##### 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, 2009
 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)
 Registrants telephone number, including area code: (913) 338-1000
 Securities registered pursuant to Section 12(b) of the Act:
 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
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
 o þ
 .
 DOCUMENTS INCORPORATED BY REFERENCE




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##### 



BLUE VALLEY BAN CORP.
 FORM 10-K INDEX
 Page No.PART I.Item 1. Business
    
    
    2Item 1A. Risk Factors
    
    
    17Item 1B. Unresolved Staff Comments
    
    
    21Item 2. Properties
    
    
    21Item 3. Legal Proceedings
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22PART II.Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    23Item 6. Selected Financial Data
    
    
    24Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    26Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    51Item 8. Financial Statements and Supplementary Data
    
    
    53Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    53Item 9A. Controls and Procedures
    
    
    54Item 9B. Other Information
    
    
    54PART III.Item 10. Directors, Executive Officers and Corporate Governance
    
    
    55Item 11. Executive Compensation
    
    
    55Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    55Item 13. Certain Relationships, Related Transactions, and Director Independence
    
    
    55Item 14. Principal Accountant Fees and Services
    
    
    56PART IV.Item 15. Exhibits, Financial Statement Schedules
    
    
    56EX-21.1EX-23.3EX-31.1EX-31.2EX-32.1EX-99.1EX-99.2
  1




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Part I
 
 Item 1:
    
    Business
 The Company and Subsidiaries
          2




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Our Market Area
    Lending Activities
 Overview
   3




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LOAN PORTFOLIO
 As of December 31, 2009Amount
    
    
    Percent(In thousands)Commercial
    
    $
    142,528
    
    
    
    25.72
    %Commercial real estate
    
    
    167,581
    
    
    
    30.24Construction
    
    
    113,077
    
    
    
    20.41Home equity
    
    
    66,586
    
    
    
    12.02Residential real estate
    
    
    45,014
    
    
    
    8.12Lease financing
    
    
    11,259
    
    
    
    2.03Consumer
    
    
    8,066
    
    
    
    1.46Total loans and leases
    
    
    554,111
    
    
    
    100.00
    %Less allowance for loan losses
    
    
    20,000Loans receivable, net
    
    $
    534,111
 Commercial loans.
    Commercial real estate loans
  4




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Construction loans.
  Home equity loans.
 Residential real estate loans.
  5




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Lease financing.
  Consumer loans.
  6




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Investment Activities
  
    
    secure the safety of principal;
 
    
    provide adequate liquidity;
 
    
    provide securities for use in pledging for public funds or repurchase agreements; and
 
    
    maximize after-tax income.
  Deposit Services
   7




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Investment Brokerage Services
  Trust Services
  Competition
   Trademarks
   
 Employees
  8




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Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    PositionsDirectorsRobert D. Regnier
    
    61
    
    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
    
    71
    
    Director of Blue Valley and the BankMichael J. Brown
    
    53
    
    Director of Blue ValleyAnne D. St. Peter
    
    44
    
    Director of Blue ValleyRobert D. Taylor
    
    62
    
    Director of Blue Valley and Chairman of the Audit Committee of Blue ValleyAdditional Directors of the BankHarvey S. Bodker
    
    74
    
    Director of the BankRichard L. Bond
    
    74
    
    Director of the BankSuzanne E. Dotson
    
    63
    
    Director of the BankCharles H. Hunter
    
    67
    
    Director of the BankExecutive Officers who are not DirectorsMark A. Fortino
    
    43
    
    Executive Vice President and Chief Financial Officer of the Bank; Chief Financial Officer of Blue ValleyBruce A. Easterly
    
    50
    
    Executive Vice President  Chief Lending Officer of the BankBonnie M. McConnaughy
    
    50
    
    Senior Vice President  Operations of the Bank
 Available Information
 http://www.bankbv.com http://www.sec.gov
 Regulation and Supervision
   9




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Applicable Legislation
  Emergency Economic Stabilization Act of 2008.
    10




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USA PATRIOT Act.
 Gramm-Leach-Bliley Act
    11




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Sarbanes-Oxley Act
 Bank Holding Company Regulation
  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.
 12




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Capital Requirements.
  Dividends.
  Bank Regulations
  13




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Deposit Insurance.
  Capital Requirements.
  14




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
    
    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;
 
    
    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
establishment 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.
 15




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Insider Transactions.
 Community Reinvestment Act Requirements.
 State Bank Activities.
 Regulations Governing Extensions of Credit .
 Reserve Requirements.
 Other Regulations
  16




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Item 1A:
    
    Risk Factors
  Difficult market conditions have adversely affected the Companys industry and may continue to
affect the industry.
  Our loan portfolio is concentrated in real estate lending, which has made and will make our loan
portfolio more susceptible to credit losses in the current real estate market.
  Current levels of market volatility.
  Our future ability to raise capital may be limited.
  17




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Blue Valley and the Bank are subject to extensive governmental regulation.
  If we are unable to pay our Preferred Shares dividend, the holder of the Preferred Shares may have
additional rights.
  Our operations may be adversely affected if we are unable to maintain and increase our deposit base
and secure adequate funding.
  Changes in interest rates may adversely affect our earnings and cost of funds.
  18




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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.
  The continued slowdown in real estate sales and a decrease in residential real estate values within
our market areas have and may continue to affect our financial condition.
  If our allowance for loan losses is insufficient to absorb losses in our loan portfolio, it will
adversely affect our financial condition and results of operations.
   We may incur significant costs if we foreclose on environmentally contaminated real estate.
  19




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The loss of our key personnel could adversely affect our operations.
  If we are not able to compete effectively in the highly competitive banking industry, our business
will be adversely affected.
  Continued losses could erode our capital levels.
  Confidential customer information transmitted through the Banks online banking service is
vulnerable to security breaches and computer viruses, which could expose the Bank to litigation and
adversely affect its reputation and ability to generate deposits.
  Recent legislative and regulatory initiatives to address these difficult market and economic
conditions my not stabilize the U.S. financial system.
  20




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Item 1B:
    
    Unresolved Staff Comments
  
 Item 2:
    
    Properties
  Mortgage Indebtednessas of December 31,Location
    
    Year Occupied
    
    2009
    
    OccupancyOverland Park Banking
Center
11935 Riley
    
    
    
    
    
    80%Overland Park, Kansas *
    
    1994
    
    None
    
    One sublease occupying 20%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 Operations
Center
7900 College Boulevard
Overland Park, Kansas *
    
    2003
    
    None
    
    100%Leawood Banking Center
13401 Mission Road
    
    
    
    
    
    55%Leawood, Kansas *
    
    2004
    
    None
    
    Four subleases occupying 45%Lenexa Banking Center
9500 Lackman Road
Lenexa, Kansas **
    
    2007
    
    None
    
    100%
 
 *
    
    The building is owned by Blue Valley Building Corp, a subsidiary of the Bank as of March 31,
2009.**
    
    The building is owned by the Bank. 21




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Item 3:
    
    Legal Proceedings
  
 Item 4:
    
    Submission of Matters to a Vote of Security Holders
  22




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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
 2009
    
    2008High
    
    Low
    
    High
    
    LowFiscal QuarterFirst
    
    $
    25.00
    
    
    $
    10.05
    
    
    $
    34.00
    
    
    $
    31.00Second
    
    
    12.00
    
    
    
    7.50
    
    
    
    34.00
    
    
    
    26.00Third
    
    
    10.50
    
    
    
    7.45
    
    
    
    31.00
    
    
    
    25.00Fourth
    
    
    10.50
    
    
    
    9.30
    
    
    
    25.00
    
    
    
    15.00
 Dividends
  Declaration Date
    
    Amount Per Share
    
    Record Date
    
    Pay DateDecember 20, 2007
    
    $0.36
    
    December 31, 2007
    
    January 31, 2008
   23




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Item 6:
    
    Selected Financial Data
  As of and for theYear Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands, except share and per share data)Selected Statement of Income DataInterest income:Interest and fees on loans
    
    $
    33,996
    
    
    $
    41,245
    
    
    $
    47,194
    
    
    $
    44,537
    
    
    $
    37,492Federal funds sold and other short-term investments
    
    
    144
    
    
    
    378
    
    
    
    557
    
    
    
    256
    
    
    
    580Available-for-sale securities
    
    
    1,943
    
    
    
    3,375
    
    
    
    4,466
    
    
    
    4,039
    
    
    
    2,317Total interest income
    
    
    36,083
    
    
    
    44,998
    
    
    
    52,217
    
    
    
    48,832
    
    
    
    40,389Interest expense:Interest-bearing demand deposits
    
    
    2,589
    
    
    
    1,394
    
    
    
    656
    
    
    
    97
    
    
    
    94Savings and money market deposit accounts
    
    
    490
    
    
    
    2,402
    
    
    
    6,362
    
    
    
    4,356
    
    
    
    3,861Other time deposits
    
    
    10,742
    
    
    
    12,139
    
    
    
    13,134
    
    
    
    11,254
    
    
    
    9,171Funds borrowed
    
    
    4,166
    
    
    
    5,756
    
    
    
    5,430
    
    
    
    5,255
    
    
    
    4,867Total interest expense
    
    
    17,987
    
    
    
    21,691
    
    
    
    25,582
    
    
    
    20,962
    
    
    
    17,993Net interest income
    
    
    18,096
    
    
    
    23,307
    
    
    
    26,635
    
    
    
    27,870
    
    
    
    22,396Provision for loan losses
    
    
    21,635
    
    
    
    17,025
    
    
    
    2,855
    
    
    
    1,255
    
    
    
    230Net interest income (loss) after provision for
loan losses
    
    
    (3,539
    )
    
    
    6,282
    
    
    
    23,780
    
    
    
    26,615
    
    
    
    22,166Non-interest income:Loans held for sale fee income
    
    
    2,785
    
    
    
    2,136
    
    
    
    3,160
    
    
    
    5,046
    
    
    
    7,408Service fees
    
    
    3,250
    
    
    
    3,299
    
    
    
    2,830
    
    
    
    2,491
    
    
    
    2,166Realized gains on available-for-sale securities
    
    
    346
    
    
    
    702
    
    
    
    105
    
    
    
    
    
    
    
    Gain on settlement of litigation
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    
    
    
    
    Other income
    
    
    1,875
    
    
    
    1,275
    
    
    
    1,105
    
    
    
    1,344
    
    
    
    1,727Total non-interest income
    
    
    8,256
    
    
    
    8,412
    
    
    
    7,200
    
    
    
    8,881
    
    
    
    11,301Non-interest expense:Salaries and employee benefits
    
    
    12,272
    
    
    
    12,500
    
    
    
    13,570
    
    
    
    14,737
    
    
    
    15,986Net occupancy expense
    
    
    2,811
    
    
    
    3,144
    
    
    
    3,200
    
    
    
    3,059
    
    
    
    3,307Goodwill impairment
    
    
    
    
    
    
    4,821
    
    
    
    
    
