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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



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FORM 10-Q

(MARK ONE)

|      |  |                                                                                                                                      
|----- |  | -------------------------------------------------------------------------------------------------------------------------------------
|[X]   |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2002
|      |  |                                                                                                                                      
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934                                             

Commission File Number 000-25141



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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)



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Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
(Title of class)



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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 [X] No [   ].

As of May 9, 2002, the number of outstanding shares of Common Stock,
par value $1.00 per share, was 7,021,592.



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PART I

FINANCIAL INFORMATION

Item 1. Condensed Financial Statements.

METROCORP BANCSHARES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
(Unaudited)

|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |              |         |  |  | 
|------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ------------------------------------ | ------- | ------- | --------- | ------- | ------------ | ------- |  |  | 
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         | March 31, |         | December 31,
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         | 2002      |         | 2001        
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          |                                            |                                      | ASSETS  |         |           |         |              |         |  |  | 
|Cash and cash equivalents:                              |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        | Cash and due from banks                                                                                                                                                                                  |                                            | $                                    | 27,334  |         |           | $       | 34,428       |        
|                                                        | Federal funds sold and other temporary investments                                                                                                                                                       |                                            |                                      | 21,092  |         |           |         | 23,678       |        
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          | Total cash and cash equivalents            |                                      |         | 48,426  |           |         |              | 58,106  | 
|Investment securities available-for-sale, at fair value |                                                                                                                                                                                                          |                                            | 201,300                              |         |         |           | 173,087 |             
|Other investments                                       |                                                                                                                                                                                                          |                                            | 3,160                                |         |         |           | 3,143   |             
|Loans, net                                              |                                                                                                                                                                                                          |                                            | 481,382                              |         |         |           | 484,242 |             
|Premises and equipment, net                             |                                                                                                                                                                                                          |                                            | 5,401                                |         |         |           | 5,623   |             
|Accrued interest receivable                             |                                                                                                                                                                                                          |                                            | 3,196                                |         |         |           | 3,602   |             
|Deferred income taxes                                   |                                                                                                                                                                                                          |                                            | 5,744                                |         |         |           | 5,471   |             
|Due from customers on acceptances                       |                                                                                                                                                                                                          |                                            | 5,159                                |         |         |           | 4,605   |             
|Other real estate and repossessed assets, net           |                                                                                                                                                                                                          |                                            | 794                                  |         |         |           | 1,025   |             
|Other assets                                            |                                                                                                                                                                                                          |                                            | 2,979                                |         |         |           | 3,270   |             
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          | Total assets                               |                                      | $       | 757,541 |           |         | $            | 742,174 | 
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          |                                            | LIABILITIES AND SHAREHOLDERS EQUITY |         |         |           |         |              |         |  | 
|Deposits:                                               |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        | Noninterest-bearing                                                                                                                                                                                      |                                            | $                                    | 124,162 |         |           | $       | 127,299      |        
|                                                        | Interest-bearing                                                                                                                                                                                         |                                            |                                      | 514,368 |         |           |         | 515,452      |        
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          | Total deposits                             |                                      |         | 638,530 |           |         |              | 642,751 | 
|Other borrowings                                        |                                                                                                                                                                                                          |                                            | 42,823                               |         |         |           | 25,195  |             
|Accrued interest payable                                |                                                                                                                                                                                                          |                                            | 738                                  |         |         |           | 863     |             
|Income taxes payable                                    |                                                                                                                                                                                                          |                                            | 436                                  |         |         |           | (608    | )           
|Acceptances outstanding                                 |                                                                                                                                                                                                          |                                            | 5,159                                |         |         |           | 4,605   |             
|Other liabilities                                       |                                                                                                                                                                                                          |                                            | 3,365                                |         |         |           | 4,139   |             
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          | Total liabilities                          |                                      |         | 691,051 |           |         |              | 676,945 | 
|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 7,013,829 shares and 7,017,823 shares are outstanding at March
31, 2002 and December 31, 2001,
respectively |                                            |                                      | 7,187   |         |           |         | 7,187        |        
|                                                        | Additional paid-in-capital                                                                                                                                                                               |                                            |                                      | 26,173  |         |           |         | 26,144       |        
|                                                        | Retained earnings                                                                                                                                                                                        |                                            |                                      | 34,504  |         |           |         | 32,834       |        
|                                                        | Accumulated other comprehensive income                                                                                                                                                                   |                                            |                                      | 12      |         |           |         | 376          |        
|                                                        | Treasury stock, at cost                                                                                                                                                                                  |                                            |                                      | (1,386  | )       |           |         | (1,312       | )      
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          | Total shareholders equity                 |                                      |         | 66,490  |           |         |              | 65,229  | 
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             
|                                                        |                                                                                                                                                                                                          | Total liabilities and shareholders equity |                                      | $       | 757,541 |           |         | $            | 742,174 | 
|                                                        |                                                                                                                                                                                                          |                                            |                                      |         |         |           |         |             

See accompanying notes to condensed consolidated financial statements

1



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METROCORP BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)

|                                                    |                                                    |            |                           |       |                      |        |       |        |       |        | 
|--------------------------------------------------- | -------------------------------------------------- | ---------- | ------------------------- | ----- | -------------------- | ------ | ----- | ------ | ----- | ------ | 
|                                                    |                                                    |            |                           |       | For The Three Months
|                                                    |                                                    |            |                           |       | Ended March 31,     
|                                                    |                                                    |            |                           |       |                     
|                                                    |                                                    |            |                           |       | 2002                 |        | 2001 
|                                                    |                                                    |            |                           |       |                      |        |      
|Interest income:                                    |                                                    |            |                           |       |                      |        |       |       
|                                                    | Loans                                              |            | $                         | 9,261 |                      |        | $     | 12,019 |      
|                                                    | Investment securities:                             |            |                           |       |                      |        |       |        |      
|                                                    |                                                    | Taxable    |                           |       | 1,998                |        |       |        | 2,108 |       
|                                                    |                                                    | Tax-exempt |                           |       | 310                  |        |       |        | 269   |       
|                                                    | Federal funds sold and other temporary investments |            |                           | 118   |                      |        |       | 667    |      
|                                                    |                                                    |            |                           |       |                      |        |       |       
|                                                    |                                                    |            | Total interest income     |       |                      | 11,687 |       |        |       | 15,063 | 
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Interest expense:                                   |                                                    |            |                           |       |                      |        |       |       
|                                                    | Time deposits                                      |            |                           | 2,960 |                      |        |       | 5,660  |      
|                                                    | Demand and savings deposits                        |            |                           | 601   |                      |        |       | 1,178  |      
|                                                    | Other borrowings                                   |            |                           | 330   |                      |        |       | 312    |      
|                                                    |                                                    |            |                           |       |                      |        |       |       
|                                                    |                                                    |            | Total interest expense    |       |                      | 3,891  |       |        |       | 7,150  | 
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Net interest income                                 |                                                    |            | 7,796                     |       |                      |        | 7,913 |       
|Provision for loan losses                           |                                                    |            | 600                       |       |                      |        | 427   |       
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Net interest income after provision for loan losses |                                                    |            | 7,196                     |       |                      |        | 7,486 |       
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Noninterest income:                                 |                                                    |            |                           |       |                      |        |       |       
|                                                    | Service charges                                    |            |                           | 1,657 |                      |        |       | 1,522  |      
|                                                    | Other loan-related fees                            |            |                           | 586   |                      |        |       | 200    |      
|                                                    | Letters of credit commissions and fees             |            |                           | 126   |                      |        |       | 165    |      
|                                                    | Gain on sale of investment securities, net         |            |                           | 2     |                      |        |       | 70     |      
|                                                    | Other noninterest income                           |            |                           | 105   |                      |        |       | 145    |      
|                                                    |                                                    |            |                           |       |                      |        |       |       
|                                                    |                                                    |            | Total noninterest income  |       |                      | 2,476  |       |        |       | 2,102  | 
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Noninterest expense:                                |                                                    |            |                           |       |                      |        |       |       
|                                                    | Employee compensation and benefits                 |            |                           | 3,570 |                      |        |       | 3,319  |      
|                                                    | Occupancy                                          |            |                           | 1,235 |                      |        |       | 1,366  |      
|                                                    | Other real estate, net                             |            |                           | 263   |                      |        |       | 7      |      
|                                                    | Data processing                                    |            |                           | 24    |                      |        |       | 16     |      
|                                                    | Professional fees                                  |            |                           | 173   |                      |        |       | 396    |      
|                                                    | Advertising                                        |            |                           | 90    |                      |        |       | 114    |      
|                                                    | Other noninterest expense                          |            |                           | 1,268 |                      |        |       | 1,221  |      
|                                                    |                                                    |            |                           |       |                      |        |       |       
|                                                    |                                                    |            | Total noninterest expense |       |                      | 6,623  |       |        |       | 6,439  | 
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Income before provision for income taxes            |                                                    |            | 3,049                     |       |                      |        | 3,149 |       
|Provision for income taxes                          |                                                    |            | 958                       |       |                      |        | 1,069 |       
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Net income                                          |                                                    | $          | 2,091                     |       |                      | $      | 2,080 |       
|                                                    |                                                    |            |                           |       |                      |        |       |       
|Earnings per common share:                          |                                                    |            |                           |       |                      |        |       |       
|                                                    | Basic                                              |            | $                         | 0.30  |                      |        | $     | 0.30   |      
|                                                    | Diluted                                            |            | $                         | 0.29  |                      |        | $     | 0.30   |      
|Weighted average shares outstanding:                |                                                    |            |                           |       |                      |        |       |       
|                                                    | Basic                                              |            |                           | 7,020 |                      |        |       | 6,981  |      
|                                                    | Diluted                                            |            |                           | 7,140 |                      |        |       | 7,028  |      

