Exhibit 99.1
MetroCorp Bancshares, Inc.
Announces Net Income of $2.84 Million, or $0.39 Per Share, in Third
Quarter 2005
HOUSTON--(BUSINESS WIRE)--Oct. 27, 2005--MetroCorp Bancshares,
Inc. (Nasdaq:MCBI), a Texas corporation which through its subsidiary,
MetroBank, N.A., provides community banking services in Houston and
Dallas, and through its subsidiary, First United Bank that was
acquired on October 5, 2005, provides community banking service in San
Diego and Los Angeles, California, today announced net income of $2.84
million for the third quarter of 2005, up approximately $1.2 million
or 76.8% compared with the same quarter in 2004. Diluted earnings per
share for the third quarter 2005 were $0.39, compared with $0.22 for
the same quarter in 2004. The improved performance was mainly a result
of growth in both loans and deposits, and an overall increase in the
net interest margin. In addition, income in the third quarter of 2004
was reduced by a severance payment to a senior executive.
Third Quarter Highlights
-- Net income of $2.84 million, up 76.8% from same quarter of
2004 and 2.4% from second quarter of 2005
-- Fully diluted earnings per share reached $0.39, increasing
77.3% from same quarter of 2004
-- Total loans increased to $612.9 million
-- Total deposits increased to $788.5 million
-- Return on average equity (ROAE) of 12.48%
-- Return on average assets (ROAA) of 1.22%
George M. Lee, President and CEO of MetroCorp Bancshares, Inc.,
said, "Our management team is pleased with the Company's delivery of
another quarter of record earnings. Our net earnings for the third
quarter of 2005 increased by 76.8% over the same period in 2004, and
31.5% if we exclude the $800,000 severance payment made during the
third quarter of 2004. The third quarter 2005 net interest margin of
4.57% improved compared with the second quarter of 2005 by 6 basis
points while we achieved modest growth in loans and deposits. The
efficiency ratio improved from 66.95% for the year ended December 31,
2004 to 62.57% for the third quarter of 2005. We are making consistent
progress with our core operations." Lee added, "All the preparatory
work relating to the acquisition of First United Bank was completed
during the third quarter allowing the successful close of the
transaction on October 5, 2005. Management also is pursuing its
expansion plans in Texas, and is in the process of finalizing
leasehold negotiations and staffing for our largest new branch in the
Dallas-Fort Worth region, which is expected to be in operation during
the first quarter of 2006. With encouraging results from each
additional quarter, we are building more momentum towards the future."
Interest income and expense. Interest income for the three months
ended September 30, 2005, was $14.3 million, up approximately $2.8
million or 24.3% compared with $11.5 million for the same period in
2004. The higher interest income in the third quarter of 2005,
compared with the same quarter in 2004, was primarily the result of an
increase in both average earning assets and average yield. The
increase in average earning assets came primarily from loan growth.
The average loan balance for the third quarter of 2005 was $603.2
million compared with $559.7 million for the third quarter of 2004, an
increase of 7.8%. The yield on average earning assets for the third
quarter of 2005 was 6.47% compared with 5.35% for the third quarter of
2004, an increase of 112 basis points. The Federal Reserve's eleven
interest rate increases since June 2004 contributed positively to the
yield on loans. The majority of the Bank's loan portfolio is comprised
of variable and adjustable rate loans that benefit the Company during
periods of increases in the prime rate.
Interest income for the nine months ended September 30, 2005 was
$40.4 million, up approximately $7.5 million or 23.0% compared with
$32.9 million for the same period in 2004. The higher interest income
for the nine months was a result of increases in both average earning
assets and average yield. The yield on average earning assets for the
nine months ended September 30, 2005 was 6.20% compared with 5.26% for
the same period in 2004, an increase of 94 basis points, which mainly
came from a higher yield on loans.
Interest expense for the three months ended September 30, 2005 was
$4.2 million, up approximately $1.3 million or 43.9% compared with
$2.9 million for the same period in 2004. The increase in interest
expense was primarily due to an increase in interest-bearing deposits
and higher interest rates. Average interest-bearing deposits were
$614.3 million for the third quarter of 2005 compared with $567.0
million for the third quarter of 2004, an increase of 8.3%. The cost
of average interest-bearing liabilities for the third quarter of 2005
was 2.59% compared with 1.83% for the third quarter of 2004, an
increase of 76 basis points. The increase in rates primarily reflected
the impact of the Federal Reserve's interest rate increases.
Interest expense for the nine months ended September 30, 2005 was
$11.1 million, up approximately $3.0 million or 36.8% compared with
$8.1 million for the same period in 2004. The increase in interest
expense was primarily the result of higher interest-bearing deposits
and higher interest rates. The cost of average interest-bearing
liabilities for the nine months ended September 30, 2005 was 2.33%
compared with 1.77% for the same period in 2004, an increase of 56
basis points.
