##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 OR
 o
    
    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.
  Kansas
    
    48-1070996(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)11935 RileyOverland Park, Kansas
    
    66225-6128(Address of principal executive offices)
    
    (Zip Code)
 (913) 338-1000
  Title of each class
    
    Name of each exchange on which registeredGuarantee with respect to the Trust Preferred
    
    None currentlySecurities, $8.00 par value, of BVBC CapitalTrust I (None of which are currently outstanding)
  o þ
 þ o
 þ o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
 .
 DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



BLUE VALLEY BAN CORP.
 FORM 10-K INDEX
 Page No.PART I.Item 1.
    
    Business
    
    
    2Item 1A.
    
    Risk Factors
    
    
    14Item 1B.
    
    Unresolved Staff Comments
    
    
    16Item 2.
    
    Properties
    
    
    16Item 3.
    
    Legal Proceedings
    
    
    17Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    17PART II.Item 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    18Item 6.
    
    Selected Financial Data
    
    
    19Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    40Item 8.
    
    Financial Statements and Supplementary Data
    
    
    42Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    42Item 9A.
    
    Controls and Procedures
    
    
    42Item 9B.
    
    Other Information
    
    
    42PART III.Item 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    43Item 11.
    
    Executive Compensation
    
    
    43Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    43Item 13.
    
    Certain Relationships, Related Transactions, and Director Independence
    
    
    43Item 14.
    
    Principal Accountant Fees and Services
    
    
    44PART IV.Item 15.
    
    Exhibits, Financial Statement Schedules
    
    
    44SubsidiariesConsent of BKD, LLPCertificationCertificationCertification
  1




---



##### Table of Contents



Part I
 
 Item 1: Business
 The Company and Subsidiaries
        Our Market Area
   2




---



##### Table of Contents



Lending Activities
 Overview
   3




---



##### Table of Contents



LOAN PORTFOLIO
 As of December 31, 2007Amount
    
    
    Percent(In thousands)Commercial
    
    $
    139,120
    
    
    
    23.32
    %Commercial real estate
    
    
    150,655
    
    
    
    25.25Construction
    
    
    188,229
    
    
    
    31.55Lease financing
    
    
    19,724
    
    
    
    3.30Residential real estate
    
    
    37,511
    
    
    
    6.29Consumer
    
    
    22,934
    
    
    
    3.84Home equity
    
    
    38,473
    
    
    
    6.45Total loans and leases
    
    
    596,646
    
    
    
    100.00
    %Less allowance for loan losses
    
    
    8,982Loans receivable, net
    
    $
    587,664
 Commercial loans.
    Commercial real estate loans
  4




---



##### Table of Contents



Construction loans.
  Lease financing.
  Residential real estate loans.
  5




---



##### Table of Contents



Consumer loans.
  Home equity loans.
 Investment Activities
  
    
    secure the safety of principal;
    
    provide adequate liquidity;
    
    provide securities for use in pledging for public funds or repurchase agreements; and
 6




---



##### Table of Contents




    
    maximize after-tax income.
  Deposit Services
  Investment Brokerage Services
  Trust Services
  7




---



##### Table of Contents



Competition
   Employees
  Directors and Executive Officers of the Registrant
  8




---



##### Table of Contents



Name
    
    Age
    
    PositionsDirectorsRobert 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 BankDonald H. Alexander
    
    
    69
    
    
    Director of Blue Valley and the BankMichael J. Brown
    
    
    51
    
    
    Director of Blue ValleyThomas A. McDonnell
    
    
    62
    
    
    Director of Blue ValleyAnne D. St. Peter
    
    
    42
    
    
    Director of Blue ValleyRobert D. Taylor
    
    
    60
    
    
    Director of Blue ValleyAdditional Directors of the BankHarvey S. Bodker
    
    
    72
    
    
    Director of the BankRichard L. Bond
    
    
    72
    
    
    Director of the BankSuzanne E. Dotson
    
    
    61
    
    
    Director of the BankCharles H. Hunter
    
    
    65
    
    
    Director of the BankExecutive Officers who are not DirectorsMark A. Fortino
    
    
    41
    
    
    Senior Vice President and Chief Financial Officer
of the Bank; Chief Financial Officer of Blue ValleyRalph J. Schramp
    
    
    58
    
    
    Senior Vice President  Commercial Lending,
Mortgage Originations and Business Development for
the BankSheila C. Stokes
    
    
    46
    
    
    Senior Vice President  Retail Division of the Bank
 Regulation and Supervision
   Applicable Legislation
  USA PATRIOT Act.
 9




---



##### Table of Contents



Gramm-Leach-Bliley Act
     Bank Holding Company Regulation
  10




---



##### Table of Contents



Investments and Activities.
 
    
    Acquiring, directly or indirectly, ownership or control of any voting shares of another
bank or bank holding company if, after the acquisition, it would own or control more than
5% of the shares of the bank or bank holding company (unless it already owns or controls
the majority of the shares);
    
    Acquiring all or substantially all of the assets of another bank or bank holding
company; or
    
    Merging or consolidating with another bank holding company.
   
    
    Acquiring or retaining direct or indirect ownership or control of more than 5% of the
voting shares of any company that is not a bank or bank holding company; and
    
    Engaging, directly or indirectly, in any business other than that of banking, managing
and controlling banks or furnishing services to banks and their subsidiaries.
   Source of Strength.
 Capital Requirements.
 11




---



##### Table of Contents



Dividends.
 Bank Regulations
  Deposit Insurance.
 Capital Requirements.
  
    
    Well-capitalized if the institution has a total risk-based capital ratio of 10% or
greater, a Tier 1 risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or
greater, and the institution is not subject to an order, written agreement, capital
directive, or prompt corrective action directive to meet and maintain a specific capital
level for any capital measure;
 12




---



##### Table of Contents




    
    Adequately capitalized if the institution has a total risk-based capital ratio of 8%
or greater, a Tier 1 risk-based capital ratio of 4% or greater, and a leverage ratio of 4%
or greater;
    
    Undercapitalized if the institution has a total risk-based capital ratio that is less
than 8%, a Tier 1 risk-based capital ratio that is less than 4%, or a leverage ratio that
is less than 4%;
    
    Significantly undercapitalized if the institution has a total risk-based capital ratio
that is less than 6%, a Tier 1 risk-based capital ratio that is less than 3%, or a leverage
ratio that is less than 3%; and
    
    Critically undercapitalized if the institution has a ratio of tangible equity to total
assets that is equal to or less than 2%.
  
    
    Placing limits on asset growth and restrictions on activities, including the
establishing of new branches;
    
    Requiring the institution to issue additional capital stock (including additional voting
stock) or to be acquired;
    
    Restricting transactions with affiliates;
    
    Restricting the interest rate the institution may pay on deposits;
    
    Requiring that senior executive officers or directors be dismissed;
    
    Requiring the institution to divest subsidiaries;
    
    Prohibiting the payment of principal or interest on subordinated debt; and
    
    Appointing a receiver for the institution.
   Federal Deposit Insurance Corporation Improvement Act.
 Insider Transactions.
 Community Reinvestment Act Requirements.
 13




---



##### Table of Contents



State Bank Activities.
 Regulations Governing Extensions of Credit .
 Reserve Requirements.
 Other Regulations
  
 Item 1A: Risk Factors
 Our operations may be adversely affected if we are unable to maintain and increase our deposit base
and secure adequate funding.
  14




---



##### Table of Contents



The loss of our key personnel could adversely affect our operations.
  Changes in interest rates may adversely affect our earnings and cost of funds.
  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.
  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.
   15




---



##### Table of Contents



We may incur significant costs if we foreclose on environmentally contaminated real estate.
  If we are not able to compete effectively in the highly competitive banking industry, our business
will be adversely affected.
  
 Item 1B: Unresolved Staff Comments
  
 Item 2: Properties
 th
 MortgageIndebtednessLocation
    
    Year Occupied
    
    as of December 31, 2007
    
    OccupancyOverland Park Banking
Center
11935 Riley
    
    
    
    
    
    
    
    
    
    
    74
    %Overland Park, Kansas
    
    
    1994
    
    
    $2.2 Million
    
    One sublease occupying 26%Olathe Banking Center
1235 E. Santa Fe
Olathe, Kansas
    
    
    2001
    
    
    None
    
    
    100
    %Shawnee Banking Center
5520 Hedge Lane Terrace
Shawnee, Kansas
    
    
    2001
    
    
    None
    
    
    100
    %Mortgage and Banking
Center
7900 College Boulevard
Overland Park, Kansas
    
    
    2003
    
    
    $3.8 Million
    
    
    100
    %Leawood Banking Center
13401 Mission Road
    
    
    
    
    
    
    
    
    
    
    42
    %Leawood, Kansas
    
    
    2004
    
    
    None
    
    Five subleases occupying 58%Lenexa Banking Center
9500 Lackman Road
Lenexa, Kansas
    
    
    2007
    
    
    None
    
    
    100
    %
 16




---



##### Table of Contents



Item 3: Legal Proceedings
  
 Item 4: Submission of Matters to a Vote of Security Holders
  17




---



##### Table of Contents



Part II
 
 Item 5: Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.
 Market for Common Stock
 Yahoo.com
 2007
    
    2006Fiscal Quarter
    
    High
    
    Low
    
    High
    
    LowFirst
    
    $
    38.25
    
    
    $
    33.50
    
    
    $
    32.00
    
    
    $
    29.75Second
    
    
    40.00
    
    
    
    33.50
    
    
    
    31.00
    
    
    
    28.15Third
    
    
    38.50
    
    
    
    33.00
    
    
    
    33.00
    
    
    
    28.15Fourth
    
    
    36.00
    
    
    
    31.00
    
    
    
    35.00
    
    
    
    33.00
 Dividends
  Declaration Date
    
    Amount Per Share
    
    Record Date
    
    Pay DateDecember 15, 2005
    
    $0.25
    
    December 30, 2005
    
    January 31, 2006December 21, 2006
    
    $0.30
    
    December 29, 2006
    
    January 29, 2007December 20, 2007
    
    $0.36
    
    December 31, 2007
    
    January 31, 2008
   18




---



##### Table of Contents



Item 6: Selected Financial Data
  As of and for theYear Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands, except share and per share data)Selected Statement of Income DataInterest income:Loans, including fees
    
    $
    47,194
    
    
    $
    44,537
    
    
    $
    37,492
    
    
    $
    29,245
    
    
    $
    28,293Federal funds sold and interest-bearing deposits
    
    
    557
    
    
    
    256
    
    
    
    580
    
    
    
    157
    
    
    
    49Securities
    
    
    4,466
    
    
    
    4,039
    
    
    
    2,317
    
    
    
    2,301
    
    
    
    2,070Total interest income
    
    
    52,217
    
    
    
    48,832
    
    
    
    40,389
    
    
    
    31,703
    
    
    
    30,412Interest expense:Interest-bearing demand deposits
    
    
    656
    
    
    
    97
    
    
    
    94
    
    
    
    169
    
    
    
    165Savings and money market deposit accounts
    
    
    6,362
    
    
    
    4,356
    
    
    
    3,861
    
    
    
    2,932
    
    
    
    2,204Other time deposits
    
    
    13,134
    
    
    
    11,254
    
    
    
    9,171
    
    
    
    7,297
    
    
    
    6,935Funds borrowed
    
    
    5,430
    
    
    
    5,255
    
    
    
    4,867
    
    
    
    4,115
    
    
    
    4,245Total interest expense
    
    
    25,582
    
    
    
    20,962
    
    
    
    17,993
    
    
    
    14,513
    
    
    
    13,549Net interest income
    
    
    26,635
    
    
    
    27,870
    
    
    
    22,396
    
    
    
    17,190
    
    
    
    16,863Provision for loan losses
    
    
    2,855
    
    
    
    1,255
    
    
    
    230
    
    
    
    1,965
    
    
    
    1,350Net interest income after provision for loan losses
    
    
    23,780
    
    
    
    26,615
    
    
    
    22,166
    
    
    
    15,225
    
    
    
    15,513Non-interest income:Loans held for sale fee income
    
    
    3,160
    
    
    
    5,046
    
    
    
    7,408
    
    
    
    10,358
    
    
    
    19,866NSF charges & service fees
    
    
    1,413
    
    
    
    1,244
    
    
    
    1,129
    
    
    
    1,326
    
    
    
    1,283Other service charges
    
    
    1,417
    
    
    
    1,247
    
    
    
    1,037
    
    
    
    1,115
    
    
    
    924Realized gain on available-for-sale securities
    
    
    105
    
    
    
    
    
    
    
    
    
    
    
    524
    
    
    
    Other income
    
    
    1,105
    
    
    
    1,344
    
    
    
    1,727
    
    
    
    617
    
    
    
    463Total non-interest income
    
    
    7,200
    
    
    
    8,881
    
    
    
    11,301
    
    
    
    13,940
    
    
    
    22,536Non-interest expense:Salaries and employee benefits
    
    
    13,570
    
    
    
    14,737
    
    
    
    15,986
    
    
    
    16,670
    
    
    
    19,670Occupancy
    
    
    3,200
    
    
    
    3,059
    
    
    
    3,307
    
    
    
    3,433
    
    
    
    3,137General & administrative
    
    
    7,447
    
    
    
    6,578
    
    
    
    6,841
    
    
    
    6,467
    
    
    
    6,478Total non-interest expense
    
    
    24,217
    
    
    
    24,374
    
    
    
    26,134
    
    
    
    26,570
    
    
    
    29,285Income before income taxes
    
    
    6,763
    
    
    
    11,122
    
    
    
    7,333
    
    
    
    2,595
    
    
    
    8,764Income tax provision
    
    
    2,275
    
    
    
