U.S. Securities and Exchange Commission
Washington D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1999.
Commission file number: 0-23790
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MetroBanCorp
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(Exact name of small business issuer as specified in its charter)
Indiana 35-1712167
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(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
10333 N. Meridian Street, Suite 111, Indianapolis, Indiana 46290
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(Address of principal executive offices) (Zip Code)
(317) 573-2400
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(Issuer's telephone number)
http://www.metb.com
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(Issuer's Internet Website Address)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,938,827 Shares of Common Stock
----------------------------------
Transitional Small Business Disclosure Format:
Yes No X
--- ---
<PAGE>
MetroBanCorp
FORM 10-QSB
Index
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statement of Condition
March 31, 1999 and December 31, 1998 3
Consolidated Statement of Operations
Three Months Ended March 31, 1999 and 1998 4
Consolidated Statement of Cash Flows
Three Months Ended March 31, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 12
EXHIBITS 13
<PAGE>
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Condition
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
03/31/99 12/31/98
---------------- ---------------
<S> <C> <C>
Assets
Cash and Due from Banks $7,896 $7,719
Federal Funds Sold 4,000 2,325
---------------- ---------------
Total Cash and Cash Equivalents 11,896 10,044
Investment Securities HTM - at Cost 3,605 3,605
Investment Securities AFS - at Market 34,906 37,726
---------------- ---------------
Total Investment Securities 38,511 41,331
Loans:
Gross Loans 80,230 80,469
Less: Allowance for Loan Losses (1,357) (1,300)
---------------- ---------------
Loans, Net 78,873 79,169
Premises and Equipment, Net 1,503 1,536
Accrued Interest Receivable 910 956
Core Deposit Intangible, Net 6 41
Deferred Tax Asset 624 554
Other Assets 372 349
---------------- ---------------
Total Assets $132,695 $133,980
================ ===============
Liabilities
Deposits:
Non-Interest Bearing Demand 25,227 29,534
Interest Bearing:
Savings and NOW Accounts 54,731 46,594
Time Deposits of $100,000 and over 11,046 11,728
Other Time Deposits 27,274 31,972
---------------- ---------------
Total Deposits 118,278 119,828
Accrued Interest Payable 436 449
Other Liabilities 1,057 864
---------------- ---------------
Total Liabilities 119,771 121,141
---------------- ---------------
Commitments and Contingencies - -
Shareholders' Equity
Preferred Stock: 1,000,000 Shares Authorized; None Outstanding
Common Stock: 3,000,000 Shares Authorized; - -
1,938,827 Shares Issued and Outstanding in 1999
1,941,762 Shares Issued and Outstanding in 1998 13,523 13,548
Accumulated Earnings (551) (756)
Net Unrealized Gain/(Loss) on Investment Securities AFS (48) 47
---------------- ---------------
Total Shareholders' Equity 12,924 12,839
---------------- ---------------
Total Liabilities and Shareholders' Equity $132,695 $133,980
================ ===============
</TABLE>
See "Notes to Consolidated Financial Statements"
<PAGE>
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
(unaudited)
(dollars in thousands, except share data)
Three Months Ended
---------------------------------
03/31/99 03/31/98
--------------- ---------------
<S> <C> <C>
Interest Income
Interest and Fees on Loans $1,892 $1,908
Interest on Investment Securities 574 357
Interest on Federal Funds Sold 12 115
--------------- ---------------
Total Interest Income 2,478 2,380
Interest Expense
Interest on Deposits 979 1,032
Other Interest Expense 8 -
--------------- ---------------
Total Interest Expense 987 1,032
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Net Interest Income 1,491 1,348
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Provision for Loan Losses 58 75
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Net Interest Income after Provision for Loan Losses 1,433 1,273
--------------- ---------------
Non-Interest Income
Service Charges on Deposit Accounts 95 79
Loss on Sale of Investment Securities - (8)
Other Service Charges, Commissions and Fees 163 128
--------------- ---------------
Total Non-Interest Income 258 199
Non-Interest Expense
Salaries and Employee Benefits 521 503
Occupancy Expense 104 104
Equipment Expense 84 87
Advertising and Public Relations 57 65
Legal, Professional and Audit Services 45 54
