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 JUNE 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
executive offices) (Zip Code)
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 [ ] No [X]
Number of shares of Common Stock ($1.00 par value) outstanding at the close
of business on June 30, 2000 was 2,141,720 shares.
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BLUE VALLEY BAN CORP
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS
Independent Accountants' Review Report 3
Consolidated Balance Sheets - June 30 2000 (unaudited) and December 31, 1999 4
Consolidated Statements of Income (unaudited) - three months and six months ended
June 30, 2000 and 1999. 6
Consolidated Statements of Changes in Stockholders' Equity (unaudited) - six months
ended June 30, 2000 and 1999 7
Consolidated Statements of Cash Flows (unaudited) - six months ended June 30, 2000
and 1999 8
Notes to Consolidated Financial Statements (unaudited) - six months ended June 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 13
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 14
</TABLE>
2
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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 June 30, 2000 and the related consolidated statements of income for the
three-month and six-month periods ended June 30, 2000 and the consolidated
statement of cash flows for the six-month period ended June 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 June 30, 2000 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
August 4, 2000
3
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BLUE VALLEY BAN CORP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
ASSETS
JUNE 30, 2000 DECEMBER 31, 1999
---------------- ----------------
(UNAUDITED)
Cash and due from banks $18,821 $15,460
Federal funds sold 100 8,000
---------------- ----------------
Cash and cash equivalents 18,921 23,460
Available-for-sale securities 52,971 48,646
Mortgage loans held for sale 4,655 952
Loans 267,720 250,410
Less allowance for loan losses (4,229) (3,817)
---------------- ----------------
Net loans 263,491 246,593
Premises and equipment 5,810 5,574
Foreclosed assets held for sale, net 86 186
Interest receivable 2,254 2,039
Deferred income taxes 1,893 1,841
Prepaid expenses and other assets 962 840
Federal Home Loan Bank stock and other
securities 1,465 1,034
Excess of cost over fair value of net
assets acquired, at amortized cost 1,372 1,448
---------------- ----------------
Total Assets $353,880 $332,613
================ ================
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Review Report.
4
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BLUE VALLEY BAN CORP
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000 AND DECEMBER 31, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
LIABILITIES AND STOCKHOLDERS' EQUITY
JUNE 30, 2000 DECEMBER 31, 1999
---------------- ----------------
(UNAUDITED)
LIABILITIES
Demand deposits $37,691 $36,950
Savings, NOW and money market deposits 137,412 126,398
Time deposits 111,823 104,797
---------------- ----------------
Total Deposits 286,926 268,145
Securities sold under agreements to
repurchase 12,137 11,260
Short-term debt 17,075 17,450
Long-term debt 11,840 11,908
Advances from borrowers for taxes and
insurance 3,047 2,559
Accrued interest and other liabilities 2,235 2,422
---------------- ----------------
Total Liabilities 333,260 313,744
---------------- ----------------
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 14,237 12,458
Accumulated other comprehensive income
Unrealized depreciation on
available-for-sale securities, net of
income taxes of $(691) in 2000 and
$(638) in 1999 (1,036) (957)
---------------- ----------------
Total Stockholders' Equity 20,620 18,869
---------------- ----------------
Total Liabilities and Stockholders'
Equity $353,880 $332,613
================ ================
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Review Report.
