UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------ ------------------
COMMISSION FILE NUMBER: 001-15933
BLUE VALLEY BAN CORP
(Exact name of registrant as specified in its charter)
KANSAS 48-1070996
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11935 RILEY
OVERLAND PARK, KANSAS 66225-6128
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (913) 338-1000
Securities registered pursuant to Section 12(b) of the Act:
<Table>
<Caption>
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Guarantee with respect to the Trust Preferred American Stock Exchange
Securities, $8.00 par value, of BVBC Capital
Trust I
</Table>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by checkmark whether the registrant is an accelerated filer.
Yes [ ] No [X]
As of March 31, 2003 the registrant had 2,235,736 shares of Common Stock
($1.00 par value) outstanding, of which 1,202,853 shares were held by
non-affiliates. The aggregate market value of the common shares of the
registrant held by non-affiliates, computed based on the March 31, 2003 closing
price of the stock, was approximately $29.5 million.
BLUE VALLEY BAN CORP
INDEX
<Table>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Independent Accountants' Report.....................................................................3
Consolidated Balance Sheets - March 31, 2003 (unaudited) and December 31, 2002......................4
Consolidated Statements of Income (unaudited) -
three months ended March 31, 2003 and 2002........................................................6
Consolidated Statements of Stockholders' Equity (unaudited) -
three months ended March 31, 2003 and 2002 .......................................................7
Consolidated Statements of Cash Flows (unaudited) -
three months ended March 31, 2003 and 2002........................................................8
Notes to Consolidated Financial Statements (unaudited) -
three months ended March 31, 2003 and 2002........................................................9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS...........................................................................12
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK....................................21
ITEM 4. CONTROLS AND PROCEDURES.......................................................................23
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................................................................24
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.....................................................24
ITEM 3. DEFAULTS UPON SENIOR SECURITIES...............................................................24
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS...........................................24
ITEM 5. OTHER INFORMATION.............................................................................24
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K..............................................................24
</Table>
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INDEPENDENT ACCOUNTANTS' REPORT
Board of Directors
Blue Valley Ban Corp
Overland Park, Kansas 66225
We have reviewed the consolidated balance sheet of Blue Valley Ban Corp as of
March 31, 2003, and the related consolidated statements of income, stockholders'
equity and cash flows for the three-month periods ended March 31, 2003 and 2002.
These financial statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of
America, the objective of which is the expression of an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with accounting principles generally accepted in the United
States of America.
We have previously audited, in accordance with auditing standards generally
accepted in the United States of America, the consolidated balance sheet as of
December 31, 2002 and the related consolidated statements of income,
stockholders' equity and cash flows for the year then ended (not presented
herein), and in our report dated February 14, 2003 we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated balance sheet as of
December 31, 2002 is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ BKD, LLP
Kansas City, Missouri
April 25, 2003
3
BLUE VALLEY BAN CORP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
(dollars in thousands, except share data)
ASSETS
<Table>
<Caption>
MARCH 31, DECEMBER 31,
2003 2002
------------ ------------
(Unaudited)
Cash and due from banks $ 27,777 $ 27,755
Federal funds sold 8,000 --
------------ ------------
Cash and cash equivalents 35,777 27,755
Available-for-sale securities 62,840 61,364
Mortgage loans held for sale 66,007 119,272
Loans, net of allowance for loan losses of $7,454
and $6,914 in 2003 and 2002, respectively 396,531 373,168
Premises and equipment 15,903 10,277
Foreclosed assets held for sale, net 553 614
Interest receivable 2,072 2,014
Deferred income taxes 1,755 1,688
Prepaid expenses and other assets 2,769 2,541
Federal Home Loan Bank stock, Federal Reserve Bank stock,
and other securities 5,959 5,209
Core deposit intangible asset, at amortized cost 1,243 1,281
------------ ------------
Total assets $ 591,409 $ 605,183
============ ============
</Table>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Report
4
BLUE VALLEY BAN CORP
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2003 AND DECEMBER 31, 2002
(dollars in thousands, except share data)
LIABILITIES AND STOCKHOLDERS' EQUITY
<Table>
<Caption>
MARCH 31, DECEMBER 31,
2003 2002
------------ ------------
(Unaudited)
LIABILITIES
Deposits
Demand $ 95,013 $ 86,591
Savings, NOW and money market 161,913 167,553
Time 192,301 169,643
------------ ------------
Total deposits 449,227 423,787
Federal funds purchased and securities sold under agreements to
repurchase 25,661 33,688
Short-term debt -- 35,000
Long-term debt 63,208 58,051
Guaranteed preferred beneficial interest in Company's
subordinated debt 11,500 11,500
Balance due under U.S. Treasury note option 335 3,142
Accrued interest and other liabilities 5,230 5,671
------------ ------------
Total liabilities 555,161 570,839
------------ ------------