The net interest margin for the three months ended September 30,
2005, was 4.57%, up 58 basis points compared with 3.99% for the same
period in 2004. The increase was primarily the result of an increase
in the yield on earning assets of 112 basis points that was the result
of a higher yield on loans. The yield on loans for the third quarter
of 2005 was 7.60% compared with 6.15% for the third quarter of 2004,
an increase of 145 basis points. The increase in net interest margin
was partially offset by an increase in the cost of average earning
assets of 54 basis points. However, the effect of higher interest
rates on the cost of interest-bearing liabilities was reduced by a
decrease in other borrowings and an increase in noninterest-bearing
deposits.
The net interest margin for the nine months ended September 30,
2005 was 4.49%, up 53 basis points from 3.96% for the same period in
2004. The increase was the result of an increase in the yield on
average earning assets of 94 basis points that was partially offset by
an increase in the cost of average earning assets of 41 basis points.
Net interest income before the provision for loan losses for the
three months ended September 30, 2005 was $10.1 million, up
approximately $1.5 million or 17.6% compared with $8.6 million for the
same period in 2004. Net interest income before the provision for loan
losses for the nine months ended September 30, 2005 was $29.3 million,
up approximately $4.6 million or 18.4% from $24.7 million for the same
period in 2004.
Noninterest income and expense. Noninterest income for the three
months ended September 30, 2005 was $2.1 million, up approximately
$248,000 or 13.5% compared with the same three months in 2004. The
increase was primarily the result of an increase in service fees in
the third quarter of 2005 and the charge-off of uncollectible consumer
late fees in the same period of 2004.
Noninterest income for the nine months ended September 30, 2005
was $6.2 million, down approximately $181,000 or 2.9% compared with
the same period in 2004. The decrease was primarily the result of
lower gain on sale of loans, partially offset by higher other
loan-related fees.
Noninterest expense for the three months ended September 30, 2005
was $7.6 million, down approximately $229,000 or 2.9% compared with
$7.9 million for the same period in 2004. The decrease was a result of
reduced salaries and benefits, partially offset by an increase in
other noninterest expense. Salaries and benefits expense for the three
months ended September 30, 2005 was $4.2 million, down $575,000
compared with $4.8 million for the same period in 2004, primarily due
to a severance payment of approximately $800,000 made to a senior
executive in the third quarter of 2004. Other noninterest expense for
the three months ended September 30, 2005 was $2.1 million, up
$471,000 compared with $1.6 million for the same period in 2004
primarily due to Sarbanes-Oxley compliance costs in the third quarter
of 2005 and a franchise tax refund in the same period of 2004.
Noninterest expense for the nine months ended September 30, 2005
was $22.6 million, up $1.8 million or 8.6% compared with $20.8 million
for the same period in 2004, primarily due to a write-down on
foreclosed assets of approximately $391,000 in the first quarter of
2005 and a $67,000 net gain on the sale of foreclosed assets in the
third quarter of 2005, compared with a $844,000 net gain on the sale
of foreclosed assets for the nine months ended September 30, 2004.
Other noninterest expense for the nine months ended September 30, 2005
was up approximately $757,000 compared with the same period in 2004,
primarily due to expenses associated with the First United Bank
acquisition, a branch consolidation in Dallas, and Sarbanes-Oxley
compliance costs.
Provision for loan losses. The provision for loan losses for the
three months ended September 30, 2005 was $468,000, a $253,000
increase compared with $215,000 for the same period in 2004 primarily
due to growth of the loan portfolio. The provision for loan losses for
the nine months ended September 30, 2005 was $1,368,000, up
approximately $303,000 compared with the provision made in the same
period of 2004. The allowance for loan losses as a percent of total
loans at September 30, 2005 and 2004 was 1.76% and 1.92%,
respectively. At December 31, 2004, the allowance for loan losses as a
percent of total loans was 1.83%.
Net charge-offs for the three months ended September 30, 2005 were
$34,000 compared with $403,000 for the same period in 2004. Net
charge-offs for the nine months ended September 30, 2005 were $1.1
million compared with $668,000 for the same period in 2004. The
increase in net charge-offs for the nine months ended September 30,
2005 primarily consisted of an $800,000 charge-off on one
nonperforming credit, taken against the specific reserve for that
credit in the second quarter of 2005. The charge-off was recorded in
connection with the sale of the company to match the sales price,
which was completed in the third quarter of 2005.
Asset Quality. Total nonperforming assets at September 30, 2005
were $19.6 million compared with $18.3 million at December 31, 2004.
