10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2013

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 0-25141

MetroCorp Bancshares, Inc.

(Exact name of registrant as specified in its charter)

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

9600 Bellaire Boulevard, Suite 252

Houston, Texas 77036

(Address of principal executive offices including zip code)

(713) 776-3876

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 R     No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes R     No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer £	Accelerated Filer R
Non-accelerated Filer £  (Do not check if a smaller reporting company)	Smaller Reporting Company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes £    No R

As of May 2, 2013, the number of outstanding shares of Common Stock was 18,725,901.

1

PART I

FINANCIAL INFORMATION

 Item 1. Financial Statements.

METROCORP BANCSHARES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

(Unaudited)

	March 31, 2013			December 31, 2012
ASSETS
Cash and due from banks	$	25,013		$	31,203
Federal funds sold and other short-term investments		163,282			128,246
Total cash and cash equivalents		188,295			159,449
Interest-bearing time deposits in banks		15,354			15,321
Securities available-for-sale, at fair value		142,713			119,422
Securities available-for-sale pledged with creditors’ right to repledge, at fair value		37,959			44,626
Total securities available-for-sale		180,672			164,048
Securities held-to-maturity (fair value $4,670 and $4,757 at March 31, 2013 and December 31, 2012, respectively)		4,046			4,046
Other investments		5,413			5,592
Loans, net of allowance for loan losses of $22,832 and $24,592, respectively		1,101,884			1,075,745
Accrued interest receivable		3,680			4,120
Premises and equipment, net		3,948			4,046
Goodwill		14,327			14,327
Deferred tax asset, net		12,676			13,110
Customers' liability on acceptances		4,914			7,045
Foreclosed assets, net		12,152			12,555
Cash value of bank owned life insurance		33,120			32,794
Prepaid FDIC assessment		3,001			3,439
Other assets		3,754			4,175
Total assets	$	1,587,236		$	1,519,812
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	318,912		$	309,696
Interest-bearing		1,009,140			957,334
Total deposits		1,328,052			1,267,030
Junior subordinated debentures		36,083			36,083
Other borrowings		30,000			25,000
Accrued interest payable		274			233
Acceptances outstanding		4,914			7,045
Other liabilities		8,390			7,390
Total liabilities		1,407,713			1,342,781
Commitments and contingencies		–			—
Shareholders' equity:
Common stock, $1.00 par value, 50,000,000 shares authorized;  18,766,765 shares issued and 18,725,901 and 18,746,385 outstanding at March 31, 2013 and December 31, 2012, respectively		18,767			18,767
Additional paid-in-capital		75,019			74,998
Retained earnings		85,908			82,881
Accumulated other comprehensive loss		221			567
Treasury stock, at cost, 40,864 and 20,380 shares at March 31, 2013 and December 31, 2012, respectively		(392	)		(182	)
Total shareholders' equity		179,523			177,031
Total liabilities and shareholders' equity	$	1,587,236		$	1,519,812

See accompanying notes to unaudited condensed consolidated financial statements.

2

METROCORP BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	For the Three Months Ended March 31,
	2013			2012
Interest income:
Loans	$	13,829		$	14,999
Securities:
Taxable		791			1,027
Tax-exempt		147			117
Other investments		50			43
Federal funds sold and other short-term investments (1)		200			212
Total interest income		15,017			16,398
Interest expense:
Time deposits		1,219			1,536
Demand and savings deposits		427			635
Junior subordinated debentures		316			336
Other borrowings		233			247
Total interest expense		2,195			2,754
Net interest income		12,822			13,644
(Reduction in) provision for loan losses		(450	)		400
Net interest income after provision for loan losses		13,272			13,244
Noninterest income:
Service fees		909			1,117
Loan-related fees		130			70
Letters of credit commissions and fees		199			197
Gain on securities transactions, net		14			12
Total other-than-temporary-impairment (“OTTI”) on securities		(40	)		(39	)
Less: Noncredit portion of  OTTI		(13	)		–
Net impairments on securities		(27	)		(39	)
Other noninterest income		425			446
Total noninterest income		1,650			1,803
Noninterest expenses:
Salaries and employee benefits		6,292			5,921
Occupancy and equipment		1,650			1,689
Foreclosed assets, net		(841	)		1,001
FDIC assessment		460			397
Other noninterest expense		2,741			1,925
Total noninterest expenses		10,302			10,933
Income before provision  for income taxes		4,620			4,114
Provision for income taxes		1,593			1,346
Net income	$	3,027		$	2,768
Dividends and discount – preferred stock		–			(598	)
Net income available to common shareholders	$	3,027		$	2,170
Earnings per common share:
Basic	$	0.17		$	0.16
Diluted	$	0.16		$	0.16
Weighted average common shares outstanding:
Basic		18,332			13,169
Diluted		18,723			13,309
Dividends per common share	$	–		$	–

(1) Includes interest-bearing time deposits in banks

See accompanying notes to unaudited condensed consolidated financial statements.

3

METROCORP BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2013			2012
Net income	$	3,027		$	2,768
Other comprehensive income, net of tax:
Change in accumulated gain on effective cash flow hedging derivatives		96			43
Change in unrealized losses on investment securities, net of tax:
Securities with OTTI charges during the period		(25	)		(25	)
Less: OTTI charges recognized in net income		(17	)		(25	)
Net unrealized losses on investment securities with OTTI		(8	)		–
Unrealized holding (losses) gains arising during the period		(425	)		21
Less: reclassification adjustment for losses included in net income		9			8
Net unrealized (losses) gains on investment securities		(434	)		13
Other comprehensive (loss) income		(346	)		56
Total comprehensive income	$	2,681		$	2,824

METROCORP BANCSHARES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

For the Three Months Ended March 31, 2013

(In thousands)

(Unaudited)

	Common Stock				Additional paid-in		Retained		Accumulated other comprehensive income			Treasury Stock at
	Shares		At par		capital		earnings		(loss)			cost			Total
Balance at December 31, 2012		18,767	$	18,767	$	74,998	$	82,881	$	567			(182	)	$	177,031
Repurchase of common stock		–		–		–		–		–			(210	)		(210	)
Stock-based compensation expense related to stock options recognized in earnings		–		–		21		–		–			–			21
Net income		–		–		–		3,027		–			–			3,027
Other comprehensive loss		–		–		–		–		(346	)		–			(346	)
Balance at March 31, 2013		18,767	$	18,767	$	75,019	$	85,908	$	221			(392	)	$	179,523

See accompanying notes to unaudited condensed consolidated financial statements.

4

METROCORP BANCSHARES, INC

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2013			2012
Cash flows from operating activities:
Net income	$	3,027		$	2,768
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		234			284
(Reduction in) provision for loan losses		(450	)		400
Impairment on securities		27			39
Gain on securities transactions, net		(14	)		(12	)
(Gain) loss on sale or writedown of foreclosed assets, net		(910	)		782
Amortization of premiums and discounts on securities		191			128
Amortization of deferred loan fees and discounts		(312	)		(244	)
Amortization of core deposit intangibles		10			14
Stock-based compensation		21			20
Change in:
Accrued interest receivable		440			(40	)
Other assets		995			538
Accrued interest payable		41			(25	)
Other liabilities		1,096			(529	)
Net cash provided by operating activities		4,396			4,123
Cash flows from investing activities:
Net change in interest-bearing deposits in banks		(33	)		–
Purchases of securities available-for-sale		(28,484	)		(31,565	)
Purchases of other investments		–			(1	)
Proceeds from maturities, calls and principal paydowns of securities available-for-sale		10,966			12,603
Proceeds from sales and maturities of other investments		179			110
Net change in loans		(32,056	)		(2,546	)
Proceeds from sales of foreclosed assets		7,992			2,800
Purchases of premises and equipment		(136	)		(83	)
Net cash used in investing activities		(41,572	)		(18,682	)
Cash flows from financing activities:
Net change in:
Deposits		61,022			5,252
Other borrowings		5,000			(315	)
Repurchase of common stock		–			(112	)
Cash dividends paid on preferred stock		–			(563	)
Net cash provided by financing activities		66,022			4,262
Net increase (decrease) in cash and cash equivalents		28,846			(10,297	)
Cash and cash equivalents at beginning of period		159,449			193,609
Cash and cash equivalents at end of period	$	188,295		$	183,312
Supplemental information:
Interest paid	$	2,154		$	2,778
Income taxes paid		250			1,160
Noncash investing and financing activities:
Issuance of common stock pursuant to incentive plan		–			44
Foreclosed assets acquired		6,679			202
Loans originated to finance foreclosed assets		6,120			–

See accompanying notes to unaudited condensed consolidated financial statements.

5

METROCORP BANCSHARES, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.         BASIS OF PRESENTATION

 The unaudited condensed consolidated financial statements include the accounts of MetroCorp Bancshares, Inc. (the “Company”) and wholly-owned subsidiaries, MetroBank, National Association (“MetroBank”) and Metro United Bank (“Metro United”), in Texas and California, respectively (collectively, the “Banks”).  MetroBank is engaged in commercial banking activities through its thirteen branches in the greater Houston and Dallas, Texas metropolitan areas, and Metro United is engaged in commercial banking activities through its six branches in the San Diego, Los Angeles and San Francisco, California metropolitan areas. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain principles which significantly affect the determination of financial position, results of operations and cash flows are summarized below.

A legal entity is referred to as a Variable Interest Entity (“VIE”) if any of the following conditions exist: (1) the total equity at risk is insufficient to permit the legal entity to finance its activities without additional subordinated financial support from other parties, or (2) the entity has equity investors that cannot make significant decisions about the entity’s operations or that do not absorb their proportionate share of the expected losses or receive the expected returns of the entity.  In addition, as specified in VIE accounting guidance, a VIE must be consolidated by the Company if it is deemed to be the primary beneficiary of the VIE. The primary beneficiary is the party that has both (1) the power to direct the activities of an entity that most significantly impact the VIE’s economic performance, and (2) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.  All facts and circumstances are taken into consideration when determining whether the Company has variable interest that would deem it the primary beneficiary and, therefore, require consolidation of the related VIE or otherwise rise to the level where disclosure would provide useful information to the users of the Company’s financial statements.  In the case of the Company’s sole VIE, MCBI Statutory Trust I,  it is qualitatively clear based on the extent of the Company’s involvement that the Company is not the primary beneficiary of the VIE.  Accordingly, the accounts of this entity are not consolidated in the Company’s financial statements.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the Company’s financial position at March 31, 2013 and December 31, 2012, results of operations for the three months ended March 31, 2013 and 2012, and cash flows for the three months ended March 31, 2013 and 2012. Interim period results are not necessarily indicative of results for a full-year period.  The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting  principles.

Certain items in prior financial statements have been reclassified to conform to the 2013 presentation, with no impact on the balance sheet, net income, shareholders’ equity or cash flows.

These unaudited financial statements and the notes thereto should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

6

2.         SECURITIES

The amortized cost and approximate fair value of securities is as follows:

	As of March 31, 2013
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
	(Dollars in thousands)
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	81,385	$	240	$	(206	)	$	-		$	81,419
Obligations of state and political subdivisions		14,618		426		(49	)		-			14,995
Corporate		6,074		265		-			-			6,339
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		61,558		1,225		(51	)		-			62,732
Privately issued residential		684		353					(342	)		695
Asset backed securities		176		148		-			(167	)		157
Equity Securities
CRA funds		14,204		131		-			-			14,335
Total available-for-sale securities	$	178,699	$	2,788	$	(306	)	$	(509	)	$	180,672
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	624	$	-		$	-		$	4,670
Total held-to-maturity securities	$	4,046	$	624	$	-		$	-		$	4,670
Other investments
FHLB (1)/Federal Reserve Bank stock (2)	$	4,330	$	-	$	-		$	-		$	4,330
Investment in subsidiary trust (3)		1,083		-		-			-			1,083
Total other investments	$	5,413	$	-	$	-		$	-		$	5,413

7

	As of December 31, 2012
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	70,892	$	362	$	(73	)	$	—		$	71,181
Obligations of state and political subdivisions		12,810		579		—			—			13,389
Corporate		6,080		270		—			—			6,350
Mortgage-backed securities and collateralized mortgage obligations:
Government issued or guaranteed		56,572		1,369		—			—			57,941
Privately issued residential		718		330		—			(365	)		683
Asset backed securities		187		129		—			(173	)		143
Equity securities
Investment in CRA funds		14,128		233		—			—			14,361
Total available-for-sale securities	$	161,387	$	3,272	$	(73	)	$	(538	)	$	164,048
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	711	$	—		$	—		$	4,757
Total held-to-maturity securities	$	4,046	$	711	$	—		$	—		$	4,757
Other investments
FHLB (1)/Federal Reserve Bank (2) stock		4,509		—		—			—			4,509
Investment in subsidiary trust (3)		1,083		—		—			—			1,083
Total other investments	$	5,592	$	—	$	—		$	—		$	5,592

(1)	FHLB stock held by the Banks is subject to certain restrictions under a credit policy of the FHLB dated May 1, 1997. Redemption of FHLB stock is dependent upon repayment of borrowings, if any, from the FHLB.
(2)	Federal Reserve Bank stock held by MetroBank is subject to certain restrictions under Federal Reserve Bank Policy.
(3)	The Company’s ownership of common securities of MCBI Trust I is carried at cost.

The following tables display the fair value and gross unrealized losses on securities available-for-sale as of March 31, 2013 and December 31, 2012 for which OTTI has not been recognized, that were in a continuous unrealized loss position for the periods indicated.  There were no securities held-to-maturity in a continuous unrealized loss position as of March 31, 2013 or December 31, 2012.

	March 31, 2013
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	31,078	$	(206	)	$	—	$	—	$	31,078	$	(206	)
Obligations of state and political subdivisions		2,573		(49	)		—		—		2,573		(49	)
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		14,697		(51	)		—		—		14,697		(51	)
Privately issued residential		—		—			71		—		71		—
Total securities	$	48,348	$	(306	)	$	71	$	—	$	48,419	$	(306	)

8

	As of December 31, 2012
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	9,921	$	(73	)	$	—	$	—	$	9,921	$	(73	)
Mortgage-backed securities and collateralized mortgage obligations:
Privately issued residential		—		—			72		—		72		—
Total securities	$	9,921	$	(73	)	$	72	$	—	$	9,993	$	(73	)

As of March 31, 2013, management did not have the intent to sell any of the securities classified as available-for-sale in unrealized loss positions and believes it is not more likely than not that the Company will have to sell any such securities before a recovery of the cost. However, if strategic opportunities arise, the Company may consider selling selected securities.  Any unrealized losses on such selected securities would be charged to earnings.

The unrealized losses are largely due to increases in the market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such securities decline. Management does not believe any of the unrealized losses above are due to credit quality. Accordingly, management believes the $306,000 of unrealized losses is temporary and the remaining $509,000 of OTTI as of March 31, 2013 represents an unrealized loss for which an impairment has been recognized in other comprehensive loss.

Other-Than-Temporary Impairments (OTTI)

The following table represents the impairment activity related to debt securities (in thousands):

Impairment related to credit losses	Three months ended March 31, 2013		Three months ended March 31, 2012
Beginning balance at beginning of period	$	1,716	$	1,594
Addition of OTTI that was not previously recognized		—		—
Additions to OTTI that was previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis		—		21
Transfers from accumulated other comprehensive income (“AOCI”) to OTTI related to credit losses		16		18
Reclassifications from OTTI to realized losses		—		—
Ending balance at end of period	$	1,732	$	1,633

For the three months ended March 31, 2013, the Company recognized credit-related losses of $10,000 on one non-agency residential mortgage-backed security and $6,000 on one asset-backed security. There were no noncredit impairments included in accumulated other comprehensive income  for the three months ended March 31, 2013.

To measure credit losses, external credit ratings and other relevant collateral details and performance statistics on a security-by-security basis were considered. Securities exhibiting significant deterioration are subjected to further analysis. Assumptions were developed for prepayment speed, default rate and loss severity for each security using third party sources and based on the collateral history. The resulting projections of future cash flows of the underlying collateral were then discounted by the underlying yield before any write-downs were considered to determine the net present value of the cash flows (“NPV”). The difference between the cost basis and the NPV was taken as a credit loss in the current period to the extent that these losses have not been previously recognized. The difference between the NPV and the quoted market price is considered a noncredit related loss and was included in other comprehensive income. 

9

Other Securities Information

There were no sales (excluding calls and maturities) of available-for-sale securities for the three months ended March 31, 2013 or 2012.  There were no sales or transfers of held-to-maturity securities for the three months ended March 31, 2013 or 2012.

At March 31, 2013, future contractual maturities of debt securities were as follows (in thousands):

	Securities Available-for-sale				Securities Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	702	$	711	$	—	$	—
Within two to five years		12,569		12,845		—		—
Within six to ten years		75,675		75,800		—		—
After ten years		13,307		13,554		4,046		4,670
Mortgage-backed securities and collateralized mortgage obligations		62,242		63,427		—		—
Total debt securities	$	164,495	$	166,337	$	4,046	$	4,670

The Company holds mortgage-backed securities which may mature at an earlier date than the contractual maturity due to prepayments. The Company also holds certain securities which may be called by the issuer at an earlier date than the contractual maturity date.

10

3.          LOANS

The loan portfolio is classified by major type as follows:

	As of March 31, 2013						As of December 31, 2012
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Commercial and industrial	$	395,640			35.10	%	$	383,641			34.78	%
Real estate mortgage
Residential		37,526			3.33			36,807			3.34
Commercial		677,061			60.07			665,244			60.32
		714,587			63.40			702,051			63.66
Real estate construction
Residential		2,753			0.24			2,420			0.22
Commercial		7,379			0.66			7,284			0.66
		10,132			0.90			9,704			0.88
Consumer and other		6,808			0.60			7,531			0.68
Gross loans		1,127,167			100.00	%		1,102,927			100.00	%
Unearned discounts, interest and deferred fees		(2,451	)					(2,590	)
Total loans		1,124,716						1,100,337
Allowance for loan losses		(22,832	)					(24,592	)
Loans, net	$	1,101,884					$	1,075,745

The recorded investment in loans is the face amount increased or decreased by applicable accrued interest and unamortized premium, discount or finance charges, and may also reflect a previous direct write-down of the loan.

The recorded investment in loans at the dates indicated is determined as follows (in thousands):

March 31, 2013	Gross Loan Balance		Deferred Loan Fees			Accrued Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	395,640	$	(687	)	$	958	$	395,911
Real estate mortgage		714,587		(1,574	)		2,020		715,033
Real estate construction		10,132		(37	)		17		10,112
Consumer and other		6,808		(153	)		18		6,673
Total	$	1,127,167	$	(2,451	)	$	3,013	$	1,127,729

December 31, 2012	Gross Loan Balance		Deferred Loan Fees			Accrued  Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	383,641	$	(814	)	$	1,078	$	383,905
Real estate mortgage		702,051		(1,595	)		2,024		702,480
Real estate construction		9,704		(30	)		18		9,692
Consumer and other		7,531		(151	)		21		7,401
Total	$	1,102,927	$	(2,590	)	$	3,141	$	1,103,478

11

Loan Origination/Risk Management

The Company selectively extends credit for the purpose of establishing long-term relationships with its customers. The Company mitigates the risks inherent in lending by focusing on businesses and individuals with demonstrated payment history, historically favorable profitability trends and stable cash flows. In addition to these primary sources of repayment, the Company looks to tangible collateral and personal guarantees as secondary sources of repayment. Lending officers are provided with detailed underwriting policies covering all lending activities in which the Company is engaged and that require all lenders to obtain appropriate approvals for the extension of credit. The Company also maintains documentation requirements and extensive credit quality assurance practices in order to identify credit portfolio weaknesses as early as possible so any exposures that are discovered may be reduced.

The Company has certain lending procedures in place that are designed to maximize loan income within an acceptable level of risk. These procedures include the approval of lending policies and underwriting guidelines by the Board of Directors of each Bank, and separate policy, administrative and approval oversight by the Directors’ Loan Committee of MetroBank, and by the Directors’ Credit Committee of Metro United.  Additionally, MetroBank’s loan portfolio is reviewed by its internal loan review department, and Metro United's loan portfolio is reviewed by an external third-party company. These procedures also serve to timely identify changes in asset quality and to ensure proper recording and reporting of nonperforming assets.

Inherent in all lending is the risk of nonpayment. The types of collateral required, the terms of the loans and the underwriting practices discussed under each loan category below are all designed to minimize the risk of nonpayment. In addition, as further risk protection, the Banks rarely make loans at their respective legal lending limit. MetroBank generally does not make loans larger than $13 million to one borrower and Metro United generally does not make loans larger than $8 million to one borrower. Loans greater than the Banks’ lending limits are subject to participation with other financial institutions, including with each other. Loans originated by MetroBank are approved by the Chief Lending Officer, Chief Credit Officer, MetroBank’s Loan Committee or the Director’s Loan Committee based on the size of the loan relationship and its risk rating. Loans originated by Metro United are approved by the Management Credit Committee or Director’s Credit Committee except for certain consumer loans, which are approved under individual authority. Control systems and procedures are in place to ensure all loans are approved in accordance with credit policies.

Commercial and Industrial Loans. Generally, the Company’s commercial loans are underwritten on the basis of the borrower’s ability to service such debt as reflected by cash flow projections. Commercial loans are generally collateralized by business assets, which may include real estate, accounts receivable and inventory, certificates of deposit, securities, guarantees or other collateral. The Company also generally obtains personal guarantees from the principals of the business. Working capital loans are primarily collateralized by short-term assets, whereas term loans are primarily collateralized by long-term assets. As a result, commercial loans involve additional complexities, variables and risks and require more thorough underwriting and servicing than other types of loans. Indigenous to individuals in the Asian business community is the desire to own the building and land which house their businesses. Accordingly, while a loan may be principally driven and classified by the type of business operated, real estate is frequently the primary source of collateral.

Real Estate Mortgage - Commercial  and Residential Mortgage Loans. The Company makes commercial mortgage loans to finance the purchase of real property, which generally consists of developed real estate. The Company’s commercial mortgage loans are collateralized by first liens on real estate. For MetroBank, these loans typically have variable rates and amortize over a 15 to 20 year period, with balloon payments due at the end of five to seven years. For Metro United, these loans have both variable and fixed rates and amortize over a 25 to 30 year period, with balloon payments due at the end of five to ten years. Payments on loans collateralized by such properties are dependent on the successful operation or management of the properties. Accordingly, repayment of these loans may be subject to adverse conditions in the real estate market or the economy to a greater extent than other types of loans. In underwriting commercial mortgage loans, consideration is given to the property’s historical cash flow, current and projected occupancy, location and physical condition. The underwriting analysis also includes credit checks, appraisals, environmental impact reports and a review of the financial condition of the borrower. The Company also originates two to seven year balloon residential mortgage loans with a 15 to 30-year amortization primarily collateralized by owner occupied residential properties, which are retained in the Company’s residential mortgage portfolio.

Real Estate Construction Loans. The Company makes loans to finance the construction of residential and non-residential properties. The majority of the Company’s residential construction loans in Texas are for single-family dwellings that are pre-sold or are under earnest money contracts. The Company also originates loans to finance the construction of commercial properties such as multi-family, office, industrial, warehouse and retail centers. Construction loans involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the project is of uncertain value prior to its completion. Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company will be able to recover the entire unpaid portion of the loan. In addition, the Company may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminable period of time. While the Company has underwriting procedures designed to identify what it believes to be acceptable levels of risks in construction lending, no assurance can be given that these procedures will prevent losses from the risks described above.  

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Consumer Loans. The Company, through its subsidiary Metro United, offers a variety of loan products to retail customers through its branch network. Loans to retail customers include automobile loans, lines of credit and other personal loans. The terms of these loans typically range from 12 to 60 months depending on the nature of the collateral and the size of the loan.

 Loan review process. In addition to MetroBank’s loan portfolio review by its internal loan review department and Metro United's loan portfolio review by an external third-party company, other ongoing reviews are performed by loan officers and involve the grading of each loan by its respective loan officer. Depending on the grade, a loan will be aggregated with other loans of similar grade and a loss factor is applied to the total loans in each group to establish the required level of allowance for loan losses. For both Banks, grades of 1-10 are applied to each loan, with loans graded 7-10 requiring the most allowance for loan losses. Factors utilized in the grading process include but are not limited to historical performance, payment status, collateral value and financial strength of the borrower. Oversight of the loan review process is the responsibility of the Loan Review/Compliance Officer. Differences of opinion are resolved among the Loan Officer, Loan Review/Compliance Officer and the Chief Credit Officer. See “Allowance for Loan Losses and Reserve for Unfunded Lending Commitments” for additional discussion on loan grades.

MetroBank’s credit department reports credit risk grade changes on a monthly basis to its management and the Board of Directors. MetroBank performs monthly and quarterly, and Metro United performs monthly concentration analyses based on industries, collateral types and business lines. Findings are reported monthly to the Directors’ Loan Committee of MetroBank and the Directors’ Credit Committee of Metro United and quarterly to the Board of Directors of each respective Bank.

In addition, the Company reviews the real estate values, and when necessary, orders new appraisals on loans collateralized by real estate when loans are renewed, prior to foreclosure and at other times as necessary, particularly in problem loan situations. In instances where updated appraisals reflect reduced collateral values, an evaluation of the borrower’s overall financial condition is made to determine the need, if any, for possible charge-offs or appropriate additions to the allowance for loan losses. The Company records other real estate at fair value at the time of acquisition less estimated costs to sell.

The following table presents the recorded investment in loans by credit risk profile, and which were updated as of the date indicated (in thousands):

As of March 31, 2013	Commercial and industrial		Real estate mortgage		Real estate construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	380,163	$	645,678	$	5,583	$	6,673	$	1,038,097
7 - “Special Mention”/ “Watch”		3,797		13,268		—		—		17,065
8 - “Substandard”		11,951		56,087		4,529		—		72,567
9 -“Doubtful"		—		—		—		—		—
Total	$	395,911	$	715,033	$	10,112	$	6,673	$	1,127,729

As of December 31, 2012	Commercial and industrial		Real estate mortgage		Real estate construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	366,571	$	611,159	$	5,163	$	7,401	$	990,294
7 - “Special Mention”/ “Watch”		4,393		14,593		—		—		18,986
8 - “Substandard”		12,941		76,728		4,529		—		94,198
9 -“Doubtful"		—		—		—		—		—
Total	$	383,905	$	702,480	$	9,692	$	7,401	$	1,103,478

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There can be no assurance, however, that the Company’s loan portfolio will not become subject to increasing pressures from deteriorating borrowers’ financial condition due to general economic and other factors. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program. In addition, management is focusing its attention on minimizing the Company’s credit risk through diversification.

Nonperforming Assets

            The Company generally places a loan on nonaccrual status and ceases accruing interest when, in the opinion of management, full payment of loan principal or interest is in doubt. All loans past due 90 days are placed on nonaccrual status unless the loan is both well collateralized and in the process of collection. Cash payments received while a loan is classified as nonaccrual are recorded as a reduction of principal as long as significant doubt exists as to collection of the principal. Loans are restored to accrual status only when interest and principal payments are brought current and, in management’s judgment, future payments are reasonably assured.  In addition to nonaccrual loans, the Company evaluates on an ongoing basis other loans which are potential problem loans as to risk exposure in determining the adequacy of the allowance for loan losses.

A loan is considered impaired based on current information and events if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual basis for other loans.  The measurement of impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the loan’s observable market price or based on the fair value of the collateral if the loan is collateral-dependent.

Loans are classified as a troubled debt restructuring in cases where a borrower is experiencing financial difficulty and the Banks make concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate and an extension of the maturity date(s). Generally, a nonaccrual loan that is restructured remains on nonaccrual for a minimum period of six months to demonstrate that the borrower can meet the restructured terms. Once performance has been demonstrated, the loan may be returned to performing status after the calendar year end.

The Company requires that nonperforming assets be monitored by the special assets department or senior lenders for MetroBank, and by the special asset team consisting of internal credit personnel with the assistance of third party consultants and attorneys for Metro United. All nonperforming assets are actively managed pursuant to the Company’s loan policy. Senior management is apprised on a weekly basis of the workout endeavors and provides assistance as necessary to determine the best strategy for problem loan resolution and maximizing repayment on nonperforming assets.

In addition to the Banks’ loan review process described in the preceding paragraphs, the Office of the Comptroller of the Currency (“OCC”) periodically examines and evaluates MetroBank, while the Federal Deposit Insurance Corporation (“FDIC”) and California Department of Financial Institutions (“CDFI”) periodically examine and evaluate Metro United. Based upon such examinations, the regulators may revalue the assets of the institution and require that it charge-off certain assets, establish specific reserves to compensate for the difference between the regulators-determined value and the book value of such assets or take other regulatory action designed to lessen the risk in the asset portfolio.

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The following table provides an analysis of the age of the recorded investment in loans by portfolio segment at the date indicated (in thousands):

As of March 31, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Recorded Investment in Loans		Recorded Investment 90 Days and Accruing
Commercial and industrial	$	870	$	645	$	510	$	2,025	$	393,886	$	395,911	$	—
Real estate mortgage:
Residential		66		—		142		208		37,401		37,609		—
Commercial		2,264		376		12,053		14,693		662,731		677,424		—
Real estate construction:
Residential		—		—		1,426		1,426		1,322		2,748		—
Commercial		—		—		3,103		3,103		4,261		7,364		—
Consumer and other		—		—		—		—		6,673		6,673		—
Total	$	3,200	$	1,021	$	17,234	$	21,455	$	1,106,274	$	1,127,729	$	—

As of December 31, 2012	30-59 Days Past Due		60-89 Days  Past Due		Greater Than 90 Days		Total Past  Due		Current		Total Recorded Investment in Loans		Recorded  Investment 90 Days and Accruing
Commercial and industrial	$	2,233	$	817	$	1,308	$	4,358	$	379,547	$	383,905	$	—
Real estate mortgage:
Residential		—		—		239		239		36,667		36,906		—
Commercial		114		3,817		18,141		22,072		643,502		665,574		—
Real estate construction:
Residential		—		—		1,426		1,426		984		2,410		—
Commercial		150		—		3,103		3,253		4,029		7,282		—
Consumer and other		—		—		—		—		7,401		7,401		—
Total	$	2,497	$	4,634	$	24,217	$	31,348	$	1,072,130	$	1,103,478	$	—

The following table presents the recorded investment in nonaccrual loans, including nonaccruing troubled debt restructurings, by portfolio segment at the dates indicated (in thousands):

Recorded investment in nonaccrual loans	March 31, 2013		December 31, 2012
Commercial and industrial	$	579	$	1,308
Real estate mortgage:
Residential		142		239
Commercial		16,347		22,501
Real estate construction:
Residential		1,426		1,426
Commercial		3,104		3,103
Total	$	21,598	$	28,577

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Information on impaired loans, which includes nonaccrual loans and troubled debt restructurings, and the related specific allowance for loan losses on such loans at March 31, 2013 and December 31, 2012, is presented below (in thousands):

As of March 31, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no allowance
Commercial and industrial	$	579	$	579	$	—	$	4,394
Real estate mortgage:
Residential		142		142		—		188
Commercial		12,368		12,368		—		17,096
Real estate construction:
Residential		1,426		1,426		—		1,885
Commercial		3,104		3,104		—		3,132
Impaired loans with an allowance
Commercial and industrial	$	—	$	—	$	—	$	17
Real estate mortgage:
Commercial		3,979		3,980		252		4,530
Total:
Commercial and industrial	$	579	$	579	$	—	$	4,411
Real estate mortgage		16,489		16,490		252		21,814
Real estate construction		4,530		4,530		—		5,017

As of December 31, 2012	Recorded Investment		Unpaid Principal  Balance		Related Allowance		Average  Recorded  Investment
Impaired loans with no allowance
Commercial and industrial	$	1,287	$	1,289	$	—	$	5,162
Real estate mortgage:
Residential		239		239		—		213
Commercial		18,369		18,369		—		19,732
Real estate construction:
Residential		1,426		1,426		—		1,529
Commercial		3,103		3,103		—		3,171
Impaired loans with an allowance
Commercial and industrial		21		21		21		1,434
Real estate mortgage:
Commercial		4,533		4,535		503		6,836
Total:
Commercial and industrial	$	1,308	$	1,310	$	21	$	6,596
Real estate mortgage		23,141		23,143		503		26,781
Real estate construction		4,529		4,529		—		4,700

For the three months ended March 31, 2013 there was no interest income recognized on impaired loans.  For the three months ended March 31, 2012, interest income of $89,000 was recognized on impaired loans, which consisted of nonaccrual loans that were paid in full and accruing TDRs. 

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Troubled Debt Restructurings

Loans are classified as a TDR in cases where a borrower is experiencing financial difficulty and the Banks make concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate and/or an extension of the maturity date(s). Generally, a nonaccrual loan that is restructured remains on nonaccrual for a minimum period of six months to demonstrate that the borrower can meet the restructured terms. Once performance has been demonstrated the loan may be returned to performing status after the calendar year end.

There were no investments in troubled debt restructurings that occurred for the three months ended March 31, 2013. As of March 31, 2013, there were no commitments to lend additional funds on loans that were modified as troubled debt restructurings.   As of March 31, 2013, there were no defaults on any loans that were modified as troubled debt restructurings during the preceding twelve months.

The following table presents the recorded investment in troubled debt restructurings that occurred for the three months ended March  31, 2012 (dollars in thousands):

	Three Months Ended March 31, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate mortgage:
Commercial		1	$	2,699	$	2,699

The loan identified as a troubled debt restructuring by the Company was previously on nonaccrual status and reported as an impaired loan prior to restructuring.  The borrower was under the protection of the Federal Bankruptcy Act and the court approved and imposed a reorganization plan which modified the existing payment terms.  Since the loan was classified and on nonaccrual status both before and after restructuring, the modification did not impact the Company’s determination of the allowance for loan losses.  

