Shortfall Worsens At Metropolitan

By Kim Souza

Posted: November 3, 2009 at 5:59 a.m.

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SPRINGDALE — Metropolitan National Bank’s capital shortfall worsened in the third quarter amid a $13.7 million loss.

The Little Rock-based bank lost $54.84 million in the last nine months, compared to $7.17 million net income earned in the same period last year, according to a call report made public this weekend by the Federal Deposit Insurance Corp.

Under enforcement orders with the O◊ce of Comptroller of the Currency, Metropolitan National is roughly $20 million short of the capital mandate required by its regulators, according to Tim Yeager, Arkansas Bankers Chair at the University of Arkansas.

The bank faced a $10 million capital defi cit inthe second quarter, which prompted a separate enforcement action by the Federal Reserve Bank in August.

The bank exhausted nearly $40 million of its capital reserve in the past year, in addition to $25 million it received through the Treasury Department’s Capital Purchase Plan in January. The bank’s equity capital fell from $122.13 million in the second quarter to $110.32 million in the third quarter.

Metropolitan National Bank CEO Lunsford Bridges said in a Friday news release the bank has su◊cient time to make up its capital shortfall.

When asked for more detail Monday, Bridges declined to comment.

John Dominick, banking professor at the University of Arkansas, said capital is a bank’s lifeblood and without a su◊cient supply to keep allsystems operating, fi nancial health quickly deteriorates, Dominick said.

“Regulators generally tighten their grip when a bank doesn’t keep its enforcement agreement, more severe actions or orders can follow,” he said.

The bank said a capital recovery plan had been fi led with its regulators in October. When asked Monday for details about future amendments to the plan, the bank declined further comment.

Metropolitan has a $202 million delinquent loan portfolio as of Sept. 30, which includes $61.5 million in loans restructured with borrowers, according to the FDIC.

Another problem for the bank is its lack of loan loss reserves. Metropolitan has about $41.7 million in loss reserves, which won’t cover the $140 million in loans on the verge of foreclosure.

News, Pages 4 on 11/03/2009

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