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MEMBER FDIC
OVERLAND PARK
11935 RILEY ST l OVERLAND PARK, KS 66213
OLATHE
1235 E. SANTA FE l OLATHE, KS 66061
SHAWNEE
5520 HEDGE LANE TERR l SHAWNEE, KS 66226
LEAWOOD
13401 MISSION RD l LEAWOOD, KS 66209
LENEXA
9500 LACKMAN RD l LENEXA, KS 66219
WWW.BANKBV.COM l 913.338.1000
S E R V I N G K A N S A S C I T Y F O R A Q U A R T E R O F A C E N T U R Y
COMMUNITY
PHILANTHROPY
ENTREPRENEURSHIP
BANK’S EXCESS REGULATORY CAPITAL
in thousands
$25,000
$24,000
$23,000
$22,000
$21,000
$20,000
$19,000
$18,000
$17,000
$16,000
$15,000
Since 2010, one of the primary contributing factors to the
strengthening of our capital position has been the expanding
contribution of our net interest margin and net interest
income to our earnings. We have seen our net interest margin
grow 111 basis points from 2.23% as of December 31, 2010
to 3.34% as of December 31, 2014. During that period, our
net interest income has increased $2.2 million, or 14.0%, from
$15.9 million to $18.2 million.
2011
2012
2013
2014
We engaged creative expertise from within and outside of our
organization to refine our messaging and communications
BANK EXECUTIVE TEAM
Mark A. Fortino
Bruce A. Easterly
Robert D. Regnier
Bonnie M. McConnaughy
Steve H. Fleischaker
Executive Vice President &
Chief Operating Officer
Executive Vice President &
Chief Lending Officer
Chairman, President &
Chief Executive Officer
Senior Vice President,
Operations
Senior Vice President,
Director of Sales & Business
Development
As we celebrate our 25th year of serving Kansas City and I
reflect on the timeline and events highlighted in this annual
report, it reminds me of all the great moments we’ve shared
over the past quarter of a century.
Each year brought with it new challenges and new oppor-
tunities to form relationships and to better serve our
customers and our community.
Our strategic plan for 2014 set forth very aggressive goals
for our Company, and I am pleased to report that we
achieved those goals and we are well-positioned for 2015
and beyond.
During 2014, we reduced our nonperforming assets by
$11.2 million or 34.0%. As of December 31, 2014 our
nonperforming assets accounted for only 3.4% of our
total assets. We enhanced our leadership team with the
promotion of several key officers and the addition of
significant talent to both our Company’s and our Bank’s
Board of Directors. Earnings and prudent asset manage-
ment have enabled us to continue the expansion of our
Bank’s excess regulatory capital. Since 2011, we have
expanded our Bank’s excess regulatory capital by $8.8
million or 54.4%. As of December 31, 2014, the Bank had
$25.1 million of capital in excess of what is required to be
considered “Well Capitalized” by regulatory standards. The
Bank’s total regulatory capital as of December 31, 2014
exceeded $75.4 million which puts us in a good position
going forward.
ROBERT D. REGNIER
PRESIDENT & CEO
1989
Opened for business in a double-wide
trailer on the corner of 119th & Metcalf
in Overland Park, KS
1994
Growth through acquisition –
Olathe banking center opens
1994
Completed construction of new
headquarters building (moved out
of double-wide trailer)
1994
Began offering Wealth Management
Trust Services
From our very first day, we've aspired to give back to the
community that has fostered our success, and 2014 was
no exception. Last year, the Bank and our employees
donated more than $288,000 to a variety of community
causes, charities, and non-profits. It is important for our
Company to embody a strong philanthropic presence
because of the important role we play in helping the
community grow and prosper. This is why we are proud to
have given over $3 million to nearly 600 local non-profits
over the past 25 years.
to clarify our brand and our identity — those tangible
I have always believed that if we create a better environment
Inclusive of this growth, the mix of our deposit portfolio as of
promotion of Steve Fleischaker, a fourteen-year employee,
and intangible qualities that set us apart from other organiza-
for our customers and community members, business will
December 31, 2014 is reflective of the diverse composition
to Senior Vice President and Director of Sales and Business
tions. We listened to our staff, our board, our stockholders,
flourish and people will seek this community as a place to
and needs of our customers.
Development for the Bank. Mark and Steve, together with
and most importantly, our customers, who reminded us of
live, work, and raise a family. We’ve seen this happen over 25
Bruce Easterly, Executive Vice President and Chief Lending
the three pillars that have defined us since our inception 25
years as our Company has grown with our community. In
Over the past 25 years, Bank of Blue Valley has taken pride in
Officer, and Bonnie McConnaughy, Senior Vice President,
years ago: Community, Philanthropy and Entrepreneurship.
2014, our total deposits grew by over $20 million or 4.55%.
assisting individuals and entrepreneurs. The Bank continues
Operations, have contributed greatly to our success in the
to support the growth of the Kansas City community by
past and will be instrumental to our success going forward.
being an active lender to area businesses and offering
customizable solutions to help business owners achieve
The strength of our Company and Bank Boards has been at
their financial goals. We have a diverse range of lending
the heart of our success since our inception. We have been
products to offer which is reflected in the composition of our
fortunate to have attracted many great community leaders to
loan portfolio as of December 31, 2014.
our boards over the years. However, our addition of four new
directors at one time is unprecedented for the organization.
Our success in being a community-minded, philanthropic,
entrepreneurial organization starts with our leadership. Our
• Thomas A. McDonnell, is an experienced business leader
staff is consistently recognized in local publications for their
with a track record of building global organizations that
leadership and outstanding service. Over 28% of our
are both innovative and philanthropic.
employees and 62% of our officer staff have been with us for
• Anne D. St. Peter is the founder of a high-growth, digital
10 or more years. The tenure of our employees is a signifi-
marketing and advertising agency.
cant component of our success and we are grateful for their
• William “Ryan” Wilkerson IV is the President and CEO of a
continued loyalty. This past December we promoted Mark
third-generation Kansas City risk management and insurance
Fortino, a seventeen-year employee to Executive Vice
brokerage firm.
President and Chief Operating Officer of the Bank. We
• Steven D. Wilkinson is the immediate past CEO of a major
further enhanced our senior leadership team with the
local medical center whose vision and passion over the
past 17 years helped them grow and expand to become
invest in our employees and we will look to enhance
one of Kansas City's best-known healthcare assets.
our market perception through active communication
Tom, Anne, Ryan and Steve are all very successful in
and community events, which have been at the core of our
strategies and continued support and involvement in civic
their respective careers, are highly regarded in the Kansas
values since our inception.
City community and will contribute significantly to the
governance of both the Company and the Bank. I have had
Community, Philanthropy, and Entrepreneurship will
the good fortune to know and work with each of them
continue to drive the decisions we make every day. Thank
and can speak to the fact they all embody our values of
you for the relationship that we’ve enjoyed with each
community, philanthropy and entrepreneurship.
other over the past Quarter of a Century.
We are looking forward to 2015 as we refine the Company’s
sales management process with the goal of cultivating new
customer
relationships, expanding existing customer
relationships, prudent asset and deposit growth, and
Robert D. Regnier
increasing non-interest income. We will continue to
President & CEO
BANK’S EXCESS REGULATORY CAPITAL
in thousands
$25,000
$24,000
$23,000
$22,000
$21,000
$20,000
$19,000
$18,000
$17,000
$16,000
$15,000
Since 2010, one of the primary contributing factors to the
strengthening of our capital position has been the expanding
contribution of our net interest margin and net interest
income to our earnings. We have seen our net interest margin
grow 111 basis points from 2.23% as of December 31, 2010
to 3.34% as of December 31, 2014. During that period, our
net interest income has increased $2.2 million, or 14.0%, from
$15.9 million to $18.2 million.
2011
2012
2013
2014
We engaged creative expertise from within and outside of our
organization to refine our messaging and communications
BANK EXECUTIVE TEAM
Mark A. Fortino
Bruce A. Easterly
Robert D. Regnier
Bonnie M. McConnaughy
Steve H. Fleischaker
Executive Vice President &
Chief Operating Officer
Executive Vice President &
Chief Lending Officer
Chairman, President &
Chief Executive Officer
Senior Vice President,
Operations
Senior Vice President,
Director of Sales & Business
Development
As we celebrate our 25th year of serving Kansas City and I
reflect on the timeline and events highlighted in this annual
report, it reminds me of all the great moments we’ve shared
over the past quarter of a century.
Each year brought with it new challenges and new oppor-
tunities to form relationships and to better serve our
customers and our community.
Our strategic plan for 2014 set forth very aggressive goals
for our Company, and I am pleased to report that we
achieved those goals and we are well-positioned for 2015
and beyond.
During 2014, we reduced our nonperforming assets by
$11.2 million or 34.0%. As of December 31, 2014 our
nonperforming assets accounted for only 3.4% of our
total assets. We enhanced our leadership team with the
promotion of several key officers and the addition of
significant talent to both our Company’s and our Bank’s
Board of Directors. Earnings and prudent asset manage-
ment have enabled us to continue the expansion of our
Bank’s excess regulatory capital. Since 2011, we have
expanded our Bank’s excess regulatory capital by $8.8
million or 54.4%. As of December 31, 2014, the Bank had
$25.1 million of capital in excess of what is required to be
considered “Well Capitalized” by regulatory standards. The
Bank’s total regulatory capital as of December 31, 2014
exceeded $75.4 million which puts us in a good position
going forward.
ROBERT D. REGNIER
PRESIDENT & CEO
1989
Opened for business in a double-wide
trailer on the corner of 119th & Metcalf
in Overland Park, KS
1994
Growth through acquisition –
Olathe banking center opens
1994
Completed construction of new
headquarters building (moved out
of double-wide trailer)
1994
Began offering Wealth Management
Trust Services
From our very first day, we've aspired to give back to the
community that has fostered our success, and 2014 was
no exception. Last year, the Bank and our employees
donated more than $288,000 to a variety of community
causes, charities, and non-profits. It is important for our
Company to embody a strong philanthropic presence
because of the important role we play in helping the
community grow and prosper. This is why we are proud to
have given over $3 million to nearly 600 local non-profits
over the past 25 years.
to clarify our brand and our identity — those tangible
I have always believed that if we create a better environment
Inclusive of this growth, the mix of our deposit portfolio as of
promotion of Steve Fleischaker, a fourteen-year employee,
and intangible qualities that set us apart from other organiza-
for our customers and community members, business will
December 31, 2014 is reflective of the diverse composition
to Senior Vice President and Director of Sales and Business
tions. We listened to our staff, our board, our stockholders,
flourish and people will seek this community as a place to
and needs of our customers.
Development for the Bank. Mark and Steve, together with
and most importantly, our customers, who reminded us of
live, work, and raise a family. We’ve seen this happen over 25
Bruce Easterly, Executive Vice President and Chief Lending
the three pillars that have defined us since our inception 25
years as our Company has grown with our community. In
Over the past 25 years, Bank of Blue Valley has taken pride in
Officer, and Bonnie McConnaughy, Senior Vice President,
years ago: Community, Philanthropy and Entrepreneurship.
2014, our total deposits grew by over $20 million or 4.55%.
assisting individuals and entrepreneurs. The Bank continues
Operations, have contributed greatly to our success in the
to support the growth of the Kansas City community by
past and will be instrumental to our success going forward.
being an active lender to area businesses and offering
customizable solutions to help business owners achieve
The strength of our Company and Bank Boards has been at
their financial goals. We have a diverse range of lending
the heart of our success since our inception. We have been
products to offer which is reflected in the composition of our
fortunate to have attracted many great community leaders to
loan portfolio as of December 31, 2014.
our boards over the years. However, our addition of four new
directors at one time is unprecedented for the organization.
Our success in being a community-minded, philanthropic,
entrepreneurial organization starts with our leadership. Our
• Thomas A. McDonnell, is an experienced business leader
staff is consistently recognized in local publications for their
with a track record of building global organizations that
leadership and outstanding service. Over 28% of our
are both innovative and philanthropic.
employees and 62% of our officer staff have been with us for
• Anne D. St. Peter is the founder of a high-growth, digital
10 or more years. The tenure of our employees is a signifi-
marketing and advertising agency.
cant component of our success and we are grateful for their
• William “Ryan” Wilkerson IV is the President and CEO of a
continued loyalty. This past December we promoted Mark
third-generation Kansas City risk management and insurance
Fortino, a seventeen-year employee to Executive Vice
brokerage firm.
President and Chief Operating Officer of the Bank. We
• Steven D. Wilkinson is the immediate past CEO of a major
further enhanced our senior leadership team with the
local medical center whose vision and passion over the
past 17 years helped them grow and expand to become
invest in our employees and we will look to enhance
one of Kansas City's best-known healthcare assets.
our market perception through active communication
Tom, Anne, Ryan and Steve are all very successful in
and community events, which have been at the core of our
strategies and continued support and involvement in civic
their respective careers, are highly regarded in the Kansas
values since our inception.
City community and will contribute significantly to the
governance of both the Company and the Bank. I have had
Community, Philanthropy, and Entrepreneurship will
the good fortune to know and work with each of them
continue to drive the decisions we make every day. Thank
and can speak to the fact they all embody our values of
you for the relationship that we’ve enjoyed with each
community, philanthropy and entrepreneurship.
other over the past Quarter of a Century.