As of March 31, 2012, commitments to lend additional funds on loans that were modified as troubled debt restructurings were insignificant.   As of March 31, 2012, there were no defaults on any loans that were modified as troubled debt restructurings during the preceding twelve months.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments

The allowance for loan losses provides for the risk of losses inherent in the lending process and the Company allocates the allowance for loan losses according to management’s assessments of risk inherent in the portfolio. The allowance for loan losses is increased by provisions charged against current earnings and is reduced by net charge-offs. Loans are charged off when they are deemed to be uncollectible in whole or in part. Recoveries are recorded when cash payments are received. In developing the assessment, the Company relies on estimates and exercises judgment regarding matters where the ultimate outcome is uncertain. Circumstances may change and future assessments of credit risk may yield materially different results, resulting in an increase or decrease in the allowance for credit losses.

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments and is maintained at levels that the Company believes are adequate to absorb probable losses inherent in the loan portfolio and unfunded lending commitments as of the date of the financial statements. The Company employs a systematic methodology for determining the allowance for credit losses that consists of four components: (1) a formula-based general reserve derived from  historical average losses by loan grade, (2) specific reserves on larger impaired individual credits that are based on the difference between the current loan balance and the loan’s collateral value, observable market price, or discounted present value, (3) a qualitative component that reflects current market conditions and other factors precedent to losses different from historical averages and (4) a reserve for unfunded lending commitments.

In setting the qualitative reserve portion of the allowance for loan losses, the factors the Company may consider include, but are not limited to, concentrations of credit, common characteristics of known problem loans, potential problem loans and other loans that exhibit weaknesses or deterioration, the general economic environment in the Company’s markets as well as the national economy, particularly the real estate markets, changes in value of the collateral securing loans, results of portfolio stress tests, and changes in lending processes, procedures and personnel. After the aforementioned assessment of the loan portfolio, the general economic environment and other relevant factors, management determines the appropriate allowance for loan loss level and makes the provision necessary to achieve that level. This methodology is consistently followed so that the level of the allowance for loan losses is reevaluated in response to changes in circumstances, economic conditions or other factors on an ongoing basis.

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The Company follows a loan review program to evaluate the credit risk in the loan portfolio as discussed under “Nonperforming Assets.” The Company maintains an internally classified loan list which, along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. Loans classified as “substandard” are risk-rated as grade 8, and are those loans with well-defined weaknesses such as a highly-leveraged position, unfavorable financial ratios, uncertain repayment sources or poor financial condition, which may jeopardize recoverability of the debt. Loans classified as “doubtful” are risk-rated as grade 9, and are those loans which have characteristics similar to substandard loans but with an increased risk that a loss may occur, or at least a portion of the loan may require a charge-off if liquidated at present. Although loans classified as substandard do not duplicate loans classified as doubtful, both substandard and doubtful loans include some loans that are delinquent at least 30 days or on nonaccrual status. Loans classified as “loss” are risk-rated as grade 10 and are those loans which are charged off.

In addition to the internally classified loan list and delinquency list of loans, the Company maintains a separate “watch list” for loans risk-rated as grade 7, which further aids the Company in monitoring loan portfolios. Watch list loans show potential weaknesses where the present status portrays one or more deficiencies that require attention in the short-term or where pertinent ratios of the loan account have weakened to a point where more frequent monitoring is warranted. These loans do not have all of the characteristics of a classified loan (substandard or doubtful) but do show weakened elements compared with those of a satisfactory credit. The Company reviews these loans to assist in assessing the adequacy of the allowance for loan losses.

Policies and procedures have been developed to assess the adequacy of the allowance for loan losses and the reserve for unfunded lending commitments that include the monitoring of qualitative and quantitative trends described above. Management of both Banks review and approve their respective allowance for loan losses and the reserve for unfunded lending commitments monthly and perform a comprehensive analysis quarterly, which is also presented for approval by each Bank’s Board of Directors. The allowance for credit losses is also subject to federal and California State banking regulations. The Banks’ primary regulators conduct periodic examinations of the allowance for credit losses and make assessments regarding its adequacy and the methodology used in its determination.

The Company maintains a reserve for unfunded commitments to provide for the risk of loss inherent in its unfunded lending related commitments. The process used in determining the reserve is consistent with the process used for the allowance for loan losses discussed above.

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The following table presents the allowance for loan losses and recorded investment in loans by portfolio segment at the date indicated (in thousands):

As of and for the three months ended  March 31, 2013	Commercial and industrial			Real estate mortgage			Real estate construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	8,255		$	14,748		$	216		$	143		$	1,230	$	24,592
(Reduction in) provision for loan losses		(408	)		(1,031	)		(41	)		(43	)		1,073		(450	)
Charge-offs		(884	)		(550	)		—			(25	)		—		(1,459	)
Recoveries		90			50			5			4			—		149
Allowance for loan losses at end of period	$	7,053		$	13,217		$	180		$	79		$	2,303	$	22,832
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	—		$	289		$	—		$	—				$	289
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	7,053		$	12,928		$	180		$	79				$	20,240
Loans:
Recorded investment in loans	$	395,911		$	715,033		$	10,112		$	6,673				$	1,127,729
Recorded investment in loans  individually evaluated for impairment	$	579		$	16,489		$	4,530		$	—				$	21,598
Recorded investment in loans  collectively evaluated for impairment	$	395,332		$	698,544		$	5,582		$	6,673				$	1,106,131

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As of and for the three months ended  March 31, 2012	Commercial and industrial			Real estate mortgage			Real estate construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	7,966		$	19,213		$	320		$	137		$	685	$	28,321
(Reduction in) provision for loan losses		1,923			(2,638	)		(104	)		(6	)		1,225		400
Charge-offs		(784	)		(340	)		—			(42	)		—		(1,166	)
Recoveries		118			363			19			11			—		511
Allowance for loan losses at end of period	$	9,223		$	16,598		$	235		$	100		$	1,910	$	28,066
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	362		$	655		$	—		$	—				$	1,017
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	8,861		$	15,943		$	235		$	100				$	25,139
Loans:
Recorded investment in loans	$	344,975		$	691,071		$	9,208		$	4,795				$	1,050,049
Recorded investment in loans  individually evaluated for impairment	$	9,315		$	29,165		$	3,263		$	1				$	41,744
Recorded investment in loans  collectively evaluated for impairment	$	335,660		$	661,906		$	5,945		$	4,794				$	1,008,305

4.        GOODWILL

Goodwill is recorded on the acquisition date of each entity, and evaluated annually for possible impairment. Goodwill is required to be tested for impairment on an annual basis or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’s only reporting unit with assigned goodwill is Metro United.

2012 Annual Evaluation

The Company completed its 2012 annual impairment test based on information as of August 31, 2012. The impairment analysis utilized guideline company and guideline transaction information where available, discounted cash flow analysis, and the market capitalization of the Company to estimate the fair value of Metro United.

Due to the limited number of bank transaction multiples, management allocated more weight on the income approach for the step-one analysis. The Company also performed a reconciliation of the estimated fair value of the reporting unit to the stock price of the Company. This reconciliation is performed by first determining the fair value of the reporting unit from various valuation techniques (i.e., guideline transactions, discounted cash flows, and quoted market prices). The fair value is compared to the allocated value of the reporting unit based on the Company’s market value using the stock price as of the valuation date. The Company allocates the total market value to both of its segments, MetroBank and Metro United. For each Bank, the allocation is based upon the following internal ratios:

Balance Sheet Ratios

• Total Bank assets as a percentage of total assets;

• Total Bank loans as a percentage of total loans;

• Total Bank deposits as a percentage of total deposits; and

• Total Bank shareholder's equity as a percentage of total shareholders' equity.

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Performance Ratios

• Total Bank nonperforming assets as a percentage of total assets;

• Last twelve months return on assets; and

• Last twelve months return on equity.

In allocating the market value between the two Banks, more weight was assigned to the Performance Ratios than the Balance Sheet Ratios in order to account for the differences in market valuation as a result of different financial performance. The allocated market value of Metro United is then reconciled to the weighted average fair value derived from each valuation technique (i.e., guideline transactions, discounted cash flows, and quoted market prices) by assigning an estimated control premium of 20% to the allocated market value.

Under the discounted cash flow method, the Company used an average asset growth rate of 9.8% for the next five-year period and discounted Metro United’s cash flow and terminal value using a 13.2% discount rate. The derived fair value of Metro United was lower than the carrying value of its equity; therefore Metro United failed the step-one impairment test.

The Company then performed the step-two analysis to derive the implied fair value of goodwill. The size of the implied goodwill under the step-two analysis was significantly affected by the estimated fair value of the loans pertaining to Metro United. The significant market risk adjustment, which is a consequence of the current market conditions such as the interest rate environment, risk premium requirement on performing and nonperforming loans, supply and demand of loans for sale, macroeconomic conditions and political and regulatory environment, were all substantial contributors to the valuation discounts associated with Metro United’s loan portfolio. The implied fair value of goodwill at the evaluation date exceeded the carrying value; therefore the Company determined there was no impairment of goodwill as of that date.

To the extent that market liquidity returns and the fair value of the individual assets or loans of Metro United increases at a faster rate than the fair value of Metro United as a whole, that may cause the implied goodwill to be lower than the carrying value of goodwill. Future potential changes in valuation assumptions may also impact the estimated fair value of Metro United, resulting in impairment of goodwill under the step-two analysis. The stock price performance of the Company and the fair value of Metro United's loans are factors that may impact the potential future goodwill impairment.

Goodwill impairment, if any, is a noncash adjustment to the Company’s financial statements. As goodwill and other intangible assets are not included in the calculation of regulatory capital, the Company’s well capitalized regulatory ratios are not affected. Subsequent reversal of goodwill impairment is prohibited.

Changes in the carrying amount of the Company’s goodwill for the periods indicated are as follows (in thousands):

Balance as of January 1, 2013
Goodwill		21,827
Accumulated impairment losses		7,500
Net goodwill	$	14,327
Impairment losses for the three months ended March 31, 2013		—
Balance as of March 31, 2013
Goodwill		21,827
Accumulated impairment losses		7,500
Net goodwill	$	14,327

5.        EARNINGS PER COMMON SHARE

Basic earnings per common share (“EPS”) is computed by dividing net income (after deducting dividends on preferred stock) by the weighted-average number of common shares outstanding during the period. Diluted EPS 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. Stock options, restricted common shares and warrants can be dilutive common shares and are therefore considered in the earnings per share calculation, if dilutive.  Stock options, restricted common shares and warrants that are antidilutive are excluded from earnings per share calculation.  Stock options, restricted common shares and warrants are antidilutive when the exercise price is higher than the current market price of the Company’s common stock.  As of March 31, 2013 and 2012, there were 258,920 and 652,750 antidilutive stock options, respectively.  The number of potentially dilutive common shares is determined using the treasury stock method.

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	For the Three Months Ended March 31,
	2013		2012
	(In thousands, except per share amounts)
Net income available to common shareholders	$	3,027	$	2,170
Weighted average common shares in basic EPS		18,332		13,169
Effect of dilutive securities		391		140
Weighted average common and potentially dilutive common shares used in diluted EPS		18,723		13,309
Income per common share:
Basic	$	0.17	$	0.16
Diluted	$	0.16	$	0.16

6.       COMMITMENTS AND CONTINGENCIES

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include various guarantees, commitments to extend credit and standby letters of credit. Additionally, these instruments may involve, to varying degrees, credit risk in excess of the amount recognized in the statement of financial condition. The Company’s maximum exposure to credit loss under such arrangements is represented by the contractual amount of those instruments. The Company applies the same credit policies and collateralization guidelines in making commitments and conditional obligations as they do for on-balance sheet instruments. Off-balance sheet financial instruments include commitments to extend credit and guarantees under standby and other letters of credit.

The contractual amount of the Company’s financial instruments with off-balance sheet risk at March 31, 2013 and December 31, 2012 is presented below:

	As of March 31, 2013		As of December 31, 2012
	(Dollars in thousands)
Unfunded loan commitments including unfunded lines of credit	$	117,221	$	99,474
Standby letters of credit		9,821		10,387
Commercial letters of credit		2,660		1,595
Operating leases		6,750		7,337
Total financial instruments with off-balance sheet risk	$	136,452	$	118,793

Litigation. The Company is involved in various litigation that arises from time to time in the normal course of business.  In the opinion of management, after consultations with its legal counsel, such litigation is not expected to have a material adverse effect of the Company’s consolidated financial position, results of operations or cash flows.

7.       REGULATORY MATTERS

The Banks are subject to regulations and, among others things, may be limited in their ability to pay dividends or otherwise transfer funds to the holding company. Under applicable restrictions as of March 31, 2013, no dividends could be paid by MetroBank to the Parent without regulatory approval.  In addition, dividends paid by the Banks to the Parent would be prohibited if the effect thereof would cause the Banks’ capital to be reduced below applicable minimum capital requirements.

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On August 10, 2009, MetroBank entered into a written agreement (the “Agreement”) with the OCC. The Agreement is based on the findings of the OCC during the annual on-site examination of MetroBank performed in the first quarter of 2009 and is primarily focused on matters related to MetroBank’s asset quality. Pursuant to the Agreement, the Board of Directors of MetroBank has appointed a compliance committee to monitor and coordinate MetroBank’s performance under the Agreement. The Agreement provides for, among other things, the development and implementation of written programs to reduce MetroBank’s credit risks, monitor and reduce the level of criticized assets and manage commercial real estate loan concentrations in light of current adverse commercial real estate market conditions generally and in its market areas. Since the completion of the examination, management of MetroBank has proactively made adjustments to policies and procedures in an effort to alleviate the effects of the credit challenge caused by the economic deterioration and market conditions generally and in its market areas. Additionally, management and the Boards of Directors of the Company and MetroBank have aggressively taken steps to address the findings of the exam and are aggressively working to comply with the requirements of the Agreement. Failure by MetroBank to meet the requirements and conditions imposed by the Agreement could result in more severe regulatory enforcement actions such as capital directives to raise additional capital, civil money penalties, cease and desist or removal orders, injunctions, and public disclosure of such actions against MetroBank. Any such failure and resulting regulatory action could have a material adverse effect on the financial condition and results of operations of the Company and MetroBank.

As of March 31, 2013, the most recent notifications from the OCC with respect to MetroBank, and the CDFI with respect to Metro United categorized the Banks  as “well capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events since the notifications that management believes have changed the Banks’ level of capital adequacy.

The Company’s and the Banks’ actual capital amounts and ratios at the dates indicated are presented in the following table (dollars in thousands):

	Actual					Minimum Required For Capital Adequacy Purposes					To be Categorized as Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2013
Total risk-based capital ratio
MetroCorp Bancshares, Inc.	$	214,605		17.75	%	$	96,750		8.00	%	$	N/A		N/A	%
MetroBank, N.A.		155,837		17.76			70,186		8.00			87,733		10.00
Metro United Bank		52,931		16.10			26,309		8.00			32,886		10.00
Tier 1 risk-based capital ratio
MetroCorp Bancshares, Inc.		199,323		16.48			48,375		4.00			N/A		N/A
MetroBank, N.A.		144,743		16.50			35,093		4.00			52,640		6.00
Metro United Bank		48,782		14.83			13,154		4.00			19,732		6.00
Leverage ratio
MetroCorp Bancshares, Inc.		199,323		13.09			60,923		4.00			N/A		N/A
MetroBank, N.A.		144,743		13.04			44,389		4.00			55,487		5.00
Metro United Bank		48,782		11.76			16,596		4.00			20,745		5.00
As of December 31, 2012
Total risk-based capital ratio
MetroCorp Bancshares, Inc.	$	212,083		17.95	%	$	94,509		8.00	%	$	N/A		N/A	%
MetroBank, N.A.		152,613		17.80			68,587		8.00			85,734		10.00
Metro United Bank		52,714		16.34			25,814		8.00			32,267		10.00
Tier 1 risk-based capital ratio
MetroCorp Bancshares, Inc.		197,077		16.68			47,255		4.00			N/A		N/A
MetroBank, N.A.		141,702		16.53			34,293		4.00			51,440		6.00
Metro United Bank		48,636		15.07			12,907		4.00			19,360		6.00
Leverage ratio
MetroCorp Bancshares, Inc.		197,077		13.18			59,812		4.00			N/A		N/A
MetroBank, N.A.		141,702		12.70			44,613		4.00			55,766		5.00
Metro United Bank		48,636		12.76			15,243		4.00			19,053		5.00

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8.       OTHER COMPREHENSIVE INCOME (LOSS)

The tax effects allocated to each component of other comprehensive income (loss) were as follows (in thousands):

	Three Months Ended March 31, 2013									Three Months Ended March 31, 2012
	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount			Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Change in accumulated gain on effective cash flow derivatives	$	151		$	55		$	96		$	68		$	25		$	43
Unrealized loss on investment securities with OTTI:
Securities with OTTI charges during the period		(40	)		(15	)		(25	)		(39	)		(14	)		(25	)
Less: OTTI charges recognized in net income		(27	)		(10	)		(17	)		(39	)		(14	)		(25	)
Net unrealized losses on investment securities with OTTI		(13	)		(5	)		(8	)		—			—			—
Unrealized gain (loss) on investment securities:
Unrealized holding gain (loss) arising during the period		(663	)		(238	)		(425	)		31			10			21
Less: reclassification adjustment for gain included in net income		14			5			9			12			4			8
Net unrealized gains (losses) on investment securities		(677	)		(243	)		(434	)		19			6			13
Other comprehensive (loss) income	$	(539	)	$	(193	)	$	(346	)	$	87		$	31		$	56

The balance of and changes in each component of accumulated other comprehensive income (loss) as of and for the three months ended March 31, 2013 are as follows (net of taxes):

	Gains (Losses) on Effective Cash Hedging Derivatives			Net Unrealized Gains (Losses) on Investments with OTTI			Net Unrealized Investment Gains			Total Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) December 31, 2012	$	(1,136	)	$	(1,017	)	$	2,720		$	567
Other comprehensive income (loss)before reclassifications		96			(8	)		(425	)		(337	)
Amounts reclassified from other comprehensive income (loss) (1)		—			—			(9	)		(9	)
Net current-period other comprehensive income (loss)		96			(8	)		(434	)		(346	)
Accumulated other comprehensive income (loss) March 31, 2013	$	(1,040	)	$	(1,025	)	$	2,286		$	221

(1) Amounts reclassified from other comprehensive income were transferred to gain (loss) on securities, net.

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9.       DERIVATIVE FINANCIAL INSTRUMENTS

The fair value of derivative positions outstanding is included in other liabilities in the accompanying condensed consolidated balance sheets and in the net change in this financial statement line item in the accompanying condensed consolidated statements of cash flows.

Interest Rate Derivatives. During the third quarter of 2009, the Company entered into a forward-starting interest rate swap contract on its junior subordinated debentures with a notional amount of $17.5 million. The interest rate swap contract was designated as a hedging instrument in a cash flow hedge with the objective of protecting the quarterly interest payments on a portion of the Company’s $36.1 million of junior subordinated debentures issued to the Company’s unconsolidated subsidiary trust MCBI Statutory Trust I throughout the five-year period beginning in December 2010 and ending in December 2015 from the risk of variability of those payments resulting from changes in the three-month LIBOR interest rate. Under the swap contract, beginning in December 2010, the Company pays a fixed interest rate of 5.38% and receives a variable interest rate of three-month LIBOR plus a margin of 1.55% on a total notional amount of $17.5 million, with quarterly settlements, which began in March 2011.

The Company applies hedge accounting to interest rate derivatives when qualified.  To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability and type of risk to be hedged, and how the effectiveness of the derivative will be assessed prospectively and retrospectively. To assess effectiveness, the Company compares the dollar-value of the change in the fair value of the derivative to the change in the fair value or cash flows of the hedged item. The extent to which a derivative has been, and is expected to continue to be, effective at offsetting changes in the fair value or cash flows of the hedged item must be assessed and documented at least quarterly. Any hedge ineffectiveness (i.e., the amount by which the gain or loss on the designated derivative instrument does not exactly offset the gain or loss on the hedged item attributable to the hedged risk) must be reported in current-period earnings. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued.

At the end of the second quarter of 2011, the Company entered into an interest rate cap with a notional amount of $15.0 million with the objective of mitigating the effect of potential future interest rate increases.  The interest rate cap contract is not designated nor accounted for as a hedging instrument.  The interest rate cap contract was effective July 1, 2011 for a five-year term. Under the interest rate cap contract, beginning October 3, 2011 and ending July 1, 2016, the Company will receive quarterly settlements for the difference between the three-month LIBOR interest rate and the cap rate of 2.0%, if the three-month LIBOR interest rate exceeds the cap rate on the settlement date.

The Company obtains dealer quotations to value its interest rate derivative contract designated as a hedge of cash flows and its non-hedging interest rate derivative.  The notional amounts and estimated fair values of interest rate derivative contracts outstanding at March 31, 2013 and December 31, 2012 are presented in the following table (in thousands).

	March 31, 2013					December 31, 2012
	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
Interest rate derivative contract designated as a hedge of cash flows	$	17,500	$	(1,624	)	$	17,500	$	(1,775	)
Interest rate derivative contract not designated as a hedge of cash flows	$	15,000	$	49		$	15,000	$	41

Gains, Losses and Derivative Cash Flows.   For cash flow hedges, the effective portion of the gain or loss due to changes in the fair value of the derivative hedging instrument is included in other comprehensive income, while the ineffective portion (indicated by the excess of the cumulative change in the fair value of the derivative over that which is necessary to offset the cumulative change in expected future cash flows on the hedge transaction) is included in other non-interest income or other non-interest expense. Net cash flows from the interest rate swap on junior subordinated debentures designated as a hedging instrument in an effective hedge of cash flows are included in interest expense on junior subordinated debentures.

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Amounts included in the condensed consolidated statements of income and in other comprehensive income for the period related to interest rate derivatives designated as hedges of cash flows were as follows:

	Gains recorded in income and other comprehensive income, net of tax (in thousands)
	Derivatives – effective portion reclassified from AOCI into income		Hedge ineffectiveness recorded directly in income		Total income statement impact		Derivatives – effective portion recorded in OCI		Total change in OCI for period
Three months ended March 31, 2013
Interest rate swap	$	—	$	—	$	—	$	96	$	96
Three months ended March 31, 2012
Interest rate swap	$	—	$	—	$	—	$	43	$	43

Amounts included in the consolidated statements of operations for the period related to non-hedging interest rate derivatives for the year ended March 31, 2013 and 2012 were as follows (in thousands).

	Three Months Ended March 31,
	2013		2012
Non-hedging interest rate derivative:
Other non-interest income	$	7	$	(34)

Counterparty Credit Risk. Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Derivative contracts are executed with a Credit Support Annex, or CSA, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels. These agreements protect the interests of the Company and its counterparties, should either party suffer a credit rating deterioration. Institutional counterparties must have an investment grade credit rating. The Company’s credit exposure on interest rate swaps is limited to the net favorable value and interest payments of all swaps by each counterparty. Credit exposure may be reduced by the amount of collateral pledged by the counterparty. There are no credit-risk-related contingent features associated with any of the Company’s derivative contracts.  The Company had no credit exposure relating to the interest rate swap at March 31, 2013.  The amount of cash collateral posted by the Company related to derivative contracts was $2.3 million at March 31, 2013.

10.     OPERATING SEGMENT INFORMATION

The Company operates two community banks in distinct geographical areas, and manages its operations and prepares management reports and other information with a primary focus on these geographical areas.  Performance assessment and resource allocation are based upon this geographical structure.  The operating segment identified as “Other” includes the parent company and eliminations of transactions between segments. The accounting policies of the individual operating segments are the same as those of the Company as described in Note 1. Transactions between operating segments are primarily conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations.  Operating segments pay for centrally provided services based upon estimated or actual usage of those services.

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The following is a summary of selected operating segment information as of and for the three months ended March 31, 2013 and 2012:

	For the Three Months Ended March 31, 2013											For the Three Months Ended March 31, 2012
	MetroBank			Metro United		Other			Consolidated Company			MetroBank		Metro United		Other			Consolidated Company
	(Dollars in thousands)
Total interest income	$	10,849		$	4,166	$	2		$	15,017		$	12,410	$	3,981	$	7		$	16,398
Total interest expense		1,309			574		312			2,195			1,737		669		348			2,754
Net interest income		9,540			3,592		(310	)		12,822			10,673		3,312		(341	)		13,644
(Reduction in) provision for loan losses		(450	)		─		─			(450	)		400		─		─			400
Net interest income after provision for loan losses		9,990			3,592		(310	)		13,272			10,273		3,312		(341	)		13,244
Noninterest income		1,905			106		(361	)		1,650			2,057		84		(338	)		1,803
Noninterest expenses		7,418			2,411		473			10,302			8,513		2,391		29			10,933
Income (loss) before income tax provision		4,477			1,287		(1,144	)		4,620			3,817		1,005		(708	)		4,114
Provision (benefit) for income taxes		1,435			548		(390	)		1,593			1,160		423		(237	)		1,346
Net income (loss)	$	3,042		$	739	$	(754	)	$	3,027		$	2,657	$	582	$	(471	)	$	2,768

	As of March 31, 2013									As of March 31, 2012
	MetroBank		Metro United		Other			Consolidated Company		MetroBank		Metro United		Other			Consolidated Company
	(Dollars in thousands)
Net loans	$	767,618	$	334,266	$	─		$	1,101,884	$	724,511	$	293,972	$	─		$	1,018,483
Total assets		1,146,420		440,418		398			1,587,236		1,106,658		395,975		(1,626	)		1,501,007
Deposits		964,232		370,574		(6,754	)		1,328,052		933,396		333,992		(10,561	)		1,256,827

11.     FAIR VALUE

Fair value is the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value is reported based on a hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The three levels of inputs that may be used to measure fair value are:

· Level 1 – Quoted prices in active markets for identical assets or liabilities.

· Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

· Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.  Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Financial assets measured at fair value on a recurring basis are as follows:

Securities. Where quoted prices are available in an active market, securities are reported at fair value utilizing Level 1 inputs. Level 1 securities are comprised of bond funds. If quoted market prices are not available, the Company obtains fair values from an independent pricing service. The fair value measurements consider data that may include proprietary pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities are comprised of highly liquid government bonds, and collateralized mortgage and debt obligations. Market values provided by the pricing service are compared to prices from other sources for reasonableness. The Company has not adjusted the values from the pricing service.

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Interest Rate Derivatives. The Company’s derivative positions are classified within Level 2 in the fair value hierarchy and is valued using models generally accepted in the financial services industry that use actively quoted or observable market input values from external market data providers and/or non-binding broker-dealer quotations. The fair value of the derivatives aredetermined using discounted cash flow models. These models’ key assumptions include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, yield curves, non-performance risk and volatility. Derivative contracts are executed with a Credit Support Annex, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels. These agreements protect the interests of the Company and its counterparties, should either party suffer a credit rating deterioration.

The following table presents the financial instruments carried at fair value on a recurring basis by caption on the consolidated balance sheets and by valuation hierarchy (as described above) at March 31, 2013 and December 31, 2012:

	Fair Value Measurements, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Fair Value Measurements
Securities available-for-sale at March 31, 2013
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	—	$	81,419		$	—	$	81,419
Obligations of state and political subdivisions		—		14,995			—		14,995
Corporate		—		6,339			—		6,339
Mortgage-backed securities and collateralized mortgage obligations:							—
Government issued or guaranteed		—		62,732			—		62,732
Privately issued residential		—		695			—		695
Asset backed securities		—		157			—		157
Investment in CRA funds		14,335		—			—		14,335
Total available-for-sale securities		14,335		166,337			—		180,672
Derivative assets
Interest rate cap		—		49			—		49
Total assets measured at fair value on a recurring basis	$	14,335	$	166,386		$	—	$	180,721
Derivative liabilities at March 31, 2013
Interest rate swap	$	—	$	(1,624	)	$	—	$	(1,624	)
Securities available-for-sale at December 31, 2012
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	—	$	71,181		$	—	$	71,181
Obligations of state and political subdivisions		—		13,389			—		13,389
Corporate		—		6,350			—		6,350
Mortgage-backed securities and collateralized mortgage obligations:							—
Government issued or guaranteed		—		57,941			—		57,941
Privately issued residential		—		683			—		683
Asset backed securities		—		143			—		143
Investment in CRA funds		14,361		—			—		14,361
Total available-for-sale securities		14,361		149,687			—		164,048
Derivative assets
Interest rate cap		—		41			—		41
Total assets measured at fair value on a recurring basis	$	14,361	$	149,728		$	—	$	164,089
Derivative liabilities at December 31, 2012
Interest rate swap	$	—	$	(1,775)		$	—	$	(1,775)

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Certain non-financial assets measured at fair value on a non-recurring basis include non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets measured at fair value for impairment assessment, as well as foreclosed assets.  Certain financial assets are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Non-financial and financial assets measured at fair value on a non-recurring basis include the following:

Goodwill. Goodwill is measured at fair value on a non-recurring basis using Level 3 inputs.   In the first step of a goodwill impairment test, the Company primarily uses a review of the valuation of recent guideline bank acquisitions, if available, as well as discounted cash flow analysis and the market capitalization of the Company.   If the second step of a goodwill impairment test is required, the implied fair value of goodwill is determined in the same manner as goodwill is recognized in a business combination.  See Note 4 “Goodwill” for additional information.

Foreclosed Assets.  Foreclosed assets are carried at fair value less costs to sell.  The fair value measurements of foreclosed assets can include Level 2 measurement inputs such as real estate appraisals and comparable real estate sales information, in conjunction with Level 3 measurement inputs such as cash flow projections, qualitative adjustments, sales cost estimates, etc.  As a result, the categorization of foreclosed assets is Level 3 of the fair value hierarchy.  In connection with the measurement and initial recognition of certain foreclosed assets, the Company may recognize charge-offs through the allowance for loan losses.

  Impaired Loans. Certain impaired loans with a valuation reserve are measured for impairment using the practical expedient, whereby fair value of the loan is based on the fair value of the loan’s collateral, provided the loan is collateral dependent. The fair value measurements of loan collateral can include real estate appraisals, comparable real estate sales information, cash flow projections, realization estimates, etc., all of which can include observable and unobservable inputs. As a result, the categorization of impaired loans can be either Level 2 or Level 3 of the fair value hierarchy, depending on the nature of the inputs used for measuring the related collateral’s fair value. As of March 31, 2013 and December 31, 2012, certain impaired loans were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral.

The following presents assets carried at fair value on a nonrecurring basis by caption on the condensed consolidated balance sheets and by valuation hierarchy (as described above) as of March 31, 2013 and December 13, 2012 (in thousands):

	As of March 31, 2013
	Level 2		Level 3
Assets
Goodwill	$	—	$	14,327
Foreclosed assets		—		12,152
Impaired loans (1)		3,728		—

	As of December 31, 2012
	Level 2		Level 3
Assets
Goodwill	$	—	$	14,327
Foreclosed assets		—		12,555
Impaired loans (1)		4,646		—

(1) Impaired loans represent collateral dependent impaired loans with a specific valuation allowance.

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The following presents losses related to fair value adjustments that are included in the Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 related to assets held at those dates (in thousands):

	Three Months Ended March 31,
	2013		2012
Losses related to:
Goodwill	$	—	$	—
Foreclosed assets (1)		64		77
Impaired loans (2)		—		—

(1) Losses represent related losses on foreclosed properties that were written down subsequent to their initial classification as foreclosed properties.

(2) Losses on impaired loans represent charge-offs which are netted against the allowance for loan losses.

              FASB ASC Topic 825 requires disclosure of the fair value of financial assets and liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

       The estimated fair values of financial instruments that are reported at amortized cost in the Company’s Consolidated Balance Sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows:

	As of March 31, 2013				As of December 31, 2012
	Carrying or Contract Amount		Estimated Fair Value		Carrying or Contract Amount		Estimated Fair Value
	(In thousands)
Financial Assets
Level 2 inputs:
Cash and cash equivalents	$	188,295	$	188,295	$	159,449	$	159,449
Interest-bearing time deposits in banks		15,354		15,354		15,321		15,321
Investment securities held-to-maturity		4,046		4,670		4,046		4,757
Other investments		5,413		5,413		5,592		5,592
Cash value of bank owned life insurance		33,120		33,120		32,794		32,794
Accrued interest receivable		3,680		3,680		4,120		4,120
Level 3 inputs:
Loans held-for-investment, net		1,101,884		1,091,892		1,075,745		1,062,432
Financial Liabilities
Level 2 inputs:
Deposit transaction accounts		810,247		810,247		808,377		808,377
Junior subordinated debentures		36,083		36,083		36,083		36,083
Accrued interest payable		274		274		233		233
Level 3 inputs:
Time deposits		517,804		520,982		458,653		461,672
Other borrowings		30,000		29,976		25,000		25,008
Off-balance sheet financial instruments
Unfunded loan commitments, including unfunded lines of credit		—		226		—		251
Standby letters of credit		—		13		—		24

The following methodologies and assumptions were used to estimate the fair value of the Company’s financial instruments as disclosed in the table:

Assets for Which Fair Value Approximates Carrying Value. The fair values of certain financial assets and liabilities carried at cost, including cash and due from banks, deposits with banks, federal funds sold, cash value of bank owned life insurance, certificates of deposit with banks denominated in a foreign currency, other investments, due from customers on acceptances and accrued interest receivable, are considered to approximate their respective carrying values due to their short-term nature and/or negligible credit risks.

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Investment Securities.Fair values are based primarily upon quoted market prices obtained from an independent pricing service.

Loans.The fair value of loans originated by the Banks is estimated by discounting the expected future cash flows using the current interest rates at which similar loans with similar terms would be made. The presence of floors on a large portion of the variable rate loans has supported the yields above current market levels and is the key factor causing the fair value of the variable rate loans with floors to exceed the book value. The fair value of the remainder of the variable rate loans approximates the carrying value while fixed rate loans are generally above the carrying values. Using these results, valuation adjustments are made for specific credit risks as well as general portfolio credit and market risks to arrive at the fair value. The valuation methods described above are not based on the exit price concept of fair value.

