U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 2000.
Commission file number: 0-23790
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MetroBanCorp
- ------------
(Exact name of small business issuer as specified in its charter)
Indiana 35-1712167
- --------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10333 N. Meridian Street, Suite 111, Indianapolis, Indiana 46290
- --------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(317) 573-2400
- ---------------------------
(Issuer's telephone number)
http://www.metb.com
-------------------
(Issuer's Internet Website Address)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
1,997,754 Shares of Common Stock
- --------------------------------
Transitional Small Business Disclosure Format:
Yes No X
--- ---
MetroBanCorp
FORM 10-QSB
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Condition
June 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations and Comprehensive Income
Three Months Ended June 30, 2000 and 1999 4
Consolidated Statements of Operations and Comprehensive Income 5
Six Months Ended June 30, 2000 and 1999
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2000 and 1999 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities and Use of Proceeds 13
Item 3. Defaults Under Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
EXHIBITS 15
Page 2 of 17
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition
(unaudited)
(dollars in thousands)
06/30/00 12/31/99
------------- ------------
Assets
Cash and Due from Banks $14,795 $9,526
Federal Funds Sold - -
------------- ------------
Total Cash and Cash Equivalents 14,795 9,526
Securities held-to-maturity 3,604 3,212
Securities available-for-sale 32,407 37,745
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Total Securities 36,011 40,957
Loans:
Gross Loans 97,822 88,067
Less: Allowance for Loan Losses (1,428) (1,464)
------------- ------------
Loans, Net 96,394 86,603
Premises and Equipment, Net 1,690 1,543
Accrued Interest Receivable and Other Assets 2,664 2,608
------------- ------------
Total Assets $151,554 $141,237
============= ============
Liabilities
Deposits:
Non-Interest Bearing Demand $33,652 $24,225
Interest Bearing:
Savings and NOW Accounts 50,646 57,386
Time Deposits of $100,000 and over 11,124 10,763
Other Time Deposits 31,375 25,772
------------- ------------
Total Deposits 126,797 118,146
Accrued Interest Payable and Other Liabilities 1,410 1,120
Repurchase Agreements 4,880 5,395
Federal Home Loan Bank Advances 5,000 -
Federal Funds Purchased - 3,300
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Total Liabilities 138,087 127,961
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Shareholders' Equity
Preferred Stock: 1,000,000 Shares Authorized; None Outstanding - -
Common Stock: 3,000,000 Shares Authorized;
1,997,754 Shares Issued and Outstanding in 2000
2,033,036 Shares Issued and Outstanding in 1999 14,024 14,232
Accumulated Deficit (71) (508)
Accumulated Other Comprehensive Loss (486) (448)
------------- ------------
Total Shareholders' Equity 13,467 13,276
------------- ------------
Total Liabilities and Shareholders' Equity $151,554 $141,237
============= ============
See "Notes to Consolidated Financial Statements"
Page 3 of 17
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations and Comprehensive Income
(unaudited)
(dollars in thousands, except share data)
Three Months Ended
---------------------------
06/30/00 06/30/99
------------- ------------
Interest Income
Loans, including related fees $2,363 $1,931
Securities 557 547
Federal Funds Sold 5 30
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Total Interest Income 2,925 2,508
Interest Expense
Deposits 1,143 978
Other 95 6
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Total Interest Expense 1,238 984
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Net Interest Income 1,687 1,524
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Provision for Loan Losses 22 58
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Net Interest Income after Provision for Loan Losses 1,665 1,466
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Non-Interest Income
Service Charges on Deposit Accounts 122 103
Other Service Charges, Commissions and Fees 184 170
------------- ------------
Total Non-Interest Income 306 273
Non-Interest Expense
Salaries and Employee Benefits 634 551
Occupancy 125 106
Equipment 108 85
Advertising and Public Relations 69 68
Legal, Professional and Audit Services 64 42
Data Processing 93 81
Other 284 224
------------- ------------
Total Non-Interest Expense 1,377 1,157
Income Before Income Taxes 594 582
Provision for Income Taxes 223 222
------------- ------------
Net Income $371 $360
============= ============
Comprehensive Income $402 $148
============= ============
Basic earnings per share $0.19 $0.18
Diluted earnings per share $0.18 $0.17
Weighted Average Shares Outstanding 2,001,051 2,035,738
Weighted Average Shares Outstanding - Assuming Dilution 2,013,681 2,092,041
