Exhibit 99.1
MetroCorp Bancshares, Inc.
Announces Record Net Income of $2.91 Million, or $0.40 Per Share,
in Fourth Quarter 2005
HOUSTON--(BUSINESS WIRE)--Feb. 3, 2006--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 ("First
United"), provides community banking services in San Diego and Los
Angeles, California, today announced net income of $2.91 million for
the fourth quarter of 2005, up approximately $594,000 or 25.6%
compared with the same quarter in 2004. Diluted earnings per share for
the fourth quarter 2005 were $0.40, compared with $0.32 for the same
quarter in 2004.
Fourth Quarter Highlights
-- Record net income of $2.91 million, up 25.6% compared with
same quarter of 2004
-- Fully diluted earnings per share of $0.40, increasing 23.9%
compared with same quarter of 2004
-- Total loans increased to $771.5 million
-- Total deposits increased to $961.8 million
-- Return on average equity (ROAE) of 12.58%
-- Return on average assets (ROAA) of 1.02%
-- Completed the acquisition of First United Bank in October 2005
-- Issuance of $36.1 million in junior subordinated debentures
George M. Lee, President and CEO of MetroCorp Bancshares, Inc.,
said, "The fundamental improvements made by the management team in
2004 have resulted in three consecutive quarters of record earnings,
making 2005 the most profitable year in the history of MetroCorp. Our
net income for 2005 is 25.4% higher than 2004 and our fourth quarter
net income is 25.6% higher than the same quarter of 2004. The
expansion of 47 basis points in yield on average earning assets from
6.47% for the third quarter of 2005 to this quarter's 6.94% is
encouraging and compares favorably to our peers. We are pleased with
the accretive contribution of First United Bank after its first
quarter of operation as a part of MetroCorp. Systems integration of
the two banks is scheduled for completion by the end of first quarter
of 2006. The efficiency ratio has improved from 66.9% to 64.4% in
2005. Our fourth quarter non-performing assets decreased slightly from
the third quarter of 2005. Our progress in improving asset quality was
delayed by uncontrollable natural conditions, but tangible progress
has been made with the largest portion of our non-performing
portfolio. Management expects the synergies among our markets in
Houston, Dallas, San Diego and Los Angeles to develop momentum over
time. With the performance of 2005 as our new baseline we are
expecting more improvements to continue."
Balance Sheet Summary
At December 31, 2005, total assets were $1.13 billion, up
approximately 23.4% compared with $914.3 million at December 31, 2004.
The growth in assets was primarily a result of the organic growth of
the loan portfolio and the acquisition of First United. Total loans at
December 31, 2005 were $771.5 million, up approximately 29.8% compared
with $594.5 million at December 31, 2004. Organic loan growth for the
year ended December 31, 2005 was $42.1 million, or 7.1%, excluding the
impact of the First United acquisition.
Total deposits at December 31, 2005 were $961.8 million, up
approximately 27.4% compared with $755.1 million at December 31, 2004.
Organic deposit growth for the year ended December 31, 2005 was $35.1
million, or 4.7%, excluding the impact of the First United
acquisition.
In October 2005, the Company issued $36.1 million of junior
subordinated debentures to fund the acquisition of First United.
Interest income and expense. Interest income for the three months
ended December 31, 2005 was $18.6 million, up approximately $6.2
million or 49.9% compared with $12.4 million for the same period in
2004. The higher interest income in the fourth 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 from the impact of the First
United acquisition as well as the organic growth in the loan
portfolio. Average total loans for the fourth quarter of 2005 were
$765.7 million compared with $585.2 million for the fourth quarter of
2004, an increase of 30.8%. The yield on average earning assets for
the fourth quarter of 2005 was 6.94% compared with 5.64% for the
fourth quarter of 2004, an increase of 130 basis points. The increase
in the yield on average earning assets was primarily attributable to
the Federal Reserve's thirteen interest rate increases since June
2004. The majority of the Company'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 year ended December 31, 2005 was $59.1
million, up approximately $13.8 million or 30.4% compared with $45.3
million for the year 2004. The higher interest income for the year was
a result of increases in both average earning assets and average
yield. The yield on average earning assets for the year ended December
31, 2005 was 6.42% compared with 5.36% for the same period in 2004, an
increase of 106 basis points, which was primarily the result of a
higher yield on loans.
Interest expense for the three months ended December 31, 2005 was
$6.4 million, up approximately $3.2 million or 99.7% compared with
$3.2 million for the same period in 2004. The increase in interest
expense was primarily due to an increase in interest-bearing deposits
and the issuance of $36.1 million in junior subordinated debentures in
October 2005 in connection with the acquisition of First United.
