2012 ANNUAL REPORT
p r o a c t i v e . s t r o n g . c o m m i t t e d .
Dear Shareholders:
2012 will be viewed as a pivotal year for the
company. Over the past 5 years, the “Gr eat
Recession” has exacted a significant toll on
nearly all of us and its impact on the customers
of Bank of Blue Valley has been reflected in our
operating performance.
In 2012, our operating performance resulted
in a modest pr ofit for the year. Our pr ogress
over the last 5 years to r each this pivotal
outcome has been achieved because of a
consistent focus on being Proactive, staying
Strong, and remaining steadfastly Committed.
proactive
Robe Rt D. Regnie R
President & Ceo
The deteriorating economy resulted in a significant increase in our
Classified and Past Due loans in 2008 and 2009. Our consistent proactive
approach to addressing these credit issues is reflected in our numbers and
has had a significant impact on the improvement in the quality of our
balance sheet as well as our earnings and capital position. The balance
of our classified loans has declined by over 75% from December 31, 2008
to December 31, 2012. Total loans past due over 30 days have declined
by over 70% during that period. Non-Accrual Loans were reduced by
nearly 90%. During this same period we have proactively increased
our reserves from 28% of Non-Accrual Loans to 187%. We continue
to proactively manage our O ther Real Estate Owned portfolio and
have made significant progress in that area. It is no coincidence that
the results from improvements in our balance sheet positively correlate
with an improvement in our earnings. Although we are not satisfied with
the current level of earnings, net of the costs incurred in the remediation
of classified assets, we were able to generate a profit of $117,000 for
the year ending December 31, 2012 while significantly improving the
quality of our balance sheet and improving our overall capital position.
improvement in the quality of our balance sheet over the past 5 years
TOTAL
CLASSIFIED LOANS
TOTAL
PAST DUE LOANS
TOTAL
NON-ACCRUAL LOANS
TOTAL RESERVES/
NON-ACCRUAL LOANS
DOWN
BY OVER
75%
DOWN
BY OVER
70%
DOWN
BY NEARLY
90%
INCREASED TO
187%
strong
We have always maintained a strong capital position, but over the
past five years we have improved our Bank’s capital position . Our
Total Capital to Risk Weighted Assets has improved from 12.22% at
December 31, 2008 to 13.33% at December 31, 2012. The result is that
the Bank’s excess capital position over what is considered to be Well
Capitalized has grown from $16.3 million at December 31, 2008 to
$18.1 million at December 31, 2012.
The Bank’s excess capital position over what is considered to be Adequately
Capitalized has remained at approximately $30.0 million over this same
time period. We believe this puts us in a strong position to capitalize on
opportunities to invest in our future.
excess capital
13.15%
12.98%
13.33%
12.67%
12.22%
10%
well
capitalized
12.31.2008
12.31.2009
12.31.2010
12.31.2011
12.31.2012
committed
The commitment to our employees, our customers and our community
has never wavered over the past five years. Throughout the financial
combined united way &
charity golf tournament
funds raised
crises we continued to provide benefits to our employees that many
other companies reduced or eliminated. Retention of quality emplo yees
is a key component to providing superior customer service, to which the
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$
2012
2011
2010
2009
2008
Company has always remained committed. The result of this and other
such policies has been a very low level of turnover in our officer staff. Our
customers continued to benefit from a high level of service, including our
very competitive banking hours. We are open 91.5 hours a week to serve
our customers. Finally, the commitment of our Company, its Board
of Directors, management and employees to our community has never
been stronger. We continue to support numerous civic, cultural and
charitable causes in our community by participation and sponsorship
including, our annual United Way campaign and our annual Charity
Golf Tournament. These two events alone raised nearly $400,000 over the
past 5 years.
Thank you for your continued support. We look forward to continued
progress in 2013 and beyond.
Robert D. Regnier
President & CEO
committed
committed
BLUE VALLEY BAN CORP.
Accountants’ Reports and
Consolidated Financial Statements
December 31, 2012, 2011 and 2010
BLUE VALLEY BAN CORP.
DECEMBER 31, 2012, 2011 AND 2010
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Page
INDEPENDENT AUDITOR’S REPORT ............................................................................................
F-2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ..........................
F-3
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets ...................................................................................................................................
Statements of Operations ...................................................................................................................
Statements of Comprehensive Income (Loss) ...................................................................................
Statements of Stockholders’ Equity...................................................................................................
Statements of Cash Flows .................................................................................................................
Notes to Financial Statements ...........................................................................................................
F-4
F-6
F-7
F-8
F-9
F-11
F-1
Independent Auditor’s Report
Audit Committee,
Board of Directors and Stockholders
Blue Valley Ban Corp.
Overland Park, Kansas
We have audited the accompanying consolidated financial statements of Blue Valley Ban Corp. and its sub-
sidiaries, which comprise the consolidated balance sheets as of December 31, 2012, and the related consoli-
dated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for the
year then ended, and the related notes to the consolidated financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements
in accordance with accounting principles generally accepted in the United States of America; this includes the
design, implementation and maintenance of internal control relevant to the preparation and fair presentation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of
America. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the consolidated financial statements. The procedures selected depend on the auditor’s judgment, includ-
ing the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to
the entity’s preparation and fair presentation of the consolidated financial statements in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opin-
ion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Audit Committee,
Board of Directors and Stockholders
Blue Valley Ban Corp.
Page 2
Opinion
In our opinion, the consolidated financial statements referred to above present fairly, in all material re-
spects, the financial position of Blue Valley Ban Corp. and its subsidiaries as of December 31, 2012, and
the results of their operations and their cash flows for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
Kansas City, Missouri
March 6, 2013
Report of Independent Registered Public Accounting Firm
Audit Committee,
Board of Directors and Stockholders
Blue Valley Ban Corp.
Overland Park, Kansas
We have audited the accompanying consolidated balance sheet of Blue Valley Ban Corp. as of
December 31, 2011, and the related consolidated statements of operations, comprehensive income (loss),
stockholders’ equity and cash flows for each of the years in the two-year period ended December 31,
2011. The Company’s management is responsible for these consolidated financial statements. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight
Board (United States). Those standards require that we plan and perform the audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.
Our audits included consideration of internal control over financial reporting as a basis for designing
auditing procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we
express no such opinion. Our audits also included examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material
respects, the financial position of Blue Valley Ban Corp. as of December 31, 2011, and the results of its
operations and its cash flows for each of the years in the two-year period ended December 31, 2011 in
conformity with accounting principles generally accepted in the United States of America.
Kansas City, Missouri
March 6, 2013
BLUE VALLEY BAN CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2012 AND 2011
(In thousands, except share data)
ASSETS
Cash and due from banks
Interest bearing deposits in other financial institutions
Federal funds sold
Cash and cash equivalents
Available-for-sale securities
Mortgage loans held for sale, fair value
$
2012
33,353
67,724
–
101,077
77,845
7,621
$
2011
23,480
76,419
–
99,899
61,790
5,686
Loans, net of allowance for loan losses of $9,057 and $13,189 in 2012 and 2011,
respectively
406,614
425,654
Premises and equipment, net
Foreclosed assets held for sale, net
Interest receivable
Deferred income taxes
Prepaid expenses and other assets
Federal Home Loan Bank stock, Federal Reserve Bank stock, and
other securities
Core deposit intangible asset, at amortized cost
15,448
31,936
1,529
1,121
6,095
7,540
179
15,897
29,246
1,573
911
6,106
7,369
321
Total assets
$
657,005
$
654,452
See Notes to Consolidated Financial Statements
F-4
BLUE VALLEY BAN CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2012 AND 2011
(In thousands, except share data)
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits
Demand
Savings, NOW and money market
Time
Total deposits
Other interest-bearing liabilities
Long-term debt
Interest payable and other liabilities
Total liabilities
STOCKHOLDERS’ EQUITY
Capital stock
Preferred stock, $1 par value, $1,000 liquidation preference
Authorized 15,000,000 shares; issued and outstanding
2012 – 21,750 shares; 2011 – 21,750 shares
Common stock, par value $1 per share;
Authorized 15,000,000 shares; issued and outstanding
2012 – 2,934,123 shares; 2011 – 2,879,158 shares
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive income, net of income tax of
$29 in 2012 and $89 in 2011
Total stockholders’ equity
2012
2011
$
113,698
235,632
135,136
484,466
21,668
101,111
9,945
617,190
$
100,842
222,984
166,587
490,413
15,372
100,434
7,778
613,997
22
22
2,934
38,746
(1,930)
43
39,815
2,879
38,511
(1,091)
134
40,455
Total liabilities and stockholders’ equity
$
657,005
$
654,452
See Notes to Consolidated Financial Statements
F-5
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
(In thousands, except per share data)
INTEREST AND DIVIDEND INCOME
Interest and fees on loans
Federal funds sold and other short-term investments
Available-for-sale securities
Dividends on Federal Home Loan Bank and
Federal Reserve Bank stock
Total interest and dividend income
INTEREST EXPENSE
Interest-bearing demand deposits
Savings and money market deposit accounts
Other time deposits
Federal funds purchased and other interest-bearing liabilities
Long-term debt, net
Total interest expense
NET INTEREST INCOME
PROVISION FOR LOAN LOSSES
$
2012
2011
2010
$
$
22,853
193
1,097
240
24,383
700
291
2,487
44
3,670
7,192
17,191
1,200
25,277
151
1,202
225
26,855
1,611
346
3,755
41
3,502
9,255
17,600
3,300
28,011
245
1,825
222
30,303
2,343
438
7,746
45
3,791
14,363
15,940
3,095
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES
15,991
14,300
12,845
NON-INTEREST INCOME
Loans held for sale fee income
NSF charges and service fees
Other service charges
Realized gains on available-for-sale securities
Other income
Total non-interest income
NON-INTEREST EXPENSE
Salaries and employee benefits
Net occupancy expense
Foreclosed assets expense
Other operating expense
Total non-interest expense
INCOME (LOSS) BEFORE INCOME TAXES
PROVISION (BENEFIT) FOR INCOME TAXES
Provision (benefit) for income taxes
Valuation allowance for deferred tax asset
Total provision (benefit) for income taxes
NET INCOME (LOSS)
DIVIDENDS AND ACCRETION ON PREFERRED STOCK
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS
BASIC LOSS PER SHARE
DILUTED LOSS PER SHARE
See Notes to Consolidated Financial Statements
$
$
$
F-6
2,447
980
2,472
–
1,535
7,434
10,587
2,568
2,647
7,506
23,308
117
50
(200)
(150)
267
1,106
2,120
944
2,276
–
984
6,324
10,955
2,599
5,219
7,851
26,624
(6,000)
(2,777)
12,600
9,823
(15,823)
1,106
3,506
1,062
2,021
885
1,145
8,619
11,753
2,756
2,708
8,550
25,767
(4,303)
(1,561)
–
(1,561)
(2,742)
1,105
(839)
$
(16,929)
$
(3,847)
(0.29)
(0.29)
$
$
(6.03)
(6.03)
$
$
(1.38)
(1.38)
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
(In thousands)
NET INCOME (LOSS)
OTHER COMPREHENSIVE INCOME (LOSS)
Change in unrealized appreciatio n on av ailable-for-sale securities, net of
income taxes (credit) of $(60) in 2012, $69 in 2011 and $305 in 2010
Less: re classification adjustment for realized gains (losses) in cluded in
net loss, net of income tax credit of $354 in 2010
Comprehensive income (loss)
2012
2011
2010
$
267
$
(15,823)
$
(2,742)
(91)
–
176
104
–
(15,719)
458
(531)
(2,815)
See Notes to Consolidated Financial Statements
F-7
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
(In thousands, except share data)
Preferred
Stock
Common
Stock
Additional
Paid-In
Capital
Retained
Earnings
Accumulated
Other
(Accumulated Comprehensive
Income (Loss)
Deficit)
Total
BALANCE, DECEMBER 31, 2009
$
22
$ 2,818
$ 37,975
$19,685
$
103
$60,603
Issuance of 29,640 shares of restricted stock,
net of forfeitures of 7,454
Issuance of 3,645 shares of common stock for
the employee stock purchase plan
Net loss
Accretion of discount on preferred shares
Dividend on preferred shares
Change in unrealized appreciation on
available-for-sale securities, net of income
taxes (credit) of $(49)
22
3
406
32
18
(2,742)
(18)
(1,087)
428
35
(2,742)
–
(1,087)
(73)
(73)
BALANCE, DECEMBER 31, 2010
$ 22
$ 2,843
$38,431
$15,838
$
30
$ 57,164
Issuance of 40,666 shares of restricted stock,
net of forfeitures of 7,437
Issuance of 2,628 shares of common stock for
the employee stock purchase plan
Net loss
Accretion of discount on preferred shares
Dividend on preferred shares
Change in unrealized appreciation on
available-for-sale securities, net of income
taxes of $69
33
3
44
18
18
(15,823)
(18)
(1,088)
77
21
(15,823)
–
(1,088)
104
104
BALANCE, DECEMBER 31, 2011
$
22
$ 2,879
$38,511
$(1,091)
$
134
$40,455
Issuance of 55,155 shares of restricted stock,
net of forfeitures of 6,698
Issuance of 6,508 shares of common stock for
the employee stock purchase plan
Net income
Accretion of discount on preferred shares
Dividend on preferred shares
Change in unrealized appreciation on
available-for-sale securities, net of income
taxes (credit) of $(60)
48
7
197
20
18
267
(18)
(1,088)
245
27
267
–
(1,088)
(91)
(91)
BALANCE, DECEMBER 31, 2012
$ 22
$ 2,934
$38,746
$(1,930)
$ 43
$ 39,815
See Notes to Consolidated Financial Statements
F-8
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
(In thousands)
OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization
Accretion, net of am ortization of premiums and discounts on available-
for-sale securities
Provision for loan losses
Provision for losses on foreclosed assets held for sale
Deferred income taxes
Stock dividends on FHLBank (FHLB) stock
Increase in value of bank owned life insurance
Net realized gains on available-for-sale securities
