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, 2000.
Commission file number: 0-23790
---------
MetroBanCorp
- ------------
(Exact name of small business issuer as specified in its charter)
Indiana 35-1712167
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
10333 N. Meridian Street, Suite 111, Indianapolis, Indiana 46290
- ----------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(317) 573-2400
- --------------
(Issuer's telephone number)
http://www.metb.com
- -------------------
(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: 2,042,754 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, 2000 and December 31, 1999 3
Consolidated Statement of Operations
Three Months Ended March 31, 2000 and 1999 4
Consolidated Statement of Cash Flows
Three Months Ended March 31, 2000 and 1999 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 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Under Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBITS 14
Page 2 of 16
<PAGE>
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
Consolidated Statement of Condition
(unaudited)
(dollars in thousands)
03/31/00 12/31/99
------------- ------------
<S> <C> <C>
Assets
Cash and Due from Banks $11,395 $9,526
Federal Funds Sold 4,400 -
------------- ------------
Total Cash and Cash Equivalents 15,795 9,526
Investment Securities HTM - at Cost 3,605 3,212
Investment Securities AFS - at Market 33,770 37,745
------------- ------------
Total Investment Securities 37,375
40,957
Loans:
Gross Loans 91,545 88,067
Less: Allowance for Loan Losses (1,406) (1,464)
------------- ------------
Loans, Net 90,139 86,603
Premises and Equipment, Net 1,778
1,543
Accrued Interest Receivable 962 992
Deferred Tax Asset 1,084 1,033
Other Assets 450 583
------------- ------------
Total Assets $147,583 $141,237
============= ============
Liabilities
Deposits:
Non-Interest Bearing Demand $32,784 $24,225
Interest Bearing:
Savings and NOW Accounts 58,579 57,386
Time Deposits of $100,000 and over 12,122 10,763
Other Time Deposits 26,772 25,772
------------- ------------
Total Deposits 130,257 118,146
Accrued Interest Payable 517 472
Securities Sold Under Agreements to 2,584 5,395
Repurchase
Federal Funds Purchased - 3,300
Other Liabilities 791 648
------------- ------------
Total Liabilities 134,149 127,961
------------- ------------
Commitments and Contingencies
- -
Shareholders' Equity
Preferred Stock: 1,000,000 Shares Authorized; None Outstanding - -
Common Stock: 3,000,000 Shares Authorized;
2,042,754 Shares Issued and Outstanding in 2000
2,033,036 Shares Issued and Outstanding in 1999 14,267 14,232
Accumulated Earnings (316) (508)
Net Unrealized Loss on Investment Securities AFS (517) (448)
------------- ------------
Total Shareholders' Equity 13,434 13,276
------------- ------------
Total Liabilities and Shareholders' Equity $147,583 $141,237
============= ============
</TABLE>
See "Notes to Consolidated Financial Statements"
Page 3 of 16
<PAGE>
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
Consolidated Statement of Operations
(unaudited) Three Months Ended
---------------------------
(dollars in thousands, except share data)
03/31/00 03/31/99
------------- ------------
<S> <C> <C>
Interest Income
Interest and Fees on Loans $2,178 $1,892
Interest on Investment Securities 572 574
Interest on Federal Funds Sold 7 12
------------- ------------
Total Interest Income 2,757 2,478
Interest Expense
Interest on Deposits 1,090 979
Other Interest Expense 65 8
------------- ------------
Total Interest Expense 1,155 987
------------- ------------
Net Interest Income 1,602 1,491
------------- ------------
Provision for Loan Losses 21 58
------------- ------------
Net Interest Income after Provision for Loan Losses 1,581 1,433
------------- ------------
Non-Interest Income
Service Charges on Deposit Accounts 102 95
Other Service Charges, Commissions and Fees 167 163
------------- ------------
Total Non-Interest Income 269 258
Non-Interest Expense
Salaries and Employee Benefits 636 521
Occupancy Expense 121 104
Equipment Expense 107 84
Advertising and Public Relations 68 57
Legal, Professional and Audit Services 39 45
Data Processing 95 87
Amortization of Core Deposit Intangible - 35
Other 258 242
------------- ------------
Total Non-Interest Expense 1,324 1,175
Income before Income Taxes 526 516
Applicable Income Taxes 206 203
------------- ------------
Net Income $320 $313
============= ============
Net Income per Common Share $0.16 $0.15
Net Income per Common Share - Assuming Dilution $0.16 $0.15
Weighted Average Shares Outstanding 2,036,190 2,035,768
Weighted Average Shares Outstanding - Assuming Dilution 2,036,190 2,136,312
</TABLE>
See "Notes to Consolidated Financial Statements"
Page 4 of 16
<PAGE>
MetroBanCorp
Part I. Financial Information
Item 1. Financial Statements
<TABLE>
<CAPTION>
Consolidated Statement of Cash Flows
(unaudited)
(dollars in thousands)
Three months Ended
