Exhibit 99.1
MetroCorp Bancshares, Inc. Announces Record Net Income of $3.4
million, or $0.46 Per Share, in Second Quarter 2006
HOUSTON--(BUSINESS WIRE)--July 27, 2006--MetroCorp Bancshares,
Inc. (Nasdaq:MCBI), a Texas corporation which provides community
banking services through its subsidiaries, MetroBank, N.A., serving
Houston and Dallas, Texas, and Metro United Bank ("Metro United"),
formerly known as First United Bank, serving San Diego and Los
Angeles, California, today announced net income of $3.4 million for
the second quarter of 2006, up approximately $622,000 or 22.5%
compared with the same quarter in 2005. Diluted earnings per share for
the second quarter 2006 were $0.46 compared with $0.38 for the same
quarter in 2005.
Second Quarter Highlights
-- Record net income of $3.4 million, up 22.5% compared with the
same quarter of 2005
-- Diluted earnings per share of $0.46, an increase of 20.4%
compared with the same quarter of 2005
-- Total loans increased to $825.9 million
-- Total deposits increased to $1.01 billion
-- Return on average equity (ROAE) of 14.06%
-- Return on average assets (ROAA) of 1.15%
-- Net nonperforming assets to total assets decreased from 1.53%
at December 31, 2005 to 0.97% at June 30, 2006
-- New branch in Plano, Texas opened during June 2006
-- Definitive agreement entered into, pending regulatory
approval, to purchase Irvine, California branch
-- Loan production office in San Mateo, California scheduled to
open in third quarter 2006
-- Regulatory approval received from the China Banking Regulatory
Commission for the first representative office in Xiamen,
China
George M. Lee, President and CEO of MetroCorp Bancshares, Inc.
stated, "Our second quarter performance again reflects how our
employees have executed our strategic plan by delivering solid
earnings, expanding our market presence in both Texas and California,
and improving our asset quality. The management team is pleased with
the growth in earnings for the first six months of 2006, which
improved 31.7% and 41.8% as compared to the same periods in 2005 and
2004. We are even more encouraged by the fact that our net
nonperforming assets to total assets ratio was 0.97% at June 30, 2006
compared to 1.53% at December 31, 2005 and 1.67% at December 31, 2004.
Our total deposits have grown by approximately $40 million and total
loans by approximately $39 million from the first quarter of 2006 in a
very competitive market environment, which is a tribute to our branch
management and business officers. All of this was achieved during the
past quarter while we opened our largest branch, based on square
footage, in Plano, Texas, entered into a definitive agreement to
acquire a branch in Irvine, California, evaluated the prospects for a
loan production office in San Mateo, California which is scheduled to
open in the third quarter of 2006, and executed a lease for the second
largest branch, based on square footage, in Houston. We have also
received regulatory approval from the China Banking Regulatory
Commission for our first representative office in Xiamen, China, which
is across from Taiwan and one of the fastest growing economic regions
in China. The second quarter has been a challenging and exciting
quarter, and we continue to see encouraging results from our focus on
fundamentals, including cost control, credit underwriting, and market
expansion."
Interest income and expense. Interest income for the three months
ended June 30, 2006 was $21.2 million, up approximately $7.9 million
or 59.5% compared with $13.3 million for the same period in 2005.
Interest income for the six months ended June 30, 2006 was $40.8
million, up approximately $14.7 million or 56.4% compared with $26.1
million for the same period in 2005. Interest income increased for
both the three and six months ended June 30, 2006 primarily due to
increases in both average earning assets and average yield.
Average earning assets increased due primarily to the Metro United
acquisition in October 2005 and organic growth in the loan portfolio
of approximately 9.8% or $58.4 million. Average total loans increased
34.6% in the second quarter of 2006, to $803.1 million from $596.6
million for the second quarter of 2005. The yield on average earning
assets for the second quarter of 2006 was 7.70% compared with 6.18%
for the second quarter of 2005. The yield on average earning assets
increased primarily due to the Federal Reserve's eight interest rate
increases over the last 12 months. 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 expense for the three months ended June 30, 2006 was $8.0
million, up approximately $4.4 million or 123.5% compared with $3.6
million for the same period in 2005. Interest expense for the six
months ended June 30, 2006 was $14.8 million, up approximately $7.9
million or 113.9% compared with $6.9 million for the same period in
2005.