We are looking forward to 2015 as we refine the Company’s
sales management process with the goal of cultivating new
customer
relationships, expanding existing customer
relationships, prudent asset and deposit growth, and
Robert D. Regnier
increasing non-interest income. We will continue to
President & CEO
Since 2010, one of the primary contributing factors to the
strengthening of our capital position has been the expanding
contribution of our net interest margin and net interest
income to our earnings. We have seen our net interest margin
grow 111 basis points from 2.23% as of December 31, 2010
to 3.34% as of December 31, 2014. During that period, our
net interest income has increased $2.2 million, or 14.0%, from
$15.9 million to $18.2 million.
We engaged creative expertise from within and outside of our
organization to refine our messaging and communications
As we celebrate our 25th year of serving Kansas City and I
reflect on the timeline and events highlighted in this annual
report, it reminds me of all the great moments we’ve shared
over the past quarter of a century.
Each year brought with it new challenges and new oppor-
tunities to form relationships and to better serve our
customers and our community.
Our strategic plan for 2014 set forth very aggressive goals
for our Company, and I am pleased to report that we
achieved those goals and we are well-positioned for 2015
and beyond.
During 2014, we reduced our nonperforming assets by
$11.2 million or 34.0%. As of December 31, 2014 our
nonperforming assets accounted for only 3.4% of our
total assets. We enhanced our leadership team with the
promotion of several key officers and the addition of
significant talent to both our Company’s and our Bank’s
Board of Directors. Earnings and prudent asset manage-
ment have enabled us to continue the expansion of our
Bank’s excess regulatory capital. Since 2011, we have
expanded our Bank’s excess regulatory capital by $8.8
million or 54.4%. As of December 31, 2014, the Bank had
$25.1 million of capital in excess of what is required to be
considered “Well Capitalized” by regulatory standards. The
Bank’s total regulatory capital as of December 31, 2014
exceeded $75.4 million which puts us in a good position
going forward.
EXPANSION OF NET INTEREST MARGIN
& NET INTEREST INCOME
From our very first day, we've aspired to give back to the
community that has fostered our success, and 2014 was
COMPOSITION OF DEPOSIT PORTFOLIO
COMPOSITION OF LOAN PORTFOLIO
in thousands
$18,500
$18,000
$17,500
$17,000
$16,500
$16,000
$15,500
Net Interest Income
Net Interest Margin
no exception. Last year, the Bank and our employees
3.60%
3.40%
3.20%
3.00%
2.80%
2.60%
2.40%
2.20%
2.00%
donated more than $288,000 to a variety of community
causes, charities, and non-profits. It is important for our
Company to embody a strong philanthropic presence
because of the important role we play in helping the
community grow and prosper. This is why we are proud to
have given over $3 million to nearly 600 local non-profits
21% Time
Deposits •
22% Investment
Accounts •
2010
2011
2012
2013
2014
over the past 25 years.
• 4% Savings
• 26% Demand
Deposits
11% Residential
Real Estate •
9% Home Equity •
11% Construction •
• 2% Consumer
• 34% Commercial
• 27% Interest
Checking
• 33% Commercial
Real Estate
to clarify our brand and our identity — those tangible
I have always believed that if we create a better environment
Inclusive of this growth, the mix of our deposit portfolio as of
promotion of Steve Fleischaker, a fourteen-year employee,
and intangible qualities that set us apart from other organiza-
for our customers and community members, business will
December 31, 2014 is reflective of the diverse composition
to Senior Vice President and Director of Sales and Business
tions. We listened to our staff, our board, our stockholders,
flourish and people will seek this community as a place to
and needs of our customers.
Development for the Bank. Mark and Steve, together with
and most importantly, our customers, who reminded us of
live, work, and raise a family. We’ve seen this happen over 25
Bruce Easterly, Executive Vice President and Chief Lending
the three pillars that have defined us since our inception 25
years as our Company has grown with our community. In
Over the past 25 years, Bank of Blue Valley has taken pride in
Officer, and Bonnie McConnaughy, Senior Vice President,
years ago: Community, Philanthropy and Entrepreneurship.
2014, our total deposits grew by over $20 million or 4.55%.
assisting individuals and entrepreneurs. The Bank continues
Operations, have contributed greatly to our success in the
BANK BOARD
to support the growth of the Kansas City community by
past and will be instrumental to our success going forward.
being an active lender to area businesses and offering
Don H. Alexander
Steven D. Wilkinson
Charles H. Hunter
Robert D. Regnier
William “Ryan” Wilkerson IV
Richard L. Bond
customizable solutions to help business owners achieve
The strength of our Company and Bank Boards has been at
President,
Alexander &
Associates, Inc.
Former President &
CEO of Menorah
Medical Center
Principal, Kessinger/
Hunter & Company
Chairman,
President & CEO
President & CEO
of Haas &
Wilkerson Insurance
Consultant, Midwest
Trust Co. & former
Kansas Senate President
their financial goals. We have a diverse range of lending
the heart of our success since our inception. We have been
products to offer which is reflected in the composition of our
fortunate to have attracted many great community leaders to
loan portfolio as of December 31, 2014.
our boards over the years. However, our addition of four new
directors at one time is unprecedented for the organization.
Our success in being a community-minded, philanthropic,
entrepreneurial organization starts with our leadership. Our
• Thomas A. McDonnell, is an experienced business leader
staff is consistently recognized in local publications for their
with a track record of building global organizations that
leadership and outstanding service. Over 28% of our
are both innovative and philanthropic.
employees and 62% of our officer staff have been with us for
• Anne D. St. Peter is the founder of a high-growth, digital
10 or more years. The tenure of our employees is a signifi-
marketing and advertising agency.
cant component of our success and we are grateful for their
• William “Ryan” Wilkerson IV is the President and CEO of a
continued loyalty. This past December we promoted Mark
third-generation Kansas City risk management and insurance
Fortino, a seventeen-year employee to Executive Vice
brokerage firm.
President and Chief Operating Officer of the Bank. We
• Steven D. Wilkinson is the immediate past CEO of a major
further enhanced our senior leadership team with the
local medical center whose vision and passion over the
1999
Began offering Wealth Management
Investment Brokerage Services
2000
Became a public company
2001
Shawnee banking
center opens
2004
Leawood banking
center opens
2007
Growth through acquisition –
Lenexa banking center opens
past 17 years helped them grow and expand to become
invest in our employees and we will look to enhance
one of Kansas City's best-known healthcare assets.
our market perception through active communication
Tom, Anne, Ryan and Steve are all very successful in
and community events, which have been at the core of our
strategies and continued support and involvement in civic
their respective careers, are highly regarded in the Kansas
values since our inception.
City community and will contribute significantly to the
governance of both the Company and the Bank. I have had
Community, Philanthropy, and Entrepreneurship will
the good fortune to know and work with each of them
continue to drive the decisions we make every day. Thank
and can speak to the fact they all embody our values of
you for the relationship that we’ve enjoyed with each
community, philanthropy and entrepreneurship.
other over the past Quarter of a Century.
We are looking forward to 2015 as we refine the Company’s
sales management process with the goal of cultivating new
customer
relationships, expanding existing customer
relationships, prudent asset and deposit growth, and
Robert D. Regnier
increasing non-interest income. We will continue to
President & CEO
Since 2010, one of the primary contributing factors to the
strengthening of our capital position has been the expanding
contribution of our net interest margin and net interest
income to our earnings. We have seen our net interest margin
grow 111 basis points from 2.23% as of December 31, 2010
to 3.34% as of December 31, 2014. During that period, our
net interest income has increased $2.2 million, or 14.0%, from
$15.9 million to $18.2 million.
We engaged creative expertise from within and outside of our
organization to refine our messaging and communications
As we celebrate our 25th year of serving Kansas City and I
reflect on the timeline and events highlighted in this annual
report, it reminds me of all the great moments we’ve shared
over the past quarter of a century.
Each year brought with it new challenges and new oppor-
tunities to form relationships and to better serve our
customers and our community.
Our strategic plan for 2014 set forth very aggressive goals
for our Company, and I am pleased to report that we
achieved those goals and we are well-positioned for 2015
and beyond.
During 2014, we reduced our nonperforming assets by
$11.2 million or 34.0%. As of December 31, 2014 our
nonperforming assets accounted for only 3.4% of our
total assets. We enhanced our leadership team with the
promotion of several key officers and the addition of
significant talent to both our Company’s and our Bank’s
Board of Directors. Earnings and prudent asset manage-
ment have enabled us to continue the expansion of our
Bank’s excess regulatory capital. Since 2011, we have
expanded our Bank’s excess regulatory capital by $8.8
million or 54.4%. As of December 31, 2014, the Bank had
$25.1 million of capital in excess of what is required to be
considered “Well Capitalized” by regulatory standards. The
Bank’s total regulatory capital as of December 31, 2014
exceeded $75.4 million which puts us in a good position
going forward.
EXPANSION OF NET INTEREST MARGIN
& NET INTEREST INCOME
From our very first day, we've aspired to give back to the
community that has fostered our success, and 2014 was
COMPOSITION OF DEPOSIT PORTFOLIO
COMPOSITION OF LOAN PORTFOLIO
in thousands
$18,500
$18,000
$17,500
$17,000
$16,500
$16,000
$15,500
Net Interest Income
Net Interest Margin
no exception. Last year, the Bank and our employees
3.60%
3.40%
3.20%
3.00%
2.80%
2.60%
2.40%
2.20%
2.00%
donated more than $288,000 to a variety of community
causes, charities, and non-profits. It is important for our
Company to embody a strong philanthropic presence
because of the important role we play in helping the
community grow and prosper. This is why we are proud to
have given over $3 million to nearly 600 local non-profits
21% Time
Deposits •
22% Investment
Accounts •
2010
2011
2012
2013
2014
over the past 25 years.
• 4% Savings
• 26% Demand
Deposits
11% Residential
Real Estate •
9% Home Equity •
11% Construction •
• 2% Consumer
• 34% Commercial
• 27% Interest
Checking
• 33% Commercial
Real Estate
to clarify our brand and our identity — those tangible
I have always believed that if we create a better environment
Inclusive of this growth, the mix of our deposit portfolio as of
promotion of Steve Fleischaker, a fourteen-year employee,
and intangible qualities that set us apart from other organiza-
for our customers and community members, business will
December 31, 2014 is reflective of the diverse composition
to Senior Vice President and Director of Sales and Business
tions. We listened to our staff, our board, our stockholders,
flourish and people will seek this community as a place to
and needs of our customers.
Development for the Bank. Mark and Steve, together with
and most importantly, our customers, who reminded us of
live, work, and raise a family. We’ve seen this happen over 25
Bruce Easterly, Executive Vice President and Chief Lending
the three pillars that have defined us since our inception 25
years as our Company has grown with our community. In
Over the past 25 years, Bank of Blue Valley has taken pride in
Officer, and Bonnie McConnaughy, Senior Vice President,
years ago: Community, Philanthropy and Entrepreneurship.
2014, our total deposits grew by over $20 million or 4.55%.
assisting individuals and entrepreneurs. The Bank continues
Operations, have contributed greatly to our success in the
BANK BOARD
to support the growth of the Kansas City community by
past and will be instrumental to our success going forward.
being an active lender to area businesses and offering
Don H. Alexander
Steven D. Wilkinson
Charles H. Hunter
Robert D. Regnier
William “Ryan” Wilkerson IV
Richard L. Bond
customizable solutions to help business owners achieve
The strength of our Company and Bank Boards has been at
President,
Alexander &
Associates, Inc.
Former President &
CEO of Menorah
Medical Center
Principal, Kessinger/
Hunter & Company
Chairman,
President & CEO
President & CEO
of Haas &
Wilkerson Insurance
Consultant, Midwest
Trust Co. & former
Kansas Senate President
their financial goals. We have a diverse range of lending
the heart of our success since our inception. We have been
products to offer which is reflected in the composition of our
fortunate to have attracted many great community leaders to
loan portfolio as of December 31, 2014.
our boards over the years. However, our addition of four new
directors at one time is unprecedented for the organization.
Our success in being a community-minded, philanthropic,
entrepreneurial organization starts with our leadership. Our
• Thomas A. McDonnell, is an experienced business leader
staff is consistently recognized in local publications for their
with a track record of building global organizations that
leadership and outstanding service. Over 28% of our
are both innovative and philanthropic.
employees and 62% of our officer staff have been with us for
• Anne D. St. Peter is the founder of a high-growth, digital
10 or more years. The tenure of our employees is a signifi-
marketing and advertising agency.
cant component of our success and we are grateful for their
• William “Ryan” Wilkerson IV is the President and CEO of a
continued loyalty. This past December we promoted Mark
third-generation Kansas City risk management and insurance
Fortino, a seventeen-year employee to Executive Vice
brokerage firm.
President and Chief Operating Officer of the Bank. We
• Steven D. Wilkinson is the immediate past CEO of a major
further enhanced our senior leadership team with the
local medical center whose vision and passion over the
1999
Began offering Wealth Management
Investment Brokerage Services
2000
Became a public company
2001
Shawnee banking
center opens
2004
Leawood banking
center opens
2007
Growth through acquisition –
Lenexa banking center opens
past 17 years helped them grow and expand to become
invest in our employees and we will look to enhance
one of Kansas City's best-known healthcare assets.
our market perception through active communication
Tom, Anne, Ryan and Steve are all very successful in
and community events, which have been at the core of our
strategies and continued support and involvement in civic
their respective careers, are highly regarded in the Kansas
values since our inception.