--------------------------------
03/31/00 03/31/99
--------------- --------------
Operating Activities:
<S> <C> <C>
Net Income $320 $313
Adjustments to Reconcile Net Income to
Cash Provided by Operating Activities:
Provision for Loan Losses 21 58
Depreciation and Amortization 97 75
(Increase) in Accrued Interest Receivable 30 46
(Increase)/Decrease in Other Assets 24 (60)
Increase/(Decrease) in Accrued Interest Payable (45) (13)
Increase in Other Liabilities 142 193
--------------- --------------
Total Adjustments 269 299
--------------- --------------
Net Cash Provided by Operating Activities 589 612
--------------- --------------
Investing Activities:
Proceeds from Maturities of Investment Securities Available for Sale 1,082 3,625
Proceeds from Sales of Investment Securities Available for Sale 2,500 100
Purchases of Investment Securities Available for Sale - (999)
Proceeds from the Sale of Student Loans - 32
Proceeds from the Repayment of Student Loans 143 164
Net Loans Made to Customers (3,621) 43
Purchases of Premises and Equipment (332) (42)
--------------- --------------
Net Cash Provided by (Used in) Investing Activities (228) 2,923
--------------- --------------
Financing Activities:
Net Increase in DDA, NOW and Savings Accounts 9,752 3,830
Net Increase/(Decrease) in Time Deposits 2,359 (5,380)
Net Decrease Fed Funds Purchased (3,300) -
Net Decrease Securities Sold Under Agreements to Repurchase (2,811) -
Cash Dividends Paid (127) (108)
Issuance of Common Stock 184 -
Repurchases of Common Stock (149) (25)
--------------- --------------
Net Cash Provided by (Used in) Financing Activities 5,908 (1,683)
--------------- --------------
Net Increase in Cash and Cash Equivalents 6,269 1,852
Cash and Cash Equivalents at Beginning of Period 9,526 10,044
--------------- --------------
Cash and Cash Equivalents at End of Period $15,795 11,896
=============== ==============
</TABLE>
See "Notes to Consolidated Statements"
Page 5 of 16
<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, 2000 and December 31, 1999, and the results of its operations and
cash flows for the periods ended March 31, 2000 and 1999.
These financial statements should be read in conjunction with Metro's
latest Annual Report on Form 10-KSB for the year ending December 31,
1999.
2. Investments
-----------
The market value and amortized cost of investment securities of Metro as
of March 31, 2000 are set forth below:
Market Value Amortized Cost
------------ --------------
Held to Maturity $ 3,449,178 $ 3,604,952
Available for Sale 33,769,976 34,665,534
------------ ------------
Total Investments $ 37,219,154 $ 38,270,486
============ ============
3. Allowance for Loan and Lease Losses
-----------------------------------
As of March 31, 2000, Metro had investments in loans which are impaired
in accordance with SFAS Nos. 114 and 118 of $324,000. Specific
allowances on impaired loans were $15,136.
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 6 of 16
<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 $251,000 and $218,000 for the
three month period ended March 31, 2000 and 1999, 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
period. 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, March 31,
2000 1999
--------------------------------- ---------------------------------
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 $320,000 2,036,190 $313,000 2,035,768
Net Income per Common Share $0.16 $0.15
========= =========
Effects of Dilutive Options
Stock Options - - - 100,544
------------------------ ------------------------
Net Income per Common
Share - Assuming Dilution $320,000 2,036,190 $0.16 $313,000 2,136,312 $0.15
================================= =================================
</TABLE>
Per share data included in Metro's Consolidated Statement of Operations
for the month periods ended March 31, 2000 and 1999 was based on the
weighted average number of common shares outstanding.
Page 7 of 16
<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, 2000 as
compared to December 31, 1999, and the results of operations for the three month
periods ending March 31, 2000 and 1999.
FINANCIAL CONDITION
At March 31, 2000, Metro had total assets of $147.6 million, an increase of $6.3
million or 4.5 percent from December 31, 1999. Consolidated earning assets
totaled $133.0 million, or 90.1 percent of total assets, at March 31, 2000. The
principal components of earning assets were loans in the amount of $91.2 million
or 68.6 percent of total earning assets, and investment securities of $37.4
million or 28.1 percent of total earning assets. Earning assets at December 31,
1999 were $128.6 million, or 91.0 percent of total assets.
LOANS
- -----
Total gross loans outstanding increased $3.5 million or 3.9 percent from
December 31, 1999 to March 31, 2000. At March 31, 2000, net loans amounted to
61.1 percent of total assets as compared to 61.3 percent at year end 1999.