See accompanying notes to condensed consolidated financial statements

2



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METROCORP BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

|                                        |                                                              |                            |       |                      |       |      |       |   |       | 
|--------------------------------------- | ------------------------------------------------------------ | -------------------------- | ----- | -------------------- | ----- | ---- | ----- | - | ----- | 
|                                        |                                                              |                            |       | For The Three Months
|                                        |                                                              |                            |       | Ended March 31,     
|                                        |                                                              |                            |       |                     
|                                        |                                                              |                            |       | 2002                 |       | 2001
|                                        |                                                              |                            |       |                      |       |     
|Net income                              |                                                              | $                          | 2,091 |                      |       | $    | 2,080 |  
|Other comprehensive income, net of tax: |                                                              |                            |       |                      |       |      |       |  
|                                        | Unrealized (loss) gain on investment securities, net of tax: |                            |       |                      |       |      |       |   |      
|                                        |                                                              | Other comprehensive income |       |                      | (364  | )    |       |   | 1,104 | 
|                                        |                                                              |                            |       |                      |       |      |       |  
|                                        |                                                              | Total comprehensive income |       | $                    | 1,727 |      |       | $ | 3,184 | 
|                                        |                                                              |                            |       |                      |       |      |       |  

METROCORP BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
For The Three Months Ended March 31, 2002 and 2001
(In thousands)
(Unaudited)

|                             |  |  |              |   |            |   |          |  |               |   |               |  |          |   |        |   |  |   |             |   |  |   |        |   |  |   |        |   | 
|---------------------------- |  |  | ------------ | - | ---------- | - | -------- |  | ------------- | - | ------------- |  | -------- | - | ------ | - |  | - | ----------- | - |  | - | ------ | - |  | - | ------ | - | 
|                             |  |  |              |   |            |   |          |  |               |   |               |  |          |   |        |   |  |   | Accumulated |   |  |   |        |   |  |   |       
|                             |  |  | Common Stock |   | Additional |   |          |  |               |   | Other         |  | Treasury |   |        |   | 
|                             |  |  |              |   | Paid-in    |   | Retained |  | Comprehensive |   | Stock         |  |          |   |       
|                             |  |  | Shares       |   | At Par     |   | Capital  |  | Earnings      |   | Income (Loss) |  | At Cost  |   | Total 
|                             |  |  |              |   |            |   |          |  |               |   |               |  |          |   |       
|Balance at January 1, 2001   |  |  | 6,979        |   |            | $ | 7,180    |  |               | $ | 26,033        |  |          | $ | 26,936 |   |  | $ | 121         |   |  | $ | (1,569 | ) |  | $ | 58,701 |  
|Issuance of common stock     |  |  | 2            |   |            |   | 2        |  |               |   | 14            |  |          |   |       |   |  |   |            |   |  |   |       |   |  |   | 16     |  
|Other comprehensive income   |  |  |             |   |            |   |         |  |               |   |              |  |          |   |       |   |  |   | 1,104       |   |  |   |       |   |  |   | 1,104  |  
|Adjustment                   |  |  |             |   |            |   |         |  |               |   | 1             |  |          |   |       |   |  |   |            |   |  |   |       |   |  |   | 1      |  
|Net income                   |  |  |             |   |            |   |         |  |               |   |              |  |          |   | 2,080  |   |  |   |            |   |  |   |       |   |  |   | 2,080  |  
|Dividend payment             |  |  |             |   |            |   |         |  |               |   |              |  |          |   | (418   | ) |  |   |            |   |  |   |       |   |  |   | (418   | )
|                             |  |  |              |   |            |   |          |  |               |   |               |  |          |   |        |   |  |   |             |   |  |   |        |   |  |   |        |  
|Balance at March 31, 2001    |  |  | 6,981        |   |            | $ | 7,182    |  |               | $ | 26,048        |  |          | $ | 28,598 |   |  | $ | 1,225       |   |  | $ | (1,569 | ) |  | $ | 61,484 |  
|                             |  |  |              |   |            |   |          |  |               |   |               |  |          |   |        |   |  |   |             |   |  |   |        |   |  |   |        |  
|                            
|Balance at January 1, 2002   |  |  | 7,017        |   |            | $ | 7,187    |  |               | $ | 26,144        |  |          | $ | 32,834 |   |  | $ | 376         |   |  | $ | (1,312 | ) |  | $ | 65,229 |  
|Repurchase of treasury stock |  |  | (13          | ) |            |   |         |  |               |   |              |  |          |   |       |   |  |   |            |   |  |   | (150   | ) |  |   | (150   | )
|Sale of treasury stock       |  |  | 10           |   |            |   |         |  |               |   | 29            |  |          |   |       |   |  |   |            |   |  |   | 76     |   |  |   | 105    |  
|Other comprehensive income   |  |  |             |   |            |   |         |  |               |   |              |  |          |   |       |   |  |   | (364        | ) |  |   |       |   |  |   | (364   | )
|Net income                   |  |  |             |   |            |   |         |  |               |   |              |  |          |   | 2,091  |   |  |   |            |   |  |   |       |   |  |   | 2,091  |  
|Dividend payment             |  |  |             |   |            |   |         |  |               |   |              |  |          |   | (421   | ) |  |   |            |   |  |   |       |   |  |   | (421   | )
|                             |  |  |              |   |            |   |          |  |               |   |               |  |          |   |        |   |  |   |             |   |  |   |        |   |  |   |        |  
|Balance at March 31, 2002    |  |  | 7,014        |   |            | $ | 7,187    |  |               | $ | 26,173        |  |          | $ | 34,504 |   |  | $ | 12          |   |  | $ | (1,386 | ) |  | $ | 66,490 |  
|                             |  |  |              |   |            |   |          |  |               |   |               |  |          |   |        |   |  |   |             |   |  |   |        |   |  |   |        |  

