Metropolitan Bank Enters Agreement With Regulators Over Loans

by George Waldon  on Monday, Jun. 16, 2008 4:19 pm  

Metropolitan President and CEO Lunsford Bridges.

(THVideo: Click to see video of Arkansas Business Publisher Jeff Hankins talking to KTHV about what the agreement with regulators means for Metropolitan Bank and its customers.)

Little Rock's Metropolitan National Bank is working under an agreement with federal regulators to improve aspects of its operations, primarily related to commercial lending.

In the agreement, made public Monday, the Office of the Comptroller of the Currency, which regulates nationally chartered banks, said it "found unsafe and unsound banking practices relating to some aspects of credit risk management, capital adequacy and concentration risk management at the bank."

Click here (PDF) to see the full agreement.

Lunsford Bridges, president and CEO of Metropolitan National Bank, said the agreement with the OCC bears no reflection on the bank's soundness and profitability.

The bank has a long history of quarterly profits, and Bridges said he doesn't expect that to change as Metropolitan tightens its fiscal reins as part of the OCC agreement.

"We have some issues to work through, and it all relates to problem loans," Bridges told in an interview on Monday. "We have the capital and the earnings to handle the challenges we have with that."

Bridges said Metropolitan doesn't have a reputation as an aggressive lender. He said the OCC's action came as a surprise to him.

"There is nothing in (the agreement) that we couldn't have taken care of without the OCC order," Bridges said.

In a news release, Bridges tried to assure customers and employees that the bank's is "financially safe and sound."

"The bank's loan loss reserve and capital are both at the highest levels in our history and we are on track to generate profits in excess of $10 million in 2008, just as we have for the past several years," the news release said. "The bank is actively addressing its problem loans and we know our efforts will remedy the OCC's areas of concern."

The bank already has shrunk its asset base to achieve a capital-to-adjusted-total-assets ratio of 8 percent by June 30, and it is on pace to achieve a risk-based capital-to-risk-based-assets ratio of at least 12 percent by Sept. 30.

As part of the agreement with the OCC, the bank agreed to become more aggressive in identifying and handling problem loans while reducing its level of problem assets.



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