See "Notes to Consolidated Financial Statements"
Page 4 of 17
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations and Comprehensive Income
(unaudited)
(dollars in thousands, except share data)
Six Months Ended
---------------------------
06/30/00 06/30/99
------------- ------------
Interest Income
Loans, including related fees $4,542 $3,823
Securities 1,137 1,129
Federal Funds Sold 12 42
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Total Interest Income 5,691 4,994
Interest Expense
Deposits 2,233 1,958
Other 161 14
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Total Interest Expense 2,394 1,972
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Net Interest Income 3,297 3,022
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Provision for Loan Losses 42 116
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Net Interest Income after Provision for Loan Losses 3,255 2,906
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Non-Interest Income
Service Charges on Deposit Accounts 224 199
Other Service Charges, Commissions and Fees 343 325
------------- ------------
Total Non-Interest Income 567 524
Non-Interest Expense
Salaries and Employee Benefits 1,270 1,072
Occupancy 246 210
Equipment 215 169
Advertising and Public Relations 137 126
Legal, Professional and Audit Services 103 87
Data Processing 188 167
Other 543 501
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Total Non-Interest Expense 2,702 2,332
Income Before Income Taxes 1,120 1,098
Provision for Income Taxes 429 425
------------- ------------
Net Income $691 $673
============= ============
Comprehensive Income $653 $365
============= ============
Basic earnings per share $0.34 $0.33
Diluted earnings per share $0.34 $0.32
Weighted Average Shares Outstanding 2,018,673 2,036,219
Weighted Average Shares Outstanding - Assuming Dilution 2,037,102 2,113,149
See "Notes to Consolidated Financial Statements"
Page 5 of 17
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Cash Flows
(unaudited)
(dollars in thousands)
Six Months Ended
--------------------------------
06/30/00 06/30/99
--------------- --------------
Operating Activities:
Net Income $691 $673
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 42 116
Depreciation and Amortization 200 195
Change in Accrued Interest Receivable and Other Assets (56) (197)
Change in Accrued Interest Payable and Other Liabilities 290 545
--------------- --------------
Total Adjustments 476 659
--------------- --------------
Net Cash Provided by Operating Activities 1,167 1,332
--------------- --------------
Investing Activities:
Proceeds from Maturities of Investment Securities Available for Sale 2,408 6,682
Proceeds from Sales of Investment Securities Available for Sale 2,500 1,100
Purchases of Investment Securities Available for Sale - (5,091)
Proceeds from the Sale of Student Loans - 32
Proceeds from the Repayment of Student Loans 265 314
Net Loans Made to Customers (10,098) (2,218)
Purchases of Premises and Equipment (347) (66)
--------------- --------------
Net Cash Provided by (Used in) Investing Activities (5,272) 753
--------------- --------------
Financing Activities:
Net change in Deposits 8,651 926
Net change in Fed Funds Purchased (3,300) -
Net change in Repurchase Agreements (515) -
Draws on FHLB Advances 5,000 -
Cash Dividends Paid (254) (215)
Issuance of Common Stock 184 -
Net Sale (Purchases of) Treasury Stock (392) (25)
--------------- --------------
Net Cash Provided by Financing Activities 9,374 686
--------------- --------------
Net Increase in Cash and Cash Equivalents 5,269 2,771
Cash and Cash Equivalents at Beginning of Period 9,526 10,044
--------------- --------------
Cash and Cash Equivalents at End of Period $14,795 12,815
=============== ==============
See "Notes to Consolidated Statements"
Page 6 of 17
MetroBanCorp
Notes to Consolidated Financial Statements
1. Basis of Presentation
---------------------
The consolidated financial statements include the accounts of
MetroBanCorp and its wholly-owned affiliate, MetroBank (together,
"Metro"). All significant intercompany transactions and balances have
been eliminated.
In the opinion of management of Metro, the consolidated financial
statements contain all the normal and recurring adjustments necessary to
present fairly the consolidated financial condition of Metro as of June
30, 2000 and December 31, 1999, and the results of its operations and
cash flows for the periods ended June 30, 2000 and 1999.
These financial statements should be read in conjunction with Metro's
latest Annual Report on Form 10-KSB for the year ending December 31,
1999.
2. Comprehensive Income
--------------------
Comprehensive Income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity
during a period, except those resulting from investment by owners and
distributions to owners. In Metro's case, comprehensive income includes
net income and unrealized gains and losses on available for sale
securities.
