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MCBI > SEC Filings for MCBI > Form 8-K on 10-Dec-2013All Recent SEC Filings

Show all filings for METROCORP BANCSHARES, INC.

Form 8-K for METROCORP BANCSHARES, INC.


10-Dec-2013

Other Events, Financial Statements and Exhibits


Item 8.01 Other Events.

Regulatory Approvals

On December 10, 2013, MetroCorp Bancshares, Inc. ("MetroCorp") issued a press release announcing that the State of California Department of Business Oversight had approved the applications for the mergers of Metro United Bank and Metro Bank National Association with and into East West Bank. The press release also disclosed that the Federal Reserve Bank of San Francisco has indicated that it does not object to the consummation of the proposed merger of MetroCorp, a Texas corporation and parent company of Metro United Bank and Metro Bank National Association, with and into East West Bancorp ("East West"), a Delaware corporation and parent company of East West Bank, with East West surviving the merger (the "Merger"), without the filing of a formal application. A copy of the press release is attached hereto as Exhibit 99.1, and is incorporated by reference herein.

Settlement of Certain Litigation

MetroCorp, the members of its board of directors and East West have been named as defendants in a putative class action filed on behalf of MetroCorp shareholders filed in the United States District Court for the Southern District of Texas, Houston Division (the "Court"), captioned In re MetroCorp Bancshares, Inc. Shareholder Litigation, No. 4:13-cv-03198 (the "Action"), challenging, among other things, the Agreement and Plan of Merger, dated as of September 18, 2013 (the "Merger Agreement"), by and between East West and MetroCorp and the proposed Merger.

On December 10, 2013, following settlement discussions, the defendants entered into a memorandum of understanding with the plaintiffs regarding the settlement of the Action. In connection with the settlement contemplated by the memorandum of understanding, in consideration for the full settlement and release of all claims under the Action, MetroCorp and East West agreed to make certain additional disclosures related to the proposed Merger, which are contained in this Current Report on Form 8-K (this "Current Report"). East West has further agreed to forbear from requiring that the full 3% termination fee payable by MetroCorp in the event that the Merger Agreement is terminated under certain circumstances be paid, instead requiring that a termination fee of 2.5% of the merger consideration be paid in such circumstances. The memorandum of understanding contemplates that the parties will negotiate in good faith and use their reasonable best efforts to enter into a stipulation of settlement.

The stipulation of settlement will be subject to customary conditions, including Court approval following notice to MetroCorp's shareholders. In the event that the parties enter into a stipulation of settlement, a hearing will be scheduled at which the Court will consider the settlement. There can be no assurance that the parties will ultimately enter into a stipulation of settlement or that the Court will approve the settlement even if the parties were to enter into such stipulation. In such event, the proposed settlement as contemplated by the memorandum of understanding may be terminated.

The settlement will not affect the timing of the special meeting of MetroCorp shareholders, which is scheduled to be held on December 16, 2013, but it may affect the amount

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of merger consideration depending on whether the merger consideration is calculated at $14.60 per share or 1.72 times the per share tangible equity, as adjusted. The settlement is not, and should not be construed as, an admission of wrongdoing or liability by any defendant. MetroCorp, East West and the directors of MetroCorp continue to believe that the Action is without merit and vigorously deny the allegations that MetroCorp's directors breached their fiduciary duties. Likewise, neither MetroCorp, East West nor the directors of MetroCorp believe that any disclosures regarding the Merger are required under applicable laws other than that which has already been provided in MetroCorp's definitive proxy statement filed with the Securities and Exchange Commission on November 8, 2013 (the "Proxy Statement"). Furthermore, nothing in this Current Report or any settlement shall be deemed an admission of the legal necessity or materiality of any of the disclosures set forth in this Report. However, to avoid the risk of the putative shareholder class action delaying or adversely affecting the Merger, to minimize the substantial expense, burden, distraction and inconvenience of continued litigation and to fully and finally resolve the claims, MetroCorp and East West have agreed to make these supplemental disclosures to the Proxy Statement.

SUPPLEMENT TO THE PROXY STATEMENT

In connection with the settlement of certain outstanding shareholder litigation as described in this Current Report, MetroCorp has agreed to make these supplemental disclosures to its Proxy Statement, without admitting in any way that the disclosures below are material or otherwise required by law. This supplemental information should be read in conjunction with the Proxy Statement, which should be read in its entirety. All page references in the information below are to pages in the filed Proxy Statement, and terms used below have the meanings set forth in the Proxy Statement, unless otherwise defined below.

The following disclosure supplements the information set forth in the first paragraph on page 38 of the Proxy Statement under the heading "Background of the Merger" by adding the following after the second sentence:

In early 2013, MetroCorp retained a consultant in China to, among other duties, identify any Chinese financial institution that was interested in entering the U.S. market through a business combination with MetroCorp.

The following disclosure supplements the information set forth in the fourth paragraph on page 38 of the Proxy Statement under the heading "Background of the Merger" by adding the following before the first sentence:

On August 14, 2013, Mr. Ng and Mr. Lee met for dinner in Los Angeles during which Mr. Lee advised Mr. Ng that MetroCorp was amenable to receiving a specific indication of interest from East West. They further discussed, among other topics, share price as a multiple of tangible book value and premium to market pricing indicated in recent Texas bank and Asian ethnic bank transactions.

