U.S. sells stake in Bank of Blue Valley

10/11/2013 9:31 AM

10/11/2013 6:39 PM

Uncle Sam sold his stake in the Bank of Blue Valley to undisclosed buyers, taking a $5.38 million loss.

Blue Valley Ban Corp., which owns the $639 million bank based in Overland Park, had received $21.75 million under the federal Troubled Asset Relief Program, or TARP, in December 2008. The U.S. Treasury got shares in the bank holding company.

Bob Regnier, prominent civic leader and chief executive of the bank he founded, said he did not know yet who bought the shares. He expects to find out next week, adding that the transfer of the shares is expected Oct. 21.

Wichita-based Equity Bancshares Inc. bought none of the shares, said Brad Elliott, its chief executive. Equity had said this summer that it planned to bid on part but not all of the shares.

Financially, Regnier said, the sale makes no difference to Blue Valley and its controlling owners.

“We were going to pay it anyway,” he said. “We’ll just pay it to a different party.”

Blue Valley has been unable to repay the TARP funds to the U.S. Treasury, needing approval from its regulators to do so.

The Bank of Blue Valley was troubled by real estate loans during the recession but has returned to profits. It earned $1 million in the first half of this year, up from a $346,000 profit in the same period a year earlier.

Regnier said the bank still holds some property it gained through foreclosures but has written down the values. Blue Valley may be able to sell some of the properties for higher amounts than is currently recorded in its books.

“We feel good about our future,” Regnier said.

The Treasury auctioned its TARP shares in Blue Valley Ban Corp. early this week and announced the results Friday morning.

Buyers paid the Treasury $21.26 million, which amounts to a 2.24 percent discount to what Washington had invested in Blue Valley. Other area banks that could not repay their TARP also have been auctioned, some at much larger discounts.

The Treasury also is out $4,893,750 in unpaid dividends that were owed on the shares. Blue Valley now owes that money and the $21.75 million to the new owners of the TARP shares.

Blue Valley’s TARP shares continue to earn dividends for their new owners but give the holders a limited role at Blue Valley. They come without voting rights, for example, which means the new holders don’t have a say in selecting the company’s board of directors.

The Treasury purposely accepted shares that limited its potential role in the banks in which it invested.

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