PINX:BVBC Blue Valley Ban Corp Quarterly Report 10-Q Filing - 3/31/2012

Effective Date 3/31/2012

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Table of Contents

 

 

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, 2012

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

incorporation or organization)

 

(I.R.S. Employer

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

 

 

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 check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   ¨      Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Securities Act    Yes  ¨    No  x

As of March 31, 2012 the registrant had 2,883,936 shares of Common Stock ($1.00 par value) outstanding.

 

 

 


Table of Contents

Blue Valley Ban Corp.

FORM 10-Q Index

 

Part I. Financial Information

  

Item 1. Financial Statements

  

Report of Independent Registered Public Accounting Firm

     3   

Condensed Consolidated Balance Sheets— March 31, 2012 (unaudited) and December 31, 2011

     4   

Condensed Consolidated Statements of Operations (unaudited)—three months ended March  31, 2012 and 2011

     6   

Condensed Consolidated Statements of Comprehensive Loss (unaudited)—three months ended March  31, 2012 and 2011

     7   

Condensed Consolidated Statements of Stockholders’ Equity (unaudited)—three months ended March 31, 2012 and 2011

     8   

Condensed Consolidated Statements of Cash Flows (unaudited)—three months ended March  31, 2012 and 2011

     9   

Notes to Condensed Consolidated Financial Statements (unaudited)—three months ended March  31, 2012 and 2011

     11   

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

     36   

Item 3. Quantitative and Qualitative Disclosures About Market Risk

     50   

Item 4. Controls and Procedures

     52   

Part II. Other Information

  

Item 1. Legal Proceedings

     53   

Item 1A. Risk Factors

     53   

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

     53   

Item 3. Defaults Upon Senior Securities

     53   

Item 4. Mine Safety Disclosures

     53   

Item 5. Other Information

     53   

Item 6. Exhibits

     53   

 

2


Table of Contents

Part I. Financial Information

Item 1. Financial Statements

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

Blue Valley Ban Corp.

Overland Park, Kansas

We have reviewed the accompanying condensed consolidated balance sheet of Blue Valley Ban Corp. as of March 31, 2012, and the related condensed consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows for the three-month periods ended March 31, 2012 and 2011. These interim financial statements are the responsibility of the Company’s management.

We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 the standards of the Public Company Accounting Oversight Board (United States), 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 condensed 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 the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2011 and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended (not presented herein), and in our report dated March 22, 2012 we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2011 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

May 11, 2012

 

3


Table of Contents

Blue Valley Ban Corp.

Condensed Consolidated Balance Sheets

March 31, 2012 and December 31, 2011

(In thousands, except share data)

 

     March 31, 2012      December 31, 2011  
     (Unaudited)         

ASSETS

     

Cash and due from banks

   $ 29,546       $ 23,480   

Interest-bearing deposits in other financial institutions

     86,443         76,419   
  

 

 

    

 

 

 

Cash and cash equivalents

     115,989         99,899   

Available-for-sale securities

     66,666         61,790   

Mortgage loans held for sale, fair value

     1,597         5,686   

Loans, net of allowance for loan losses of $10,841 and $13,189 in 2012 and 2011, respectively

     427,094         425,654   

Premises and equipment, net

     15,873         15,897   

Foreclosed assets held for sale, net

     27,864         29,246   

Interest receivable

     1,899         1,573   

Deferred income taxes

     965         911   

Prepaid expenses and other assets

     6,315         6,106   

Federal Home Loan Bank stock, Federal Reserve Bank stock, and other securities

     7,398         7,369   

Core deposit intangible asset, at amortized cost

     286         321   
  

 

 

    

 

 

 

Total assets

   $ 671,946       $ 654,452   
  

 

 

    

 

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

and Report of Independent Registered Public Accounting Firm

 

4


Table of Contents

Blue Valley Ban Corp.

Condensed Consolidated Balance Sheets

March 31, 2012 and December 31, 2011

(In thousands, except share data)

 

     March 31, 2012     December 31, 2011  
     (Unaudited)        

LIABILITIES

    

Deposits

    

Demand

   $ 107,740      $ 100,842   

Savings, NOW and money market

     228,767        222,984   

Time

     170,897        166,587   
  

 

 

   

 

 

 

Total deposits

     507,404        490,413   

Other interest-bearing liabilities

     15,625        15,372   

Long-term debt

     100,603        100,434   

Interest payable and other liabilities

     8,481        7,778   
  

 

 

   

 

 

 

Total liabilities

     632,113        613,997   
  

 

 

   

 

 

 

STOCKHOLDERS’ EQUITY

    

Capital stock

    

Preferred stock, $1 par value, $1,000 liquidation preference; authorized 15,000,000 shares; issued and outstanding 2012 – 21,750 shares; 2011 – 21,750 shares

     22        22   

Common stock, par value $1 per share; authorized 15,000,000 shares; issued and outstanding 2012 – 2,883,936 shares; 2011 – 2,879,158 shares

     2,884        2,879   

Additional paid-in capital

     38,550        38,511   

Retained earnings (Accumulated deficit)

     (1,678     (1,091

Accumulated other comprehensive income, net of income tax of $36 in 2012 and $89 in 2011

     55        134   
  

 

 

   

 

 

 

Total stockholders’ equity

     39,833        40,455   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 671,946      $ 654,452   
  

 

 

   

 

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

and Report of Independent Registered Public Accounting Firm

 

5


Table of Contents

Blue Valley Ban Corp.

Condensed Consolidated Statements of Operations

Three Months Ended March 31, 2012 and 2011

(In thousands, except share data)

 

     March 31, 2012     March 31, 2011  
     (Unaudited)     (Unaudited)  

INTEREST AND DIVIDEND INCOME

    

Interest and fees on loans

   $ 5,884      $ 6,343   

Federal funds sold and other short-term investments

     43        39   

Available-for-sale securities

     268        244   

Dividends on Federal Home Loan Bank and Federal Reserve Bank stock

     29        25   
  

 

 

   

 

 

 

Total interest and dividend income

     6,224        6,651   
  

 

 

   

 

 

 

INTEREST EXPENSE

    

Interest-bearing demand deposits

     265        474   

Savings and money market deposit accounts

     84        97   

Other time deposits

     700        1,099   

Federal funds purchased and other interest-bearing liabilities

     9        10   

Long-term debt, net

     912        860   
  

 

 

   

 

 

 

Total interest expense

     1,970        2,540   
  

 

 

   

 

 

 

NET INTEREST INCOME

     4,254        4,111   

PROVISION FOR LOAN LOSSES

     450        —     
  

 

 

   

 

 

 

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES

     3,804        4,111   
  

 

 

   

 

 

 

NON-INTEREST INCOME

    

Loans held for sale fee income

     543        554   

NSF charges and service fees

     256        223   

Other service charges

     618        500   

Other income

     193        127   
  

 

 

   

 

 

 

Total non-interest income

     1,610        1,404   
  

 

 

   

 

 

 

NON-INTEREST EXPENSE

    

Salaries and employee benefits

     2,581        2,822   

Net occupancy expense

     647        663   

Foreclosed assets expense

     609        741   

Other operating expense

     1,893        1,962   
  

 

 

   

 

 

 

Total non-interest expense

     5,730        6,188   
  

 

 

   

 

 

 

LOSS BEFORE INCOME TAXES

     (316     (673

PROVISION (BENEFIT) FOR INCOME TAXES

    

Benefit for income taxes

     (104     (244

Valuation allowance for deferred tax asset

     103        —     
  

 

 

   

 

 

 

Total provision (benefit) for income taxes

     (1     (244
  

 

 

   

 

 

 

NET LOSS

     (315     (429
  

 

 

   

 

 

 

DIVIDENDS AND ACCRETION ON PREFERRED STOCK

     (272     (272
  

 

 

   

 

 

 

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS

   $ (587   $ (701
  

 

 

   

 

 

 

BASIC LOSS PER SHARE

   $ (0.21   $ (0.25
  

 

 

   

 

 

 

DILUTED LOSS PER SHARE

   $ (0.21   $ (0.25
  

 

 

   

 

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

and Report of Independent Registered Public Accounting Firm

 

6


Table of Contents

Blue Valley Ban Corp.

Condensed Consolidated Statements of Comprehensive Loss

Three Months Ended March 31, 2012 and 2011

(In thousands)

 

     March 31, 2012     March 31, 2011  
     (Unaudited)     (Unaudited)  

NET LOSS

    

OTHER COMPREHENSIVE LOSS

   $ (315   $ (429

Change in unrealized appreciation on available-for-sale securities, net of income taxes of $(53) in 2012 and $(18) in 2011

     (79     (26
  

 

 

   

 

 

 

COMPREHENSIVE LOSS

   $ (394   $ (455
  

 

 

   

 

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

and Report of Independent Registered Public Accounting Firm

 

7


Table of Contents

Blue Valley Ban Corp.

Condensed Consolidated Statements of Stockholders’ Equity

Three Months Ended March 31, 2012 and 2011

(In thousands, except share data)

(Unaudited)

 

                              Accumulated        
                  Additional           Other        
     Preferred      Common     Paid-In     Retained     Comprehensive        
     Stock      Stock     Capital     Earnings     Income (Loss)     Total  

BALANCE, DECEMBER 31, 2010

   $ 22       $ 2,843      $ 38,431      $ 15,838      $ 30      $ 57,164   

Forfeiture of 2,280 shares of restricted stock

     —           (2     (88     —          —          (90

Issuance of 2,628 shares common stock for the employee stock purchase plan

     —           3        18        —          —          21   

Dividends on preferred stock

     —           —          —          (272     —          (272

Net loss

     —           —          —          (429     —          (429

Change in unrealized appreciation on available-for-sale securities, net of income taxes (credit) of $18

     —           —          —          —          (26     (26
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, MARCH 31, 2011

   $ 22       $ 2,844      $ 38,361      $ 15,137      $ 4      $ 56,368   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, DECEMBER 31, 2011

   $ 22       $ 2,879      $ 38,511      $ (1,091   $ 134      $ 40,455   

Forfeiture of 1,730 shares of restricted stock

     —           (2     19        —          —          17   

Issuance of 6,508 shares common stock for the employee stock purchase plan

     —           7        20        —          —          27   

Dividends on preferred stock

     —           —          —          (272     —          (272

Net loss

     —           —          —          (315     —          (315

Change in unrealized appreciation on available-for-sale securities, net of income taxes (credit) of $53

     —           —          —          —          (79     (79
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

BALANCE, MARCH 31, 2012

   $ 22       $ 2,884      $ 38,550      $ (1,678   $ 55      $ 39,833   
  

 

 

    

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

and Report of Independent Registered Public Accounting Firm

 

8


Table of Contents

Blue Valley Ban Corp.

