Team Financial Inc /Ks - Current report filing (8-K)
May 06 2008 - 5:25PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM 8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
April 24, 2008
(Date of earliest event reported)
TEAM
FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
KANSAS
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000-26335
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48-1017164
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(State or other jurisdiction
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(Commission
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(I.R.S. Employer
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of incorporation)
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File Number)
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Identification No.)
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8 West Peoria, Suite 200, Paola, Kansas, 66071
(Address of principal executive offices) (Zip Code)
Registrants telephone, including area code:
(913) 294-9667
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
o
Written Communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
Item
8.01 Other Events.
On
May 2, 2008, the Board of Directors of Team Financial, Inc., (the Company,
our or we) approved a merger of our two subsidiary banks, TeamBank, N.A.
and Colorado National Bank (the Banks), subject to approval by our banking
regulators. The merger is expected to
cost up to approximately $225,000 to complete.
Afterwards, we expect approximately $225,000 in annual cost savings
resulting from operational efficiencies.
National
banking-related publications, as well as a recent pronouncement of our primary
banking regulator, the Office of the Comptroller of the Currency (the OCC),
have indicated that the economic downturn in the national housing market has
accelerated and is more pronounced than previously estimated. Our Banks have concentrations in this area of
lending through real estate construction and land development loans. The Federal Deposit Insurance Corporation has
recommended that financial institutions such as our Banks, that have
concentration levels in these types of loans, increase their levels of loan
loss allowances and increase capital to provide ample protection from
unexpected losses if market conditions deteriorate further. As a result of this guidance and additional
data becoming available relating to the national economy, and more specifically
to our market areas, we have increased our Banks allowance for loan loss
allocations by an aggregate of $2 million.
Specifically, on May 2, 2008 the Board of Directors of TeamBank,
N.A. approved an additional $1,750,000 to be allocated to the
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allowance
for loan losses, through a charge to provision for loan losses and on May 6,
2008, the Board of Directors of Colorado National Bank, approved an additional
$250,000 to be allocated to the allowance for loan losses, through a charge to
provision for loan losses. The increased
loan loss allowance provisions will be reflected in our March 31, 2008
financial statements and will be direct charges to operating results. Despite these additional allowances for loan
losses, both Banks continue to be well capitalized in accordance with defined
regulatory capital adequacy standards.
Because
of the above factors, we are closely monitoring the Banks regulatory capital ratios,
we have infused additional capital into the Banks, and we expect to seek
further increases in their regulatory capital ratios in the near term. On May 5, 2008, we infused $1,750,000
and $250,000 in capital to TeamBank, N.A. and Colorado National Bank,
respectively. We funded the capital
infusions through our existing line of credit, and our remaining available
borrowing capacity under the line of credit is $2 million. Also, in order to increase their regulatory
capital ratios and decrease their concentrations in real estate construction
and land development loans, the Banks may decrease these loan balances through
loan sales to other financial institutions.
In order to provide additional capital to the Banks, we expect to
consider several alternatives, including seeking additional equity and debt as
well as suspending dividends on our common stock. We cannot, however, assure that we will be
successful in raising additional equity or debt, that the capital
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adequacy
levels or loan loss reserves of the Banks will be deemed satisfactory by our
banking regulators, that the Banks will not be subject to additional regulatory
action, or of the impact of such actions on debt covenants.
In
connection with a recent examination of the Banks, on April 24, 2008, the
Banks each received a letter from the OCC, Kansas City South Field office,
indicating that it believes the Banks are deemed to be in troubled condition
for purposes of Section 914 of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989, and, as a result, the Banks are subject
to specified restrictions on operations.
These letters were received before the OCCs issuance of its examination
report and were based upon the OCC staffs determination that the Banks had
deficiencies in credit administration practices, loan risk rating systems, loan
loss allowance methodologies, and levels of classified assets. The restrictions provide that: (1) the Banks must notify the OCC 90
days before adding or replacing a member of their respective boards of
directors or employing any, or promoting any existing employee as a senior
executive officer, and (2) the Banks may not, except under certain
circumstances, enter into any agreements to make severance or indemnification
payments or make any such payments to institution-affiliated parties. We expect to cooperate with the OCC to
address any regulatory concerns.
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In
addition, in light of the above, we have determined to perform goodwill
impairment tests relating to the financial statement carrying value of each of
the Banks under Statement of Financial
Accounting Standards Number 142,
Goodwill and Other
Intangible Assets.
The Banks
are currently treated as separate reporting units for purposes of goodwill
impairment testing. TeamBank, N.A.
currently has approximately $4.7 million of goodwill and Colorado National Bank
currently has approximately $6.0 million of goodwill. We have engaged an independent third party to
assist in the valuations of goodwill. An
impairment, if any, cannot be estimated until such time as the independent
valuation is completed. Any impairment
would have no impact on the regulatory capital ratios of the Banks.
Item 9.01 Financial Statements And Exhibits.
None
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SIGNATURES
Pursuant
to the requirement of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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TEAM
FINANCIAL, INC.
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By:
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/s/ Robert J. Weatherbie
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Robert
J. Weatherbie,
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Chairman
and Chief Executive Officer
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Date:
May 6, 2008
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