Data Processing 87 80
Student Loan Servicing Fees 8 11
FDIC Insurance Assessment 8 7
Amortization of Core Deposit Intangible 35 36
Other 226 221
--------------- ---------------
Total Non-Interest Expense 1,175 1,168
Income before Income Taxes 516 304
Applicable Income Taxes 203 121
--------------- ---------------
Net Income $313 $183
=============== ===============
Net Income per Common Share $0.16 $0.09
Net Income per Common Share - Assuming Dilution $0.15 $0.09
Weighted Average Shares Outstanding 1,939,968 1,941,726
Weighted Average Shares Outstanding - Assuming Dilution 2,038,328 2,045,505
</TABLE>
See "Notes to Consolidated Financial Statements"
<PAGE>
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
Consolidated Statement of Cash Flows
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------------
03/31/99 03/31/98
-------------------- ------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Income $313 $183
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 58 75
Depreciation and Amortization 75 106
Loss on Sale of Securities - 8
Decrease in Accrued Interest Receivable 46 57
(Increase)/Decrease in Other Assets (60) 49
Increase/(Decrease) in Accrued Interest Payable (13) 17
Increase in Other Liabilities 193 16
-------------------- ------------------
Total Adjustments 299 328
-------------------- ------------------
Net Cash Flows Provided by Operating Activities 612 511
-------------------- ------------------
Cash Flows from Investing Activities:
Proceeds from Maturities of Investment Securities Held to Maturity - 19
Proceeds from Maturities of Investment Securities Available for Sale 3,625 -
Proceeds from Sales of Investment Securities Available for Sale 100 4,198
Purchases of Investment Securities Available for Sale (999) (5,174)
Proceeds from the Sale of Student Loans 32 -
Proceeds from the Repayment of Student Loans 164 77
Net Loans Made to Customers 43 (605)
Purchases of Premises and Equipment (42) (94)
-------------------- ------------------
Net Cash Flows Provided by/(Used in) Investing Activities 2,923 (1,579)
-------------------- ------------------
Cash Flows from Financing Activities:
Net Increase in DDA, NOW and Savings Accounts 3,830 5,883
Net Increase/(Decrease) in Time Deposits (5,380) 959
Cash Dividends Paid (108) (84)
Purchases of Treasury Stock (25) -
-------------------- ------------------
Net Cash Flows Provided by/(Used in) Financing Activities (1,683) 6,758
-------------------- ------------------
Net Increase in Cash and Cash Equivalents 1,852 5,690
Cash and Cash Equivalents at Beginning of Period 10,044 17,095
-------------------- ------------------
Cash and Cash Equivalents at End of Period $11,896 $22,785
==================== ==================
</TABLE>
See "Notes to Consolidated Statements"
<PAGE>
MetroBanCorp
Notes to Consolidated Financial Statements
1. Basis of Presentation
---------------------
The consolidated financial statements include the accounts of
MetroBanCorp and its wholly-owned affiliate, MetroBank (together,
"Metro"). All significant intercompany transactions and balances have
been eliminated.
In the opinion of management of Metro, the consolidated financial
statements contain all the normal and recurring adjustments necessary
to present fairly the consolidated financial condition of Metro as of
March 31, 1999 and December 31, 1998, and the results of its operations
and cash flows for the three months ended March 31, 1999 and 1998.
These financial statements should be read in conjunction with Metro's
latest Annual Report on Form 10-KSB for the year ending December 31,
1998.
2. Investments
-----------
The market value and amortized cost of investment securities of Metro
as of March 31, 1999 are set forth below:
Market Value Amortized Cost
------------ --------------
Held to Maturity $ 3,156,443 $ 3,604,138
Available for Sale 34,906,853 35,380,017
----------- -----------
Total Investments $38,063,296 $38,984,155
=========== ===========
3. Allowance for Loan and Lease Losses
-----------------------------------
As of March 31, 1999, Metro had investments in loans which are impaired
in accordance with SFAS Nos. 114 and 118 of $360,580. Of this amount,
$358,178 had no related specific allowance. The remaining $2,402 of
impaired loans were fully reserved.
Metro's policy for recognizing income on impaired loans is to accrue
earnings until a loan is classified as impaired. For loans which
receive the classification of impaired during the current period,
interest accrued to date is charged against current earnings. All
payments received on a loan which is classified as impaired are
utilized to reduce the outstanding principal balance.
