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Weekly UpdatesMETROPOLITAN NATIONAL Bank reported last week a second-quarter loss of $32.5 million, which executives blamed on commercial real estate troubles in northwest Arkansas and an aggressive marking-to-market of loan values.
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Capital ratios remain well above the levels required for a well-capitalized bank, CEO Lunsford Bridges said Tuesday--7.33 percent for Tier 1 capital and 11.21 percent for risked-based capital. Those ratios are down, however, from 9.06 percent and 13.23 percent three months earlier.
"We're being very aggressive in our approach," Bridges told ArkansasBusiness.com, "meaning we're trying to get as much of this behind us as we can now."
Bridges would not comment directly on reports of recent layoffs, but he confirmed that the bank has reduced its staffing levels by 10 to 12 percent over the past two years. (The call report filed in mid-2007 listed a high of 543 employees, a number that was down to 498 at the end of 2008.)
A stand-alone branch at Markham Street and Interstate 430 in west Little Rock was being closed last Friday, joining three branches in Kroger stores that were closed earlier this year. No other branch closings are currently being contemplated, Senior Executive Vice President Susie Smith said.
The bank's second-quarter call report was not available last week, but a written statement includes the quarterly loss figure and the capital ratios. It also says the bank made a $33 million provision for loan losses in the second quarter, which ended June 30.
The $32.5 million loss compares with a $2.5 million profit for the same quarter of 2008, but it followed a loss of $8.6 million in the first quarter and a restated loss of $5.7 million in the fourth quarter of 2008. The fourth-quarter restatement was required by the Office of the Comptroller of the Currency, regulator of national banks like Metropolitan. In May 2008, the bank and the OCC entered a balance sheet improvement plan that requires Metropolitan to maintain Tier I capital of 8 percent and risk-based capital of 12 percent.
The OCC is aware of the second-quarter results and has not required any changes in that agreement, Bridges and Smith said on Tuesday.
"They are fine with it, nothing has changed, no new requirements," Bridges said. He said the OCC had been provided with a "capital plan" that the written statement said "will increase its capital ratios to even higher levels over the next several months."
Metropolitan has about $1.6 billion in assets, down slightly from the first quarter. At the end of the second quarter, the bank's loan loss reserves stood at $47 million, Smith said. That's up from $31.5 million at Dec. 31 and $41.9 million at March 31.
"Most all of this is created by mark-to-market accounting," Bridges said, referring to a regulatory requirement that the underlying value of collateral of any problem loan be booked at its current market value. And most of that has happened on property in the northwest corner of the state, he said.
"For us it's northwest Arkansas, and most everything is commercial real estate of one form or another," Bridges said.
While the bank's deposit base remains strong, Bridges echoed many other bankers when he said loan demand "is not great."
Speculation that Metropolitan will be sold in the near future has been rife in the Arkansas banking community for months, but Bridges had no news to share on Tuesday.
"We never comment on a rumor," he said.
Metropolitan National Bank is the single charter owned by Rogers Bancshares, and almost all of its stock is owned by Doyle Rogers of Batesville and his family. Bridges said he owns "a little bit."
By Gwen Moritz
gmoritz@abpg.com
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