    
    
    
    
    
    
    Other operating expense
    
    
    12,758
    
    
    
    8,304
    
    
    
    7,447
    
    
    
    6,578
    
    
    
    6,841Total non-interest expense
    
    
    27,841
    
    
    
    28,769
    
    
    
    24,217
    
    
    
    24,374
    
    
    
    26,134Income (loss) before income taxes
    
    
    (23,124
    )
    
    
    (14,075
    )
    
    
    6,763
    
    
    
    11,122
    
    
    
    7,333Provision (benefit) for income taxes
    
    
    (8,514
    )
    
    
    (3,824
    )
    
    
    2,275
    
    
    
    4,199
    
    
    
    2,764Net income (loss)
    
    $
    (14,610
    )
    
    $
    (10,251
    )
    
    $
    4,488
    
    
    $
    6,923
    
    
    $
    4,569Per Share DataBasic earnings
    
    $
    (5.68
    )
    
    $
    (4.20
    )
    
    $
    1.86
    
    
    $
    2.93
    
    
    $
    1.95Diluted earnings
    
    
    (5.68
    )
    
    
    (4.20
    )
    
    
    1.84
    
    
    
    2.88
    
    
    
    1.91Dividends
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.36
    
    
    
    0.30
    
    
    
    0.25Book value basic (at end of period)
    
    
    14.09
    
    
    
    19.97
    
    
    
    24.34
    
    
    
    22.45
    
    
    
    19.42Weighted average common shares outstanding:Basic
    
    
    2,754,419
    
    
    
    2,438,809
    
    
    
    2,410,621
    
    
    
    2,365,932
    
    
    
    2,348,805Diluted
    
    
    2,762,603
    
    
    
    2,460,045
    
    
    
    2,438,203
    
    
    
    2,407,802
    
    
    
    2,388,531Dividend payout ratio
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    19.35
    %
    
    
    10.23
    %
    
    
    12.82
    %
 24




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As of and for theYear Ended December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands)Selected Financial Condition Data
(at end of period):Total available-for-sale securities
    
    $
    72,757
    
    
    $
    68,681
    
    
    $
    76,653
    
    
    $
    87,009
    
    
    $
    99,987Total mortgage loans held for sale
    
    
    8,752
    
    
    
    8,157
    
    
    
    10,978
    
    
    
    21,805
    
    
    
    13,906Total loans
    
    
    554,111
    
    
    
    662,401
    
    
    
    596,646
    
    
    
    528,515
    
    
    
    503,143Total assets
    
    
    773,967
    
    
    
    815,700
    
    
    
    736,213
    
    
    
    692,219
    
    
    
    689,589Total deposits
    
    
    590,110
    
    
    
    600,868
    
    
    
    536,370
    
    
    
    535,864
    
    
    
    529,341Funds borrowed
    
    
    118,208
    
    
    
    135,129
    
    
    
    134,942
    
    
    
    96,577
    
    
    
    104,394Total stockholders equity
    
    
    60,603
    
    
    
    76,439
    
    
    
    58,934
    
    
    
    53,820
    
    
    
    46,255Trust assets under administration
    
    
    121,418
    
    
    
    112,688
    
    
    
    104,167
    
    
    
    104,445
    
    
    
    93,988Selected Financial Ratios and Other Data:Performance Ratios:Net interest margin (1)
    
    
    2.42
    %
    
    
    3.19
    %
    
    
    3.95
    %
    
    
    4.34
    %
    
    
    3.50
    %Non-interest income to average assets
    
    
    1.01
    
    
    
    1.07
    
    
    
    0.99
    
    
    
    1.29
    
    
    
    1.63Non-interest expense to average assets
    
    
    3.42
    
    
    
    3.67
    
    
    
    3.34
    
    
    
    3.54
    
    
    
    3.77Net overhead ratio (2)
    
    
    2.40
    
    
    
    2.59
    
    
    
    2.35
    
    
    
    2.25
    
    
    
    2.14Efficiency ratio (3)
    
    
    105.65
    
    
    
    90.70
    
    
    
    71.57
    
    
    
    66.32
    
    
    
    77.56Return on average assets (4)
    
    
    (1.79
    )
    
    
    (1.31
    )
    
    
    0.62
    
    
    
    1.00
    
    
    
    0.66Return on average equity (5)
    
    
    (33.07
    )
    
    
    (17.53
    )
    
    
    7.88
    
    
    
    13.81
    
    
    
    10.44Asset Quality Ratios:Non-performing loans to total loans
    
    
    6.30
    %
    
    
    6.54
    %
    
    
    4.22
    %
    
    
    1.31
    %
    
    
    0.87
    %Allowance for possible loan losses to:Total loans
    
    
    3.61
    
    
    
    1.87
    
    
    
    1.51
    
    
    
    1.16
    
    
    
    1.33Non-performing loans
    
    
    57.33
    
    
    
    28.54
    
    
    
    35.65
    
    
    
    88.16
    
    
    
    153.27Net charge-offs to average total loans
    
    
    2.30
    
    
    
    2.16
    
    
    
    0.06
    
    
    
    0.35
    
    
    
    0.17Non-performing loans to total assets
    
    
    4.51
    
    
    
    5.31
    
    
    
    3.42
    
    
    
    1.00
    
    
    
    0.63Balance Sheet Ratios:Loans to deposits
    
    
    93.90
    %
    
    
    110.24
    %
    
    
    111.24
    %
    
    
    98.63
    %
    
    
    95.05
    %Average interest-earning assets to averageinterest-bearing liabilities
    
    
    114.05
    
    
    
    115.18
    
    
    
    117.84
    
    
    
    119.12
    
    
    
    116.78Capital Ratios:Total equity to total assets
    
    
    7.83
    %
    
    
    9.37
    %
    
    
    8.01
    %
    
    
    7.77
    %
    
    
    6.71
    %Total capital to risk-weighted assets ratio
    
    
    12.54
    
    
    
    13.82
    
    
    
    11.53
    
    
    
    12.47
    
    
    
    12.04Tier 1 capital to risk-weighted assets ratio
    
    
    11.26
    
    
    
    12.57
    
    
    
    10.28
    
    
    
    11.33
    
    
    
    10.25Tier 1 capital to average assets ratio
    
    
    9.07
    
    
    
    11.50
    
    
    
    9.86
    
    
    
    10.29
    
    
    
    8.86Average equity to average assets ratio
    
    
    8.47
    
    
    
    7.66
    
    
    
    7.85
    
    
    
    7.27
    
    
    
    6.31
 
 (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. 25




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##### 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.
 26




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Income Taxes
 Overview
    27




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28




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Net Interest Income
  Years ended December 31, 2009 and 2008.
   Years ended December 31, 2008 and 2007.
  29




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30




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Average Balance Sheets.
 AVERAGE BALANCES, YIELDS AND RATES
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Average
    
    
    
    
    
    
    
    
    
    
    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
    
    $
    68,310
    
    
    $
    144
    
    
    
    0.21
    %
    
    $
    22,478
    
    
    $
    378
    
    
    
    1.68
    %
    
    $
    10,902
    
    
    $
    557
    
    
    
    5.11
    %Available-for-sale securities  taxable
    
    
    60,441
    
    
    
    1,943
    
    
    
    3.21
    
    
    
    69,741
    
    
    
    3,369
    
    
    
    4.83
    
    
    
    90,246
    
    
    
    4,452
    
    
    
    4.93Available-for-sale securities  non-taxable (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    9
    
    
    
    6.38
    
    
    
    312
    
    
    
    21
    
    
    
    6.66Mortgage loans held for sale
    
    
    9,875
    
    
    
    477
    
    
    
    4.83
    
    
    
    6,157
    
    
    
    340
    
    
    
    5.52
    
    
    
    9,589
    
    
    
    609
    
    
    
    6.35Loans, net of unearned discount and fees (2)
    
    
    608,080
    
    
    
    33,519
    
    
    
    5.51
    
    
    
    631,673
    
    
    
    40,905
    
    
    
    6.48
    
    
    
    563,224
    
    
    
    46,585
    
    
    
    8.27Total earning assets
    
    
    746,706
    
    
    
    36,083
    
    
    
    4.83
    
    
    
    730,190
    
    
    
    45,001
    
    
    
    6.16
    
    
    
    674,273
    
    
    
    52,224
    
    
    
    7.75Cash and due from banks  
non-interest bearing
    
    
    36,257
    
    
    
    
    
    
    
    
    
    
    
    20,611
    
    
    
    
    
    
    
    
    
    
    
    17,728Allowance for loan losses
    
    
    (19,647
    )
    
    
    
    
    
    
    
    
    
    
    (10,060
    )
    
    
    
    
    
    
    
    
    
    
    (6,962
    )Premises and equipment, net
    
    
    18,270
    
    
    
    
    
    
    
    
    
    
    
    18,337
    
    
    
    
    
    
    
    
    
    
    
    19,072Other assets
    
    
    33,381
    
    
    
    
    
    
    
    
    
    
    
    25,704
    
    
    
    
    
    
    
    
    
    
    
    20,895Total assets
    
    $
    814,967
    
    
    
    
    
    
    
    
    
    
    $
    784,782
    
    
    
    
    
    
    
    
    
    
    $
    725,006Liabilities and Stockholders EquityDeposits-interest bearing:Interest-bearing demand accounts
    
    $
    96,315
    
    
    $
    2,589
    
    
    
    2.69
    %
    
    $
    52,776
    
    
    $
    1,394
    
    
    
    2.64
    %
    
    $
    30,719
    
    
    $
    656
    
    
    
    2.14
    %Savings and money market deposits
    
    
    93,672
    
    
    
    490
    
    
    
    0.52
    
    
    
    137,295
    
    
    
    2,402
    
    
    
    1.75
    
    
    
    163,099
    
    
    
    6,362
    
    
    
    3.90Time deposits
    
    
    337,363
    
    
    
    10,742
    
    
    
    3.18
    
    
    
    286,404
    
    
    
    12,139
    
    
    
    4.24
    
    
    
    269,673
    
    
    
    13,134
    
    
    
    4.87Total interest-bearing deposits
    
    
    527,350
    
    
    
    13,821
    
    
    
    2.62
    
    
    
    476,475
    
    
    
    15,935
    
    
    
    3.34
    
    
    
    463,491
    
    
    
    20,152
    
    
    
    4.35Short-term debt
    
    
    23,261
    
    
    
    58
    
    
    
    0.25
    
    
    
    46,008
    
    
    
    943
    
    
    
    2.05
    
    
    
    33,610
    
    
    
    1,319
    
    
    
    3.93Long-term debt
    
    
    104,096
    
    
    
    4,108
    
    
    
    3.95
    
    
    
    111,490
    
    
    
    4,813
    
    
    
    4.32
    
    
    
    75,087
    
    
    
    4,111
    
    
    
    5.48Total interest-bearing liabilities
    
    
    654,707
    
    
    
    17,987
    
    
    
