UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 11-K
(Mark
One)
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x
ANNUAL REPORT PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the
fiscal year end
12/31/2007
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OR
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o
TRANSITION REPORT PURSUANT TO
SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period
from to
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Commission file number 000-26335
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A.
Full title of the plan and the address of the plan, if different from that of
the issuer named below:
Team Financial, Inc. Employees Stock
Ownership Plan
B.
Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
Team
Financial, Inc.
8 West
Peoria, Suite 200, Paola Kansas 66071
TEAM FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Financial Statements and
Schedules
December 31, 2007
and 2006
(With Report of
Independent Registered Public Accounting Firm Thereon)
Report of Independent Registered Public Accounting
Firm
The
Board of Directors
Team Financial, Inc. Employees Stock
Ownership Plan:
We have audited
the accompanying statements of net assets available for benefits of the Team
Financial, Inc. Employees Stock Ownership Plan (the Plan) as of December 31,
2007 and 2006, and the related statements of changes in net assets available
for benefits for each of the years in the three-year period ended December 31,
2007. These financial statements are the responsibility of the Plans
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our
audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion,
the financial statements referred to above present fairly, in all material
respects, the net assets available for benefits of the Team Financial, Inc.
Employees Stock Ownership Plan as of December 31, 2007 and 2006, and the
changes in net assets available for benefits for each of the years in the
three-year period ended December 31, 2007 in conformity with U.S.
generally accepted accounting principles.
Our audits were
made for the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplemental schedules (schedule H, line 4ischedule of
assets (held at end of year) and schedule H, line 4jschedule of reportable
transactions) are presented for the purpose of additional analysis and are not
a required part of the basic financial statements, but are supplementary
information required by the Department of Labors Rules and Regulations
for Reporting and Disclosure under the Employee Retirement Income Security Act
of 1974. The supplemental schedules are the responsibility of the Plans management.
The supplemental schedules have been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion,
are fairly stated, in all material respects, in relation to the basic financial
statements taken as a whole.
/s/ KPMG LLP
Kansas City, Missouri
June 27, 2008
TEAM FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Statements
of Net Assets Available for Benefits
December 31,
2007 and 2006
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2007
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2006
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Assets:
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Investments, at fair value:
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Common stocks:
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Team Financial, Inc.
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$
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12,626,484
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14,187,264
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Other
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112,428
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91,956
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Cash
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28,105
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8,109
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Total investments
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12,767,017
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14,287,329
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Employer contribution receivable
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400,000
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357,500
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Interest and dividends receivable
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68,219
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70,971
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Net assets available for benefits
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$
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13,235,237
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14,715,800
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See accompanying notes to
financial statements.
2
TEAM FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Statements
of Changes in Net Assets Available for Benefits
Years
ended December 31, 2007, 2006, and 2005
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2007
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2006
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2005
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Additions to net assets attributed to:
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Appreciation (depreciation) in fair value of investments
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$
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(960,931
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)
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1,479,745
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1,493,482
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Contributions from employer
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400,000
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357,500
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250,000
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Dividend income
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283,245
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297,031
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314,015
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Interest income
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6,580
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3,401
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1,668
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Net additions (deductions)
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(271,106
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)
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2,137,677
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2,059,165
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Deductions from net assets attributed to:
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Distributions to participants
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1,209,457
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1,335,469
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1,252,089
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Increase (decrease) in net assets available for
benefits
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(1,480,563
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802,208
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807,076
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Net assets available for benefits:
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Beginning of year
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14,715,800
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13,913,592
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13,106,516
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End of year
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$
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13,235,237
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14,715,800
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13,913,592
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See accompanying notes to
financial statements.
3
TEAM
FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Notes
to Financial Statements
December 31,
2007 and 2006
(1)
Description
of the Plan
The following description of the Team Financial, Inc. Employees
Stock Ownership Plan (the Plan) is provided for general information purposes
only. More complete information regarding the Plans provisions may be found in
the plan document.
(a)
General
The Plan is a
defined contribution plan adopted by Team Financial, Inc. and its
affiliates; TeamBank N.A.; and Colorado National Bank (collectively, the
Company). All employees who have attained six months of service and age 19 are
eligible to participate in the Plan and may enroll on January 1 or July 1
subsequent to becoming eligible. With limited exceptions, an employee must
complete 1,000 hours of service during the plan year and must be employed by
the employer on the last day of the plan year to be entitled to an allocation
of Company contributions. The Plan is subject to the provisions of the Employee
Retirement Income Security Act of 1974, as amended (ERISA).
(b)
Plan Administration
The Plan is
administered by the Advisory Committee, which is appointed by the board of
directors of the Company. The Company also acts as the Plans trustee and is
responsible for the custody and management of the Plans assets.