See accompanying notes to condensed consolidated financial statements

3



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METROCORP BANCSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |         |         |     |         |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------- | ---------------- | --------------------------------- | --------------------------------------------------- | ------ | -------------------- | ------- | ------- | ------- | --- | ------- | -
|                                                 |                                                                                             |                  |                                   |                                                     |        | For The Three Months
|                                                 |                                                                                             |                  |                                   |                                                     |        | Ended March 31,     
|                                                 |                                                                                             |                  |                                   |                                                     |        |                     
|                                                 |                                                                                             |                  |                                   |                                                     |        | 2002                 |         | 2001   
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|Cash flow from operating activities:             |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|                                                 | Net income                                                                                  |                  | $                                 | 2,091                                               |        |                      | $       | 2,080   |        
|                                                 | Adjustments to reconcile net income to net cash provided by (used in)
operating activities: |                  |                                   |                                                     |        |                      |         |         |        
|                                                 |                                                                                             |                  | Depreciation                      |                                                     |        | 366                  |         |         |         | 459 |        
|                                                 |                                                                                             |                  | Provision for loan losses         |                                                     |        | 600                  |         |         |         | 427 |        
|                                                 |                                                                                             |                  | Gain on securities sales          |                                                     |        |                     |         |         |         | (70 | )      
|                                                 |                                                                                             |                  | Loss on sale of other real estate |                                                     |        | 256                  |         |         |         |    |        
|                                                 |                                                                                             |                  | Gain on sale of premises          |                                                     |        | (2                   | )       |         |         |    |        
|                                                 |                                                                                             |                  | Deferred loan fees                |                                                     |        | (586                 | )       |         |         | (79 | )      
|                                                 |                                                                                             |                  | Deferred income taxes             |                                                     |        | (86                  | )       |         |         | (72 | )      
|                                                 |                                                                                             |                  | Changes in:                       |                                                     |        |                      |         |         |         |     |        
|                                                 |                                                                                             |                  |                                   | Accrued interest receivable                         |        |                      | 406     |         |         |     | 476     |  
|                                                 |                                                                                             |                  |                                   | Accrued interest payable                            |        |                      | (125    | )       |         |     | (548    | )
|                                                 |                                                                                             |                  |                                   | Income taxes payable                                |        |                      | 1,044   |         |         |     | 841     |  
|                                                 |                                                                                             |                  |                                   | Other liabilities                                   |        |                      | (774    | )       |         |     | (14,805 | )
|                                                 |                                                                                             |                  |                                   | Other assets                                        |        |                      | 291     |         |         |     | 454     |  
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|                                                 |                                                                                             |                  |                                   | Net cash provided by (used in) operating activities |        |                      | 3,481   |         |         |     | (10,837 | )
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|Cash flows from investing activities:            |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|                                                 | Purchases of securities available-for-sale                                                  |                  |                                   | (48,207                                             | )      |                      |         | (21,270 | )      
|                                                 | Proceeds from sales, maturities and principal paydowns of securities
available-for-sale     |                  |                                   | 19,426                                              |        |                      |         | 16,730  |        
|                                                 | Net change in loans                                                                         |                  |                                   | 2,810                                               |        |                      |         | 15,149  |        
|                                                 | Proceeds from sale of other real estate                                                     |                  |                                   | 11                                                  |        |                      |         | 5       |        
|                                                 | Proceeds from sale of premises and equipment                                                |                  |                                   | 2                                                   |        |                      |         |        |        
|                                                 | Purchases of premises and equipment                                                         |                  |                                   | (144                                                | )      |                      |         | (142    | )      
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|                                                 | Net cash (used in) provided by investing activities                                         |                  |                                   | (26,102                                             | )      |                      |         | 10,472  |        
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|Cash flows from financing activities:            |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|                                                 | Net change in:                                                                              |                  |                                   |                                                     |        |                      |         |         |        
|                                                 |                                                                                             | Deposits         |                                   |                                                     | (4,221 | )                    |         |         | (11,353 | )  
|                                                 |                                                                                             | Other borrowings |                                   |                                                     | 17,628 |                      |         |         | 382     |    
|                                                 | Proceeds from issuance of common stock                                                      |                  |                                   | 29                                                  |        |                      |         | 17      |        
|                                                 | Treasury stock purchased, net                                                               |                  |                                   | (74                                                 | )      |                      |         |        |        
|                                                 | Dividends paid                                                                              |                  |                                   | (421                                                | )      |                      |         | (419    | )      
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|                                                 |                                                                                             |                  |                                   | Net cash provided by (used in) financing activities |        |                      | 12,941  |         |         |     | (11,373 | )
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|Net decrease in cash and cash equivalents        |                                                                                             |                  | (9,680                            | )                                                   |        |                      | (11,738 | )      
|Cash and cash equivalents at beginning of period |                                                                                             |                  | 58,106                            |                                                     |        |                      | 92,226  |        
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        
|Cash and cash equivalents at end of period       |                                                                                             | $                | 48,426                            |                                                     |        | $                    | 80,488  |        
|                                                 |                                                                                             |                  |                                   |                                                     |        |                      |         |        

See accompanying notes to condensed consolidated financial statements

4



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##### 



METROCORP BANCSHARES, INC.



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The unaudited condensed consolidated financial statements include the
accounts of MetroCorp Bancshares, Inc. (the Company) and its wholly-owned
subsidiary MetroBank, National Association (the Bank). All material
intercompany accounts and transactions have been eliminated in consolidation.

The accompanying unaudited condensed consolidated financial
statements were prepared in accordance with accounting principles generally
accepted in the United States of America 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 to present fairly the
Companys consolidated financial position at March 31, 2002, the Companys
consolidated results of operations for the three months ended March 31, 2002 and
2001, consolidated cash flows for the three months ended March 31, 2002 and
2001, and consolidated changes in shareholders equity for the three months
ended March 31, 2002 and 2001. Interim period results are not necessarily
indicative of results for a full-year period.

Certain amounts applicable to the prior periods have been
reclassified to conform to the classifications currently followed. Such
reclassifications do not affect earnings.

These 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, 2001.

2. EARNINGS PER COMMON SHARE

Basic earnings per share (EPS) is computed by dividing net income
available to common shareholders 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.
Potentially dilutive common shares are computed using the treasury stock method.

|                                            |         |   |                       |       |      |   |       |       | 
|------------------------------------------- | ------- | - | --------------------- | ----- | ---- | - | ----- | ----- | 
|                                            |         |   | For The Three Months 
|                                            |         |   | Ended March 31,      
|                                            |         |   |                      
|                                            |         |   | 2002                  |       | 2001
|                                            |         |   |                       |       |     
|                                            |         |   | (In thousands, except
|                                            |         |   | per share amounts)   
|                                            |         |  
|Net income available to common shareholders |         | $ | 2,091                 |       |      | $ | 2,080 |      
|                                            |         |   |                       |       |      |   |       |      
|Weighted-average common shares outstanding: |         |   |                       |       |      |   |       |      
|                                            | Basic   |   |                       | 7,020 |      |   |       | 6,981 | 
|                                            | Diluted |   |                       | 7,140 |      |   |       | 7,028 | 
|                                            |         |   |                       |       |      |   |       |      
|Earnings per common share:                  |         |   |                       |       |      |   |       |      
|                                            | Basic   |   | $                     | 0.30  |      |   | $     | 0.30  | 
|                                            | Diluted |   | $                     | 0.29  |      |   | $     | 0.30  | 

3. SIGNIFICANT ACCOUNTING PRONOUNCEMENTS

In July 2001, FASB
issued SFAS 142, Goodwill and Other Intangible Assets.
The statement requires that goodwill no longer be amortized to earnings, but
instead be reviewed for impairment. This change provides investors with greater
transparency regarding the economic value of goodwill and its impact on
earnings. The amortization of goodwill ceases upon adoption of the statement,
which for most companies, was to be January 1, 2002. The adoption of this
statement on January 1, 2002 did not have a material impact on the Companys
financial position or results of operations as the Company does not have any
goodwill.

5



---



##### 



In July 2001, FASB
issued SFAS 143, Accounting for Asset Retirement
Obligations. The statement requires entities to record the fair value of a
liability for an asset retirement obligation in the period in which it is
incurred. When the liability is initially recorded, the entity capitalizes a
cost by increasing the carrying amount of the related long-lived asset. Over
time, the liability is accreted to its present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its
recorded amount or incurs a gain or loss upon settlement. The standard is
effective for fiscal years beginning after September 15, 2002, with earlier
application encouraged. Management believes adopting this statement will not
have a material impact on the Companys financial position or results of
operations.

In August 2001, the FASB issued SFAS 144, Accounting for Impairment or
Disposal of Long-lived Assets. SFAS 144 addresses financial accounting and
reporting for the impairment of long-lived assets and for long-lived assets to
be disposed of. It supersedes, with exceptions, SFAS 121, Accounting for the
Impairment of Long-lived assets and Long-lived Assets to be Disposed Of, and is
effective for fiscal years beginning after December 15, 2001. Management
believes adopting this statement will not have a material impact on the
Companys financial position or results of operations.

