As filed with the Securities and Exchange Commission on October 17, 2008
Registration No. ___________
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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BLUE VALLEY BAN CORP.
(Exact name of registrant as specified in its charter)
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Kansas 6022 48-1070996
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
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11935 Riley
Overland Park, Kansas 66225-6128
(913) 338-1000
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Agent for Service: Copies of Communications to:
Robert D. Regnier Steven F. Carman, Esq.
President and Chief Executive Officer Husch Blackwell Sanders LLP
Blue Valley Ban Corp. 4801 Main Street, Suite 1000
11935 Riley Kansas City, Missouri 64112
Overland Park, Kansas 66225-6128 (816) 983-8000
(913) 338-1000
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. |_|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
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 definitions of "large accelerated filer," "accelerated filer" and
"smaller reporting company" in Rule 12b2 of the Exchange Act.
Large accelerated filer |_| Accelerated filer |_|
Non-accelerated filer |_| Smaller reporting company |X|
CALCULATION OF REGISTRATION FEE
=============================================================================================================
Proposed
Title of Each Class Offering Proposed
of Securities to Amount to be Price Per Aggregate Amount of
be Registered Registered Share Offering Price Registration Fee
- -------------------------------------------------------------------------------------------------------------
Nontransferable common 2,470,242 -- -- -- (1)
stock subscription rights
$6,012,000 (2)
Common Stock, par value $1.00 per share 334,000 $18.00 (2) $335.47
=============================================================================================================
(1) The nontransferable subscription rights are being issued without
consideration. Pursuant to Rule 457(g) under the Securities Act of 1933, as
amended, no separate registration fee is required because the rights are
being registered in the same registration statement as the securities to be
offered pursuant thereto.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
The information in this preliminary prospectus is not complete and may be
changed. We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This preliminary
prospectus is not an offer to sell these securities and we are not soliciting
offers to buy these securities in any state where the offer or sale is not
permitted.
Subject to completion, dated _________ [___], 2008
PRELIMINARY PROSPECTUS
 |
Nontransferable Subscription Rights for up to
334,000 Shares of Common Stock
We are distributing to holders of our outstanding common stock, at no
charge, non-transferable subscription rights to purchase up to an aggregate of
334,000 shares of our common stock at a cash subscription price of $18.00 per
share.
You are receiving this prospectus because you held shares of our common
stock as of the close of business on [*], 2008, the record date for this rights
offering. We have granted you one right for each share of our common stock that
you owned on the record date. You may purchase one share of our common stock for
every 7.396 rights granted to you. If you exercise your rights in full, you may
also exercise an oversubscription right to purchase (at the same subscription
price) additional shares of common stock that may remain unsubscribed at the
expiration of the rights offering.
The rights will expire if they are not exercised and paid in full
(including final clearance of any checks) by 5:00 p.m., Eastern Time on December
[ ], 2008, unless we extend the rights offering in our sole discretion.
Shares of our common stock are traded on the Over the Counter Bulletin
Board ("OTCBB") under the trading symbol "BVBC." On October [ ], 2008, the
closing sales price for our common stock was [$*] per share.
OFFERING SUMMARY
Per Share Total
------------------- -------------------
Subscription Price $ 18.00 $ 6,012,000
Proceeds, before expenses, to Blue $ 18.00 $ 6,012,000
Valley Ban Corp.
Investing in our common stock involves a high degree of risk. We urge you
to carefully read the "Risk Factors" section beginning on page 20 of this
prospectus, the Section titled "Risk Factors" in our Annual Report on Form 10-K
for the year ended December 31, 2007 and all other documents incorporated by
reference in this prospectus to read about the important factors you should
consider before determining whether to exercise your subscription rights.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The shares of our common stock are not deposits or savings accounts or
other obligations of any bank or savings association, and are not insured by the
Federal Deposit Insurance Corporation or any other governmental agency.
The date of this prospectus is [*], 2008
TABLE OF CONTENTS
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING..............................1
PROSPECTUS SUMMARY...........................................................6
The Company...........................................................6
The Rights Offering...................................................7
Other Developments....................................................8
Our Market Area.......................................................9
Lending Activities...................................................10
Loan Portfolio.......................................................10
Investment Activities................................................14
Deposit Services.....................................................14
Investment Brokerage Services........................................14
Trust Services.......................................................15
Competition..........................................................15
Employees............................................................15
Properties...........................................................15
Legal Proceedings....................................................16
Summary Financial Data...............................................16
FORWARD-LOOKING STATEMENTS..................................................19
RISK FACTORS................................................................20
Risks Related to the Rights Offering.................................20
Risks Related to Blue Valley.........................................21
Risks Related to Investment in our Common Stock......................24
USE OF PROCEEDS.............................................................24
MARKET PRICE AND DIVIDENDS ON OUR COMMON STOCK..............................25
DILUTION....................................................................25
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES...............................26
PLAN OF DISTRIBUTION........................................................28
DESCRIPTION OF SECURITIES TO BE REGISTERED..................................29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS...................................................30
MANAGEMENT..................................................................30
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS...........................31
CERTAIN RELATIONSHIPS WITH RELATED PARTY TRANSACTIONS.......................33
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES.......................34
LEGAL MATTERS...............................................................35
EXPERTS.....................................................................35
INCORPORATION BY REFERENCE OF CERTAIN DOCUMENTS.............................35
QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING
The following are examples of what we anticipate will be common questions
about the rights offering. The answers are based on selected information from
this prospectus and may not contain all of the information that is important to
you. This prospectus includes specific terms of the rights offering, as well as
information regarding our business, including potential risks related to the
rights offering and our common stock. We encourage you to read this prospectus
in its entirety.
Q: What is the rights offering?
A: The rights offering is a distribution to holders of our common stock, at no
charge, of nontransferable rights to purchase shares of our common stock
based on your ownership of common stock as of [*], 2008, the record date.
You may purchase one whole share of our common stock at $18.00 per share
for every 7.396 rights granted to you.
Q: Why do I need to exercise 7.396 rights to purchase one share of common
stock?
A: As of September 30, 2008, we had outstanding 2,470,242 shares of our common
stock. By granting one right for each share of common stock, we have
granted an aggregate of 2,470,242 rights. As a result, because we are
targeting the sale of 334,000 shares of common stock in this rights
offering, you must exercise 7.396 rights to acquire one share.
Q: What is a subscription right?
A: A subscription right is the right to purchase shares of our common stock.
Because we have 2,470,242 shares of common stock outstanding and we are
targeting the sale of 334,000 shares in connection with this rights
offering, each subscription right carries with it a basic subscription
right to purchase .1352 of a share of our common stock. Each subscription
right also includes an oversubscription right to purchase additional shares
of our common stock.
Q: What is the basic subscription right?
A: Each whole subscription right entitles you to purchase .1352 of a share of
our common stock at the subscription price of $18.00 per share. We have
granted to you, as a stockholder of record on the record date, a
subscription right for each share of our common stock you owned at that
time. Fractional shares of our common stock resulting from the exercise of
the basic subscription right will be eliminated by rounding down to the
nearest whole share, with the total subscription payment being adjusted
accordingly. For example, if you owned 1,000 shares of our common stock on
the record date, your basic subscription right would permit the purchase of
135 shares [1,000 purchase rights / 7.396= 135.21, with fractional shares
rounded down to the nearest whole number]. You may exercise all or a
portion of your basic subscription right, or you may choose not to exercise
any subscription rights at all. However, if you exercise less than your
full basic subscription right, you will not be entitled to purchase shares
under your oversubscription right.
If you hold your shares in the name of a custodian bank, broker, dealer or
other nominee, you will not receive a rights certificate. Instead, the
Depository Trust Company, or DTC, will issue the appropriate number of
subscription rights to your nominee record holder based on the shares of
our common stock that you own at the record date. If you are not contacted
by your nominee, you should contact your nominee as soon as possible.
Q: What is the oversubscription right?
A: If any holders of subscription rights do not fully exercise their basic
subscription rights as of the expiration time of the rights offering, we
will permit stockholders who do fully exercise their basic subscription
rights to subscribe for additional shares of our common stock at the same
subscription price per share, on the pro rata basis described below,
rounded down to the nearest whole share number. This oversubscription right
will be available only to stockholders who exercise their basic
subscription rights in full.
If sufficient shares of common stock are available, we will seek to honor
your oversubscription request in full. If,
1
however, oversubscription requests exceed the number of shares of common
stock available, we will allocate the available shares of common stock
among stockholders who oversubscribed by multiplying the number of shares
requested by each stockholder through the exercise of their
oversubscription rights by a fraction that equals (x) the number of shares
available to be issued through oversubscription rights divided by (y) the
total number of shares requested by all subscribers through the exercise of
their oversubscription rights. As described above for the basic
subscription right, we will not issue fractional shares through the
exercise of oversubscription rights.
If the number of basic subscription rights and oversubscription rights
exercised exceeds 334,000 shares, our Board of Directors may, at its sole
discretion, elect to honor these oversubscription requests in an amount up
to an additional 66,800 shares. These proceeds will be used for general
corporate purposes and capital enhancement. See section captioned "Use of
Proceeds," for more details.
Q: How many shares may I purchase if I exercise my subscription rights?
A: The number of shares of common stock you can purchase under your basic
subscription rights will depend on the number of subscription rights you
receive. You will receive one basic subscription right for each share of
our common stock you hold on the record date. Each basic subscription right
entitles you to purchase .1352 of a share of our common stock at the
subscription price of $18.00 per share.
Upon exercising your oversubscription rights, you may request to subscribe
for additional shares [on your subscription rights certificate]. However,
the actual number of shares for which you will be entitled to subscribe
under your oversubscription rights will not be determinable until after the
expiration time of the rights offering and the pro rata allocation.
Q: What if there is an insufficient number of shares to satisfy the
oversubscription requests?
A: If there is an insufficient number of shares available to fully satisfy the
oversubscription requests of rightsholders, each subscription rightsholder
who exercised his or her oversubscription right will receive the available
shares pro rata, rounded down to the nearest whole share number, as
described above. Any excess subscription payments will be returned, without
interest or deduction, promptly after the expiration of this rights
offering.
Q: Am I required to participate in the rights offering?
A: No.
Q: Why are we conducting the rights offering?
A: We are conducting the rights offering to raise capital for general
corporate purposes and capital enhancement. Our Board of Directors has
chosen to raise capital through a rights offering to give our stockholders
the opportunity to limit ownership dilution from a capital raise by
allowing our current stockholders to purchase additional shares of our
common stock. We cannot determine the amount of dilution that a stockholder
will experience or whether the rights offering will be successful. See
section captioned, "Use of Proceeds," for more details.
Q: Will the Company be issuing fractional shares of common stock?
A: No. You may not purchase fractional shares of common stock pursuant to the
exercise of subscription rights. We will accept any subscription indicating
a purchase of fractional shares by rounding down to the nearest whole share
number and promptly refunding without interest any payment received for a
fractional share.
Q: If I wish to exercise my rights, do I have to exercise all of my rights?
A: No. You may exercise some or all of your rights. However, if you subscribe
for fewer than all the shares represented by your basic subscription
rights, your remaining rights are non-transferable and will expire at the
expiration time of the rights offering. You may not sell your remaining
rights. In addition, you may only participate in the oversubscription
portion of this rights offering if you exercise your basic subscription
rights in full.
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Q: How long will the rights offering remain open?
A: The rights offering will commence on the day this registration statement
becomes effective. The rights offering will remain open for 16 days after
commencement, and the rights will expire at 5:00 p.m., Eastern Time, on
[[*], 2008 unless we extend the rights offering. We reserve the right to
extend the rights offering at our discretion for a period not to exceed 45
additional days beyond [*], 2008, in which event the term "expiration time"
will mean the latest date and time to which the rights offering has been
extended. We will make a public announcement of any extension by issuing a
press release prior to 9:00 a.m., Eastern Time, on the next business day
after the previously scheduled expiration time and filing a Current Report
on Form 8-K with the Securities and Exchange Commission. In addition, if
the commencement of the rights offering is delayed, the expiration time of
the rights offering will be similarly delayed. In that event, we will
notify you by issuing a press release and filing a Current Report on Form
8-K with the Securities and Exchange Commission.
Q: When must I exercise my oversubscription rights?
A: You must exercise your oversubscription rights when you exercise your basic
subscription rights in full. However, the number of shares for which you
will be entitled to subscribe under your oversubscription rights cannot be
determined until after the expiration time of the rights offering period.
Q: What happens if I choose not to exercise my subscription rights?
A: You will retain your current number of shares of our common stock held by
you even if you do not exercise your subscription rights. If you choose not
to exercise your subscription rights, then the percentage of our capital
stock held by you will decrease, however, the magnitude of the reduction
will depend upon the extent to which other rightsholders subscribe in the
rights offering.
Q: Will I be charged a sales commission or a fee by the Company if I exercise
my subscription rights?
A: No. We will not charge a brokerage commission or a fee to rightsholders for
exercising their subscription rights. However, if you exercise your
subscription rights through a broker or nominee, then you will be
responsible for any transaction fees charged by your broker or nominee.
Q: What is the Board of Directors' recommendation regarding whether I should
exercise my rights in the rights offering?
A: Our Board of Directors is not making any recommendation as to whether you
should exercise your subscription rights. You are urged to make your
decision based on your own assessment of our business and the rights
offering.
Q: Will our directors and executive officers participate in the rights
offering?
A: We expect our directors and executive officers and the directors of the
Company's primary wholly-owned subsidiary, Bank of Blue Valley (the
"Bank"), together with their affiliates, to subscribe for, in the
aggregate, 246,216 shares of common stock in the rights offering, which
includes shares acquired in connection with their oversubscription rights.
The purchase price paid by them will be $18.00 per share, the same paid by
all other persons who purchase shares of our common stock in the stock
offerings. Assuming our directors and their affiliates purchase the number
of shares in this rights offering reflected herein, and assuming we sell
334,000 shares of stock in the rights offering, our directors, together
with their affiliates, are expected to own approximately 1,441,302 shares
of common stock, which represents approximately 51% of our total
outstanding shares of common stock.
Q: How was the subscription price established?
A: In determining the subscription price, our Board of Directors considered a
number of factors, including: the price at which our stockholders might be
willing to participate in the rights offering, historical and current
trading prices for our common stock, the need for liquidity and capital,
potential market conditions, and the desire to provide an opportunity to
our stockholders to participate in the rights offering on a pro rata basis.
In conjunction with its
3
review of these factors, our Board of Directors also reviewed our history
and prospects, including our past and present earnings, our prospects for
future earnings, our current financial condition and regulatory status.
Although we did not seek or obtain an opinion of a financial advisor in
establishing the subscription price, a special committee of the Board of
Directors was provided with financial information concerning current market
conditions, trading values of other bank holding companies, recent public
common stock offerings, and other recent capital raising efforts of bank
holding companies. The subscription price is not necessarily related to our
book value, net worth or any other established criteria of value and may or
may not be considered the fair value of our common stock. You should not
assume or expect that, after this offering, our shares of common stock will
trade at or above the $18.00 per share purchase price.
Q: Is exercising my subscription rights risky?
A: Yes. Investing in our securities involves risks. Exercising your rights
should be considered as carefully as any other equity investment. Some of
the risks include the following:
• You may not revoke your subscription rights once you exercise them and
so you could be committed to buying shares above the prevailing market
value of our common stock.
• If you do not act promptly and follow subscription instructions, then
we may reject your exercise of subscription rights.
• For a more complete discussion of the risks associated with an
investment in our common stock, you should carefully review the
section captioned "Risk Factors".
Q: May I transfer my subscription rights if I do not want to purchase any
shares?
A: No. Your subscription rights are not transferable.
Q: How many shares will be outstanding after the rights offering?
A: There were 2,470,242 shares of our common stock outstanding as of [*],
2008. If all of the rights we are offering are exercised by our
stockholders, and the Board of Directors does not decide, in its sole
discretion, to increase the offering by up to 66,800 shares, there will be
2,804,242 shares of our common stock outstanding.
Q: After I exercise my subscription rights, can I change my mind and cancel my
purchase?
A: No. All exercises of subscription rights are irrevocable.
Q: What are the federal income tax consequences of receiving or exercising my
subscription rights as a holder of common stock?
