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

Oct 19, 2012, 17:08 ET from MetroCorp Bancshares, Inc.

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.



RELATED LINKS

http://www.metrobank-na.com