Exhibit 99.1
MetroCorp Bancshares Inc. Announces
Third Quarter 2003 Financial Results
HOUSTON--(BUSINESS WIRE)--Oct. 28, 2003--MetroCorp Bancshares Inc.
(Nasdaq:MCBI), a Texas corporation, which through its subsidiary,
MetroBank, N.A., provides community banking services in Houston and
Dallas, today announced net income of $1.3 million for the third
quarter 2003, down approximately $1.2 million from the same quarter in
2002. Diluted earnings per share for the third quarter 2003 were
$0.19, compared to $0.35 for the same quarter in 2002. Net income for
the nine months ended Sept. 30, 2003 was $1.9 million, down
approximately $4.9 million from the same period in 2002. Diluted
earnings per share for the nine months ended Sept. 30, 2003 were
$0.26, compared to $0.95 for the same period in 2002.
Allen Brown, President of MetroCorp Bancshares Inc. and Chief
Executive Officer of MetroBank, N.A., said, "We have made good
progress in resolving weaknesses in the loan portfolio. In addition,
we reduced our concentration in hospitality-related loans by
approximately $15.4 million to $70.8 million during the third quarter
2003."
Interest income and expense. Interest income for the three months
ended Sept. 30, 2003 was $10.7 million, down approximately $1.7
million or 13.8% from $12.5 million for the same three months in 2002.
The lower interest income in the third quarter 2003, compared to the
same quarter in 2002, was primarily the result of a lower yield on
earning assets that was partially offset by a 6.9% increase in average
earning assets. The yield on average earning assets for the third
quarter 2003 was 5.17% compared to 6.40% for the third quarter of
2002, a decrease of 123 basis points. The decrease in yields primarily
reflects the impact of the Federal Reserve's interest rate cuts in the
fourth quarter of 2002 and the second quarter of 2003 along with new
loan production being added to the portfolio at lower interest rates.
In addition, as of Sept. 30, 2003, approximately 63.0% of the total
loan portfolio was comprised of loans with interest rate floors that
carried a weighted average interest rate of 5.98% compared to 59.8% of
the total loan portfolio with a weighted average interest rate of
6.89% at Sept. 30, 2002.
Interest income for the nine months ended Sept. 30, 2003 was $32.8
million, down approximately $4.0 million or 11.0% from $36.8 million
for the same period in 2002. The lower interest income for the nine
months ended Sept. 30, 2003, compared to the same period in 2002, was
primarily the result of a lower yield on earning assets that was
partially offset by an 11.3% increase in average earning assets. The
yield on average earning assets for the nine months ended Sept. 30,
2003 was 5.38% compared to 6.73% for the same period in 2002, a
decrease of 135 basis points.
Interest expense for the three months ended Sept. 30, 2003 was
$3.0 million, down approximately $654,000 or 18.1% from $3.6 million
for the same three months in 2002. The decrease in interest expense
primarily reflected lower interest rates paid on interest-bearing
liabilities. However, the benefit of a decrease in interest rates paid
was partially offset by a 5.8% increase in average interest-bearing
liabilities. The cost of average interest-bearing liabilities for the
third quarter 2003 was 1.87% compared to 2.42% for the third quarter
2002, a decrease of 55 basis points.
Interest expense for the nine months ended Sept. 30, 2003 was $9.4
million, down approximately $1.7 million or 15.3% from $11.1 million
for the same period in 2002. However, the benefit of a decrease in
interest rates paid was partially offset by a 9.8% increase in average
interest-bearing liabilities The cost of average interest-bearing
liabilities for the nine months ended Sept. 30, 2003 was 2.03%
compared to 2.63% for the same period in 2002, a decrease of 60 basis
points.
The net interest margin for the three months ended Sept. 30, 2003
was 3.74%, down 81 basis points from 4.55% for the same period in 2002
and was primarily the result of a decrease in the yield on
earning-assets of 123 basis points that was partially offset by a
decrease in the cost of earning-assets of 42 basis points.
