July 24, 2002

MetroCorp Bancshares Inc. Announces Second Quarter 2002 Earnings Results

HOUSTON, Jul 24, 2002 (BUSINESS WIRE) -- MetroCorp Bancshares Inc. (Nasdaq:MCBI), a Texas corporation, which through its subsidiary, MetroBank, N.A., provides community banking services to multicultural markets, today announced net income after tax of $2.2 million for the second quarter ended June 30, 2002, approximately $100,000 higher than the same period in 2001. Diluted earnings per share for the second quarter 2002 were $0.30, unchanged from the same quarter in 2001. Net income after tax and diluted earnings per share for the six months ended June 30, 2002 were $4.3 million and $0.60, respectively, up approximately $100,000 from the same period in 2001.

Allen Brown, president of MetroCorp Bancshares Inc. and chief executive officer of MetroBank, N.A., said, "We are pleased with the growth seen in our balance sheet, as loans grew 2.3% and investment securities grew 25.4% since December 31, 2001. Our deposit balances continue to be stable, providing asset funding and consistent noninterest income. Net interest income before provision for loan losses for the three and six months ended June 30, 2002 was $8.8 million and $16.6 million respectively and was an increase over the same periods in 2001 of 12.6% and 5.5%, respectively. This is positive news while we continue to commit resources towards our asset quality assessment and resolution program."

Interest income and expense. Interest income for the three months ended June 30, 2002 was $12.4 million, down $1.8 million or 13.0% from $14.2 million for the same three months in 2001. Interest income for the six months ended June 30, 2002 was $24.0 million, down $5.3 million or 17.8% from $29.3 million for the same period in 2001. The lower interest income in 2002, compared to 2001 was primarily the result of significantly lower market interest rates in 2002 coupled with an increase in nonaccrual loans. Refinancing of existing loans and lower interest rates on new loan production were also factors in the lower interest income.

Interest expense for the three months ended June 30, 2002 was $3.6 million, down $2.8 million or 44.0% from $6.4 million for the same three months in 2001. Interest expense for the six months ended June 30, 2002 was $7.5 million, down $6.1 million or 44.8% from $13.6 million for the same period in 2001. The decrease in interest expense during both periods was primarily the result of lower market interest rates in 2002 and also a decline in certificate of deposits. Additionally, a significant portion of the certificate of deposit portfolio matured in the first quarter 2002 and renewed at lower interest rates compared to interest rate levels in early 2001.

Net interest income before provision for loan losses for the three months ended June 30, 2002 was $8.8 million, up $979,000 or 12.6% from $7.8 million for the same three months in 2001. Net interest income before provision for loan losses for the six months ended June 30, 2002 was $16.6 million, up $862,000 or 5.5% from $15.7 million for the same period in 2001. The increase in net interest income for the three and six months ended June 30, 2002 was primarily the result of lower interest income offset by significantly lower interest expense. A rate and volume analysis of the increase in net interest income overwhelmingly reflects an increase in volume of average earning assets as the major contribution to the increase. The net interest margin for the three months ended June 30, 2002 was 4.82% compared to 4.64% for the same three months in 2001, an improvement of 18 basis points, primarily due to a lower cost of funds and an increase in net average earning assets. The net interest margin for the six months ended June 30, 2002 was 4.69% compared to 4.70% for the same period in 2001.

Noninterest income and expense. Noninterest income for the three months ended June 30, 2002 was $2.3 million, basically unchanged from $2.3 million for the same three months in 2001. Noninterest income for the six months ended June 30, 2002 was $4.8 million, up $331,000 or 7.5% from $4.4 million for the same period in 2001. The increase was primarily due to increased transaction accounts that have provided additional service charge and NSF fee income as a result of continued relationship banking initiatives.

Noninterest expense for the three months ended June 30, 2001 was $6.9 million, up $272,000 or 4.1% compared with $6.6 million for the same period in 2001. Noninterest expense for the six months ended June 30, 2002 was $13.5 million, up $456,000 or 3.5% compared with $13.1 million for the same period in 2001. The increased noninterest expense in both periods was primarily due to higher employee compensation and benefits as a result of increases in officer-level and exempt staff in addition to normal annual salary increases which became effective in May 2002. Other operating expenses decreased in both periods primarily in the categories of occupancy, professional fees, and advertising and were partially offset by losses incurred in other real estate.