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2012 and 2011

(In thousands)

 

     March 31, 2012     March 31, 2011  
     (Unaudited)     (Unaudited)  

CASH FLOWS FROM OPERATING ACTIVITIES

    

Net loss

   $ (315   $ (429

Adjustments to reconcile net loss to net cash flow

    

From operating activities:

    

Depreciation and amortization

     411        404   

Accretion of premiums and discounts on available-for-sale securities

     (20     (3

Provision for loan losses

     450        —     

Provision for losses on foreclosed assets held for sale

     128        361   

Deferred income taxes

     (1     (107

Stock dividends on Federal Home Loan Bank (FHLB) stock

     (29     (24

Net (gain) loss on sale of foreclosed assets

     79        (345

Restricted stock earned and forfeited

     17        (90

Compensation expense related to the Employee Stock Purchase Plan (ESPP)

     1        1   

Originations of loans held for sale

     (16,111     (6,244

Proceeds from the sale of loans held for sale

     20,167        14,200   

Realized (gain) loss on loans held for sale fair value adjustment

     33        (146

Changes in:

    

Interest receivable

     (326     (36

Net fair value of loan related commitments

     61        354   

Cash surrender value of life insurance

     (37     (6

Prepaid expenses and other assets

     (231     (403

Interest payable and other liabilities

     433        101   
  

 

 

   

 

 

 

Net cash provided by operating activities

     4,710        7,588   
  

 

 

   

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

    

Net change in loans

     (4,343     14,992   

Proceeds from the sale of loan participations

     1,456        —     

Purchase of premises and equipment

     (183     (29

Proceeds from the sale of foreclosed assets, net of expenses

     2,167        1,768   

Purchases of available-for-sale securities

     (9,988     —     

Proceeds from maturities of available-for-sale securities

     5,000        8,000   
  

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     (5,891     24,731   
  

 

 

   

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

    

Net increase (decrease) in demand deposits, money market, NOW and savings accounts

     12,681        (2,243

Net increase (decrease) in time deposits

     4,310        (23,659

Net increase (decrease) in federal funds purchased and other interest-bearing liabilities

     253        (3,163

Net proceeds from the sale of stock through ESPP

     27        21   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     17,271        (29,044
  

 

 

   

 

 

 

Increase in cash and cash equivalents

     16,090        3,275   

Cash and cash equivalents, beginning of period

     99,899        114,781   
  

 

 

   

 

 

 

CASH AND CASH EQUIVALENTS, END OF PERIOD

   $ 115,989      $ 118,056   
  

 

 

   

 

 

 

See Accompanying Notes to Condensed Consolidated Financial Statements

and Report of Independent Registered Public Accounting Firm

 

9


Table of Contents

Blue Valley Ban Corp.

Condensed Consolidated Statements of Cash Flows

Three Months Ended March 31, 2012 and 2011

(In thousands)

 

     March 31, 2012     March 31, 2011  
     (Unaudited     (Unaudited

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

    

Cash paid during the year for:

    

Interest

   $ 2,093      $ 2,466   

Income taxes, net of refunds

     —          —     

Noncash investing and financing activities:

    

Transfer of loans to foreclosed property, net of specific allowance

     997        722   

Restricted stock issued, net of forfeitures

     (2     (2

Preferred dividends accrued but not paid

     272        272   

See Accompanying Notes to Condensed Consolidated Financial Statements

and Report of Independent Registered Public Accounting Firm

 

10


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

Note 1: Basis of Presentation

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments necessary to present fairly Blue Valley Ban Corp.’s (the “Company”) condensed consolidated financial position as of March 31, 2012, and the condensed consolidated results of its operations, comprehensive loss, stockholders’ equity and cash flows for the periods ended March 31, 2012 and 2011, and are of a normal recurring nature. The condensed consolidated balance sheet of the Company, as of December 31, 2011, has been derived from the audited consolidated balance sheet of the Company as of that date.

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 condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s December 31, 2011 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 condensed consolidated financial statements included in Item 1 of Part I.

Note 2: Recent and Future Accounting Pronouncements

On June 16, 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income. This update is intended to increase the prominence of other comprehensive income in the financial statements. The main provision of this update provides that an entity that reports items of other comprehensive income has the option to present comprehensive income in either one or two consecutive financial statements. In the single statement approach the entity must present the components of net income and total net income, the components of other comprehensive income and total other comprehensive income, and a total for comprehensive income. In the two-statement approach, an entity must present the components of net income and total net income in the first statement. That statement must be immediately followed by a financial statement that presents the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The option in current GAAP that permits the presentation of other comprehensive income in the statement of changes in equity has been eliminated. The amendments for this update are to be applied retrospectively. For public entities, the amendments were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this update had no adverse impact on the Company’s consolidated financial statements.

On December 23, 2011, the FASB issued ASU 2011-12, Comprehensive Income (Topic 220): Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05. This update defers the specific requirement to present items that are reclassified from accumulated other comprehensive income to net income separately with their respective components of net income and other comprehensive income. This update does not defer the requirement to report comprehensive income either in a single continuous statement or in two separate but consecutive financial statements. For public entities, the amendments were effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this update had no adverse impact on the Company’s consolidated financial statements.

 

11


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 3: Earnings Per Share

Basic earnings (loss) per share represents income available to common stockholders divided by the weighted average number of shares outstanding during each year. Diluted earnings (loss) per share reflects additional potential common shares that would have been outstanding if dilutive potential common shares had been issued, as well as any adjustment to income that would result from the assumed issuance. The computation of per share earnings (loss) for the three months ended March 31, 2012 and 2011 is as follows:

 

     March 31, 2012     March 31, 2011  
(In thousands, except share and per share data)    (Unaudited)     (Unaudited)  

Net loss

   $ (315   $ (429

Preferred dividends

     (272     (272
  

 

 

   

 

 

 

Net loss available to common stockholders

   $ (587   $ (701
  

 

 

   

 

 

 

Average common shares outstanding

     2,845,444        2,798,084   

Average common share stock options outstanding and restricted stock (B)

     18,338        24,522   
  

 

 

   

 

 

 

Average diluted common shares (B)

     2,863,782        2,822,606   
  

 

 

   

 

 

 

Basic loss per share

   $ (0.21   $ (0.25
  

 

 

   

 

 

 

Diluted loss per share (A)

   $ (0.21   $ (0.25
  

 

 

   

 

 

 

 

(A) No shares of stock options, restricted stock or warrants were included in the computation of diluted earnings per share for any period there was a loss.
(B) Warrants to purchase 111,083 shares of common stock at an exercise price of $29.37 per share were outstanding at March 31, 2012 and 2011, but were not included in the computation of diluted earnings per share because the warrant’s exercise price was greater than the average market price of the common shares, thus making the warrants anti-dilutive. Stock options to purchase 10,575 and 24,375 shares of common stock were outstanding at March 31, 2012 and 2011, respectively, but were not included in the computation of diluted earnings per share because the option’s exercise price was greater than the average market price of the common shares, thus making the options anti-dilutive.

Income available for common stockholders is reduced by dividends declared in the period on preferred stock (whether or not they are paid) and the accretion of the warrants.

 

12


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 4: Available-for-Sale Securities

The amortized cost and estimated fair value, together with gross unrealized gains and losses, of available-for-sale securities are as follows:

 

     March 31, 2012  
(In thousands)    Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair
Value
 

U.S. Government sponsored agencies

   $ 65,975       $ 80       $ (7   $ 66,048   

Equity and other securities

     600         18         —          618   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 66,575       $ 98       $ (7   $ 66,666   
  

 

 

    

 

 

    

 

 

   

 

 

 

 

     December 31, 2011  
(In thousands)    Amortized
Cost
     Gross
Unrealized
Gains
     Gross
Unrealized
Losses
    Fair
Value
 

U.S. Government sponsored agencies

   $ 60,967       $ 228       $ (24   $ 61,171   

Equity and other securities

     600         19         —          619   
  

 

 

    

 

 

    

 

 

   

 

 

 
   $ 61,567       $ 247       $ (24   $ 61,790   
  

 

 

    

 

 

    

 

 

   

 

 

 

The amortized cost and estimated fair value of available-for-sale securities at March 31, 2012, by contractual maturity are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.

 

(In thousands)    Amortized
Cost
     Fair
Value
 

Due in one year or less

   $ 5,998       $ 6,014   

Due after one year through five years

     24,996         25,023   

Due after five years through ten years

     34,981         35,011   

Due after ten years

     —           —     
  

 

 

    

 

 

 

Total

     65,975         66,048   

Equity and other securities

     600         618   
  

 

 

    

 

 

 
   $ 66,575       $ 66,666   
  

 

 

    

 

 

 

The book value and estimated fair value of securities pledged as collateral to secure public deposits amounted to $5,000,000 and $5,005,000, respectively at March 31, 2012 and $5,000,000 and $5,013,000, respectively at December 31, 2011.

 

13


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 4: Available-for-Sale Securities (Continued)

 

There were no gross gains or losses realized for the three months ended March 31, 2012 and 2011, respectively, from sales of available-for-sale securities.

Certain investments in debt and marketable equity securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at March 31, 2012 and December 31, 2011, was $9,981,000 and $19,973,000, which is approximately 15.0% and 32.3%, respectively, of the Company’s available-for-sale investment portfolio. These declines in fair value resulted primarily from recent increases in market interest rates. Based on evaluation of available information and evidence, particularly recent volatility in market yields on debt securities, management believes the declines in the fair value for these securities are temporary.

