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
SEPTEMBER 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
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(Issuer's telephone number)
http://www.metb.com
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(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:
1,932,547 Shares of Common Stock
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Transitional Small Business Disclosure Format:
Yes No X
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MetroBanCorp
FORM 10-QSB
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Condition
September 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations and Comprehensive Income
Three Months Ended September 30, 2000 and 1999 4
Consolidated Statements of Operations and Comprehensive Income 5
Nine Months Ended September 30, 2000 and 1999
Consolidated Statements of Cash Flows
Nine Months Ended September 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 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Under Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBITS 14
Page 2
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Condition
(dollars in thousands)
(unaudited)
09/30/00 12/31/99
--------- ---------
Assets
Cash and Due from Banks $ 23,988 $ 9,526
Federal Funds Sold - -
--------- ---------
Total Cash and Cash Equivalents 23,988 9,526
Securities held-to-maturity 3,210 3,212
Securities available-for-sale 31,934 37,745
--------- ---------
Total Securities 35,144 40,957
Loans:
Gross Loans 100,226 88,067
Less: Allowance for Loan Losses (1,438) (1,464)
--------- ---------
Loans, Net 98,788 86,603
Premises and Equipment, Net 1,603 1,543
Accrued Interest Receivable and Other Assets 2,570 2,608
--------- ---------
Total Assets $ 162,093 $ 141,237
========= =========
Liabilities
Deposits:
Non-Interest Bearing Demand $ 34,546 $ 24,225
Interest Bearing:
Savings and NOW Accounts 53,080 57,386
Time Deposits of $100,000 and over 14,398 10,763
Other Time Deposits 33,153 25,772
--------- ---------
Total Deposits 135,177 118,146
Accrued Interest Payable and Other Liabilities 1,497 1,120
Repurchase Agreements 6,933 5,395
Federal Home Loan Bank Advances 5,000 -
Federal Funds Purchased - 3,300
--------- ---------
Total Liabilities 148,607 127,961
--------- ---------
Shareholders' Equity
Preferred Stock: 1,000,000 Shares Authorized; None Outstanding - -
Common Stock: 3,000,000 Shares Authorized;
1,932,547 Shares Issued and Outstanding in 2000
2,036,169 Shares Issued and Outstanding in 1999 13,612 14,232
Retained Earnings/(Accumulated Deficit) 199
(508)
Accumulated Other Comprehensive Loss (325)
(448)
--------- ---------
Total Shareholders' Equity 13,486 13,276
--------- ---------
Total Liabilities and Shareholders' Equity $ 162,093 $ 141,237
========= =========
See "Notes to Consolidated Financial Statements"
Page 3
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations and Comprehensive Income
(unaudited) Three Months Ended
(dollars in thousands, except share data) -----------------------
09/30/00 09/30/99
---------- ----------
Interest Income
Loans, including related fees $ 2,530 $ 2,022
Securities 598 583
Federal Funds Sold - 23
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Total Interest Income 3,128 2,628
Interest Expense
Deposits 1,274 1,013
Other 142 12
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Total Interest Expense 1,416 1,025
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Net Interest Income 1,712 1,603
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Provision for Loan Losses 20 58
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Net Interest Income after Provision for Loan Losses 1,692 1,545
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Non-Interest Income
Service Charges on Deposit Accounts 145 100
Other Service Charges, Commissions and Fees 182 164
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Total Non-Interest Income 327 264
Non-Interest Expense
Salaries and Employee Benefits 626 567
Occupancy 129 110
Equipment 104 88
Advertising and Public Relations 65 63
Legal, Professional and Audit Services 56 36
Data Processing 95 83
Other 324 221
---------- ----------
Total Non-Interest Expense 1,399 1,168
Income Before Income Taxes 620 641
Provision for Income Taxes 222 252
---------- ----------
Net Income $ 398 $ 389
========== ==========
Comprehensive Income $ 559 $ 330
========== ==========
Basic earnings per share $ 0.21 $ 0.19
Diluted earnings per share $ 0.20 $ 0.19
Weighted Average Shares Outstanding 1,937,698 2,036,120
Weighted Average Shares Outstanding - Assuming Dilution 1,968,281 2,105,976
See "Notes to Consolidated Financial Statements"
Page 4
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Operations and Comprehensive Income
(unaudited) Nine Months Ended
(dollars in thousands, except share data) -----------------------
09/30/00 09/30/99
---------- ----------
Interest Income
Loans, including related fees $ 7,072 $ 5,846
Securities 1,735 1,712
Federal Funds Sold 12 64
---------- ----------
Total Interest Income 8,819 7,622
Interest Expense
Deposits 3,507 2,971
Other 302 26
