends per common share $ 0.04 $ 0.04 $ 0.16 $ 0.16 Performance Ratio Data ---------------------- Return on average assets (0.57)% 0.78% 0.28% 0.90% Return on average shareholders' equity (7.25)% 9.47% 3.51% 10.77% Net interest margin 3.72% 4.30% 3.87% 4.47% Efficiency ratio(1) 71.79% 65.96% 69.36% 65.86% Equity to assets (average) 7.86% 8.26% 7.93% 8.32% (1) Calculated by dividing total noninterest expense, excluding loan loss provisions and impairment write-down on securities, by net interest income plus noninterest income.