
Metropolitan National Bank of Little Rock announced on Wednesday a first-quarter loss of $1.04 million, its bottom line still being dragged into the red by real estate in northwest Arkansas.
The bank took a write-down of $2 million — more than its quarterly loss — on its portfolio of "other real estate owned," CEO Lunsford Bridges told ArkansasBusiness.com on Wednesday afternoon, and most of that was one unidentified parcel in northwest Arkansas.
Senior Executive Vice President Susie Smith called the loss "incremental improvement" in the condition of the bank, which has improved its capital ratios for four consecutive quarters.
Bridges announced that Metropolitan had entered a new consent order with its primary federal regulator, the Office of the Comptroller of the Currency, that replaces the formal order that the bank has operated under for the past four years.
The new order, which the OCC is expected to announced in the next few days, was signed on March 21 and includes five articles of improvement, compared with seven articles in the original order. Metropolitan is already in compliance with three of the five, although its capital ratios are still not high enough and it still has too many nonperforming assets on its books.
The bank’s Tier 1 capital ratio stood at 6.18 percent on March 31, up from 5.11 percent a year ago but far from the 8 percent called for by the consent order. Its risk-based capital has improved to 9.57 percent from 8.34 percent a year earlier; the OCC order calls for 12 percent.
Northwest Arkansas
Bank regulators require banks to value foreclosed property at fair market value — so-called "mark to market" accounting. Still, Metropolitan executives said they were not particularly concerned about Bank of America’s recent sale of 375 foreclosed acres in three parcels along Interstate 540 in Benton County for a bargain-basement price of $19 million.
"We’ve had one appraisal of any size since that sale on a parcel of undeveloped land, and it went down so minutely that I’d say it wasn’t’ a change," Bridges said. "Now, one appraisal does not a trend make, but I don’t know that [the BOA deal] will have an effect" on other bank-owned property in northwest Arkansas.
The Bank of America property was sold for cash to developer Joe Whisenhunt. Lunsford said appraisers will realize that the bank was eager to get rid of the property and did so in a bulk sale.
Smith said the bank had sold $16 million worth of OREO in the first quarter and had taken a loss of only $52,000 compared with the book value — indicating that the book values were less than a half-percent higher than market value.
‘About the Right Size’
Metropolitan had $1.03 billion in assets at the end of March, down from $1.05 billion at the end of December and from its peak of $1.9 billion at the end of 2007.
"That shrinkage has been very controlled," Bridges said Wednesday.
"And we don’t see much more," Smith added. "We think we’re just about the right size."
Metropolitan will close its branch inside the Kroger supermarket at Baseline and Geyer Springs roads in southwest Little Rock in June, and customers of that branch have been sent notices that their accounts will be moved to the standalone branch on Baseline.
Once the market leader in in-store bank branches, Metropolitan will have only two left, in the Kroger stores on West Markham Street and Chenal Parkway.
Smith said Metropolitan was instead focusing on the convenience of mobile banking options.
Previous Quarters
In the first quarter of 2011, Metropolitan reported a $4.05 million loss, which was its 10th consecutive quarterly loss.
In the fourth quarter of 2011, the bank company reported a profit of $537,000, a vast improvement over the $4.61 million loss recorded in the same quarter of 2010. But it was not enough to overcome losses earlier in the year.
In all, Metropolitan lost $4.82 million in 2011, compared with a loss of $12 million in 2010.