    4,199
    
    
    
    2,764
    
    
    
    665
    
    
    
    3,130Net income
    
    $
    4,488
    
    
    $
    6,923
    
    
    $
    4,569
    
    
    $
    1,930
    
    
    $
    5,634Per Share DataBasic earnings
    
    $
    1.86
    
    
    $
    2.93
    
    
    $
    1.95
    
    
    $
    0.84
    
    
    $
    2.51Diluted earnings
    
    
    1.84
    
    
    
    2.88
    
    
    
    1.91
    
    
    
    0.82
    
    
    
    2.43Dividends
    
    
    0.36
    
    
    
    0.30
    
    
    
    0.25
    
    
    
    0.20
    
    
    
    0.15Book value basic (at end of period)
    
    
    24.34
    
    
    
    22.45
    
    
    
    19.42
    
    
    
    17.78
    
    
    
    17.64Weighted average common shares outstanding:Basic
    
    
    2,410,621
    
    
    
    2,365,932
    
    
    
    2,348,805
    
    
    
    2,302,564
    
    
    
    2,244,930Diluted
    
    
    2,438,203
    
    
    
    2,407,802
    
    
    
    2,388,531
    
    
    
    2,360,061
    
    
    
    2,320,840Dividend payout ratio
    
    
    19.35
    %
    
    
    10.23
    %
    
    
    12.82
    %
    
    
    23.80
    %
    
    
    5.98
    %
 19




---



##### Table of Contents



As of and for theYear Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands)Selected Financial Condition Data
(at end of period):Total securities
    
    $
    76,871
    
    
    $
    87,206
    
    
    $
    99,987
    
    
    $
    66,350
    
    
    $
    106,036Total mortgage loans held for sale
    
    
    10,978
    
    
    
    21,805
    
    
    
    13,906
    
    
    
    44,144
    
    
    
    18,297Total loans
    
    
    596,646
    
    
    
    528,515
    
    
    
    503,143
    
    
    
    507,170
    
    
    
    424,620Total assets
    
    
    736,213
    
    
    
    692,219
    
    
    
    689,589
    
    
    
    672,717
    
    
    
    627,073Total deposits
    
    
    536,370
    
    
    
    535,864
    
    
    
    529,341
    
    
    
    522,646
    
    
    
    470,495Funds borrowed
    
    
    134,942
    
    
    
    96,577
    
    
    
    104,394
    
    
    
    102,469
    
    
    
    111,741Total stockholders equity
    
    
    58,934
    
    
    
    53,820
    
    
    
    46,255
    
    
    
    41,384
    
    
    
    40,198Trust assets under administration
    
    
    104,167
    
    
    
    104,445
    
    
    
    93,988
    
    
    
    118,074
    
    
    
    90,389Selected Financial Ratios and Other Data:Performance Ratios:Net interest margin (1)
    
    
    3.95
    %
    
    
    4.34
    %
    
    
    3.50
    %
    
    
    2.91
    %
    
    
    3.01
    %Non-interest income to average assets
    
    
    0.99
    
    
    
    1.29
    
    
    
    1.63
    
    
    
    2.16
    
    
    
    3.62Non-interest expense to average assets
    
    
    3.34
    
    
    
    3.54
    
    
    
    3.77
    
    
    
    4.11
    
    
    
    4.71Net overhead ratio (2)
    
    
    2.35
    
    
    
    2.25
    
    
    
    2.14
    
    
    
    1.96
    
    
    
    1.08Efficiency ratio (3)
    
    
    71.57
    
    
    
    66.32
    
    
    
    77.56
    
    
    
    85.35
    
    
    
    74.33Return on average assets (4)
    
    
    0.62
    
    
    
    1.00
    
    
    
    0.66
    
    
    
    0.30
    
    
    
    0.91Return on average equity (5)
    
    
    7.88
    
    
    
    13.81
    
    
    
    10.44
    
    
    
    4.69
    
    
    
    14.85Asset Quality Ratios:Non-performing loans to total loans
    
    
    4.22
    %
    
    
    1.31
    %
    
    
    0.87
    %
    
    
    0.86
    %
    
    
    0.72
    %Allowance for possible loan losses to:Total loans
    
    
    1.51
    
    
    
    1.16
    
    
    
    1.33
    
    
    
    1.45
    
    
    
    1.66Non-performing loans
    
    
    35.65
    
    
    
    88.16
    
    
    
    153.27
    
    
    
    168.60
    
    
    
    230.79Net charge-offs to average total loans
    
    
    0.06
    
    
    
    0.35
    
    
    
    0.17
    
    
    
    0.36
    
    
    
    0.30Non-performing loans to total assets
    
    
    3.42
    
    
    
    1.00
    
    
    
    0.63
    
    
    
    0.65
    
    
    
    0.50Balance Sheet Ratios:Loans to deposits
    
    
    111.24
    %
    
    
    98.63
    %
    
    
    95.05
    %
    
    
    97.04
    %
    
    
    90.25
    %Average interest-earning assets to average
interest-bearing liabilities
    
    
    117.84
    
    
    
    119.12
    
    
    
    116.78
    
    
    
    114.38
    
    
    
    114.61Capital Ratios:Total equity to total assets
    
    
    8.01
    %
    
    
    7.77
    %
    
    
    6.71
    %
    
    
    6.15
    %
    
    
    6.42
    %Total capital to risk-weighted assets ratio
    
    
    11.53
    
    
    
    12.47
    
    
    
    12.04
    
    
    
    11.15
    
    
    
    12.41Tier 1 capital to risk-weighted assets ratio
    
    
    10.28
    
    
    
    11.33
    
    
    
    10.25
    
    
    
    9.00
    
    
    
    10.04Tier 1 capital to average assets ratio
    
    
    9.86
    
    
    
    10.29
    
    
    
    8.86
    
    
    
    8.45
    
    
    
    8.31Average equity to average assets ratio
    
    
    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. 20




---



##### Table of Contents



Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations
   Critical Accounting Policies
   
    
    analytical reviews of loan loss experience in relationship to outstanding loans and commitments;
    
    problem and non-performing loans and other loans presenting credit concerns;
    
    trends in loan growth, portfolio composition and quality;
    
    appraisals of the value of collateral; and
    
    managements judgment with respect to current economic conditions and their impact on
the existing loan portfolio.
  21




---



##### Table of Contents



Overview
       22




---



##### Table of Contents



Net Interest Income
  Years ended December 31, 2007 and 2006.
   Years ended December 31, 2006 and 2005.
  23




---



##### Table of Contents



Average Balance Sheets.
 AVERAGE BALANCES, YIELDS AND RATES
 Year Ended December 31,2007
    
    
    2006
    
    
    2005Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(In thousands)AssetsFederal funds sold and other short term investments
    
    $
    10,902
    
    
    $
    557
    
    
    
    5.11
    %
    
    $
    5,100
    
    
    $
    256
    
    
    
    5.01
    %
    
    $
    16,076
    
    
    $
    580
    
    
    
    3.61
    %Investment securities  taxable
    
    
    90,246
    
    
    
    4,452
    
    
    
    4.93
    
    
    
    93,043
    
    
    
    4,013
    
    
    
    4.31
    
    
    
    71,695
    
    
    
    2,256
    
    
    
    3.15Investment securities  non-taxable (1)
    
    
    312
    
    
    
    21
    
    
    
    6.66
    
    
    
    565
    
    
    
    40
    
    
    
    7.03
    
    
    
    1,317
    
    
    
    92
    
    
    
    6.95Mortgage loans held for sale
    
    
    9,589
    
    
    
    609
    
    
    
    6.35
    
    
    
    18,067
    
    
    
    1,145
    
    
    
    6.34
    
    
    
    35,232
    
    
    
    1,903
    
    
    
    5.40Loans, net of unearned discount and fees (2)
    
    
    563,224
    
    
    
    46,585
    
    
    
    8.27
    
    
    
    525,471
    
    
    
    43,392
    
    
    
    8.26
    
    
    
    516,642
    
    
    
    35,589
    
    
    
    6.89Total earning assets
    
    
    674,273
    
    
    
    52,224
    
    
    
    7.75
    
    
    
    642,246
    
    
    
    48,846
    
    
    
    7.61
    
    
    
    640,962
    
    
    
    40,420
    
    
    
    6.31Cash and due from banks  non-interest bearing
    
    
    17,728
    
    
    
    
    
    
    
    
    
    
    
    18,545
    
    
    
    
    
    
    
    
    
    
    
    22,733Allowance for possible loan losses
    
    
    (6,962
    )
    
    
    
    
    
    
    
    
    
    
    (6,556
    )
    
    
    
    
    
    
    
    
    
    
    (7,067
    )Premises and equipment, net
    
    
    19,072
    
    
    
    
    
    
    
    
    
    
    
    18,300
    
    
    
    
    
    
    
    
    
    
    
    19,304Other assets
    
    
    20,895
    
    
    
    
    
    
    
    
    
    
    
    16,444
    
    
    
    
    
    
    
    
    
    
    
    18,119Total assets
    
    $
    725,006
    
    
    
    
    
    
    
    
    
    
    $
    688,979
    
    
    
    
    
    
    
    
    
    
    $
    694,051Liabilities and Stockholders EquityDeposits-interest bearing:Interest-bearing demand accounts
    
    $
    30,719
    
    
    $
    656
    
    
    
    2.14
    %
    
    $
    24,979
    
    
    $
    97
    
    
    
    0.39
    %
    
    $
    25,104
    
    
    $
    94
    
    
    
    0.38
    %Savings and money market deposits
    
    
    163,099
    
    
    
    6,362
    
    
    
    3.90
    
    
    
    147,403
    
    
    
    4,356
    
    
    
    2.95
    
    
    
    178,947
    
    
    
    3,861
    
    
    
    2.16Time deposits
    
    
    269,673
    
    
    
    13,134
    
    
    
    4.87
    
    
    
    262,199
    
    
    
    11,254
    
    
    
    4.29
    
    
    
    238,051
    
    
    
    9,171
    
    
    
    3.85Total interest-bearing deposits
    
    
    463,491
    
    
    
    20,152
    
    
    
    4.35
    
    
    
    434,581
    
    
    
    15,707
    
    
    
    3.61
    
    
    
    442,102
    
    
    
    13,126
    
    
    
    2.97Short-term borrowings
    
    
    33,610
    
    
    
    1,319
    
    
    
    3.93
    
    
    
    32,047
    
    
    
    1,365
    
    
    
    4.26
    
    
    
    24,511
    
    
    
    557
    
    
    
    2.27Long-term debt
    
    
    75,087
    
    
    
    4,111
    
    
    
    5.48
    
    
    
    72,530
    
    
    
    3,890
    
    
    
    5.36
    
    
    
    82,243
    
    
    
    4,310
    
    
    
    5.24Total interest-bearing liabilities
    
    
    572,188
    
    
    
    25,582
    
    
    
    4.47
    
    
    
    539,158
    
    
    
    20,962
    
    
    
    3.89
    
    
    
    548,856
    
    
    
    17,993
    
    
    
    3.28Non-interest bearing deposits
    
    
    91,151
    
    
    
    
    
    
    
    
    
    
    
    93,916
    
    
    
    
    
    
    
    
    
    
    
    93,447Other liabilities
    
    
    4,745
    
    
    
    
    
    
    
    
    
    
    
    5,770
    
    
    
    
    
    
    
    
    
    
    
    7,982Stockholders equity
    
    
    56,922
    
    
    
    
    
    
    
    
    
    
    
    50,135
    
    
    
    
    
    
    
    
    
    
    
    43,766Total liabilities and stockholders equity
    
    $
    725,006
    
    
    
    
    
    
    
    
    
    
    $
    688,979
    
    
    
    
    
    
    
    
    
    
    $
    694,051FTE net interest income/spread
    
    
    
    
    
    $
    26,642
    
    
    
    3.28
    %
    
    
    
    
    
    $
    27,884
    
    
    
    3.72
    %
    
    
    
    
    
    $
    22,427
    
    
    
    3.03
    %FTE net interest margin
    
    
    
    
    
    
    
    
    
    
    3.95
    %
    
    
    
    
    
    
    
    
    
    
    4.34
    %
    
    
    
    
    
    
    
    
    
    
    3.50
    %
 
 (1)
    
    Presented on a fully tax-equivalent basis assuming a tax rate of 34%. For the three
years ended December 31, 2007, 2006 and 2005, the tax equivalency adjustment amounted to
$7,000, $14,000, and $31,000, respectively.(2)
    
    Includes average balances and income from loans on nonaccrual status 24




---



##### Table of Contents



Analysis of Changes in Net Interest Income Due to Changes in Interest Rates and Volumes.
 
    
    changes in rate, reflecting changes in rate multiplied by the prior period volume; and
    
    changes in volume, reflecting changes in volume multiplied by the current period rate.
 CHANGES IN INTEREST INCOME AND EXPENSE VOLUME AND RATE VARIANCES
 Year Ended December 31,
 2007 Compared to 2006
    
    
    2006 Compared to 2005Change
    
    
    Change
    
    
    
    
    
    
    Change
    
    
    ChangeDue to
    
    
    Due to
    
    
    Total
    
    
    Due to
    
    
    Due to
    
    
    TotalRate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    Volume
    
    
    ChangeFederal funds sold
    
    $
    5
    
    
    $
    296
    
    
    $
    301
    
    
    $
    226
    
    
    $
    (550
    )
    
    $
    (324
    )Investment securities  taxable
    
    
    577
    
    
    
    (138
    )
    
    
    439
    
    
    
    836
    
    
    
    921
    
    
    
    1,757Investment securities  non-taxable (1)
    
    
    (2
    )
    