(c)
Contributions
Contributions to
the Plan are determined by the Companys board of directors. Contributions may
be made in cash, common stock, or other investments as determined by the board
of directors. The Company may make contributions up to 15% of the compensation
paid to participating employees during the plan year. Pursuant to certain
limitations set forth in the Internal Revenue Code (IRC), the Company may
contribute additional amounts of up to 10% of the total compensation of all
participants to apply to a principal repayment on the borrowings incurred for
the purpose of acquiring common stock and/or an amount without limitation if it
is to be applied to the repayment of interest on borrowings incurred for the
purpose of acquiring common stock. As of December 31, 2007 and 2006, the
Plan has no outstanding borrowings.
The Plan does not
permit contributions by participants.
(d)
Voting Rights
Each participant
is entitled to exercise voting rights attributable to the shares of the Companys
common stock allocated to his or her account. A participant who does not submit
a voting direction is deemed to have voted in a specified manner, unallocated
shares are voted in the same proportion as allocated shares. An unrelated third
party tabulates the participant votes and provides the aggregate voting
directions to the trustee. As of December 31, 2007 and 2006, the Plan has
no unallocated shares.
4
TEAM FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2007 and 2006
(e)
Vesting
Prior
to January 1, 2007, Company contributions vest according to the following
schedule:
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Percentage
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of vested
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Years of service
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interest
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Less than 3 years
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%
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3 years
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20
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4 years
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40
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5 years
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60
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6 years
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80
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7 years or more
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100
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The
Plans vesting schedule was amended effective January 1, 2007 applicable
to company contributions for plan years beginning on or after January 1,
2007. Company contributions for plan years beginning on or after January 1,
2007 vest according to the following schedule:
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Percentage
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of vested
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Years of service
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interest
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Less than 1 year
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%
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1 year
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20
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2 years
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40
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3 years
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60
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4 years
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80
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5 years or more
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100
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In the
event of termination of the Plan, all participants shall become fully vested.
(f)
Payment of Benefits
Participants
are eligible for benefit distributions following death, disability, retirement,
or other termination of employment. When a participants employment is
terminated because of retirement, permanent disability, or death, the
distributions of the participants account must commence not later than one
year after the close of the plan year in which the event occurs unless the
participant elects otherwise. When a participants employment is terminated for
any other reason, the form of the distribution depends on the balance in the
participants account. If the vested balance is less than $1,000, the Plan will
distribute that amount, in a lump sum, in the plan year following the plan year
in which the participant terminates. If the vested account balance exceeds
$1,000, the Plan will generally commence distributions of such amount in the plan
year following the date of termination unless the participant elects otherwise.
Distributions may be in a lump sum or installments. Generally, the portion of a
participants account invested in the Companys common stock will be
5
TEAM FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2007 and 2006
distributed in the form of the Companys common stock, and the
remaining portion of the participants account will be distributed at the
participants election, either in the form of the Companys common stock or
cash. Additionally, vested benefits may be paid to a participant if the
participant reaches age 60 or if the participant reaches age 55 and has
participated in the Plan for at least 10 years.
(g)
Participant Accounts
Each participants account is credited as of the last day of each plan
year with an allocation of Company contribution and any forfeitures of
terminated participants nonvested accounts. Only those participants who
satisfy certain eligibility requirements as of the last day of the plan year
will receive an allocation. Allocations are based on a participants eligible
compensation relative to total eligible compensation. The benefit to which a participant
is entitled is that which can be provided from the participants account.
(h)
Forfeitures
Plan forfeitures are allocated to each participants account based upon
the relation of the participants compensation to total compensation for the
plan year. Forfeitures of terminated nonvested account balances allocated to
remaining participants during 2007, 2006, and 2005 totaled $49,683, $55,777 and
$204,916, respectively. There were no unallocated forfeitures at December 31,
2007 and 2006.
(2)
Summary of Significant Accounting
Policies
(a)
Basis of Presentation
The accompanying financial statements are prepared on the accrual
method of accounting.
(b)
Use of Estimates
The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of America
requires the Plans management to make estimates and assumptions that affect
the accompanying financial statements and disclosures. Actual results could
differ from those estimates.
(c)
Investment Valuation and
Income Recognition
Investments in common stock are stated at fair value as determined by
quoted market prices reported on a recognized securities exchange on the last
business day of the year. Purchases and sales of investments are recorded on a
trade-date basis. Net appreciation (depreciation) in fair value of investments
includes both realized and unrealized gains and losses.
Interest income is recorded as earned on the accrual basis. Dividend
income is recorded on the ex-dividend date.
6
TEAM FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2007 and 2006
(d)
Administrative Expenses
Investment and administrative expenses are principally paid by the
Company.