Liabilities for Which Fair Value Approximates Carrying Value.The estimated fair value for transactional deposit liabilities with no stated maturity (i.e., demand, savings, and money market deposits) approximates the carrying value. The estimated fair value of deposits does not take into account the value of the Company’s long-term relationships with depositors, commonly known as core deposit intangibles, which are separate intangible assets, and not considered financial instruments. Nonetheless, the Company would likely realize a core deposit premium if its deposit portfolio were sold in the principal market for such deposits.

The fair value of acceptances outstanding, accounts payable and accrued liabilities are considered to approximate their respective carrying values due to their short-term nature.

Time Deposits.Fair values for fixed-rate time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on time deposits to a schedule of aggregated expected monthly maturities on time deposits.

Other Borrowings.The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other borrowings maturing within fourteen days approximate their fair values. Fair values of other borrowings are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Junior Subordinated Debentures.The fair value of the junior subordinated debentures approximates the carrying value as the debentures reprice quarterly.

Commitments to Extend Credit and Letters of Credit.The fair value of such instruments is estimated using the unamortized portion of fees collected for execution of such credit facility.

12.     INCOME TAXES

The Company’s effective tax rate was 34.5% for three months ended March 31, 2013 compared with 32.7% for the three months ended March 31, 2012. The increase in the effective income tax rate in 2013 as compared to 2012 was partially the result of state income taxes, bank owned life insurance investment income and foreign taxes. Additionally, the effective income tax rates for the three months ended March 31, 2013 and 2012 were impacted by the amount of other non-deductible expense and non-taxable income in each respective period, and also relative to the pre-tax accounting income/loss upon which the effective income tax rate was calculated. The Texas state tax is based on the Company’s gross margin with limited deductions. Because the Texas state tax allows only limited deductions the tax may not correlate, from year to year, with pre-tax income. The California state tax is based on the unitary income of the consolidated group which can vary disproportionately from pre-tax income depending on the apportionment of income among members of the unitary group.

As of March 31, 2013, the Company had approximately $12.7 million in deferred tax assets. Deferred tax assets are subject to an evaluation of whether it is more likely than not that they will be realized. The Company has not provided a valuation allowance for the deferred tax assets at March 31, 2013 and  December 31, 2012 due primarily to its ability to offset reversals of net deductible temporary differences against income taxes paid in previous years and expected to be paid in future years. In making such judgments, significant weight is given to evidence that can be objectively verified. Because of historical losses that were recorded by the Company for the years ended December 31, 2010 and 2009, and if the Company is unable to generate sufficient taxable income in the future, then the Company may not be able to conclude it is more likely than not that the benefits of the deferred tax assets will be fully realized and may be required to recognize a valuation allowance and a corresponding income tax expense equal to the portion of the deferred tax asset that may not be realized.

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The U.S. Federal and California State net operating loss carryforward period of 20 years provides sufficient time to utilize the deferred tax assets pertaining to the existing net operating loss carryforwards and any net operating losses that would be created by the reversal of the future net deductions which have not yet been taken.

13.     NEW AUTHORITATIVE ACCOUNTING GUIDANCE

Accounting Standards Update (“ASU”) ASU No. 2013-02–“Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”.  ASU No. 2013-02 does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts ASU No. 2013-02 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2013-01 – “Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”.  ASU No. 2013-01 addresses implementation issues about the scope of ASU No. 2011-11 “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” and clarifies that ASU No. 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement . ASU No. 2013-01 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2012-06 – “Business Combinations (Topic 805) -  Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution”.  ASU No. 2012-06 states that when a reporting entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs, the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets).  ASU No. 2012-06 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2012-04 – “Technical Corrections and Improvements”.  The amendments in ASU No. 2012-04 represent changes to clarify the FASB Accounting Standards Codification (“Codification”), correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.  The amendments are categorized as (1) source literature amendments (2) guidance clarification and reference corrections and (3) relocated guidance.  Additionally, the amendments are intended to make the Codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarifications.  The amendments in ASU No. 2012-04 that do not have transition guidance were effective October 1, 2012. The amendments that are subject to the transition guidance were effective for fiscal periods beginning on January 1, 2013. ASU No. 2012-04 did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2012-02 "Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment".  ASU No. 2012-02 gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU No. 2011-08. ASU No. 2012-02 was effective for the Company beginning January 1, 2013 and did not have a significant impact on the Company's financial condition, results of operations or cash flows.

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ASU No. 2011-11, "Balance Sheet (Topic 210) - "Disclosures about Offsetting Assets and Liabilities".  ASU No. 2011-11 amends Topic 210, "Balance Sheet," to require an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject to a master netting arrangement or similar agreement. ASU No. 2011-11 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Special Cautionary Notice Regarding Forward-looking Statements

Statements and financial discussion and analysis contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and is including this statement for purposes of invoking these safe harbor provisions. These forward-looking statements include information about possible or assumed future results of the Company’s operations or performance. Words such as “believe”, “expect”, “anticipate”, “estimate”, “continue”, “intend”, “may”, “will”, “should”, the negatives of such words or similar expressions, identify these forward-looking statements. Many possible factors or events could affect the future financial results and performance of the Company and could cause those financial results or performance to differ materially from those expressed in the forward-looking statement. These possible events or factors include, without limitation:

• changes in the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on the Company's loan portfolio and allowance for loan losses;

• changes in interest rates and market prices, which could reduce the Company’s net interest margins, asset valuations and expense expectations;

• changes in the levels of loan prepayments and the resulting effects on the value of the Company’s loan portfolio;

• changes in local economic and business conditions which adversely affect the ability of the Company’s customers to transact profitable business with the Company, including the ability of borrowers to repay their loans according to their terms or a change in the value of the related collateral;

• increased competition for deposits and loans adversely affecting rates and terms;

• the concentration of the Company’s loan portfolio in loans collateralized by real estate;

• the Company’s ability to raise additional capital;

• the effect of MetroBank’s compliance, or failure to comply within stated deadlines, of the provisions of the Agreement with the OCC;

• the Company’s ability to identify suitable acquisition candidates;

• the timing, impact and other uncertainties of the Company’s ability to enter new markets successfully and capitalize on growth opportunities;

• increased credit risk in the Company’s assets and increased operating risk caused by a material change in commercial, consumer and/or real estate loans as a percentage of the total loan portfolio;

• incorrect assumptions underlying the establishment of and provisions made to the allowance for loan losses;

• increases in the level of nonperforming assets;

• the incurrence and possible impairment of goodwill associated with an acquisition and possible adverse short-term effects on the results of operations;

• changes in the availability of funds resulting in increased costs or reduced liquidity;

• an inability to fully realize the Company’s net deferred tax asset;

• a deterioration or downgrade in the credit quality and credit agency ratings of the securities in the Company’s securities portfolio;

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• increased asset levels and changes in the composition of assets and the resulting impact on our capital levels and regulatory capital ratios;

• potential environmental risk and associated cost on the Company's foreclosed real estate assets;

• the Company’s ability to acquire, operate and maintain cost effective and efficient systems without incurring unexpectedly difficult or expensive but necessary technological changes;

• increases in FDIC deposit insurance assessments;

• government intervention in the U.S. financial system;

• the loss of senior management or operating personnel and the potential inability to hire qualified personnel at reasonable compensation levels;

• changes in statutes and government regulations or their interpretations applicable to bank holding companies and our present and future banking and other subsidiaries, including changes in tax requirements and tax rates;

• the potential payment of interest on demand deposit accounts in order to effectively compete for clients;

• adverse conditions in Asia;

• potential interruptions or breaches in security of the Company’s information systems; and

• possible noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statues and regulations.

All written or oral forward-looking statements attributable to the Company are expressly qualified in their entirety by these cautionary statements. The Company undertakes no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company analyzes the major elements of the Company’s balance sheets and statements of income. This section should be read in conjunction with the Company’s Unaudited Condensed Consolidated Financial Statements and accompanying notes and other detailed information appearing elsewhere in this document.       

Overview

The Company recorded net income of $3.0 million for the three months ended March 31, 2013, compared with $2.8 million for the same quarter in 2012. The Company’s diluted earnings per common share for the three months ended March 31, 2013 were $0.16 (based on 18.7 million diluted shares), compared with $0.16 (based on 13.3 million diluted shares) for the same quarter in 2012. Diluted earnings per share is computed by dividing net income (after deducting dividends on preferred stock) by the weighted-average number of common shares and potentially dilutive common shares outstanding at the end of the period.

Total assets were $1.59 billion at March 31, 2013, an increase of $67.4 million or 4.4% from $1.52 billion at December 31, 2012. Available-for-sale investment securities at March 31, 2013 were $180.7 million, an increase of $16.6 million or 10.1% from $164.0 million at December 31, 2012. Net loans at March 31, 2013 were $1.10 billion, an increase of $26.1 million or 2.4% from $1.08 billion at December 31, 2012. Total deposits at March 31, 2013 were $1.33 billion, an increase of $61.0 million or 4.8% from $1.27 billion at December 31, 2012. Other borrowings at March 31, 2013 were $30.0 million, an increase of $5.0 million or 20.0% from $25.0 million at December 31, 2012. The Company’s return on average assets (“ROAA”) for the three months ended March 31, 2013 and 2012 was 0.80% and 0.75%, respectively. The Company’s return on average equity (“ROAE”) for the three months ended March 31, 2013 and 2012 was 6.88% and 6.67%, respectively.  Shareholders’ equity at March 31, 2013 was $179.5 million compared to $177.0 million at December 31, 2012, an increase of $2.5 million or 1.4%.  Details of the changes in the various components of net income are further discussed below.

Results of Operations

Net Interest Income and Net Interest Margin. For the three months ended March 31, 2013, net interest income, before the provision for loan losses, was $12.8 million, a decrease of $822,000 or 6.0% compared with $13.6 million for the same period in 2012. The decrease was due primarily to a decline in the yield on average total loans, partially offset by lower cost of deposits.  Average interest-earning assets for the three months ended March 31, 2013 were $1.44 billion, an increase of $44.5 million or 3.2% compared with $1.40 billion for the same period in 2012. The weighted average yield on interest-earning assets for the first quarter of 2013 was 4.23%, a decrease of 50 basis points compared with 4.73% for the same quarter in 2012. Average interest-bearing liabilities for the three months ended March 31, 2013 were $1.04 billion, a decrease of $23.6 million or 2.2% compared with $1.06 billion for the same period in 2012. The weighted average interest rate paid on interest-bearing liabilities for the first quarter 2013 was 0.86%, a decrease of 18 basis points compared with 1.04% for the same quarter in 2012.  The average interest rate decreased primarily as higher cost time deposits matured and were replaced with lower cost deposits. Additionally, market rates paid on savings and money market accounts declined.

The net interest margin for the three months ended March 31, 2013 was 3.61%, a decrease of 32 basis points compared with 3.93% for the same period in 2012. The decrease was primarily the result of lower yields on loans and a lower volume of taxable securities, partially offset by lower rates paid on deposits.

Total Interest Income. Total interest income for the three months ended March 31, 2013 was $15.0 million, a decrease of $1.4 million or 8.4% compared with $16.4 million for the same period in 2012. The decrease was primarily due to lower yield on loans and securities, partially offset by an increase in the volume of loans.

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Interest Income from Loans. Interest income from loans for the three months ended March 31, 2013 was $13.8 million, a decrease of $1.2 million or 7.8% compared with $15.0 million for the same quarter in 2012. The decrease was the result of lower loan yield compared with the same quarter in 2012.   Average total loans for the three months ended March 31, 2013 were $1.10 billion compared to $1.05 billion for the same period in 2012, an increase of approximately $46.7 million or 4.5%. For the first quarter of 2013, the average yield on loans was 5.12% compared to 5.75% for the same quarter in 2012, a decrease of 63 basis points.

Approximately $750.7 million or 66.6% of the total loan portfolio are variable rate loans that periodically reprice and are sensitive to changes in market interest rates.  To lessen interest rate sensitivity in the event of a falling interest rate environment, the Company originates variable rate loans with interest rate floors.  At March 31, 2013, approximately $601.3 million in loans or 53.3% of the total loan portfolio were variable rate loans with interest rate floors that carried a weighted average interest rate of 5.46%.  For the three months ended March 31, 2013, the average yield on total loans was approximately 187 basis points above the prime rate.    At March 31, 2012, variable rate loans with interest rate floors comprised 59.3% of the total loan portfolio and carried a weighted average interest rate of 6.00%.

Interest Income from Investments. Interest income from investments (which includes investment securities, federal funds sold and other investments) for the three months ended March 31, 2013 was $1.2 million, a decrease of $211,000 or 15.1% compared to $1.4 million for the same period in 2012.  The decrease was primarily the result of a decrease in the volume of average taxable securities, lower reinvestment rates on taxable securities and a redeployment of funds to federal funds sold and other short-term investments. Average total investments for the three months ended March 31, 2013 were $344.5 million compared to average total investments for the same period in 2012 of $346.6 million, a decrease of approximately $2.1 million or 0.6%.  The decrease in average total investments was primarily due to the redeployment of funds as a result of greater loan volume.  For the first quarter of 2013, the average yield on total investments was 1.39% compared to 1.62% for the same quarter in 2012, a decrease of 23 basis points.

Total Interest Expense. Total interest expense for the three months ended March 31, 2013 was $2.2 million, a decrease of $559,000 or 20.3% compared to $2.8 million for the same period in 2012. The decrease primarily reflected lower costs on deposits.

Interest Expense on Deposits. Interest expense on interest-bearing deposits for the three months ended March 31, 2013 was $1.6 million, a decrease of $525,000 or 24.2% compared to $2.2 million for the same period in 2012. Average interest-bearing deposits for the three months ended March 31, 2013 were $974.5 million compared to average interest-bearing deposits for the same period in 2012 of $1.00 billion, a decrease of $26.4 million or 2.6%.  The average interest rate paid on interest-bearing deposits for the first quarter of 2013 was 0.68% compared to 0.87% for the same quarter in 2012, a decrease of 19 basis points. The decline in interest expense was primarily due to lower volume and cost of interest-bearing deposits and the replacement of higher cost time deposits with lower cost deposits as they matured.

Interest Expense on Junior Subordinated Debentures and Other Borrowings. Interest expense on junior subordinated debentures for the three months ended March 31, 2013 was $316,000, a decrease of $20,000 compared to $336,000 for the same period in 2012. The average interest rate paid on junior subordinated debentures for the first quarter of 2013 was 3.50% compared to 3.68% for the same quarter in 2012.  Average junior subordinated debentures for the three months ended March 31, 2013 and 2012 were $36.1 million.

Interest expense on other borrowings for the three months ended March 31, 2013 was $233,000, a decrease of $14,000 compared to $247,000 for the same period in 2012. Average borrowed funds for the three months ended March 31, 2013 was $28.8 million, an increase of $2.8 million or 10.9% compared to $26.0 million for the same period in 2012, primarily due to FHLB San Francisco advances.  The average interest rate paid on borrowed funds for the first quarter of 2013 was 3.28% compared to 3.82% for the same quarter in 2012. The cost decreased due primarily to the lower market rates on FHLB advances.

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The following table presents, for each major category of interest-earning assets and interest-bearing liabilities, the total dollar amount of interest income from average interest-earning assets and the resultant yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates for the periods indicated. No tax-equivalent adjustments were made and all average balances are daily average balances. Nonaccruing loans have been included in the table as loans having a zero yield, with income, if any, recognized at the end of the loan term.

	For The Three Months Ended March 31,
	2013								2012
	Average			Interest		Average			Average			Interest		Average
	Outstanding			Earned/		Yield/			Outstanding			Earned/		Yield/
	Balance			Paid		Rate(1)			Balance			Paid		Rate(1)
	(Dollars in thousands)
Assets
Interest-earning assets:
Loans	$	1,095,386		$	13,829		5.12	%	$	1,048,717		$	14,999		5.75	%
Taxable securities		149,913			791		2.14			172,909			1,027		2.39
Tax-exempt securities		17,111			147		3.48			11,622			117		4.05
Other investments (2)		5,580			50		3.63			6,464			43		2.68
Federal funds sold and other short-term investments		171,880			200		0.47			155,617			212		0.55
Total interest-earning assets		1,439,870			15,017		4.23			1,395,329			16,398		4.73
Allowance for loan losses		(24,262	)							(28,707	)
Total interest-earning assets, net of allowance for loan losses		1,415,608								1,366,622
Noninterest-earning assets		121,471								126,791
Total assets	$	1,537,079							$	1,493,413
Liabilities and shareholders' equity
Interest-bearing liabilities:
Interest-bearing demand deposits	$	70,776		$	21		0.12	%	$	63,839		$	21		0.13	%
Savings and money market accounts		412,248			406		0.40			438,445			614		0.56
Time deposits		491,428			1,219		1.01			498,564			1,536		1.24
Junior subordinated debentures		36,083			316		3.50			36,083			336		3.68
Other borrowings		28,833			233		3.28			26,007			247		3.82
Total interest-bearing liabilities		1,039,368			2,195		0.86			1,062,938			2,754		1.04
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits		306,101								247,030
Other liabilities		13,087								16,416
Total liabilities		1,358,556								1,326,384
Shareholders' equity		178,523								167,029
Total liabilities and shareholders' equity	$	1,537,079							$	1,493,413
Net interest income				$	12,822							$	13,644
Net interest spread							3.37	%							3.68	%
Net interest margin							3.61	%							3.93	%

(1)	Annualized.
(2)	Other investments include Federal Reserve Bank stock, Federal Home Loan Bank stock and investment in subsidiary trust.

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The following table presents the dollar amount of changes in interest income and interest expense for the major components of interest-earning assets and interest-bearing liabilities and distinguishes between changes in outstanding balances and changes in interest rates for the three months ended March 31, 2013 compared with the three months ended March 31, 2012. For purposes of this table, changes attributable to both rate and volume have been allocated to each accordingly.

	Three Months Ended March 31,
	2013 vs 2012
	Increase (Decrease)
	Due to
	Volume			Rate			Total
	(Dollars in thousands)
Interest-earning assets:
Loans	$	538		$	(1,708	)	$	(1,170	)
Taxable securities		(144	)		(92	)		(236	)
Tax-exempt securities		54			(24	)		30
Other investments		(6	)		13			7
Federal funds sold and other short-term investments		20			(32	)		(12	)
Total decrease in interest income		462			(1,843	)		(1,381	)
Interest-bearing liabilities:
Interest-bearing demand deposits		2			(2	)		—
Savings and money market accounts		(41	)		(167	)		(208	)
Time deposits		(35	)		(282	)		(317	)
Junior subordinated debentures		(8	)		(12	)		(20	)
Other borrowings		25			(39	)		(14	)
Total decrease in interest expense		(57	)		(502	)		(559	)
(Decrease) increase in net interest income	$	519		$	(1,341	)	$	(822	)

Provision for Loan Losses. Provisions for loan losses are charged to income to bring the Company’s allowance for loan losses to a level which management considers adequate to absorb probable losses inherent in the loan portfolio. The (reduction in ) provision for loan losses for the three months ended March 31, 2013 was a reversal of ($450,000), a decrease of $850,000 compared with a provision of $400,000 for the same period in 2012, primarily as a result of a reduction in nonperforming and classified loans. The allowance for loan losses as a percent of total loans was 2.03%, 2.23% and 2.68% at March 31, 2013, December 31, 2012 and  March 31, 2012, respectively.

Noninterest Income.  Noninterest income for the three months ended March 31, 2013 was $1.7 million, a decrease of $153,000 or 8.5% compared with $1.8 million for the same period in 2012. The decrease for the three months ended March 31, 2013 was primarily due to a decline in service fees.

Noninterest Expense. Noninterest expense for the three months ended March 31, 2013 was $10.3 million, a decrease of $631,000 or 5.8% compared with $10.9 million for the same period in 2012.  The decrease was mainly the result of $974,000 in net gains on sales of ORE properties as well as a decline in ORE expenses, but partially offset by increases in other noninterest expense and salaries and employee benefits.

Salaries and employee benefits expense for the three months ended March 31, 2013 was $6.3 million, an increase of $371,000 or 6.3% compared with $5.9 million for the same period in 2012. The increase was primarily due to increased headcount and share-based compensation costs.

Other noninterest expense for the three months ended March 31, 2013 was $2.7 million, an increase of $816,000 or 42.4% compared to $1.9 million for the same period in 2012, primarily due to an increase in data processing expenses as a result of a core processing system conversion, and increases in the provision for unfunded commitments and in operational losses.

The Company’s efficiency ratio is calculated by dividing total noninterest expense, excluding loan loss provisions, goodwill impairment, provisions for unfunded commitments, writedowns on foreclosed assets and gains and losses on sales of foreclosed assets, by net interest income plus noninterest income, excluding impairment on securities and gains and losses on securities transactions. The efficiency ratio for the three months ended March 31, 2013 was 77.49%, an increase from 66.96% for the same quarter in 2012, primarily due to decreased net interest income combined with increases in other noninterest expense and salaries and employee benefits expense.

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Income Taxes. Income tax expense for the three months ended March 31, 2013 was $1.6 million, compared with $1.3 million for the same period in 2012. The Company’s effective tax rate was 34.5% for three months ended March 31, 2013 compared with 32.7% for the three months ended March 31, 2012. The increase in the effective income tax rate in 2013 as compared to 2012 was partially the result of state income taxes, bank owned life insurance investment income and foreign taxes. Additionally, the effective income tax rates for the three months ended March 31, 2013 and 2012 were impacted by the amount of other non-deductible expense and non-taxable income in each respective period, and also relative to the pre-tax accounting income/loss upon which the effective income tax rate was calculated. The Texas state tax is based on the Company’s gross margin with limited deductions. Because the Texas state tax allows only limited deductions the tax may not correlate, from year to year, with pre-tax income. The California state tax is based on the unitary income of the consolidated group which can vary disproportionately from pre-tax income depending on the apportionment of income among members of the unitary group.

As of March 31, 2013, the Company had approximately $12.7 million in deferred tax assets compared with $13.1 million at December 31, 2012 and $14.8 million at March 31, 2012. Deferred tax assets are subject to an evaluation of whether it is more likely than not that they will be realized. The Company has not provided a valuation allowance for the deferred tax assets at March 31, 2013 and  December 31, 2012 due primarily to its ability to offset reversals of net deductible temporary differences against income taxes paid in previous years and expected to be paid in future years. In making such judgments, significant weight is given to evidence that can be objectively verified. Because of historical losses that were recorded by the Company for the years ended December 31, 2010 and 2009, and if the Company is unable to generate sufficient taxable income in the future, then the Company may not be able to conclude it is more likely than not that the benefits of the deferred tax assets will be fully realized and may be required to recognize a valuation allowance and a corresponding income tax expense equal to the portion of the deferred tax asset that may not be realized.

The U.S. Federal and California State net operating loss carryforward period of 20 years provides sufficient time to utilize the deferred tax assets pertaining to the existing net operating loss carryforwards and any net operating losses that would be created by the reversal of the future net deductions which have not yet been taken.

Financial Condition

Loan Portfolio. Total loans at March 31, 2013 were $1.12 billion, an increase of $24.4 million or 2.2% compared with $1.10 billion at December 31, 2012, mainly due to increases in real estate mortgage loans and commercial and industrial loans.  At March 31, 2013 and December 31, 2012, the ratio of total loans to total deposits was 84.69% and 86.84%, respectively. Total loans represented 70.9% and72.4% of total assets at March 31, 2013 and December 31, 2012, respectively.

The following table summarizes the loan portfolio by type of loan at the dates indicated:

	As of March 31, 2013						As of December 31, 2012
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Commercial and industrial	$	395,640			35.10	%	$	383,641			34.78	%
Real estate mortgage:
Residential		37,526			3.33			36,807			3.34
Commercial		677,061			60.07			665,244			60.32
		714,587			63.40			702,051			63.66
Real estate construction:
Residential		2,753			0.24			2,420			0.22
Commercial		7,379			0.66			7,284			0.66
		10,132			0.90			9,704			0.88
Consumer and other		6,808			0.60			7,531			0.68
Gross loans		1,127,167			100.00	%		1,102,927			100.00	%
Unearned discounts, interest and deferred fees		(2,451	)					(2,590	)
Total loans		1,124,716						1,100,337
Allowance for loan losses		(22,832	)					(24,592	)
Loans, net	$	1,101,884					$	1,075,745

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Nonperforming Assets. At March 31, 2013, total nonperforming assets consisted of $17.5 million in nonaccrual loans, $4.1 million in nonaccruing troubled debt restructurings (“TDRs”) and $12.2 million in other real estate (“ORE”). Total nonperforming assets at March 31, 2013 were $33.8 million compared with $41.5 million at December 31, 2012, a decrease of $7.8 million or 18.7%. The ratio of total nonperforming assets to total assets decreased to 2.13% at March 31, 2013 from 2.73% at December 31, 2012.

The $7.8 million decrease in total nonperforming assets consisted of declines of $6.1 million in nonaccrual loans, $916,000 in TDRs, $400,000 in accruing TDRs and a net reduction of $403,000 in ORE. In Texas, nonaccrual loans including nonaccrual TDRs decreased primarily due to a $6.7 million loan transfer to ORE and $1.0 million in charge-offs, but partially offset by the addition of three loans totaling approximately $878,000. The decrease in nonperforming assets in California primarily consisted of decreases of $354,000 in nonaccrual loans, $400,000 in accruing TDRs, $45,000 in nonaccrual TDRs and $340,000 in ORE.

ORE at March 31, 2013 decreased $403,000 compared with December 31, 2012, which included a net reduction of $64,000 in Texas and $340,000 in California.  The decrease in Texas was primarily the result of a $6.7 million loan transferred to ORE but was subsequently sold during first quarter 2013, and writedowns of two other properties.  The decrease in California was primarily the result of the sale of two properties.

The Company is occasionally involved in the sale of certain federally guaranteed loans into the secondary market with servicing retained. Under the terms of the Small Business Administration (“SBA”) program, the Company at its option may repurchase any loan that may become classified as nonperforming. Any repurchased loans may increase the Company’s nonperforming loans until the time at which the loan repurchased is either restored to an accrual status or the Company files a claim with the SBA for the guaranteed portion of the loan.  There were no sales of SBA loans for the three months ended March 31, 2013 or 2012.

The following table presents information regarding nonperforming assets as of the dates indicated:

	As of			As of
	March 31, 2013			December 31, 2012
	(Dollars in thousands)
Nonaccrual loans (1)	$	17,501		$	23,568
Accruing loans 90 days or more past due (1)		—			—
Troubled debt restructurings – accruing (1)		—			400
Troubled debt restructurings – nonaccruing (1)		4,098			5,014
Other real estate (“ORE”)		12,152			12,555
Total nonperforming assets		33,751			41,537
Total nonperforming assets to total assets		2.13	%		2.73	%
Total nonperforming assets to total loans and ORE		2.97	%		3.73	%

(1) Represents unpaid principal balance.

A loan is considered impaired, based on current information and events, if management believes that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. All amounts due according to the contractual terms means that both the contractual interest payments and the contractual principal payments of a loan will be collected as scheduled in the loan agreement. An insignificant delay or insignificant shortfall in the amount of payment does not require a loan to be considered impaired. If the measure of the impaired loan is less than the recorded investment in the loan, a specific reserve is established for the shortfall as a component of the Company’s allowance for loan loss methodology. The Company considers all nonaccrual loans to be impaired.

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Information on impaired loans, which includes nonaccrual loans and troubled debt restructurings, and the related specific allowance for loan losses on such loans at March 31, 2013 and December 31, 2012, is presented below (in thousands):

As of March 31, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no allowance
Commercial and industrial	$	579	$	579	$	—	$	4,394
Real estate mortgage:
Residential		142		142		—		188
Commercial		12,368		12,368		—		17,096
Real estate construction:
Residential		1,426		1,426		—		1,885
Commercial		3,104		3,104		—		3,132
Impaired loans with an allowance
Commercial and industrial	$	—	$	—	$	—	$	17
Real estate mortgage:
Commercial		3,979		3,980		252		4,530
Total:
Commercial and industrial	$	579	$	579	$	—	$	4,411
Real estate mortgage		16,489		16,490		252		21,814
Real estate construction		4,530		4,530		—		5,017

As of December 31, 2012	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no allowance
Commercial and industrial	$	1,287	$	1,289	$	—	$	5,162
Real estate mortgage:
Residential		239		239		—		213
Commercial		18,369		18,369		—		19,732
Real estate construction:
Residential		1,426		1,426		—		1,529
Commercial		3,103		3,103		—		3,171
Impaired loans with an allowance
Commercial and industrial		21		21		21		1,434
Real estate mortgage:
Commercial		4,533		4,535		503		6,836
Total:
Commercial and industrial	$	1,308	$	1,310	$	21	$	6,596
Real estate mortgage		23,141		23,143		503		26,781
Real estate construction		4,529		4,529		—		4,700

For the three months ended March 31, 2013 there was no interest income recognized on impaired loans.  For the three months ended March 31, 2012, interest income of $89,000 was recognized on impaired loans, which consisted of nonaccrual loans that were paid in full and accruing TDRs. 

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments. At March 31, 2013 and 2012, the allowance for loan losses was $22.8 million and $28.1 million, respectively, or 2.03% and 2.68% of total loans, respectively.  At December 31, 2012, the allowance for loan losses was $24.6 million, or 2.23% of total loans. Net charge-offs for the three months ended March 31, 2013 were $1.3 million or 0.12% of total loans compared with net charge-offs of $655,000 or 0.06% of total loans for the same period in 2012. The net charge-offs for the first quarter of 2013 primarily consisted of $921,000 in loans from Texas and $389,000 in loans from California.

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The allowance for loan losses provides for the risk of losses inherent in the lending process and the Company allocates the allowance for loan losses according to management’s assessments of risk inherent in the portfolio. The allowance for loan losses is increased by provisions charged against current earnings and is reduced by net charge-offs. Loans are charged off when they are deemed to be uncollectible in whole or in part. Recoveries are recorded when cash payments are received. In developing the assessment, the Company relies on estimates and exercises judgment regarding matters where the ultimate outcome is uncertain. Circumstances may change and future assessments of credit risk may yield materially different results, resulting in an increase or decrease in the allowance for credit losses.

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments and is maintained at levels that the Company believes are adequate to absorb probable losses inherent in the loan portfolio and unfunded lending commitments as of the date of the financial statements. The Company employs a systematic methodology for determining the allowance for credit losses that consists of four components: (1) a formula-based general reserve based on historical average losses by loan grade, (2) specific reserves on larger impaired individual credits that are based on the difference between the current loan balance and the loan’s collateral value, observable market price, or discounted present value, (3) a qualitative component that reflects current market conditions and other factors precedent to losses different from historical averages and (4) a reserve for unfunded lending commitments.

In setting the qualitative reserve portion of the allowance for loan losses, the factors the Company may consider include, but are not limited to, concentrations of credit, common characteristics of known problem loans, potential problem loans and other loans that exhibit weaknesses or deterioration, the general economic environment in the Company’s markets as well as the national economy, particularly the real estate markets, changes in value of the collateral securing loans, results of portfolio stress tests and changes in lending processes, procedures and personnel. After the aforementioned assessment of the loan portfolio, the general economic environment and other relevant factors, management determines the appropriate allowance for loan loss level and makes the provision necessary to achieve that level. This methodology is consistently followed so that the level of the allowance for loan losses is reevaluated in response to changes in circumstances, economic conditions or other factors on an ongoing basis.

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The Company maintains a reserve for unfunded commitments to provide for the risk of loss inherent in its unfunded lending related commitments. The process used in determining the reserve is consistent with the process used for the allowance for loan losses discussed above.

The following table presents an analysis of the allowance for credit losses and other related data for the periods indicated:

	As of and for the Three Months Ended March 31,
	2013			2012
	(Dollars in thousands)
Average total loans outstanding for the period	$	1,095,386		$	1,048,717
Total loans outstanding at end of period	$	1,124,716		$	1,046,549
Allowance for loan losses at beginning of period	$	24,592		$	28,321
(Reduction in) provision for loan losses		(450	)		400
Charge-offs:
Commercial and industrial		(884	)		(784	)
Real estate mortgage		(550	)		(340	)
Real estate construction		–			–
Consumer and other		(25	)		(42	)
Total charge-offs		(1,459	)		(1,166	)
Recoveries:
Commercial and industrial		90			118
Real estate mortgage		50			363
Real estate construction		5			19
Consumer and other		4			11
Total recoveries		149			511
Net charge-offs		(1,310	)		(655	)
Allowance for loan losses at end of period		22,832			28,066
Reserve for unfunded lending commitments at beginning of period		961			1,012
Provision (reversal) for unfunded lending commitments		(12	)		(212	)
Reserve for unfunded lending commitments at end of period		949			800
Allowance for credit losses	$	23,781		$	28,866
Ratio of allowance for loan losses to end of period total loans		2.03	%		2.68	%
Ratio of net (charge-offs) recoveries to average total loans		(0.12	)%		(0.06	)%
Ratio of allowance for loan losses to end of period total nonperforming loans (1)		105.71	%		67.18	%

(1) Total nonperforming loans are nonaccrual loans, accruing and nonaccruing TDRs, plus loans over 90 days past due.

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Securities. At March 31, 2013, the available-for-sale securities portfolio was $180.7 million, an increase of $16.6 million or 10.1% compared with $164.0 million at December 31, 2012. The increase was primarily due to purchases of U.S. government agency securities and U.S. government sponsored mortgage-backed securities. At March 31, 2013 and December 31, 2012, the held-to-maturity portfolio was $4.0 million.  The securities portfolio is primarily comprised of obligations of U.S. government sponsored enterprises, mortgage-backed securities and municipal securities. The securities portfolio has been funded primarily by the liquidity created from deposit growth and loan repayments in excess of loan funding requirements. Other investments, which include Federal Reserve Bank (“FRB”) and Federal Home Loan Bank (“FHLB”) stock, and the investment in subsidiary trust, were $5.4 million at March 31, 2013, a decrease of $179,000 or 3.2% compared with $5.6 million at December 31, 2012.

