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