-----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, WmxFC9P5d1bM8Zhkciw/nueevIKXmaiqqMpI8q7N8JlpPjPrwhKZuiSZBN3gTOH+ hr05OGw349+3pGyu0HWKiw== 0000950134-03-007721.txt : 20030513 0000950134-03-007721.hdr.sgml : 20030513 20030513141059 ACCESSION NUMBER: 0000950134-03-007721 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20030331 FILED AS OF DATE: 20030513 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BLUE VALLEY BAN CORP CENTRAL INDEX KEY: 0000901842 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 481070996 STATE OF INCORPORATION: KS FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-15933 FILM NUMBER: 03695007 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 c77084e10vq.txt FORM 10-Q 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 MARCH 31, 2003 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 jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 11935 RILEY OVERLAND PARK, KANSAS 66225-6128 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (913) 338-1000 Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered - ------------------- ----------------------------------------- Guarantee with respect to the Trust Preferred American Stock Exchange Securities, $8.00 par value, of BVBC Capital Trust I
Securities registered pursuant to Section 12(g) of the Act: None 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 [ ] Indicate by checkmark whether the registrant is an accelerated filer. Yes [ ] No [X] As of March 31, 2003 the registrant had 2,235,736 shares of Common Stock ($1.00 par value) outstanding, of which 1,202,853 shares were held by non-affiliates. The aggregate market value of the common shares of the registrant held by non-affiliates, computed based on the March 31, 2003 closing price of the stock, was approximately $29.5 million. BLUE VALLEY BAN CORP INDEX PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Independent Accountants' Report.....................................................................3 Consolidated Balance Sheets - March 31, 2003 (unaudited) and December 31, 2002......................4 Consolidated Statements of Income (unaudited) - three months ended March 31, 2003 and 2002........................................................6 Consolidated Statements of Stockholders' Equity (unaudited) - three months ended March 31, 2003 and 2002 .......................................................7 Consolidated Statements of Cash Flows (unaudited) - three months ended March 31, 2003 and 2002........................................................8 Notes to Consolidated Financial Statements (unaudited) - three months ended March 31, 2003 and 2002........................................................9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...........................................................................12 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................21 ITEM 4. CONTROLS AND PROCEDURES.......................................................................23 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS.............................................................................24 ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.....................................................24 ITEM 3. DEFAULTS UPON SENIOR SECURITIES...............................................................24 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................24 ITEM 5. OTHER INFORMATION.............................................................................24 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..............................................................24
2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INDEPENDENT ACCOUNTANTS' 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 March 31, 2003, and the related consolidated statements of income, stockholders' equity and cash flows for the three-month periods ended March 31, 2003 and 2002. These financial statements are the responsibility of the Company's management. We conducted our reviews 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 auditing standards generally accepted in the United States of America, 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 reviews, 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 accounting principles generally accepted in the United States of America. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the consolidated balance sheet as of December 31, 2002 and the related consolidated statements of income, stockholders' equity and cash flows for the year then ended (not presented herein), and in our report dated February 14, 2003 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, 2002 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/ BKD, LLP Kansas City, Missouri April 25, 2003 3 BLUE VALLEY BAN CORP CONSOLIDATED BALANCE SHEETS MARCH 31, 2003 AND DECEMBER 31, 2002 (dollars in thousands, except share data) ASSETS
MARCH 31, DECEMBER 31, 2003 2002 ------------ ------------ (Unaudited) Cash and due from banks $ 27,777 $ 27,755 Federal funds sold 8,000 -- ------------ ------------ Cash and cash equivalents 35,777 27,755 Available-for-sale securities 62,840 61,364 Mortgage loans held for sale 66,007 119,272 Loans, net of allowance for loan losses of $7,454 and $6,914 in 2003 and 2002, respectively 396,531 373,168 Premises and equipment 15,903 10,277 Foreclosed assets held for sale, net 553 614 Interest receivable 2,072 2,014 Deferred income taxes 1,755 1,688 Prepaid expenses and other assets 2,769 2,541 Federal Home Loan Bank stock, Federal Reserve Bank stock, and other securities 5,959 5,209 Core deposit intangible asset, at amortized cost 1,243 1,281 ------------ ------------ Total assets $ 591,409 $ 605,183 ============ ============
