-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MeGo7OKM6BJZZ5B2T21AtCv1HdAHs212b08ZuLcG+JR25pOR3U7mDiVWw6q/qRFe Z9uBH/YcdeDRAMzTd98NOQ== /in/edgar/work/0000922907-00-000238/0000922907-00-000238.txt : 20001114 0000922907-00-000238.hdr.sgml : 20001114 ACCESSION NUMBER: 0000922907-00-000238 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE VALLEY BAN CORP CENTRAL INDEX KEY: 0000901842 STANDARD INDUSTRIAL CLASSIFICATION: [6022 ] IRS NUMBER: 481070996 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-15933 FILM NUMBER: 759417 BUSINESS ADDRESS: STREET 1: 11935 RILEY CITY: OVERLAND PARK STATE: KS ZIP: 66225 BUSINESS PHONE: 9133381000 MAIL ADDRESS: STREET 1: 11935 RILEY CITY: OVERLAND PARK STATE: KS ZIP: 66225 10-Q 1 0001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________ Commission file number: 001-15933 BLUE VALLEY BAN CORP (Exact name of registrant as specified in its charter) Kansas 48-1070996 (State or other (I.R.S. jurisdiction of Employer incorporation or Identification organization) No.) 11935 Riley Overland Park, Kansas 66225-6128 (Address of principal (Zip Code) executive offices) Registrant's telephone number, including area code: (913) 338-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Number of shares of Common Stock ($1.00 par value) outstanding at the close of business on September 30, 2000 was 2,141,720 shares. BLUE VALLEY BAN CORP INDEX
Page No. Part I. Financial Information Item I. Financial Statements Independent Accountants' Review Report 3 Consolidated Balance Sheets - September 30, 2000 (unaudited) and December 31, 1999 4 Consolidated Statements of Income (unaudited) - three months and nine months ended September 30, 2000 and 1999 6 Consolidated Statements of Changes in Stockholders' Equity (unaudited) - nine months ended September 30, 2000 and 1999 7 Consolidated Statements of Cash Flows (unaudited) - nine months ended September 30, 2000and 1999 8 Notes to Consolidated Financial Statements (unaudited) - nine months ended September 30, 2000 and 1999 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11 Item 3. Quantitative and Qualitative Disclosures About Market Risk 15 Part II. Other Information Item 2. Changes in Securities and Use of Proceeds 16 Item 6. Exhibits and Reports on Form 8-K 16
2 Part I. Financial Information Item 1. FINANCIAL STATEMENTS Independent Accountants' Review Report Board of Directors Blue Valley Ban Corp Overland Park, Kansas 66225 We have reviewed the consolidated balance sheet of BLUE VALLEY BAN CORP as of September 30, 2000 and the related consolidated statements of income for the three-month and nine-month periods ended September 30, 2000 and the consolidated statements of changes in stockholders' equity and cash flows for the nine-month period ended September 30, 2000. These financial statements are the responsibility of the Company's management. We conducted our review in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet as of December 31, 1999 and the related consolidated statements of income, retained earnings, and cash flows for the year then ended (not presented herein), and in our report dated March 1, 2000 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 1999 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ BAIRD, KURTZ & DOBSON Kansas City, Missouri November 9, 2000 3 BLUE VALLEY BAN CORP CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 (dollars in thousands, except share data) ASSETS September 30, December 31, 2000 1999 ---------------- ---------------- (Unaudited) Cash and due from banks $8,780 $15,460 Federal funds sold 26,920 8,000 ---------------- ---------------- Cash and cash equivalents 35,700 23,460 Available-for-sale securities 63,086 48,646 Held-to-maturity securities 2,000 Mortgage loans held for sale 2,639 952 Loans 283,349 250,410 Less allowance for loan losses (4,355) (3,817) ---------------- ---------------- Net loans 278,994 246,593 Premises and equipment 6,158 5,574 Foreclosed assets held for sale, net 340 186 Interest receivable 2,691 2,039 Deferred income taxes 1,533 1,841 Prepaid expenses and other assets 1,704 840 Federal Home Loan Bank stock and other 1,465 1,034 securities Excess of cost over fair value of net 1,334 1,448 assets acquired, at amortized cost ---------------- ---------------- Total Assets $397,644 $332,613 ================ ================ See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Review Report. 