City community and will contribute significantly to the
governance of both the Company and the Bank. I have had
Community, Philanthropy, and Entrepreneurship will
the good fortune to know and work with each of them
continue to drive the decisions we make every day. Thank
and can speak to the fact they all embody our values of
you for the relationship that we’ve enjoyed with each
community, philanthropy and entrepreneurship.
other over the past Quarter of a Century.
We are looking forward to 2015 as we refine the Company’s
sales management process with the goal of cultivating new
customer
relationships, expanding existing customer
relationships, prudent asset and deposit growth, and
Robert D. Regnier
increasing non-interest income. We will continue to
President & CEO
Since 2010, one of the primary contributing factors to the
strengthening of our capital position has been the expanding
contribution of our net interest margin and net interest
income to our earnings. We have seen our net interest margin
grow 111 basis points from 2.23% as of December 31, 2010
to 3.34% as of December 31, 2014. During that period, our
net interest income has increased $2.2 million, or 14.0%, from
$15.9 million to $18.2 million.
We engaged creative expertise from within and outside of our
organization to refine our messaging and communications
As we celebrate our 25th year of serving Kansas City and I
reflect on the timeline and events highlighted in this annual
report, it reminds me of all the great moments we’ve shared
over the past quarter of a century.
Each year brought with it new challenges and new oppor-
tunities to form relationships and to better serve our
customers and our community.
Our strategic plan for 2014 set forth very aggressive goals
for our Company, and I am pleased to report that we
achieved those goals and we are well-positioned for 2015
and beyond.
During 2014, we reduced our nonperforming assets by
$11.2 million or 34.0%. As of December 31, 2014 our
nonperforming assets accounted for only 3.4% of our
total assets. We enhanced our leadership team with the
promotion of several key officers and the addition of
significant talent to both our Company’s and our Bank’s
Board of Directors. Earnings and prudent asset manage-
ment have enabled us to continue the expansion of our
Bank’s excess regulatory capital. Since 2011, we have
expanded our Bank’s excess regulatory capital by $8.8
million or 54.4%. As of December 31, 2014, the Bank had
$25.1 million of capital in excess of what is required to be
considered “Well Capitalized” by regulatory standards. The
Bank’s total regulatory capital as of December 31, 2014
exceeded $75.4 million which puts us in a good position
going forward.
From our very first day, we've aspired to give back to the
community that has fostered our success, and 2014 was
no exception. Last year, the Bank and our employees
donated more than $288,000 to a variety of community
causes, charities, and non-profits. It is important for our
Company to embody a strong philanthropic presence
because of the important role we play in helping the
community grow and prosper. This is why we are proud to
have given over $3 million to nearly 600 local non-profits
over the past 25 years.
to clarify our brand and our identity — those tangible
I have always believed that if we create a better environment
Inclusive of this growth, the mix of our deposit portfolio as of
promotion of Steve Fleischaker, a fourteen-year employee,
and intangible qualities that set us apart from other organiza-
for our customers and community members, business will
December 31, 2014 is reflective of the diverse composition
to Senior Vice President and Director of Sales and Business
tions. We listened to our staff, our board, our stockholders,
flourish and people will seek this community as a place to
and needs of our customers.
Development for the Bank. Mark and Steve, together with
and most importantly, our customers, who reminded us of
live, work, and raise a family. We’ve seen this happen over 25
Bruce Easterly, Executive Vice President and Chief Lending
the three pillars that have defined us since our inception 25
years as our Company has grown with our community. In
Over the past 25 years, Bank of Blue Valley has taken pride in
Officer, and Bonnie McConnaughy, Senior Vice President,
years ago: Community, Philanthropy and Entrepreneurship.
2014, our total deposits grew by over $20 million or 4.55%.
assisting individuals and entrepreneurs. The Bank continues
Operations, have contributed greatly to our success in the
to support the growth of the Kansas City community by
past and will be instrumental to our success going forward.
being an active lender to area businesses and offering
customizable solutions to help business owners achieve
The strength of our Company and Bank Boards has been at
their financial goals. We have a diverse range of lending
the heart of our success since our inception. We have been
products to offer which is reflected in the composition of our
fortunate to have attracted many great community leaders to
loan portfolio as of December 31, 2014.
our boards over the years. However, our addition of four new
directors at one time is unprecedented for the organization.
Our success in being a community-minded, philanthropic,
entrepreneurial organization starts with our leadership. Our
• Thomas A. McDonnell, is an experienced business leader
staff is consistently recognized in local publications for their
with a track record of building global organizations that
leadership and outstanding service. Over 28% of our
are both innovative and philanthropic.
employees and 62% of our officer staff have been with us for
• Anne D. St. Peter is the founder of a high-growth, digital
10 or more years. The tenure of our employees is a signifi-
marketing and advertising agency.
cant component of our success and we are grateful for their
• William “Ryan” Wilkerson IV is the President and CEO of a
continued loyalty. This past December we promoted Mark
third-generation Kansas City risk management and insurance
Fortino, a seventeen-year employee to Executive Vice
brokerage firm.
President and Chief Operating Officer of the Bank. We
• Steven D. Wilkinson is the immediate past CEO of a major
further enhanced our senior leadership team with the
local medical center whose vision and passion over the
past 17 years helped them grow and expand to become
invest in our employees and we will look to enhance
one of Kansas City's best-known healthcare assets.
our market perception through active communication
Tom, Anne, Ryan and Steve are all very successful in
and community events, which have been at the core of our
strategies and continued support and involvement in civic
their respective careers, are highly regarded in the Kansas
values since our inception.
City community and will contribute significantly to the
governance of both the Company and the Bank. I have had
Community, Philanthropy, and Entrepreneurship will
the good fortune to know and work with each of them
continue to drive the decisions we make every day. Thank
and can speak to the fact they all embody our values of
you for the relationship that we’ve enjoyed with each
community, philanthropy and entrepreneurship.
other over the past Quarter of a Century.
We are looking forward to 2015 as we refine the Company’s
sales management process with the goal of cultivating new
customer
relationships, expanding existing customer
relationships, prudent asset and deposit growth, and
Robert D. Regnier
increasing non-interest income. We will continue to
President & CEO
HOLDING COMPANY BOARD
Thomas A. McDonnell
Robert D. Taylor
Anne D. St. Peter
Robert D. Regnier
Don H. Alexander
James L. Gegg
Former CEO of DST
Systems & Kauffman
Foundation
Chairman Emeritus &
Director, Executive
AirShare Corporation
Founder of
Global Prairie
Chairman,
President & CEO
President, Alexander &
Associates, Inc.
Former Managing
Partner with
PricewaterhouseCoopers LLP
Celebrated serving Kansas City for a Quarter of a Century
2014
BLUE VALLEY BAN CORP.
DECEMBER 31, 2014, 2013 AND 2012
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Page
INDEPENDENT AUDITOR’S REPORT AND REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM ............................................................................................................................
F-2
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-2
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., which comprise the
consolidated balance sheet as of December 31, 2014, and the related consolidated statements of operations,
comprehensive income, stockholders’ equity and cash flows for the year then ended, and the related notes to the
consolidated 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.
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, including 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 opinion 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.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of Blue Valley Ban Corp. and its subsidiaries as of December 31, 2014, 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.
/s/ BKD, LLP
Kansas City, Missouri
March 20, 2015
F-2
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, 2013, 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, 2013. 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
consolidated 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 consolidated 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, 2013, and the results of its operations and its cash flows for each
of the years in the two-year period ended December 31, 2013, in conformity with accounting principles generally
accepted in the United States of America.
/s/ BKD, LLP
Kansas City, Missouri
March 28, 2014
F-3
BLUE VALLEY BAN CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2014 AND 2013
(In thousands, except share data)
ASSETS
Cash and due from banks
Interest bearing deposits in other financial institutions
Cash and cash equivalents
Available-for-sale securities
Mortgage loans held for sale, fair value
$
2014
26,575
42,442
69,017
91,372
588
$
2013
26,428
14,071
40,499
100,657
1,438
Loans, net of allowance for loan losses of $6,386 and $8,992 in 2014 and 2013,
respectively
416,407
405,803
Premises and equipment, net
Foreclosed assets held for sale, net
Interest receivable
Deferred income taxes
Prepaid expenses and other assets
FHLBank stock, Federal Reserve Bank stock, and other securities
16,226
16,758
1,603
13,445
7,539
5,490
15,466
25,801
1,736
4,205
6,231
7,250
Total assets
$ 638,445
$ 609,086
See Notes to Consolidated Financial Statements
F-4
BLUE VALLEY BAN CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2014 AND 2013
(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
2014
2013
$ 120,974
248,166
99,619
468,759
30,780
71,528
8,918
579,985
$ 100,965
233,335
114,068
448,368
32,335
77,887
8,268
566,858
Preferred stock, $1 par value, $1,000 liquidation preference
Authorized 15,000,000 shares; issued and outstanding
2014 – 21,750 shares; 2013 – 21,750 shares
Common stock, par value $1 per share;
Authorized 15,000,000 shares; issued and outstanding
2014 – 4,649,001 shares; 2013 – 4,326,704 shares
Additional paid-in capital
Retained earnings (Accumulated deficit)
Accumulated other comprehensive income (loss), net of income tax (credit) of
$(380) in 2014 and $(2,759) in 2013
Total stockholders’ equity
22
22
4,649
45,328
9,030
(569)
58,460
4,327
44,010
(1,992)
(4,139)
42,228
Total liabilities and stockholders’ equity
$ 638,445
$ 609,086
See Notes to Consolidated Financial Statements
F-5
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
(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 FHLBank and Federal Reserve Bank stock
Total interest and dividend income
INTEREST EXPENSE
Interest-bearing demand deposits
Savings and money market deposit accounts
Time deposits
Federal funds purchased and other interest-bearing liabilities
Long-term debt, net
Total interest expense
NET INTEREST INCOME
PROVISION FOR LOAN LOSSES
$
2014
2013
2012
$
$
20,283
97
2,062
242
22,684
269
305
1,247
25
2,668
4,514
18,170
400
20,800
135
1,683
239
22,857
313
275
1,661
26
3,196
5,471
17,386
950
22,852
193
1,097
241
24,383
700
291
2,487
44
3,670
7,192
17,191
1,200
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES
17,770
16,436
15,991
NON-INTEREST INCOME
Loans held for sale fee income
NSF charges and service fees
Trust services
Investment brokerage services
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 BEFORE INCOME TAXES
PROVISION (BENEFIT) FOR INCOME TAXES
Provision for income taxes
Valuation allowance for deferred tax asset
Total provision (benefit) for income taxes
NET INCOME
DIVIDENDS AND ACCRETION ON PREFERRED STOCK
NET INCOME (LOSS) AVAILABLE TO COMMON
STOCKHOLDERS
BASIC EARNINGS (LOSS) PER COMMON SHARE
DILUTED EARNINGS (LOSS) PER COMMON SHARE
See Notes to Consolidated Financial Statements
628
892
602
509
1,375
36
1,599
5,641
10,826
2,716
2,426
6,238
22,206
1,205
377
(11,934)
(11,557)
12,762
1,740
1,456
968
560
500
1,418
127
3,443
8,472
11,079
2,620
3,612
6,855
24,166
742
200
(500)
(300)
1,042
1,104
2,447
980
543
434
1,495
–
1,535
7,434
10,587
2,568
2,647
7,506
23,308
117
50
(200)
(150)
267
1,106
11,022
$
(62)
$
(839)
2.40
2.40
$
$
(0.02)
(0.02)
$
$
(0.29)
(0.29)
$
$
$
F-6
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
(In thousands)
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS)
Change in unrealized appreciation (depreciation) on available-for-sale
securities, net of income taxes (credit) of $2,370 in 2014, $(2,710) in
2013 and $(60) in 2012
Less: reclassification adjustment for realized gains included in net income
(loss), net of income taxes of $15 in 2014 and $51 in 2013
Comprehensive income (loss)
2014
2013
2012
$
12,762
$
1,042
$
267
3,591
(4,106)
$
(21)
16,332
$
(76)
(3,140)
$
(91)
–
176
See Notes to Consolidated Financial Statements
F-7
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
(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, 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
Other comprehensive loss
48
7
197
20
18
267
(18)
(1,088)
(91)
245
27
267
–
(1,088)
(91)
BALANCE, DECEMBER 31, 2012
$
22
$ 2,934
$38,746
$ (1,930)
$
43
$ 39,815
Issuance of 44,210 shares of restricted stock,
net of forfeitures of 567
Issuance of 4,748 shares of common stock for
the employee stock purchase plan
Issuance of 1,344,000 shares of common stock
Net income
Accretion of discount on preferred shares
Dividend on preferred shares
Other comprehensive loss
44
244
5
1,344
14
4,989
17
1,042
(17)
(1,087)
(4,182)
288
19
6,333
1,042
–
(1,087)
(4,182)
BALANCE, DECEMBER 31, 2013
$ 22
$ 4,327
$44,010
$ (1,992)
$ (4,139)
$ 42,228
Issuance of 40,674 shares of restricted stock,
net of forfeitures of 2,363
Issuance of 6,877 shares of common stock for
the employee stock purchase plan
Issuance of 277,109 shares of common stock
Net income
Dividend on preferred shares
Other comprehensive income
38
7
277
236
24
1,058
12,762
(1,740)
3,570
274
31
1,335
12,762
(1,740)
3,570
BALANCE, DECEMBER 31, 2014
$ 22
$ 4,649
$45,328
$ 9,030
$ (569)
$ 58,460
See Notes to Consolidated Financial Statements
F-8
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
(In thousands)
OPERATING ACTIVITIES
Net income
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization
Amortization, net of (accretion) 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 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
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
Capitalized expenditures on foreclosed assets held for sale
Purchase of priority lien on foreclosed assets held for sale
Purchases of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Proceeds from sale of available-for-sale securities
Purchases of FHLBank and Federal Reserve Bank stock
and other securities
Proceeds from the redemption of FHLBank stock, Federal Reserve Bank
stock, and other securities
Net cash provided by (used in) investing activities
FINANCING ACTIVITIES
Net increase (decrease) 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
Prepayment penalty on modification of FHLBank advances
Proceeds from sale of additional stock
Proceeds from sale of additional stock through rights offering
Net proceeds from the sale of stock through Employee Stock Purchase Plan
Net cash provided by (used in) financing activities
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
CASH AND CASH EQUIVALENTS, END OF YEAR
See Notes to Consolidated Financial Statements
F-9
2014
2013
2012
$
12,762
$
1,042
$
267
2,149
286
400
1,006
(11,557)
(127)
(169)
(36)
(153)
274
4
(29,046)
29,915
(18)
133
37
(1,213)
(1,157)
3,490
(19,907)
10,606
(1,731)
6,892
(406)
─
(13,593)
15,000
13,578
1,671
269
950
2,147
(300)
(121)
(167)
(127)
(1,069)
288
4
(53,278)
59,423
38
(207)
168
(95)
(2,769)
7,867
(11,170)
9,698
(905)
7,022
(254)
(378)
(66,006)
29,923
6,159
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
─
(73)
(3)
(79)
1,960
12,326
34,840
(14,449)
(1,555)
(7,500)
─
85
1,250
31
12,702
28,518
40,499
69,017
$
414
(25,500)
(15,030)
(21,068)
10,667
(20,000)
(3,866)
─
6,333
19
(42,945)
31
(2,035)
25,504
(31,451)
6,296
─
─
─
─
27
376
(60,578)
101,077
40,499
$
1,178
99,899
101,077
$
BLUE VALLEY BAN CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
(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
2014
2013
2012
$
$
$
$
$
$
4,261
53
1,903
─
1,740
3,607
$
$
$
$
$
$
8,648
─
4,371
50
1,087
3,038
$
$
$
$
$
$
6,254
─
10,518
48
1,088
1,018
See Notes to Consolidated Financial Statements
F-10
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
The Company is a holding company for Bank of Blue Valley (the “Bank”), BVBC Capital Trust II and BVBC
Capital Trust III, through 100% ownership of each.