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 and documents incorporated herein by reference
that are not historical facts are forward-looking statements made pursuant to
the safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements, that describe the Companys future plans,
strategies and expectations, are based on assumptions and involve a number of
risks and uncertainties, many of which are beyond the Companys control. The
important factors that could cause actual results to differ materially from the
results, performance or achievements expressed or implied by the forward-looking
statements include, without limitation:



| |  |  | 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 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;                                                                                                  
|
| |  |  | The failure of assumptions underlying the establishment of and
provisions made to the allowance for loan losses;                                                                                                                                                                                      
|
| |  |  | Changes in the availability of funds resulting in increased costs
or reduced liquidity;                                                                                                                                                                                                               
|
| |  |  | Increased asset levels and changes in the composition of assets and
the resulting impact on our capital levels and regulatory capital
ratios;                                                                                                                                                         

6



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##### 





| |  |  | The Companys ability to acquire, operate and maintain cost
effective and efficient systems without incurring unexpectedly
difficult or expensive but necessary technological changes;                                      
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | The loss of senior management or operating personnel and the
potential inability to hire qualified personnel at reasonable
compensation levels; and                                                                         
|
| |  |  | 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 Company undertakes no obligation to publicly update or otherwise
revise any forward-looking statements, unless the securities laws require the
Company to do so. All written or oral forward-looking statements attributable to
the Company are expressly qualified in their entirety by these cautionary
statements.

Overview

Net income for the three months ended March 31, 2002 was $2.1 million,
up $11,000 or 0.5% from the quarter ended March 31, 2001. The Companys basic
and diluted EPS for the three months ended March 31, 2002 was $0.30 and $0.29,
respectively, compared to $0.30 for the same quarter in 2001. The slight
difference in diluted EPS at March 31, 2002, compared to March 31, 2001, was
primarily the result of stock options granted during the third and fourth
quarters of 2001.

At March 31, 2002, total assets were $757.5 million, up $15.3 million
or 2.1% from $742.2 million at December 31, 2001. This was primarily the result
of an increase in investment securities of $28.2 million that was funded by
$11.2 million in cash and $17.0 million from other borrowings, reflecting
managements goal to increase earning assets. These funds were primarily
invested in mortgage-backed securities and collateralized mortgage obligations
(CMOs). The characteristics of the mortgage-backed securities and CMOs have
durations of approximately three years and are both fixed rate and variable rate
securities. Net loans at March 31, 2002 were $481.4 million, down slightly from
$484.2 at December 31, 2001. The Companys return on average assets (ROAA) for
the three months ended March 31, 2002 and 2001 was 1.15% and 1.17%, respectively. The
decrease in ROAA for the three months ended March 31, 2002 compared to the same
period in 2001 was primarily the result of flat earnings over
increased assets in 2002.

Shareholders equity at March 31, 2002 was $66.5 million compared
with $65.2 million at December 31, 2001, an increase of $1.3 million or 1.9%.
The return on average shareholders equity (ROAE) for the three months ended
March 31, 2002 was 12.64% compared with 13.97% for the same period in 2001. The decrease in ROAE was primarily the result of flat earnings
over increased equity in 2002.

Results of Operations

Net Interest Income. For the three months ended March 31, 2002, net
interest income, before the provision for loan losses, was $7.8 million, down
$100,000 or 1.5% from $7.9 million for the three months ended
March 31, 2001. The net interest margin at March 31, 2002 was 4.55%, down 22
basis points from 4.77% at March 31, 2001. The decreases in net interest income
and the net interest margin for the quarter ended March 31, 2002 compared to the
same quarter in 2001 were primarily the result of lower interest rates at the
end of 2001 and in 2002. The lower interest rates negatively impacted the yields
on variable rate loans and contributed to increased refinancing activity on
loans including those with interest rate floors. In terms of net interest
income, the decrease in the yield on earning assets was partially offset by
declining rates on interest-bearing liabilities.

Total interest income for the three months ended March 31, 2002
decreased $3.4 million or 22.9% to $11.7 million from $15.1 million for the same
period in 2001. The decrease was primarily due to lower interest rates in 2002
compared to 2001. The loan portfolio is heavily weighted toward variable rate
loans that reprice as the market prime rate moves, and therefore, is sensitive
to interest rate movement. At March 31, 2002, the Company had $391.6 million in
variable rate loans which represented 79.9% of the total loan portfolio.

Interest income from loans for the three months ended March 31, 2002
was $9.3 million, down $2.8 million or 22.9% from $12.0 million for the same
period in 2001. For the three months ended March 31, 2002, the average yield on
loans was 7.67%, compared to 10.26% for the same period in 2001. Approximately
55.8% of the loan portfolio is tied to loans with interest rate floors with a
weighted average yield of 7.48% at March 31, 2002.

Interest income from investments for the three months ended March 31,
2002 was $2.4 million, down approximately $600,000 or 8.0% compared to $3.0
million for the same period in 2001, primarily due to lower interest rates in
2002. For the three months ended March 31, 2002, the

7



---



##### 



average yield on investments (securities, Federal Funds sold and other temporary
investments) was 4.81% compared to 6.24% for the same period in 2001.

For the three months ended March 31, 2002, total earning assets
averaged $694.5 million with an average yield of 6.82%, compared to $673.0
million with an average yield of 9.08% for the same period in 2001. This
represented an increase in average earning assets of $21.5 million for the three
months ended March 31, 2002 compared with the same period in 2001, and a
decrease in average yield of 226 basis points.

Total interest expense for the three months ended March 31, 2002
decreased by $3.3 million or 45.6% to $3.9 million compared with $7.2 million
for the same period in 2001. The decrease in total interest expense for the
three months ended March 31, 2002 compared to the same period in 2001 was
primarily the result of declining interest rates in 2001 that contributed to
lower rates paid for interest-bearing deposits.

Interest paid on interest-bearing deposits for the three months ended
March 31, 2002 was $3.6 million compared to $6.8 million for the same period in
2001, a decrease of $3.2 million or 47.1%. This was primarily due to decreases
in the rates paid for interest-bearing deposits along with a decrease in deposit
balances. Average interest-bearing deposits for the three months ended March 31,
2002 were $510.6 million compared with average interest-bearing deposits for the
same period in 2001 of $519.5 million, a decrease of $8.9 million or 1.7%. The
average rate paid on interest-bearing deposits for the three months ended March
31, 2002 was 2.83% compared with the average rate for the same three months in
2001 at 5.34%, a decrease of 251 basis points. During the first quarter 2002,
approximately $110.2 million or 33.7% of the time deposit portfolio renewed.
These time deposits had a weighted average interest rate of approximately 4.42%.
Many of these time deposits renewed for six-month to one-year terms. The
offering rates at the end of the first quarter 2002 for six-month and one-year
time deposits (under $100,000) were approximately 2.10% and 2.30%, respectively.
Management believes, based on its historical experience, that its large time
deposits have core-type characteristics and anticipates that this source of
funding will continue to sustain a substantial portion of the Companys asset
growth in the future.

Interest paid on borrowed funds for the three months ended March 31,
2002 was $330,000 compared to $312,000 for the same period in 2001, an increase
of $18,000 or 5.8%. Average borrowed funds for the three months ended March 31,
2002 were $29.2 million compared with average borrowed funds for the same period
in 2001 of $25.8 million, an increase of $3.4 million or 13.2%. The increase in
borrowed funds reflected advances obtained from the Federal Home Loan Bank of
Dallas (FHLB) to fund securities investments. The average rate paid on
borrowed funds for the three months ended March 31, 2002 was 4.58%, compared to
the same three months ended in 2001 at 4.90%, a decrease of 32 basis points.

