MetroCorp Bancshares, Inc. Announces Net Income of $2.9 Million for Third Quarter 2012, an Increase of 27% from Third Quarter 2011. EPS of $0.15 per Diluted Share Increased 15.4% from Third Quarter 2011

HOUSTON, Oct. 19, 2012 /PRNewswire/ -- 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 operating results for the third quarter of 2012.

(Logo: http://photos.prnewswire.com/prnh/20110119/MM32884LOGO)

Financial Highlights

  • Net income of $2.9 million for the third quarter of 2012 improved 27.0% compared with $2.3 million for the third quarter of 2011.
  • Earnings per diluted share of $0.15 for the third quarter of 2012 increased 15.4% compared with $0.13 for the third quarter of 2011.
  • Total nonperforming assets ("NPA") at September 30, 2012 declined $15.7 million or 24.5% to $48.2 million compared with $63.9 million at December 31, 2011, and declined $379,000 or 0.8% compared with $48.6 million at June 30, 2012. 
  • The ratio of nonperforming assets to total assets declined to 3.16% at September 30, 2012 compared with 4.27% at December 31, 2011, and increased slightly from 3.13% at June 30, 2012.
  • Net interest margin was 3.84% for the third quarter of 2012 compared with 3.83% for the third quarter of 2011, and 3.82% for the second quarter of 2012.
  • Total risk-based capital ratio increased to 17.68% at September 30, 2012 compared with 17.30% at December 31, 2011.

George M. Lee, Executive Vice Chairman, President and CEO of MetroCorp Bancshares, Inc. stated, "The Company's third quarter 2012 performance was in line and consistent with management's 2012 annual objectives. Our goal for 2012 was to establish a solid platform for the years ahead, and management is pleased with the Company's third quarter performance.  Net income of $2.9 million, linked-quarter loan growth of $2.6 million, nonperforming assets at $48.2 million and net interest margin at 3.84% for the third quarter of 2012 were all modestly ahead or stable on a linked-quarter basis as compared to the second quarter of 2012.

"The loan pipeline going forward is solid; however competition is fierce in both the Texas and California markets.  Management will strive to complete the year 2012 toward our target of mid-high, single-digit loan growth compared with year end 2011, and a ratio of nonperforming assets to total assets below 3%." 

Interest income and expense 
Net interest income for the three months ended September 30, 2012 was $13.6 million, an increase of $123,000 or 0.9% compared with $13.5 million for the same period in 2011. The increase for the three months ended September 30, 2012 was due primarily to lower cost and volume of deposits, partially offset by a decline in the yield on average total loans. Net interest income for the nine months ended September 30, 2012 was $40.9 million, an increase of $464,000 or 1.1% compared with $40.5 million for the same period in 2011. The increase for the nine months ended September 30, 2012 was due primarily to lower cost and volume of deposits, partially offset by a decline in the yield and volume on average total loans.  On a linked-quarter basis, net interest income remained consistent at $13.6 million for the three months ended September 30, 2012 and June 30, 2012. 

The net interest margin for the three months ended September 30, 2012 was 3.84%, an increase of one basis point compared with 3.83% for the same period in 2011. The yield on average earning assets decreased 23 basis points, and the cost of average earning assets decreased 24 basis points for the same periods.  On a linked-quarter basis, the net interest margin for the three months ended September 30, 2012 increased two basis points compared with 3.82% for the three months ended June 30, 2012. The yield on average earning assets decreased two basis points, and the cost of average earning assets decreased four basis points compared with June 30, 2012.  

The net interest margin for the nine months ended September 30, 2012 was 3.87%, an increase of six basis points compared with 3.81% for the same period in 2011. The yield on average earning assets decreased 21 basis points, and the cost of average earning assets decreased 27 basis points for the same periods. 

Interest income for the three months ended September 30, 2012 was $16.0 million, down $739,000 or 4.4% compared with $16.8 million for the same period in 2011, primarily due to lower yields on loans and securities.  Average earning assets increased $9.9 million or 0.7% to $1.41 billion for the third quarter of 2012, compared with $1.40 billion for the same period in 2011, due to growth in securities and loans, partially offset by a decrease in federal funds sold and other short-term investments.  Average total loans for the third quarter of 2012 were $1.07 billion or 0.4% higher than $1.06 billion for the third quarter of 2011. The yield on average earning assets for the third quarter of 2012 was 4.51% compared with 4.74% for the third quarter of 2011.