Unrealized losses and fair value as of March 31, 2012 and December 31, 2011, aggregated by investment type and length of time that individual securities have been in a continuous unrealized loss position are as follows:

 

     March 31, 2012  
     Less than 12 Months      12 Months or More      Total  
(In thousands)    Fair
Value
     Unrealized
Losses
     Fair Value      Unrealized
Losses
     Fair Value      Unrealized
Losses
 

U.S. Government sponsored agencies

   $ 9,981       $ 7       $  —         $  —         $ 9,981       $ 7   

Equity and other securities

     —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total temporarily impaired securities

   $ 9,981       $ 7       $ —         $ —         $ 9,981       $ 7   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     December 31, 2011  
     Less than 12 Months      12 Months or More      Total  
(In thousands)    Fair Value      Unrealized
Losses
     Fair Value      Unrealized
Losses
     Fair Value      Unrealized
Losses
 

U.S. Government sponsored agencies

   $ 19,973       $ 24       $  —         $  —         $ 19,973       $ 24   

Equity and other securities

     —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total temporarily impaired securities

   $ 19,973       $ 24       $ —         $ —         $ 19,973       $ 24   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

14


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 4: Available-for-Sale Securities (Continued)

 

The unrealized losses on the Company’s investments in direct obligations of U.S. government sponsored agencies were caused by interest rate increases. The contractual terms of those investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. Because the Company does not intend to sell the investments and it is not more likely than not the Company will be required to sell the investments before the recovery of their amortized cost bases, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired at March 31, 2012.

The Company enters into sales of securities under agreements to repurchase. The amounts deposited under these agreements represent short-term debt and are reflected as a liability in the consolidated balance sheets. The securities underlying the agreements are book-entry securities. During the period, securities held in safekeeping were pledged to the depositors under a written custodial agreement that explicitly recognizes the depositors’ interest in the securities. At March 31, 2012, or at any month end during the period, no material amount of agreements to repurchase securities sold was outstanding with any individual entity. Information on sales of securities under agreements to repurchase is as follows:

 

(In thousands)    March 31, 2012      December 31, 2011  

Balance

   $ 15,625       $ 14,413   

Carrying value of securities pledged to secure agreements to repurchase at period end

     24,037         24,131   

Average balance during the period of securities sold under agreements to repurchase

     15,138         16,405   

Maximum amount outstanding at any month-end during the period

     15,625         18,633   

Note 5: Loans and Allowance for Loan Losses

Categories of loans at March 31, 2012 and December 31, 2011 include the following:

 

(In thousands)    March 31, 2012      December 31, 2011  

Commercial loans

   $ 132,283       $ 130,398   

Commercial real estate loans

     150,702         154,109   

Construction loans

     49,207         48,438   

Home equity loans

     57,446         59,750   

Residential real estate loans

     40,324         37,882   

Lease financing

     1,910         2,268   

Consumer loans

     6,063         5,998   
  

 

 

    

 

 

 

Total loans

     437,935         438,843   

Less: Allowance for loan losses

     10,841         13,189   
  

 

 

    

 

 

 

Net loans

   $ 427,094       $ 425,654   
  

 

 

    

 

 

 

 

15


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following tables present the balance in the allowance for loan losses at or for the three months ended March 31, 2012 and 2011:

 

    At or For the Three Months Ended March 31, 2012  
(In thousands)   Commercial     Commercial
Real Estate
    Construction     Home
Equity
    Residential
Real Estate
    Lease
Financing
    Consumer     Total  

Allowance for loan losses:

               

Balance, beginning of period

  $ 2,987      $ 3,772      $ 2,721      $ 1,338      $ 2,312      $ 30      $ 29      $ 13,189   

Provision charged to expense

    725        747        (206     55        (854     (15     (2     450   

Losses charged off

    (1,829     —          (876     —          (339     —          —          (3,044

Recoveries

    75        8        125        25        12        —          1        246   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, end of period

  $ 1,958      $ 4,527      $ 1,764      $ 1,418      $ 1,131      $ 15      $ 28      $ 10,841   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    At or For the Three Months Ended March 31, 2011  
    Commercial     Commercial
Real Estate
    Construction     Home
Equity
    Residential
Real Estate
    Lease
Financing
    Consumer     Total  

Allowance for loan losses:

               

Balance, beginning of period

  $ 3,339      $ 3,974      $ 4,579      $ 1,262      $ 1,488      $ 38      $ 51      $ 14,731   

Provision charged to expense

    33        643        (940     (5     246        27        (4     —     

Losses charged off

    (18     —          (80     —          (183     —          —          (281

Recoveries

    155        —          21        37        64        25        3        305   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, end of period

  $ 3,509      $ 4,617      $ 3,580      $ 1,294      $ 1,615      $ 90      $ 50      $ 14,755   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

16


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following tables present the balance in the allowance for loan losses and the recorded investment in loans based on portfolio segment and impairment methods as of March 31, 2012 and December 31, 2011:

 

    March 31, 2012  
(In thousands)   Commercial     Commercial
Real Estate
    Construction     Home
Equity
    Residential
Real Estate
    Lease
Financing
    Consumer     Total  

Allowance for loan losses:

               

Individually evaluated for impairment

  $ 953      $ 3,638      $ 679      $ 615      $ 473      $ 11      $ —        $ 6,369   

Collectively evaluated for impairment

    1,005        889        1,085        803        658        4        28        4,472   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 1,958      $ 4,527      $ 1,764      $ 1,418      $ 1,131      $ 15      $ 28      $ 10,841   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans:

               

Individually evaluated for impairment

  $ 21,580      $ 19,137      $ 15,177      $ 4,855      $ 5,935      $ 601      $ 12      $ 67,297   

Collectively evaluated for impairment

    110,703        131,565        34,030        52,591        34,389        1,309        6,051        370,638   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 132,283      $ 150,702      $ 49,207      $ 57,446      $ 40,324      $ 1,910      $ 6,063      $ 437,935   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

    December 31, 2011  
    Commercial     Commercial
Real Estate
    Construction     Home
Equity
    Residential
Real Estate
    Lease
Financing
    Consumer     Total  

Allowance for loan losses:

               

Individually evaluated for impairment

  $ 1,825      $ 3,055      $ 1,462      $ 565      $ 1,727      $ 26      $ —        $ 8,660   

Collectively evaluated for impairment

    1,162        717        1,259        773        585        4        29        4,529   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 2,987      $ 3,772      $ 2,721      $ 1,338      $ 2,312      $ 30      $ 29      $ 13,189   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loans:

               

Individually evaluated for impairment

  $ 24,625      $ 18,099      $ 16,535      $ 3,836      $ 6,981      $ 648      $ 2      $ 70,726   

Collectively evaluated for impairment

    105,773        136,010        31,903        55,914        30,901        1,620        5,996        368,117   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $ 130,398      $ 154,109      $ 48,438      $ 59,750      $ 37,882      $ 2,268      $ 5,998      $ 438,843   
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

17


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following table presents the credit risk profile of the Company’s loan portfolio based on the rating category and payment activity as of March 31, 2012 and December 31, 2011. These categories are defined as follows:

Pass – loans that exhibit acceptable financial performance, cash flow, leverage and the probability of default is considered low.

Classified – loans are inadequately protected by the current payment capacity of the obligor or by the collateral pledged. These loans are characterized by the distinct probability that the Company will sustain some loss or added expenses if the deficiencies are not corrected.

 

     March 31, 2012      December 31, 2011  
(In thousands)    Pass      Classified      Total      Pass      Classified      Total  

Commercial

   $ 124,847       $ 7,436       $ 132,283       $ 118,396       $ 12,002       $ 130,398   

Commercial real estate

     140,203         10,499         150,702         144,693         9,416         154,109   

Construction

     36,497         12,710         49,207         33,792         14,646         48,438   

Home equity

     53,493         3,953         57,446         56,779         2,971         59,750   

Residential real estate

     35,393         4,931         40,324         32,002         5,880         37,882   

Lease financing

     1,617         293         1,910         1,960         308         2,268   

Consumer

     6,052         11         6,063         5,998                 5,998   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 398,102       $ 39,833       $ 437,935       $ 393,620       $ 45,223       $ 438,843   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

18


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following tables present the Company’s loan portfolio aging analysis, including loans on non-accrual, as of March 31, 2012 and December 31, 2011:

 

     March 31, 2012  
(In thousands)    30-59 Days
Past Due
     60-89 Days
Past Due
     Greater than
90 Days

Past Due
     Total Past
Due
     Current      Total
Loans
Receivable
     Total
Loans > 90
Days &
Accruing
 

Commercial

   $ 20       $ 177       $ 600       $ 797       $ 131,486       $ 132,283       $  —     

Commercial real estate

     1,932         1,479         142         3,553         147,149         150,702         —     

Construction

     —           1,253         1,171         2,424         46,783         49,207         —     

Home equity

     —           —           3,155         3,155         54,291         57,446         —     

Residential real estate

     861         247         448         1,556         38,768         40,324         —     

Lease financing

     —           —           18         18         1,892         1,910         —     

Consumer

     —           —           —           —           6,063         6,063         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,813       $ 3,156       $ 5,534       $ 11,503       $ 426,432       $ 437,935       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

     December 31, 2011  
     30-59 Days
Past Due
     60-89 Days
Past Due
     Greater than
90 Days

Past Due
     Total Past
Due
     Current      Total
Loans
Receivable
     Total
Loans > 90
Days &
Accruing
 

Commercial

   $ 703       $ 200       $ 928       $ 1,831       $ 128,567       $ 130,398       $  —     

Commercial real estate

     —           —           143         143         153,966         154,109         —     

Construction

     1,376         —           1,781         3,157         45,281         48,438         —     

Home equity

     —           2,165         —           2,165         57,585         59,750         —     

Residential real estate

     678         717         1,367         2,762         35,120         37,882         —     

Lease financing

     104         —           18         122         2,146         2,268         —     

Consumer

     —           —           —           —           5,998         5,998         —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 2,861       $ 3,082       $ 4,237       $ 10,180       $ 428,663       $ 438,843       $ —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

A loan is considered impaired, in accordance with the impairment accounting guidance (ASC 310-10-35-16), when based on current information and events, it is probable the Company will be unable to collect the scheduled payments of principal and interest due from the borrower in accordance with the contractual terms of the loan agreement. Impaired loans include non-performing loans, but also include loans modified in troubled debt restructurings where concessions have been granted to borrowers experiencing financial difficulties. These concessions could include a reduction in the interest rate on the loan, payment extensions, forgiveness of principal, forbearance or other actions intended to maximize collection.