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Total Interest Expense 3,809 2,997
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Net Interest Income 5,010 4,625
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Provision for Loan Losses 62 174
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Net Interest Income after Provision for Loan Losses 4,948 4,451
---------- ----------
Non-Interest Income
Service Charges on Deposit Accounts 369 299
Other Service Charges, Commissions and Fees 525 489
---------- ----------
Total Non-Interest Income 894 788
Non-Interest Expense
Salaries and Employee Benefits 1,897 1,638
Occupancy 375 321
Equipment 319 257
Advertising and Public Relations 202 188
Legal, Professional and Audit Services 159 123
Data Processing 284 250
Other 866 722
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Total Non-Interest Expense 4,102 3,499
Income Before Income Taxes 1,740 1,740
Provision for Income Taxes 651 678
---------- ----------
Net Income $ 1,089 $ 1,062
========== ==========
Comprehensive Income $ 1,211 $ 696
========== ==========
Basic earnings per share $ 0.55 $ 0.52
Diluted earnings per share $ 0.54 $ 0.50
Weighted Average Shares Outstanding 1,991,484 2,036,186
Weighted Average Shares Outstanding - Assuming Dilution 2,013,872 2,110,721
See "Notes to Consolidated Financial Statements"
Page 5
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statements of Cash Flows
(unaudited)
(dollars in thousands)
Nine Months Ended
--------------------
09/30/00 09/30/99
-------- --------
Operating Activities:
Net Income $ 1,089 $ 1,062
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 62 174
Depreciation and Amortization 353 275
Change in Accrued Interest Receivable and Other Assets (52) (713)
Change in Accrued Interest Payable and Other Liabilities 377 (108)
-------- --------
Total Adjustments 740 (372)
-------- --------
Net Cash Provided by Operating Activities 1,829 690
-------- --------
Investing Activities:
Proceeds from Maturities and Paydowns of Investment Securities
Available for Sale 3,975 8,827
Proceeds from Sales of Investment Securities Available for Sale 2,500 1,100
Purchases of Investment Securities Available for Sale (500) (9,100)
Proceeds from the Sale of Student Loans - 32
Proceeds from the Repayment of Student Loans 576 464
Net Loans Made to Customers (12,823) (6,807)
Purchases of Premises and Equipment (362) (122)
-------- --------
Net Cash Provided by (Used in) Investing Activities (6,634) (5,606)
-------- --------
Financing Activities:
Net change in Deposits 17,031 6,055
Net change in Fed Funds Purchased (3,300) -
Net change in Repurchase Agreements 1,538 541
Draws on FHLB Advances 5,000 -
Cash Dividends Paid (382) (321)
Issuance of Common Stock 188 3
Purchase and Retirement of Common Stock (808) (25)
-------- --------
Net Cash Provided by Financing Activities 19,267 6,253
-------- --------
Net Increase in Cash and Cash Equivalents 14,462 1,337
Cash and Cash Equivalents at Beginning of Period 9,526 10,044
-------- --------
Cash and Cash Equivalents at End of Period $ 23,988 $ 11,381
======== ========
See "Notes to Consolidated Financial Statements"
Page 6
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
September 30, 2000 and December 31, 1999, and the results of its
operations and cash flows for the periods ended September 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 change in 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 the same, 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
----------------------------------------------------------------------------------
September 30, September 30,
2000 1999
----------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------------------------------------- ----------------------------------------
Income Available to Common
Shareholders $398,000 1,937,698 $389,000 2,036,120
Basic earnings per share $0.21 $0.19
=========== ===========
Effect of Dilutive Stock Options - 30,583 - 69,856
------------------------------ -----------------------------
Diluted earnings per share $398,000 1,968,281 $0.20 $389,000 2,105,976 $0.19
========================================= ========================================
Page 7
For the Nine Months Ended
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September 30, September 30,
2000 1999
----------------------------------------- ----------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------------------------------------- ----------------------------------------
Income Available to Common
Shareholders $1,089,000 1,991,484 $1,062,000 2,036,186
Basic earnings per share $0.55 $0.52
=========== ===========
Effect of Dilutive Stock Options - 22,388 - 74,535
------------------------------ -----------------------------
Diluted earnings per share $1,089,000 2,013,872 $0.54 $1,062,000 2,110,721 $0.50
========================================= ========================================
4. New Accounting Pronouncements
-----------------------------
Beginning January 1, 2001 a new accounting standard will require all
derivatives to be recorded at fair value. Unless designated as hedges,
changes in these fair values will be recorded in the income statement.