    
    (17
    )
    
    
    (19
    )
    
    
    1
    
    
    
    (53
    )
    
    
    (52
    )Mortgage loans held for sale
    
    
    2
    
    
    
    (538
    )
    
    
    (536
    )
    
    
    330
    
    
    
    (1,088
    )
    
    
    (758
    )Loans, net of unearned discount
    
    
    70
    
    
    
    3,123
    
    
    
    3,193
    
    
    
    7,074
    
    
    
    729
    
    
    
    7,803Total interest income
    
    
    652
    
    
    
    2,726
    
    
    
    3,378
    
    
    
    8,467
    
    
    
    (41
    )
    
    
    8,426Interest-bearing demand accounts
    
    
    436
    
    
    
    123
    
    
    
    559
    
    
    
    4
    
    
    
    (1
    )
    
    
    3Savings and money market deposits
    
    
    1,394
    
    
    
    612
    
    
    
    2,006
    
    
    
    1,427
    
    
    
    (932
    )
    
    
    495Time deposits
    
    
    1,516
    
    
    
    364
    
    
    
    1,880
    
    
    
    1,047
    
    
    
    1,036
    
    
    
    2,083Short-term borrowings
    
    
    (107
    )
    
    
    61
    
    
    
    (46
    )
    
    
    487
    
    
    
    321
    
    
    
    808Long-term debt
    
    
    81
    
    
    
    140
    
    
    
    221
    
    
    
    101
    
    
    
    (521
    )
    
    
    (420
    )Total interest expense
    
    
    3,320
    
    
    
    1,300
    
    
    
    4,620
    
    
    
    3,066
    
    
    
    (97
    )
    
    
    2,969Net interest income
    
    $
    (2,668
    )
    
    $
    1,426
    
    
    $
    (1,242
    )
    
    $
    5,401
    
    
    $
    56
    
    
    $
    5,457
 
 (1)
    
    Presented on a fully tax-equivalent basis assuming a tax rate of 34%. Provision for Loan Losses
   25




---



##### Table of Contents



Critical Accounting Policies
 Non-interest Income
  NON-INTEREST INCOME
 Year Ended December 312007
    
    
    2006
    
    
    2005(In thousands)Loans held for sale fee income
    
    $
    3,160
    
    
    $
    5,046
    
    
    $
    7,408NSF charges and service fees
    
    
    1,418
    
    
    
    1,244
    
    
    
    1,129Other service charges
    
    
    1,412
    
    
    
    1,247
    
    
    
    1,037Realized gains on available-for-sale securities, net
    
    
    105
    
    
    
    
    
    
    
    Other income
    
    
    1,105
    
    
    
    1,344
    
    
    
    1,727Total non-interest income
    
    $
    7,200
    
    
    $
    8,881
    
    
    $
    11,301
   26




---



##### Table of Contents



Non-interest Expense
  NON-INTEREST EXPENSE
 Year Ended December 312007
    
    
    2006
    
    
    2005(In thousands)Salaries and employee benefits
    
    $
    13,570
    
    
    $
    14,737
    
    
    $
    15,986Occupancy
    
    
    3,200
    
    
    
    3,059
    
    
    
    3,307General and administrative
    
    
    7,447
    
    
    
    6,578
    
    
    
    6,841Total non-interest expenses
    
    $
    24,217
    
    
    $
    24,374
    
    
    $
    26,134
   Income Taxes
  Financial Condition
 Lending Activities.
  27




---



##### Table of Contents



As of December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(In thousands)Commercial
    
    $
    139,120
    
    
    
    23.32
    %
    
    $
    110,849
    
    
    
    20.97
    %
    
    $
    112,452
    
    
    
    22.35
    %
    
    $
    117,604
    
    
    
    23.19
    %
    
    $
    109,818
    
    
    
    25.86
    %Commercial real estate
    
    
    150,655
    
    
    
    25.25
    
    
    
    126,952
    
    
    
    24.02
    
    
    
    114,562
    
    
    
    22.77
    
    
    
    126,205
    
    
    
    24.88
    
    
    
    87,438
    
    
    
    20.59Construction
    
    
    188,229
    
    
    
    31.55
    
    
    
    171,709
    
    
    
    32.49
    
    
    
    139,662
    
    
    
    27.76
    
    
    
    130,631
    
    
    
    25.76
    
    
    
    123,445
    
    
    
    29.08Lease financing
    
    
    19,724
    
    
    
    3.30
    
    
    
    18,512
    
    
    
    3.50
    
    
    
    18,238
    
    
    
    3.62
    
    
    
    21,203
    
    
    
    4.18
    
    
    
    22,175
    
    
    
    5.22Residential real estate
    
    
    37,511
    
    
    
    6.29
    
    
    
    34,988
    
    
    
    6.63
    
    
    
    39,371
    
    
    
    7.83
    
    
    
    30,886
    
    
    
    6.09
    
    
    
    27,017
    
    
    
    6.37Consumer
    
    
    22,934
    
    
    
    3.84
    
    
    
    33,097
    
    
    
    6.26
    
    
    
    45,221
    
    
    
    8.99
    
    
    
    48,950
    
    
    
    9.65
    
    
    
    29,701
    
    
    
    6.99Home equity
    
    
    38,473
    
    
    
    6.45
    
    
    
    32,408
    
    
    
    6.13
    
    
    
    33,637
    
    
    
    6.68
    
    
    
    31,691
    
    
    
    6.25
    
    
    
    25,026
    
    
    
    5.89Total loans and leases
    
    
    596,646
    
    
    
    100.00
    %
    
    
    528,515
    
    
    
    100.00
    %
    
    
    503,143
    
    
    
    100.00
    %
    
    
    507,170
    
    
    
    100.00
    %
    
    
    424,620
    
    
    
    100.00
    %Less allowance for loan
losses
    
    
    8,982
    
    
    
    
    
    
    
    6,106
    
    
    
    
    
    
    
    6,704
    
    
    
    
    
    
    
    7,333
    
    
    
    
    
    
    
    7,051Loans receivable, net
    
    $
    587,664
    
    
    
    
    
    
    $
    522,409
    
    
    
    
    
    
    $
    496,439
    
    
    
    
    
    
    $
    499,837
    
    
    
    
    
    
    $
    417,569
 Collateral and Concentration.
  MATURITIES AND SENSITIVITIES OF LOANS TO
CHANGES IN INTEREST RATES
 As of December 31, 2007Less than
    
    One to
    
    Over five
    
    
    
    
    
    More than One Yearone year
    
    five years
    
    years
    
    Total
    
    Fixed
    
    Variable(In thousands)Commercial
    
    $
    67,820
    
    
    $
    65,651
    
    
    $
    5,649
    
    
    $
    139,120
    
    
    $
    22,594
    
    
    $
    48,706Commercial Real Estate
    
    
    23,l05
    
    
    
    115,670
    
    
    
    11,880
    
    
    
    150,655
    
    
    
    70,291
    
    
    
    57,259Construction
    
    
    148,502
    
    
    
    35,869
    
    
    
    3,858
    
    
    
    188,229
    
    
    
    20,815
    
    
    
    18,912
 Non-performing Assets
  28




---



##### Table of Contents



NON-PERFORMING ASSETS
 As of December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands)Commercial and all other loans:Past due 90 days or more
    
    $
    680
    
    
    $
    802
    
    
    $
    781
    
    
    $
    2,008
    
    
    $
    118Nonaccrual
    
    
    60
    
    
    
    381
    
    
    
    769
    
    
    
    543
    
    
    
    318Commercial real estate loans:Past due 90 days or more
    
    
    
    
    
    
    4,951
    
    
    
    598
    
    
    
    
    
    
    
    Nonaccrual
    
    
    512
    
    
    
    
    
    
    
    
    
    
    
    158
    
    
    
    Construction loans:Past due 90 days or more
    
    
    10,699
    
    
    
    
    
    
    
    585
    
    
    
    
    
    
    
    Nonaccrual
    
    
    10,115
    
    
    
    136
    
    
    
    452
    
    
    
    
    
    
    
    487Lease financing:Past due 90 days or more
    
    
    11
    
    
    
    186
    
    
    
    5
    
    
    
    1
    
    
    
    Nonaccrual
    
    
    1,084
    
    
    
    
    
    
    
    119
    
    
    
    80
    
    
    
    249Residential real estate loans:Past due 90 days or more
    
    
    1,194
    
    
    
    
    
    
    
    
    
    
    
    153
    
    
    
    336Nonaccrual
    
    
    189
    
    
    
    410
    
    
    
    1,016
    
    
    
    1,315
    
    
    
    437Consumer loans:Past due 90 days or more
    
    
    13
    
    
    
    13
    
    
    
    49
    
    
    
    17
    
    
    
    42Nonaccrual
    
    
    
    
    
    
    47
    
    
    
    
    
    
    
    
    
    
    
    Home equity loans:Past due 90 days or more
    
    
    637
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonaccrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    1,068Debt securities and other assets (excluding
other real estate owned and other repossessed
assets):Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Nonaccrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    
    25,194
    
    
    
    6,926
    
    
    
    4,374
    
    
    
    4,350
    
    
    
    3,055Foreclosed assets held for sale
    
    
    2,523
    
    
    
    717
    
    
    
    711
    
    
    
    2,645
    
    
    
    416Total non-performing assets
    
    $
    27,717
    
    
    $
    7,643
    
    
    $
    5,085
    
    
    $
    6,995
    
    
    $
    3,471Total non-performing loans to total loans
    
    
    4.22
    %
    
    
    1.31
    %
    
    
    0.87
    %
    
    
    0.86
    %
    
    
    0.72
    %Total non-performing loans to total assets
    
    
    3.42
    
    
    
    1.00
    
    
    
    0.63
    
    
    
    0.65
    
    
    
    0.49Allowance for loan losses to non-performing loans
    
    
    35.65
    
    
    
    88.16
    
    
    
    153.27
    
    
    
    168.60
    
    
    
    230.79Non-performing assets to loans and foreclosed
assets held for sale
    
    
    4.63
    
    
    
    1.44
    
    
    
    1.01
    
    
    
    1.37
    
    
    
    0.82
 Non-performing assets
 Impaired Loans.
  29




---



##### Table of Contents



Allowance For Loan Losses.
  30




---



##### Table of Contents



SUMMARY OF LOAN LOSS EXPERIENCE
AND RELATED INFORMATION
 As of and for theYear Ended December 31,2007
    
    
    2006
    
    
    2005
    
    
    2004
    
    
    2003(In thousands)Balance at beginning of period
    
    $
    6,106
    
    
    $
    6,704
    
    
    $
    7,333
    
    
    $
    7,051
    
    
    $
    6,914Loans charged-off:Commercial loans
    
    
    215
    
    
    
    1,417
    
    
    
    949
    
    
    
    1,665
    
    
    
    802Commercial real estate loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    395Construction loans
    
    
    244
    
    
    
    100
    
    
    
    
    
    
    
    
    
    
    
    Lease financing
    
    
    139
    
    
    
    134
    
    
    
    86
    
    
    
    220
    
    
    
    279Residential real estate loans
    
    
    49
    
    
    
    318
    
    
    
    
    
    
    
    18
    
    
    
    Consumer loans
    
    
    16
    
    
    
    83
    
    
    
    77
    
    
    
    80
    
    
    
    68Home equity loans
    
    
    
    
    
    
    8
    
    
    
    16
    
    
    
    
    
    
    
    10Total loans charged-off
    
    
    663
    
    
    
    2,060
    
    
    
    1,128
    
    
    
    1,983
    
    
    
    1,554Recoveries:Commercial loans
    
    
    294
    
    
    
    117
    
    
    
    154
    
    
    
    41
    
    
    
    77Commercial real estate loans
    
    
    1
    
    
    
    
    
    
    
    3
    
    
    
    7
    
    
    
    10Construction loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lease financing
    
    
    9
    
    
    
    32
    
    
    
    76
    
    
    
    166
    
    
    
    219Residential real estate loans
    
    
    6
    
    
    
    47
    
    
    
    1
    
    
    
    48
    
    
    
    Consumer loans
    
    
    14
    
    
    
    11
    
    
    
    35
    
    
    
    38
    
    
    
    35Home equity loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total recoveries
    
    
    324
    
    
    
    207
    
    
    
    269
    
    
    
    300
    
    
    
    341Net loans charged-off
    
    
    339
    
    
    
    1,853
    
    
    
    859
    
    
    
    1,683
    
    
    
    1,213Allowance of acquired company
    
    
    360
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    2,855
    
    
    
    1,255
    
    
    
    230
    
    
    
    1,965
    
    
    
    1,350Balance at end of period
    
    $
    8,982
    
    
    $
    6,106
    
    
    $
    6,704
    
    
    $
    7,333
    
    
    $
    7,051Loans outstanding:Average
    
    $
    563,224
    
    
    $
    525,471
    
    
    $
    516,643
    
    
    $
    463,833
    
    
    $
    410,593End of period
    
    
    596,646
    
    
    
    528,515
    
    
    
    503,143
    
    
    
    507,170
    
    
    
    424,620Ratio of allowance for loan
losses to loans outstanding:Average
    
    
    1.59
    %
    
    
    1.16
    %
    
    
    1.30
    %
    
    
    1.58
    %
    
    
    1.72
    %End of period
    
    
    1.51
    
    
    
    1.16
    
    
    
    1.33
    
    
    
    1.45
    
    
    
    1.66Ratio of net charge-offs to:Average loans
    
    
    0.06
    
    
    
    0.35
    
    
    
    0.17
    
    
    
    0.36
    
    
    
    0.30End of period loans
    
    
    0.06
    
    
    
    0.35
    
    
    