STOCKHOLDERS' EQUITY
Capital stock
Common stock, par value $1 per share;
authorized 15,000,000 shares; issued and outstanding
2003 - 2,235,736 shares; 2002 - 2,222,711 2,236 2,223
Additional paid-in capital 6,499 6,284
Retained earnings 26,828 25,052
Accumulated other comprehensive income
Unrealized appreciation on available-for-sale securities,
net of income taxes of $457 in 2003 and $523 in 2002 685 785
------------ ------------
Total stockholders' equity 36,248 34,344
------------ ------------
Total liabilities and stockholders' equity $ 591,409 $ 605,183
============ ============
</Table>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Report
5
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(dollars in thousands, except share data)
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31,
2003 2002
------------ ------------
(Unaudited) (Unaudited)
INTEREST INCOME
Interest and fees on loans $ 7,047 $ 6,586
Federal funds sold 6 16
Available-for-sale securities 582 1,016
------------ ------------
Total interest income 7,635 7,618
------------ ------------
INTEREST EXPENSE
Interest-bearing demand deposits 41 95
Savings and money market deposit accounts 401 803
Other time deposits 1,715 2,048
Federal funds purchased and securities sold under repurchase
agreements 42 40
Long-term debt and advances 953 788
------------ ------------
Total interest expense 3,152 3,774
------------ ------------
NET INTEREST INCOME 4,483 3,844
PROVISION FOR LOAN LOSSES 600 600
------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 3,883 3,244
------------ ------------
NONINTEREST INCOME
Loans held for sale fee income 5,104 3,008
Service fees 518 435
Other income 76 129
------------ ------------
Total noninterest income 5,698 3,572
------------ ------------
NONINTEREST EXPENSE
Salaries and employee benefits 4,672 3,319
Net occupancy expense 658 450
Other operating expense 1,482 1,271
------------ ------------
Total noninterest expense 6,812 5,040
------------ ------------
INCOME BEFORE INCOME TAXES 2,769 1,776
PROVISION FOR INCOME TAXES 993 616
------------ ------------
NET INCOME $ 1,776 $ 1,160
============ ============
BASIC EARNINGS PER SHARE $ 0.80 $ 0.53
============ ============
DILUTED EARNINGS PER SHARE $ 0.77 $ 0.52
============ ============
</Table>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Report
6
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(dollars in thousands, except share data)
<Table>
<Caption>
ACCUMULATED
ADDITIONAL OTHER
COMPREHENSIVE COMMON PAID-IN RETAINED COMPREHENSIVE
INCOME STOCK CAPITAL EARNINGS INCOME TOTAL
------------- ---------- ---------- ---------- ------------- ---------
BALANCE, DECEMBER 31, 2001 $ 2,175 $ 5,641 $ 19,878 $ 831 $ 28,525
Issuance of 1,500 shares
of common stock 2 28 -- -- 30
Net income $ 1,160 -- -- 1,160 -- 1,160
Change in unrealized
appreciation on
available-for-sale
securities, net of
income taxes of $(248) (373) -- -- -- (373) (373)
------------- ---------- ---------- ---------- ------------- ---------
BALANCE, MARCH 31, 2002 $ 787 $ 2,177 $ 5,669 $ 21,038 $ 458 $ 29,342
============= ========== ========== ========== ============= =========
Issuance of 46,035 shares
of common stock 46 615 -- -- 661
Net income $ 4,236 -- -- 4,236 -- 4,236
Dividends on common stock
($0.10 per share) (222) (222)
Change in unrealized
appreciation on
available-for-sale
securities, net of
income taxes of $218 327 -- -- -- 327 327
------------- ---------- ---------- ---------- ------------- ---------
BALANCE, DECEMBER 31, 2002 $ 4,563 $ 2,223 $ 6,284 $ 25,052 $ 785 $ 34,344
============= ========== ========== ========== ============= =========
Issuance of 13,025 shares
of common stock 13 215 -- -- 228
Net income $ 1,776 -- -- 1,776 -- 1,776
Change in unrealized
appreciation on
available-for-sale
securities, net of
income taxes of $(67) (100) -- -- -- (100) (100)
------------- ---------- ---------- ---------- ------------- ---------
BALANCE, MARCH 31, 2003 $ 1,676 $ 2,236 $ 6,499 $ 26,828 $ 685 $ 36,248
============= ========== ========== ========== ============= =========
</Table>
<Table>
<Caption>
RECLASSIFICATION DISCLOSURE: March 31, December 31, March 31,
2003 2002 2002
------------ ------------ ------------
Unrealized appreciation (depreciation) on available-for-sale
securities, net of income taxes (credit) of $(67), $47, and
$(232) for the periods ended March 31, 2003, December
31, 2002 and March 31, 2002, respectively $ (100) $ 70 $ (349)
Less: reclassification adjustments for appreciation included
in net income, net of income taxes of $0, $77 and $(16)
for the periods ended March 31, 2003, December 31,
2002 and March 31, 2002, respectively -- (116) (24)
------------ ------------ ------------
Change in unrealized appreciation on available-for-sale
securities, net of income taxes (credit) of $(67), $(30), and
$(248) for the periods ended March 31, 2003, December
31, 2002 and March 31, 2002, respectively $ (100) $ (46) $ (373)
============ ============ ============
</Table>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Report
7
BLUE VALLEY BAN CORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
(dollars in thousands, except share data)
<Table>
<Caption>
MARCH 31, 2003 MARCH 31, 2002
-------------- --------------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,776 $ 1,160
Adjustments to reconcile net income to net cash flow from
operating activities:
Depreciation and amortization 335 224
Amortization of premiums and discounts on securities 4 14
Provision for loan losses 600 600
Deferred income taxes -- (53)
Net gain on sales of available-for-sale securities -- (40)
Net loss on sale of foreclosed assets 3 19
Net loss on sale of premises and equipment -- 10
Originations of loans held for sale (369,376) (278,109)
Proceeds from the sale of loans held for sale 422,640 262,378
Changes in
Accrued interest receivable (59) 104
Prepaid expenses and other assets (312) (411)
Accrued interest payable and other liabilities (441) (266)
-------------- --------------
Net cash provided by (used in) operating activities 55,170 (14,370)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net originations of loans (23,996) (4,078)
