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)

In September 2009, Rogers Bancshares was put under a written agreement by the Federal Reserve. The move ended all dividend and interest payments to trust preferred holders and preferred shareholders, including TARP payments to the U.S. Treasury.

“At this point, we had $260 million in nonperforming as-sets,” Smith testified. “That’s 20 percent of our asset base. It is highly unusual for a bank to even be open with 20 percent nonperforming assets.

“Any numbers usually over 3 to 4 percent are considered severe numbers. So we had tremendously severe nonperforming asset numbers. And that really compounded the marketing process problems. We continued marketing throughout 2010, constantly meeting with other banks, private investors, trying to find groups to bring us capital.”

Despite significantly reducing its nonperforming assets, the bank was unable to attract a capital partner. Smith described a revolving door of would-be investors performing due diligence on the bank since 2009.

She said the closest thing to a genuine offer occurred in 2010, a nonbinding letter of intent to provide $50 million in capital if the bank could find investors who would match that with an additional $50 million.

“We spent a tremendous amount of time, over a year, trying to find different groups to match that $50 million and talked to a great number of people that KBW brought to the table,” Smith testified.

“What ended up being told to us, time and time again, is our $1 billion bank is too small. The groups that have this type money are looking for an investment of a $100 million and more for just 25 percent or less of the bank.

“And it was ‘no,’ ‘no,’ ‘no’ over and over from every private investor we heard from.”

At the same time, banks that had looked at Metropolitan in 2009 were back performing loan due diligence. Those same unnamed groups came back for new rounds of due diligence in 2011 and 2012.

“In 2010, my sense was they were just in there getting prepared

in case the bank failed,” Smith testified. “When a bank fails, prior to the day it fails, the FDIC will market the bank to other banks for bids. And our bank, with 20 percent nonperforming assets in 2010, had just in 2009 lost $80 million, in 2010, we lost $12 million …

“Most outside parties thought we would be a bank failure. And I think that’s the reason, after all the marketing efforts in 2010, we didn’t have any bites or takers from other banks. And I think that the reason we didn’t get any takers on the private equity side is the groups that were doing funding needed us to be a bigger bank to put those type contributions in.”

 

 

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