8



---



##### 



The following table presents 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.

|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |       |   |      |      |  
|--------------------------------------------------------------- | -------------------------------------------------- | ------------------------------------------ | ---------------------------------- | ----------------------------- | ------- | ------------------------------------ | ------- | -------- |  | ------- | ------ | ----------- | - | -------- | ------- | ------- | ------- | ------- | ------- | ------ |  | ----- | ------ | ----- | - | ---- | ---- | -
|                                                                |                                                    |                                            |                                    |                               |         | For The Three Months Ended March 31,
|                                                                |                                                    |                                            |                                    |                               |         |                                     
|                                                                |                                                    |                                            |                                    |                               |         | 2002                                 |         | 2001    
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |         
|                                                                |                                                    |                                            |                                    |                               |         | 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:                                        |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                | Total loans                                        |                                            | $                                  | 489,801                       |         |                                      | $       | 9,261    |  |         |        | 7.67        | % |          | $       | 475,193 |         |         | $       | 12,019 |  |       |        | 10.26 | %
|                                                                | Taxable securities                                 |                                            |                                    | 155,542                       |         |                                      |         | 1,998    |  |         |        | 5.21        |   |          |         | 125,157 |         |         |         | 2,108  |  |       |        | 6.83  |  
|                                                                | Tax-exempt securities                              |                                            |                                    | 24,931                        |         |                                      |         | 310      |  |         |        | 5.04        |   |          |         | 20,873  |         |         |         | 269    |  |       |        | 5.23  |  
|                                                                | Federal funds sold and other temporary investments |                                            |                                    | 24,203                        |         |                                      |         | 118      |  |         |        | 1.98        |   |          |         | 51,817  |         |         |         | 667    |  |       |        | 5.22  |  
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                |                                                    |                                            |                                    | Total interest-earning assets |         |                                      | 694,477 |          |  |         | 11,687 |             |   |          | 6.82    | %       |         |         | 673,040 |        |  |       | 15,063 |       |   |      | 9.08 | %
|                                                                | Less allowance for loan losses                     |                                            |                                    | (8,957                        | )       |                                      |         |          |  |         |        |             |   |          |         | (9,271  | )       |         |         |        |  |       |        |       |  
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|Total interest-earning assets, net of allowance for
loan losses |                                                    |                                            | 685,520                            |                               |         |                                      |         |          |  |         |        |             |   |          | 663,769 |         |         |         |         |        |  |       |        |      
|Noninterest-earning assets                                      |                                                    |                                            | 53,708                             |                               |         |                                      |         |          |  |         |        |             |   |          | 55,416  |         |         |         |         |        |  |       |        |      
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                |                                                    | Total assets                               |                                    | $                             | 739,228 |                                      |         |          |  |         |        |             |   |          |         | $       | 719,185 |         |         |        |  |       |        |       |   |     
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|Liabilities and shareholders equity                            |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|Interest-bearing liabilities:                                   |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                | Interest-bearing demand deposits                   |                                            | $                                  | 66,818                        |         |                                      |         | 227      |  |         |        | 1.38        | % |          | $       | 49,429  |         |         |         | 368    |  |       |        | 3.02  | %
|                                                                | Saving and money market accounts                   |                                            |                                    | 111,433                       |         |                                      |         | 374      |  |         |        | 1.36        |   |          |         | 96,050  |         |         |         | 810    |  |       |        | 3.42  |  
|                                                                | Time deposits                                      |                                            |                                    | 332,378                       |         |                                      |         | 2,960    |  |         |        | 3.61        |   |          |         | 373,979 |         |         |         | 5,660  |  |       |        | 6.14  |  
|Federal funds purchased and other repurchase agreements         |                                                    |                                            | 3,631                              |                               |         |                                      | 18      |          |  |         | 2.01   |             |   |          |        |         |         |         |        |        |  |       |       |      
|                                                                | Other borrowings                                   |                                            |                                    | 25,559                        |         |                                      |         | 312      |  |         |        | 4.95        |   |          |         | 25,823  |         |         |         | 312    |  |       |        | 4.90  |  
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                |                                                    |                                            | Total interest-bearing liabilities |                               |         | 539,819                              |         |          |  | 3,891   |        |             |   | 2.92     | %       |         |         | 545,281 |         |        |  | 7,150 |        |       |   | 5.32 | %   
|Noninterest-bearing liabilities:                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                | Noninterest-bearing demand deposits                |                                            |                                    | 123,832                       |         |                                      |         |          |  |         |        |             |   |          |         | 102,706 |         |         |         |        |  |       |        |       |  
|                                                                | Other liabilities                                  |                                            |                                    | 8,469                         |         |                                      |         |          |  |         |        |             |   |          |         | 10,812  |         |         |         |        |  |       |        |       |  
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                |                                                    |                                            | Total liabilities                  |                               |         | 672,120                              |         |          |  |         |        |             |   |          |         |         |         | 658,799 |         |        |  |       |        |       |   |      |     
|Shareholders equity                                            |                                                    |                                            | 67,108                             |                               |         |                                      |         |          |  |         |        |             |   |          | 60,386  |         |         |         |         |        |  |       |        |      
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|                                                                |                                                    | Total liabilities and shareholders equity |                                    | $                             | 739,228 |                                      |         |          |  |         |        |             |   |          |         | $       | 719,185 |         |         |        |  |       |        |       |   |     
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|Net interest income                                             |                                                    |                                            |                                    |                               |         | $                                    | 7,796   |          |  |         |        |             |   |          |         |         |         | $       | 7,913   |        |  |       |        |      
|                                                                |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         |        |             |   |          |         |         |         |         |         |        |  |       |        |      
|Net interest spread                                             |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         | 3.90   | %           |   |          |         |         |         |         |         |        |  |       | 3.76   | %    
|Net interest margin                                             |                                                    |                                            |                                    |                               |         |                                      |         |          |  |         | 4.55   | %           |   |          |         |         |         |         |         |        |  |       | 4.77   | %    



---

|(1) |  | Annualized.
|--- |  | -----------

9



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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, 2002 compared with the three months ended March 31, 2001. For purposes
of this table, changes attributable to both rate and volume have been allocated
to rate.

|                              |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |      |        |        |  
|----------------------------- | ------------------------------------------ | ------------------------------------------------------- | -------------------------------------------- | ----- | ---------------------------- | ---- | ---- | ------ | ------ | ------ | - | ---- | ------ | ------ | -
|                              |                                            |                                                         |                                              |       | Three Months Ended March 31,
|                              |                                            |                                                         |                                              |       | 2002 vs. 2001               
|                              |                                            |                                                         |                                              |       |                             
|                              |                                            |                                                         |                                              |       | Increase (Decrease)          |      |      |        |       
|                              |                                            |                                                         |                                              |       | Due To                       |      |      |        |       
|                              |                                            |                                                         |                                              |       |                              |      |      |        |       
|                              |                                            |                                                         |                                              |       | Volume                       |      | Rate |        | Total 
|                              |                                            |                                                         |                                              |       |                              |      |      |        |       
|                              |                                            |                                                         |                                              |       | (Dollars in thousands)      
|INTEREST- EARNING ASSETS:     |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |     
|                              |                                            | Loans                                                   |                                              | $     | 369                          |      |      | $      | (3,127 | )      |   | $    | (2,758 | )     
|                              |                                            | Securities                                              |                                              |       | 734                          |      |      |        | (803   | )      |   |      | (69    | )     
|                              |                                            | Federal funds sold and other temporary investments      |                                              |       | (356                         | )    |      |        | (193   | )      |   |      | (549   | )     
|                              |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |     
|                              |                                            |                                                         | Total increase (decrease) in interest income |       |                              | 747  |      |        |        | (4,123 | ) |      |        | (3,376 | )
|                              |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |     
|INTEREST-BEARING LIABILITIES: |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |     
|                              |                                            | Interest-bearing demand deposits                        |                                              |       | 129                          |      |      |        | (270   | )      |   |      | (141   | )     
|                              |                                            | Saving and money market accounts                        |                                              |       | 129                          |      |      |        | (565   | )      |   |      | (436   | )     
|                              |                                            | Time deposits                                           |                                              |       | (629                         | )    |      |        | (2,071 | )      |   |      | (2,700 | )     
|                              |                                            | Federal funds purchased and other repurchase agreements |                                              |       |                             |      |      |        | 18     |        |   |      | 18     |       
|                              |                                            | Other borrowings                                        |                                              |       | (3                           | )    |      |        | 3      |        |   |      |       |       
|                              |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |     
|                              |                                            |                                                         | Total (decrease) in interest expense         |       |                              | (374 | )    |        |        | (2,885 | ) |      |        | (3,259 | )
|                              |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |     
|                              | Increase (decrease) in net interest income |                                                         | $                                            | 1,121 |                              |      | $    | (1,238 | )      |        | $ | (117 | )     
|                              |                                            |                                                         |                                              |       |                              |      |      |        |        |        |   |     

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 provision for loan losses for the three months ended March 31,
2002 was $600,000, up $173,000 compared with $427,000 for the three months ended
March 31, 2001, primarily due to increased nonaccrual loans. The allowance for
loan losses as a percent of total loans (net of unearned interest, deferred
fees, and discounts) at March 31, 2002 was 1.75% compared with 1.81% at March
31, 2001.