 

19


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following tables present impaired loans for March 31, 2012 and December 31, 2011:

 

     March 31, 2012  
(In thousands)    Recorded
Balance
     Unpaid
Principal
Balance
     Specific
Allowance
 

Loans without a specific valuation allowance:

        

Commercial

   $ 154       $ 361       $ —     

Commercial real estate

     2,509         3,085         —     

Construction

     910         1,420         —     

Home equity

     1,462         1,500         —     

Residential real estate

     826         947         —     

Lease financing

     —           —           —     

Consumer

     —           —           —     

Loans with a specific valuation allowance:

        

Commercial

   $ 1,950       $ 1,969       $ 471   

Commercial real estate

     3,955         3,955         2,837   

Construction

     11,571         11,580         550   

Home equity

     2,260         2,304         380   

Residential real estate

     2,922         2,947         125   

Lease financing

     293         294         11   

Consumer

     —           —           —     

Total:

        

Commercial

   $ 2,104       $ 2,330       $ 471   

Commercial real estate

     6,464         7,040         2,837   

Construction

     12,481         13,000         550   

Home equity

     3,722         3,804         380   

Residential real estate

     3,748         3,894         125   

Lease financing

     293         294         11   

Consumer

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Total

   $ 28,812       $ 30,362       $ 4,374   
  

 

 

    

 

 

    

 

 

 

 

20


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

 

     December 31, 2011  
(In thousands)    Recorded
Balance
     Unpaid
Principal
Balance
     Specific
Allowance
 

Loans without a specific valuation allowance:

        

Commercial

   $ 16       $ 32       $ —     

Commercial real estate

     482         514         —     

Construction

     101         101         —     

Home equity

     468         500         —     

Residential real estate

     904         1,014         —     

Lease financing

     —           —           —     

Consumer

     —           —           —     

Loans with a specific valuation allowance

        

Commercial

   $ 3,709       $ 3,850       $ 1,281   

Commercial real estate

     4,819         5,357         2,257   

Construction

     14,313         14,776         1,353   

Home equity

     2,208         2,242         296   

Residential real estate

     3,838         4,416         1,389   

Lease financing

     307         307         25   

Consumer

     —           —           —     

Total:

        

Commercial

   $ 3,725       $ 3,882       $ 1,281   

Commercial real estate

     5,301         5,871         2,257   

Construction

     14,414         14,877         1,353   

Home equity

     2,676         2,742         296   

Residential real estate

     4,742         5,430         1,389   

Lease financing

     307         307         25   

Consumer

     —           —           —     
  

 

 

    

 

 

    

 

 

 

Total

   $ 31,165       $ 33,109       $ 6,601   
  

 

 

    

 

 

    

 

 

 

 

21


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following table presents additional information related to impaired loans for the three months ended March 31, 2012 and 2011:

 

     For the three
months ended
March 31, 2012
     For the three
months  ended
March 31, 2011
 
(In thousands)    Average
Investment
in
Impaired
Loans
     Interest
Income
Recognized
     Average
Investment
in
Impaired
Loans
     Interest
Income
Recognized
 

Loans without a specific valuation allowance:

           

Commercial

   $ 85       $  —         $ 216       $  —     

Commercial real estate

     1,416         87         2,458         —     

Construction

     303         —           2,814         —     

Home equity

     715         —           619         —     

Residential real estate

     878         —           1,277         14   

Lease financing

     —           —           54         35   

Consumer

     —           —           51         —     

Loans with a specific valuation allowance:

           

Commercial

   $ 4,218       $ 32       $ 5,093       $ 47   

Commercial real estate

     4,174         50         9,548         28   

Construction

     13,369         116         21,856         95   

Home equity

     2,468         —           745         —     

Residential real estate

     3,154         35         4,289         37   

Lease financing

     300         4         350         7   

Consumer

     —           —           —           —     

Total:

           

Commercial

   $ 4,303       $ 32       $ 5,309       $ 47   

Commercial real estate

     5,590         137         12,006         28   

Construction

     13,672         116         24,670         95   

Home equity

     3,183         —           1,364         —     

Residential real estate

     4,032         35         5,566         51   

Lease financing

     300         4         404         42   

Consumer

     —           —           51         —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 31,080       $ 324       $ 49,370       $ 263   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

22


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following table presents the Company’s non-accrual loans, also included in impaired loans, at March 31, 2012 and December 31, 2011:

 

(In thousands)    March 31, 2012      December 31, 2011  

Commercial

   $ 749       $ 2,029   

Commercial real estate

     2,509         1,340   

Construction

     1,171         3,058   

Home equity

     3,722         2,676   

Residential real estate

     1,220         2,204   

Lease financing

     18         18   

Consumer

     —           —     
  

 

 

    

 

 

 
   $ 9,389       $ 11,325   
  

 

 

    

 

 

 

Included in certain loan categories in the impaired loans are loans designated as troubled debt restructurings and classified as impaired. At March 31, 2012, the Company had $1,594,000 of commercial loans, $5,222,000 of commercial real estate loans, $12,350,000 of construction loans, $2,664,000 of residential real estate loans and $276,000 of lease financing loans that were modified in troubled debt restructurings and classified as impaired. At December 31, 2011, the Company had $2,565,000 of commercial loans, $5,233,000 of commercial real estate loans, $13,659,000 of construction loans, $3,271,000 of residential real estate loans and $290,000 of lease financing loans that were modified in troubled debt restructurings and classified as impaired

The modification of terms for loans restructured and classified as troubled debt restructurings and impaired during the three month period ended March 31, 2012 and for the year ended December 31, 2011, were primarily the renewals of existing debt to troubled borrowers at a below market rate, debt restructurings to interest-only terms and debt restructurings extending the amortization period.

The following table presents loans restructured and classified as troubled debt restructurings during the three months ended March 31, 2012 and during the year ended December 31, 2011:

 

     March 31, 2012      December 31, 2011  
(In thousands)    Number
of Loans
     Pre-Modification
Outstanding
Recorded
Balance
     Post-Modification
Outstanding
Recorded
Balance
     Number
of Loans
     Pre-Modification
Outstanding
Recorded
Balance
     Post-Modification
Outstanding
Recorded
Balance
 

Commercial

     —         $  —         $  —           6       $ 1,417       $ 1,408   

Commercial real estate

     —           —           —           5         3,498         3,498   

Construction

     —           —           —           3         3,724         3,724   

Home equity

     —           —           —           —           —           —     

Residential real estate

     1         136         136         —           —           —     

Lease financing

     —           —           —           —           —           —     

Consumer

     —           —           —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

     1       $ 136       $ 136         14       $ 8,639       $ 8,630   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

23


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 5: Loans and Allowance for Loan Losses (Continued)

 

The following table presents troubled debt restructurings within the previous 12 months included above that are 90 days past due or are on non-accrual as of March 31, 2012:

 

     March 31, 2012  
(In thousands)    Number
of Loans
     Recorded Balance  

Commercial

     3       $ 238   

Commercial real estate

     2         1,114   

Construction

     1         261   

Home equity

     —           —     

Residential real estate

     1         136   

Lease financing

     —           —     

Consumer

     —           —     
  

 

 

    

 

 

 

Total

     7       $ 1,749   
  

 

 

    

 

 

 

As of March 31, 2012, the Company had $9,000 of commitments outstanding to borrowers with loans classified as troubled debt restructurings. However, these commitments are subject to approval prior to advancement of funds to the borrower.

Note 6: Short-Term Debt

The Company has a line of credit with the Federal Home Loan Bank of Topeka (FHLB) which is collateralized by various assets including mortgage-backed loans and available-for-sale securities. At March 31, 2012 and December 31, 2011, there was no outstanding balance on the line of credit. The variable interest rate was 0.29% on March 31, 2012 and 0.26% on December 31, 2011. At March 31, 2012 approximately $10,308,000 was available.

The Company also has a line of credit with the Federal Reserve Bank of Kansas City which is collateralized by various assets, including commercial and commercial real estate loans. At March 31, 2012 and December 31, 2011, there was no outstanding balance on the line of credit. The line of credit has a variable interest rate of federal funds rate plus 75 basis points and at March 31, 2012 approximately $32,831,000 was available. Advances are made at the discretion of the Federal Reserve Bank of Kansas City.

 

24


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 7: Long-Term Debt

Long-term debt at March 31, 2012 and December 31, 2011, consisted of the following components:

 

(In thousands)    March 31, 2012     December 31, 2011  

Federal Home Loan Bank advances (A)

   $ 82,500      $ 82,500   

Less: Deferred prepayment penalty on modification of FHLB advances

     (1,485     (1,654
  

 

 

   

 

 

 

Net Federal Home Loan Bank advances

     81,015        80,846   
  

 

 

   

 

 

 

Subordinated Debentures – BVBC Capital Trust II (B)

     7,732        7,732   

Subordinated Debentures – BVBC Capital Trust III (C)

     11,856        11,856   
  

 

 

   

 

 

 

Total long-term debt

   $ 100,603      $ 100,434   
  

 

 

   

 

 

 

 

  (A) Due in 2013, 2014, 2015, 2016 and 2018; collateralized by various assets including mortgage-backed loans and available-for-sale securities. Advances, at interest rates from 0.37% to 4.26% are subject to restrictions on or penalties in the event of prepayment. Federal Home Loan Bank advance availability is determined quarterly and at March 31, 2012, approximately $10,308,000 was available.