Metro's loan to deposit ratio, which is one measure of liquidity, was 69.2
percent at March 31, 2000, as compared to 73.3 percent at year end 1999.
<TABLE>
<CAPTION>
Loan Portfolio at Period-End
(dollars in thousands)
March 31, 2000 December 31, 1999 % Change
---------------------- --------------------- -------------------
<S> <C> <C> <C>
Commercial $23,407 $22,067 6.07%
Real Estate - Construction 1,272 1,295 (1.78)%
Mortgage 42,444 41,603 2.02%
Installment 20,801 19,338 7.57%
Student Loans 3,621 3,764 (3.80)%
---------------------- --------------------- -------------------
Total Loans $91,545 $88,067 3.95%
Less:
Allowance for Loan Losses (1,406) (1,464) (3.96%)
---------------------- --------------------- -------------------
Net Loans $90,139 $86,603 4.08%
====================== ===================== ===================
</TABLE>
Delinquent loans at March 31, 2000 were $1.2 million, representing 1.3 percent
of total loans outstanding. At December 31, 1999, delinquent loans were $935,000
or 1.1 percent of total loans outstanding. Delinquent loans in both periods
shown above consisted primarily of student loans guaranteed by a third party.
Non-accruing loans at March 31, 2000 amounted to $324,000 as compared to
$443,000 at December 31, 1999. There were $87,000 of loans charged-off and
$8,000 of recoveries received for the three month period ending March 31, 2000.
Page 8 of 16
<PAGE>
At March 31, 2000 and December 31, 1999, Metro had an allowance for loan losses
of $1,406,000 and $1,464,000, respectively. The percentage of provision for loan
losses to ending loans amounted to 1.5 percent and 1.7 percent for March 31,
2000 and December 31, 1999, respectively. Metro 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 Metro's loan loss reserve account.
Allowance for Loan Losses
Three months ended March 31, 2000 and 1999
(dollars in thousands)
2000 1999
---- ----
Allowance for Loan Losses, January 1 $1,464 $1,300
Loans Charged-Off:
Commercial (68) -
Real Estate - -
Mortgage - -
Installment (19) (1)
Student Loans - -
--------- ---------
Total Charged-Off Loans (87) (1)
--------- ---------
Recoveries on Charged-Off Loans:
Commercial 3 -
Real Estate - -
Mortgage - -
Installment 5 -
Student Loans - -
--------- ---------
Total Recoveries 8 -
--------- ---------
Net Charged-Off Loans (79) (1)
--------- ---------
Provision for Loan Losses 21 58
--------- ---------
Allowance for Loan Losses, March 31 $1,406 $1,357
========= =========
Average Loans Outstanding $87,631 $79,766
========= =========
Net Charged-Off loans to Average Loans .09% .00%
========= =========
INVESTMENT SECURITIES
- ---------------------
Total investments at March 31, 2000 were $37.4 million, decreasing by $3.6
million or 8.8 percent from the amount at December 31, 1999. This decrease was
due primarily to three securities sold as well as principal paydowns and
maturities within the investment securities available for sale category.
Page 9 of 16
<PAGE>
DEPOSITS
- --------
Total deposits at March 31, 2000 amounted to $130.3 million in comparison to
$118.1 million at December 31, 1999, representing an increase of $12.2 million.
Since December 31, 1999, non-interest bearing demand deposits increased by $8.6
million or 35.3 percent, while interest bearing deposits increased by $3.6
million or 3.8 percent.
OTHER LIABILITIES
- -----------------
Liabilities other than deposits decreased to $3.9 million from $9.8 million from
December 31, 1999. Total liabilities increased by $6.2 million or 4.8 percent to
$134.1 million since December 31, 1999.
CAPITAL
- -------
Metro's total capital increased by a net amount of $158,000 or 1.2 percent
during the first three months of 2000. Metro's earnings in the first three
months of 2000 amounted to $320,000. The net unrealized loss on investment
securities available for sale amounted to $(517,000) at March 31, 2000,
decreasing by $69,000 since December 31, 1999. Capital decreased by $127,000 in
2000 following the payment of a $.0625 quarterly cash dividend per common share
outstanding in the month of March, 2000. Capital also decreased by $149,000 as a
result of repurchases of common stock by Metro during the first quarter of 2000.
Capital increased by $4,000 as a result of grants of common stock to employees
of MetroBank under the MetroBanCorp Employee Equity Ownership Plan, and $180,000
resulting from the exercising of 32,634 stock options by directors of
MetroBanCorp and MetroBank.
