8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): February 7, 2005

METROCORP BANCSHARES, INC.

(Exact name of registrant as specified in its charter)

Texas	0-25141	76-0579161
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

9600 Bellaire Boulevard, Suite 252
Houston, Texas
(Address of principal executive offices)  
77036
(Zip Code)

Registrant’s telephone number, including area code: (713) 776-3876

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	Item 2.02. Results of Operations and Financial Condition.
	Item 9.01. Financial Statements and Exhibits.
SIGNATURES
EXHIBIT INDEX
Press Release dated February 7, 2005

Item 2.02. Results of Operations and Financial Condition.

     On February 7, 2005, MetroCorp Bancshares, Inc. publicly disseminated a press release announcing its financial results for the fourth quarter and year ending December 31, 2004. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.

     As provided in General Instruction B.2 to Form 8-K, the information furnished in Item 2.02 and Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits. The following materials are filed as exhibits to this Current Report on Form 8-K:

Exhibit
Number	Description of Exhibit
99.1 -	Press Release issued by MetroCorp Bancshares, Inc. dated February 7, 2005.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	METROCORP BANCSHARES, INC.
Dated: February 8, 2005	By:	/s/ David Choi
		David Choi
		Chief Financial Officer

EXHIBIT INDEX

Exhibit
Number	Description of Exhibit
99.1 -	Press Release issued by MetroCorp Bancshares, Inc. dated February 7, 2005.

EX-99.1

Exhibit 99.1

MetroCorp Bancshares, Inc. Announces Fourth Quarter and Year 2004 Earnings

HOUSTON, TEXAS – (February 7, 2005), MetroCorp Bancshares, Inc. (Nasdaq:MCBI), a Texas corporation, which through its subsidiary, MetroBank, N.A., provides community banking services in Houston and Dallas, today announced net income of $2.3 million for the fourth quarter 2004, up approximately $398,000 or 20.7% compared with the same quarter in 2003. Diluted earnings per share for the fourth quarter 2004 were $0.32, compared to $0.27 for the same quarter in 2003. Net income for the year ended December 31, 2004, was $8.6 million, up approximately $4.5 million compared with the year 2003. The increase in net income was due in part to a $4.1 million decrease in the provision for loan losses in 2004 compared with 2003 because of lower nonperforming loans. Diluted earnings per share for the year ended December 31, 2004 were $1.19 compared with $0.57 for the year 2003.

George Lee, President of MetroCorp Bancshares, Inc. and Chief Executive Officer of MetroBank, N.A., said, “MetroCorp’s fourth quarter and year 2004 performance has provided us with another set of encouraging data points reflecting improvements in earnings and asset quality, the two areas where the management team has focused its strategic changes. The results are due to a combination of organization realignment and process improvements utilizing internal and external customer and market databases. The Company is committed to monitor and pace our growth without deviating from our core business, in an effort to improve our operating efficiency and upgrade our asset quality.”

Interest income and expense. Interest income for the three months ended December 31, 2004, was $12.4 million, up approximately $1.7 million or 16.3% compared with $10.7 million for the same three months in 2003. The higher interest income in the fourth quarter 2004, compared to the same quarter in 2003, was primarily the result of an increase in average earning assets and an increase in the yield on earning assets. The yield on average earning assets for the fourth quarter 2004 was 5.64% compared with 5.17% for the fourth quarter of 2003, an increase of 47 basis points. The increase in yield primarily reflects the impact of the Federal Reserve’s five interest rate increases beginning in June 2004 and continuing through the rest of the year. The majority of the Bank’s loan portfolio is comprised of variable and adjustable rate loans that benefit the Company during periods of increases in the prime rate.

Interest income for the year ended December 31, 2004 was $45.3 million, up approximately $2.0 million or 4.7% compared with $43.3 million for the year 2003. The yield on average earning assets for the year ended December 31, 2004 was 5.36% compared to 5.30% for the year 2003, an increase of 6 basis points.

Interest expense for the three months ended December 31, 2004 was $3.2 million, up approximately $462,000 or 16.9% compared with $2.7 million for the same three months in 2003. The increase in interest expense primarily reflected higher interest rates and an increase in interest-bearing liabilities. The cost of average interest-bearing liabilities for the fourth quarter 2004 was 1.96% compared to 1.78% for the fourth quarter 2003, an increase of 18 basis points.