Fair value changes involving hedges will generally be recorded by
offsetting gains and losses on the hedge and on the hedged item, even
if the fair value of the hedged item is not otherwise recorded.
Adoption of this pronouncement will not have a material effect on the
Corporation's financial results, but the effect will depend on
derivative holdings when this standard is adopted.
Page 8
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 September 30,
2000 as compared to December 31, 1999, and the results of operations for the
three and nine month periods ending September 30, 2000 and 1999.
FINANCIAL CONDITION
At September 30, 2000, Metro had total assets of $162.1 million, an increase of
$20.9 million or 14.8 percent from December 31, 1999. Consolidated earning
assets totaled $135.1 million, or 83.4 percent of total assets, at September 30,
2000. The principal components of earning assets were loans in the amount of
$100.0 million or 74.0 percent of total earning assets, and securities of $35.1
million or 26.0 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 $12.2 million or 13.8 percent from December
31, 1999 to September 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
September 30, 2000, net loans amounted to 60.9 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 74.1 percent at September 30, 2000,
compared to 74.5 percent at year end 1999.
Loan Portfolio at Period-End
(dollars in thousands)
September 30, 2000 December 31, 1999 % Change
--------------------------- ----------------- ------------------
Commercial $27,310 $22,067 23.76%
Real Estate - Construction 2,757 1,295 112.90%
Mortgage 46,388 41,603 11.50%
Installment 20,582 19,338 6.43%
Student Loans 3,189 3,764 (15.28)%
--------------------------- ------------------- ------------------
Gross Loans 100,226 88,067 13.81%
Less:
Allowance for Loan Losses (1,438) (1,464) (1.78%)
--------------------------- ------------------- ------------------
Loans, net $98,788 $86,603 14.07%
=========================== =================== ==================
Delinquent loans at September 30, 2000 were $590,000, representing 0.6 percent
of gross loans, compared to $935,000 of delinquent loans, or 1.1 percent of
gross loans, at year end 1999. Delinquent loans in both periods consisted
primarily of student loans guaranteed by a third party. Non-accruing loans at
September 30, 2000 amounted to $254,000, compared to $443,000 at December 31,
1999.
Page 9
At September 30, 2000 and December 31, 1999, Metro had an allowance for loan
losses of $1,438,000 and $1,464,000, respectively, representing 1.4 percent and
1.7 percent, respectively, of gross loans at September 30, 2000 and December 31,
1999. 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
Nine months ended September 30, 2000 and 1999
(dollars in thousands)
2000 1999
---- ----
Allowance for Loan Losses, January 1 $1,464 $1,300
Loans Charged-Off:
Commercial (73) (2)
Real Estate - -
Mortgage - -
Installment (30) (20)
Student Loans - -
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Total Charged-Off Loans (103) (22)
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Recoveries on Charged-Off Loans:
Commercial 9 3
Real Estate - -
Mortgage - -
Installment 6 2
Student Loans - -
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Total Recoveries 15 5
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Net Charged-Off Loans (88) (17)
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Provision for Loan Losses 62 174
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Allowance for Loan Losses, September 30 $1,438 $1,457
========== ==========
Average Loans Outstanding $93,093 $80,498
========== ==========
Net Charged-Off loans to Average Loans .095% .021%
========== ==========
SECURITIES
- ----------
Total securities at September 30, 2000 were $35.1 million, decreasing by $5.8
million or 14.2 percent from the amount at December 31, 1999. This decrease was
due primarily to securities sold, principal paydowns and maturities. Proceeds
from these activities were used to fund loan growth.