In the third quarter of 2010, the Company repaid $42,500,000 of FHLB advances by rolling the net present value of the advances being repaid into the funding cost of $42,500,000 of new advances. A $2,569,000 modification fee was associated with paying off the original FHLB advances which is amortized as an adjustment of interest expense over the remaining term of the new FHLB advances using the straight line method. The unamortized modification fee at March 31, 2012 was approximately $1,485,000. This transaction reduced the effective interest rate, as well as modified the maturity date on these borrowings.

 

  (B) Due in 2033; interest only at LIBOR + 3.25% (3.80% at March 31, 2012 and 3.68% at December 31, 2011) due quarterly; fully and unconditionally guaranteed by the Company on a subordinated basis to the extent that the funds are held by the Trust. BVBC Capital Trust II issued and sold $7,500,000 in Preferred Securities to third parties and $232,000 of Common Securities to the Company. As of 2008, the Company may prepay the subordinated debentures, in whole or in part, at their face value plus accrued interest.

 

  (C) Due in 2035; interest only at LIBOR + 1.60% (2.07% at March 31, 2012 and 2.18% at December 31, 2011) due quarterly; fully and unconditionally guaranteed by the Company on a subordinated basis to the extent that the funds are held by the Trust. Subordinated to the trust preferred securities (B) due in 2033. BVBC Capital Trust III issued and sold $11,500,000 in Preferred Securities to third parties and $356,000 in Common Securities to the Company. As of 2010, the Company may prepay the subordinated debentures, in whole or in part, at their face value plus accrued interest.

 

25


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 7: Long-Term Debt (Continued)

At the request of the Federal Reserve Bank of Kansas City, quarterly payments are being deferred on the Company’s outstanding trust preferred securities. Under the governing documents of BVBC Capital Trust II and III, the quarterly payments due since April 24, 2009 for BVBC Capital Trust II and March 31, 2009 for BVBC Capital Trust III were deferred. The Company has the right to declare such a deferral for up to 20 consecutive quarterly periods and deferral may only be declared as long as the Company is not then in default under the provisions of the Amended and Restated Trust Agreement. During the deferral period, interest on the indebtedness continues to accrue and the unpaid interest is compounded. For BVBC Capital Trust III, the Company must also accrue additional interest that is equal to the three month LIBOR rate plus 1.60% during the deferral period. All accrued interest and compounded interest must be paid at the end of the deferral period.

For both BVBC Capital Trust II and BVBC Capital Trust III, as long as the deferral period continues, the Company is prohibited from: (i) declaring or paying any dividend on any of its capital stock, which would include both its common stock and the outstanding preferred stock issued to the United States Department of Treasury (the “Treasury”), or (ii) making any payment on any debt security that is ranked pari passu with the debt securities issued by the respective trusts. Because the Preferred Shares issued under the U.S. Treasury’s Capital Purchase Plan (the “CPP”) are subordinate to the trust preferred securities, the Company will be restricted from paying dividends on these Preferred Shares until such time as all trust preferred dividends have been brought current.

Aggregate annual maturities of long-term debt at March 31, 2012 are as follows:

 

(In thousands)       

April 1 to December 31, 2012

   $ —     

2013

     20,000   

2014

     7,500   

2015

     20,000   

2016

     10,000   

Thereafter

     44,588   
  

 

 

 
     102,088   
  

 

 

 

Less: Deferred prepayment penalty on modification of FHLB advances

     (1,485
  

 

 

 
   $ 100,603   
  

 

 

 

 

26


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 8: Income Taxes

The Company accounts for income taxes in accordance with income tax accounting guidance (ASC 740, Income Taxes). The income tax accounting guidance results in two components of income tax expense: current and deferred. Current income tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is based on the tax effects of the differences between the book and tax basis of assets and liabilities, and enacted changes in tax rates and laws are recognized in the period in which they occur. Deferred tax assets are reduced by a valuation allowance if, based on the weight of evidence available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The valuation allowance is a contra asset account that reduces the deferred tax asset to its expected realizable value and is based on management’s expectation of future taxable income. As of March 31, 2012 and December 31, 2011, the Company had a valuation allowance of $12,703,000, and $12,600,000, respectively, which covered all but $965,000 and $911,000 of the Company’s gross deferred tax asset of $13,668,000 and $13,511,000 at March 31, 2012 and December 31, 2011, respectively.

Note 9: Derivative Instruments

The Company has commitments outstanding to extend credit on residential mortgages that have not closed prior to the end of the period. As the Company enters into commitments to originate these loans, it also enters into commitments to sell the loans in the secondary market on a best-efforts basis. The Company acquires such commitments to reduce interest rate risk on mortgage loans in the process of origination and mortgage loans held for sale. These commitments to originate or sell loans on a best efforts basis are considered derivative instruments under ASC 815. This standard requires the Company to recognize all derivative instruments in the balance sheet and to measure those instruments at fair value. As a result of measuring the fair value of the commitments to originate loans, the Company recorded a decrease of $4,000 in other assets, an increase in other liabilities of $1,000 and a decrease in other income of $5,000 for the three month period ended March 31, 2012. The Company recorded an increase in other assets of $1,000, a decrease in other liabilities of $7,000, and an increase in other income of $8,000 for the three month period ended March 31, 2011.

Additionally, the Company has commitments to sell loans that have closed prior to the end of the period on a best efforts basis. Due to the mark to market adjustment on commitments to sell loans held for sale the Company recorded a decrease in other assets of $55,000, an increase in other liabilities of $1,000 and a decrease in other income of $56,000 for the three month period ended March 31, 2012. The Company recorded a decrease in other assets of $362,000 and a decrease in other income of $362,000 for the three month period ended March 31, 2011.

 

27


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 9: Derivative Instruments (Continued)

 

Total mortgage loans in the process of origination amounted to $1,636,000 at March 31, 2012 and $1,410,000 at December 31, 2011. Related forward commitments to sell mortgage loans amounted to approximately $3,233,000 at March 31, 2012 and $7,096,000 at December 31, 2011.

The balance of derivative instruments related to commitments to originate and sell loans at March 31, 2012, is disclosed in Note 11, Disclosures About Fair Value of Assets and Liabilities.

Note 10: Fair Value Option

The Company has elected to measure loans held for sale at fair value in accordance with ASC 825, Fair Value Option. This standard permits an entity to choose to measure many financial instruments and other items at fair value. An entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each reporting date. Loans held for sale is made up entirely of mortgage loans held for immediate sale in the secondary market with servicing released. These loans are sold prior to origination at a contracted price to an outside investor on a best efforts basis and remain on the Company’s balance sheet for a short period of time (typically 30 to 60 days). It is management’s opinion given the short-term nature of these loans, that fair value provides a reasonable measure of the economic value of these assets. In addition, carrying such loans at fair value eliminates some measure of volatility created by the timing of sales proceeds from outside investors, which typically occur in the month following origination.

The difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale was a gain of $1,000 at March 31, 2012. The net loss from fair value changes included in loans held for sale fee income was $33,000 for the three months ended March 31, 2012 and a net gain of $146,000 for the three months ended March 31, 2011. Interest income on loans held for sale is included in interest and fees on loans in the Company’s condensed consolidated statement of operations. See Note 11 for additional disclosures regarding fair value of mortgage loans held for sale.

 

28


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 11: Disclosures About Fair Value of Assets and Liabilities

ASC Topic 820, Fair Value Measurements, defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Topic 820 also specifies a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

 

  Level 1 Quoted prices in active markets for identical assets or liabilities.

 

  Level 2 Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

  Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Following is a description of the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis and recognized in the Company’s condensed consolidated balance sheet, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Available-for-Sale Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include exchange traded equities. If quoted market prices are not available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. Level 2 securities include U.S. Government sponsored agencies. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy and include other less liquid securities.

Mortgage Loans Held for Sale

Mortgage loans held for sale are valued using market prices for loans with similar characteristics. This measurement is classified as Level 2 within the hierarchy.

Commitments to Originate Loans and Forward Sales Commitments

The fair value of commitments to originate loans and the fair value of forward sales commitments are estimated using a valuation model which considers differences between quoted prices for loans with similar characteristics in the secondary market and the committed rates. The valuation model includes assumptions which adjust the price for the likelihood that the commitment will ultimately result in a closed loan. These measurements are significant unobservable inputs and are classified as Level 3 within the hierarchy.

 

29


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 11: Disclosures About Fair Value of Assets and Liabilities (Continued)

 

The following table presents the fair value measurements of assets and liabilities recognized in the Company’s condensed consolidated balance sheet and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2012 and December 31, 2011:

 

     Fair Value Measurements Using  
(In thousands)    Fair Value      Quoted Prices
in Active
Markets for
Identical
Assets

(Level 1)
     Significant
Other
Observable
Inputs

(Level 2)
     Unobservable
Inputs

(Level 3)
 

March 31, 2012:

           

Assets:

           

Available-for-sale securities:

           

U.S. Government sponsored agencies

   $ 66,048       $ —         $ 66,048       $ —     

Equity and other securities

     618         618         —           —     

Mortgage loans held for sale

     1,597         —           1,597         —     

Commitments to originate loans

     4         —           —           4   

Forward sales commitments

     45         —           —           45   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 68,312       $ 618       $ 67,645       $ 49   
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Commitments to originate loans

   $ 2       $ —         $ —         $ 2   

Forward sales commitments

     1         —           —           1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

   $ 3       $ —         $ —         $ 3   
  

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2011:

           

Assets:

           

Available-for-sale securities:

           

U.S. Government sponsored agencies

   $ 61,171       $ —         $ 61,171       $ —     

Equity and other securities

     619         619         —           —     

Mortgage loans held for sale

     5,686         —           5,686         —     

Commitments to originate loans

     8         —           —           8   

Forward sales commitments

     100         —           —           100   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

   $ 67,584       $ 619       $ 66,857       $ 108   
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities:

           

Commitments to originate loans

   $ 1       $ —         $ —         $ 1   

Forward sales commitments

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

   $ 1       $ —         $ —         $ 1   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

30


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 11: Disclosures About Fair Value of Assets and Liabilities (Continued)

 

The following table is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the Company’s condensed consolidated balance sheet using significant unobservable (Level 3) inputs:

 

(In thousands)    Commitments to
Originate Loans
    Forward Sales
Commitments
 

Balance as of December 31, 2011

   $ 7      $ 100   

Total realized and unrealized gains (losses):

    

Included in net loss

     (5     (56

Included in other comprehensive loss

     —          —     

Transfers in and/or out due to changes in significant inputs

     —          —     
  

 

 

   

 

 

 

Balance as of March 31, 2012

   $ 2      $ 44   
  

 

 

   

 

 

 

Balance as of December 31, 2010

   $ (8   $ 372   

Total realized and unrealized gains (losses):

    

Included in net loss

     8        (362

Included in other comprehensive loss

     —          —     

Transfers in and/or out due to changes in significant inputs

     —          —     
  

 

 

   

 

 

 

Balance as of March 31, 2011

   $  —        $ 10   
  

 

 

   

 

 

 

Realized and unrealized gains and losses for items reflected in the table above are included in other income in the condensed statements of operations for the periods ended March 31, 2012 and 2011.

