Metropolitan is a real estate play in NWA

The winning bidder for ownership of Metropolitan National Bank — either Ford Financial Fund II, Arvest or Simmons First National Bank — will pick up millions in real estate for pennies on the dollar.

Metropolitan National Bank will soon be awarded to the highest bidder as its parent company Rogers Bancshares’ bankruptcy proceedings wind down. The three bidders are dueling today (Sept. 9) in a Little Rock hotel room for the right to acquire 100% of Metropolitan National Bank.

While the Little Rock-based lender has failed to garner substantial deposits in Northwest Arkansas it has accumulated a vast amount of real estate in one of the fastest growing regions in the country. Metropolitan’s bank buildings in Benton and Washington counties are valued in excess of $22.6 million, according tax records.

The last known bid for the $1 billion bank was $16.9 million, plus any break-up fee charged and additional capital to shore up the bank’s balance sheet.

If Arvest or Simmons walks away with the bank, there may be no need to keep Metropolitan’s 12 bank buildings scattered across Northwest Arkansas, as these two banks already have their own local infrastructure. (See the link for a map of the locations.)

Metropolitan resides in some high profile places across the this region with branches located in heavy traffic areas such as Pinnacle Hills, Walton Boulevard, Pleasant Crossing, Mission and Crossover in Fayetteville and Northwest Arkansas Mall areas. The location of Metropolitan’s Benton County headquarters is 3701 Pinnacle Hills Parkway, a stone’s throw from the Embassy Suites Hotel and Hunt Towers. This property is valued at $5.74 million in the county records, but real estate experts agree its worth more given the ongoing development and expansion in that immediate area.

Other branches across the region like the two on Walton Boulevard in Bentonville or in Har-Ber Meadows in Springdale or Martin Luther King Boulevard in Fayetteville could be prime pickings for CVS Pharmacy, Casey’s General Stores, Walgreens or Kum & Go who continue expand their footprints in this region.

Gaines Dittrich, of Dittrich & Associates bank consulting group, said he remembers when the prominent corners now occupied by banks like Metropolitan National were gas stations.

“In this era of mobile banking, the need for lots of physical branches is shrinking. Larger national banks continue to sell off branches because underperforming branches can be a drag on profitability,” Dittrich said.

Other banking consultants describe three possibilities for the 12 Metropolitan Bank locations in Northwest Arkansas depending on the outcome of Monday’s auction. They said Ford Financial has a track record for buying distressed banks, infusing capital and streamlining operations and then reselling that investment for a profit. In that case, Metropolitan’s local branches fail to meet the industry benchmarks for profitability because there are not enough local deposits to justify the overhead. Analysts expect Ford will need to take additional write downs on these underperforming branches, which are likely more valuable as a real estate asset than a bank branch.

Arvest and Simmons already have a substantial branch presence in Northwest Arkansas and would likely close the local Metropolitan locations after merging that bank into their own operations.

OTHER REAL ESTATE
Aside from the 12 bank branches, Metropolitan also owns 87 parcels of real estate in Benton County and 137 parcels in Washington County, according to the counties’ websites.

While much of that land involves residential lots, there are also seven executive condos in the Legacy Building in downtown Fayetteville and eight other condos at Greer Plaza on North College Avenue in Fayetteville. The condo listings in the Legacy Building are priced between $453,000 and $356,000, according to the Multiple Listing Service.

Real estate agents agree the condo market has improved in recent months as financing  has become more readily available amid flush financial markets and low interest rates. But they said there is still an excess supply in downtown Fayetteville with more than 50 listings among several properties in an eight-block radius.

It’s important to note that the property Metropolitan National owns as other real estate has likely already been marked down for several years at the bank’s expense, said Tim Yeager, Arkansas Bankers Chair at the University of Arkansas. The bank that acquires Metropolitan will have the benefit of those past write downs and rising real estate prices of today, he said.

Other property owned by Metropolitan includes:
• 10 acres in the Ruskin Heights subdivision, Fayetteville;
• 10 lots in Rupple Row subdivision, Fayetteville;
• 9 lots in Timber Trails, Fayetteville;
• 50 lots and three homes in Woodbury subdivision, Fayetteville;
• 160 acres near the Grand Valley Ridge area in East Springdale;
• 16 lots in Jacobs Court, Springdale;
• 153 acres in Greenland;
• 2 industrial buildings in Springdale; and
• 20 acres along Airport Road in Bentonville.