    0.17
    
    
    
    0.33
    
    
    
    0.29
  31




---



##### Table of Contents



ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
 As of December 31,2007
    
    2006
    
    2005
    
    2004
    
    2003(In thousands)% of Total
    
    
    
    
    
    % of Total
    
    
    
    
    
    % of Total
    
    
    
    
    
    % of Total
    
    
    
    
    
    % of TotalAmount
    
    Allowance
    
    Amount
    
    Allowance
    
    Amount
    
    Allowance
    
    Amount
    
    Allowance
    
    Amount
    
    AllowanceCommercial
    
    $
    1,790
    
    
    
    19.93
    %
    
    $
    1,386
    
    
    
    22.70
    %
    
    $
    1,863
    
    
    
    27.79
    %
    
    $
    3,016
    
    
    
    41.13
    %
    
    $
    2,899
    
    
    
    41.12
    %Commercial real estate
    
    
    1,597
    
    
    
    17.78
    
    
    
    1,674
    
    
    
    27.42
    
    
    
    1,441
    
    
    
    21.49
    
    
    
    1,432
    
    
    
    19.53
    
    
    
    1,161
    
    
    
    16.47Construction
    
    
    4,188
    
    
    
    46.63
    
    
    
    1,920
    
    
    
    31.44
    
    
    
    1,776
    
    
    
    26.51
    
    
    
    1,475
    
    
    
    20.11
    
    
    
    1,581
    
    
    
    22.42Lease financing
    
    
    664
    
    
    
    7.39
    
    
    
    355
    
    
    
    5.81
    
    
    
    582
    
    
    
    8.68
    
    
    
    583
    
    
    
    7.95
    
    
    
    690
    
    
    
    9.78Residential real estate
    
    
    377
    
    
    
    4.20
    
    
    
    402
    
    
    
    6.58
    
    
    
    536
    
    
    
    7.99
    
    
    
    209
    
    
    
    2.85
    
    
    
    273
    
    
    
    3.87Consumer
    
    
    119
    
    
    
    1.32
    
    
    
    172
    
    
    
    2.82
    
    
    
    294
    
    
    
    4.38
    
    
    
    404
    
    
    
    5.51
    
    
    
    288
    
    
    
    4.09Home equity
    
    
    247
    
    
    
    2.75
    
    
    
    197
    
    
    
    3.23
    
    
    
    212
    
    
    
    3.16
    
    
    
    214
    
    
    
    2.92
    
    
    
    159
    
    
    
    2.25Total
    
    $
    8,982
    
    
    
    100.00
    %
    
    $
    6,106
    
    
    
    100.00
    %
    
    $
    6,704
    
    
    
    100.00
    %
    
    $
    7,333
    
    
    
    100.00
    %
    
    $
    7,051
    
    
    
    100.00
    %
 Investment securities.
    INVESTMENT SECURITIES PORTFOLIO COMPOSITION
 At December 31,2007
    
    
    2006
    
    
    2005(In thousands)U.S. government sponsored agency securities
    
    $
    75,953
    
    
    $
    86,165
    
    
    $
    98,667State and municipal obligations
    
    
    210
    
    
    
    360
    
    
    
    674Equity and other
    
    
    708
    
    
    
    681
    
    
    
    646Total
    
    $
    76,871
    
    
    $
    87,206
    
    
    $
    99,987
  32




---



##### Table of Contents



MATURITY OF INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES
 Total InvestmentOne Year or Less
    
    
    One to Five Years
    
    
    Five to Ten Years
    
    
    More Than Ten Years
    
    
    SecuritiesCarrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    AverageValue
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield(In thousands)Available-For-SaleU.S. government sponsored
agency
    
    $
    7,527
    
    
    
    4.81
    %
    
    $
    49,714
    
    
    
    5.11
    %
    
    $
    18,712
    
    
    
    5.62
    %
    
    $
    
    
    
    
    
    %
    
    $
    75,953
    
    
    
    5.18
    %State and municipal
Obligations
    
    
    210
    
    
    
    6.44
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    210
    
    
    
    6.44Equity and other securities
with no defined maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    708
    
    
    
    2.96Total available-for-sale
    
    $
    7,737
    
    
    
    4.85
    %
    
    $
    49,714
    
    
    
    5.11
    %
    
    $
    18,712
    
    
    
    5.62
    %
    
    $
    
    
    
    
    
    %
    
    $
    76,871
    
    
    
    5.16
    %
 Deposits.
  DEPOSITS
 Year Ended December 31,2007
    
    
    2006
    
    
    2005(In thousands)Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weightedof
    
    
    Average
    
    
    
    
    
    
    of
    
    
    Average
    
    
    
    
    
    
    Of
    
    
    AverageBalance
    
    
    Deposits
    
    
    Rate
    
    
    Balance
    
    
    Deposits
    
    
    Rate
    
    
    Balance
    
    
    Deposits
    
    
    RateDemand
    
    $
    87,927
    
    
    
    16.39
    %
    
    
    
    %
    
    $
    94,823
    
    
    
    17.69
    %
    
    
    
    %
    
    $
    94,452
    
    
    
    17.85
    %
    
    
    
    %Savings
    
    
    8,384
    
    
    
    1.57
    
    
    
    0.49
    
    
    
    8,874
    
    
    
    1.66
    
    
    
    0.49
    
    
    
    9,669
    
    
    
    1.82
    
    
    
    0.49Interest-bearing demand
    
    
    35,983
    
    
    
    6.71
    
    
    
    2.14
    
    
    
    26,427
    
    
    
    4.93
    
    
    
    0.39
    
    
    
    26,560
    
    
    
    5.01
    
    
    
    0.38Money Market
    
    
    153,619
    
    
    
    28.64
    
    
    
    4.09
    
    
    
    23,071
    
    
    
    4.31
    
    
    
    1.13
    
    
    
    27,583
    
    
    
    5.21
    
    
    
    0.57Money Management
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    97,697
    
    
    
    18.23
    
    
    
    3.61
    
    
    
    121,422
    
    
    
    22.94
    
    
    
    2.60Time Deposits
    
    
    250,457
    
    
    
    46.69
    
    
    
    4.87
    
    
    
    284,972
    
    
    
    53.18
    
    
    
    3.97
    
    
    
    249,655
    
    
    
    47.17
    
    
    
    3.85Total deposits
    
    $
    536,370
    
    
    
    100.00
    %
    
    
    
    
    
    $
    535,864
    
    
    
    100.00
    %
    
    
    
    
    
    $
    529,341
    
    
    
    100.00
    %
 33




---



##### Table of Contents



AMOUNTS AND MATURITIES OF
TIME DEPOSITS OF $100,000 OR MORE
 As of December 31, 2007Weighted AverageAmount
    
    
    Rate Paid(In thousands)Three months or less
    
    $
    36,306
    
    
    
    5.08
    %Over three months through six months
    
    
    19,091
    
    
    
    5.30Over six months through twelve months
    
    
    46,733
    
    
    
    5.23Over twelve months
    
    
    36,922
    
    
    
    5.02Total
    
    $
    139,052
    
    
    
    5.14
    %
 Liquidity and Capital Resources
 Liquidity
   34




---



##### Table of Contents



SHORT-TERM BORROWINGS
 AverageAmount
    
    
    amount
    
    
    Maximum
    
    
    Weighted
    
    
    Weightedoutstanding
    
    
    outstanding
    
    
    Outstanding
    
    
    average interest
    
    
    Averageat
    
    
    during the
    
    
    At any
    
    
    rate during
    
    
    interest rateperiod end
    
    
    period (1)
    
    
    Month end
    
    
    the period
    
    
    at period end(In thousands)At or for the year ended December 31, 2007:Federal Home Loan Bank borrowings
    
    $
    25,000
    
    
    $
    2,701
    
    
    $
    25,000
    
    
    
    5.10
    %
    
    
    4.67
    %Federal Funds purchased
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase agreements and other
interest bearing liabilities
    
    
    27,956
    
    
    
    29,873
    
    
    
    35,472
    
    
    
    3.78
    
    
    
    2.82Total
    
    $
    52,956
    
    
    $
    32,574
    
    
    
    
    
    
    
    3.89
    
    
    
    3.69At or for the year ended December 31, 2006:Federal Home Loan Bank borrowings
    
    $
    
    
    
    $
    6,668
    
    
    $
    31,500
    
    
    
    5.13
    %
    
    
    
    %Federal Funds purchased
    
    
    
    
    
    
    152
    
    
    
    
    
    
    
    5.09
    
    
    
    Repurchase agreements and other
interest bearing liabilities
    
    
    28,574
    
    
    
    24,499
    
    
    
    34,052
    
    
    
    3.27
    
    
    
    4.07Total
    
    $
    28,574
    
    
    $
    31,319
    
    
    
    
    
    
    
    3.67
    
    
    
    4.07At or for the year ended December 31, 2005:Federal Home Loan Bank borrowings
    
    $
    
    
    
    $
    596
    
    
    $
    
    
    
    
    2.90
    %
    
    
    
    %Federal Funds purchased
    
    
    
    
    
    
    136
    
    
    
    
    
    
    
    3.04
    
    
    
    Repurchase agreements and other
interest bearing liabilities
    
    
    24,929
    
    
    
    23,152
    
    
    
    25,252
    
    
    
    2.22
    
    
    
    2.95Total
    
    $
    24,929
    
    
    $
    23,884
    
    
    
    
    
    
    
    2.25
    
    
    
    2.95
 
 (1)
    
    Calculations are based on daily averages where available and monthly averages otherwise. Capital Resources.
  35




---



##### Table of Contents



RISK-BASED CAPITAL
 December 31,2007
    
    
    2006
    
    
    2005(In thousands)Tier 1 capitalStockholders equity
    
    $
    58,934
    
    
    $
    53,820
    
    
    $
    46,255Intangible assets
    
    
    (5,942
    )
    
    
    (671
    )
    
    
    (823
    )Unrealized (appreciation)
depreciation on available-for-sale
securities and derivative instruments
    
    
    (600
    )
    
    
    95
    
    
    
    473Trust preferred securities (1)
    
    
    19,000
    
    
    
    17,972
    
    
    
    15,576Total Tier 1 capital
    
    
    71,392
    
    
    
    71,216
    
    
    
    61,481Tier 2 capitalQualifying allowance for loan losses
    
    
    8,683
    
    
    
    6,106
    
    
    
    6,704Trust preferred securities(1)
    
    
    
    
    
    
    1,028
    
    
    
    4,012Total Tier 2 capital
    
    
    8,683
    
    
    
    7,134
    
    
    
    10,716Total risk-based capital
    
    $
    80,075
    
    
    $
    78,350
    
    
    $
    72,197Risk weighted assets
    
    $
    694,318
    
    
    $
    628,521
    
    
    
    599,880Ratios at end of periodTotal capital to risk-weighted assets
ratio
    
    
    11.53
    %
    
    
    12.47
    %
    
    
    12.04
    %Tier 1 capital to average assets ratio
(leverage ratio)
    
    
    9.86
    %
    
    
    10.29
    %
    
    
    8.86
    %Tier 1 capital to risk-weighted assets
ratio
    
    
    10.28
    %
    
    
    11.33
    %
    
    
    10.25
    %Minimum guidelinesTotal capital to risk-weighted assets
ratio
    
    
    8.00
    %
    
    
    8.00
    %
    
    
    8.00
    %Tier 1 capital to average assets ratio
(leverage ratio)
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Tier 1 capital to risk-weighted assets
ratio
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
 
 (1)
    
    Federal Reserve guidelines for calculation of Tier 1 capital limits the amount of cumulative
trust preferred securities which can be included in Tier 1 capital to 25% of total Tier 1
capital (Tier 1 capital before reduction of intangibles). Approximately $19.0 million, $18.0
million and $15.6 million of the trust preferred securities have been included as Tier 1
capital as of December 31, 2007, 2006 and 2005, respectively. The remaining balance of the
trust preferred securities have been included as Tier 2 capital. 36




---



##### Table of Contents



Contractual Obligations
  Payments due by Period (In thousands)Less than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsTime Deposit Obligations
    
    $
    250,457
    
    
    $
    179,375
    
    
    $
    60,178
    
    
    $
    9,752
    
    
    $
    1,152Short-term Debt
Obligations
    
    
    25,000
    
    
    
    25,000
    
    
    
    
    
    
    
    
    
    
    
    Long-term Debt
Obligations
    
    
    80,906
    
    
    
    11,140
    
    
    
    2,368
    
    
    
    24,777
    
    
    
    42,621Total Obligations
    
    $
    356,363
    
    
    $
    215,515
    
    
    $
    62,546
    
    
    $
    34,529
    
    
    $
    43,773
 Inflation
  Off-Balance Sheet Arrangements
     37




---



##### Table of Contents



Recent and Future Accounting Requirements
 Accounting for Uncertainty in Income
Taxes  an interpretation of SFAS No. 109
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities-Including an Amendment to FASB Statement No. 115 Accounting for Certain Investments in Debt and Equity Securities
  Business Combinations
 38




---



##### Table of Contents



39




---



##### Table of Contents



Item 7A: Qualitative and Quantitative Disclosure About Market Risk
     Net Interest
    
    Net EconomicIncome
    
    Value ofChanges in Interest Rates
    
    (next 12 months)
    
    Equity at Risk200 basis point rise
    
    
    1.92
    %
    
    
    (5.92
    %)Base Rate Scenario
    
    
    
    
    
    
    200 basis point decline
    
    
    3.91
    %
    
    
    3.98
    %
  40




---



##### Table of Contents



INTEREST-RATE SENSITIVITY ANALYSIS
 Expected Maturity or Repricing Date(In thousands)0-90 Days
    