The net interest margin for the nine months ended Sept. 30, 2003
was 3.84%, down 86 basis points from 4.70% for the same period in 2002
and was primarily the result of a decrease in the yield on
earning-assets of 135 basis points that was partially offset by a
decrease in the cost of earning-assets of 49 basis points. The
Company's net interest margin may experience further pressure
depending on the future interest rate environment.
Noninterest income and expense. Noninterest income for the three
months ended Sept. 30, 2003 was $2.4 million, up approximately
$163,000 compared to the same three months in 2002. Service fees for
the third quarter 2003 were relatively flat compared the same period
in 2002. Other loan-related fees for the third quarter 2003 were up
approximately $281,000 compared to the same period in 2002 primarily
due to an increase in prepayment penalty collections. All other
categories of noninterest income for the third quarter 2003 were down
approximately $79,000 compared to the same period in 2002 primarily
due to reduced international letters of credit activity.
Noninterest income for the nine months ended Sept. 30, 2003 was
$6.9 million, up approximately $185,000 compared to the same period in
2002. Service fees for the nine months ended Sept. 30, 2003 were down
approximately $284,000 compared to the same period in 2002 primarily
due to less NSF-related activity. Other loan-related fees for the nine
months ended Sept. 30, 2003 were up approximately $530,000 compared to
the same period in 2002 primarily due to an increase in late charge
and prepayment penalty collections. All other categories of
noninterest income for the nine months ended Sept. 30, 2003 were down
approximately $61,000 primarily due to a combination of approximately
$192,000 in lower international letters of credit and other fee income
that was partially offset by a $131,000 increase in the gain on sale
of securities.
Noninterest expense for the three months ended Sept. 30, 2003 was
$7.8 million, up approximately $1.3 million or 19.6% compared with
$6.5 million for the same period in 2002. The higher noninterest
expense for the three months ended Sept. 30, 2003, compared to the
same period in 2002, was primarily due to a lower of cost or market
adjustment of $824,000 on loans held-for-sale and increased costs
related to problem assets that was partially offset by lower salaries
and benefits expense as a result of vacant positions for which
replacements have not yet been hired.
Noninterest expense for the nine months ended Sept. 30, 2003 was
$22.3 million, up $2.3 million or 11.5% compared with $20.0 million
for the same period in 2002. The higher noninterest expense for the
nine months ended Sept. 30, 2003, compared to the same period in 2002,
was primarily due to $2.1 million in lower of cost or market
adjustments on loans held-for-sale. Salaries and benefits expense for
the nine months ended Sept. 30, 2003, compared to the same period in
2002, was relatively flat. Occupancy and equipment expense for the
nine months ended Sept. 30, 2003, compared to the same period in 2002,
was up approximately $173,000 and was primarily the result of
additional leased corporate office space. Other noninterest expense
for the nine months ended Sept. 30, 2003 compared to the same period
in 2002 was up approximately $474,000 as a result of increased costs
related to problem assets.
Provision for loan losses and asset quality. The provision for
loan losses for the three months ended Sept. 30, 2003 was $575,000,
down $175,000 from the same period in 2002. The provision for loan
losses for the nine months ended Sept. 30, 2003 was approximately $5.4
million, up $3.1 million from the same period in 2002 primarily due to
an additional provision for loan losses recorded in the second quarter
2003 as a result of deterioration in certain hospitality-related
loans. The allowance for loan losses as a percent of total loans at
Sept. 30, 2003 and Dec. 31, 2002 was 1.89% and 1.92%, respectively.
Net charge-offs for the three months ended Sept. 30, 2003 were
$343,000 compared to $120,000 for the same period in 2002. Net
charge-offs for the nine months ended Sept. 30, 2003 were $5.1 million
compared to $2.6 million for the same period in 2002. The charge-offs
for the nine months ended Sept. 30, 2003 primarily consisted of $4.5
million charged-off in the second quarter 2003 on certain hospitality-
and retail-related credits. The charge-offs were made based on revised
appraisals, financial performance, cash flows, and other local
economic factors surrounding those loans. The Company seeks recovery
on its charge-offs through all available channels.
As of Sept. 30, 2003, the Company had approximately $70.8 million
or 13.0% of the loan portfolio concentrated in the hospitality
industry, compared to $86.2 million or 15.0% at June 30, 2003.