<PAGE>
4. Comprehensive Income
--------------------
During the first quarter of 1998, Metro adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income."
Comprehensive Income is defined as the change in equity of a business
enterprise during a period from transactions and other events and
circumstances from non-owner sources. It includes all changes in equity
during a period except those resulting from investment by owners and
distributions to owners. In Metro's case, comprehensive income includes
net income and unrealized gains and losses on available for sale
securities. Total comprehensive income was $218,000 and $177,000 for
the three month period ended March 31, 1999 and 1998, respectively.
5. Per Share Data
--------------
Basic net income per common share is computed by dividing net income by
the weighted average number of common shares outstanding during each
year. Net income per common share, assuming full dilution, is computed
as above except that the denominator is increased to include the number
of additional common shares that would have been outstanding if the
dilutive potential common shares (stock options) had been issued. Below
is a table reconciling basic net income per common share and net income
per common share assuming full dilution:
<TABLE>
<CAPTION>
For the Three Months Ended
---------------------------------------------------------------------------------
March 31, 1999 March 31, 1998
----------------------------------------- ---------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
----------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income Available to Common
Stockholders $313,000 1,939,968 $183,000 1,941,726
Net Income per Common Share $0.16 $0.09
=========== ===========
Effects of Dilutive Options
Stock Options - 98,360 - 103,779
---------------------------- -----------------------
Net Income per Common
Share - Assuming Dilution $313,000 2,038,328 $0.15 $183,000 2,045,505 $0.09
========================================= =======================================
</TABLE>
Per share data included in Metro's consolidated statement of operations
for the three months ended March 31, 1999 and 1998 was based on the
weighted average number of common shares outstanding.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
-----------------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
The following management discussion is presented to provide information
concerning the consolidated financial condition of Metro as of March 31, 1999 as
compared to December 31, 1998, and the results of operations for the three month
period ending March 31, 1999 and 1998.
FINANCIAL CONDITION
At March 31, 1999, Metro had total assets of $132.7 million, a decrease of $1.3
million or 1.0 percent from December 31, 1998. Consolidated earning assets
totaled to $122.4 million, or 92.2 percent of total assets, at March 31, 1999.
The principal components of earning assets were loans in the amount of $78.9
million or 64.5 percent of total earning assets, and investment securities of
$38.5 million or 31.5 percent of total earning assets. Earning assets at
December 31, 1998 were $124.1 million, or 92.6 percent of total assets.
LOANS
- -----
Total gross loans outstanding decreased $239,000 or 0.3 percent from December
31, 1998 to March 31, 1999. At March 31, 1999, net loans amounted to 59.4
percent of total assets as compared to 59.1 percent at year end 1998. The Bank's
loan to deposit ratio, which is one measure of liquidity, was 66.7 percent at
March 31, 1999, as compared to 66.1 percent at year end 1998.
<TABLE>
<CAPTION>
Loan Portfolio at Period-End
(dollars in thousands)
March 31, 1999 December 31, 1998 % Change
-------------- ----------------- -------------
<S> <C> <C > <C>
Commercial $51,378 $50,556 1.63%
Real Estate - Construction 1,697 2,399 (29.26)%
Mortgage 495 776 (36.21)%
Installment 22,452 22,333 0.53%
Student Loans 4,208 4,405 (4.47)%
------------ ------------ -------------
Total Loans $80,230 $80,469 (0.30)%
Less:
Allowance for Loan Losses (1,357) (1,300) 4.38%
------------ ------------ -------------
Net Loans $78,873 $79,169 (0.37)%
============ ============ =============
</TABLE>
Delinquent loans at March 31, 1999 were $774,308, representing 0.97 percent of
total loans. At December 31, 1998, delinquent loans amounted to $1.3 million or
1.6 percent of total loans outstanding. Delinquent loans in both periods shown
above consisted primarily of student loans
<PAGE>
guaranteed by a third party. Non-accruing loans at March 31, 1999 amounted to
$361,000 as compared to $369,000 at December 31, 1998. There were no recoveries
on charged-off loans for the three month period ending March 31, 1999.