The Bank is primarily engaged in providing a full range of banking and mortgage services to consumer and
commercial customers in Johnson County, Kansas. The Bank also originates residential mortgages locally and
nationwide through its InternetMortgage.com website. The Bank is subject to competition from other financial
institutions. The Bank is also subject to regulation by certain federal and state agencies and undergoes periodic
examination by those regulatory authorities.
BVBC Capital Trust II and III are Delaware business trusts created in 2003 and 2005, respectively, 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 subsidiary bank, including such products and
services as loans; time deposits, checking and savings accounts, mortgage originations, trust services, 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 make estimates and assumptions 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 revenues and expenses during the reporting period. Actual 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.
Management believes that the allowance for loan losses, valuation of foreclosed assets held for sale, and valuation of
deferred tax assets are adequate. While management uses available information to recognize losses on loans,
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 their examination
process, periodically review the Company’s allowance for loan losses, valuation of foreclosed assets held for sale
and deferred tax assets. Such agencies may require the Company to recognize additional losses based on their
judgments of information available to them at the time of their examination.
F-11
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Evaluation of Subsequent Events
Subsequent events have been evaluated through the date of the Independent Auditor’s Report, which is the date the
financial statements were available to be issued.
Effect of New Financial Accounting Standards
In January, 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-04, Receivables –
Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate
Collateralized Consumer Mortgage Loans Upon Foreclosure. ASU 2014-04 clarifies that an insubstance
foreclosure, repossession or foreclosure occurs, and a creditor is considered to have received physical possession of
residential real estate property collateralizing a consumer mortgage loan, upon either the creditor obtaining legal title
to the residential real estate property upon foreclosure or the borrower conveying all interest in the residential real
estate property to the creditor to satisfy the borrower’s obligation for the loan through completion of a deed in lieu
of foreclosure or through a similar agreement. Additional disclosures are required. ASU 2014-4 is effective for
annual periods and interim periods within those annual periods beginning after December 15, 2014. The Company’s
adoption of ASU 2014-04 is not expected to have a material impact on its financial condition or results of
operations.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). ASU 2014-09
provided guidance applicable to contracts with customers so that a company should recognize revenue to depict the
transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services. For financial institutions, significant changes are not
expected because most financial instruments are not in the scope of the Update. ASU 2014-09 is effective for
annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption
is not permitted. The Company is currently evaluating the impact of the adoption of this standard.
Cash and Cash Equivalents
The Company considers all liquid investments with original maturities of three months or less to be cash
equivalents.
The Company’s interest-bearing cash accounts exceeded the $250,000 FDIC insurance limits by approximately
$83,000 at December 31, 2014.
The Bank had no required reserve at December 31, 2014. The deposit balance held at the Federal Reserve Bank on
December 31, 2014 was $42,109,000.
F-12
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Investment in Securities
Available-for-sale securities, which include any security for which the Company has no immediate plan to sell, but
which may be sold in the future, are carried at fair value. Unrealized gains and losses are excluded from earnings
and are reported, net of related income tax effects, in accumulated other comprehensive income. Purchase
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 for which 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
basis, the Company recognizes the credit component of an other-than-temporary impairment of the debt security in
earnings and the remaining portion in other comprehensive income. The credit loss component recognized in
earnings 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, 2014.
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 and losses, if any, are recognized through a valuation allowance by charges to non-interest
income. Gains and losses, net of discounts collected or paid, commitment fees paid and considering a normal
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 payoff, are
reported at their outstanding principal balance adjusted for unearned income, charge-offs, the allowance for loan
losses, and any deferred fees or costs on originated loans and unamortized premiums or discounts 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 loans is discontinued at the time the loan is 90 days past due and interest is
considered a loss, unless the loan is well-secured and in the process of collection. Past due status is based on
contractual term of the loans. Loans 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 when loans are placed on non-accrual or charged off, which reduces interest income. The
interest on these loans is generally 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 principal and interest
amounts contractually due are brought current and future payments are reasonably assured.
F-13
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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. Loan losses are charged against the
allowance when management believes the uncollectability of a loan balance is confirmed. Subsequent recoveries, if
any, are credited to the allowance.
The allowance for loan losses is evaluated on a monthly basis by management and is based on management’s
periodic review of the collectability 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 requires 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. The general reserve covers non-impaired loans and is based 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 probable that the Company will
be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of
the loan agreement. Factors 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 payment shortfalls generally are not classified as impaired.
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. Impairment is measured on a loan-by-loan basis by either the present 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
collateral securing the loan 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. Leasehold 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, 2014, 2013 AND 2012
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 value less
costs 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
costs 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 sheets 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 valuation model which considers differences between quoted prices for loans with similar
characteristics in the secondary market and the committed rates.
Forward Loan Sale Commitments
The Company carefully evaluates all loan 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 the derivative loan commitments. Accordingly, forward loan
commitments 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 of its forward loan
commitments using a methodology similar to that used for derivative loan commitments.
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, 2014, 2013 AND 2012
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 surrendered. 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 income taxes in accordance with income tax accounting guidance (ASC 740, Income
Taxes). The income tax accounting guidance results in two components of income tax expense: current and
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 Company
determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred
tax asset or liability is based on the tax effects of the differences between the book and tax bases 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
(“DTAs”) are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than
not that some portion or all of a DTA will not be realized. As of September 30, 2014 and in consideration of the
Company’s sustained profitability principally resulting from improved net interest income, reduced non-interest
expense, and assessment of the Company’s future ability to realize its DTA, the Company recorded a recovery of its
remaining $11.8 million DTA valuation allowance. The valuation allowance at December 31, 2013 was
$11,934,000. The DTA valuation allowance had been recorded due to the Company’s losses recorded over previous
years, which had resulted in uncertainty of the Company’s ability to recognize the DTA in future near term periods.
Tax positions are recognized 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 include resolution of the related appeals or litigation processes, if
any. A tax position that meets the more-likely-than-not recognition threshold is initially 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 taxing authority that has full knowledge of all relevant information. The 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 component of income tax expense. The
Company files consolidated income tax returns with its subsidiaries. The Company is generally not subject to
federal, state and local examination by tax authorities for years prior to 2011.
F-16
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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. Accumulated 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 $(569,000) and $(4,139,000), respectively,
at December 31, 2014 and 2013.
Reclassification
Certain reclassifications have been made to the 2013 and 2012 financial statements to conform to the 2014 financial
statement presentation. These reclassifications had no effect on net income.
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 share reflects additional
potential common shares that would have been outstanding if dilutive potential common shares had been issued, as
well as any adjustment to income that would result from the assumed issuance. The computation of per share
earnings is as follows:
2014
2013
2012
(In thousands, except share and per share data)
Net Income
Dividends and accretion on preferred stock
Net income (loss) available to common stockholders
$
$
12,762 $
(1,740)
11,022 $
1,042 $
(1,104)
(62) $
267
(1,106)
(839)
Average common shares outstanding
Average common share stock options outstanding and
restricted stock (B)
4,586,741
2,930,115
2,855,566
9,100
21,262
11,997
Average diluted common shares (B)
4,595,841
2,951,377
2,867,563
Basic income (loss) per share
Diluted income (loss) per share (A)
$2.40
$2.40
($0.02)
($0.02)
($0.29)
($0.29)
(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, 2014, 2013 and 2012, 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. In January, 2015, the Company repurchased the warrants for $3,000 and
cancelled them. There were no stock options to purchase shares of common stock outstanding at December 31,
2014, 2013 and 2012 respectively.
Income available for common stockholders is reduced by dividends declared on preferred stock (whether or not they
are paid) in the period in which they are declared, as well as the accretion on the warrants.
F-17
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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
State and political subdivision securities
U.S. Small Business Administration loan pool certificates
Equity and other securities
(In thousands)
U.S. Government sponsored agencies
State and political subdivision securities
U.S. Government sponsored agency mortgage-backed securities
U.S. Small Business Administration loan pool certificates
Equity and other securities
December 31, 2014
Gross
Gross
Unrealized
Unrealized
Losses
Gains
Fair Value
$
3
141
–
2
$ (811)
(172)
(112)
$ 66,215
19,882
4,673
– 602
Amortized
Cost
$ 67,023
19,913
4,785
600
$ 92,321
$
146
$ (1,095)
$ 91,372
December 31, 2013
Gross
Gross
Unrealized
Unrealized
Losses
Gains
Fair Value
$
–
39
35
–
–
$ (4,798)
(1,742)
(81)
(338)
(13)
$ 68,313
19,764
7,183
4,810
587
Amortized
Cost
$ 73,111
21,467
7,229
5,148
600
$ 107,555
$
74
$ (6,972)
$ 100,657
The amortized cost and estimated fair value of available-for-sale securities at December 31, 2014, 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
U.S. Small Business Administration loan pool certificates
Equity and other securities
Amortized
Cost
$
$
–
–
70,358
16,578
86,936
4,785
600
92,321
Fair Value
$
$
–
–
69,568
16,529
86,097
4,673
602
91,372
The amortized cost and estimated fair value of securities pledged as collateral to secure public deposits amounted to
$5,875,000 and $5,780,000 at December 31, 2014 and $5,875,000 and $5,346,000 at December 31, 2013.
Gross gains of $207,000 and gross losses of $171,000 were realized in 2014 from sales of available-for-sale
securities. Gross gains of $134,000 and gross losses of $7,000 were realized in 2013 from sales of available-for-sale
securities. No gross gains or losses were realized in 2012 from sales of available-for-sale securities.