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a non-recurring basis and recognized in the accompanying balance sheet, as well as the general classification of such assets pursuant to the valuation hierarchy. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Impaired Loans (Collateral Dependent)

Loans for which it is probable that the Company will not collect all principal and interest due according to the contractual terms are measured for impairment. The estimated fair value of collateral-dependent impaired loans is based on the appraised fair value of the collateral, less estimated cost to sell. Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.

The Company considers the appraisal or evaluation as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value. Collateral evaluations on collateral-dependent loans are monitored on an ongoing basis. The collateral values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral. These discounts and estimates are developed by the Company based on comparison to historical results and other factors.

 

31


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 11: Disclosures About Fair Value of Assets and Liabilities (Continued)

 

Foreclosed Assets Held for Sale

Foreclosed assets held for sale are carried at the lower of fair value at acquisition date or current estimated fair value, less estimated costs to sell when the real estate is acquired. Subsequent to foreclosure, valuations are periodically performed and the assets are recorded at the lower of carrying amount or estimated fair value less cost to sell. Estimated fair value of foreclosed assets held for sale is based on outside third party appraisals. Foreclosed assets held for sale are classified within Level 3 of the fair value hierarchy.

Appraisals of foreclosed assets held for sale are obtained when the real estate is acquired and annually thereafter. Appraisals are reviewed for accuracy and consistency. Appraisers are selected from the list of approved appraisers maintained by management.

The following table presents the fair value measurement at March 31, 2012 and December 31, 2011 of assets and liabilities measured at fair value on a non-recurring basis during the respective period:

 

     Fair Value Measurements Using  
(In thousands)    Fair Value      Quoted Prices in
Active Markets
for Identical
Assets (Level 1)
     Significant
Other
Observable
Inputs

(Level 2)
     Unobservable
Inputs

(Level 3)
 

March 31, 2012:

  

Impaired loans, net of reserves

   $ 16,684       $ —         $  —         $ 16,684   

Foreclosed assets held for sale, net

     3,339         —           —           3,339   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 20,023       $ —         $ —         $ 20,023   
  

 

 

    

 

 

    

 

 

    

 

 

 

December 31, 2011:

           

Impaired loans, net of reserves

   $ 21,139       $ —         $ —         $ 21,139   

Foreclosed assets held for sale, net

     12,826         —           —           12,826   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 33,965       $  —         $ —         $ 33,965   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

32


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 11: Disclosures About Fair Value of Assets and Liabilities (Continued)

 

 

(In thousands)    Fair Value      Valuation
Technique
     Unobservable Inputs      Range
(Weighted
Average)
 

March 31, 2012:

           

Impaired Loans (Collateral Dependent)

   $ 16,684        
 
Market comparable
properties
  
  
     Marketability discount         10-50

Foreclosed assets held for sale, net

     3,339         Outside Appraisals         Comparability adjustments         5-10

The following methods and assumptions were used to estimate the fair value of all other financial instruments recognized in the accompanying condensed consolidated balance sheets at amounts other than fair value.

Cash and Cash Equivalents

For these short-term instruments, the carrying amount approximates fair value.

Loans

The fair value of loans is estimated by discounting the future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations. The carrying amount of accrued interest approximates its fair value.

Federal Home Loan Bank Stock, Federal Reserve Bank Stock and Other Securities

The carrying amounts for these securities approximate their fair value.

Deposits

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount of these deposits approximates fair value. The fair value of fixed maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities. The carrying amount of accrued interest payable approximates its fair value.

Securities Sold Under Agreement to Repurchase and Other Interest-Bearing Liabilities

For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

 

33


Table of Contents

Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 11: Disclosures About Fair Value of Assets and Liabilities (Continued)

 

Long-Term Debt

Rates currently available to the Company for debt with similar terms and remaining maturities are used to estimate fair value of existing debt. Fair value of long-term debt is based on quoted market prices or dealer prices for the identical liability when traded as an asset in an active market. If a quoted market price is not available, an expected present value technique is used to estimate fair value.

Commitments to Extend Credit, Letters of Credit and Lines of Credit

The fair value of commitments to originate loans is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit and lines of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date.

 

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Blue Valley Ban Corp.

Notes to Condensed Consolidated Financial Statements

Three Months Ended March 31, 2012 and 2011

(Unaudited)

 

Note 11: Disclosures About Fair Value of Assets and Liabilities (Continued)

 

The following table presents estimated fair values of the Company’s financial instruments not previously disclosed and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2012 and December 31, 2011.

 

     March 31, 2012      December 31, 2011  
(In thousands)    Carrying
Amount
     Fair
Value
     Carrying
Amount
     Fair
Value
 

Financial assets:

        

Cash and cash equivalents (Level 1)

   $ 115,989       $ 115,989       $ 99,899       $ 99,899   

Loans, net of allowance for loan losses (Level 3)

     427,094         429,650         425,654         428,698   

Federal Home Loan Bank stock, Federal Reserve Bank stock, and other securities (Level 3)

     7,398         7,398         7,369         7,369   

Interest receivable (Level 3)

     1,899         1,899         1,573         1,573   

Financial liabilities:

        

Deposits (Level 3)

     507,404         509,458         490,413         492,688   

Securities sold under agreement to repurchase and other interest-bearing liabilities (Level 3)

     15,625         15,625         15,372         15,372   

Long-term debt (Level 3)

     100,603         94,433         100,434         94,411   

Interest payable (Level 3)

     3,351         3,351         3,228         3,228   

Unrecognized financial instruments (net of amortization):

           

Commitments to extend credit (Level 3)

     —           —           —           —     

Letters of credit (Level 3)

     —           —           —           —     

Lines of credit (Level 3)

     —           —           —           —     

Note 12: Dividends on Preferred Shares

At the request of the Federal Reserve Bank of Kansas City, the Company notified the United States Department of the Treasury (the “Treasury”) of its intention to defer the quarterly dividend payments on the Preferred Shares due to the Treasury since May 15, 2009. As part of the Capital Purchase Plan, the Company entered into a letter agreement with the Treasury on December 5, 2008, which includes a Securities Purchase Agreement-Standard Terms. As part of the agreement, dividends compound if they accrue and are not paid. Failure by the Company to pay the Preferred Share dividend is not an event of default. However, a failure to pay a total of six Preferred Share dividends, whether or not consecutive, gives the holders of the Preferred Shares the right to elect two directors to the Company’s Board of Directors. That right would continue until the Company pays all dividends in arrears. As of March 31, 2012, the Company has deferred 12 Preferred Share dividend payments. At this time, the Treasury has not elected any directors to serve on the Company’s Board of Directors; however, the Treasury has assigned an observer to attend the Company’s board meetings. The Company has accrued for the dividends and interest and has every intention to bring the obligation current as soon as permitted. As of March 31, 2012, the Company had accrued $3,518,000 for dividends and interest on outstanding Preferred Shares.

 

 

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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 “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” or the negative of these terms or other comparable terminology. 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; inability to maintain or increase deposit base and secure adequate funding; a continued 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; regulatory action; continued adverse developments in the Company’s loan or investment portfolio; any inability to obtain funding on favorable terms; the Company’s non-payment on TARP funds or Trust Preferred Securities; the loss of key personnel; significant increases in competition; potential unfavorable actions from rating agencies; potential unfavorable results of litigation to which the Company may become a party; and the possible dilutive effect of potential acquisitions or expansions. For other risk factors refer to the risk factors section of the December 31, 2011 Form 10-K filed with the SEC on March 22, 2012. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors. Nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

General

Critical Accounting Policies

Our critical accounting policies are largely prescribed 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 and income taxes are deemed critical accounting policies because of the valuation techniques used and the sensitivity of certain financial statement amounts to the methods, as well as the assumptions and estimates underlying these policies. Accounting for these critical areas requires subjective and complex judgments that could be subject to revision as new information becomes available. Further description of our critical accounting policies can be found in our Annual Report on Form 10-K for the year ended December 31, 2011.

Results of Operations

Three months ended March 31, 2012 and 2011. Net loss for the quarter ended March 31, 2012, was $315,000 compared to net loss of $429,000 for the quarter ended March 31, 2011, representing an improvement of $114,000, or 26.57%. The loss per share on a diluted basis was $0.21 for the three months ended March 31, 2012, which represented an improvement of 16.00%, compared to diluted loss per share of $0.25 in the same period of 2011. The Company’s annualized returns on average assets and average stockholders’ equity for the three month period ended March 31, 2012 were negative 0.19% and negative 12.74%, compared to negative 0.25% and 8.13%, respectively, for the same period in 2011.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

The Company experienced improvement in net interest income by $143,000, or 3.48%, to $4.3 million for the three month period ended March 31, 2012, as compared to $4.1 million earned during the same period in 2011. The increase was due to a decline in the interest expense, which decreased $570,000, or 22.44%, from the same period in 2011, as a result of a decrease in rates paid on deposits as market rates have declined and a decline in the average balance of time deposits. The Company had funds from various time deposit promotions mature in 2011, and as those higher rate time deposits matured they were renewed at lower market rates. As the renewal rate for these deposits was much lower, some deposits were not renewed. This increase in net interest income was a result of the decrease in interest expense described above partially offset by the decline in interest income by $427,000, or 6.42%, as compared to the same period in 2011. The lower interest income was the result of a decline in the average outstanding loan balances by $43.8 million, or 9.08%, for the three month period ended March 31, 2012, as compared to the prior year period. The decline in outstanding loan balances was the result of loan payoffs and lower loan origination volume due to the current economic environment and loan foreclosures.