A: A holder of common stock will not recognize income or loss for federal
income tax purposes in connection with the receipt or exercise of
subscription rights in the rights offering. We urge you to consult your own
tax adviser with respect to the particular tax consequences of the rights
offering or any related share purchases by you. See section captioned,
"Material U.S. Federal Income Tax Consequences," for more details.
Q: If the rights offering is not completed, will my subscription payment be
refunded to me?
A: Yes. The subscription agent will hold all funds it receives in escrow until
completion of the rights offering. If the right offering is not completed,
the subscription agent will return promptly, without interest, all
subscription payments. We reserve the right to terminate the offering at
any time if, due to market conditions or otherwise, the Board of Directors
deems it advisable not to proceed with the rights offering.
Q: To whom should I send my forms and payment?
A: If your shares are held in the name of a broker, or other nominee holder,
then you should send your subscription documents, [subscription rights
certificate,] notices of guaranteed delivery, and subscription payment to
that record
4
holder. If you are the record holder, then you should send your
subscription documents, [subscription rights certificate,] notices of
guaranteed delivery, and subscription payment to Computershare, Inc. at:
By Mail, By Hand, or By Overnight Courier
Computershare Inc.
250 Royall Street
Canton, Massachusetts 02021
You are solely responsible for completing delivery to the subscription
agent of your subscription documents, [subscription rights certificate],
notices of guaranteed delivery, and subscription payment. We urge you to
allow sufficient time for delivery of your subscription materials to the
subscription agent so that they are received by the subscription agent by
5:00 p.m., Eastern Time, on [*], 2008.
If you send a payment that is insufficient to purchase the number of shares
you requested, or if the number of shares you requested is not specified in
the forms, the payment received will be applied to exercise your
subscription rights to the fullest extent possible based on the amount of
the payment received, subject to the availability of shares under the
oversubscription right and the elimination of fractional shares. Any excess
subscription payments received by the subscription agent will be returned,
without interest, as soon as practicable following the expiration of the
rights offering.
Q: What form of payment is required to purchase the shares of our common
stock?
A: As described in the subscription rights certificate, payments submitted to
the subscription agent must be made in full United States currency by:
• personal or certified check to Computershare Inc., drawn upon a United
States bank;
• postal, telegraphic or express money order payable to Computershare
Inc.; or
• wire transfer of immediately available funds to accounts maintained by
Computershare Inc.
Q: What should I do if I want to participate in the rights offering but my
shares are held in the name of my broker, custodian bank, or other nominee?
A: If you hold shares of our common stock through a broker, custodian bank, or
other nominee, then we will ask your broker, custodian bank, or other
nominee to notify you of the rights offering. If you wish to exercise your
subscription rights, then you will need to have your broker, custodian
bank, or other nominee act for you.
Q: When will I receive my new shares?
A: If you purchase stock in the rights offering by submitting a subscription
rights certificate and payment, we will mail you a stock certificate
representing your new shares as soon as practicable after the expiration of
the rights offering; however, we will not be able to begin calculations for
any oversubscription pro rata allocations and adjustments until three days
after the expiration time of the rights offering, which is the latest date
for our stockholders to deliver the subscription rights certificate
according to the guaranteed delivery procedures. If your shares are held by
your nominee, and you participate in the rights offering, you will not
receive a stock certificate for your new shares. Your nominee will be
credited with the shares of common stock you purchase in the rights
offering as soon as practicable after the expiration of the rights
offering.
Q: What should I do if I have other questions?
A: If you have questions or need assistance about the procedure for exercising
your rights, [including the procedure if you have lost your rights
certificate], please contact, Computershare Inc., which is acting as our
subscription agent and transfer agent, at:
5
By Telephone
(800) 962-4284
(From 6:00 a.m. to 8:00 p.m, Eastern Time, Monday through Friday)
By Mail
Computershare Inc.
250 Royall Street
Canton, Massachusetts 02021
You may also contact Bob Regnier, our President and Chief Executive
Officer, at (913) 234-2240 or Mark Fortino our Chief Financial Officer, at
(913) 234-2345 from 7:00 a.m. to 6:00 p.m., Central Time, Monday through
Friday, if you have any questions.
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus
or incorporated herein. Because this is a summary, it does not contain all the
information that may be important to you. For a more complete understanding, you
should carefully read the more detailed information set out in this prospectus
or in the documents incorporated by reference, especially the "Risk Factors"
section, as well as the financial statements and the related notes to those
statements included elsewhere in this prospectus.
The Company
All references in this prospectus to "we," "us," "our," "Company" and "Blue
Valley" refers to Blue Valley Ban Corp., a Kansas corporation, unless the
context requires otherwise. Blue Valley is an $788 million dollar bank holding
company organized in 1989. The Company's primary wholly-owned subsidiary, the
Bank, was also organized in 1989 to provide banking services to closely-held
businesses and their owners, professionals and residents in Johnson County,
Kansas, a high growth, demographically attractive area within the Kansas City,
Missouri -- Kansas Metropolitan Statistical Area (the "Kansas City MSA"). The
focus of Blue Valley has been to take advantage of the current and anticipated
growth in our market area as well as to serve the needs of small and mid-sized
commercial borrowers -- customers that we believe currently are underserved as a
result of banking consolidation in the industry generally and within our market
specifically. In addition, Blue Valley has established a national presence by
originating residential mortgages nationwide through the Bank's
InternetMortgage.com website.
The Bank operates a total of six banking center locations in Johnson
County, Kansas, including our main office and a mortgage operations office in
Overland Park, both of which include lobby banking centers, and full-service
offices in Leawood, Lenexa, Olathe, and Shawnee, Kansas.
The lending activities are focused on commercial lending, and to a lesser
extent, consumer lending, residential mortgage origination services and leasing.
The Company strives to identify, develop and maintain diversified lines of
business that provide acceptable risk-adjusted returns. Our primary lines of
business consist of commercial, commercial real estate, construction, lease,
residential real estate, consumer, and home equity loans.
The Company also seeks to develop lines of business that diversifies the
Bank's revenue sources, increases the Bank's non-interest income and offers
additional value-added services to the Bank's customers. We develop these new or
existing lines of business while monitoring related risk factors. In addition to
fees generated in conjunction with lending activities, the Bank derives
non-interest income by providing mortgage origination services, deposit and cash
management services, investment brokerage services and trust services.
6
In addition to the Bank, the Company has three wholly-owned subsidiaries:
Blue Valley Building Corp., which owns the buildings and real property that
comprise the headquarters, mortgage operations facility and the Leawood banking
center; and BVBC Capital Trust II and BVBC Capital Trust III, which were created
to offer the Company's trust preferred securities and to purchase our junior
subordinated debentures.
The proceeds from the sale of common stock resulting from this rights
offering will be invested by the Company in the Bank to further strengthen the
well capitalized condition of the Bank. See the section of this prospectus
captioned "Use of Proceeds" for further details.
Our principal executive offices are located at 11935 Riley, Overland Park,
Kansas 66225-6128, and our telephone number is (913) 338-1000. Our website
address is http://www.bankbv.com. Information included or referred to on our
website is not incorporated by reference in or otherwise a part of this
prospectus.
The Rights Offering
Securities Offered By Us: We are distributing to you, at no charge, a non-transferable
subscription right for each share of our common stock that you
owned as of 5:00 p.m., Eastern Time, on [*, 2008], the record
date, either as a holder of record or, in the case of shares held
of record by custodian banks, brokers, dealers, or other nominees
on your behalf, as a beneficial owner of such shares. If the
rights offering is fully subscribed, the gross proceeds from the
rights offering will be $6,012,000.
Subscription Price: $18.00 per share
Common Stock to be Assuming no options are exercised prior to the expiration of the
Outstanding Immediately rights offering and assuming all shares are sold in the rights
After This Offering: offering, we expect approximately [*] shares of our common stock
will be outstanding immediately after completion of the rights
offering.
Record Date: 5:00 p.m. Eastern Time on [record date], 2008
Basic Rights of Common Each holder of our common stock on the record date is entitled to
Stockholders: receive a subscription right for each whole share of our common
stock you owned on the record date. For each basic subscription
right you hold, you may purchase .1352 shares of our common
stock.
Oversubscription Right: In the event that you purchase all of the shares of our common
stock available to you pursuant to your basic subscription
rights, you may also choose to purchase a portion of any shares
of our common stock that our other stockholders do not purchase
through the exercise of their basic subscription rights. The
number of shares of our common stock that you purchase pursuant
to this oversubscription right will be determined on a pro rata
basis.
Nontransferability: You may not transfer your subscription rights.
Maximum Offering: The maximum number of shares to be sold in this offering is
334,000 plus any oversubscription rights that the Board of
Directors, in its sole discretion, elects to honor in an amount up
to an additional 66,800 shares.
Irrevocability: Once you submit a subscription, you may not revoke it.
Best Efforts Offering: We are offering the shares on a best efforts basis. This means
there is no guarantee that we will be able to sell all or any of
the shares offered. We intend to pay no commissions on shares we
sell in this offering. However, we have reserved the right to
retain brokers or sales agents to assist us in selling the
shares, if we deem it necessary.
7
No Recommendation: Our Board of Directors is making no recommendation as to whether
you should subscribe for shares pursuant to either your basic
right or your oversubscription right.
Board and Executive We expect our directors and executive officers and the directors
of the Bank, together
Officer Commitment: with their affiliates, to subscribe for, in the aggregate 246,216
shares of common stock in the rights offering, which includes
shares acquired in connection with their oversubscription rights.
The purchase price paid by them will be $18.00 per share, the
same paid by all other persons who purchase shares of our common
stock in the stock offerings.
Use Of Proceeds: We intend to use these net proceeds for capital enhancement and
for general corporate purposes. See the section of this
prospectus captioned "Use of Proceeds" for further details.
Risk Factors: See the section of this prospectus captioned "Risk Factors" on
page 20 and other information included in this prospectus for a
discussion of certain factors that you should carefully consider
before making a decision to invest in our common stock.
Expiration Date: The offering will terminate on December [ ], 2008, unless
extended by our Board of Directors for up to an additional [*]
days.
Subscription Agent and We have retained Computershare Inc., and its fully owned
Transfer Agent: subsidiary Computershare Trust Company, N.A., to act as the
subscription agent and information agent for the rights offering.
The process for you to follow in communicating with Computershare
is set forth in the section of this prospectus captioned
"QUESTIONS AND ANSWERS ABOUT THE RIGHTS OFFERING".
Additional Documents: In addition to the information contained in this prospectus, this
document also incorporates by reference portions of our March 31,
2008, June 30, 2008, and September 30, 2008 Quarterly Reports on
Form 10-Q, our Annual Report on Form 10-K for the year ended
December 31, 2007, and our definitive proxy statement on Schedule
14A filed April 14, 2008.
Other Developments
As result of one deteriorating commercial credit and a continued decline in
the credit quality of the real estate and construction loan portfolio, Bank
management decided recently to increase the provision for loan losses at the
Bank. Management of the Bank also recognized the impact of the industry wide
decline in the real estate market and the general economy. Bank management
assessed the loan portfolio, specifically the non performing loans, on a credit
by credit basis and reached the judgment that it would be appropriate to charge
down $9.7 million in non performing loans to account for these impaired loans.
Based on this analysis, Bank management made a provision for loan losses of
$12.1 million in the third quarter of 2008. Of the $9.7 million in loans written
down, 48% related to the real estate and construction market and the remaining
amount was a result of one deteriorating commercial credit. Bank management
believes they have identified the significant non performing loans and will
continue to aggressively pursue collection of these loans. Management believes
they have aggressively addressed the decline in its loan portfolio credit
quality with this provision. Included in the provision for loan losses was a
$1.1 million reserve for potential uncollected deposit overdrafts with one
commercial relationship. The Bank'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. Bank
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. The Bank makes provisions for loan losses in
amounts that management deems necessary to maintain the allowance for loan
losses at an appropriate level.
Even though the provision for loan losses was the primary reason for the
$6.2 million net loss for the
8
quarter ending September 30, 2008, the Bank had $11.8 million more capital as of
September 30, 2008 than the amount necessary to remain "well-capitalized" by
regulatory standards. However, in an effort to immediately replace the capital,
the Board of Directors has approved a rights offering to existing shareholders
to raise approximately $6.0 million in capital. The capital raised will be
invested in the Bank to further enhance its capital levels and for general
corporate purposes.
Management and the Board of Directors believe that as the residential
construction development markets become more stable the remaining level of non
performing assets will decrease and potential recoveries of amounts written down
are possible. If the level of non performing assets do not decrease, we are
likely to be under increased regulatory scrutiny, which may include enforcement
actions against us. In response to these factors, the Board of Directors has
chosen to take the following actions, along with the increase in capital which
will result from this rights offering. The following list is not intended to be
all inclusive and other actions may be necessary as economic conditions change:
• We have developed a classified asset team, which includes individuals whose
sole responsibility will be to continue to reduce non-performing assets as
quickly as possible.
• We will continue to review and revise, as appropriate, our loan portfolio
management procedures and processes which will include loan
diversification, increased underwriting standards, intensified loan review
and aggressive problem asset identification.
• We will take necessary steps in order to remain well capitalized as
determined by regulatory standards applicable to the Bank and the Company.
• The Bank has done a restructuring of staffing and reduced the number
of employees by approximately 10%. In particular, the Bank restructured its
banking center operations, mortgage division, and leasing portfolio
divisions, along with implementing other potential cost saving measures. As
a result, the Bank expects to save approximately $1.1 million on an annual
basis in salary and employee benefits.
In early October, 2008, President Bush signed into law the Emergency
Economic Stabilization Act ("EESA"), which is principally designed to allow the
U.S. Treasury and other government agencies to take action to restore liquidity
and stability to the U.S. financial system. As part of EESA, the FDIC's
insurance coverage for deposits has increased from $100,000 to $250,000 until
December 31, 2009. Further, the FDIC has announced the Temporary Liquidity
Guarantee Program. The program is designed to encourage confidence and liquidity
in the banking system by guaranteeing the newly issued senior unsecured debt of
banks, thrifts, and certain holding companies. The program will also provide
full coverage of non-interest bearing deposit transaction accounts, regardless
of the dollar amount.
Our Market Area
The Bank operates primarily as a community bank, serving the banking needs
of small- and medium-sized companies and individuals in the Kansas City MSA.
Specifically, our trade area consists of Johnson County, Kansas. We believe that
coupling our strategy of providing exceptional customer service and local
decision making with attractive market demographics has led to the continued
growth of our total assets and deposits.
The income levels and growth rate of Johnson County, Kansas compare
favorably to national averages. Johnson County's population growth rate ranks in
the top 9% of counties nationally, and its per capita income ranks in the top 2%
of counties nationally. Johnson County is also a significant banking market in
the State of Kansas and in the Kansas City MSA. According to available industry
data, as of June 30, 2008, total deposits in Johnson County, including those of
banks, thrifts and credit unions, were approximately $14.5 billion, which
represented 25.14% of total deposits in the state of Kansas and 31.44% of total
deposits in the Kansas City MSA.
As our founders anticipated, the trade area surrounding our main banking
facility in Overland Park, Kansas has become one of the most highly developed
retail areas in the Kansas City MSA. Our Olathe, Kansas facility is
9
located approximately 10 miles southwest of our main office and opened in 1994.
The Shawnee, Kansas banking facility is approximately 20 miles northwest of our
headquarters location. We entered into the Shawnee market in 1999 and in the
first quarter of 2001, construction of our freestanding banking facility in
Shawnee was completed and operations commenced in that facility. The Leawood,
Kansas banking facility is approximately five miles southeast of our
headquarters location. We entered into the Leawood market in 2002, and in the
second quarter of 2004 we completed construction of our freestanding banking
facility in Leawood and operations commenced in that facility. During 2003 we
acquired an office building in Overland Park, Kansas approximately one mile
northwest of our headquarters location. At this location, we consolidated our
mortgage operations, bank operations, and opened a banking facility. The Lenexa,
Kansas banking facility is approximately seven miles northwest of our
headquarters location. The Lenexa facility was opened in February 2007 when we
acquired Unison Bancorp, Inc., and its subsidiary, Western National Bank. We
made this acquisition to continue our expansion in Johnson County and to
establish our first presence in the Lenexa market.