Deposits. At March 31, 2013, total deposits were $1.33 billion, an increase of $61.0 million or 4.8% compared with $1.27 billion at December 31, 2012, primarily due to an increase in interest-bearing accounts. The Company’s ratio of noninterest-bearing demand deposits to total deposits at March 31, 2013 and December 31, 2012 was 24.0% and 24.4%, respectively. Interest-bearing deposits at March 31, 2013 were $1.01 billion, an increase of $51.8 million or 4.8% compared with $957.3 million at December 31, 2012.

Junior Subordinated Debentures.  Junior subordinated debentures at March 31, 2013 and December 31, 2012 were $36.1 million. The debentures mature on December 15, 2035, but are redeemable at the Company’s option at par plus accrued and unpaid interest. The debentures, issued to the Company’s unconsolidated subsidiary trust MCBI Statutory Trust I, were used to fund the Company’s acquisition of Metro United. The junior subordinated debentures accrued interest at a fixed rate of 5.76% until December 15, 2010, at which time the debentures began accruing interest at a floating rate equal to the 3-month LIBOR plus 1.55%. Related to these debentures, the Company entered into a forward-starting interest rate swap contract during the third quarter of 2009. Under the swap, the Company pays a fixed interest rate of 5.38% and receives a variable interest rate of three-month LIBOR plus a margin of 1.55% on a total notional amount of $17.5 million, with quarterly settlements which began in March 2011.  See Note 10, “Derivative Financial Instruments,” to the Condensed Consolidated Financial Statements for additional information related to this interest rate swap.

Other Borrowings. Other borrowings at March 31, 2013 were $30.0 million, an increase of $5.0 million or 20.0% compared to other borrowings of $25.0 million at December 31, 2012.  Other borrowings at March 31, 2013 primarily include $5.0 million in advances from the FHLB of San Francisco and $25.0 million in security repurchase agreements.  The advances from the FHLB of San Francisco bear interest at an average rate of 0.91% and have maturities ranging from four years to five years. The security repurchase agreements bear an average rate of 3.71% and mature on December 31, 2014.  Securities sold under securities repurchase agreements are currently puttable by the counterparty at a fixed repurchase price at the end of each calendar quarter. In addition, securities under one repurchase agreement are puttable by either the counterparty or the Company at the replacement cost of the repurchase transaction at the end of each calendar year.

In February 2010, the Company issued an unsecured debenture to one of the Company's Co-Chairmen of the Board and an affiliate of one of the Company's 5.0% or more shareholders.  Each debenture was issued for a principal amount of $500,000.  The notes, as amended in February 2012 were to mature February 10, 2013 and bore interest on the principal amount at a fixed rate per annum equal to 5.0% due quarterly and began March 31, 2010; however, the promissory notes were repaid in the fourth quarter of 2012.

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The following table provides an analysis of the Company’s other borrowings as of the dates and for the periods indicated:

	As of and for the Three Months Ended March 31, 2013			As of and for the Year Ended December 31, 2012
	(Dollars in thousands)
FHLB Notes and Advances:
at end of period	$	5,000		$	—
average during the period		3,833			—
maximum month-end balance during the period		5,000			3
Interest rate at end of period		0.91	%		—	%
Interest rate during the period		0.89			0.02
Security Repurchase Agreements:
at end of period	$	25,000		$	25,000
average during the period		25,000			25,000
maximum month-end balance during the period		25,000			25,000
Interest rate at end of period		3.71	%		3.71	%
Interest rate during the period		3.71			3.71
Unsecured debentures:
at end of period	$	—		$	—
average during the period		—			926
maximum month-end balance during the period		—			1,000
Interest rate at end of period		—	%		5.00	%
Interest rate during the period		—			5.00
Federal Reserve TT&L:
at end of period	$	—		$	—
average during the period		—			2
maximum month-end balance during the period		—			—

Liquidity. The Company’s loan to deposit ratio at March 31, 2013 and December 31, 2012 was 84.69% and 86.84%, respectively. As of March 31, 2013, the Company had commitments to fund loans in the amount of $117.2 million. At this same date, the Company had stand-by letters of credit of $12.5 million.  Available sources to fund these commitments and other cash demands of the Company come from loan and investment securities repayments, deposit inflows and lines of credit from the FHLBs of Dallas and San Francisco as well as the FRB discount window. With its current level of collateral, the Company has the ability to borrow an additional $458.2 million from the FHLBs, $10.2 million from the FRB discount window and $5.0 million from other correspondent banks.

Capital Resources. Shareholders’ equity at March 31, 2013 was $179.5 million compared to $177.0 million at December 31, 2012, an increase of $2.5 million. The increase was primarily the result of net income for the three months ending March 31, 2013.

The Company’s Board of Directors elected to suspend its common stock dividend indefinitely in April 2009.  The payment of future dividends by the Company will be made at the discretion of the Company's Board of Directors.  Additionally, future determination of dividends will depend on a number of factors, including but not limited to current and prospective earnings, capital requirements, financial condition, and other factors that the Board of Directors may deem relevant to the Company and the Banks.

The Company paid no dividends on common stock for the three months ended March 31, 2013 and 2012.  There were no preferred dividends paid for the three months ended March 31, 2013 due to the repurchase of Troubled Asset Relief Program (“TARP”) preferred stock in 2012.  Preferred dividends paid for the three months ended March 31, 2012 were $563,000.

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The following table provides a comparison of the Company’s and each of the Bank’s leverage and risk-weighted capital ratios as of March 31, 2013 to the minimum and well-capitalized regulatory standards:

	Minimum Required For Capital Adequacy Purposes			To Be Categorized as Well Capitalized  Under Prompt Corrective Action Provisions			Actual Ratio At March 31, 2013
The Company
Leverage ratio		4.00	%(1)		N/A			13.09	%
Tier 1 risk-based capital ratio		4.00			N/A			16.48
Risk-based capital ratio		8.00			N/A			17.75
MetroBank
Leverage ratio		4.00	%(2)		5.00	%		13.04	%
Tier 1 risk-based capital ratio		4.00			6.00			16.50
Risk-based capital ratio		8.00			10.00			17.76
Metro United
Leverage ratio		4.00	%(3)		5.00	%		11.76	%
Tier 1 risk-based capital ratio		4.00			6.00			14.83
Risk-based capital ratio		8.00			10.00			16.10

(1)	The Federal Reserve Board may require the Company to maintain a leverage ratio above the required minimum.
(2)	The OCC may require MetroBank to maintain a leverage ratio above the required minimum.
(3)	The FDIC may require Metro United to maintain a leverage ratio above the required minimum.

Critical Accounting Estimates

The Company has established various accounting estimates which govern the application of accounting principles generally accepted in the United States in the preparation of the Company’s consolidated financial statements. Certain accounting estimates involve significant judgments and assumptions by management which have a material impact on the carrying value of certain assets and liabilities; management considers such accounting estimates to be critical accounting estimates. The judgments and assumptions used by management are based on historical experience and other factors, which are believed to be reasonable under the circumstances. Because of the nature of the judgments and assumptions made by management, actual results could differ from these judgments and estimates which could have a material impact on the carrying values of assets and liabilities and the results of operations of the Company.

Allowance for loan losses.  The Company believes the allowance for loan losses is a critical accounting estimate that requires the most significant judgments and estimates used in the preparation of its consolidated financial statements. The allowance for loan losses is increased by provisions charged against current earnings and is reduced by net charge-offs. Loans are charged off when they are deemed to be uncollectible in whole or in part. Recoveries are recorded when cash payments are received. In developing the assessment, the Company relies on estimates and exercises judgment regarding matters where the ultimate outcome is uncertain. Circumstances may change and future assessments of credit risk may yield materially different results, resulting in an increase or decrease in the allowance for credit losses.

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The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments and is maintained at levels that the Company believes are adequate to absorb probable losses inherent in the loan portfolio and unfunded lending commitments as of the date of the financial statements. The Company employs a systematic methodology for determining the allowance for credit losses that consists of four components: (i) a formula-based general reserve based on historical average losses by loan grade and grade migration, (ii) specific reserves on larger individual impaired credits that are based on the difference between the current loan balance and the loan’s collateral value, observable market price or discounted present value, (iii) a qualitative component that reflects current market conditions and other factors precedent to losses different from historical averages and (iv) a reserve for unfunded lending commitments.

In estimating the allowance for loan losses, management reviews the effect of changes in the local real estate market on collateral values, the effect of current economic indicators on the loan portfolio and their probable impact on borrowers and increases or decreases in nonperforming and impaired loans. Changes in these factors may cause management’s estimate of the allowance to increase or decrease and result in adjustments to the Company’s provision for loan losses. See—“Financial Condition—Allowance for Loan Losses and the Reserve for Unfunded Lending Commitments.”

Impairment of goodwill.  The Company believes impairment of goodwill is a critical accounting estimate that requires significant judgment and estimates to be used in the preparation of its consolidated financial statements. The Company reviews goodwill for impairment on an annual basis, or more often, if events or circumstances indicate that it is more likely than not that the fair value of Metro United, the Company’s only reporting unit with assigned goodwill, is below the carrying value of its equity. The Company’s annual evaluation is performed as of August 31 of each year.

In determining the fair value of Metro United, the Company uses a review of the valuation of recent guideline bank acquisitions, if available, pricing of publicly traded comparables, as well as a discounted cash flow analysis and the market capitalization of the Company. The guideline bank transactions are selected from a similar geographic footprint as Metro United or having a similar market focus, based on publicly available information. Valuation multiples such as price-to-book, price-to-tangible book, price-to-deposits and price-to-earnings from the guideline transactions are compared with Metro United’s operating results to derive its estimated fair value as of the valuation date. For discounted cash flow analyses, financial forecasts are developed by projecting operations for the next five years and discounting the cash flows and the terminal values. The financial forecasts consider several key business drivers such as anticipated loan and deposit growth, forward interest rates, historical performance, and industry and economic trends, among other considerations. In addition, as a third method of determining fair value, quoted stock prices as of the valuation date for the Company and its peer guideline banks are used. The fair values of the reporting unit separately derived from each valuation technique (i.e., guideline transactions, discounted cash flows, and quoted market prices) are used to assess whether there is any goodwill impairment.

            The Company also considers the fair value of Metro United in relationship to the Company’s stock price by performing a reconciliation to the Company’s market value. This reconciliation is performed by first determining the fair value of the reporting unit from the valuation technique mentioned previously (i.e. guideline transactions, discounted cash flows and quoted market prices).  The fair value is compared to the allocated value of the reporting unit based on the Company’s market value using the stock price as of the valuation date.  The Company allocates the total market value to both of its segments, MetroBank and Metro United. For each Bank, the allocation is based upon the following internal ratios:

Balance Sheet Ratios

• Total Bank assets as a percentage of total assets;

• Total Bank loans as a percentage of total loans;

• Total Bank deposits as a percentage of total deposits; and

• Total Bank shareholder's equity as a percentage of total shareholders' equity.

Performance Ratios

• Total Bank nonperforming assets as a percentage of total assets;

• Last twelve months return on assets; and

• Last twelve months return on equity.

In allocating the market value between the two Banks, more weight was assigned to the Performance Ratios than the Balance Sheet Ratios in order to account for the differences in market valuation as a result of different financial performance. The allocated market value of Metro United is then reconciled to the weighted average fair value derived from each valuation technique (i.e. guideline transactions, discounted cash flows and quoted market prices) by assigning an estimated control premium of 20% to the allocated market value.

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 The derived fair value of Metro United is then compared with the carrying value of its equity. If the carrying value of its equity exceeds the fair value at the evaluation date, then the step-one impairment test would have failed, and the Company would perform the step-two analysis to derive the implied fair value of goodwill.

Under the step-two analysis, the implied fair value of goodwill is determined in the same manner as goodwill is recognized in a business combination. The fair value of Metro United’s assets and liabilities, including previously unrecognized intangible assets, is individually determined. The excess between the fair value of Metro United over the fair value of its net assets is the implied goodwill.

Impairment of investment securities.  The Company believes impairment of investment securities is a critical accounting estimate that requires significant judgment and estimates to be used in the preparation of its consolidated financial statements. Investments classified as available-for-sale are carried at fair value and the impact of changes in fair value are recorded on the consolidated balance sheet as an unrealized gain or loss in accumulated other comprehensive income (loss), a separate component of shareholders’ equity. Securities classified as available-for-sale or held-to-maturity are subject to review to identify when a decline in value is other-than-temporary. Factors considered in determining whether a decline in value is other-than-temporary include: the extent and the duration of the decline; the reasons for the decline in value (credit event, and interest-rate related including general credit spread widening); the financial condition of and near-term prospects of the issuer, and the Company’s intent to sell and whether or not it is more likely than not that the Company would be required to sell the security before the anticipated recovery of its amortized cost basis. When it is determined that an other-than-temporary impairment exists and the Company does not intend to sell the security or if it is not more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis, the impairment is separated into the amount that is credit-related and the amount due to all other factors. The credit-related impairment is recognized in earnings.

49

For debt securities, determining credit-related impairment is driven principally by assumptions regarding the amount and timing of projected cash flows. For mortgage-backed and asset-backed securities, cash flow estimates are determined based on prepayment assumptions, default rates and loss severity rates derived from widely accepted third-party data sources. The Company has developed these estimates using information based on historical experience as well as using market observable data, such as industry analyst reports and forecasts, sector credit ratings and other data relevant to the collectability of a security. See Note 2 “Securities” for additional discussion on other-than-temporary impairment.

Stock-based compensation.The Company believes stock-based compensation is a critical accounting estimate that requires significant judgment and estimates used in the preparation of its consolidated financial statements. The Company accounts for stock-based compensation in accordance with generally accepted accounting principles. The Company uses the Black-Scholes option-pricing model which requires the input of highly subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected term”), the estimated volatility of the Company’s common stock price over the expected term and the number of options that will ultimately not complete their vesting requirements (“forfeitures”). Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation and consequently, the related amount recognized on the consolidated statements of income.

Fair Value.  The Company believes that the determination of fair value of certain assets is a critical accounting estimate that requires significant judgment used in the preparation of its consolidated financial statements. Certain portions of the Company’s assets are reported on a fair value basis. Fair value is used on a recurring basis for certain assets in which fair value is the primary basis of accounting. An example of this recurring use of fair value includes available-for-sale securities. Additionally, fair value is used on a non-recurring basis to evaluate assets for impairment or for disclosure purposes. Examples of these non-recurring uses of fair value include goodwill and intangible assets. Depending on the nature of the asset various valuation techniques and assumptions are used when estimating fair value.

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Fair value determination requires that a number of significant judgments are made. First, where prices for identical assets and liabilities are not available, application of the three-level hierarchy would require that similar assets are identified. If observable market prices are unavailable or impracticable to obtain, then fair value is estimated using modeling techniques such as discounted cash flow analyses. These modeling techniques incorporate the Company’s assessments regarding assumptions that market participants would use in pricing the asset or the liability, including assumptions about the risks inherent in a particular valuation technique, the effect of a restriction on the sale or use of an asset, and the risk of nonperformance. Assessments with respect to assumptions that market participants would make are inherently difficult to determine and use of different assumptions could result in material changes to these fair value measurements. The use of significant, unobservable inputs is described in Note 12 “Fair Value” to the consolidated financial statements.

In estimating the fair values for investment securities the Company believes that independent, third-party market prices are the best evidence of exit price and where available, estimates are based on such prices. If such third-party market prices are not available on the exact securities owned, fair values are based on the market prices of similar instruments, independent pricing service estimates or are estimated using industry-standard or proprietary models whose inputs may be unobservable. When market observable data is not available, the valuation of financial instruments becomes more subjective and involves substantial judgment. The need to use unobservable inputs generally results from the lack of market liquidity for certain types of loans and securities, which results in diminished observability of both actual trades and assumptions that would otherwise be available to value these instruments.

Income taxes.  The Company believes that the determination of income taxes is a critical accounting estimate that requires significant judgment used in the preparation of its consolidated financial statements.  The estimates and judgments occur in the calculation of tax credits, benefits, and deductions, in the calculation of certain tax assets and liabilities that arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.  Significant changes in these estimates may result in an increase or decrease to the Company’s tax provision in a subsequent period.

The Company must assess the likelihood that it will be able to recover its deferred tax assets.  If recovery is not likely, it must increase the provision for taxes by recording a valuation allowance against the deferred tax assets that it estimates will not ultimately be recoverable.  The Company believes that it will ultimately recover the deferred tax assets recorded in its consolidated balance sheets.  However, should there be a change in the Company’s ability to recover its deferred tax assets, the tax provision would increase in the period in which it has determined that the recovery was not likely.

50

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

There have been no material changes in the market risk information previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012. See Form 10-K, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Condition — Interest Rate Sensitivity and Liquidity.”

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures.  As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting. There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

51

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

The Company is involved in various litigation that arises from time to time in the normal course of business.  In the opinion of management, after consultations with its legal counsel, such litigation is not expected to have a material adverse effect of the Company’s consolidated financial position, results of operations or cash flows.

Item 1A. Risk Factors.

There have been no material changes to the risk factors previously disclosed under "Item 1A. Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Securities and Exchange Commission on March 21, 2013.

52

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table provides information with respect to purchases made by or on behalf of the Company or any “affiliated purchaser” (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934), of the Company’s common stock during the three months ended March 31, 2013:

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan (2)		Maximum Number of Shares That May Yet Be Purchased Under the Plan (2)
February 1, 2013 to February 28, 2013		20,210	$	10.27		N/A		N/A
March 1, 2013 to March 31, 2013		274		10.61		N/A		N/A
Total		20,484	$	10.27		N/A		N/A

(1)	All shares of common stock reported in the table above were repurchased by the Company at the fair market value of the Company’s common stock in connection with the satisfaction of tax withholding obligations under restricted stock agreements between us and certain key employees and directors.
(2)	The Company has no publicly announced plans or programs.

Item 3. Defaults Upon Senior Securities.

Not applicable

Item 4. Mine Safety Disclosures. Not applicable

Item 5. Other Information.

Not applicable

53

Item 6. Exhibits.

Exhibit
Number	Identification of Exhibit
3.1	Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (Registration No. 333-62667) (the "Registration Statement")).
3.2	Articles of Amendment to Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).
3.3	Statement of Designations establishing the terms of the Series A Preferred Stock of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on January 21, 2009).
3.4	Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 19, 2007).
4.1	Specimen form of certificate evidencing the Common Stock (incorporated herein by reference to Exhibit 4 to the Registration Statement).
4.2	Warrant, dated January 16, 2009, to purchase 771,429 shares of the Company's Common Stock (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on January 21, 2009).
11	Computation of Earnings Per Common Share, included as Note 5 to the unaudited Condensed Consolidated Financial Statements of this Form 10-Q.
31.1*	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1**	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Interactive Data File.

* Filed herewith.

** Furnished herewith.

54

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, thereunto duly authorized.

	METROCORP BANCSHARES, INC.
	By:	/s/ George M. Lee
Date: May 9, 2013		George M. Lee  Co-Chairman, President and
		Chief Executive Officer (principal executive officer)
Date: May 9, 2013	By:	/s/ David C. Choi
		David C. Choi
		Chief Financial Officer (principal financial officer/ principal accounting officer)

55

EXHIBIT INDEX

Exhibit
Number	Identification of Exhibit
3.1	Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Registration Statement on Form S-1 (Registration No. 333-62667) (the "Registration Statement")).
3.2	Articles of Amendment to Amended and Restated Articles of Incorporation of the Company (incorporated herein by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008).
3.3	Statement of Designations establishing the terms of the Series A Preferred Stock of the Company (incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on January 21, 2009).
3.4	Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 19, 2007).
4.1	Specimen form of certificate evidencing the Common Stock (incorporated herein by reference to Exhibit 4 to the Registration Statement).
4.2	Warrant, dated January 16, 2009, to purchase 771,429 shares of the Company's Common Stock (incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on January 21, 2009).
11	Computation of Earnings Per Common Share, included as Note 5 to the unaudited Condensed Consolidated Financial Statements of this Form 10-Q.
31.1*	Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1**	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	Interactive Data File.

* Filed herewith.

** Furnished herewith.

56

EX-31.1

Exhibit 31.1

Certification Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended

	I, George M. Lee, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of MetroCorp Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2013

/s/ George M. Lee

George M. Lee

Co-Chairman, President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Rule 13a – 14(a) of the Securities Exchange Act of 1934, as amended

	I, David C. Choi, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of MetroCorp Bancshares, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2013

/s/ David C. Choi

David C. Choi

Chief Financial Officer

EX-32.1

Exhibit 32.1

Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of MetroCorp Bancshares, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, George M. Lee, Co-Chairman, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and operating results of the Company.

/s/ George M. Lee

George M. Lee

Co-Chairman, President and Chief Executive Officer

May 9, 2013

EX-32.2

Exhibit 32.2

Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

In connection with the quarterly report of MetroCorp Bancshares, Inc. (the “Company”) on Form 10-Q for the period ending March 31, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David C. Choi, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and operating results of the Company.

/s/ David C. Choi

David C. Choi

Chief Financial Officer

May 9, 2013

XML

Note 3 - Loans and Allowance for Loan Losses (Detail) - Recorded Investment In Loans By Credit Risk Profile (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Grade	$ 1,127,729	$ 1,103,478	$ 1,050,049
Commercial And Industrial [Member] | Pass [Member]
Grade	380,163	366,571
Commercial And Industrial [Member] | Special Mention [Member]
Grade	3,797	4,393
Commercial And Industrial [Member] | Substandard [Member]
Grade	11,951	12,941
Commercial And Industrial [Member]
Grade	395,911	383,905	344,975
Real Estate Mortgage [Member] | Pass [Member]
Grade	645,678	611,159
Real Estate Mortgage [Member] | Special Mention [Member]
Grade	13,268	14,593
Real Estate Mortgage [Member] | Substandard [Member]
Grade	56,087	76,728
Real Estate Mortgage [Member]
Grade	715,033	702,480	691,071
Real Estate Construction [Member] | Pass [Member]
Grade	5,583	5,163
Real Estate Construction [Member] | Substandard [Member]
Grade	4,529	4,529
Real Estate Construction [Member]
Grade	10,112	9,692	9,208
Consumer And Other [Member] | Pass [Member]
Grade	6,673	7,401
Consumer And Other [Member]
Grade	6,673	7,401	4,795
Pass [Member]
Grade	1,038,097	990,294
Special Mention [Member]
Grade	17,065	18,986
Substandard [Member]
Grade	$ 72,567	$ 94,198

XML

Note 9 - Derivative Financial Instruments (Detail) - Notional Amounts And Estimated Fair Values Of Interest Rate Derivative Contracts (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Interest rate derivative contract designated as a hedge of cash flows	$ 17,500	$ 17,500
Interest rate derivative contract designated as a hedge of cash flows	(1,624)	(1,775)
Interest rate derivative contract not designated as a hedge of cash flows	15,000	15,000
Interest rate derivative contract not designated as a hedge of cash flows	$ 49	$ 41

XML

Note 5 - Earnings Per Share (Detail) - Earnings Per Common Share: (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income available to common shareholders (in Dollars)	$ 3,027	$ 2,170
Weighted average common shares in basic EPS	18,332	13,169
Effect of dilutive securities	391	140
Weighted average common and potentially dilutive common shares used in diluted EPS	18,723	13,309
Income per common share:
Basic (in Dollars per share)	$ 0.17	$ 0.16
Diluted (in Dollars per share)	$ 0.16	$ 0.16

XML

Note 9 - Derivative Financial Instruments (Detail) - Derivatives Designated As Cash Flow Hedges (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Interest Rate Swap [Member]
Interest rate swap	$ 96	$ 43

XML

Note 4 - Goodwill (Detail) - Changes In The Carrying Amount of the Company’s Goodwill (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Goodwill	$ 21,827	$ 21,827
Accumulated impairment losses	7,500	7,500
Net goodwill	$ 14,327	$ 14,327

XML

Note 2 - Securities (Detail) - Gross Unrealized Losses And Fair Value Of Securities Available For Sale Gross Of OTTI (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Securities available-for-sale
Less Than 12 Months Fair Value	$ 48,348	$ 9,921
Less Than 12 Months Gross Unrealized Losses	(306)	(73)
Greater Than 12 Months Fair Value	71	72
Total Fair Value	48,419	9,993
Total Gross Unrealized Losses	(306)	(73)
US Treasury and Government [Member]
Securities available-for-sale
Less Than 12 Months Fair Value	31,078	9,921
Less Than 12 Months Gross Unrealized Losses	(206)	(73)
Total Fair Value	31,078	9,921
Total Gross Unrealized Losses	(206)	(73)
US States and Political Subdivisions Debt Securities [Member]
Securities available-for-sale
Less Than 12 Months Fair Value	2,573
Less Than 12 Months Gross Unrealized Losses	(49)
Total Fair Value	2,573
Total Gross Unrealized Losses	(49)
US Government Agencies Debt Securities [Member]
Securities available-for-sale
Less Than 12 Months Fair Value	14,697
Less Than 12 Months Gross Unrealized Losses	(51)
Total Fair Value	14,697
Total Gross Unrealized Losses	(51)
Residential Mortgage Backed Securities [Member]
Securities available-for-sale
Greater Than 12 Months Fair Value	71	72
Total Fair Value	$ 71	$ 72

XML

Note 10 - Operating Segment Information (Detail) - Selected Operating Segment Information: (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Total interest income	$ 15,017	$ 16,398
Total interest expense	2,195	2,754
Net interest income	12,822	13,644
(Reduction in) provision for loan losses	(450)	400
Net interest income after provision for loan losses	13,272	13,244
Noninterest income	1,650	1,803
Noninterest expenses	10,302	10,933
Income (loss) before income tax provision	4,620	4,114
Provision (benefit) for income taxes	1,593	1,346
Net income (loss)	3,027	2,768
Net loans	1,101,884	1,018,483	1,075,745
Total assets	1,587,236	1,501,007	1,519,812
Deposits	1,328,052	1,256,827
MetroBank [Member]
Total interest income	10,849	12,410
Total interest expense	1,309	1,737
Net interest income	9,540	10,673
(Reduction in) provision for loan losses	(450)	400
Net interest income after provision for loan losses	9,990	10,273
Noninterest income	1,905	2,057
Noninterest expenses	7,418	8,513
Income (loss) before income tax provision	4,477	3,817
Provision (benefit) for income taxes	1,435	1,160
Net income (loss)	3,042	2,657
Net loans	767,618	724,511
Total assets	1,146,420	1,106,658
Deposits	964,232	933,396
Metro United [Member]
Total interest income	4,166	3,981
Total interest expense	574	669
Net interest income	3,592	3,312
Net interest income after provision for loan losses	3,592	3,312
Noninterest income	106	84
Noninterest expenses	2,411	2,391
Income (loss) before income tax provision	1,287	1,005
Provision (benefit) for income taxes	548	423
Net income (loss)	739	582
Net loans	334,266	293,972
Total assets	440,418	395,975
Deposits	370,574	333,992
Other Segments [Member]
Total interest income	2	7
Total interest expense	312	348
Net interest income	(310)	(341)
Net interest income after provision for loan losses	(310)	(341)
Noninterest income	(361)	(338)
Noninterest expenses	473	29
Income (loss) before income tax provision	(1,144)	(708)
Provision (benefit) for income taxes	(390)	(237)
Net income (loss)	(754)	(471)
Total assets	398	(1,626)
Deposits	$ (6,754)	$ (10,561)

XML

Note 6 - Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Fair Value, Off-balance Sheet Risks [Table Text Block]

	As of March 31, 2013		As of December 31, 2012
	(Dollars in thousands)
Unfunded loan commitments including unfunded lines of credit	$	117,221	$	99,474
Standby letters of credit		9,821		10,387
Commercial letters of credit		2,660		1,595
Operating leases		6,750		7,337
Total financial instruments with off-balance sheet risk	$	136,452	$	118,793

XML

Note 7 - Regulatory Matters (Detail) - Comparison Of The Company’s And Each Of The Banks’ Leverage And Risk-Weighted Capital Ratios (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
MetroCorp Bancshares Inc [Member]
Total risk-based capital ratio
Actual Amount (in Dollars)	$ 214,605	$ 212,083
Actual Ratio	17.75%	17.95%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	96,750	94,509
Minimum Required For Capital Adequacy Purposes Ratio	8.00%	8.00%
Tier 1 risk-based capital ratio
Actual Amount (in Dollars)	199,323	197,077
Actual Ratio	16.48%	16.68%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	48,375	47,255
Minimum Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
Leverage ratio
Actual Amount (in Dollars)	199,323	197,077
Actual Ratio	13.09%	13.18%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	60,923	59,812
Minimum Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
MetroBank NA [Member]
Total risk-based capital ratio
Actual Amount (in Dollars)	155,837	152,613
Actual Ratio	17.76%	17.80%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	70,186	68,587
Minimum Required For Capital Adequacy Purposes Ratio	8.00%	8.00%
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Amount (in Dollars)	87,733	85,734
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Ratio	10.00%	10.00%
Tier 1 risk-based capital ratio
Actual Amount (in Dollars)	144,743	141,702
Actual Ratio	16.50%	16.53%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	35,093	34,293
Minimum Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Amount (in Dollars)	52,640	51,440
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Ratio	6.00%	6.00%
Leverage ratio
Actual Amount (in Dollars)	144,743	141,702
Actual Ratio	13.04%	12.70%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	44,389	44,613
Minimum Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Amount (in Dollars)	55,487	55,766
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Ratio	5.00%	5.00%
Metro United [Member]
Total risk-based capital ratio
Actual Amount (in Dollars)	52,931	52,714
Actual Ratio	16.10%	16.34%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	26,309	25,814
Minimum Required For Capital Adequacy Purposes Ratio	8.00%	8.00%
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Amount (in Dollars)	32,886	32,267
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Ratio	10.00%	10.00%
Tier 1 risk-based capital ratio
Actual Amount (in Dollars)	48,782	48,636
Actual Ratio	14.83%	15.07%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	13,154	12,907
Minimum Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Amount (in Dollars)	19,732	19,360
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Ratio	6.00%	6.00%
Leverage ratio
Actual Amount (in Dollars)	48,782	48,636
Actual Ratio	11.76%	12.76%
Minimum Required For Capital Adequacy Purposes Amount (in Dollars)	16,596	15,243
Minimum Required For Capital Adequacy Purposes Ratio	4.00%	4.00%
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Amount (in Dollars)	$ 20,745	$ 19,053
To be Categorized as Well Capitalized under Prompt Corrective Action Provisions Ratio	5.00%	5.00%

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Note 3 - Loans and Allowance for Loan Losses (Detail) - Information On Impaired Loans (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Commercial And Industrial [Member] | No Allowance [Member]
Recorded Investment	$ 579	$ 1,287
Unpaid Principal Balance	579	1,289
Average Recorded Investment	4,394	5,162
Commercial And Industrial [Member] | With Allowance [Member]
Recorded Investment		21
Unpaid Principal Balance		21
Related Allowance		21
Average Recorded Investment	17	1,434
Real Estate Mortgage Residential [Member] | No Allowance [Member]
Recorded Investment	142	239
Unpaid Principal Balance	142	239
Average Recorded Investment	188	213
Real Estate Mortgage Commercial [Member] | No Allowance [Member]
Recorded Investment	12,368	18,369
Unpaid Principal Balance	12,368	18,369
Average Recorded Investment	17,096	19,732
Real Estate Mortgage Commercial [Member] | With Allowance [Member]
Recorded Investment	3,979	4,533
Unpaid Principal Balance	3,980	4,535
Related Allowance	252	503
Average Recorded Investment	4,530	6,836
Real Estate Construction Residential [Member] | No Allowance [Member]
Recorded Investment	1,426	1,426
Unpaid Principal Balance	1,426	1,426
Average Recorded Investment	1,885	1,529
Real Estate Construction Commercial [Member] | No Allowance [Member]
Recorded Investment	3,104	3,103
Unpaid Principal Balance	3,104	3,103
Average Recorded Investment	3,132	3,171
Commercial And Industrial [Member]
Recorded Investment	579	1,308
Unpaid Principal Balance	579	1,310
Related Allowance		21
Average Recorded Investment	4,411	6,596
Real Estate Mortgage [Member]
Recorded Investment	16,489	23,141
Unpaid Principal Balance	16,490	23,143
Related Allowance	252	503
Average Recorded Investment	21,814	26,781
Real Estate Construction [Member]
Recorded Investment	4,530	4,529
Unpaid Principal Balance	4,530	4,529
Average Recorded Investment	$ 5,017	$ 4,700

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Note 3 - Loans and Allowance for Loan Losses (Detail) - Classified By Major Type: (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Unearned discounts, interest and deferred fees	$ (2,451)	$ (2,590)
Total loans	1,124,716	1,100,337
Allowance for loan losses	(22,832)	(24,592)
Loans, net	1,101,884	1,075,745
Commercial And Industrial [Member]
Amount	395,640	383,641
Percent	35.10%	34.78%
Real Estate Mortgage Residential [Member]
Amount	37,526	36,807
Percent	3.33%	3.34%
Real Estate Mortgage Commercial [Member]
Amount	677,061	665,244
Percent	60.07%	60.32%
Real Estate Mortgage [Member]
Amount	714,587	702,051
Percent	63.40%	63.66%
Real Estate Construction Residential [Member]
Amount	2,753	2,420
Percent	0.24%	0.22%
Real Estate Construction Commercial [Member]
Amount	7,379	7,284
Percent	0.66%	0.66%
Real Estate Construction [Member]
Amount	10,132	9,704
Percent	0.90%	0.88%
Consumer And Other [Member]
Amount	6,808	7,531
Percent	0.60%	0.68%
Variable And Fixed [Member]
Amount	$ 1,127,167	$ 1,102,927
Percent	100.00%	100.00%

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Note 8 - Accumulated Other Comprehensive Income (Detail) - The Balance of and Changes in Each Component of Accumulated Other Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Accumulated other comprehensive income (loss) December 31, 2012	$ 567
Net current-period other comprehensive income (loss)	(346)		56
Accumulated other comprehensive income (loss) March 31, 2013	221
Gains (Losses) Effective Hedging [Member]
Accumulated other comprehensive income (loss) December 31, 2012	(1,136)
Other comprehensive income (loss)before reclassifications	96
Amounts reclassified from other comprehensive income (loss) (1)		[1]
Net current-period other comprehensive income (loss)	96
Accumulated other comprehensive income (loss) March 31, 2013	(1,040)
Unrealized Losses OTTI [Member]
Accumulated other comprehensive income (loss) December 31, 2012	(1,017)
Other comprehensive income (loss)before reclassifications	(8)
Amounts reclassified from other comprehensive income (loss) (1)		[1]
Net current-period other comprehensive income (loss)	(8)
Accumulated other comprehensive income (loss) March 31, 2013	(1,025)
Net Unrealized Investment Gain [Member]
Accumulated other comprehensive income (loss) December 31, 2012	2,720
Other comprehensive income (loss)before reclassifications	(425)
Amounts reclassified from other comprehensive income (loss) (1)	(9)	[1]
Net current-period other comprehensive income (loss)	(434)
Accumulated other comprehensive income (loss) March 31, 2013	2,286
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated other comprehensive income (loss) December 31, 2012	567
Other comprehensive income (loss)before reclassifications	(337)
Amounts reclassified from other comprehensive income (loss) (1)	(9)	[1]
Net current-period other comprehensive income (loss)	(346)
Accumulated other comprehensive income (loss) March 31, 2013	$ 221

[1] Amounts reclassified from other comprehensive income were transferred to gain (loss) on securities, net.