Interest income for the nine months ended September 30, 2012 was $48.6 million, down $2.4 million or 4.6% compared with $51.0 million for the same period in 2011, primarily due to lower volume and yield on loans, and a lower yield on securities, partially offset by an increase in the yield of federal funds sold and other short-term investments.  Average earning assets decreased $5.0 million or 0.4% to $1.41 billion for nine months ended September 30, 2012, compared with $1.42 billion for the same period in 2011.  Average total loans decreased $28.1 million or 2.6% to $1.06 billion for the nine months ended September 30, 2012 compared with $1.09 billion for the nine months ended September 30, 2011. The yield on average earning assets for the nine months ended September 30, 2012 was 4.59% compared with 4.80% for the nine months ended September 30, 2011.

Interest expense for the three months ended September 30, 2012 was $2.4 million, down $862,000 or 26.6% compared with $3.2 million for the same period in 2011, primarily due to lower deposit cost and lower volume on time deposits. Average interest-bearing deposits were $977.8 million for the third quarter of 2012, a decrease of $30.4 million or 3.0% compared with $1.00 billion for the same period of 2011. The cost of interest-bearing deposits for the third quarter of 2012 was 0.73% compared with 1.05% for the third quarter of 2011.  Average other borrowings (excluding junior subordinated debentures) were $26.0 million for the third quarter of 2012, a decrease of $10.4 million or 28.5% compared with $36.4 million for the third quarter of 2011.  The cost of other borrowings for the third quarter of 2012 was 3.78% compared with 2.82% for the third quarter of 2011, primarily due to a reduction of lower cost short-term borrowings.

Interest expense for the nine months ended September 30, 2012 was $7.7 million, down $2.8 million or 26.8% compared with $10.5 million for the same period in 2011, primarily due to lower deposit cost and lower volume of time deposits and other borrowings. Average interest-bearing deposits were $994.0 million for the nine months ended September 30, 2012, a decrease of $32.1 million or 3.1% compared with $1.03 billion for the same period of 2011. The cost of interest-bearing deposits for the nine months ended September 30, 2012 was 0.80% compared with 1.13% for the nine months ended September 30, 2011.  Average other borrowings (excluding junior subordinated debentures) were $26.0 million for the nine months ended September 30, 2012, a decrease of $19.0 million or 42.2% compared with $45.0 million for the nine months ended September 30, 2011.  The cost of other borrowings for the nine months ended September 30, 2012 was 3.81% compared with 2.39% for the nine months ended September 30, 2011, primarily due to a reduction of lower cost short-term borrowings.

Noninterest income and expense
Noninterest income for the three months ended September 30, 2012 was $1.9 million, an increase of $56,000 or 3.1% compared with $1.8 million for the same period in 2011. The increase for the three months ended September 30, 2012 was primarily due to increases in other noninterest income, letters of credit commissions and other loan-related fees, partially offset by a decrease in gains on securities transactions.  Other noninterest income increased primarily due to a reduction in losses related to the fair value adjustments on an interest rate derivative, partially offset by a decline in earnings on foreign exchange transactions and ORE rental income.  Noninterest income for the nine months ended September 30, 2012 was $5.4 million, an increase of $389,000 or 7.7% compared with $5.0 million for the same period in 2011. The increase for the nine months ended September 30, 2012 was primarily due to increases in service fees and a decline in impairment on securities.

Noninterest expense for the three months ended September 30, 2012 was $11.5 million, an increase of $94,000 or 0.8% compared with $11.4 million for the same period in 2011. Noninterest expense for the nine months ended September 30, 2012 was $33.8 million, an increase of $553,000 or 1.7% compared with $33.2 million for the same period in 2011. The increase for the three and nine months ended September 30, 2012 was mainly due to increases in other noninterest expense and salaries and employee benefits, partially offset by decreases in expenses related to ORE, the FDIC assessment and occupancy expenses.  Other noninterest expense increased primarily due to an increase in other operational losses.

Salaries and employee benefits expense for the three months ended September 30, 2012 was $6.0 million, an increase of $802,000 or 15.4% compared with $5.2 million for the same period in 2011. The increase was primarily due to increases in salary expense (as a result of increased lending and credit staff in both Texas and California), bonus accruals and stock based compensation costs.  Salaries and employee benefits expense for the nine months ended September 30, 2012 was $17.9 million, an increase of $2.2 million or 14.2% compared with $15.7 million for the same period in 2011. The increase was primarily due to increases in salary expense (as a result of increased lending and credit staff in both Texas and California), bonus accruals and employee healthcare costs.

