EXHIBIT 99.1
MetroCorp Bancshares, Inc. Announces Net Income of $2.8 million, or $0.26 Per Diluted Share, in Fourth Quarter 2007, and Total Assets Reached $1.46 Billion
HOUSTON, Jan. 30, 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 ("Metro United"), serving California, today announced net income of $2.8 million for the fourth quarter of 2007, down approximately 15.9% compared with $3.3 million for the same quarter in 2006. Diluted earnings per share for the fourth quarter of 2007 were $0.26 compared with $0.30 for the fourth quarter of 2006. Diluted earnings per share for the year ended 2007 decreased 9.8% from $1.22 to $1.10. The decrease in earnings is primarily attributed to increased personnel and occupancy costs related to the expansion in California, as well as an increase in the provision for loan losses due to loan growth.
Fourth Quarter Highlights
* Total loans increased to a record high of $1.20 billion, a 6.0%
increase for the fourth quarter of 2007 compared with the third
quarter of 2007, and a 35.6% increase compared with year end 2006.
* Asset quality remained stable with net nonperforming assets to
total assets of 0.46% as of December 31, 2007 compared with 0.47%
as of September 30, 2007, and improved from 0.74% as of December
31, 2006.
* Regulatory approval received in December 2007 from the China
Banking Regulatory Commission for a second representative office
in China located in the city of Chongqing.
George M. Lee, President and CEO of MetroCorp Bancshares, Inc. stated, "We designated 2007 as the beginning of the second phase of MetroCorp's strategic plan with a focus on balanced loan and deposit growth and expansion of market presence, while maintaining our credit quality in a turbulent operating environment. Our total loans grew by $315.4 million from $886.6 million at December 31, 2006 to $1.20 billion at December 31, 2007, representing an increase of 35.6%. During the same period, our net nonperforming assets were reduced from $9.3 million at December 31, 2006 to $6.8 million at December 31, 2007, a decrease of 27.3%, bringing our net nonperforming assets to total assets ratio to 0.46%. Our total deposits grew by $109.4 million or 10.1% in 2007, and our total assets increased by $191.3 million or 15.1%, setting a record of $1.46 billion at year end 2007.
"As a result of our 35.6% loan growth, we increased our provision for loan losses by $2.5 million in 2007. Management continues to maintain a prudent and conservative stance in credit management. The two new branches in California and our Xiamen representative office in China that were established during 2007 are beginning to contribute to our overall market strategy. We have also received approval from China regulatory authorities for our second representative office, which will be located in Chongqing, China. The city of Chongqing is the largest city in China, approximately twice the population of the city of Shanghai, and was ranked fourth in terms of total foreign investment in China. Management believes that the addition of the Chongqing office will provide opportunities for new business relationships as well as assisting our U.S. customers with respect to trade activities within the region.
"Our efficiency ratio of 65.96% for the three months ended December 31, 2007 was affected by the increase in other real estate expenses of $290,000, which primarily resulted from the loss on the sale of a foreclosed property in December, and approximately $113,000 of various one-time expense charges. Management is pleased with the progress we have made in controlling noninterest expense and intends to continue to place our emphasis on efficiency improvement."
Interest income and expense. Interest income for the three months ended December 31, 2007 was $26.3 million, up approximately $3.0 million or 12.9% compared with $23.3 million for the same period in 2006. Interest income for the year ended December 31, 2007 was $102.3 million, up approximately $15.6 million or 18.0% compared with $86.7 million for 2006. The increase in interest income for the three months and year ended December 31, 2007 was due primarily to loan growth.
Average earning assets grew 13.5% during the fourth quarter of 2007 compared with the same period in 2006. Average total loans increased 33.6% to $1.16 billion in the fourth quarter of 2007 compared with $865.2 million for the fourth quarter of 2006, offsetting the decline in other earning assets. Average earning assets grew 13.9% during the year ended December 31, 2007 compared with the same period in 2006. The increase was primarily due to loan growth, with average total loans increasing 29.4% from $819.1 million to $1.06 billion while other earning assets declined during the same period. The yield on average earning assets for the fourth quarter of 2007 was 7.87% compared with 7.91% for the fourth quarter of 2006. The decline in yield for the three months ended December 31, 2007 was the result of the interest rate cut by the Federal Reserve. The yield on average earning assets for the year ended December 31, 2007 was 8.03% compared with 7.75% for the same period of 2006, primarily due to the increase in l oans, which had higher yields, and a decline in lower yielding other interest earning assets.
