Simmons’ bank bid approved by judge
Posted: September 13, 2013 at 12:57 a.m.
Simmons First National Corp.’s $53.6 million cash bid to buy Metropolitan National Bank was approved Thursday by a U.S. Bankruptcy Court judge in Little Rock.
The transaction is expected to close in early December and is subject to regulatory approval.
“Simmons First has had a long, positive history with the Rogers family and Metropolitan National Bank,” George A. Makris Jr., Simmons First chief executive officer-elect, said in a prepared statement. “We believe the acquisition fits nicely into our footprint and will enable us to better meet our combined customers’ needs in Central and Northwest Arkansas.”
Simmons prevailed after about 19 rounds of bidding in a private auction Monday to acquire Metropolitan from Rogers Bancshares. The Pine Bluff bank was bidding against Arvest Bank of Fayetteville and Ford Financial II, a Dallas-based private equity firm.
The auction, held at the Wyndham Riverfront-Little Rock hotel in North Little Rock, was part of Rogers Bancshares’ Chapter 11 bankruptcy case. Rogers Bancshares is the holding company that owns Metropolitan.
Ford Financial bid $16 million in July to buy Metropolitan, with plans to in-vest another $74 million in the struggling bank. Ford Financial, which has a history of turning around troubled banks, will receive about $640,000 for setting a bid price high enough to prevent low offers for Metropolitan.
Simmons bid $16.9 million for Metropolitan before the auction. Simmons shares fell 2.3 percent Thursday to close at $26.87.
Simmons said it would combine the operations of Metropolitan with Simmons First National Bank. The company said during a conference call Thursday that it expects “significant branch consolidation” to take place around April 2014.
The consolidation will result in “more super branches, offering enhanced customer service and products,” Makris said.
Makris said during Thursday’s Bankruptcy Court hearing before Judge James Mixon that in the past, Simmons and Metropolitan had discussed a merger.
Doyle Rogers Sr., who died earlier this year, owned essentially all of Rogers Bancshares and its only asset, the bank.
Metropolitan’s struggles began in 2006 when it began to add branches in Benton and Washington counties.
It was the bank’s first move outside central Arkansas and by the next year Metropolitan had five branches in Benton County and four in Washington County with about $70 million in deposits. By 2010, there were 13 branches with about $112 million in deposits.
The quick growth increased Metropolitan’s operating costs, according to its bankruptcy filing. And since the financial crisis began in 2008, it has been burdened with with bad real-estate loans in Northwest and central Arkansas, and in Texas. The bank’s assets have fallen from $1.8 billion to just under $1 billion.
The $53.6 million “will be put in a safe, secure account either in Metropolitan or another institute,” said Jack Williams, senior counsel for Williams & Anderson, speaking on behalf of Rogers Bancshares.
He said the court will have to approve where the money goes and that it will be jointly controlled by Metropolitan and Simmons.
“It’s going to be spent reasonably quickly,” Williams said.
The money will go first to “all the claims against the estate,” such as lawyers and financial advisers, and then to preferred trust holders and others who are owed money.
Rogers Bancshares owes money to preferred trust holders, preferred stockholders and the U.S. Treasury, which loaned it federal bailout money in 2009.
The Rogers Bancshares bankruptcy filing lists debts of $41.24 million in three separate trust preferred securities, $10 million in preferred stock to Bear, Stearns & Co., $3.25 million in preferred stock to individual investors and $26.25 million owed to the U.S. Treasury.
In an effort to help the bank after the recession, the holding company sold more than 26,000 shares of preferred stock to the U.S. Treasury Department in 2009 as part of the agency’s Troubled Asset Relief Program. Metropolitan was one of several Arkansas banks to apply for the program, designed to help stabilize lending.
The purchase of Metropolitan for $53.6 million will give creditors more money, said Garland Binns, a banking specialist in Little Rock.
“That’s an outstanding bid,” he said. “I think all around it’s a good transaction both for the holding company, [Rogers Bancshares], and Simmons. Both of those organizations will be stronger as a result of the transaction.”
Front Section, Pages 1 on 09/13/2013