Provision for loan losses and asset quality. The provision for loan losses for the three months ended June 30, 2002 was $970,000, up $614,000 from $356,000 for the same quarter in 2001. The provision for loan losses for the six months ended June 30, 2002 was $1.6 million, up $787,000 from $783,000 for the same period in 2001. This was the result of continued asset quality assessment coupled with a newly established loan grading system. The allowance for loan losses as a percent of total loans at June 30, 2002 and December 31, 2001 was 1.80% and 1.81%, respectively.

Net charge-offs for the three months ended June 30, 2002 were $484,000, down $425,000 compared with $909,000 reported in the first quarter of 2002. For the six months ended June 30, 2002, net charge-offs were $1.4 million, compared to $726,000 for the same period in 2001. For the quarter ended June 30, 2002, the most significant charge-offs were related to two commercial credits (secured by real estate) totaling $213,000. The remaining charge-offs in the second quarter 2002 were various smaller commercial and consumer related credits. The Company seeks recovery on its charge-offs through all available channels.

Net nonperforming assets at June 30, 2002 were $10.7 million compared to $3.7 million at December 31, 2001, an increase of $7.0 million. The increase in nonperforming assets primarily occurred during the first quarter of 2002 with approximately $8.0 million added to nonaccrual loans as part of an identification process that represented an integral part of an overall effort to improve credit quality. Facilitating this process, loan review and problem resolution staffing was added during the first and second quarters of 2002. 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 Bank's credit risk through more diversified business development avenues.

Allen Brown added, "Our main focus is on improving asset quality as we strive to minimize credit risk through more diversified business development, continue our relationship banking initiatives, and concentrate on future growth opportunities; all in all, diligently working towards our commitment of enhancing shareholder value. We are encouraged with the Company's financial performance in light of the uncertain national and local economic conditions."

Balance sheet data. Total assets at June 30, 2002 were $786.3 million, up $44.1 million or 5.9% from $742.2 million at December 31, 2001. Net loans at June 30, 2002 were $495.3 million, up $11.0 million or 2.3% from $484.2 million at December 31, 2001. Total deposits at June 30, 2002 were $645.7 million, up $3.0 million or 0.5% from $642.8 million at December 31, 2001. Other borrowings at June 30, 2002 were $60.3 million, up $35.2 million from $25.2 million at December 31, 2001. The increase was primarily the result of the Company's strategy to maintain earning asset growth during the period. Shareholders' equity at June 30, 2002 grew to $70.5 million, up $5.3 million or 8.1% from $65.2 million at December 31, 2001.

MetroCorp Bancshares Inc., with $786.3 million in assets, provides a full range of commercial and consumer banking services through its wholly owned subsidiary, MetroBank, N.A. The Company has 14 full-service banking locations in the greater Houston and Dallas metropolitan areas. For more information, visit the Company's Web site at www.metrobank-na.com.

The statements contained in this release that are not historical facts may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements describe MetroCorp's future plans, projections, strategies and expectations, are based on assumptions and involve a number of risks and uncertainties, many of which are beyond MetroCorp's control. Important factors that could cause actual results to differ materially from the results anticipated or projected include, but are not limited to, the following: (1) general business and economic conditions in the markets MetroCorp serves may be less favorable than expected which could decrease the demand for loan, deposit and other financial services and increase loan delinquencies and defaults; (2) changes in the interest rate environment which could reduce MetroCorp's net interest margin; (3) changes in management's estimate of the adequacy of the allowance for loan losses; (4) legislative or regulatory developments including changes in laws concerning taxes, banking, securities, insurance and other aspects of the financial securities industry; (5) the effects of competition from other financial institutions operating in the Company's market area and elsewhere, including institutions operating locally, regionally, nationally and internationally, together with such competitors offering banking products and services by mail, telephone, computer and the Internet; (6) changes in accounting principles, policies or guidelines; and (7) the Company's ability to adapt successfully to technological changes to meet customers' needs and developments in the market place. All written or oral forward-looking statements are expressly qualified in their entirety by these cautionary statements. Please also read the additional risks and factors described from time to time in MetroCorp's reports filed with the Securities and Exchange Commission.

