The troubled holding company that owns Academy Bank has agreed to sell a major part of its largest bank in a deal it says will put the company in a better financial position to recover from mounting problems with real estate lending portfolios at its banks.
Dickinson Financial Corp., owner of Academy and five other banks, has agreed to sell most of Bank Midwest in Kansas City, Mo., to NBH Holdings Corp. NBH is a Boston-based private equity group started a year ago that has raised $1 billion from private investors to acquire banks.
Under the deal that is scheduled to be completed in September, NBH will get 36 branches in Kansas and Missouri, 850 employees, the bank’s good loans and $3 billion in deposits.
Dickinson will retain 30 Bank Midwest branches in Wal-Mart stores, the company’s remaining employees and Bank Midwest’s delinquent loans, capital and reserves for potential loan losses. Terms of the transaction were not disclosed. But a NBH spokeswoman, who declined to be named because she was not authorized to be quoted, said Dickinson would use proceeds from the deal to pay back part of the $146 million it received last year from the Treasury Department’s Troubled Asset Relief Program.
“In addition to positioning Bank Midwest for future success, this transaction will provide (Dickinson Financial) with important new capital resources that we can utilize across our company,” Dickinson Financial CEO Paul Holewinski said in a press release.
“The capital generated from the sale and the remaining loans, reserves and branches will be combined with other (Dickinson Financial) banks, and the smaller, more streamlined organization will be realigned and focus for the future,” Holewinski said.
The transaction must be approved by federal regulators, in part because Dickinson Financial signed an agreement last month with the Federal Reserve Bank of Kansas City, Mo., restricting dividend payments and requiring the company to come up with a plan to rebuild its capital reserves.
All six banks are operating under “cease-and-desist” orders from the U.S. Comptroller of the Currency’s Office that restrict lending and boost capital reserves.
The transaction does not include Academy or the four other banks owned by Dickinson in Arizona, California, Florida and Kansas, but the spokeswoman called Colorado and the southeastern U.S. areas of interest for NBH, which eventually plans a public offering of its stock.
Bank Midwest is Dickinson Financial’s largest bank with $4.32 billion in assets. In additional to Academy and Bank Midwest, Dickinson Financial owns Armed Forces Bank in Fort Leavenworth, Kan., which operates branches at the Air Force Academy and Fort Carson; Armed Forces Bank of California in San Diego; Southern Commerce Bank in Tampa, Fla.; and SunBank in Phoenix. The six banks have combined assets of $6.02 billion.
Academy is El Paso County’s largest locally based bank with $507.3 million in assets and $453 million in deposits spread among 13 branches in the Colorado Springs area and 41 others across Colorado, many located in Wal-Mart stores.
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