Net gain on sale of foreclosed assets
Restricted stock earned and forfeited
Compensation expense related to the Employee Stock Purchase Plan
Originations of loans held for sale
Proceeds from the sale of loans held for sale
Realized (gain) loss on loans held for sale fair value adjustment
Changes in:
Interest receivable
Net fair value of loan related commitments
Income taxes receivable
Prepaid expenses and other assets
Interest payable and other liabilities
Net cash provided by operating activities
INVESTING ACTIVITIES
Net change in loans
Proceeds from sale of loan participations
Purchase of premises and equipment
Proceeds from the sale of foreclosed assets, net of expenses
Purchases of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Proceeds from sale of available-for-sale securities
Purchases of bank owned life insurance
Purchases of FHLB and Federal Reserve Bank stock
and other securities
Proceeds from the redemption of FHLB stock, Federal Reserve Bank stock,
and other securities
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES
Net increase in demand deposits, money market, NOW and savings accounts
Net decrease in time deposits
Net increase (decrease) in federal funds purchased and other interest-bearing
liabilities
Repayments of long-term debt
Proceeds from long-term debt
Prepayment penalty on modification of FHLB advances
Net proceeds from the sale of stock through Employee Stock Purchase Plan
Net cash provided by (used in) financing activities
2012
2011
2010
$
267
$
(15,823)
$
(2,742)
1,686
(14)
1,200
867
(150)
(124)
(170)
─
(337)
245
3
(83,477)
81,540
2
44
(92)
─
270
1,077
2,837
5,666
2,675
(417)
6,281
(107,192)
91,000
─
─
1,661
(62)
3,300
3,159
9,823
(106)
─
─
(555)
77
4
(66,014)
68,668
(178)
210
257
─
(172)
490
4,739
28,561
2,854
(499)
5,638
(64,915)
67,000
─
(4,000)
(79)
(100)
31
(2,035)
25,504
(31,451)
6,296
─
─
─
27
376
─
34,539
4,444
(55,249)
(3,376)
─
─
─
21
(54,160)
1,298
(73)
3,095
734
(1,561)
(104)
─
(885)
(168)
428
3
(135,930)
136,487
33
520
(128)
2,746
981
116
4,850
42,909
32
(226)
9,077
(134,932)
115,000
29,885
─
─
─
61,745
23,979
(72,871)
2,628
(42,500)
42,500
(2,569)
35
(48,798)
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
CASH AND CASH EQUIVALENTS, END OF YEAR
1,178
99,899
101,077
$
(14,882)
114,781
99,899
$
17,797
96,984
114,781
$
See Notes to Consolidated Financial Statements
F-9
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2012, 2011 AND 2010
(In thousands)
SUPPLEMENTAL CASH FLOWS INFORMATION
Cash paid during the year for:
Interest
Income taxes, net of refunds
Noncash investing and financing activities:
Transfer of loans to foreclosed property, net of specific allowance
Restricted stock issued
Preferred dividends accrued but not paid
Sale and financing of foreclosed assets
2012
2011
2010
$
$
6,254
─
$
$
8,717
1
$
$
14,372
(2,750)
$
$
$
10,518
48
1,088
$ 1,018
$
$
$
$
17,354
33
1,088
268
$
$
$
$
10,352
22
1,087
819
See Notes to Consolidated Financial Statements
F-10
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company is a hol ding company for Bank of Blue Valley (the “Bank”), BVBC Capital Trust II and B VBC
Capital Trust III through 100% ownership of each. In addition, the Company owned 49% of Homeland Title, LLC
until it closed its operations in March 2009.
The Bank is primarily engaged in providing a full range of banking and mortgage services to individual and
corporate customers in Johnson County, Kansas. The Bank also orig inates residential mortgages locally and
nationwide through its In ternetMortgage.com website. Th e Bank is su bject to competition from other financial
institutions. Th e Bank is also subject to regulation by certain federal and state ag encies and undergoes periodic
examination by those regulatory authorities.
BVBC Capital Trust II and III are Delaware b usiness trusts created in 2003 and 2005, re spectively, to offer trust
preferred securities and to purchase the Company’s junior subordinated debentures. The Trusts have terms of 30
years, but may dissolve earlier as provided in their trust agreements.
Operating Segment
The Company provides community banking services through its su bsidiary bank, including such products and
services as loans; tim e deposits, chec king and savi ngs accounts; mortgage originations; trust s ervices; and
investment services. These activities are reported as a single operating segment.
Principles of Consolidation
The consolidated financial statements include the accounts of Blue Valley Ban Corp. and its 100% owned
subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America requires management to m ake estimates and a ssumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of re venues and ex penses during the reporting period. Act ual results could differ from those
estimates.
Material estimates that are particularly susceptible to significant change include the determination of the allowance
for loan losses, valuation of real estate acquired in connection with foreclosures or in satisfaction of loans, valuation
of deferred tax assets and fair values of financial instruments. In connection with the determination of the allowance
for loan losses and the valuation of foreclosed assets held for sale, management obtains independent appraisals for
significant properties.
F-11
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Management believes that the allowance for loan losses, valuation of foreclosed assets held for sale, and valuation of
deferred tax assets are adeq uate. While management uses avai lable information to recognize losses on l oans,
foreclosed assets held for sale and deferred tax assets, changes in economic conditions may necessitate revision of
these estimates in future years. In addition, various regulatory agencies, as an integral part of th eir examination
process, periodically review the Company’s allowance for loan losses, valuation of foreclosed assets held for sale
and deferred tax assets. S uch agencies may require the Company to recognize additional losses based on their
judgments of information available to them at the time of their examination.
Cash and Cash Equivalents
The Company considers all liquid investments with original maturities of three months or less to be cash
equivalents.
Pursuant to legislation enacted in 2010, the FDIC fully insured all noninterest-bearing transaction accounts
beginning December 31, 2010 through December 31, 2012 at all FDIC-insured institutions. Upon expiration of this
legislation on December 31, 2012, the FDIC insurance limit on noninterest-bearing transaction accounts at all FDIC-
insured institutions was restored to the $250,000 FDIC insurance limit previously made effective July 21, 2011. The
Company’s interest-bearing cash account s exceeded federally insured limits by a pproximately $495,000 at
December 31, 2012.
Prior to June, 2012, the Bank was required to maintain reserve funds in cash a nd/or on deposit with the Federal
Reserve Bank. The Bank had no required reserve at December 31, 2012, and had a clearing balance requirement of
$15,000,000 at December 31, 2011. The deposit balance held at the Federal Reserve Bank on December 31, 2012
was $66,979,000.
Investment in Securities
Available-for-sale securities, which include any security for wh ich the Company has no immediate plan to sell, but
which may be sold in the future, are carried at fair val ue. Unrealized gain s and losses are excluded from earnings
and are report ed, net of rel ated income tax effects , in accumulated other comprehensive income. Purc hase
premiums and discounts are amortized and accreted, respectively, to interest income using a method which
approximates the level-yield method over the terms of the securities. Realized gains and losses, based on amortized
cost of the specific security, are recorded on trade date and included in non-interest income. Interest on investments
in debt securities is included in income when earned.
For debt securities with fair value below amortized cost and the Company does not intend to sell the debt security,
and it is more likely than not the Company will not have to sell the security before recovery of its cost b asis, the
Company recognizes the credit component of an other-than-temporary impairment of the de bt security in earnings
and the remaining portion in other comprehensive income. The credit loss com ponent recognized in earni ngs is
identified as the amount of principal cash flows not expected to be received over the remaining term of the security
as projected based on cash flow projections. The Company did not have any securities with other-than-temporary
impairment at December 31, 2012.
F-12
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
For equity securities, when the Company has decided to sell an impaired available-for-sale security and the entity
does not expect the fair value of the security to fully recover before the expected time of sale, the security is deemed
other-than-temporarily impaired in the period in which the decision to sell is made. The Company recognizes an
impairment loss when the impairment is deemed other-than-temporary even if a decision to sell has not been made.
Mortgage Loans Held for Sale
Mortgage loans originated and intended for sale in the secondary market are carried at fair value in the aggregate.
Net unrealized gains a nd losses, if an y, are recognized t hrough a val uation allowance by charges t o non-interest
income. Gai ns and l osses, net of discounts collected or paid, commitment fees pai d and considering a no rmal
servicing rate are recognized in non-interest income upon sale of the loan.
Loans
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are
reported at their outstanding principal balance adjusted for unearned i ncome, charge-offs, the allowance for loa n
losses, and any deferred fees or costs on originated loans and unamortized premiums or di scounts on purchased
loans. For loans recorded at amortized cost, interest income is accrued based on the unpaid principal balance. Loan
origination fees, as well as premiums and discounts, are deferred and amortized over the respective term of the loan.
Generally, the accrual of interest on loa ns is discontinued at the tim e the loan is 90 days past due a nd interest is
considered a lo ss, unless the loan is well-secu red and in the process of collection. P ast due st atus is based o n
contractual term of the loa ns. Loa ns are placed on non-accrual or charged off at an earlier date if collection of
principal or interest is considered doubtful. All interest accrued but not collected for loans placed on non-accrual or
charged off is reversed against interest income. The in terest on these loans is ge nerally accounted for on a cash-
basis or a cost recovery method, until conditions qualify the loan’s return to accrual status. Loans may be returned
to accrual status when all the princi pal and i nterest amounts contractually due a re brought current and future
payments are reasonably assured.
F-13
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Allowance for Loan Losses
The allowance for loan losses is management's estimate of probable losses which have occurred as of the balance
sheet date based on management's evaluation of risk in the loan portfolio. Lo an losses are charge d against the
allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if
any, are credited to the allowance.
The allowance for l oan losses is ev aluated on a m onthly basis by management and is based on management’s
periodic review of the collectibility of the loans in consideration of historical experience, the nature and volume of
the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of underlying
collateral and prevailing economic conditions. This evaluation is inherently subjective as it requ ires estimates that
are susceptible to significant revision as more information becomes available.
The Company computes its allowance by assigning specific reserves to impaired loans, and then applies general
reserve factors to the rest of the loan portfolio. Th e general reserve covers non-impaired loans and is b ased on
historical charge off experience, expected loss given default derived from the Company’s internal risk rating process
and current and projected economic conditions and factors. Other adjustments may be made to the allowance for
pools of loans after an assessment of internal and external influences on credit quality that are not fully reflected in
the historical loss or risk rating data.
A loan is considered impaired when, based on current information and events, it is p robable that the Company will
be unable to collect the scheduled payments of principal or interest when due according to the c ontractual terms of
the loan agreement. Fact ors considered by management in determining impairment include payment status,
collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that
experience insignificant payment delays and pay ment shortfalls generally are not classified as im
paired.
Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking
into consideration all of the circumstances surrounding the loan and the borrower, including the length of delay, the
reason for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal
and interest owed. Im pairment is measured on a loan-by-loan basis by either the pres ent value of expected future
cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the
collateral if the loan is collateral dependent.
Premises and Equipment
Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged to expense using the
straight-line method over the estimated useful lives of the assets. Lea sehold improvements are capitalized and
depreciated using the straight-line method over the terms of the respective lease or the estimated useful lives of the
improvements, whichever is shorter.
The estimated useful lives for each major depreciable classification of premises and equipment are as follows:
Buildings and improvements
Furniture and equipment
35-40 years
3-10 years
F-14
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Foreclosed Assets Held for Sale
Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair v alue less
cost to sell at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are
periodically performed by management and the assets are carried at the lower of carrying amount or fair value less
cost to sell. Revenue and expenses from operations and changes in the valuation allowance are reported as other
income and foreclosed assets expense.
FHLBank Stock, Federal Reserve Bank Stock and Other Securities
FHLBank and Federal Reserve Bank stock are required investments for institutions that are members of the Federal
Home Loan Bank and Federal Reserve systems. The required investment in the stock is based on a predetermined
formula, carried at cost and evaluated for impairment.
Derivatives
Derivatives are recognized as assets and liabilities in the consolidated balance sheet and measured at fair value.
Derivative Loan Commitments
Mortgage loan commitments that relate to the origination of a mortgage that will be held for sale upon funding are
considered derivative instruments under the derivatives and hedging accounting guidance (ASC 815, Derivatives and
Hedging). Loan commitments that are derivatives are recognized at fair value on the consolidated balance sheet in
other assets and other liabilities with changes in their fair values recorded in other income. The Company estimates
the fair value using a val uation model which considers differences between quoted prices for lo ans with similar
characteristics in the secondary market and the committed rates.