Average interest-bearing deposits were $772.9 million for the fourth
quarter of 2005 compared with $587.8 million for the fourth quarter of
2004, an increase of 31.5%. The cost of average interest-bearing
liabilities for the fourth quarter of 2005 was 3.04% compared with
1.96% for the fourth quarter of 2004, an increase of 108 basis points.
The increase in rates primarily reflected the additional cost of the
junior subordinated debentures and the impact of the Federal Reserve's
interest rate increases.
Interest expense for the year ended December 31, 2005 was $17.5
million, up approximately $6.2 million or 54.5% compared with $11.3
million for the same period in 2004. The increase in interest expense
was primarily the result of higher interest rates paid on increased
interest-bearing deposits and the additional cost of the junior
subordinated debentures. The cost of average interest-bearing
liabilities for the year ended December 31, 2005 was 2.55% compared
with 1.82% for the year 2004, an increase of 73 basis points.
The net interest margin for the three months ended December 31,
2005 was 4.56%, up 37 basis points compared with 4.19% for the same
period in 2004. The increase was primarily the result of an increase
in the yield on earning assets of 130 basis points that was the result
of a higher yield on loans. The yield on loans for the fourth quarter
of 2005 was 8.04% compared with 6.53% for the fourth quarter of 2004,
an increase of 151 basis points. The increase in the yield on earning
assets was partially offset by an increase in the cost of average
earning assets of 93 basis points.
The net interest margin for the year ended December 31, 2005 was
4.51%, up 49 basis points compared with 4.02% for the year 2004. The
increase was the result of an increase in the yield on average earning
assets of 106 basis points that was partially offset by an increase in
the cost of average earning assets of 57 basis points.
Net interest income before the provision for loan losses for the
three months ended December 31, 2005 was $12.2 million, up
approximately $3.0 million or 32.6% compared with $9.2 million for the
same period of 2004. Net interest income before the provision for loan
losses for the year ended December 31, 2005 was $41.5 million, up
approximately $7.6 million or 22.3% from $34.0 million for the year
2004.
Noninterest income and expense. Noninterest income for the three
months ended December 31, 2005 was $2.0 million, up approximately
$39,000 or 2.0% compared with the same three months in 2004. The
increase was primarily the result of higher loan-related fees in the
fourth quarter of 2005 and the loss on sale of securities in the same
period of 2004.
Noninterest income for the year ended December 31, 2005 was $8.1
million, down approximately $142,000 or 1.7% compared with the year
2004. The decrease was primarily the result of lower gain on sale of
loans, partially offset by higher other loan-related fees and other
noninterest income.
Noninterest expense for the three months ended December 31, 2005
was $9.4 million, up approximately $2.2 million or 30.8% compared with
$7.2 million for the same period in 2004. Approximately $1.0 million
of the increase was a result of the First United acquisition. Salaries
and benefits expense for the three months ended December 31, 2005 was
$5.3 million, up $1.5 million compared with $3.8 million for the same
period in 2004. The increase was primarily due to the First United
acquisition, higher bonus accruals, and compensation expense
associated with the acceleration of certain stock options in December
2005. Other noninterest expense for the three months ended December
31, 2005 was $2.6 million, up $805,000 compared with $1.8 million for
the same period in 2004 primarily due to the First United acquisition,
and Sarbanes-Oxley compliance costs.
Noninterest expense for the year ended December 31, 2005 was $32.0
million, up $3.7 million or 13.2% compared with $28.2 million for the
same period in 2004. Salaries and benefits expense for the year ended
December 31, 2005 was $17.6 million, up $1.5 million compared with
$16.1 million for the year 2004, primarily due to a $1.0 million
increase in the Company's bonus accrual for the year ended December
31, 2005. The loss on foreclosed assets primarily consisted of a
write-down on foreclosed assets of approximately $391,000 in March
2005 partially offset by a $76,000 gain on the sale of foreclosed
assets in September 2005, compared with a $728,000 net gain on the
sale of foreclosed assets for the year 2004. Other noninterest expense
for the year ended December 31, 2005 was up approximately $1.3 million
compared with the year 2004, primarily due to the First United
acquisition in 2005, expenses associated with a branch consolidation
in Dallas, and Sarbanes-Oxley compliance costs as well as a franchise
tax refund in the third quarter of 2004.