Lending Activities
Overview
Our principal loan categories include commercial, commercial real estate,
construction, leasing and residential mortgages. We also offer a variety of
consumer loans and home equity loans. Our primary source of interest income is
interest earned on our loan portfolio. As of September 30, 2008, our loans
represented approximately 81.55% of our total assets, our legal lending limit to
any one borrower was $21.6 million, and our largest single borrower as of that
date had outstanding loans of $12.8 million.
We have been successful in expanding our loan portfolio because of the
commitment of our staff and the economic growth in our area of operation. Our
staff has significant experience in lending and has been successful in offering
our products to both potential and existing customers. We believe that we have
been successful in maintaining our customers because of our staff's
attentiveness to their financial needs and the development of professional
relationships with them. We strive to become a strategic business partner with
our customers, not just a source of funds.
We conduct our lending activities pursuant to the loan policies adopted by
our Board of Directors. These policies currently require the approval of our
loan committee of all commercial credits in excess of $1.5 million and all real
estate credits in excess of $2.5 million. Credits up to $1.5 million on
commercial loans and $2.5 million on real estate loans can be approved by the
Bank's President and a combination of two senior loan management officers. Our
management information systems and loan review policies are designed to monitor
lending sufficiently to ensure adherence to our loan policies. The following
table shows the composition of our loan portfolio at September 30, 2008.
Loan Portfolio
As of September 30, 2008
--------------------------------
Amount Percent
(In thousands)
Commercial...................................... $ 160,576 24.98 %
Commercial real estate.......................... 163,095 25.37
Construction.................................... 186,731 29.05
Lease financing................................. 19,595 3.05
Residential real estate......................... 43,236 6.72
Consumer........................................ 15,684 2.44
Home equity..................................... 53,929 8.39
------------- ------------
Total loans and leases.................... 642,846 100.00 %
Less allowance for loan losses.................. 11,756
-------------
Loans receivable, net........................... $ 631,090
=============
10
Commercial Loans.
As of September 30, 2008, approximately $160.6 million, or 24.98%, of our
loan portfolio represented commercial loans. The Bank has developed a strong
reputation for providing and servicing small business and commercial loans. We
have expanded this portfolio through the addition of commercial lending staff,
their business development efforts, our reputation and the acquisition of Unison
Bancorp, Inc. and its subsidiary, Western National Bank, in 2007. Commercial
loans have historically been a significant portion of our loan portfolio and we
expect to continue our emphasis on this loan category.
The Bank's commercial lending activities historically have been directed to
small and medium-sized companies in or near Johnson County, Kansas, with annual
sales generally between $100,000 and $20 million. The Bank's commercial
customers are primarily firms engaged in manufacturing, service, retail,
construction, distribution and sales with significant operations in our market
areas. The Bank's commercial loans are primarily secured by real estate,
accounts receivable, inventory and equipment, and the Bank may seek to obtain
personal guarantees for its commercial loans. The Bank primarily underwrites its
commercial loans on the basis of the borrowers' cash flow and ability to service
the debt, as well as the value of any underlying collateral and the financial
strength of any guarantors.
Approximately $6.9 million, or 4.32%, of our commercial loans are Small
Business Administration (SBA) loans, of which $5.2 million is government
guaranteed. The SBA guarantees the repayment in the event of a default of a
portion of the principal on these loans, plus accrued interest on the guaranteed
portion of the loan. Under the federal Small Business Act, the SBA may guarantee
up to 85% of qualified loans of $150,000 or less and up to 75% of qualified
loans in excess of $150,000, up to a maximum guarantee of $2.0 million. We are
an active SBA lender in our market area and have been approved to participate in
the SBA Certified Lender Program.
Commercial lending is subject to risks specific to the business of each
borrower. In order to address these risks, we seek to understand the business of
each borrower, place appropriate value on any personal guarantee or collateral
pledged to secure the loan, and structure the loan amortization to maintain the
value of any collateral during the term of the loan.
Commercial Real Estate Loans.
The Bank also makes loans to provide permanent financing for retail and
office buildings, multi-family properties and churches. As of September 30,
2008, approximately $163.1 million, or 25.37%, of our loan portfolio represented
commercial real estate loans. Our commercial real estate loans are underwritten
on the basis of the appraised value of the property, the cash flow of the
underlying property, and the financial strength of any guarantors.
Risks inherent in commercial real estate lending are related to the market
value of the property taken as collateral, the underlying cash flows and
documentation. Commercial real estate lending involves more risk than
residential real estate lending because loan balances may be greater and
repayment is dependent on the borrower's operations. We attempt to mitigate
these risks by carefully assessing property values, investigating the source of
cash flow servicing the loan on the property and adhering to our lending and
underwriting policies and procedures.
Construction Loans.
Our construction loans include loans to developers, home building
contractors and other companies and consumers for the construction of
single-family homes, land development, and commercial buildings, such as retail
and office buildings and multi-family properties. As of September 30, 2008,
approximately $186.7 million, or 29.05%, of our loan portfolio represented real
estate construction loans. The builder and developer loan portfolio has been a
consistent component of our loan portfolio over our history. The Bank's
experience and reputation in this area have grown, thereby enabling the Bank to
focus on relationships with a smaller number of larger builders and increasing
the total value of the Bank's real estate construction portfolio. Construction
loans are made to qualified builders to build houses to be sold following
construction, pre-sold houses and model houses. These loans are
11
generally underwritten based on several factors, including the experience and
current financial condition of the borrowing entity, amount of the loan to
appraised value, and general conditions of the housing market with respect to
the subdivision and surrounding area, which the bank receives from a third party
reporting entity. Construction loans are also made to individuals for whom
houses are being constructed by builders with whom the Bank has an existing
relationship. Such loans are made on the basis of the individual's financial
condition, the loan to value ratio, the reputation of the builder, and whether
the individual will be pre-qualified for permanent financing.
Risks related to construction lending include assessment of the market for
the finished product, reasonableness of the construction budget, ability of the
borrower to fund cost overruns, and the borrower's ability to liquidate and
repay the loan at a point when the loan-to-value ratio is the greatest. We seek
to manage these risks by, among other things, ensuring that the collateral value
of the property throughout the construction process does not fall below
acceptable levels, ensuring that funds disbursed are within parameters set by
the original construction budget, and properly documenting each construction
draw.
Lease Financing.
Our lease portfolio includes capital leases that we have originated and
leases that we have acquired from brokers or third parties. As of September 30,
2008, our lease portfolio totaled $19.6 million, or 3.05% of our total loan
portfolio, consisting of $16.1 million principal amount of leases originated by
us and $3.5 million principal amount of leases that we purchased. We provide
lease financing for a variety of equipment and machinery, including office
equipment, heavy equipment, telephone systems, tractor trailers and computers.
Lease terms are generally from three to five years. We have provided lease
financing in the past and will continue to do so for our customers. However, we
don't expect to aggressively pursue lease financing unless the lessor maintains
an additional banking relationship with the Bank. Our lease portfolio as of
September 30, 2008 was $19.6 million, but as result of recent changes, we expect
the portfolio to decrease over time. Our leases are generally underwritten based
upon several factors, including the overall credit worthiness, experience and
current financial condition of the lessee, the amount of the financing to
collateral value, and general conditions of the market.
The primary risks related to our lease portfolio are the value of the
underlying collateral and specific risks related to the business of each
borrower. To address these risks, we attempt to understand the business of each
borrower, value the underlying collateral appropriately and structure the loan
amortization to ensure that the value of the collateral exceeds the lease
balance during the term of the lease.
Residential Real Estate Loans.
Our residential real estate loan portfolio consists primarily of first and
second mortgage loans on residential properties. As of September 30, 2008, $43.2
million, or 6.72%, of our loan portfolio represented residential mortgage loans.
The terms of these loans typically include 2-5 year balloon payments based on a
15 to 30 year
amortization, and accrue interest at a fixed or variable rate. By
offering these products, we can offer credit to individuals who are
self-employed or have significant income from partnerships or investments. These
individuals are often unable to satisfy the underwriting criteria permitting the
sale of their mortgages into the secondary market.
In addition, we also originate residential mortgage loans with the
intention of selling these loans in the secondary market. For the nine month
period ending September 30, 2008, we originated approximately $115.7 million of
residential mortgage loans, and we sold approximately $120.5 million in the
secondary market in 2008. We originate conventional first mortgage loans through
our internet website as well as through referrals from real estate brokers,
builders, developers, prior customers and media advertising. We have offered
customers the ability to apply for mortgage loans and to pre-qualify for
mortgage loans over the Internet since 1999. In 2001, we expanded our internet
mortgage application capacity with the acquisition of the internet domain name
InternetMortgage.com and created a separate National Mortgage division. The
timing of this expansion allowed us to establish this division in a relatively
low-rate environment, and reap the benefits of a significant increase in
mortgage originations and refinancing experienced from 2001 through 2003. While
the volume of mortgage originations and refinancing has declined since 2004, we
continue to take advantage of the national presence established in previous
years and originate residential mortgage loans through our InternetMortgage.com
website. The origination of a mortgage loan
12
from the date of initial application through closing normally takes 15 to 60
days. We acquire forward commitments from investors on mortgage loans that we
intend to sell into the secondary market to reduce interest rate risk on
mortgage loans to be sold in the secondary market.
Our mortgage loan credit review process is consistent with the standards
set by traditional secondary market sources. We review appraised value and debt
service ratios, and we gather data during the underwriting process in accordance
with various laws and regulations governing real estate lending. Loans
originated by the Bank are sold with servicing released to increase current
income and reduce the costs associated with retaining servicing rights.
Commitments are obtained from the purchasing investor on a loan-by-loan basis on
a 30, 45 or 60-day delivery commitment. Interest rates are committed to the
borrower when a rate commitment is obtained from the investor. Loans are funded
by the Bank and purchased by the investor within 30 days following closing
pursuant to commitments obtained at the time of origination. We sell
conventional conforming loans and all loans that are non-conforming as to credit
quality to secondary market investors for cash on a limited recourse basis. In
our recent experience, we have not been asked to repurchase significant amounts
of loans. Consequently, foreclosure losses on all sold loans are primarily the
responsibility of the investor and not that of the Bank.
As with other loans to individuals, the risks related to residential
mortgage loans include primarily the value of the underlying property and the
financial strength and employment stability of the borrower. We attempt to
manage these risks by performing a pre-funding underwriting that consists of the
verification of employment and utilizes a detailed checklist of loan
qualification requirements, including the source and amount of down payments,
bank accounts, existing debt and overall credit.
Consumer Loans.
As of September 30, 2008, the Bank's consumer loans totaled $15.7 million,
or 2.44% of its total loan portfolio. A substantial part of this amount
consisted of installment loans to individuals in our market area. Installment
lending offered directly by the Bank in our market area includes automobile
loans, recreational vehicle loans, home improvement loans, unsecured lines of
credit and other loans to professionals, people employed in education, industry
and government, as well as retired individuals and others. A significant portion
of the Bank's consumer loan portfolio consists of indirect automobile loans
offered through automobile dealerships located primarily in our trade area. As
of September 30, 2008, approximately $6.0 million, or 38.12%, of the Bank's
consumer loan portfolio, represented indirect automobile loans. The Bank's loans
made through this program generally represent loans to purchase new or late
model automobiles. There are currently 13 dealerships participating in this
program. The Bank's consumer and other loans are underwritten based on the
borrower's income, current debt, past credit history, collateral, and the
reputation of the originating dealership with respect to indirect automobile
loans.
Consumer loans are subject to the same risks as other loans to individuals,
including the financial strength and employment stability of the borrower. In
addition, some consumer loans are subject to the additional risk that the loan
is not secured by collateral. For some of the loans that are secured, the
underlying collateral may be rapidly depreciating and not provide an adequate
source of repayment if we are required to repossess the collateral. The Bank
attempts to mitigate these risks by requiring a down payment and carefully
verifying and documenting the borrower's credit quality, employment stability,
monthly income, and with respect to indirect automobile loans, understanding and
documenting the value of the collateral and the reputation of the originating
dealership.
Home Equity Loans.
As of September 30, 2008, the Bank's home equity loans totaled $53.9
million, or 8.39% of the total loan portfolio. Home equity loans are generally
secured by second liens on residential real estate and are underwritten in a
similar manner as our consumer loans.
13
Investment Activities
The objectives of our investment policies are to:
• secure the safety of principal;
• provide adequate liquidity;
• provide securities for use in pledging for public funds or repurchase
agreements; and
• maximize after-tax income.
We invest primarily in obligations of agencies of the United States and
bank-qualified obligations of state and local political subdivisions. Although
direct obligations of the United States and obligations guaranteed as to
principal and interest by the United States are permitted by our investment
policy, we currently do not hold any in our portfolio. In order to ensure the
safety of principal, we do not invest in mortgage-backed securities or sub-prime
mortgages and we typically do not invest in corporate debt or other securities
even though they are permitted by our investment policy. In addition, we enter
into federal funds transactions with our principal correspondent banks, and
depending on our liquidity position, act as a net seller or purchaser of these
funds. The sale of federal funds is effectively a short-term loan from us to
another bank; while conversely, the purchase of federal funds is effectively a
short-term loan from another bank to us.
Deposit Services
The principal sources of funds for the Bank are core deposits from the
local market areas surrounding the Bank's offices, including demand deposits,
interest-bearing transaction accounts, money market accounts, savings deposits
and time deposits. Transaction accounts include interest-bearing and
non-interest-bearing accounts, which provide the Bank with a source of fee
income and cross-marketing opportunities as well as a low-cost source of funds.
Since 2001, the Bank has realized a significant level of deposit growth from
commercial checking accounts. While these accounts do not earn interest, many of
them receive an earnings credit on their average balance to offset the cost of
other services provided by the Bank. The Bank's money market account is a daily
access account that bears a higher rate and allows for limited check-writing
ability. This account pays a tiered rate of interest. We believe money market
accounts have proven to be attractive products in our market area and provide us
with a more attractive source of funds than other alternatives such as Federal
Home Loan Bank borrowings, as it provides us with the potential to cross-sell
additional services to these account holders. During 2007, we introduced
performance checking accounts. This interest-bearing demand product has also
proven to be an attractive product in our market area as it pays a higher rate
than most checking accounts as long as the customer meets the requirements of at
least 12 signature based debit card transactions and at least one direct deposit
or ACH debit each statement cycle. The Bank realizes non-interest income from
the signature based debit card transactions that, when netted against the high
rate paid to the customer, results in a very attractive low cost of funds for
the Bank. Time and savings accounts also provide a relatively stable customer
base and source of funding. Because of the nature and behavior of these deposit
products, management reviews and analyzes our pricing strategy in comparison not
only to competitor rates, but also as compared to other alternative funding
sources to determine the most advantageous source. In pricing deposit rates,
management also considers profitability, the matching of term lengths with
assets, the attractiveness to customers, and rates offered by our competitors.
The Bank has joined the Certificate of Deposit Account Registry Service
("CDARS") which effectively lets depositors receive FDIC insurance on amounts
larger than $100,000. CDARS allows the Bank to break large deposits into smaller
amounts and place them in a network of other CDARS banks to ensure that full
FDIC insurance coverage is gained on the entire deposit. The Bank's Funds
Management policy allows for acceptance of brokered deposits, up to certain
policy limits, which can be utilized to support the growth of the Bank. As of
September 30, 2008, the Bank had $86.8 million in brokered deposits.
Investment Brokerage Services
In 1999, the Bank began offering investment brokerage services through
an unrelated broker-dealer. These services are currently offered at all of our
locations. Four individuals responsible for providing these services are joint
employees of the Bank and the registered broker-dealer. Investment brokerage
services provide a source of fee
14
income for the Bank. For the nine month period ending September 30, 2008, the
amount of our fee income generated from investment brokerage services was
$307,000.
Trust Services
The Bank began offering trust services in 1996. Until 1999, the Bank's
trust services were offered exclusively through the employees of an unaffiliated
trust company. The Bank hired a full-time officer in 1999 to develop the Bank's
trust business and the trust department now has three full-time officers and two
trust administrators. Trust services are marketed to both existing Bank
customers and new customers. We believe that the ability to offer trust services
as a part of our financial services to new customers of the Bank presents a
significant cross-marketing opportunity. The services currently offered by the
Bank's trust department include the administration of personal trusts,
investment management agency accounts, self-directed individual retirement
accounts, qualified retirement plans, corporate trust accounts and custodial and
directed trust accounts. For the nine month period ending September 30, 2008,
the Bank's trust department administered 225 accounts, with assets under
administration of approximately $121.5 million. Trust services provide the Bank
with a source of fee income and additional deposits. As of September 30, 2008,
the amount of our fee income from trust services was $330,000.