Provision for loan losses
The following table summarizes the provision for loan losses and net charge-offs as of and for the quarters indicated:



September 30,
 2012


June 30,
 2012


December 31,
2011


September 30,
2011



(dollars in thousands)

Allowance for Loan Losses









Balance at beginning of quarter


$27,311


$28,066


$29,969


$30,393

Provision for loan losses for quarter


(300)


200


1,275


875

Net charge-offs for quarter


(1,469)


(955)


(2,923)


(1,299)

Balance at end of quarter


$25,542


$27,311


$28,321


$29,969










Total loans


$1,096,855


$1,094,233


$1,044,616


$1,059,165










Allowance for loan losses to total  loans


2.33%


2.50%


2.71%


2.83%

Net charge-offs to total  loans


0.13%


0.09%


0.28%


0.12%










For the three months ended September 30, 2012, the provision for loan losses had a reversal of ($300,000), which represented a decrease of $1.2 million or 134.3% compared with provision for loan losses of $875,000 for the same period in 2011.  The provision for loan losses for the nine months ended September 30, 2012 was $300,000, a decrease of $2.2 million or 87.8% compared with $2.5 million for the same period in 2011.  On a linked-quarter basis, the provision for loan losses in the third quarter of 2012 decreased by $500,000 compared with the provision for loan losses of $200,000 for the second quarter of 2012. Following the assessment of the allowance for loan losses as of September 30, 2012, management determined that a reduction in the allowance was necessary as a result of improvement in asset quality year-to-date and a reduction of classified loans.

Net charge-offs for the three months ended September 30, 2012 were $1.5 million or 0.13% of total loans compared with net charge-offs of $1.3 million or 0.12% of total loans for the three months ended September 30, 2011. The net charge-offs for the third quarter of 2012 primarily consisted of $1.5 million of net charge-offs from Texas and $74,000 of net recoveries from California.  Net charge-offs for the nine months ended September 30, 2012 were $3.1 million or 0.28% of total loans compared with net charge-offs of $6.2 million or 0.59% of total loans for the nine months ended September 30, 2011. The net charge-offs for the nine months ended September 30, 2012 primarily consisted of $3.2 million of net charge-offs from Texas and $76,000 of net recoveries from California.

Asset Quality
The following table summarizes nonperforming assets as of the dates indicated:



September 30,
 2012


June 30,
2012


December 31,
 2011


September 30,
 2011



(dollars in thousands)

Nonperforming Assets









Nonaccrual loans


$        31,454


$       24,664


$        31,099


$          29,664

Accruing loans 90 days or more past due


-


62


-


28

Troubled debt restructurings - accruing


4,126


4,126


-


-

Troubled debt restructurings -  nonaccruing


4,707


5,315


13,763


18,660

Other real estate ("ORE")


7,915


14,414


19,018


23,844

Total nonperforming assets


48,202


48,581


63,880


72,196










Total nonperforming assets to total assets


3.16%


3.13%


4.27%


4.82%

Total nonperforming assets at September 30, 2012 were $48.2 million ($38.1 million from Texas and $10.1 million from California) compared with $63.9 million at December 31, 2011 ($46.2 million from Texas and $17.7 million from California), a decrease of $15.7 million or 24.5%. The ratio of total nonperforming assets to total assets decreased to 3.16% at September 30, 2012 from 4.27% at December 31, 2011.

On a linked-quarter basis, total nonperforming assets decreased by $379,000, which consisted of a $905,000 decrease in California, partially offset by an increase of $526,000 in Texas.  The decline in California consisted primarily of decreases of $842,000 in ORE and $54,000 in nonaccrual loans. The increase in nonperforming assets in Texas was primarily the result of an increase of $6.8 million in nonaccrual loans, partially offset by decreases of $5.7 million in ORE and $599,000 in Troubled Debt Restructurings ("TDRs").  Nonaccrual loans in Texas increased primarily due to the reclassification of $7.6 million of two classified loans to nonaccrual status, partially offset by $360,000 in paydowns and payoffs and $250,000 in a note sale. Nonaccrual TDRs decreased primarily due to $386,000 in charge-offs and $171,000 in principal payments and payoffs. The decrease in nonperforming assets in California primarily consisted of $54,000 in paydowns on nonaccrual loans and an $842,000 reduction in ORE as a result of sales and writedowns.

On a linked-quarter basis, ORE at September 30, 2012 decreased $6.5 million compared with June 30, 2012, which included a decrease of $5.7 million in Texas and $842,000 in California.  The decrease in Texas was primarily the result of $5.4 million in the sale of six properties and writedowns of $247,000 on five properties.  The decrease in California was primarily the result of $351,000 in writedowns on two properties and $491,000 in the sale of two ORE properties.

