Regulators: Colorado National Bank should avoid seizure

Feb 24, 2009 (The Gazette - McClatchy-Tribune Information Services via COMTEX) -- TFIN | Quote | Chart | News | PowerRating -- Federal regulators have imposed additional restrictions on how Colorado National Bank can attract deposits, but have told its parent company that the troubled bank has enough reserves to escape seizure despite mounting losses.

Colorado National faces restrictions both on buying deposits from investment brokers and on paying "excessive interest rates on deposits," but is now considered "adequately capitalized for purposes of prompt corrective action provisions," according to a filing with the Securities and Exchange Commission late Monday. The filing was made by Team Financial Inc., the Paola, Kan.-based owner of Colorado National and Team Bank in the Kansas City, Mo., area.

Colorado National had $77.7 million in deposits, $117.8 million in assets and 28 employees at its three branches in northern Colorado Springs, Monument and Peyton as of Sept. 30, the most recent information available from the Federal Deposit Insurance Corp.

Team told stockholders in the filing that it "has continued to experience further deterioration in its financial condition," particularly in its loan portfolio. The company said it expects to lose at least $44.2 million, or $12.32 a share, for all of last year. The loss stemmed mostly from setting aside $28.5 million for expected losses on its loans, writing off $10.7 million spent to acquire Colorado National and other banks and nearly $16 million in losses on securities and tax breaks it can't use.

That means Team lost nearly as much in the final three months of the year as it did in the previous nine months, when it lost $23.5 million, or $6.53 a share. Most of the losses, $28.3 million, were at Team Bank and cut its reserves in half by the end of last year, but the company has been working to raise additional capital, Team President Sandy Moll told the Kansas City Star on Feb. 17. She was not available Tuesday for further comment.

Team Bank must submit an "acceptable capital restoration plan" to the U.S. Comptroller of the Currency's office by Monday or face having the $500 million bank placed under FDIC control. Team Financial also said it had extended a $4 million revolving credit agreement with U.S. Bank from Jan. 31 to March 6, but remains in default under the agreement because it hasn't "fully complied" with orders from comptroller's office issued in September.

Team said in the filing that its ability "to continue operations would be extremely doubtful" if regulators seized its largest bank. Deposits in both Team Bank and Colorado National are insured by the FDIC up to $250,000.

The latest filing comes a week after Bruce Vance resigned as Team Financial's chief financial officer after 10 months "to pursue other opportunities." The company said the resignation didn't result from any disagreements or any matter relating to its operations, policies or practices. Vance, who spent 15 years with the federal agency that regulates savings and loan associations, will continue to provide consulting services as needed.

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