3. Per Share Data
--------------
Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during each period.
Diluted earnings per share is computed as above, except that the
denominator is increased to include the number of additional common
shares that would have been outstanding if the dilutive potential common
shares (stock options) had been issued. Below is a table reconciling
basic earnings per share and diluted earnings per share:
For the Three Months Ended
-------------------------------------------------------------------
June 30, June 30,
2000 1999
--------------------------------- ---------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator)(Denominator) Amount (Numerator)(Denominator) Amount
--------------------------------- ---------------------------------
Income Available to Common
Shareholders $371,000 2,001,051 $360,000 2,035,738
Basic earnings per share $0.19 $0.18
========= =========
Effect of Dilutive Stock - 12,630 - 56,303
Options
------------------------ ------------------------
Diluted earnings per share $371,000 2,013,681 $0.18 $360,000 2,092,041 $0.17
================================= =================================
Page 7 of 17
For the Six Months Ended
-------------------------------------------------------------------
June 30, June 30,
2000 1999
--------------------------------- ---------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator)(Denominator) Amount (Numerator)(Denominator) Amount
--------------------------------- ---------------------------------
Income Available to Common
Shareholders $691,000 2,018,673 $673,000 2,036,219
Basic earnings per share $0.34 $0.33
========= =========
Effect of Dilutive Stock - 18,429 - 76,930
Options
------------------------ ------------------------
Diluted earnings per share $691,000 2,037,102 $0.34 $673,000 2,113,149 $0.32
================================= =================================
Page 8 of 17
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The following management discussion is presented to provide information
concerning the consolidated financial condition of Metro as of June 30, 2000 as
compared to December 31, 1999, and the results of operations for the three and
six month periods ending June 30, 2000 and 1999.
FINANCIAL CONDITION
At June 30, 2000, Metro had total assets of $151.6 million, an increase of $10.3
million or 7.3 percent from December 31, 1999. Consolidated earning assets
totaled $133.5 million, or 88.1 percent of total assets, at June 30, 2000. The
principal components of earning assets were loans in the amount of $97.5 million
or 73.0 percent of total earning assets, and securities of $36.0 million or 27.0
percent of total earning assets. Earning assets at December 31, 1999 were $128.6
million, or 91.0 percent of total assets.
LOANS
- -----
Gross loans outstanding increased $9.8 million or 11.1 percent from December 31,
1999 to June 30, 2000. Metro continued to make a concerted effort to increase
its commercial and installment loan portfolio through the use of an extensive
loan officer calling program aimed at Metro's target market. At June 30, 2000,
net loans amounted to 63.6 percent of total assets, compared to 61.3 percent of
total assets at year end 1999. Metro's loan to deposit ratio, which is one
measure of liquidity, was 77.1 percent at June 30, 2000, compared to 74.5
percent at year end 1999.
Loan Portfolio at Period-End
(dollars in thousands)
June 30, 2000 December 31, 1999 % Change
---------------------- --------------------- -------------------
Commercial $26,935 $22,067 22.06%
Real Estate - Construction 2,999 1,295 131.58%
Mortgage 44,476 41,603 6.91%
Installment 19,913 19,338 2.97%
Student Loans 3,499 3,764 (7.04)%
---------------------- --------------------- -------------------
Gross Loans 97,822 88,067 11.08%
Less:
Allowance for Loan Losses (1,428) (1,464) (2.46%)
---------------------- --------------------- -------------------
Loans, net $96,394 $86,603 11.31%
====================== ===================== ===================
Delinquent loans at June 30, 2000 were $1.2 million, representing 1.2 percent of
gross loans outstanding, compared to $935,000 of delinquent loans, or 1.1
percent, at year end 1999. Delinquent loans in both periods consisted primarily
of student loans guaranteed by a third party. Non-accruing loans at June 30,
2000 amounted to $362,000, compared to $443,000 at December 31, 1999. There were
$6,000 of loans charged-off and $5,000 of recoveries received for the three
month period ending June 30, 2000.
At June 30, 2000 and December 31, 1999, Metro had an allowance for loan losses
of $1,428,000 and $1,464,000, respectively, representing 1.5 percent and 1.7
percent of gross loans at June 30, 2000 and
Page 9 of 17
December 31, 1999, respectively. Metro provides for possible loan losses through
regular provisions to the allowance for loan losses. These provisions are made
at a level which is considered necessary by Metro's management to absorb
estimated losses in the loan portfolio and is based upon an assessment of
adequacy of Metro's loan loss reserve account.
