Team Financial Inc. expects its banks to come under a regulatory enforcement action that will require Team to raise more capital, a company document said.
In a filing with the Securities and Exchange Commission, Team also said its banks had “engaged in unsafe or unsound banking practices” relating to their lending and supervision. The quoted phrase is standard in enforcement actions in which regulators set out cures for the deficiencies.
Team Financial said it already had boosted its reserves for potential loan losses, added capital to both banks, appointed a “loan workout manager,” changed its credit and loan processes and begun a search for a chief credit officer.
“We anticipate the expected enforcement action will require us to raise additional capital,” the filing said.
Team’s filing also made final the company’s report last week that it lost $7 million in the second quarter, largely from adding to its reserves for potential loan losses. The loss also reflected the decision to write off goodwill associated with previous bank mergers.
Team owns TeamBank, which is based in Paola, Kan., and also operates in the Kansas City area, and Colorado National Bank in Colorado Springs, Colo. Team Financial said it had paused plans to merge the banks but had agreed to sell “one of its Colorado locations” that it values at $1.2 million.
Regulators previously determined both banks were in “troubled condition” and were deficient in handling a concentration of lending in real estate.
Team’s filing Tuesday said it also has been deemed in “troubled condition” by its primary regulator, the Federal Reserve Bank of Kansas City. The findings increase the regulatory scrutiny of the banks and Team Financial.
Team said it was cooperating with regulators to resolve matters. It also is working to improve the condition of its banks’ problem loans, many of which it believes are adequately collateralized.
Trading in shares of Team Financial had not opened this morning. Shares closed Monday at $4.56.
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