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Note 11 - Fair Value (Detail) - Carrying Value And Estimated Fair Values Of Financial Instruments (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011	Sep. 30, 2009
Level 2 inputs:
Cash and cash equivalents	$ 188,295	$ 159,449	$ 183,312	$ 193,609
Interest-bearing time deposits in banks	15,354	15,321
Investment securities held-to-maturity	4,046
Other investments	5,413	5,592
Cash value of bank owned life insurance	33,120	32,794
Accrued interest receivable	3,680	4,120
Level 3 inputs:
Loans held-for-investment, net	1,101,884	1,075,745
Level 2 inputs:
Junior subordinated debentures					36,100
Level 3 inputs:
Time deposits	1,328,052	1,267,030
Carrying (Reported) Amount, Fair Value Disclosure [Member]
Level 2 inputs:
Cash and cash equivalents	188,295	159,449
Interest-bearing time deposits in banks	15,354	15,321
Investment securities held-to-maturity	4,046	4,046
Other investments	5,413	5,592
Cash value of bank owned life insurance	33,120	32,794
Accrued interest receivable	3,680	4,120
Level 3 inputs:
Loans held-for-investment, net	1,101,884	1,075,745
Level 2 inputs:
Deposit transaction accounts	810,247	808,377
Junior subordinated debentures	36,083	36,083
Accrued interest payable	274	233
Level 3 inputs:
Time deposits	517,804	458,653
Other borrowings	30,000	25,000
Estimate of Fair Value, Fair Value Disclosure [Member]
Level 2 inputs:
Cash and cash equivalents	188,295	159,449
Interest-bearing time deposits in banks	15,354	15,321
Investment securities held-to-maturity	4,670	4,757
Other investments	5,413	5,592
Cash value of bank owned life insurance	33,120	32,794
Accrued interest receivable	3,680	4,120
Level 3 inputs:
Loans held-for-investment, net	1,091,892	1,062,432
Level 2 inputs:
Deposit transaction accounts	810,247	808,377
Junior subordinated debentures	36,083	36,083
Accrued interest payable	274	233
Level 3 inputs:
Time deposits	520,982	461,672
Other borrowings	29,976	25,008
Off-balance sheet financial instruments
Unfunded loan commitments, including unfunded lines of credit	226	251
Standby letters of credit	$ 13	$ 24

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Note 5 - Earnings Per Share (Detail)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	258,920	652,750

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Note 2 - Securities

3 Months Ended

Mar. 31, 2013

Investment [Text Block]

2.         SECURITIES

The amortized cost and approximate fair value of securities is as follows:

	As of March 31, 2013
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
	(Dollars in thousands)
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	81,385	$	240	$	(206	)	$	-		$	81,419
Obligations of state and political subdivisions		14,618		426		(49	)		-			14,995
Corporate		6,074		265		-			-			6,339
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		61,558		1,225		(51	)		-			62,732
Privately issued residential		684		353					(342	)		695
Asset backed securities		176		148		-			(167	)		157
Equity Securities
CRA funds		14,204		131		-			-			14,335
Total available-for-sale securities	$	178,699	$	2,788	$	(306	)	$	(509	)	$	180,672
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	624	$	-		$	-		$	4,670
Total held-to-maturity securities	$	4,046	$	624	$	-		$	-		$	4,670
Other investments
FHLB (1)/Federal Reserve Bank stock (2)	$	4,330	$	-	$	-		$	-		$	4,330
Investment in subsidiary trust (3)		1,083		-		-			-			1,083
Total other investments	$	5,413	$	-	$	-		$	-		$	5,413

	As of December 31, 2012
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	70,892	$	362	$	(73	)	$	—		$	71,181
Obligations of state and political subdivisions		12,810		579		—			—			13,389
Corporate		6,080		270		—			—			6,350
Mortgage-backed securities and collateralized mortgage obligations:
Government issued or guaranteed		56,572		1,369		—			—			57,941
Privately issued residential		718		330		—			(365	)		683
Asset backed securities		187		129		—			(173	)		143
Equity securities
Investment in CRA funds		14,128		233		—			—			14,361
Total available-for-sale securities	$	161,387	$	3,272	$	(73	)	$	(538	)	$	164,048
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	711	$	—		$	—		$	4,757
Total held-to-maturity securities	$	4,046	$	711	$	—		$	—		$	4,757
Other investments
FHLB (1)/Federal Reserve Bank (2) stock		4,509		—		—			—			4,509
Investment in subsidiary trust (3)		1,083		—		—			—			1,083
Total other investments	$	5,592	$	—	$	—		$	—		$	5,592

(1)	FHLB stock held by the Banks is subject to certain restrictions under a credit policy of the FHLB dated May 1, 1997. Redemption of FHLB stock is dependent upon repayment of borrowings, if any, from the FHLB.
(2)	Federal Reserve Bank stock held by MetroBank is subject to certain restrictions under Federal Reserve Bank Policy.
(3)	The Company’s ownership of common securities of MCBI Trust I is carried at cost.

The following tables display the fair value and gross unrealized losses on securities available-for-sale as of March 31, 2013 and December 31, 2012 for which OTTI has not been recognized, that were in a continuous unrealized loss position for the periods indicated.  There were no securities held-to-maturity in a continuous unrealized loss position as of March 31, 2013 or December 31, 2012.

	March 31, 2013
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	31,078	$	(206	)	$	—	$	—	$	31,078	$	(206	)
Obligations of state and political subdivisions		2,573		(49	)		—		—		2,573		(49	)
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		14,697		(51	)		—		—		14,697		(51	)
Privately issued residential		—		—			71		—		71		—
Total securities	$	48,348	$	(306	)	$	71	$	—	$	48,419	$	(306	)

	As of December 31, 2012
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	9,921	$	(73	)	$	—	$	—	$	9,921	$	(73	)
Mortgage-backed securities and collateralized mortgage obligations:
Privately issued residential		—		—			72		—		72		—
Total securities	$	9,921	$	(73	)	$	72	$	—	$	9,993	$	(73	)

As of March 31, 2013, management did not have the intent to sell any of the securities classified as available-for-sale in unrealized loss positions and believes it is not more likely than not that the Company will have to sell any such securities before a recovery of the cost. However, if strategic opportunities arise, the Company may consider selling selected securities.  Any unrealized losses on such selected securities would be charged to earnings.

The unrealized losses are largely due to increases in the market interest rates over the yields available at the time the underlying securities were purchased. The fair value is expected to recover as the securities approach their maturity date or repricing date or if market yields for such securities decline. Management does not believe any of the unrealized losses above are due to credit quality. Accordingly, management believes the $306,000 of unrealized losses is temporary and the remaining $509,000 of OTTI as of March 31, 2013 represents an unrealized loss for which an impairment has been recognized in other comprehensive loss.

Other-Than-Temporary Impairments (OTTI)

The following table represents the impairment activity related to debt securities (in thousands):

Impairment related to credit losses	Three months ended March 31, 2013		Three months ended March 31, 2012
Beginning balance at beginning of period	$	1,716	$	1,594
Addition of OTTI that was not previously recognized		—		—
Additions to OTTI that was previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis		—		21
Transfers from accumulated other comprehensive income (“AOCI”) to OTTI related to credit losses		16		18
Reclassifications from OTTI to realized losses		—		—
Ending balance at end of period	$	1,732	$	1,633

For the three months ended March 31, 2013, the Company recognized credit-related losses of $10,000 on one non-agency residential mortgage-backed security and $6,000 on one asset-backed security. There were no noncredit impairments included in accumulated other comprehensive income  for the three months ended March 31, 2013.

To measure credit losses, external credit ratings and other relevant collateral details and performance statistics on a security-by-security basis were considered. Securities exhibiting significant deterioration are subjected to further analysis. Assumptions were developed for prepayment speed, default rate and loss severity for each security using third party sources and based on the collateral history. The resulting projections of future cash flows of the underlying collateral were then discounted by the underlying yield before any write-downs were considered to determine the net present value of the cash flows (“NPV”). The difference between the cost basis and the NPV was taken as a credit loss in the current period to the extent that these losses have not been previously recognized. The difference between the NPV and the quoted market price is considered a noncredit related loss and was included in other comprehensive income. 

Other Securities Information

There were no sales (excluding calls and maturities) of available-for-sale securities for the three months ended March 31, 2013 or 2012.  There were no sales or transfers of held-to-maturity securities for the three months ended March 31, 2013 or 2012.

At March 31, 2013, future contractual maturities of debt securities were as follows (in thousands):

	Securities Available-for-sale				Securities Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	702	$	711	$	—	$	—
Within two to five years		12,569		12,845		—		—
Within six to ten years		75,675		75,800		—		—
After ten years		13,307		13,554		4,046		4,670
Mortgage-backed securities and collateralized mortgage obligations		62,242		63,427		—		—
Total debt securities	$	164,495	$	166,337	$	4,046	$	4,670

The Company holds mortgage-backed securities which may mature at an earlier date than the contractual maturity due to prepayments. The Company also holds certain securities which may be called by the issuer at an earlier date than the contractual maturity date.

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Note 12 - Income Taxes (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Effective Income Tax Rate, Continuing Operations	34.50%	32.70%
Deferred Tax Assets, Net (in Dollars)	$ 12.7
Operating Loss Carryforward Period	20 years

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Note 3 - Loans and Allowance for Loan Losses (Detail) - Recorded Investment In Troubled Debt Restructurings (Commercial Real Estate Construction [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2012
Commercial Real Estate Construction [Member]
Real estate mortgage:
Commercial	1
Commercial	$ 2,699
Commercial	$ 2,699

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Note 10 - Operating Segment Information (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	For the Three Months Ended March 31, 2013											For the Three Months Ended March 31, 2012
	MetroBank			Metro United		Other			Consolidated Company			MetroBank		Metro United		Other			Consolidated Company
	(Dollars in thousands)
Total interest income	$	10,849		$	4,166	$	2		$	15,017		$	12,410	$	3,981	$	7		$	16,398
Total interest expense		1,309			574		312			2,195			1,737		669		348			2,754
Net interest income		9,540			3,592		(310	)		12,822			10,673		3,312		(341	)		13,644
(Reduction in) provision for loan losses		(450	)		─		─			(450	)		400		─		─			400
Net interest income after provision for loan losses		9,990			3,592		(310	)		13,272			10,273		3,312		(341	)		13,244
Noninterest income		1,905			106		(361	)		1,650			2,057		84		(338	)		1,803
Noninterest expenses		7,418			2,411		473			10,302			8,513		2,391		29			10,933
Income (loss) before income tax provision		4,477			1,287		(1,144	)		4,620			3,817		1,005		(708	)		4,114
Provision (benefit) for income taxes		1,435			548		(390	)		1,593			1,160		423		(237	)		1,346
Net income (loss)	$	3,042		$	739	$	(754	)	$	3,027		$	2,657	$	582	$	(471	)	$	2,768

	As of March 31, 2013									As of March 31, 2012
	MetroBank		Metro United		Other			Consolidated Company		MetroBank		Metro United		Other			Consolidated Company
	(Dollars in thousands)
Net loans	$	767,618	$	334,266	$	─		$	1,101,884	$	724,511	$	293,972	$	─		$	1,018,483
Total assets		1,146,420		440,418		398			1,587,236		1,106,658		395,975		(1,626	)		1,501,007
Deposits		964,232		370,574		(6,754	)		1,328,052		933,396		333,992		(10,561	)		1,256,827

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Note 9 - Derivative Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Interest Rate Derivatives [Table Text Block]

	March 31, 2013					December 31, 2012
	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
Interest rate derivative contract designated as a hedge of cash flows	$	17,500	$	(1,624	)	$	17,500	$	(1,775	)
Interest rate derivative contract not designated as a hedge of cash flows	$	15,000	$	49		$	15,000	$	41

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Gains recorded in income and other comprehensive income, net of tax (in thousands)
	Derivatives – effective portion reclassified from AOCI into income		Hedge ineffectiveness recorded directly in income		Total income statement impact		Derivatives – effective portion recorded in OCI		Total change in OCI for period
Three months ended March 31, 2013
Interest rate swap	$	—	$	—	$	—	$	96	$	96
Three months ended March 31, 2012
Interest rate swap	$	—	$	—	$	—	$	43	$	43

Schedule of Other Derivatives Not Designated as Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]

	Three Months Ended March 31,
	2013		2012
Non-hedging interest rate derivative:
Other non-interest income	$	7	$	(34)

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Note 9 - Derivative Financial Instruments (Detail) - Non-hedging Interest Rate Derivatives (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Non-hedging interest rate derivative:
Other non-interest income	$ 1,650	$ 1,803
Not Designated as Hedging Instrument [Member] | Interest Rate Swap [Member]
Non-hedging interest rate derivative:
Other non-interest income	$ 7	$ (34)

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Note 3 - Loans and Allowance for Loan Losses (Detail) - Allowance For Loan Losses And Recorded Investment In Loans By Portfolio Segment (USD $) In Thousands, unless otherwise specified	3 Months Ended							3 Months Ended							3 Months Ended							3 Months Ended							3 Months Ended							3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012	Dec. 31, 2012 Commercial And Industrial [Member] Period Beginning [Member]	Dec. 31, 2011 Commercial And Industrial [Member] Period Beginning [Member]	Mar. 31, 2013 Commercial And Industrial [Member] Period Ending [Member]	Mar. 31, 2012 Commercial And Industrial [Member] Period Ending [Member]	Mar. 31, 2013 Commercial And Industrial [Member]	Mar. 31, 2012 Commercial And Industrial [Member]	Dec. 31, 2012 Commercial And Industrial [Member]	Dec. 31, 2012 Real Estate Mortgage [Member] Period Beginning [Member]	Dec. 31, 2011 Real Estate Mortgage [Member] Period Beginning [Member]	Mar. 31, 2013 Real Estate Mortgage [Member] Period Ending [Member]	Mar. 31, 2012 Real Estate Mortgage [Member] Period Ending [Member]	Mar. 31, 2013 Real Estate Mortgage [Member]	Mar. 31, 2012 Real Estate Mortgage [Member]	Dec. 31, 2012 Real Estate Mortgage [Member]	Dec. 31, 2012 Real Estate Construction [Member] Period Beginning [Member]	Dec. 31, 2011 Real Estate Construction [Member] Period Beginning [Member]	Mar. 31, 2013 Real Estate Construction [Member] Period Ending [Member]	Mar. 31, 2012 Real Estate Construction [Member] Period Ending [Member]	Mar. 31, 2013 Real Estate Construction [Member]	Mar. 31, 2012 Real Estate Construction [Member]	Dec. 31, 2012 Real Estate Construction [Member]	Dec. 31, 2012 Consumer And Other [Member] Period Beginning [Member]	Dec. 31, 2011 Consumer And Other [Member] Period Beginning [Member]	Mar. 31, 2013 Consumer And Other [Member] Period Ending [Member]	Mar. 31, 2012 Consumer And Other [Member] Period Ending [Member]	Mar. 31, 2013 Consumer And Other [Member]	Mar. 31, 2012 Consumer And Other [Member]	Dec. 31, 2012 Consumer And Other [Member]	Dec. 31, 2012 Unallocated [Member] Period Beginning [Member]	Dec. 31, 2011 Unallocated [Member] Period Beginning [Member]	Mar. 31, 2013 Unallocated [Member] Period Ending [Member]	Mar. 31, 2012 Unallocated [Member] Period Ending [Member]	Mar. 31, 2013 Unallocated [Member]	Mar. 31, 2012 Unallocated [Member]	Dec. 31, 2012 Period Beginning [Member]	Dec. 31, 2011 Period Beginning [Member]	Mar. 31, 2013 Period Ending [Member]	Mar. 31, 2012 Period Ending [Member]
Allowance for loan losses beginning	$ 24,592			$ 8,255	$ 7,966	$ 7,053	$ 9,223				$ 14,748	$ 19,213	$ 13,217	$ 16,598				$ 216	$ 320	$ 180	$ 235				$ 143	$ 137	$ 79	$ 100				$ 1,230	$ 685	$ 2,303	$ 1,910			$ 24,592	$ 28,321	$ 22,832	$ 28,066
(Reduction in) provision for loan losses	(450)	400						(408)	1,923						(1,031)	(2,638)						(41)	(104)						(43)	(6)						1,073	1,225
Charge-offs	(1,459)	(1,166)						(884)	(784)						(550)	(340)													(25)	(42)
Recoveries	149	511						90	118						50	363						5	19						4	11
Allowance for loan losses ending	22,832			8,255	7,966	7,053	9,223				14,748	19,213	13,217	16,598				216	320	180	235				143	137	79	100				1,230	685	2,303	1,910			24,592	28,321	22,832	28,066
Ending allowance for loan losses balance for loans individually evaluated for impairment	289	1,017							362						289	655
Ending allowance for loan losses balance for loans collectively evaluated for impairment	20,240	25,139						7,053	8,861						12,928	15,943						180	235						79	100
Loans:
Recorded investment in loans	1,127,729	1,050,049	1,103,478					395,911	344,975	383,905					715,033	691,071	702,480					10,112	9,208	9,692					6,673	4,795	7,401
Recorded investment in loans individually evaluated for impairment	21,598	41,744						579	9,315						16,489	29,165						4,530	3,263							1
Recorded investment in loans collectively evaluated for impairment	$ 1,106,131	$ 1,008,305						$ 395,332	$ 335,660						$ 698,544	$ 661,906						$ 5,582	$ 5,945						$ 6,673	$ 4,794

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Note 11 - Fair Value (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value, Assets Measured on Recurring Basis [Table Text Block]

	Fair Value Measurements, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Fair Value Measurements
Securities available-for-sale at March 31, 2013
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	—	$	81,419		$	—	$	81,419
Obligations of state and political subdivisions		—		14,995			—		14,995
Corporate		—		6,339			—		6,339
Mortgage-backed securities and collateralized mortgage obligations:							—
Government issued or guaranteed		—		62,732			—		62,732
Privately issued residential		—		695			—		695
Asset backed securities		—		157			—		157
Investment in CRA funds		14,335		—			—		14,335
Total available-for-sale securities		14,335		166,337			—		180,672
Derivative assets
Interest rate cap		—		49			—		49
Total assets measured at fair value on a recurring basis	$	14,335	$	166,386		$	—	$	180,721
Derivative liabilities at March 31, 2013
Interest rate swap	$	—	$	(1,624	)	$	—	$	(1,624	)
Securities available-for-sale at December 31, 2012
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	—	$	71,181		$	—	$	71,181
Obligations of state and political subdivisions		—		13,389			—		13,389
Corporate		—		6,350			—		6,350
Mortgage-backed securities and collateralized mortgage obligations:							—
Government issued or guaranteed		—		57,941			—		57,941
Privately issued residential		—		683			—		683
Asset backed securities		—		143			—		143
Investment in CRA funds		14,361		—			—		14,361
Total available-for-sale securities		14,361		149,687			—		164,048
Derivative assets
Interest rate cap		—		41			—		41
Total assets measured at fair value on a recurring basis	$	14,361	$	149,728		$	—	$	164,089
Derivative liabilities at December 31, 2012
Interest rate swap	$	—	$	(1,775)		$	—	$	(1,775)

Fair Value Measurements, Nonrecurring [Table Text Block]

	As of March 31, 2013
	Level 2		Level 3
Assets
Goodwill	$	—	$	14,327
Foreclosed assets		—		12,152
Impaired loans (1)		3,728		—

	As of December 31, 2012
	Level 2		Level 3
Assets
Goodwill	$	—	$	14,327
Foreclosed assets		—		12,555
Impaired loans (1)		4,646		—

Fair Value, by Balance Sheet Grouping [Table Text Block]

	Three Months Ended March 31,
	2013		2012
Losses related to:
Goodwill	$	—	$	—
Foreclosed assets (1)		64		77
Impaired loans (2)		—		—

Estimated Fair Value of Instruments [Member]

Fair Value, by Balance Sheet Grouping [Table Text Block]

	As of March 31, 2013				As of December 31, 2012
	Carrying or Contract Amount		Estimated Fair Value		Carrying or Contract Amount		Estimated Fair Value
	(In thousands)
Financial Assets
Level 2 inputs:
Cash and cash equivalents	$	188,295	$	188,295	$	159,449	$	159,449
Interest-bearing time deposits in banks		15,354		15,354		15,321		15,321
Investment securities held-to-maturity		4,046		4,670		4,046		4,757
Other investments		5,413		5,413		5,592		5,592
Cash value of bank owned life insurance		33,120		33,120		32,794		32,794
Accrued interest receivable		3,680		3,680		4,120		4,120
Level 3 inputs:
Loans held-for-investment, net		1,101,884		1,091,892		1,075,745		1,062,432
Financial Liabilities
Level 2 inputs:
Deposit transaction accounts		810,247		810,247		808,377		808,377
Junior subordinated debentures		36,083		36,083		36,083		36,083
Accrued interest payable		274		274		233		233
Level 3 inputs:
Time deposits		517,804		520,982		458,653		461,672
Other borrowings		30,000		29,976		25,000		25,008
Off-balance sheet financial instruments
Unfunded loan commitments, including unfunded lines of credit		—		226		—		251
Standby letters of credit		—		13		—		24

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Note 2 - Securities (Detail) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2012 Credit Loss [Member]
Available-for-sale Securities, Gross Realized Gain (Loss)	$ (306,000)
Other than Temporary Impairment Losses, Investments, Available-for-sale Securities	509,000
Less OTTI Charges Recognized In Net Income Mortgage Backed Securities		10,000
Less OTTI Charges Recognized In Net Income Asset Backed Securities		$ 6,000

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Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2013

Significant Accounting Policies [Text Block]

1.         BASIS OF PRESENTATION

 The unaudited condensed consolidated financial statements include the accounts of MetroCorp Bancshares, Inc. (the “Company”) and wholly-owned subsidiaries, MetroBank, National Association (“MetroBank”) and Metro United Bank (“Metro United”), in Texas and California, respectively (collectively, the “Banks”).  MetroBank is engaged in commercial banking activities through its thirteen branches in the greater Houston and Dallas, Texas metropolitan areas, and Metro United is engaged in commercial banking activities through its six branches in the San Diego, Los Angeles and San Francisco, California metropolitan areas. All significant intercompany accounts and transactions have been eliminated in consolidation. Certain principles which significantly affect the determination of financial position, results of operations and cash flows are summarized below.

A legal entity is referred to as a Variable Interest Entity (“VIE”) if any of the following conditions exist: (1) the total equity at risk is insufficient to permit the legal entity to finance its activities without additional subordinated financial support from other parties, or (2) the entity has equity investors that cannot make significant decisions about the entity’s operations or that do not absorb their proportionate share of the expected losses or receive the expected returns of the entity.  In addition, as specified in VIE accounting guidance, a VIE must be consolidated by the Company if it is deemed to be the primary beneficiary of the VIE. The primary beneficiary is the party that has both (1) the power to direct the activities of an entity that most significantly impact the VIE’s economic performance, and (2) through its interests in the VIE, the obligation to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.  All facts and circumstances are taken into consideration when determining whether the Company has variable interest that would deem it the primary beneficiary and, therefore, require consolidation of the related VIE or otherwise rise to the level where disclosure would provide useful information to the users of the Company’s financial statements.  In the case of the Company’s sole VIE, MCBI Statutory Trust I,  it is qualitatively clear based on the extent of the Company’s involvement that the Company is not the primary beneficiary of the VIE.  Accordingly, the accounts of this entity are not consolidated in the Company’s financial statements.

The accompanying unaudited condensed consolidated financial statements were prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of the Company’s financial position at March 31, 2013 and December 31, 2012, results of operations for the three months ended March 31, 2013 and 2012, and cash flows for the three months ended March 31, 2013 and 2012. Interim period results are not necessarily indicative of results for a full-year period.  The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by U.S. generally accepted accounting  principles.

Certain items in prior financial statements have been reclassified to conform to the 2013 presentation, with no impact on the balance sheet, net income, shareholders’ equity or cash flows.

These unaudited financial statements and the notes thereto should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

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Note 2 - Securities (Detail) - The Amortized Cost And Approximate Fair Value Of Securities Is As Follows: (USD $)	3 Months Ended																																																																																						3 Months Ended	12 Months Ended							3 Months Ended	12 Months Ended												12 Months Ended						3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2013 US States and Political Subdivisions Debt Securities [Member] Amortized Cost [Member]	Dec. 31, 2012 US States and Political Subdivisions Debt Securities [Member] Amortized Cost [Member]	Mar. 31, 2013 US States and Political Subdivisions Debt Securities [Member] Unrealized Gains [Member]	Dec. 31, 2012 US States and Political Subdivisions Debt Securities [Member] Unrealized Gains [Member]	Mar. 31, 2013 US States and Political Subdivisions Debt Securities [Member] Fair Value [Member]	Dec. 31, 2012 US States and Political Subdivisions Debt Securities [Member] Fair Value [Member]	Mar. 31, 2013 Held To Maturity [Member] Amortized Cost [Member]	Dec. 31, 2012 Held To Maturity [Member] Amortized Cost [Member]	Mar. 31, 2013 Held To Maturity [Member] Unrealized Gains [Member]	Dec. 31, 2012 Held To Maturity [Member] Unrealized Gains [Member]	Mar. 31, 2013 Held To Maturity [Member] Fair Value [Member]	Dec. 31, 2012 Held To Maturity [Member] Fair Value [Member]	Mar. 31, 2013 Federal Reserve Bank Stock [Member] Amortized Cost [Member]		Dec. 31, 2012 Federal Reserve Bank Stock [Member] Amortized Cost [Member]		Mar. 31, 2013 Federal Reserve Bank Stock [Member] Unrealized Gains [Member]		Dec. 31, 2012 Federal Reserve Bank Stock [Member] Unrealized Gains [Member]		Mar. 31, 2013 Federal Reserve Bank Stock [Member] Unrealized Losses [Member]		Dec. 31, 2012 Federal Reserve Bank Stock [Member] Unrealized Losses [Member]		Dec. 31, 2012 Federal Reserve Bank Stock [Member] OTTI [Member]		Dec. 31, 2011 Federal Reserve Bank Stock [Member] OTTI [Member]		Mar. 31, 2013 Federal Reserve Bank Stock [Member] Fair Value [Member]		Dec. 31, 2012 Federal Reserve Bank Stock [Member] Fair Value [Member]		Mar. 31, 2013 Subsidiary Trust [Member] Amortized Cost [Member]		Dec. 31, 2012 Subsidiary Trust [Member] Amortized Cost [Member]		Mar. 31, 2013 Subsidiary Trust [Member] Unrealized Gains [Member]		Dec. 31, 2012 Subsidiary Trust [Member] Unrealized Gains [Member]		Mar. 31, 2013 Subsidiary Trust [Member] Unrealized Losses [Member]		Dec. 31, 2012 Subsidiary Trust [Member] Unrealized Losses [Member]		Dec. 31, 2012 Subsidiary Trust [Member] OTTI [Member]		Dec. 31, 2011 Subsidiary Trust [Member] OTTI [Member]		Mar. 31, 2013 Subsidiary Trust [Member] Fair Value [Member]		Dec. 31, 2012 Subsidiary Trust [Member] Fair Value [Member]		Mar. 31, 2013 US Government Agencies Debt Securities [Member] Amortized Cost [Member]	Dec. 31, 2012 US Government Agencies Debt Securities [Member] Amortized Cost [Member]	Mar. 31, 2013 US Government Agencies Debt Securities [Member] Unrealized Gains [Member]	Dec. 31, 2012 US Government Agencies Debt Securities [Member] Unrealized Gains [Member]	Mar. 31, 2013 US Government Agencies Debt Securities [Member] Unrealized Losses [Member]	Dec. 31, 2012 US Government Agencies Debt Securities [Member] Unrealized Losses [Member]	Mar. 31, 2013 US Government Agencies Debt Securities [Member] Fair Value [Member]	Dec. 31, 2012 US Government Agencies Debt Securities [Member] Fair Value [Member]	Mar. 31, 2013 US States and Political Subdivisions Debt Securities [Member] Amortized Cost [Member]	Dec. 31, 2012 US States and Political Subdivisions Debt Securities [Member] Amortized Cost [Member]	Mar. 31, 2013 US States and Political Subdivisions Debt Securities [Member] Unrealized Gains [Member]	Dec. 31, 2012 US States and Political Subdivisions Debt Securities [Member] Unrealized Gains [Member]	Mar. 31, 2013 US States and Political Subdivisions Debt Securities [Member] Unrealized Losses [Member]	Mar. 31, 2013 US States and Political Subdivisions Debt Securities [Member] Fair Value [Member]	Dec. 31, 2012 US States and Political Subdivisions Debt Securities [Member] Fair Value [Member]	Mar. 31, 2013 Corporate Debt Securities [Member] Amortized Cost [Member]	Dec. 31, 2012 Corporate Debt Securities [Member] Amortized Cost [Member]	Mar. 31, 2013 Corporate Debt Securities [Member] Unrealized Gains [Member]	Dec. 31, 2012 Corporate Debt Securities [Member] Unrealized Gains [Member]	Mar. 31, 2013 Corporate Debt Securities [Member] Fair Value [Member]	Dec. 31, 2012 Corporate Debt Securities [Member] Fair Value [Member]	Mar. 31, 2013 Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] Amortized Cost [Member]	Dec. 31, 2012 Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] Amortized Cost [Member]	Mar. 31, 2013 Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] Unrealized Gains [Member]	Dec. 31, 2012 Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] Unrealized Gains [Member]	Mar. 31, 2013 Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] Unrealized Losses [Member]	Mar. 31, 2013 Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] Fair Value [Member]	Dec. 31, 2012 Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] Fair Value [Member]	Mar. 31, 2013 Residential Mortgage Backed Securities [Member] Amortized Cost [Member]	Dec. 31, 2012 Residential Mortgage Backed Securities [Member] Amortized Cost [Member]	Mar. 31, 2013 Residential Mortgage Backed Securities [Member] Unrealized Gains [Member]	Dec. 31, 2012 Residential Mortgage Backed Securities [Member] Unrealized Gains [Member]	Mar. 31, 2013 Residential Mortgage Backed Securities [Member] OTTI [Member]	Dec. 31, 2012 Residential Mortgage Backed Securities [Member] OTTI [Member]	Mar. 31, 2013 Residential Mortgage Backed Securities [Member] Fair Value [Member]	Dec. 31, 2012 Residential Mortgage Backed Securities [Member] Fair Value [Member]	Mar. 31, 2013 Asset-backed Securities [Member] Amortized Cost [Member]	Dec. 31, 2012 Asset-backed Securities [Member] Amortized Cost [Member]	Mar. 31, 2013 Asset-backed Securities [Member] Unrealized Gains [Member]	Dec. 31, 2012 Asset-backed Securities [Member] Unrealized Gains [Member]	Mar. 31, 2013 Asset-backed Securities [Member] OTTI [Member]	Dec. 31, 2012 Asset-backed Securities [Member] OTTI [Member]	Mar. 31, 2013 Asset-backed Securities [Member] Fair Value [Member]	Dec. 31, 2012 Asset-backed Securities [Member] Fair Value [Member]	Mar. 31, 2013 CRA Funds [Member] Amortized Cost [Member]	Dec. 31, 2012 CRA Funds [Member] Amortized Cost [Member]	Mar. 31, 2013 CRA Funds [Member] Unrealized Gains [Member]	Dec. 31, 2012 CRA Funds [Member] Unrealized Gains [Member]	Mar. 31, 2013 CRA Funds [Member] Fair Value [Member]	Dec. 31, 2012 CRA Funds [Member] Fair Value [Member]	Dec. 31, 2012 Securities (Assets) [Member] Amortized Cost [Member]	Dec. 31, 2012 Securities (Assets) [Member] Unrealized Gains [Member]	Dec. 31, 2012 Securities (Assets) [Member] Unrealized Losses [Member]	Dec. 31, 2012 Securities (Assets) [Member] OTTI [Member]	Dec. 31, 2012 Securities (Assets) [Member] Fair Value [Member]	Mar. 31, 2013 Amortized Cost [Member]	Dec. 31, 2012 Amortized Cost [Member]	Mar. 31, 2013 Unrealized Gains [Member]	Mar. 31, 2013 Unrealized Losses [Member]	Mar. 31, 2013 OTTI [Member]	Mar. 31, 2013 Fair Value [Member]	Dec. 31, 2012 Fair Value [Member]
Debt securities
Amortized Cost																																																							$ 81,385,000	$ 70,892,000							$ 14,618,000	$ 12,810,000						$ 6,074,000	$ 6,080,000					$ 61,558,000	$ 56,572,000						$ 684,000	$ 718,000							$ 176,000	$ 187,000							$ 14,204,000	$ 14,128,000					$ 161,387,000					$ 178,699,000
Gains																																																									240,000	362,000							426,000	579,000						265,000	270,000					1,225,000	1,369,000						353,000	330,000							148,000	129,000							131,000	233,000				3,272,000						2,788,000
Unrealized Losses																																																											(206,000)	(73,000)							(49,000)													(51,000)																											(73,000)						(306,000)
OTTI	509,000																																																																																						(342,000)	(365,000)							(167,000)	(173,000)												(538,000)						(509,000)
Fair Value	166,337,000																																																												81,419,000	71,181,000						14,995,000	13,389,000					6,339,000	6,350,000						62,732,000	57,941,000							695,000	683,000							157,000	143,000					14,335,000	14,361,000					164,048,000						180,672,000
Securities held-to-maturity
Amortized Cost			4,046,000	4,046,000					4,046,000	4,046,000
Gains					624,000	711,000					624,000	711,000
Fair Value	4,670,000	4,757,000					4,670,000	4,757,000					4,670,000	4,757,000
Amortized Cost	5,413,000														4,330,000	[1],[2]	4,509,000	[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]	4,330,000	[1],[2]	4,509,000	[1],[2]	1,083,000	[3]	1,083,000	[3]		[3]		[3]		[3]		[3]		[3]		[3]	1,083,000	[3]	1,083,000	[3]																																																								5,413,000	5,592,000				5,413,000	5,592,000
Fair Value	5,413,000														4,330,000	[1],[2]	4,509,000	[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]	4,330,000	[1],[2]	4,509,000	[1],[2]	1,083,000	[3]	1,083,000	[3]		[3]		[3]		[3]		[3]		[3]		[3]	1,083,000	[3]	1,083,000	[3]																																																								5,413,000	5,592,000				5,413,000	5,592,000
Gains	5,413,000														4,330,000	[1],[2]	4,509,000	[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]	4,330,000	[1],[2]	4,509,000	[1],[2]	1,083,000	[3]	1,083,000	[3]		[3]		[3]		[3]		[3]		[3]		[3]	1,083,000	[3]	1,083,000	[3]																																																								5,413,000	5,592,000				5,413,000	5,592,000
Unrealized Losses	5,413,000														4,330,000	[1],[2]	4,509,000	[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]	4,330,000	[1],[2]	4,509,000	[1],[2]	1,083,000	[3]	1,083,000	[3]		[3]		[3]		[3]		[3]		[3]		[3]	1,083,000	[3]	1,083,000	[3]																																																								5,413,000	5,592,000				5,413,000	5,592,000
OTTI	$ 5,592,000														$ 4,330,000	[1],[2]	$ 4,509,000	[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]		[1],[2]	$ 4,330,000	[1],[2]	$ 4,509,000	[1],[2]	$ 1,083,000	[3]	$ 1,083,000	[3]		[3]		[3]		[3]		[3]		[3]		[3]	$ 1,083,000	[3]	$ 1,083,000	[3]																																																								$ 5,413,000	$ 5,592,000				$ 5,413,000	$ 5,592,000

[1] FHLB stock held by the Banks is subject to certain restrictions under a credit policy of the FHLB dated May 1, 1997. Redemption of FHLB stock is dependent upon repayment of borrowings, if any, from the FHLB.