4 BLUE VALLEY BAN CORP CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 2000 AND DECEMBER 31, 1999 (dollars in thousands, except share data) LIABILITIES AND STOCKHOLDERS' EQUITY September 30, December 31, 2000 1999 ---------------- ---------------- (Unaudited) LIABILITIES Demand deposits $40,289 $36,950 Savings, NOW and money market deposits 143,646 126,398 Time deposits 137,733 104,797 ---------------- ---------------- Total Deposits 321,668 268,145 Securities sold under agreements to repurchase 14,206 11,260 Short-term debt 10,000 17,450 Long-term debt 11,804 11,908 Guaranteed preferred beneficial interest in Company's subordinated debt 11,500 Advances from borrowers for taxes and insurance 3,317 2,559 Accrued interest and other liabilities 3,174 2,422 ---------------- ---------------- Total Liabilities 375,669 313,744 ---------------- ---------------- STOCKHOLDERS' EQUITY Capital stock Common stock, pare value $1 per share; Authorized 15,000,000 shares; issued and outstanding 2000 - 2,141,720 shares; 1999 - 2,137,720 2,142 2,138 Additional paid-in capital 5,277 5,230 Retained earnings 15,051 12,458 Accumulated other comprehensive income Unrealized depreciation on available-for-sale securities, net of income taxes of $(331) in 2000 and $(638) in 1999 (495) (957) ---------------- ---------------- Total Stockholders' Equity 21,975 18,869 ---------------- ---------------- Total Liabilities and Stockholders' Equity $397,644 $332,613 ================ ================ See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Review Report. 5 BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (dollars in thousands, except share data) Three Months Ended Nine Months Ended September 30 September 30 2000 1999 2000 1999 --------- --------- --------- --------- (Unaudited)(Unaudited) (Unaudited)(Unaudited) INTEREST INCOME Interest and fees on loans $6,813 $5,141 $19,537 $14,174 Federal funds sold 390 57 443 361 Available-for-sale securities 905 676 2,472 2,021 --------- --------- --------- --------- Total Interest Income 8,108 5,874 22,452 16,556 --------- --------- --------- --------- INTEREST EXPENSE Deposits 3,852 2,473 10,004 7,045 Securities sold under repurchase agreements 120 71 297 199 Long-term debt and advances 644 295 1,500 783 --------- --------- --------- --------- Total Interest Expense 4,616 2,839 11,801 8,027 --------- --------- --------- --------- NET INTEREST INCOME 3,492 3,035 10,651 8,529 PROVISION FOR LOAN LOSSES 495 369 1,440 1,175 --------- --------- --------- --------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,997 2,666 9,211 7,354 NONINTEREST INCOME Service fees 758 696 2,052 1,980 Other income 59 39 219 144 --------- --------- --------- --------- Total Noninterest Income 817 735 2,271 2,124 --------- --------- --------- --------- NONINTEREST EXPENSE Salaries and employee benefits 1,466 1,155 4,299 3,279 Net occupancy expense 291 237 824 648 Other operating expense 832 714 2,459 2,129 --------- --------- --------- --------- Total Noninterest Expense 2,589 2,106 7,582 6,056 --------- --------- --------- --------- INCOME BEFORE INCOME TAXES 1,225 1,295 3,900 3,422 PROVISION FOR INCOME TAXES 411 433 1,307 1,128 --------- --------- --------- --------- NET INCOME $814 $862 $2,593 $2,294 ========= ========= ========= ========= BASIC EARNINGS PER SHARE $0.38 $0.40 $1.21 $1.08 ========= ========= ========= ========= DILUTED EARNINGS PER SHARE $0.37 $0.40 $1.19 $1.07 ========= ========= ========= ========= See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Review Report. 6
BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (dollars in thousands, except share data) Accumulated Other Comprehensive Income Unrealized Additional Depreciation on Comprehensive Common Paid-In Retained Available-for-Sale Income Stock Capital Earnings Securities, Net Total ---- ----- ------- -------- ------------------ ----- BALANCE, DECEMBER 31, 1998 $2,130 $5,159 $9,375 $352 $17,016 Issuance of 1324 shares of common stock 2 4 6 Net income $2,294 2,294 2,294 Change in unrealized depreciation on available-for-sale securities, net of income taxes of $(593) (893) (893) (893) ----------- ------------ -------------- ----------- --------------- ------------ BALANCE, SEPTEMBER 30, 1999 $1,401 $2,132 $5,163 $11,669 $(541) $18,423 ----------- ------------ -------------- ----------- --------------- ------------ Issuance of 6,000 shares of common stock 6 67 73 Net income $789 789 789 Change in unrealized depreciation on available-for-sale securities, net of income taxes of $(277) (416) (416) (416) ----------- ------------ -------------- ----------- --------------- ------------ BALANCE, DECEMBER 31, 1999 $1,774 $2,138 $5,230 $12,458 $(957) $18,869 ----------- ------------ -------------- ----------- --------------- ------------ Issuance of 4,000 shares of common stock 4 47 51 Net income $2,593 2,593 2,593 Change in unrealized depreciation on available-for-sale securities, net of income taxes of $307 462 462 462 ----------- ------------ -------------- ----------- --------------- ------------ BALANCE, SEPTEMBER 30, 2000 $3,055 $2,142 $5,277 $15,051 $(495) $21,975 =========== ============ ============== =========== =============== ============ September 30, December 31, 1999 September 30, ------------- ----------------- ------------- 2000 1999 ---- ---- RECLASSIFICATION DISCLOSURE: Unrealized depreciation on available-for-sale securities, net of income taxes of $307, $(277), and $(592) for the periods ended September 30, 2000, December 31, 1999, and September 30, 1999, respectively $462 $(416) $(891) Less: reclassification adjustments for appreciation (depreciation) included in net income, net of income taxes of $1 for the period ended September 30, 1999 (2) ----------- --------------- ------------ Change in unrealized depreciation on available-for-sale securities, net of income taxes of $307, $(277), and $(593) for the periods ended September 30, 2000, December 31, 1999, and September 30, 1999, respectively $462 $(416) $(893) =========== =============== ============ See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Review Report.
7
BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (dollars in thousands, except share data) September 30, 2000 September 30, 1999 ------------------------ ----------------------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $2,593 $2,294 Items not requiring (providing) cash: Depreciation and amortization 464 384 Amortization of premiums and discounts on securities 60 27 Provision for loan losses 1,440 1,175 Gain on sales of available-for-sale securities (3) Changes in: Accrued interest receivable (652) (340) Mortgage loans held for sale (1,687) (54) Prepaid expenses and other assets 18 75 Accrued interest payable and other liabilities 752 411 ------------------------ ----------------------- Net cash provided by operating activities 2,988 3,969 ------------------------ ----------------------- CASH FLOWS FROM INVESTING ACTIVITIES Net originations of loans (35,084) (63,248) Proceeds from sales of loan participations 658 1,741 Purchase of premises and equipment (931) (355) Proceeds from the sale of foreclosed assets 431 134 Purchases of held-to-maturity securities (2,000) Proceeds from sales of available-for-sale securities 2,003 Proceeds from maturities of available-for-sale securities 3,205 8,000 Purchases of available-for-sale securities (16,935) (5,350) Purchases of Federal Home Loan Bank Stock and other securities (431) (399) ------------------------ ----------------------- Net cash used in investing activities (51,087) (57,075) ------------------------ ----------------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in demand deposits, money market, NOW and savings accounts 20,587 37,821 Net increase (decrease) in certificates of deposit 32,936 (9,944) Repayments of long-term debt (104) (97) Net proceeds from guaranteed preferred beneficial interest in Company's subordinated debt 11,500 Net proceeds (payments) on short-term debt (7,450) 6,063 Proceeds from sale of common stock 51 6 Net increase in other borrowings 2,946 244 Net increase in advances from borrowers for taxes and insurance 758 2,302 ------------------------ ----------------------- Net cash provided by financing activities 61,224 36,395 ------------------------ ----------------------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 12,240 (16,711) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 23,460 28,999 ------------------------ ----------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $35,700 $12,288 ======================== ======================= See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Review Report.
