Profits rise at Metropolitan National ahead of merger

Metropolitan National Bank reported third quarter profits of $1.59 million and has pocketed $3.53 million so far this year, according to financial filings with Federal Deposit Insurance Corp. made public today (Oct. 31).

Net income through September is a marked improvement over the $2.7 million Metropolitan had lost at the same time last year.

“We are extremely proud of the progress Metropolitan has made over the past five and a half years; our journey has not been an easy one,” said Lunsford Bridges, president and CEO of Metropolitan National Bank. “Through this process our loyal customers have stood with us, which is a testament to our tradition of quality Nearby and Neighborly banking.”

That brand will soon be swallowed up by Simmons First National Bank in the pending merger that is expected to be completed following the first quarter of 2014. Simmons was the highest bidder for Metropolitan National Bank, which was essentially auctioned off by the bankruptcy court last month for $53.6 million dollars. The deal is one of the largest mergers in the state on record and was a result of the bankruptcy of Rogers Bancshares, the holding company for Metropolitan National Bank.

“The merger of Metropolitan National Bank and Simmons First is going exceptionally well, our two companies share similar values, culture and principles of community banking. We are working closely with the leadership team at Simmons First National Bank to make the transition as smooth as possible,” Bridges stated in the earnings release.

FiNANCIAL RESULTS
Metropolitan reported totaled assets of $996.3 million as of Sept. 30. Assets declined 1% from the prior quarter and are 2% less than the $1.07 billion in assets reported a year ago.

The bank’s equity capital shrunk to $60.664 million, compared to $62.17 million the prior quarter and $64.86 million it reported in September of 2012. 

Metropolitan’s Tier 1 Capital Ratio, as of Sept. 30, has improved to 6.80% and the Risk Based Capital Ratio to 11.26%. This improved over the same time period in 2012 when the Tier 1 Capital Ratio was 6.15% and the Risk Based Capital Ratio was 10.09%.

Despite the improvements in capital ratios, the bank remains out of compliance with its enforcement orders which were updated in April 2012. Metropolitan has not been able to shake its enforcement actions by federal regulators that demanded the holding company to raise bank capital as hefty real estate losses depleted capital reserves to an “unsafe” levels in 2008, according to regulators.

By shrinking the bank’s size, Metropolitan management was able to make nominal improvements in its capital ratios over the past year, while it reneged on the $25 million borrowed from federal government during its TARP funding to banks in 2009. The Office of the Comptroller of the Currency is expected to remove the enforcement action once the bank is fully acquired by Simmons First National.

Metropolitan reported non-accrual loans of $26.66 million as of Sept. 30, down from $28.97 million in the prior quarter and roughly half the level they were a year ago. At the same time the bank was able to reduce some of its real estate inventory, showing $67 million of real estate on the books in September, down from $88 million a year ago.

The bank has set aside $18 million in loan loss reserves – $500,000 of that this year. At the end of September, the bank reported $497 million in outstanding loans to its customers. Loans shrunk from $592 million outstanding a year ago.

Simmons First CEO-elect George Makris Jr. said last month that his lending analysts had reviewed the Metropolitan books with a fine-tooth comb before bidding on the bank. He said Metropolitan management had performed well in cleaning up the real estate portfolio of loans in Northwest Arkansas that had weighed heavy on bank earnings across the region for several years.


TARP OBLIGATION

Rogers Bancshares, parent of Metropolitan National, still owes the government the $25 million in took in TARP money in 2009 and $5.6 million in unpaid dividends as of May 2013. It is ninth largest institution in the U.S. that still has not fully repaid it’s obligation. Metropolitan ownership had missed 17 quarters of dividend payments as of June, according to the Treasury Department website.


In July, the bank slipped into bankruptcy receivership and is one of 27 banks in receivership as of Sept. 30, according to the October report to Congress from the U.S.Treasury Department.


The reports states that the $25 million owed by Rogers Bancshares, parent of Metropolitan National Bank is uncollectable. The total uncollectable by the treasury department as of Sept. 30 was in excess of $768 million, among 27 banks under receivership.


The treasury report notes it collected a total of $738,021 in total dividend payments from Rogers Bancshares since it invested $25 million into the bank more than four years ago, leaving more than $5.6 million in unpaid dividends. The report states the treasury department is writing off the $25 million debt left by Little Rock-based bank.


The federal government continues to try and wind down its TARP program, noting that it has collected $224.7 billion from 707 institutions it funded, which is $16 billion more than it spent on TARP investments in banks. 
There are still 108 institutions that have not repaid the debt, not including the 27 banks in receivership.