Proceeds from sales of loan participations -- 1,015
Purchase of premises and equipment (5,839) (250)
Proceeds from the sale of foreclosed assets 92 78
Proceeds from the sale of premises and equipment -- 12
Proceeds from sales of available-for-sale securities -- 5,035
Proceeds from maturities of available-for-sale securities 23,350 6,005
Purchases of available-for-sale securities (24,997) --
Purchases of Federal Home Loan Bank stock, Federal Reserve Bank
stock, and other securities (750) (875)
-------------- --------------
Net cash provided by (used in) investing activities (32,140) 6,942
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in demand deposits, money market, NOW
and savings accounts 2,783 18,016
Net increase in certificates of deposit 22,658 20,965
Repayments of long-term debt (168) (40)
Proceeds from long-term debt 5,325 --
Net payments on short-term debt (35,000) --
Proceeds from sale of common stock 228 30
Net decrease in other borrowings (8,027) (4,260)
Net increase (decrease) in balance due under U.S. Treasury note
option (2,807) 2,668
-------------- --------------
Net cash provided by (used in) financing activities (15,008) 37,379
-------------- --------------
INCREASE IN CASH AND CASH EQUIVALENTS 8,022 29,951
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 27,755 25,159
-------------- --------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 35,777 $ 55,110
============== ==============
</Table>
See Accompanying Notes to Consolidated Financial Statements
and Independent Accountant's Report
8
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
NOTE 1: BASIS OF PRESENTATION
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present
fairly the Company's consolidated financial position as of March 31,
2003, and the consolidated results of its operations, changes in
stockholders' equity and cash flows for the periods ended March 31,
2003 and 2002, and are of a normal recurring nature.
Certain information and note disclosures normally included in the
company's annual financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America have been omitted. These consolidated financial statements
should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's December 31,
2002 Form 10-K filed with the Securities and Exchange Commission.
The results of operations for the period are not necessarily indicative
of the results to be expected for the full year.
The report of BKD, LLP commenting upon their review accompanies the
consolidated financial statements included in Item 1 of Part I.
NOTE 2: EARNINGS PER SHARE
Basic earnings per share is computed based on the weighted average
number of shares outstanding during each year. Diluted earnings per
share is computed using the weighted average common shares and all
potential dilutive common shares outstanding during the period.
The computation of per share earnings for the three-months ended March
31, 2003 and 2002 is as follows:
<Table>
<Caption>
MARCH 31, 2003 MARCH 31, 2002
-------------- --------------
(Unaudited) (Unaudited)
(dollars in thousands, except
share and per share data)
Net income $ 1,776 $ 1,160
============== ==============
Average common shares outstanding 2,225,419 2,175,243
Average common share stock options outstanding 74,562 57,098
-------------- --------------
Average diluted common shares 2,299,981 2,232,341
============== ==============
Basic earnings per share $ 0.80 $ 0.53
============== ==============
Diluted earnings per share $ 0.77 $ 0.52
============== ==============
</Table>
9
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
NOTE 3: LONG-TERM DEBT
Long-term debt at March 31, 2003 and December 31, 2002, consisted of
the following components:
<Table>
<Caption>
MARCH 31, DECEMBER 31,
2003 2002
------------ ------------
(Unaudited)
(in thousands)
Note payable - other (A) $ 1,413 $ 1,456
Note payable - bank (B) 4,070 4,095
Note payable - bank (C) 5,225 --
Federal Home Loan Bank advances (D) 52,500 52,500
------------ ------------
Total long-term debt $ 63,208 $ 58,051
============ ============
</Table>
(A) Due in August 2009, payable in monthly installments of
$23,175, plus interest at 7.5%; collateralized by land,
building and assignment of future rents.
(B) Borrowing under $8 million revolving line of credit; interest
only at the Fed Funds Rate + 1.68% due quarterly until
December 2003, when the outstanding principal balance is due;
collateralized by common stock of the Company's subsidiary
bank. In February, 2003, the line of credit was amended and
the available balance reduced from $10 million in conjunction
with the execution of the term note discussed in note (C).
(C) Due in December 2012, payable in quarterly installments of
principal plus interest at the Fed Funds Rate + 1.68%;
collateralized by common stock of the Company's subsidiary
bank.
(D) Due in 2007, 2008, 2010 and 2011; collateralized by various
assets including mortgage-backed loans. The interest rates on
the advances range from 1.55% to 5.682%. Federal Home Loan
Bank advance availability is determined quarterly and at March
31, 2003, approximately $71,308,000 was available.
Aggregate annual maturities of long-term debt at March 31, 2003 are as
follows:
<Table>
<Caption>
(in thousands)
April 1 to December 31, 2003 $ 4,502
2004 613
2005 653
2006 694
2007 20,736
Thereafter 36,010
--------------
$ 63,208
==============
</Table>
10
BLUE VALLEY BAN CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 2003 AND 2002
NOTE 4: ACCOUNTING FOR STOCK-BASED COMPENSATION
The Company applies Accounting Principles Board No. 25 and related
Interpretations in accounting for its stock option plan and no
compensation cost has been recognized. Pro forma compensation costs for
the Company's plan are determined based on the fair value at the option
grant dates using the minimum value method under Statement of Financial
Accounting Standards No. 123 "Accounting for Stock-based Compensation."
During the quarter, the Company issued no stock options; consequently,
reported and pro forma net income were identical.