    2.75
    
    
    
    633,973
    
    
    
    21,691
    
    
    
    3.42
    
    
    
    572,188
    
    
    
    25,582
    
    
    
    4.47Non-interest bearing deposits
    
    
    86,744
    
    
    
    
    
    
    
    
    
    
    
    86,811
    
    
    
    
    
    
    
    
    
    
    
    91,151Other liabilities
    
    
    4,478
    
    
    
    
    
    
    
    
    
    
    
    3,852
    
    
    
    
    
    
    
    
    
    
    
    4,745Stockholders equity
    
    
    69,038
    
    
    
    
    
    
    
    
    
    
    
    60,146
    
    
    
    
    
    
    
    
    
    
    
    56,922Total liabilities and stockholders equity
    
    $
    814,967
    
    
    
    
    
    
    
    
    
    
    $
    784,782
    
    
    
    
    
    
    
    
    
    
    $
    725,006FTE net interest income/spread
    
    
    
    
    
    $
    18,096
    
    
    
    2.08
    %
    
    
    
    
    
    $
    23,310
    
    
    
    2.74
    %
    
    
    
    
    
    $
    26,642
    
    
    
    3.28
    %FTE net interest margin
    
    
    
    
    
    
    
    
    
    
    2.42
    %
    
    
    
    
    
    
    
    
    
    
    3.19
    %
    
    
    
    
    
    
    
    
    
    
    3.95
    %
 
 (1)
    
    Presented on a fully tax-equivalent basis assuming a tax rate of 34%. For the three years ended December 31, 2009, 2008 and 2007, the tax equivalency adjustment amounted to $0, $3,000, and $7,000, respectively.(2)
    
    Includes average balances and income from loans on non-accrual status. 31




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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,(In thousands)2009 Compared to 2008
    
    
    2008 Compared to 2007Change
    
    
    Change
    
    
    
    
    
    
    Change
    
    
    ChangeDue to
    
    
    Due to
    
    
    Total
    
    
    Due to
    
    
    Due to
    
    
    TotalRate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    Volume
    
    
    ChangeFederal funds sold and
other short-term
investments
    
    $
    (255
    )
    
    $
    21
    
    
    $
    (234
    )
    
    $
    (374
    )
    
    $
    195
    
    
    $
    (179
    )Available-for-sale
securities  taxable
    
    
    (1,128
    )
    
    
    (298
    )
    
    
    (1,426
    )
    
    
    (93
    )
    
    
    (990
    )
    
    
    (1,083
    )Available-for-sale
securities 
non-taxable (1)
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )
    
    
    (1
    )
    
    
    (11
    )
    
    
    (12
    )Mortgage loans held for
sale
    
    
    (8
    )
    
    
    145
    
    
    
    137
    
    
    
    (79
    )
    
    
    (190
    )
    
    
    (269
    )Loans, net of unearned
discount and fees
    
    
    (6,088
    )
    
    
    (1,298
    )
    
    
    (7,386
    )
    
    
    (10,112
    )
    
    
    4,432
    
    
    
    (5,680
    )Total interest income
    
    
    (7,479
    )
    
    
    (1,439
    )
    
    
    (8,918
    )
    
    
    (10,659
    )
    
    
    3,436
    
    
    
    (7,223
    )Interest-bearing demand
accounts
    
    
    26
    
    
    
    1,169
    
    
    
    1,195
    
    
    
    155
    
    
    
    583
    
    
    
    738Savings and money market
deposits
    
    
    (1,686
    )
    
    
    (226
    )
    
    
    (1,912
    )
    
    
    (3,509
    )
    
    
    (451
    )
    
    
    (3,960
    )Time deposits
    
    
    (1,963
    )
    
    
    566
    
    
    
    (1,397
    )
    
    
    (1,707
    )
    
    
    712
    
    
    
    (995
    )Short-term debt
    
    
    (828
    )
    
    
    (57
    )
    
    
    (885
    )
    
    
    (630
    )
    
    
    254
    
    
    
    (376
    )Long-term debt
    
    
    (411
    )
    
    
    (294
    )
    
    
    (705
    )
    
    
    (870
    )
    
    
    1,572
    
    
    
    702Total interest expense
    
    
    (4,862
    )
    
    
    1,158
    
    
    
    (3,704
    )
    
    
    (6,561
    )
    
    
    2,670
    
    
    
    (3,891
    )Net interest income
    
    $
    (2,617
    )
    
    $
    (2,597
    )
    
    $
    (5,214
    )
    
    $
    (4,098
    )
    
    $
    766
    
    
    $
    (3,332
    )
 
 (1)
    
    Presented on a fully tax-equivalent basis assuming a tax rate of 34%. Provision for Loan Losses
  32




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Non-interest Income
  NON-INTEREST INCOME
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Loans held for sale fee income
    
    $
    2,785
    
    
    $
    2,136
    
    
    $
    3,160NSF charges and service fees
    
    
    1,472
    
    
    
    1,641
    
    
    
    1,418Other service charges
    
    
    1,778
    
    
    
    1,658
    
    
    
    1,412Realized gains on available-for-sale securities
    
    
    346
    
    
    
    702
    
    
    
    105Gain on settlement of litigation
    
    
    
    
    
    
    1,000
    
    
    
    Other income
    
    
    1,875
    
    
    
    1,275
    
    
    
    1,105Total non-interest income
    
    $
    8,256
    
    
    $
    8,412
    
    
    $
    7,200
  33




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34




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Non-interest Expense
  NON-INTEREST EXPENSE
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Salaries and employee benefits
    
    $
    12,272
    
    
    $
    12,500
    
    
    $
    13,570Net occupancy expense
    
    
    2,811
    
    
    
    3,144
    
    
    
    3,200Goodwill impairment
    
    
    
    
    
    
    4,821
    
    
    
    Other operating expense
    
    
    12,758
    
    
    
    8,304
    
    
    
    7,447Total non-interest expenses
    
    $
    27,841
    
    
    $
    28,769
    
    
    $
    24,217
   Goodwill and Other
Intangible Assets
  35




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##### Table of Contents



Income Taxes
  Financial Condition
  Investment securities.
   INVESTMENT SECURITIES PORTFOLIO COMPOSITION
 At December 31,2009
    
    
    2008
    
    
    2007(In thousands)U.S. government sponsored agency securities
    
    $
    72,163
    
    
    $
    68,092
    
    
    $
    75,953State and political subdivisions
    
    
    
    
    
    
    
    
    
    
    210Equity and other securities
    
    
    594
    
    
    
    589
    
    
    
    490Total
    
    $
    72,757
    
    
    $
    68,681
    
    
    $
    76,653
  36




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##### Table of Contents



MATURITY OF INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES
 More Than Ten
    
    
    Total InvestmentOne Year or Less
    
    
    One to Five Years
    
    
    Five to Ten Years
    
    
    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
    
    $
    
    
    
    
    
    %
    
    $
    67,272
    
    
    
    2.46
    %
    
    $
    
    
    
    
    
    %
    
    $
    4,891
    
    
    
    3.00
    %
    
    $
    72,163
    
    
    
    2.50
    %Equity and other securities
with no defined maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    594
    
    
    
    3.86Total available-for-sale
    
    $
    
    
    
    
    
    %
    
    $
    67,272
    
    
    
    2.46
    %
    
    $
    
    
    
    
    
    %
    
    $
    4,891
    
    
    
    3.00
    %
    
    $
    72,757
    
    
    
    2.51
    %
 Loans Held for Sale.
 Loans.
   37




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##### Table of Contents



As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(In thousands)Commercial
    
    $
    142,528
    
    
    
    25.72
    %
    
    $
    172,647
    
    
    
    26.06
    %
    
    $
    139,120
    
    
    
    23.32
    %
    
    $
    110,849
    
    
    
    20.97
    %
    
    $
    112,452
    
    
    
    22.35
    %Commercial real estate
    
    
    167,581
    
    
    
    30.24
    
    
    
    170,697
    
    
    
    25.77
    
    
    
    150,655
    
    
    
    25.25
    
    
    
    126,952
    
    
    
    24.02
    
    
    
    114,562
    
    
    
    22.77Construction
    
    
    113,077
    
    
    
    20.41
    
    
    
    182,933
    
    
    
    27.62
    
    
    
    188,229
    
    
    
    31.55
    
    
    
    171,709
    
    
    
    32.49
    
    
    
    139,662
    
    
    
    27.76Home equity
    
    
    66,586
    
    
    
    12.02
    
    
    
    59,257
    
    
    
    8.94
    
    
    
    38,473
    
    
    
    6.45
    
    
    
    32,408
    
    
    
    6.13
    
    
    
    33,637
    
    
    
    6.68Residential real estate
    
    
    45,014
    
    
    
    8.12
    
    
    
    43,695
    
    
    
    6.60
    
    
    
    37,511
    
    
    
    6.29
    
    
    
    34,988
    
    
    
    6.63
    
    
    
    39,371
    
    
    
    7.83Lease financing
    
    
    11,259
    
    
    
    2.03
    
    
    
    18,927
    
    
    
    2.86
    
    
    
    19,724
    
    
    
    3.30
    
    
    
    18,512
    
    
    
    3.50
    
    
    
    18,238
    
    
    
    3.62Consumer
    
    
    8,066
    
    
    
    1.46
    
    
    
    14,245
    
    
    
    2.15
    
    
    
    22,934
    
    
    
    3.84
    
    
    
    33,097
    
    
    
    6.26
    
    
    
    45,221
    
    
    
    8.99Total loans and
leases
    
    
    554,111
    
    
    
    100.00
    %
    
    
    662,401
    
    
    
    100.00
    %
    
    
    596,646
    
    
    
    100.00
    %
    
    
    528,515
    
    
    
    100.00
    %
    
    
    503,143
    
    
    
    100.00
    %Less allowance for
loan losses
    
    
    20,000
    
    
    
    
    
    
    
    12,368
    
    
    
    
    
    
    
    8,982
    
    
    
    
    
    
    
    6,106
    
    
    
    
    
    
    
    6,704Loans, net
    
    $
    534,111
    
    
    
    
    
    
    $
    650,033
    
    
    
    
    
    
    $
    587,664
    
    
    
    
    
    
    $
    522,409
    
    
    
    
    
    
    $
    496,439
 Collateral and Concentration.
  MATURITIES AND SENSITIVITIES OF LOANS TO
CHANGES IN INTEREST RATES
 As of December 31, 2009More than One YearLess than
    
    One to
    
    Over fiveone year
    
    five years
    
    years
    
    Total
    
    Fixed
    
    Variable(In thousands)Commercial
    
    $
    89,350
    
    
    $
    48,081
    
    
    $
    5,097
    
    
    $
    142,528
    
    
    $
    18,770
    
    
    $
    34,408Commercial Real Estate
    
    
    56,399
    
    
    
    107,830
    
    
    
    3,352
    
    
    
    167,581
    
    
    
    77,606
    
    
    