At March 31, 1999 and December 31, 1998, the Bank had an allowance for loan
losses of $1,357,000 and $1,300,000, respectively. The percentage of provision
for loan losses to ending loans amounted to 1.70 percent and 1.62 percent for
March 31, 1999 and December 31, 1998, respectively. The Bank provides for
possible loan losses through regular provisions to the allowance for loan
losses. The provisions are made at a level which is considered necessary by
management to absorb estimated losses in the loan portfolio and is based upon an
assessment of adequacy of the Bank's loan loss reserve account.
Allowance for Loan Losses
Three Months ended March 31, 1999 and 1998
(dollars in thousands)
1999 1998
---- ----
Allowance for Loan Losses, January 1 $1,300 $998
Loans Charged-Off:
Commercial - -
Real Estate - -
Mortgage - -
Installment (1) (10)
Student Loans - -
------------- ------------
Total Charged-Off Loans (1) (10)
------------- ------------
Recoveries on Charged-Off Loans:
Commercial - 10
Real Estate - -
Mortgage - -
Installment - 8
Student Loans - -
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Total Recoveries - 18
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Net Charged-Off Loans (1) 8
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Provision for Loan Losses 58 75
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Allowance for Loan Losses, March 31 $1,357 $1,081
============= ============
Average Loans Outstanding $79,766 $78,249
============= ============
Net Charged-Off loans to Average Loans .000% .006%
============= ============
<PAGE>
INVESTMENT SECURITIES
- ---------------------
Total investments at March 31, 1999 were $38.5 million, decreasing by $2.8
million or 6.8 percent from the amount at December 31, 1998. This decrease was
due primarily to principal paydowns and maturities within the investment
securities available for sale category.
DEPOSITS
- --------
Total deposits at March 31, 1999 amounted to $118.3 million in comparison to
$119.8 million at December 31, 1998, representing a decrease of $1.5 million.
Since December 31, 1998, non-interest bearing demand deposits decreased by $4.3
million or 14.6 percent, while interest bearing deposits increased by $2.8
million or 3.1 percent.
OTHER LIABILITIES
- -----------------
Other liabilities increased to $1,054,000 from $864,000 from December 31, 1998.
Total liabilities decreased by $1.4 million or 1.1 percent to $119.8 million
since December 31, 1998.
CAPITAL
- -------
Metro's total capital increased by a net amount of $88,000 or 0.69 percent
during the first three months of 1999. Metro's earnings in the first three
months of 1999 amounted to $313,000. The net unrealized loss on investment
securities available for sale amounted to $48,000 at March 31, 1999, decreasing
by $95,000 since December 31, 1998. Capital decreased by $108,000 in 1999
following the payment of a $.055 quarterly cash dividend per common stock
outstanding in March, 1999. Capital also decreased by $25,000 as a result of
common stock reacquisitions by Metro during the first quarter of 1999.
During the first quarter of 1999, the Board of Directors of Metro declared a ten
percent stock dividend issuable February 8, 1999 to shareholders of record as of
January 19, 1999. Fractional share interests resulting from the stock dividend
were paid in cash. All share and per share data presented here in have been
restated for the effects of the stock dividend.
Metro is subject to various capital requirements imposed by the federal banking
regulatory authorities. Quantitative measures established by regulation to
ensure capital adequacy require Metro to maintain minimum amounts and ratios of
total and Tier 1 capital (as defined in the regulations) to risk-weighted
assets, and Tier 1 capital to average assets. Management believes, as of March
31, 1999, that Metro meets all capital adequacy requirements to which it is
subject. The following table sets forth the actual and minimum capital amount
and ratios of Metro and the Bank as of March 31, 1999 (dollars in thousands):
<PAGE>
To Be Well Capitalized
Under Prompt Corrective
Actual Action Provisions
-------------------- -----------------------
Amount Ratio Amount Ratio
---------- --------- ---------- ---------
Total Capital
(to Risk Weighted Assets)
Consolidated $13,400 15.44% > $8,677 > 10.00%
Bank $10,236 11.88% > $8,619 > 10.00%
Tier 1 Capital
(to Risk Weighted Assets)
Consolidated $12,873 14.84% > $5,206 > 6.00%
Bank $10,166 11.80% > $5,171 > 6.00%
Tier 1 Capital
(to Average Assets)
Consolidated $12,873 9.93% > $6,480 > 5.00%
Bank $10,166 8.00% > $6,351 > 5.00%
As of December 31, 1998, the most recent notification from the FDIC categorized
the Bank as "well capitalized" under the regulatory framework for prompt
corrective action. To be categorized as "well capitalized", the Bank must
maintain minimum total risk-weighted, Tier 1 capital and leverage ratios as set
forth in the table. There are no conditions or events since this notification
that management believes have changed its or the Bank's capital category.