[2] Federal Reserve Bank stock held by MetroBank is subject to certain restrictions under Federal Reserve Bank Policy.

[3] The Company's ownership of common securities of MCBI Trust I is carried at cost.

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Note 3 - Loans and Allowance for Loan Losses (Detail) - Age Of The Recorded Investment In Loans By Portfolio (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
30-59 Days Past Due	$ 3,200	$ 2,497
60-89 Days Past Due	1,021	4,634
Greater Than 90 Days	17,234	24,217
Total Past Due	21,455	31,348
Current	1,106,274	1,072,130
Loans	1,127,729	1,103,478	1,050,049
Commercial And Industrial [Member]
30-59 Days Past Due	870	2,233
60-89 Days Past Due	645	817
Greater Than 90 Days	510	1,308
Total Past Due	2,025	4,358
Current	393,886	379,547
Loans	395,911	383,905	344,975
Real Estate Mortgage Residential [Member]
30-59 Days Past Due	66
Greater Than 90 Days	142	239
Total Past Due	208	239
Current	37,401	36,667
Loans	37,609	36,906
Real Estate Mortgage Commercial [Member]
30-59 Days Past Due	2,264	114
60-89 Days Past Due	376	3,817
Greater Than 90 Days	12,053	18,141
Total Past Due	14,693	22,072
Current	662,731	643,502
Loans	677,424	665,574
Real Estate Construction Residential [Member]
Greater Than 90 Days	1,426	1,426
Total Past Due	1,426	1,426
Current	1,322	984
Loans	2,748	2,410
Real Estate Construction Commercial [Member]
30-59 Days Past Due		150
Greater Than 90 Days	3,103	3,103
Total Past Due	3,103	3,253
Current	4,261	4,029
Loans	7,364	7,282
Consumer And Other [Member]
Current	6,673	7,401
Loans	$ 6,673	$ 7,401	$ 4,795

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Note 9 - Derivative Financial Instruments (Detail) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Jun. 30, 2011	Dec. 31, 2010	Sep. 30, 2009
Notional Amount of Interest Rate Derivatives		$ 15.0	$ 17.5	$ 17.5
Junior Subordinated Notes				36.1
Average Term of Credit Risk Derivatives	5 years
Derivative, Fixed Interest Rate			5.38%
Derivative, Variable Interest Rate			1.55%
Derivative, Cap Interest Rate		2.00%
Derivative, Collateral, Right to Reclaim Cash	$ 2.3

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Condensed Consolidated Balance Sheets (Unaudited) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Cash and due from banks	$ 25,013	$ 31,203
Federal funds sold and other short-term investments	163,282	128,246
Total cash and cash equivalents	188,295	159,449
Interest-bearing time deposits in banks	15,354	15,321
Securities available-for-sale, at fair value	142,713	119,422
Securities available-for-sale pledged with creditors’ right to repledge, at fair value	37,959	44,626
Total securities available-for-sale	180,672	164,048
Securities held-to-maturity (fair value $4,670 and $4,757 at March 31, 2013 and December 31, 2012, respectively)	4,046	4,046
Other investments	5,413	5,592
Loans, net of allowance for loan losses of $22,832 and $24,592, respectively	1,101,884	1,075,745
Accrued interest receivable	3,680	4,120
Premises and equipment, net	3,948	4,046
Goodwill	14,327	14,327
Deferred tax asset, net	12,676	13,110
Customers' liability on acceptances	4,914	7,045
Foreclosed assets, net	12,152	12,555
Cash value of bank owned life insurance	33,120	32,794
Prepaid FDIC assessment	3,001	3,439
Other assets	3,754	4,175
Total assets	1,587,236	1,519,812
Deposits:
Noninterest-bearing	318,912	309,696
Interest-bearing	1,009,140	957,334
Total deposits	1,328,052	1,267,030
Junior subordinated debentures	36,083	36,083
Other borrowings	30,000	25,000
Accrued interest payable	274	233
Acceptances outstanding	4,914	7,045
Other liabilities	8,390	7,390
Total liabilities	1,407,713	1,342,781
Shareholders' equity:
Common stock, $1.00 par value, 50,000,000 shares authorized; 18,766,765 shares issued and 18,725,901 and 18,746,385 outstanding at March 31, 2013 and December 31, 2012, respectively	18,767	18,767
Additional paid-in-capital	75,019	74,998
Retained earnings	85,908	82,881
Accumulated other comprehensive loss	221	567
Treasury stock, at cost, 40,864 and 20,380 shares at March 31, 2013 and December 31, 2012, respectively	(392)	(182)
Total shareholders' equity	179,523	177,031
Total liabilities and shareholders' equity	$ 1,587,236	$ 1,519,812

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Note 4 - Goodwill (Detail)	3 Months Ended
	Mar. 31, 2013
Control Premium	20.00%
Metro United [Member]
Average Growth Rate	9.80%
Fair Value Inputs, Discount Rate	13.20%

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Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (USD $) In Thousands	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]	Total
Balance at Dec. 31, 2012	$ 18,767	$ 74,998	$ 82,881	$ 567	$ (182)	$ 177,031
Balance (in Shares) at Dec. 31, 2012	18,767
Repurchase of common stock					(210)	(210)
Stock-based compensation expense related to stock options recognized in earnings		21				21
Net income			3,027			3,027
Other comprehensive loss				(346)		(346)
Balance at Mar. 31, 2013	$ 18,767	$ 75,019	$ 85,908	$ 221	$ (392)	$ 179,523
Balance (in Shares) at Mar. 31, 2013	18,767

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Note 11 - Fair Value (Detail) - Assets Carried At Fair Value On A Nonrecurring Basis By Caption On The Condensed Consolidated Balance Sheets And By Valuation Hierarchy (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Goodwill [Member] | Fair Value, Inputs, Level 3 [Member]
Assets
Assets	$ 14,327		$ 14,327
Foreclosed Assets [Member] | Fair Value, Inputs, Level 3 [Member]
Assets
Assets	12,152		12,555
Impaired Loans [Member] | Fair Value, Inputs, Level 2 [Member]
Assets
Assets	3,728	[1]	4,646	[1]
Impaired Loans [Member] | Fair Value, Inputs, Level 3 [Member]
Assets
Assets		[1]		[1]

[1] Impaired loans represent collateral dependent impaired loans with a specific valuation allowance.

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Note 2 - Securities (Detail) - Future Contractual Maturities Of Debt Securities (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Within one year	$ 702
Within one year	711
Within two to five years	12,569
Within two to five years	12,845
Within six to ten years	75,675
Within six to ten years	75,800
After ten years	13,307
After ten years	13,554
After ten years	4,046
After ten years	4,670
Mortgage-backed securities and collateralized mortgage obligations	62,242
Mortgage-backed securities and collateralized mortgage obligations	63,427
Total debt securities	164,495
Total debt securities	166,337
Total debt securities	4,046
Total debt securities	$ 4,670	$ 4,757

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Note 3 - Loans and Allowance for Loan Losses (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

March 31, 2013	Gross Loan Balance		Deferred Loan Fees			Accrued Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	395,640	$	(687	)	$	958	$	395,911
Real estate mortgage		714,587		(1,574	)		2,020		715,033
Real estate construction		10,132		(37	)		17		10,112
Consumer and other		6,808		(153	)		18		6,673
Total	$	1,127,167	$	(2,451	)	$	3,013	$	1,127,729

December 31, 2012	Gross Loan Balance		Deferred Loan Fees			Accrued  Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	383,641	$	(814	)	$	1,078	$	383,905
Real estate mortgage		702,051		(1,595	)		2,024		702,480
Real estate construction		9,704		(30	)		18		9,692
Consumer and other		7,531		(151	)		21		7,401
Total	$	1,102,927	$	(2,590	)	$	3,141	$	1,103,478

Financing Receivable Credit Quality Indicators [Table Text Block]

As of March 31, 2013	Commercial and industrial		Real estate mortgage		Real estate construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	380,163	$	645,678	$	5,583	$	6,673	$	1,038,097
7 - “Special Mention”/ “Watch”		3,797		13,268		—		—		17,065
8 - “Substandard”		11,951		56,087		4,529		—		72,567
9 -“Doubtful"		—		—		—		—		—
Total	$	395,911	$	715,033	$	10,112	$	6,673	$	1,127,729

As of December 31, 2012	Commercial and industrial		Real estate mortgage		Real estate construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	366,571	$	611,159	$	5,163	$	7,401	$	990,294
7 - “Special Mention”/ “Watch”		4,393		14,593		—		—		18,986
8 - “Substandard”		12,941		76,728		4,529		—		94,198
9 -“Doubtful"		—		—		—		—		—
Total	$	383,905	$	702,480	$	9,692	$	7,401	$	1,103,478

Past Due Financing Receivables [Table Text Block]

As of March 31, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Recorded Investment in Loans		Recorded Investment 90 Days and Accruing
Commercial and industrial	$	870	$	645	$	510	$	2,025	$	393,886	$	395,911	$	—
Real estate mortgage:
Residential		66		—		142		208		37,401		37,609		—
Commercial		2,264		376		12,053		14,693		662,731		677,424		—
Real estate construction:
Residential		—		—		1,426		1,426		1,322		2,748		—
Commercial		—		—		3,103		3,103		4,261		7,364		—
Consumer and other		—		—		—		—		6,673		6,673		—
Total	$	3,200	$	1,021	$	17,234	$	21,455	$	1,106,274	$	1,127,729	$	—

As of December 31, 2012	30-59 Days Past Due		60-89 Days  Past Due		Greater Than 90 Days		Total Past  Due		Current		Total Recorded Investment in Loans		Recorded  Investment 90 Days and Accruing
Commercial and industrial	$	2,233	$	817	$	1,308	$	4,358	$	379,547	$	383,905	$	—
Real estate mortgage:
Residential		—		—		239		239		36,667		36,906		—
Commercial		114		3,817		18,141		22,072		643,502		665,574		—
Real estate construction:
Residential		—		—		1,426		1,426		984		2,410		—
Commercial		150		—		3,103		3,253		4,029		7,282		—
Consumer and other		—		—		—		—		7,401		7,401		—
Total	$	2,497	$	4,634	$	24,217	$	31,348	$	1,072,130	$	1,103,478	$	—

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

Recorded investment in nonaccrual loans	March 31, 2013		December 31, 2012
Commercial and industrial	$	579	$	1,308
Real estate mortgage:
Residential		142		239
Commercial		16,347		22,501
Real estate construction:
Residential		1,426		1,426
Commercial		3,104		3,103
Total	$	21,598	$	28,577

Impaired Financing Receivables [Table Text Block]

As of March 31, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no allowance
Commercial and industrial	$	579	$	579	$	—	$	4,394
Real estate mortgage:
Residential		142		142		—		188
Commercial		12,368		12,368		—		17,096
Real estate construction:
Residential		1,426		1,426		—		1,885
Commercial		3,104		3,104		—		3,132
Impaired loans with an allowance
Commercial and industrial	$	—	$	—	$	—	$	17
Real estate mortgage:
Commercial		3,979		3,980		252		4,530
Total:
Commercial and industrial	$	579	$	579	$	—	$	4,411
Real estate mortgage		16,489		16,490		252		21,814
Real estate construction		4,530		4,530		—		5,017

As of December 31, 2012	Recorded Investment		Unpaid Principal  Balance		Related Allowance		Average  Recorded  Investment
Impaired loans with no allowance
Commercial and industrial	$	1,287	$	1,289	$	—	$	5,162
Real estate mortgage:
Residential		239		239		—		213
Commercial		18,369		18,369		—		19,732
Real estate construction:
Residential		1,426		1,426		—		1,529
Commercial		3,103		3,103		—		3,171
Impaired loans with an allowance
Commercial and industrial		21		21		21		1,434
Real estate mortgage:
Commercial		4,533		4,535		503		6,836
Total:
Commercial and industrial	$	1,308	$	1,310	$	21	$	6,596
Real estate mortgage		23,141		23,143		503		26,781
Real estate construction		4,529		4,529		—		4,700

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

	Three Months Ended March 31, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate mortgage:
Commercial		1	$	2,699	$	2,699

Allowance for Credit Losses on Financing Receivables [Table Text Block]

As of and for the three months ended  March 31, 2013	Commercial and industrial			Real estate mortgage			Real estate construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	8,255		$	14,748		$	216		$	143		$	1,230	$	24,592
(Reduction in) provision for loan losses		(408	)		(1,031	)		(41	)		(43	)		1,073		(450	)
Charge-offs		(884	)		(550	)		—			(25	)		—		(1,459	)
Recoveries		90			50			5			4			—		149
Allowance for loan losses at end of period	$	7,053		$	13,217		$	180		$	79		$	2,303	$	22,832
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	—		$	289		$	—		$	—				$	289
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	7,053		$	12,928		$	180		$	79				$	20,240
Loans:
Recorded investment in loans	$	395,911		$	715,033		$	10,112		$	6,673				$	1,127,729
Recorded investment in loans  individually evaluated for impairment	$	579		$	16,489		$	4,530		$	—				$	21,598
Recorded investment in loans  collectively evaluated for impairment	$	395,332		$	698,544		$	5,582		$	6,673				$	1,106,131

As of and for the three months ended  March 31, 2012	Commercial and industrial			Real estate mortgage			Real estate construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	7,966		$	19,213		$	320		$	137		$	685	$	28,321
(Reduction in) provision for loan losses		1,923			(2,638	)		(104	)		(6	)		1,225		400
Charge-offs		(784	)		(340	)		—			(42	)		—		(1,166	)
Recoveries		118			363			19			11			—		511
Allowance for loan losses at end of period	$	9,223		$	16,598		$	235		$	100		$	1,910	$	28,066
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	362		$	655		$	—		$	—				$	1,017
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	8,861		$	15,943		$	235		$	100				$	25,139
Loans:
Recorded investment in loans	$	344,975		$	691,071		$	9,208		$	4,795				$	1,050,049
Recorded investment in loans  individually evaluated for impairment	$	9,315		$	29,165		$	3,263		$	1				$	41,744
Recorded investment in loans  collectively evaluated for impairment	$	335,660		$	661,906		$	5,945		$	4,794				$	1,008,305

Class of Financing Receivable [Member]

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	As of March 31, 2013						As of December 31, 2012
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Commercial and industrial	$	395,640			35.10	%	$	383,641			34.78	%
Real estate mortgage
Residential		37,526			3.33			36,807			3.34
Commercial		677,061			60.07			665,244			60.32
		714,587			63.40			702,051			63.66
Real estate construction
Residential		2,753			0.24			2,420			0.22
Commercial		7,379			0.66			7,284			0.66
		10,132			0.90			9,704			0.88
Consumer and other		6,808			0.60			7,531			0.68
Gross loans		1,127,167			100.00	%		1,102,927			100.00	%
Unearned discounts, interest and deferred fees		(2,451	)					(2,590	)
Total loans		1,124,716						1,100,337
Allowance for loan losses		(22,832	)					(24,592	)
Loans, net	$	1,101,884					$	1,075,745

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Note 3 - Loans and Allowance for Loan Losses (Detail) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans (in Dollars)	$ 0	$ 89,000
Consumer Loans [Member] | Minimum [Member]
Amortization Period	12 months
Consumer Loans [Member] | Maximum [Member]
Amortization Period	60 months
MetroBank Maximum [Member]
Loans and Leases Receivable, Gross (in Dollars)	13,000,000
Metro United Maximum [Member]
Loans and Leases Receivable, Gross (in Dollars)	$ 8,000,000
Minimum [Member] | MetroBank [Member]
Amortization Period	15 years
Balloon Payment Period	five
Minimum [Member] | Metro United [Member]
Amortization Period	25 years
Balloon Payment Period	five
Minimum [Member]
Amortization Period	15 years
Balloon Payment Period	two
Maximum [Member] | MetroBank [Member]
Amortization Period	20 years
Balloon Payment Period	seven
Maximum [Member] | Metro United [Member]
Amortization Period	30 years
Balloon Payment Period	ten
Maximum [Member]
Amortization Period	30 years
Balloon Payment Period	seven

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Note 5 - Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Three Months Ended March 31,
	2013		2012
	(In thousands, except per share amounts)
Net income available to common shareholders	$	3,027	$	2,170
Weighted average common shares in basic EPS		18,332		13,169
Effect of dilutive securities		391		140
Weighted average common and potentially dilutive common shares used in diluted EPS		18,723		13,309
Income per common share:
Basic	$	0.17	$	0.16
Diluted	$	0.16	$	0.16

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Net income	$ 3,027	$ 2,768
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	234	284
(Reduction in) provision for loan losses	(450)	400
Impairment on securities	27	39
Gain on securities transactions, net	(14)	(12)
(Gain) loss on sale or writedown of foreclosed assets, net	(910)	782
Amortization of premiums and discounts on securities	191	128
Amortization of deferred loan fees and discounts	(312)	(244)
Amortization of core deposit intangibles	10	14
Stock-based compensation	21	20
Change in:
Accrued interest receivable	440	(40)
Other assets	995	538
Accrued interest payable	41	(25)
Other liabilities	1,096	(529)
Net cash provided by operating activities	4,396	4,123
Cash flows from investing activities:
Net change in interest-bearing deposits in banks	(33)
Purchases of securities available-for-sale	(28,484)	(31,565)
Purchases of other investments		(1)
Proceeds from maturities, calls and principal paydowns of securities available-for-sale	10,966	12,603
Proceeds from sales and maturities of other investments	179	110
Net change in loans	(32,056)	(2,546)
Proceeds from sales of foreclosed assets	7,992	2,800
Purchases of premises and equipment	(136)	(83)
Net cash used in investing activities	(41,572)	(18,682)
Cash flows from financing activities:
Deposits	61,022	5,252
Other borrowings	5,000	(315)
Repurchase of common stock		(112)
Cash dividends paid on preferred stock		(563)
Net cash provided by financing activities	66,022	4,262
Net increase (decrease) in cash and cash equivalents	28,846	(10,297)
Cash and cash equivalents at beginning of period	159,449	193,609
Cash and cash equivalents at end of period	188,295	183,312
Supplemental information:
Interest paid	2,154	2,778
Income taxes paid	250	1,160
Foreclosed assets acquired	6,679	202
Loans originated to finance foreclosed assets	6,120
Incentive Plan [Member]
Supplemental information:
Issuance of common stock pursuant to incentive plan		$ 44

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Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Fair value (in Dollars)	$ 4,670	$ 4,757
Net of allowance for loan losses (in Dollars)	$ 22,832	$ 24,592
Common stock, par value (in Dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	18,766,765	18,766,765
Common stock, shares outstanding	18,725,901	18,746,385
Treasury stock, shares	40,864	20,380

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Note 10 - Operating Segment Information

3 Months Ended

Mar. 31, 2013

Segment Reporting Disclosure [Text Block]

10.     OPERATING SEGMENT INFORMATION

The Company operates two community banks in distinct geographical areas, and manages its operations and prepares management reports and other information with a primary focus on these geographical areas.  Performance assessment and resource allocation are based upon this geographical structure.  The operating segment identified as “Other” includes the parent company and eliminations of transactions between segments. The accounting policies of the individual operating segments are the same as those of the Company as described in Note 1. Transactions between operating segments are primarily conducted at fair value, resulting in profits that are eliminated for reporting consolidated results of operations.  Operating segments pay for centrally provided services based upon estimated or actual usage of those services.

The following is a summary of selected operating segment information as of and for the three months ended March 31, 2013 and 2012:

	For the Three Months Ended March 31, 2013											For the Three Months Ended March 31, 2012
	MetroBank			Metro United		Other			Consolidated Company			MetroBank		Metro United		Other			Consolidated Company
	(Dollars in thousands)
Total interest income	$	10,849		$	4,166	$	2		$	15,017		$	12,410	$	3,981	$	7		$	16,398
Total interest expense		1,309			574		312			2,195			1,737		669		348			2,754
Net interest income		9,540			3,592		(310	)		12,822			10,673		3,312		(341	)		13,644
(Reduction in) provision for loan losses		(450	)		─		─			(450	)		400		─		─			400
Net interest income after provision for loan losses		9,990			3,592		(310	)		13,272			10,273		3,312		(341	)		13,244
Noninterest income		1,905			106		(361	)		1,650			2,057		84		(338	)		1,803
Noninterest expenses		7,418			2,411		473			10,302			8,513		2,391		29			10,933
Income (loss) before income tax provision		4,477			1,287		(1,144	)		4,620			3,817		1,005		(708	)		4,114
Provision (benefit) for income taxes		1,435			548		(390	)		1,593			1,160		423		(237	)		1,346
Net income (loss)	$	3,042		$	739	$	(754	)	$	3,027		$	2,657	$	582	$	(471	)	$	2,768

	As of March 31, 2013									As of March 31, 2012
	MetroBank		Metro United		Other			Consolidated Company		MetroBank		Metro United		Other			Consolidated Company
	(Dollars in thousands)
Net loans	$	767,618	$	334,266	$	─		$	1,101,884	$	724,511	$	293,972	$	─		$	1,018,483
Total assets		1,146,420		440,418		398			1,587,236		1,106,658		395,975		(1,626	)		1,501,007
Deposits		964,232		370,574		(6,754	)		1,328,052		933,396		333,992		(10,561	)		1,256,827

XML

Document And Entity Information	3 Months Ended
	Mar. 31, 2013	May 02, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	MetroCorp Bancshares, Inc.
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		18,725,901
Amendment Flag	false
Entity Central Index Key	0001068300
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1

XML

Note 11 - Fair Value

3 Months Ended

Mar. 31, 2013

Fair Value Disclosures [Text Block]

11.     FAIR VALUE

Fair value is the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value is reported based on a hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  The three levels of inputs that may be used to measure fair value are:

· Level 1 – Quoted prices in active markets for identical assets or liabilities.

· Level 2 – Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

· Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.  Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

Financial assets measured at fair value on a recurring basis are as follows:

Securities. Where quoted prices are available in an active market, securities are reported at fair value utilizing Level 1 inputs. Level 1 securities are comprised of bond funds. If quoted market prices are not available, the Company obtains fair values from an independent pricing service. The fair value measurements consider data that may include proprietary pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities are comprised of highly liquid government bonds, and collateralized mortgage and debt obligations. Market values provided by the pricing service are compared to prices from other sources for reasonableness. The Company has not adjusted the values from the pricing service.

Interest Rate Derivatives. The Company’s derivative positions are classified within Level 2 in the fair value hierarchy and is valued using models generally accepted in the financial services industry that use actively quoted or observable market input values from external market data providers and/or non-binding broker-dealer quotations. The fair value of the derivatives aredetermined using discounted cash flow models. These models’ key assumptions include the contractual terms of the respective contract, along with significant observable inputs, including interest rates, yield curves, non-performance risk and volatility. Derivative contracts are executed with a Credit Support Annex, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels. These agreements protect the interests of the Company and its counterparties, should either party suffer a credit rating deterioration.

The following table presents the financial instruments carried at fair value on a recurring basis by caption on the consolidated balance sheets and by valuation hierarchy (as described above) at March 31, 2013 and December 31, 2012:

	Fair Value Measurements, using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Fair Value Measurements
Securities available-for-sale at March 31, 2013
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	—	$	81,419		$	—	$	81,419
Obligations of state and political subdivisions		—		14,995			—		14,995
Corporate		—		6,339			—		6,339
Mortgage-backed securities and collateralized mortgage obligations:							—
Government issued or guaranteed		—		62,732			—		62,732
Privately issued residential		—		695			—		695
Asset backed securities		—		157			—		157
Investment in CRA funds		14,335		—			—		14,335
Total available-for-sale securities		14,335		166,337			—		180,672
Derivative assets
Interest rate cap		—		49			—		49
Total assets measured at fair value on a recurring basis	$	14,335	$	166,386		$	—	$	180,721
Derivative liabilities at March 31, 2013
Interest rate swap	$	—	$	(1,624	)	$	—	$	(1,624	)
Securities available-for-sale at December 31, 2012
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	—	$	71,181		$	—	$	71,181
Obligations of state and political subdivisions		—		13,389			—		13,389
Corporate		—		6,350			—		6,350
Mortgage-backed securities and collateralized mortgage obligations:							—
Government issued or guaranteed		—		57,941			—		57,941
Privately issued residential		—		683			—		683
Asset backed securities		—		143			—		143
Investment in CRA funds		14,361		—			—		14,361
Total available-for-sale securities		14,361		149,687			—		164,048
Derivative assets
Interest rate cap		—		41			—		41
Total assets measured at fair value on a recurring basis	$	14,361	$	149,728		$	—	$	164,089
Derivative liabilities at December 31, 2012
Interest rate swap	$	—	$	(1,775)		$	—	$	(1,775)

Certain non-financial assets measured at fair value on a non-recurring basis include non-financial assets and non-financial liabilities measured at fair value in the second step of a goodwill impairment test, and intangible assets measured at fair value for impairment assessment, as well as foreclosed assets.  Certain financial assets are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Non-financial and financial assets measured at fair value on a non-recurring basis include the following:

Goodwill. Goodwill is measured at fair value on a non-recurring basis using Level 3 inputs.   In the first step of a goodwill impairment test, the Company primarily uses a review of the valuation of recent guideline bank acquisitions, if available, as well as discounted cash flow analysis and the market capitalization of the Company.   If the second step of a goodwill impairment test is required, the implied fair value of goodwill is determined in the same manner as goodwill is recognized in a business combination.  See Note 4 “Goodwill” for additional information.

Foreclosed Assets.  Foreclosed assets are carried at fair value less costs to sell.  The fair value measurements of foreclosed assets can include Level 2 measurement inputs such as real estate appraisals and comparable real estate sales information, in conjunction with Level 3 measurement inputs such as cash flow projections, qualitative adjustments, sales cost estimates, etc.  As a result, the categorization of foreclosed assets is Level 3 of the fair value hierarchy.  In connection with the measurement and initial recognition of certain foreclosed assets, the Company may recognize charge-offs through the allowance for loan losses.

  Impaired Loans. Certain impaired loans with a valuation reserve are measured for impairment using the practical expedient, whereby fair value of the loan is based on the fair value of the loan’s collateral, provided the loan is collateral dependent. The fair value measurements of loan collateral can include real estate appraisals, comparable real estate sales information, cash flow projections, realization estimates, etc., all of which can include observable and unobservable inputs. As a result, the categorization of impaired loans can be either Level 2 or Level 3 of the fair value hierarchy, depending on the nature of the inputs used for measuring the related collateral’s fair value. As of March 31, 2013 and December 31, 2012, certain impaired loans were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral.

The following presents assets carried at fair value on a nonrecurring basis by caption on the condensed consolidated balance sheets and by valuation hierarchy (as described above) as of March 31, 2013 and December 13, 2012 (in thousands):

	As of March 31, 2013
	Level 2		Level 3
Assets
Goodwill	$	—	$	14,327
Foreclosed assets		—		12,152
Impaired loans (1)		3,728		—

	As of December 31, 2012
	Level 2		Level 3
Assets
Goodwill	$	—	$	14,327
Foreclosed assets		—		12,555
Impaired loans (1)		4,646		—

(1) Impaired loans represent collateral dependent impaired loans with a specific valuation allowance.

The following presents losses related to fair value adjustments that are included in the Consolidated Statements of Operations for the three months ended March 31, 2013 and 2012 related to assets held at those dates (in thousands):

	Three Months Ended March 31,
	2013		2012
Losses related to:
Goodwill	$	—	$	—
Foreclosed assets (1)		64		77
Impaired loans (2)		—		—

(1) Losses represent related losses on foreclosed properties that were written down subsequent to their initial classification as foreclosed properties.

(2) Losses on impaired loans represent charge-offs which are netted against the allowance for loan losses.

              FASB ASC Topic 825 requires disclosure of the fair value of financial assets and liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis.

       The estimated fair values of financial instruments that are reported at amortized cost in the Company’s Consolidated Balance Sheets, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value, were as follows:

	As of March 31, 2013				As of December 31, 2012
	Carrying or Contract Amount		Estimated Fair Value		Carrying or Contract Amount		Estimated Fair Value
	(In thousands)
Financial Assets
Level 2 inputs:
Cash and cash equivalents	$	188,295	$	188,295	$	159,449	$	159,449
Interest-bearing time deposits in banks		15,354		15,354		15,321		15,321
Investment securities held-to-maturity		4,046		4,670		4,046		4,757
Other investments		5,413		5,413		5,592		5,592
Cash value of bank owned life insurance		33,120		33,120		32,794		32,794
Accrued interest receivable		3,680		3,680		4,120		4,120
Level 3 inputs:
Loans held-for-investment, net		1,101,884		1,091,892		1,075,745		1,062,432
Financial Liabilities
Level 2 inputs:
Deposit transaction accounts		810,247		810,247		808,377		808,377
Junior subordinated debentures		36,083		36,083		36,083		36,083
Accrued interest payable		274		274		233		233
Level 3 inputs:
Time deposits		517,804		520,982		458,653		461,672
Other borrowings		30,000		29,976		25,000		25,008
Off-balance sheet financial instruments
Unfunded loan commitments, including unfunded lines of credit		—		226		—		251
Standby letters of credit		—		13		—		24

The following methodologies and assumptions were used to estimate the fair value of the Company’s financial instruments as disclosed in the table:

Assets for Which Fair Value Approximates Carrying Value. The fair values of certain financial assets and liabilities carried at cost, including cash and due from banks, deposits with banks, federal funds sold, cash value of bank owned life insurance, certificates of deposit with banks denominated in a foreign currency, other investments, due from customers on acceptances and accrued interest receivable, are considered to approximate their respective carrying values due to their short-term nature and/or negligible credit risks.

Investment Securities.Fair values are based primarily upon quoted market prices obtained from an independent pricing service.

Loans.The fair value of loans originated by the Banks is estimated by discounting the expected future cash flows using the current interest rates at which similar loans with similar terms would be made. The presence of floors on a large portion of the variable rate loans has supported the yields above current market levels and is the key factor causing the fair value of the variable rate loans with floors to exceed the book value. The fair value of the remainder of the variable rate loans approximates the carrying value while fixed rate loans are generally above the carrying values. Using these results, valuation adjustments are made for specific credit risks as well as general portfolio credit and market risks to arrive at the fair value. The valuation methods described above are not based on the exit price concept of fair value.

Liabilities for Which Fair Value Approximates Carrying Value.The estimated fair value for transactional deposit liabilities with no stated maturity (i.e., demand, savings, and money market deposits) approximates the carrying value. The estimated fair value of deposits does not take into account the value of the Company’s long-term relationships with depositors, commonly known as core deposit intangibles, which are separate intangible assets, and not considered financial instruments. Nonetheless, the Company would likely realize a core deposit premium if its deposit portfolio were sold in the principal market for such deposits.

The fair value of acceptances outstanding, accounts payable and accrued liabilities are considered to approximate their respective carrying values due to their short-term nature.