                       MetroCorp Bancshares Inc.
                 (In thousands, except share amounts)
                              (Unaudited)
                             June 30,  December 31,    Change
                               2002        2001           %
                            ---------  ------------    -------
Consolidated Balance Sheet
                      Assets
Cash and cash equivalents:
  Cash and due from banks    $28,148      $34,428      (18.2)
  Federal funds sold
   and other temporary
   investments                25,581       26,821       (4.6)
                             -------      -------
     Total cash and
      cash equivalents        53,729       61,249      (12.3)
Investment securities
 available-for-sale          217,089      173,087       25.4
Loans, net                   495,278      484,242        2.3
Premises and equipment, net    5,320        5,623       (5.4)
Accrued interest receivable    3,444        3,602       (4.4)
Deferred income taxes          4,667        5,471      (14.7)
Due from customers on
 acceptances                   4,039        4,605      (12.3)
Other real estate and
 repossessed assets, net         921        1,025      (10.1)
Other assets                   1,793        3,270      (45.2)
                             -------      -------
  Total assets              $786,280     $742,174        5.9
                             =======      =======
   Liabilities and Shareholders' Equity
Deposits:
  Noninterest-bearing       $132,326     $127,299        3.9
  Interest-bearing           513,423      515,452       (0.4)
                             -------      -------
   Total deposits            645,749      642,751        0.5
Other borrowings              60,349       25,195      139.5
Accrued interest payable         700          863      (18.9)
Income taxes payable            (610)        (608)       0.3
Acceptances outstanding        4,039        4,605      (12.3)
Other liabilities              5,521        4,139       33.4
                             -------      -------
  Total liabilities          715,748      676,945        5.7
Commitments and
 contingencies (Note 15)          --           --         --
Shareholders' Equity:
 Preferred stock, $1.00
  par value, 2,000,000
  shares authorized; none
  of which are issued and
  outstanding                     --           --         --
 Common stock, $1.00
  par value, 20,000,000 shares
  authorized; 7,187,423 shares
  are issued and 7,021,592
  shares and 7,017,823
  shares are outstanding at
  June 30, 2002 and
  December 31, 2001,
  respectively                 7,187        7,187         --
 Additional paid-in-
  capital                     26,209       26,144        0.2
 Retained earnings            36,273       32,834       10.5
 Accumulated other
  comprehensive income         2,191          376      482.7
 Treasury stock,
  at cost                     (1,328)      (1,312)       1.2
                             -------      -------
  Total shareholders'
   equity                     70,532       65,229        8.1
                             -------      -------
  Total liabilities
   and shareholders'
   equity                   $786,280     $742,174        5.9
                             =======      =======
Nonperforming Assets and
 Asset Quality Ratios
Nonaccrual loans             $11,780       $3,758      213.5
Accruing loans 90 days
 or more past due              1,180          783       50.7
Other real estate ("ORE")        921          969       (5.0)
Other assets
 repossessed ("OAR")              --           56     (100.0)
                             -------      -------
Total nonperforming
 assets                       13,881        5,566      149.4
Less nonperforming
 loans guaranteed by
 the SBA, Ex-Im Bank,
 or the OCCGF                 (3,154)      (1,833)      72.1
                             -------      -------
Net nonperforming
 assets                      $10,727       $3,733      187.4
                             =======      =======
Net nonperforming
 assets to total assets         1.36%        0.50%     171.2
Net nonperforming
 assets to total loans
 and ORE/OAR                    2.12%        0.76%     181.0
Allowance for loan
 losses to total loans          1.80%        1.81%      (0.3)
Allowance for loan
 losses to net
 nonperforming loans           92.60%      328.77%     (71.8)
Net loan charge-offs
 to total loans                 0.28%        0.84%     (67.3)
Net loan charge-offs          $1,393       $4,167      (66.6)
Total loans to total
 deposits                      78.10%       76.72%       1.8
Total loans                 $504,358     $493,145        2.3
Allowance for loan
 losses                       $9,080       $8,903        2.0
                       MetroCorp Bancshares Inc.
               (In thousands, except per share amounts)
                              (Unaudited)
               As of or for the            As of or for the
                three months                  six months
                ended June 30,     Change   ended June 30,     Change
               ----------------            ----------------
                2002    2001          %    2002      2001         %