Forward Loan Sale Commitments
The Company carefully evaluate s all lo an sales agreements to determine whether they meet the definition of a
derivative under the derivatives and hedging accounting guidance (ASC 815), as facts and circumstances may differ
significantly. If agreements qualify, to protect against the price risk inherent in derivative loan commitments, the
Company uses best efforts forward loan sale commitments to mitigate the risk of potential decreases in the values of
loans that would result from the exercise of th e derivative loan commitments. Ac cordingly, forward loan
commitments are recognized at fair value on the consolidated balance sheet in other assets and other liabilities with
changes in th eir fair values recorded in other income. Th e Company estimates the fair v alue of its forward loan
commitments using a methodology similar to that used for derivative loan commitments.
Core Deposit Intangible Assets
Intangible assets are being amortized on the straight-line basis over seven years. Such assets a re periodically
evaluated as to the recoverability of their carrying value.
Fee Income
Loan origination fees, net of direct origination costs, are recognized as income using the level-yield method over the
term of the loans.
F-15
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Transfers of Financial Assets
Transfers of financial assets are accounted for as sales, when control over the assets has been s urrendered. Control
over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company—put
presumptively beyond the reach of the transferor and its creditors, even in bankruptcy or other receivership, (2) the
transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or
exchange the transferred assets and (3) the Company does not maintain effective control over the transferred assets
through an agreement to repurchase them before their maturity or the ability to unilaterally cause the holder to return
specific assets.
Transfers between Fair Value Hierarchy Levels
Transfers in and out of Level 1 (quoted market prices), Level 2 (other significant observable inputs) and Level 3
(significant unobservable inputs) are recognized on the period end date.
Income Taxes
The Company accounts for incom e taxes i n accordance with income tax acc ounting guidance (ASC 740, Income
Taxes). The i ncome tax accounting guida nce results in two com ponents of in come tax expense: current a nd
deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the
provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The C ompany
determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred
tax asset or liability is b ased on the tax effects of the differences between the book and tax b ases of assets and
liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred
income tax expense results from changes in deferred tax assets and liabilities between periods. Deferred tax assets
are reduced by a valuation al lowance if, based on the weight of evidence available, it is more likely than not that
some portion or all of a deferred tax asset will not be realized. The valuation allowance at December 31, 2012 was
$12,436,000. Due to the Company’s losses recorded over the previous four years, the Com pany assessed t he
deferred tax asset during 2011 and recognized a $12,600,000 valuation allowance on the deferred tax asset based on
historical and current information available relating to uncertainty of th e Company’s ability to recognize the
deferred tax as set in futu re near term periods. A s the Co mpany recognizes profits in the future, portions of this
allowance may be recognizable in future years.
Deferred tax assets are recogn ized if it is more likely than not, based on the technical merits, that the tax position
will be realized or sustained upon examination. The term more likely than not means a likelihood of more than 50
percent; the terms examined and upon examination also in clude resolution of th e related appeals or litigation
processes, if any. A tax position that meets the more-likely-than-not recognition threshold is in itially and
subsequently measured as the largest amount of tax benefit that has a greater than 50 percent likelihood of being
realized upon settlement with a tax ing authority that has full knowledge of all relev ant information. Th e
determination of whether or not a tax position has met the more-likely-than-not recognition threshold considers the
facts, circumstances and information available at the reporting date and is subject to management’s judgment.
The Company recognizes interest and penalties on income taxes as a co mponent of income tax expense. The
Company files con solidated income tax returns with its su bsidiaries. Th e Company is g enerally not subject to
federal, state and local examination by tax authorities for years prior to 2009.
F-16
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Comprehensive Income (Loss)
Comprehensive income (loss) consists of net income (loss) and accumulated other comprehensive income (loss), net
of applicable income taxes. Accu mulated other comprehensive income (loss) includes unrealized appreciation
(depreciation) on available-for-sale securities. Net unrealized gain or loss on available-for-sale securities, net of
income taxes, included in accumulated other comprehensive income was $4 3,000 and $134,000, respectively, at
December 31, 2012 and 2011.
Reclassification
Certain reclassifications have been made to the 2011 and 2010 financial statements to conform to the 2012 financial
statement presentation. These reclassifications had no effect on net income (loss).
Earnings (Loss) Per Share
Basic earnings (loss) per share represents income available to common stockholders divided by the weighted
average number of shares outstanding during each period. Diluted earnings (loss) per s hare reflects additional
potential common shares that would have been outstanding if dilutive potential common shares had been issued, as
well as an y adjustment to income that would result from the assum ed issuance. The computation of per share
earnings is as follows:
2012
2011
2010
(In thousands, except share and per share data)
Net Income (loss)
Dividends and accretion on preferred stock
Net loss available to common shareholders
$
$
267 $
(1,106)
(839) $
(15,823) $
(1,106)
(16,929) $
(2,742)
(1,105)
(3,847)
Average common shares outstanding
Average common share stock options outstanding and
restricted stock (B)
2,855,566
2,806,299
2,773,039
11,997
21,589
15,115
Average diluted common shares (B)
2,867,563
2,827,888
2,788,154
Basic loss per share
Diluted loss per share (A)
($0.29)
($0.29)
($6.03)
($6.03)
($1.38)
($1.38)
(A)
(B)
No shares of stock options, restricted stock or warrants were included in the computation of diluted earnings per
share for any period there was a loss.
Warrants to purchase 111,083 shares of common stock at an exercise price of $29.37 per share were outstanding
at December 31, 2012, 2011 and 2010, but were not included in the computation of diluted earnings per share
because the warrant’s exercise price was greater than the average market price of the common shares, thus
making the warrants anti-dilutive. Stock options to purchase 0, 10,575, and 24,375 shares of common stock
were outstanding at December 31, 2012, 2011 and 2010 respectively, but were not included in the computation
of diluted earnings per share because the option’s exercise price was greater than the average market price of the
common shares, thus making the options anti-dilutive.
Income available for common stockholders will be reduced by dividends declared in the period on preferred stock
(whether or not they are paid) and the accretion on the warrants.
F-17
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 2: AVAILABLE-FOR-SALE SECURITIES
The amortized cost and estimated fair value, together with gross unrealized gains and losses, of available-for-sale
securities are as follows:
(In thousands)
U.S. Government sponsored agencies
Municipal securities
Equity and other securities
(In thousands)
U.S. Government sponsored agencies
Equity and other securities
Amortized
Cost
$
63,123
14,051
600
December 31, 2012
Gross
Unrealized
Gains
$
68
176
23
Gross
Unrealized
Losses
$
(43)
(153)
–
Fair Value
$
63,148
14,074
623
$
77,774
$
267
$
(196)
$
77,845
December 31, 2011
Amortized
Cost
$
60,967
600
Gross
Unrealized
Gains
$
228
19
$
61,567
$
247
Gross
Unrealized
Losses
$
$
(24)
–
(24)
Fair Value
$
61,171
619
$
61,790
The amortized cost and estimated fair v alue of av ailable-for-sale securities at Dece mber 31, 2012, by contractual
maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the
right to call or prepay obligations with or without call or prepayment penalties.
(In thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Total
Equity and other securities
Amortized
Cost
$
$
0
0
410
76,764
77,174
600
77,774
Fair Value
$
$
0
0
407
76,815
77,222
623
77,845
The amortized cost and estimated fair value of securities pledged as collateral to secure public deposits amounted to
$5,000,000 and $4,997,080 at December 31, 2012 and $5,000,000 and $5,013,000 at December 31, 2011.
Gross gains of $0, $0, and $885,000 were realized in 2012, 2011 and 2010, respectively, and no gross losses were
realized in 2012, 2011 and 2010, respectively, from sales of available-for-sale securities.
F-18
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
Certain investments in debt and marketable equity securities are reporte d in the financial statements at an am ount
less than thei r historical cos t. To tal fair value of these investments at Decem ber 31, 2012 a nd 2011, was
$33,985,000 and $19,973,000, which is approximately 43.7% and 32.3%, respectively, of the Company’s available-
for-sale investment portfolio. These declines in fair value resulted primarily from recent increases in market interest
rates. Based on evaluation of availabl e information and evidence, particularly recent volatility in market yields on
debt securities, management believes the declines in fair value for these securities are temporary.
Unrealized losses and fair value, aggregated by investment type and length of time that individual securities have
been in a continuous unrealized loss position are as follows:
Description of
Securities
(In thousands)
U.S. Government sponsored
agencies
Municipal securities
Total temporarily impaired
Less than 12 Months
December 31, 2012
12 Months or More
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Total
Fair Value
Total
Unrealized
Losses
$
27,832
6,153
$
43 $
153
$
–
–
– $
–
27,832 $
6,153
43
153
securities
$
33,985
$
196 $
–
$
– $
33,985 $
196
Description of
Securities
(In thousands)
U.S. Government sponsored
agencies
Total temporarily impaired
Less than 12 Months
December 31, 2011
12 Months or More
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Total
Fair Value
Total
Unrealized
Losses
$
19,973
$
24 $
–
$
– $
19,973 $
24
24
securities
$
19,973
$
24 $
–
$
– $
19,973 $
The unrealized losses on the Company’s investments in direct obligations of U.S. government sponsored agencies
and municipal securities were caused by interest rate increases. The contractual terms of those investments do not
permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the
Company does not intend to sell the investments and it is not more likely than not the Company will be required to
sell the investments before recovery of t heir amortized cost bases, which may be maturity, the Company did not
consider those investments to be other-than-temporarily impaired at December 31, 2012 or 2011.
F-19
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
The Company enters into sales of securities under agreements to repurchase. The am ounts deposited under these
agreements represent short-term debt and are reflected as a liab ility in the consolidated balance sheets. The
securities underlying the agreements are book-entry securities. During the period, securities held in safek eeping
were pledged to the depositors under a written custodial agreement that explicitly recognizes the depositors’ interest
in the securities. At December 31, 2012, or at any month end during the period, no material amount of agreements
to repurchase securities sold was outstanding with any individual entity.
Information on sales of securities under agreements to repurchase is as follows:
(In thousands)
Balance as of December 31
Carrying value of securities pledged to secure agreements to repurchase
at December 31
Average balance during the year of securities sold under agreements to repurchase
Maximum amount outstanding at any month-end during the year
2012
2011
$21,668
$14,413
$37,059
$18,663
$22,071
$24,131
$16,405
$18,633
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES
Classes of loans at December 31, 2012 and 2011 include the following:
(In thousands)
Commercial loans
Commercial real estate loans
Construction loans
Home equity loans
Residential real estate loans
Lease financing
Consumer loans
Total loans
Less: Allowance for loan losses
2012
2011
$
115,520
143,198
46,515
49,529
43,584
10,054
7,271
415,671
9,057
$
130,398
154,109
48,438
59,750
37,882
2,268
5,998
438,843
13,189
Net loans
$
406,614
$
425,654
F-20
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
The following tables present the activity in the allowance for loan losses for the years ended December 31, 2012,
2011 and 2010:
(In thousands)
Allowance for loan losses:
Balance, beginning of year
Provision charged to
expense
Losses charged off
Recoveries
Balance, end of year
Commercial
Commercial
Real Estate Construction
Home
Equity
Residential
Real Estate
Lease
Financing
Consumer
Total
For the Year Ended December 31, 2012
$
2,987
$
3,772
$
2,721
$
1,338 $
2,312
$
30
$
29
$
13,189
961
(2,030)
179
2,097
$
2,029
(2,239)
20
3,582
$
(777)
(882)
481
1,543
$
$
(345)
(417)
58
634 $
(677)
(540)
43
1,138
$
25
(9)
-
46
(16)
–
4
17
$
1,200
(6,117)
785
9,057
$
Allowance for loan losses:
Balance, beginning of year
Provision charged to
expense
Losses charged off
Recoveries
Balance, end of year
Commercial
Commercial
Real Estate Construction
Home
Equity
Residential
Real Estate
Lease
Financing
Consumer
Total
For the Year Ended December 31, 2011
$
3,339
$
3,974
$
4,579
$
1,262 $
1,488
$
38
$
51
(31)
$
14,731
(52)
(582)
282
2,987
$
925
(1,218)
91
3,772
$
434
(2,352)
60
2,721
$
753
(725)
48
$
1,338 $
1,304
(637)
157
2,312
$
(33)
–
25
30
$
3,300
(5,514)
672
13,189
$
–
9
29
Allowance for loan losses:
Balance, beginning of year
Provision charged to
expense
Losses charged off
Recoveries
Balance, end of year
Commercial
Commercial
Real Estate Construction
Home
Equity
Residential
Real Estate
Lease
Financing
Consumer
Total
For the Year Ended December 31, 2010
$
3,630
$
7,253
$
5,929
$
1,061 $
1,737
$
238
$
152
$
20,000
683
(1,364)
390
3,339
$
(465)
(2,985)
171
3,974
$
2,189
(3,662)
123
4,579
$
571
(387)
17
$
1,262 $
400
(660)
11
1,488
$
(171)
(43)
14
38
$
(112)
(7)
18
51
3,095
(9,108)
744
14,731
$
F-21
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on
portfolio segment and impairment methods as of December 31, 2012 and 2011:
Commercial
Commercial
Real Estate Construction
December 31, 2012
Home
Equity
Residential
Real Estate
Lease
Financing
Consumer
Total
$
$
550
$
1,812
$
564
$
143
$
331
$
–
$
–
$
3,400
1,547
2,097
1,770
3,582
$
979
1,543
$
$
491
634 $
807
1,138
$
46
46
$
17
17
5,657
9,057
$
(In thousands)
Allowance for loan losses:
Individually evaluated for
impairment
Collectively evaluated for
impairment
Total
Loans:
Individually evaluated for
impairment
$
15,092
$
9,437
$
12,548
$
1,315
$
4,135
$
–
$
–
$
42,527
Collectively evaluated for
impairment
Total
100,428
$ 115,520
133,761
$ 143,198
33,967
46,515
$
48,214
49,529 $
39,449
43,584
$
10,054
10,054
$
7,271
7,271
$
373,144
$ 415,671
Commercial
Commercial
Real Estate Construction
December 31, 2011
Home
Equity
Residential
Real Estate
Lease
Financing
Consumer
Total
Allowance for loan losses:
Individually evaluated for
impairment
$
1,825
$
3,055
$
1,462
$
565
$
1,727
$
26
$
–
$
8,660
Collectively evaluated for
impairment
Total
Loans:
Individually evaluated for
1,162
2,987
$
717
3,772
$
1,259
2,721
$
773
1,338 $
585
2,312
$
$
4
30
$
29
29
4,529
13,189
$
impairment
$
24,625
$
18,099
$
16,535
$
3,836
$
6,981
$
648
$
2
$
70,726
Collectively evaluated for
impairment
Total
105,773
$ 130,398
136,010
$ 154,109
31,903
48,438
$
55,914
59,750 $
30,901
37,882
$
1,620
2,268
$
5,996
5,998
$
368,117
$ 438,843
F-22
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
The following table presents the credit risk profile of the Company’s loan portfolio based on the rating category and
payment activity as of December 31, 2012 and 2011. These categories are defined as follows:
Pass – loans that exhibit acceptable financial performance, cash flow, leverage and the probability of default
is considered low.
