Seven area bank companies have missed more than $16 million in TARP payments

Seven area banking companies owe a combined $16.6 million in missed quarterly payments under the government’s Troubled Asset Relief Program, and the U.S. Treasury now attends board meetings of two of them.

“Observers” from the Treasury’s Office of Financial Stability have begun to attend — but not participate in — the board meetings of Dickinson Financial Corp., which recently sold Bank Midwest to a Boston group, and Blue Valley Ban Corp., which owns the Bank of Blue Valley.

“We had an observer from the Treasury attend our December meeting, and it’s purely voluntary,” said John Cox, general counsel of Dickinson Financial, which still operates Academy Bank and Armed Forces Bank in the area. “They use the observation process to determine if, when and how they will exercise their rights to appoint directors.”

The Treasury invested billions of dollars in banking companies in response to the financial crisis. Terms of the investment allow the agency to appoint up to two board members if a banking company misses six dividend or interest payments.

Dickinson has missed six payments and Blue Valley Ban Corp. seven, according to a Dec. 10 report from the Treasury, which has not appointed board members at either company.

Bob Regnier, Blue Valley chief executive, said a Treasury observer attended the November and December board meetings.

A Treasury fact sheet said using observers was much less expensive than recruiting qualified directors and allowed the agency to immediately assess the situation.

Regulators generally have prohibited banking companies with heightened levels of problem loans or the need to retain capital from making their payments under the Treasury’s TARP.

Missing the payments isn’t a default but can allow the Treasury to seek membership on the banking company’s board. The recent Treasury report showed it had observers attending 18 banking companies’ board meetings.

Area companies that have missed fewer than five TARP payments include the parent firms of Blue Ridge Bank and Trust based in Independence; Citizens Bank and Trust based in Chillicothe, Mo.; First Community Bank based in Lee’s Summit; Excel Bank based in Sedalia, Mo.; and Bank of the Prairie based in Olathe.

Source: www.kansascity.com