RESULTS OF OPERATIONS
NET INTEREST INCOME
- -------------------
Net interest income after provision for loan losses was $1.4 million for the
three months ended March 31, 1999, compared to $1.3 million for the comparable
period of 1998, an increase of 12.5 percent. The Bank's provision for loan loss
expense was $58,000 for the three months ended March 31, 1999, compared to
$75,000 for the same period in 1998. The provision made in 1999 was a level
considered necessary by management to absorb estimated losses in the loan
portfolio and is based upon an assessment of the adequacy of the Bank's loan
loss reserve account.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense amounted to $1.2 million for the three month period ending
March 31, 1999, an amount similar to total non-interest expense for the same
period in 1998.
<PAGE>
NET INCOME
- ----------
Metro recognized net income of $313,000 for the three month period ending March
31, 1999, compared to $183,000 for the same period one year earlier.
PART II. OTHER INFORMATION
--------------------------
Item 5. Other Information
- ------- -----------------
On February 26, 1999, the Board of Directors of MetroBanCorp approved and
adopted the MetroBanCorp Equity Ownership Plan, effective as of January 1, 1999
("Equity Plan"). The Equity Plan provides for the grant, to full time employees
of MetroBank, of common stock of MetrBanCorp based upon the employees' service
with MetroBank. In general, for each full month of employment, an employee
receives a grant of one (1) share of MetroBanCorp common stock. In addition,
eligible employees will receive a one-time grant of one (1) share of stock for
each year of service for MetroBank from 1987 through 1998. Each employee who
receives stock under the Equity Plan receive a cash payment, as additional
compensation, to defray the cost of paying income and employment taxes on the
value of the stock received.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
Exhibit 27 Financial Data Schedule
Exhibit 10 MetroBanCorp Employee Equity Ownership Plan
(b) No reports on Form 8-K were filed during the quarter ended March 31, 1999.
SIGNATURES
----------
In accordance with the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
METROBANCORP
(Registrant)
May 14, 1999 By: /S/ Ike G. Batalis
---------------------------
Ike G. Batalis
Chairman and
President (Principal
Executive Officer)
May 14, 1999 By: /S/ Charles V. Turean
---------------------------
Charles V. Turean
Executive Vice President
(Principal Financial and
Accounting Officer)
EXHIBIT 10
METROBANCORP
EMPLOYEE EQUITY OWNERSHIP PLAN
Effective Date: January 1, 1999
<PAGE>
CONTENTS
- ----------------------------------------------------------------------------
Page
----
Article 1. Establishment, Purpose, and Duration.................... 1
1.1 Establishment of the Plan...................... 1
1.2 Purpose of the Plan............................ 1
1.3 Duration of the Plan........................... 1
Article 2. Definitions............................................. 1
Article 3. Administration.......................................... 2
Article 4. Participation; Eligibility for Award Payments........... 2
4.1 Participation.................................. 2
4.2 Eligibility for Award Payments................. 2
Article 5. Establishment of Potential Awards....................... 3
5.1 Determination of Awards........................ 3
5.2 Determination of Cash Payments ................ 3
5.3 Put Option..................................... 3
5.4 Record Keeping................................. 4
Article 6. Termination of Employment............................... 4
6.1 Termination of Employment Due to Death,
Disability, or Retirement...................... 4
6.2 Termination of Employment for Other Reasons.... 4
Article 7. Payment of Awards....................................... 4
Article 8. Withholding............................................. 4
Article 9. Beneficiary Designation................................. 4
i
<PAGE>
CONTENTS CONT'D
- ----------------------------------------------------------------------------
Article 10. Rights of Participants.................................. 5
10.1 Employment Rights.............................. 5
10.2 Nontransferability............................. 5
10.3 Conflict With Employment Agreement............. 5
Article 11. Amendment, Modification, and Termination................ 5
Article 12. Indemnification......................................... 5
Article 13. Successors.............................................. 6
Article 14. Legal Construction...................................... 6
14.1 Evidence....................................... 6
14.2 Gender and Number.............................. 6
14.3 Controlling Laws............................... 6
14.4 Mistake of Fact................................ 6
14.5 Severability................................... 6
14.6 Effect of Headings............................. 6
14.7 Notices........................................ 7
14.8 Effective Date................................. 7
ii
<PAGE>
Article 1. Establishment, Purpose, and Duration
1.1 Establishment of the Plan. MetroBanCorp, an Indiana corporation,
hereby establishes, effective as of January 1, 1999, an equity-based
compensation plan to be known as the MetroBanCorp Employee Equity Ownership Plan
("Plan").