Interest expense for the three months ended December 31, 2007 was $11.9 million, up approximately $2.2 million or 22.8% compared with $9.7 million for the same period in 2006. Interest expense for the year ended December 31, 2007 was $45.4 million, up approximately $11.9 million or 35.5% compared with $33.5 million for 2006. Interest expense increased for both the three and twelve months ended December 31, 2007 primarily due to growth in money market and time deposits and increases in interest rates paid on deposits. Average interest-bearing deposits were $998.9 million for the fourth quarter of 2007 compared with $857.9 million for the fourth quarter of 2006, an increase of 16.4%. The cost of interest-bearing deposits for the fourth quarter of 2007 was 4.34% compared with 4.10% for the fourth quarter of 2006. For the year ended December 31, 2007, average interest-bearing deposits were $960.5 million, compared with $820.8 million for the same period of 2006, an increase of 17.0%. The cost of interest-bearing deposits for the year ended December 31, 2007 was 4.38% compared with 3.67% for the same period 2006. The increases in cost for the three months and year ended December 31, 2007 reflected the higher volume of money market and time deposits, which are paid higher rates than other types of deposits.
The net interest margin for the three months ended December 31, 2007 was 4.30%, down from 4.61% for the same period in 2006. The decrease in net interest margin for the three months ended December 31, 2007 was primarily the result of higher interest rates paid on interest-bearing liabilities, which increased to 4.39% compared with 4.19% for the same period in 2006, coupled with a decrease in the yield on interest-earning assets for the same period due to the rate cut by the Federal Reserve during the third and fourth quarters of 2007. For the three months ended December 31, 2007 compared with the same period in 2006, the yield on average earning assets decreased four basis points, and the cost of average earning assets increased 27 basis points.
The net interest margin for the year ended December 31, 2007 was 4.47%, down from 4.76% for the same period in 2006. The decrease in net interest margin for the year ended December 31, 2007 was primarily the result of higher interest rates paid on interest-bearing liabilities, which increased to 4.44% compared with 3.79% for the same period in 2006. For the year ended December 31, 2007, the yield on average earning assets increased 28 basis points primarily due to loan growth, which was offset by an increase in the cost of average earning assets of 57 basis points.
Net interest income before the provision for loan losses for the three months ended December 31, 2007 was $14.4 million, up approximately $794,000 or 5.8% compared with $13.6 million for the same period in 2006. Net interest income before the provision for loan losses for the year ended December 31, 2007 was $56.9 million, up approximately $3.7 million or 7.0% compared with $53.2 million for the same period in 2006.
Noninterest income and expense. Noninterest income for the three months ended December 31, 2007 was $2.4 million, up $260,000 compared with the same period in 2006. The increase in noninterest income for the three months ended December 31, 2007 was primarily due to increases in the cash value of bank owned life insurance and the gain on sale of a branch property. The increase was partially offset by a decrease in the gain on sale of SBA loans which slowed as a result of lower loan sales due to unfavorable market prices. Noninterest income for the year ended December 31, 2007 was $8.3 million, up $364,000 or 4.6% compared with the same period in 2006. The increase in noninterest income for the year ended December 31, 2007 was primarily due to increases in the cash value of bank owned life insurance which was purchased in June 2007 and the gain on sale of a branch property, which were partially offset by decreases in service fee income, other loan related fees and the gain on sale of SBA loans.
Noninterest expense for the three months ended December 31, 2007 was $11.1 million, up approximately $612,000 or 5.8% compared with $10.5 million for the same period in 2006. Noninterest expense for the year ended December 31, 2007 was $42.9 million, up approximately $3.4 million or 8.8% compared with $39.5 million for the same period in 2006. The increase for the three months and year ended December 31, 2007 was primarily due to increases in salaries and benefits expense and occupancy and equipment expense.
