Simmons First Submits 'Successful Bid' for Metropolitan Bank

by Lance Turner  on Monday, Sep. 9, 2013 6:31 pm  

Simmons First National Bank Corp., along with Arvest Bank and Ford Financial Fund II of Dallas, made proposals to acquire Metropolitan National Bank during an historic auction Monday at the Wyndham Hotel in North Little Rock. (Photo by Mauren Kennedy)

Simmons First National Corp. of Pine Bluff said Monday that it has submitted the successful bid to purchase Metropolitan National Bank of Little Rock.

Simmons, along with Arvest Bank of Fayetteville and Ford Financial Fund II of Dallas, made proposals to acquire the bank from Rogers Bancshares Inc. during an historic auction Monday at the Wyndham Hotel in North Little Rock.

The auction was closed to press. Simmons, a publicly traded bank holding company (Nasdaq: SFNC), did not provide details of the bid. It said it would issue "detailed information" on Thursday after a U.S. Bankruptcy Court ruling on the deal. It also plans to discuss the matter in an analyst conference call at 4 p.m. Thursday.

Simmons announced its intention to bid on Wednesday in a filing with the U.S. Securities & Exchange Commission. At the time, it said it submitted a bid of at least $16.9 million -- the minimum required to overbid the "stalking horse" bidder, Ford Financial Fund, a $750 million investment fund led by Gerald J. Ford and Carl B. Webb. 

Arvest, the state's largest bank, announced its intention to bid in a filing with the Federal Reserve Bank of St. Louis sometime last week. It was disclosed in a legal notice placed in the Arkansas Democrat-Gazette's Thursday newspaper. 

Simmons, which operates eight separate bank charters, said last week that if its bid was successful, it would combine Metropolitan with its flagship, Simmons First National Bank of Pine Bluff. The move would grow Simmons First National Bank by nearly 50 percent, taking it from $1.99 billion in assets to nearly $3 billion.

A look at Simmons First National Bank's balance sheet suggests that the combined entity will need approximately $50 million in additional equity capital to reach a comfortable ratio of 8 percent of assets, but the public announcement gave no hint about that part of the deal.

Simmons First National Bank has 35 offices in Arkansas and nine each in Missouri and Kansas. Metropolitan National Bank has 45 offices in Arkansas. The combined entity would have significant overlap with a sister bank, Simmons First Bank of Northwest Arkansas. That operation, headquartered at Rogers, has about $244.3 million in assets.

The final phase of selling Metropolitan, which had been hit hard by losses sustained on loans in northwest Arkansas, became public in July, when Metropolitan and Ford Financial announced that Ford had offered $16 million for 100 percent of the bank's stock. To facilitate the sale, Metropolitan's holding company, Rogers Bancshares, declared Chapter 11 bankruptcy. 

As the "stalking horse" bidder, Ford Financial had the opportunity to match more favorable bids submitted by Simmons and Arvest. As Arkansas Business previously reported, with Ford outbid, Rogers Bancshares will have to pay the fund a $640,000 "break-up fee."

The entire deal for Metropolitan, including details of the "break-up fee," will go before Bankruptcy Judge James Mixon in a hearing set for Thursday. Mixon must review and approve the deal.

One detail that will be closely watched is how Simmons will capitalize the combined entity. As a combined $3 billion-asset bank, Simmons First National Bank will require about $240 million in equity to be ideally capitalized. Right now, the bank has about $190 million in equity, meaning it could need as much as $50 million more.

 

 

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