1.2 Purpose of the Plan. The Plan is an equity-based compensation
program for full time employees of MetroBank ("Bank"), the wholly-owned
subsidiary of MetroBanCorp. It is designed and intended to promote the
achievement of the Bank's goals by providing an incentive to employees to assist
in meeting those goals, and to share the results of meeting or exceeding these
goals with employees. The Plan provides for grants of common stock to employees
based upon their service with the Bank. The Plan is further intended to enable
the Bank to motivate, attract, and retain the services of employees upon whose
judgment, interest, and special effort the successful and efficient conduct of
its operations is dependent.
1.3 Duration of the Plan. The Plan commenced on the Effective Date, as
described in Article 14.8, and shall remain in effect until terminated by the
Board pursuant to Article 11.
Article 2. Definitions.
Whenever used in the Plan, the following terms shall have the meanings
set forth below and, when the meaning is intended, the initial letter of the
word is capitalized:
(a) "Bank" means MetroBank.
(b) "Board" means the Board of Directors of MetroBanCorp.
(c) "Company Stock" means common voting stock of MetroBanCorp.
(d) "Computation Period" means each of the six (6) consecutive
month periods ended on June 30th and December 31st of each
year.
(e) "Director" means an individual who is a member of the Board or
the Board of Directors of the Bank.
(f) "Disability" shall have the meaning ascribed to such term in
the Bank's long-term disability plan.
(g) "Employee" means any employee of the Bank who is regularly
scheduled to work forty (40) hours per week for the Bank
and/or MetroBanCorp. The term "Employee" shall not include (i)
an individual who is a leased employee, as defined in Section
414(n)(2) of the Internal Revenue Code ("Code"), who is
treated as an employee of the employer-recipient pursuant to
the provisions of
1
<PAGE>
Section 414(n) or 414(o) of the Code; (ii) an individual
designated or otherwise classified as an independent
contractor and/or contract employee regardless of his or her
actual employment status; (iii) a self-employed individual;
(iv) a temporary employee; or (v) a member of the Board who is
not otherwise employed by the Bank or MetroBanCorp.
(h) "Payment Date" means January 1 and July 1 of each year.
(i) "Plan" means the MetroBanCorp Employee Equity Ownership Plan,
as amended from time to time.
(j) "Plan Year" means January 1 through December 31.
(k) "Retirement" means the date on which an Employee attains age
sixty-five (65).
Article 3. Administration
The Plan will be operated and administered by the Bank. The Bank, from
time to time, may adopt any rule or procedure it deems necessary or desirable
for the proper operation and administration of the Plan, provided it is
consistent with the terms of the Plan. The Bank's determinations and
interpretations with respect to the Plan shall be binding on all parties. While
the Bank may appoint individuals to act on its behalf in the administration of
the Plan, the Bank shall have the sole, final, and conclusive authority to
administer, construe, and interpret the Plan.
Article 4. Participation; Eligibility for Award Payments
4.1 Participation. All Employees shall become participants in the Plan
on the earlier of their date of hire or the date on which they satisfy the
requirements for being an Employee, as defined in Article 2(g).
4.2 Eligibility for Award Payments. For an Employee to receive payment
of an Award, he or she must be actively employed, as an Employee, throughout the
Computation Period ended on the day before the applicable Payment Date. It is
noted that Sections 6.1 and 6.3 contain provisions applicable to individuals who
are not employed throughout a Computation Period but who may qualify for payment
of Awards.