    33,576Construction
    
    
    88,834
    
    
    
    21,045
    
    
    
    3,198
    
    
    
    113,077
    
    
    
    13,272
    
    
    
    10,971
 38




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##### Table of Contents



Non-performing Assets
   NON-PERFORMING ASSETS
 As of December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands)Commercial and all other loans:Past due 90 days or more
    
    $
    
    
    
    $
    
    
    
    $
    680
    
    
    $
    802
    
    
    $
    781Non-accrual
    
    
    1,327
    
    
    
    2,143
    
    
    
    60
    
    
    
    381
    
    
    
    769Commercial real estate loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,951
    
    
    
    598Non-accrual
    
    
    13,267
    
    
    
    1,951
    
    
    
    512
    
    
    
    
    
    
    
    Construction loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    10,699
    
    
    
    
    
    
    
    585Non-accrual
    
    
    11,205
    
    
    
    32,110
    
    
    
    10,115
    
    
    
    136
    
    
    
    452Home equity loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    637
    
    
    
    
    
    
    
    Non-accrual
    
    
    344
    
    
    
    488
    
    
    
    
    
    
    
    
    
    
    
    Residential real estate loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    1,194
    
    
    
    
    
    
    
    Non-accrual
    
    
    8,404
    
    
    
    6,129
    
    
    
    189
    
    
    
    410
    
    
    
    1,016Lease financing:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    186
    
    
    
    5Non-accrual
    
    
    335
    
    
    
    475
    
    
    
    1,084
    
    
    
    
    
    
    
    119Consumer loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13
    
    
    
    49Non-accrual
    
    
    6
    
    
    
    36
    
    
    
    
    
    
    
    47
    
    
    
    Debt securities and other assets (excluding
other real estate owned and other repossessed
assets):Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Non-accrual
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total non-performing loans
    
    
    34,888
    
    
    
    43,332
    
    
    
    25,194
    
    
    
    6,926
    
    
    
    4,374Foreclosed assets held for sale
    
    
    19,434
    
    
    
    4,783
    
    
    
    2,523
    
    
    
    717
    
    
    
    711Total non-performing assets
    
    $
    54,322
    
    
    $
    48,115
    
    
    $
    27,717
    
    
    $
    7,643
    
    
    $
    5,085Total non-performing loans to total loans
    
    
    6.30
    %
    
    
    6.54
    %
    
    
    4.22
    %
    
    
    1.31
    %
    
    
    0.87
    %Total non-performing loans to total assets
    
    
    4.51
    
    
    
    5.31
    
    
    
    3.42
    
    
    
    1.00
    
    
    
    0.63Allowance for loan losses to non-performing loans
    
    
    57.33
    
    
    
    28.54
    
    
    
    35.65
    
    
    
    88.16
    
    
    
    153.27Non-performing assets to loans and foreclosed
assets held for sale
    
    
    9.47
    
    
    
    7.21
    
    
    
    4.63
    
    
    
    1.44
    
    
    
    1.01
 Non-performing assets
 39




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##### Table of Contents



Year EndedDecember 31, 2009(In thousands)Gross interest income (since date
of non-accrual) if the loans had been
current and accruing interest
    
    $
    1,536Interest income reversed at time loan
placed on non-accrual
    
    
    739Cash interest received during the period
    
    
    212
 Impaired Loans.
   Allowance For Loan Losses.
 40




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##### Table of Contents



SUMMARY OF LOAN LOSS EXPERIENCE
AND RELATED INFORMATION
 As of and for theYear Ended December 31,2009
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005(In thousands)Balance at beginning of period
    
    $
    12,368
    
    
    $
    8,982
    
    
    $
    6,106
    
    
    $
    6,704
    
    
    $
    7,333Loans charged-off:Commercial loans
    
    
    4,713
    
    
    
    6,603
    
    
    
    215
    
    
    
    1,417
    
    
    
    949Commercial real estate loans
    
    
    374
    
    
    
    262
    
    
    
    
    
    
    
    
    
    
    
    Construction loans
    
    
    7,716
    
    
    
    6,022
    
    
    
    244
    
    
    
    100
    
    
    
    Home equity loans
    
    
    653
    
    
    
    127
    
    
    
    
    
    
    
    8
    
    
    
    16Residential real estate loans
    
    
    1,480
    
    
    
    424
    
    
    
    49
    
    
    
    318
    
    
    
    Lease financing
    
    
    109
    
    
    
    372
    
    
    
    139
    
    
    
    134
    
    
    
    86Consumer loans
    
    
    58
    
    
    
    112
    
    
    
    16
    
    
    
    83
    
    
    
    77Total loans charged-off
    
    
    15,103
    
    
    
    13,922
    
    
    
    663
    
    
    
    2,060
    
    
    
    1,128Recoveries:Commercial loans
    
    
    259
    
    
    
    223
    
    
    
    294
    
    
    
    117
    
    
    
    154Commercial real estate loans
    
    
    123
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    3Construction loans
    
    
    592
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    Home equity loans
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Residential real estate loans
    
    
    72
    
    
    
    1
    
    
    
    6
    
    
    
    47
    
    
    
    1Lease financing
    
    
    21
    
    
    
    29
    
    
    
    9
    
    
    
    32
    
    
    
    76Consumer loans
    
    
    2
    
    
    
    6
    
    
    
    14
    
    
    
    11
    
    
    
    35Total recoveries
    
    
    1,100
    
    
    
    283
    
    
    
    324
    
    
    
    207
    
    
    
    269Net loans charged-off
    
    
    14,003
    
    
    
    13,639
    
    
    
    339
    
    
    
    1,853
    
    
    
    859Allowance of acquired company
    
    
    
    
    
    
    
    
    
    
    360
    
    
    
    
    
    
    
    Provision for loan losses
    
    
    21,635
    
    
    
    17,025
    
    
    
    2,855
    
    
    
    1,255
    
    
    
    230Balance at end of period
    
    $
    20,000
    
    
    $
    12,368
    
    
    $
    8,982
    
    
    $
    6,106
    
    
    $
    6,704Loans outstanding:Average
    
    $
    608,080
    
    
    $
    631,673
    
    
    $
    563,224
    
    
    $
    525,471
    
    
    $
    516,643End of period
    
    
    554,111
    
    
    
    662,401
    
    
    
    596,646
    
    
    
    528,515
    
    
    
    503,143Ratio of allowance for loan
losses to loans outstanding:Average
    
    
    3.29
    %
    
    
    1.96
    %
    
    
    1.59
    %
    
    
    1.16
    %
    
    
    1.30
    %End of period
    
    
    3.61
    
    
    
    1.87
    
    
    
    1.51
    
    
    
    1.16
    
    
    
    1.33Ratio of net charge-offs to:Average loans
    
    
    2.30
    
    
    
    2.16
    
    
    
    0.06
    
    
    
    0.35
    
    
    
    0.17End of period loans
    
    
    2.53
    
    
    
    2.06
    
    
    
    0.06
    
    
    
    0.35
    
    
    
    0.17
 41




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##### Table of Contents



ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
 As of December 31,2009
    
    2008
    
    2007
    
    2006
    
    2005(In thousands)% of Total
    
    
    
    
    
    % of Total
    
    
    
    
    
    % of Total
    
    
    
    
    
    % of Total
    
    
    
    
    
    % of TotalAmount
    
    Allowance
    
    Amount
    
    Allowance
    
    Amount
    
    Allowance
    
    Amount
    
    Allowance
    
    Amount
    
    AllowanceCommercial
    
    $
    3,630
    
    
    
    18.15
    %
    
    $
    3,040
    
    
    
    24.58
    %
    
    $
    1,790
    
    
    
    19.93
    %
    
    $
    1,386
    
    
    
    22.70
    %
    
    $
    1,863
    
    
    
    27.79
    %Commercial real
estate
    
    
    7,253
    
    
    
    36.27
    
    
    
    2,507
    
    
    
    20.27
    
    
    
    1,597
    
    
    
    17.78
    
    
    
    1,674
    
    
    
    27.42
    
    
    
    1,441
    
    
    
    21.49Construction
    
    
    5,929
    
    
    
    29.65
    
    
    
    4,695
    
    
    
    37.96
    
    
    
    4,188
    
    
    
    46.63
    
    
    
    1,920
    
    
    
    31.44
    
    
    
    1,776
    
    
    
    26.51Home equity
    
    
    1,061
    
    
    
    5.30
    
    
    
    409
    
    
    
    3.31
    
    
    
    247
    
    
    
    2.75
    
    
    
    197
    
    
    
    3.23
    
    
    
    212
    
    
    
    3.16Residential real estate
    
    
    1,737
    
    
    
    8.68
    
    
    
    1,201
    
    
    
    9.71
    
    
    
    377
    
    
    
    4.20
    
    
    
    402
    
    
    
    6.58
    
    
    
    536
    
    
    
    7.99Lease financing
    
    
    238
    
    
    
    1.19
    
    
    
    449
    
    
    
    3.63
    
    
    
    664
    
    
    
    7.39
    
    
    
    355
    
    
    
    5.81
    
    
    
    582
    
    
    
    8.68Consumer
    
    
    152
    
    
    
    0.76
    
    
    
    67
    
    
    
    0.54
    
    
    
    119
    
    
    
    1.32
    
    
    
    172
    
    
    
    2.82
    
    
    
    294
    
    
    
    4.38Total
    
    $
    20,000
    
    
    
    100.00
    %
    
    $
    12,368
    
    
    
    100.00
    %
    
    $
    8,982
    
    
    
    100.00
    %
    
    $
    6,106
    
    
    
    100.00
    %
    
    $
    6,704
    
    
    
    100.00
    %
 Deposits.
 42




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##### Table of Contents



DEPOSITS
 Year Ended December 31,2009
    
    
    2008
    
    
    2007(In thousands)Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weightedof
    
    
    Average
    
    
    
    
    
    
    of
    
    
    Average
    
    
    
    
    
    
    Of
    
    
    AverageBalance
    
    
    Deposits
    
    
    Rate
    
    
    Balance
    
    
    Deposits
    
    
    Rate
    
    
    Balance
    
    
    Deposits
    
    
    RateDemand
    
    $
    91,158
    
    
    
    15.45
    %
    
    
    
    %
    
    $
    86,020
    
    
    
    14.32
    %
    
    
    
    %
    
    $
    87,927
    
    
    
    16.39
    %
    
    
    
    %Savings
    
    
    8,947
    
    
    
    1.52
    
    
    
    0.25
    
    
    
    8,030
    
    
    
    1.34
    
    
    
    0.44
    
    
    
    8,384
    
    
    
    1.57
    
    
    
    0.49Interest-bearing demand
    
    
    117,519
    
    
    
    19.91
    
    
    
    2.69
    
    
    
    72,699
    
    
    
    12.10
    
    
    
    2.64
    
    
    
    35,983
    
    
    
    6.71
    
    
    
    2.14Money Market
    
    
    77,779
    
    
    