Net nonperforming assets at Sept. 30, 2003 were $17.1 million,
compared to $20.7 million at June 30, 2003 and $15.5 million at Dec.
31, 2002. As of Sept. 30, 2003, net nonperforming assets primarily
consisted of $12.8 million in net nonaccrual loans, $4.1 million in
other real estate, and $189,000 in accruing loans that were 90 days or
more past due. Approximately $10.3 million or 60.2% of the net
nonperforming assets at Sept. 30, 2003 were loans collateralized by
real estate. While future deterioration in the loan portfolio is
possible, management has continued its risk assessment and resolution
program. In addition, management is focusing its attention on
minimizing the Bank's credit risk through more diversified business
development.
Management conference call. On Wednesday, Oct. 29, 2003 the
Company will hold a conference call at 10:00 a.m. Central (11:00 a.m.
Eastern) to discuss the third quarter 2003 results. A brief management
presentation will be followed by a question and answer period. To
participate by phone, dial 1.800.915.4836 ten minutes before the call
and ask for the MetroCorp conference. The call will be webcast by CCBN
and can be accessed at MetroCorp's web site at www.metrobank-na.com.
The webcast will be distributed over CCBN's Investor Distribution
Network. Individual investors can listen through CCBN's individual
investor center at www.companyboardroom.com, or by visiting any of the
investor sites in the network. Institutional investors can access the
call via CCBN's password-protected event management site,
StreetEvents, at www.streetevents.com. A digital replay will be
available an hour after the call. It can be accessed until Nov. 30,
2003 at www.metrobank-na.com by clicking the webcast link.
MetroCorp Bancshares Inc., with $863.9 million in assets, provides
a full range of commercial and consumer banking services through its
wholly owned subsidiary, MetroBank, N.A. The Company has 14
full-service banking locations in the greater Houston and Dallas
metropolitan areas. 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 MetroCorp's future plans, projections, strategies
and expectations, are based on assumptions and involve a number of
risks and uncertainties, many of which are beyond MetroCorp'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 MetroCorp 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 MetroCorp's net
interest margin; (3) changes in management's assumptions regarding of
the adequacy of the allowance for loan losses; (4) legislative 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 MetroCorp's reports and other documents filed with the
Securities and Exchange Commission.
MetroCorp Bancshares Inc.
(In thousands, except share amounts)
(Unaudited)
Sept. 30, Dec. 31, Change
2003 2002 %
--------- --------- -------
Consolidated Balance Sheet
- --------------------------
Assets
Cash and cash equivalents:
Cash and due from banks $32,135 $30,195 6.4
Federal funds sold and other temporary
investments 2,989 7,991 (62.6)
--------- ---------
Total cash and cash equivalents 35,124 38,186 (8.0)
Investment securities available-for-sale 256,218 260,038 (1.5)
Other investments 5,178 4,380 18.2
Loans, held-for-investment, net 537,152 517,609 3.8
Loans, held-for-sale, net 7,219 - 100.0
Premises and equipment, net 5,533 5,841 (5.3)
Accrued interest receivable 3,123 3,391 (7.9)
Customers' liability on acceptances 2,985 4,080 (26.8)
Foreclosed assets, net 4,062 1,190 241.3
Other assets 7,299 5,350 36.4
--------- ---------
Total assets $863,893 $840,065 2.8
========= =========
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $162,802 $144,544 12.6
Interest-bearing 564,141 546,817 3.2
