Metropolitan National Bank is expected to be acquired by a limited liability company tied to Dallas billionaire banker, Gerald J. Ford.
According to Metropolitan’s CEO Lunsford Bridges, the privately-held Little Rock bank will change ownership after a Chapter 11 bankruptcy proceeding of its current shareholder group, Rogers Bancshares.
Rogers Bancshares was the holding company for the bank under the leadership of businessman Doyle Rogers, who died in February at the age of 94.
Ford Financial Fund II, a private equity fund led by Ford and his partner, Carl Webb, has created Little Rock Acquisition LLC. That entity will purchase all of Rogers Bancshares’ stock in Metropolitan National Bank for $16 million and recapitalize the financial institution. The capital reinvestment amount is not known at this time, according to bank officials, and will be determined after the bankruptcy court evaluates assets and liabilities of the holding company. The bankruptcy will dispose as much as $25 million in TARP (Troubled Asset Relief Program) funds once borrowed by the bank holding company to stabilize the bank’s capital.
For nearly five years, Metropolitan has been operating under consent orders with the Office of the Comptroller of the Currency. The Ford Fund, which has raised $750 million for this and future investment deals, will bring the bank’s Tier 1 capital ratio up to 8% and its Risk-based capital up to 12% – a level that regulators are requiring to release the bank from oversight.
Metropolitan has operations and branches throughout central and northwest Arkansas.
In its most recent quarter, the bank posted a profit of $662,000 compared to a loss of $1.04 million in the first quarter of 2012. It has struggled with profitability since the 2008-9 recession and its capital ratios led to its oversight by the feds.
“The bank will continue with same name, management group, employees, and be recapitalized,” Bridges tells Talk Business. “This is great for the bank and for Arkansas.”
Bridges said that the Rogers Bancshares bankruptcy will involve an auction, but Ford Financial Fund II will have the opportunity to match the highest bid.
ABOUT GERALD FORD
Ford and Webb will join the Metropolitan bank board.
“To have an investor of this strength is great for the bank,” Bridges said.
Ford is a Texas-born, self-made billionaire. He made his money buying and selling banks beginning in the 1970’s.
His most recent venture, Hilltop Holdings, did its first deal last year when it acquired PlainsCapital Corp., a Dallas-based financial institution. The $520 million deal was a cash and stock transaction, according to the American Banker magazine.
PlainsCapital Corp, the holding company for the $5.7 billion-asset PlainsCapital Bank, PrimeLending and FirstSouthwest, maintained its name after the transaction, too.
Forbes magazine reports that Ford made his initial fortune buying a small Texas bank for $1.2 million and selling it for $80 million. Ford also scored big when he and his partners sold California’s Golden State Bancorp to Citigroup in 2002 for $6 billion. His additional success involved a string of other successful bank and private equity deals.
He is also a big supporter of Southern Methodist University in Dallas, where he earned his undergraduate and law degrees.
In 1997, he donated $20 million to SMU to fund the construction of a new football stadium. He has also donated $10 million to the Weill Cornell Medical College.