Noninterest Income.Total noninterest income for the three months
ended March 31, 2002 was $2.5 million, up $400,000 or 17.8% compared to $2.1
million for the same three months in 2001. For the three months ended March 31,
2002, service charges on deposit accounts were $1.7 million and represented
66.9% of total noninterest income, compared to $1.5 million for the same period
in 2001 when service charges on deposit accounts represented 72.4% of total
noninterest income. For the three months ended March 31, 2002, other
loan-related fees were $590,000, up $390,000 compared to $200,000 for the same
period in 2001. The increases in noninterest income were primarily due to
increased transaction deposit accounts as a result of continued relationship
banking initiatives, more vigorous efforts in the collection of late fees and
NSF fees, and a more structured fee collection process as a result of improved
systems capabilities. In addition, management had discouraged the waiving of late fees, NSF
fees, and other service-related fees. For the three months ended March 31, 2002
all other noninterest income was $230,000, down $150,000 from $380,000 for the
three months ended March 31, 2001, primarily due to lower letters of credit
volume and a decline in sales of noninsured products.

10



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##### 



The following table presents, for the periods indicated, the major
categories of noninterest income:

|                                           |                          |   |                        |       |      |   |       |       | 
|------------------------------------------ | ------------------------ | - | ---------------------- | ----- | ---- | - | ----- | ----- | 
|                                           |                          |   | For The Three Months  
|                                           |                          |   | Ended March 31,       
|                                           |                          |   |                       
|                                           |                          |   | 2002                   |       | 2001
|                                           |                          |   |                        |       |     
|                                           |                          |   | (Dollars in thousands)
|Service charges                            |                          | $ | 1,657                  |       |      | $ | 1,522 |      
|Other loan-related fees                    |                          |   | 586                    |       |      |   | 200   |      
|Letters of credit commissions and fees     |                          |   | 126                    |       |      |   | 165   |      
|Gain on sale of investment securities, net |                          |   | 2                      |       |      |   | 70    |      
|Other noninterest income                   |                          |   | 105                    |       |      |   | 145   |      
|                                           |                          |   |                        |       |      |   |       |      
|                                           | Total noninterest income |   | $                      | 2,476 |      |   | $     | 2,102 | 
|                                           |                          |   |                        |       |      |   |       |      

Noninterest Expense.Total noninterest expense for the three months
ended March 31, 2002 was $6.6 million, up approximately $180,000 or 2.9% from
$6.4 million for the same three months in 2001. The increase was primarily the
result of a $250,000 increase in employee compensation and benefits and a
$200,000 charge to other real estate, partially offset by decreased occupancy,
professional fees, and other operating expenses of $270,000. The increase in
employee compensation and benefits was primarily due to the addition of officer
level employees and loan workout staff along with various incentive bonus
payments. The decreases in non-staff expense were primarily due to lower
occupancy expense as a result of the Galleria branch closing in November 2000
that had expenses trailing into 2001 and lower professional fees related to less
legal and less audit/consulting fees.

The Companys efficiency ratio for the three months ended March 31,
2002 was 64.48%, slightly higher than the 64.29% for the same three months ended
in 2001. This was primarily the result of lower net interest income and slightly
higher noninterest expense that was partially offset by higher noninterest
income.

The following table presents, for the periods indicated, the major
categories of noninterest expense:

|                                   |                           |                           |       |                        |       |      |       |       |       | 
|---------------------------------- | ------------------------- | ------------------------- | ----- | ---------------------- | ----- | ---- | ----- | ----- | ----- | 
|                                   |                           |                           |       | For The Three Months  
|                                   |                           |                           |       | Ended March 31,       
|                                   |                           |                           |       |                       
|                                   |                           |                           |       | 2002                   |       | 2001
|                                   |                           |                           |       |                        |       |     
|                                   |                           |                           |       | (Dollars in thousands)
|Employee compensation and benefits |                           | $                         | 3,570 |                        |       | $    | 3,319 |      
|Non-staff expense:                 |                           |                           |       |                        |       |      |       |      
|                                   | Occupancy                 |                           |       | 1,235                  |       |      |       | 1,366 |      
|                                   | Other real estate, net    |                           |       | 263                    |       |      |       | 7     |      
|                                   | Data processing           |                           |       | 24                     |       |      |       | 16    |      
|                                   | Professional fees         |                           |       | 173                    |       |      |       | 396   |      
|                                   | Advertising               |                           |       | 90                     |       |      |       | 114   |      
|                                   | Director compensation     |                           |       | 61                     |       |      |       | 98    |      
|                                   | Printing and supplies     |                           |       | 144                    |       |      |       | 107   |      
|                                   | Telecommunications        |                           |       | 154                    |       |      |       | 171   |      
|                                   | Other noninterest expense |                           |       | 909                    |       |      |       | 845   |      
|                                   |                           |                           |       |                        |       |      |       |      
|                                   |                           | Total non-staff expense   |       |                        | 3,053 |      |       |       | 3,120 | 
|                                   |                           |                           |       |                        |       |      |       |      
|                                   |                           | Total noninterest expense |       | $                      | 6,623 |      |       | $     | 6,439 | 
|                                   |                           |                           |       |                        |       |      |       |      

Employee compensation and benefits expense of $3.6 million for the
three months ended March 31, 2002 represented 53.9% of total noninterest
expense. The full-time equivalent (FTE) employees at March 31, 2002 were 284.1
compared with FTE of 306.6 at March 31, 2001, a decrease of 22.5 FTE. The
decrease in FTE was primarily due to less contract and part-time employees. The
full-time equivalent calculation includes all full-time, part-time, temporary,
and contract staff and is based on total hours worked.

11



---



##### 



Financial Condition

Loan Portfolio.Total loans decreased by $3.2 million or 0.6%, from
$493.1 million at December 31, 2001 to $490.0 million at March 31, 2002. The
decrease was primarily due to loan prepayments that exceeded new loan funding during
the quarter. Historically, the Company has experienced slower loan demand in the
first quarter. At March 31, 2002 and December 31, 2001, the ratio of total loans
to total deposits was 76.7%. At the same dates, total loans represented 64.7%
and 66.4% of total assets, respectively.

The following table summarizes the loan portfolio of the Company by
type of loan:

|                          |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |       | 
|------------------------- | ---------------------------------------------------- | - | -------------------- | ------- | ----------------------- |  | ---------------------- | ----- | ------- | - | ------- | ------- | - |  | ------ | ----- | 
|                          |                                                      |   | As of March 31, 2002 |         | As of December 31, 2001
|                          |                                                      |   |                      |         |                        
|                          |                                                      |   | Amount               |         | Percent                 |  | Amount                 |       | Percent
|                          |                                                      |   |                      |         |                         |  |                        |       |        
|                          |                                                      |   |                      |         |                         |  | (Dollars in thousands) |       |         |   |        
|Commercial and industrial |                                                      | $ | 313,203              |         |                         |  | 63.12                  | %     |         | $ | 312,899 |         |   |  | 62.67  | %    
|Real estate mortgage:     |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |      
|                          | Residential                                          |   |                      | 7,301   |                         |  |                        | 1.47  |         |   |         | 7,833   |   |  |        | 1.57  | 
|                          | Commercial                                           |   |                      | 128,944 |                         |  |                        | 25.99 |         |   |         | 131,022 |   |  |        | 26.24 | 
|Real estate construction: |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |      
|                          | Residential                                          |   |                      | 7,546   |                         |  |                        | 1.52  |         |   |         | 5,962   |   |  |        | 1.19  | 
|                          | Commercial                                           |   |                      | 26,870  |                         |  |                        | 5.42  |         |   |         | 30,215  |   |  |        | 6.05  | 
|Consumer and other        |                                                      |   | 12,305               |         |                         |  | 2.48                   |       |         |   | 11,364  |         |   |  | 2.28   |      
|                          |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |      
|Gross loans               |                                                      |   | 496,169              |         |                         |  | 100.00                 | %     |         |   | 499,295 |         |   |  | 100.00 | %    
|                          |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |      
|                          | Less: unearned discounts, interest and deferred fees |   |                      | (6,195  | )                       |  |                        |       |         |   |         | (6,150  | ) |  |        |       | 
|                          |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |      
|Total loans               |                                                      |   | 489,974              |         |                         |  |                        |       |         |   | 493,145 |         |   |  |        |      
|                          | Less: allowance for loan losses                      |   |                      | (8,592  | )                       |  |                        |       |         |   |         | (8,903  | ) |  |        |       | 
|                          |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |      
|Loans, net                |                                                      | $ | 481,382              |         |                         |  |                        |       |         | $ | 484,242 |         |   |  |        |      
|                          |                                                      |   |                      |         |                         |  |                        |       |         |   |         |         |   |  |        |      