--------- ---------
Total deposits 726,943 691,361 5.1
Other borrowings 53,897 65,774 (18.1)
Accrued interest payable 550 717 (23.3)
Acceptances outstanding 2,985 4,080 (26.8)
Other liabilities 5,432 3,670 48.0
--------- ---------
Total liabilities 789,807 765,602 3.2
Shareholders' Equity:
Preferred stock, $1.00 par value,
2,000,000 shares authorized; none of
which are issued and outstanding - - -
Common stock, $1.00 par value,
20,000,000 shares authorized; 7,305,627
shares and 7,195,927 shares are issued
and 7,148,255 shares and 7,031,882
shares are outstanding at Sept. 30,
2003 and Dec. 31, 2002, respectively 7,306 7,196 1.5
Additional paid-in-capital 27,523 26,344 4.5
Retained earnings 40,563 39,938 1.6
Accumulated other comprehensive income 82 2,354 (96.5)
Treasury stock, at cost (1,388) (1,369) 1.4
--------- ---------
Total shareholders' equity 74,086 74,463 (0.5)
--------- ---------
Total liabilities and shareholders'
equity $863,893 $840,065 2.8
========= =========
Nonperforming Assets and Asset Quality
Ratios
- --------------------------------------
Nonaccrual loans $17,279 $17,209 0.4
Accruing loans 90 days or more past due 189 380 (50.3)
Other real estate ("ORE") 4,062 1,185 242.8
Other assets repossessed ("OAR") - 5 (100.0)
--------- ---------
Total nonperforming assets 21,530 18,779 14.6
Less nonperforming loans guaranteed by the
SBA, Ex-Im Bank, or the OCCGF (4,430) (3,310) 33.8
--------- ---------
Net nonperforming assets $17,100 $15,469 10.5
========= =========
Net nonperforming assets to total assets 1.98% 1.84% 7.5
Net nonperforming assets to total loans
and ORE/OAR 3.06% 2.92% 4.6
Allowance for loan losses to total loans 1.89% 1.92% (1.8)
Allowance for loan losses to net
nonperforming loans 80.40% 71.08% 13.1
Net loan charge-offs to total loans 0.91% 0.49% 84.6
Net loan charge-offs (for the nine and
twelve months ended) $5,057 $2,606 94.1
Total loans to total deposits 76.33% 76.34% (0.0)
Total loans $554,854 $527,759 5.1
Allowance for loan losses $10,483 $10,150 3.3
MetroCorp Bancshares Inc.
(In thousands, except per share amounts)
(Unaudited)
As of or for the
three months
ended Sept. 30, Change
--------------------
2003 2002 %
--------- --------- ------
Average Balance Sheet Summary
- -----------------------------
Total assets $862,972 $811,082 6.4
Securities 249,578 234,981 6.2
Total loans 555,569 509,837 9.0
Allowance for loan losses (10,530) (9,392) 12.1
Net loans 545,039 500,445 8.9
Total deposits 724,372 662,487 9.3
FHLB and other borrowings 56,697 65,068 (12.9)
Total shareholders' equity 74,489 72,435 2.8
Income Statement
- ----------------
Interest income:
Loans $8,783 $9,549 (8.0)
Investment securities:
Taxable 1,650 2,511 (34.3)
Tax-exempt 248 273 (9.2)
Federal funds sold and other temporary
investments 68 139 (51.1)
--------- ---------
Total interest income 10,749 12,472 (13.8)
Interest expense:
Time deposits 2,219 2,523 (12.0)
Demand and savings deposits 299 565 (47.1)
Other borrowings 438 522 (16.1)
--------- ---------
Total interest expense 2,956 3,610 (18.1)
Net interest income 7,793 8,862 (12.1)
Provision for loan losses 575 750 (23.3)
--------- ---------
Net interest income after provision for
loan losses 7,218 8,112 (11.0)
Noninterest income:
Service fees 1,646 1,685 (2.3)
Other loan-related fees 632 351 80.1
Letters of credit commissions and fees 134 176 (23.9)
Gain on sale of securities, net 2 - 100.0
Other noninterest income 15 54 (72.2)
--------- ---------
Total noninterest income 2,429 2,266 7.2
Noninterest expense:
Salaries and employee benefits 3,736 3,934 (5.0)
Lower of cost or market adjustment -
loans held-for-sale 824 - 100.0