9600 Bellaire Boulevard   *   Suite 252   *   P.O. Box 4760, Houston, Texas 77210-4760   *   713-776-3876

Interest expense for the year ended December 31, 2004 was $11.3 million, down approximately $785,000 or 6.5% compared with $12.1 million for the year 2003. The decline in interest expense for the year 2004 was primarily due to a decrease in interest rates paid but was partially offset by a 1.0% increase in average interest-bearing liabilities. Although short-term interest rates increased beginning June 2004, the effect on deposit interest rates was not seen until the fourth quarter 2004. The cost of average interest-bearing liabilities for the year ended December 31, 2004, was 1.82% compared to 1.96% for the same period in 2003, a decrease of 14 basis points, mainly due to generally lower rates paid on deposit accounts.

Net interest income before the provision for loan losses for the three months ended December 31, 2004 was $9.2 million, up approximately $1.3 million or 16.1% compared with $7.9 million for the same three months in 2003. Net interest income before the provision for loan losses for the year ended December 31, 2004 was $34.0 million, up approximately $2.8 million or 9.0% compared with $31.2 million for the year 2003.

The net interest margin for the three months ended December 31, 2004, was 4.19%, up 34 basis points compared with 3.85% for the same period in 2003. The increase was primarily the result of an increase in the yield on earning assets of 47 basis points that was partially offset by an increase in the cost of earning assets of 13 basis points.

The net interest margin for the year ended December 31, 2004, was 4.02%, up 21 basis points from 3.81% compared with the year 2003. The increase was primarily the result of an increase in the yield on earning assets of 6 basis points and a decrease in the cost of earning assets of 15 basis points.

Noninterest income and expense. Noninterest income for the three months ended December 31, 2004 was $1.8 million, down approximately $151,000 or 7.7% compared to the same three months in 2003 primarily due to charge-offs of uncollectible late fees on loans, and losses on investment securities.

Non-interest income for the year ended December 31, 2004 was $9.0 million, up approximately $300,000 or 3.5% compared to the same period in 2003. Service fees were down approximately $391,000, offset by a $691,000 increase in other noninterest income as a result of a gain from the sale of ORE properties, and realized losses on sale of investment securities.

Non-interest expense for the three months ended December 31, 2004 was $7.1 million, up approximately $305,000 or 4.5% compared to $6.8 million for the same period in 2003. Salaries and benefits expense for the three months ended December 31, 2004 was $3.8 million up $231,000 compared with $3.6 million for the same period in 2003 primarily due to an additional incentive bonus. Occupancy and equipment expense for the three months ended December 31, 2004 was up approximately $89,000 compared to the same period in 2003, primarily due to additional leased office space. Other non-interest expense for the three months ended December 31, 2004 compared to the same period in 2003 was down approximately $15,000 from $1.8 million.

Non-interest expense for the year ended December 31, 2004 was $28.7 million, up $447,000 or 1.6% compared with $28.3 million for the same period in 2003. Salaries and employee benefits for the year ended December 31, 2004 compared to the same period in 2003, was up $2.0 million from $14.1 million to $16.1 million. The increase in salary and employee benefits was primarily a result of approximately $800,000 severance payment to a senior executive.

9600 Bellaire Boulevard   *   Suite 252   *   P.O. Box 4760, Houston, Texas 77210-4760   *   713-776-3876

Occupancy and equipment expense for the year ended December 31, 2004 was up approximately $362,000 compared with $5.4 million in the same period 2003, and was primarily the result of additional leased office space. Other non-interest expense for the year ended December 31, 2004 compared to the same period in 2003 was down approximately $1.9 million from $8.8 million to $6.9 million primarily due to a lower of cost or market adjustment on loans held-for-sale made in 2003.

Provision for loan losses and asset quality. The provision for loan losses for the three months ended December 31, 2004 was $500,000, compared with $300,000 in the same period in 2003. The provision for loan losses for the year ended December 31, 2004 was $1.6 million, down $4.1 million from the same period in 2003. The decrease in the provision for loan losses in 2004 was due to a reduction in nonperforming loans. The allowance for loan losses as a percent of total loans at December 31, 2004 and 2003 was 1.92% and 1.88%, respectively.

Net charge-offs for the three months ended December 31, 2004 were $717,000 compared to $336,000 for the same period in 2003. Net charge-offs for the year ended December 31, 2004 were $1.2 million compared to $5.4 million for the same period in 2003. The charge-offs for the year ended December 31, 2003 primarily consisted of $4.5 million on certain hospitality and retail related credits.

Total nonperforming assets at December 31, 2004 were $18.3 million, compared to $28.3 million at December 31, 2003. As of December 31, 2004, nonperforming assets primarily consisted of $16.5 million in non-accrual loans, $181,000 in accruing loans that were 90 days or more past due, and $1.6 million in other real estate. Net nonperforming assets, which are total nonperforming assets net of the portion of loans guaranteed by the SBA, Ex-Im Bank, or the OCCGF, at December 31, 2004, were $15.2 million, compared with $25.0 million at December 31, 2003. Approximately $11.1 million or 67.4 % of the net nonperforming assets at December 31, 2004 were loans collateralized by real estate. While future deterioration in the loan portfolio is possible, management has continued its risk assessment and resolution program. In addition, management is continuing to focus its attention on minimizing the Bank’s credit risk through more diversified business development.