F-18
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
Certain investments in debt and marketable equity securities are reported in the consolidated financial statements at
an amount less than their historical cost. Total fair value of these investments at December 31, 2014 and 2013, was
$70,893,000 and $96,923,000, which is approximately 77.6% and 96.3%, respectively, of the Company’s available-
for-sale investment portfolio. These declines in fair value resulted primarily from increases in market interest rates
from the date of the acquisition of the securities. Based on evaluation of available 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
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Less than 12 Months
December 31, 2014
12 Months or More
Total
Fair Value
Total
Unrealized
Losses
(In thousands)
U.S. Government sponsored agencies
State and political subdivision
securities
U.S. Small Business Administration
loan pool certificates
Equity and other securities
Total temporarily impaired
securities
$
18,772 $
126 $
37,440 $
685
$
56,212 $
1,275
22
8,733
–
–
–
–
4,673
–
150
112
–
10,008
4,673
–
811
172
112
–
$
20,047 $
148 $
50,846 $
947
$
70,893 $
1,095
Description of
Securities
Fair Value
Unrealized
Losses
Fair Value
Unrealized
Losses
Less than 12 Months
December 31, 2013
12 Months or More
Total
Fair Value
Total
Unrealized
Losses
(In thousands)
U.S. Government sponsored agencies
State and political subdivision
securities
U.S. Government sponsored agency
mortgage-backed securities
U.S. Small Business Administration
loan pool certificates
Equity and other securities
Total temporarily impaired
securities
$
68,313 $
4,798 $
– $
–
$
68,313 $
4,798
14,379
1,464
2,904
278
17,283
1,742
5,930
4,810
587
81
338
13
–
–
–
–
–
–
5,930
4,810
587
81
338
13
$
94,019 $
6,694 $
2,904 $
278
$
96,923 $
6,972
The unrealized losses on the Company’s investments in obligations of U.S. government sponsored agencies, state
and political subdivision securities, U.S. government sponsored agency mortgage-backed securities and U.S. Small
Business Administration loan pool certificates were caused by changes in market interest rates from various dates of
purchase. 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 their amortized
cost bases, which may be at maturity, the Company did not consider those investments to be other-than-temporarily
impaired at December 31, 2014 or 2013.
F-19
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
The Company enters into sales of securities under agreements to repurchase. The amounts deposited under these
agreements represent short-term debt and are reflected as a liability in the consolidated balance sheets. The
securities underlying the agreements are book-entry securities. During the period, securities held in safekeeping
were pledged to the depositors under a written custodial agreement that explicitly recognizes the depositors’ interest
in the securities. At December 31, 2014, 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
2014
2013
$30,780
$32,335
$43,409
$29,852
$36,281
$44,643
$32,426
$40,944
Amounts Reclassified out of Accumulated Other Comprehensive Income (Loss)
Amounts reclassified from accumulated other comprehensive income (loss) and the affected line items in the
consolidated statements of operations during the years ended December 31, 2014 and 2013 were as follows:
Amounts Reclassified From
Accumulated Other
Comprehensive Income (Loss)
Year Ended
(In thousands)
Realized gains on available-for-sale
securities
Income taxes
Total reclassifications out of accumulated
December 31,
2014
December 31,
2013
Affected line item in the Consolidated
Statements of Operations
$
36
$
127 Realized gains on available-for-sale securities
(Total reclassified amount before tax)
(15)
(51) Benefit for income taxes
other comprehensive income
$
21
$
76
There were no such amounts reclassified from accumulated other comprehensive income (loss) in 2012.
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES
Classes of loans at December 31, 2014 and 2013 include the following:
(In thousands)
Commercial loans
Commercial real estate loans
Construction loans
Home equity loans
Residential real estate loans
Consumer loans
Lease financing
Total loans
Less: Allowance for loan losses
2014
2013
$ 142,617
138,047
46,798
36,893
46,985
2,738
8,715
422,793
6,386
$ 120,283
145,045
44,806
43,169
44,771
8,885
7,836
414,795
8,992
Net loans
$ 416,407
$ 405,803
F-20
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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, 2014,
2013 and 2012:
(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, 2014
$
4,556
$
1,870
$
1,426
$
484 $
618
$
20
$
18
$
8,992
1,132
(3,205)
54
2,537
$
(334)
–
41
1,577
$
(597)
–
203
1,032
$
103
(134)
12
465 $
$
60
–
20
698
$
(6)
–
1
15
$
42
–
2
62
400
(3,339)
333
6,386
$
(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, 2013
$
2,097
$
3,582
$
1,543
$
634 $
1,138
$
46
$
17
$
9,057
2,281
(141)
319
4,556
$
(1,067)
(672)
27
1,870
$
(38)
(250)
171
1,426
$
$
(180)
–
30
484 $
(37)
(523)
40
618
$
(26)
–
–
20
$
17
(18)
2
18
950
(1,604)
590
8,992
$
(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
$
F-21
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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, 2014 and 2013:
(In thousands)
Allowance
losses:
Individually evaluated
for
loan
for impairment
Collectively evaluated
for impairment
Total
Loans:
Individually evaluated
for impairment
Collectively evaluated
for impairment
Total
(In thousands)
Allowance
losses:
Individually evaluated
for
loan
for impairment
Collectively evaluated
for impairment
Total
Loans:
Individually evaluated
for impairment
Collectively evaluated
for impairment
Total
Commercial
Commercial
Real Estate Construction
December 31, 2014
Home
Equity
Residential
Real Estate
Lease
Financing
Consumer
Total
$
1,590
$
171
$
347
$
16
$
15
$
–
$
–
$
2,139
947
2,537
$
1,406
1,577
$
685
1,032
$
$
449
465 $
683
698
$
15
15 $
62
62
4,247
6,386
$
$
20,299
$
5,438
$
8,973
$
1,193
$
1,449
$
–
$
–
$
37,352
122,318
$ 142,617
132,609
$ 138,047
37,825
46,798
$
35,700
36,893 $
45,536
46,985
$
2,738
2,738 $
8,715
8,715
$
385,441
$ 422,793
Commercial
Commercial
Real Estate Construction
December 31, 2013
Home
Equity
Residential
Real Estate
Lease
Financing
Consumer
Total
$
3,747
$
635
$
775
$
116
$
56
$
–
$
–
$
5,329
809
4,556
$
1,235
1,870
$
651
1,426
$
$
368
484 $
562
618
$
20
20 $
18
18
3,663
8,992
$
$
18,100
$
7,343
$
11,331
$
1,307
$
1,890
$
–
$
–
$
39,970
102,183
$ 120,283
137,702
$ 145,045
33,475
44,806
$
41,862
43,169 $
42,882
44,771
$
7,836
7,836 $
8,885
8,885
$
374,825
$ 414,795
F-22
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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, 2014 and 2013. 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 – loans are inadequately protected by the current payment capacity of the obligor or by the
collateral pledged. These loans are characterized by the distinct probability that the Company will sustain
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
$ 134,786
135,662
44,054
36,085
46,002
2,738
8,715
$ 408,042
2014
Classified
7,831
2,385
2,744
808
983
–
–
14,751
$
$
Total
$ 142,617
138,047
46,798
36,893
46,985
2,738
8,715
$ 422,793
Pass
$ 113,254
140,874
34,922
42,587
43,162
7,836
8,885
$ 391,519
2013
Classified
7,029
$
4,171
9,885
582
1,610
–
–
23,276
$
Total
$ 120,283
145,045
44,806
43,169
44,771
7,836
8,885
$ 414,795
The following tables present the Company’s loan portfolio aging analysis, including loans on non-accrual, as of
December 31, 2014 and 2013:
December 31, 2014
(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
$ 142,617
138,047
46,798
36,893
46,985
2,738
8,715
$ 422,793
Total
Loans > 90
Days &
Accruing
–
$
–
–
–
–
–
–
–
$
Total
Loans
Receivable
$ 120,283
145,045
44,806
43,169
44,771
7,836
8,885
$ 414,795
Total
Loans > 90
Days &
Accruing
–
$
–
–
–
–
–
–
–
$
$
30-59 Days
Past Due
764
–
–
–
476
–
–
1,240
$
$
60-89 Days
Past Due
4,579
–
–
376
191
–
–
5,146
$
$
Greater than
90 Days
Past Due
266
903
660
50
59
–
–
1,938
$
Total
Past Due
$
Current
5,609 $ 137,008
137,144
46,138
36,467
46,259
2,738
8,715
8,324 $ 414,469
903
660
426
726
–
–
$
December 31, 2013
Total
Past Due
$
Current
16 $ 120,267
145,045
44,146
43,061
43,910
7,836
8,885
1,645 $ 413,150
–
660
108
861
–
–
$
$
30-59 Days
Past Due
16
–
–
–
267
–
–
283
$
$
60-89 Days
Past Due
–
–
–
8
475
–
–
483
$
$
Greater than
90 Days
Past Due
–
–
660
100
119
–
–
879
$
F-23
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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 probable the Company will be unable to collect the scheduled
payments of principal and interest due from the borrower in accordance with the contractual terms of the loan
agreement. Impaired loans include non-performing loans, but also include loans modified in troubled debt
restructurings where concessions have been granted to borrowers experiencing financial difficulties. These
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, 2014, 2013 and 2012:
December 31, 2014
Recorded
Balance
Unpaid
Principal
Balance
Specific
Allowance
Average
Investment
in
Impaired
Loans
Interest
Income
Recognized
(In thousands)
Loans without a specific
valuation allowance:
Commercial
$
110
$
110
$
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
Loans with a specific
valuation allowance:
1,308
1,405
1,322
1,405
–
97
–
95
–
155
–
95
–
–
–
–
–
–
–
$
$
166
640
1,433
132
623
123
–
Commercial
$
2,896
$
2,914
$
909
$
1,584
$
Commercial real estate
–
–
Construction
Home equity
Residential real estate
Lease financing
Consumer
Total impaired loans:
2,084
2,085
368
380
–
–
–
–
–
–
–
134
7
–
–
–
75
2,117
198
114
–
–
Commercial
$
3,006
$
3,024
$
909
$
1,750
$
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
1,308
3,489
1,322
3,490
368
97
–
95
380
155
–
95
–
134
7
–
–
–
715
3,550
330
737
123
–
6
23
43
6
28
7
–
5
–
109
–
–
–
–
11
23
152
6
28
7
–
Total
$
8,363
$
8,466
$
1,050
$
7,205
$
227
F-24
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
December 31, 2013
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
$
52
423
$
54
423
Construction
Home equity
Residential real estate
Lease financing
Consumer
Loans with a specific
valuation allowance:
1,419
1,419
–
800
–
154
–
1,017
–
154
–
–
–
–
–
–
–
$
$
666
470
1,504
–
2,458
205
–
Commercial
$
5,332
$
5,355
$
3,533
$
938
$
Commercial real estate
–
–
Construction
Home equity
Residential real estate
Lease financing
Consumer
Total impaired loans:
2,250
2,250
232
220
–
–
238
275
–
–
–
168
56
31
–
–
1,022
5,556
202
1,059
–
–
Commercial
$
5,385
$
5,408
$
3,533
$
1,604
$
Commercial real estate
423
423
Construction
Home equity
3,669
3,669
232
238
Residential real estate
1,020
1,292
Lease financing
Consumer
–
154
–
154
–
168
56
31
–
–
1,492
7,060
202
3,517
205
–
18
69
45
–
94
12
–
13
–
284
–
–
–
–
31
69
328
–
94
12
–
Total
$
10,883
$
11,184
$
3,788
$
14,081
$
534
F-25
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
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
–
71
40
4
57
16
–
42
49
466
–
183
–
–
148
120
506
4
240
16
–
Total
$
20,219
$
20,482
$
3,074
$
26,425
$
1,034
The following table presents the Company’s non-accrual loans, also included in impaired loans, at December 31,
2014 and 2013:
(In thousands)
Commercial
Commercial real estate
Construction
Home equity
Residential real estate
Lease financing
Consumer
2014
2013
$ 2,876
903
727
368
97
–
–
$ 4,971
$ 5,194
–
660
232
1,020
–
–
$ 7,106
F-26
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
Included in certain loan categories in the impaired loans are loans designated as troubled debt restructurings and
classified as impaired. At December 31, 2014, the Company had $131,000 of commercial loans, $405,000 of
commercial real estate loans, $2,762,000 of construction loans, and $95,000 of lease financing loans that were
modified in troubled debt restructurings and classified as impaired.
The Company evaluates and classifies loans in accordance with ASU 2011-02, A Creditor’s Determination of
Whether a Restructuring Is a Troubled Debt Restructuring, as amended. During the year ending December 31,
2014, the Company modified one loan in a troubled debt restructuring transaction and classified the loan as
impaired. During the year ended December 31, 2013, the Company modified no loans in troubled debt restructuring
transactions. During the year ending December 31, 2012, the Company modified two loans in troubled debt
restructuring transactions and classified the loans as impaired. The modification of terms 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. None of the loans
that were restructured subsequently defaulted within twelve months of the date of the restructure.
The following table presents loans restructured and classified as troubled debt restructurings by class during the
years ended December 31, 2014, 2013 and 2012:
December 31, 2014
Pre-
Modification
Outstanding
Recorded
Balance
–
$
Post-
Modification
Outstanding
Recorded
Balance
–
$
December 31, 2013
Pre-
Modification
Outstanding
Recorded
Balance
–
$
Post-
Modification
Outstanding
Recorded
Balance
–
$
December 31, 2012
Pre-
Modification
Outstanding
Recorded
Balance
85
$
Post-
Modification
Outstanding
Recorded
Balance
85
$
Number
of
Loans
1
Number
of
Loans
–
Number
of
Loans
–
–
1
–
–
–
–
1
$
–
69
–
–
–
–
69
$
–
69
–
–
–
–
69
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
$
–
–
–
–
–
–
–
–
–
–
1
–
–
2
$
–
–
–
371
–
–
456
$
–
–
–
371
–
–
456
(In
thousands)
Commercial
Commercial
real estate
Construction
Home
equity
Residential
real estate
Lease
financing
Consumer
Total
As of December 31, 2014, the Company had no commitments outstanding to borrowers with loans identified as
troubled debt restructurings.