See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Report 4 BLUE VALLEY BAN CORP CONSOLIDATED BALANCE SHEETS MARCH 31, 2003 AND DECEMBER 31, 2002 (dollars in thousands, except share data) LIABILITIES AND STOCKHOLDERS' EQUITY
MARCH 31, DECEMBER 31, 2003 2002 ------------ ------------ (Unaudited) LIABILITIES Deposits Demand $ 95,013 $ 86,591 Savings, NOW and money market 161,913 167,553 Time 192,301 169,643 ------------ ------------ Total deposits 449,227 423,787 Federal funds purchased and securities sold under agreements to repurchase 25,661 33,688 Short-term debt -- 35,000 Long-term debt 63,208 58,051 Guaranteed preferred beneficial interest in Company's subordinated debt 11,500 11,500 Balance due under U.S. Treasury note option 335 3,142 Accrued interest and other liabilities 5,230 5,671 ------------ ------------ Total liabilities 555,161 570,839 ------------ ------------ STOCKHOLDERS' EQUITY Capital stock Common stock, par value $1 per share; authorized 15,000,000 shares; issued and outstanding 2003 - 2,235,736 shares; 2002 - 2,222,711 2,236 2,223 Additional paid-in capital 6,499 6,284 Retained earnings 26,828 25,052 Accumulated other comprehensive income Unrealized appreciation on available-for-sale securities, net of income taxes of $457 in 2003 and $523 in 2002 685 785 ------------ ------------ Total stockholders' equity 36,248 34,344 ------------ ------------ Total liabilities and stockholders' equity $ 591,409 $ 605,183 ============ ============
See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Report 5 BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (dollars in thousands, except share data)
THREE MONTHS ENDED MARCH 31, 2003 2002 ------------ ------------ (Unaudited) (Unaudited) INTEREST INCOME Interest and fees on loans $ 7,047 $ 6,586 Federal funds sold 6 16 Available-for-sale securities 582 1,016 ------------ ------------ Total interest income 7,635 7,618 ------------ ------------ INTEREST EXPENSE Interest-bearing demand deposits 41 95 Savings and money market deposit accounts 401 803 Other time deposits 1,715 2,048 Federal funds purchased and securities sold under repurchase agreements 42 40 Long-term debt and advances 953 788 ------------ ------------ Total interest expense 3,152 3,774 ------------ ------------ NET INTEREST INCOME 4,483 3,844 PROVISION FOR LOAN LOSSES 600 600 ------------ ------------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,883 3,244 ------------ ------------ NONINTEREST INCOME Loans held for sale fee income 5,104 3,008 Service fees 518 435 Other income 76 129 ------------ ------------ Total noninterest income 5,698 3,572 ------------ ------------ NONINTEREST EXPENSE Salaries and employee benefits 4,672 3,319 Net occupancy expense 658 450 Other operating expense 1,482 1,271 ------------ ------------ Total noninterest expense 6,812 5,040 ------------ ------------ INCOME BEFORE INCOME TAXES 2,769 1,776 PROVISION FOR INCOME TAXES 993 616 ------------ ------------ NET INCOME $ 1,776 $ 1,160 ============ ============ BASIC EARNINGS PER SHARE $ 0.80 $ 0.53 ============ ============ DILUTED EARNINGS PER SHARE $ 0.77 $ 0.52 ============ ============
See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Report 6 BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (dollars in thousands, except share data)
ACCUMULATED ADDITIONAL OTHER COMPREHENSIVE COMMON PAID-IN RETAINED COMPREHENSIVE INCOME STOCK CAPITAL EARNINGS INCOME TOTAL ------------- ---------- ---------- ---------- ------------- --------- BALANCE, DECEMBER 31, 2001 $ 2,175 $ 5,641 $ 19,878 $ 831 $ 28,525 Issuance of 1,500 shares of common stock 2 28 -- -- 30 Net income $ 1,160 -- -- 1,160 -- 1,160 Change in unrealized appreciation on available-for-sale securities, net of income taxes of $(248) (373) -- -- -- (373) (373) ------------- ---------- ---------- ---------- ------------- --------- BALANCE, MARCH 31, 2002 $ 787 $ 2,177 $ 5,669 $ 21,038 $ 458 $ 29,342 ============= ========== ========== ========== ============= ========= Issuance of 46,035 shares of common stock 46 615 -- -- 661 Net income $ 4,236 -- -- 4,236 -- 4,236 Dividends on common stock ($0.10 per share) (222) (222) Change in unrealized appreciation on available-for-sale securities, net of income taxes of $218 327 -- -- -- 327 327 ------------- ---------- ---------- ---------- ------------- --------- BALANCE, DECEMBER 31, 2002 $ 4,563 $ 2,223 $ 6,284 $ 25,052 $ 785 $ 34,344 ============= ========== ========== ========== ============= ========= Issuance of 13,025 shares of common stock 13 215 -- -- 228 Net income $ 1,776 -- -- 1,776 -- 1,776 Change in unrealized appreciation on available-for-sale securities, net of income taxes of $(67) (100) -- -- -- (100) (100) ------------- ---------- ---------- ---------- ------------- --------- BALANCE, MARCH 31, 2003 $ 1,676 $ 2,236 $ 6,499 $ 26,828 $ 685 $ 36,248 ============= ========== ========== ========== ============= =========
RECLASSIFICATION DISCLOSURE: March 31, December 31, March 31, 2003 2002 2002 ------------ ------------ ------------ Unrealized appreciation (depreciation) on available-for-sale securities, net of income taxes (credit) of $(67), $47, and $(232) for the periods ended March 31, 2003, December 31, 2002 and March 31, 2002, respectively $ (100) $ 70 $ (349) Less: reclassification adjustments for appreciation included in net income, net of income taxes of $0, $77 and $(16) for the periods ended March 31, 2003, December 31, 2002 and March 31, 2002, respectively -- (116) (24) ------------ ------------ ------------ Change in unrealized appreciation on available-for-sale securities, net of income taxes (credit) of $(67), $(30), and $(248) for the periods ended March 31, 2003, December 31, 2002 and March 31, 2002, respectively $ (100) $ (46) $ (373) ============ ============ ============