Allowance for Loan Losses Activity
Six months ended June 30, 2000 and 1999
(dollars in thousands)
2000 1999
---- ----
Allowance for Loan Losses, January 1 $1,464 $1,300
Loans Charged-Off:
Commercial (70) -
Real Estate - -
Mortgage - -
Installment (22) (8)
Student Loans - -
--------------------- ----------------
Total Charged-Off Loans (92) (8)
--------------------- ----------------
Recoveries on Charged-Off Loans:
Commercial 9 3
Real Estate - -
Mortgage - -
Installment 5 2
Student Loans - -
--------------------- ----------------
Total Recoveries 14 5
--------------------- ----------------
Net Charged-Off Loans (78) (3)
--------------------- ----------------
Provision for Loan Losses 42 116
--------------------- ----------------
Allowance for Loan Losses, June 30 $1,428 $1,413
===================== ================
Average Loans Outstanding $90,738 $79,222
===================== ================
Net Charged-Off loans to Average Loans .086% .004%
===================== ================
SECURITIES
- ----------
Total securities at June 30, 2000 were $36.0 million, decreasing by $4.9 million
or 12.1 percent from the amount at December 31, 1999. This decrease was due
primarily to three securities sold, as well as principal paydowns and maturities
within the available-for-sale category.
DEPOSITS
- --------
Total deposits at June 30, 2000 amounted to $126.8 million, compared to $118.1
million at December 31, 1999, representing an increase of $8.7 million. Since
December 31, 1999, non-interest bearing demand deposits increased by $9.4
million or 38.9 percent, while interest bearing deposits decreased by $776,000
or 0.8 percent.
OTHER LIABILITIES
- -----------------
Liabilities other than deposits increased to $11.3 million from $9.8 million at
December 31, 1999. Other borrowed money at June 30, 2000 in the amount of $5.0
million represented borrowings from the Federal Home Loan Bank. Membership in
the Federal Home Loan Bank provides Metro with an ongoing source
Page 10 of 17
of funds to assist in liquidity management and funding loans. Total liabilities
increased by $10.1 million or 7.9 percent to $138.1 million since December 31,
1999.
CAPITAL
- -------
For the six months ending June 30, 2000, Metro's total capital increased by a
net amount of $191,000. Total increases in capital in 2000 amounted to $875,000.
Year to date earnings amounted to $691,000. The exercise of 32,634 stock options
by directors of Metro and MetroBank added $180,000 to capital. Capital increased
by $4,000 as a result of grants of Metro common stock to employees of MetroBank
under the MetroBanCorp Employee Equity Ownership Plan. Total decreases in
capital amounted to $684,000, which resulted from the repurchase of 68,300
shares of Metro common stock for $392,000, two cash dividends to Metro
shareholders in the total amount of $254,000, and an increase in the accumulated
other comprehensive loss in the amount of $38,000.
Metro is subject to various capital requirements imposed by the federal banking
regulatory authorities. Quantitative measures established by regulation to
ensure capital adequacy require Metro to maintain minimum amounts and ratios of
total and Tier 1 capital (as defined in the regulations) to risk-weighted
assets, and Tier 1 capital to average assets. Management believes, as of June
30, 2000, that Metro meets all capital adequacy requirements to which it is
subject. The following table sets forth the actual and minimum capital amount
and ratios of Metro and MetroBank as of June 30, 2000 (dollars in thousands):
To Be Well Capitalized
Under Prompt Corrective
Actual Action Provisions
----------------------- -----------------------------
Amount Ratio Amount Ratio
---------- ---------- ------------ -------------
Total Capital
(to Risk Weighted Assets)
Metro $15,276 14.44% > $10,582 > 10.00%
- -
MetroBank $12,855 12.23% > $10,513 > 10.00%
- -
Tier 1 Capital
(to Risk Weighted Assets)
Metro $13,953 13.19% > $6,349 > 6.00%
- -
MetroBank $11,541 10.98% > $6,308 > 6.00%
- -
Tier 1 Capital
(to Average Assets)
Metro $13,953 9.84% > $7,090 > 5.00%
- -
MetroBank $11,541 8.27% > $6,981 > 5.00%
- -
As of December 31, 1999, the most recent notification from the FDIC categorized
MetroBank as "well capitalized" under the regulatory framework for prompt
corrective action. To be categorized as "well capitalized", MetroBank must
maintain minimum total risk-weighted, Tier 1 capital and leverage ratios as set
forth in the table. There are no conditions or events since this notification
that management believes have changed MetroBank's capital category.
