Blue Valley Ban Corp. in Overland Park, Kan., has obtained regulatory approval to redeem its Troubled Asset Relief program preferred shares.

The $617 million-asset bank will redeem $21.75 million of Series A preferred stock, issued as part of Tarp.

"Improved earnings and asset quality over this period have allowed us to replace this temporary source of capital with more permanent common equity," Robert Regnier, chairman and chief executive, said in a news release.

Blue Valley will also issue shares of common stock and Series B convertible preferred stock Regnier and to an unnamed third-party investor; and for term loan funding provided by an unnamed third party lender.

After the transaction, Blue Valley expects its annual cost of capital will decrease by about $2 million.

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