Classified – l oans are i nadequately protected by the current paym ent capacity of the obligor or by the
collateral pledged. Th ese loans are ch aracterized by the distinct probability that the Company will su stain
some loss or incur additional expenses if the deficiencies are not corrected.
(In thousands)
Commercial
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
Total
Pass
$ 112,679
136,397
35,589
49,299
41,228
10,054
7,271
$ 392,517
2012
Classified
2,841
6,801
10,926
230
2,356
–
–
23,154
$
$
Total
$ 115,520
143,198
46,515
49,529
43,584
10,054
7,271
$ 415,671
Pass
$ 118,396
144,693
33,792
56,779
32,002
1,960
5,998
$ 393,620
2011
Classified
12,002
$
9,416
14,646
2,971
5,880
308
–
45,223
$
Total
$ 130,398
154,109
48,438
59,750
37,882
2,268
5,998
$ 438,843
The following tables prese nt the Com pany’s loan portfolio aging analy sis, including loans on non-accrual, as of
December 31, 2012 and 2011:
December 31, 2012
(In thousands)
Commercial
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
Total
Commercial
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
Total
Total
Loans
Receivable
$ 115,520
143,198
46,515
49,529
43,584
10,054
7,271
$ 415,671
Total
Loans > 90
Days &
Accruing
–
$
–
–
–
–
–
–
–
$
Total
Loans
Receivable
$ 130,398
154,109
48,438
59,750
37,882
2,268
5,998
$ 438,843
Total
Loans > 90
Days &
Accruing
–
$
–
–
–
–
–
–
–
$
$
30-59 Days
Past Due
110
–
–
–
766
–
–
876
$
$
60-89 Days
Past Due
–
–
–
605
–
–
605
$
$
Greater than
90 Days
Past Due
365
–
910
–
569
–
–
1,844
$
Total
Past Due
$
Current
–
910
475 $ 115,045
143,198
45,605
49,529
41,644
10,054
7,271
3,325 $ 412,346
1,940
–
–
$
December 31, 2011
Total
Past Due
$
Current
1,831 $ 128,567
153,966
45,281
57,585
35,120
2,146
5,998
10,180 $ 428,663
143
3,157
2,165
2,762
122
–
$
$
30-59 Days
Past Due
703
–
1,376
–
678
104
–
2,861
$
$
60-89 Days
Past Due
200
–
–
2,165
717
–
–
3,082
$
$
Greater than
90 Days
Past Due
928
143
1,781
–
1,367
18
–
4,237
$
F-23
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when
based on current information and events, it is p robable the Company will b e unable to collect the scheduled
payments of principal and interest du e from the borrower in accordance with t he contractual terms of the loan
agreement. I mpaired loans include non-performing loans, but also include loans modified in troubled debt
restructurings where concessions have been granted to borrowers experiencing financial difficulties. Th ese
concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal,
forbearance or other actions intended to maximize collection.
The following tables present impaired loans for the years ended December 31, 2012, 2011 and 2010:
December 31, 2012
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
(In thousands)
Loans without a specific
valuation allowance:
Commercial
$
Commercial real estate
$
877
521
$
916
521
Construction
Home equity
1,684
1,684
–
–
Residential real estate
1,201
1,336
Lease financing
Consumer
233
–
233
–
–
–
–
–
–
–
–
1,798
1,699
287
847
169
–
Average
Investment
in
Impaired
Loans
Interest
Income
Recognized
$
694
$
106
Loans with a specific
valuation allowance:
Commercial
$
643
$
657
$
241
$
2,240
$
Commercial real estate
Construction
Home equity
1,537
10,016
175
1,567
10,016
176
1,000
490
81
Residential real estate
3,332
3,376
1,262
Lease financing
Consumer
Total impaired loans:
–
–
–
–
–
–
2,741
10,915
1,919
3,016
100
–
Commercial
$
1,520
$
1,573
$
241
$
2,934
$
Commercial real estate
Construction
Home equity
2,058
11,700
175
2,088
11,700
176
1,000
490
81
Residential real estate
4,533
4,712
1,262
Lease financing
Consumer
233
–
233
–
–
–
4,539
12,614
2,206
3,863
269
–
Total
$
20,219
$
20,482
$
3,074
$
26,425
$
1,034
F-24
71
40
4
57
16
–
42
49
466
–
183
–
–
148
120
506
4
240
16
–
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
December 31, 2011
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
Average
Investment
in
Impaired
Loans
Interest
Income
Recognized
(In thousands)
Loans without a specific
valuation allowance:
Commercial
$
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
Loans with a specific
valuation allowance
$
16
482
101
468
904
–
–
$
32
514
101
500
1,014
–
–
–
–
–
–
–
–
–
$
223
$
1,781
1,427
532
1,140
25
28
Commercial
$
3,709
$
3,850
$
1,281
$
4,298
$
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
Total impaired loans:
4,819
14,313
2,208
3,838
307
–
5,357
14,776
2,242
4,416
307
–
2,257
1,353
296
6,793
18,080
940
1,389
3,791
25
–
324
–
Commercial
$
3,725
$
3,882
$
1,281
$
4,521
$
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
5,301
14,414
2,676
4,742
307
–
5,871
14,877
2,742
5,430
307
–
2,257
1,353
296
1,389
25
–
8,574
19,507
1,472
4,931
349
28
56
109
–
3
17
67
1
171
107
454
3
149
21
–
227
216
454
6
166
88
1
Total
$
31,165
$
33,109
$
6,601
$
39,382
$
1,158
F-25
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
December 31, 2010
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
Average
Investment
in
Impaired
Loans
Interest
Income
Recognized
(In thousands)
Loans without a specific
valuation allowance:
Commercial
$
220
$
315
$
Commercial real estate
Construction
Home equity
4,080
3,203
585
4,700
3,203
587
Residential real estate
1,279
1,924
Lease financing
Consumer
140
52
256
54
–
–
–
–
–
–
–
$
627
$
3,891
3,384
102
1,391
254
50
Loans with a specific
valuation allowance
Commercial
$
5,541
$
5,585
$
1,133
$
2,834
$
Commercial real estate
Construction
Home equity
8,022
22,318
626
8,092
22,430
648
Residential real estate
4,618
5,480
Lease financing
Consumer
Total:
402
–
402
–
1,110
3,039
299
577
3
–
10,760
23,662
411
6,150
302
12
Commercial
$
5,761
$
5,900
$
1,133
$
3,461
$
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
12,102
25,521
1,211
5,897
542
52
12,792
25,633
1,235
7,404
658
54
1,110
3,039
299
577
3
–
14,651
27,046
513
7,541
556
62
24
37
–
–
–
2
3
7
–
20
–
–
–
–
31
37
20
–
–
2
3
Total
$
51,086
$
53,676
$
6,161
$
53,830
$
93
The following table pre sents the Company’s non-accrual loans, also i ncluded in impaired loans, at December 31,
2012 and 2011:
(In thousands)
Commercial
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
2012
2011
$ 1,131
1,537
910
1,084
175
–
–
$ 4,837
$ 2,029
1,340
3,058
2,676
2,204
18
–
$ 11,325
F-26
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
Included in certain loan categories in the impaired loans are loans designated as t roubled debt restructurings and
classified as impaired. At Decem ber 31, 2012, the Company had $1,044,000 of commercial loans, $2,058,000 of
commercial real estate lo ans, $10,790,000 of construction loans, $3,450,000 of residential real estate lo ans and
$233,000 of lease financing loans that were modified in troubled debt restructurings and classified as impaired.
As a result of adopting the amendments in ASU 2011-02, A Creditor’s Determination of Whether a Restructuring Is
a Troubled Debt Restructuring, in 2011, the Company reassessed all restructurings for identification as troubled debt
restructurings. The Company identified four loans restructured during 2011 fiscal year not originally classified as
troubled debt restructurings totaling $1,066,000; however, these loans were properly classified as non-accrual
impaired loans at the time of restructure and thus the allowance for loan losses was measured using the impairment
measurement guidance. Accordingly, there was no change in the valuation of these loans.
During the years ended December 31, 2012 and December 31, 2011, the Company modified loans in troubled debt
restructuring transactions and classifi ed the loans as im paired. The modi fication of term s for the troubled debt
restructuring transactions included renewals of existing loans to borrowers experiencing financial difficulties at
below market rates, modification to interest-only terms or extension of the amortization period.
The following table presents loans restructured and class ified as troubled de bt restructurings by class during the
years ended December 31, 2012 and 2011:
December 31, 2012
December 31, 2011
(In thousands)
Commercial
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
Total
Number
of Loans
1
–
–
–
1
–
–
2
$
Pre-
Modification
Outstanding
Recorded
Balance
85
–
–
–
371
–
–
456
$
$
Post-
Modification
Outstanding
Recorded
Balance
85
–
–
–
371
–
–
456
$
$
Pre-
Modification
Outstanding
Recorded
Balance
1,417
3,498
3,724
–
–
–
–
8,639
$
Number
of Loans
6
5
3
–
–
–
–
14
$
Post-
Modification
Outstanding
Recorded
Balance
1,408
3,498
3,724
–
–
–
–
8,630
$
The following table presents troubled debt restructurings modified within the past 12 months included above that are
90 days past due or are non-accrual as of December 31, 2012:
(In thousands)
Commercial
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
December 31, 2012
Number
of Loans
Recorded
Balance
1
–
–
–
–
–
–
1
$
$
79
–
–
–
–
–
–
79
As of December 31, 2012, the C ompany had no commitments outstanding t o borrowers with loans identified as
troubled debt restructurings.
F-27
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 4: PREMISES AND EQUIPMENT
Major classifications of premises and equipment, stated at cost, are as follows:
(In thousands)
Land
Buildings and improvements
Furniture and equipment
Less accumulated depreciation
Total premises and equipment
NOTE 5: FORECLOSED ASSETS HELD FOR SALE
Activity in the allowance for losses on foreclosed assets was as follows:
(In thousands)
Balance, beginning of year
Provision charged to expense
Charge offs, net of recoveries
Balance, end of year
Expenses applicable to foreclosed assets at December 31 include the following:
(In thousands)
Net gains on sale of foreclosed assets
Provision for losses
Operating expenses, net of rental income
2012
2011
$
5,154
15,984
8,382
29,520
14,072
$
5,154
15,898
8,110
29,162
13,265
$ 15,448
$ 15,897
2012
2011
2010
$ 2,985 $ 481
3,159
867
(655)
(668)
$ 3,184 $ 2,985
$ 166
734
(419)
$ 481
2012
2011
2010
$ (349)
867
1,361
$ 1,879
$ (555) $ (168)
734
3,159
1,656
1,921
$ 2,222
$ 4,525
F-28
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 6: CORE DEPOSIT INTANGIBLE ASSETS
The carrying basis and accumulated amortization of recognized intangible assets at December 31, 2012 and 2011
were:
(In thousands)
Core Deposit Intangible
2012
2011
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
$
1,000
$
(821)
$
1,000
$
(679)
Amortization expense for the years ended Decem ber 31, 2012, 2011 and 2010 was $143,000, $143,000 and
$219,000, respectively. Estimated amortization expense for the remainder of the amortization period is:
(In thousands)
2013
2014
NOTE 7: DERIVATIVE INSTRUMENTS
$ 143
36
The Company has commitments outstanding to extend credit on residential mortgages that have not closed prior to
the end of the period. A s the Company enters into commitments to originate these loans, it also enters into
commitments to sell th e loans in the secondary market on a best-efforts basis. T he Company acquires such
commitments to reduce interest rate risk on mortgage loans in the process of origination and mortgage loans held for
sale. Th ese commitments to originate or sell loans on a best efforts basis are c onsidered derivative instruments
under ASC 815. These statements requi re the Company to recognize all derivative instruments in the balance sheet
and to m easure those inst ruments at fa ir value. As a resu lt of m easuring the fair valu e of t he commitments to
originate loans, the Company recorded a decrease in other assets of $8,000, a decrease in other liabilities of $1,000
and a decrease in other income of $7,000 for the year ended December 31, 2012. For the year ended December 31,
2011, the Company recorded an increase in other assets of $7,000, a decrease in other liabilities of $8,000 and an
increase in other income of $15,000.
