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MetroCorp Bancshares Inc. Reports Operating Results (10-Q)

November 06, 2009 | About:

10qk

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MetroCorp Bancshares Inc. (MCBI) filed Quarterly Report for the period ended 2009-09-30.

MetroCorp Bancshares Inc. is a bank holding company for MetroBank National Association. Metrocorp Bancshares Inc. has a market cap of $40.4 million; its shares were traded at around $3.7 with and P/S ratio of 0.4. Metrocorp Bancshares Inc. had an annual average earning growth of 31.9% over the past 5 years.

Highlight of Business Operations:

The Company recorded net income of $1.1 million for the three months ended September 30, 2009, a decrease of $938,000 compared with the same quarter in 2008. The Company s diluted earnings per common share for the three months ended September 30, 2009 was $0.05, a decrease of $0.14 per diluted common share compared with diluted earnings per common share of $0.19 for the same quarter in 2008. Diluted earnings per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares and potentially dilutive common shares outstanding during the period. Preferred stock dividends were $563,000 or $0.05 per diluted share for the three months ended September 30, 2009. There were no preferred stock dividends for the three months ending September 30, 2008. The Company recorded net income of $256,000 for the nine months ended September 30, 2009, a decrease of $6.3 million compared with the same period in 2008. The Company s diluted loss per common share for the nine months ended September 30, 2009 was $0.12, a decrease of $0.72 per diluted share compared with diluted earnings per common share of $0.60 for the same period in 2008. Preferred stock dividends were $1.6 million or $0.15 per diluted share for the nine months ended September 30, 2009. There were no preferred stock dividends for the nine months ended September 30, 2008. Details of the changes in the various components of net income are further discussed below.

Total assets were $1.63 billion at September 30, 2009, an increase of $49.5 million or 3.1% from $1.58 billion at December 31, 2008. Available-for-sale investment securities at September 30, 2009 were $90.2 million, a decrease of $11.9 million or 11.6% from $102.1 million at December 31, 2008. Net loans at September 30, 2009 were $1.29 billion, a decrease of $35.9 million or 2.7% from $1.32 billion at December 31, 2008. Total deposits at September 30, 2009 were $1.39 billion, an increase of $122.7 million or 9.7% from $1.27 billion at December 31, 2008. Other borrowings at September 30, 2009 were $25.1 million, a decrease of $113.9 million or 81.9% from $139.0 million at December 31, 2008. The Company s return on average assets (“ROAA”) for the three months ended September 30, 2009 and 2008 was 0.28% and 0.52%, respectively. The Company s return on average equity (“ROAE”) for the three months ended September 30, 2009 and 2008 was 2.74% and 6.67%, respectively. The Company s ROAA for the nine months ended September 30, 2009 and 2008 was 0.02% and 0.57%, respectively. The Company s ROAE for the nine months ended September 30, 2009 and 2008 was 0.21% and 7.21%, respectively. Shareholders equity at September 30, 2009 was $163.8 million compared to $119.2 million at December 31, 2008, an increase of $44.6 million or 37.4%. Details of the changes in the various balance sheet items are further discussed below.

For the nine months ended September 30, 2009, net interest income, before the provision for loan losses, was $41.1 million, a decrease of $1.2 million or 2.9% compared with $42.3 million for the same period in 2008, primarily due to lower loan yields as a result of interest rate cuts and an increase in nonperforming assets. Average interest-earning assets for the nine months ended September 30, 2009 were $1.51 billion, an increase of $75.0 million or 5.2% compared with $1.44 billion for the same period in 2008, primarily due to growth in loans and federal funds sold and other short-term investments. The weighted average yield on interest-earning assets for the nine months ended September 30, 2009 was 5.79%, down 104 basis points compared with 6.83% for the same period in 2008. Average interest-bearing liabilities for the nine months ended September 30, 2009 were $1.23 billion, an increase of $47.4 million or 4.0% compared with $1.18 billion for the same period in 2008, primarily due to an increase in money market accounts and time deposits, partially offset by a decrease in other borrowings. The weighted average rate paid on interest-bearing liabilities for the nine months ended September 30, 2009 was 2.67%, down 87 basis points compared with 3.54% for the same period in 2008.