Salaries and benefits expense for the three months ended December 31, 2007 was $6.3 million, up $589,000 compared with $5.7 million for the same period in 2006. Salaries and benefits expense for the year ended December 31, 2007 was $24.8 million, up $3.1 million compared with $21.7 million for the same period in 2006. The increase for the three months and year ended December 31, 2007 was primarily due to an increase in staffing at Metro United for new branches and supporting personnel.
Occupancy and equipment expense for the three months ended December 31, 2007 was $2.1 million, up $157,000 or 8.3% compared with $1.9 million for the same period in 2006. Occupancy and equipment expense for the year ended December 31, 2007 was $8.2 million, up $1.2 million or 16.4% compared with $7.0 million for the same period in 2006. The increase for both the three months and year ended December 31, 2007 was primarily due to the new branches added in California.
Other noninterest expense for the three months ended December 31, 2007 was $2.5 million, a decrease of $215,000 or 8.1% compared with $2.7 million for the same period in 2006. The decrease for the three months ended December 31, 2007 was primarily the result of the decreases in the provision for unfunded commitments, franchise tax, legal fees, and contract security, which were partially offset by increases in online banking expense, other outside services, and data processing expense. Other noninterest expense for the year ended December 31, 2007 was $9.7 million, down $602,000 compared with $10.3 million at December 31, 2006. The decrease for the year ended December 31, 2007 was primarily the result of decreases in professional fees, consultant fees, franchise taxes, the provision for unfunded loan commitments, and intangible asset amortization, which were partially offset by increases in online banking expense, telecommunications expense, and other outside services.
Provision for loan losses. The provision for loan losses for the three months ended December 31, 2007 was $1.4 million, an increase of $1.3 million compared with $52,000 for the same period in 2006. The increase was due to loan growth and an increase in net charge offs in the fourth quarter of 2007. The provision for loan losses for the year ended December 31, 2007 was $3.1 million, a $2.5 million increase compared with $612,000 for the same period in 2006. Although asset quality improved with a $2.5 million or 27.3% reduction in net nonperforming assets since December 31, 2006, the provision for loan losses increased primarily as a result of the $315.4 million or 35.6% growth in total loans since December 31, 2006. The allowance for loan losses as a percent of total loans at December 31, 2007 and 2006 was 1.09% and 1.29%, respectively.
Net charge offs for the three months ended December 31, 2007 were $1.1 million compared with net charge offs of $467,000 for the same period in 2006. The increase was the result of a $610,000 charge off on a real estate development loan in California, and approximately $539,000 of charge offs on various loans in Texas. Net charge offs for the year ended December 31, 2007 were $1.5 million, a decrease of $888,000, compared with net charge offs of $2.3 million for the year ended December 31, 2006.
Asset Quality. Total nonperforming assets decreased $3.1 million from $12.2 million at December 31, 2006 to $9.1 million at December 31, 2007. The ratio of net nonperforming assets to total assets was reduced to 0.46% at December 31, 2007, compared with 0.74% at December 31, 2006.
On a linked-quarter basis compared with September 30, 2007, other real estate decreased $792,000 primarily due to the sale of one property in the amount of $1.9 million, which was partially offset by the foreclosure of another property in the amount of $1.2 million. During the fourth quarter 2007, nonaccrual loans increased by $257,000 primarily as a result of the addition of two loans, which were partially offset by the foreclosure noted above.
At December 31, 2007, total nonperforming assets consisted of $6.3 million in nonaccrual loans, $1.3 million in accruing loans that were 90 days or more past due, and $1.5 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, 2007, were $6.8 million compared with $9.3 million at December 31, 2006. Approximately $3.7 million of the nonaccrual loans are collateralized by real estate, which represented 58.6% of total nonaccrual loans at December 31, 2007. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program.
Stock Repurchase. The Company, through its stock repurchase program, repurchased 131,000 shares of its common stock during the fourth quarter 2007 resulting in a total of 167,000 shares repurchased under the program.
Management conference call. On Thursday, January 31, 2008, the Company will hold a conference call at 10:00 a.m. Central (11:00 a.m. Eastern) to discuss the fourth quarter 2007 results. A brief management presentation will be followed by a question and answer period. To participate by phone, U.S. callers may dial 1.877.407.8291 (International callers may dial 1.201.689.8345) and ask for the MetroCorp conference. The call will be webcast by Thomson/CCBN and can be accessed at MetroCorp's web site at www.metrobank-na.com. An audio archive of the call will be available approximately one hour after the call and will be accessible at www.metrobank-na.com in the Investor Relations section.
