Nov. 25--The owner of Colorado National Bank warned its stockholders last week that the bank doesn't meet federal capital reserve requirements and could be seized by the Federal Deposit Insurance Corp. if it fails to raise more capital by about year's end.

Paola, Kan.-based Team Financial Inc., which also owns Team Bank in Kansas, signed agreements in September with the U.S. Comptroller of the Currency's office requiring the holding company to boost reserves at Colorado National by $1.6 million and Team Bank by $3.5 million, come up with longer-term plans to generate cash to meet "expected funding needs" and make several changes in lending practices and personnel.

The banks' financial problems stem from problem loans in construction and real estate development lending.

Sandy Moll, Team's chief operating officer, could not be reached late Monday for comment. But she told the Kansas City Star last week that the disclosures were made to stockholders to warn them of a "worst-case scenario." She also told the Star that bank officials have multiple initiatives under way to raise capital and are working closely with regulators and others to meet the company's obligations.

Should Team fail, all deposits in both banks are insured by the FDIC up to $250,000.

"Based on the banks' current and projected levels of capital, the company cannot assure the banks will be able to meet the minimum capital ratios established in (the comptroller's order) without raising additional capital. In the current economic environment, there is significant risk that the company will not be able to raise additional capital," Team said Wednesday in a Securities and Exchange Commission filing.

Since the filing, Team Financial's stock has plunged nearly 80 percent to 52 cents Monday on the Nasdaq Stock Market.

Team also said in the filing that the company will set aside at least $4.2 million in the third quarter for potential loan losses after regulators classified an additional $11.5 million in loans as troubled, reduced the value of a deferred tax benefit by $1.8 million to $4.2 million, and cut the value of its securities portfolio by $2.5 million. As a result of those moves, Team said it expects to lose at least $9.8 million, or $2.72 a share, in the third quarter.

The company also said it can no longer borrow from the Federal Home Loan Bank because it does not have adequate collateral for the $118.5 million it has borrowed as of Sept. 30, but added that it is in the process of substituting other collateral. If the Federal Home Loan Bank were to declare Team in default on its borrowing agreement, the filing said "the entire balance would become immediately due and payable."

Team also is in default of its $4 million line of credit with U.S. Bank, which matures Jan. 31. While the company said it plans to seek an extension, it said it could not afford to pay off the line if U.S. Bank refuses its request.

Team sold its downtown Colorado Springs branch in October for $1.13 million to State Bank of Bartley, a Nebraska institution that reopened it last week as Stockmen's Bank.

Colorado National opened in 1963 as Northern National Bank, later changed its name to Colorado National and was sold to Team in 2001. The bank employed 32 and had $138.2 million in assets and $90.6 million in deposits as of June 30.

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Contact the writer: 636-0234 or wayneh@gazette.com

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