Interest expense increased for both the three and six months ended
June 30, 2006 primarily due to interest-bearing deposits acquired with
Metro United, growth in interest-bearing deposits, and the issuance of
$36.1 million junior subordinated debentures in October 2005 in
connection with the acquisition of Metro United. Average
interest-bearing deposits were $817.0 million for the second quarter
of 2006 compared with $575.8 million for the second quarter of 2005,
an increase of 41.9%. Cost of interest-bearing liabilities for the
second quarter of 2006 was 3.67% compared with 2.31% for the second
quarter of 2005. The increase in rates primarily reflected the impact
of the Federal Reserve's interest rate increases.
The net interest margin for the three months ended June 30, 2006
was 4.79%, up from 4.51% for the same period in 2005. Net interest
income before the provision for loan losses for the three months ended
June 30, 2006 was $13.2 million, up approximately $3.5 million or
35.9% compared with $9.7 million for the same period in 2005.
The net interest margin for the six months ended June 30, 2006 was
4.82%, up from 4.45% for the same period in 2005. Net interest income
before the provision for loan losses for the six months ended June 30,
2006 was $25.9 million, up approximately $6.8 million or 35.5%
compared with $19.1 million for the same period in 2005.
The increase in net interest margin and net interest income for
both the three and six months ended June 30, 2006 was primarily the
result of an increase in the yield on average earning assets that was
the result of a higher yield on average loans. The yield on loans
increased to 8.76% for the six months ended June 30, 2006 compared
with 7.01% for the same period in 2005. For the six months ended June
30, 2006, the increase in the yield on earning assets was partially
offset by an increase in the cost of average earning assets of 114
basis points.
Noninterest income and expense. Noninterest income for the three
months ended June 30, 2006 was $2.0 million, down approximately
$52,000 or 2.6% compared with the same period in 2005. Noninterest
income for the six months ended June 30, 2006 was $3.9 million, down
approximately $183,000 or 4.5% compared with the same period in 2005.
Noninterest income decreased for both the three and six months
ended June 30, 2006 primarily due to reduced service fees, which were
partially offset by increases in other loan-related fees and letters
of credit commissions and fees. Service fees decreased as a result of
fewer NSF service charges, an increase in the earnings credit on
commercial demand deposit accounts, and a reduction in check cashing
fees.
Noninterest expense for the three months ended June 30, 2006 was
$9.7 million, up approximately $2.4 million or 32.7% compared with
$7.3 million for the same period in 2005. Noninterest expense for the
six months ended June 30, 2006 was $19.2 million, up approximately
$4.2 million or 28.2% compared with $14.9 million for the same period
in 2005.
The increase in noninterest expense for both the three and six
months ended June 30, 2006, was primarily attributable to the addition
of noninterest expenses of Metro United, which totaled approximately
$1.3 million for the three months ended June 30, 2006 and $2.4 million
for the six months ended June 30, 2006.
Salaries and benefits expense for the six months ended June 30,
2006 was $10.6 million, up $2.6 million compared with $8.0 million for
the same period in 2005. The increase was primarily due to the staff
added in the Metro United acquisition, severance expenses with respect
to one executive officer and an increase in bonuses. Other noninterest
expense for the six months ended June 30, 2006 was $5.2 million, up
$1.4 million compared with $3.8 million for the same period in 2005
primarily due to the impact of the Metro United acquisition, an
increase in legal fees, and intangible asset amortization.
Provision for loan losses. The provision for loan losses for the
three months ended June 30, 2006 was $188,000, a $266,000 decrease
compared with $454,000 for the same period in 2005. The provision for
loan losses for the six months ended June 30, 2006 was $446,000, a
$482,000 decrease compared with $928,000 for the same period in 2005.
The provision for loan losses decreased for both the three and six
months ended June 30, 2006 primarily due to improvement in asset
quality as indicated by the increase in the ratio of allowance for
loan losses to net nonperforming loans from 98.07% at December 31,
2005 to 176.35% at June 30, 2006. The allowance for loan losses as a
percent of total loans at June 30, 2006 and 2005 was 1.56% and 1.70%,
respectively. At December 31, 2005, the allowance for loan losses as a
percent of total loans was 1.71%.