5
<PAGE>
BLUE VALLEY BAN CORP
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000 AND 1999 (DOLLARS IN
THOUSANDS, EXCEPT SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
2000 1999 2000 1999
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $6,451 $5,006 $12,724 $9,033
Federal funds sold 15 152 53 304
Available-for-sale securities 814 632 1,567 1,345
------------- ------------- ------------- -------------
Total Interest Income 7,280 5,790 14,344 10,682
------------- ------------- ------------- -------------
INTEREST EXPENSE
Deposits 3,201 2,343 6,152 4,572
Securities sold under repurchase
agreements 86 71 177 128
Long-term debt and advances 443 251 856 488
------------- ------------- ------------- -------------
Total Interest Expense 3,730 2,665 7,185 5,188
------------- ------------- ------------- -------------
NET INTEREST INCOME 3,550 3,125 7,159 5,494
PROVISION FOR LOAN LOSSES 480 506 945 806
------------- ------------- ------------- -------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 3,070 2,619 6,214 4,688
NONINTEREST INCOME
Service fees 694 625 1,294 1,284
Other income 85 49 160 105
------------- ------------- ------------- -------------
Total Noninterest Income 779 674 1,454 1,389
------------- ------------- ------------- -------------
NONINTEREST EXPENSE
Salaries and employee benefits 1,424 1,127 2,833 2,124
Net occupancy expense 276 213 533 411
Other operating expense 695 802 1,627 1,415
------------- ------------- ------------- -------------
Total Noninterest Expense 2,395 2,142 4,993 3,950
------------- ------------- ------------- -------------
INCOME BEFORE INCOME TAXES 1,454 1,151 2,675 2,127
PROVISION FOR INCOME TAXES 508 374 896 695
------------- ------------- ------------- -------------
NET INCOME $946 $777 $1,779 $1,432
============= ============= ============= =============
BASIC EARNINGS PER SHARE $0.44 $0.36 $0.83 $0.67
============= ============= ============= =============
DILUTED EARNINGS PER SHARE $0.43 $0.36 $0.82 $0.67
============= ============= ============= =============
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Review Report.
6
<PAGE>
<TABLE>
<CAPTION>
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 2000
(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
------ ----- ------- -------- --------------- -----
<S> <C> <C> <C> <C> <C> <C>
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 $1,432 1,432 1,432
Change in unrealized depreciation
on available-for-sale securities,
net of income taxes of $(636) (954) (954) (954)
---------------- ----------- ----------- ---------- ------------------ -----------
BALANCE, JUNE 30, 1999 $478 $2,132 $5,163 $10,807 $(602) $17,500
================ =========== =========== ========== ================== ===========
Issuance of 6,000 shares of common
stock 6 67 73
Net income $1,651 1,651 1,651
Change in unrealized depreciation
on available-for-sale securities,
net of income taxes of $(236) (355) (355) (355)
---------------- ----------- ----------- ---------- ------------------ -----------
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 $1,779 1,779 1,779
Change in unrealized depreciation
on available-for-sale securities,
net of income taxes of $(52) (79) (79) (79)
---------------- ----------- ----------- ---------- ------------------ -----------
BALANCE, JUNE 30, 2000 $3,474 $2,142 $5,277 $14,237 $(1,036) $20,620
================ =========== =========== ========== ================== ===========
June 30, December 31, 1999 June 30,
--------- ----------------- --------
2000 1999
---- ----
RECLASSIFICATION DISCLOSURE:
Unrealized depreciation on available-for-sale securities, net of income taxes of
$(52), $(236), and $(635) for the periods ended June 30, 2000,
December 31, 1999, and June 30, 1999, respectively $(79) $(355) $(952)
Less: reclassification adjustments for appreciation
(depreciation) included in net income, net of income taxes of $1 for the
period ended June 30, 1999 (2)
---------- ------------------ -----------
Change in unrealized depreciation on available-for-sale securities, net of
income taxes of $(52), $(236), and $(636) for the periods ended June 30,
2000, December 31, 1999, and June 30, 1999, respectively $(79) $(355) $(954)
========== ================== ===========
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Review Report.