2
<PAGE>
Article 5. Establishment of Potential Awards
5.1 Determination of Awards.
(a) For each month of full time employment during a
Computation Period, an Employee who meets the
requirements for Employee status on each day of such
Computation Period shall receive one (1) share of
Company Stock.
(b) In addition, a one-time Award will be paid to
eligible Employees as soon as reasonably practicable
following July 1, 1999. Such Award shall be equal to
one (1) share of Company Stock for each full year of
service as an Employee from 1987 through December 31,
1998 provided the Employee is actively employed as an
Employee on July 1, 1999. For this purpose, a year
of service means a calendar year during which an
employee is continuously employed by the Bank as an
Employee; provided, however, any employee who was
hired at any time during 1987 and who was an Employee
from his date of hire through December 31, 1987 shall
receive credit for one (1) year of service for 1987.
5.2 Determination of Cash Payments. A cash payment will be made in
connection with the payment of each Award in an amount necessary to defray all
or a portion of the Employee's Federal and Indiana State income and employment
tax liability associated with the payment of the Award. The intent of this
Section 5.2 is that payments will be grossed up in full for income tax at an
assumed aggregate marginal Federal and Indiana State income tax rate of
twenty-five and thirty-five hundreds percent (25.35%) and an employment tax rate
equal to the Employee's share of employment taxes (7.65% on the Effective Date)
at the time the Award is paid, so that the Company Stock received after paying
all applicable income and employment taxes due with respect to payments made
under Article 5.1 and this Article 5.2, at the assumed rates specified in the
preceding sentence, is equal to the amount the Employee would have received if
income and employment taxes at such rates were not applicable to Award payments.
5.3 Put Option. All shares of Company Stock issued under the Plan shall
be subject to a "put" option at the time an Employee terminates employment. Such
option shall be exercisable by the Employee or his or her beneficiary, or by a
person (including an estate or its distributee) to whom the stock passes by
reason of the Employee's or beneficiary's death. The put option shall provide
that, for a period of sixty (60) days after the Employee's termination of
employment, the holder of the option shall have the right to cause the Bank, by
notifying it in writing, to purchase such shares at their current fair market
value. All rights to exercise such option shall expire on the sixty-first (61st)
day after the Employee's termination of employment. For this purpose, fair
market value shall be determined as of the date on which the Bank receives the
written notice of exercise based on the closing price for the Company Stock as
quoted on NASDAQ on the trading day immediately prior to the date on which such
notice was received on which the Company Stock was traded.
3
<PAGE>
5.4 Record Keeping. A record shall be established and maintained by the
Bank for each Employee who is eligible to receive an Award under the Plan. Such
record shall be maintained solely for internal accounting purposes and shall not
require a segregation of any assets by the Bank or MetroBanCorp.
Article 6. Termination of Employment
6.1 Termination of Employment Due to Death, Disability, or Retirement.
If an Employee's employment is terminated by reason of death, Disability, or
Retirement, the Employee (or his beneficiary or estate) shall receive payment of
any Award which would have been payable for the Computation Period during which
such termination occurred even though such Employee was not actively employed on
the last day of the Computation Period. For purposes of this Section 6.1, the
Award shall be based upon the number of full months the individual was employed
as an Employee during the Computation Period.
6.2 Termination of Employment for Other Reasons. If an Employee's
employment is terminated for any reason other than those set forth in Section
6.1 prior to the last day of a Computation Period, such Employee's Award shall
be forfeited.
Article 7. Payment of Awards
To receive payment of an Award, an Employee must be actively employed
throughout the Computation Period to which the Award relates or be treated as
actually employed as provided in Article 6.1. Payment of Awards that are not
forfeited shall be made in Company Stock and cash in a single lump sum as soon
as practicable following the Payment Date to which the Award relates.
Article 8. Withholding
The Bank shall have the power and the right to deduct or withhold, or
require an Employee to remit to the Bank, an amount sufficient to satisfy
Federal, state, and local taxes (including the FICA obligation) required by law
to be withheld with respect to all payments made under the Plan.
Article 9. Beneficiary Designation
Each Employee may (but shall not be required to), from time to time,
name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan is to be paid in case of his or
her death before he or she receives any or all
4
<PAGE>
of such benefit. Each such designation shall revoke all prior designations by
the same Employee, shall be on a form acceptable to the Bank, and shall be
effective only when filed in writing with the Bank by the Employee during the
Employee's lifetime. In the absence of any such designation, any Award remaining
unpaid at the Employee's death shall be paid to the Employee's estate.