8 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (Unaudited) NOTE 1: BASIS OF PRESENTATION In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the Company's consolidated financial position as of September 30, 2000 and December 31, 1999, and the consolidated results of its operations, changes in stockholders' equity and cash flows for the periods ended September 30, 2000 and 1999, and are of a normal recurring nature. Certain information and note disclosures normally included in the company's annual financial statements prepared in accordance with generally accepted accounting principles have been omitted. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Form S-1 Registration Statement filed with the Securities and Exchange Commission. The results of operations for the period are not necessarily indicative of the results to be expected for the full year. The report of Baird, Kurtz & Dobson commenting upon their review accompanies the consolidated financial statements included in Item 1 of Part I. NOTE 2: EARNINGS PER SHARE Basic earnings per share is computed based on the weighted average number of shares outstanding during each year. Diluted earnings per share is computed using the weighted average common shares and all potential dilutive common shares outstanding during the period. The computation of per share earnings for the nine months ended September 30, 2000 and 1999 is as follows:
September 30, 2000 September 30, 1999 ----------------------- ----------------------- (Unaudited) (Unaudited) (dollars in thousands, except share and per share data) Net income $ 2,593 $ 2,294 ----------------------- ----------------------- Average common shares outstanding 2,141,457 2,131,206 Average common share stock options outstanding 34,372 17,808 ----------------------- ----------------------- Average diluted common shares 2,175,829 2,149,014 ----------------------- ----------------------- Basic earnings per share $ 1.21 $ 1.08 ======================= ======================= Diluted earnings per share $ 1.19 $ 1.07 ======================= =======================
9 NOTE 3: LONG-TERM DEBT Long-term debt at September 30, 2000 and December 31, 1999, consisted of the following components:
September 30, 2000 December 31, 1999 -------------------------- ----------------------- (Unaudited) (in thousands) Note Payable - other (A) $ 1,804 $ 1,908 Federal Home Loan Bank advances (B) 10,000 10,000 -------------------------- ----------------------- Total long-term debt $ 11,804 $ 11,908 ========================== =======================
[FN] (A) Due in August 2009, payable in monthly installments of $23,175, plus interest at 7.5%; collateralized by land, building and assignment of future rents. (B) Due in 2008; collateralized by various assets including mortgage-backed loans and securities, and U.S. Treasury and Agency securities. The interest rates on the advances range from 4.63% to 5.682%. Aggregate annual maturities of long-term debt at September 30, 2000 are as follows: (in thousands) ----------------------- October 1 to December 31, 2000 $ 36 2001 151 2002 162 2003 175 2004 188 2005 203 Thereafter 10,889 ------------------------ $ 11,804 ======================== On July 21, 2000, BVBC Capital Trust I (the "Trust"), a Delaware business trust formed by the Company, completed the sale of $11,500,000 of 10.375% trust preferred securities. The Trust also issued $355,672 of common securities to the Company and used the net proceeds from the offering to purchase $11,855,672 in principal amount of 10.375% junior subordinated debentures of the Company due September 30, 2030. The junior subordinated debentures are the sole assets of the Trust and will be eliminated, along with the related income statement effects, in the Company's future consolidated financial statements. The trust preferred securities are mandatorily redeemable upon the maturity of the junior subordinated debentures or upon earlier redemption as provided in the indenture. The Company has the right to redeem the junior subordinated debentures, in whole or in part, on or after September 30, 2005, at a redemption price specified in the indenture plus any accrued but unpaid interest to the redemption date. 10 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, can generally be identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company is unable to predict the actual results of its future plans or strategies with certainty. Factors which could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to, fluctuations in market rates of interest and loan and deposit pricing; a deterioration of general economic conditions or the demand for housing in the Company's market areas; legislative or regulatory changes; adverse developments in the Company's loan or investment portfolio; any inability to obtain funding on favorable terms; the loss of key personnel; significant increases in competition; and the possible dilutive effect of potential acquisitions or expansions. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. GENERAL Results of Operations Three months ended September 30, 2000 and 1999. Net income for the quarter ended September 30, 2000, was $814,000, as compared to net income of $862,000 for the quarter ended September 30, 1999. This represents a $48,000, or 5.57%, decrease in the 2000 earnings over 1999. Diluted earnings per share decreased 7.50% to $0.37 in the third quarter of 2000 from $0.40 in the same period of 1999. The Company's annualized return on average assets and average stockholders' equity for the three-month period ended September 30, 2000 were 0.85% and 15.28%, compared to 1.18% and 19.19%, respectively, for the same period in 1999. Although we recorded increases in net interest income and non-interest income for the three months ended September 30, 2000, as compared to the prior year third quarter, these increases were offset by the increase in non-interest expense in the current year third quarter resulting from additional staff hired to facilitate our growth. Net interest income for the three-month period ended September 30, 2000 increased to $3.5 million from $3.0 million in the prior year third quarter, a $500,000, or 15.06%, increase. This increase was primarily the result of a $87.8 million increase in average interest-earning assets, which more than offset a $83.7 million increase in average interest-bearing liabilities. The net interest margin decreased to 3.94% from 4.53%, resulting in a decrease in net interest income of $250,000; however, the growth in volume generated $750,000, resulting in the net increase in net interest income of $500,000. Interest income for the current year third quarter was $8.1 million, an increase of $2.2 million, or 38.03%, from $5.9 million in the prior year third quarter, primarily as a result of growth in interest-earning assets. Yields on interest-earning assets increased to 9.07% in the third quarter of 2000, as compared to 8.69% in the prior year third quarter, an increase of 38 basis points. Loan interest and fee income increased to $6.8 million from $5.1 million because of greater volume of loans outstanding. The growth in loans was primarily funded through growth in core deposits. Interest expense for the current year third quarter was $4.6 million, an increase of $1.8 million, or 62.59%, from $2.8 million in the prior year third quarter. The increase is attributable to a $63.8 million, or 31.11%, increase in our average interest-bearing deposits as well as a $20.0 million, or 68.57%, increase in other interest-bearing liabilities and junior subordinated debentures. Interest expense on long-term debt and advances for the current year third quarter increased 118.31% over the prior year third quarter. Overall, rates paid on average interest-bearing liabilities increased to 5.78% in the current year period from 4.81% in the prior year period, an increase of 97 basis points. Nine months ended September 30, 2000 and 1999. Net income for the nine-month period ended September 30, 2000, was $2.6 million, compared to net income of $2.3 million for the nine-month period ended September 30, 1999. This represents a 13.03% increase in the 2000 earnings over 1999. Diluted earnings per share increased 11.21% to $1.19 in the third quarter of 2000 from $1.07 in the same period of 1999. The Company's annualized return on average assets and average stockholders' equity for the nine-month period ended September 30, 2000 were 0.99% and 17.28%, compared to 1.12% and 17.48%, respectively, for the same period in 1999. Net interest income for the nine-month period ended September 30, 2000 increased to $10.7 million from $8.5 million in the prior year nine-month period, a $2.1 million, or 24.88%, increase. This increase was primarily the result of a $72.6 million, or 28.45%, increase in average interest-earning assets. Our net interest margin decreased to 4.42% during the current year nine-month period, from 4.56% during the prior year nine-month period. One of the major contributors to the decline in our net interest margin year-to-date was an increase of $700,000 in interest expense on long-term debt and advances, which includes interest expense on the junior subordinated debentures. 11 Interest income for the current year nine month period was $22.5 million, an increase of $5.9 million, or 35.61%, from $16.6 million in the prior year nine month period, primarily as a result of growth in interest-earning assets. The yield on average interest-earning assets increased to 9.23% in 2000 from 8.77% in 1999, an increase of 46 basis points. This increase in yield combined with the increase in interest-earning assets of $72.6 million, resulted in the $5.9 million increase in interest income in the current year period, as compared to the prior year period. Interest expense for the nine-month period ended September 30, 2000 was $11.8 million, up $3.8 million, or 47.02%, from $8.0 million for the nine month period ended September 30, 1999. We attribute the increase to growth in our deposit base, as well as increases in other funding sources such as the junior subordinated debentures issued in July 2000. Overall, rates paid on average interest-bearing liabilities increased to 5.44% in the current year period from 4.93% in the prior year period, an increase of 51 basis points. Provision for Loan Losses The provision for loan losses for