The provision for loan losses was $450,000 for the three month period ended March 31, 2012, compared to no provision for the same period in the prior year. The provision for this period was the result of the elimination of a larger commercial credit at a discount during March 2012. While the Company experienced an increase in the provision for loan losses during the quarter related to commercial loans, the Company has experienced improvement in the loan portfolio with a reduction in non-performing loans by $1.9 million, or 17.09%, since December 31, 2011, as management continues to work on improving the credit quality of the loan portfolio.

Non-interest income increased $206,000 to $1.6 million, or 14.67%, for the three month period ended March 31, 2012, as compared to the same period in 2011. The increase was the result of an increase in other service charges during the three month period ended March 31, 2012 of $118,000, or 23.60%, as compared to the same period in 2011. Other service charges includes income from trust services, investment brokerage, merchant bankcard processing and debit card processing. The increase in other service charges was attributed to increased income generated from signature based debit card transactions associated with our Performance and Ultimate Checking products and increased activity from trust and investment brokerage services. Other income increased $66,000, or 51.97%, due to the effect of recording the net fair value of certain mortgage loan-related commitments. The net fair value of certain mortgage loan-related commitments recorded for the three month period ended March 31, 2012 was a loss of $61,000 compared to a loss of $354,000 for the same period in 2011. This increase in other income was offset by lower gains realized on the sale of foreclosed assets held for sale, as compared to the same period in the 2011.

Non-interest expense declined $458,000, or 7.40%, for the three month period ended March 31, 2012, as compared to the same period in the prior year. The decline in non-interest expense was attributed to lower salaries and employee benefits by $241,000, or 8.54%, as compared to the prior year period, as a result of a reduction in staffing during the third quarter of 2011. Foreclosed assets expense declined $132,000, or 17.81%, for the three months ended March 31, 2012, as compared to the same period in 2011, due to the Company recording a lower provision for foreclosed assets held for sale for the first quarter of 2012 of $128,000, compared to a provision for foreclosed assets held for sale of $361,000 for the first quarter of 2011, a decrease of $233,000, or 64.54%. This was offset by a higher loss realized on the sale of foreclosed assets held for sale during the first quarter

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

of 2012, as compared to the same period in 2011. Other operating expenses have declined $69,000, or 3.52%, for the three months ended March 31, 2012, as compared to the same period in 2011, due to lower legal fees and Federal Deposit Insurance Corporation (FDIC) deposit assessment. The FDIC deposit assessment is lower as a result of a decrease in assessment base and a change in assessment rates effective April 1, 2011. In addition, net occupancy expense decreased by $16,000, or 2.41%, compared to the same period in 2011.

Net Interest Income

Three months ended March 31, 2012 and 2011. Fully tax equivalent (FTE) net interest income for the three month period ended March 31, 2012, was $4.3 million, an increase of $143,000, or 3.48%, from $4.1 million for the three month period ended March 31, 2011.

FTE interest income for the current year first quarter was $6.2 million, a decrease of $427,000, or 6.42%, from $6.6 million in the prior year first quarter. This decrease was primarily a result of a decline in average balances on earning assets, specifically lower average balances on outstanding loans and available-for-sale securities. The overall yield on average earning assets declined two basis points to 4.34% during the three month period ending March 31, 2012, compared to 4.36% during the same period in 2011. Interest and fees on loans declined $472,000, or 7.46%, for the three month period ended March 31, 2012, as compared to the prior year period, as a result of the decline in the average outstanding balance of loans by $43.8 million, or 9.08%, due to loan payoffs, lower loan origination volume due to the current economic environment and loan foreclosures. Interest income on available-for-sale securities increased $24,000, or 9.84%, for the three months ended March 31, 2012, as compared to the same period in 2011. This increase was the result of the Company replacing some of the securities called during 2011 with higher yielding securities.

Interest expense for the current year first quarter was $2.0 million, a decrease of $570,000, or 22.44%, from $2.5 million in the prior year first quarter. The decline in interest expense resulted from a decrease in the rate paid on average interest-bearing liabilities resulting from the impact of the lower market interest rates on interest-bearing demand accounts, savings and money market deposits and time deposits. The rate paid on total average interest-bearing liabilities decreased to 1.56% for the three month period ending March 31, 2012, compared to 1.91% in the same period of 2011, a decrease of 35 basis points. Total average interest-bearing liabilities decreased $31.9 million, or 5.91%, to $507.4 million during the first quarter of 2012, compared to $539.3 million during the prior year period. The decrease was primarily attributed to a decrease in time deposits. Average time deposits declined $39.8 million, or 18.98%, as a result of the several higher rate time deposit promotions that matured in 2011 and were renewed at a lower rate. As the renewal rate for these deposits was much lower, some time deposits were not renewed. Average interest-bearing demand accounts has declined $2.7 million, or 2.03%, for the three months ended March 31, 2012, as compared to the same period in 2011. Interest expense on interest-bearing demand deposits has declined $209,000, or 44.09%, primarily due to lowering the interest rate paid on Performance and Ultimate checking accounts in response to the rates paid in the market. The decrease in average time deposits and average interest-bearing demand accounts was offset by an increase in savings and money market deposits by $12.1 million, or 15.41%, for the three months ended March 31, 2012 as compared to the same period in 2011. The increase was a result of the Company’s marketing efforts focused on new and existing customers. While the savings and money market balances have increased, the interest expense associated with these accounts has declined $13,000, or 13.40%, due to lowering the rates paid on these accounts in response to the decline in the rates paid in the market. Interest expense on long-term debt has increased as a result of an increase in the interest rates on the Company’s adjustable subordinated debentures of BVBC Capital Trust II and BVBC Capital Trust III. As the Company has deferred the interest payments on these debentures, the unpaid interest is compounded thus increasing interest expense.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

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. Non-accrual loans are included in the calculation of average balances for loans for the periods indicated. For explanation of changes between periods reported within the table see Net Interest Income and the Financial Condition sections under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

Average Balances, Yields and Rates

 

     Three Months Ended March 31,  
     2012     2011  
(In thousands)    Average
Balance
    Interest      Avg.
Yield/
Rate
    Average
Balance
    Interest      Avg.
Yield/
Rate
 

Assets

              

Federal funds sold and other short-term investments

   $ 66,860      $ 43         0.26   $ 65,908      $ 39         0.24

Available-for-sale securities – taxable

     61,596        268         1.75        63,396        244         1.56   

Mortgage loans held for sale

     3,135        29         3.72        1,414        16         4.59   

Loans, net of unearned discount and fees

     438,444        5,855         5.37        482,238        6,327         5.32   

Federal Home Loan and Federal Reserve Bank Stock

     6,446        29         1.81        6,339        25         1.60   
  

 

 

   

 

 

      

 

 

   

 

 

    

Total earning assets

     576,481        6,224         4.34        619,295        6,651         4.36   
  

 

 

   

 

 

      

 

 

   

 

 

    

Cash and due from banks – non-interest bearing

     31,836             37,145        

Allowance for possible loan losses

     (12,537          (14,769     

Premises and equipment, net

     15,923             16,183        

Other assets

     38,950             35,838        
  

 

 

        

 

 

      

Total assets

   $ 650,653           $ 693,692        
  

 

 

        

 

 

      

Liabilities and Stockholders’ Equity

              

Deposits-interest bearing:

              

Interest-bearing demand accounts

   $ 131,644      $ 265         0.81   $ 134,368      $ 474         1.43

Savings and money market deposits

     90,802        84         0.37        78,679        97         0.50   

Time deposits

     169,822        700         1.66        209,605        1,099         2.13   
  

 

 

   

 

 

      

 

 

   

 

 

    

Total interest-bearing deposits

     392,268        1,049         1.08        422,652        1,670         1.60   
  

 

 

   

 

 

      

 

 

   

 

 

    

Other interest-bearing liabilities

     15,168        9         0.24        17,359        10         0.23   

Long-term debt

     99,959        912         3.67        99,282        860         3.51   
  

 

 

   

 

 

      

 

 

   

 

 

    

Total interest-bearing liabilities

     507,395        1,970         1.56        539,293        2,540         1.91   
  

 

 

   

 

 

      

 

 

   

 

 

    

Non-interest bearing deposits

     94,437             90,972        

Other liabilities

     8,575             6,682        

Stockholders’ equity

     40,246             56,745        
  

 

 

        

 

 

      

Total liabilities and stockholders’ equity

   $ 650,653           $ 693,692        
  

 

 

        

 

 

      

FTE Net interest income/spread

     $ 4,254         2.78     $ 4,111         2.45
    

 

 

    

 

 

     

 

 

    

 

 

 

FTE Net interest margin

          2.97          2.69
       

 

 

        

 

 

 

 

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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:

 

   

changes in rate, reflecting changes in rate multiplied by the prior period volume; and

 

   

changes in volume, reflecting changes in volume multiplied by the current period rate.