The increase was primarily due to one loan relationship being placed
on nonaccrual status in the first quarter of 2005 and the result of a
customer impacted by Hurricane Rita. A $2.8 million distressed loan to
a shrimp processor was placed on nonaccrual status after it suffered
severe damage during the recent hurricane. The customer's business is
not in operation at this time and it is not known when the inventory
will be able to be shipped and sold, nor when shrimp processing, which
generates cash flow, will be able to resume. As a result, the Bank
placed the loan on nonaccrual status until the ability of the business
to generate sufficient cash flow to service debt has been resolved.
Management does not currently expect the loss to exceed what was
previously accrued, but future changes in circumstances or other
factors could cause management to reevaluate its position.
At September 30, 2005, nonperforming assets consisted of $19.5
million in nonaccrual loans and $95,000 in accruing loans that were 90
days or more past due. 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 September
30, 2005, were $17.5 million, compared with $15.2 million at December
31, 2004. Approximately $12.6 million of such nonaccrual loans are
collateralized by real estate, which represented 64.5% of total
nonaccrual loans at September 30, 2005. While future deterioration in
the loan portfolio is possible, management has continued its risk
assessment and resolution program.
Management conference call. On Friday, October 28, 2005, the
Company will hold a conference call at 10:00 a.m. Central (11:00 a.m.
Eastern) to discuss the third quarter 2005 results. A brief management
presentation will be followed by a question and answer period. To
participate by phone, U.S. callers may dial 1.866.578.5784
(International callers may dial 1.617.213.8056) and enter the passcode
90934972 ten minutes before the call 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 First United Bank. The Company has 15 full-service
banking locations in the greater Houston, Dallas, San Diego and Los
Angeles metropolitan areas. The Company acquired First United Banks
and its locations in San Diego and Los Angeles, California on October
5, 2005. As of September 30, 2005, the Company had consolidated assets
of $934.5 million. For more information, visit the Company's web site
at www.metrobank-na.com.
The statements contained in this release that are not historical
facts may constitute forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements describe the Company's future plans, projections,
strategies and expectations, are based on assumptions and involve a
number of risks and uncertainties, many of which are beyond the
Company's control. Important factors that could cause actual results
to differ materially from the results anticipated or projected
include, but are not limited to, the following: (1) general business
and economic conditions in the markets the Company serves may be less
favorable than expected which could decrease the demand for loan,
deposit and other financial services and increase loan delinquencies
and defaults; (2) changes in the interest rate environment which could
reduce the Company's net interest margin; (3) changes in management's
assumptions regarding 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 the Company's reports and other documents filed with the
Securities and Exchange Commission.
MetroCorp Bancshares, Inc.
(In thousands, except share amounts)
(Unaudited)
September 30, December 31,
2005 2004
-------------- ---------------
Consolidated Balance Sheets
- ---------------------------
Assets
Cash and cash equivalents:
Cash and due from banks $23,044 $26,285
Federal funds sold and other
investments 42,919 5,788
-------------- ---------------
Total cash and cash equivalents 65,963 32,073
Securities available-for-sale, at fair
value 246,142 273,720
Loans, net of allowance for loan
losses of $10,806 and $10,863
respectively 602,098 581,774
Loans, held-for-sale - 1,899
Accrued interest receivable 3,502 3,308
Premises and equipment, net 6,261 6,512
Deferred tax asset 6,458 5,201
Customers' liability on acceptances 2,367 6,669
Foreclosed assets, net - 1,566
Other assets 1,729 1,228
-------------- ---------------
Total assets $934,520 $913,950
============== ===============
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $171,789 $163,191
Interest-bearing 616,758 591,862
-------------- ---------------
Total deposits 788,547 755,053
Other borrowings 44,034 60,849
Accrued interest payable 680 649
Acceptances outstanding 2,367 6,669
Other liabilities(a) 8,405 5,007
-------------- ---------------
Total liabilities 844,033 828,227
Commitments and contingencies - -
Shareholders' Equity:
Common stock, $1.00 par value,
20,000,000 shares authorized;
7,323,127 shares and 7,312,627
shares are issued and 7,210,735
shares and 7,187,446 shares are
outstanding at September 30, 2005
and December 31, 2004,
respectively 7,323 7,313
Additional paid-in-capital 28,130 27,859
Retained earnings 57,546 50,976
Accumulated other comprehensive
income (loss) (1,478) 710
Treasury stock, at cost (1,034) (1,135)
-------------- ---------------
Total shareholders' equity 90,487 85,723
-------------- ---------------
Total liabilities and
shareholders' equity $934,520 $913,950
============== ===============
Nonperforming Assets and Asset Quality
Ratios
- --------------------------------------
Nonaccrual loans $19,546 $16,504
Accruing loans 90 days or more past
due 95 181
Other real estate ("ORE") - 1,566
-------------- ---------------
Total nonperforming assets 19,641 18,251
Less nonperforming loans guaranteed by
the SBA, Ex-Im Bank, or the OCCGF (2,101) (3,032)
-------------- ---------------
Net nonperforming assets $17,540 $15,219
============== ===============
Net nonperforming assets to total
assets 1.88% 1.67%
Net nonperforming assets to total
loans and ORE 2.86% 2.55%
Allowance for loan losses to total
loans 1.76% 1.83%
Allowance for loan losses to net
nonperforming loans 61.61% 79.56%
Net charge-offs to total loans 0.18% 0.19%
Net charge-offs $1,091 $1,150
Total loans to total deposits 77.73% 78.74%
Total loans $612,904 $594,536
Allowance for loan losses $10,806 $10,863
MetroCorp Bancshares, Inc.