    
    91-365 Days
    
    
    1 year
    
    
    1 to 2 years
    
    
    2 to 5 years
    
    
    Thereafter
    
    
    TotalInterest-Earning Assets:Fixed Rate Loans
    
    $
    33,446
    
    
    $
    73,392
    
    
    $
    106,838
    
    
    $
    44,157
    
    
    $
    92,036
    
    
    $
    31,207
    
    
    $
    274,238Average Interest Rate
    
    
    7.58
    %
    
    
    7.50
    %
    
    
    7.53
    %
    
    
    7.61
    %
    
    
    7.86
    %
    
    
    7.52
    %
    
    
    7.65
    %Variable Rate Loans
    
    
    305,338
    
    
    
    16,931
    
    
    
    322,269
    
    
    
    5,592
    
    
    
    5,525
    
    
    
    
    
    
    
    333,386Average Interest Rate
    
    
    7.54
    %
    
    
    7.88
    %
    
    
    7.56
    %
    
    
    7.61
    %
    
    
    7.90
    %
    
    
    
    %
    
    
    7.57
    %Fixed Rate Investments
    
    
    2,500
    
    
    
    5,210
    
    
    
    7,710
    
    
    
    10,997
    
    
    
    38,186
    
    
    
    18,286
    
    
    
    75,179Average Interest Rate
    
    
    4.30
    %
    
    
    5.03
    %
    
    
    4.79
    %
    
    
    4.96
    %
    
    
    5.16
    %
    
    
    5.66
    %
    
    
    5.22
    %Variable Rate Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average Interest Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Interest Bearing Deposits
    
    
    312
    
    
    
    
    
    
    
    312
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    312Average Interest Rate
    
    
    4.06
    %
    
    
    
    
    
    
    4.06
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4.06
    %Federal Funds Sold
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Average Interest Rate
    
    
    
    %
    
    
    
    
    
    
    
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    %Total interest-earning assets
    
    $
    341,596
    
    
    $
    95,533
    
    
    $
    437,129
    
    
    $
    60,746
    
    
    $
    135,747
    
    
    $
    49,493
    
    
    $
    683,115Interest-Bearing Liabilities:Interest-bearing demand
    
    $
    35,983
    
    
    $
    
    
    
    $
    35,983
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    35,983Average Interest Rate
    
    
    2.14
    %
    
    
    
    
    
    
    2.14
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.14
    %Savings and money market
    
    
    162,003
    
    
    
    
    
    
    
    162,003
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162,003Average Interest Rate
    
    
    3.90
    %
    
    
    
    
    
    
    3.90
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.90
    %Time deposits
    
    
    62,696
    
    
    
    116,679
    
    
    
    179,375
    
    
    
    49,117
    
    
    
    20,813
    
    
    
    1,152
    
    
    
    250,457Average Interest Rate
    
    
    4.84
    %
    
    
    5.01
    %
    
    
    4.95
    %
    
    
    5.19
    %
    
    
    4.32
    %
    
    
    4.31
    %
    
    
    4.94
    %Funds borrowed
    
    
    91,256
    
    
    
    31,008
    
    
    
    122,264
    
    
    
    1,169
    
    
    
    8,477
    
    
    
    3,032
    
    
    
    134,942Average Interest Rate
    
    
    4.61
    %
    
    
    4.55
    %
    
    
    4.60
    %
    
    
    5.32
    %
    
    
    4.58
    %
    
    
    5.19
    %
    
    
    4.62
    %Total interest-bearing
liabilities
    
    $
    351,938
    
    
    $
    147,687
    
    
    $
    499,625
    
    
    $
    50,286
    
    
    $
    29,290
    
    
    $
    4,184
    
    
    $
    583,385Cumulative:Rate sensitive assets (RSA)
    
    $
    341,596
    
    
    $
    437,129
    
    
    $
    437,129
    
    
    $
    497,875
    
    
    $
    633,622
    
    
    $
    683,115
    
    
    $
    683,115Rate sensitive liabilities (RSL)
    
    
    351,938
    
    
    
    499,625
    
    
    
    499,625
    
    
    
    549,911
    
    
    
    579,201
    
    
    
    583,385
    
    
    
    583,385GAP (GAP = RSA  RSL)
    
    
    (10,342
    )
    
    
    (62,496
    )
    
    
    (62,496
    )
    
    
    (52,036
    )
    
    
    54,421
    
    
    
    99,730
    
    
    
    99,730RSA/RSL
    
    
    97.06
    %
    
    
    87.49
    %
    
    
    87.49
    %
    
    
    90.54
    %
    
    
    109.40
    %
    
    
    117.10
    %RSA/Total assets
    
    
    46.40
    
    
    
    59.37
    
    
    
    59.37
    
    
    
    67.62
    
    
    
    86.06
    
    
    
    92.79RSL/Total assets
    
    
    47.80
    
    
    
    67.86
    
    
    
    67.86
    
    
    
    74.69
    
    
    
    78.67
    
    
    
    79.24GAP/Total assets
    
    
    (1.40
    )
    
    
    (8.49
    )
    
    
    (8.49
    )
    
    
    (7.07
    )
    
    
    7.39
    
    
    
    13.55GAP/RSA
    
    
    (3.03
    )
    
    
    (14.30
    )
    
    
    (14.30
    )
    
    
    (10.45
    )
    
    
    8.59
    
    
    
    14.60
   41




---



##### Table of Contents



Item 8: Financial Statements and Supplementary Data
  
 Item 9:
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A: Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting:
   
 Item 9B: Other Information
  42




---



##### Table of Contents



Part III
 
 Item 10: Directors, Executive Officers and Corporate Governance
    ir@bankbv.com
  
 Item 11: Executive Compensation
  
 Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13: Certain Relationships, Related Transactions, and Director Independence
  
    
    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.
 43




---



##### Table of Contents



Item 14: Principal Accounting Fees and Services
  
 Part IV
 
 Item 15: Exhibits, Financial Statement Schedules
 (a)
    
    The financial statements and financial statement schedules listed in the accompanying index
to consolidated financial statements and financial statement schedules are filed as part of
this Form 10-K.(b)
    
    The exhibits listed in the accompanying exhibit index are filed as part of this Form 10-K.(c)
    
    None
 44




---



##### Table of Contents



SIGNATURES
  Date: March 26, 2008
    By:
    /s/ Robert D. RegnierRobert D. Regnier, President,Chief Executive Officer and Director  Date: March 26, 2008
    By:
    /s/ Robert D. RegnierRobert D. Regnier, President,Chief Executive Officer and Director
(Principal Executive Officer)Date: March 26, 2008
    By:
    /s/ Mark A. FortinoMark A. Fortino, Chief Financial Officer(Principal Financial [and Accounting] Officer)Date: March 26, 2008
    By:
    /s/ Donald H. AlexanderDonald H. Alexander, DirectorDate: March 26, 2008
    By:
    /s/ Michael J. BrownMichael J. Brown, DirectorDate: March 26, 2008
    By:
    /s/ Thomas A. McDonnellThomas A. McDonnell, DirectorDate: March 26, 2008
    By:
    /s/ Anne D. St. PeterAnne D. St. Peter, DirectorDate: March 26, 2008
    By:
    /s/ Robert D. TaylorRobert D. Taylor, Director 45




---



##### Table of Contents



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***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*****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*****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*****11.1
    
    Statement regarding computation of per share earnings. Please see p. F-12.21.1
    
    Subsidiaries of Blue Valley Ban Corp.
 46




---



##### Table of Contents



23.3
    
    Consent of BKD, LLP.31.1
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)31.2
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)32.1
    
    Certification of the Chief Executive Officer and Chief Financial Officer
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
 
 *
    
    Filed with the Commission on April 10, 2000 as an Exhibit to Blue Valleys
Registration Statement on Form S-1, Amendment No. 1, File No. 333-34328. 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. Exhibit incorporated herein by reference.***
    
    Filed with the Commission on July 29, 2005 as an Exhibit to Blue Valleys
Current Report on Form 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. 47




---



##### 



BLUE VALLEY BAN CORP.
 DECEMBER 31, 2007, 2006 AND 2005
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
  
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    F-2CONSOLIDATED FINANCIAL STATEMENTSBalance Sheets
    
    F-3Statements of Income
    
    F-5Statements of Stockholders Equity
    
    F-6Statements of Cash Flows
    
    F-7Notes to Financial Statements
    
    F-8
  F-1




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    /s/ BKD, LLP 
 F-2




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2007 AND 2006
 ASSETS
 2007
    
    
    2006Cash and due from banks
    
    $
    17,827
    
    
    $
    21,499Interest bearing deposits in other financial institutions
    
    
    312
    
    
    
    356Federal funds sold
    
    
    
    
    
    
    5,375Cash and cash equivalents
    
    
    18,139
    
    
    
    27,230Available-for-sale securities
    
    
    76,871
    
    
    
    87,206Mortgage loans held for sale
    
    
    10,978
    
    
    
    21,805Loans, net of allowance for loan losses of $8,982 and
$6,106 in 2007 and 2006, respectively
    
    
    587,664
    
    
    
    522,409Premises and equipment, net
    
    
    18,778
    
    
    
    17,953Foreclosed assets held for sale, net
    
    
    2,523
    
    
    
    717Interest receivable
    
    
    4,621
    
    
    
    4,200Deferred income taxes
    
    
    2,083
    
    
    
    2,276Prepaid expenses and other assets
    
    
    1,571
    
    
    
    1,305Federal Home Loan Bank stock, Federal Reserve Bank
stock, and other securities
    
    
    7,043
    
    
    
    6,447Goodwill
    
    
    4,821
    
    
    
    290Core deposit intangible asset, at amortized cost
    
    
    1,121
    
    
    
    381Total assets
    
    $
    736,213
    
    
    $
    692,219
  F-3




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2007 AND 2006
 LIABILITIES AND STOCKHOLDERS EQUITY
 2007
    
    
    2006LIABILITIESDepositsDemand
    
    $
    87,927
    
    
    $
    94,823Savings, NOW and money market
    
    
    197,986
    
    
    
    156,069Time
    
    
    250,457
    
    
    
    284,972Total deposits
    
    
    536,370
    
    
    
    535,864Other interest-bearing liabilities
    
    
    29,036
    
    
    
    29,558Short-term debt
    
    
    25,000
    
    
    
    Long-term debt
    
    
    80,906
    
    
    
    67,019Interest payable and other liabilities
    
    
    5,967
    
    
    
    5,958Total liabilities
    
    
    677,279
    
    
    
    638,399STOCKHOLDERS EQUITYCapital stockCommon stock, par value $1 per share;
Authorized 15,000,000 shares; issued and outstanding
2007  2,439,655 shares; 2006  2,409,490 shares
    
    
    2,440
    
    
    
    2,409Additional paid-in capital
    
    
    10,312
    
    
    
    9,561Retained earnings
    
    
    45,592
    
    
    
    41,982Accumulated other comprehensive income (loss), net of
income tax (credits) of $394 in 2007 and $(88) in 2006
    
    
    590
    
    
    
    (132
    )Total stockholders equity
    
    
    58,934
    
    
    
    53,820Total liabilities and stockholders equity
    
    $
    736,213
    
    
    $
    692,219
  F-4




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF INCOME
 YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
 2007
    
    
    2006
    
    
    2005INTEREST INCOMEInterest and fees on loans
    
    $
    47,194
    
    
    $
    44,537
    
    
    $
    37,492Federal funds sold and other short-term investments
    
    
    557
    
    
    
    256
    
    
    
    580Available-for-sale securities
    
    
    4,466
    
    
    
    4,039
    
    
    
    2,317Total interest income
    
    
    52,217
    
    
    
    48,832
    
    
    
    40,389INTEREST EXPENSEInterest-bearing demand deposits
    
    
    656
    
    
    
    97
    
    
    
    94Savings and money market deposit accounts
    
    
    6,362
    
    
    
    4,356
    
    
    
    3,861Other time deposits
    
    
    13,134
    
    
    
    11,254
    
    
    
    9,171Federal funds purchased and other interest-bearing
liabilities
    
    
    1,181
    
    
    
    1,023
    
    
    
    540Short-term debt
    
    
    138
    
    
    
    342
    
    
    
    17Long-term debt, net
    
    
    4,111
    
    
    
    3,890
    
    
    
    4,310Total interest expense
    
    
    25,582
    
    
    
    20,962
    
    
    
    17,993NET INTEREST INCOME
    
    
    26,635
    
    
    
    27,870
    
    
    
    22,396PROVISION FOR LOAN LOSSES
    
    
    2,855
    
    
    
    1,255
    
    
    
    230NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
    
    
    23,780
    
    
    
    26,615
    
    
    
    22,166NONINTEREST INCOMELoans held for sale fee income
    
    
    3,160
    
    
    
    5,046
    
    
    
    7,408Service fees
    
    
    2,830
    
    
    
    2,491
    
    
    
    2,166Gains on available for sale securities, net
    
    
    105
    
    
    
    
    
    
    
    Other income
    
    
    1,105
    
    
    
    1,344
    
    
    
    1,727Total noninterest income
    
    
    7,200
    
    
    
    8,881
    
    
    
    11,301NONINTEREST EXPENSESalaries and employee benefits
    
    
    13,570
    
    
    
    14,737
    
    
    
    15,986Net occupancy expense
    
    
    3,200
    
    
    
    3,059
    
    
    
    3,307Other operating expense
    
    
    7,447
    
    
    
    6,578
    
    
    
    6,841Total noninterest expense
    
    
    24,217
    
    
    
    24,374
    
    
    
    26,134INCOME BEFORE INCOME TAXES
    
    
    6,763
    
    
    