Approximately $35.0 million or 96.9% of nonaccrual loans and nonaccruing TDRs at September 30, 2012 are collateralized by real estate.  Management is closely monitoring the loan portfolio and actively working on problem loan resolutions; however uncertain economic conditions could further impact the loan portfolio.

Management conference call.  On Monday, October 22, 2012, the Company will hold a conference call at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss the third quarter 2012 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 Shareholder.com  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 September 30, 2012, the Company had consolidated assets of $1.5 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) the failure of or changes in management's assumptions regarding the adequacy of the allowance for loan losses; (4) an adverse change in the real estate market in the Company's primary market areas; (5) legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial services industry; (6) the effect of compliance, or failure to comply within stated deadlines, with the provisions of the Formal Agreement between MetroBank and the Office of the Comptroller of the Currency; (7) increases in the level of nonperforming assets; (8) changes in the availability of funds which could increase costs or decrease liquidity; (9) the effects of competition from other financial institutions operating in the Company's market areas 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; (10) changes in accounting principles, policies or guidelines; (11) a deterioration or downgrade in the credit quality and credit agency ratings of the securities in the Company's securities portfolio; (12) the incurrence and possible impairment of goodwill associated with an acquisition; (13) the Company's ability to raise additional capital; (14) the inability to fully realize the Company's net deferred tax asset; and (15) 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 2011 Annual Report on Form 10-K and other reports and other documents filed with the Securities and Exchange Commission.

For more information contact:
MetroCorp Bancshares, Inc., Houston
George Lee, Executive Vice Chairman, President & CEO, (713) 776-3876, or
David Choi, Executive Vice President& CFO, (713) 776-3876

 

MetroCorp Bancshares, Inc.

(In thousands, except share amounts)

(Unaudited)













September 30,


December 31,






2012


2011


Consolidated Balance Sheets





Assets





Cash and due from banks

$           21,998


$          28,798


Federal funds sold and other short-term investments

152,913


164,811


       Total cash and cash equivalents

174,911


193,609


Securities available-for-sale, at fair value

178,282


172,389


Securities held-to-maturity, at cost (fair value $4,773 at September 30, 2012 and $4,536 at December 31, 2011)

4,046


4,046


Other investments 

5,774


6,484


Loans, net of allowance for loan losses of $25,542 and $28,321 at September 30, 2012 and December 31, 2011, respectively

1,071,313


1,016,295


Accrued interest receivable

3,938


4,327


Premises and equipment, net

4,195


4,697


Goodwill

14,327


14,327


Deferred tax asset

13,902


14,995


Customers' liability on acceptances

6,051


5,152


Foreclosed assets, net

7,915


19,018


Cash value of bank owned life insurance

32,456


31,427


Prepaid FDIC assessment

3,902


5,204


Other assets

5,076


2,561


   Total assets

$      1,526,088


$     1,494,531










Liabilities and Shareholders' Equity





Deposits:






Noninterest-bearing

$         289,979


$        259,397



Interest-bearing

975,078


992,178



   Total deposits

1,265,057


1,251,575


Junior subordinated debentures

36,083


36,083


Other borrowings

26,000


26,315


Accrued interest payable

258


310


Acceptances outstanding

6,051


5,152


Other liabilities

18,085


9,913



Total liabilities

1,351,534


1,329,348


Commitments and contingencies

-


-


Shareholders' Equity:






Preferred stock, $1.00 par value, 2,000,000 shares authorized; no shares and 45,000 shares issued and outstanding at September 30, 2012 and December 31, 2011,  respectively

-


45,003



Common stock, $1.00 par value, 50,000,000 shares authorized; 18,766,765 and 13,340,815 shares issued; 18,749,912 and 13,340,815 shares outstanding at Sept. 30, 2012 and December 31, 2011, respectively

18,767


13,341



Additional paid-in-capital

74,976


33,816



Retained earnings

80,033


73,188



Accumulated other comprehensive income (loss)

923


(165)



Treasury stock, at cost

(145)


-



   Total shareholders' equity

174,554


165,183



   Total liabilities and shareholders' equity

$      1,526,088


$     1,494,531






-


-


Nonperforming Assets and Asset Quality Ratios





Nonaccrual loans

$           31,454


$          31,099


Accruing loans 90 days or more past due

-


-


Troubled debt restructurings - accrual

4,126


-


Troubled debt restructurings - nonaccrual

4,707


13,763


Other real estate ("ORE")

7,915


19,018


Total nonperforming assets

48,202


63,880










Total nonperforming assets to total assets

3.16

%

4.27

%

Total nonperforming assets to total loans and ORE

4.36

%

6.01

%

Allowance for loan losses to total loans

2.33

%

2.71

%

Allowance for loan losses to total nonperforming loans

63.40

%

63.13

%

Net year-to-date charge-offs to total loans 

0.28

%

0.88

%

Net year-to-date charge-offs

$             3,079


$            9,161


Total loans to total deposits

86.70

%

83.46

%

 

MetroCorp Bancshares, Inc.


