Ford Financial Fund II of Dallas plans to invest a bit more than $90 million if it wins its bid to buy Metropolitan National Bank of Little Rock from its holding company, documents filed in bankruptcy court show.
On July 5, Rogers Bancshares Inc. filed for Chapter 11 bankruptcy reorganization and announced that the Ford fund had offered $16 million in cash for Metropolitan plus enough to recapitalize it to the level required by federal regulators.
A brief filed Thursday by bankruptcy attorneys for Rogers Bancshares Inc. says the Ford fund also proposes “a $74.2 million equity contribution to the bank” — the first indication of exactly how much additional capital Ford Financial expected to inject.
Ford Financial Fund II, a $750 million investment fund recently organized by Dallas managers Gerald J. Ford and Carl B. Webb, is acting as a “stalking horse bidder” in the Chapter 11 reorganization, meaning it has the opportunity to match any other bids received. The brief by bankruptcy attorneys Samuel M. Stricklin of Dallas and W. Jackson Williams of Little Rock says Rogers Bancshares began marketing the bank to other potential buyers on July 22, and it contemplates a bid deadline of Sept. 3 and an auction on Sept. 9.
U.S. Bankruptcy Judge James G. Mixon is expected to rule on various motions, including the timetable, on Wednesday, according to Susie Smith, Metropolitan’s senior executive vice president.
Smith said she had had no conversations with any other potential buyers. If Ford ends up being outbid, Rogers Bancshares has proposed paying a $3.25 million “break-up fee” — another item that will require the judge’s approval.
Metropolitan had equity capital of $65.7 million as of March 31, but the recapitalization proposed by Ford Financial is not a simple matter of adding its $74.2 million to that $65.7 million. There will be some “purchase accounting adjustments” to Metropolitan’s balance sheet, Smith said, but she said she did not know exactly what adjustments the Ford group anticipates making.
Metropolitan, with just over $1 billion in assets as of March 31, has been operating under a regulatory order from the Office of the Comptroller of the Currency since May 2008, but it has not been able to bring its capital ratios up to the required level — 8 percent Tier 1 capital and 12 percent risk-based capital.
Metropolitan National Bank stacked up almost $100 million in losses beginning in 2008. Metropolitan had net income of $662,000 in the first quarter of this year 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 yet filed its second-quarter 2013 results.
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