by Gwen Moritz
Posted 7/5/2013 04:00 pm
Updated 8 months ago
A Dallas investment fund has signed a definitive agreement to purchase Metropolitan National Bank of Little Rock from its holding company, which late Friday filed for Chapter 11 bankruptcy reorganization to facilitate the sale, and to recapitalize the bank to the level required by federal regulators.
Ford Financial Fund II, a $750 million investment fund recently organized by managers Gerald J. Ford and Carl B. Webb, has offered $16 million for 100 percent of the Metropolitan National Bank stock held by Rogers Bancshares Inc., the holding company controlled by the heirs of Doyle Rogers Sr., who died Feb. 4.
Click here to view a copy of the bankruptcy filing. Assets and liability of the holding company are both estimated at between $10 million and $50 million.
Metropolitan CEO Lunsford Bridges told Arkansas Business Friday afternoon that the $25 million that Rogers Bancshares received from the U.S. Treasury in 2009 as part of the TARP program was among the holding company's liabilities.
Exactly how much additional capital the fund will need to inject in the bank will depend on the booked value of assets when the acquisition closes, but the bank's most recent call report suggests it is likely to be at least $20 million.
Bridges and Senior EVP Susie Smith said there was no regulatory opposition to the bankruptcy reorganization and sale, but the terms will ultimately have to be approved by the Office of the Comptroller of the Currency and by the bankruptcy court.
If all goes smoothly, the sale could be completed by early September.
Metropolitan had assets of $1.03 billion and equity capital of $65.7 million as of March 31.
FFFII will play the role of "stalking horse" in the bankruptcy reorganization, according to Bridges. If a more favorable bid is received by the bankruptcy court, FFFII will have the opportunity to match it.
"After five years of challenges, we've come to the point where we have a solution to our challenges," Bridges told Arkansas Business.
Ford and Webb will be added to the board of directors of Metropolitan National Bank, but no other changes in management are planned.
"We were attracted to Metropolitan based on the strength of their leadership team and brand," Ford said in a press release. "We are career bankers and recognize quality banking. Metropolitan is an outstanding community bank with a solid footprint and reputation in Arkansas. Our combined resources and expertise will result in long-term success and growth."
Metropolitan has been operating under a regulatory order from the OCC since May 2008, and bringing its capital ratios up to the required level — 8 percent Tier 1 capital and 12 percent risk-based capital — is "the final step in achieving full compliance" with the order, Bridges said in the press release. Bridges said it was premature to release results for the second quarter that ended Sunday; the bank's capital ratios stood at 6.3 percent and 10.85 percent as of March 31, up from 6.18 percent and 9.57 percent a year earlier.
Metropolitan National Bank had net income of $662,000 in the first quarter and $761,000 in the fourth quarter of 2012 — the first consecutive quarterly profits for the bank since the first two quarters of 2008.
The bank has not had a profitable year since 2008 and lost almost $99 million in 2009-12, including a loss of $80 million in 2009 alone.
Bridges told Arkansas Business that Metropolitan managers were introduced to the Ford fund by its financial consultants, Keefe Bruyette & Woods. The deal has been in the works for three or four months, he said, but he also said that the death five months ago of Doyle Rogers, a legendary real estate developer, "had no effect on this."