See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Report 7 BLUE VALLEY BAN CORP CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2003 AND 2002 (dollars in thousands, except share data)
MARCH 31, 2003 MARCH 31, 2002 -------------- -------------- (Unaudited) (Unaudited) CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,776 $ 1,160 Adjustments to reconcile net income to net cash flow from operating activities: Depreciation and amortization 335 224 Amortization of premiums and discounts on securities 4 14 Provision for loan losses 600 600 Deferred income taxes -- (53) Net gain on sales of available-for-sale securities -- (40) Net loss on sale of foreclosed assets 3 19 Net loss on sale of premises and equipment -- 10 Originations of loans held for sale (369,376) (278,109) Proceeds from the sale of loans held for sale 422,640 262,378 Changes in Accrued interest receivable (59) 104 Prepaid expenses and other assets (312) (411) Accrued interest payable and other liabilities (441) (266) -------------- -------------- Net cash provided by (used in) operating activities 55,170 (14,370) -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES Net originations of loans (23,996) (4,078) Proceeds from sales of loan participations -- 1,015 Purchase of premises and equipment (5,839) (250) Proceeds from the sale of foreclosed assets 92 78 Proceeds from the sale of premises and equipment -- 12 Proceeds from sales of available-for-sale securities -- 5,035 Proceeds from maturities of available-for-sale securities 23,350 6,005 Purchases of available-for-sale securities (24,997) -- Purchases of Federal Home Loan Bank stock, Federal Reserve Bank stock, and other securities (750) (875) -------------- -------------- Net cash provided by (used in) investing activities (32,140) 6,942 -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in demand deposits, money market, NOW and savings accounts 2,783 18,016 Net increase in certificates of deposit 22,658 20,965 Repayments of long-term debt (168) (40) Proceeds from long-term debt 5,325 -- Net payments on short-term debt (35,000) -- Proceeds from sale of common stock 228 30 Net decrease in other borrowings (8,027) (4,260) Net increase (decrease) in balance due under U.S. Treasury note option (2,807) 2,668 -------------- -------------- Net cash provided by (used in) financing activities (15,008) 37,379 -------------- -------------- INCREASE IN CASH AND CASH EQUIVALENTS 8,022 29,951 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 27,755 25,159 -------------- -------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 35,777 $ 55,110 ============== ==============
See Accompanying Notes to Consolidated Financial Statements and Independent Accountant's Report 8 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2003 AND 2002 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 March 31, 2003, and the consolidated results of its operations, changes in stockholders' equity and cash flows for the periods ended March 31, 2003 and 2002, 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 accounting principles generally accepted in the United States of America 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 December 31, 2002 Form 10-K 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 BKD, LLP 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 three-months ended March 31, 2003 and 2002 is as follows:
MARCH 31, 2003 MARCH 31, 2002 -------------- -------------- (Unaudited) (Unaudited) (dollars in thousands, except share and per share data) Net income $ 1,776 $ 1,160 ============== ============== Average common shares outstanding 2,225,419 2,175,243 Average common share stock options outstanding 74,562 57,098 -------------- -------------- Average diluted common shares 2,299,981 2,232,341 ============== ============== Basic earnings per share $ 0.80 $ 0.53 ============== ============== Diluted earnings per share $ 0.77 $ 0.52 ============== ==============
9 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2003 AND 2002 NOTE 3: LONG-TERM DEBT Long-term debt at March 31, 2003 and December 31, 2002, consisted of the following components:
MARCH 31, DECEMBER 31, 2003 2002 ------------ ------------ (Unaudited) (in thousands) Note payable - other (A) $ 1,413 $ 1,456 Note payable - bank (B) 4,070 4,095 Note payable - bank (C) 5,225 -- Federal Home Loan Bank advances (D) 52,500 52,500 ------------ ------------ Total long-term debt $ 63,208 $ 58,051 ============ ============
(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) Borrowing under $8 million revolving line of credit; interest only at the Fed Funds Rate + 1.68% due quarterly until December 2003, when the outstanding principal balance is due; collateralized by common stock of the Company's subsidiary bank. In February, 2003, the line of credit was amended and the available balance reduced from $10 million in conjunction with the execution of the term note discussed in note (C). (C) Due in December 2012, payable in quarterly installments of principal plus interest at the Fed Funds Rate + 1.68%; collateralized by common stock of the Company's subsidiary bank. (D) Due in 2007, 2008, 2010 and 2011; collateralized by various assets including mortgage-backed loans. The interest rates on the advances range from 1.55% to 5.682%. Federal Home Loan Bank advance availability is determined quarterly and at March 31, 2003, approximately $71,308,000 was available. Aggregate annual maturities of long-term debt at March 31, 2003 are as follows:
(in thousands) April 1 to December 31, 2003 $ 4,502 2004 613 2005 653 2006 694 2007 20,736 Thereafter 36,010 -------------- $ 63,208 ==============
10 BLUE VALLEY BAN CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2003 AND 2002 NOTE 4: ACCOUNTING FOR STOCK-BASED COMPENSATION The Company applies Accounting Principles Board No. 25 and related Interpretations in accounting for its stock option plan and no compensation cost has been recognized. Pro forma compensation costs for the Company's plan are determined based on the fair value at the option grant dates using the minimum value method under Statement of Financial Accounting Standards No. 123 "Accounting for Stock-based Compensation." During the quarter, the Company issued no stock options; consequently, reported and pro forma net income were identical. NOTE 5: SUBSEQUENT EVENT On April 10th, 2003, BVBC Capital Trust II ("the Trust"), a Delaware business trust formed by the Company, completed the sale of $7,500,000 of trust preferred securities. The Trust is a 100% owned finance subsidiary of the Company. The Trust also issued $232,000 of common securities to the Company and used the total proceeds of $7,732,000 from the offering to purchase $7,732,000 in principal amount of variable rate (LIBOR plus 3.25%) junior subordinated debentures of the Company due April 24, 2033. Securities issued by the Trust are subordinate to the $11,500,000 issued by BVBC Capital Trust I on July 21, 2000. The offering was a private placement that the Company intends to use to reduce existing debt and to fund additional growth. 11 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; a deterioration in the demand for mortgage financing; 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 CRITICAL ACCOUNTING POLICIES Our critical accounting policies are largely proscribed by accounting principles generally accepted in the United States of America. After a review of our policies, we determined that accounting for the allowance for loan losses, income taxes, and stock-based compensation are deemed critical accounting policies because of the valuation techniques used, and the sensitivity of these financial statement amounts to the methods, as well as the assumptions and estimates underlying these balances. Accounting for these critical areas requires the most subjective and complex judgments that could be subject to revision as new information becomes available. There have not been any material changes in our critical accounting policies since December 31, 2002. Further description of our critical accounting policies can be found in our Annual Report on Form 10-K for the year ended December 31, 2002. RESULTS OF OPERATIONS Three months ended March 31, 2003 and 2002. Net income for the quarter ended March 31, 2003, was $1.8 million, compared to net income of $1.2 million for the quarter ended March 31, 2002, representing an increase of $616,000, or 53.10%. Diluted earnings per share increased 48.07% to $0.77 during the first quarter of 2003 from $0.52 in the same period of 2002. The Company's annualized return on average assets and average stockholders' equity for the three-month period ended March 31, 2003 were 1.23% and 20.19%, compared to 0.92% and 16.11%, respectively, for the same period in 2002, increases of 33.69% and 25.32%, respectively. The principal contributing factors to our increase in net income from the prior year first quarter to the current year were an increase in non-interest income, specifically loans held for sale fee income and an increase in net interest income. The current low interest rate environment has resulted in continued strong demand 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for residential mortgage loan originations as well as a decline in funding rates. The Company continues to capitalize on the mortgage resources put into place during 2001 and 2002. Fully tax equivalent (FTE) net interest income for the three-month period ended March 31, 2003 was $4.6 million, an increase of $628,000, or 15.96%, from $3.9 million for the three-month period ended March 31, 2002. FTE interest income for the current year first quarter was $7.7 million, with a slight increase of $6,000, or 0.07%, from $7.7 million in the prior year first quarter. FTE interest income remained constant due to an overall decrease in the yield on average earning assets offset by an increase in earning assets. The overall yield on average earning assets decreased by 84 basis points to 5.74% in the first quarter of 2003, compared to 6.58% in the prior year first quarter. Average earning asset volume increased from the first quarter of 2002 to the current period by $69.9 million, or 14.71% which offset the decrease in yield on interest-earning assets. The 84 basis point decrease in yield resulted primarily from decreases in market interest rates during 2002 and the impact of the low interest rates on new and repriced assets during 2002 and 2003. Interest expense for the current year first quarter was $3.2 million, a decrease of $622,000, or 16.49%, from $3.8 million in the prior year first quarter. The decrease is attributable to a decrease in the rates paid on average interest-bearing liabilities during the first quarter of 2003. The primary cause for this decline was the overall decline in market interest rates and the impact of