    13.18
    
    
    
    0.55
    
    
    
    99,282
    
    
    
    16.52
    
    
    
    1.83
    
    
    
    153,619
    
    
    
    28.64
    
    
    
    4.09Time Deposits
    
    
    294,707
    
    
    
    49.94
    
    
    
    3.18
    
    
    
    334,837
    
    
    
    55.72
    
    
    
    4.24
    
    
    
    250,457
    
    
    
    46.69
    
    
    
    4.87Total deposits
    
    $
    590,110
    
    
    
    100.00
    %
    
    
    
    
    
    $
    600,868
    
    
    
    100.00
    %
    
    
    
    
    
    $
    536,370
    
    
    
    100.00
    %
  AMOUNTS AND MATURITIES OF
TIME DEPOSITS OF $100,000 OR MORE
 As of December 31, 2009WeightedAverageAmount
    
    
    Rate Paid(In thousands)Three months or less
    
    $
    20,925
    
    
    
    2.39
    %Over three months through six months
    
    
    12,640
    
    
    
    1.69Over six months through twelve months
    
    
    55,805
    
    
    
    3.09Over twelve months
    
    
    18,048
    
    
    
    3.40Total
    
    $
    107,418
    
    
    
    2.84
    %
 Liquidity and Capital Resources
 Liquidity
 43




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44




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##### Table of Contents



SHORT-TERM DEBT
 Average
    
    
    
    
    
    
    WeightedAmount
    
    
    amount
    
    
    Maximum
    
    
    average
    
    
    Weightedoutstanding
    
    
    outstanding
    
    
    Outstanding
    
    
    interest rate
    
    
    Averageat
    
    
    during the
    
    
    At any
    
    
    during the
    
    
    interest rateperiod end
    
    
    period (1)
    
    
    Month end
    
    
    period
    
    
    at period end(In thousands)At or for the year ended December 31, 2009:Federal Home Loan Bank borrowings
    
    $
    
    
    
    $
    8
    
    
    $
    
    
    
    
    0.43
    %
    
    
    
    %Federal Funds purchased
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    1.20
    
    
    
    Federal Reserve Bank line of credit
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    0.50
    
    
    
    Repurchase agreements and other interest
bearing liabilities
    
    
    16,120
    
    
    
    23,235
    
    
    
    25,955
    
    
    
    0.25
    
    
    
    0.24Total
    
    $
    16,120
    
    
    $
    23,262
    
    
    
    
    
    
    
    0.25
    
    
    
    0.24At or for the year ended December 31, 2008:Federal Home Loan Bank borrowings
    
    $
    
    
    
    $
    1,730
    
    
    $
    4,000
    
    
    
    3.16
    %
    
    
    
    %Federal Funds purchased
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    1.97
    
    
    
    JP Morgan Chase operating line of credit
    
    
    
    
    
    
    10,385
    
    
    
    15,000
    
    
    
    4.94
    
    
    
    Federal Reserve Bank line of credit
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    1.40
    
    
    
    Repurchase agreements and other
interest bearing liabilities
    
    
    27,545
    
    
    
    33,884
    
    
    
    41,708
    
    
    
    1.11
    
    
    
    0.31Total
    
    $
    27,545
    
    
    $
    46,008
    
    
    
    
    
    
    
    2.05
    
    
    
    0.31At 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
    
    
    29,036
    
    
    
    30,909
    
    
    
    37,569
    
    
    
    3.83
    
    
    
    2.89Total
    
    $
    54,036
    
    
    $
    33,610
    
    
    
    
    
    
    
    3.93
    
    
    
    3.71
 
 (1)
    
    Calculations are based on daily averages where available and monthly averages otherwise. Capital Resources.
  45




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##### Table of Contents



RISK-BASED CAPITAL
 December 31,2009
    
    
    2008
    
    
    2007(In thousands)Tier 1 capitalStockholders equity
    
    $
    60,603
    
    
    $
    76,439
    
    
    $
    58,934Intangible assets
    
    
    (607
    )
    
    
    (826
    )
    
    
    (5,942
    )Unrealized (appreciation) depreciation on
available-for-sale securities and
derivative instruments
    
    
    (106
    )
    
    
    (657
    )
    
    
    (600
    )Disallowed deferred tax asset
    
    
    (8,435
    )
    
    
    
    
    
    
    Trust preferred securities (1)
    
    
    19,000
    
    
    
    19,000
    
    
    
    19,000Total Tier 1 capital
    
    
    70,455
    
    
    
    93,956
    
    
    
    71,392Tier 2 capitalQualifying allowance for loan losses
    
    
    7,969
    
    
    
    9,381
    
    
    
    8,683Trust preferred securities (1)
    
    
    
    
    
    
    
    
    
    
    Total Tier 2 capital
    
    
    7,969
    
    
    
    9,381
    
    
    
    8,683Total risk-based capital
    
    $
    78,424
    
    
    $
    103,337
    
    
    $
    80,075Risk weighted assets
    
    $
    625,475
    
    
    $
    747,504
    
    
    
    694,318Ratios at end of periodTotal capital to risk-weighted assets ratio
    
    
    12.54
    %
    
    
    13.82
    %
    
    
    11.53
    %Tier 1 capital to average assets ratio
(leverage ratio)
    
    
    9.07
    %
    
    
    11.50
    %
    
    
    9.86
    %Tier 1 capital to risk-weighted assets
ratio
    
    
    11.26
    %
    
    
    12.57
    %
    
    
    10.28
    %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). All of the trust preferred
securities balance of $19.0 million have been included as Tier 1 capital as of December 31, 2009, 2008 and 2007.  46




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##### Table of Contents




    
    The Preferred Shares have a senior rank. The Company is not free to issue other preferred
stock that is senior to the Preferred Shares.
 
    
    Until the third anniversary of the sale of the Preferred Shares, unless the Preferred Shares
have been redeemed in whole or the Treasury has transferred all of the shares to a
non-affiliated third party, the Company may not declare or pay a common stock dividend in an
amount greater than the amount of the last quarterly cash dividend per share declared prior to
October 14, 2008, or repurchase common stock or other equity shares (subject to certain
limited exceptions) without the Treasurys approval.
 
    
    If the Company were to pay a cash dividend in the future, any such dividend would have to be
discontinued if a Preferred Share dividend were missed. Thereafter, dividends on common stock
could be resumed only if all Preferred Share dividends in arrears were paid. Similar
restrictions apply to the Companys ability to repurchase common stock if Preferred Share
dividends are missed.
 
    
    Failure to pay the Preferred Share dividend is not an event of default. However, a failure
to pay a total of six Preferred Share dividends, whether or not consecutive, gives the holders
of the Preferred Shares the right to elect two directors to the Companys Board of Directors.
That right would continue until the Company pays all dividends in arrears.
 
    
    In conformity with requirements of the Securities Purchase Agreement-Standard Terms and
Section 111(b) of the Emergency Economic Stabilization Act of 2008 (the EESA), the Company
and its subsidiary, Bank of Blue Valley, and each of its senior executive officers agreed to
limit certain compensation, bonus, incentive and other benefits plans, arrangements, and
policies with respect to the senior executive officers during the period that the Treasury
owns any debt or equity securities acquired in connection with the Transaction. The
applicable senior executive officers have entered into letter agreements with the Company
consenting to the foregoing and have executed a waiver voluntarily waiving any claim against
the Treasury or the Company for any changes to such senior executive officers compensation or
benefits that are required to comply with Section 111(b) of EESA.
   47




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Contractual Obligations
  Payments due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    1 year
    
    
    1 - 3 years
    
    
    3 - 5 years
    
    
    5 years(In thousands)Time deposit obligations
    
    $
    294,707
    
    
    $
    221,132
    
    
    $
    43,099
    
    
    $
    18,332
    
    
    $
    12,144Short-term debt obligations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Long-term debt obligations
    
    
    102,088
    
    
    
    
    
    
    
    22,500
    
    
    
    20,000
    
    
    
    59,588Total obligations
    
    $
    396,795
    
    
    $
    221,132
    
    
    $
    65,599
    
    
    $
    38,332
    
    
    $
    71,732
 Inflation
  Off-Balance Sheet Arrangements
     48




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##### Table of Contents



Future Accounting Requirements
    49




---



##### Table of Contents



Regulatory Matters
  Subsequent Events
 Non-performing assets
  50




---



##### 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
    
    
    2.85
    %
    
    
    (8.78
    )%Base Rate Scenario
    
    
    
    
    
    
    200 basis point decline
    
    
    1.61
    %
    
    
    (1.39)
    %
  51




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52




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##### 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
    
    $
    25,011
    
    
    $
    63,542
    
    
    $
    88,553
    
    
    $
    39,056
    
    
    $
    89,879
    
    
    $
    10,669
    
    
    $
    228,157Average Interest Rate
    
    
    6.67
    %
    
    
    6.90
    %
    
    
    6.83
    %
    
    
    7.23
    %
    
    
    6.87
    %
    
    
    6.50
    %
    
    
    6.90
    %Variable Rate Loans
    
    
    302,850
    
    
    
    10,271
    
    
    
    313,121
    
    
    
    19,824
    
    
    
    1,761
    
    
    
    
    
    
    
    334,706Average Interest Rate
    
    
    4.91
    %
    
    
    4.50
    %
    
    
    4.89
    %
    
    
    5.53
    %
    
    
    7.0
    %
    
    
    
    
    
    
    4.94
    %Fixed Rate Investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,066
    
    
    
    60,206
    
    
    
    4,891
    
    
    
    72,163Average Interest Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.19
    %
    
    
    2.50
    %
    
    
    3.0
    %
    
    
    2.50
    %Variable Rate Investments
    
    
    594
    
    
    
    
    
    
    
    594
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    594Average Interest Rate
    
    
    3.86
    %
    
    
    
    
    
    
    3.86
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.86
    %Interest Bearing Deposits
    
    
    64,858
    
    
    
    
    
    
    
    64,858
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,858Average Interest Rate
    
    
    0.04
    %
    
    
    
    
    
    
    0.04
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    .04
    %Total interest-earning assets
    
    $
    393,313
    
    
    $
    73,813
    
    
    $
    467,126
    
    
    $
    65,946
    
    
    $
    151,846
    
    
    $
    15,560
    
    
    $
    700,478Interest-Bearing Liabilities:Interest-bearing demand
    
    $
    117,519
    
    
    $
    
    
    
    $
    117,519
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    117,519Average Interest Rate
    
    
    2.30
    %
    
    
    
    
    
    
    2.30
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2.30
    %Savings and money market
    
    
    86,726
    
    
    
    
    
    
    
    86,726
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86,726Average Interest Rate
    
    
    0.52
    %
    
    
    
    
    
    
    0.52
    %
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.52
    %Time deposits
    
    
    56,990
    
    
    
    164,166
    
    
    
    221,156
    
    
    
    32,700
    
    
    
    28,721
    
    
    
    12,130
    
    
    