Additionally, the Company has commitments to sell loans that have closed prior to the end of the p eriod on a best
efforts basis. Du e to the mark to market adjustment on commitments to sell lo ans held for sale th e Company
recorded an increase in other assets of $84,000 and an increase in other income of $84,000 for the year end ed
December 31, 2012. For the year ended December 31, 2011, t he Company recorded a decrease in other assets of
$272,000 and a decrease in other income of $272,000.
At December 31, 2012 and 2011, total mortgage loans in the process of origination amounted to $1,577,000 and
$1,410,000, respectively. At Decem ber 31, 2012 and 2011, related fo rward commitments to sell mortgage loans
amounted to approximately $7,621,000 and $7,096,000, respectively.
The balance of derivative instruments related to commitments to originate and sell loans at December 31, 2012 and
2011, is disclosed in Note 20, Disclosures about Fair Value of Assets and Liabilities.
F-29
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 8: INTEREST-BEARING DEPOSITS
Interest-bearing time deposits in denominations of $100,000 or more were $66,840,000 on December 31, 2012 and
$86,351,000 on December 31, 2011. The Company acquires brokered deposits in the normal course of business. At
December 31, 2012 and 2011, brokered deposits of $27,236,000 and $34,544,000, respectively, were included in the
Company’s time deposit balance. Of the $27,236,000 in brokered deposits, $17,106,000 represented customer funds
placed into the Certificate of Deposit Account Registry Service (“CDARS”). The Bank is a member of the CDARS
service which effectively allows depositors to receive FDIC insurance on amounts greater than the FDIC insurance
limit, which is currently $250,000. CDARS allows the Bank to break large deposits into smaller amounts and place
them in a network of other CDARS institutions to ensure that full FDIC insurance coverage is gained on the entire
deposit. Although classified as brokered deposits for regulatory pur poses, funds placed through the CDARS
program are Bank customer relationships that management views as core funding.
At December 31, 2012, the scheduled maturities of time deposits are as follows:
(In thousands)
2013
2014
2015
2016
2017
Thereafter
$
81,516
18,481
18,529
10,345
4,920
1,345
$
135,136
NOTE 9: OPERATING LEASES
Blue Valley Building Corp. l eases office space to others under noncancellable operating leases expiring in various
years through 2015. Minimum future rent receivable under noncancellable operating leases at December 31, 2012
was as follows:
(In thousands)
2013
2014
2015
$
$
344
96
8
448
Consolidated rental and operating lease expenses incurre d for space the Company leases from others were $0,
$11,000 and $14,000 in 2012, 2011 and 2010, res pectively. The Company term inated the lease for space re nted
from others on September 30, 2011.
F-30
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 10: SHORT TERM DEBT
The Company has a line of credit with the Federal Home Loan Bank of Topeka (FHLB) which is collateralized by
various assets including mortgage-backed loans and available-for-sale securities. At December 31, 2012 and 2011,
there was no outstanding balance on the line of credit. The variable interest rate was 0.23% on December 31, 2012
and 0.26% on December 31, 2011. At December 31, 2012 approximately $2,467,000 was available. Advances are
made at the discretion of the Federal Home Loan Bank of Topeka.
The Company also has a line of cre dit with the Federal Reserve Bank of Kansas City wh ich is co llateralized by
various assets, including commercial and commercial real estate loans. At December 31, 2012 and 2011, there was
no outstanding balance on the line of credit. The line of credit has a variable interest rate of federal funds rate plus
75 basis points and at December 31, 2 012 approximately $37,510,000 was avai lable. Adva nces are made at the
discretion of the Federal Reserve Bank of Kansas City.
NOTE 11: LONG TERM DEBT
Long-term debt at December 31, 2012 and 2011 consisted of the following components:
(In thousands)
FHLBank advances (A)
Less: Deferred prepayment penalty on modification of FHLB
advances
Net FHLBank advances
Subordinated Debentures – BVBC Capital Trust II (B)
Subordinated Debentures – BVBC Capital Trust III (C)
2012
2011
$
82,500
$
82,500
(977)
81,523
7,732
11,856
(1,654)
80,846
7,732
11,856
Total long-term debt
$ 101,111
$ 100,434
(A)
(B)
(C)
Due in 2013, 2014, 2015, 2016 and 2018; collateralized by various assets including mortgage-backed loans
and available-for-sale securities totaling $159,011,000 at December 31, 2012. Advances, at interest rates
from 0.37% to 4.26% are subject to restr ictions or penalties in the event of prepay ment. FHLB advance
availability is determined quarterly and at December 31, 2012, approximately $2,467,000 was available.
Advances are made at the discretion of the FHLBank Topeka.
In the third quarter of 2010, the Company repaid $42,500,000 of FHLB advances by rolling the net present
value of the r epaid advances into the funding cost of $42,500,000 of new advances. A $2,569,000
modification fee was associated with the pa y-off of the original FHLB advances which is amortized as an
adjustment of interest exp ense over the rem aining term of the ne w FHLB advances using the straight line
method. Th e unamortized modification fee at December 31, 2 012 was approxim ately $977,000. This
transaction reduced the effective interest rate, as well as modified the maturity date on these borrowings.
Due in 2033 ; interest only at three month LIBOR + 3.25% (3.56% at December 31, 2012 and 3.68% at
December 31, 2011) due quarterly; fully and unconditionally guaranteed by the Company on a subordinated
basis to the extent that the funds are held by the Trust. BVBC Capital Trust II issued and sold $7,500,000
in Capital Securities to third parties and $232,000 of Co mmon Securities to the Company. As of 2008, the
Company may prepay the subordinated debentures, in whole or in part , at th eir face v alue plus accrued
interest.
Due in 2035 ; interest only at three month LIBOR + 1.60% (1.91% at December 31, 2012 and 2.18% at
December 31, 2011) due quarterly; fully and unconditionally guaranteed by the Company on a subordinated
basis to the extent that the funds are held by the Trust. BVBC Capital Trust III issued and sold $11,500,000
in Preferred Securities to th ird parties and $356,000 in Com mon Securities to the Company. Subordinated
to the trust pr eferred securities (B) due in 2033 . As of 2010, the Compan y may prepay the subordinated
debentures, in whole or in part, at their face value plus accrued interest.
F-31
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 11: LONG TERM DEBT (Continued)
At the request of the Federal Reserve Bank of Kansas City, quarterly payments are being deferred on the Company’s
outstanding trust preferred securities. Under the governing documents of the BVBC Capital Trust II and III, the
quarterly payments since April 24, 2009 for BVBC Capital Trust II and March 31, 2009 for BVBC Capital Trust III
were deferred. The Company has the right to declare such a deferral for up to 20 consecutive quarterly periods and
deferral may only be declared as long as the Company is not then in default under the provisions of the Amended
and Restated Trust Agreement. During the deferral period, interest on the indebtedness continues to accrue and the
unpaid interest is compounded. For BVBC Capital Trust III, the Company must also accrue additional interest that
is equal to the three month LIBOR rate plus 1.60% during the deferral period. All accrued interest and compounded
interest must be paid at the end of the deferral period.
For both BVBC Capital Trust II and BVBC Capital Trust III, as long as the deferral period continues, the Company
is prohibited from: (i) declaring or paying any dividend on any of its capital stock, which would include both its
common stock and the outstanding preferred stock issued to the United States Department of T reasury (the
“Treasury”), or (ii) making any payment on any debt security that is ranked pari passu with the debt securities issued
by the respective trusts. Bec ause the Preferred Shares issued under the U.S. Treasury’s Capital Purchase Plan (the
“CPP”) are sub ordinate to the tru st preferred securities, the Co mpany will b e restricted fro m paying dividends on
these Preferred Shares until such time as all trust preferred dividends have been brought current. See Note 13,
Regulatory Matters for additional information.
Aggregate annual maturities of long-term debt at December 31, 2012 are as follows:
(In thousands)
2013
2014
2015
2016
2017
Thereafter
Less: Deferred prepayment penalty on modification of
FHLB advances
NOTE 12: INCOME TAXES
The provision for income taxes consists of the following:
$
20,000
7,500
20,000
10,000
-
44,588
102,088
(977)
$ 101,111
(In thousands)
Taxes currently (refundable) payable
Deferred income taxes
2012
2011
2010
$
–
(150)
$
–
9,823
$
–
(1,561)
$
(150)
$
9,823
$ (1,561)
F-32
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 12: INCOME TAXES (Continued)
A reconciliation of income tax expense at the statutory rate to the Company’s actual income tax expense is shown
below:
(In thousands)
Computed at the statutory rate (34%)
Increase (decrease) resulting from:
Tax-exempt interest
State income taxes
Changes in the deferred tax asset valuation allowance
Other
2012
2011
2010
$
40
$ (2,040)
$ (1,463)
(87)
77
(200)
20
(50)
(20)
12,600
(667)
(5)
124
–
(217)
Actual tax provision
$
(150)
$ 9,823
$ (1,561)
The tax effects of t emporary differences related to deferred taxes shown on the December 31, 2012 and 2011
consolidated balance sheets are as follows:
(In thousands)
Deferred tax assets:
Allowance for loan losses
Net Operating Loss from Blue Valley Ban Corp. and
subsidiary
Deferred compensation
Offering costs
Non-accrual loan interest
Other real estate owned reserve
Other
Deferred tax liabilities:
Accumulated depreciation
FHLB stock basis
Accumulated appreciation on available-for-sale
securities
Prepaid intangibles
Core Deposit Intangible related to Unison Bancorp Inc.
and subsidiary acquisition
Other
Net deferred tax asset before valuation allowance
Valuation allowance:
Beginning balance
(Increase) decrease during the period
Ending balance
Net deferred tax asset
2012
2011
$
3,351
$
4,880
9,153
80
180
46
1,178
639
14,627
(253)
(557)
(29)
(177)
(45)
(9)
(1,070)
13,557
(12,600)
164
(12,436)
1,121
$
7,733
123
190
59
1,215
516
14,716
(321)
(511)
(89)
(185)
(90)
(9)
(1,205)
13,511
–
(12,600)
(12,600)
911
$
The Company has unused Federal net operating loss carryforwards of $23,911,000, which expire starting in 2029.
The Company has unused Kansas Privilege Tax net operating loss carryforwards of $34,107,000 which expire
between 2018 and 2022.
F-33
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 13: REGULATORY MATTERS
The Company and the Bank are subject to various regulatory capital requirements administered by federal banking
agencies. Failure to meet minimum capital requirements can in itiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a d irect material effect on the Company’s
consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt
corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative
measures of assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.
The capital amounts and classification are also subject to qualitative judgments by the regulators about components,
risk weightings and other factors. Furthermore, the Company’s regulators could require adjustments to regulatory
capital not reflected in these consolidated financial statements.
Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to
maintain minimum amounts and rat ios (set forth in the table below) of total and Ti er I capi tal (as defi ned in the
regulations) to risk-weighted assets (as defined) and of Tier I capital to average assets (as defined). As of December
31, 2012 and 2011, the Company and the Bank met all capital adequacy requirements to which they are subject.
As of December 31, 2012, the Bank had capital in e xcess of regulatory requirements for a well-capitalized
institution. To b e categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-
based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since December 31, 2012
that management believes have changed the Bank’s position.
F-34
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 13: REGULATORY MATTERS (Continued)
The Company and the Bank’s actual capital amounts and ratios are also presented in the table.
(In thousands)
December 31, 2012:
Total Capital
(to Risk Weighted Assets)
Consolidated
Bank Only
Tier 1 Capital
(to Risk Weighted Assets)
Consolidated
Bank Only
Tier 1 Capital
(to Average Assets)
Consolidated
Bank Only
(In thousands)
December 31, 2011:
Total Capital
(to Risk Weighted Assets)
Consolidated
Bank Only
Tier 1 Capital
(to Risk Weighted Assets)
Consolidated
Bank Only
Tier 1 Capital
(to Average Assets)
Consolidated
Bank Only
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Amount
Ratio
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
$ 65,441
$ 72,542
12.01%
13.33%
$ 43,588
$ 43,539
8.00%
8.00%
N/A
$ 54,424
10.00%
$ 52,851
$ 65,702
9.70%
12.07%
$ 21,794
$ 21,769
4.00%
4.00%
N/A
$ 32,654
6.00%
$ 52,851
$ 65,702
8.10%
10.08%
$ 26,084
$ 26,060
4.00%
4.00%
N/A
$ 32,574
5.00%
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Amount
Ratio
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
$ 65,917
$ 70,736
12.08%
12.98%
$ 43,640
$ 43,587
8.00%
8.00%
N/A
$ 54,484
10.00%
$ 53,455
$ 63,838
9.80%
11.72%
$ 21,820
$ 21,794
4.00%
4.00%
N/A
$ 32,691
6.00%
$ 53,455
$ 63,838
8.04%
9.61%
$ 26,609
$ 26,571
4.00%
4.00%
N/A
$ 33,214
5.00%
The Company and Bank are subject to certain restrictions on the amounts of dividends that it may declare without
prior regulatory approval. At December 31, 2012, any dividend declaration would require regulatory approval.