Page 11 of 17
RESULTS OF OPERATIONS
NET INTEREST INCOME
- -------------------
Net interest income after provision for loan losses was $3.3 million for the six
months ended June 30, 2000, compared to $2.9 million for the comparable period
of 1999, an increase of 13.8 percent. Metro's provision for loan loss expense
was $42,000 for the six months ended June 30, 2000, compared to $116,000 for the
same period in 1999. The loan loss provision made in 2000 was at a level
considered necessary by Metro management to absorb estimated losses in the loan
portfolio and is based upon an assessment of the adequacy of Metro's loan loss
reserve account.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense amounted to $2.7 million for the six month period ending
June 30, 2000, compared to $2.3 million for the same period one year earlier, an
increase of 17.4 percent compared to the same six month period in 1999. More
than one-half of this increase resulted from an 18.5 percent increase in
salaries and employee benefits driven by annual merit increases and additional
staff hired to support Metro's growth.
NET INCOME
- ----------
Metro recognized net income of $691,000 for the six month period ending June 30,
2000, compared to $673,000 for the same period one year earlier, an increase of
2.7 percent. Net income for the three months ended June 30, 2000 was $371,000,
up 3.1 percent over 1999's same period net income of $360,000. Results for the
quarter reflect the same trends as do year to date results.
Page 12 of 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - none.
- ------- -----------------
Item 2. Changes in Securities and Use of Proceeds - none.
- ------- -----------------------------------------
Item 3. Defaults Under Senior Securities - none.
- ------- --------------------------------
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
(a) Metro held its annual meeting of shareholders on May 18, 2000.
(b) At the annual meeting, Metro's shareholders elected ten directors to
serve until the next annual meeting of the shareholders and until their
successors are duly elected, qualified and serving. The votes cast for
the directors at the annual meeting were as follows:
Number of Votes
--------------------------------------------
Director's Name For Withheld Abstaining
----------------------------- ------------ ------------- -------------
Chris G. Batalis 1,630,555 1,755 23,525
Ike G. Batalis 1,619,707 12,603 23,525
Terry L. Eaton 1,630,558 1,752 23,525
Evans M. Harrell 1,630,980 1,330 23,525
Robert L. Lauth, Jr. 1,631,163 1,147 23,525
James C. Lintzenich 1,631,705 605 23,525
Edward G. McMahon 1,630,857 1,453 23,525
R. D. "Rusty" Richardson 1,631,403 907 23,525
Edward R. Schmidt 1,630,135 2,175 23,525
Donald F. Walter 1,630,617 1,693 23,525
----------------------------- ------------ ------------- -------------
(c) (i) At the annual meeting, Metro's shareholders approved amendment
of the 1994 Directors' Stock Option Plan of MetroBanCorp to: (i)
reserve an additional 217,500 shares of Metro common stock for
issuance under the Plan, and (ii) provide for a cashless exercise
option for payment of stock under the Plan.
For: 1,156,326 Against: 86,426 Abstaining: 20,222
--------- ------ ------
(ii) At the annual meeting, Metro's shareholders also approved amendment
of the 1994 Stock Option and Stock Appreciation Rights Plan of
MetroBanCorp to: (i) reserve an additional 50,000 shares of Metro
common stock for issuance under the Plan, (ii) provide for a
cashless exercise option for payment of stock under the Plan, and
(iii) provide for an automatic reload provision under the Plan.
For: 1,137,681 Against: 107,438 Abstaining: 19,312
--------- ------- ------
Item 5. Other Information - none.
- ------- ------------------
Page 13 of 17
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
Exhibit 27 Financial Data Schedule
(b) A change in Metro's certified public accountant on May 18, 2000 was
disclosed on Form 8-K filed on May 25, 2000.
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
METROBANCORP
(Registrant)
August 4, 2000 By: /S/ Ike G. Batalis
------------------------
Ike G. Batalis
Chairman and
President (Principal
Executive Officer)
August 4, 2000 By: /S/ Charles V. Turean
-----------------------
Charles V. Turean
Executive Vice President
(Principal Financial and
Accounting Officer)
Page 14 of 17