Competition
The Bank encounters competition primarily in seeking deposits and in
obtaining loan customers. The level of competition for deposits in our market
area is high. The Bank's principal competitors for deposits are other financial
institutions within a few miles of our locations including other banks, savings
institutions and credit unions. Competition among these institutions is based
primarily on interest rates offered, the quality of service provided, and the
convenience of banking facilities. Additional competition for depositors' funds
comes from U.S. government securities, private issuers of debt obligations and
other providers of investment alternatives for depositors.
The Bank competes in lending, investment brokerage and trust activities
with other financial institutions, such as banks and thrift institutions, credit
unions, automobile financing companies, mortgage companies, securities firms,
investment companies and other finance companies. Many of the Bank's competitors
are not subject to the same extensive federal regulations that govern bank
holding companies and federally-insured banks and state regulations governing
state-chartered banks. As a result, these non-bank competitors have some
advantages over the Bank in providing certain products and services. Many of the
financial institutions with which the Bank competes are larger and possess
greater financial resources, name recognition and market presence.
Employees
The Bank has 204 employees, of which 190 are full time. The Company and its
other subsidiaries did not have any employees. None of the Bank's employees are
subject to a collective bargaining agreement. We consider the Bank's
relationship with its employees to be excellent.
Properties
The Bank currently operates six full service banking centers in the Kansas
City MSA, which includes our principal office located at 11935 Riley in Overland
Park, Kansas. The portions of these premises not occupied by the Bank are leased
to third parties. The following table sets forth the locations of the banking
and mortgage centers, dates opened, mortgage indebtedness, and occupancy dates:
- ---------------------------------- ------------------ --------------------------------- ----------------------------
Mortgage Indebtedness
Location Year Occupied as of September 30, 2008 Occupancy
- ---------------------------------- ------------------ --------------------------------- ----------------------------
Overland Park Banking Center
11935 Riley 80%,
Overland Park, KS * 1994 $2.1 Million One sublease occupying 20%
- ---------------------------------- ------------------ --------------------------------- ----------------------------
15
- ---------------------------------- ------------------ --------------------------------- ----------------------------
Olathe Banking Center
1235 E. Santa Fe
Olathe, KS ** 2001 None 100%
- ---------------------------------- ------------------ --------------------------------- ----------------------------
Shawnee Banking Center
5520 Hedge Lane Terrace
Shawnee, KS ** 2001 None 100%
- ---------------------------------- ------------------ --------------------------------- ----------------------------
Mortgage and Banking Center
7900 College Boulevard
Overland Park, KS * 2003 $3.5 Million 100%
- ---------------------------------- ------------------ --------------------------------- ----------------------------
Leawood Banking Center
13401 Mission Road 55%,
Leawood, KS * 2004 None Four subleases occupying
45%
- ---------------------------------- ------------------ --------------------------------- ----------------------------
Lenexa Banking Center
9500 Lackman Road
Lenexa, KS ** 2007 None 100%
- ---------------------------------- ------------------ --------------------------------- ----------------------------
* The building is owned by Blue Valley Building Corp.
** The building is owned by the Bank.
Legal Proceedings
We are periodically involved in routine litigation incidental to our
business. We are not currently a party to any legal proceedings, nor are we
aware of any threatened litigation, that we believe is likely to have a material
adverse effect on our financial position, liquidity, or results of operations.
Summary Financial Data
The following table presents our consolidated financial data for the nine
months ending and as of September 30, 2008 and for each of the five prior
calendar years ending as of December 31. The information in these tables should
be read in conjunction with our financial statements, the related notes, "Risk
Factors," "Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere or
incorporated by reference in this prospectus. The selected statements of
financial condition and statements of income data, insofar as they relate to
each of the five prior calendar years have been derived from our audited
consolidated financial statements. The historical results are not necessarily
indicative of the results to be expected for any future period.
As of and For the
Nine Months Ended As of and for the
September 30 Year Ended December 31,
--------------- ---------------------------------------------------------
2008 2007 2006 2005 2004 2003
--------------- --------- ---------- ---------- -------- -------
(In thousands, except share and per share data)
Selected Statement of Income Data
Interest income:
Loans, including fees $ 31,331 $ 47,194 $ 44,537 $ 37,492 $ 29,245 $ 28,293
Federal funds sold and
interest-bearing deposits 301 557 256 580 157 49
Availaible-for-sale securities 2,596 4,466 4,039 2,317 2,301 2,070
--------- --------- --------- --------- -------- --------
Total interest income 34,228 52,217 48,832 40,389 31,703 30,412
--------- --------- --------- --------- -------- --------
Interest expense:
Interest-bearing demand deposits 933 656 97 94 169 165
16
As of and For the
Nine Months Ended As of and for the
September 30 Year Ended December 31,
--------------- ---------------------------------------------------------
2008 2007 2006 2005 2004 2003
--------------- --------- ---------- ---------- -------- -------
(In thousands, except share and per share data)
Selected Statement of Income Data
Savings and money market deposit
accounts 2,097 6,362 4,356 3,861 2,932 2,204
Other time deposits 8,965 13,134 11,254 9,171 7,297 6,935
Funds borrowed 4,394 5,430 5,255 4,867 4,115 4,245
--------- --------- --------- --------- -------- --------
Total interest expense 16,389 25,582 20,962 17,993 14,513 13,549
--------- --------- --------- --------- -------- --------
Net interest income 17,839 26,635 27,870 22,396 17,190 16,863
Provision for loan losses 15,400 2,855 1,255 230 1,965 1,350
--------- --------- --------- --------- -------- --------
Net interest income after provision
for loan losses 2,439 23,780 26,615 22,166 15,225 15,513
--------- --------- --------- --------- -------- --------
Non-interest income:
Loans held for sale fee income 1,740 3,160 5,046 7,408 10,358 19,866
NSF charges & service fees 1,221 1,413 1,244 1,129 1,326 1,283
Other service charges 1,231 1,417 1,247 1,037 1,115 924
Realized gain on available-for-sale
securities 702 105 - - 524 -
--------
Contingency Gain 1,000 - - - - -
Other income 1,006 1,105 1,344 1,727 617 463
--------- --------- --------- --------- -------- --------
Total non-interest income 6,900 7,200 8,881 11,301 13,940 22,536
--------- --------- --------- --------- -------- --------
Non-interest expense:
Salaries and employee benefits 9,801 13,570 14,737 15,986 16,670 19,670
Occupancy 2,400 3,200 3,059 3,307 3,433 3,137
General & administrative 5,918 7,447 6,578 6,841 6,467 6,478
--------- --------- --------- --------- -------- --------
Total non-interest expense 18,119 24,217 24,374 26,134 26,570 29,285
--------- --------- --------- --------- -------- --------
Income before income taxes (8,780) 6,763 11,122 7,333 2,595 8,764
Income tax provision (3,224) 2,275 4,199 2,764 665 3,130
--------- --------- --------- --------- -------- --------
Net income $ (5,556) $ 4,488 $ 6,923 $ 4,569 $ 1,930 $ 5,634
========= ========= ========= ========= ======== ========
Per Share Data
Basic earnings $ (2.28) $ 1.86 $ 2.93 $ 1.95 $ 0.84 $ 2.51
Diluted earnings (2.26) 1.84 2.88 1.91 0.82 2.43
Dividends - 0.36 0.30 0.25 0.20 0.15
Book value basic (at end of period) 21.97 24.34 22.45 19.42 17.78 17.64
Weighted average common shares
outstanding:
Basic 2,434,515 2,410,621 2,365,932 2,348,805 2,302,564 2,244,930
Diluted 2,458,141 2,438,203 2,407,802 2,388,531 2,360,061 2,320,840
Dividend payout ratio - 19.35% 10.23% 12.82% 23.80% 5.98%
17
As of and For the
Nine Months Ended As of and for the
September 30 Year Ended December 31,
------------ -----------------------
2008 2007 2006 2005 2004 2003
---------------------------------------------------------------------------------
(In thousands, except share and per share data)
Selected Financial Condition Data
(at end of period):
Total securities $ 66,060 $ 76,653 $ 87,206 $ 99,987 $ 66,350 $ 106,036
Total mortgage loans held for sale 6,141 10,978 21,805 13,906 44,144 18,297
Total loans 642,846 596,646 528,515 503,143 507,170 424,620
Total assets 788,261 736,213 692,219 689,589 672,717 627,073
Total deposits 560,733 536,370 535,864 529,341 522,646 470,495
Funds borrowed 170,261 134,942 96,577 104,394 102,469 111,741
Total stockholders' equity 53,701 58,934 53,820 46,255 41,384 40,198
Trust assets under administration 121,497 104,167 104,445 93,988 118,074 90,389
Selected Financial Ratios and Other
Data:
Performance Ratios:
Net interest margin (1) 3.31% 3.95% 4.34% 3.50% 2.91% 3.01%
Non-interest income to average
assets 1.19 0.99 1.29 1.63 2.16 3.62
Non-interest expense to average
assets 3.13 3.34 3.54 3.77 4.11 4.71
Net overhead ratio (2) 1.94 2.35 2.25 2.14 1.96 1.08
Efficiency ratio (3) 73.24 71.57 66.32 77.56 85.35 74.33
Return on average assets (4) -0.96 0.62 1.00 0.66 0.30 0.91
Return on average equity (5) -12.40 7.88 13.81 10.44 4.69 14.85
Asset Quality Ratios:
Non-performing loans to total
loans 4.80% 4.22% 1.31% 0.87% 0.86% 0.72%
Allowance for possible loan losses
to:
Total loans 1.83 1.51 1.16 1.33 1.45 1.66
Non-performing loans 38.10 35.65 88.16 153.27 168.60 230.79
Net charge-offs to average total
loans 2.02 0.06 0.35 0.17 0.36 0.30
Non-performing loans to total
assets 3.91 3.42 1.00 0.63 0.65 0.50
Balance Sheet Ratios:
Loans to deposits 114.64% 111.24% 98.63% 95.05% 97.04% 90.25%
Average interest-earning assets
to average interest-bearing
liabilities 115.66 117.84 119.12 116.78 114.38 114.61
Capital Ratios:
Total equity to total assets 6.81% 8.01% 7.77% 6.71% 6.15% 6.42%
Total capital to risk-weighted
assets ratio 10.33 11.53 12.47 12.04 11.15 12.41
Tier 1 capital to risk-weighted
assets ratio 8.92 10.28 11.33 10.25 9.00 10.04
Tier 1 capital to average assets
ratio 8.48 9.86 10.29 8.86 8.45 8.31
Average equity to average assets
ratio 7.74 7.85 7.27 6.31 6.37 6.10
(1) Net interest income, on a full tax-equivalent basis, divided by average
interest-earning assets.
(2) Non-interest expense less non-interest income divided by average total
assets.
(3) Non-interest expense divided by the sum of net interest income plus
non-interest income.
(4) Net income divided by average total assets.
(5) Net income divided by average common equity.
18
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These
forward-looking statements are subject to a number of risks and uncertainties,
many of which are beyond our control. All statements, other than statements of
historical fact, contained in this prospectus, including statements regarding
future events, our future financial performance, business strategy and plans and
objectives of management for future operations, are forward-looking statements.
We have attempted to identify forward-looking statements by terminology
including "anticipates," "believes," "can," "continue," "could," "estimates,"
"expects," "intends," "may," "plans," "potential," "predicts," "should" or
"will" or the negative of these terms or other comparable terminology. Although
we do not make forward-looking statements unless we believe we have a reasonable
basis for doing so, we cannot guarantee their accuracy. These statements are
only predictions and involve known and unknown risks, uncertainties and other
factors, including the risks outlined under "Risk Factors" or referenced
elsewhere in this prospectus, which may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements. Moreover,
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 our actual
results to differ materially from those contained in any forward-looking
statements. The factors impacting these risks and uncertainties include, but are
not limited to:
• general economic conditions, either nationally or locally in some or
all of the areas in which we do business, or conditions in the
securities or real estate markets or the banking industry may be less
favorable than we currently anticipate;
• the timing and occurrence or non-occurrence of events may be subject
to circumstances beyond our control;
• there may be increases in competitive pressure among financial
institutions or from non-financial institutions;
• changes in the interest rate environment could adversely affect our
results of operations and financial condition;
• changes in accounting principles, policies or guidelines;
• legislative or regulatory changes may adversely affect our business;
• changes in management's estimate of the adequacy of the allowance for
loan losses;
• litigation or matters before regulatory agencies, whether currently
existing or commencing in the future, may delay the occurrence or
non-occurrence of events longer than we anticipate;
• changes in deposit flows, loan demand or real estate values may
adversely affect our business;
• technological changes may be more difficult or expensive than we
anticipate; and
• success or consumption of new business initiatives may be more
difficult or expensive than we anticipate.
You should not place undue reliance on any forward-looking statement,
each of which applies only as of the date of this prospectus. Before you invest
in our common stock, you should be aware that the occurrence of the events
described in the section entitled "Risk Factors" and elsewhere in this
prospectus, or incorporated in this prospectus by reference, could negatively
affect our business, operating results, financial condition and stock price.
Except as required by law, we undertake no obligation to update or revise
publicly any of the forward-looking statements after the date of this prospectus
to conform our statements to actual results or changed expectations.
19
RISK FACTORS
Investing in our common stock involves a high degree of risk. In addition
to the following risk factors and other information contained in, or
incorporated by reference into, this prospectus, including the matters under the
caption "Forward-Looking Statements," you should carefully consider the risks
described below before deciding whether to invest in our common stock. If any of
the following risks actually occur, our business, financial condition, operating
results and prospects would suffer. In that case, the trading price of our
common stock would likely decline and you might lose all or part of your
investment. The risks described below are not the only ones we face. Additional
risks that we currently do not know about or that we currently believe to be
immaterial may also impair our operations and business results.
Risks Related to the Rights Offering
The subscription price determined for this rights offering is not necessarily an
indication of our value.
The subscription price per share was arbitrarily set by our Board of
Directors and [approximates a slight premium to the current trading value of our
common stock as of the date of this prospectus.] The subscription price does not
necessarily bear any relationship to the book value of our assets, past
operations, cash flows, income, financial condition or any other established
criteria for value. You should not consider the subscription price as an
indication of the value of our common stock.
Because our management will have broad discretion over the use of the net
proceeds from the rights offering, you may not agree with how we use the
proceeds, and we may not invest the proceeds effectively.
We will use the proceeds of the rights offering to invest in the Bank,
where it will be used for general corporate purposes. Management of the Bank
will retain the discretion to allocate the proceeds among such purposes as it
deems appropriate. The net proceeds may be applied in ways with which you and
other investors in the offering may not agree. Moreover, our management may use
the proceeds for corporate purposes that may not increase our market value or
make us profitable. In addition, it may take us some time to deploy the proceeds
from this offering effectively in accordance with our intended uses.
Management's failure to utilize the proceeds effectively could have an adverse
effect on our business, financial condition and results of operations.
All exercises of subscription rights are irrevocable, even if the market price
of our common stock declines below the subscription price you have paid.
Once you exercise your subscription rights, you may not revoke them. It is
possible that the market price of our common stock will decline after you elect
to exercise your subscription rights. If you exercise your subscription rights
and, afterwards, the public trading market price of our common stock decreases
below the subscription price, you will have committed to buying shares of our
common stock at a price above the prevailing market price and could have an
immediate unrealized loss.
The subscription rights are not transferable and there is no market for the
subscription rights.
You may not sell, give away or otherwise transfer your subscription rights.
The subscription rights are only transferable by operation of law. Because the
subscription rights are otherwise non-transferable, there is no market or other
means for you to directly realize any value associated with the subscription
rights. You must exercise the subscription rights and acquire additional shares
of our common stock to realize any value from your subscription rights.
20
If you do not exercise your subscription rights, your percentage ownership in
the Company will be diluted.
Assuming we sell the full amount of common stock issuable in connection
with the rights offering, we will issue approximately 334,000 shares. Because
certain of our directors and executive officers intend to purchase shares of our
common stock, if you choose not to exercise your subscription rights prior to
the expiration of the rights offering, your relative ownership interest in our
common stock will be diluted.