               ------  ------       ----- ------    ------     ------
Average
 Balance Sheet
 Summary
Total assets  $770,688 $721,848      6.8 $755,045  $720,524       4.8
Securities     212,091  150,617     40.8  196,369   148,336      32.4
Total loans    496,971  469,795      5.8  493,406   472,479       4.4
Allowance
 for loan
 losses          8,848    9,287     (4.7)   8,902     9,279      (4.1)
Net loans      488,123  460,508      6.0  484,504   463,200       4.6
Total
 deposits      510,864  518,969     (1.6) 510,747   519,212      (1.6)
FHLB and
 other
 borrowings     49,498   25,473     94.3   39,400    25,647      53.6
Total
 shareholders'
 equity         68,538   62,174     10.2   67,827    61,285      10.7
Income
 Statement
Interest
 income:
 Loans           9,592   11,207    (14.4)  18,853    23,226     (18.8)
 Investment
  securities:
  Taxable        2,360    2,120     11.3    4,358     4,228       3.1
  Tax-exempt       304      291      4.5      614       560       9.6
 Federal funds
  sold and
  other
  temporary
  investments       98      578    (83.0)     216     1,245     (82.7)
              -------- --------          --------  --------
    Total
     interest
     income     12,354   14,196    (13.0)  24,041    29,259     (17.8)
Interest
 expense:
 Time deposits   2,581    5,151    (49.9)   5,541    10,811     (48.7)
 Demand and
  savings
  deposits         580      951    (39.0)   1,181     2,129     (44.5)
 Other
  borrowings       435      315     38.1      765       627      22.0
              -------- --------          --------  --------
    Total
     interest
     expense     3,596    6,417    (44.0)   7,487    13,567     (44.8)
Net interest
 income          8,758    7,779     12.6   16,554    15,692       5.5
Provision for
 loan losses       970      356    172.5    1,570       783     100.5
              -------- --------          --------  --------
Net interest
 income after
 provision for
 loan losses     7,788    7,423      4.9   14,984    14,909       0.5
Noninterest
 income:
 Service
  charges on
  deposit
  accounts       1,740    1,620      7.4    3,397     3,142       8.1
 Other loan-
  related fees     326      363    (10.2)     912       563      62.0
 Letters of
  credit
  commissions
  and fees         153      184    (16.8)     279       349     (20.1)
 Gain on sale
  of investment
  securities,
  net               32      106    (69.8)      34       176     (80.7)
 Other
  noninterest
  income            46       66    (30.3)     151       212     (28.8)
              -------- --------          --------  --------
    Total
     noninterest
     income      2,297    2,339     (1.8)   4,773     4,442       7.5
Noninterest
 expense:
 Employee
  compensation
  and benefits   3,857    3,504     10.1    7,427     6,823       8.9
 Occupancy       1,241    1,321     (6.1)   2,476     2,687      (7.9)
 Other real
  estate, net      155      (10) 1,650.0      418        (3) 14,033.3
 Data processing    25       22     13.6       49        38      28.9
 Professional
  fees             226      368    (38.6)     399       764     (47.8)
 Advertising        77      104    (26.0)     167       218     (23.4)
 Other
  noninterest
  expense        1,311    1,311       --    2,579     2,532       1.9
              -------- --------          --------  --------
    Total
     noninterest
     expense     6,892    6,620      4.1   13,515    13,059       3.5
Income before
 provision for
 income taxes    3,193    3,142      1.6    6,242     6,292      (0.8)
Provision for
 income taxes    1,003    1,019     (1.6)   1,961     2,088      (6.1)
              -------- --------          --------  --------
Net income      $2,190   $2,123      3.2   $4,281    $4,204       1.8
              ======== ========          ========  ========
Note:  Net interest income (full tax-equivalent)
Per Share Data
Earnings per
 share - basic   $0.31    $0.30      2.7    $0.61     $0.60       1.3
Earnings per
 share -
 diluted          0.30     0.30       --     0.60      0.60       0.0
Weighted
 average shares
 outstanding:
  Basic          7,020    6,990      0.4    7,020     6,986       0.5
  Diluted        7,140    7,001      2.0    7,140     7,014       1.8
Performance
 Ratios
Return on
 average
 assets          1.14%     1.18%    (3.4)    1.14%     1.18%     (3.4)
Return on
 average
 shareholders'
 equity         12.82%    13.73%    (6.7)   12.73%    13.87%     (8.2)
Net interest
 margin          4.82%     4.64%     3.9     4.69%     4.70%     (0.2)
Efficiency
 ratio          62.34%    65.43%    (4.7)   63.37%    64.86%     (2.3)
Equity to
 assets          8.89%     8.61%     3.2     8.98%     8.51%      5.6
Bank Capital
 Ratios
Tier I capital                              11.94%    11.98%     (0.3)
Total capital
 (tier I & II)                              13.19%    13.23%     (0.3)
Leverage
 (Regulatory)                                8.65%     8.23%      5.1
CONTACT:          MetroCorp Bancshares Inc., Houston
                  Allen Brown, 713/776-3876
                  or
                  David D. Rinehart, 713/776-3876


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