Posted 9/16/2013 12:00 am
Updated 10 months ago
Yes, we know that banks in Arkansas have not been completely immune to the avoidable mistakes and unavoidable economic factors that brought down hundreds of banks across the country during the past five years. But the auction last week of Metropolitan National Bank was oddly reaffirming of the overall strength of the Arkansas banking industry.
For a while there, it looked like the only buyer interested in Met was an investment fund out of Texas. And those Texans wanted a fire-sale bargain — $16 million for the bank as-is — and a guarantee of $3.25 million just for getting the bidding started, in the unlikely event that some other bidder was willing to pay more.
First the bankruptcy court reduced the break-up fee to a more reasonable $640,000 — there is some risk involved in any deal, right? Then two strong Arkansas banks, Arvest and Simmons, stepped forward to bid.
The bidding went through 19 rounds, and Simmons First National Corp. of Pine Bluff emerged the winner with a bid more than three times larger — $53.6 million. This was encouraging in itself, a bit like seeing a house in your neighborhood command a good price even though it hadn’t been maintained to the highest standards.
It’s especially encouraging to realize that Simmons bid so much when it will also have to inject a considerable amount of additional capital into the combined Simmons First National Bank. We assume that at least one other bidder was willing to go nearly as high since the minimum bid increment was $100,000.
The auction of Metropolitan was closely watched across the country. Bank auctions are rare; those that attract multiple bidders even more so. What the rest of the banking industry saw was Arkansas strength taking care of Arkansas business.