NOTE 5: SUBSEQUENT EVENT
On April 10th, 2003, BVBC Capital Trust II ("the Trust"), a Delaware
business trust formed by the Company, completed the sale of $7,500,000
of trust preferred securities. The Trust is a 100% owned finance
subsidiary of the Company. The Trust also issued $232,000 of common
securities to the Company and used the total proceeds of $7,732,000
from the offering to purchase $7,732,000 in principal amount of
variable rate (LIBOR plus 3.25%) junior subordinated debentures of the
Company due April 24, 2033. Securities issued by the Trust are
subordinate to the $11,500,000 issued by BVBC Capital Trust I on July
21, 2000. The offering was a private placement that the Company intends
to use to reduce existing debt and to fund additional growth.
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. The
Company intends such forward-looking statements to be covered by the
safe harbor provisions for forward-looking statements contained in the
Private Securities Litigation Reform Act of 1995, and is including this
statement for purposes of those safe harbor provisions. Forward-looking
statements, which are based on certain assumptions and describe future
plans, strategies and expectations of the Company, can generally be
identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The
Company is unable to predict the actual results of its future plans or
strategies with certainty. Factors which could have a material adverse
effect on the operations and future prospects of the Company include,
but are not limited to, fluctuations in market rates of interest and
loan and deposit pricing; a deterioration of general economic
conditions or the demand for housing in the Company's market areas; a
deterioration in the demand for mortgage financing; legislative or
regulatory changes; adverse developments in the Company's loan or
investment portfolio; any inability to obtain funding on favorable
terms; the loss of key personnel; significant increases in competition;
and the possible dilutive effect of potential acquisitions or
expansions. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not be
placed on such statements.
GENERAL
CRITICAL ACCOUNTING POLICIES
Our critical accounting policies are largely proscribed by accounting
principles generally accepted in the United States of America. After a
review of our policies, we determined that accounting for the allowance
for loan losses, income taxes, and stock-based compensation are deemed
critical accounting policies because of the valuation techniques used,
and the sensitivity of these financial statement amounts to the
methods, as well as the assumptions and estimates underlying these
balances. Accounting for these critical areas requires the most
subjective and complex judgments that could be subject to revision as
new information becomes available. There have not been any material
changes in our critical accounting policies since December 31, 2002.
Further description of our critical accounting policies can be found in
our Annual Report on Form 10-K for the year ended December 31, 2002.
RESULTS OF OPERATIONS
Three months ended March 31, 2003 and 2002. Net income for the quarter
ended March 31, 2003, was $1.8 million, compared to net income of $1.2
million for the quarter ended March 31, 2002, representing an increase
of $616,000, or 53.10%. Diluted earnings per share increased 48.07% to
$0.77 during the first quarter of 2003 from $0.52 in the same period of
2002. The Company's annualized return on average assets and average
stockholders' equity for the three-month period ended March 31, 2003
were 1.23% and 20.19%, compared to 0.92% and 16.11%, respectively, for
the same period in 2002, increases of 33.69% and 25.32%, respectively.
The principal contributing factors to our increase in net income from
the prior year first quarter to the current year were an increase in
non-interest income, specifically loans held for sale fee income and an
increase in net interest income. The current low interest rate
environment has resulted in continued strong demand
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
for residential mortgage loan originations as well as a decline in
funding rates. The Company continues to capitalize on the mortgage
resources put into place during 2001 and 2002.
Fully tax equivalent (FTE) net interest income for the three-month
period ended March 31, 2003 was $4.6 million, an increase of $628,000,
or 15.96%, from $3.9 million for the three-month period ended March 31,
2002.
FTE interest income for the current year first quarter was $7.7
million, with a slight increase of $6,000, or 0.07%, from $7.7 million
in the prior year first quarter. FTE interest income remained constant
due to an overall decrease in the yield on average earning assets
offset by an increase in earning assets. The overall yield on average
earning assets decreased by 84 basis points to 5.74% in the first
quarter of 2003, compared to 6.58% in the prior year first quarter.
Average earning asset volume increased from the first quarter of 2002
to the current period by $69.9 million, or 14.71% which offset the
decrease in yield on interest-earning assets. The 84 basis point
decrease in yield resulted primarily from decreases in market interest
rates during 2002 and the impact of the low interest rates on new and
repriced assets during 2002 and 2003.
Interest expense for the current year first quarter was $3.2 million, a
decrease of $622,000, or 16.49%, from $3.8 million in the prior year
first quarter. The decrease is attributable to a decrease in the rates
paid on average interest-bearing liabilities during the first quarter
of 2003. The primary cause for this decline was the overall decline in
market interest rates and the impact of the low interest rates on new
and repriced liabilities during 2002 and 2003. The rate paid on total
average interest-bearing liabilities decreased to 2.76% during the
quarter ended March 31, 2003 compared to 3.72% during the quarter ended
March 31, 2002, a decrease of 96 basis points. Average interest-bearing
deposits decreased slightly by $1.5 million, or 0.44% from the prior
year and other interest-bearing liabilities increased by $53.1 million
or 73.25% from the prior year, mainly in the form of FHLB borrowings,
Federal Funds purchased, securities sold under agreements to repurchase
and notes payable. The increase in volume partially offset the decrease
in rate.
Average Balance Sheets. The following table sets forth, for the periods
and as of the dates indicated, information regarding our average
balances of assets and liabilities as well as the dollar amounts of FTE
interest income from interest-earning assets and interest expense on
interest-bearing liabilities and the resultant yields or costs. Ratio,
yield and rate information are based on average daily balances where
available; otherwise, average monthly balances have been used.
