Susie Smith Testimony Recounts Trials, Tribulations at Metropolitan National Bank

by George Waldon  on Monday, Aug. 19, 2013 12:00 am  

A  bankruptcy sale next month will separate Metropolitan National Bank from its insolvent parent company and bring the bank much- needed capital.  (Photo by Mauren Kennedy)

The Chapter 11 filing of Rogers Bancshares Inc. in July is a grim reality check of the five-year struggle to keep Metropolitan National Bank a viable ongoing concern.

Perhaps no one can appreciate the battle to save the $991 million-asset bank more than Susie Smith, Metropolitan’s senior executive vice president, chief operating officer and chief financial officer.

Her testimony at a July 26 hearing in Little Rock’s U.S. Bankruptcy Court offers a glimpse inside the embattled, former $1.8 billion-asset lender.

“Throughout the bank, we were all very scared, from top down to a teller level,” Smith said of the financial crisis that peaked in 2009. “We worked a great deal and being transparent with our staff, letting them know before we had a loss that we were announcing what was going to happen, so that they could be prepared to answer customer questions. They were all frightened. And we did lose quite a few employees in 2009 …”

“We had a reduction in forces where we cut staff back by about 20 percent, so that we could have some operating savings.”

Smith took the witness stand as part of a daylong proceeding to help sort out the details of Rogers Bancshares selling Metropolitan under the protection of bankruptcy court.

Her lengthy courtroom appearance also served as a platform to convince holding company creditors that every effort had been made to find a solution before resorting to Chapter 11.

Smith spoke of the bank’s dire need to resolve its near untenable situation through a bankruptcy sale led by the stalking horse bid of $16 million by Ford Financial Fund II of Dallas and Ford’s promise of sufficient cash to cure what the OCC described in its 2013 exam of Metropolitan as a “critically deficient” capital position.

Smith also described Metropolitan’s Catch 22 predicament of needing earnings to replenish lost capital and cover the holding company’s financial obligations but being unable to grow earnings because the bank was undercapitalized with an uncertain future.

“To have earnings, you have to have earning assets,” she testified. “To have loan growth, you have to have lenders. I cannot recruit new lenders at the bank, so it is very difficult, when I’m in troubled condition, to grow earning assets …

“In 2012, we have tried talking to some top key people throughout the state who would be a real boost to our lending staff and are unable to bring anyone on board of a troubled bank.

“So our operations, when you take the bank operations and the holding company debt service, and you look forward for three years, the bank, with luck, will get close to breaking even in three years.



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