DEPOSITS
- --------
Total deposits at September 30, 2000 amounted to $135.2 million, compared to
$118.1 million at December 31, 1999, representing an increase for this period of
$17.0 million. Since December 31, 1999, non-interest bearing demand deposits
increased by $10.3 million or 42.6 percent, while interest bearing deposits
increased by $6.7 million or 7.1 percent.
Page 10
OTHER LIABILITIES
- -----------------
Liabilities other than deposits increased to $13.4 million from $9.8 million at
December 31, 1999. Other borrowed money at September 30, 2000 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 of funds to assist
in liquidity management and funding loans.
CAPITAL
- -------
For the nine months ending September 30, 2000, Metro's total capital increased
by a net amount of $210,000. Total increases in capital in 2000 amounted to
$1,400,000. Year to date earnings amounted to $1,089,000. The exercise of 18,806
stock options by directors of Metro and MetroBank added $104,000 to capital. The
purchase of 13,828 shares by directors of Metro and MetroBank added $76,000.
Capital increased by $8,000 as a result of exercise of grants of Metro common
stock to employees of MetroBank under the MetroBanCorp Employee Equity Ownership
Plan. The accumulated other comprehensive loss decreased by $123,000 during the
first nine months in 2000. The total decrease in capital amounted to $1,189,000,
which resulted from the repurchase of 134,149 shares of Metro common stock for
$808,000, and three quarterly cash dividends to Metro shareholders in the total
amount of $382,000.
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
September 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 September 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 $15,178 13.90% > $10,922 > 10.00%
- -
MetroBank $12,867 11.85% > $10,856 > 10.00%
- -
Tier 1 Capital
(to Risk Weighted Assets)
Metro $13,812 12.65% > $6,553 > 6.00%
- -
MetroBank $11,509 10.60% > $6,514 > 6.00%
- -
Tier 1 Capital
(to Average Assets)
Metro $13,812 9.52% > $7,255 > 5.00%
- -
MetroBank $11,509 8.06% > $7,142 > 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
RESULTS OF OPERATIONS
NET INTEREST INCOME
- -------------------
Net interest income after provision for loan losses was $4.9 million for the
nine months ended September 30, 2000, compared to $4.4 million for the
comparable period of 1999, an increase of 11.2 percent. The increase in net
interest income was driven primarily by an increase in loan volume. Metro's
provision for loan loss expense was $62,000 for the nine months ended September
30, 2000, compared to $174,000 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 $4.1 million for the nine month period ending
September 30, 2000, compared to $3.5 million for the same period one year
earlier, an increase of 17.2 percent compared to the same nine month period in
1999. Approximately forty-three percent of this increase resulted from a 15.8
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 $1,089,000 for the nine month period ending
September 30, 2000, compared to $1,062,000 for the same period one year earlier,
an increase of 2.5 percent. Net income for the three months ended September 30,
2000 was $398,000, up 2.3 percent over 1999's same period net income of
$389,000. Results for the quarter reflect the same trends as do year to date
results.
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 - none.
- ------- ---------------------------------------------------
Item 5. Other Information - none.
- ------ -----------------
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K: No reports on Form 8-K were filed during the
quarterly period ending September 30, 2000.
Page 12
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)
November 14, 2000 By: /S/ Ike G. Batalis
--------------------
Ike G. Batalis
Chairman and
President (Principal
Executive Officer)
November 14, 2000 By: /S/ Charles V. Turean
-----------------------
Charles V. Turean
Executive Vice President
(Principal Financial and
Accounting Officer)
Page 13