Net charge-offs for the three months ended June 30, 2006 were $1.0
million compared with net charge-offs of $869,000 for the same period
in 2005, and resulted from the partial write-down of approximately
$1.1 million in loans to a shrimp processing business. The partial
write-down amount had been specifically reserved in a prior period to
adjust the collateral to fair value. Net charge-offs for the six
months ended June 30, 2006 were $710,000 compared with $1.1 million
for the same period in 2005.
Asset Quality. Total nonperforming assets decreased $5.9 million
from $19.5 million at December 31, 2005 to $13.6 million at June 30,
2006. The decrease was primarily due to the payoff of a hospitality
loan, payments received on a loan to the shrimp processing business
and its related charge-off.
At June 30, 2006, nonperforming assets consisted of $9.3 million
in nonaccrual loans, $91,000 in accruing loans that were 90 days or
more past due, and $4.2 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 June 30, 2006, were $11.6 million compared
with $17.3 million at December 31, 2005. Approximately $4.9 million of
such nonaccrual loans are collateralized by real estate, which
represented 52.17% of total nonaccrual loans at June 30, 2006. While
future deterioration in the loan portfolio is possible, management is
continuing its risk assessment and resolution program.
Management conference call. On Friday, July 28, 2006, the Company
will hold a conference call at 10:00 a.m. Central (11:00 a.m. Eastern)
to discuss the second quarter 2006 results. A brief management
presentation will be followed by a question and answer period. To
participate by phone, U.S. callers may dial 877-407-8291
(International callers may dial 201-689-8345) 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 Metro United Bank. The Company has 13 full-service
banking locations in the greater Houston, and Dallas, Texas
metropolitan areas, and two full service banking locations in the
greater San Diego and Los Angeles, California metropolitan areas. As
of June 30, 2006, the Company had consolidated assets of $1.19
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 per share
amounts)
(Unaudited)
As of or for the As of or for the six
three months months
ended June 30, ended June 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- -------- ---------- --------
Average Balance Sheet
Data
- -------------------------
Total assets $1,179,391 $896,892 $1,156,053 $902,534
Securities 218,573 254,794 224,829 260,570
Total loans 803,132 596,615 788,106 596,214
Allowance for loan losses (13,910) (11,263) (13,861) (11,153)
Net loans 789,222 585,352 774,245 585,061
Total interest-earning
assets 1,105,859 863,265 1,085,283 867,387
Total deposits 1,005,688 754,077 984,090 751,125
FHLB and other borrowings 61,829 47,813 62,283 56,949
Total shareholders'
equity 96,795 88,034 95,712 87,494
Income Statement Data
- -------------------------
Interest income:
Loans $ 17,831 $ 10,657 $ 34,254 $ 20,727
Securities:
Taxable 2,196 2,359 4,460 4,781
Tax-exempt 187 212 393 430
Federal funds sold and
other investments 1,021 82 1,659 136
---------- -------- ---------- --------
Total interest
income 21,235 13,310 40,766 26,074
Interest expense:
Time deposits 5,801 2,685 10,828 5,060
Demand and savings
deposits 1,392 427 2,308 813
Other borrowings 841 482 1,684 1,055
---------- -------- ---------- --------
Total interest
expense 8,034 3,594 14,820 6,928
Net interest income 13,201 9,716 25,946 19,146
Provision for loan losses 188 454 446 928
---------- -------- ---------- --------
Net interest income after
provision for loan
losses 13,013 9,262 25,500 18,218
Noninterest income:
Service fees 1,445 1,633 2,906 3,261
Other loan-related fees 224 172 435 317
Letters of credit
commissions and fees 207 133 378 275
Other noninterest
income 86 76 162 211
---------- -------- ---------- --------
Total noninterest
income 1,962 2,014 3,881 4,064
Noninterest expense:
Salaries and employee
benefits 5,332 3,868 10,622 8,004
Occupancy and equipment 1,658 1,398 3,202 2,736
Foreclosed assets, net 118 14 161 424
Other noninterest
expense 2,546 1,993 5,180 3,785
---------- -------- ---------- --------
Total noninterest
expense 9,654 7,273 19,165 14,949
Income before provision
for income taxes 5,321 4,003 10,216 7,333
Provision for income
taxes 1,929 1,233 3,593 2,303
---------- -------- ---------- --------
Net income $ 3,392 $ 2,770 $ 6,623 $ 5,030
========== ======== ========== ========
Per Share Data
- -------------------------
Earnings per share -
basic $ 0.47 $ 0.38 $ 0.91 $ 0.70
Earnings per share -
diluted 0.46 0.38 0.90 0.69
Weighted average shares
outstanding:
Basic 7,263 7,205 7,254 7,200
Diluted 7,398 7,271 7,381 7,282
Dividends per common
share $ 0.06 $ 0.06 $ 0.12 $ 0.12
Performance Ratio Data
- -------------------------
Return on average assets 1.15 % 1.24 % 1.16 % 1.12 %
Return on average
shareholders' equity 14.06 % 12.62 % 13.95 % 11.59 %
Net interest margin 4.79 % 4.51 % 4.82 % 4.45 %
Efficiency ratio 63.67 % 62.00 % 64.25 % 64.41 %
Equity to assets
(Average) 8.21 % 9.82 % 8.28 % 9.69 %
MetroCorp Bancshares, Inc.