    294,707Average Interest Rate
    
    
    2.68
    %
    
    
    3.20
    %
    
    
    3.07
    %
    
    
    3.18
    %
    
    
    3.57
    %
    
    
    3.57
    %
    
    
    3.15
    %Funds borrowed
    
    
    103,208
    
    
    
    5,000
    
    
    
    108,208
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    118,208Average Interest Rate
    
    
    2.95
    %
    
    
    4.08
    %
    
    
    3.00
    %
    
    
    
    
    
    
    3.71
    %
    
    
    
    
    
    
    3.06
    %Total interest-bearing
liabilities
    
    $
    364,443
    
    
    $
    169,166
    
    
    $
    533,609
    
    
    $
    32,700
    
    
    $
    38,721
    
    
    $
    12,130
    
    
    $
    617,160Cumulative:Rate sensitive assets (RSA)
    
    $
    393,313
    
    
    $
    467,126
    
    
    $
    467,126
    
    
    $
    533,072
    
    
    $
    684,918
    
    
    $
    700,478
    
    
    $
    700,478Rate sensitive liabilities (RSL)
    
    
    364,443
    
    
    
    533,609
    
    
    
    533,609
    
    
    
    566,309
    
    
    
    605,030
    
    
    
    617,160
    
    
    
    617,160GAP (GAP = RSA  RSL)
    
    
    28,870
    
    
    
    (66,483
    )
    
    
    (66,483
    )
    
    
    (33,237
    )
    
    
    79,888
    
    
    
    83,318
    
    
    
    83,318RSA/RSL
    
    
    107.92
    %
    
    
    87.54
    %
    
    
    87.54
    %
    
    
    94.13
    %
    
    
    113.20
    %
    
    
    113.50
    %RSA/Total assets
    
    
    50.82
    
    
    
    60.35
    
    
    
    60.35
    
    
    
    68.88
    
    
    
    88.49
    
    
    
    90.50RSL/Total assets
    
    
    47.09
    
    
    
    68.94
    
    
    
    68.94
    
    
    
    73.17
    
    
    
    78.17
    
    
    
    79.74GAP/Total assets
    
    
    3.73
    
    
    
    (8.59
    )
    
    
    (8.59
    )
    
    
    (4.29
    )
    
    
    10.32
    
    
    
    10.77GAP/RSA
    
    
    7.34
    
    
    
    (14.23
    )
    
    
    (14.23
    )
    
    
    (6.23
    )
    
    
    11.66
    
    
    
    11.89
   
 Item 8: Financial Statements and Supplementary Data
  
 Item 9: Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
  53




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##### Table of Contents



Item 9A: Controls and Procedures
   Managements Report on Internal Control Over Financial Reporting:
   
 Item 9B: Other Information
  54




---



##### Table of Contents



Part III
 
 Item 10: Directors, Executive Officers and Corporate Governance
    
  
 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 not related to the
Bank; and
 
    
    did not involve more than the normal risk of collectibility or present other unfavorable
features.
 55




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##### 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
 56




---



##### Table of Contents



SIGNATURES
  Date:  March 23, 2010
    By:
    /s/ Robert D. RegnierRobert D. Regnier, President,Chief Executive Officer and Director  Date:  March 23, 2010
    By:
    /s/ Robert D. RegnierRobert D. Regnier, President,Chief Executive Officer and Director
(Principal Executive Officer)Date:  March 23, 2010
    By:
    /s/ Mark A. FortinoMark A. Fortino, Chief Financial Officer(Principal Financial and Accounting Officer)Date:  March 23, 2010
    By:
    /s/ Donald H. AlexanderDonald H. Alexander, DirectorDate:  March 23, 2010
    By:
    /s/ Michael J. BrownMichael J. Brown, DirectorDate:  March 23, 2010
    By:
    /s/ Anne D. St. PeterAnne D. St. Peter, DirectorDate:  March 23, 2010
    By:
    /s/ Robert D. TaylorRobert D. Taylor, Director 57




---



##### Table of Contents



Exhibits2.1
    
    Agreement and Plan of Merger between Unison Bancorp, Inc., BVBC Acquisition I,
Inc. and Blue Valley Ban Corp., dated as of November 2, 2006.*****2.2
    
    Acquisition Agreement and Plan of Merger among Northland National Bank, Blue
Valley Ban Corp. and Western National Bank, dated as of March 2, 2007.*****2.3
    
    Purchase and Assumption Agreement among Northland National Bank, Bank of Blue
Valley and Blue Valley Ban Corp., dated as of March 2, 2007.*****3.1
    
    Amended and Restated Articles of Incorporation of Blue Valley Ban Corp. *3.2
    
    Bylaws, as amended, of Blue Valley Ban Corp. *3.3
    
    Certificate of Designations dated December 3, 2008.******4.1
    
    1998 Equity Incentive Plan. *4.2
    
    1994 Stock Option Plan. *4.3
    
    Agreement as to Expenses and Liabilities. *4.4
    
    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
    
    Junior Subordinated 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***4.12
    
    Warrant to purchase Common Stock dated December 5, 2008.******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 ****
 58




---



##### Table of Contents



Exhibits10.6
    
    Letter Agreement dated December 5, 2008, including Securities Purchase
Agreement  Standard Terms, incorporated by reference herein, between Blue Valley Ban
Corp. and the United States Department of Treasury.******10.7
    
    Amendment and Waiver by and among Bank of Blue Valley, Blue Valley Ban Corp.
and its Senior Executive Officers.******11.1
    
    Statement regarding computation of per share earnings. Please see p. F-12.21.1
    
    Subsidiaries of Blue Valley Ban Corp.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 200299.1
    
    Certification of the Principal Executive Officer pursuant to Section 111 of the
Emergency Economic Stabilization Act of 2008.99.2
    
    Certification of the Principal Financial Officer pursuant to Section 111 of the
Emergency Economic Stabilization Act of 2008.
 
 *
    
    Filed with the SEC 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 SEC 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 SEC on August 3, 2005 as an Exhibit to Blue Valleys Current
Report on Form 8-K. Exhibit incorporated herein by reference.****
    
    Filed with the SEC on March 27, 2006 as an Exhibit to Blue Valleys Annual
Report on Form 10-K. Exhibit incorporated herein by reference.*****
    
    Filed with the SEC on March 29, 2007 as an Exhibit to Blue Valleys Annual
Report on Form 10-K. Exhibit incorporated herein by reference.******
    
    Filed with the SEC on December 8, 2008 as an Exhibit to Blue Valleys Current Report
on Form 8-K. Exhibit incorporated herein by reference.*******
    
    Filed with the SEC on October 17, 2008 as an Exhibit to Blue Valleys Quarterly
Report on Form 10-Q. Exhibit incorporated herein by reference. 59




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##### Table of Contents



BLUE VALLEY BAN CORP.
 DECEMBER 31, 2009, 2008 AND 2007
 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-9
 F-1




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
     
 F-2




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 CONSOLIDATED BALANCE SHEETS
 
 DECEMBER 31, 2009 AND 2008  (In thousands, except share data)
 2009
    
    
    2008ASSETSCash and due from banks
    
    $
    32,126
    
    
    $
    24,630Interest bearing deposits in other financial institutions
    
    
    64,858
    
    
    
    343Federal funds sold
    
    
    
    
    
    
    20,000Cash and cash equivalents
    
    
    96,984
    
    
    
    44,973Available-for-sale securities
    
    
    72,757
    
    
    
    68,681Mortgage loans held for sale, fair value at December 31,
2009 and lower of amortized cost or fair value at December
31, 2008
    
    
    8,752
    
    
    
    8,157Loans, net of allowance for loan losses of $20,000 and
$12,368 in 2009 and 2008, respectively
    
    
    534,111
    
    
    
    650,033Premises and equipment, net
    
    
    16,930
    
    
    
    17,883Foreclosed assets held for sale, net
    
    
    19,435
    
    
    
    4,783Interest receivable
    
    
    2,303
    
    
    
    3,273Deferred income taxes
    
    
    9,480
    
    
    
    3,265Income taxes receivable
    
    
    2,746
    
    
    
    3,623Prepaid expenses and other assets
    
    
    2,803
    
    
    
    2,315Federal Home Loan Bank stock, Federal Reserve Bank stock, and
other securities
    
    
    7,059
    
    
    
    7,888Core deposit intangible asset, at amortized cost
    
    
    607
    
    
    
    826Total assets
    
    $
    773,967
    
    
    $
    815,700
  F-3




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##### Table of Contents



BLUE VALLEY BAN CORP.
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2009 AND 2008  (In thousands, except share data)
 LIABILITIES AND STOCKHOLDERS EQUITY
 2009
    
    
    2008LIABILITIESDepositsDemand
    
    $
    91,158
    
    
    $
    86,020Savings, NOW and money market
    
    
    204,245
    
    
    
    180,011Time
    
    
    294,707
    
    
    
    334,837Total deposits
    
    
    590,110
    
    
    
    600,868Other interest-bearing liabilities
    
    
    16,120
    
    
    
    27,545Short-term debt
    
    
    
    
    
    
    Long-term debt
    
    
    102,088
    
    
    
    107,584Interest payable and other liabilities
    
    
    5,046
    
    
    
    3,264Total liabilities
    
    
    713,364
    
    
    
    739,261STOCKHOLDERS EQUITYCapital stockPreferred stock, $1 par value, $1,000 liquidation preference
Authorized 15,000,000 shares; issued and outstanding
2009  21,750 shares; 2008  21,750 shares
    
    
    22
    
    
    
    22Common stock, par value $1 per share;
Authorized 15,000,000 shares; issued and outstanding
2009  2,817,650 shares; 2008  2,760,105 shares
    
    
    2,818
    
    
    
    2,760Additional paid-in capital
    
    
    37,975
    
    
    
    37,666Retained earnings
    
    
    19,685
    
    
    
    35,340Accumulated other comprehensive income, net of income tax of
$69 in 2009 and $434 in 2008
    
    
    103
    
    
    
    651Total stockholders equity
    
    
    60,603
    
    
    
    76,439Total liabilities and stockholders equity
    
    $
    773,967
    
    
    $
    815,700
  F-4




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007  (In thousands, except per share data)
 2009
    
    
    2008
    
    
    2007INTEREST INCOMEInterest and fees on loans
    
    $
    33,996
    
    
    $
    41,245
    
    
    $
    47,194Federal funds sold and other short-term investments
    
    
    144
    
    
    
    378
    
    
    
    557Available-for-sale securities
    
    
    1,943
    
    
    
    3,375
    
    
    
    4,466Total interest income
    
    
    36,083
    
    
    
    44,998
    
    
    
    52,217INTEREST EXPENSEInterest-bearing demand deposits
    
    
    2,589
    
    
    
    1,394
    
    
    
    656Savings and money market deposit accounts
    
    
    490
    
    
    
    2,402
    
    
    
    6,362Other time deposits
    
    
    10,742
    
    
    