7
<PAGE>
<TABLE>
<CAPTION>
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
JUNE 30, 2000 JUNE 30, 1999
---------------------- -----------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,779 $1,432
Items not requiring (providing) cash:
Depreciation and amortization 302 248
Amortization of premiums and discounts on securities 41 8
Provision for loan losses 945 806
Gain on sales of available-for-sale securities (3)
Changes in:
Accrued interest receivable (215) (170)
Mortgage loans held for sale (3,703) (339)
Prepaid expenses and other assets (123) (1,162)
Accrued interest payable and other liabilities (187) 16
---------------------- -----------------------
Net cash provided by (used in) operating activities (1,161) 836
---------------------- -----------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net originations of loans (18,785) (46,120)
Proceeds from sales of loan participations 734
Purchase of premises and equipment (460) (265)
Proceeds from the sale of foreclosed assets 308 259
Proceeds from sales of available-for-sale securities 2,003
Proceeds from maturities of available-for-sale securities 2,205 8,000
Purchases of available-for-sale securities (7,134) (4,340)
---------------------- -----------------------
Net cash used in investing activities (23,132) (40,463)
---------------------- -----------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, money market, NOW and savings
accounts 11,755 25,507
Net increase (decrease) in certificates of deposit 7,026 (3,622)
Repayments of long-term debt (68) (64)
Net proceeds (payments) on short-term debt (375) 2,250
Proceeds from sale of common stock 51 6
Net increase in other borrowings 877 780
Net increase in advances from borrowers for taxes and
insurance 488 1,999
---------------------- -----------------------
Net cash provided by financing activities 19,754 26,856
---------------------- -----------------------
DECREASE IN CASH AND CASH EQUIVALENTS (4,539) (12,771)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 23,460 28,999
---------------------- -----------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $18,921 $16,228
====================== =======================
</TABLE>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Review Report.
8
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BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 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 June 30, 2000 and December 31,
1999, and the consolidated results of its operations, changes in stockholders'
equity and cash flows for the periods ended June 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 six months ended June 30,
2000 and 1999 is as follows:
JUNE 30, JUNE 30,
2000 1999
------------ ----------
(UNAUDITED) (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT
SHARE AND PER SHARE DATA)
Net income $ 1,779 $ 1,432
----------- ----------
Average common shares outstanding
2,141,324 2,130,945
Average common share stock options
outstanding 34,372 17,808
----------- ----------
Average diluted common shares
2,175,696 2,148,753
----------- ----------
Basic earnings per share $ 0.83 $ 0.67
=========== ==========
Diluted earnings per share $ 0.82 $ 0.67
=========== ==========
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Review Report.
9
<PAGE>
NOTE 3: LONG-TERM DEBT
Long-term debt at June 30, 2000 and December 31, 1999, consisted of the
following components:
JUNE 30, 2000 DECEMBER 31, 1999
--------------- --------------
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Note Payable - other (A) $ 1,840 $ 1,908
Federal Home Loan Bank advances (B) 10,000 10,000
--------------- --------------
Total $ 11,840 $ 11,908
long-term debt
=============== ==============
(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 June 30, 2000 are as follows:
(DOLLARS
IN THOUSANDS)
---------------------
July 1 to December 31, 2000 $ 72
2001 151
2002 162
2003 175
2004 188
2005 203
Thereafter 10,889
---------------------
$ 11,840
=====================
NOTE 4: SUBSEQUENT EVENT
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 common securities to the Company and
used the net proceeds for 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
<PAGE>
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 JUNE 30, 2000 AND 1999. Net income for the quarter ended June
30, 2000, was $946,000, as compared to net income of $777,000 for the quarter
ended June 30, 1999. This represents a $169,000, or 21.75% increase in the 2000
earnings over 1999. Diluted earnings per share increased 19.44% to $0.43 in the
second quarter of 2000 from $0.36 in the same period of 1999. The Company's
return on average assets and return on average stockholders' equity for the
three month period ended June 30, 2000 were 1.12% and 19.01%, compared to 1.14%
and 17.72%, respectively, for the same period in 1999.