(In thousands, except share amounts)
(Unaudited)
June 30, December 31,
2006 2005
---------- ----------
Consolidated Balance Sheets
- ----------------------------------------------
Assets
Cash and due from banks $ 26,773 $ 28,213
Federal funds sold and other investments 79,717 53,599
---------- ----------
Total cash and cash equivalents 106,490 81,812
Securities available-for-sale, at fair value 211,895 236,100
Loans, net of allowance for loan losses of
$12,905 and $13,169, respectively 813,015 758,304
Accrued interest receivable 5,295 4,835
Premises and equipment, net 6,872 6,196
Goodwill 21,607 21,607
Core deposit intangibles 1,192 1,428
Customers' liability on acceptances 6,488 3,148
Foreclosed assets, net 4,188 3,866
Other assets 10,703 10,908
---------- ----------
Total assets $1,187,745 $1,128,204
========== ==========
Liabilities and Shareholders' Equity
Deposits:
Noninterest-bearing $ 191,625 $ 195,422
Interest-bearing 820,202 766,328
---------- ----------
Total deposits 1,011,827 961,750
Junior subordinated debentures 36,083 36,083
Other borrowings 25,505 26,054
Accrued interest payable 1,242 1,126
Acceptances outstanding 6,488 3,148
Other liabilities 9,465 7,815
---------- ----------
Total liabilities 1,090,610 1,035,976
Commitments and contingencies - -
Shareholders' Equity:
Common stock, $1.00 par value, 50,000,000
shares authorized; 7,329,977 shares are
issued and 7,278,820 shares and 7,232,239
shares are outstanding at June 30, 2006 and
December 31, 2005, respectively 7,330 7,330
Additional paid-in-capital 29,199 28,576
Retained earnings 65,777 60,023
Accumulated other comprehensive loss (4,588) (2,783)
Treasury stock, at cost (583) (918)
---------- ----------
Total shareholders' equity 97,135 92,228
---------- ----------
Total liabilities and shareholders'
equity $1,187,745 $1,128,204
========== ==========
Nonperforming Assets and Asset Quality Ratios
- ----------------------------------------------
Nonaccrual loans $ 9,306 $ 15,606
Accruing loans 90 days or more past due 91 32
Other real estate ("ORE") 4,188 3,866
---------- ----------
Total nonperforming assets 13,585 19,504
Less nonperforming loans guaranteed by the
SBA, Ex-Im Bank, or the OCCGF (2,079) (2,210)
---------- ----------
Net nonperforming assets $ 11,506 $ 17,294
========== ==========
Net nonperforming assets to total assets 0.97 % 1.53 %
Net nonperforming assets to total loans and
ORE/OAR 1.39 % 2.23 %
Allowance for loan losses to total loans 1.56 % 1.71 %
Allowance for loan losses to net nonperforming
loans 176.35 % 98.07 %
Net charge-offs to total loans 0.09 % 0.20 %
Net charge-offs $ 710 $ 1,575
Total loans to total deposits 81.63 % 80.22 %
Total loans $ 825,920 $ 771,473
Allowance for loan losses $ 12,905 $ 13,169
CONTACT: MetroCorp Bancshares, Inc., Houston
George Lee, 713-414-3876
or
David Choi, 713-414-3768