the third quarter of 2000 was $495,000, compared to $369,000 for the same period of 1999, resulting in a $126,000, or 34.15%, decrease. For the nine months ended September 30, 2000 and 1999, the provision was $1.4 million and $1.2 million, respectively, resulting in a 22.55% increase. We make provisions for loan losses in amounts management deems necessary to maintain the allowance for loan losses at an appropriate level. Non-interest Income Non-interest income increased to $817,000, or 11.16%, during the three months ended September 30, 2000, from $735,000 during the prior year third quarter. This increase is primarily attributable to an increase in other service charge income of $161,000 and an increase in non-sufficient funds charges of $38,000. Other service charge income includes lease referral fees which generated an additional $80,000 over the prior year quarter, investment brokerage services which generated an additional $26,000 over the prior year quarter, and commercial mortgage services which generated an additional $27,000 over the prior year quarter. The increase in other service charge income and non-sufficient funds charges for the three months ended September 30, 2000 was offset by a decrease in mortgage loans held for sale fee income of $137,000. For the nine months ended September 30, 2000, non-interest income was $2.3 million, a 6.92% increase from the $2.1 million reported for the same period in 1999. Non-interest Expense Non-interest expense increased to $2.6 million, or 22.93%, during the three months ended September 30, 2000, from $2.1 million in the prior year period. Year-to-date non-interest expense increased to $7.6 million, or 25.20%, during the nine months ended September 30, 2000, from $6.1 million in the prior year period. This increase is primarily attributable to an increase in salaries and employee benefits expense. Our salaries and employee benefits expense increased to $1.5 million and $4.3 million during the three month and nine month ended periods in 2000, from $1.2 million and $3.3 million during the three month and nine month ended periods in 1999, as we hired additional staff to facilitate our growth. We had 120 full-time employees at September 30, 2000 as compared to 102 at September 30, 1999. FINANCIAL CONDITION Total assets for the Company at September 30, 2000, were $397.6 million, an increase of $65.0 million, or 19.55%, compared to December 31, 1999. Deposits and stockholders' equity at September 30, 2000, were $321.7 million and $22.0 million, respectively, compared with $268.1 million and $18.9 million, respectively, at December 31, 1999, increases of $53.5 million, or 19.96%, and $3.1 million, or 16.46%, respectively. Loans at September 30, 2000 totaled $283.3 million, an increase of $32.9 million, or 13.15%, compared to December 31, 1999. The loan to deposit ratio at September 30, 2000 was 88.09% compared to 93.44% at September 30, 1999. Significant deposit growth and our trust preferred securities offering, completed in July 2000, have provided the funding necessary to facilitate our growth. Non-performing assets consist primarily of loans past due 90 days or more and nonaccrual loans and foreclosed real estate. The following table sets forth our non-performing assets as of the dates indicated: 12
NON-PERFORMING ASSETS As of As of As of and for the and for the and for the nine months ended nine months ended year ended September 30, September 30, December 31, 2000 1999 1999 ---- ---- ---- (Dollars in thousands) Real estate loans: Past due 90 days or more $- $119 $- Nonaccrual 394 338 - Installment loans: Past due 90 days or more - 79 - Nonaccrual 59 75 87 Credit cards and related plans: Past due 90 days or more - - - Nonaccrual - - - Commercial (time and demand) and all other loans: Past due 90 days or more 649 9 50 Nonaccrual 633 402 375 Lease financing receivables: Past due 90 days or more - - - Nonaccrual 180 96 25 Debt securities and other assets (exclude other real estate owned and other repossessed assets): Past due 90 days or more - - - Nonaccrual - - - Total non-performing loans 1,915 1,118 537 ----------- ---------------- ------------- Foreclosed assets held for sale 340 174 186 ----------- ---------------- ------------- Total non-performing assets $2,255 $1,292 $723 =========== ================ ============= Total nonperforming loans to total loans 0.68% 0.50% 0.21% Total nonperforming loans to total assets 0.48% 0.38% 0.16% Allowance for loan losses to nonperforming loans 227.42% 261.72% 710.80% Nonperforming assets to loans and foreclosed assets held for sale 0.79% 0.58% 0.29%
As of September 30, 2000, non-performing loans equaled 0.68% of total loans. The non-performing loan ratios were above historical averages due in part to three larger credit relationships, which are being closely monitored. Our philosophy has been to value non-performing loans at their estimated collectible value and to aggressively manage these situations. Generally, the Bank maintains its allowance for loan losses in excess of its non-performing loans. As of September 30, 2000, our ratio of allowance for loan losses to non-performing loans was 227.42%. 13