Net interest income for the three month period ended June 30, 2000
increased to $3.6 million from $3.1 million in the prior year second quarter, a
$500,000, or 13.60% increase. Average interest-earning assets increased by $62.3
million, or 24.25%, while average interest-bearing liabilities increased by
$64.2 million, or 29.63%. Although the growth of average interest-bearing
liabilities was slightly above the growth of average interest-earning assets,
and the net interest margin decreased to 4.55% from 4.97%, the growth in volume
generated more net interest income. In addition to the increase in volume, the
average balance of federal funds sold was $12.0 million lower for the three
months ended June 30, 2000 compared with June 30, 1999. The result is that a
higher percentage of average interest-earning dollars were invested in higher
yielding assets such as investment securities and loans, generating additional
net interest income.
Interest income for the current year second quarter was $7.3 million, an
increase of $1.5 million, or 25.73%, from $5.8 million in the prior year second
quarter, primarily as a result of growth in interest-earning assets. Yields on
interest-earning assets increased to 9.25% in the second quarter of 2000, as
compared to 9.13% in the prior year second quarter. Loan interest and fee income
increased to $6.4 million from 5.0 million because of greater volume of loans
outstanding. These additional loans were funded by deposit growth, advances from
the FHLB, and funds previously invested in federal funds sold.
Interest expense for the current year second quarter was $3.7 million, an
increase of $1.1 million, or 39.96%, from $2.7 million in the prior year second
quarter. The increase is attributable to a $50.7 million, or 26.62%, increase in
our average interest-bearing deposits as well as a $13.5 million, or 51.52%,
increase in other interest-bearing liabilities, including FHLB borrowings and
increased borrowings under our bank stock loan. Overall, rates paid on average
interest-bearing liabilities increased to 5.34% in the current year period from
4.93% in the prior year period, an increase of 41 basis points.
SIX MONTHS ENDED JUNE 30, 2000 AND 1999. Net income for the six month period
ended June 30, 2000, was $1.8 million, compared to net income of $1.4 million
for the six month period ended June 30, 1999. This represents a 24.23% increase
in the 2000 earnings over 1999. Diluted earnings per share increased 22.39% to
$0.82 in the second quarter of 2000 from $0.67 in the same period of 1999. The
Company's return on average assets and return on average stockholders' equity
for the six month period ended June 30, 2000 was 1.07% and 18.34%, compared to
1.09% and 16.57%, respectively, for the same period in 1999.
Net interest income for the six month period ended June 30, 2000 increased
to $7.2 million from $5.5 million in the prior year sixth month period, a $1.7
million, or 30.31% increase. This increase was primarily the result of a $64.9
million, or 26.27% increase in average interest-earning assets. Our net interest
margin improved to 4.69% during the current year six month period, from 4.58%
during the prior year six month period. One of the major contributors to the
improvement in our net interest margin year-to-date was interest of $555,000
earned on a purchased lease portfolio during the first quarter 2000. We expect
our interest income from these purchased leases to decline over the next two
years as the portfolio matures. Without the interest income generated from this
portfolio, the net interest margin would have been 4.34%.
11
<PAGE>
Interest income for the current year six month period was $14.3 million,
an increase of $3.6 million, or 34.28%, from $10.7 million in the prior year six
month period, primarily as a result of growth in interest-earning assets. The
yield on average interest-earning assets increased to 9.32% in 2000 from 8.81%
in 1999, an increase of 51 basis points, which combined with the increase in
volume, resulted in the $3.6 million increase in interest income in the current
year period, as compared to the prior year period.
Interest expense for the six month period ended June 30, 2000 was $7.2
million, up $2.0 million, or 38.49%, from $5.2 million for the six month period
ended June 30, 1999. We attribute the increase to growth in our deposit base, as
well as increases in other funding sources such as the FHLB. Overall, rates paid
on average interest-bearing liabilities increased to 5.25% in the current year
period from 4.99% in the prior year period, an increase of 26 basis points.