F-35
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 13: REGULATORY MATTERS (Continued)
Preferred Stock and Warrants
On December 5, 2008, the Company issued and sold to the United States Department of Treasury (the “Treasury”)
21,750 shares of Fixed Rate Cumulative Perpetual Preferred Stock (the “Preferred Shares”), along with a ten year
warrant to purchase 111,083 shares of the Company’s common stock for $29.37 per share, for a tota l cash price of
$21,750,000 (the “Transaction”). The Pr eferred Shares have a l iquidation preference of $1,000 per share. The
Transaction occurred pursuant to, and is governed by the U.S. Treasury’s Capital Purchase Plan (the “CPP”), which
was designed to attract broad participation by institutions, to stabilize the financial system, and to increase lending
for the benefit of the U.S. economy. In connection with the transaction, the Company entered into a letter agreement
with the T reasury which includes a Sec urities Purchase Agreement-Standard Terms (the “SPA”). The Preferred
Shares carry a 5% per year cumulative preferred dividend rate, payable quarterly. The dividend rate increases to 9%
after five years. Divide nds compound if t hey accrue a nd are not paid.
During the first three yea rs after the
transaction, the Com pany may not re deem the Pre ferred Shares except in conjunction with a qu alified equity
offering meeting certain requirements. Du ring the time that the Prefe rred Shares are outstanding, a num ber of
restrictions apply to the Company, including, among others:
•
•
•
•
•
The Preferred Shares have a senior rank. The Company is not free to issue other preferred stock that is senior
to the Preferred Shares.
Until the third anniversary of the sale of th e Preferred Shares, unless the Preferred Shares have been
redeemed in whole or th e Treasury has transferred all of the shares to a n on-affiliated third party, the
Company may not declare or pay a common stock dividend in an amount greater than the amount of the last
quarterly cash dividend per share declared prior to October 14, 2008, or repurchase common stock or other
equity shares (subject to certain limited exceptions) without the Treasury’s approval.
If the Company were to pay a cash dividend in the future, any such dividend would have to be discontinued if
a Preferred Share dividend were missed. Thereafter, dividends on common stock could be resumed only if all
Preferred Share d ividends in arrear s were paid. Similar restrictions apply to the Company’s ability to
repurchase common stock if Preferred Share dividends are missed.
Failure to pay the Preferred Share dividend is not an event of default. However, a failure to pay a total of six
Preferred Share dividends, whether or not consecutive, gives the holders of the Preferred Shares the right to
elect two directors to the Company’s Board of Directors. That right would continue until the Company pays
all dividends in arrears.
In conformity with requirements of t he SPA and Section 111(b) of the Emergency Economic Stabilization
Act of 2008 (the “EESA”), the Company and its sub sidiary, Bank of Blue Valley, and each of its sen ior
executive officers agreed to lim it certain compensation, bonus, incentive and other benefits plans,
arrangements, and policies with respect to the senior executive officers during the period that the Treasury
owns any debt or equity securities acquired in connection with the Transaction. Th e applicable senior
executive officers have entered into letter agreements with the Company consenting to the foregoing and have
executed a waiver voluntarily waiving a ny claim against the Treas ury or t he Company for any changes to
such senior executive officer’s compensation or benefits that are required to comply with Section 111(b) of
EESA.
The Company’s preferred stock qualifies as Tier 1 capital in accordance with regulatory capital requirements.
F-36
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 13: REGULATORY MATTERS (Continued)
The Warrant is exercisable immediately and e xpires in ten years. T he Warrant has anti-dilution protections and
certain other protections for the holder, as w ell as p otential registration rights upon written request from the
Treasury. If requested by the Treasury, the Warrant (and the underlying common stock) may need to be listed on a
national securities exchange. The Treasury has agreed not to exercise voting rights with respect to common shares it
may acquire upon exercise of the Warrant. If the Prefe rred Shares are redeemed in whole, the C ompany has the
right to purchase any common shares held by the Treasury at their fair market value at that time.
The Board of Directors of Blue Valley Ban Corp. and its wholly owned subsidiary, Bank of Blue Valley, entered
into a written agreement with the Federal Reserve Bank of Kansas City as o f November 4, 2009. This agreement
was a result of a regulatory examination that was completed in May 2009, and relates primarily to the Bank’s asset
quality. Under the terms of the agr eement, the Company and the Bank agree d, among other things, to submit an
enhanced written plan to strengthen credit risk management practices and improve the Bank’s position on the past
due loans, classified l oans, and other real estate owne d; review and revise its allowance for loan and lease los s
methodology and maintain an adequate allowance for loan loss; m aintain sufficient capital at th e Company and
Bank level; and improve the Bank’s earnings and overall condition. The Company and Bank have also agreed not to
increase or guarantee any debt, purchase or redeem any shares of stock or declare or pay any dividends without prior
written approval from the Federal Reserve Bank.
As a r esult of the improved financial condition of the Company and the Bank, satisfactory risk management
processes and senior management oversight, and full compliance with all actionable provisions of the Agreement,
the Federal Reserve Bank of Kansas City terminated the Agreement effective January 11, 2013. In order to maintain
the financial soundness of the Company and the Bank, among other things, the Company and the Bank will continue
to work on improvement of asset quality, maintaining an adequate allowance for loan losses, maintaining adequate
capital, improving earnings, and not declaring or paying any dividends or increasing or guaranteeing any debt
without prior written approval from the Federal Reserve Bank and the OSBC.
At the request of the Federal Reserve Bank of Kansas City, the Company notified the Treasury of its in tention to
defer the quarterly dividend payments on the Preferred Shares due to the Treasury since May 15, 2009. As part of
the Capital Purchase Plan, the Company entered into a letter agreement with the T reasury on December 5, 2008,
which includes a Securities Purchase Agreement-Standard Terms. As part of the agreement, dividends compound if
they accrue and are not paid. Failure by the Company to pay the Preferred Share dividend is not an event of default.
However, a failure to pay a total of six Preferred Share dividends, whether or not consecutive, gives the holders of
the Preferred Shares the right to elect two directors to the Company’s Board of Directors. That right would continue
until the Com pany pays all divide nds in a rrears. As of December 31, 2012, the C ompany has de ferred fifteen
dividend payments. At this time, the Treasury has not elected any directors to serve on the Company’s Board of
Directors; however, in November 2010 the Treasury assigned an observer to attend the Company’s board meetings.
The Company has accrued for the dividends and interest a nd has every intention to bring the obligation current as
soon as permitted. As of December 31, 2012, the Company had accrued $4,483,000 for t he dividends and interest
on outstanding Preferred Shares.
On December 18, 2012 the U.S. Treasury Department Office of Public Affairs issued a press release that stated that
the Treasury will co ntinue to conduct periodic, individual auctions of its Cap ital Purchase Program preferred stock
and subordinated debt positions (the “CPP Securities”). According to the press release, th e next auctions will
include another 53 of the 218 remaining institutions in this program beginning as early as late January, 2013. The
Company was listed among the 53 named. However, to date, no notification has been received by the Company that
its securities are being included in the next individual or pooled auction.
F-37
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 14: TRANSACTIONS WITH RELATED PARTIES
At December 31, 2012 a nd 2011, the C ompany had loans outstanding to e xecutive officers, directors and to
companies in which the Company’s and Bank’s executive officers or directors were principal owners, in the amount
of $13,632,000 and $12,967,000, respectively. Annual activity consisted of the following:
(In thousands)
Balance, beginning of year
New loans and advances
Repayments and reclassifications
Balance, end of year
2012
$ 12,967
4,060
(3,395)
$ 13,632
2011
$ 20,549
7,191
(14,773)
$ 12,967
In management’s opinion, such loans and other extensions of credit and deposits were made in the ordinary course
of business and were made on s ubstantially the same terms (including interest rates an d collateral) as th ose
prevailing at th e time for comparable transactions with other persons. Further, in management’s opinion, when
originated these loans did not involve more than the normal risk of collectability or present other unfavorable
features.
Deposits from executive officers and directors held by the Com pany at December 31, 2012, and 2011 totaled
$5,119,000 and $4,514,000, respectively.
NOTE 15: PROFIT SHARING AND 401(K) PLANS
The Company’s profit sharing and 401(k) plans cover substantially all employees. C ontributions to the profit
sharing plan are determined annually by the Board of Directors, and participant interests are vested over a five-year
period. The Company did not make a con tribution to t he profit sharing plan during 2012, 2011 and 2010. The
Company’s 401(k) plan permits participants to make contributions by salary reduction, based on which the
Company matches 100% of the first 3% of the employee’s contribution plus 50% of the next 2% of compensation
contributed by the employee. The C ompany’s matching contributions to the 401(k) plan are vested immediately.
The Company’s matching contributions charged to expense for 2012, 2011 and 2010 were $234,000, $255,000 and
$282,000, respectively.
NOTE 16: EQUITY INCENTIVE COMPENSATION
The Company has an Eq uity Incentive Plan (the “Plan”) which allows th e Company to issue equity incentive
compensation awards to its employees and directors in the forms of stock options, restricted shares or deferred share
units.
Under the fixed option provisions of the Plan, the Company may grant options for shares of common stock that vest
two years from the date of gra nt to its e mployees. At December 31, 2012, the C ompany had 102,184 s hares
available to be g ranted (options granted prior to 1998 were subject to an earlier plan with similar terms). Th e
exercise price of each option is intended to equal the fair value of the Company’s stock on the date of grant, and
maximum terms are 10 years.
F-38
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 16: EQUITY INCENTIVE COMPENSATION (Continued)
During 2012, 2011 and 2010, the Company granted no stock options, but did grant 55,155, 40,666 and 29,640 shares
of restricted common stock, respectively. Restricted stock grants to the President of the Company vest immediately
at such time when the United States Department of Treasury no longer holds any equity securities of the Company
acquired through the TARP Capital Purchase Program. Other 2012 recipients of the restricted stock grant who are
employees vested immediately. 2011 and 2010 recipients of the restricted stock grant who are employees fully vest
in the stock after three years from the date of the grant. Recipients of the restricted stock grant who are directors
vested immediately in 2012, 2011 and 2010. The non-vested shares were 30,730, 40,529, and 49,308 as o f
December 31, 2012, 2011 and 2010, respectively. The cost basis of the restricted shares granted which is equal t o
the fair value of the Company’s stock on the date of grant, will be amortized to compensation expense ratably over
the applicable vesting period. Expenses associated with restricted stock grants were $272,000, $300,000, and
608,000 for 2012, 2011 and 2010, respectively. The am ount of unre cognized compensation costs was $97,000,
$127,000, and $264,000 as of December 31, 2012, 2011, and 2010, respectively. During 2012, 2011 and 2010, 0,
7,437 and 7,454 shares of restricted stock were forfeited, respectively.
A summary of the status of option shares under the plan at December 31, 2012, 2011 and 2010, and changes during
the years then ended, is presented below:
2012
2011
2010
Weighted
Average
Exercise
Price
$ 25.00
–
25.00
$ 0.00
Shares
10,575
–
10,575
0
Outstanding, beginning of year
Exercised
Forfeited
Outstanding, end of year
Intrinsic value of shares exercised
$
Options exercisable, end of year
–
0
Weighted
Average
Exercise
Shares
Price
Shares
24,375
–
13,800
10,575
$ 22.07
–
19.82
$ 25.00
33,875
–
9,500
24,375
$
–
$
–
Weighted
Average
Exercise
Price
$ 20.51
–
16.50
$ 22.07
$ 0.00
10,575
$ 25.00
24,375
$ 22.07
There were no options outstanding and exercisable as of December 31, 2012.
NOTE 17: EMPLOYEE STOCK PURCHASE PLAN
The 2004 Blue Valley Ban Corp. employee stock purchase plan (“ESPP”) provides the right to subscribe to 100,000
shares of common stock to substantially all employees of the Company and subsidiaries, except those who are 5% or
greater shareholders of the Company. The purchase price for shares under the plan is determined by the Company’s
Board of Directors (or a designated Committee thereof) and was set to 85% of the market price on either the grant
date or the offering date, whichever is lower, for the plan year beginning in February 2004. Expense associated with
the plan recognized in 2012, 2011 and 2 010 was approximately $3,000, $4,000 and $3,000, respectively.
Information about employee stock purchase plan activity as of December 31, 2012, 2011 and 2010 is set forth in the
following table.