MetroCorp Bancshares, Inc., provides a full range of commercial and consumer banking services through its wholly owned subsidiaries, MetroBank, N.A. and Metro United Bank. The Company has twelve full-service banking locations in the greater Houston and Dallas, Texas metropolitan areas, and six full service banking locations in the greater San Diego, Los Angeles and San Francisco, California metropolitan areas. As of December 31, 2007, the Company had consolidated assets of $1.5 billion. For more information, visit the Company's web site at www.metrobank-na.com.
The MetroCorp Bancshares Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=2894
The statements contained in this release that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe the Company's future plans, projections, strategies and expectations, are based on assumptions and involve a number of risks and uncertainties, many of which are beyond the Company's control. Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) general business and economic conditions in the markets the Company serves may be less favorable than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; (2) changes in the interest rate environment which could reduce the Company's net interest margin; (3) changes in management's assumptions regarding the adequacy of the allowance for loan losses; (4) legis lative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry; (5) the effects of competition from other financial institutions operating in the Company's market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; (6) changes in accounting principles, policies or guidelines; and (7) the Company's ability to adapt successfully to technological changes to meet customers' needs and developments in the market place. All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements. Please also read the additional risks and factors described from time to time in the Company's reports and other documents filed with the Securities and Exchange Commission.
MetroCorp Bancshares, Inc.
(In thousands, except share amounts)
(Unaudited)
December 31, December 31,
2007 2006
----------- -----------
Consolidated Balance Sheets
---------------------------
Assets
Cash and due from banks $ 28,889 $ 25,709
Federal funds sold and other investments 17,381 125,649
----------- -----------
Total cash and cash equivalents 46,270 151,358
Securities available-for-sale, at fair
value 137,749 181,544
Other investments 6,886 4,931
Loans, net of allowance for loan losses of
$13,125 and $11,436 respectively 1,188,786 875,120
Accrued interest receivable 6,482 5,841
Premises and equipment, net 8,795 7,585
Goodwill 21,827 21,827
Core deposit intangibles 756 1,103
Customers' liability on acceptances 5,967 7,693
Foreclosed assets, net 1,474 2,747
Cash value of bank owned life insurance 25,737 --
Other assets 8,977 8,685
----------- -----------
Total assets $ 1,459,706 $ 1,268,434
=========== ===========
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 209,223 $ 208,750
Interest-bearing 981,820 872,914
----------- -----------
Total deposits 1,191,043 1,081,664
Junior subordinated debentures 36,083 36,083
Repurchase agreements 25,000 --
Other borrowings 74,796 26,316
Accrued interest payable 1,727 1,822
Acceptances outstanding 5,967 7,693
Other liabilities 7,680 8,908
----------- -----------
Total liabilities 1,342,296 1,162,486
Commitments and contingencies -- --
Shareholders' Equity:
Common stock, $1.00 par value, 50,000,000
shares authorized; 10,994,965 shares
issued and 10,825,837 shares and
10,946,135 shares outstanding at
December 31, 2007 and 2006 respectively 10,995 10,995
Additional paid-in-capital 27,386 25,974
Retained earnings 82,211 71,783
Accumulated other comprehensive loss (786) (2,421)
Treasury stock, at cost (2,396) (383)
----------- -----------
Total shareholders' equity 117,410 105,948
----------- -----------
Total liabilities and shareholders'
equity $ 1,459,706 $ 1,268,434
=========== ===========
-- --
Nonperforming Assets and Asset Quality
Ratios
--------------------------------------
Nonaccrual loans $ 6,336 $ 9,414
Accruing loans 90 days or more past due 1,284 29
Other real estate ("ORE") 1,474 2,747
----------- -----------
Total nonperforming assets 9,094 12,190
Less nonperforming loans guaranteed by the
SBA, Ex-Im Bank, or the OCCGF (2,309) (2,857)
----------- -----------
Net nonperforming assets $ 6,785 $ 9,333
=========== ===========
Net nonperforming assets to total assets 0.46% 0.74%
Net nonperforming assets to total loans and
ORE 0.56% 1.05%
Allowance for loan losses to total loans 1.09% 1.29%
Allowance for loan losses to net
nonperforming loans 247.13% 173.64%
Net charge-offs to total loans 0.12% 0.26%
Net charge-offs $ 1,456 $ 2,344
Total loans to total deposits 100.91% 81.96%
MetroCorp Bancshares, Inc.