(e)
Recently Adopted Accounting Standards
Effective January 1, 2007, the Plan adopted provisions of FASB
Interpretation No. 48,
Accounting for Uncertainty
in Income Taxes
(FIN 48). FIN 48 addresses the accounting for
uncertainty in income taxes recognized in an enterprises financial statements
and prescribes a threshold or more-likely-than-not for recognition and
derecognition of tax positions taken or expected to be taken in a tax return.
FIN 48 also provides related guidance on measurement, classification, interest
and penalties, and disclosure. The adoption of FIN 48 did not have a material
effect on the Plans net assets available for benefits and changes in net
assets available for benefits and changes in net assets available for benefits.
In February 2007, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS or FAS) No. 159,
The Fair Value Option for Financial Assets and Financial Liabilities,
Including an Amendment of FASB Statement No. 115
. This standard
is effective as of the beginning of an entitys first fiscal year that begins
after November 15, 2007, which for the Plan is January 1, 2008. SFAS
No. 159 permits all entities to choose to elect, at specified election
dates, to measure eligible financial instruments, as defined in SFAS
No. 159, at fair value. Changes in unrealized gains and losses on items
for which the fair value option has been elected would be reported in earnings
at each subsequent reporting date and upfront costs and fees related to those
items would be reported in earnings as incurred and not deferred. At adoption,
for those financial assets and financial liabilities which management has
elected to carry at fair value, an entity would report the effect of the first remeasurement
to fair value as a cumulative-effect adjustment to the opening balance of
retained earnings. The adoption of SFAS
No. 159 is not expected to have a material impact on the Plans net assets
available for benefits or changes in net assets available for benefits.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
. This standard is effective for
financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. Generally, the provisions
of this statement are to be applied prospectively as of the beginning of the
fiscal year of adoption. SFAS No. 157 defines fair value, establishes a
framework for measuring fair value in accordance with GAAP and expands disclosures
about fair value measurements. The
adoption of SFAS No. 157 is not expected to have a material impact on the
Plans net assets available for benefits or changes in net assets available for
benefits.
(3)
Investments
The following table presents investments that
represent 5% or more of the Plans net assets at December 31, 2007 and
2006:
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2007
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2006
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Team Financial, Inc. common stock
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$
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12,626,484
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14,187,264
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The investment in the Team Financial, Inc. common
stock represents approximately 23.8% and 24.7% of the outstanding common stock
of the Company at December 31, 2007 and 2006, respectively. During the
years ended December 31, 2007, 2006, and 2005, $400,000, $357,500, and
$250,000, respectively, was contributed to the Plan by the Company as part of
its annual discretionary contribution. During the years ended December 31,
2007, 2006, and 2005, the Plan purchased 20,000, 16,000, and 0 shares, and
distributed 55,289, 60,468, and 72,524, shares of Team Financial, Inc.
common stock, respectively.
During 2007, 2006, and 2005, the Plans investments
(including gains and losses on investments bought and sold, as well as held
during the year) appreciated (depreciated) in value as follows:
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2007
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2006
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2005
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Common stocks
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$
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(960,931
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)
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1,479,745
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1,493,482
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(4)
Portfolio Risk
The Plan provides for investments in various
securities that, in general, are exposed to various risks, such as interest
rate, credit, and overall market volatility risks. Due to the level of risk
associated with certain investment securities, it is reasonably possible that
changes in the values of investment securities will occur in the near term and
that such change could materially affect the amounts reported in the statements
of net assets available for benefits.
7
TEAM FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 2007 and 2006
Subsequent to December 31, 2007, the Plans
investment in the common stock of Team Financial, Inc experienced a significant
decline in value which has resulted in a material decrease in the net assets
available for benefits. Please see subsequent events footnote (8) for
further detail.
(5)
Tax Status
The Plan has received a favorable determination letter
from the Internal Revenue Service dated July 6, 2005, indicating that it
is qualified under Section 401(a) of the IRC, and therefore, the
related trust is exempt from tax under Section 501(a) of the IRC. The
determination letter is applicable for amendments executed through April 23,
2003. The tax determination letter has not been updated for the latest plan
amendments occurring after April 23, 2003. However, the plan administrator
believes that the Plan is designed and is being operated in compliance with the
applicable requirements of the IRC. Therefore, the plan administrator believes
that the Plan was qualified and the related trust was tax-exempt for the years
ended December 31, 2007 and 2006.
The Company is not aware of any activity or
transactions that may adversely affect the qualified status of the Plan.
(6)
Related-Party Transactions
Plan investments are shares
of common stock of the Company and a money market fund managed by the Company.
The Company is the trustee as defined by the Plan, and therefore, these
transactions qualify as party-in-interest transactions.
Certain
administrative functions are performed by officers or employees of the Company.
No such officer or employee receives compensation from the Plan.
(7)
Plan Termination
Although it has expressed no intention to do so, the
Company has the right under the Plan to discontinue its contributions at any
time and to terminate the Plan subject to the provisions of ERISA. Upon
termination of the Plan, the participants would become 100% vested in their
accounts and would receive amounts equal to their respective account balances.