We may cancel the rights offering at any time prior to the expiration of the
rights offering, and neither we nor the subscription agent will have any
obligation to you except to return your exercise payments.
We may, in our sole discretion, decide not to continue with the rights
offering or cancel the rights offering prior to the expiration of the rights
offering. If the rights offering is cancelled, all subscription payments that
the subscription agent has received will be returned, without interest, as soon
as practicable.
If you do not act promptly and follow the subscription instructions, we may
reject your exercise of subscription rights.
If you desire to purchase shares in the rights offering, you must act
promptly to ensure that the subscription agent actually receives all required
forms and payments before the expiration of the rights offering at [*] p.m.,
Eastern Time, on December [ ], 2008. If you are beneficial owner of shares, you
must act promptly to ensure that your broker, custodian bank or other nominee
holder acts for you and that all required forms and payments are actually
received by the subscription agent before the expiration of the rights offering.
We are not responsible if your broker, or other nominee holder, fails to ensure
that the subscription agent receives all required forms and payments before the
expiration of the rights offering. If you fail to complete and sign the required
subscription forms, send an incorrect payment amount, or otherwise fail to
follow the subscription procedures that apply to the exercise of your
subscription rights prior to the expiration of the rights offering, the
subscription agent may reject your subscription or accept it only to the extent
of the payment received. Neither we nor our subscription agent undertake any
responsibility to contact you concerning an incomplete or incorrect subscription
form or payment, nor are we under any obligation to correct such forms or
payment. We have the sole discretion to determine whether a subscription
exercise properly complies with the subscription procedures.
Our position for U.S. federal income tax consequences on the receipt of the
subscription rights may not be sustained by the Internal Revenue Service.
A risk exists as to the value, if any, of the subscription right. If the
value is more than 15% of the value of the common stock, or you elect to
allocate basis to the subscription right, a risk exists that the IRS may
challenge the value of the subscription right, which could affect the amount of
gain or loss recognized on the sale of particular shares of our common stock
owned by you. The Company has not sought any third party appraisal for guidance
on the value of the subscription rights.
Risks Related to Blue Valley
Our operations may be adversely affected if we are unable to maintain and
increase our deposit base and secure adequate funding.
We fund our banking and lending activities primarily through demand,
savings and time deposits and, to a lesser extent, lines of credit,
sale/repurchase facilities from various financial institutions, and Federal Home
Loan Bank borrowings. The success of our business depends in part on our ability
to maintain and increase our deposit base and our ability to maintain access to
other funding sources. Our inability to obtain funding on favorable terms, on a
timely basis, or at all, would adversely affect our operations and financial
condition.
The loss of our key personnel could adversely affect our operations.
21
We are a relatively small organization and depend on the services of all of
our employees. Our growth and development to date has depended in a large part
on a few key employees who have primary responsibility for maintaining personal
relationships with our largest customers. The unexpected loss of services of one
or more of these key employees could have a material adverse effect on our
operations. Our key employees are Robert D. Regnier, Mark A. Fortino, Ralph J.
Schramp, and Sheila C. Stokes. Each of these persons is an officer of the Bank.
We do not have written employment or non-compete agreements with any of these
key employees; however, if employment was terminated, Mr. Fortino, Mr. Schramp,
and Ms. Stokes would all lose three years of Blue Valley Ban Corp. Restricted
Stock Awards as well as amounts awarded in their Long-Term Retention Bonus
Pools. Mr. Regnier would lose one year of Restricted Stock and amounts awarded
in his Long-Term Retention Bonus Pool. We carry a $1 million "key person" life
insurance policy on the life of Mr. Regnier.
Changes in interest rates may adversely affect our earnings and cost of funds.
Changes in interest rates affect our operating performance and financial
condition in diverse ways. A substantial part of our profitability depends on
the difference between the rates we receive on loans and investments and the
rates we pay for deposits and other sources of funds. Our net interest spread
will depend on many factors that are partly or entirely outside our control,
including competition, federal monetary and fiscal policies, and economic
conditions generally. Historically, net interest spreads for many financial
institutions have widened and narrowed in response to these and other factors,
which are often collectively referred to as "interest rate risk." We try to
minimize our exposure to interest rate risk, but are unable to eliminate it.
Because our business is concentrated in the Kansas City MSA, a downturn in the
economy of the Kansas City MSA may adversely affect our business.
Our success is dependent to a significant extent upon the general economic
conditions in the Kansas City MSA, including Johnson County, Kansas, and, in
particular, the conditions for the medium- and small-sized businesses that are
the focus of our customer base. Adverse changes in economic conditions in the
Kansas City MSA, including Johnson County, Kansas, could impair our ability to
collect loans, reduce our growth rate and have a negative effect on our overall
financial condition.
If our allowance for loan losses is insufficient to absorb losses in our loan
portfolio, it will adversely affect our financial condition and results of
operations.
Some borrowers may not repay loans that we make to them. This risk is
inherent in the banking business. Like all financial institutions, the Company
maintains an allowance for loan losses to absorb probable loan losses in our
loan portfolio. As noted elsewhere in this prospectus, we have recently
significantly increased the level of our loan loss allowance. The level of the
allowance reflects management's continuing evaluation of industry
concentrations, specific credit risks, loan loss experience, current loan
portfolio credit quality, economic and regulatory conditions and unidentified
losses inherent in the current loan portfolio. However, we cannot predict loan
losses with certainty, and we cannot assure you that our allowance, even as
recently increased, will be sufficient to cover our future loan losses. Loan
losses in excess of our reserves would have a material adverse effect on our
financial condition and results of operations. The loan loss provision related
to real estate construction loans has increased during the second half of the
year. This increase is a result of the industry wide decline in the real estate
market. If the recent trend is prolonged and losses continue to increase, our
results of operations could be negatively impacted by higher loan losses in the
future.
In addition, various regulatory agencies, as an integral part of the
examination process, periodically review our loan portfolio. These agencies may
require us to add to the allowance for loan losses based on their judgments and
interpretations of information available to them at the time of their
examinations. If these agencies require us to increase our allowance for loan
losses, our earnings will be adversely affected in the period in which the
increase occurs.
We may incur significant costs if we foreclose on environmentally contaminated
real estate.
22
If we foreclose on a defaulted real estate loan to recover our investment,
we may be subject to environmental liabilities in connection with the underlying
real property. It is also possible that hazardous substances or wastes may be
discovered on these properties during our ownership or after they are sold to a
third party. If they are discovered on a property that we have acquired through
foreclosure or otherwise, we may be required to remove those substances and
clean up the property. We may have to pay for the entire cost of any removal and
clean-up without the contribution of any other third parties. We may also be
liable to tenants and other users of neighboring properties. These costs or
liabilities may exceed the fair value of the property. In addition, we may find
it difficult or impossible to sell the property prior to or following any
environmental clean-up.
If we are not able to compete effectively in the highly competitive banking
industry, our business will be adversely affected.
Our business is extremely competitive. Many of our competitors are, or are
affiliates of, enterprises that have greater resources, name recognition and
market presence than we do. Some of our competitors are not regulated as
extensively as we are and, therefore, may have greater flexibility in competing
for business. Some of these competitors are subject to similar regulation but
have the advantages of established customer bases, higher lending limits,
extensive branch networks, numerous ATMs, and more ability to absorb the costs
of maintaining technology or other factors.
We are in default on a covenant to a secured lender and our future inability to
obtain a waiver or renew our financing arrangements could have a material
adverse impact on our business.
For the past twelve months we have been in default on a covenant owed to
our secured lender on a $2.3 million term note and a $15.0 million line of
credit. Since the default first occurred, we have routinely obtained waivers of
non-compliance with the terms of the underlying agreements. On October 15, 2008
we executed another waiver for the customary three-month period. As part of the
waiver, the maturity date for the term note and line of credit has been set at
January 31, 2009. Our inability to obtain a waiver in the future, our failure to
renew the line of credit, or our inability to obtain alternative financing could
have a material adverse impact on our business.
The goodwill noted on our balance sheet may become impaired.
As required by accounting standards, the goodwill reflected on our balance
sheet is tested annually for impairment or more frequently if events or changes
in circumstances indicate the asset may be impaired. Goodwill could be subject
to impairment upon the occurrence of certain triggering events such as current
period losses combined with historical losses or significant impairment of
earning assets. In the event of a significant downturn in our business, it is
possible that we may need to recognize a partial or complete impairment of our
goodwill.
Blue Valley and the Bank are subject to extensive governmental regulation.
Blue Valley and the Bank are subject to extensive governmental regulation.
Blue Valley, as a bank holding company, is regulated primarily by the Federal
Reserve Bank. The Bank is a commercial bank chartered by the State of Kansas and
regulated by the Federal Reserve, the Federal Deposit Insurance Corporation, and
the Office of the State Banking Commissioner of Kansas (OSBC). These federal and
state bank regulators have the ability, should the situation require, to place
significant regulatory and operational restrictions upon us and the Bank. Any
such restrictions imposed by federal and state bank regulators could affect the
profitability of the Blue Valley and the Bank. Blue Valley and the Bank recently
entered into an agreement with the Federal Reserve and the OSBC imposing certain
limitations and requirements on the Bank and Blue Valley.
Confidential customer information transmitted through the Bank's online banking
service is vulnerable to security breaches and computer viruses, which could
expose the Bank to litigation and adversely affect its reputation and ability to
generate deposits.
The Bank provides its clients with the ability to bank online. The secure
transmission of confidential information over the Internet is a critical element
of online banking. The Bank's network could be vulnerable to unauthorized
access, computer viruses, phishing schemes and other security problems. The Bank
may be required to spend significant capital and other resources to protect
against the threat of security breaches and computer viruses,
23
or to alleviate problems caused by security breaches or viruses. To the extent
that the Bank's activities or the activities of its clients involve the storage
and transmission of confidential information, security breaches and viruses
could expose the Bank to claims, litigation and other possible liabilities. Any
inability to prevent security breaches or computer viruses could also cause
existing clients to lose confidence in the Bank's systems and could adversely
affect its reputation and its ability to generate deposits.
Risks Related to Investment in our Common Stock
Limited trading activity for shares of our common stock may contribute to price
volatility.
While our common stock is traded on the OTCBB, there has been limited
trading activity in our common stock. The average monthly trading volume of our
common stock since it began trading in July 2002 has been less than [*] shares.
Due to the limited trading activity of our common stock, relatively small trades
may have a significant impact on the price of our common stock.
Future sales of our common stock could further depress the price of our common
stock.
Sales of a substantial number of shares of our common stock in the public
market by our stockholders, or the perception that such sales are likely to
occur, could cause the market price of our common stock to decline.
We cannot predict what effect, if any, future sales of our common stock, or
the availability of shares for future sale, may have on the trading price of our
common stock. Future sales of shares of our common stock by our existing
stockholders or by us, or the perception that such sales may occur, could
adversely affect the market price of shares of our common stock and may make it
more difficult for you to sell your shares of our common stock at a time and
price that you deem appropriate.
Our management and directors will hold a large portion of our common stock.
Upon closing of this rights offering, assuming the offering is fully
subscribed, we anticipate that our directors and executive officers, along with
the Bank's directors, will beneficially own approximately 1,441,302 shares of
our common stock, or approximately 51%, of our total outstanding shares. As a
result, our management and directors, if acting together, may be able to
influence or control matters requiring approval by our stockholders, including
the election of directors and the approval of mergers, acquisitions or other
extraordinary transactions.
Management and the directors may also have interests that differ from yours
and may vote in a way that is adverse to your interests. The concentration of
ownership may delay, prevent or deter a change-in-control, could deprive our
stockholders of an opportunity to receive a premium for their common stock as
part of a sale of our company and might ultimately affect the market price of
our common stock.
Your shares of common stock will not be an insured deposit.
The shares of our common stock that you purchase in this offering will not
be a bank deposit and will not be insured or guaranteed by the FDIC or any other
government agency. Your investment will be subject to investment risk, and you
must be capable of affording the loss of your entire investment.
USE OF PROCEEDS
Assuming the rights offering results in the sale of $6,012,000 in common
stock, we expect the net proceeds (after deducting the payments for
transactional expenses totaling approximately $100,000) to be approximately $5.9
million. We intend to use the net proceeds from the rights offering to invest in
the Bank for its general corporate purposes. The expected result is to enhance
capital levels at the Bank. While the Bank is considered well capitalized under
regulatory standards, the additional capital will bolster the reputation of the
Bank as being well capitalized and permit the Bank to continue to expand its
asset base.
24
The precise amounts and timing of the application of the net proceeds from
this offering depend upon many factors, including, but not limited to, the
amount of any such proceeds and actual funding requirements. Until the proceeds
are used, the Bank will invest the proceeds, depending on its cash flow
requirements, in short- and long-term investments, including, but not limited to
treasury bills, commercial paper, certificates of deposit, securities issued by
U.S. government agencies, money market funds, repurchase agreements and other
similar investments.
MARKET PRICE AND DIVIDENDS ON OUR COMMON STOCK
We began our status as a reporting company under the Exchange Act as a
result of the trust preferred securities offering we completed during July 2000.
Shares of our common stock have traded on the OTCBB since July 2002 under the
symbol "BVBC." As of September 30, 2008, there were approximately 182
stockholders of record of our common stock. The following table sets forth the
high and low prices of the Company's common stock since the first quarter of
2006 based on closing stock price quotations provided by Yahoo.com. These prices
reflect inter-dealer prices, without retail mark-up, mark-down or commission and
may not necessarily represent actual transactions.
2008 2007 2006
--------------------------- ----------------------- -----------------------
Fiscal Quarter High Low High Low High Low
First $ 34.00 $ 31.00 $ 38.25 $ 33.50 $ 32.00 $ 29.75
Second 34.00 26.00 40.00 33.50 31.00 28.15
Third 31.00 25.00 38.50 33.00 33.00 28.15
Fourth N/A N/A 36.00 31.00 35.00 33.00
The closing price of the Company's stock as of [ ], 2008 was [$*].
Dividends
Our board of directors declared cash dividends on our common stock as
follows:
Declaration Date Amount Record Date Pay Date
Per Share
----------------------------------- -------------- ----------------------------- ----------------------
December 21, 2006 $0.30 December 29, 2006 January 29, 2007
December 20, 2007 $0.36 December 31, 2007 January 31, 2008
Because our consolidated net income consists largely of the net income of
the Bank, our ability to pay dividends on our common stock is subject to our
receipt of dividends from the Bank. The ability of the Bank to pay dividends,
and thus our ability to pay dividends to our stockholders, is regulated by
federal banking laws. In addition, if we elect to defer interest payments on our
outstanding junior subordinated debentures, we will be prohibited from paying
dividends on our common stock during such deferral. As a result of an agreement
with the Federal Reserve Bank and the OSBC, prior regulatory approval is
currently required prior to the payment of any dividends by the Company or the
Bank. After that agreement is terminated, our Board of Directors anticipates the
ability to declare future dividends, subject to limitations imposed by
regulatory capital guidelines and approval, as permitted by the Company's
profitability and liquidity. However, because of our lack of earnings and
regulatory constraints we do not anticipate paying cash dividends to our common
stockholders in the fiscal year ending 2008, nor do we know when we will resume
paying cash dividends.
