by Lance Turner
Posted 9/9/2013 06:31 pm
Updated 6 months ago
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.
On July 30, the Ford Financial Fund said that, in addition to the $16 million in cash it offered for Metropolitan, it planned to make a $74.2 million capital contribution to the bank — enough to recapitalize it to the level required by federal regulators.
Monday's auction came after years of Metropolitan suffering from problem loans in northwest Arkansas, which led to almost $100 million in losses beginning in 2008. The bank was under a supervisory agreement with the Office of the Comptroller of the Currency, filed in May 2008.
Metropolitan had worked since 2009 to find a partner to recapitalize the bank. Other banks also circled, conducting due diligence to possibly make an acquisition offer or be prepared to buy should the bank fail and the FDIC swoop in.
Monday's took place behind closed doors in meeting rooms at the Wyndham. The rooms were reserved under the name "Project Diamond."
The complete statement from Simmons:
SIMMONS FIRST SUBMITS SUCCESSFUL BID FOR METROPOLITAN NATIONAL BANK
Pine Bluff, AR – Simmons First National Corporation (NASDAQ-GS: SFNC) announced today that it participated in the auction to acquire Metropolitan National Bank ("MNB") and was designated as the Successful Bidder subject to the approval of the U. S. Bankruptcy Court at a hearing scheduled on September 12, 2013 in the bankruptcy proceeding of its parent bank holding company, Rogers Bancshares, Inc. MNB, a national bank with $991 million in assets with its main office in Little Rock and branches in 14 other communities in the State of Arkansas, has a rich history of providing exemplary customer service to the communities in which it is located. Simmons will combine the operations of MNB with Simmons First National Bank and expects to continue to provide the highest quality customer service throughout the combined service area.
A more detailed information release will be made on Thursday, September 12, 2013 after the ruling of the U.S. Bankruptcy Court to be followed by an analyst conference call at 4:00 p.m. Central Time on Thursday.
Simmons First National Corporation is a $3.6 billion Arkansas based financial holding company with eight community banks in Pine Bluff, Lake Village, Jonesboro, Rogers, Searcy, Russellville, El Dorado and Hot Springs, Arkansas. The Company’s eight banks conduct financial operations from 91 offices, of which 87 are financial centers, in 54 communities, in Arkansas, Kansas and Missouri. The Company’s common stock trades on the NASDAQ Global Select Market under the symbol “SFNC”.