During the first quarter of 2000, the Board of Directors of Metro declared a
five percent stock dividend issuable February 7, 2000 to shareholders of record
as of January 20, 2000. Fractional share interests resulting from the stock
dividend were paid in cash. All share and per share data presented herein have
been restated for the effect of this 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, 2000, 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 MetroBank as of March 31, 2000 (dollars in thousands):
Page 10 of 16
<PAGE>
<TABLE>
<CAPTION>
To Be Well Capitalized
Under Prompt Corrective
Actual Action Provisions
----------------------- -----------------------------
Amount Ratio Amount Ratio
---------- ---------- ------------ -------------
<S> <C> <C> <C> <C>
Total Capital
(to Risk Weighted Assets)
Metro $15,208 15.13% > $10,051 > 10.00%
- -
MetroBank $12,694 12.71% > $9,988 > 10.00%
- -
Tier 1 Capital
(to Risk Weighted Assets)
Metro $13,951 13.88% > $6,031 > 6.00%
- -
MetroBank $11,446 11.46% > $5,993 > 6.00%
- -
Tier 1 Capital
(to Average Assets)
Metro 10.03% > $6,958 > 5.00%
- -
$13,951
MetroBank $11,446 8.36% > $6,849 > 5.00%
- -
</TABLE>
As of December 31, 1999, the most recent notification from the FDIC categorized
MetroBank as "well capitalized" under the regulatory framework for prompt
corrective action. To be categorized as "well capitalized", MetroBank 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 MetroBank's capital category.
RESULTS OF OPERATIONS
NET INTEREST INCOME
- -------------------
Net interest income after provision for loan losses was $1.6 million for the
three months ended March 31, 2000, compared to $1.4 million for the comparable
period of 1999, an increase of 10.3 percent. MetroBank's provision for loan loss
expense was $21,000 for the three months ended March 31, 2000, compared to
$58,000 for the same period in 1999. The provision made in 2000 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 MetroBank's loan
loss reserve account.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense amounted to $1.3 million for the three month period ending
March 31, 2000, compared to $1.2 million for the same period one year earlier.
This represents an increase of 12.7 percent compared to the same three month
period in 1999.
NET INCOME
- ----------
Metro recognized net income of $320,000 for the three month period ending March
31, 2000, compared to $313,000 for the same period one year earlier,
representing an increase of 2.2 percent.
Page 11 of 16
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings - none.
- ------- -----------------
Item 2. Changes in Securities and Use of Proceeds - none.
- ------- -----------------------------------------
Item 3. Defaults Under Senior Securities - none.
- ------- --------------------------------
Item 4. Submission of Matters to a Vote of Security Holders - none.
- ------- ---------------------------------------------------
Item 5. Other Information
- ------- -----------------
During the first quarter of 2000, MetroBank opened its eighth banking office at
11815 Allisonville Road, Fishers, Indiana within an existing retail shopping
center. The center is located in a high traffic area within a fast growing
community of Hamilton County. MetroBank's presence in this center will provide
greater convenience and accessibility for current and potential MetroBank
customers.
Item 6. Exhibits and Reports on Form 8-K
- ------- --------------------------------
(a) Exhibits:
Exhibit 27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March 31, 2000.
Page 12 of 16
<PAGE>
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 15, 2000 By: /S/ Ike G. Batalis
--------------------
Ike G. Batalis
Chairman and
President (Principal
Executive Officer)
May 15, 2000 By: /S/ Charles V. Turean
----------------------
Charles V. Turean
Executive Vice President
(Principal Financial and
Accounting Officer)
Page 13 of 16
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 11,395
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,400
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,770
<INVESTMENTS-CARRYING> 37,375
<INVESTMENTS-MARKET> 37,219
<LOANS> 91,545
<ALLOWANCE> 1,406
<TOTAL-ASSETS> 147,583
<DEPOSITS> 130,257
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,892
<LONG-TERM> 0
0
0
<COMMON> 14,267
<OTHER-SE> (833)
<TOTAL-LIABILITIES-AND-EQUITY> 147,583
<INTEREST-LOAN> 2,178
<INTEREST-INVEST> 572
<INTEREST-OTHER> 7
<INTEREST-TOTAL> 2,757
<INTEREST-DEPOSIT> 1,090
<INTEREST-EXPENSE> 65
<INTEREST-INCOME-NET> 1,602
<LOAN-LOSSES> 21
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,324
<INCOME-PRETAX> 526
<INCOME-PRE-EXTRAORDINARY> 320
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 320
<EPS-BASIC> .16
<EPS-DILUTED> .16
<YIELD-ACTUAL> 4.63
<LOANS-NON> 324
<LOANS-PAST> 115
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,044
<ALLOWANCE-OPEN> 1,464
<CHARGE-OFFS> 87
<RECOVERIES> 8
<ALLOWANCE-CLOSE> 1,406
<ALLOWANCE-DOMESTIC> 1,406
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,391
</TABLE>