Management conference call. On Tuesday, February 8, 2005, the Company will hold a conference call at 10:15 a.m. Central (11:15 a.m. Eastern) to discuss the fourth quarter and year-end 2004 results. A brief management presentation will be followed by a question and answer period. To participate by phone, dial 1.800.257.2101 ten minutes before the call and ask for the MetroCorp conference. The call will be webcast by 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., with $914.0 million in assets, provides a full range of commercial and consumer banking services through its wholly owned subsidiary, MetroBank, N.A. The Company has 13 full-service banking locations in the greater Houston and Dallas metropolitan areas. 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 MetroCorp’s future plans, projections, strategies and expectations, are based on assumptions and involve a number of risks and uncertainties, many of which are beyond MetroCorp’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 MetroCorp 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

9600 Bellaire Boulevard   *   Suite 252   *   P.O. Box 4760, Houston, Texas 77210-4760   *   713-776-3876

MetroCorp’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 MetroCorp’s reports and other documents filed with the Securities and Exchange Commission.

Contact:
MetroCorp Bancshares, Inc., Houston
George Lee, President, (713) 414-3506, or
David Choi, EVP/Chief Financial Officer, (713) 414-3768

9600 Bellaire Boulevard   *   Suite 252   *   P.O. Box 4760, Houston, Texas 77210-4760   *   713-776-3876

MetroCorp Bancshares, Inc.
(In thousands, except share amounts)
(Unaudited)

	December 31,						Change
	2004			2003			%
Consolidated Balance Sheet
Assets
Cash and cash equivalents:
Cash and due from banks	$	26,285		$	26,347			(0.2	)%
Federal funds sold and other temporary investments		5,788			10,580			(45.3	)
Total cash and cash equivalents		32,073			36,927			(13.1	)
Investment securities available-for-sale		267,913			257,064			4.2
Other investments		5,807			5,200			11.7
Loans, held-for-investment, net		581,774			540,658			7.6
Loans, held-for-sale, net		1,899			6,030			(68.5	)
Premises and equipment, net		6,512			5,674			14.8
Accrued interest receivable		3,308			3,452			(4.2	)
Defered tax asset		5,201			4,664			11.5
Customers’ liability on acceptances		6,669			3,352			99.0
Foreclosed assets, net		1,566			2,585			(39.4	)
Other assets		1,228			1,410			(12.9	)
Total assets	$	913,950		$	867,016			5.4
Liabilities and Shareholders’ Equity
Deposits:
Noninterest-bearing	$	163,191		$	169,097			(3.5	)%
Interest-bearing		591,862			555,844			6.5
Total deposits		755,053			724,941			4.2
Other borrowings		60,849			54,173			12.3
Accrued interest payable		649			567			14.5
Acceptances outstanding		6,669			3,352			99.0
Other liabilities		5,007			5,610			(10.7	)
Total liabilities		828,227			788,643			5.0
Shareholders’ Equity:
Preferred stock, $1.00 par value, 2,000,000 shares authorized; none of which are issued and outstanding		—			—			—
Common stock, $1.00 par value, 20,000,000 shares authorized; 7,312,627 shares and 7,306,627 shares are issued and 7,187,446 shares and 7,156,689 shares are outstanding at December 31, 2004 and December 31, 2003, respectively		7,313			7,307			0.1	%
Additional paid-in-capital		27,859			27,620			0.9
Retained earnings		50,976			44,105			15.6
Accumulated other comprehensive income		710			671			5.8
Treasury stock, at cost		(1,135	)		(1,330	)		(14.7	)
Total shareholders’ equity		85,723			78,373			9.4
Total liabilities and shareholders’ equity	$	913,950		$	867,016			5.4
Nonperforming Assets and Asset Quality Ratios
Nonaccrual loans	$	16,504		$	25,442			(35.1	)%
Accruing loans 90 days or more past due		181			264			(31.4	)
Other real estate (“ORE”)		1,566			2,585			(39.4	)
Other assets repossessed (“OAR”)		—			—			—
Total nonperforming assets		18,251			28,291			(35.5	)
Less nonperforming loans guaranteed by the SBA, Ex-Im Bank, or the OCCGF		(3,032	)		(3,323	)		(8.8	)
Net nonperforming assets	$	15,219		$	24,968			(39.0	)
Net nonperforming assets to total assets		1.67	%		2.88	%		(42.2	)%
Net nonperforming assets to total loans and ORE/OAR		2.55	%		4.46	%		(42.8	)
Allowance for loan losses to total loans		1.83	%		1.88	%		(2.6	)
Allowance for loan losses to net nonperforming loans		79.56	%		46.68	%		70.5
Net loan charge-offs to total loans		0.19	%		0.97	%		(80.0	)
Net loan charge-offs	$	1,150		$	5,392			(78.7	)
Total loans to total deposits		78.74	%		76.85	%		2.5
Total loans	$	594,536		$	557,136			6.7
Allowance for loan losses	$	10,863		$	10,448			4.0