Provision for loan losses. The provision for loan losses for the
three months ended December 31, 2005 was $538,000, an $11,000 increase
compared with $527,000 for the same period in 2004. The provision for
loan losses for the year ended December 31, 2005 was $1.9 million, up
approximately $591,000 compared with the provision made for the same
period of 2004 primarily due to growth of the loan portfolio. The
allowance for loan losses as a percent of total loans at December 31,
2005 and 2004 was 1.71% and 1.77%, respectively.
Net charge-offs for the three months ended December 31, 2005 were
$484,000 compared with $482,000 for the same period in 2004. Net
charge-offs for the year ended December 31, 2005 were $1.6 million
compared with $1.2 million for the same period in 2004. Net
charge-offs for the year ended December 31, 2005 primarily consisted
of an $800,000 charge-off on one nonperforming credit taken in the
second quarter of 2005 and a $1.1 million charge-off on a wholesale
business taken in the fourth quarter 2005. Both charge-offs were taken
against specific reserves that had been established for these credits.
Asset Quality. Total nonperforming assets at December 31, 2005
were $19.5 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 one customer
impacted by Hurricane Rita. A $2.8 million distressed loan to a shrimp
processor was placed on nonaccrual status after the business suffered
severe damage during the hurricane. An insurance claim has been
approved, but not yet funded. Operations have resumed, but cash flow
is marginal at this time. Management does not currently expect losses
on this credit, if any, to exceed what was previously accrued as a
specific reserve; however, future changes in circumstances or other
factors could cause management to reevaluate its position.
At December 31, 2005, nonperforming assets consisted of $15.6
million in nonaccrual loans, $32,000 in accruing loans that were 90
days or more past due, and $3.9 million in other real estate. Net
nonperforming assets, which are total nonperforming assets net of the
portion of loans guaranteed by the Small Business Administration, the
Export Import Bank of the United States, or the Overseas Chinese
Community Guaranty Fund, at December 31, 2005, were $17.3 million
compared with $15.2 million at December 31, 2004. Approximately $10.0
million of such nonaccrual loans are collateralized by real estate,
which represented 64.1% of total nonaccrual loans at December 31,
2005. While future deterioration in the loan portfolio is possible,
management has continued its risk assessment and resolution program.
Management conference call. On Monday, February 6, 2006, the
Company will hold a conference call at 10:00 a.m. Central (11:00 a.m.
Eastern) to discuss the fourth 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 1-800-299-9086
(International callers may dial 1-617-786-2903) and enter the passcode
57584967 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 Bank and
its locations in San Diego and Los Angeles, California on October 5,
2005. As of December 31, 2005, the Company had consolidated assets of
$1.13 billion. 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)
December 31,
-----------------------
2005 2004
----------- -----------
Consolidated Balance Sheets
- ---------------------------------------------
Assets
Cash and cash equivalents:
Cash and due from banks $28,213 $26,285
Federal funds sold and other investments 53,599 5,788
----------- -----------
Total cash and cash equivalents 81,812 32,073
Securities available-for-sale, at fair value 236,100 273,720
Loans, net of allowance for loan losses of
$13,177 and $10,501 respectively 758,296 582,136
Loans, held-for-sale - 1,899
Accrued interest receivable 4,835 3,308
Premises and equipment, net 6,196 6,512
Goodwill 21,607 -
Core deposit intangibles 1,428 -
Deferred tax asset 8,630 5,201
Customers' liability on acceptances 3,148 6,669
Foreclosed assets, net 3,866 1,566
Other assets 2,377 1,228
----------- -----------
Total assets $1,128,295 $914,312
=========== ===========
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $195,422 $163,191
Interest-bearing 766,328 591,862
----------- -----------
Total deposits 961,750 755,053
Other borrowings 26,054 60,849
Junior subordinated debentures 36,083 -
Accrued interest payable 1,126 649
Acceptances outstanding 3,148 6,669
Other liabilities 7,906 5,369
----------- -----------
Total liabilities 1,036,067 828,589
Commitments and contingencies - -
Shareholders' Equity:
Common stock, $1.00 par value, 20,000,000
shares authorized; 7,329,977 shares and
7,312,627 shares are issued and 7,232,239
shares and 7,187,446 shares are
outstanding at December 31, 2005 and
December 31, 2004, respectively 7,330 7,313
Additional paid-in-capital 28,576 27,859
Retained earnings 60,023 50,976
Accumulated other comprehensive income
(loss) (2,783) 710
Treasury stock, at cost (918) (1,135)
----------- -----------
Total shareholders' equity 92,228 85,723
----------- -----------
Total liabilities and shareholders'
equity $1,128,295 $914,312
=========== ===========
Nonperforming Assets and Asset Quality Ratios
- ---------------------------------------------
Nonaccrual loans $15,606 $16,504
Accruing loans 90 days or more past due 32 181
Other real estate ("ORE") 3,866 1,566
----------- -----------
Total nonperforming assets 19,504 18,251
Less nonperforming loans guaranteed by the
SBA, Ex-Im Bank, or the OCCGF (2,210) (3,032)
----------- -----------
Net nonperforming assets $17,294 $15,219
=========== ===========
Net nonperforming assets to total assets 1.53% 1.66%
Net nonperforming assets to total loans and
ORE/OAR 2.23% 2.55%
Allowance for loan losses to total loans 1.71% 1.77%
Allowance for loan losses to net
nonperforming loans 98.13% 76.91%
Net loan charge-offs to total loans 0.20% 0.19%
Net loan charge-offs $1,575 $1,150
Total loans to total deposits 80.22% 78.74%
Total loans $771,473 $594,536
Allowance for loan losses $13,177 $10,501
MetroCorp Bancshares, Inc.