Time Deposits.Fair values for fixed-rate time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on time deposits to a schedule of aggregated expected monthly maturities on time deposits.

Other Borrowings.The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other borrowings maturing within fourteen days approximate their fair values. Fair values of other borrowings are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Junior Subordinated Debentures.The fair value of the junior subordinated debentures approximates the carrying value as the debentures reprice quarterly.

Commitments to Extend Credit and Letters of Credit.The fair value of such instruments is estimated using the unamortized portion of fees collected for execution of such credit facility.

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Condensed Consolidated Statements of Income (Unaudited) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Interest income:
Loans	$ 13,829		$ 14,999
Securities:
Taxable	791		1,027
Tax-exempt	147		117
Other investments	50		43
Federal funds sold and other short-term investments (1)	200	[1]	212	[1]
Total interest income	15,017		16,398
Interest expense:
Time deposits	1,219		1,536
Demand and savings deposits	427		635
Junior subordinated debentures	316		336
Other borrowings	233		247
Total interest expense	2,195		2,754
Net interest income	12,822		13,644
(Reduction in) provision for loan losses	(450)		400
Net interest income after provision for loan losses	13,272		13,244
Noninterest income:
Service fees	909		1,117
Loan-related fees	130		70
Letters of credit commissions and fees	199		197
Gain on securities transactions, net	14		12
Total other-than-temporary-impairment (“OTTI”) on securities	(40)		(39)
Less: Noncredit portion of OTTI	(13)
Net impairments on securities	(27)		(39)
Other noninterest income	425		446
Total noninterest income	1,650		1,803
Noninterest expenses:
Salaries and employee benefits	6,292		5,921
Occupancy and equipment	1,650		1,689
Foreclosed assets, net	(841)		1,001
FDIC assessment	460		397
Other noninterest expense	2,741		1,925
Total noninterest expenses	10,302		10,933
Income before provision for income taxes	4,620		4,114
Provision for income taxes	1,593		1,346
Net income	3,027		2,768
Dividends and discount – preferred stock			(598)
Net income available to common shareholders	$ 3,027		$ 2,170
Earnings per common share:
Basic (in Dollars per share)	$ 0.17		$ 0.16
Diluted (in Dollars per share)	$ 0.16		$ 0.16
Weighted average common shares outstanding:
Basic (in Shares)	18,332		13,169
Diluted (in Shares)	18,723		13,309

[1] Includes interest-bearing time deposits in banks.

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Note 5 - Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Text Block]

5.        EARNINGS PER COMMON SHARE

Basic earnings per common share (“EPS”) is computed by dividing net income (after deducting dividends on preferred stock) by the weighted-average number of common shares outstanding during the period. Diluted EPS 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. Stock options, restricted common shares and warrants can be dilutive common shares and are therefore considered in the earnings per share calculation, if dilutive.  Stock options, restricted common shares and warrants that are antidilutive are excluded from earnings per share calculation.  Stock options, restricted common shares and warrants are antidilutive when the exercise price is higher than the current market price of the Company’s common stock.  As of March 31, 2013 and 2012, there were 258,920 and 652,750 antidilutive stock options, respectively.  The number of potentially dilutive common shares is determined using the treasury stock method.

	For the Three Months Ended March 31,
	2013		2012
	(In thousands, except per share amounts)
Net income available to common shareholders	$	3,027	$	2,170
Weighted average common shares in basic EPS		18,332		13,169
Effect of dilutive securities		391		140
Weighted average common and potentially dilutive common shares used in diluted EPS		18,723		13,309
Income per common share:
Basic	$	0.17	$	0.16
Diluted	$	0.16	$	0.16

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Note 4 - Goodwill

3 Months Ended

Mar. 31, 2013

Goodwill and Intangible Assets Disclosure [Text Block]

4.        GOODWILL

Goodwill is recorded on the acquisition date of each entity, and evaluated annually for possible impairment. Goodwill is required to be tested for impairment on an annual basis or as events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’s only reporting unit with assigned goodwill is Metro United.

2012 Annual Evaluation

The Company completed its 2012 annual impairment test based on information as of August 31, 2012. The impairment analysis utilized guideline company and guideline transaction information where available, discounted cash flow analysis, and the market capitalization of the Company to estimate the fair value of Metro United.

Due to the limited number of bank transaction multiples, management allocated more weight on the income approach for the step-one analysis. The Company also performed a reconciliation of the estimated fair value of the reporting unit to the stock price of the Company. This reconciliation is performed by first determining the fair value of the reporting unit from various valuation techniques (i.e., guideline transactions, discounted cash flows, and quoted market prices). The fair value is compared to the allocated value of the reporting unit based on the Company’s market value using the stock price as of the valuation date. The Company allocates the total market value to both of its segments, MetroBank and Metro United. For each Bank, the allocation is based upon the following internal ratios:

Balance Sheet Ratios

• Total Bank assets as a percentage of total assets;

• Total Bank loans as a percentage of total loans;

• Total Bank deposits as a percentage of total deposits; and

• Total Bank shareholder's equity as a percentage of total shareholders' equity.

Performance Ratios

• Total Bank nonperforming assets as a percentage of total assets;

• Last twelve months return on assets; and

• Last twelve months return on equity.

In allocating the market value between the two Banks, more weight was assigned to the Performance Ratios than the Balance Sheet Ratios in order to account for the differences in market valuation as a result of different financial performance. The allocated market value of Metro United is then reconciled to the weighted average fair value derived from each valuation technique (i.e., guideline transactions, discounted cash flows, and quoted market prices) by assigning an estimated control premium of 20% to the allocated market value.

Under the discounted cash flow method, the Company used an average asset growth rate of 9.8% for the next five-year period and discounted Metro United’s cash flow and terminal value using a 13.2% discount rate. The derived fair value of Metro United was lower than the carrying value of its equity; therefore Metro United failed the step-one impairment test.

The Company then performed the step-two analysis to derive the implied fair value of goodwill. The size of the implied goodwill under the step-two analysis was significantly affected by the estimated fair value of the loans pertaining to Metro United. The significant market risk adjustment, which is a consequence of the current market conditions such as the interest rate environment, risk premium requirement on performing and nonperforming loans, supply and demand of loans for sale, macroeconomic conditions and political and regulatory environment, were all substantial contributors to the valuation discounts associated with Metro United’s loan portfolio. The implied fair value of goodwill at the evaluation date exceeded the carrying value; therefore the Company determined there was no impairment of goodwill as of that date.

To the extent that market liquidity returns and the fair value of the individual assets or loans of Metro United increases at a faster rate than the fair value of Metro United as a whole, that may cause the implied goodwill to be lower than the carrying value of goodwill. Future potential changes in valuation assumptions may also impact the estimated fair value of Metro United, resulting in impairment of goodwill under the step-two analysis. The stock price performance of the Company and the fair value of Metro United's loans are factors that may impact the potential future goodwill impairment.

Goodwill impairment, if any, is a noncash adjustment to the Company’s financial statements. As goodwill and other intangible assets are not included in the calculation of regulatory capital, the Company’s well capitalized regulatory ratios are not affected. Subsequent reversal of goodwill impairment is prohibited.

Changes in the carrying amount of the Company’s goodwill for the periods indicated are as follows (in thousands):

Balance as of January 1, 2013
Goodwill		21,827
Accumulated impairment losses		7,500
Net goodwill	$	14,327
Impairment losses for the three months ended March 31, 2013		—
Balance as of March 31, 2013
Goodwill		21,827
Accumulated impairment losses		7,500
Net goodwill	$	14,327

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Note 4 - Goodwill (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Goodwill [Table Text Block]

Balance as of January 1, 2013
Goodwill		21,827
Accumulated impairment losses		7,500
Net goodwill	$	14,327
Impairment losses for the three months ended March 31, 2013		—
Balance as of March 31, 2013
Goodwill		21,827
Accumulated impairment losses		7,500
Net goodwill	$	14,327

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Note 12 - Income Taxes

3 Months Ended

Mar. 31, 2013

Income Tax Disclosure [Text Block]

12.     INCOME TAXES

The Company’s effective tax rate was 34.5% for three months ended March 31, 2013 compared with 32.7% for the three months ended March 31, 2012. The increase in the effective income tax rate in 2013 as compared to 2012 was partially the result of state income taxes, bank owned life insurance investment income and foreign taxes. Additionally, the effective income tax rates for the three months ended March 31, 2013 and 2012 were impacted by the amount of other non-deductible expense and non-taxable income in each respective period, and also relative to the pre-tax accounting income/loss upon which the effective income tax rate was calculated. The Texas state tax is based on the Company’s gross margin with limited deductions. Because the Texas state tax allows only limited deductions the tax may not correlate, from year to year, with pre-tax income. The California state tax is based on the unitary income of the consolidated group which can vary disproportionately from pre-tax income depending on the apportionment of income among members of the unitary group.

As of March 31, 2013, the Company had approximately $12.7 million in deferred tax assets. Deferred tax assets are subject to an evaluation of whether it is more likely than not that they will be realized. The Company has not provided a valuation allowance for the deferred tax assets at March 31, 2013 and  December 31, 2012 due primarily to its ability to offset reversals of net deductible temporary differences against income taxes paid in previous years and expected to be paid in future years. In making such judgments, significant weight is given to evidence that can be objectively verified. Because of historical losses that were recorded by the Company for the years ended December 31, 2010 and 2009, and if the Company is unable to generate sufficient taxable income in the future, then the Company may not be able to conclude it is more likely than not that the benefits of the deferred tax assets will be fully realized and may be required to recognize a valuation allowance and a corresponding income tax expense equal to the portion of the deferred tax asset that may not be realized.

The U.S. Federal and California State net operating loss carryforward period of 20 years provides sufficient time to utilize the deferred tax assets pertaining to the existing net operating loss carryforwards and any net operating losses that would be created by the reversal of the future net deductions which have not yet been taken.

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Note 8 - Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income Loss [Text Block]

8.       OTHER COMPREHENSIVE INCOME (LOSS)

The tax effects allocated to each component of other comprehensive income (loss) were as follows (in thousands):

	Three Months Ended March 31, 2013									Three Months Ended March 31, 2012
	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount			Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Change in accumulated gain on effective cash flow derivatives	$	151		$	55		$	96		$	68		$	25		$	43
Unrealized loss on investment securities with OTTI:
Securities with OTTI charges during the period		(40	)		(15	)		(25	)		(39	)		(14	)		(25	)
Less: OTTI charges recognized in net income		(27	)		(10	)		(17	)		(39	)		(14	)		(25	)
Net unrealized losses on investment securities with OTTI		(13	)		(5	)		(8	)		—			—			—
Unrealized gain (loss) on investment securities:
Unrealized holding gain (loss) arising during the period		(663	)		(238	)		(425	)		31			10			21
Less: reclassification adjustment for gain included in net income		14			5			9			12			4			8
Net unrealized gains (losses) on investment securities		(677	)		(243	)		(434	)		19			6			13
Other comprehensive (loss) income	$	(539	)	$	(193	)	$	(346	)	$	87		$	31		$	56

The balance of and changes in each component of accumulated other comprehensive income (loss) as of and for the three months ended March 31, 2013 are as follows (net of taxes):

	Gains (Losses) on Effective Cash Hedging Derivatives			Net Unrealized Gains (Losses) on Investments with OTTI			Net Unrealized Investment Gains			Total Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) December 31, 2012	$	(1,136	)	$	(1,017	)	$	2,720		$	567
Other comprehensive income (loss)before reclassifications		96			(8	)		(425	)		(337	)
Amounts reclassified from other comprehensive income (loss) (1)		—			—			(9	)		(9	)
Net current-period other comprehensive income (loss)		96			(8	)		(434	)		(346	)
Accumulated other comprehensive income (loss) March 31, 2013	$	(1,040	)	$	(1,025	)	$	2,286		$	221

(1) Amounts reclassified from other comprehensive income were transferred to gain (loss) on securities, net.

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Note 11 - Fair Value (Detail) - Losses Related to Fair Value Adjustments (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Foreclosed Assets [Member]
Losses related to:
Losses	$ 64	[1]	$ 77	[1]
Impaired Loans [Member]
Losses related to:
Losses		[2]		[2]

[1] Losses represent related losses on foreclosed properties that were written down subsequent to their initial classification as foreclosed properties.

[2] Losses on impaired loans represent charge-offs which are netted against the allowance for loan losses.

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Note 6 - Commitments and Contingencies

3 Months Ended

Mar. 31, 2013

Commitments and Contingencies Disclosure [Text Block]

6.       COMMITMENTS AND CONTINGENCIES

The Company is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include various guarantees, commitments to extend credit and standby letters of credit. Additionally, these instruments may involve, to varying degrees, credit risk in excess of the amount recognized in the statement of financial condition. The Company’s maximum exposure to credit loss under such arrangements is represented by the contractual amount of those instruments. The Company applies the same credit policies and collateralization guidelines in making commitments and conditional obligations as they do for on-balance sheet instruments. Off-balance sheet financial instruments include commitments to extend credit and guarantees under standby and other letters of credit.

The contractual amount of the Company’s financial instruments with off-balance sheet risk at March 31, 2013 and December 31, 2012 is presented below:

	As of March 31, 2013		As of December 31, 2012
	(Dollars in thousands)
Unfunded loan commitments including unfunded lines of credit	$	117,221	$	99,474
Standby letters of credit		9,821		10,387
Commercial letters of credit		2,660		1,595
Operating leases		6,750		7,337
Total financial instruments with off-balance sheet risk	$	136,452	$	118,793

Litigation. The Company is involved in various litigation that arises from time to time in the normal course of business.  In the opinion of management, after consultations with its legal counsel, such litigation is not expected to have a material adverse effect of the Company’s consolidated financial position, results of operations or cash flows.

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Note 7 - Regulatory Matters

3 Months Ended

Mar. 31, 2013

Regulatory Capital Requirements under Banking Regulations [Text Block]

7.       REGULATORY MATTERS

The Banks are subject to regulations and, among others things, may be limited in their ability to pay dividends or otherwise transfer funds to the holding company. Under applicable restrictions as of March 31, 2013, no dividends could be paid by MetroBank to the Parent without regulatory approval.  In addition, dividends paid by the Banks to the Parent would be prohibited if the effect thereof would cause the Banks’ capital to be reduced below applicable minimum capital requirements.

On August 10, 2009, MetroBank entered into a written agreement (the “Agreement”) with the OCC. The Agreement is based on the findings of the OCC during the annual on-site examination of MetroBank performed in the first quarter of 2009 and is primarily focused on matters related to MetroBank’s asset quality. Pursuant to the Agreement, the Board of Directors of MetroBank has appointed a compliance committee to monitor and coordinate MetroBank’s performance under the Agreement. The Agreement provides for, among other things, the development and implementation of written programs to reduce MetroBank’s credit risks, monitor and reduce the level of criticized assets and manage commercial real estate loan concentrations in light of current adverse commercial real estate market conditions generally and in its market areas. Since the completion of the examination, management of MetroBank has proactively made adjustments to policies and procedures in an effort to alleviate the effects of the credit challenge caused by the economic deterioration and market conditions generally and in its market areas. Additionally, management and the Boards of Directors of the Company and MetroBank have aggressively taken steps to address the findings of the exam and are aggressively working to comply with the requirements of the Agreement. Failure by MetroBank to meet the requirements and conditions imposed by the Agreement could result in more severe regulatory enforcement actions such as capital directives to raise additional capital, civil money penalties, cease and desist or removal orders, injunctions, and public disclosure of such actions against MetroBank. Any such failure and resulting regulatory action could have a material adverse effect on the financial condition and results of operations of the Company and MetroBank.

As of March 31, 2013, the most recent notifications from the OCC with respect to MetroBank, and the CDFI with respect to Metro United categorized the Banks  as “well capitalized” under the regulatory framework for prompt corrective action. There are no conditions or events since the notifications that management believes have changed the Banks’ level of capital adequacy.

The Company’s and the Banks’ actual capital amounts and ratios at the dates indicated are presented in the following table (dollars in thousands):

	Actual					Minimum Required For Capital Adequacy Purposes					To be Categorized as Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2013
Total risk-based capital ratio
MetroCorp Bancshares, Inc.	$	214,605		17.75	%	$	96,750		8.00	%	$	N/A		N/A	%
MetroBank, N.A.		155,837		17.76			70,186		8.00			87,733		10.00
Metro United Bank		52,931		16.10			26,309		8.00			32,886		10.00
Tier 1 risk-based capital ratio
MetroCorp Bancshares, Inc.		199,323		16.48			48,375		4.00			N/A		N/A
MetroBank, N.A.		144,743		16.50			35,093		4.00			52,640		6.00
Metro United Bank		48,782		14.83			13,154		4.00			19,732		6.00
Leverage ratio
MetroCorp Bancshares, Inc.		199,323		13.09			60,923		4.00			N/A		N/A
MetroBank, N.A.		144,743		13.04			44,389		4.00			55,487		5.00
Metro United Bank		48,782		11.76			16,596		4.00			20,745		5.00
As of December 31, 2012
Total risk-based capital ratio
MetroCorp Bancshares, Inc.	$	212,083		17.95	%	$	94,509		8.00	%	$	N/A		N/A	%
MetroBank, N.A.		152,613		17.80			68,587		8.00			85,734		10.00
Metro United Bank		52,714		16.34			25,814		8.00			32,267		10.00
Tier 1 risk-based capital ratio
MetroCorp Bancshares, Inc.		197,077		16.68			47,255		4.00			N/A		N/A
MetroBank, N.A.		141,702		16.53			34,293		4.00			51,440		6.00
Metro United Bank		48,636		15.07			12,907		4.00			19,360		6.00
Leverage ratio
MetroCorp Bancshares, Inc.		197,077		13.18			59,812		4.00			N/A		N/A
MetroBank, N.A.		141,702		12.70			44,613		4.00			55,766		5.00
Metro United Bank		48,636		12.76			15,243		4.00			19,053		5.00

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Note 9 - Derivative Financial Instruments

3 Months Ended

Mar. 31, 2013

Derivative Instruments and Hedging Activities Disclosure [Text Block]

9.       DERIVATIVE FINANCIAL INSTRUMENTS

The fair value of derivative positions outstanding is included in other liabilities in the accompanying condensed consolidated balance sheets and in the net change in this financial statement line item in the accompanying condensed consolidated statements of cash flows.

Interest Rate Derivatives. During the third quarter of 2009, the Company entered into a forward-starting interest rate swap contract on its junior subordinated debentures with a notional amount of $17.5 million. The interest rate swap contract was designated as a hedging instrument in a cash flow hedge with the objective of protecting the quarterly interest payments on a portion of the Company’s $36.1 million of junior subordinated debentures issued to the Company’s unconsolidated subsidiary trust MCBI Statutory Trust I throughout the five-year period beginning in December 2010 and ending in December 2015 from the risk of variability of those payments resulting from changes in the three-month LIBOR interest rate. Under the swap contract, beginning in December 2010, the Company pays a fixed interest rate of 5.38% and receives a variable interest rate of three-month LIBOR plus a margin of 1.55% on a total notional amount of $17.5 million, with quarterly settlements, which began in March 2011.

The Company applies hedge accounting to interest rate derivatives when qualified.  To qualify for hedge accounting, a derivative must be highly effective at reducing the risk associated with the exposure being hedged. In addition, for a derivative to be designated as a hedge, the risk management objective and strategy must be documented. Hedge documentation must identify the derivative hedging instrument, the asset or liability and type of risk to be hedged, and how the effectiveness of the derivative will be assessed prospectively and retrospectively. To assess effectiveness, the Company compares the dollar-value of the change in the fair value of the derivative to the change in the fair value or cash flows of the hedged item. The extent to which a derivative has been, and is expected to continue to be, effective at offsetting changes in the fair value or cash flows of the hedged item must be assessed and documented at least quarterly. Any hedge ineffectiveness (i.e., the amount by which the gain or loss on the designated derivative instrument does not exactly offset the gain or loss on the hedged item attributable to the hedged risk) must be reported in current-period earnings. If it is determined that a derivative is not highly effective at hedging the designated exposure, hedge accounting is discontinued.

At the end of the second quarter of 2011, the Company entered into an interest rate cap with a notional amount of $15.0 million with the objective of mitigating the effect of potential future interest rate increases.  The interest rate cap contract is not designated nor accounted for as a hedging instrument.  The interest rate cap contract was effective July 1, 2011 for a five-year term. Under the interest rate cap contract, beginning October 3, 2011 and ending July 1, 2016, the Company will receive quarterly settlements for the difference between the three-month LIBOR interest rate and the cap rate of 2.0%, if the three-month LIBOR interest rate exceeds the cap rate on the settlement date.

The Company obtains dealer quotations to value its interest rate derivative contract designated as a hedge of cash flows and its non-hedging interest rate derivative.  The notional amounts and estimated fair values of interest rate derivative contracts outstanding at March 31, 2013 and December 31, 2012 are presented in the following table (in thousands).

	March 31, 2013					December 31, 2012
	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
Interest rate derivative contract designated as a hedge of cash flows	$	17,500	$	(1,624	)	$	17,500	$	(1,775	)
Interest rate derivative contract not designated as a hedge of cash flows	$	15,000	$	49		$	15,000	$	41

Gains, Losses and Derivative Cash Flows.   For cash flow hedges, the effective portion of the gain or loss due to changes in the fair value of the derivative hedging instrument is included in other comprehensive income, while the ineffective portion (indicated by the excess of the cumulative change in the fair value of the derivative over that which is necessary to offset the cumulative change in expected future cash flows on the hedge transaction) is included in other non-interest income or other non-interest expense. Net cash flows from the interest rate swap on junior subordinated debentures designated as a hedging instrument in an effective hedge of cash flows are included in interest expense on junior subordinated debentures.

Amounts included in the condensed consolidated statements of income and in other comprehensive income for the period related to interest rate derivatives designated as hedges of cash flows were as follows:

	Gains recorded in income and other comprehensive income, net of tax (in thousands)
	Derivatives – effective portion reclassified from AOCI into income		Hedge ineffectiveness recorded directly in income		Total income statement impact		Derivatives – effective portion recorded in OCI		Total change in OCI for period
Three months ended March 31, 2013
Interest rate swap	$	—	$	—	$	—	$	96	$	96
Three months ended March 31, 2012
Interest rate swap	$	—	$	—	$	—	$	43	$	43

Amounts included in the consolidated statements of operations for the period related to non-hedging interest rate derivatives for the year ended March 31, 2013 and 2012 were as follows (in thousands).

	Three Months Ended March 31,
	2013		2012
Non-hedging interest rate derivative:
Other non-interest income	$	7	$	(34)

Counterparty Credit Risk. Derivative contracts involve the risk of dealing with institutional derivative counterparties and their ability to meet contractual terms. Derivative contracts are executed with a Credit Support Annex, or CSA, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels. These agreements protect the interests of the Company and its counterparties, should either party suffer a credit rating deterioration. Institutional counterparties must have an investment grade credit rating. The Company’s credit exposure on interest rate swaps is limited to the net favorable value and interest payments of all swaps by each counterparty. Credit exposure may be reduced by the amount of collateral pledged by the counterparty. There are no credit-risk-related contingent features associated with any of the Company’s derivative contracts.  The Company had no credit exposure relating to the interest rate swap at March 31, 2013.  The amount of cash collateral posted by the Company related to derivative contracts was $2.3 million at March 31, 2013.

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Note 2 - Securities (Detail) - Credit Loss Component Of OTTI That Have Been Recognized In Income, Related To Debt Securities That The Company Does Not Intend To Sell (USD $) In Thousands, unless otherwise specified					3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011	Mar. 31, 2012 No Intent to Sell and No Requirement to Sell [Member]	Mar. 31, 2013 Other than Temporary Impairment, Credit Losses Recognized in Earnings, Categories of Investments [Member]	Mar. 31, 2012 Other than Temporary Impairment, Credit Losses Recognized in Earnings, Categories of Investments [Member]
Beginning balance at beginning of period	$ 1,732	$ 1,716	$ 1,633	$ 1,594
OTTI Additions					21	16	18
Ending balance at end of period	$ 1,732	$ 1,716	$ 1,633	$ 1,594

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Note 8 - Accumulated Other Comprehensive Income (Detail) - Tax Effects Allocated to Each Component (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Before Tax Amount	$ (539)	$ 87
Tax Expense (Benefit)	(193)	31
Net of Tax Amount	(346)	56
Change in Accumulated Gain (Loss) on Effective Cash Flow Derivatives [Member]
Before Tax Amount	151	68
Tax Expense (Benefit)	55	25
Net of Tax Amount	96	43
Securities With OTTI Charges During the Period [Member]
Before Tax Amount	(40)	(39)
Tax Expense (Benefit)	(15)	(14)
Net of Tax Amount	(25)	(25)
OTTI Charges Recognized in Net Income [Member]
Before Tax Amount	(27)	(39)
Tax Expense (Benefit)	(10)	(14)
Net of Tax Amount	(17)	(25)
Net Unrealized Losses On Investment Securities With OTTI [Member]
Before Tax Amount	(13)
Tax Expense (Benefit)	(5)
Net of Tax Amount	(8)
Unrealized Holding Gain Arising During the Period [Member]
Before Tax Amount	(663)	31
Tax Expense (Benefit)	(238)	10
Net of Tax Amount	(425)	21
Reclassification Adjustment for Gain (Loss) Included in Net Income [Member]
Before Tax Amount	14	12
Tax Expense (Benefit)	5	4
Net of Tax Amount	9	8
Net Unrealized Gains on Investment Securities [Member]
Before Tax Amount	(677)	19
Tax Expense (Benefit)	(243)	6
Net of Tax Amount	$ (434)	$ 13

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Note 2 - Securities (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	As of March 31, 2013
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
	(Dollars in thousands)
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	81,385	$	240	$	(206	)	$	-		$	81,419
Obligations of state and political subdivisions		14,618		426		(49	)		-			14,995
Corporate		6,074		265		-			-			6,339
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		61,558		1,225		(51	)		-			62,732
Privately issued residential		684		353					(342	)		695
Asset backed securities		176		148		-			(167	)		157
Equity Securities
CRA funds		14,204		131		-			-			14,335
Total available-for-sale securities	$	178,699	$	2,788	$	(306	)	$	(509	)	$	180,672
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	624	$	-		$	-		$	4,670
Total held-to-maturity securities	$	4,046	$	624	$	-		$	-		$	4,670
Other investments
FHLB (1)/Federal Reserve Bank stock (2)	$	4,330	$	-	$	-		$	-		$	4,330
Investment in subsidiary trust (3)		1,083		-		-			-			1,083
Total other investments	$	5,413	$	-	$	-		$	-		$	5,413

	As of December 31, 2012
	Amortized		Unrealized								Fair
	Cost		Gains		Losses			OTTI			Value
Securities available-for-sale
Debt securities
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	70,892	$	362	$	(73	)	$	—		$	71,181
Obligations of state and political subdivisions		12,810		579		—			—			13,389
Corporate		6,080		270		—			—			6,350
Mortgage-backed securities and collateralized mortgage obligations:
Government issued or guaranteed		56,572		1,369		—			—			57,941
Privately issued residential		718		330		—			(365	)		683
Asset backed securities		187		129		—			(173	)		143
Equity securities
Investment in CRA funds		14,128		233		—			—			14,361
Total available-for-sale securities	$	161,387	$	3,272	$	(73	)	$	(538	)	$	164,048
Securities held-to-maturity
Obligations of state and political subdivisions	$	4,046	$	711	$	—		$	—		$	4,757
Total held-to-maturity securities	$	4,046	$	711	$	—		$	—		$	4,757
Other investments
FHLB (1)/Federal Reserve Bank (2) stock		4,509		—		—			—			4,509
Investment in subsidiary trust (3)		1,083		—		—			—			1,083
Total other investments	$	5,592	$	—	$	—		$	—		$	5,592

Unrealized Gain (Loss) on Investments [Table Text Block]

	March 31, 2013
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	(Dollars in thousands)
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	31,078	$	(206	)	$	—	$	—	$	31,078	$	(206	)
Obligations of state and political subdivisions		2,573		(49	)		—		—		2,573		(49	)
Mortgage-backed securities and collateralized mortgage obligations
Government issued or guaranteed		14,697		(51	)		—		—		14,697		(51	)
Privately issued residential		—		—			71		—		71		—
Total securities	$	48,348	$	(306	)	$	71	$	—	$	48,419	$	(306	)

	As of December 31, 2012
	Less Than 12 Months					Greater Than 12 Months				Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Securities available-for-sale
U.S. Treasury and other U.S. government sponsored enterprises and agencies	$	9,921	$	(73	)	$	—	$	—	$	9,921	$	(73	)
Mortgage-backed securities and collateralized mortgage obligations:
Privately issued residential		—		—			72		—		72		—
Total securities	$	9,921	$	(73	)	$	72	$	—	$	9,993	$	(73	)

Other than Temporary Impairment, Credit Losses Recognized in Earnings [Table Text Block]

Impairment related to credit losses	Three months ended March 31, 2013		Three months ended March 31, 2012
Beginning balance at beginning of period	$	1,716	$	1,594
Addition of OTTI that was not previously recognized		—		—
Additions to OTTI that was previously recognized when there is no intent to sell and no requirement to sell before recovery of amortized cost basis		—		21
Transfers from accumulated other comprehensive income (“AOCI”) to OTTI related to credit losses		16		18
Reclassifications from OTTI to realized losses		—		—
Ending balance at end of period	$	1,732	$	1,633

Investments Classified by Contractual Maturity Date [Table Text Block]

	Securities Available-for-sale				Securities Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Within one year	$	702	$	711	$	—	$	—
Within two to five years		12,569		12,845		—		—
Within six to ten years		75,675		75,800		—		—
After ten years		13,307		13,554		4,046		4,670
Mortgage-backed securities and collateralized mortgage obligations		62,242		63,427		—		—
Total debt securities	$	164,495	$	166,337	$	4,046	$	4,670

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Note 7 - Regulatory Matters (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations [Table Text Block]

	Actual					Minimum Required For Capital Adequacy Purposes					To be Categorized as Well Capitalized under Prompt Corrective Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
As of March 31, 2013
Total risk-based capital ratio
MetroCorp Bancshares, Inc.	$	214,605		17.75	%	$	96,750		8.00	%	$	N/A		N/A	%
MetroBank, N.A.		155,837		17.76			70,186		8.00			87,733		10.00
Metro United Bank		52,931		16.10			26,309		8.00			32,886		10.00
Tier 1 risk-based capital ratio
MetroCorp Bancshares, Inc.		199,323		16.48			48,375		4.00			N/A		N/A
MetroBank, N.A.		144,743		16.50			35,093		4.00			52,640		6.00
Metro United Bank		48,782		14.83			13,154		4.00			19,732		6.00
Leverage ratio
MetroCorp Bancshares, Inc.		199,323		13.09			60,923		4.00			N/A		N/A
MetroBank, N.A.		144,743		13.04			44,389		4.00			55,487		5.00
Metro United Bank		48,782		11.76			16,596		4.00			20,745		5.00
As of December 31, 2012
Total risk-based capital ratio
MetroCorp Bancshares, Inc.	$	212,083		17.95	%	$	94,509		8.00	%	$	N/A		N/A	%
MetroBank, N.A.		152,613		17.80			68,587		8.00			85,734		10.00
Metro United Bank		52,714		16.34			25,814		8.00			32,267		10.00
Tier 1 risk-based capital ratio
MetroCorp Bancshares, Inc.		197,077		16.68			47,255		4.00			N/A		N/A
MetroBank, N.A.		141,702		16.53			34,293		4.00			51,440		6.00
Metro United Bank		48,636		15.07			12,907		4.00			19,360		6.00
Leverage ratio
MetroCorp Bancshares, Inc.		197,077		13.18			59,812		4.00			N/A		N/A
MetroBank, N.A.		141,702		12.70			44,613		4.00			55,766		5.00
Metro United Bank		48,636		12.76			15,243		4.00			19,053		5.00

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Note 6 - Commitments and Contingencies (Detail) - The Contractual Amount of the Company’s Financial Instruments with Off-Balance Sheet Risk (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Financial instruments with off-balance sheet risk	$ 136,452	$ 118,793
Unfunded Loan Commitments [Member]
Financial instruments with off-balance sheet risk	117,221	99,474
Standby Letters of Credit [Member]
Financial instruments with off-balance sheet risk	9,821	10,387
Commercial Letters Of Credit [Member]
Financial instruments with off-balance sheet risk	2,660	1,595
Operating Leases [Member]
Financial instruments with off-balance sheet risk	$ 6,750	$ 7,337

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Note 3 - Loans and Allowance for Loan Losses (Detail) - Recorded Investment In Nonaccrual Loans (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Recorded Investment In Nonaccrual Loans	$ 21,598	$ 28,577
Commercial And Industrial [Member]
Recorded Investment In Nonaccrual Loans	579	1,308
Real Estate Mortgage Residential [Member]
Recorded Investment In Nonaccrual Loans	142	239
Real Estate Mortgage Commercial [Member]
Recorded Investment In Nonaccrual Loans	16,347	22,501
Real Estate Construction Residential [Member]
Recorded Investment In Nonaccrual Loans	1,426	1,426
Real Estate Construction Commercial [Member]
Recorded Investment In Nonaccrual Loans	$ 3,104	$ 3,103

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Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Net income	$ 3,027	$ 2,768
Other comprehensive income, net of tax:
Change in accumulated gain on effective cash flow hedging derivatives	96	43
Change in unrealized losses on investment securities, net of tax:
Securities with OTTI charges during the period	(25)	(25)
Less: OTTI charges recognized in net income	(17)	(25)
Net unrealized losses on investment securities with OTTI	(8)
Unrealized holding (losses) gains arising during the period	(425)	21
Less: reclassification adjustment for losses included in net income	9	8
Net unrealized (losses) gains on investment securities	(434)	13
Other comprehensive (loss) income	(346)	56
Total comprehensive income	$ 2,681	$ 2,824

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Note 3 - Loans and Allowance for Loan Losses

3 Months Ended

Mar. 31, 2013

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

3.          LOANS

The loan portfolio is classified by major type as follows:

	As of March 31, 2013						As of December 31, 2012
	Amount			Percent			Amount			Percent
	(Dollars in thousands)
Commercial and industrial	$	395,640			35.10	%	$	383,641			34.78	%
Real estate mortgage
Residential		37,526			3.33			36,807			3.34
Commercial		677,061			60.07			665,244			60.32
		714,587			63.40			702,051			63.66
Real estate construction
Residential		2,753			0.24			2,420			0.22
Commercial		7,379			0.66			7,284			0.66
		10,132			0.90			9,704			0.88
Consumer and other		6,808			0.60			7,531			0.68
Gross loans		1,127,167			100.00	%		1,102,927			100.00	%
Unearned discounts, interest and deferred fees		(2,451	)					(2,590	)
Total loans		1,124,716						1,100,337
Allowance for loan losses		(22,832	)					(24,592	)
Loans, net	$	1,101,884					$	1,075,745

The recorded investment in loans is the face amount increased or decreased by applicable accrued interest and unamortized premium, discount or finance charges, and may also reflect a previous direct write-down of the loan.