Nonperforming Assets. Net nonperforming assets at March 31, 2002 were
$10.4 million, an increase of $6.7 million from net nonperforming assets of $3.7
million at December 31, 2001. The $6.7 million increase in net nonperforming
assets was primarily due to an increase of $9.0 million in nonaccrual loans
partially offset by a $525,000 decrease in accruing loans 90 days or more past
due, a $231,000 decrease in other real estate and other repossessed assets, and
an increase in the government guaranteed portions on loans of $1.5 million. The
ratios for net nonperforming assets to total loans and other real estate were
2.13% and 0.76% at March 31, 2002 and December 31, 2001, respectively. The
ratios for net nonperforming assets to total assets were 1.38% and 0.50% for the
same periods, respectively. These figures are net of the loan portions
guaranteed from the United States Department of Commerces Small Business
Administration (the SBA), the Export Import Bank of the United States (the
Ex-Im Bank), an independent agency of the United States Government, and the
Overseas Chinese Community Guaranty Fund (OCCGF), an agency sponsored by the
government of Taiwan, which were $3.3 million at March 31, 2002 compared to $1.8
million at December 31, 2001.

During the quarter ended March 31, 2002, the Company continued its
efforts that commenced in the fourth quarter 2001 to systematically review the
quality of its loan portfolio. As a result, the Company placed approximately
$9.8 million in loans (with a weighted average interest rate of 8.18%) on
nonaccrual status. This proactive identification process is an integral part of
an overall effort to improve credit quality, and to facilitate this process,
loan review and problem resolution staff were added during the first quarter
2002. The largest credit placed on nonaccrual status during the quarter ended
March 31, 2002 was a $3.6 million participation in a $5.3 million hotel loan.
While further deterioration in the loan portfolio is possible, management will
continue its risk assessment program as it also turns its attention to
diversifying its credit risk through new business development.

Prior to 2001, the Company was actively involved in the origination and
sale of certain federally guaranteed loans into the secondary market with
servicing retained. Under the terms of these programs, the Company is required
to repurchase any loans which may become nonperforming. As a result of this
requirement, the Companys nonperforming loans may increase during the period of
time in which any loan repurchased is either restored to an accrual status or
the Company claims on the guarantee.

12



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##### 



The following table presents information regarding nonperforming
assets at the periods indicated:

|                                                                  |                                                                 |   |                        |        |                   |   |       |        |  
|----------------------------------------------------------------- | --------------------------------------------------------------- | - | ---------------------- | ------ | ----------------- | - | ----- | ------ | -
|                                                                  |                                                                 |   | As of                  |        | As of            
|                                                                  |                                                                 |   | March 31, 2002         |        | December 31, 2001
|                                                                  |                                                                 |   |                        |        |                  
|                                                                  |                                                                 |   | (Dollars in thousands)
|Nonaccrual loans                                                  |                                                                 | $ | 12,720                 |        |                   | $ | 3,758 |       
|Accruing loans 90 days or more past due                           |                                                                 |   | 258                    |        |                   |   | 783   |       
|Other real estate                                                 |                                                                 |   | 794                    |        |                   |   | 969   |       
|Other assets repossessed                                          |                                                                 |   |                       |        |                   |   | 56    |       
|                                                                  |                                                                 |   |                        |        |                   |   |       |       
|                                                                  | Total nonperforming assets                                      |   |                        | 13,772 |                   |   |       | 5,566  |  
|Less:                                                             |                                                                 |   |                        |        |                   |   |       |       
|                                                                  | Nonperforming loans guaranteed by the SBA, Ex-Im Bank
and OCCGF |   |                        | (3,333 | )                 |   |       | (1,833 | )
|                                                                  |                                                                 |   |                        |        |                   |   |       |       
|                                                                  | Total net nonperforming assets                                  |   | $                      | 10,439 |                   |   | $     | 3,733  |  
|                                                                  |                                                                 |   |                        |        |                   |   |       |       
|Total nonperforming assets to total assets                        |                                                                 |   | 1.82                   | %      |                   |   | 0.75  | %     
|Total nonperforming assets to total loans and other real estate   |                                                                 |   | 2.81                   | %      |                   |   | 1.13  | %     
|Net nonperforming assets to total assets (1)                      |                                                                 |   | 1.38                   | %      |                   |   | 0.50  | %     
|Net nonperforming assets to total loans and other real estate (1) |                                                                 |   | 2.13                   | %      |                   |   | 0.76  | %     



---

|(1) |  | Net nonperforming assets are net of the loan portions guaranteed by the SBA,
Ex-Im Bank and OCCGF.
|--- |  | --------------------------------------------------------------------------------------------------

Allowance for Loan Losses. For the three months ended March 31, 2002,
net loan charge-offs were $911,000 or 0.19% of average total loans outstanding.
The Company seeks recovery of charge-offs through all available channels. The
Company continues working to further strengthen its credit administration
systems, policies, and loan review procedures. At both March 31, 2002 and
December 31, 2001, the allowance for loan losses aggregated $8.6 million and
$8.9 million, respectively, or 1.75% and 1.81% of average total loans,
respectively.

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

|                                                              |  |                            |                   |   |                        |        |                   |   |        |        |  
|------------------------------------------------------------- |  | -------------------------- | ----------------- | - | ---------------------- | ------ | ----------------- | - | ------ | ------ | -
|                                                              |  |                            |                   |   | As of and for the      |        | As of and for the
|                                                              |  |                            |                   |   | three months ended     |        | year ended       
|                                                              |  |                            |                   |   | March 31, 2002         |        | December 31, 2001
|                                                              |  |                            |                   |   |                        |        |                  
|                                                              |  |                            |                   |   | (Dollars in thousands)
|Average year-to-date total loans outstanding                  |  | $                          | 489,801           |   |                        | $      | 474,986           |  
|                                                              |  |                            |                   |   |                        |        |                   |  
|Total loans outstanding at end of period                      |  | $                          | 489,974           |   |                        | $      | 493,145           |  
|                                                              |  |                            |                   |   |                        |        |                   |  
|Allowance for loan losses at beginning of period              |  | $                          | 8,903             |   |                        | $      | 9,271             |  
|Provision for loan losses                                     |  |                            | 600               |   |                        |        | 3,799             |  
|Charge-offs:                                                  |  |                            |                   |   |                        |        |                   |  
|                                                              |  | Commercial and industrial  |                   |   | (934                   | )      |                   |   | (4,075 | )     
|                                                              |  | Real estate  mortgage     |                   |   | (19                    | )      |                   |   |       |       
|                                                              |  | Real estate  construction |                   |   |                       |        |                   |   |       |       
|                                                              |  | Consumer and other         |                   |   | (49                    | )      |                   |   | (201   | )     
|                                                              |  |                            |                   |   |                        |        |                   |  
|                                                              |  |                            | Total charge-offs |   |                        | (1,002 | )                 |   |        | (4,276 | )
|                                                              |  |                            |                   |   |                        |        |                   |  
|Recoveries:                                                   |  |                            |                   |   |                        |        |                   |  
|                                                              |  | Commercial and industrial  |                   |   | 64                     |        |                   |   | 54     |       
|                                                              |  | Real estate  mortgage     |                   |   |                       |        |                   |   | 11     |       
|                                                              |  | Real estate  construction |                   |   |                       |        |                   |   |       |       
|                                                              |  | Consumer and other         |                   |   | 27                     |        |                   |   | 44     |       
|                                                              |  |                            |                   |   |                        |        |                   |  
|                                                              |  |                            | Total recoveries  |   |                        | 91     |                   |   |        | 109    |  
|                                                              |  |                            |                   |   |                        |        |                   |  
|Net loan charge-offs                                          |  |                            | (911              | ) |                        |        | (4,167            | )
|                                                              |  |                            |                   |   |                        |        |                   |  
|Allowance for loan losses at end of period                    |  | $                          | 8,592             |   |                        | $      | 8,903             |  
|                                                              |  |                            |                   |   |                        |        |                   |  
|Ratio of allowance to end of period total loans               |  |                            | 1.75              | % |                        |        | 1.81              | %
|Ratio of net loan charge-offs to average total loans          |  |                            | 0.19              | % |                        |        | 0.88              | %
|Ratio of allowance to end of period total nonperforming loans |  |                            | 66.20             | % |                        |        | 196.06            | %
|Ratio of allowance to end of period net nonperforming loans   |  |                            | 89.08             | % |                        |        | 328.77            | %