Occupancy and equipment 1,370 1,320 3.8
Foreclosed assets, net 155 65 138.5
Other noninterest expense 1,713 1,200 42.8
--------- ---------
Total noninterest expense 7,798 6,519 19.6
Income before provision for income taxes 1,849 3,859 (52.1)
Provision for income taxes 504 1,329 (62.1)
--------- ---------
Net income $1,345 $2,530 (46.8)
========= =========
Per Share Data
- --------------
Earnings (loss) per share - basic $0.19 $0.36 (47.6)
Earnings (loss) per share - diluted 0.19 0.35 (47.3)
Weighted average shares outstanding:
Basic 7,132 7,026 1.5
Diluted 7,215 7,147 1.0
Dividends per common share $0.06 $0.06 -
Performance Ratios
- ------------------
Return on average assets 0.62% 1.24% (50.0)
Return on average shareholders' equity 7.16% 13.86% (48.3)
Net interest margin 3.74% 4.55% (17.8)
Efficiency ratio 76.29% 58.58% 30.2
Equity to assets
Bank Capital Ratios
- -------------------
Tier I capital
Total capital (tier I & II)
Leverage (Regulatory)
As of or for the
nine months
ended Sept. 30, Change
--------------------
2003 2002 %
--------- --------- ------
Average Balance Sheet Summary
- -----------------------------
Total assets $849,781 $773,929 9.8
Securities 245,620 209,381 17.3
Total loans 549,166 498,943 10.1
Allowance for loan losses (10,581) (9,067) 16.7
Net loans 538,585 489,876 9.9
Total deposits 704,783 646,881 9.0
FHLB and other borrowings 62,166 48,050 29.4
Total shareholders' equity 75,363 69,380 8.6
Income Statement
- ----------------
Interest income:
Loans $26,581 $28,733 (7.5)
Investment securities:
Taxable 5,242 6,869 (23.7)
Tax-exempt 762 887 (14.1)
Federal funds sold and other temporary
investments 221 355 (37.7)
--------- ---------
Total interest income 32,806 36,844 (11.0)
Interest expense:
Time deposits 6,922 8,064 (14.2)
Demand and savings deposits 1,055 1,746 (39.6)
Other borrowings 1,417 1,287 10.1
--------- ---------
Total interest expense 9,394 11,097 (15.3)
Net interest income 23,412 25,747 (9.1)
Provision for loan losses 5,390 2,320 132.3
--------- ---------
Net interest income after provision for
loan losses 18,022 23,427 (23.1)
Noninterest income:
Service fees 4,798 5,082 (5.6)
Other loan-related fees 1,462 932 56.9
Letters of credit commissions and fees 399 455 (12.3)
Gain on sale of securities, net 165 34 385.3
Other noninterest income 69 205 (66.3)
--------- ---------
Total noninterest income 6,893 6,708 2.8
Noninterest expense:
Salaries and employee benefits 11,357 11,361 (0.0)
Lower of cost or market adjustment -
loans held-for-sale 2,149 - 100.0
Occupancy and equipment 3,969 3,796 4.6
Foreclosed assets, net 3 483 (99.4)
Other noninterest expense 4,868 4,394 10.8
--------- ---------
Total noninterest expense 22,346 20,034 11.5
Income before provision for income taxes 2,569 10,101 (74.6)
Provision for income taxes 669 3,290 (79.7)
--------- ---------
Net income $1,900 $6,811 (72.1)
========= =========
Per Share Data
- --------------
Earnings (loss) per share - basic $0.27 $0.97 (72.3)
Earnings (loss) per share - diluted 0.26 0.95 (72.3)
Weighted average shares outstanding:
Basic 7,067 7,022 0.6
Diluted 7,203 7,142 0.9
Dividends per common share $0.18 $0.18 -
Performance Ratios
- ------------------
Return on average assets 0.30% 1.18% (74.6)
Return on average shareholders' equity 3.37% 13.13% (74.3)
Net interest margin 3.84% 4.70% (18.3)
Efficiency ratio 73.74% 61.73% 19.5
Equity to assets 8.58% 8.70% (1.4)
Bank Capital Ratios
- -------------------
Tier I capital 11.65% 11.99% (2.8)
Total capital (tier I & II) 12.91% 13.24% (2.5)
Leverage (Regulatory) 8.17% 8.71% (6.2)
CONTACT: MetroCorp Bancshares Inc., Houston
Allen Brown, 713-776-3876
or
David D. Rinehart, 713-776-3876