the low interest rates on new and repriced liabilities during 2002 and 2003. The rate paid on total average interest-bearing liabilities decreased to 2.76% during the quarter ended March 31, 2003 compared to 3.72% during the quarter ended March 31, 2002, a decrease of 96 basis points. Average interest-bearing deposits decreased slightly by $1.5 million, or 0.44% from the prior year and other interest-bearing liabilities increased by $53.1 million or 73.25% from the prior year, mainly in the form of FHLB borrowings, Federal Funds purchased, securities sold under agreements to repurchase and notes payable. The increase in volume partially offset the decrease in rate. Average Balance Sheets. The following table sets forth, for the periods and as of the dates indicated, information regarding our average balances of assets and liabilities as well as the dollar amounts of FTE interest income from interest-earning assets and interest expense on interest-bearing liabilities and the resultant yields or costs. Ratio, yield and rate information are based on average daily balances where available; otherwise, average monthly balances have been used. Nonaccrual loans are included in the calculation of average balances for loans for the periods indicated. 13 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS AVERAGE BALANCES, YIELDS AND RATES
Three Months Ended March 31, ------------------------------------------------------------------ 2003 2002 ------------------------------- ------------------------------- Average Average Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate -------- -------- -------- -------- -------- -------- (Dollars in thousands) ASSETS Federal funds sold ................................. $ 2,112 $ 6 1.08% $ 5,422 $ 16 1.20% Investment securities - taxable .................... 50,100 429 3.47 58,239 841 5.86 Investment securities - non-taxable (1) ............ 13,608 232 6.93 15,224 265 7.06 Mortgage loans held for sale ....................... 82,718 1,066 5.23 60,356 948 6.37 Loans, net of unearned discount and fees ........... 396,090 5,981 6.12 335,520 5,638 6.81 -------- -------- -------- -------- Total earning assets ............................. 544,628 7,714 5.74 474,761 7,708 6.58 -------- -------- -------- -------- Cash and due from banks - non-interest bearing ..... 19,792 20,985 Allowance for possible loan losses ................. (7,211) (4,908) Premises and equipment, net ........................ 15,793 8,101 Other assets ....................................... 14,019 11,144 -------- -------- Total assets ..................................... $587,021 $510,083 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits-interest bearing: Interest-bearing demand accounts ................... $ 25,172 $ 41 0.67% $ 28,083 $ 95 1.37% Savings and money market deposits .................. 133,882 401 1.22 139,315 803 2.34 Time deposits ...................................... 178,581 1,715 3.89 171,708 2,048 4.84 -------- -------- -------- -------- Total interest-bearing deposits .................. 337,635 2,157 2.59 339,106 2,946 3.52 -------- -------- -------- -------- Short-term borrowings .............................. 54,890 191 1.41 24,906 87 1.42 Long-term debt ..................................... 70,719 804 4.61 47,592 741 6.31 -------- -------- -------- -------- Total interest-bearing liabilities ............... 463,244 3,152 2.76 411,604 3,774 3.72 -------- -------- -------- -------- Non-interest bearing deposits ...................... 83,037 65,748 Other liabilities .................................. 5,058 3,532 Stockholders' equity ............................... 35,682 29,199 -------- -------- Total liabilities and stockholders' equity ...... $587,021 $510,083 ======== ======== Net interest income/spread ......................... $ 4,562 2.98% $ 3,934 2.86% ======== ======== ======== ======== Net interest margin ................................ 3.40% 3.36% ======== ========
- ---------- (1) Presented on a fully tax-equivalent basis assuming a tax rate of 34%. 14 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Analysis of Changes in Net Interest Income Due to Changes in Interest Rates and Volumes. The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the increase or decrease related to changes in balances and changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to: o changes in volume, reflecting changes in volume multiplied by the current period rate; and o changes in rate, reflecting changes in rate multiplied by the prior period volume. CHANGES IN INTEREST INCOME AND EXPENSE VOLUME AND RATE VARIANCES
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO 2002 -------------------------------- CHANGE CHANGE DUE TO DUE TO TOTAL RATE VOLUME CHANGE -------- -------- -------- (Dollars in thousands) Federal funds sold ............................... $ (2) $ (8) $ (10) Investment securities - taxable .................. (343) (69) (412) Investment securities - non-taxable (1) .......... (5) (28) (33) Mortgage loans held for sale ..................... (168) 286 118 Loans, net of unearned discount .................. (570) 913 343 -------- -------- -------- Total interest income ................. (1,088) 1,094 6 -------- -------- -------- Interest-bearing demand accounts ................. (49) (5) (54) Savings and money market deposits ................ (386) (16) (402) Time deposits .................................... (399) 66 (333) Short-term borrowings ............................ (1) 105 104 Long-term debt ................................... (198) 261 63 -------- -------- -------- Total interest expense ................ (1,033) 411 (622) -------- -------- -------- Net interest income .............................. $ (55) $ 683 $ 628 ======== ======== ========