13



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##### 



Securities. At March 31, 2002, the securities portfolio totaled
$201.3 million, reflecting an increase of $28.2 million or 16.3% from $173.1
million at December 31, 2001. The securities portfolio is primarily comprised of
mortgage-backed securities, collateralized mortgage obligations, tax-free
municipal bonds, and U.S. government agency securities. The securities portfolio
has been funded primarily by the liquidity created from deposit growth and loan
prepayments in excess of loan funding requirements. However, during the three
months ended March 31, 2002, approximately $17.6 million in short-term
borrowings, obtained from the FHLB, was utilized to purchase approximately the
same amount of mortgage-backed securities in order to increase earning asset
volumes.

Deposits. At March 31, 2002, total deposits were $638.5 million, down
$4.3 million or 0.07% from $642.8 million at December 31, 2001.
Noninterest-bearing demand deposits at March 31, 2002 decreased by $3.1 million
or 2.5% to $124.2 million from $127.3 million at December 31, 2001. The
Companys ratios of noninterest-bearing demand deposits to total deposits at
March 31, 2002 and December 31, 2001 were 19.4% and 19.8%, respectively.
Interest-bearing deposits at March 31, 2002 decreased slightly by $1.1 million
or 0.2% to $514.4 million from $515.5 million at December 31, 2001.

Other Borrowings.Other borrowings at March 31, 2002 were $42.8 million,
compared to $25.2 million at March 31, 2001, an increase of
$17.6 million that was primarily the result of short-term advances
obtained from the FHLB to fund securities investments. The Company
has two ten-year loans totaling $25.0 million from the FHLB to further
leverage its balance sheet and diversify its funding sources. The
ten-year loans bear interest at an average rate of 4.99% per annum
until the fifth year anniversary of the loans, September 2003, at
which time the loans may be repaid or the interest rate may be
renegotiated. The Company has an additional unused, unsecured line of
credit with the FHLB totaling $118.5 million at March 31, 2002. Other
short-term borrowings principally consist of U.S. Treasury tax note
option accounts. Additionally, the Company had several unused,
unsecured lines of credit with correspondent banks totaling $15.0
million at March 31, 2002 and at December 31, 2001, respectively.

Capital Resources. Shareholders equity at March 31, 2002 increased by
$1.3 million or 1.9% to $66.5 million from $65.2 million at December 31, 2001.
The increase for the three months ended March 31, 2002 was primarily due to net
income of $2.1 million that was partially offset by a dividend payment of
$420,000, a decrease in other comprehensive income and the unrealized gains on
investment securities of $360,000, and a net change in treasury stock of $45,000
that was the result of dividend reinvestments and treasury stock repurchases.
During the first quarter 2002, the Company announced a plan to repurchase up to
350,000 shares of its common stock on the open market or in privately negotiated
block transactions. As of March 31, 2002, the Company had repurchased 14,476
shares.

The following table provides a comparison of the Companys and the
Banks leverage and risk-weighted capital ratios as of March 31, 2002 to the
minimum and well-capitalized regulatory standards:

|                                |  |                  |      |                   |  |                 |       |   |  |  |       |  
|------------------------------- |  | ---------------- | ---- | ----------------- |  | --------------- | ----- | - |  |  | ----- | -
|                                |  | Minimum          |      | To Be Well        |  |                 |       |  
|                                |  | Required For     |      | Capitalized Under |  |                 |       |  
|                                |  | Capital Adequacy |      | Prompt Corrective |  | Actual Ratio At
|                                |  | Purposes         |      | Action Provisions |  | March 31, 2002 
|                                |  |                  |      |                   |  |                
|The Company                     |  |                  |      |                   |  |                 |       |   |  |  |       |  
|Leverage ratio                  |  |                  | 4.00 | %(1)              |  |                 | N/A   |   |  |  | 8.99  | %
|Tier 1 risk-based capital ratio |  |                  | 4.00 |                   |  |                 | N/A   |   |  |  | 12.64 |  
|Risk-based capital ratio        |  |                  | 8.00 |                   |  |                 | N/A   |   |  |  | 13.89 |  
|                                |  |                  |      |                   |  |                 |       |   |  |  |       |  
|The Bank                        |  |                  |      |                   |  |                 |       |   |  |  |       |  
|Leverage ratio                  |  |                  | 4.00 | %(2)              |  |                 | 5.00  | % |  |  | 8.59  | %
|Tier 1 risk-based capital ratio |  |                  | 4.00 |                   |  |                 | 6.00  |   |  |  | 12.08 |  
|Risk-based capital ratio        |  |                  | 8.00 |                   |  |                 | 10.00 |   |  |  | 13.33 |  



---

|(1) |  | The Federal Reserve Board may require the Company to maintain a
leverage ratio above the required minimum.
|--- |  | ----------------------------------------------------------------------------------------------------------
|(2) |  | The OCC may require the Bank to maintain a leverage ratio above the
required minimum.                     

14



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##### 



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 Form 10-K for the year ended December 31,
2001. 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.

PART II

OTHER INFORMATION

|         |  |                                                    
|-------- |  | ---------------------------------------------------
|Item 1.  |  | Legal Proceedings                                  
|         |  |                                                    
|         |  | Not applicable                                     
|         |  |                                                    
|Item 2.  |  | Changes in Securities and Use of Proceeds          
|         |  |                                                    
|         |  | Not applicable                                     
|         |  |                                                    
|Item 3.  |  | Defaults Upon Senior Securities                    
|         |  |                                                    
|         |  | Not applicable                                     
|         |  |                                                    
|Item 4.  |  | Submission of Matters to a Vote of Security Holders
|         |  |                                                    
|         |  | Not applicable                                     
|         |  |                                                    
|Item 5.  |  | Other Information                                  
|         |  |                                                    
|         |  | Not applicable                                     
|         |  |                                                    
|Item 6A. |  | Exhibits                                           

|        |  |   |  |                                                                                                                                               
|------- |  | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |   |  | Identification                                                                                                                                
|Number  |  |   |  | of Exhibit                                                                                                                                    
|        |  |   |  |                                                                                                                                               
|11      |  |  |  | Computation of Earnings Per Common Share, included as
Note (2) to the Condensed Consolidated Financial Statements on
Page 5 of this Form 10-Q.

Item 6B.Reports On Form 8-K



| | (1) |  | The Company filed a current report on Form 8-K on January 11, 2002
announcing the Companys projected earnings for the 2001 fiscal year.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | The Company filed a current report on Form 8-K on January 25, 2002
announcing the Companys earnings for the 2001 fiscal year.          
|
| | (3) |  | The Company filed a current report on Form 8-K on January 31, 2002
announcing the Companys approval of a stock repurchase plan.        

15



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##### 



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.                                                                                                                                 
|     
|Date: | May 10, 2002 |  |  | By: | /s/  Allen D. BrownAllen D. Brown
President
(principal executive officer)                                                                                  
|     
|Date: | May 10, 2002 |  |  | By: | /s/  David D. RinehartDavid D. Rinehart
Executive Vice President and
Chief Financial Officer
(principal accounting officer and
principal financial officer)

16