DILUTION
The sales price for the common stock under this rights offering is less
than the book value and tangible book value as of September 30, 2008. Assuming
we sell the full amount of common stock issuable in connection with the rights
offering, we will issue approximately 334,000 shares. Because certain of our
directors and executive officers and certain Bank directors intend to purchase
shares of our common
25
stock, if you choose not to exercise your subscription rights prior to the
expiration of the rights offering, your relative ownership interest in our
common stock will be diluted. In particular, dilution will be experienced by any
stockholder who (i) does not exercise any of the basic subscription rights or
(ii) although exercising all of the basic subscription rights, fails to exercise
its oversubscription rights in the proportion necessary to maintain the same
percentage of ownership.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the material federal income tax
consequences to U.S. Holders (as defined below) of our common stock of the
receipt of subscription rights in the rights offering and the ownership,
exercise and disposition of the subscription rights. This discussion is a
summary and does not consider all aspects of U.S. federal income taxation that
may be relevant to particular U.S. Holders in the light of their individual
investment circumstances or to certain types of U.S. Holders that are subject to
special tax rules, including partnerships, banks, financial institutions or
other "financial services" entities, broker-dealers, insurance companies,
tax-exempt organizations, regulated investment companies, real estate investment
trusts, retirement plans, individual retirement accounts or other tax-deferred
accounts, persons who use or are required to use mark-to-market accounting,
persons that received our common stock in satisfaction of our prior indebtedness
to such persons, persons that hold rights or our common stock as part of a
"straddle," a "hedge" or a "conversion transaction," persons that have a
functional currency other than the U.S. dollar, investors in pass-through
entities, certain former citizens or permanent residents of the United States
and persons subject to the alternative minimum tax. This discussion also does
not address any federal non-income, state, local or foreign tax considerations
to U.S. Holders, nor does it address any tax considerations to persons other
than U.S. Holders. This summary assumes that U.S. Holders have held our common
stock exclusively as a "capital asset" within the meaning of Section 1221 of the
Internal Revenue Code of 1986, as amended, or the "Code." This summary is based
on the Code and applicable Treasury Regulations, rulings, administrative
pronouncements and decisions as of the date hereof, all of which are subject to
change or differing interpretations at any time with possible retroactive
effect.
For purposes of this discussion, a "U.S. Holder" is a beneficial owner of
our common stock who is (1) a citizen or an individual resident of the United
States; (2) a corporation (or entity treated as a corporation for U.S. federal
income tax purposes) created or organized, or treated as created or organized,
in or under the laws of the United States or any political subdivision of the
United States; (3) an estate the income of which is subject to U.S. federal
income taxation regardless of its source; or (4) a trust (a) if a court within
the United States is able to exercise primary supervision over its
administration and one or more U.S. persons have authority to control all
substantial decisions of the trust or (b) that has a valid election in effect
under applicable Treasury Regulations to be treated as a U.S. person.
If a partnership (or entity or arrangement treated as a partnership for
U.S. federal income tax purposes) holds our common stock, the tax treatment of a
partner in the partnership will depend upon the status of the partner and the
activities of the partnership. In this event, the partner and partnership should
consult their tax advisors concerning the tax treatment of the receipt of
subscription rights in the rights offering and the ownership, exercise and
disposition of the subscription rights.
EACH HOLDER OF OUR COMMON STOCK IS URGED TO CONSULT THEIR TAX ADVISOR
REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL AND FOREIGN INCOME AND OTHER TAX
CONSIDERATIONS OF THE RECEIPT OF SUBSCRIPTION RIGHTS IN THE RIGHTS OFFERING AND
THE OWNERSHIP, EXERCISE AND DISPOSITION OF THE SUBSCRIPTION RIGHTS.
Receipt, Exercise and Expiration of the Subscription Rights; Tax Basis and
Holding Period of Shares Received upon Exercise of the Subscription Rights
You should not recognize taxable income for U.S. federal income tax
purposes in connection with the receipt of subscription rights in the rights
offering. If you allow the subscription rights received in the offering to
expire, you should not recognize any gain or loss upon the expiration of the
subscription rights. You also should not recognize any gain or loss upon the
exercise of the subscription rights received in the rights offering, and the tax
basis of the shares of our common stock acquired through the exercise of the
subscription rights should equal the sum of the subscription price for the
shares and your tax basis, if any, in the subscription rights.
26
Your tax basis in the subscription rights will generally be zero unless
either (1) the fair market value of the subscription rights on the date the
subscription rights are distributed is equal to or exceeds 15% of the fair
market value on that date of our common stock with respect to which the
subscription rights are received or (2) you elect, in your United States federal
income tax return for the taxable year in which the subscription rights are
received, to allocate part of the tax basis of the common stock to the
subscription rights. In the case of (1) or (2) above, a portion of your basis in
our common stock with respect to which the subscription rights are received will
be allocated to the subscription rights in proportion to the respective fair
market values of our common stock and the subscription rights on the date the
subscription rights are distributed. The fair market value of the subscription
rights on the date the subscription rights are distributed is uncertain, and
Blue Valley has not obtained, and does not intend to obtain, an appraisal of the
fair market value of the subscription rights on that date. In determining the
fair market value of the subscription rights, you should consider all relevant
facts and circumstances, including any difference between the subscription price
set forth in the subscription rights and the trading price of our common stock
on the date that the subscription rights are distributed, the length of the
period during which the subscription rights may be exercised and the fact that
the subscription rights are non-transferable. If you have tax basis in the
subscription rights and you allow the subscription rights to expire, the tax
basis of our common stock owned by you with respect to which such subscription
rights were distributed will be restored to the tax basis of such common stock
immediately before the receipt of the subscription rights in the rights
offering. The holding period for the shares of our common stock acquired through
the exercise of the rights will begin on the date the rights are exercised.
If you exercise the subscription rights received in this rights offering
after disposing of the shares of our common stock with respect to which the
subscription rights are received, then certain aspects of the tax treatment of
the exercise of the subscription rights are unclear, including (1) the
allocation of tax basis between our common stock previously sold and the
subscription rights, (2) the impact of that allocation on the amount and timing
of gain or loss recognized with respect to our common stock previously sold, and
(3) the impact of that allocation on the tax basis of our common stock acquired
through exercise of the subscription rights. If you exercise the subscription
rights received in the rights offering after disposing of the shares of our
common stock with respect to which the subscription rights are received, you
should consult your tax advisor.
Sale of Shares of Our Common Stock and Receipt of Distributions on Shares of Our
Common Stock
You will recognize capital gain or loss upon the sale of our common stock
acquired through the exercise of subscription rights in an amount equal to the
difference between the amount realized and your tax basis in our common stock
that you sold. The capital gain or loss will be long-term if your holding period
in the shares is more than one year.
Long-term capital gains recognized by individuals are taxable under current
law at a maximum rate of 15%. Under current law, long-term capital gains
recognized by individuals will be taxable at a maximum rate of 20% for taxable
years beginning after December 31, 2010. Long-term capital gains recognized by
corporations are taxable at ordinary corporate tax rates. If you have held your
shares of our common stock for one year or less, your capital gain or loss will
be short-term. Short-term capital gains are taxed at a maximum rate equal to the
maximum rate applicable to ordinary income. Your ability to use any capital loss
is subject to certain limitations.
Distributions, if any, on shares of our common stock acquired through the
exercise of subscription rights will be taxable to you as a dividend to the
extent that the cash and fair market value of property is allocable to our
current and accumulated earnings and profits for the taxable year in which the
distribution is made. Dividends received by corporate holders of our common
stock are taxable at ordinary corporate tax rates, subject to any applicable
dividends-received deduction. Dividends received by noncorporate (individual)
holders of our common stock in taxable years beginning before January 1, 2011
are taxed under current law at the holder's capital gain tax rate (a maximum
rate of 15%) provided that the holder meets applicable holding period and other
requirements. Under current law, dividends received by noncorporate holders of
our common stock in taxable years after 2010 will be taxed as ordinary income at
a maximum rate of 35%. Any distributions in excess of our current and
accumulated earnings and profits will be treated as a tax-free return of basis,
and any further distributions in excess of your basis in our common stock will
be treated as gain from the sale or exchange of such common stock.
27
Information Reporting and Backup Withholding
You may be subject to information reporting and/or backup withholding with
respect to dividend payments on or the gross proceeds from the disposition of
our common stock acquired through the exercise of subscription rights. Backup
withholding may apply under certain circumstances if you (1) fail to furnish
your social security or other taxpayer identification number, or TIN, (2)
furnish an incorrect TIN, (3) fail to report interest or dividends properly, or
(4) fail to provide a certified statement, signed under penalty of perjury, that
the TIN provided is correct and that you are not subject to backup withholding.
Any amount withheld from a payment under the backup withholding rules is
allowable as a credit against (and may entitle you to a refund with respect to)
your federal income tax liability, provided that the required information is
furnished to the Internal Revenue Service. Certain persons are exempt from
backup withholding, including corporations and financial institutions. You
should consult your tax advisors as to your qualification for exemption from
withholding and the procedure for obtaining such exemption.
Investment by IRA Investors
If you own shares of our common stock through an individual retirement
account or individual retirement annuity (collectively the "IRA") described in
Section 408 of the Code, then you should consult with your tax advisers to
determine whether participation in this offering will result in a non-exempt
prohibited transaction under Section 4975 of the Code. "Prohibited Transactions"
generally include (i) a transfer of plan income or assets to, or use of them by
or for the benefit of, a disqualified person; (ii) any act of a fiduciary by
which plan income or assets are used for his or her own interest; (iii) the
receipt of consideration by a fiduciary for his or her own account from any
party dealing with the plan in a transaction that involves plan income or
assets; (iv) the sale, exchange, or lease of property between a plan and a
disqualified person; (v) lending or extending credit between a plan and a
disqualified person; or (vi) the furnishing of goods, services, or facilities
between a plan and a disqualified person. The most likely scenario in which a
prohibited transaction may occur is if the Bank is serving as trustee for your
IRA. If an IRA participates in a prohibited transaction, then the IRA may lose
its tax-qualified status, resulting in immediate taxation and other adverse tax
consequences to the IRA beneficiary.
PLAN OF DISTRIBUTION
We are offering shares of our common stock directly to you pursuant to the
rights offering. We have not engaged, nor do we intend to engage in connection
with this rights offering, any underwriter, broker, dealer, placement agent or
finder. Our directors and executive officers may participate in the solicitation
of the exercise of subscription rights for the purchase of common stock. These
persons will be reimbursed only for their reasonable out-of-pocket expenses
incurred in connection with any solicitation. Other trained employees of Blue
Valley may assist in the rights offering in ministerial capacities, providing
clerical work in effecting an exercise of subscription rights or answering
questions of a ministerial nature. None of our officers, directors or employees
will be compensated in connection with their participation in the offering by
the payment of commissions or other remuneration based either directly or
indirectly on the transactions in the shares of common stock.
We have agreed to pay the subscription agent a fee plus certain expenses,
which we estimate will total approximately [$*]. We estimate that our total
expenses in connection with the rights offering will be approximately
$100,000.
28
DESCRIPTION OF SECURITIES TO BE REGISTERED
Common Stock
The Company has authorized 15,000,000 shares of common stock, $1.00 par
value. We are also authorized to issue 15,000,000 shares of preferred stock, but
there are no shares issued and outstanding. The holders of Common Stock are
entitled to receive dividends when and as declared by the Board of Directors. In
the event of our liquidation, dissolution or winding-up, the holders of common
stock are entitled to share pro rata in the Company's net assets, if any, after
payment or provision for payment of all debts and liabilities of the Company.
The holders of common stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders and may not cumulate their votes
for the election of directors. Thus, the holders of a majority of the shares of
common stock have the power to elect all the directors. Each share of common
stock is entitled to participate on a pro rata basis in dividends and other
distribution to holders of common stock. There are no redemption, sinking fund,
conversion or preemptive rights with respect to the shares of common stock. The
transfer agent for the common stock is Computershare, Inc. (successor to
American Securities Transfer & Trust, Inc.). As of September 30, 2008, there
are 2,470,242 shares of common stock issued and outstanding held by 182
stockholders of the Company. All shares of common stock currently outstanding
are, and the shares offered hereby, when issued, will be, fully paid and
nonassessable.
Restrictions on Changes in Control
Certain provisions of the Kansas General Corporation Code (the "KGCC"), the
Amended and Restated Articles and the Bylaws of the Company could make more
difficult the acquisition of the Company by means of a tender offer, a proxy
contest or otherwise or the removal of incumbent officers and directors. These
provisions are expected to discourage certain types of coercive takeover
practices and inadequate takeover bids and to encourage persons seeking to
acquire control of the Company to first negotiate with the Company. The Company
believes that the benefits of increased protection of the Company's potential
ability to negotiate with the proponent of an unfriendly or unsolicited proposal
to acquire or restructure the Company outweigh the disadvantages of discouraging
such proposals because, among other things, negotiation of such proposals could
result in an improvement of the terms.
The Company will be subject to the provisions of Section 17-12,100 et seq.
of the KGCC (the "Business Combination Statute"). In general, the Business
Combination Statute prohibits a publicly held Kansas corporation from engaging
in a "business combination" with an "interested stockholder" for a period of
three years after the date that the person became an interested stockholder
unless (with certain exceptions) the business combination or the transaction in
which the person became an interested stockholder is approved in a prescribed
manner. Generally a "business combination" includes a merger, assets sale, stock
sale, or other transaction resulting in a financial benefit to the stockholder.
Generally, an "interested stockholder" is a person who, together with affiliates
and associates, owns (or within three year prior, did own) 15% or more of the
corporation's outstanding voting stock. This provision may have the effect of
delaying, deferring or preventing a change in control of the Company without
further action by the interested stockholder.
The Company will also be subject to the provisions of Section 17-1286 of
the KGCC (the "Control Share Statute"). In general, the Control Share Statute
provides that shares of a Kansas corporation acquired in a "control share
acquisition" have no voting rights except to the extent approved by a vote of a
majority of the votes entitled to be cast on the matter, excluding shares of
stock owned by the acquirer or by officer or directors who are employees of the
corporation. A control share acquisition means, subject to certain exceptions,
the acquisition of beneficial ownership of voting shares of stock which, if
aggregated with all other shares of stock which then have voting rights and are
beneficially owned by such a person, would entitle the acquirer to exercise
voting power in electing directors within one of the following ranges of voting
power: (i) 20% or more but less than 33 1/3%; (ii) 33 1/3% or more but less than
a majority; or (iii) a majority of all voting power. The acquisition of shares
of stock in addition to shares an acquiring person is entitled to vote as a
result of having previously obtained stockholder approval does not constitute a
control share acquisition unless, as a result of such acquisition, the voting
power of the shares beneficially owned by the acquirer would exceed the range in
respect of which voting rights had previously been granted. A number of
29
other acquisition of shares are not deemed to constitute control share
acquisitions, including good faith gifts, transfers pursuant to will, purchases
pursuant to an issuance by the corporation and certain mergers involving the
corporation.
If voting rights are not approved at a meeting of stockholders or if the
acquiring person does not deliver an acquiring person statement as permitted by
statute, then, subject to certain conditions and limitations, the corporation
may redeem at market value any and all of the shares acquired in the control
share acquisition. If voting rights for such shares are restored at a
stockholders' meeting and the acquirer becomes entitled to vote a majority of
the shares entitled to vote, stockholders who properly objected to the control
share acquisition may exercise appraisal rights and receive, in exchange for
their stock, the fair value of such stock. The fair value of the stock as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid in the control share acquisition.
The Company's Amended and Restated Articles require that the Board of
Directors consist of three classes with staggered three-year terms. The number
of directors in each class must be as nearly equal as possible. Thus, one class
of directors will be elected at each annual meeting of stockholders of the
Company, with the other classes continuing for the remainder of their respective
three-year terms. The classification of the Board of Directors makes it more
difficult for the Company's existing stockholders to replace quickly the
majority of the Board of Directors as well as for another party to obtain
control of the Company by replacing the majority of the Board of Directors.
Since the Board of Directors has the power to retain and discharge officers of
the Company, these provisions also make it more difficult for existing
stockholders or another party to effect quickly a change in management.
The Company's Bylaws, as amended, provide special meetings of stockholders
can be called only by a majority of the Board of Directors, the President, or
20% or more of the stockholders. Moreover, the business permitted to be
conducted at any special meeting of stockholders will be limited to the business
for which the meeting was called. The Amended and Restated Articles set forth an
advance notice procedure with regard to the nomination, other than by or at the
direction of the Board of Directors, of candidates for election as directors and
with regard to business to be brought before an annual meeting of stockholders
of the Company. Stockholders will not be permitted to fill vacancies on the
Board of Directors caused by resignation or newly created directorships.
The Company's Amended and Restated Articles and Bylaws contain provisions
requiring the affirmative vote of the holders of at least two-thirds of the
voting stock of the Company to amend many of the foregoing provisions.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The management's discussion and analysis sets forth the major factors that have
affected our financial condition and results of operations and provides a better
understanding of the major factors and trends that affect our earnings
performance and financial condition, and how our performance during 2008
compares with prior years. See our Form 10-K and Quarterly Reports on Form 10-Q
which contain our updated financial results through September 30, 2008 as well
as updated management's discussion and analysis, all of which are incorporated
herein by reference.