(In thousands, except per share amounts)


(Unaudited)




















For the Three Months


For the Nine Months







Ended Sept 30,


Ended Sept 30,







2012


2011


2012


2011


Average Balance Sheet Data










Total assets


$ 1,510,577


$ 1,504,893


$ 1,512,667


$ 1,517,897


Securities


172,739


163,074


180,117


172,631


Total loans


1,066,352


1,062,275


1,058,782


1,086,860


Allowance for loan losses


27,214


30,718


27,948


32,514


Net loans


1,039,138


1,031,557


1,030,834


1,054,346


Total interest-earning assets


1,412,727


1,402,822


1,414,710


1,419,697


Total deposits


1,255,481


1,249,564


1,256,389


1,257,937


Other borrowings and junior subordinated debt


62,083


72,468


62,085


81,091


Total shareholders' equity


173,370


165,395


176,143


162,740















Income Statement Data










Interest income:











Loans


$      14,593


$      15,364


$      44,346


$      46,696



Securities:












Taxable


1,020


1,025


3,051


3,413




Tax-exempt


145


99


407


296



Federal funds sold and other short-term investments

271


280


804


551





Total interest income


16,029


16,768


48,608


50,956


Interest expense:











Time deposits


1,288


1,857


4,194


6,057



Demand and savings deposits


508


800


1,729


2,647



Other borrowings


585


586


1,748


1,779





Total interest expense


2,381


3,243


7,671


10,483


Net interest income


13,648


13,525


40,937


40,473


Provision for loan losses


(300)


875


300


2,450


Net interest income after provision for loan losses


13,948


12,650


40,637


38,023


Noninterest income:











Service fees


1,099


1,124


3,347


3,214



Other loan-related fees


139


89


326


268



Letters of credit commissions and fees


197


143


584


492



Gain on securities, net


24


203


108


129
















Total other-than-temporary impairment ("OTTI") on securities


(14)


(32)


(101)


(215)




Less: Noncredit portion of "OTTI"


(7)


(2)


(17)


(20)





Net impairments on securities


(7)


(30)


(84)


(195)



Other noninterest income


420


287


1,154


1,138





Total noninterest income


1,872


1,816


5,435


5,046


Noninterest expense:











Salaries and employee benefits


6,016


5,214


17,934


15,702



Occupancy and equipment


1,792


1,896


5,224


5,545



Foreclosed assets, net


552


1,222


1,915


2,741



FDIC assessment


480


632


1,362


2,016



Other noninterest expense


2,689


2,471


7,339


7,217





Total noninterest expense


11,529


11,435


33,774


33,221


Income before provision for income taxes


4,291


3,031


12,298


9,848


Provision for income taxes


1,410


762


4,023


3,090


Net income 


$        2,881


$        2,269


$        8,275


$        6,758















Dividends and discount - preferred stock


(20)


(601)


(1,429)


(1,811)


Adjustment from repurchase of preferred stock


(149)


-


557


-


Net income (loss) applicable to common stock


$        2,712


$        1,668


$        7,403


$        4,947















Per Share Data










Earnings per share - basic


$          0.15


$          0.13


$          0.47


$          0.38


Earnings per share - diluted


0.15


0.13


0.47


0.37


Weighted average shares outstanding:











Basic


18,307


13,145


15,666


13,141



Diluted


18,648


13,234


15,876


13,216


 Dividends per common share 


$              -


$              -


$              -


$              -















Performance Ratio Data










Return on average assets


0.76

%

0.60

%

0.73

%

0.60

%

Return on average shareholders' equity


6.61

%

5.44

%

6.28

%

5.55

%

Net interest margin


3.84

%

3.83

%

3.87

%

3.81

%

Efficiency ratio


71.66

%

74.39

%

70.95

%

72.88

%

Equity to assets (average)


11.48

%

10.99

%

11.64

%

10.72

%

SOURCE MetroCorp Bancshares, Inc.



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