Metropolitan National Bank will soon be acquired by Simmons First National, as the Pine Bluff-based financial institution was the last bidder standing during Monday’s (Sept. 9) court-sanctioned auction held in Little Rock.
Simmons noted in a press release that the deal is subject to the approval of the U.S. Bankruptcy Court hearing scheduled for Thursday (Sept. 12).
Metropolitan had assets of $1.006 billion and equity capital of $65.7 million as of June 30. Simmons First National is a $3.6 billion financial holding company with 91 offices in 54 communities, in Arkansas, Kansas and Missouri.
“It’s a great acquisition for Simmons, a feather in their cap and one that surely add to the franchise value,” said Garland Binns, attorney with Dover Dixon Horne, specializing in mergers and capital fund raising.
Metropolitan is well-known brand in the Little Rock and Northwest Arkansas markets touting itself as “Nearby and Neighborly," but Simmons will undoubtedly merge those assets into its own growing footprint.
The Little Rock bank has operated with a capital shortfall for several years and remains under enforcement actions with the Office of the Comptroller of the Currency and the Federal Reserve Bank. Simmons, once approved by the court as the winning bid, will be asked to get the bank’s capital ratios back in compliance. Metropolitan is ordered to maintain a tier-one leverage ratio of 8%, and as of June 30, the bank posted a ratio of 6.46%. Rough calculations indicate a shortfall of just under $15 million is needed for Metropolitan to hit the 8% requirement.
When Simmons combines assets with Metropolitan National Bank, the institutions would have roughly $3.819 billion in earning assets, with combined equity capital of $253.853 million. The tier-one ratio of these combined banks would be roughly 8.29% and meets with federal guidelines.
"Simmons is a well-run bank and this is a great use of its capital surplus. It will open up Little Rock to them and also give them some more diversification away from agricultural loans which they have in many of their other markets," said Dr. John Dominick, industry consultant and banking professor at the University of Arkansas.
"Metropolitan has a rich history of providing exemplary customer service to the communities in which it is located,” Simmons noted in a recent filing with the federal Securities and Exchange Commission. Bank officials said it will “combine its operations of Metropolitan and continue to provide the highest quality customer service throughout the combined service area," should they prevail with the highest bid.
In the Little Rock market Simmons can grow its marketshare from 1.53% to 7.35%, overtaking Arvest and Bank of Ozarks with the acquisition of Metropolitan National Bank.
The gain in Northwest Arkansas is far less appealing in deposits but it holds potential opportunity in real estate profits.
Gary Head, CEO of Signature Bank in Fayetteville, said he favored a Simmons or Arvest deal because it does take one competitor out the already crowed market.
Simmons last year won a bid to acquire Excel Bank in Sedalia, Mo., in an FDIC-assisted deal. It also made two FDIC-assisted acquisitions in 2010, one in Springfield, Mo., and one in Olathe, Kan.