The troubled Team Financial Inc. may be putting itself on the block.
The $848 million-asset Paola, Kan., company established an internal planning committee this month to "explore all strategic alternatives" and followed up by hiring Sandler O'Neill & Partners LP.
The alternatives being explored include raising capital and merging with another banking company, Team said June 16.
The two-bank holding company did not elaborate, and Robert Weatherbie, its chairman and chief executive, did not return calls for comment.
What is apparent is that Team needs capital to address its loan troubles. If it cannot come up with it, a sale becomes more likely.
Howe Barnes Hoefer & Arnett Inc. said in a research note last month that Team needs as much as $6 million, and that it may not be able to access a $4 million line of credit because it is not in compliance with the terms of the loan agreement.
The research note said that it expects Team's credit quality issues "will worsen before they get better."
Last month Team used its credit line to infuse its TeamBank and its Colorado National Bank with $2 million of fresh capital, after the Office of the Comptroller of the Currency told the company that the banks were in "troubled condition," because of their credit practices, risk-rating system, and classified assets. At the time the company said it might need to raise additional capital.
Last week it said it is suspending dividend payments for the foreseeable future, to help it save about $1.1 million a year.
"We recognize that dividend payments are important to our shareholders," Mr. Weatherbie said in a press release last week. "However, we are taking this action to strengthen our balance sheet and capital position. The protection of long-term shareholder value is essential in light of our current operating environment."
For the first quarter, Team posted a $6.4 million loss, which it attributed to a goodwill impairment charge and a $2.5 million loan-loss provision.
Its shares have dropped roughly 59% this year, and shareholders are getting restless. Last month a former director threatened a proxy contest to gain three seats on the board. His efforts were supported by Team's largest shareholder, Bicknell Group LLC, which owns 12% of the stock.
Team's board "is failing to fulfill its fiduciary obligations," Bicknell said in a June 6 letter.
"We call upon the board of directors to face up to the current realities and recognize that it must promptly address the dismal financial performance of the company and its current management," the letter said. "There is clearly a need for a change in the composition of the board of directors in order to produce greater independence, more active and effective oversight, fresh thinking, financial discipline, and better leadership."
Team's board quelled Bicknell's concerns by announcing right before it was scheduled to hold annual meeting June 17 that it had formed the planning committee of independent directors and was taking steps to split the chairman and CEO positions.
The committee is chaired by Connie Hart, who was formerly with the Federal Reserve Bank of Kansas City's regional office. Ms. Hart is set to become Team's chairman, with Mr. Weatherbie remaining in the CEO position.