    11,122
    
    
    
    7,333PROVISION FOR INCOME TAXES
    
    
    2,275
    
    
    
    4,199
    
    
    
    2,764NET INCOME
    
    $
    4,488
    
    
    $
    6,923
    
    
    $
    4,569BASIC EARNINGS PER SHARE
    
    $
    1.86
    
    
    $
    2.93
    
    
    $
    1.95DILUTED EARNINGS PER SHARE
    
    $
    1.84
    
    
    $
    2.88
    
    
    $
    1.91DIVIDENDS PER SHARE
    
    $
    0.36
    
    
    $
    0.30
    
    
    $
    0.25
  F-5




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
 AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    OtherComprehensive
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Unearned
    
    
    ComprehensiveIncome
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Compensation
    
    
    Income (Loss)
    
    
    TotalBALANCE, DECEMBER 31, 2004
    
    
    
    
    
    $
    2,327
    
    
    $
    8,099
    
    
    $
    31,809
    
    
    $
    (594
    )
    
    $
    (257
    )
    
    $
    41,384Issuance of 54,960 shares of common stock
    
    
    
    
    
    
    55
    
    
    
    1,113
    
    
    
    
    
    
    
    (355
    )
    
    
    
    
    
    
    813Dividends on common stock ($0.25 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (596
    )
    
    
    
    
    
    
    
    
    
    
    (596
    )Net income
    
    
    4,569
    
    
    
    
    
    
    
    
    
    
    
    4,569
    
    
    
    
    
    
    
    
    
    
    
    4,569Restricted stock earned, net of forfeitures
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    301
    
    
    
    
    
    
    
    301Change in unrealized depreciation on
available-for-sale securities, net of
income taxes (credit) of $(144)
    
    
    (216
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (216
    )
    
    
    (216
    )$
    4,353BALANCE, DECEMBER 31, 2005
    
    
    
    
    
    $
    2,382
    
    
    $
    9,212
    
    
    $
    35,782
    
    
    $
    (648
    )
    
    $
    (473
    )
    
    $
    46,255Issuance of 27,444 shares of common stock
    
    
    
    
    
    
    27
    
    
    
    512
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    539Dividends on common stock ($0.30 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (723
    )
    
    
    
    
    
    
    
    
    
    
    (723
    )Net income
    
    
    6,923
    
    
    
    
    
    
    
    
    
    
    
    6,923
    
    
    
    
    
    
    
    
    
    
    
    6,923Restricted stock earned, net of forfeitures
    
    
    
    
    
    
    
    
    
    
    485
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    485Reclassification of unearned compensation
in accordance with adoption of SFAS No.
123R
    
    
    
    
    
    
    
    
    
    
    (648
    )
    
    
    
    
    
    
    648
    
    
    
    
    
    
    
    Change in derivative financial instrument,
net of income taxes of $51
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    76Change in unrealized appreciation on
available-for-sale securities, net of
income taxes of $177
    
    
    265
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    265
    
    
    
    265$
    7,264BALANCE, DECEMBER 31, 2006
    
    
    
    
    
    $
    2,409
    
    
    $
    9,561
    
    
    $
    41,982
    
    
    $
    
    
    
    $
    (132
    )
    
    $
    53,820Issuance of 10,182 shares of restricted
stock, net of forfeitures
    
    
    
    
    
    
    10
    
    
    
    292
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    302Issuance of 15,425 shares of common stock
through stock options exercised
    
    
    
    
    
    
    16
    
    
    
    327
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    343Issuance of 4,558 shares of common stock
for the employee stock purchase plan
    
    
    
    
    
    
    5
    
    
    
    132
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    137Dividends on common stock ($0.36 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (878
    )
    
    
    
    
    
    
    
    
    
    
    (878
    )Net income
    
    
    4,488
    
    
    
    
    
    
    
    
    
    
    
    4,488
    
    
    
    
    
    
    
    
    
    
    
    4,488Change in derivative financial instrument,
net of income taxes (credit) of $(47)
    
    
    (70
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70
    )
    
    
    (70
    )Change in unrealized appreciation on
available-for-sale securities, net of
income taxes of $528
    
    
    792
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    792
    
    
    
    792$
    5,210BALANCE, DECEMBER 31, 2007
    
    
    
    
    
    $
    2,440
    
    
    $
    10,312
    
    
    $
    45,592
    
    
    $
    
    
    
    $
    590
    
    
    $
    58,934
  F-6




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2007, 2006 AND 2005
 2007
    
    
    2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    4,488
    
    
    $
    6,923
    
    
    $
    4,569Adjustments to reconcile net income to net cash flowFrom operating activities:Depreciation and amortization
    
    
    1,606
    
    
    
    1,471
    
    
    
    1,857Accretion of premiums on securities
    
    
    (30
    )
    
    
    (92
    )
    
    
    (44
    )Provision for loan losses
    
    
    2,855
    
    
    
    1,255
    
    
    
    230Provision for other real estate
    
    
    5
    
    
    
    40
    
    
    
    Deferred income taxes
    
    
    (1,134
    )
    
    
    260
    
    
    
    149Stock dividend on FHLB securities
    
    
    (264
    )
    
    
    (275
    )
    
    
    (353
    )Net gain on available-for-sale securities
    
    
    (105
    )
    
    
    
    
    
    
    Net (gain) loss on sale of foreclosed assets
    
    
    97
    
    
    
    (12
    )
    
    
    34Net (gain) loss on sale of premises and equipment
    
    
    
    
    
    
    6
    
    
    
    (344
    )Restricted stock earned and forfeited
    
    
    316
    
    
    
    485
    
    
    
    301Compensation expense related to the employee stock purchase plan
    
    
    17
    
    
    
    19
    
    
    
    Originations of loans held for sale
    
    
    (185,809
    )
    
    
    (336,254
    )
    
    
    (675,636
    )Proceeds from the sale of loans held for sale
    
    
    196,636
    
    
    
    328,355
    
    
    
    705,874Changes in:Interest receivable
    
    
    (232
    )
    
    
    (828
    )
    
    
    (997
    )Prepaid expenses and other assets
    
    
    248
    
    
    
    3,455
    
    
    
    (1,546
    )Interest payable and other liabilities
    
    
    (172
    )
    
    
    (3,987
    )
    
    
    3,293Net cash provided by operating activities
    
    
    18,522
    
    
    
    821
    
    
    
    37,387CASH FLOWS FROM INVESTING ACTIVITIESNet originations of loans
    
    
    (55,168
    )
    
    
    (28,689
    )
    
    
    (4,334
    )Proceeds from sales of loan participations
    
    
    13,235
    
    
    
    500
    
    
    
    6,400Purchase of premises and equipment
    
    
    (649
    )
    
    
    (671
    )
    
    
    (707
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    
    
    
    
    993Proceeds from the sale of foreclosed assets, net of expenses
    
    
    1,133
    
    
    
    930
    
    
    
    3,002Proceeds from sales of available-for-sale securities
    
    
    6,105
    
    
    
    
    
    
    
    Proceeds from maturities of available-for-sale securities
    
    
    55,250
    
    
    
    36,310
    
    
    
    26,440Purchases of available-for-sale securities
    
    
    (47,970
    )
    
    
    (22,995
    )
    
    
    (60,393
    )Purchases of Federal Home Loan Bank stock, Federal Reserve Bank
stock, and other securities
    
    
    (314
    )
    
    
    
    
    
    
    (150
    )Proceeds from the redemption of Federal Home Loan Bank stock,
Federal Reserve Bank stock, and other securities
    
    
    686
    
    
    
    2,319
    
    
    
    Sale of Western National Bank charter and other assets
    
    
    392
    
    
    
    
    
    
    
    Purchase of Unison Bancorp, Inc. and subsidiary, net of cash received
    
    
    (6,255
    )
    
    
    
    
    
    
    Proceeds from other investing activities
    
    
    123
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (33,432
    )
    
    
    (12,296
    )
    
    
    (28,749
    )CASH FLOWS FROM FINANCING ACTIVITIESNet (decrease) increase in demand deposits, money market, NOW and
savings accounts
    
    
    7,042
    
    
    
    (28,794
    )
    
    
    (25,182
    )Net (decrease) increase in time deposits
    
    
    (37,777
    )
    
    
    35,317
    
    
    
    31,877Net (decrease) increase in federal funds purchased and other
interest-bearing liabilities
    
    
    (1,426
    )
    
    
    3,270
    
    
    
    3,907Net proceeds from short-term debt
    
    
    25,000
    
    
    
    
    
    
    
    Repayments of long-term debt
    
    
    (1,763
    )
    
    
    (21,087
    )
    
    
    (23,269
    )Proceeds from long-term debt
    
    
    15,000
    
    
    
    10,000
    
    
    
    21,244Dividends paid on common stock
    
    
    (723
    )
    
    
    (596
    )
    
    
    (465
    )Net proceeds the sale of additional stock
    
    
    466
    
    
    
    538
    
    
    
    813Net cash provided by (used in) financing activities
    
    
    5,819
    
    
    
    (1,352
    )
    
    
    8,925Increase (decrease) in cash and cash equivalents
    
    
    (9,091
    )
    
    
    (12,827
    )
    
    
    17,563Cash and cash equivalents, beginning of year
    
    
    27,230
    
    
    
    40,057
    
    
    
    22,494CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    18,139
    
    
    $
    27,230
    
    
    $
    40,057SUPPLEMENTAL CASH FLOWS INFORMATIONLoans transferred to foreclosed assets held for sale
    
    $
    3,023
    
    
    $
    964
    
    
    $
    1,102Restricted stock issued
    
    $
    10
    
    
    $
    
    
    
    $
    355Cash dividends declared on common stock
    
    $
    878
    
    
    $
    723
    
    
    $
    596Interest paid
    
    $
    25,175
    
    
    $
    20,587
    
    
    $
    17,742Income taxes paid (net of refunds)
    
    $
    561
    
    
    $
    4,035
    
    
    $
    1,289Assets acquired and liabilities assumed (see Note 21)
    
    $
    33,668
    
    
    $
    
    
    
    $
    
  F-7




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations
      Operating Segment
  Use of Estimates
    Principles of Consolidation
  F-8




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Cash Equivalents
   Investment in Securities
   Other Investments
   Mortgage Loans Held for Sale
  F-9




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Loans
  Allowance for Loan Losses
    Premises and Equipment
  F-10




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Continued)
 Foreclosed Assets Held for Sale
  Goodwill
  2007(In thousands)Balance as of January 1, 2007
    
    $
    290Goodwill relating to
acquisition of Unison Bancorp,
Inc. and subsidiary in 2007
    
    
    4,531Balance as of December 31, 2007
    
    $
    4,821
 Core Deposit Intangible Assets
  Fee Income
  Reclassification
  Income Taxes
  F-11




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Earnings Per Share
  2007
    
    
    2006
    
    
    2005(In thousands, except share and per share data)Net income
    
    $
    4,488
    
    
    $
    6,923
    
    
    $
    4,569Average common shares outstanding
    
    
    2,410,621
    
    
    
    2,365,932
    
    
    
    2,348,805Average common share stock options
outstanding
    
    
    27,582
    
    
    
    41,870
    
    
    
    39,726Average diluted common shares
    
    
    2,438,203
    
    
    
    2,407,802
    
    
    
    2,388,531Basic earnings per share
    
    $
    1.86
    
    
    $
    2.93
    
    
    $
    1.95Diluted earnings per share
    
    $
    1.84
    
    
    $
    2.88
    
    
    $
    1.91
 Accounting for Stock-Based Compensation
  Recent and Future Accounting Requirements
 Accounting for Uncertainty in Income
Taxes  an interpretation of SFAS No. 109
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities-Including an Amendment to FASB Statement No. 115 Accounting for Certain
 F-12




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Investments in Debt and Equity Securities
  Business Combinations
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES
  December 31, 2007Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)U.S. Government sponsored
agencies
    
    $
    74,969
    
    
    $
    985
    
    
    $
    (1
    )
    
    $
    75,953State and political subdivisions
    
    
    210
    
    
    
    
    
    
    
    
    
    
    
    210Equity and other securities
    
    
    718
    
    
    
    
    
    
    
    (10
    )
    
    
    708$
    75,897
    
    
    $
    985
    
    
    $
    (11
    )
    
    $
    76,871
 December 31, 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)U.S. Government sponsored
agencies
    
    $
    86,475
    
    
    $
    65
    
    
    $
    (375
    )
    
    $
    86,165State and political subdivisions
    
    
    360
    
    
    
    
    
    
    
    
    
    
    
    360Equity and other
    
    
    718
    
    
    
    
    
    
    
    (37
    )
    
    
    681$
    87,553
    
    
    $
    65
    
    
    $
    (412
    )
    
    $
    87,206
 F-13




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
  Amortized
    
    
    EstimatedCost
    
    
    Fair Value(In thousands)Due in one year or less
    
    $
    7,710
    
    
    $
    7,737Due after one through five years
    
    
    49,183
    
    
    
    49,714Due after five years
    
    
    18,286
    
    
    
    18,712Total
    
    
    75,179
    
    
    
    76,163Equity and other securities
    
    
    718
    
    
    
    708$
    75,897
    
    
    $
    76,871
   2007
    
    2006(In thousands)Balance as of December 31
    
    $
    27,956
    
    
    $
    28,574Carrying value of securities pledged to secure agreements to repurchases
at December 31
    
    $
    47,657
    
    
    $
    40,309Average balance during the year of securities sold under agreements to repurchase
    
    $
    29,873
    
    
    $
    24,499Maximum amount outstanding at any month-end during the year
    
    $
    35,472
    
    
    $
    34,052
   F-14




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
  December 31, 2007
 Less than 12 Months
    