PROVISION FOR LOAN LOSSES
The provision for loan losses for the second quarter of 2000 was $480,000,
compared to $506,000 for the same period of 1999, resulting in a $26,000, or
5.14% decrease. In the second quarter of 1999, a larger provision was taken as a
result of higher than expected growth in the loan portfolio. For the six months
ended June 30, 2000 and 1999, the provision was $945,000 and $806,000,
respectively, resulting in a 17.25% 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 $779,000, or 15.58%, during the three
months ended June 30, 2000, from $674,000 during the prior year second quarter.
This increase is primarily attributable to an increase in other service charge
income of $145,000, such as investment brokerage services which generated an
additional $52,000 over the prior year quarter, and commercial mortgage services
which generated an additional $44,000 over the prior year quarter. For the six
months ended June 30, 2000, non-interest income was $1.5 million, a 4.68%
increase from the $1.4 million reported for the same period in 1999.
NON-INTEREST EXPENSE
Non-interest expense increased to $2.4 million, or 11.81%, during the
three months ended June 30, 2000, from $2.1 million in the prior year period.
Year-to-date non-interest expense increased to $5.0 million, or 26.41%, during
the six months ended June 30, 2000, from $4.0 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 $1.4
million and $2.8 million during the three month and six month ended periods in
2000, from $1.1 million and $2.1 million during the three month and six month
ended periods in 1999, as we hired additional staff to facilitate our growth. We
had 123 full-time employees at June 30, 2000 as compared to 99 at June 30, 1999.
FINANCIAL CONDITION
Total assets for the Company at June 30, 2000, were $353.9 million, an
increase of $21.3 million, or 6.39%, compared to December 31, 1999. Deposits and
stockholders' equity at June 30, 2000, were $286.9 million and $20.6 million,
increases of $18.8 million, or 7.00%, and $1.8 million, or 9.28%, respectively.
Loans at June 30, 2000 totaled $267.7 million, an increase of $17.3
million, or 6.91% compared to December 31, 1999. Loan growth was limited in the
first half of the year due to funding constraints. The loan to deposit ratio
remained above 91% from December 31, 1999 through the end of the second quarter.
Although higher-cost funding sources, such as brokered deposits, are available
to the Bank, consistent with our growth strategy, management seeks to maintain
an appropriate balance between loan portfolio growth and overall profitability.
Our just completed trust preferred securities offering should provide relief in
this area for a period of time.
Asset quality remains strong with the allowance for loan losses as a
percent of total loans at 1.58% as of June 30, 2000, compared to 1.52% at
December 31, 1999. As of June 30, 2000, non-performing loans equaled 0.43% of
total loans, the allowance for loan losses equaled 365.83% of non-performing
loans, and net charge-offs equaled 0.42% of average total loans.
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
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71.32% of our total assets at June 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 June 30,
2000, the Bank was within the established guidelines.
At June 30, 2000, our total stockholders' equity was $20.6 million and our
equity to asset ratio was 5.83%, compared to total stockholders' equity of $18.9
million and equity to asset ratio of 5.67% as of December 31, 1999. At June 30,
2000, our Tier 1 capital ratio was 7.07%, while our total risk-based capital
ratio was 8.32%, both of which exceed the capital minimums established in the
risk-based capital requirements.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no significant changes in our Qualitative and Quantitative
Disclosure About Market Risk since December 31, 1999, as reported in our
Registration Statement on Form S-1 (File Nos. 333-34328 and 333-34328-01), filed
on July 18, 2000.
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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 $10.7 million, after deducting
underwriting commissions and estimated offering expenses of approximately
$800,000. Of these net proceeds, approximately $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.
27. Financial Data Schedule
(B) REPORTS ON FORM 8-K
Blue Valley filed no reports on Form 8-K during the quarter ended
June 30, 2000.
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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: August 14, 2000 By: /s/ Robert D. Regnier
Robert D. Regnier,
President and
Chief Executive Officer
Date: August 14, 2000 By: /s/ Mark A. Fortino
Mark A. Fortino, Treasurer
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