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION As of and for As of and for the the As of and for nine months nine months the ended ended year ended September 30, September 30, December 31, 2000 1999 1999 ---- ---- ---- (Dollars in thousands) Balance at beginning of period $ 3,817 $ 2,341 $ 2,341 Loans charged-off: Commercial real estate Residential real estate Commercial 343 539 567 Personal 140 22 47 Home Equity Construction Leases 534 122 158 ---------------- ---------------- ----------------- Total loans charged-off 1,017 683 772 Recoveries: Commercial real estate Residential real estate Commercial 51 88 90 Personal 26 1 2 Home Equity Construction Leases 38 4 12 ---------------- ---------------- ----------------- Total recoveries 115 93 104 ---------------- ---------------- ----------------- Net loans charged-off 902 590 668 Provision for loan losses 1,440 1,175 2,144 ---------------- ---------------- ----------------- Balance at end of period $ 4,355 $ 2,926 $ 3,817 ================ ================ ================= Loans outstanding: Average 263,104 195,527 206,310 End of period 283,349 222,099 250,410 Ratio of allowance for loan losses to loans outstanding: Average 1.66% 1.50% 1.85% End of period 1.54% 1.32% 1.52% Ratio of net charge-offs to: Average loans 0.46% 0.40% 0.32% End of period loans 0.43% 0.36% 0.27%
The allowance for loan losses as a percent of total loans was 1.54% as of September 30, 2000, compared to 1.52% at December 31, 1999. As of September 30, 2000, net charge-offs equaled 0.46% of average total loans. This ratio is slightly above historical averages due in part to rising fuel prices, which have contributed to defaults in the Bank's portfolio of over-the-road truck and trailer leases. The over-the-road truck and trailer lease portfolio was $3.7 million, or 1.32%, of the $283.3 million loan portfolio as of September 30, 2000. Liquidity is measured by a financial institution's ability to raise funds through deposits, borrowed funds, capital, or the sale of marketable assets, such as residential mortgage loans or a portfolio of SBA loans. Other sources of liquidity, including cash flow from the repayment of loans, are also considered in determining whether liquidity is satisfactory. Liquidity is also achieved through growth of core deposits and liquid assets, and accessibility to the money and capital markets. The funds are used to meet deposit withdrawals, maintain reserve requirements, fund loans and operate the organization. Core deposits, defined as demand deposits, interest-bearing transaction accounts, savings deposits and certificates of deposit less that $100,000, were 68.69% of our total assets at September 30, 2000, and 70.11% of total assets at December 31, 1999. Internal guidelines have been established to measure liquid assets as well as relevant ratios concerning asset levels and purchased funds. These indicators are reported to the board of directors monthly, and at September 30, 2000, the Bank was within the established guidelines. At September 30, 2000, our total stockholders' equity was $22.0 million and our equity to asset ratio was 5.53%. At September 30, 2000, our Tier 1 capital ratio was 9.29% compared to 6.82% at September 30, 1999, while our total risk-based capital ratio was 10.54% compared to 8.07% at September 30, 1999. Both exceed the capital minimums established in the risk-based capital requirements. 14 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a continued part of our financial strategy, we attempt to manage the impact of fluctuations in market interest rates on our net interest income. This effort entails providing a reasonable balance between interest rate risk, credit risk, liquidity risk and maintenance of yield. Our funds management policy is established by our Board of Directors and monitored by our Risk Management Committee. Our funds management policy sets standards within which we are expected to operate. These standards include guidelines for exposure to interest rate fluctuations, liquidity, loan limits as a percentage of funding sources, exposure to correspondent banks and brokers, and reliance on non-core deposits. Our funds management policy also establishes the reporting requirements to the Board of Directors. Our investment policy complements our asset/liability policy by establishing criteria by which we may purchase securities. These criteria include approved types of securities, brokerage sources, terms of investment, quality standards, and diversification. We use an asset/liability modeling service to analyze the Bank of Blue Valley's current sensitivity to changes in interest rates. The system simulates the Bank's asset and liability base and projects future net interest income results under several interest rate assumptions. We strive to maintain a position such that changes in interest rates will not affect net interest income by more than 10%, per 100 basis points, in any twelve-month period. The following table indicates that, at September 30, 2000, in the event of a sudden and sustained increase in prevailing market rates, our net interest income would be expected to increase, while a decrease in rates would indicate a decrease in income.