F-27
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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
2014
2013
$ 5,154
17,984
9,015
32,153
15,927
$ 5,154
16,493
8,778
30,425
14,959
$ 16,226
$ 15,466
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
2014
2013
2012
$ 4,050 $ 3,184 $ 2,985
867
2,147
1,006
(823)
(668)
(1,281)
$ 4,233 $ 4,050 $ 3,184
Income and 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
2014
2013
2012
$ (153)
1,006
1,192
$ 2,045
$ (1,069) $ (337)
867
2,147
1,349
901
$ 1,879
$ 1,979
F-28
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 6: DERIVATIVE INSTRUMENTS
The Company may have commitments outstanding to extend credit on residential mortgages that have not closed
prior to the end of the period. As the Company enters into commitments to originate these loans, it also enters into
commitments to sell the loans in the secondary market on a best-efforts basis. The Company acquires such
commitments to reduce interest rate risk on mortgage loans in the process of origination and mortgage loans held for
sale. These commitments to originate or sell loans on a best efforts basis are considered derivative instruments
under ASC 815. These statements require the Company to recognize all derivative instruments in the balance sheet
and to measure those instruments at fair value. As a result of measuring the fair value of the commitments to
originate loans, the Company recorded no change in other assets or other liabilities for the year ended December 31,
2014 and 2013.
Additionally, the Company has commitments to sell loans that have closed prior to the end of the period on a best
efforts basis. Due to the mark to market adjustment on commitments to sell loans held for sale the Company
recorded a decrease in other assets of $37,000 and a decrease in other income of $37,000 for the year ended
December 31, 2014. For the year ended December 31, 2013, the Company recorded a decrease in other assets of
$144,000 and a decrease in other income of $144,000.
At December 31, 2014 and 2013, total mortgage loans in the process of origination amounted to $0 and $216,000,
respectively. At December 31, 2014 and 2013, related forward commitments to sell mortgage loans amounted to
approximately $588,000 and $1,438,000, respectively.
The balance of derivative instruments related to commitments to originate and sell loans at December 31, 2014 and
2013, is disclosed in Note 20, Disclosures about Fair Value of Assets and Liabilities.
NOTE 7: INTEREST-BEARING DEPOSITS
Interest-bearing time deposits in denominations in excess of $250,000 were $19,811,000 on December 31, 2014 and
$18,377,000 on December 31, 2013. The Company acquires brokered deposits in the normal course of business. At
December 31, 2014 and 2013, brokered deposits of $27,670,000 and $28,060,000, respectively, were included in the
Company’s time deposit balance. Of the $27,670,000 in brokered deposits at December 31, 2014, $17,540,000
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 purposes, funds
placed through the CDARS program are Bank customer relationships that management views as core funding.
At December 31, 2014, the scheduled maturities of time deposits are as follows:
(In thousands)
2015
2016
2017
2018
2019
Thereafter
$
69,806
17,305
5,893
3,723
1,971
921
$
99,619
F-29
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 8: OPERATING LEASES
Blue Valley Building Corp. leases office space to others under noncancellable operating leases expiring in various
years through 2021. Minimum future rent receivable under noncancellable operating leases at December 31, 2014
was as follows:
(In thousands)
2015
2016
2017
2018
2019
Thereafter
$
797
775
688
600
621
1,030
$
4,511
The Company incurred no consolidated rental and operating lease expenses for space it leases from others in 2014,
2013, and 2012.
NOTE 9: SHORT TERM DEBT
The Company has a line of credit with the FHLBank of Topeka (FHLB) which is collateralized by various assets.
At December 31, 2014 and 2013, there was no outstanding balance on the line of credit. The variable interest rate
was 0.25% on December 31, 2014 and 0.19% on December 31, 2013. At December 31, 2014 approximately
$28,363,000 was available. Advances are made at the discretion of the FHLBank of Topeka.
The Company also has a line of credit with the Federal Reserve Bank of Kansas City which is collateralized by
various assets, including commercial and commercial real estate loans. At December 31, 2014 and 2013, 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, 2014 approximately $27,339,000 was available. Advances are made at the
discretion of the Federal Reserve Bank of Kansas City.
The Company has unsecured Federal Funds Purchased (“FFP”) lines of credit with commercial banks. At December
31, 2014, the Company had a $17,000,000 and $5,000,000 FFP line of credit with no outstanding balances. The
variable interest rate for the $17,000,000 FFP line of credit was 0.39% and for the $5,000,000 FFP line of credit was
0.22% on December 31, 2014. At December 31, 2013, the Company had a $5,000,000 FFP line of credit with no
outstanding balance. The variable interest rate for the $5,000,000 FFP line of credit was 0.20% on December 30,
2013.
F-30
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 10: LONG TERM DEBT
Long-term debt at December 31, 2014 and 2013 consisted of the following components:
(In thousands)
FHLBank advances (A)
Less: Deferred prepayment penalty on modification of
FHLBank advances
Net FHLBank advances
Subordinated Debentures – BVBC Capital Trust II (B)
Subordinated Debentures – BVBC Capital Trust III (C)
2014
2013
$
55,000
$
62,500
(3,060)
51,940
7,732
11,856
(4,201)
58,299
7,732
11,856
Total long-term debt
$
71,528
$
77,887
(A)
Due in 2015, 2016 and 2018; collateralized by various assets including mortgage-backed loans and
available-for-sale securities totaling $119,839,000 at December 31, 2014. Advances, at interest rates from
0.32% to 1.84% are subject to restrictions or penalties in the event of prepayment. FHLBank advance
availability is determined quarterly and at December 31, 2014, approximately $28,363,000 was available.
Advances are made at the discretion of the FHLBank Topeka.
In the fourth quarter of 2013 and third quarter of 2010, the Company repaid FHLBank advances totaling
$40.0 million and $42.5 million, respectively, of FHLBank advances by rolling the net present value of the
repaid advances into the funding cost of $40.0 million and $42.5 million, respectively, of new advances. A
modification fee of $3.9 million and $2.6 million, respectively, was associated with the pay-off of the
original FHLBank advances which is amortized as an adjustment of interest expense over the remaining
term of the new FHLBank advances using the straight line method. The unamortized modification fee at
December 31, 2014 was approximately $3.1 million. These transactions 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% (3.48% at December 31, 2014 and 3.49% at
December 31, 2013) 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 Common Securities to the Company. As of 2008, the
Company may prepay the subordinated debentures, in whole or in part, at their face value plus accrued
interest.
Due in 2035; interest-only at three-month LIBOR + 1.60% (1.86% at December 31, 2014 and 1.85% at
December 31, 2013) 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 third parties and $356,000 in Common Securities to the Company. Subordinated
to the trust preferred securities (B) due in 2033. As of 2010, the Company may prepay the subordinated
debentures, in whole or in part, at their face value plus accrued interest.
(B)
(C)
F-31
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 10: LONG TERM DEBT (Continued)
At the request of the Federal Reserve Bank of Kansas City, quarterly payments had been deferred on the Company’s
outstanding trust preferred securities. Under the governing documents of our Subordinated Debentures issued by
BVBC Capital Trust II and III, the quarterly payments since April 24, 2009 for BVBC Capital Trust II and since
March 31, 2009 for BVBC Capital Trust III had been deferred through December 30, 2013. 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. The
Company received regulatory approval and utilized the proceeds from the December 23, 2013 initial close of our
Common Stock Rights Offering to bring current all previously accrued and unpaid dividends and interest on our
Subordinated Debentures issued by BVBC Capital Trust II and III prior to December 31, 2013. Subsequent to
December 31, 2013, the Company received approval for the Bank to pay dividends to the Company to pay amounts
needed to pay quarterly dividends due in March and April, 2014 for our Subordinated Debentures.
For both BVBC Capital Trust II and BVBC Capital Trust III, during a deferral period, 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 Fixed Rate Cumulative Preferred Stock (“Preferred Shares”), or (ii) making any payment on any
debt security that is ranked pari passu with the debt securities issued by the respective trusts. See Note 13,
Regulatory Matters for additional information.
Aggregate annual maturities of long-term debt at December 31, 2014 are as follows:
(In thousands)
2015
2016
2017
2018
2019
Thereafter
Less: Deferred prepayment penalty on modification of
FHLB advances
NOTE 11: INCOME TAXES
The provision for income taxes consists of the following:
$ 15,000
-
15,000
25,000
-
19,588
74,588
(3,060)
$ 71,528
(In thousands)
Taxes currently (refundable) payable
Deferred income taxes
2014
2013
2012
–
$
(11,557)
$
–
(300)
$
–
(150)
$ (11,557)
$
(300)
$
(150)
F-32
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 11: 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
2014
2013
2012
$
410
$
252
$
40
(198)
(37)
(11,934)
202
(163)
(27)
(502)
140
(87)
77
(164)
16
Actual tax provision
$(11,557)
$
(300)
$
(150)
The tax effects of temporary differences related to deferred taxes shown on the December 31, 2014 and 2013
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
Accumulated depreciation on available-for-sale
securities
Deferred compensation
Offering costs
Non-accrual loan interest
Other real estate owned reserve
Other
Deferred tax liabilities:
Accumulated depreciation
FHLB stock basis
Prepaid intangibles
Other
Net deferred tax asset before valuation allowance
Valuation allowance:
Beginning balance
(Increase) decrease during the period
Ending balance
Net deferred tax asset
2014
2013
$ 2,363
$ 3,327
8,977
380
10
159
118
1,645
534
14,186
(114)
(346)
(275)
(6)
(741)
13,445
(11,934)
11,934
–
$ 13,445
8,475
2,759
27
170
116
1,374
856
17,104
(215)
(555)
(187)
(8)
(965)
16,139
(12,436)
502
(11,934)
$ 4,205
The Company has unused Federal net operating loss carryforwards of $22,895,000, which expire starting in 2029.
The Company has unused Kansas Privilege Tax net operating loss carryforwards of $32,109,000 which expire
between 2019 and 2022.
F-33
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 12: FIXED RATE CUMULATIVE PREFERRED STOCK
In an October, 2013 auction to private investors and as part of its outlined strategy to wind down its remaining
Troubled Asset Relief Program investments, the U.S. Treasury (“the Treasury”) sold its 21,750 shares of Fixed Rate
Cumulative Perpetual Preferred Stock (the “Preferred Shares”) investment in the Company, which had been
previously issued and sold by the Company pursuant to the Treasury’s Capital Purchase Plan (the “CPP”). The
Preferred Shares have a liquidation preference of $1,000 per share, and carried a 5% per year cumulative preferred
dividend rate, payable quarterly, which increased to 9% beginning with the May 15, 2014 quarterly payment.
Dividends compound if they accrue and are not paid. During the time that the Preferred Shares are outstanding, a
number 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.
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 dividends in arrears 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.
The Company’s preferred stock qualifies as Tier 1 capital in accordance with regulatory capital requirements.
The Preferred Shares included ten year warrants to purchase 111,083 shares of the Company’s common stock for
$29.37 per share which were retained by the Treasury subsequent to the October, 2013 auction. In January, 2015,
the Company repurchased the warrants for $3,000 and cancelled them.
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 initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a direct 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 ratios (set forth in the table below) of total and Tier I capital (as defined in the
regulations) to risk-weighted assets (as defined) and of Tier I capital to average assets (as defined). As of December
31, 2014 and 2013, the Company and the Bank met all capital adequacy requirements to which they are subject.
As of December 31, 2014, the Bank had capital in excess of regulatory requirements for a well-capitalized
institution. To be 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, 2014
that management believes have changed the Bank’s position.
F-34
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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, 2014:
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, 2013:
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
$ 72,757
$ 75,438
14.45%
14.98%
$ 40,277
$ 40,274
8.00%
8.00%
N/A
$ 50,343
10.00%
$ 63,129
$ 69,143
12.54%
13.73%
$ 20,138
$ 20,137
4.00%
4.00%
N/A
$ 30,206
6.00%
$ 63,129
$ 69,143
10.19%
11.14%
$ 24,773
$ 24,836
4.00%
4.00%
N/A
$ 31,045
5.00%
Actual
Amount
Ratio
For Capital
Adequacy Purposes
Amount
Ratio
To Be Well Capitalized
Under Prompt Corrective
Action Provisions
Amount
Ratio
$ 71,811
$ 73,451
13.90%
14.24%
$ 41,321
$ 41,267
8.00%
8.00%
N/A
$ 51,583
10.00%
$ 61,777
$ 66,972
11.96%
12.98%
$ 20,661
$ 20,633
4.00%
4.00%
N/A
$ 30,950
6.00%
$ 61,777
$ 66,972
10.07%
10.80%
$ 24,550
$ 24,793
4.00%
4.00%
N/A
$ 30,991
5.00%
The Company and Bank are subject to certain restrictions on the amounts of dividends that it may declare without
prior regulatory approval.
F-35
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 13: REGULATORY MATTERS (Continued)
As a result of a 2012 regulatory examination, which noted the improved financial condition of the Company and the
Bank, satisfactory risk management processes, and senior management oversight, as well as full compliance with all
actionable provisions of a November 4, 2009 Written Agreement with the Federal Reserve Bank of Kansas City
(“FRB”), the FRB terminated the Written Agreement and, effective January 11, 2013, replaced it with a
Memorandum of Understanding (“MOU”). The MOU’s purpose was to maintain the financial soundness of the
Company and the Bank, and provided, among other things, the Company and the Bank would continue to work on
improvement of asset quality, maintain an adequate allowance for loan losses, maintain adequate capital, improve
earnings, and not declare or pay any dividends or increase or guarantee any debt without prior written approval from
the FRB and the Office of the State Banking Commissioner of Kansas (“OSBC”). As a result of a 2014 regulatory
examination, which noted the improved financial condition of the Company and the Bank, satisfactory risk
management processes, and senior management oversight, as well as full compliance with all actionable provisions
of the MOU, the FRB terminated the July 11, 2013 MOU and, effective February 12, 2015, replaced it with an MOU
requiring FRB approval for the Company to declare or pay dividends, pay interest on its trust preferred securities or
receive dividends from the Bank. Consequently, under the terms of the February 12, 2015 MOU, the Bank is no
longer subject to a regulatory agreement.