    
    12 Months or More
    
    
    Total
    
    
    TotalDescription of
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedSecurities
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Government sponsored
agencies
    
    $
    
    
    
    $
    
    
    
    $
    2,499
    
    
    $
    1
    
    
    $
    2,499
    
    
    $
    1State and political subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity and other securities
    
    
    
    
    
    
    
    
    
    
    708
    
    
    
    10
    
    
    
    708
    
    
    
    10Total temporarily impaired
securities
    
    $
    
    
    
    $
    
    
    
    $
    3,207
    
    
    $
    11
    
    
    $
    3,207
    
    
    $
    11
 December 31, 2006
 Less than 12 Months
    
    
    12 Months or More
    
    
    Total
    
    
    TotalDescription of
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    UnrealizedSecurities
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Government sponsored
agencies
    
    $
    37,855
    
    
    $
    134
    
    
    $
    36,251
    
    
    $
    241
    
    
    $
    74,106
    
    
    $
    375State and political subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity and other securities
    
    
    
    
    
    
    
    
    
    
    681
    
    
    
    37
    
    
    
    681
    
    
    
    37Total temporarily impaired
securities
    
    $
    37,855
    
    
    $
    134
    
    
    $
    36,932
    
    
    $
    278
    
    
    $
    74,787
    
    
    $
    412
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES
  2007
    
    
    2006(In thousands)Commercial loans
    
    $
    139,120
    
    
    $
    110,849Commercial real estate loans
    
    
    150,655
    
    
    
    126,952Construction loans
    
    
    188,229
    
    
    
    171,709Lease financing
    
    
    19,724
    
    
    
    18,512Residential real estate loans
    
    
    37,511
    
    
    
    34,988Consumer loans
    
    
    22,934
    
    
    
    33,097Home equity loans
    
    
    38,473
    
    
    
    32,408Total loans
    
    
    596,646
    
    
    
    528,515Less: Allowance for loan losses
    
    
    8,982
    
    
    
    6,106Net loans
    
    $
    587,664
    
    
    $
    522,409
 F-15




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
  2007
    
    
    2006
    
    
    2005(In thousands)Balance, beginning of year
    
    $
    6,106
    
    
    $
    6,704
    
    
    $
    7,333Provision charged to expense
    
    
    2,855
    
    
    
    1,255
    
    
    
    230Allowance of acquired company
    
    
    360
    
    
    
    
    
    
    
    Losses charged off, net of recoveries
of $324,000, $207,000 and $269,000
for 2007, 2006 and 2005, respectively
    
    
    (339
    )
    
    
    (1,853
    )
    
    
    (859
    )Balance, end of year
    
    $
    8,982
    
    
    $
    6,106
    
    
    $
    6,704
   NOTE 4: PREMISES AND EQUIPMENT
  2007
    
    
    2006(In thousands)Land
    
    $
    4,885
    
    
    $
    4,185Building and improvements
    
    
    15,626
    
    
    
    14,749Furniture and equipment
    
    
    7,183
    
    
    
    6,604Land improvements, net
    
    
    285
    
    
    
    28527,979
    
    
    
    25,823Less accumulated depreciation
    
    
    9,201
    
    
    
    7,870Total premises and equipment
    
    $
    18,778
    
    
    $
    17,953
 F-16




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 5: CORE DEPOSIT INTANGIBLE ASSETS
  2007
    
    

    2006Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)Core Deposit Intangible
    
    $
    3,286
    
    
    $
    (2,165
    )
    
    $
    2,286
    
    
    $
    (1,905
    )
  (In thousands)2008
    
    $
    2952009
    
    
    2192010
    
    
    1432011
    
    
    1432012
    
    
    143
 NOTE 6: INTEREST-BEARING DEPOSITS
   (In thousands)2008
    
    $
    179,3752009
    
    
    49,1172010
    
    
    11,0612011
    
    
    5,0712012
    
    
    4,6812013 and thereafter
    
    
    1,152$
    250,457
 F-17




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 7: OPERATING LEASES
  (In thousands)2008
    
    
    3222009
    
    
    1202010
    
    
    882011
    
    
    782012
    
    
    65$
    673
  (In thousands)2008
    
    
    452009
    
    
    452010
    
    
    19$
    109
 NOTE 8: INCOME TAXES
  2007
    
    
    2006
    
    
    2005(In thousands)Taxes currently payable
    
    $
    3,409
    
    
    $
    3,939
    
    
    $
    2,615Deferred income taxes
    
    
    (1,134
    )
    
    
    260
    
    
    
    149$
    2,275
    
    
    $
    4,199
    
    
    $
    2,764
  2007
    
    
    2006
    
    
    2005(In thousands)Computed at the statutory rate (34%)
    
    $
    2,299
    
    
    $
    3,793
    
    
    $
    2,493Increase (decrease) resulting from:Tax-exempt interest
    
    
    (28
    )
    
    
    (32
    )
    
    
    (54
    )State income taxes
    
    
    200
    
    
    
    251
    
    
    
    232Other
    
    
    (196
    )
    
    
    187
    
    
    
    93Actual tax provision
    
    $
    2,275
    
    
    $
    4,199
    
    
    $
    2,764
 F-18




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 8: INCOME TAXES (Continued)
  2007
    
    
    2006(In thousands)Deferred tax assets:Allowance for loan losses
    
    $
    3,279
    
    
    $
    2,343Accumulated depreciation on
available-for- sale securities
    
    
    
    
    
    
    139Deferred compensation
    
    
    171
    
    
    
    41Offering costs
    
    
    231
    
    
    
    241Nonaccrual loan interest
    
    
    52
    
    
    
    Net Operating Loss carried from
Unison Bancorp Inc. and
subsidiary acquisition
    
    
    77
    
    
    
    Other
    
    
    129
    
    
    
    6933,939
    
    
    
    3,457Deferred tax liabilities:Accumulated depreciation
    
    
    (465
    )
    
    
    (503
    )FHLBank stock basis
    
    
    (464
    )
    
    
    (380
    )Accumulated appreciation on
available-for- sale securities
    
    
    (394
    )
    
    
    Prepaid intangibles
    
    
    (168
    )
    
    
    (157
    )Core Deposit Intangible related
to Unison Bancorp Inc. and
subsidiary acquisition
    
    
    (304
    )
    
    
    Other
    
    
    (61
    )
    
    
    (141
    )(1,856
    )
    
    
    (1,181
    )Net deferred tax asset
    
    $
    2,083
    
    
    $
    2,276
 NOTE 9: SHORT TERM DEBT
  2007
    
    
    2006(In thousands)Federal Home Loan Bank advance (A)
    
    $
    25,000
    
    
    $
    JP Morgan Chase operating line of credit (B)
    
    
    
    
    
    
    Total short-term debt
    
    $
    25,000
    
    
    $
    
 
 (A)
    
    Payable on demand; collateralized by various assets including
mortgage-backed loans. The variable interest rate was 4.67% on December 31,
2007.(B)
    
    Line of credit matures May 31, 2008; collateralized by stock in the
Companys subsidiary bank. The line of credit bears a variable interest rate
of the Federal Funds rate plus 1.63%. F-19




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 10: LONG TERM DEBT
  2007
    
    
    2006(In thousands)Note payable  Ban Corp (A)
    
    $
    2,781
    
    
    $
    3,381Note payable  Blue Valley Building Corp. (B)
    
    
    6,037
    
    
    
    6,550Federal Home Loan Bank advances (C)
    
    
    52,500
    
    
    
    37,500Subordinated Debentures  BVBC Capital Trust II (D)
    
    
    7,732
    
    
    
    7,732Subordinated Debentures  BVBC Capital Trust III (E)
    
    
    11,856
    
    
    
    11,856Total long-term debt
    
    $
    80,906
    
    
    $
    67,019
 
 (A)
    
    Due in December 2012, payable in quarterly installments of principal plus
interest at the Federal Funds Rate plus 1.63%; collateralized by common stock
of the Companys subsidiary bank. The interest rate on this note has been
fixed at 5.45% by the use of a swap agreement (see Note 11).(B)
    
    Two notes due in 2017; payable in monthly installments totaling $70,084
including interest at 5.19%; collateralized by land, buildings, and assignment
of future rents. This debt is guaranteed by the Company.(C)
    
    Due in 2008, 2011, 2012, 2013, 2015 and 2016; collateralized by various
assets including mortgage-backed loans. The interest rates on the advances
range from 2.62% to 5.682%. Federal Home Loan Bank advance availability is
determined quarterly and at December 31, 2007, approximately $40,202,000 was
available.(D)
    
    Due in 2033; interest only at LIBOR + 3.25% due quarterly; fully and
unconditionally guaranteed by the Company on a subordinated basis to the extent
that the funds are held by the Trust. The Company may prepay the subordinated
debentures beginning in 2008, in whole or in part, at their face value plus
accrued interest.(E)
    
    Due in 2035; interest only at LIBOR + 1.60% due quarterly; fully and
unconditionally guaranteed by the Company on a subordinated basis to the extent
that the funds are held by the Trust. Subordinated to the trust preferred
securities (D) due in 2033. The Company may prepay the subordinated debentures
beginning in 2010, in whole or in part, at their face value plus accrued
interest.  (In thousands)2008
    
    $
    11,1402009
    
    
    1,1692010
    
    
    1,1992011
    
    
    8,7312012
    
    
    16,046Thereafter
    
    
    42,621$
    80,906
 F-20




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 11: DERIVATIVE FINANCIAL INSTRUMENTS
   NOTE 12: REGULATORY MATTERS
    F-21




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 12: REGULATORY MATTERS (Continued)
  To Be Well CapitalizedFor Capital
    
    
    Under Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(In thousands)As of December 31, 2007:Total
Capital
(to Risk Weighted Assets)Consolidated
    
    $
    80,075
    
    
    
    11.53
    %
    
    $
    55,545
    
    
    
    8.00
    %
    
    
    N/ABank Only
    
    $
    73,947
    
    
    
    10.89
    %
    
    $
    54,329
    
    
    
    8.00
    %
    
    $
    67,911
    
    
    
    10.00
    %Tier 1 Capital
(to Risk Weighted Assets)Consolidated
    
    $
    71,392
    
    
    
    10.28
    %
    
    $
    27,773
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    65,452
    
    
    
    9.64
    %
    
    $
    27,165
    
    
    
    4.00
    %
    
    $
    40,747
    
    
    
    6.00
    %Tier 1 Capital
(to Average Assets)Consolidated
    
    $
    71,392
    
    
    
    9.86
    %
    
    $
    28,953
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    65,452
    
    
    
    9.23
    %
    
    $
    28,360
    
    
    
    4.00
    %
    
    $
    35,450
    
    
    
    5.00
    %
 To Be Well CapitalizedFor Capital
    
    
    Under Prompt CorrectiveActual
    
    
    Adequacy Purposes
    
    
    Action ProvisionsAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(In thousands)As of December 31, 2006:Total Capital
(to Risk Weighted Assets)Consolidated
    
    $
    78,350
    
    
    
    12.47
    %
    
    $
    50,194
    
    
    
    8.00
    %
    
    
    N/ABank Only
    
    $
    73,225
    
    
    
    11.95
    %
    
    $
    49,007
    
    
    
    8.00
    %
    
    $
    61,259
    
    
    
    10.00
    %Tier 1 Capital
(to Risk Weighted Assets)Consolidated
    
    $
    71,216
    
    
    
    11.33
    %
    
    $
    25,097
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    67,119
    
    
    
    10.96
    %
    
    $
    24,503
    
    
    
    4.00
    %
    
    $
    36,755
    
    
    
    6.00
    %Tier 1 Capital
(to Average Assets)Consolidated
    
    $
    71,216
    
    
    
    10.29
    %
    
    $
    27,559
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    67,119
    
    
    
    9.91
    %
    
    $
    27,081
    
    
    
    4.00
    %
    
    $
    33,851
    
    
    
    5.00
    %
  F-22




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 13: TRANSACTIONS WITH RELATED PARTIES
  2007
    
    
    2006(In thousands)Balance, beginning of year
    
    $
    10,773
    
    
    $
    12,258New loans
    
    
    19,035
    
    
    
    7,651Repayments and reclassifications
    
    
    (9,520
    )
    
    
    (9,136
    )Balance, end of year
    
    $
    20,288
    
    
    $
    10,773
  NOTE 14: PROFIT SHARING AND 401(K) PLANS
  NOTE 15: EQUITY INCENTIVE COMPENSATION
    F-23




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 15: EQUITY INCENTIVE COMPENSATION (Continued)
  2007
    
    2006
    
    2005Weighted
    
    
    
    
    
    Weighted
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    Average
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    Exercise
    
    
    
    
    
    ExerciseShares
    
    Price
    
    Shares
    
    Price
    
    Shares
    
    PriceOutstanding, beginning of year
    
    
    84,300
    
    
    $
    19.11
    
    
    
    111,400
    
    
    $
    18.38
    
    
    
    155,000
    
    
    $
    17.80Exercised
    
    
    (15,425
    )
    
    
    15.42
    
    
    
    (27,100
    )
    
    
    16.12
    
    
    
    (41,425
    )
    
    
    16.00Forfeited
    
    
    (2,550
    )
    
    
    25.00
    
    
    
    
    
    
    
    
    
    
    
    (2,175
    )
    
    
    22.47Outstanding, end of year
    
    
    66,325
    
    
    $
    19.73
    
    
    
    84,300
    
    
    $
    19.11
    
    
    
    111,400
    
    
    $
    18.38Options exercisable, end of year
    
    
    66,325
    
    
    $
    19.73
    
    
    