For explanation of changes see Net Interest Income section under Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Changes in Interest Income and

Expense Volume and Rate Variances

 

     Three Months Ended March 31,
2012 compared to 2011
 
(In thousands)    Change
Due to
Rate
    Change
Due to
Volume
    Total
Change
 

Federal funds sold and other short-term investments

   $ 3      $ 1      $ 4   

Available-for-sale securities – taxable

     31        (7     24   

Mortgage loans held for sale

     (3     16        13   

Loans, net of unearned discount and fees

     64        (536     (472

Federal Home Loan and Federal Reserve Bank Stock

     3        1        4   
  

 

 

   

 

 

   

 

 

 

Total interest income

     98        (525     (427
  

 

 

   

 

 

   

 

 

 

Interest-bearing demand accounts

     (204     (5     (209

Savings and money market deposits

     (25     12        (13

Time deposits

     (238     (161     (399

Other interest-bearing liabilities

     —          (1     (1

Long-term debt

     45        7        52   
  

 

 

   

 

 

   

 

 

 

Total interest expense

     (422     (148     (570
  

 

 

   

 

 

   

 

 

 

Net interest income

   $ 520      $ (377   $ 143   
  

 

 

   

 

 

   

 

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

Provision for Loan Losses

The Company makes 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 based upon the analysis of several factors, including general economic conditions, analysis of impaired loans, the general reserve factors, changes in loan mix, classified loans to total risk weighted capital and current and historical charge-offs by loan type. Historical charge off information currently utilized is based on three year weighted average of net charge offs by loan type with more weight given to more current data due to the current economic environment. The Company’s credit administration function performs monthly analyses on the loan portfolio to assess and report on risk levels, delinquencies, internal ranking system and overall credit exposure. Management and the Bank’s Board of Directors review the allowance for loan losses 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. Economic conditions monitored include but are not limited to: Johnson County, KS unemployment rate; consumer confidence; foreclosure rates; vacant property rates; stock market performance; inflation; and interest rates. The allowance for loan losses represents our best estimate of probable losses that have been incurred as of the respective balance sheet dates.

The provision for loan losses recorded for the first quarter of 2012 was $450,000 compared to no provision in the same period of 2011. The provision for this period was attributed to the elimination of a larger commercial credit at a discount during March 2012. While the Company experienced an increase in the provision for loan losses related to commercial loans, the Company has experienced improvement within the loan portfolio with a reduction in non-performing loans by $1.9 million, or 17.09%, since December 31, 2011 and $18.0 million, or 65.76% since March 31, 2011. Management believes they have identified the significant non-performing loans and will continue to aggressively pursue collection of these loans. If the adverse real estate industry and general economic conditions are more prolonged than management anticipates, the Company could experience higher than anticipated loan losses in the future.

Non-interest Income

 

     Three Months Ended
March 31, 2012
 
(In thousands)    2012      2011  

Loans held for sale fee income

   $ 543       $ 554   

NSF charges and service fees

     256         223   

Other service charges

     618         500   

Other income

     193         127   
  

 

 

    

 

 

 

Total non-interest income

   $ 1,610       $ 1,404   
  

 

 

    

 

 

 

Non-interest income increased $206,000, or 14.67%, to $1.6 million during the three month period ended March 31, 2012, from $1.4 million during the three month period ended March 31, 2011. The increase in non-interest income was a result of an increase in other service charges, which includes income from trust services, investment brokerage, merchant bankcard processing and debit card processing, by $118,000, or 23.60%, for the three months ended March 31, 2012 as compared to the same period in the prior year. The increase was attributed to income generated from increased signature based debit card transactions associated with our Performance Checking product and our Ultimate Checking product which was introduced in February 2011. The increase

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

in other service charges was also a result of increased activity in trust and investment brokerage services. For the three months ended March 31, 2012, other income increased $66,000, or 51.97%, as compared to the same period in 2011. The increase was a result of recording the net fair value of mortgage loan-related commitments of a loss of $61,000 for the three months ended March 31, 2012, as compared to a loss of $354,000 for the three months ended March 31, 2011. The fair value on these commitments will fluctuate based on the market rates for mortgage loans. This increase was partially offset by lower gains realized on the sale of foreclosed assets during the first quarter of 2012, as compared to the first quarter of 2011.

Other changes reflected in non-interest income include a decline in loans held for sale fee income for the three months ended March 31, 2012 by $11,000, or 1.99%, as compared to the same period in 2011. The Company measures mortgage loans held for sale at fair value and for the three months ended March 31, 2012, the net loss from fair value changes included in loans held for sale fee income was $33,000 and a net gain of $146,000 for the three months ended March 31, 2011, a decrease of $179,000. Mortgage loan originations have increased during the first quarter of 2012 to $16.1 million, as compared to $6.2 million in the same period in 2011. Excluding the fair value change, loans held for sale fee income increased $168,000, or 41.18%, for the three months ended 2012 as compared to the same period in 2011 due to increased activity as a result of the mortgage rate environment. NSF charges and service fees increased $33,000, or 14.80% as compared to the same period in 2011, as a result of a change in service charges on checking accounts.

Non-interest Expense

 

     Three Months Ended
March 31, 2012
 
(In thousands)    2012      2011  

Salaries and employee benefits

   $ 2,581       $ 2,822   

Net occupancy expense

     647         663   

Foreclosed assets expense

     609         741   

Other operating expenses

     1,893         1,962   
  

 

 

    

 

 

 

Total non-interest expense

   $ 5,730       $ 6,188   
  

 

 

    

 

 

 

Non-interest expense declined $458,000, or 7.40%, to $5.7 million during the three month period ended March 31, 2012, compared to $6.2 million during the prior year period. The decline in non-interest expense was a result of lower salaries and employee benefits of $241,000, or 8.54%, due to reduction in staffing in the third quarter of 2011. Foreclosed assets expense decreased $132,000, or 17.81%, for the three months ended March 31, 2012, as compared to the same period in 2011. The decline was a result of the Company recording a lower provision for foreclosed assets held for sale during the first quarter of 2012 of $128,000, compared to a provision for foreclosed assets held for sale of $361,000 during the first quarter of 2011, a decrease of $233,000, or 64.54%. This was offset by a higher loss realized on the sale of foreclosed assets held for sale during the first quarter of 2012, as compared to the same period in 2011. Other operating expenses have declined $69,000, or 3.52%, for the three months ended March 31, 2012, as compared to the same period in 2011, due to lower legal fees and Federal Deposit Insurance Corporation deposit assessment. The FDIC deposit assessment has decreased as a result of a decrease in assessment base and a change in assessment rates as of April 1, 2011. In addition, net occupancy expense decreased $16,000, or 2.41%, due to lower utilities and repairs and maintenance expenses.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

Financial Condition

Total assets for the Company at March 31, 2012, were $671.9 million, an increase of $17.4 million, or 2.67%, compared to $654.5 million at December 31, 2011. Deposits were $507.4 million compared with $490.4 million at December 31, 2011, an increase of $17.0 million, or 3.46%. Stockholders’ equity was $39.8 million at March 31, 2012, compared with $40.5 million at December 31, 2011, a decrease of $622,000, or 1.54%.

Investment Securities. Available-for-sale securities at March 31, 2012, totaled $66.7 million, reflecting a 7.89% increase from $61.8 million at December 31, 2011. The increase was a result of the purchase of $10.0 million in available-for-sale securities during the three months ended March 31, 2012 to replace $5.0 million in securities called and to invest excess funds.

Loans Held for Sale. Mortgage loans held for sale at March 31, 2012, totaled $1.6 million, a decrease of $4.1 million, or 7.19%, compared to $5.7 million at December 31, 2011. The volume of mortgage loans held for sale originated fluctuates based on the mortgage rate environment and the economic environment.

Loans. Loans at March 31, 2012, totaled $437.9 million, reflecting a decrease of $908,000, or 0.21%, compared to $438.8 million at December 31, 2011. The decrease in the loan portfolio was attributed to loans paying off, lower loan originations due to the current economic conditions and loan foreclosures. The loan to deposit ratio at March 31, 2012, was 86.31% compared to 89.48% at December 31, 2011.

Non-performing assets consist primarily of loans past due 90 days or more, non-accrual loans and foreclosed assets. Generally, loans are placed on non-accrual status at 90 days past due and interest accrued to date is considered a loss, unless the loan is well-secured and in the process of collection. Interest accrued but not collected for the loans placed on non-accrual or charged off is reversed against interest income. The interest on these loans is generally accounted for on a cash basis or a cost recovery basis, meaning interest is not recognized until the past due balance has been collected. Loans may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

 

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Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results Of Operations

 

The following table sets forth our non-performing assets as of the dates indicated:

Non-Performing Assets

 

     As of  
(In thousands)    March 31,
2012
    March 31,
2011
    December 31,
2011
 

Commercial and all other loans:

      

Past due 90 days or more

   $ —        $ —        $ —     

Non-accrual

     749        2,376        2,029   

Commercial real estate loans:

      

Past due 90 days or more

     —          —          —     

Non-accrual

     2,509        8,128        1,340   

Construction loans:

      

Past due 90 days or more

     —          —          —     

Non-accrual

     1,171        10,312        3,058   

Home equity loans :

      

Past due 90 days or more

     —          —          —     

Non-accrual

     3,722        1,352        2,676   

Residential real estate loans:

      

Past due 90 days or more

     —          —          —     

Non-accrual

     1,220        5,173        2,204   

Lease financing:

      

Past due 90 days or more

     —          —          —     

Non-accrual

     18        26        18   

Consumer loans:

      

Past due 90 days or more

     —          —          —     

Non-accrual

     —          51        —     

Debt securities and other assets (exclude other real estate owned and other repossessed assets):

      

Past due 90 days or more

     —          —          —     

Non-accrual

     —          —          —     
  

 

 

   

 

 

   

 

 

 

Total non-performing loans

     9,389        27,418        11,325   
  

 

 

   

 

 

   

 

 

 

Foreclosed assets held for sale

     27,864        19,082        29,246   
  

 

 

   

 

 

   

 

 

 

Total non-performing assets

   $ 37,253      $ 46,500      $ 40,571   
  

 

 

   

 

 

   

 

 

 

Total non-performing loans to total loans

     2.14     5.75     2.58

Total non-performing loans to total assets

     1.40     3.95     1.73

Allowance for loan losses to non-performing loans

     115.46     53.82     116.46

Non-performing assets to loans and foreclosed assets held for sale

     8.00     9.38     8.67

&nbs