MetroCorp Bancshares, Inc.
(In thousands, except per share amounts)
(Unaudited)

	As of or for the Three Months									As of or for the Twelve Months
	ended December 31,						Change			ended December 31,						Change
	2004			2003			%			2004			2003			%
Average Balance Sheet Data
Total assets	$	914,593		$	859,110			6.5	%	$	882,017		$	852,946			3.4	%
Securities		276,633			251,686			9.9			265,578			247,149			7.5
Total loans		585,249			552,750			5.9			565,920			551,287			2.7
Allowance for loan losses		(11,063	)		(10,637	)		4.0			(10,944	)		(10,595	)		3.3
Net loans		574,186			542,113			5.9			554,976			540,692			2.6
Total deposits		755,419			719,827			4.9			728,683			708,575			2.8
FHLB and other borrowings		61,994			54,802			13.1			64,022			60,310			6.2
Total shareholders’ equity		85,857			76,087			12.8			81,044			76,333			6.2
Income Statement Data
Interest income:
Loans	$	9,603		$	8,316			15.5	%	$	34,711		$	34,691			0.1	%
Investment securities:
Taxable		2,519			2,079			21.2			9,441			7,321			29.0
Tax-exempt		224			235			(4.7	)		917			997			(8.0	)
Federal funds sold and other temporary investments		83			57			45.6			235			278			(15.5	)
Total interest income		12,429			10,687			16.3			45,304			43,287			4.7
Interest expense:
Time deposits		2,295			2,020			13.6			8,133			8,942			(9.0	)
Demand and savings deposits		403			290			39.0			1,338			1,345			(0.5	)
Other borrowings		504			430			17.2			1,878			1,847			1.7
Total interest expense		3,202			2,740			16.9			11,349			12,134			(6.5	)
Net interest income		9,227			7,947			16.1			33,955			31,153			9.0
Provision for loan losses		500			300			66.7			1,565			5,690			(72.5	)
Net interest income after provision for loan losses		8,727			7,647			14.1			32,390			25,463			27.2
Noninterest income:
Service fees		1,981			2,086			(5.0	)		7,678			8,069			(4.8	)
Other noninterest income		(178	)		(132	)		34.8			1,301			610			113.3
Total noninterest income		1,803			1,954			(7.7	)		8,979			8,679			3.5
Noninterest expense:
Salaries and employee benefits		3,791			3,560			6.5			16,104			14,109			14.1
Occupancy and equipment		1,481			1,392			6.4			5,723			5,361			6.8
Other noninterest expense		1,795			1,810			(0.8	)		6,917			8,827			(21.6	)
Total noninterest expense		7,067			6,762			4.5			28,744			28,297			1.6
Income before provision for income taxes		3,463			2,839			22.0			12,625			5,845			116.0
Provision for income taxes		1,143			917			24.6			4,031			1,735			132.3
Net income	$	2,320		$	1,922			20.7		$	8,594		$	4,110			109.1
Per Share Data
Earnings per share — basic	$	0.32		$	0.27			20.2	%	$	1.20		$	0.58			106.6	%
Earnings per share — diluted		0.32			0.27			20.4			1.19			0.57			108.1
Weighted average shares outstanding:
Basic		7,186			7,154			0.4			7,175			7,089			1.2
Diluted		7,234			7,215			0.3			7,246			7,213			0.5
Dividends per common share	$	0.06		$	0.06			—		$	0.24		$	0.24			—
Performance Ratio Data
Return on average assets		1.01	%		0.89	%		13.7	%		0.97	%		0.48	%		102.2	%
Return on average shareholders’ equity		10.75	%		10.02	%		7.3			10.60	%		5.38	%		96.9
Net interest margin		4.19	%		3.85	%		8.8			4.02	%		3.81	%		5.5
Efficiency ratio		64.07	%		68.30	%		(6.2	)		66.95	%		71.04	%		(5.8	)
Equity to assets											9.38	%		9.04	%		3.8
Bank Capital Ratio Data
Tier I capital											12.52	%		11.98	%		4.5
Total capital (tier I & II)											13.78	%		13.23	%		4.2
Leverage (Regulatory)											9.37	%		8.54	%		9.7