    84,300
    
    
    $
    19.11
    
    
    
    111,400
    
    
    $
    18.38
  Options Outstanding and ExercisableExercise
    
    Number Outstanding and
    
    Weighted Average
    
    Weighted AveragePrices
    
    Exercisable at 12/31/07
    
    Remaining Contractual Life
    
    Exercise Price$
    11.25
    
    
    
    2,800
    
    
    1      year
    
    $
    11.2514.38
    
    
    
    6,500
    
    
    2      years
    
    
    14.3816.50
    
    
    
    13,550
    
    
    3      years
    
    
    16.5019.50
    
    
    
    23,000
    
    
    4      years
    
    
    19.5025.00
    
    
    
    20,475
    
    
    5      years
    
    
    25.0066,325
 NOTE 16: EMPLOYEE STOCK PURCHASE PLAN
  Employee Stock Purchase Plan ActivityPlan year ending January
    
    Shares purchased
    
    Purchase Price2007
    
    
    4,558
    
    
    $
    25.502006
    
    
    4,073
    
    
    $
    19.55
 F-24




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 17: OTHER INCOME/EXPENSE
  2007
    
    
    2006
    
    
    2005(In thousands)Rental income
    
    $
    481
    
    
    $
    459
    
    
    $
    365Other income
    
    
    624
    
    
    
    885
    
    
    
    1,362Total
    
    $
    1,105
    
    
    $
    1,344
    
    
    $
    1,727
  2007
    
    
    2006
    
    
    2005(In thousands)Advertising
    
    $
    998
    
    
    $
    1,080
    
    
    $
    1,413Loan processing fees
    
    
    484
    
    
    
    904
    
    
    
    232Data processing
    
    
    1,077
    
    
    
    889
    
    
    
    863Professional fees
    
    
    1,271
    
    
    
    631
    
    
    
    790Other expense
    
    
    3,617
    
    
    
    3,074
    
    
    
    3,543Total
    
    $
    7,447
    
    
    $
    6,578
    
    
    $
    6,841
 NOTE 18: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
  Cash and Cash Equivalents
  Available-for-Sale Securities
  Mortgage Loans Held for Sale
  Loans
  Federal Home Loan Bank Stock, Federal Reserve Bank Stock, and other securities
  F-25




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 18: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
 Deposits
  Securities Sold Under Agreement to Repurchase and Other Interest-Bearing Liabilities
  Short-Term and Long-Term Debt
  Commitments to Extend Credit, Letters of Credit and Lines of Credit
   F-26




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 18: DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
 2007
    
    2006Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In thousands)Financial assets:Cash and cash equivalents
    
    $
    18,139
    
    
    $
    18,139
    
    
    $
    27,230
    
    
    $
    27,230Available-for-sale securities
    
    
    76,871
    
    
    
    76,871
    
    
    
    87,206
    
    
    
    87,206Mortgage loans held for sale
    
    
    10,978
    
    
    
    10,978
    
    
    
    21,805
    
    
    
    21,805Interest receivable
    
    
    4,621
    
    
    
    4,621
    
    
    
    4,200
    
    
    
    4,200Loans, net of allowance for loan losses
    
    
    587,664
    
    
    
    590,500
    
    
    
    522,409
    
    
    
    516,011Federal Home Loan Bank stock, Federal
Reserve Bank
stock, and other securities
    
    
    7,043
    
    
    
    7,043
    
    
    
    6,447
    
    
    
    6,447Financial liabilities:Deposits
    
    
    536,370
    
    
    
    537,412
    
    
    
    535,864
    
    
    
    535,643Securities Sold Under Agreement to
Repurchase and Other Interest-Bearing
Liabilities
    
    
    29,036
    
    
    
    29,036
    
    
    
    29,558
    
    
    
    29,558Short-term debt
    
    
    25,000
    
    
    
    25,000
    
    
    
    
    
    
    
    Long-term debt
    
    
    80,906
    
    
    
    81,963
    
    
    
    67,019
    
    
    
    64,702Interest payable
    
    
    2,459
    
    
    
    2,459
    
    
    
    2,053
    
    
    
    2,053Unrecognized financial instruments
(net of amortization):Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 NOTE 19: COMMITMENTS AND CREDIT RISKS
     F-27




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 19: COMMITMENTS AND CREDIT RISKS (Continued)
        F-28




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 20: SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
  2007
    
    
    2006Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(In thousands, except per share data)Interest income
    
    $
    12,713
    
    
    $
    13,143
    
    
    $
    13,605
    
    
    $
    12,756
    
    
    $
    12,827
    
    
    $
    12,647
    
    
    $
    12,031
    
    
    $
    11,327Interest expense
    
    
    6,297
    
    
    
    6,734
    
    
    
    6,561
    
    
    
    5,990
    
    
    
    5,660
    
    
    
    5,381
    
    
    
    5,194
    
    
    
    4,727Net interest income
    
    
    6,416
    
    
    
    6,409
    
    
    
    7,044
    
    
    
    6,766
    
    
    
    7,167
    
    
    
    7,266
    
    
    
    6,837
    
    
    
    6,600Provision for loan losses
    
    
    1,865
    
    
    
    590
    
    
    
    
    
    
    
    400
    
    
    
    50
    
    
    
    540
    
    
    
    590
    
    
    
    75Net interest income after provision
for loan losses
    
    $
    4,551
    
    
    $
    5,819
    
    
    $
    7,044
    
    
    $
    6,366
    
    
    $
    7,117
    
    
    $
    6,726
    
    
    $
    6,247
    
    
    $
    6,525Noninterest income
    
    
    1,636
    
    
    
    1,761
    
    
    
    1,806
    
    
    
    1,997
    
    
    
    2,346
    
    
    
    2,364
    
    
    
    2,139
    
    
    
    2,032Noninterest expense
    
    
    5,474
    
    
    
    5,848
    
    
    
    6,311
    
    
    
    6,584
    
    
    
    6,094
    
    
    
    5,880
    
    
    
    5,954
    
    
    
    6,446Income before income taxes
    
    
    713
    
    
    
    1,732
    
    
    
    2,539
    
    
    
    1,779
    
    
    
    3,369
    
    
    
    3,210
    
    
    
    2,432
    
    
    
    2,111Income taxes (1)
    
    
    35
    
    
    
    646
    
    
    
    979
    
    
    
    615
    
    
    
    1,270
    
    
    
    1,219
    
    
    
    916
    
    
    
    794Net income
    
    $
    678
    
    
    $
    1,086
    
    
    $
    1,560
    
    
    $
    1,164
    
    
    $
    2,099
    
    
    $
    1,991
    
    
    $
    1,516
    
    
    $
    1,317Net Income per Share DataBasic
    
    $
    0.28
    
    
    $
    0.45
    
    
    $
    0.65
    
    
    $
    0.48
    
    
    $
    0.89
    
    
    $
    0.84
    
    
    $
    0.64
    
    
    $
    0.56Diluted
    
    $
    0.28
    
    
    $
    0.44
    
    
    $
    0.64
    
    
    $
    0.48
    
    
    $
    0.87
    
    
    $
    0.83
    
    
    $
    0.63
    
    
    $
    0.55Balance SheetTotal assets
    
    $
    736,213
    
    
    $
    730,449
    
    
    $
    738,187
    
    
    $
    739,864
    
    
    $
    692,219
    
    
    $
    684,935
    
    
    $
    675,186
    
    
    $
    705,682Total loans, net
    
    
    587,664
    
    
    
    554,161
    
    
    
    547,405
    
    
    
    552,288
    
    
    
    522,409
    
    
    
    527,864
    
    
    
    515,922
    
    
    
    522,492Stockholders equity
    
    
    58,934
    
    
    
    58,788
    
    
    
    56,887
    
    
    
    55,419
    
    
    
    53,820
    
    
    
    52,195
    
    
    
    49,437
    
    
    
    47,742
 
 (1)
    
    Income taxes were adjusted in the 4th Quarter to correct the effective rate
taken during the previous quarters in 2007.  NOTE 21: BUSINESS ACQUISITION
  F-29




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 21: BUSINESS ACQUISITION (Continued)
  (In thousands)Cash and cash equivalents
    
    $
    4,134Available-for-sale securities
    
    
    1,594Loans
    
    
    29,200Premises and equipment
    
    
    1,508Core deposits intangible
    
    
    1,000Western National Bank charter  intangible
    
    
    325Goodwill
    
    
    4,531Other assets
    
    
    1,660Total assets
    
    
    43,952Deposits
    
    
    31,241Other interest-bearing liabilities
    
    
    903Long-term debt
    
    
    650Other liabilities
    
    
    874Total liabilities assumed
    
    
    33,668Net assets acquired
    
    $
    10,284
  F-30




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 22: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
 Condensed Balance Sheets
December 31, 2007 and 2006
 2007
    
    
    2006(In thousands)ASSETSCash and cash equivalents
    
    $
    1,261
    
    
    $
    922Investments in subsidiaries:Bank of Blue Valley
    
    
    71,988
    
    
    
    67,619Blue Valley Building Corp.
    
    
    8,437
    
    
    
    8,141BVBC Capital Trust II
    
    
    232
    
    
    
    232BVBC Capital Trust III
    
    
    356
    
    
    
    356Other assets
    
    
    374
    
    
    
    704Total Assets
    
    $
    82,648
    
    
    $
    77,974LIABILITIESLong-term debt
    
    $
    2,781
    
    
    $
    3,381Subordinated debentures
    
    
    19,588
    
    
    
    19,588Other liabilities
    
    
    1,345
    
    
    
    1,185Total Liabilities
    
    
    23,714
    
    
    
    24,154STOCKHOLDERS EQUITYCommon stock
    
    
    2,440
    
    
    
    2,409Additional paid-in capital
    
    
    10,312
    
    
    
    9,561Retained earnings
    
    
    45,592
    
    
    
    41,982Accumulated other comprehensive loss, net of income
tax (credits) of $394 and $(88) at 2007 and 2006,
respectively
    
    
    590
    
    
    
    (132
    )Total Stockholders Equity
    
    
    58,934
    
    
    
    53,820Total Liabilities and Stockholders Equity
    
    $
    82,648
    
    
    $
    77,974
 F-31




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 22: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (Continued)
 Condensed Statements of Income
Years Ended December 31, 2007, 2006 and 2005
 2007
    
    
    2006
    
    
    2005(In thousands)IncomeDividends from subsidiaries
    
    $
    12,495
    
    
    $
    2,104
    
    
    $
    52Other income
    
    
    15
    
    
    
    65
    
    
    
    6412,510
    
    
    
    2,169
    
    
    
    116Expenses
    
    
    2,174
    
    
    
    2,252
    
    
    
    2,572Income (loss) before income
taxes and equity in
undistributed net income of
subsidiaries
    
    
    10,336
    
    
    
    (83
    )
    
    
    (2,456
    )Credit for income taxes
    
    
    (818
    )
    
    
    (729
    )
    
    
    (835
    )Income (loss) before equity in
undistributed net income of
subsidiaries
    
    
    11,154
    
    
    
    646
    
    
    
    (1,621
    )Equity in undistributed
(distributions in excess of) net
income of subsidiaries
    
    
    (6,666
    )
    
    
    6,277
    
    
    
    6,190Net income
    
    $
    4,488
    
    
    $
    6,923
    
    
    $
    4,569
 F-32




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2007, 2006 AND 2005
 NOTE 22: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (Continued)
 Condensed Statements of Cash Flows
Years Ended December 31, 2007, 2006 and 2005
 2007
    
    
    2006
    
    
    2005(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income
    
    $
    4,488
    
    
    $
    6,923
    
    
    $
    4,569Items not requiring (providing) cash:Deferred income taxes
    
    
    (42
    )
    
    
    (2,982
    )
    
    
    835Equity in
undistributed (distributions in excess of) net income of subsidiaries
    
    
    6,666
    
    
    
    (6,277
    )
    
    
    (6,190
    )Restricted stock earned
    
    
    316
    
    
    
    485
    
    
    
    301Changes in:Other assets
    
    
    255
    
    
    
    5,866
    
    
    
    (1,515
    )Other liabilities
    
    
    52
    
    
    
    (3,399
    )
    
    
    1,089Net cash provided by (used in)
operating activities
    
    
    11,735
    
    
    
    616
    
    
    
    (911
    )CASH FLOW FROM INVESTING ACTIVITIESCapital contributed to subsidiary
    
    
    (5,764
    )
    
    
    
    
    
    
    (12
    )Purchase of Unison Bancorp, Inc. and subsidiary
    
    
    (10,284
    )
    
    
    
    
    
    
    Proceeds from sale of assets and liabilities of
Western National Bank
    
    
    5,834
    
    
    
    
    
    
    
    Sale of Western National Bank charter
    
    
    325
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (9,889
    )
    
    
    
    
    
    
    (12
    )CASH FLOWS FROM FINANCING ACTIVITIESRepayments of long-term debt
    
    
    (1,250
    )
    
    
    (600
    )
    
    
    (12,375
    )Proceeds from long-term debt
    
    
    
    
    
    
    
    
    
    
    11,856Dividends paid on common stock
    
    
    (723
    )
    
    
    (596
    )
    
    
    (465
    )Proceeds from sale of common stock
    
    
    466
    
    
    
    538
    
    
    
    813Net cash used in financing activities
    
    
    (1,507
    )
    
    
    (658
    )
    
    
    (171
    )INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    339
    
    
    
    (42
    )
    
    
    (1,094
    )CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR
    
    
    922
    
    
    
    964
    
    
    
    2,058CASH AND CASH EQUIVALENTS,
END OF YEAR
    
    $
    1,261
    
    
    $
    922
    
    
    $
    964
 F-33