MANAGEMENT
Directors and Executive Officers
For each of our directors and our executive officers, we have set forth below
their ages as of September 30, 2008, and their principal positions.
30
Name Age Positions
Directors
Robert D. Regnier ................................. 59 President, Chief Executive Officer and Chairman of the
Board of Directors of Blue Valley; President, Chief
Executive Officer and Chairman of the Board of
Directors of the Bank
Donald H. Alexander................................ 70 Director of Blue Valley and the Bank
Michael J. Brown................................... 51 Director of Blue Valley
Thomas A. McDonnell................................ 63 Director of Blue Valley
Anne D. St. Peter.................................. 43 Director of Blue Valley
Robert D. Taylor................................... 61 Director of Blue Valley
Additional Directors of the Bank
Harvey S. Bodker................................... 72 Director of the Bank
Richard L. Bond.................................... 73 Director of the Bank
Suzanne E. Dotson.................................. 61 Director of the Bank
Charles H. Hunter.................................. 66 Director of the Bank
Executive Officers who are not Directors
Mark A. Fortino.................................... 42 Executive Vice President and Chief Financial Officer
of the Bank; Chief Financial Officer of Blue Valley
Ralph J. Schramp................................... 59 Senior Vice President - Commercial Lending, Mortgage
Originations and Business Development for the Bank
Sheila C. Stokes................................... 46 Senior Vice President - Retail Division of the Bank
Over the past five years, none of the Blue Valley or Bank directors or
executive officers have been involved in any bankruptcy proceeding or criminal
proceeding or have violated any federal or state securities or commodities laws.
SUBSCRIPTIONS BY DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of September 30, 2008, for each of our
directors, each of our named executive officers, each owner of more than 5% of
our common stock, and all of our executive officers and directors as a group,
the following information:
(i) the proposed purchases of shares, assuming sufficient shares of common
stock are available to fulfill purchase intentions; and
(ii) the total amount of our common stock to be held following the
offerings.
Under the rules of the SEC, a person is deemed to be a "beneficial owner"
of a security if that person has or shares "voting power," which includes the
power to vote or to direct the voting of the security, or "investment power,"
which includes the power to dispose of or to direct the disposition of the
security. The rules also treat as outstanding all shares of common stock that a
person would receive upon exercise of stock options or warrants held by that
person, which are immediately exercisable or exercisable within 60 days of the
determination date. Under these rules, more than one person may be deemed a
beneficial owner of the same securities and a person may be deemed to be a
beneficial owner of securities as to which that person has no economic interest.
The address of each person listed below is c/o Blue Valley Ban Corp., 11935
Riley, Overland Park, Kansas 66213.
31
Proposed Purchases of
Common Stock in the Rights
Offering
-----------------------------
Percentage
Common Stock of Class
Beneficially Owned Before Common Stock to be
Before Rights Rights Number of Beneficially Owned After
Offering Offering Shares Amount Rights Offering
--------------------- ------------- ------------- --------------- ----------------------------
Robert D. Regnier 708,894 (1)(3) 28.70% 95,848 $1,725,264 804,472
Thomas A. McDonnell 160,352 (1)(4) 6.49% 77,326 (5) 1,390,248 237,588
Donald H. Alexander 152,432 (1)(6) 6.17% 55,556 (7) 1,000,008 207,988
Robert D. Taylor 7,974 (1)(8) .32% 1,078 19,404 9,052
Michael J. Brown 27,944 (1)(9) 1.13% 3,778 68,004 31,722
Anne D. St. Peter 600 (1)(10) .02% 636 (11) 11,448 1,236
Mark A. Fortino 10,349 (1)(12) .42% 1,399 (13) 25,182 11,748
Sheila C. Stokes 9,012 (1)(14) .37% 407 7,326 9,419
Ralph J. Schramp 3,609 (1) (15) .15% 365 7,300 3,974
Harvey S. Bodker 67,032 (1)(16) 2.71% 6,112 110,016 73,144
Richard L. Bond 600 (1) (17) .02% 81 1,458 681
Suzanne E. Dotson 27,900 (1) (18) 1.13% 2,096 37,728 29,996
Charles H. Hunter 18,748 (1) (19) .76% 1,534 27,612 20,282
- --------------------------------------------------------------------------------------------------------------------------
All Directors and 48.39% 246,216 $4,430,998 1,441,302
Executive Officers, 13 in
number, as a Group
(1) All entries based on information provided to us by our directors and
executive officers.
(2) For purposes of this table, a person is considered to beneficially own
shares of common stock if he or she directly or indirectly has or
shares voting power, which includes the power to vote or to direct the
voting of the shares, or investment power, which includes the power to
dispose or direct the disposition of the shares, or if he/she has the
right to acquire the shares under options which are exercisable
currently or within 60 days of September 30, 2008. Each person named
in the above table has sole voting power and sole investment power
with respect to the indicated shares unless otherwise noted. A person
is considered to have shared voting and investment power over shares
indicated as being owned by the spouse or the IRA of the spouse of
that person.
(3) Includes 119,919 shares held in family limited partnerships and a
corporate entity; 499,047 shares held individually; 1,800 shares
issued to Mr. Regnier under the restricted stock award program; and
88,128 shares held in a family limited partnership with his spouse.
(4) Consists of 2,400 shares held individually; 157,352 shares jointly
held by Mr. McDonnell and his spouse in a trust; and 600 shares issued
to Mr. McDonnell under the restricted stock award program.
(5) Consists of 21,681 shares acquired once Mr. McDonnell exercises his
basic subscription rights; and 55,645 shares acquired once Mr.
McDonnell exercises his oversubscription rights, if available.
(6) Includes 151,832 shares held individually; and 600 shares issued to
Mr. Alexander under the restricted stock award program.
(7) Consists of 20,610 shares acquired once Mr. Alexander exercises his
basic subscription rights; and 34,946 shares acquired once Mr.
Alexander exercises his oversubscription rights, if available.
32
(8) Includes 7,374 shares held individually; and 600 shares issued to Mr.
Taylor under the restricted stock award program.
(9) Includes 600 shares held individually; 26,744 shares held individually
by his spouse; and 600 shares issued to Mr. Brown under the restricted
stock award program.
(10) Includes 600 shares issued to Ms. St. Peter under the restricted stock
award program.
(11) Consists of 81 shares acquired once Ms. Peter exercises her basic
subscription rights; and 555 shares to be acquired once Ms. Peter
exercises her oversubscription rights, if available.
(12) Consists of 4,329 shares held individually; 1,800 shares issued to Mr.
Fortino under the restricted stock award program; 3,400 shares jointly
held by Mr. Fortino and his spouse in a trust; and 820 shares held
individually by his spouse.
(13) Consists of 1,288 shares acquired once Mr. Fortino exercises his basic
subscription rights; and 111 shares to be acquired once Mr. Fortino
exercises his oversubscription rights, if available.
(14) Consists of 812 shares held individually; 1,800 shares issued to Ms.
Stokes under the restricted stock award program; and 6,400 shares Ms.
Stokes has the right to acquire under vested stock options that she
has not exercised.
(15) Consists of 1,209 shares held individually; 1,800 shares issued to Mr.
Schramp under the restricted stock award program; and 600 shares Mr.
Schramp has the right to acquire under vested stock options that he
has not exercised.
(16) Consists of 39,768 shares held individually; 600 shares issued to Mr.
Bodker under the restricted stock award program; and 26,664 shares
jointly held in a family trust.
(17) Consists of 600 shares issued to Mr. Bond under the restricted stock
award program.
(18) Consists of 14,900 shares held individually; 600 shares issued to Ms.
Dotson under the restricted stock award program; and 12,400 shares Ms.
Dotson has the right to acquire under vested stock options that she
has not exercised.
(19) Consists of 10,748 shares held individually; 600 shares issued to Mr.
Hunter under the restricted stock award program; and 7,400 shares Mr.
Hunter has the right to acquire under vested stock options that he has
not exercised.
CERTAIN RELATIONSHIPS WITH RELATED PARTY TRANSACTIONS
The Bank periodically makes loans to the executive officers and directors
of the Bank and Blue Valley, the members of their immediate families and
companies with which they are affiliated. As of September 30, 2008, the Bank had
aggregate loans outstanding to such persons of approximately $24.8 million,
which represented 46.23% of our stockholders' equity of $53.7 million on that
date. These loans:
• were made in the ordinary course of business;
• were made on substantially the same terms, including interest rates
and collateral, as those prevailing at the time for comparable
transactions with other persons; and
• did not involve more than the normal risk of collectibility or present
other unfavorable features.
33
As of September 30, 2008, related party transactions were as follows:
2008 2007
---- ----
(In Thousands) (In Thousands)
Balance, beginning of year $ 20,288 $ 10,773
New loans 15,709 19,035
Repayments and reclassifications (11,173) (9,520)
------------------ ---------------
Balance, end of year $ 24,824 $ 20,288
INDEMNIFICATION OF DIRECTORS, OFFICERS, AND EMPLOYEES
The KGCC authorizes a company to indemnify its directors and officers in
certain instances against certain liabilities that they may incur by virtue of
their relationship with the company. A company may indemnify any director,
officer, employee or agent against judgments, fines, penalties, amounts paid in
settlement, and expenses incurred in any pending, threatened or completed civil,
criminal, administrative, or investigative proceeding (except an action by the
Company) against the individual in his or her capacity as a director, officer,
employee, or agent of the company, or another company if serving in such
capacity at the company's request if the individual (i) acted in good faith;
(ii) acted in a manner which he or she reasonably believed to be in or not
opposed to the best interests of the company; and (iii) with respect to a
criminal action, had no reasonable cause to believe his or her conduct was
unlawful. Furthermore, a company may indemnify any director, officer, agent or
employee against expenses incurred in defense or settlement of any proceeding
brought by the company against the individual in his or her capacity as a
director, officer, employee or agent of the company, or another company if
serving in such capacity at the company's request, if the individual: (i) acted
in good faith; (ii) acted in a manner which he or she reasonably believed to be
in or not opposed to the best interests of the company; and (iii) is not
adjudged to be liable to the company (unless the court finds that he or she is
nevertheless reasonably entitled to indemnity for expenses which the court deems
proper). A company must repay the expenses of any director, officer, employee or
agent who is successful on the merits of an action against the individual in his
or her capacity as such.
A Kansas company is authorized to make any other or further indemnification
or advancement of expenses of any of its directors, officers, employees, or
agents, except for acts or omissions which constitute (i) a violation of the
criminal law (unless the individual had reasonable cause to believe it was
lawful); (ii) a transaction in which the individual derived an improper personal
benefit; (iii) in the case of a director, a circumstance under which certain
liability provisions of the KGCC are applicable (related to payment of dividends
or other distributions or repurchases of shares in violation of the KGCC); or
(iv) willful misconduct or a conscious disregard for the best interest of the
company in a proceeding by the company, or a company stockholder. A Kansas
company also is authorized to purchase and maintain liability insurance for its
directors, officers, employees and agents.
Under our Bylaws, we may indemnify our directors and officers to the
fullest extent permitted by applicable law.
Federal banking law, which is applicable to us as a financial holding
company and to the Bank as an insured depository institution, limits our and the
Bank's ability to indemnify their directors and officers. Neither the Bank nor
we may make, or agree to make, indemnification payments to an
institution-affiliated party such as an officer or director in connection with
any administrative or civil action instituted by a federal banking agency if as
a result of the banking agency action the indemnitee is assessed a civil money
penalty, is removed from office or prohibited from participating in the conduct
of our or the Bank's affairs, or is subject to a cease and desist order. Prior
to the resolution of any action instituted by the applicable banking agency, the
Bank, or we, as applicable, may indemnify officers and directors only if the
respective board of directors, as the case may be, (i) determines in writing
that the indemnified person acted in good faith and in a manner he/she believed
to be in the best interest of the institution, (ii) determines after
investigation that making indemnification payments would not affect our safety
and soundness or the safety and soundness of the Bank, as the case may be, (iii)
if the indemnified party agrees in writing to reimburse us or the Bank, as the
case may be, for any indemnity payments which turn out to be impermissible, and
(iv)
34
determines that the indemnification payments would not otherwise be prohibited
by federal banking law.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby will be
passed upon for us by Husch Blackwell Sanders LLP.
EXPERTS
BKD, LLP, independent registered public accounting firm, has audited our
consolidated financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2007, which are incorporated by reference in this
prospectus and elsewhere in the registration statement. Our financial statements
are incorporated by reference in reliance on BKD, LLP's report, given on their
authority as experts in accounting and auditing.
With respect to the unaudited interim financial information for the periods
ended September 30, 2008, June 30, 2008 and March 31, 2008, incorporated by
reference in this prospectus, the independent accountants have reported that
they have applied limited procedures in accordance with professional standards
for a review of such information. However, their separate reports included in
the Company's quarterly reports on Form 10-Q for the quarters ended September
30, 2008, June 30, 2008 and March 31, 2008, and incorporated by reference
herein, states that they did not audit and they do not express an opinion on
that interim financial information. Accordingly, the degree of reliance on their
report on such information should be restricted in light of the limited nature
of the review procedures applied. The accountants are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
report on the unaudited interim financial information because that report is not
a "report" or a "part" of the registration statement prepared or certified by
the accountants within the meaning of Sections 7 and 11 of the Act.
INCORPORATION BY REFERENCE OF CERTAIN DOCUMENTS
You should rely only on the information provided or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
any different information. This prospectus does not constitute an offer to sell,
or a solicitation of an offer to buy, these securities in any state where the
offer or sale is prohibited. You should not assume that the information in this
prospectus or any prospectus supplement is accurate as of any date other than
the date on the front of the document.
The Securities and Exchange Commission, or the SEC, allows us to
"incorporate by reference" the information that we file with it, meaning we can
disclose important information to you by referring you to those documents
already on file with the SEC. The information incorporated by reference is
considered to be part of this prospectus except for any information that is
superseded by other information that is included in this prospectus.
This filing incorporates by reference the following documents, which we
have previously filed with the SEC:
Blue Valley Ban Corp. SEC Filings Period or Date Filed
(SEC File 001-15933);
(CIK No. 0000901842)
- --------------------------------------------------------------------------------------------------------------------
Annual Report on Form 10-K Year ended December 31, 2007
Quarterly Report on Form 10-Q Quarters ended March 31, 2008, June 30, 2008 and September 30,
2008
35
Current reports on Form 8-K January 17, 2008, April 25, 2008, and August 4, 2008
Definitive proxy statement on Schedule 14A April 14, 2008
In addition to information elsewhere incorporated herein, the following is
hereby incorporated by reference:
• Information from our Annual Proxy Statement on Schedule 14A filed on
April 14, 2008 includes information related to director and executive
officer terms of office, director positions and offices with
registrant, director independence, director and executive officer
family relationships, director and executive officer compensation,
director and executive officer business experience, and general
corporate governance information.
• Information from our Form 10-Q for quarter ended September 30, 2008
includes information related to quantitative and qualitative
disclosures about market risk.
These documents may also be accessed through our website at www.bankbv.com.
The information and other content contained on or linked from our website are
not part of this Prospectus.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this prospectus.
We will provide, without charge, to each person, including any beneficial
owner, to whom this prospectus is delivered, on the written or oral request of
such person, a copy of any or all of the reports or documents incorporated by
reference in this prospectus but not delivered with this prospectus. Any request
may be made by writing or calling us at the following address or telephone
number:
Blue Valley Ban Corp.
11935 Riley
Overland Park, Kansas 66225-6128
Attn: Mark Fortino
Telephone: (913) 338-1000
We file annual, quarterly and current reports with the SEC. You may read
and copy these materials at the SEC's Public Reference Room at 100 F. Street,
N.E., Washington, DC 20549. The public may obtain information on the operation
of the Public Reference Room by calling the SEC at 800-SEC-0330. The SEC
maintains an internet site at http://www.sec.gov that contains reports, proxy
and information statements and other information regarding the company.
36
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with different information. This prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any of
the securities offered by this prospectus to any person or in any jurisdiction
in which an offer or solicitation is not authorized or in which the person
making an offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make an offer or solicitation in those jurisdictions. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of the Blue Valley Ban Corp. common stock.
Blue Valley Ban Corp.
Shares of
COMMON STOCK
PROSPECTUS
______________, 2008
37
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth all costs and expenses, payable by us in
connection with the common stock subscription rights offering being registered
hereunder. All of the amounts shown are estimates except for the Securities and
Exchange Commission registration fee.