- ---------- (1) Presented on a fully tax-equivalent basis assuming a tax rate of 34%. 15 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS PROVISION FOR LOAN LOSSES The provision for loan losses for the first quarter of 2003 was $600,000, compared to $600,000 for the same period of 2002. We make provisions for loan losses in amounts that management deems necessary to maintain the allowance for loan losses at an appropriate level. The allowance for loan losses is reviewed monthly, considering such factors as current and projected economic conditions, loan growth, the composition of the loan portfolio, loan trends and classifications, and other factors. NON-INTEREST INCOME
THREE MONTHS ENDED MARCH 31, ------------------- 2003 2002 -------- -------- (In thousands) Loans held for sale fee income ........................ $ 5,104 $ 3,008 NSF charges and service fees .......................... 290 252 Other service charges ................................. 228 183 Realized gain on sales of investment securities ....... -- 40 Other income .......................................... 76 89 -------- -------- Total non-interest income ....................... $ 5,698 $ 3,572 ======== ========
Non-interest income increased to $5.7 million, or 59.51%, during the three-month period ended March 31, 2003, from $3.6 million during the three-month period ended March 31, 2002. This increase is attributable primarily to increases in loans held for sale fee income of $2.1 million. During 2002, we experienced significant growth in our loans held for sale income due to the expansion of our internet mortgage capabilities concurrent with a relatively low-rate environment. Mortgage originations and refinancing, and the resultant revenue, have continued to flourish in the low interest rate environment which has persisted through the first quarter of 2003. 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NON-INTEREST EXPENSE
THREE MONTHS ENDED MARCH 31, ------------------- 2003 2002 -------- -------- (In thousands) Salaries and employee benefits ......... $ 4,672 $ 3,319 Occupancy .............................. 658 450 FDIC and other insurance expense ....... 61 69 General and administrative ............. 1,421 1,202 -------- -------- Total non-interest expense ....... $ 6,812 $ 5,040 ======== ========
Non-interest expense increased to $6.8 million, or 35.15%, during the three-month period ended March 31, 2003, from $5.0 million in the prior year period. This increase is attributable to an increase in salaries and employee benefits expense of $1.4 million, occupancy expense of $208,000 and general and administrative expense of $219,000. Our salaries and employee benefits expense increased to $4.7 million during the first quarter of 2003 from $3.3 million during the prior year first quarter, an increase of 40.76%, due to increased volume-based incentive compensation in our mortgage production departments as well as additional staff hired to facilitate our growth. We had 263 full-time equivalent employees at March 31, 2003 as compared to 226 at March 31, 2002. Many areas of the Company added employees to manage growth and expansion. FINANCIAL CONDITION Total assets for the Company at March 31, 2003, were $591.4 million, a decrease of $13.8 million, or 2.29%, compared to $605.2 million at December 31, 2002. Deposits and stockholders' equity at March 31, 2003, were $449.2 million and $36.2 million, respectively, compared with $423.8 million and $34.3 million, respectively, at December 31, 2002, increases of $25.4 million, or 5.99%, and $1.9 million, or 5.53%, respectively. Loans at March 31, 2003 totaled $404.0 million, reflecting an increase of $23.9 million, or 6.28%, compared to December 31, 2002. Deposit volume grew $25.4 million, or 5.99%, to $449.2 million at March 31, 2003 as compared to $423.8 million at December 31, 2002. The majority of the increase in volume was due to an increase in demand and time deposits. The loan to deposit ratio at March 31, 2003 was 89.93% compared to 89.69% at December 31, 2002. Mortgage loans held for sale at March 31, 2003 totaled $66.0 million, a decrease of $53.3 million, or 44.66%, compared to December 31, 2002. While the mortgage origination and refinancing boom experienced during 2002 continued into the first quarter of 2003, the Company's loans held for sale balance declined primarily due to mortgage interest rate fluctuations during the period. The Company's principal funding source for mortgage loans held for sale is short and long-term advances from the Federal Home Loan Bank. Advance availability with the Federal Home Loan Bank is determined quarterly and at March 31, 2003, approximately $71,308,000 million was available. 17 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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: NON-PERFORMING ASSETS
AS OF ------------------------------------------------ MARCH 31, MARCH 31, DECEMBER 31, 2003 2002 2002 ------------ ------------ ------------ (Dollars in thousands) REAL ESTATE LOANS: Past due 90 days or more $ 4 $ -- $ 54 Nonaccrual 175 585 582 INSTALLMENT LOANS: Past due 90 days or more 40 63 -- Nonaccrual -- -- -- CREDIT CARDS AND RELATED PLANS: Past due 90 days or more 10 -- 23 Nonaccrual -- -- -- COMMERCIAL (TIME AND DEMAND) AND ALL OTHER LOANS: Past due 90 days or more 3,880 -- -- Nonaccrual 787 211 233 LEASE FINANCING RECEIVABLES: Past due 90 days or more -- -- 3 Nonaccrual 310 280 223 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 5,206 1,139 1,118 FORECLOSED ASSETS HELD FOR SALE 553 188 614 ------------ ------------ ------------ Total non-performing assets $ 5,759 $ 1,327 $ 1,732 ============ ============ ============ Total nonperforming loans to total loans 1.31% 0.34% 0.29% Total nonperforming loans to total assets 0.88% 0.21% 0.18% Allowance for loan losses to nonperforming loans 143.18% 439.24% 618.29% Nonperforming assets to loans and foreclosed assets held for sale 1.45% 0.39% 0.46%