    12,139
    
    
    
    13,134Federal funds purchased and other interest-bearing liabilities
    
    
    58
    
    
    
    375
    
    
    
    1,181Short-term debt
    
    
    
    
    
    
    568
    
    
    
    138Long-term debt, net
    
    
    4,108
    
    
    
    4,813
    
    
    
    4,111Total interest expense
    
    
    17,987
    
    
    
    21,691
    
    
    
    25,582NET INTEREST INCOME
    
    
    18,096
    
    
    
    23,307
    
    
    
    26,635PROVISION FOR LOAN LOSSES
    
    
    21,635
    
    
    
    17,025
    
    
    
    2,855NET INTEREST INCOME (LOSS) AFTER PROVISION FOR LOAN LOSSES
    
    
    (3,539
    )
    
    
    6,282
    
    
    
    23,780NON-INTEREST INCOMELoans held for sale fee income
    
    
    2,785
    
    
    
    2,136
    
    
    
    3,160Service fees
    
    
    3,250
    
    
    
    3,299
    
    
    
    2,830Realized gains on available-for-sale securities
    
    
    346
    
    
    
    702
    
    
    
    105Gain on settlement of litigation
    
    
    
    
    
    
    1,000
    
    
    
    Other income
    
    
    1,875
    
    
    
    1,275
    
    
    
    1,105Total non-interest income
    
    
    8,256
    
    
    
    8,412
    
    
    
    7,200NON-INTEREST EXPENSESalaries and employee benefits
    
    
    12,272
    
    
    
    12,500
    
    
    
    13,570Net occupancy expense
    
    
    2,811
    
    
    
    3,144
    
    
    
    3,200Goodwill impairment
    
    
    
    
    
    
    4,821
    
    
    
    Other operating expense
    
    
    12,758
    
    
    
    8,304
    
    
    
    7,447Total non-interest expense
    
    
    27,841
    
    
    
    28,769
    
    
    
    24,217INCOME (LOSS) BEFORE INCOME TAXES
    
    
    (23,124
    )
    
    
    (14,075
    )
    
    
    6,763PROVISION (BENEFIT) FOR INCOME TAXES
    
    
    (8,514
    )
    
    
    (3,824
    )
    
    
    2,275NET INCOME (LOSS)
    
    
    (14,610
    )
    
    
    (10,251
    )
    
    
    4,488DIVIDENDS AND ACCRETION ON PREFERRED STOCK
    
    
    1,045
    
    
    
    
    
    
    
    NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
    
    $
    (15,655
    )
    
    $
    (10,251
    )
    
    $
    4,488BASIC EARNINGS (LOSS) PER SHARE
    
    $
    (5.68
    )
    
    $
    (4.20
    )
    
    $
    1.86DILUTED EARNINGS (LOSS) PER SHARE
    
    $
    (5.68
    )
    
    $
    (4.20
    )
    
    $
    1.84DIVIDENDS PER SHARE
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.36
  F-5




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##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007  (In thousands, except share data)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherComprehensive
    
    
    Preferred
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveIncome
    
    Stock
    
    Stock
    
    Capital
    
    Earnings
    
    Income (Loss)
    
    TotalBALANCE, 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
    
    
    $
    58,934Issuance of 21,750 shares of preferred stock
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    21,639
    
    
    
    
    
    
    
    
    
    
    
    21,661Issuance of stock warrants to purchase
111,083 shares of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    
    
    
    
    89Issuance of 288,943 shares of common stock
through rights offering
    
    
    
    
    
    
    
    
    
    
    289
    
    
    
    4,912
    
    
    
    
    
    
    
    
    
    
    
    5,201Issuance of 12,820 shares of restricted
stock, net of forfeitures
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    296
    
    
    
    
    
    
    
    
    
    
    
    309Issuance of 15,100 shares of common stock
through stock options exercised
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    305
    
    
    
    
    
    
    
    
    
    
    
    320Issuance of 3,587 shares of common stock
for the employee stock purchase plan
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    112
    
    
    
    
    
    
    
    
    
    
    
    115Net income
    
    
    (10,251
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,251
    )
    
    
    
    
    
    
    (10,251
    )Accretion of discount on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    Change in derivative financial instrument,
net of income taxes (credit) of $(4)
    
    
    (6
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    (6
    )Change in unrealized appreciation on available-for-sale securities, net of
income taxes of $44
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    67$
    (10,190
    )BALANCE, DECEMBER 31, 2008
    
    
    
    
    
    $
    22
    
    
    $
    2,760
    
    
    $
    37,666
    
    
    $
    35,340
    
    
    $
    651
    
    
    $
    76,439Issuance of 55,050 shares of restricted
stock, net of forfeitures
    
    
    
    
    
    
    
    
    
    
    55
    
    
    
    232
    
    
    
    
    
    
    
    
    
    
    
    287Issuance of 2,495 shares of common stock
for the employee stock purchase plan
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    62Net income
    
    
    (14,610
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,610
    )
    
    
    
    
    
    
    (14,610
    )Accretion of discount on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    (18
    )
    
    
    
    
    
    
    Dividend on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,027
    )
    
    
    
    
    
    
    (1,027
    )Change in unrealized appreciation on available-for-sale securities, net of
income taxes (credit) of $(365)
    
    
    (548
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (548
    )
    
    
    (548
    )$
    (15,158
    )BALANCE, DECEMBER 31, 2009
    
    
    
    
    
    $
    22
    
    
    $
    2,818
    
    
    $
    37,975
    
    
    $
    19,685
    
    
    $
    103
    
    
    $
    60,603
  F-6




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##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007  (In thousands)
 2009
    
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (14,610
    )
    
    $
    (10,251
    )
    
    $
    4,488Adjustments to reconcile net income to net cash flow
From operating activities:Depreciation and amortization
    
    
    1,417
    
    
    
    1,552
    
    
    
    1,606Amortization (accretion) of premiums and discounts on
available-for-sale securities
    
    
    10
    
    
    
    (26
    )
    
    
    (30
    )Provision for loan losses
    
    
    21,635
    
    
    
    17,025
    
    
    
    2,855Provision for foreclosed assets held for sale
    
    
    1,363
    
    
    
    
    
    
    
    5Goodwill impairment
    
    
    
    
    
    
    4,821
    
    
    
    Deferred income taxes
    
    
    (6,126
    )
    
    
    (1,223
    )
    
    
    (1,134
    )Stock dividends on Federal Home Loan Bank (FHLB) stock
    
    
    (101
    )
    
    
    (188
    )
    
    
    (264
    )Gain on sale of available-for-sale securities
    
    
    (346
    )
    
    
    (702
    )
    
    
    (105
    )Net (gain) loss on sale of foreclosed assets
    
    
    (212
    )
    
    
    46
    
    
    
    97Restricted stock earned and forfeited
    
    
    287
    
    
    
    309
    
    
    
    316Compensation expense related to the employee stock purchase plan
    
    
    7
    
    
    
    10
    
    
    
    17Originations of loans held for sale
    
    
    (196,374
    )
    
    
    (136,798
    )
    
    
    (185,809
    )Proceeds from the sale of loans held for sale
    
    
    195,668
    
    
    
    139,619
    
    
    
    196,636Realized loss on loans held for sale fair value adjustment
    
    
    111
    
    
    
    
    
    
    
    Proceeds from settlement of litigation
    
    
    
    
    
    
    200
    
    
    
    Gain on settlement of litigation
    
    
    
    
    
    
    (1,000
    )
    
    
    Changes in:Interest receivable
    
    
    970
    
    
    
    1,348
    
    
    
    (232
    )Net fair value of loan related commitments
    
    
    (236
    )
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    839
    
    
    
    (3,591
    )
    
    
    248Interest payable and other liabilities
    
    
    913
    
    
    
    (1,835
    )
    
    
    (172
    )Net cash provided by operating activities
    
    
    5,215
    
    
    
    9,316
    
    
    
    18,522CASH FLOWS FROM INVESTING ACTIVITIESNet (origination) collection of loans
    
    
    57,854
    
    
    
    (86,958
    )
    
    
    (55,168
    )Proceeds from sales of loan participations
    
    
    4,199
    
    
    
    1,514
    
    
    
    13,235Purchase of premises and equipment
    
    
    (136
    )
    
    
    (364
    )
    
    
    (649
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    16
    
    
    
    Proceeds from the sale of foreclosed assets, net of expenses
    
    
    16,431
    
    
    
    3,744
    
    
    
    1,133Purchases of available-for-sale securities
    
    
    (85,749
    )
    
    
    (48,100
    )
    
    
    (47,970
    )Proceeds from maturities of available-for-sale securities
    
    
    69,750
    
    
    
    33,210
    
    
    
    55,250Proceeds from sales of available-for-sale securities
    
    
    11,346
    
    
    
    23,702
    
    
    
    6,105Purchases of Federal Home Loan Bank stock, Federal Reserve Bank
stock, and other securities
    
    
    (521
    )
    
    
    (439
    )
    
    
    (314
    )Proceeds from the redemption of Federal Home Loan Bank stock,
Federal Reserve Bank stock, and other securities
    
    
    1,451
    
    
    
    
    
    
    
    686Purchase of Unison Bancorp, Inc. and subsidiary, net of cash received
    
    
    
    
    
    
    
    
    
    
    (6,255
    )Proceeds from other investing activities
    
    
    
    
    
    
    
    
    
    
    515Net cash provided by (used in) investing activities
    
    
    74,625
    
    
    
    (73,675
    )
    
    
    (33,432
    )CASH FLOWS FROM FINANCING ACTIVITIESNet increase (decrease) in demand deposits, money market, NOW and
savings accounts
    
    
    29,372
    
    
    
    (19,882
    )
    
    
    7,042Net increase (decrease) in time deposits
    
    
    (40,130
    )
    
    
    84,380
    
    
    
    (37,777
    )Net decrease in federal funds purchased and other interest-bearing liabilities
    
    
    (11,425
    )
    
    
    (1,491
    )
    
    
    (1,426
    )Net (payments of) proceeds from short-term debt
    
    
    
    
    
    
    (25,000
    )
    
    
    25,000Repayments of long-term debt
    
    
    (5,396
    )
    
    
    (13,322
    )
    
    
    (1,763
    )Discount on repayment of long-term debt
    
    
    (100
    )
    
    
    
    
    
    
    Proceeds from long-term debt
    
    
    
    
    
    
    40,000
    
    
    
    15,000Proceeds from sale of preferred stock and warrants through the Capital Purchase Plan
    
    
    
    
    
    
    21,750
    
    
    
    Proceeds from sale of common stock through rights offering
    
    
    
    
    
    
    5,201
    
    
    
    Dividends paid on preferred stock
    
    
    (212
    )
    
    
    
    
    
    
    Dividends paid on common stock
    
    
    
    
    
    
    (878
    )
    
    
    (723
    )Net proceeds from the sale of additional stock through Employee
Stock Purchase Plan (ESPP) and stock options exercised
    