Nonaccrual loans are included in the calculation of average balances
for loans for the periods indicated.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
AVERAGE BALANCES, YIELDS AND RATES
<Table>
<Caption>
Three Months Ended March 31,
------------------------------------------------------------------
2003 2002
------------------------------- -------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-------- -------- -------- -------- -------- --------
(Dollars in thousands)
ASSETS
Federal funds sold ................................. $ 2,112 $ 6 1.08% $ 5,422 $ 16 1.20%
Investment securities - taxable .................... 50,100 429 3.47 58,239 841 5.86
Investment securities - non-taxable (1) ............ 13,608 232 6.93 15,224 265 7.06
Mortgage loans held for sale ....................... 82,718 1,066 5.23 60,356 948 6.37
Loans, net of unearned discount and fees ........... 396,090 5,981 6.12 335,520 5,638 6.81
-------- -------- -------- --------
Total earning assets ............................. 544,628 7,714 5.74 474,761 7,708 6.58
-------- -------- -------- --------
Cash and due from banks - non-interest bearing ..... 19,792 20,985
Allowance for possible loan losses ................. (7,211) (4,908)
Premises and equipment, net ........................ 15,793 8,101
Other assets ....................................... 14,019 11,144
-------- --------
Total assets ..................................... $587,021 $510,083
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits-interest bearing:
Interest-bearing demand accounts ................... $ 25,172 $ 41 0.67% $ 28,083 $ 95 1.37%
Savings and money market deposits .................. 133,882 401 1.22 139,315 803 2.34
Time deposits ...................................... 178,581 1,715 3.89 171,708 2,048 4.84
-------- -------- -------- --------
Total interest-bearing deposits .................. 337,635 2,157 2.59 339,106 2,946 3.52
-------- -------- -------- --------
Short-term borrowings .............................. 54,890 191 1.41 24,906 87 1.42
Long-term debt ..................................... 70,719 804 4.61 47,592 741 6.31
-------- -------- -------- --------
Total interest-bearing liabilities ............... 463,244 3,152 2.76 411,604 3,774 3.72
-------- -------- -------- --------
Non-interest bearing deposits ...................... 83,037 65,748
Other liabilities .................................. 5,058 3,532
Stockholders' equity ............................... 35,682 29,199
-------- --------
Total liabilities and stockholders' equity ...... $587,021 $510,083
======== ========
Net interest income/spread ......................... $ 4,562 2.98% $ 3,934 2.86%
======== ======== ======== ========
Net interest margin ................................ 3.40% 3.36%
======== ========
</Table>
- ----------
(1) Presented on a fully tax-equivalent basis assuming a tax rate of 34%.
14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Analysis of Changes in Net Interest Income Due to Changes in Interest
Rates and Volumes. The following table presents the dollar amount of
changes in interest income and interest expense for major components of
interest-earning assets and interest-bearing liabilities. It
distinguishes between the increase or decrease related to changes in
balances and changes in interest rates. For each category of
interest-earning assets and interest-bearing liabilities, information
is provided on changes attributable to:
o changes in volume, reflecting changes in volume multiplied by
the current period rate; and
o changes in rate, reflecting changes in rate multiplied by the
prior period volume.
CHANGES IN INTEREST INCOME AND
EXPENSE VOLUME AND RATE VARIANCES
<Table>
<Caption>
THREE MONTHS ENDED MARCH 31,
2003 COMPARED TO 2002
--------------------------------
CHANGE CHANGE
DUE TO DUE TO TOTAL
RATE VOLUME CHANGE
-------- -------- --------
(Dollars in thousands)
Federal funds sold ............................... $ (2) $ (8) $ (10)
Investment securities - taxable .................. (343) (69) (412)
Investment securities - non-taxable (1) .......... (5) (28) (33)
Mortgage loans held for sale ..................... (168) 286 118
Loans, net of unearned discount .................. (570) 913 343
-------- -------- --------
Total interest income ................. (1,088) 1,094 6
-------- -------- --------
Interest-bearing demand accounts ................. (49) (5) (54)
Savings and money market deposits ................ (386) (16) (402)
Time deposits .................................... (399) 66 (333)
Short-term borrowings ............................ (1) 105 104
Long-term debt ................................... (198) 261 63
-------- -------- --------
Total interest expense ................ (1,033) 411 (622)
-------- -------- --------
Net interest income .............................. $ (55) $ 683 $ 628
======== ======== ========
</Table>
- ----------
(1) Presented on a fully tax-equivalent basis assuming a tax rate of 34%.
15
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
PROVISION FOR LOAN LOSSES
The provision for loan losses for the first quarter of 2003 was
$600,000, compared to $600,000 for the same period of 2002. We make
provisions for loan losses in amounts that management deems necessary
to maintain the allowance for loan losses at an appropriate level. The
allowance for loan losses is reviewed monthly, considering such factors
as current and projected economic conditions, loan growth, the
composition of the loan portfolio, loan trends and classifications, and
other factors.
NON-INTEREST INCOME
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------
2003 2002
-------- --------
(In thousands)
Loans held for sale fee income ........................ $ 5,104 $ 3,008
NSF charges and service fees .......................... 290 252
Other service charges ................................. 228 183
Realized gain on sales of investment securities ....... -- 40
Other income .......................................... 76 89
-------- --------
Total non-interest income ....................... $ 5,698 $ 3,572
======== ========
</Table>
Non-interest income increased to $5.7 million, or 59.51%, during the
three-month period ended March 31, 2003, from $3.6 million during the
three-month period ended March 31, 2002. This increase is attributable
primarily to increases in loans held for sale fee income of $2.1
million. During 2002, we experienced significant growth in our loans
held for sale income due to the expansion of our internet mortgage
capabilities concurrent with a relatively low-rate environment.