At the request of the FRB, the Company had deferred the payment of quarterly dividends on the Preferred Shares
since May 15, 2009. The Preferred Shares carried a 5% per year cumulative preferred dividend rate, payable
quarterly. The dividend rate increased to 9% beginning with the May 15, 2014 quarterly payment, which caused the
Company’s quarterly dividend to increase from $271,875 to $489,375. Dividends compound if they accrue and are
not paid; however, failure by the Company to pay the preferred share dividend is not an event of default. The
Company paid the quarterly dividend and accrued interest expense for the quarters ending August 15, 2014 and
November 15, 2014, and the Company had accrued for all other deferred dividends declared and compounded
interest through December 31, 2014. As of December 31, 2014 and December 31, 2013, the Company had accrued
$6.8 million and $5.8 million, respectively, for dividends and interest on the Preferred Shares.
NOTE 14: TRANSACTIONS WITH RELATED PARTIES
At December 31, 2014 and 2013, the Company had loans outstanding to executive officers, directors and to
companies in which the Company’s and Bank’s executive officers or directors were principal owners, in the amount
of $19,011,000 and $17,066,000, respectively. Annual activity consisted of the following:
(In thousands)
Balance, beginning of year
New loans and advances
Repayments and reclassifications
Balance, end of year
2014
2013
$ 17,066
15,033
(13,088)
$ 19,011
$ 13,632
14,144
(10,710)
$ 17,066
These loans and other extensions of credit were made in the ordinary course of business and were made on
substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable
transactions with other persons. Further, 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 Company at December 31, 2014, and 2013 totaled
$4,824,000 and $4,501,000, respectively.
F-36
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 15: PROFIT SHARING AND 401(K) PLANS
The Company’s profit sharing and 401(k) plans cover substantially all employees. Contributions 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 contribution to the profit sharing plan during 2014, 2013 and 2012. 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 Company’s matching contributions to the 401(k) plan are vested immediately.
The Company’s matching contributions charged to expense for 2014, 2013 and 2012 were $268,000, $281,000 and
$234,000, respectively.
NOTE 16: EQUITY INCENTIVE COMPENSATION
The Company has an Equity Incentive Plan (the “Plan”) which allows the Company to issue equity incentive
compensation awards to its employees and directors in the forms of stock options, restricted shares or deferred share
units.
At December 31, 2014, the Company had 20,230 shares available to be granted (options granted prior to 1998 were
subject to an earlier plan with similar terms). The 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.
During 2014, 2013 and 2012, the Company granted no stock options, but did grant 40,674, 44,210 and 55,155 shares
of restricted common stock, respectively. All restricted stock granted in 2014, restricted stock granted in 2013 to
employees and restricted stock granted in 2012 to employees other than the President vested immediately.
Restricted stock granted to the President in 2012 fully vested in 2014. Restricted stock granted in 2011 to
employees other than the President fully vested in the stock in 2014. Recipients of the restricted stock grant who are
directors vested immediately in 2014, 2013 and 2012. The non-vested shares were 0, 11,930, and 30,730 as of
December 31, 2014, 2013 and 2012, respectively. The cost basis of the restricted shares granted which is equal to
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 $282,000, $257,000, and
$295,000 for 2014, 2013 and 2012, respectively. The amount of unrecognized compensation costs was $0, $23,000,
and $97,000 as of December 31, 2014, 2013, and 2012, respectively. No shares were forfeited during 2014, 2013
and 2012.
A summary of the status of option shares under the plan at December 31, 2014, 2013 and 2012, and changes during
the years then ended, is presented below:
2014
2013
2012
Weighted
Average
Exercise Price
Shares
Weighted
Average
Exercise Price
Weighted
Average
Exercise Price
Shares
Shares
Outstanding, beginning of year
Exercised
Forfeited
Outstanding, end of year
Intrinsic value of shares exercised
$
Options exercisable, end of year
–
–
–
0
–
0
$
$
–
–
–
–
$ 0.00
$
–
–
–
0
–
0
$
$
–
–
–
–
$ 0.00
10,575
–
10,575
0
–
0
$
$ 25.00
–
25.00
$ 0.00
$ 0.00
There were no options outstanding and exercisable as of December 31, 2014.
F-37
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 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 2014, 2013 and 2012 was approximately $4,000, $4,000 and $3,000, respectively.
Information about employee stock purchase plan activity as of December 31, 2014, 2013 and 2012 is set forth in the
following table.
Plan year ending January 31,
2014
2013
2012
Employee Stock Purchase Plan Activity
Shares purchased
6,877
4,748
6,508
Purchase Price
$ 3.83
$ 3.49
$ 3.49
NOTE 18: OTHER INCOME/EXPENSE
Other income consists of the following:
(In thousands)
Rental income
Realized gain on foreclosed assets
Other income
2014
2013
2012
$
909
236
454
$
719
1,292
1,432
$
556
521
458
Total
$
1,599
$
3,443
$
1,535
2013 other income includes the realization of approximately $1.0 million of income upon payment of the deferred
interest due for BVBC Capital Trust III due to a change in assumptions in the calculation for interest due on the
securities.
Other operating expenses consist of the following:
(In thousands)
Data processing
FDIC assessments
ATM and network fees
Professional fees
Loan processing fees
Other expense
2014
2013
2012
$
1,085
798
768
740
154
2,693
$
1,082
824
741
784
175
3,249
$
1,104
1,324
745
1,383
194
2,756
Total
$
6,238
$
6,855
$
7,506
F-38
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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 value. 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 composed entirely of mortgage loans held for immediate sale in the secondary market with servicing released.
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 economic 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 $13,000 at December 31, 2014, losses of $6,000 at December 31, 2013 and gains of $32,000 at
December 31, 2012. Gains from fair value changes included in loans held for sale fee income were $18,000 and
losses from fair value changes included in loans held for sale fee income were $38,000 and $2,000 for the years
ended December 31, 2013 and 2012, respectively. Interest income on loans held for sale is included in interest and
fees on loans in the Company’s consolidated statement of operations. See Note 20 for additional disclosures
regarding fair value of mortgage loans held for sale.
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement 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
Quoted prices in active markets for identical assets or liabilities
Level 2
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities;
quoted prices in markets 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.
Level 3
Unobservable inputs that are supported by little or no market activity and that are significant to the
fair value of the assets or liabilities.
F-39
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 20: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
Recurring Measurements
The following table presents the fair value measurements of assets and liabilities recognized in the Company’s
consolidated balance sheet and the level within the fair value hierarchy in which the fair value measurements fall at
December 31, 2014 and 2013:
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
(In thousands)
December 31, 2014:
Assets:
Available-for-sale securities:
U.S. Government sponsored agencies
State and political subdivision securities
U.S. Small Business Administration loan
pool certificates
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, 2013:
Assets:
Available-for-sale securities:
U.S. Government sponsored agencies
State and political subdivision securities
U.S. Government sponsored agency
mortgage-backed securities
U.S. Small Business Administration loan
pool certificates
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
$
66,215
19,882
$
4,673
602
588
–
3
91,963
–
–
–
$
$
$
68,313
19,764
$
7,183
4,810
587
1,438
–
40
102,135
–
–
–
$
$
$
$
$
$
$
$
$
$
F-40
–
–
–
602
–
–
–
602
–
–
–
–
–
–
–
587
–
–
–
587
–
–
–
$
$
$
$
$
$
$
$
66,215
19,882
4,673
–
588
–
–
91,358
–
–
–
68,313
19,764
7,183
4,810
–
1,438
–
–
101,508
–
–
–
$
$
$
$
$
$
$
$
–
–
–
–
–
–
3
3
–
–
–
–
–
–
–
–
–
–
40
40
–
–
–
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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 general
classification of such assets and liabilities pursuant to the valuation hierarchy.
Available-for-Sale Securities
Where quoted market prices are available 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 similar characteristics. This
measurement is classified as Level 2 within the hierarchy.
Commitments to Originate Loans and Forward Sales Commitments
The fair value of commitments to originate loans and the fair value of forward sales commitments are estimated
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 ultimately result in a closed loan. These measurements are significant
unobservable inputs and are classified as Level 3 within the hierarchy.
Level 3 Reconciliation
The following table is a reconciliation of the beginning 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, 2013
Total realized and unrealized gains (losses):
Included in net income (loss)
Balance as of December 31, 2014
Balance as of December 31, 2012
Total realized and unrealized gains (losses):
Included in net income (loss)
Balance as of December 31, 2013
Commitments to
Originate Loans
Forward Sales
Commitments
$
$
$
$
–
–
–
–
–
–
$
40
(37)
$
3
$
184
(144)
$
40
F-41
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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, 2014 and 2013 of assets and liabilities
measured at fair value on a non-recurring basis during the respective year:
(In thousands)
December 31, 2014:
Impaired loans, net of reserves
Foreclosed assets held for sale, net
December 31, 2013:
Impaired loans, net of reserves
Foreclosed assets held for sale, net
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
$
$
$
$
3,439
7,618
11,057
4,685
13,983
18,668
$
$
$
$
–
–
–
–
–
–
$
$
$
$
–
–
–
–
–
–
$
$
$
$
3,439
7,618
11,057
4,685
13,983
18,668
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, as well as the general classification of such
assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the 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 not 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 collateral 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 value 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-42
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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
12/31/14
Valuation Technique
Unobservable Inputs
Commitments to Originate
$
– Market comparable
Loans
Forward Sales
Commitments
Collateral-dependent
impaired loans
Foreclosed assets held for
Sale, net
$
$
$
prices
3 Market comparable
prices
3,439 Market comparable
properties
16,758 Market comparable
properties
Quoted prices for similar loans
Estimated Customer Fallout Rate
Quoted prices for similar loans
Comparability adjustments (%)
Comparability adjustments (%)
Range
(Weighted Average)
NA
2.75%-3.625%
(3.38%)
9.00%-100.00%
(28.00%)
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 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 estimated customer fallout rate. Significant increases (decreases) in either of those
inputs in isolation would result in a significantly lower (higher) fair value measurement. Generally, 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-43
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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, 2014 and 2013.
(In thousands)
Financial assets:
Cash and cash equivalents (Level 1)
Loans, net of allowance for loan losses (Level 3)
FHLBank 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)
2014
2013
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
$
69,017
416,407
$
69,017
416,682
$
40,499
405,803
$
40,499
408,445
5,490
1,603
5,490
1,603
7,250
1,736
7,250
1,736
468,759
469,596
448,368
450,027
30,780
71,528
1,242
30,780
71,676
1,242
32,335
77,887
989
32,335
78,240
989
–
–
–
–
–
–
–
–
–
–
–
–
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 estimated by discounting the future cash flows using the market rates at which similar
loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with
similar characteristics were aggregated for purposes of the calculations. The carrying amount of accrued interest
approximates its fair value.
FHLBank 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 money market deposits. The
carrying amount of these deposits approximates fair value. The fair value of fixed maturity time deposits is
estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar
remaining maturities. The carrying amount of accrued interest payable approximates its fair value.
F-44
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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 fixed rate loan commitments, fair value also considers the difference between current levels of
interest rates and the committed rates. The fair value of letters of credit and lines of credit are based on fees
currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations
with the counterparties at the reporting date.
F-45
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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 Bank 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. Commitments generally have fixed expiration dates or other 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. Each customer’s creditworthiness is
evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on
management’s credit evaluation of the counterparty. The collateral securing these agreements varies, but may
include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real
estate. At December 31, 2014 and 2013, the Company had outstanding commitments to originate loans aggregating
approximately $4,512,000 and $6,388,000, respectively. The commitments extend over varying periods of time
with the majority being disbursed within a one-year period.
Mortgage loans in the process of origination represent amounts that the Company plans to fund within a normal
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 $0 and $216,000 at December 31, 2014 and 2013, respectively. Mortgage
loans in the process of origination represent commitments to originate loans at both fixed and variable rates.
Mortgage loans held for sale amounted to $588,000 and $1,438,000 at December 31, 2014 and 2013, 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 $588,000 and $1,654,000 at December 31, 2014 and 2013, respectively.
Letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to
a third party. Financial standby letters of credit are primarily 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 $974,000 and $955,000 at December 31, 2014 and 2013,
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 customer 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 requirements. Each customer’s
creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is
based on management’s credit evaluation of the counterparty. The collateral securing these agreements 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-balance sheet
instruments. At December 31, 2014, the Company had unused lines of credit to borrowers aggregating
approximately $144,574,000 for commercial, commercial real estate and construction lines and $33,153,000 for
open-end consumer lines of credit. At December 31, 2013, the Company had unused lines of credit to borrowers
aggregating approximately $165,238,000 for commercial, commercial real estate and construction lines and
$31,866,000 for open-end consumer lines of credit.