As of March 31, 2003, non-performing loans equaled 1.31% of total loans, representing a substantial increase in non-performing loans from December 31, 2002. This increase was primarily due to one commercial credit relationship which became past due over 90 days in the first quarter of 2003. The Company had reserved for the estimated potential loss from this credit relationship when it was identified as impaired during the fourth quarter of 2002. The level of loans charged-off decreased during the first quarter of 2003, as evidenced by the decrease in our ratio of net charge-offs to average loans to 0.06% for the period ending March 31, 2003 as compared to 0.36% for the period ending December 31, 2002. We closely monitor non-performing credit relationships and 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 18 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS losses in excess of its non-performing loans. As of March 31, 2003, our ratio of allowance for loan losses to non-performing loans was 143.18%. The following table sets forth information regarding changes in our allowance for loan and valuation losses for the periods indicated. SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION
AS OF AND FOR THE ------------------------------------------------ THREE MONTHS THREE MONTHS ENDED ENDED YEAR ENDED MARCH 31, MARCH 31, DECEMBER 31, 2003 2002 2002 ------------ ------------ ------------ (Dollars in thousands) BALANCE AT BEGINNING OF PERIOD $ 6,914 $ 5,267 $ 5,267 LOANS CHARGED OFF Commercial real estate -- 70 323 Residential real estate -- -- -- Commercial 81 192 323 Personal 26 15 66 Home Equity -- -- -- Construction -- -- -- Leases 73 681 870 ------------ ------------ ------------ Total loans charged-off 180 958 1,582 ------------ ------------ ------------ RECOVERIES Commercial real estate 5 -- 1 Residential real estate 1 -- -- Commercial 41 32 123 Personal 5 10 23 Home Equity -- -- -- Construction -- -- -- Leases 68 52 162 ------------ ------------ ------------ Total recoveries 120 94 309 ------------ ------------ ------------ NET LOANS CHARGED OFF 60 864 1,273 PROVISION FOR LOAN LOSSES 600 600 2,920 ------------ ------------ ------------ BALANCE AT END OF PERIOD $ 7,454 $ 5,003 $ 6,914 ============ ============ ============ LOANS OUTSTANDING Average $ 396,090 $ 335,520 $ 349,879 End of period 403,985 336,038 380,082 RATIO OF ALLOWANCE FOR LOAN LOSSES TO LOANS OUTSTANDING Average 1.88% 1.49% 1.98% End of period 1.85% 1.49% 1.82% RATIO OF NET CHARGE-OFFS TO Average loans 0.06% 1.04% 0.36% End of period loans 0.06% 1.04% 0.33%
19 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The allowance for loan losses as a percent of total loans increased slightly to 1.85% as of March 31, 2003, compared to 1.82% as of December 31, 2002. As of March 31, 2003, net charge-offs equaled 0.06% of average total loans on an annualized basis. 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 time deposits less than $100,000 (excluding brokered deposits), were 59.28% and 57.80% of our total assets at March 31, 2003, and December 31, 2002, respectively. Management has established internal guidelines 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 March 31, 2003, the Bank was within the established guidelines. At March 31, 2003, our total stockholders' equity was $36.2 million and our equity to asset ratio was 6.12%. At March 31, 2003, our Tier 1 capital ratio was 9.11% compared to 8.82% at December 31, 2002, while our total risk-based capital ratio was 10.36% compared to 10.13% at December 31, 2002. As of March 31, 2003, we had capital in excess of the requirements for a "well-capitalized" institution. 20 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 Asset/Liability 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 Funds Management 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 instantaneous and permanent 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. This allows management to view how changes in interest rates will affect the spread between the yield received on assets and the cost of deposits and borrowed funds. The asset/liability modeling service is also used to analyze the net economic value of equity at risk under instantaneous shifts in interest rates. The "net economic value of equity at risk" is defined as the market value of assets less the market value of liabilities plus/minus the market value of any off-balance sheet positions. By effectively looking at the present value of all future cash flows on or off the balance sheet, the net economic value of equity modeling takes a longer-term view of interest rate risk. We strive to maintain a position such that current changes in interest rates will not affect net interest income or the economic value of equity by more than 5%, per 50 basis points. The following table sets forth the estimated percentage change in the Bank of Blue Valley's net interest income over the next twelve month period and net economic value of equity at risk at March 31, 2003 based on the indicated instantaneous and permanent changes in interest rates.