The recorded investment in loans at the dates indicated is determined as follows (in thousands):

March 31, 2013	Gross Loan Balance		Deferred Loan Fees			Accrued Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	395,640	$	(687	)	$	958	$	395,911
Real estate mortgage		714,587		(1,574	)		2,020		715,033
Real estate construction		10,132		(37	)		17		10,112
Consumer and other		6,808		(153	)		18		6,673
Total	$	1,127,167	$	(2,451	)	$	3,013	$	1,127,729

December 31, 2012	Gross Loan Balance		Deferred Loan Fees			Accrued  Interest Receivable		Recorded Investment in Loans
Commercial and industrial	$	383,641	$	(814	)	$	1,078	$	383,905
Real estate mortgage		702,051		(1,595	)		2,024		702,480
Real estate construction		9,704		(30	)		18		9,692
Consumer and other		7,531		(151	)		21		7,401
Total	$	1,102,927	$	(2,590	)	$	3,141	$	1,103,478

Loan Origination/Risk Management

The Company selectively extends credit for the purpose of establishing long-term relationships with its customers. The Company mitigates the risks inherent in lending by focusing on businesses and individuals with demonstrated payment history, historically favorable profitability trends and stable cash flows. In addition to these primary sources of repayment, the Company looks to tangible collateral and personal guarantees as secondary sources of repayment. Lending officers are provided with detailed underwriting policies covering all lending activities in which the Company is engaged and that require all lenders to obtain appropriate approvals for the extension of credit. The Company also maintains documentation requirements and extensive credit quality assurance practices in order to identify credit portfolio weaknesses as early as possible so any exposures that are discovered may be reduced.

The Company has certain lending procedures in place that are designed to maximize loan income within an acceptable level of risk. These procedures include the approval of lending policies and underwriting guidelines by the Board of Directors of each Bank, and separate policy, administrative and approval oversight by the Directors’ Loan Committee of MetroBank, and by the Directors’ Credit Committee of Metro United.  Additionally, MetroBank’s loan portfolio is reviewed by its internal loan review department, and Metro United's loan portfolio is reviewed by an external third-party company. These procedures also serve to timely identify changes in asset quality and to ensure proper recording and reporting of nonperforming assets.

Inherent in all lending is the risk of nonpayment. The types of collateral required, the terms of the loans and the underwriting practices discussed under each loan category below are all designed to minimize the risk of nonpayment. In addition, as further risk protection, the Banks rarely make loans at their respective legal lending limit. MetroBank generally does not make loans larger than $13 million to one borrower and Metro United generally does not make loans larger than $8 million to one borrower. Loans greater than the Banks’ lending limits are subject to participation with other financial institutions, including with each other. Loans originated by MetroBank are approved by the Chief Lending Officer, Chief Credit Officer, MetroBank’s Loan Committee or the Director’s Loan Committee based on the size of the loan relationship and its risk rating. Loans originated by Metro United are approved by the Management Credit Committee or Director’s Credit Committee except for certain consumer loans, which are approved under individual authority. Control systems and procedures are in place to ensure all loans are approved in accordance with credit policies.

Commercial and Industrial Loans. Generally, the Company’s commercial loans are underwritten on the basis of the borrower’s ability to service such debt as reflected by cash flow projections. Commercial loans are generally collateralized by business assets, which may include real estate, accounts receivable and inventory, certificates of deposit, securities, guarantees or other collateral. The Company also generally obtains personal guarantees from the principals of the business. Working capital loans are primarily collateralized by short-term assets, whereas term loans are primarily collateralized by long-term assets. As a result, commercial loans involve additional complexities, variables and risks and require more thorough underwriting and servicing than other types of loans. Indigenous to individuals in the Asian business community is the desire to own the building and land which house their businesses. Accordingly, while a loan may be principally driven and classified by the type of business operated, real estate is frequently the primary source of collateral.

Real Estate Mortgage - Commercial  and Residential Mortgage Loans. The Company makes commercial mortgage loans to finance the purchase of real property, which generally consists of developed real estate. The Company’s commercial mortgage loans are collateralized by first liens on real estate. For MetroBank, these loans typically have variable rates and amortize over a 15 to 20 year period, with balloon payments due at the end of five to seven years. For Metro United, these loans have both variable and fixed rates and amortize over a 25 to 30 year period, with balloon payments due at the end of five to ten years. Payments on loans collateralized by such properties are dependent on the successful operation or management of the properties. Accordingly, repayment of these loans may be subject to adverse conditions in the real estate market or the economy to a greater extent than other types of loans. In underwriting commercial mortgage loans, consideration is given to the property’s historical cash flow, current and projected occupancy, location and physical condition. The underwriting analysis also includes credit checks, appraisals, environmental impact reports and a review of the financial condition of the borrower. The Company also originates two to seven year balloon residential mortgage loans with a 15 to 30-year amortization primarily collateralized by owner occupied residential properties, which are retained in the Company’s residential mortgage portfolio.

Real Estate Construction Loans. The Company makes loans to finance the construction of residential and non-residential properties. The majority of the Company’s residential construction loans in Texas are for single-family dwellings that are pre-sold or are under earnest money contracts. The Company also originates loans to finance the construction of commercial properties such as multi-family, office, industrial, warehouse and retail centers. Construction loans involve additional risks attributable to the fact that loan funds are advanced upon the security of a project under construction, and the project is of uncertain value prior to its completion. Because of uncertainties inherent in estimating construction costs, the market value of the completed project and the effects of governmental regulation on real property, it can be difficult to accurately evaluate the total funds required to complete a project and the related loan to value ratio. As a result of these uncertainties, construction lending often involves the disbursement of substantial funds with repayment dependent, in part, on the success of the ultimate project rather than the ability of a borrower or guarantor to repay the loan. If the Company is forced to foreclose on a project prior to completion, there is no assurance that the Company will be able to recover the entire unpaid portion of the loan. In addition, the Company may be required to fund additional amounts to complete a project and may have to hold the property for an indeterminable period of time. While the Company has underwriting procedures designed to identify what it believes to be acceptable levels of risks in construction lending, no assurance can be given that these procedures will prevent losses from the risks described above.  

Consumer Loans. The Company, through its subsidiary Metro United, offers a variety of loan products to retail customers through its branch network. Loans to retail customers include automobile loans, lines of credit and other personal loans. The terms of these loans typically range from 12 to 60 months depending on the nature of the collateral and the size of the loan.

 Loan review process. In addition to MetroBank’s loan portfolio review by its internal loan review department and Metro United's loan portfolio review by an external third-party company, other ongoing reviews are performed by loan officers and involve the grading of each loan by its respective loan officer. Depending on the grade, a loan will be aggregated with other loans of similar grade and a loss factor is applied to the total loans in each group to establish the required level of allowance for loan losses. For both Banks, grades of 1-10 are applied to each loan, with loans graded 7-10 requiring the most allowance for loan losses. Factors utilized in the grading process include but are not limited to historical performance, payment status, collateral value and financial strength of the borrower. Oversight of the loan review process is the responsibility of the Loan Review/Compliance Officer. Differences of opinion are resolved among the Loan Officer, Loan Review/Compliance Officer and the Chief Credit Officer. See “Allowance for Loan Losses and Reserve for Unfunded Lending Commitments” for additional discussion on loan grades.

MetroBank’s credit department reports credit risk grade changes on a monthly basis to its management and the Board of Directors. MetroBank performs monthly and quarterly, and Metro United performs monthly concentration analyses based on industries, collateral types and business lines. Findings are reported monthly to the Directors’ Loan Committee of MetroBank and the Directors’ Credit Committee of Metro United and quarterly to the Board of Directors of each respective Bank.

In addition, the Company reviews the real estate values, and when necessary, orders new appraisals on loans collateralized by real estate when loans are renewed, prior to foreclosure and at other times as necessary, particularly in problem loan situations. In instances where updated appraisals reflect reduced collateral values, an evaluation of the borrower’s overall financial condition is made to determine the need, if any, for possible charge-offs or appropriate additions to the allowance for loan losses. The Company records other real estate at fair value at the time of acquisition less estimated costs to sell.

The following table presents the recorded investment in loans by credit risk profile, and which were updated as of the date indicated (in thousands):

As of March 31, 2013	Commercial and industrial		Real estate mortgage		Real estate construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	380,163	$	645,678	$	5,583	$	6,673	$	1,038,097
7 - “Special Mention”/ “Watch”		3,797		13,268		—		—		17,065
8 - “Substandard”		11,951		56,087		4,529		—		72,567
9 -“Doubtful"		—		—		—		—		—
Total	$	395,911	$	715,033	$	10,112	$	6,673	$	1,127,729

As of December 31, 2012	Commercial and industrial		Real estate mortgage		Real estate construction		Consumer and other		Total
Grade:
1-6 - “Pass”	$	366,571	$	611,159	$	5,163	$	7,401	$	990,294
7 - “Special Mention”/ “Watch”		4,393		14,593		—		—		18,986
8 - “Substandard”		12,941		76,728		4,529		—		94,198
9 -“Doubtful"		—		—		—		—		—
Total	$	383,905	$	702,480	$	9,692	$	7,401	$	1,103,478

There can be no assurance, however, that the Company’s loan portfolio will not become subject to increasing pressures from deteriorating borrowers’ financial condition due to general economic and other factors. While future deterioration in the loan portfolio is possible, management is continuing its risk assessment and resolution program. In addition, management is focusing its attention on minimizing the Company’s credit risk through diversification.

Nonperforming Assets

            The Company generally places a loan on nonaccrual status and ceases accruing interest when, in the opinion of management, full payment of loan principal or interest is in doubt. All loans past due 90 days are placed on nonaccrual status unless the loan is both well collateralized and in the process of collection. Cash payments received while a loan is classified as nonaccrual are recorded as a reduction of principal as long as significant doubt exists as to collection of the principal. Loans are restored to accrual status only when interest and principal payments are brought current and, in management’s judgment, future payments are reasonably assured.  In addition to nonaccrual loans, the Company evaluates on an ongoing basis other loans which are potential problem loans as to risk exposure in determining the adequacy of the allowance for loan losses.

A loan is considered impaired based on current information and events if it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Impairment is evaluated in total for smaller-balance loans of a similar nature and on an individual basis for other loans.  The measurement of impaired loans is based on the present value of expected future cash flows discounted at the loan’s effective interest rate or the loan’s observable market price or based on the fair value of the collateral if the loan is collateral-dependent.

Loans are classified as a troubled debt restructuring in cases where a borrower is experiencing financial difficulty and the Banks make concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate and an extension of the maturity date(s). Generally, a nonaccrual loan that is restructured remains on nonaccrual for a minimum period of six months to demonstrate that the borrower can meet the restructured terms. Once performance has been demonstrated, the loan may be returned to performing status after the calendar year end.

The Company requires that nonperforming assets be monitored by the special assets department or senior lenders for MetroBank, and by the special asset team consisting of internal credit personnel with the assistance of third party consultants and attorneys for Metro United. All nonperforming assets are actively managed pursuant to the Company’s loan policy. Senior management is apprised on a weekly basis of the workout endeavors and provides assistance as necessary to determine the best strategy for problem loan resolution and maximizing repayment on nonperforming assets.

In addition to the Banks’ loan review process described in the preceding paragraphs, the Office of the Comptroller of the Currency (“OCC”) periodically examines and evaluates MetroBank, while the Federal Deposit Insurance Corporation (“FDIC”) and California Department of Financial Institutions (“CDFI”) periodically examine and evaluate Metro United. Based upon such examinations, the regulators may revalue the assets of the institution and require that it charge-off certain assets, establish specific reserves to compensate for the difference between the regulators-determined value and the book value of such assets or take other regulatory action designed to lessen the risk in the asset portfolio.

The following table provides an analysis of the age of the recorded investment in loans by portfolio segment at the date indicated (in thousands):

As of March 31, 2013	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days		Total Past Due		Current		Total Recorded Investment in Loans		Recorded Investment 90 Days and Accruing
Commercial and industrial	$	870	$	645	$	510	$	2,025	$	393,886	$	395,911	$	—
Real estate mortgage:
Residential		66		—		142		208		37,401		37,609		—
Commercial		2,264		376		12,053		14,693		662,731		677,424		—
Real estate construction:
Residential		—		—		1,426		1,426		1,322		2,748		—
Commercial		—		—		3,103		3,103		4,261		7,364		—
Consumer and other		—		—		—		—		6,673		6,673		—
Total	$	3,200	$	1,021	$	17,234	$	21,455	$	1,106,274	$	1,127,729	$	—

As of December 31, 2012	30-59 Days Past Due		60-89 Days  Past Due		Greater Than 90 Days		Total Past  Due		Current		Total Recorded Investment in Loans		Recorded  Investment 90 Days and Accruing
Commercial and industrial	$	2,233	$	817	$	1,308	$	4,358	$	379,547	$	383,905	$	—
Real estate mortgage:
Residential		—		—		239		239		36,667		36,906		—
Commercial		114		3,817		18,141		22,072		643,502		665,574		—
Real estate construction:
Residential		—		—		1,426		1,426		984		2,410		—
Commercial		150		—		3,103		3,253		4,029		7,282		—
Consumer and other		—		—		—		—		7,401		7,401		—
Total	$	2,497	$	4,634	$	24,217	$	31,348	$	1,072,130	$	1,103,478	$	—

The following table presents the recorded investment in nonaccrual loans, including nonaccruing troubled debt restructurings, by portfolio segment at the dates indicated (in thousands):

Recorded investment in nonaccrual loans	March 31, 2013		December 31, 2012
Commercial and industrial	$	579	$	1,308
Real estate mortgage:
Residential		142		239
Commercial		16,347		22,501
Real estate construction:
Residential		1,426		1,426
Commercial		3,104		3,103
Total	$	21,598	$	28,577

Information on impaired loans, which includes nonaccrual loans and troubled debt restructurings, and the related specific allowance for loan losses on such loans at March 31, 2013 and December 31, 2012, is presented below (in thousands):

As of March 31, 2013	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment
Impaired loans with no allowance
Commercial and industrial	$	579	$	579	$	—	$	4,394
Real estate mortgage:
Residential		142		142		—		188
Commercial		12,368		12,368		—		17,096
Real estate construction:
Residential		1,426		1,426		—		1,885
Commercial		3,104		3,104		—		3,132
Impaired loans with an allowance
Commercial and industrial	$	—	$	—	$	—	$	17
Real estate mortgage:
Commercial		3,979		3,980		252		4,530
Total:
Commercial and industrial	$	579	$	579	$	—	$	4,411
Real estate mortgage		16,489		16,490		252		21,814
Real estate construction		4,530		4,530		—		5,017

As of December 31, 2012	Recorded Investment		Unpaid Principal  Balance		Related Allowance		Average  Recorded  Investment
Impaired loans with no allowance
Commercial and industrial	$	1,287	$	1,289	$	—	$	5,162
Real estate mortgage:
Residential		239		239		—		213
Commercial		18,369		18,369		—		19,732
Real estate construction:
Residential		1,426		1,426		—		1,529
Commercial		3,103		3,103		—		3,171
Impaired loans with an allowance
Commercial and industrial		21		21		21		1,434
Real estate mortgage:
Commercial		4,533		4,535		503		6,836
Total:
Commercial and industrial	$	1,308	$	1,310	$	21	$	6,596
Real estate mortgage		23,141		23,143		503		26,781
Real estate construction		4,529		4,529		—		4,700

For the three months ended March 31, 2013 there was no interest income recognized on impaired loans.  For the three months ended March 31, 2012, interest income of $89,000 was recognized on impaired loans, which consisted of nonaccrual loans that were paid in full and accruing TDRs. 

Troubled Debt Restructurings

Loans are classified as a TDR in cases where a borrower is experiencing financial difficulty and the Banks make concessionary modifications to contractual terms. Restructured loans typically involve a modification of terms such as a reduction of the stated interest rate and/or an extension of the maturity date(s). Generally, a nonaccrual loan that is restructured remains on nonaccrual for a minimum period of six months to demonstrate that the borrower can meet the restructured terms. Once performance has been demonstrated the loan may be returned to performing status after the calendar year end.

There were no investments in troubled debt restructurings that occurred for the three months ended March 31, 2013. As of March 31, 2013, there were no commitments to lend additional funds on loans that were modified as troubled debt restructurings.   As of March 31, 2013, there were no defaults on any loans that were modified as troubled debt restructurings during the preceding twelve months.

The following table presents the recorded investment in troubled debt restructurings that occurred for the three months ended March  31, 2012 (dollars in thousands):

	Three Months Ended March 31, 2012
Troubled Debt Restructurings	Number of Contracts		Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Real estate mortgage:
Commercial		1	$	2,699	$	2,699

The loan identified as a troubled debt restructuring by the Company was previously on nonaccrual status and reported as an impaired loan prior to restructuring.  The borrower was under the protection of the Federal Bankruptcy Act and the court approved and imposed a reorganization plan which modified the existing payment terms.  Since the loan was classified and on nonaccrual status both before and after restructuring, the modification did not impact the Company’s determination of the allowance for loan losses.  

As of March 31, 2012, commitments to lend additional funds on loans that were modified as troubled debt restructurings were insignificant.   As of March 31, 2012, there were no defaults on any loans that were modified as troubled debt restructurings during the preceding twelve months.

Allowance for Loan Losses and Reserve for Unfunded Lending Commitments

The allowance for loan losses provides for the risk of losses inherent in the lending process and the Company allocates the allowance for loan losses according to management’s assessments of risk inherent in the portfolio. The allowance for loan losses is increased by provisions charged against current earnings and is reduced by net charge-offs. Loans are charged off when they are deemed to be uncollectible in whole or in part. Recoveries are recorded when cash payments are received. In developing the assessment, the Company relies on estimates and exercises judgment regarding matters where the ultimate outcome is uncertain. Circumstances may change and future assessments of credit risk may yield materially different results, resulting in an increase or decrease in the allowance for credit losses.

The allowance for credit losses consists of the allowance for loan losses and the reserve for unfunded lending commitments and is maintained at levels that the Company believes are adequate to absorb probable losses inherent in the loan portfolio and unfunded lending commitments as of the date of the financial statements. The Company employs a systematic methodology for determining the allowance for credit losses that consists of four components: (1) a formula-based general reserve derived from  historical average losses by loan grade, (2) specific reserves on larger impaired individual credits that are based on the difference between the current loan balance and the loan’s collateral value, observable market price, or discounted present value, (3) a qualitative component that reflects current market conditions and other factors precedent to losses different from historical averages and (4) a reserve for unfunded lending commitments.

In setting the qualitative reserve portion of the allowance for loan losses, the factors the Company may consider include, but are not limited to, concentrations of credit, common characteristics of known problem loans, potential problem loans and other loans that exhibit weaknesses or deterioration, the general economic environment in the Company’s markets as well as the national economy, particularly the real estate markets, changes in value of the collateral securing loans, results of portfolio stress tests, and changes in lending processes, procedures and personnel. After the aforementioned assessment of the loan portfolio, the general economic environment and other relevant factors, management determines the appropriate allowance for loan loss level and makes the provision necessary to achieve that level. This methodology is consistently followed so that the level of the allowance for loan losses is reevaluated in response to changes in circumstances, economic conditions or other factors on an ongoing basis.

The Company follows a loan review program to evaluate the credit risk in the loan portfolio as discussed under “Nonperforming Assets.” The Company maintains an internally classified loan list which, along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. Loans classified as “substandard” are risk-rated as grade 8, and are those loans with well-defined weaknesses such as a highly-leveraged position, unfavorable financial ratios, uncertain repayment sources or poor financial condition, which may jeopardize recoverability of the debt. Loans classified as “doubtful” are risk-rated as grade 9, and are those loans which have characteristics similar to substandard loans but with an increased risk that a loss may occur, or at least a portion of the loan may require a charge-off if liquidated at present. Although loans classified as substandard do not duplicate loans classified as doubtful, both substandard and doubtful loans include some loans that are delinquent at least 30 days or on nonaccrual status. Loans classified as “loss” are risk-rated as grade 10 and are those loans which are charged off.

In addition to the internally classified loan list and delinquency list of loans, the Company maintains a separate “watch list” for loans risk-rated as grade 7, which further aids the Company in monitoring loan portfolios. Watch list loans show potential weaknesses where the present status portrays one or more deficiencies that require attention in the short-term or where pertinent ratios of the loan account have weakened to a point where more frequent monitoring is warranted. These loans do not have all of the characteristics of a classified loan (substandard or doubtful) but do show weakened elements compared with those of a satisfactory credit. The Company reviews these loans to assist in assessing the adequacy of the allowance for loan losses.

Policies and procedures have been developed to assess the adequacy of the allowance for loan losses and the reserve for unfunded lending commitments that include the monitoring of qualitative and quantitative trends described above. Management of both Banks review and approve their respective allowance for loan losses and the reserve for unfunded lending commitments monthly and perform a comprehensive analysis quarterly, which is also presented for approval by each Bank’s Board of Directors. The allowance for credit losses is also subject to federal and California State banking regulations. The Banks’ primary regulators conduct periodic examinations of the allowance for credit losses and make assessments regarding its adequacy and the methodology used in its determination.

The Company maintains a reserve for unfunded commitments to provide for the risk of loss inherent in its unfunded lending related commitments. The process used in determining the reserve is consistent with the process used for the allowance for loan losses discussed above.

The following table presents the allowance for loan losses and recorded investment in loans by portfolio segment at the date indicated (in thousands):

As of and for the three months ended  March 31, 2013	Commercial and industrial			Real estate mortgage			Real estate construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	8,255		$	14,748		$	216		$	143		$	1,230	$	24,592
(Reduction in) provision for loan losses		(408	)		(1,031	)		(41	)		(43	)		1,073		(450	)
Charge-offs		(884	)		(550	)		—			(25	)		—		(1,459	)
Recoveries		90			50			5			4			—		149
Allowance for loan losses at end of period	$	7,053		$	13,217		$	180		$	79		$	2,303	$	22,832
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	—		$	289		$	—		$	—				$	289
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	7,053		$	12,928		$	180		$	79				$	20,240
Loans:
Recorded investment in loans	$	395,911		$	715,033		$	10,112		$	6,673				$	1,127,729
Recorded investment in loans  individually evaluated for impairment	$	579		$	16,489		$	4,530		$	—				$	21,598
Recorded investment in loans  collectively evaluated for impairment	$	395,332		$	698,544		$	5,582		$	6,673				$	1,106,131

As of and for the three months ended  March 31, 2012	Commercial and industrial			Real estate mortgage			Real estate construction			Consumer and other			Unallocated		Total
Allowance for loan losses at beginning of period	$	7,966		$	19,213		$	320		$	137		$	685	$	28,321
(Reduction in) provision for loan losses		1,923			(2,638	)		(104	)		(6	)		1,225		400
Charge-offs		(784	)		(340	)		—			(42	)		—		(1,166	)
Recoveries		118			363			19			11			—		511
Allowance for loan losses at end of period	$	9,223		$	16,598		$	235		$	100		$	1,910	$	28,066
Ending allowance for loan losses balance for loans individually evaluated for impairment	$	362		$	655		$	—		$	—				$	1,017
Ending allowance for loan losses balance for loans collectively evaluated for impairment	$	8,861		$	15,943		$	235		$	100				$	25,139
Loans:
Recorded investment in loans	$	344,975		$	691,071		$	9,208		$	4,795				$	1,050,049
Recorded investment in loans  individually evaluated for impairment	$	9,315		$	29,165		$	3,263		$	1				$	41,744
Recorded investment in loans  collectively evaluated for impairment	$	335,660		$	661,906		$	5,945		$	4,794				$	1,008,305

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Note 11 - Fair Value (Detail) - Financial Instruments Carried At Fair Value On A Recurring Basis By Caption On The Consolidated Balance Sheets And By Valuation Hierarchy (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Securities Available-For-Sale	$ 180,672	$ 164,048
Derivative assets
Total assets measured at fair value on a recurring basis		164,089
Total assets measured at fair value on a recurring basis	180,721
US Government Agencies Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities Available-For-Sale	81,419	71,181
US Government Agencies Debt Securities [Member]
Securities Available-For-Sale	81,419	71,181
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities Available-For-Sale	14,995	13,389
US States and Political Subdivisions Debt Securities [Member]
Securities Available-For-Sale	14,995	13,389
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities Available-For-Sale	6,339	6,350
Corporate Debt Securities [Member]
Securities Available-For-Sale	6,339	6,350
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Securities Available-For-Sale	62,732	57,941
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities Available-For-Sale	62,732	57,941
Mortgage-backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 2 [Member]
Securities Available-For-Sale	695	683
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Securities Available-For-Sale	695	683
Asset-backed Securities [Member] | Fair Value, Inputs, Level 2 [Member]
Securities Available-For-Sale	157	143
Asset-backed Securities [Member]
Securities Available-For-Sale	157	143
CRA Funds [Member] | Fair Value, Inputs, Level 1 [Member]
Securities Available-For-Sale	14,335	14,361
CRA Funds [Member]
Securities Available-For-Sale	14,335	14,361
Derivative Interest Rate Cap (Member) | Fair Value, Inputs, Level 2 [Member]
Derivative assets
Derivative Assets	49	41
Derivative Interest Rate Cap (Member)
Derivative assets
Derivative Assets	49	41
Derivative Interest Rate Swap (Member) | Fair Value, Inputs, Level 2 [Member]
Derivative liabilities at March 31, 2013
Derivative Liabilities	(1,624)	(1,775)
Derivative Interest Rate Swap (Member)
Derivative liabilities at March 31, 2013
Derivative Liabilities	(1,624)	(1,775)
Fair Value, Inputs, Level 1 [Member]
Securities Available-For-Sale	14,335	14,361
Derivative assets
Total assets measured at fair value on a recurring basis		14,361
Total assets measured at fair value on a recurring basis	14,335
Fair Value, Inputs, Level 2 [Member]
Securities Available-For-Sale	166,337	149,687
Derivative assets
Total assets measured at fair value on a recurring basis		149,728
Total assets measured at fair value on a recurring basis	$ 166,386

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Note 8 - Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2013

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Gains (Losses) on Effective Cash Hedging Derivatives			Net Unrealized Gains (Losses) on Investments with OTTI			Net Unrealized Investment Gains			Total Accumulated Other Comprehensive Income (Loss)
Accumulated other comprehensive income (loss) December 31, 2012	$	(1,136	)	$	(1,017	)	$	2,720		$	567
Other comprehensive income (loss)before reclassifications		96			(8	)		(425	)		(337	)
Amounts reclassified from other comprehensive income (loss) (1)		—			—			(9	)		(9	)
Net current-period other comprehensive income (loss)		96			(8	)		(434	)		(346	)
Accumulated other comprehensive income (loss) March 31, 2013	$	(1,040	)	$	(1,025	)	$	2,286		$	221

Domestic Tax Authority [Member]

Schedule of Comprehensive Income (Loss) [Table Text Block]

	Three Months Ended March 31, 2013									Three Months Ended March 31, 2012
	Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount			Before Tax Amount			Tax Expense (Benefit)			Net of Tax Amount
Change in accumulated gain on effective cash flow derivatives	$	151		$	55		$	96		$	68		$	25		$	43
Unrealized loss on investment securities with OTTI:
Securities with OTTI charges during the period		(40	)		(15	)		(25	)		(39	)		(14	)		(25	)
Less: OTTI charges recognized in net income		(27	)		(10	)		(17	)		(39	)		(14	)		(25	)
Net unrealized losses on investment securities with OTTI		(13	)		(5	)		(8	)		—			—			—
Unrealized gain (loss) on investment securities:
Unrealized holding gain (loss) arising during the period		(663	)		(238	)		(425	)		31			10			21
Less: reclassification adjustment for gain included in net income		14			5			9			12			4			8
Net unrealized gains (losses) on investment securities		(677	)		(243	)		(434	)		19			6			13
Other comprehensive (loss) income	$	(539	)	$	(193	)	$	(346	)	$	87		$	31		$	56

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Note 3 - Loans and Allowance for Loan Losses (Detail) - Recorded Investment In Loans At The Dates Indicated: (USD $) In Thousands, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012
Deferred Loan Fees	$ (2,451)	$ (2,590)
Accrued Interest Receivable	3,680	4,120
Recorded Investment In Loans	1,127,729	1,103,478	1,050,049
Commercial Portfolio Segment [Member]
Gross Loan Balance	395,640	383,641
Deferred Loan Fees	(687)	(814)
Accrued Interest Receivable	958	1,078
Recorded Investment In Loans	395,911	383,905
Real Estate Mortgage [Member]
Gross Loan Balance	714,587	702,051
Deferred Loan Fees	(1,574)	(1,595)
Accrued Interest Receivable	2,020	2,024
Recorded Investment In Loans	715,033	702,480
Real Estate Construction [Member]
Gross Loan Balance	10,132	9,704
Deferred Loan Fees	(37)	(30)
Accrued Interest Receivable	17	18
Recorded Investment In Loans	10,112	9,692
Consumer And Other [Member]
Gross Loan Balance	6,808	7,531
Deferred Loan Fees	(153)	(151)
Accrued Interest Receivable	18	21
Recorded Investment In Loans	6,673	7,401
Recorded Investment [Member]
Gross Loan Balance	1,127,167	1,102,927
Deferred Loan Fees	(2,451)	(2,590)
Accrued Interest Receivable	3,013	3,141
Recorded Investment In Loans	$ 1,127,729	$ 1,103,478

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Note 13 - New Authoritative Accounting Guidance

3 Months Ended

Mar. 31, 2013

New Accounting Pronouncements and Changes in Accounting Principles [Text Block]

13.     NEW AUTHORITATIVE ACCOUNTING GUIDANCE

Accounting Standards Update (“ASU”) ASU No. 2013-02–“Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income”.  ASU No. 2013-02 does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts ASU No. 2013-02 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2013-01 – “Balance Sheet (Topic 210) – Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities”.  ASU No. 2013-01 addresses implementation issues about the scope of ASU No. 2011-11 “Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities” and clarifies that ASU No. 2011-11 applies to derivatives accounted for in accordance with Topic 815, Derivatives and Hedging, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 210-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement . ASU No. 2013-01 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2012-06 – “Business Combinations (Topic 805) -  Subsequent Accounting for an Indemnification Asset Recognized at the Acquisition Date as a Result of a Government-Assisted Acquisition of a Financial Institution”.  ASU No. 2012-06 states that when a reporting entity recognizes an indemnification asset (in accordance with Subtopic 805-20) as a result of a government-assisted acquisition of a financial institution and subsequently a change in the cash flows expected to be collected on the indemnification asset occurs, the reporting entity should subsequently account for the change in the measurement of the indemnification asset on the same basis as the change in the assets subject to indemnification. Any amortization of changes in value should be limited to the contractual term of the indemnification agreement (that is, the lesser of the term of the indemnification agreement and the remaining life of the indemnified assets).  ASU No. 2012-06 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2012-04 – “Technical Corrections and Improvements”.  The amendments in ASU No. 2012-04 represent changes to clarify the FASB Accounting Standards Codification (“Codification”), correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities.  The amendments are categorized as (1) source literature amendments (2) guidance clarification and reference corrections and (3) relocated guidance.  Additionally, the amendments are intended to make the Codification easier to understand and the fair value measurement guidance easier to apply by eliminating inconsistencies and providing needed clarifications.  The amendments in ASU No. 2012-04 that do not have transition guidance were effective October 1, 2012. The amendments that are subject to the transition guidance were effective for fiscal periods beginning on January 1, 2013. ASU No. 2012-04 did not have a material impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2012-02 "Intangibles – Goodwill and Other (Topic 350) – Testing Indefinite-Lived Intangible Assets for Impairment".  ASU No. 2012-02 gives entities the option to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that an indefinite-lived intangible asset is impaired. If, after assessing the totality of events or circumstances, an entity determines it is more likely than not that an indefinite-lived intangible asset is impaired, then the entity must perform the quantitative impairment test. If, under the quantitative impairment test, the carrying amount of the intangible asset exceeds its fair value, an entity should recognize an impairment loss in the amount of that excess. Permitting an entity to assess qualitative factors when testing indefinite-lived intangible assets for impairment results in guidance that is similar to the goodwill impairment testing guidance in ASU No. 2011-08. ASU No. 2012-02 was effective for the Company beginning January 1, 2013 and did not have a significant impact on the Company's financial condition, results of operations or cash flows.

ASU No. 2011-11, "Balance Sheet (Topic 210) - "Disclosures about Offsetting Assets and Liabilities".  ASU No. 2011-11 amends Topic 210, "Balance Sheet," to require an entity to disclose both gross and net information about financial instruments, such as sales and repurchase agreements and reverse sale and repurchase agreements and securities borrowing/lending arrangements, and derivative instruments that are eligible for offset in the statement of financial position and/or subject to a master netting arrangement or similar agreement. ASU No. 2011-11 was effective for the Company for annual and interim periods beginning on January 1, 2013 and did not have a material impact on the Company's financial condition, results of operations or cash flows.