SEC registration fee........................................ $335.47
-------
Printing expenses........................................... *
-------
Legal fees and expenses..................................... *
-------
Accounting fees and expenses................................ *
-------
Blue sky fees and expenses.................................. *
-------
Miscellaneous................................................ *
-------
Total.............................................. $ *
=======
- -----------
* Estimated pursuant to instruction to Rule 511 of Regulation S-K.
Item 14. Indemnification of Directors and Officers
Section 17-6305 of the Kansas General Corporation Code (the "KGCC") and
Article VIII of Blue Valley's Bylaws provide generally and in pertinent part
that Blue Valley may indemnify its directors, officers, employees or agents
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by them in connection with any
action, suit or proceeding, whether civil, criminal, administrative or
investigative, except actions by or in the right of the corporation, if, in
connection with the matters in issue, they acted in good faith and in a manner
they reasonably believed to be in, or not opposed to, the best interests of the
corporation, and in connection with any criminal suit or proceeding, if in
connection with the matters in issue, they had no reasonable cause to believe
their conduct was unlawful. Article VIII of Blue Valley's Bylaws provides that
Blue Valley shall not be required to indemnify or advance expenses to any person
in connection with an action, suit or proceeding initiated by such person (other
than an action, suit or proceeding initiated by such person to enforce his right
to indemnification and advancement of expenses pursuant to Section 7 of Article
VIII of the Bylaws) unless the initiation of such action, suit or proceeding was
authorized in advance by the Board of Directors. Section 17-6305 and Article
VIII of our Bylaws further provide that in connection with the defense or
settlement of any action by or in the right of the corporation to procure a
judgment in its favor, Blue Valley may indemnify its directors, officers,
employees or agents against expenses actually and reasonably incurred by them in
connection with the defense or settlement of the action or suit if they acted in
good faith and in a manner they reasonably believed to be in, or not opposed to,
the best interests of the corporation; provided, however, that no
indemnification shall be made in any action as to which they have been adjudged
to be liable to the corporation unless, and only to the extent that, a court
deciding such action determines that, despite the adjudication of liability but
in view of all of the circumstances of the case, they are fairly and reasonably
entitled to indemnification for such expenses as the court deems proper.
Section 9 of Article VIII of our Bylaws and Section 17-6305(g) of the KGCC
provides that upon resolution passed by the Board of Directors, Blue Valley may
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the Blue Valley or is or was serving at
the request of Blue Valley, against any liability asserted against him and
incurred by him in such capacity, or arising out of his status as such, whether
or not Blue Valley would have the power to indemnify him against such liability
under the provisions of the Bylaws or Section 17-6305 of the KGCC. Blue Valley's
directors and officers are insured against losses arising from any claim against
them as such for wrongful acts or omissions, subject to certain limitations.
Article IX of Blue Valley's Amended and Restated Articles of Incorporation
(the "Articles") provides that Blue Valley shall indemnify its officers,
directors and advisory directors to the fullest extent permitted by law. Article
X provides that Blue Valley's directors and advisory directors shall not be
liable for monetary damages for
Part II-1
breach of a fiduciary duty, except to the extent such exemption from liability
is not permitted under the KGCC. As provided in Section 17-6002(b)(8) of the
KGCC, Articles IX and X do not limit or eliminate liability (i) for any breach
of the director's duty of loyalty to Blue Valley or its shareholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) for paying a dividend or approving a stock
repurchase in violation of the KGCC or (iv) for any transaction from which the
director derived an improper personal benefit.
Federal banking law, which is applicable to us as a financial holding
company and to the Bank as an insured depository institution, limits our and the
Bank's ability to indemnify their directors and officers. Neither the Bank nor
we may make, or agree to make, indemnification payments to an
institution-affiliated party such as an officer or director in connection with
any administrative or civil action instituted by a federal banking agency if as
a result of the banking agency action the indemnitee is assessed a civil money
penalty, is removed from office or prohibited from participating in the conduct
of our or the Bank's affairs, or is subject to a cease and desist order. Prior
to the resolution of any action instituted by the applicable banking agency, the
Bank, or we, as applicable, may indemnify officers and directors only if the
respective board of directors, as the case may be, (i) determines in writing
that the indemnified person acted in good faith and in a manner he/she believed
to be in the best interest of the institution, (ii) determines after
investigation that making indemnification payments would not affect our safety
and soundness or the safety and soundness of the Bank, as the case may be, (iii)
if the indemnified party agrees in writing to reimburse us or the Bank, as the
case may be, for any indemnity payments which turn out to be impermissible, and
(iv) determines that the indemnification payments would not otherwise be
prohibited by federal banking law.
Item 15. Recent Sales of Unregistered Securities
Not applicable.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
Exhibit No. Description
----------- -----------
1 Omitted - Inapplicable.
2.1 Agreement and Plan of Merger between Unison Bancorp, Inc., BVBC
Acquisition I, Inc. and Blue Valley Ban Corp., dated as of
November 2, 2006*****
2.2 Acquisition Agreement and Plan of Merger among Northland National
Bank, Blue Valley Ban Corp. and Western National Bank, dated as
of March 2, 2007 *****
2.3 Purchase and Assumption Agreement among Northland National Bank,
Bank of Blue Valley and Blue Valley Ban Corp., dated as of March
2, 2007*****
3.1 Amended and Restated Articles of Incorporation of Blue Valley Ban
Corp. *
3.2 Bylaws, as amended, of Blue Valley Ban Corp. *
4.1 1998 Equity Incentive Plan. *
4.2 1994 Stock Option Plan. *
4.3 Form of Agreement as to Expenses and Liabilities. *
4.4 Form of Indenture dated April 10, 2003, between Blue Valley Ban
Corp. and Wilmington Trust Company **
Part II-2
4.5 Amended and Restated Declaration of Trust dated April 10, 2003 **
4.6 Guarantee Agreement dated April 10, 2003 **
4.7 Fee Agreement dated April 10, 2003 **
4.8 Specimen of Floating Rate Junior Subordinated Debt Security **
4.9 Form of Indenture dated as of July 29, 2005 between Blue Valley
Ban Corp. and Wilmington Trust Company***
4.10 Amended and Restated Declaration of Trust dated July 29, 2005***
4.11 Guarantee Agreement dated July 29, 2005***
5 Opinion of Husch Blackwell Sanders LLP as to legality of the
rights being registered.#
8 Omitted - Inapplicable.
9 Omitted - Inapplicable.
10.1 Promissory Note of Blue Valley Building dated July 15, 1994. *
10.2 Mortgage, Assignment of Leases and Rents and Security Agreement
between Blue Valley Building and Businessmen's Assurance Company
of America, dated July 15, 1994. *
10.3 Assignment of Leases and Rents between Blue Valley Building and
Businessmen's Assurance Company of America dated July 15, 1994. *
10.4 Line of Credit Note with JP Morgan Chase dated June 15, 2005 ****
10.5 Term Note with JP Morgan Chase dated June 15, 2005 ****
10.6 Agreement and Plan of Merger between Unison Bancorp, Inc., BVBC
Acquisition I, Inc. and Blue Valley Ban Corp., dated as of
November 2, 2006 (included in Exhibit 2)*****
10.7 Acquisition Agreement and Plan of Merger among Northland National
Bank, Blue Valley Ban Corp. and Western National Bank, dated as
of March 2, 2007 (included in Exhibit 2)*****
10.8 Purchase and Assumption Agreement among Northland National Bank,
Bank of Blue Valley and Blue Valley Ban Corp., dated as of March
2, 2007 (included in Exhibit 2)*****
10.9 Waiver Letter and Proposed Term Sheet with JP Morgan Chase dated
October 15, 2008.
11 Statement regarding computation of per share earnings.+
12 Omitted - Inapplicable.
15 BKD, LLP letter regarding unaudited interim financial information.
16 Omitted - Inapplicable.
21 Subsidiaries of Blue Valley Ban Corp.+
Part II-3
23.1 Consent of BKD, LLP. (included in Exhibit 15)
23.2 Consent of Husch Blackwell Sanders LLP (included in Exhibit 5).#
24 Omitted - Inapplicable.
25 Omitted - Inapplicable.
26 Omitted - Inapplicable.
99.1 Form of Letter of Transmittal. #
99.2 Form of Instructions as to use of Blue Valley Subscription Rights
Certificates. #
99.3 [Form of Subscription Rights Certificate]. #
99.4 [Preliminary] Subscription Agreement. #
99.5 Acknowledgement of Subscription. #
- -----------------------
* Filed with the Commission on April 11, 2000 as an Exhibit to Blue Valley's
Registration Statement on Form S-1, Amendment No. 1, Fine No. 333-3428.
Exhibit incorporated herein by reference.
** Filed with the Commission on March 19, 2004 as an Exhibit to Blue Valley's
Annual Report on Form 10-K incorporated herein by reference.
*** Filed with the Commission on July 29, 2005 as an Exhibit to Blue Valley's
Current Report on From 8-K. Exhibit incorporated herein by reference.
**** Filed with the Commission on March 24, 2005 as an Exhibit to Blue Valley's
Annual Report on Form 10-K. Exhibit incorporated herein by reference.
***** Filed with the Commission on March 28, 2007 as an Exhibit to Blue Valley's
Annual Report on Form 10-K. Exhibit incorporated herein by reference.
+ Filed with the Commission on March 27, 2008 as an Exhibit to Blue Valley's
Annual Report on Form 10-K. Exhibit incorporated herein by reference.
# To be filed by amendment.
(b) Financial Statement Schedules
All financial statement schedules have been omitted because they are either
not applicable or the required information has been included in the consolidated
financial statements or notes thereto incorporated by reference into this
Prospectus.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
Part II-4
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part
of the registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A, shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in the registration statement or prospectus that
is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities, the undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule
424;
(ii) Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant
or its securities provided by or on behalf of the undersigned registrant;
and
(iv) Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
The undersigned registrant hereby undertakes to supplement the prospectus,
after the expiration of the subscription period, to set forth the results of the
subscription offer, the amount of unsubscribed securities, and the terms of any
subsequent reoffering thereof. If any public offering is to be made on terms
differing from those set forth on the cover page of the prospectus, a
post-effective amendment will be filed to set forth the terms of such offering.
Part II-5
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
Part II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Overland Park, State of
Kansas, on the 16th day of October, 2008.
BLUE VALLEY BAN CORP.
By: /s/ Robert D. Regnier
-------------------------------------------------
Robert D. Regnier, President, Chief Executive Officer and
Director (Principal Executive Officer)
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby severally constitutes and appoints Robert D. Regnier and
Mark A. Fortino and each of them, his or her true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution for him or her and
in his or her name, place and stead, in any and all capacities to sign any and
all amendments (including post-effective amendments) to the registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite or necessary
fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that each said attorneys-in-fact and agents
or any of them or their or his or her substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert D. Regnier President, Chief Executive Officer and October 16, 2008
- --------------------- Director (Principal Executive Officer)
Robert D. Regnier
/s/ Mark A. Fortino Chief Financial Officer (Principal
- ------------------- Financial [and Accounting] Officer) October 16, 2008
Mark A. Fortino
/s/ Donald H. Alexander
- -----------------------
Donald H. Alexander Director October 16, 2008
/s/ Michael J. Brown
- --------------------
Michael J. Brown Director October 16, 2008
/s/ Thomas A. McDonnell
- -----------------------
Thomas A. McDonnell Director October 16, 2008
/s/ Anne D. St. Peter
- ---------------------
Anne D. St. Peter Director October 16, 2008
/s/ Robert D. Taylor
- --------------------
Robert D. Taylor Director October 16, 2008
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
1 Omitted - Inapplicable.
2.1 Agreement and Plan of Merger between Unison Bancorp, Inc., BVBC
Acquisition I, Inc. and Blue Valley Ban Corp., dated as of
November 2, 2006*****
2.2 Acquisition Agreement and Plan of Merger among Northland National
Bank, Blue Valley Ban Corp. and Western National Bank, dated as
of March 2, 2007 *****
2.3 Purchase and Assumption Agreement among Northland National Bank,
Bank of Blue Valley and Blue Valley Ban Corp., dated as of March
2, 2007*****
3.1 Amended and Restated Articles of Incorporation of Blue Valley Ban
Corp. *
3.2 Bylaws, as amended, of Blue Valley Ban Corp. *
4.1 1998 Equity Incentive Plan. *
4.2 1994 Stock Option Plan. *
4.3 Form of Agreement as to Expenses and Liabilities. *
4.4 Form of Indenture dated April 10, 2003, between Blue Valley Ban
Corp. and Wilmington Trust Company **
4.5 Amended and Restated Declaration of Trust dated April 10, 2003 **
4.6 Guarantee Agreement dated April 10, 2003 **
4.7 Fee Agreement dated April 10, 2003 **
4.8 Specimen of Floating Rate Junior Subordinated Debt Security **
4.9 Form of Indenture dated as of July 29, 2005 between Blue Valley
Ban Corp. and Wilmington Trust Company***
4.10 Amended and Restated Declaration of Trust dated July 29, 2005***
4.11 Guarantee Agreement dated July 29, 2005***
5 Opinion of Husch Blackwell Sanders LLP as to legality of the
rights being registered.#
8 Omitted - Inapplicable.
9 Omitted - Inapplicable.
10.1 Promissory Note of Blue Valley Building dated July 15, 1994. *
10.2 Mortgage, Assignment of Leases and Rents and Security Agreement
between Blue Valley Building and Businessmen's Assurance Company
of America, dated July 15, 1994. *
10.3 Assignment of Leases and Rents between Blue Valley Building and
Businessmen's Assurance Company of America dated July 15, 1994. *
10.4 Line of Credit Note with JP Morgan Chase dated June 15, 2005 ****
10.5 Term Note with JP Morgan Chase dated June 15, 2005 ****
10.6 Agreement and Plan of Merger between Unison Bancorp, Inc., BVBC
Acquisition I, Inc. and Blue Valley Ban Corp., dated as of
November 2, 2006 (included in Exhibit 2)*****
10.7 Acquisition Agreement and Plan of Merger among Northland National
Bank, Blue Valley Ban Corp. and Western National Bank, dated as
of March 2, 2007 (included in Exhibit 2)*****
10.8 Purchase and Assumption Agreement among Northland National Bank,
Bank of Blue Valley and Blue Valley Ban Corp., dated as of March
2, 2007 (included in Exhibit 2)*****
10.9 Waiver Letter and Proposed Term Sheet with JP Morgan Chase dated
October 15, 2008.
11 Statement regarding computation of per share earnings. +
12 Omitted - Inapplicable.
15 BKD, LLP letter regarding unaudited interim financial information.
16 Omitted - Inapplicable.
21 Subsidiaries of Blue Valley Ban Corp. +
23.1 Consent of BKD, LLP
23.2 Consent of Husch Blackwell Sanders LLP (included in Exhibit 5).#
24 Omitted - Inapplicable.
25 Omitted - Inapplicable.
26 Omitted - Inapplicable.
99.1 Form of Letter of Transmittal. #
99.2 Form of Instructions as to use of Blue Valley Subscription Rights
Certificates. #
99.3 [Form of Subscription Rights Certificate.] #
99.4 [Preliminary] Subscription Agreement. #
99.5 Acknowledgement of Subscription. #
- ---------------------
* Filed with the SEC on April 11, 2000 as an Exhibit to Blue Valley's
Registration Statement on Form S-1, Amendment No. 1, Fine No. 333-3428.
Exhibit incorporated herein by reference.
** Filed with the SEC on March 19, 2004 as an Exhibit to Blue Valley's Annual
Report on Form 10-K incorporated herein by reference.
*** Filed with the SEC on July 29, 2005 as an Exhibit to Blue Valley's Current
Report on From 8-K. Exhibit incorporated herein by reference.
**** Filed with the SEC on March 24, 2005 as an Exhibit to Blue Valley's Annual
Report on Form 10-K. Exhibit incorporated herein by reference.
***** Filed with the SEC on March 28, 2007 as an Exhibit to Blue Valley's Annual
Report on Form 10-K. Exhibit incorporated herein by reference. + Filed with
the SEC on March 27, 2008 as an Exhibit to Blue Valley's Annual Report on
Form 10-K. Exhibit incorporated herein by reference.
# To be filed by amendment.