Plan year ending January
2012
2011
2010
Employee Stock Purchase Plan Activity
Shares purchased
6,508
2,628
3,465
Purchase Price
$ 3.49
$ 6.80
$ 8.71
F-39
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 18: OTHER INCOME/EXPENSE
Other income consists of the following:
(In thousands)
Rental income
Realized gain on foreclosed assets
Other income
Total
2012
2011
2010
$
556
521
458
$
1,535
$
$
378
578
28
984
$
264
434
447
$
1,145
Other operating expenses consist of the following:
(In thousands)
FDIC assessments
Professional fees
Data processing
ATM and network fees
Loan processing fees
Other expense
2012
2011
2010
$
1,324
1,383
1,104
745
194
2,756
$
1,509
1,237
1,110
758
283
2,954
$
2,076
1,520
1,278
743
308
2,625
Total
$
7,506
$
7,851
$
8,550
NOTE 19: FAIR VALUE OPTION
The Company elected to adopt The Fair Value Option for Financial Assets and Financial Liabilities – including an
Amendment of FASB Statement No. 115, which was subsequently incorporated into FASB Accounting Standards
Codification in Topic 825, for mortgage loans held for sale originated after April 1, 2009. This standard permits an
entity to choose to measure many financial instruments and certain other items at fair v alue. An entity will report
unrealized gains and losses on items for which the fair value option has been elected in earnings at each reporting
date.
In accordance with Topic 825, the Company has elected to measure loans held for sale at fair value. Loans held for
sale is made up entirely of mortgage loans held for immediate sale in the secondary m arket with servicing release.
These loans are sold prior to origination at a contracted price to an outside investor on a best efforts basis and remain
on the Company’s balance sheet for a short period of time (typically 30 to 60 days). It is management’s opinion
given the short-term nature of these loans, that fair value provides a reasonable measure of the econom ic value of
these assets. In addition, carrying such loans at fair value eliminates some measure of volatility created by the
timing of sales proceeds from outside investors, which typically occur in the month following origination.
The differences between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale
were gains of $32,000 at Dece mber 31, 2012 and $34,000 at December 31
December 31, 2010. Losses from fair value changes included in loans held for sale fee inc ome were $2,000 and
$33,000 for the years ende d December 31, 2012 and 2010, res pectively, and inc ome from fair value cha nges
included in loans held for sale fee income was $178,000 for the year ended December 31, 2011. Interest income on
loans held for sale is included in interest and fees on loan in the Company’s consolidated statement of operations.
See Note 20 for additional disclosures regarding fair value of mortgage loans held for sale.
, 2011 and a loss of $144,000 at
F-40
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
Fair value is the price that would be received to sell an as set or paid to transfer a liability in an orderly transaction
between market participants at the m easurement date. Fair value measurements must maximize the use of
observable inputs and minimize the use of unobservable inputs. There is a hierarchy of three levels of inputs that
may be used to measure fair value:
Level 1
Level 2
Level 3
Quoted prices in active markets for identical assets or liabilities
Observable inputs other than Level 1 prices, such as quoted prices for similar assets o r liabilities;
quoted prices in m arkets that are not active; or other inputs that are observable or can be
corroborated by observable market data for substantially the full term of the assets or liabilities.
Unobservable inputs that are supported by little or no market activity and that are significant to the
fair value of the assets or liabilities.
Recurring Measurements
The following table presents the fair v alue measurements of assets an d liabilities recognized in the Company’s
condensed consolidated balance sheet and the level within the fair value hierarchy in which the fair value
measurements fall at December 31, 2012 and 2011:
(In thousands)
December 31, 2012:
Assets:
Available-for-sale securities:
U.S. Government sponsored agencies
State and political subdivision securities
Equity and other securities
Mortgage loans held for sale
Commitments to originate loans
Forward sales commitments
Total assets
Liabilities:
Commitments to originate loans
Forward sales commitments
Total liabilities
December 31, 2011:
Assets:
Available-for-sale securities:
U.S. Government sponsored agencies
Equity and other securities
Mortgage loans held for sale
Commitments to originate loans
Forward sales commitments
Total assets
Liabilities:
Commitments to originate loans
Forward sales commitments
Total liabilities
Fair Value Measurements Using
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Unobservable
Inputs
(Level 3)
Fair Value
–
–
623
–
–
–
623
–
–
–
–
619
–
–
–
619
–
–
–
$
$
$
$
$
$
$
$
63,148
14,074
–
7,621
–
–
84,843
–
–
–
61,171
–
5,686
–
–
66,857
–
–
–
$
$
$
$
$
$
$
$
–
–
–
–
–
184
184
–
1
1
–
–
–
8
100
108
1
–
1
$
$
$
$
$
$
$
$
63,148
14,074
623
7,621
–
184
85,650
–
1
1
61,171
619
5,686
8
100
67,584
1
–
1
$
$
$
$
$
$
$
$
F-41
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair
value on a recurring basis and recognized in the Company’s consolidated balance sheets, as well as the ge neral
classification of such assets and liabilities pursuant to the valuation hierarchy.
Available-for-Sale Securities
Where quoted market prices are av ailable in an active market, securities are classified within Level 1 of the
valuation hierarchy. If quoted market prices are not available, then fair values are estimated by using quoted prices
of securities with similar characteristics or independent asset pricing services and pricing models, the inputs of
which are market-based or independently sourced market parameters, including, but not limited to, yield curves,
interest rates, volatilities, prepayments, defaults, cumulative loss projections and cash flows. Such securities are
classified in Level 2 of the valuation hierarchy. In certain cases where Level 1 or Level 2 inputs are not available,
securities are classified within Level 3 of the hierarchy.
Mortgage Loans Held for Sale
Mortgage loans held for sale are valued using market prices for loans with si milar characteristics. Th is
measurement is classified as Level 2 within the hierarchy.
Commitments to Originate Loans and Forward Sales Commitments
The fair v alue of commitments to originate loans and the fair value of forward sales commitments are estim ated
using a valuation model which considers differences between quoted prices for loans with similar characteristics in
the secondary market and the committed rates. The valuation model includes assumptions which adjust the price for
the likelihood that the commitment will u ltimately result in a clo sed loan. Th ese measurements are sig nificant
unobservable inputs and are classified as Level 3 within the hierarchy.
Level 3 Reconciliation
The following table is a recon ciliation of the b eginning and ending balances of recurring fair value measurements
recognized in the Company’s consolidated balance sheets using significant unobservable (Level 3) inputs:
(In thousands)
Balance as of December 31, 2011
Total realized and unrealized gains (losses):
Included in net income (loss)
Balance as of December 31, 2012
Balance as of December 31, 2010
Total realized and unrealized gains (losses):
Included in net income (loss)
Commitments to
Originate Loans
Forward Sales
Commitments
$
7
$
100
$
$
(7)
83
–
$
183
(8)
$
372
15
(272)
Balance as of December 31, 2011
$
7
$
100
F-42
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
Realized and unrealized gains and losses for items reflected in the table above are included in other income in the
consolidated statement of operations.
Nonrecurring Measurements
The following table presents the fair value measurements at December 31, 2012 and 2011 of assets and liabilities
measured at fair value on a non-recurring basis during the respective year:
Fair Value Measurements Using
(In thousands)
December 31, 2012:
Impaired loans, net of reserves
Foreclosed assets held for sale, net
December 31, 2011:
Impaired loans, net of reserves
Foreclosed assets held for sale, net
Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Fair Value
$
$
$
$
5,480
17,894
23,374
21,139
12,826
33,965
$
$
$
$
–
–
–
–
–
–
$
$
$
$
–
–
–
–
–
–
Unobservable
Inputs
(Level 3)
$
$
5,480
17,894
23,374
$
$
21,139
12,826
33,965
The following is a description of the valuation methodologies and inputs used for assets measured at fair value on a
nonrecurring basis and recognized in the accompanying balance sheet, a s well as the general classification of such
assets pursuant to the valuation hierarchy. Fo r assets cl assified within Level 3 of th e fair value hierarchy, the
process used to develop the reported fair value is described below.
Impaired Loans (Collateral Dependent)
Loans for which it is probable that the Company will no t collect all principal and interest due according to the
contractual terms are measured for impairment. Allowable methods for determining the amount of impairment
include estimating fair value using the fair value of the collateral for collateral dependent loans.
If the impaired loan is identified as c ollateral dependent, then the fair value method of measuring the amount of
impairment is utilized. This method requires obtaining a current independent appraisal of the collateral and applying
a discount factor to the value. Impaired loans that are collateral dependent are classified within Level 3 of the fair
value hierarchy when impairment is determined using the fair value method.
Foreclosed Assets Held for Sale
Foreclosed assets held for sale are carried at the fair val ue less costs to sell at the date of foreclosure, establishing a
new cost basis. Subsequent to foreclosure, valuations are periodically performed and the assets are recorded at the
lower of carrying amount or fair value less cost to sell.
F-43
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
Unobservable (Level 3) Inputs
The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring
Level 3 fair value measurements.
Fair Value at
12/31/12
Valuation Technique
Unobservable Inputs
Commitments to Originate
$
– Market comparable
Loans
Forward Sales
Commitments
Collateral-dependent
impaired loans
Foreclosed assets held for
Sale, net
prices
$
$
$
183 Market comparable
prices
5,480 Market comparable
properties
17,894 Market comparable
properties
Quoted prices for similar loans
Estimated Customer Fallout Rate
Quoted prices for similar loans
Quoted prices for similar loans
Comparability adjustments (%)
Range
(Weighted Average)
NA
2.75%-3.375%
(3.17%)
9.00%-80.00%
(18.00%)
Not available
Sensitivity of Significant Unobservable Inputs
The following is a discussion of the sensitivity of significant unobservable inputs, the interrelationships between
those inputs and other unobservable inputs used in recurring fair value measurement and of how those inputs might
magnify or mitigate the effect of changes in the unobservable inputs on the fair value measurement.
Commitments to Originate Loans
The significant unobservable inputs used in the fair value measurement of the Company’s commitments to originate
loans are the discount rate and estim ated customer fallout rate. Sig nificant increases (decreases) in any of t hose
inputs in isolation would result in a sig nificantly lower (higher) fair va lue measurement. Gene rally, changes in
either of those inputs will not affect the other input.
Forward Sales Commitments
The significant unobservable input used in the fair value measurement of the Company’s forward sales commitment
is the discount rate. Significant increases (decreases) in this input would result in a significantly lower (higher) fair
value measurement.
F-44
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
Fair Value of Financial Instruments
The following table presents estimated fair values of the Company’s financial instruments not previously disclosed
at December 31, 2012 and 2011.
(In thousands)
Financial assets:
Cash and cash equivalents (Level 1)
Loans, net of allowance for loan losses (Level 3)
Federal Home Loan Bank stock, Federal Reserve
Bank stock, and other securities (Level 3)
Interest receivable (Level 3)
Financial liabilities:
Deposits (Level 3)
Securities sold under agreement to repurchase
and other interest-bearing liabilities (Level 3)
Long-term debt (Level 3)
Interest payable (Level 3)
Unrecognized financial instruments
(net of amortization):
Commitments to extend credit (Level 3)
Letters of credit (Level 3)
Lines of credit (Level 3)
2012
2011
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
$
101,077
406,614
$
101,077
408,041
$
99,899
425,654
$
99,899
428,698
7,540
1,529
7,540
1,529
7,369
1,573
7,369
1,573
484,466
487,059
490,413
492,688
21,668
101,111
4,166
21,668
95,216
4,166
15,372
100,434
3,228
15,372
94,411
3,228
–
–
–
–
–
–
–
–
–
–
–
–
The following methods and assumptions were used to estimate the fair value of all other financial instruments
recognized in the accompanying consolidated balance sheets at amounts other than fair value.
Cash and Cash Equivalents
For these short-term instruments, the carrying amount approximates fair value.
Loans
The fair value of loans is esti mated by discounting the future cash flows using the market rates at wh ich similar
loans would be made to borrowers with similar credit ratings and for the sa me remaining maturities. Lo ans with
similar characteristics were a ggregated for purposes of the calculations. The car rying amount of accrued interest
approximates its fair value.
Federal Home Loan Bank Stock, Federal Reserve Bank Stock and other securities
The carrying amounts for these securities approximate their fair value.
Deposits
Deposits include demand deposits, savings accounts, NOW accounts and certain m oney market deposits. T he
carrying amount of these deposits approximates fair value. Th e fair value of fix ed maturity time deposits is
estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of si milar
remaining maturities. The carrying amount of accrued interest payable approximates its fair value.
F-45
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
Securities Sold Under Agreement to Repurchase and Other Interest-Bearing Liabilities
For these short-term instruments, the carrying amount is a reasonable estimate of fair value.
Long-Term Debt
Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate
the fair value of existing debt. Fair value of long-term debt is based on quoted market prices or dealer prices for the
identical liability when traded as an asset in an active market. If a quoted market price is not available, an expected
present value technique is used to estimate fair value.
Commitments to Extend Credit, Letters of Credit and Lines of Credit
The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar
agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the
counterparties. For fi xed rate loan commitments, fair value also considers the difference between current levels of
interest rates an d the committed rates. The fair v alue of letters o f credit and lines of credit are based on fe es
currently charged for similar ag reements or on the estimated cost to terminate or otherwise settle th e obligations
with the counterparties at the reporting date.