Net Interest Percent Changes in Interest Rates Income Actual Change Actual Change - ------------------------- ------ ------------- ------------- 300 basis point rise $ 18,553 $ 2,162 13.19% 200 basis point rise 17,828 1,437 8.77% 100 basis point rise 17,107 716 4.37% Base Rate Scenario 16,391 - - 100 basis point decline 15,291 (1,100) (6.71%) 200 basis point decline 14,210 (2,181) (13.30%) 300 basis point decline 13,356 (3,035) (18.51%)
The asset/liability modeling service is also used to analyze the net economic value of equity at risk under instantaneous shifts in interest rates. By looking at the present value of all future cash flows on or off the balance sheet, the economic value of equity modeling takes a longer term view of interest rate risk. We strive to maintain a position that changes in interest rates will not affect the economic value of equity by more than 10%, per 100 basis points. The following table indicates that, at September 30, 2000, in the event of a sudden increase in prevailing market rates, the economic value of our equity would decrease, while a decrease in rates would indicate an increase in the economic value of equity. Changes in Interest Rates Equity Actual Change Actual Change - ------------------------- ------ ------------- ------------- 300 basis point rise $ 27,623 ($2,999) (9.79%) 200 basis point rise 28,506 (2,116) (6.91%) 100 basis point rise 29,504 (1,118) (3.65%) Base Rate Scenario 30,622 - - 100 basis point decline 31,370 748 2.44% 200 basis point decline 31,352 730 2.38% 300 basis point decline 31,069 1.46% 15 Part II: Other Information Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities and Use of Proceeds On July 18, 2000, the Registration Statement on Form S-1 (File Nos. 333-34328 and 333-34328-01) filed by the Company and the Trust was declared effective by the Securities and Exchange Commission. The offering of the 1,437,500 10.375% trust preferred securities that was the subject of the Registration Statement commenced on July 21, 2000. The offering was made through an underwriting syndicate managed by Stifel, Nicolaus & Company, Incorporated. The public offering price was $8.00 per trust preferred security, and the Company received aggregate net proceeds of approximately $10.6 million, after deducting underwriting commissions and estimated offering expenses of approximately $900,000. Of these net proceeds, $7.1 million were used to retire outstanding indebtedness under our bank stock loan and $2.0 million were contributed to the Bank in the form of additional capital. The remainder of the proceeds have been retained by the Company for general corporate purposes, including additional investments from time to time in the Bank in the form of additional capital and possible future acquisitions. Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a Vote of Security Holders Not applicable Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K (A) EXHIBITS 11. Computation of Earnings Per Share. Please see p. 7. 15. Letter regarding Unaudited Interim Financial Information 23. Consent of Baird, Kurtz & Dobson 27. Financial Data Schedule (B) REPORTS ON FORM 8-K Blue Valley filed no reports on Form 8-K during the quarter ended September 30, 2000. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Blue Valley Ban Corp Date: November 10, 2000 By: /s/ Robert D. Regnier Robert D. Regnier, President and Chief Executive Officer Date: November 10, 2000 By: /s/ Mark A. Fortino Mark A. Fortino, Treasurer 17 EX-15 2 0002.txt [Letterhead of Baird, Kurtz & Dobson] Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 RE: Blue Valley Ban Corp. Form S-8 We acknowledge the incorporation by reference in this registration statement on Form S-8 of our reports dated May 24, 2000, August 4, 2000 and November 9, 2000, respectively, on our reviews of interim financial information of BLUE VALLEY BAN CORP., included as part of Amendment No. 5 to the registration statement on Form S-1 (SEC File Nos. 333-34328 and 333-34328-01) and the Quarterly Report on Form 10-Q for the quarter ended September 30, 2000. Pursuant to Rule 436(c) under the Securities Act of 1933, these reports should not be considered a part of the registration statement prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ Baird Kurtz & Dobson Kansas City, Missouri November 9, 2000 EX-23 3 0003.txt [Letterhead of Baird, Kurtz & Dobson] CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this registration statement on Form S-8 of our report dated March 1, 2000, on our audits of the consolidated financial statements of BLUE VALLEY BAN CORP appearing in Amendment No. 5 to the registration statement on Form S-1 (SEC File Nos. 333-34328 and 333-34328-01). /s/ Baird Kurtz & Dobson Kansas City, Missouri November 9, 2000 EX-27 4 0004.txt FDS -- ARTICLE 9 FDS FOR 9/30/00
9 9-MOS DEC-31-1999 JAN-01-2000 SEP-30-2000 8,780 0 26,920 0 63,086 2,000 1,954 283,349 4,335 397,644 321,668 10,000 3,174 11,804 0 0 2,142 0 397,644 19,537 2,472 0 22,452 10,004 11,801 10,651 1,440 0 0 3,900 3,900 0 0 2,593 1.21 1.19 9.23 1,266 649 0 0 3,817 1,017 115 4,355 4,355 0 0
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