Interest Income from Loans. Interest income from loans for the three months ended September 30, 2009 was $20.7 million, a decrease of $1.6 million or 7.4% compared with $22.3 million for the same quarter in 2008. Average total loans for the three months ended September 30, 2009 were $1.32 billion compared to $1.33 billion for the same period in 2008, a decrease of $4.7 million or 0.4%. For the third quarter of 2009, the average yield on loans was 6.20%, a decrease of 49 basis points compared to 6.69% for the same quarter in 2008. Interest income from loans for the nine months ended September 30, 2009 was $61.8 million, a decrease of $6.9 million or 10.1% compared with $68.7 million for the same period in 2008. The decrease for the three and nine months ended September 30, 2009 was the result of lower loan yields and an increase in nonperforming assets. Average total loans for the nine months ended September 30, 2009 were $1.33 billion, an increase of $49.5 million or 3.9% compared with average total loans for the same period in 2008 of $1.28 billion. For the nine months ended September 30, 2009, the yield on average total loans was 6.22%, down 96 basis points compared with 7.18% for the same period in 2008.

Interest Income from Investments. Interest income from investments (which includes investment securities, Federal funds sold, and other investments) for the three months ended September 30, 2009 was $1.2 million, a decrease of $431,000 or 27.0% compared to $1.6 million for the same period in 2008. The decrease in interest income from investments for the three months ended September 30, 2009 was primarily the result of declining interest rates. Average total investments for the three months ended September 30, 2009 were $180.3 million compared to average total investments for the same period in 2008 of $161.1 million, an increase of $19.2 million or 11.9%. For the third quarter 2009, the average yield on total investments was 2.57% compared to 3.95% for the same quarter in 2008, a decrease of 138 basis points. Interest income from investments for the nine months ended September 30, 2009 was $3.8 million, down $1.0 million or 21.8% compared with $4.8 million for the same period in 2008. The decrease in interest income from investments for the nine months ended September 30, 2009 was primarily the result of declining interest rates, and the effect of a decline in taxable securities due to paydowns, sales, calls and maturities of securities. Average total investments for the nine months ended September 30, 2009 were $187.1 million compared with average total investments for the same quarter in 2008 of $161.6 million, an increase of $25.5 million or 15.8%. The increase in average total investments for the three and nine months ended September 30, 2009 was primarily the result of an increase in Federal funds sold. For the nine months ended September 30, 2009, the average yield on investments was 2.71% compared with 4.01% for the same quarter in 2008, a decrease of 130 basis points.

Interest Expense on Other Borrowings. Interest expense on other borrowings for the three months ended September 30, 2009 was $240,000, a decrease of $734,000 compared to $974,000 for the same period in 2008. Interest expense on other borrowed funds for the nine months ended September 30, 2009 was $768,000, down $2.0 million compared with $2.7 million for the same period in 2008. Average borrowed funds, consisting primarily of security repurchase agreements and borrowings from the Federal Home Loan Bank (“FHLB”), for the three months ended September 30, 2009 was $28.8 million a decrease of $125.9 million compared to $154.7 million for the same period in 2008. Other borrowings decreased primarily due to liquidity provided by deposit growth and funds received from participation in the Capital Purchase Program (“CPP”). The average interest rate paid on borrowed funds for the third quarter of 2009 was 3.31% compared to 2.50% for the same quarter in 2008. The average interest rate increased as lower cost short-term FHLB borrowings were repaid and higher cost long-term borrowings remained outstanding. Average borrowed funds for the nine months ended September 30, 2009 was $40.2 million, a decrease of $99.3 million compared to $139.5 million for the same period in 2008. Other borrowings decreased primarily due to liquidity provided by deposit growth and funds received from participation in the CPP. The average interest rate paid on borrowed funds for the nine months ended September 30, 2009 was 2.55% compared to 2.63% for the same period in 2008.

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