Article 10. Rights of Participants
10.1 Employment Rights. Nothing in the Plan shall constitute a contract
of employment and participation in the Plan shall not give an Employee the right
to be rehired or retained in the employ of the Bank, nor will participation in
the Plan give any Employee any right or claim to any benefit under the Plan,
unless such right or claim has specifically accrued under the terms of the Plan.
10.2 Nontransferability. No Award shall be transferable, except by the
Employee's will or the laws of descent and distribution. No Award nor any rights
or privileges pertaining thereto shall be transferred, assigned, pledged, or
hypothecated in any way, whether by operation of law or otherwise and shall not
be subject to execution, attachment, or similar process.
10.3 Conflict With Employment Agreement. To the extent any provision of
the Plan conflicts with any provision of any employment agreement between an
Employee and the Bank, the provisions of the employment agreement shall control.
Article 11. Amendment, Modification, and Termination
The Bank may, at any time and from time to time, alter, amend, or
suspend the Plan in whole or in part without notice. The Board may terminate the
Plan at any time without notice.
Article 12. Indemnification
The Board (and each person who is or shall have been a Director) and
all officers and employees of the Bank and MetroBanCorp shall be indemnified and
held harmless by the Bank against and from any loss, cost, liability, or expense
that may be imposed upon or reasonably incurred by him or her in connection with
or resulting from any claim, action, suit, or proceeding to which he or she may
be a party or in which he or she may be involved by reason of any action taken
or failure to act under the Plan and against and from any and all amounts paid
by him or her in settlement thereof, with the Bank's approval, or paid by him or
her in satisfaction of any judgment in any such action, suit, or proceeding
against him or her, provided he or she shall give the Bank an opportunity, at
its own expense, to handle and defend the same before he or she undertakes to
handle and defend it on his or her own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such
5
<PAGE>
persons may be entitled under the Bank's Articles of Incorporation or By-Laws,
as a matter of law, or otherwise, or any power that the Bank may have to
indemnify them or hold them harmless.
Article 13. Successors
All obligations of the Bank under the Plan shall be binding on any
successor to the Bank, whether the existence of such successor is the result of
a direct or indirect acquisition, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Bank.
Article 14. Legal Construction
14.1 Evidence. Evidence required of anyone under the Plan may be by
certificate, affidavit, document, or other information which the person relying
thereon considers pertinent and reliable, and signed, made, or presented by the
proper party or parties.
14.2 Gender and Number. Where the context admits, words in the
masculine gender shall include the feminine gender, the plural shall include the
singular, and the singular shall include the plural.
14.3 Controlling Laws. Except to the extent superseded by laws of the
United States, the laws of Indiana, without reference to the choice of law
principles thereof, shall be controlling in all matters relating to the Plan.
14.4 Mistake of Fact. Any mistake of fact or misstatement of fact shall
be corrected when it becomes known and proper adjustment made by reason thereof.
14.5 Severability. In the event any provisions of the Plan shall be
held to be illegal or invalid for any reason, such illegality or invalidity
shall not affect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if such illegal or invalid provisions had never been
contained in the Plan.
14.6 Effect of Headings. The descriptive headings of the Articles and
Sections of this Plan are inserted for convenience of reference and
identification only and do not constitute a part of this Plan for purposes of
interpretation.
6
<PAGE>
14.7 Notices. Any notice or document required to be given to or filed
with the Bank will be properly given or filed if delivered or mailed, by
certified mail, postage prepaid, to the following:
MetroBank
10333 North Meridian St., Suite 111
P.O. Box 80451
Indianapolis, Indiana 46280-0451
14.8 Effective Date. The Plan shall be effective as of January 1, 1999.
As evidence of its adoption of the Plan, MetroBanCorp, by its officers
thereunder duly authorized, has caused this instrument to be signed this 10th
day day of May, 1999, but effective as of the Effective Date.
METROBANCORP
By:
-----------------------------
Ike G. Batalis, President
ATTEST: SEAL
By:
--------------------------------------------
Charles V. Turean, Secretary, Executive Vice
President and Chief Financial Officer
7
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