Mortgage originations and refinancing, and the resultant revenue, have
continued to flourish in the low interest rate environment which has
persisted through the first quarter of 2003.
16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
NON-INTEREST EXPENSE
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-------------------
2003 2002
-------- --------
(In thousands)
Salaries and employee benefits ......... $ 4,672 $ 3,319
Occupancy .............................. 658 450
FDIC and other insurance expense ....... 61 69
General and administrative ............. 1,421 1,202
-------- --------
Total non-interest expense ....... $ 6,812 $ 5,040
======== ========
</Table>
Non-interest expense increased to $6.8 million, or 35.15%, during the
three-month period ended March 31, 2003, from $5.0 million in the prior
year period. This increase is attributable to an increase in salaries
and employee benefits expense of $1.4 million, occupancy expense of
$208,000 and general and administrative expense of $219,000. Our
salaries and employee benefits expense increased to $4.7 million during
the first quarter of 2003 from $3.3 million during the prior year first
quarter, an increase of 40.76%, due to increased volume-based incentive
compensation in our mortgage production departments as well as
additional staff hired to facilitate our growth. We had 263 full-time
equivalent employees at March 31, 2003 as compared to 226 at March 31,
2002. Many areas of the Company added employees to manage growth and
expansion.
FINANCIAL CONDITION
Total assets for the Company at March 31, 2003, were $591.4 million, a
decrease of $13.8 million, or 2.29%, compared to $605.2 million at
December 31, 2002. Deposits and stockholders' equity at March 31, 2003,
were $449.2 million and $36.2 million, respectively, compared with
$423.8 million and $34.3 million, respectively, at December 31, 2002,
increases of $25.4 million, or 5.99%, and $1.9 million, or 5.53%,
respectively.
Loans at March 31, 2003 totaled $404.0 million, reflecting an increase
of $23.9 million, or 6.28%, compared to December 31, 2002. Deposit
volume grew $25.4 million, or 5.99%, to $449.2 million at March 31,
2003 as compared to $423.8 million at December 31, 2002. The majority
of the increase in volume was due to an increase in demand and time
deposits. The loan to deposit ratio at March 31, 2003 was 89.93%
compared to 89.69% at December 31, 2002.
Mortgage loans held for sale at March 31, 2003 totaled $66.0 million, a
decrease of $53.3 million, or 44.66%, compared to December 31, 2002.
While the mortgage origination and refinancing boom experienced during
2002 continued into the first quarter of 2003, the Company's loans held
for sale balance declined primarily due to mortgage interest rate
fluctuations during the period. The Company's principal funding source
for mortgage loans held for sale is short and long-term advances from
the Federal Home Loan Bank. Advance availability with the Federal Home
Loan Bank is determined quarterly and at March 31, 2003, approximately
$71,308,000 million was available.
17
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Non-performing assets consist primarily of loans past due 90 days or
more and nonaccrual loans and foreclosed real estate. The following
table sets forth our non-performing assets as of the dates indicated:
NON-PERFORMING ASSETS
<Table>
<Caption>
AS OF
------------------------------------------------
MARCH 31, MARCH 31, DECEMBER 31,
2003 2002 2002
------------ ------------ ------------
(Dollars in thousands)
REAL ESTATE LOANS:
Past due 90 days or more $ 4 $ -- $ 54
Nonaccrual 175 585 582
INSTALLMENT LOANS:
Past due 90 days or more 40 63 --
Nonaccrual -- -- --
CREDIT CARDS AND RELATED PLANS:
Past due 90 days or more 10 -- 23
Nonaccrual -- -- --
COMMERCIAL (TIME AND DEMAND) AND ALL OTHER LOANS:
Past due 90 days or more 3,880 -- --
Nonaccrual 787 211 233
LEASE FINANCING RECEIVABLES:
Past due 90 days or more -- -- 3
Nonaccrual 310 280 223
DEBT SECURITIES AND OTHER ASSETS (EXCLUDE OTHER
REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS
Past due 90 days or more -- -- --
Nonaccrual -- -- --
------------ ------------ ------------
Total non-performing loans 5,206 1,139 1,118
FORECLOSED ASSETS HELD FOR SALE 553 188 614
------------ ------------ ------------
Total non-performing assets $ 5,759 $ 1,327 $ 1,732
============ ============ ============
Total nonperforming loans to total loans 1.31% 0.34% 0.29%
Total nonperforming loans to total assets 0.88% 0.21% 0.18%
Allowance for loan losses to nonperforming loans 143.18% 439.24% 618.29%
Nonperforming assets to loans and foreclosed
assets held for sale 1.45% 0.39% 0.46%
</Table>
As of March 31, 2003, non-performing loans equaled 1.31% of total
loans, representing a substantial increase in non-performing loans from
December 31, 2002. This increase was primarily due to one commercial
credit relationship which became past due over 90 days in the first
quarter of 2003. The Company had reserved for the estimated potential
loss from this credit relationship when it was identified as impaired
during the fourth quarter of 2002. The level of loans charged-off
decreased during the first quarter of 2003, as evidenced by the
decrease in our ratio of net charge-offs to average loans to 0.06% for
the period ending March 31, 2003 as compared to 0.36% for the period
ending December 31, 2002. We closely monitor non-performing credit
relationships and our philosophy has been to value non-performing loans
at their estimated collectible value and to aggressively manage these
situations. Generally, the Bank maintains its allowance for loan
18
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
losses in excess of its non-performing loans. As of March 31, 2003, our
ratio of allowance for loan losses to non-performing loans was 143.18%.