(In thousands, except per share amounts)
(Unaudited)
For the three months For the twelve months
ended December 31 ended December 31
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
Average Balance
Sheet Data
---------------
Total assets $1,421,984 $1,245,402 $1,358,422 $1,191,239
Securities 149,772 185,673 164,829 207,371
Total loans 1,156,278 865,246 1,059,654 819,103
Allowance for loan
losses (13,293) (11,826) (12,599) (13,031)
Net loans 1,142,985 853,420 1,047,055 806,072
Total interest-
earning assets 1,327,319 1,169,758 1,273,431 1,118,348
Total deposits 1,205,396 1,057,436 1,164,903 1,012,887
FHLB and other
borrowings 79,703 61,818 62,486 62,032
Total shareholders'
equity 117,494 104,748 113,001 99,104
Income Statement
Data
----------------
Interest income:
Loans $ 24,444 $ 19,755 $ 92,556 $ 73,137
Securities:
Taxable 1,569 1,934 6,909 8,320
Tax-exempt 73 92 307 664
Federal funds sold
and other
investments 248 1,540 2,526 4,557
---------- ---------- ---------- ----------
Total interest
income 26,334 23,321 102,298 86,678
Interest expense:
Time deposits 8,042 7,358 32,140 24,851
Demand and savings
deposits 2,885 1,513 9,967 5,263
Other borrowings 1,013 850 3,285 3,384
---------- ---------- ---------- ----------
Total interest
expense 11,940 9,721 45,392 33,498
Net interest income 14,394 13,600 56,906 53,180
Provision for loan
losses 1,372 52 3,145 612
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 13,022 13,548 53,761 52,568
Noninterest income:
Service fees 1,318 1,315 5,175 5,618
Other loan-related
fees 132 183 643 805
Letters of credit
commissions and fees 231 225 868 822
Gain on sale of
securities, net 2 -- 2 12
Gain on sale of
loans, net 5 390 277 390
Increase in cash
value of bank owned
life insurance 331 -- 738 --
Other noninterest
income 406 52 585 277
---------- ---------- ---------- ----------
Total noninterest
income 2,425 2,165 8,288 7,924
Noninterest expense:
Salaries and employee
benefits 6,255 5,666 24,846 21,743
Occupancy and
equipment 2,055 1,898 8,157 7,007
Foreclosed assets,
net 329 248 278 461
Other noninterest
expense 2,455 2,670 9,654 10,256
---------- ---------- ---------- ----------
Total noninterest
expense 11,094 10,482 42,935 39,467
Income before
provision for income
taxes 4,353 5,231 19,114 21,025
Provision for income
taxes 1,549 1,896 6,939 7,521
---------- ---------- ---------- ----------
Net income $ 2,804 $ 3,335 $ 12,175 $ 13,504
========== ========== ========== ==========
Per Share Data
--------------
Earnings per share
- basic $ 0.26 $ 0.30 $ 1.11 $ 1.24
Earnings per share
- diluted 0.26 0.30 1.10 1.22
Weighted average
shares outstanding:
Basic 10,865 10,938 10,935 10,906
Diluted 10,961 11,173 11,110 11,112
Dividends per common
share $ 0.04 $ 0.04 $ 0.16 $ 0.16
Performance Ratio
Data
-----------------
Return on average
assets 0.78% 1.06% 0.90% 1.13%
Return on average
shareholders' equity 9.47% 12.63% 10.77% 13.63%
Net interest margin 4.30% 4.61% 4.47% 4.76%
Efficiency ratio 65.96% 66.49% 65.86% 64.59%
Equity to assets
(Average) 8.26% 8.41% 8.32% 8.32%
CONTACT: MetroCorp Bancshares, Inc., Houston
George Lee, President & CEO
(713) 776-3876
David Choi, EVP/Chief Financial Officer
(713) 776-3876
