A pair of bank holding companies with ties to the Chillicothe area lost the United States Treasury Department in excess of $80 million dollars during an auction of Troubled Asset Relief Program (TARP) debt at the end of last month.
On Jan. 28, the US Treasury initiated an auction of the debts owed by 11 bank holding companies, including Dickinson Financial and Citizens Bancshares Co., earning $295.8 million, while taking a loss of $104.5 million before fees.
Citizens Bancshares is based out of Chillicothe, and is the parent company of Citizens Band & Trust. Its current CEO is Roger M. Arwood. Executive VP and CFO is Jon L. Appleby.
Dickinson Financial is based out of Kansas City, Mo. It is owned and operated by the family of Gary Dickinson — a 30-year-plus former Chillicothean who died in an automobile accident in 1997 while commuting between home and Kansas City, and who is the namesake of the Gary Dickinson Performing Arts Center at the Chillicothe High School. The family is well-known for its philanthropy both in Chillicothe and downtown Kansas City. The company's current chairman, president, and CEO is Paul P. Holewinski. Senior EVP, treasurer, and CFO is Dennis P. Ambroske. DF sold its traditional bank branch assets for Bank Midwest to Boston-based holding company NBH Holdings Corp., in 2010.
According to a report by SNL Financial regarding the TARP debt auction, Dickinson Financial owed the single largest amount at the auction — $153.35 million in fixed rate cumulative perpetual preferred stock, series A ($146.05 million) and B ($7.3 million), respectively. Their debt was sold at a loss of $67.67 million ($65.34 million in series A; $2.33 million in series B) — a 44.74 percent and a 33.88 percent discount.
Their total accounted for over half of the total debt sold at the auction.
As of Dec. 31, 2012, DF reportedly had been struggling to keep up with its preferred dividends, missing 14 payments, for a combined $27.9 million.
The same report notes that Citizens Bancshares Co. posted the largest discount rate of any of the bank holding companies that day — a 48.75 percent discount on their FRCPPS, series A ($12.18 million of $24.99 million) and a 47.88 percent discount on their FRCPPS, series B ($600,000 from $1.25 million).
Citizens Bancshares had, at the time of the sale, missed 12 dividend payments, totaling over $4 million unpaid. They owed the federal government $24.99 million.
In all, the two companies recorded losses for the United States Treasury Department in excess of $80.45 million — approximately 77 percent of the day's total losses.
Carrie Almond, executive vice president of Citizens Bank & Trust, noted that while she was unable to comment on the Citizens Bancshares debt auction, itself (as such was between private investors and the United States Treasury Department), she would say that she did not believe that it would cause any known detriment to the bank's customers.
"This won't affect anyone that I'm aware of," she said.
Page 2 of 2 - Attempts by the C-T to reach Dickinson Financial's human resources department, as well as several members of the Dickinson family, regarding the TARP debt auction, went unanswered both Tuesday and Wednesday.
The Troubled Asset Relief Program (TARP) was established by the United States government in the Fall of 2008, as a means of purchasing assets and equity from financial institutions to strengthen the country's financial sector. It was a component of the government's measures that year to address the subprime mortgage crisis.