8
TEAM
FINANCIAL, INC.
EMPLOYEES STOCK OWNERSHIP PLAN
Notes
to Financial Statements
December 31,
2007 and 2006
(8)
Subsequent Events
As of June 24, 2008, the value Team Financial, Inc.
(TFI) stock held by the Plan has decreased by approximately half of the value
at December 31, 2007. Management of TFI announced that on April 24,
2008, the subsidiary banks each received a letter from the OCC, Kansas City
South Field office, indicating that it believes TFIs subsidiary banks are
deemed to be in troubled condition for purposes of Section 914 of the
Financial Institutions Reform, Recovery, and Enforcement Act of 1989. In
addition, TFI announced that it had officially received from its primary
regulator, the Kansas City regional office of the Federal Reserve Bank, a
letter dated June 13, 2008, which is similar to those issued by the Office
of the Comptroller with respect to the Companys subsidiary banks and which
indicates the Company is under similar regulatory conditions as those of its
subsidiary banks. As indicated in TFIs public filings, the Company has
suspended paying cash dividends on its common stock and management expects to
seek further increases in the level of the subsidiary banks regulatory capital
in the near term, and in order to do so, expect to consider several
alternatives, including but not limited to seeking additional equity and/or
debt as well as ceasing to repurchase stock under TFIs stock repurchase
program. Management of TFI also cannot assure that they will be successful in
raising additional equity and/or debt, that the capital adequacy levels and/or
loan loss reserves of the subsidiary banks will be deemed satisfactory by their
banking regulators, that the subsidiary banks will not be subject to additional
regulatory action, and/or the impact of such actions on debt covenants.
A shareholder of the Company presented to Company
shareholders a ballot of opposing nominees to be elected to the Board of
Directors of the Company at the annual meeting scheduled for June 17,
2008, in lieu of the nominees proposed by the Company. The Plan Advisory
Committee appointed Bank of America, N.A., acting through U.S. Trust, Bank of
America Private Wealth Management, as a special independent fiduciary to
administer the participant voting directions, and to direct the Plan trustee,
on the two opposing director ballots.
9
Schedule 1
TEAM
FINANCIAL, INC.
EMPLOYEES
STOCK OWNERSHIP PLAN
Schedule H, line 4iSchedule of Assets (Held
at End of Year)
December 31, 2007
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(c)
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Description of investment,
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(b)
|
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including maturity date,
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(e)
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Identity of issue, borrower,
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|
rate of interest, collateral,
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(d)
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Current
|
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(a)
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|
lessor, or similar party
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par, or maturity value
|
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Cost
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value
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*
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Team Financial, Inc.
|
|
851,415 shares of common stock
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|
$
|
4,952,449
|
|
12,626,484
|
|
|
|
Exxon Mobile Corporation
|
|
1,200 shares of common stock
|
|
44,151
|
|
112,428
|
|
*
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Team Financial, Inc.
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28,105 shares of a money market fund
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28,105
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28,105
|
|
|
|
|
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$
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5,024,705
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12,767,017
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|
* Party in
interest to the Plan.
See accompanying
report of independent registered public accounting firm.
10
Schedule 2
TEAM
FINANCIAL, INC.
EMPLOYEES
STOCK OWNERSHIP PLAN
Schedule H, line 4jSchedule
of Reportable Transactions
Year ended December 31,
2007
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|
|
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Expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
incurred
|
|
|
|
|
|
|
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Description
|
|
Purchase
|
|
Selling
|
|
with
|
|
Cost
|
|
Net
|
|
|
|
of assets
|
|
price
|
|
price
|
|
transactions
|
|
of asset
|
|
gain
|
|
*
|
|
Team Financial, Inc. money market fund
|
|
$
|
650,575
|
|
|
|
|
|
650,575
|
|
|
|
*
|
|
Team Financial, Inc. money market fund
|
|
|
|
630,580
|
|
|
|
630,580
|
|
|
|
*
|
|
Team Financial, Inc. common stock
|
|
|
|
884,624
|
|
|
|
309,038
|
|
575,586
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|
|
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* Party-in-interest to the Plan.
See accompanying report of
independent registered public accounting firm.
11
SIGNATURES
Pursuant to the
requirements of the Securities Exchange Act of 1934, the trustee has duly
caused this report to be signed on its behalf by the undersigned hereunto duly
authorized on June 27, 2008.
|
Team
Financial, Inc. Employees Stock Ownership Plan
|
|
|
|
|
|
By: Team Financial, Inc., Trustee
|
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|
/s/
Robert J. Weatherbie
|
|
Robert
J. Weatherbie, Chairman
|
|
and
Chief Executive Officer
|
12
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