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The following disclosure supplements the information set forth in the fourth paragraph on page 38 of the Proxy Statement under the heading "Background of the Merger" by adding the following at the end of that paragraph:

After discussing recent financial institution acquisition activity, it was agreed that for strategic reasons Mr. Lee would recommend that Sandler O'Neill, rather than the investment bank engaged in 2011, be engaged to render a fairness opinion with respect to the transaction with East West.

The third sentence of the third paragraph on page 39 of the Proxy Statement under the heading "Background of the Merger" is revised to read as follows:

The board of directors also approved the engagement of Sandler O'Neill to advise MetroCorp and render a fairness opinion and the two members of the board of directors unable to attend the meeting conveyed their oral support of the engagement of Sandler O'Neill.

The following disclosure supplements the information set forth in the sixth paragraph on page 39 of the Proxy Statement under the heading "Background of the Merger" by adding the following after the fourth sentence:

On September 11, 2013, Mr. Ng advised Mr. Lee by email that East West had recalculated the purchase price from $281 million to $273 million, thus lowering the purchase price from an estimated $15.00 per share as set forth in East West's letter of intent to $14.60. In that same email, Mr. Ng advised Mr. Lee that East West, as opposed to MetroCorp, would pay for approximately $2.5 million in employee stock options, as well as Mr. Lee's severance package with MetroCorp, worth approximately $1.785 million.

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The following disclosure supplements the information set forth in the table and related footnotes on page 47 of the Proxy Statement, under the heading "Opinion of MetroCorp's Financial Advisor - MetroCorp: Comparable Company Analysis":

                                                        Capital Position                                 LTM Profitability                                    Asset Quality                                 Valuation
                                                                                                                                                                                                              Price/
                                                             Tier 1        Total                                    Net                              LLR/        NPAs¹/        NCOs/        Tang.                    2013        2014
                                    Total        TCE/          RBC          RBC                                   Interest        Efficiency        Gross         Total         Avg.         Book        LTM         Est.        Est.        Market
                                   Assets         TA          Ratio        Ratio        ROAA        ROAE           Margin            Ratio          Loans        Assets        Loans        Value        EPS         EPS         EPS         Value
Company                             ($mm)         (%)          (%)          (%)         (%)          (%)            (%)               (%)            (%)           (%)          (%)          (%)         (x)         (x)         (x)         ($mm)
ViewPoint Financial Group, Inc.      3,594        14.10        17.98        18.67        1.09         7.24             3.71              57.3         0.70          0.71         0.19          159        20.3        21.8        19.3           801
Southside Bancshares, Inc.           3,385         6.34        19.83        21.04        1.07        13.29             3.24              64.2         1.42          0.36         0.68          217        13.2        17.3        16.7           463
First NBC Bank Holding Company       3,027        10.12        14.81        15.95        1.14        11.75             3.20              66.5         1.32          0.78         0.03          140        12.0        11.5        10.0           427
CoBiz Financial Inc.                 2,739         7.54        14.52        16.70        1.04        10.58             3.84              71.4         2.14          2.28         0.12          183        14.9        14.4        13.2           378
Southwest Bancorp, Inc.              2,032        12.12        22.48        23.78        0.64         5.32             3.31              68.4         3.07          1.51         0.50          117        24.1        21.9        18.8           289
Independent Bank Group, Inc.         1,906         9.74        13.80        15.69        1.30        15.49             4.40              64.5         0.84          1.27         0.08          235        14.3        19.5        17.5           430
Guaranty Bancorp                     1,866         9.55        13.71        14.96        0.66         6.44             3.60              72.3         1.63          1.53         1.26          143        20.5        18.4        16.4           242
MidSouth Bancorp, Inc.               1,864         5.21        13.24        13.95        0.70         6.33             4.59              73.4         0.76          0.76         0.07          186        17.6        13.6        12.8           176
First Guaranty Bancshares, Inc.      1,423         5.68        13.54        14.64        0.74         7.73             2.93              65.5         1.48          2.20         0.02          106         9.6          NA          NA            85
OmniAmerican Bancorp, Inc.           1,316        15.38        23.03        23.88        0.47         2.95             3.20              82.8         0.88          1.75         0.49          131        40.5          NM        39.8           265
North Dallas Bank & Trust Co.        1,247        10.24        31.06        32.32        0.41         4.22 ²           2.10 ²            67.7 ²       1.98 ²        0.51 ²       0.25 ²         98        24.3          NA          NA           125

Median                               1,906         9.74        14.81        16.70        0.74         7.24             3.31              67.7         1.42          1.27         0.19          143        17.6        17.9        16.7           289

MetroCorp Bancshares, Inc.           1,586        10.40        15.84        17.10        0.75         6.52             3.68              73.0         1.85          1.74         0.34          119        17.0        17.3        13.6           194

* Financial data as of or for the period ending June 30, 2013; market data as of September 16, 2013

1) Nonperforming assets include nonaccrual loans and leases, renegotiated loans and leases, and foreclosed or repossessed assets

2) Financial data as of or for the period ending March 31, 2013

3) Closing price divided by median analyst estimate for 2013 as of September 16, 2013; Source: FactSet First Call

4) Closing price divided by median analyst estimate for 2014 as of September 16, 2013; Source: FactSet First Call

Source: SNL Financial

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The following disclosure supplements the information set forth in the table and related footnotes on page 48 of the Proxy Statement, under the heading "Opinion of MetroCorp's Financial Advisor - East West: Comparable Company Analysis":

. . .



Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

                 Exhibit
                 Number    Description of Exhibit

                 99.1      Press Release dated December 10, 2013

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