Equity Bancshares Inc. in Wichita will bid on part but not all of the U.S. Treasury’s investment in the company that owns the Bank of Blue Valley.
The Treasury plans to auction shares it gained in Blue Valley Ban Corp. under the government’s Troubled Asset Relief Program, or TARP, in 2008. Blue Valley Ban Corp. gained $21.75 million in financing through TARP but has been unable to repay the amount.
Equity chief executive Brad Elliott said in March that the company had asked for regulatory approval from the Federal Reserve to bid on the Treasury’s TARP shares at Blue Valley.
A Fed notice of the application said Equity sought to bid for up to 100 percent of Blue Valley’s TARP.
On Friday, Elliott said Equity had withdrawn the application. He said it was no longer needed because Equity plans to bid for no more than 66 percent of Blue Valley’s TARP shares.
“We are still interested,” Elliott said, “and will bid on the TARP of Bank of Blue Valley. The Fed determined that we did not need an application to bid on the amount that we’re going to be bidding on.”
The Treasury owns preferred shares in Blue Valley Ban Corp. They lack the voting power that regular shares of the company’s stockholders exercise to elect directors, approve mergers and decide other matters.
Blue Valley Ban Corp., however, owes the Treasury dividends equal to 5 percent of the TARP amount each year. More than $4.6 million in unpaid dividends has accumulated in addition to the $21.75 million in TARP funds. The rate increases later this year to 9 percent.
Elliott said buying Blue Valley’s TARP shares makes for a good “financial play.”
The shares are expected to sell for less than what Blue Valley Ban Corp. owes, giving the buyer a profit, assuming Blue Valley pays off in the future. Paying off would include the unpaid dividends.
Blue Valley founder Bob Regnier said he had received notice from the Fed that the application had been withdrawn.
The Treasury has not set a date for auctioning Blue Valley Ban Corp.’s TARP shares.