(In thousands, except per share amounts)
(Unaudited)
As of or for the As of or for the
three months nine months
ended September 30, ended September 30,
-------------------- --------------------
2005 2004 2005 2004
---------- --------- ---------- ---------
Average Balance Sheet Data
- --------------------------
Total assets $919,616 $895,554 $908,291 $871,079
Securities 252,333 285,890 257,794 261,866
Total loans 603,225 559,703 598,577 559,430
Allowance for loan losses (10,631) (11,183) (10,977) (10,904)
Net loans 592,594 548,520 587,600 548,526
Total deposits 788,259 736,077 763,639 719,706
FHLB and other borrowings 31,026 69,750 48,213 64,703
Total shareholders' equity 90,153 81,460 88,390 79,428
Income Statement Data
- ---------------------
Interest income:
Loans $11,552 $8,649 $32,279 $25,108
Securities:
Taxable 2,382 2,648 7,163 7,018
Tax-exempt 211 227 641 693
Federal funds sold and
other investments 207 25 343 56
---------- --------- ---------- ---------
Total interest income 14,352 11,549 40,426 32,875
Interest expense:
Time deposits 3,214 2,087 8,274 5,838
Demand and savings
deposits 636 345 1,449 935
Other borrowings 365 498 1,420 1,374
---------- --------- ---------- ---------
Total interest expense 4,215 2,930 11,143 8,147
Net interest income 10,137 8,619 29,283 24,728
Provision for loan losses 468 215 1,368 1,065
---------- --------- ---------- ---------
Net interest income after
provision for loan losses 9,669 8,404 27,915 23,663
Noninterest income:
Service fees 1,711 1,656 4,972 4,942
Letters of credit
commissions and other
loan-related fees 313 139 905 755
Other noninterest income 63 44 274 635
---------- --------- ---------- ---------
Total noninterest
income 2,087 1,839 6,151 6,332
Noninterest expense:
Salaries and employee
benefits 4,225 4,800 12,229 12,313
Occupancy and equipment 1,424 1,412 4,160 4,242
Foreclosed assets, net (67) 70 357 (844)
Other noninterest expense 2,066 1,595 5,879 5,122
---------- --------- ---------- ---------
Total noninterest
expense 7,648 7,877 22,625 20,833
Income before provision for
income taxes 4,108 2,366 11,441 9,162
Provision for income taxes 1,272 762 3,575 2,888
---------- --------- ---------- ---------
Net income $2,836 $1,604 $7,866 $6,274
========== ========= ========== =========
Per Share Data
- --------------
Earnings per share - basic $0.39 $0.22 $1.09 $0.87
Earnings per share - diluted 0.39 0.22 1.08 0.87
Weighted average shares
outstanding:
Basic 7,209 7,180 7,203 7,171
Diluted 7,312 7,235 7,292 7,250
Dividends per common share $0.06 $0.06 $0.06 $0.06
Performance Ratio Data
- ----------------------
Return on average assets 1.22% 0.71% 1.16% 0.96%
Return on average
shareholders' equity 12.48% 7.83% 11.90% 10.55%
Net interest margin 4.57% 3.99% 4.49% 3.96%
Efficiency ratio 62.57% 75.32% 63.85% 67.07%
Equity to assets (Average) 9.80% 9.10% 9.73% 9.12%
Bank Capital Ratio Data
- -----------------------
Tier I capital 12.95% 12.79%
Total capital (tier I & II) 14.21% 14.05%
Leverage (Regulatory) 9.70% 9.04% 9.82% 9.29%
CONTACT: MetroCorp Bancshares, Inc., Houston
George Lee, 713-414-3506
or
David Choi, 713-414-3768