F-46
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 21: COMMITMENTS, CREDIT RISKS AND CURRENT ECONOMIC CONDITIONS
The Company extends credit for commercial real estate mortgages, residential mortgages, working capital financing
and consumer loans to businesses and residents principally in southern Johnson County. The B ank also purchases
indirect leases from various leasing companies throughout Kansas and Missouri.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition
established in the contract. C ommitments generally have fixed expiration dates or ot her termination clauses and
may require a payment of a fee. Since a portion of the commitments may expire without being drawn upon, the total
commitment amounts do not necessarily represent future cash requirements. Eac h customer’s creditworthiness is
evaluated on a case-by-case basis. T he amount of c ollateral obtained, if deem ed necessary, is based on
management’s credit evaluation of the counterparty. Collateral held va ries, but may include accounts receivable ,
inventory, property, plant and equipment, commercial real estate and resi dential real estate. At December 31, 2012
and 2011, the Company had outstanding commitments to originate loans aggregating approximately $28,268,000
and $22,744,000, respectively. Th e commitments extend over varying periods of time with the majority being
disbursed within a one-year period.
Mortgage loans in the process of o rigination represent amounts that the Company plans to fund within a norm al
period of 60 to 90 days and which are intended for sale to investors in the secondary market. Total mortgage loans
in the process of origination amounted to $1,577,000 and $1,410,000 at December 31, 2012 and 2011, respectively.
Mortgage loans in the process of origination represent commitments to originate loans at bo th fixed and variable
rates. M ortgage loans held for sale amounted to $7,621,000 and $5,686,000 at December 31, 2012 and 2011,
respectively.
Forward commitments to sell mortgage loans are obligations to sell loans at a specified price on or before a specified
future date. These commitments are acquired to reduce market risk on mortgage loans in the process of origination
and mortgage loans held for sale since the Company is exposed to interest rate risk during the period between
issuing a loan commitment and the sale of the loan into the secondary market. Related forward commitments to sell
mortgage loans amounted to approximately $7,621,000 and $7,096,000 at December 31, 2012 and 2011,
respectively.
Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to
a third party. Fin ancial standby letters of cre dit are prim arily issued to support public and private borrowing
arrangements, including commercial paper, bond financing and similar transactions. The credit risk involved in
issuing letters of credit is essentially the same as that involved in extending loans to customers. The Company had
total outstanding letters of credit amounting to $889,000 and $853,000 at D ecember 31, 2012 and 2011,
respectively, with terms ranging from one year to three years with the majority expiring in one year.
Lines of credit are agreements to lend to a cu stomer as long as there is no violation of any condition established in
the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without
being drawn upon, the total unused lines do not necessarily represent future cash re quirements. Each cust omer’s
creditworthiness is evaluated on a ca se-by-case basis. T he amount of collateral obtained, if deemed necessary, is
based on management’s credit evaluation of t he counterparty. C ollateral held varies, but may include accounts
receivable, inventory, property, plant and equipment, commercial real estate and residential real estate.
Management uses the same credit policies in granting lines of credit as it does for on-bala nce sheet instruments. At
December 31, 2012, the Company had unused lines of credit to borrowers aggregating approximately $146,913,000
for commercial, commercial real estate and construction lines and $33,570,000 for open-end consumer lines of
credit. At December 31, 2011, the Company had unused lines of credit to borrowers aggregating approximately
$141,238,000 for commercial, commercial real estate and construction lines and $38,446,000 for open-end
consumer lines of credit.
F-47
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 21: COMMITMENTS, CREDIT RISKS AND CURRENT ECONOMIC CONDITIONS (Continued)
The Bank is subject to possible future repurchase and indemnification demands for future losses realized by
investors for alleged breaches of representations and warranties on mortgage loans previously sold to investors. The
financial services industry has been materially and adversely impacted by a prolonged period of negative economic
conditions, including but not limited to high levels of unemployment, declines in asset v alues, as well as
delinquencies and defaults on loans. These defaults on loans include possible “strategic defaults” which are
characterized by borrowers that appear to have the financial means to meet the debt service requirements of their
loans, however, elect not to do so because the value of the assets securing their debts may have declined below the
amount of the debt or in c onsideration of statutory restrictions which impede a lender’s ability to exercise prudent
collection efforts or foreclose in an efficient manner. For three years ending December 31, 2012, the Company has
repurchased 1 loan from an i nvestor totaling $458,000 for which no losses have been recognized. Additionally,
during the three years e nding December 31, 2012, the Company has recognized indemnification losses totaling
approximately $255,000 for loans previously sold to investors. The financial statements have been prepared using
values and information currently available to the Company; however, there can be no assurance that the impact of
these conditions will cease or reverse to mitigate possible risk of future potential losses by the Bank.
The current protracted economic decline continues to present financial institutions with circumstances and
challenges, which in some cases have resulted in large and unanticipated declines in the fair values of investments
and other assets, con straints on liquidity and significant credit quality problems, including severe volatility in the
valuation of real estate and other collateral supporting loans. The fi nancial statements have bee n prepared using
values and information currently available to the Company.
Given the volatility of current economic conditions, the values of assets and liabilities recorded in the financial
statements could change rapidly, resulting in material future adjustments in asset v alues, the allowance for loan
losses and capital that could negatively impact the Company’s and Bank’s ability to meet regulatory capital
requirements and maintain sufficient liquidity. Furth ermore, the Company’s and Bank’s regulators could require
material adjustments to asset values or the allowance for loan losses for regulatory capital purposes that could affect
the Company’s and Bank’s measurement of regulatory capital and compliance with the capital adequacy guidelines
under the regulatory framework for prompt corrective action.
NOTE 22: LEGAL CONTINGENCIES
Various legal claims also arise from time to time in the normal course of b usiness which, in the opinion of
management, will have no material effect on the Company’s consolidated financial statements.
F-48
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 23: SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
The following table presents the unaudited results of operations for the past two years by quarter. See discussion on
earnings per share in "Note 1: Nat ure of Operations and Summary of Significant Accounting Policies" in the
Company's Consolidated Financial Statements.
2012
2011
Fourth
Second
Third
Quarter Quarter Quarter
First
Quarter
Fourth
Quarter
Third
Second
Quarter Quarter
First
Quarter
(In thousands, except per share data)
Interest income
Interest expense
Net interest income
Provision for loan losses
Net interest income after
provision for loan losses
Non-interest income
Non-interest expense
Income (loss) before income
taxes
Provision (benefit) for income taxes
Net income (loss)
Dividends on preferred shares
Net income (loss) available to
common shareholders
Net Income (loss) per Share Data
$ 6,002 $ 6,097 $ 6,060 $ 6,224
1,970
4,254
450
1,737
4,360
650
1,849
4,211
100
1,636
4,366
-
$ 6,736
2,098
4,638
600
$ 6,837 $ 6,631 $ 6,651
2,540
4,111
-
2,410
4,221
2,000
2,207
4,630
700
4,366
1,981
6,188
3,710
2,165
5,524
4,111
1,678
5,866
3,804
1,610
5,730
4,038
1,758
6,882
3,930
1,717
7,672
2,221
1,445
5,882
4,111
1,404
6,188
159
(147)
306
290
351
(1)
352
272
(77)
(1)
(76)
272
(316)
(1)
(315)
272
(1,086) (2,025) (2,216)
(69)
10,136
(11,222) (2,025) (2,147)
272
290
290
-
(673)
(244)
(429)
272
$
16 $
80 $
(348) $
(587) $ (11,512) $ (2,297) $ (2,419) $
(701)
Basic
Diluted
$
$
0.01 $
0.01 $
0.03 $ (0.12) $ (0.21)
0.03 $ (0.12) $ (0.21)
$
$
(4.10) $ (0.82) $ (0.86) $ (0.25)
(4.10) $ (0.82) $ (0.86) $ (0.25)
Balance Sheet
Total assets
Total loans, net
Stockholders' equity
$657,005 $662,917 $656,457 $671,946
406,614 421,243 419,928 427,094
39,815 39,573 39,440 39,833
$654,452
425,654
40,455
$677,511 $691,580 $693,776
442,496 443,878 462,009
51,912 54,310 56,368
The above unaudited financial information reflects all adjustments that are, in the opinion of management, necessary
to present a fair statement of the results of operations for the interim periods presented.
F-49
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 24: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
Condensed Balance Sheets
December 31, 2012 and 2011
(In thousands)
ASSETS
Cash and cash equivalents
Investments in subsidiaries:
Bank of Blue Valley
BVBC Capital Trust II
BVBC Capital Trust III
Other assets
Total Assets
LIABILITIES
Subordinated debentures
Other liabilities
Total Liabilities
STOCKHOLDERS’ EQUITY
2012
2011
$
646
$
743
65,924
232
356
18
64,282
232
356
55
$
67,176
$
65,668
$
19,588
7,773
27,361
$
19,588
5,625
25,213
Preferred Stock
Common stock
Additional paid-in capital
Retained earnings (Accumulated deficit)
Accumulated other comprehensive income, net of income tax of $29 and $89 as of
December 31, 2012 and 2011, respectively
Total Stockholders’ Equity
22
2,934
38,746
(1,930)
43
39,815
22
2,879
38,511
(1,091)
134
40,455
Total Liabilities and Stockholders’ Equity
$
67,176
$
65,668
F-50
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 24: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
(Continued)
Condensed Statements of Operations
Years Ended December 31, 2012, 2011 and 2010
(In thousands)
Income
Dividends from subsidiaries
Other income
2012
2011
2010
$
–
20
20
$
–
19
19
$
–
20
20
Expenses
1,486
1,291
1,496
Loss before income taxes and equity in undistributed net loss of
subsidiaries
Income tax (benefit)
Valuation allowance on deferred tax asset
Loss before equity in undistributed net loss of subsidiaries
Equity in undistributed net loss of subsidiaries
(1,466)
(494)
494
(1,466)
1,733
(1,272)
(1,142)
2,169
(2,299)
(13,524)
(1,476)
(531)
–
(945)
(1,797)
Net income (loss)
$
267
$ (15,823)
$
(2,742)
Condensed Statements of Comprehensive Income (Loss)
Years Ended December 31, 2012, 2011 and 2010
(In thousands)
Net income (loss)
Other comprehensive income (loss)
2012
2011
2010
$
267
$
(15,823)
$
(2,742)
Change
in un realized appreciation on available-for-sale
securities, net of income taxe s (credit) of $(60) in 2012,
$69 in 2011 and $(49) in 2010
Comprehensive income (loss)
$
(91)
176
$
104
(15,719)
$
(73)
(2,815)
F-51
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2012, 2011 AND 2010
NOTE 24: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
(Continued)
Condensed Statements of Cash Flows
Years Ended December 31, 2012, 2011 and 2010
(In thousands)
OPERATING ACTIVITIES
Net Income (loss)
Items not requiring (providing) cash:
Deferred income taxes
Equity in undistributed net loss (income) of
subsidiaries
Restricted stock earned
Changes in:
Other assets
Other liabilities
Net cash used in operating activities
INVESTING ACTIVITIES
Capital contributed to subsidiary
Net cash used in investing activities
FINANCING ACTIVITIES
Proceeds from sale of common stock through Employee
Stock Purchase Plan (ESPP)
Net cash provided by financing activities
DECREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS,
END OF YEAR
2012
2011
2010
$
267
$ (15,823)
$
(2,742)
0
(1,733)
245
37
1,060
(124)
–
–
27
27
(97)
743
1,197
13,524
77
(38)
943
(120)
–
–
21
21
(99)
842
(417)
1,797
428
–
842
(92)
–
–
35
35
(57)
899
$
646
$
743
$
842
F-52
blue valley ban corp.
STOCKHOLDER INFORMATION 2012
corporate office
11935 Riley
PO Box 26128
stock quotation symbol
Shares of Blue Valley Ban Corp. com-
mon stock are currently quoted on the
Overland Park, KS 66225-6128
OTCQB under the symbol BVBC.
913.338.1000 l 913.234.7145 (fax)
operations center
7900 College Boulevard
Overland Park, KS 66210
helpline
913.338.HELP (4357)
internet websites
• www.BankBV.com
• www.InternetMortgage.com
transfer agent and registrar
American Stock Transfer & Trust
Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
auditors
BKD, LLP
1201 Walnut Street, Suite 1700
Kansas City, MO 64106-2246
corporate counsel
annual meeting of stockholders
Husch Blackwell LLP
The annual meeting will be held on
4801 Main Street, Suite 1000
May 15, 2013 at 5:30 p.m. at the
Kansas City, MO 64112-2502
Leawood Banking Center, 13401
Mission Road, Leawood, KS 66219.
Stinson Morrison Hecker LLP
investor inquiries
To request additional copies of our
1201 Walnut Street, Suite 2900
Kansas City, MO 64106-2150
Annual Report to inquire about other
market maker
stockholder issues, visit our Investor
Relations webpage at www.BankBV.
com or contact Mark A. Fortino,
Chief Financial Officer, at our
corporate office.
Stifel, Nicolaus & Company,
Incorporated
One Financial Plaza
501 N Broadway, 9th Floor
St. Louis, MO 63102-2102
Local trading desk: 913.345.4200
OVERLAND PARK l 11935 RILEY l OVERLAND PARK, KS 66213
OLATHE l 1235 E. SANTA FE l OLATHE, KS 66061
SHAWNEE l 5520 HEDGE LANE TERRACE l SHAWNEE, KS 66226
LEAWOOD l 13401 MISSION ROAD l LEAWOOD, KS 66209
LENEXA l 9500 LACKMAN ROAD l LENEXA, KS 66219
WWW.BANKBV.COM l 913.338.1000