NET INTEREST NET ECONOMIC INCOME VALUE OF CHANGES IN INTEREST RATES (NEXT 12 MONTHS) EQUITY AT RISK - ------------------------- ---------------- ---------------- 300 basis point rise 31.16% 5.65% 200 basis point rise 21.07% 4.38% 100 basis point rise 11.12% 2.90% Base Rate Scenario -- -- 25 basis point decline (3.90)% (1.01)% 50 basis point decline (7.51)% (2.01)% 100 basis point decline (13.99)% (4.07)%
The above table indicates that, at March 31, 2003, in the event of a sudden and sustained increase in prevailing market rates, our net interest income would be expected to increase as our assets would be expected to reprice quicker than our liabilities, while a decrease in rates would indicate just the opposite. Generally, in the decreasing rate scenarios, not only would adjustable rate assets 21 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (loans) reprice to lower rates faster than our liabilities, but our liabilities - long-term Federal Home Loan Bank of Topeka (FHLB) advances and existing time deposits - would not decrease in rate as much as market rates. In addition, fixed rate loans might experience an increase in prepayments, further decreasing yields on earning assets and causing net interest income to decrease. Another consideration with a rising interest rate scenario is the impact on mortgage loan refinancing, which would likely decline, leading to lower loans held for sale fee income, though the impact is difficult to quantify or project. The table also indicates that, at March 31, 2003, in the event of a sudden increase or decrease in prevailing market rates, the current net economic value of our equity would decrease. Given our current asset/liability position, a 25, 50 or 100 basis point decline in interest rates will result in a lower economic value of our equity as the change in estimated loss on liabilities exceeds the change in estimated gain on assets in these interest rate scenarios. Currently, under a falling rate environment, the Company's estimated market value of loans could increase as a result of fixed rate loans, net of possible prepayments. The estimated market value of investment securities could also rise as our portfolio contains higher yielding securities. However, the estimated market value increase in fixed rate loans and investment securities is offset by time deposits unable to reprice to lower rates immediately and fixed-rate callable advances from FHLB. The likelihood of advances being called in a decreasing rate environment is diminished resulting in the advances existing until final maturity, which has the effect of lowering the economic value of equity. 22 ITEM 4. CONTROLS AND PROCEDURES In accordance with Item 307 of Regulation S-K promulgated under the Securities Act of 1933, as amended, and within 90 days of the date of this Quarterly Report on Form 10-Q, the Chief Executive Officer and Chief Financial Officer of the Company (the "Certifying Officers") have conducted evaluations of the Company's disclosure controls and procedures. As defined under Sections 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the term "disclosure controls and procedures" means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer's management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Certifying Officers have reviewed the Company's disclosure controls and procedures and have concluded that those disclosure controls and procedures are effective as of the date of this Quarterly Report on Form 10-Q. In compliance with Section 302 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. 1350), each of the Certifying Officers executed an Officer's Certification included in this Quarterly Report on 10-Q. As of the date of this Quarterly Report on Form 10-Q, there have not been any significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 23 PART II: OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS Not applicable 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 EXHIBITS 11. Computation of Earnings Per Share. Please see p. 9. 15. Letter regarding Unaudited Interim Financial Information 99.1 Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350 99.2 Certification of the Treasurer pursuant to 18 U.S.C. Section 1350 REPORTS ON FORM 8-K Blue Valley filed no reports on Form 8-K during the quarter ended March 31, 2003. 24 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: May 12, 2003 By: /s/ Robert D. Regnier -------------------------------- Robert D. Regnier, President and Chief Executive Officer Date: May 12, 2003 By: /s/ Mark A. Fortino -------------------------------- Mark A. Fortino, Treasurer 25 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Robert D. Regnier, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Blue Valley Ban Corp (the "Company"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of the date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditor any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significant affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. May 12, 2003 /s/ Robert D. Regnier --------------------- Robert D. Regnier, President and Chief Executive Officer 26 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Mark A. Fortino, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Blue Valley Ban Corp (the "Company"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) Designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures as of the date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) Presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditor any material weaknesses in internal controls; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significant affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. May 12, 2003 /s/ Mark A. Fortino ------------------- Mark A. Fortino, Treasurer (Chief Financial Officer) 27 EX-15 3 c77084exv15.txt LETTER RE: UNAUDITED INTERIM FINANCIAL INFORMATION EXHIBIT 15.1 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 We are aware that our report dated April 25, 2003 on our review of the interim financial information of Blue Valley Ban Corp for the periods ended March 31, 2003 and 2002 and included in the Company's quarterly report on Form 10Q for the quarter then ended is incorporated by reference in Registration Statement 333-46022. Pursuant to Rule 436(c) under the Securities Act of 1933, this report should not be considered part of the registration statement prepared or certified by us within the meaning of Sections 7 and 11 of that Act. /s/ BKD, LLP Kansas City, Missouri April 25, 2003 EX-99.1 4 c77084exv99w1.txt CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER EXHIBIT 99.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Blue Valley Ban Corp (the "Company") on Form 10-Q for the quarter ended March 31, 2003, as filed with the United States Securities and Exchange Commission on the date hereof (the "Report"), I, Robert D. Regnier, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Robert D. Regnier --------------------- Robert D. Regnier, President and Chief Executive Officer May 12, 2003 EX-99.2 5 c77084exv99w2.txt CERTIFICATION OF THE TREASURER EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Blue Valley Ban Corp (the "Company") on Form 10-Q for the quarter ended March 31, 2003, as filed with the United States Securities and Exchange Commission on the date hereof (the "Report"), I, Mark A. Fortino, Treasurer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ Mark A. Fortino ------------------- Mark A. Fortino, Treasurer (Chief Financial Officer) May 12, 2003 -----END PRIVACY-ENHANCED MESSAGE-----