(In thousands, except per share amounts)
(Unaudited)
As of or for the As of or for the
three months ended twelve months ended
December 31, December 31,
---------------------- ---------------------
2005 2004 2005 2004
----------- ---------- ---------- ----------
Average Balance Sheet Data
- --------------------------
Total assets $1,129,121 $914,593 $963,952 $882,017
Securities 244,747 276,633 254,505 265,578
Total loans 765,709 585,249 640,703 565,920
Allowance for loan losses (13,317) (11,063) (11,567) (10,944)
Net loans 752,392 574,186 629,136 554,976
Total deposits 961,291 755,419 813,457 728,683
FHLB and other borrowings 62,342 61,994 51,774 64,022
Total shareholders' equity 91,884 85,857 89,271 81,044
Income Statement Data
- --------------------------
Interest income:
Loans $15,520 $9,603 $47,799 $34,711
Securities:
Taxable 2,356 2,564 9,519 9,582
Tax-exempt 212 224 853 917
Federal funds sold and
other investments 542 38 885 94
----------- ---------- ---------- ----------
Total interest
income 18,630 12,429 59,056 45,304
Interest expense:
Time deposits 4,674 2,295 12,948 8,133
Demand and savings
deposits 867 403 2,316 1,338
Other borrowings 854 504 2,274 1,878
----------- ---------- ---------- ----------
Total interest
expense 6,395 3,202 17,538 11,349
Net interest income 12,235 9,227 41,518 33,955
Provision for loan losses 538 527 1,934 1,343
----------- ---------- ---------- ----------
Net interest income after
provision for loan losses 11,697 8,700 39,584 32,612
Noninterest income:
Service fees 1,621 1,759 6,593 6,701
Other loan-related fees 274 222 1,179 977
Other noninterest income 63 (62) 337 573
----------- ---------- ---------- ----------
Total noninterest
income 1,958 1,919 8,109 8,251
Noninterest expense:
Salaries and employee
benefits 5,326 3,791 17,555 16,104
Occupancy and equipment 1,503 1,481 5,663 5,723
Foreclosed assets, net (45) 116 312 (728)
Other noninterest
expense 2,573 1,768 8,424 7,139
----------- ---------- ---------- ----------
Total noninterest
expense 9,357 7,156 31,954 28,238
----------- ---------- ---------- ----------
Income before provision
for income taxes 4,298 3,463 15,739 12,625
Provision for income taxes 1,384 1,143 4,959 4,031
----------- ---------- ---------- ----------
Net income $2,914 $2,320 $10,780 $8,594
=========== ========== ========== ==========
Per Share Data
- --------------------------
Earnings per share - basic $0.40 $0.32 $1.50 $1.20
Earnings per share -
diluted 0.40 0.32 1.48 1.19
Weighted average shares
outstanding:
Basic 7,223 7,186 7,208 7,175
Diluted 7,366 7,267 7,306 7,230
Dividends per common
share $0.06 $0.06 $0.24 $0.24
Performance Ratio Data
- --------------------------
Return on average assets 1.02% 1.01% 1.12% 0.97%
Return on average
shareholders' equity 12.58% 10.75% 12.08% 10.60%
Net interest margin 4.56% 4.19% 4.51% 4.02%
Efficiency ratio 65.93% 64.20% 64.39% 66.91%
Equity to assets (Average) 8.14% 9.39% 9.26% 9.19%
CONTACT: MetroCorp Bancshares, Inc., Houston
George Lee, 713-414-3506
or
David Choi, 713-414-3768