F-46
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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 values, 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 consideration of statutory restrictions which impede a lender’s ability to exercise prudent
collection efforts or foreclose in an efficient manner. For the three years ending December 31, 2014, the Company
has repurchased no loans from investors. Additionally, during the three years ending December 31, 2014, the
Company has recognized indemnification losses and claims totaling approximately $371,000 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 economic environment 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, constraints on liquidity and significant credit quality problems, including severe volatility in the valuation of
real estate and other collateral supporting loans. The financial statements have been 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 values, 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. Furthermore, 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 business which, in the opinion of
management, will have no material effect on the Company’s consolidated financial statements.
F-47
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
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: Nature of Operations and Summary of Significant Accounting Policies" in the
Company's Consolidated Financial Statements.
2014
2013
Fourth
Quarter Quarter Quarter Quarter
Second
Third
First
Fourth
Quarter
Third
Second
Quarter Quarter Quarter
First
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
(In thousands, except per share data)
$ 5,626 $ 5,606 $ 5,753 $ 5,699
1,131
4,568
300
1,134
4,472
-
1,084
4,542
-
1,165
4,588
100
$ 5,824
990
4,834
2,650
$ 5,651 $ 5,680 $ 5,702
1,532
4,170
-
1,444
4,207
(1,200)
1,505
4,175
(500)
4,542
1,458
5,339
4,472
1,366
5,469
4,488
1,607
5,986
4,268
1,210
5,412
2,184
3,293
5,934
5,407
1,685
6,289
4,675
1,738
6,093
4,170
1,756
5,850
661
369
229 (11,786)
432 12,155
489
490
109
-
109
489
66
-
66
272
(457)
(300)
(157)
288
803
-
803
272
320
-
320
272
76
-
76
272
$
(58) $ 11,666 $
(380) $
(206) $
445
$
531 $
48 $
(196)
Basic
Diluted
$ (0.01) $
$ (0.01) $
2.54 $ (0.08) $ (0.05)
2.54 $ (0.08) $ (0.05)
$
$
(0.15) $
(0.15) $
0.18 $
0.18 $
0.02 $
0.02 $
(0.07)
(0.07)
Balance Sheet
Total assets
Total loans, net
Stockholders' equity
$638,445 $634,688 $620,500 $628,469
416,407 416,321 408,388 411,258
58,460 57,520 45,285 44,306
$609,086
405,803
42,229
$632,806 $636,776 $645,527
399,521 399,410 406,369
36,244 37,594 39,348
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-48
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 24: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
Condensed Balance Sheets
December 31, 2014 and 2013
(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
2014
2013
$
4,193
$
4,133
76,849
232
356
3,321
62,877
232
356
86
$ 84,951
$ 67,684
$ 19,588
6,903
26,491
$ 19,588
5,868
25,456
Preferred Stock
Common stock
Additional paid-in capital
Retained earnings (Accumulated deficit)
Accumulated other comprehensive income (loss), net of income tax (credit) of
$(380) in 2014 and $(2,759) in 2013
Total Stockholders’ Equity
22
4,649
45,328
9,030
(569)
58,460
22
4,327
44,010
(1,992)
(4,139)
42,228
Total Liabilities and Stockholders’ Equity
$ 84,951
$ 67,684
F-49
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 24: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
(Continued)
Condensed Statements of Operations
Years Ended December 31, 2014, 2013 and 2012
(In thousands)
Income
Dividends from subsidiaries
Other income
Expenses
Loss before income taxes and equity in undistributed net loss of
subsidiaries
Income tax benefit
Valuation allowance on deferred tax asset
Income (loss) before equity in undistributed net loss of
subsidiaries
Equity in undistributed net income (loss) of subsidiaries
2014
2013
2012
$
412
16
428
1,300
(872)
(435)
(2,796)
2,359
10,403
$
–
1,045
1,045
1,138
(93)
–
–
(93)
1,135
$
–
20
20
1,486
(1,466)
(494)
494
(1,466)
1,733
Net income
$ 12,762
$
1,042
$
267
Condensed Statements of Comprehensive Income (Loss)
Years Ended December 31, 2014, 2013 and 2012
(In thousands)
Net income
Other comprehensive income (loss)
Change
in unrealized appreciation on available-for-sale
securities, net of income taxes (credit) of $2,370 in 2014,
$(2,710) in 2013, and $(60) in 2012
Less: reclassification adjustment for realized gains included in
net income (loss), net of income taxes of $15 in 2014, and
$51 in 2013
Comprehensive income (loss)
2014
2013
2012
$
12,762
$
1,042
$
267
3,591
(4,106)
(21)
16,332
$
$
(76)
(3,140)
$
(91)
–
176
F-50
BLUE VALLEY BAN CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2014, 2013 AND 2012
NOTE 24: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
(Continued)
Condensed Statements of Cash Flows
Years Ended December 31, 2014, 2013 and 2012
(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 additional stock
Proceeds from sale of additional stock through rights
offering
Proceeds from sale of common stock through Employee
Stock Purchase Plan (ESPP)
Net cash provided by financing activities
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR
CASH AND CASH EQUIVALENTS,
END OF YEAR
2014
2013
2012
$ 12,762
$
1,042
$
267
(3,294)
(10,403)
274
58
(703)
(1,306)
–
–
85
1,250
31
1,366
60
4,133
–
(1,135)
288
(68)
(2,992)
(2,865)
–
–
–
6,333
19
6,352
3,487
646
–
(1,733)
245
37
1,060
(124)
–
–
–
–
27
27
(97)
743
$
4,193
$
4,133
$
646
F-51
Since 2010, one of the primary contributing factors to the
strengthening of our capital position has been the expanding
contribution of our net interest margin and net interest
income to our earnings. We have seen our net interest margin
grow 111 basis points from 2.23% as of December 31, 2010
to 3.34% as of December 31, 2014. During that period, our
net interest income has increased $2.2 million, or 14.0%, from
$15.9 million to $18.2 million.
We engaged creative expertise from within and outside of our
organization to refine our messaging and communications
As we celebrate our 25th year of serving Kansas City and I
reflect on the timeline and events highlighted in this annual
report, it reminds me of all the great moments we’ve shared
over the past quarter of a century.
Each year brought with it new challenges and new oppor-
tunities to form relationships and to better serve our
customers and our community.
Our strategic plan for 2014 set forth very aggressive goals
for our Company, and I am pleased to report that we
achieved those goals and we are well-positioned for 2015
and beyond.
During 2014, we reduced our nonperforming assets by
$11.2 million or 34.0%. As of December 31, 2014 our
nonperforming assets accounted for only 3.4% of our
total assets. We enhanced our leadership team with the
promotion of several key officers and the addition of
significant talent to both our Company’s and our Bank’s
Board of Directors. Earnings and prudent asset manage-
ment have enabled us to continue the expansion of our
Bank’s excess regulatory capital. Since 2011, we have
expanded our Bank’s excess regulatory capital by $8.8
million or 54.4%. As of December 31, 2014, the Bank had
$25.1 million of capital in excess of what is required to be
considered “Well Capitalized” by regulatory standards. The
Bank’s total regulatory capital as of December 31, 2014
exceeded $75.4 million which puts us in a good position
going forward.
From our very first day, we've aspired to give back to the
community that has fostered our success, and 2014 was
no exception. Last year, the Bank and our employees
donated more than $288,000 to a variety of community
causes, charities, and non-profits. It is important for our
Company to embody a strong philanthropic presence
because of the important role we play in helping the
community grow and prosper. This is why we are proud to
have given over $3 million to nearly 600 local non-profits
over the past 25 years.
to clarify our brand and our identity — those tangible
I have always believed that if we create a better environment
Inclusive of this growth, the mix of our deposit portfolio as of
promotion of Steve Fleischaker, a fourteen-year employee,
and intangible qualities that set us apart from other organiza-
for our customers and community members, business will
December 31, 2014 is reflective of the diverse composition
to Senior Vice President and Director of Sales and Business
tions. We listened to our staff, our board, our stockholders,
flourish and people will seek this community as a place to
and needs of our customers.
Development for the Bank. Mark and Steve, together with
and most importantly, our customers, who reminded us of
live, work, and raise a family. We’ve seen this happen over 25
Bruce Easterly, Executive Vice President and Chief Lending
the three pillars that have defined us since our inception 25
years as our Company has grown with our community. In
Over the past 25 years, Bank of Blue Valley has taken pride in
Officer, and Bonnie McConnaughy, Senior Vice President,
years ago: Community, Philanthropy and Entrepreneurship.
2014, our total deposits grew by over $20 million or 4.55%.
assisting individuals and entrepreneurs. The Bank continues
Operations, have contributed greatly to our success in the
to support the growth of the Kansas City community by
past and will be instrumental to our success going forward.
being an active lender to area businesses and offering
customizable solutions to help business owners achieve
The strength of our Company and Bank Boards has been at
their financial goals. We have a diverse range of lending
the heart of our success since our inception. We have been
products to offer which is reflected in the composition of our
fortunate to have attracted many great community leaders to
loan portfolio as of December 31, 2014.
our boards over the years. However, our addition of four new
directors at one time is unprecedented for the organization.
Our success in being a community-minded, philanthropic,
entrepreneurial organization starts with our leadership. Our
• Thomas A. McDonnell, is an experienced business leader
staff is consistently recognized in local publications for their
with a track record of building global organizations that
leadership and outstanding service. Over 28% of our
are both innovative and philanthropic.
employees and 62% of our officer staff have been with us for
• Anne D. St. Peter is the founder of a high-growth, digital
10 or more years. The tenure of our employees is a signifi-
marketing and advertising agency.
cant component of our success and we are grateful for their
• William “Ryan” Wilkerson IV is the President and CEO of a
continued loyalty. This past December we promoted Mark
third-generation Kansas City risk management and insurance
Fortino, a seventeen-year employee to Executive Vice
brokerage firm.
President and Chief Operating Officer of the Bank. We
• Steven D. Wilkinson is the immediate past CEO of a major
further enhanced our senior leadership team with the
local medical center whose vision and passion over the
past 17 years helped them grow and expand to become
invest in our employees and we will look to enhance
one of Kansas City's best-known healthcare assets.
our market perception through active communication
STOCKHOLDER INFORMATION
Tom, Anne, Ryan and Steve are all very successful in
and community events, which have been at the core of our
strategies and continued support and involvement in civic
their respective careers, are highly regarded in the Kansas
values since our inception.
City community and will contribute significantly to the
governance of both the Company and the Bank. I have had
Community, Philanthropy, and Entrepreneurship will
the good fortune to know and work with each of them
continue to drive the decisions we make every day. Thank
and can speak to the fact they all embody our values of
you for the relationship that we’ve enjoyed with each
community, philanthropy and entrepreneurship.
other over the past Quarter of a Century.
We are looking forward to 2015 as we refine the Company’s
sales management process with the goal of cultivating new
customer
relationships, expanding existing customer
relationships, prudent asset and deposit growth, and
Robert D. Regnier
increasing non-interest income. We will continue to
President & CEO
CORPORATE OFFICE
11935 Riley St
PO Box 26128
Overland Park, KS 66225-6128
913.338.1000
913.234.7145 (fax)
HELPLINE
913.338.1000
WEBSITES
www.bankbv.com
www.internetmortgage.com
TRANSFER AGENT AND REGISTRAR
American Stock Transfer & Trust Company, LLC
6201 15th Avenue
Brooklyn, NY 11219
www.amstock.com
Stockholder Services: 866.703.9077
AUDITORS
BKD, LLP
1201 Walnut Street, Suite 1700
Kansas City, MO 64106-2246
CORPORATE COUNSEL
Husch Blackwell LLP
ANNUAL MEETING OF STOCKHOLDERS
4801 Main Street, Suite 1000
The annual meeting will be held on May 20, 2015
Kansas City, MO 64112-2502
at 5:30 p.m. at the Corporate Office,
11935 Riley St., Overland Park, KS 66213.
Stinson Morrison Hecker LLP
INVESTOR INQUIRIES
To request additional copies of our Annual Report or to
1201 Walnut Street, Suite 2900
Kansas City, MO 64106-2150
inquire about other stockholder issues, visit our Investor
MARKET MAKER
Relations webpage at www.bankbv.com/about
Stifel, Nicolaus & Company, Incorporated
or contact Mark A. Fortino, Chief Financial Officer,
One Financial Plaza
at our corporate office.
501 N Broadway, 9th Floor
St. Louis, MO 63102-2102
STOCK QUOTATION SYMBOL
Local trading desk: 913.345.4200
Shares of Blue Valley Ban Corp. common stock
are currently quoted on the OTCQX under the
symbol BVBC.
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MEMBER FDIC
OVERLAND PARK
11935 RILEY ST l OVERLAND PARK, KS 66213
OLATHE
1235 E. SANTA FE l OLATHE, KS 66061
SHAWNEE
5520 HEDGE LANE TERR l SHAWNEE, KS 66226
LEAWOOD
13401 MISSION RD l LEAWOOD, KS 66209
LENEXA
9500 LACKMAN RD l LENEXA, KS 66219
WWW.BANKBV.COM l 913.338.1000
S E R V I N G K A N S A S C I T Y F O R A Q U A R T E R O F A C E N T U R Y
COMMUNITY
PHILANTHROPY
ENTREPRENEURSHIP