The following table sets forth information regarding changes in our
allowance for loan and valuation losses for the periods indicated.
SUMMARY OF LOAN LOSS EXPERIENCE AND RELATED INFORMATION
<Table>
<Caption>
AS OF AND FOR THE
------------------------------------------------
THREE MONTHS THREE MONTHS
ENDED ENDED YEAR ENDED
MARCH 31, MARCH 31, DECEMBER 31,
2003 2002 2002
------------ ------------ ------------
(Dollars in thousands)
BALANCE AT BEGINNING OF PERIOD $ 6,914 $ 5,267 $ 5,267
LOANS CHARGED OFF
Commercial real estate -- 70 323
Residential real estate -- -- --
Commercial 81 192 323
Personal 26 15 66
Home Equity -- -- --
Construction -- -- --
Leases 73 681 870
------------ ------------ ------------
Total loans charged-off 180 958 1,582
------------ ------------ ------------
RECOVERIES
Commercial real estate 5 -- 1
Residential real estate 1 -- --
Commercial 41 32 123
Personal 5 10 23
Home Equity -- -- --
Construction -- -- --
Leases 68 52 162
------------ ------------ ------------
Total recoveries 120 94 309
------------ ------------ ------------
NET LOANS CHARGED OFF 60 864 1,273
PROVISION FOR LOAN LOSSES 600 600 2,920
------------ ------------ ------------
BALANCE AT END OF PERIOD $ 7,454 $ 5,003 $ 6,914
============ ============ ============
LOANS OUTSTANDING
Average $ 396,090 $ 335,520 $ 349,879
End of period 403,985 336,038 380,082
RATIO OF ALLOWANCE FOR LOAN LOSSES TO
LOANS OUTSTANDING
Average 1.88% 1.49% 1.98%
End of period 1.85% 1.49% 1.82%
RATIO OF NET CHARGE-OFFS TO
Average loans 0.06% 1.04% 0.36%
End of period loans 0.06% 1.04% 0.33%
</Table>
19
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The allowance for loan losses as a percent of total loans increased
slightly to 1.85% as of March 31, 2003, compared to 1.82% as of
December 31, 2002. As of March 31, 2003, net charge-offs equaled 0.06%
of average total loans on an annualized basis.
Liquidity is measured by a financial institution's ability to raise
funds through deposits, borrowed funds, capital, or the sale of
marketable assets, such as residential mortgage loans or a portfolio of
SBA loans. Other sources of liquidity, including cash flow from the
repayment of loans, are also considered in determining whether
liquidity is satisfactory. Liquidity is also achieved through growth of
core deposits and liquid assets, and accessibility to the money and
capital markets. The funds are used to meet deposit withdrawals,
maintain reserve requirements, fund loans and operate the organization.
Core deposits, defined as demand deposits, interest-bearing transaction
accounts, savings deposits and time deposits less than $100,000
(excluding brokered deposits), were 59.28% and 57.80% of our total
assets at March 31, 2003, and December 31, 2002, respectively.
Management has established internal guidelines to measure liquid assets
as well as relevant ratios concerning asset levels and purchased funds.
These indicators are reported to the board of directors monthly, and at
March 31, 2003, the Bank was within the established guidelines.
At March 31, 2003, our total stockholders' equity was $36.2 million and
our equity to asset ratio was 6.12%. At March 31, 2003, our Tier 1
capital ratio was 9.11% compared to 8.82% at December 31, 2002, while
our total risk-based capital ratio was 10.36% compared to 10.13% at
December 31, 2002. As of March 31, 2003, we had capital in excess of
the requirements for a "well-capitalized" institution.
20
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a continued part of our financial strategy, we attempt to manage the
impact of fluctuations in market interest rates on our net interest
income. This effort entails providing a reasonable balance between
interest rate risk, credit risk, liquidity risk and maintenance of
yield. Our Funds Management Policy is established by our Board of
Directors and monitored by our Asset/Liability Management Committee.
Our Funds Management Policy sets standards within which we are expected
to operate. These standards include guidelines for exposure to interest
rate fluctuations, liquidity, loan limits as a percentage of funding
sources, exposure to correspondent banks and brokers, and reliance on
non-core deposits. Our Funds Management Policy also establishes the
reporting requirements to the Board of Directors. Our Investment Policy
complements our Funds Management Policy by establishing criteria by
which we may purchase securities. These criteria include approved types
of securities, brokerage sources, terms of investment, quality
standards, and diversification.
We use an asset/liability modeling service to analyze the Bank of Blue
Valley's current sensitivity to instantaneous and permanent changes in
interest rates. The system simulates the Bank's asset and liability
base and projects future net interest income results under several
interest rate assumptions. This allows management to view how changes
in interest rates will affect the spread between the yield received on
assets and the cost of deposits and borrowed funds.
The asset/liability modeling service is also used to analyze the net
economic value of equity at risk under instantaneous shifts in interest
rates. The "net economic value of equity at risk" is defined as the
market value of assets less the market value of liabilities plus/minus
the market value of any off-balance sheet positions. By effectively
looking at the present value of all future cash flows on or off the
balance sheet, the net economic value of equity modeling takes a
longer-term view of interest rate risk.
We strive to maintain a position such that current changes in interest
rates will not affect net interest income or the economic value of
equity by more than 5%, per 50 basis points. The following table sets
forth the estimated percentage change in the Bank of Blue Valley's net
interest income over the next twelve month period and net economic
value of equity at risk at March 31, 2003 based on the indicated
instantaneous and permanent changes in interest rates.
<Table>
<Caption>
NET INTEREST NET ECONOMIC
INCOME VALUE OF
CHANGES IN INTEREST RATES (NEXT 12 MONTHS) EQUITY AT RISK
- ------------------------- ---------------- ----------------
300 basis point rise 31.16% 5.65%
200 basis point rise 21.07% 4.38%
100 basis point rise 11.12% 2.90%
Base Rate Scenario -- --
25 basis point decline (3.90)% (1.01)%
50 basis point decline (7.51)% (2.01)%
100 basis point decline (13.99)% (4.07)%
</Table>
The above table indicates that, at March 31, 2003, in the event of a
sudden and sustained increase in prevailing market rates, our net
interest income would be expected to increase as our assets would be
expected to reprice quicker than our liabilities, while a decrease in
rates would indicate just the opposite. Generally, in the decreasing
rate scenarios, not only would adjustable rate assets
21
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
(loans) reprice to lower rates faster than our liabilities, but our
liabilities - long-term Federal Home Loan Bank of Topeka (FHLB)
advances and existing time deposits - would not decrease in rate as
much as market rates. In addition, fixed rate loans might experience an
increase in prepayments, further decreasing yields on earning assets
and causing net interest income to decrease. Another consideration with
a rising interest rate scenario is the impact on mortgage loan
refinancing, which would likely decline, leading to lower loans held
for sale fee income, though the impact is difficult to quantify or
project.
The table also indicates that, at March 31, 2003, in the event of a
sudden increase or decrease in prevailing market rates, the current net
economic value of our equity would decrease. Given our current
asset/liability position, a 25, 50 or 100 basis point decline in
interest rates will result in a lower economic value of our equity as
the change in estimated loss on liabilities exceeds the change in
estimated gain on assets in these interest rate scenarios. Currently,
under a falling rate environment, the Company's estimated market value
of loans could increase as a result of fixed rate loans, net of
possible prepayments. The estimated market value of investment
securities could also rise as our portfolio contains higher yielding
securities. However, the estimated market value increase in fixed rate
loans and investment securities is offset by time deposits unable to
reprice to lower rates immediately and fixed-rate callable advances
from FHLB. The likelihood of advances being called in a decreasing rate
environment is diminished resulting in the advances existing until
final maturity, which has the effect of lowering the economic value of
equity.
22
ITEM 4. CONTROLS AND PROCEDURES
In accordance with Item 307 of Regulation S-K promulgated under the
Securities Act of 1933, as amended, and within 90 days of the date of
this Quarterly Report on Form 10-Q, the Chief Executive Officer and
Chief Financial Officer of the Company (the "Certifying Officers") have
conducted evaluations of the Company's disclosure controls and
procedures. As defined under Sections 13a-14(c) and 15d-14(c) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
term "disclosure controls and procedures" means controls and other
procedures of an issuer that are designed to ensure that information
required to be disclosed by the issuer in the reports that it files or
submits under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules
and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information
required to be disclosed by an issuer in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the
issuer's management, including its principal executive officer or
officers and principal financial officer or officers, or persons
performing similar functions, as appropriate to allow timely decisions
regarding required disclosure. The Certifying Officers have reviewed
the Company's disclosure controls and procedures and have concluded
that those disclosure controls and procedures are effective as of the
date of this Quarterly Report on Form 10-Q. In compliance with Section
302 of the Sarbanes-Oxley Act of 2002, (18 U.S.C. 1350), each of the
Certifying Officers executed an Officer's Certification included in
this Quarterly Report on 10-Q.
As of the date of this Quarterly Report on Form 10-Q, there have not
been any significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent
to the date of their evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.
23
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
11. Computation of Earnings Per Share. Please see p. 9.
15. Letter regarding Unaudited Interim Financial Information
99.1 Certification of the Chief Executive Officer pursuant to 18
U.S.C. Section 1350
99.2 Certification of the Treasurer pursuant to 18 U.S.C. Section
1350
REPORTS ON FORM 8-K
Blue Valley filed no reports on Form 8-K during the quarter ended
March 31, 2003.
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
BLUE VALLEY BAN CORP
Date: May 12, 2003 By: /s/ Robert D. Regnier
--------------------------------
Robert D. Regnier, President and
Chief Executive Officer
Date: May 12, 2003 By: /s/ Mark A. Fortino
--------------------------------
Mark A. Fortino, Treasurer
25
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Robert D. Regnier, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Blue Valley
Ban Corp (the "Company");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of the date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditor any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significant affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
May 12, 2003
/s/ Robert D. Regnier
---------------------
Robert D. Regnier,
President and Chief Executive Officer
26
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Mark A. Fortino, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Blue Valley
Ban Corp (the "Company");
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this
quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) Designed such disclosure controls and procedures to ensure
that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly report
is being prepared;
b) Evaluated the effectiveness of the registrant's disclosure
controls and procedures as of the date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
c) Presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) All significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's ability
to record, process, summarize and report financial data and have
identified for the registrant's auditor any material weaknesses in
internal controls; and
b) Any fraud, whether or not material, that involves
management or other employees who have a significant role in the
registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in
this quarterly report whether or not there were significant changes in internal
controls or in other factors that could significant affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
May 12, 2003
/s/ Mark A. Fortino
-------------------
Mark A. Fortino,
Treasurer
(Chief Financial Officer)
27