    
    62
    
    
    
    435
    
    
    
    466Net cash provided by (used in) financing activities
    
    
    (27,829
    )
    
    
    91,193
    
    
    
    5,819
   F-7




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##### Table of Contents



BLUE VALLEY BAN CORP.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2009, 2008 AND 2007  (In thousands)
 2009
    
    
    2008
    
    
    2007Increase (decrease) in cash and cash equivalents
    
    
    52,011
    
    
    
    26,834
    
    
    
    (9,091
    )Cash and cash equivalents, beginning of year
    
    
    44,973
    
    
    
    18,139
    
    
    
    27,230CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    96,984
    
    
    $
    44,973
    
    
    $
    18,139SUPPLEMENTAL CASH FLOWS INFORMATIONCash paid during the year for:Interest
    
    $
    18,057
    
    
    $
    21,382
    
    
    $
    25,175Income taxes, net of refunds
    
    $
    (3,496
    )
    
    $
    1,667
    
    
    $
    561Noncash investing and financing activities:Transfer of loans to foreclosed property
    
    $
    32,234
    
    
    $
    6,050
    
    
    $
    3,023Restricted stock issued
    
    $
    55
    
    
    $
    13
    
    
    $
    10Cash dividends declared in common stock
    
    $
    
    
    
    $
    
    
    
    $
    878Preferred dividends accrued but not paid
    
    $
    815
    
    
    $
    
    
    
    $
    Assets acquired and liabilities assumed
(see Note 22)
    
    $
    
    
    
    $
    
    
    
    $
    33,668
  F-8




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##### Table of Contents



BLUE VALLEY BAN CORP.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Nature of Operations
      Operating Segment
  Principles of Consolidation
  Use of Estimates
   F-9




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
  Cash Equivalents
     Investment in Securities
   F-10




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
   Mortgage Loans Held for Sale
 ,
The Fair Value Option for Financial Assets and Financial Liabilities  Including an Amendment of
FASB Statement No. 115
  Loans
  F-11




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Allowance for Loan Losses
    Premises and Equipment
  Buildings and improvements
    
    35-40 yearsFurniture and equipment
    
    3-5 years
 Foreclosed Assets Held for Sale
  F-12




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Federal Home Loan Bank Stock, Federal Reserve Bank Stock, and Other Securities
  Derivatives
 Derivative Loan Commitments
   Forward Loan Sale Commitments
    F-13




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Goodwill
  Core Deposit Intangible Assets
  Fee Income
  Transfers of Financial Assets
  Income Taxes
 Income Taxes
  F-14




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
   Comprehensive Income (Loss)
  Reclassification
  F-15




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Earnings (Loss) Per Share
  2009
    
    
    2008
    
    
    2007(In thousands, except share and per share data)Net income (loss)
    
    $
    (14,610
    )
    
    $
    (10,251
    )
    
    $
    4,488Dividends and accretion on preferred stock
    
    
    (1,045
    )
    
    
    
    
    
    
    Net income (loss) available to common shareholders
    
    $
    (15,655
    )
    
    $
    (10,251
    )
    
    $
    4,488Average common shares outstanding
    
    
    2,754,419
    
    
    
    2,438,809
    
    
    
    2,410,621Average common share stock options outstanding
and restricted stock (B)
    
    
    8,184
    
    
    
    21,236
    
    
    
    27,582Average diluted common shares (B)
    
    
    2,762,603
    
    
    
    2,460,045
    
    
    
    2,438,203Basic income (loss) per share
    
    $
    (5.68
    )
    
    $
    (4.20
    )
    
    $
    1.86Diluted income (loss) per share (A)
    
    $
    (5.68
    )
    
    $
    (4.20
    )
    
    $
    1.86
 
 (A)
    
    No shares of stock options, restricted stock or warrants were included in the computation of diluted earnings per share for any period there was a
loss.(B)
    
    Warrants to purchase 111,083 shares of common stock at an exercise price of $29.37 per share were outstanding at December 31, 2009 and December 31,
2008, but were not included in the computation of diluted earnings per share because the warrants exercise price was greater than the average market
price of the common shares, thus making the warrants anti-dilutive. Stock options to purchase 33,875 shares of common stock were outstanding at
December 31, 2009, but were not included in the computation of diluted earnings per share because the options exercise price was greater than the
average market price of the common shares, thus making the options anti-dilutive.  Future Accounting Requirements
  F-16




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
    F-17




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES
  December 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)U.S. Government sponsored agencies
    
    $
    71,984
    
    
    $
    338
    
    
    $
    (159
    )
    
    $
    72,163State and political subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity and other securities
    
    
    600
    
    
    
    
    
    
    
    (6
    )
    
    
    594$
    72,584
    
    
    $
    338
    
    
    $
    (165
    )
    
    $
    72,757
 December 31, 2008Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)U.S. Government sponsored agencies
    
    $
    66,996
    
    
    $
    1,096
    
    
    $
    
    
    
    $
    68,092State and political subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity and other
    
    
    600
    
    
    
    
    
    
    
    (11
    )
    
    
    589$
    67,596
    
    
    $
    1,096
    
    
    $
    (11
    )
    
    $
    68,681
  AmortizedCost
    
    
    Fair Value(In thousands)Due in one year or less
    
    $
    
    
    
    $
    Due after one through five years
    
    
    66,984
    
    
    
    67,272Due after five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    5,000
    
    
    
    4,891Total
    
    
    71,984
    
    
    
    72,163Equity and other securities
    
    
    600
    
    
    
    594$
    72,584
    
    
    $
    72,757
   F-18




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
  2009
    
    2008(In thousands)Balance as of December 31
    
    $
    15,417
    
    
    $
    25,160Carrying value of securities pledged to secure agreements to repurchases
at December 31
    
    $
    29,182
    
    
    $
    47,685Average balance during the year of securities sold under agreements to repurchase
    
    $
    22,546
    
    
    $
    32,925Maximum amount outstanding at any month-end during the year
    
    $
    25,189
    
    
    $
    40,119
    December 31, 2009(In thousands)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
    
    $
    19,832
    
    
    $
    159
    
    
    $
    
    
    
    $
    
    
    
    $
    19,832
    
    
    $
    159State and political subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity and other securities
    
    
    594
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    594
    
    
    
    6Total temporarily impaired
securities
    
    $
    20,426
    
    
    $
    165
    
    
    $
    
    
    
    $
    
    
    
    $
    20,426
    
    
    $
    165
 F-19




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
 December 31, 2008(In thousands)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
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    State and political subdivisions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Equity and other securities
    
    
    
    
    
    
    
    
    
    
    589
    
    
    
    11
    
    
    
    589
    
    
    
    11Total temporarily impaired
securities
    
    $
    
    
    
    $
    
    
    
    $
    589
    
    
    $
    11
    
    
    $
    589
    
    
    $
    11
  NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES
  2009
    
    
    2008(In thousands)Commercial loans
    
    $
    142,528
    
    
    $
    172,647Commercial real estate loans
    
    
    167,581
    
    
    
    170,697Construction loans
    
    
    113,077
    
    
    
    182,933Home equity loans
    
    
    66,586
    
    
    
    59,257Residential real estate loans
    
    
    45,014
    
    
    
    43,695Lease financing
    
    
    11,259
    
    
    
    18,927Consumer loans
    
    
    8,066
    
    
    
    14,245Total loans
    
    
    554,111
    
    
    
    662,401Less: Allowance for loan losses
    
    
    20,000
    
    
    
    12,368Net loans
    
    $
    534,111
    
    
    $
    650,033
  2009
    
    
    2008
    
    
    2007(In thousands)Balance, beginning of year
    
    $
    12,368
    
    
    $
    8,982
    
    
    $
    6,106Provision charged to expense
    
    
    21,635
    
    
    
    17,025
    
    
    
    2,855Allowance of acquired company
    
    
    
    
    
    
    
    
    
    
    360Losses charged off, net of recoveries
of $1,100, $283 and $324
for 2009, 2008 and 2007, respectively
    
    
    (14,003
    )
    
    
    (13,639
    )
    
    
    (339
    )Balance, end of year
    
    $
    20,000
    
    
    $
    12,368
    
    
    $
    8,982
 F-20




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
  2009
    
    
    2008(In thousands)Impaired loans with a valuation allowance
    
    $
    25,040
    
    
    $
    44,170Impaired loans with no valuation allowance
    
    
    9,945
    
    
    
    13,607Total impaired loans
    
    $
    34,985
    
    
    $
    57,777Allowance related to impaired loans
    
    
    6,592
    
    
    
    5,238Total non-accrual loans
    
    
    34,888
    
    
    
    43,332Total loans past due 90 days or more and still accruing
    
    
    
    
    
    
    Average impaired loans
    
    
    41,730
    
    
    
    36,670Interest income recognized (cash basis) on impaired loans
    
    
    212
    
    
    
    927Interest income recognized on impaired loans
    
    
    497
    
    
    
    5,438
  NOTE 4: PREMISES AND EQUIPMENT
  2009
    
    
    2008(In thousands)Land
    
    $
    5,154
    
    
    $
    5,154Buildings and improvements
    
    
    15,697
    
    
    
    15,701Furniture and equipment
    
    
    7,590
    
    
    
    7,47328,441
    
    
    
    28,328Less accumulated depreciation
    
    
    11,511
    
    
    
    10,445Total premises and equipment
    
    $
    16,930
    
    
    $
    17,883
 F-21




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 5: FORECLOSED ASSETS HELD FOR SALE
  2009
    
    
    2008(In thousands)Balance, beginning of year
    
    $
    
    
    
    $
    Provision charged to expense
    
    
    1,363
    
    
    
    Charge offs, net of recoveries
    
    
    (1,197
    )
    
    
    Balance, end of year
    
    $
    166
    
    
    $
    
  2009
    
    
    2008(In thousands)Net loss (gain) on sales of foreclosed assets
    
    $
    (212
    )
    
    $
    46Provision for losses
    
    
    1,363
    
    
    
    Operating expenses, net of rental income
    
    
    1,902
    
    
    
    675$
    3,053
    
    
    $
    721
 NOTE 6: GOODWILL
  2009
    
    
    2008(In thousands)Balance as of January 1
    
    $
    
    
    
    $
    4,821Goodwill acquired during the year
    
    
    
    
    
    
    Impairment loss
    
    
    
    
    
    
    (4,821
    )Balance as of December 31
    
    $
    
    
    
    $
    
  NOTE 7: CORE DEPOSIT INTANGIBLE ASSETS
  2009
    
    
    2008Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)Core Deposit Intangible
    
    $
    3,286
    
    
    $
    (2,679
    )
    
    $
    3,286
    
    
    $
    (2,460
    )
 F-22




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 7: CORE DEPOSIT INTANGIBLE ASSETS (Continued)
  (In thousands)2010
    
    $
    1432011
    
    
    1432012
    
    
    1432013
    
    
    1432014
    
    
    35
 NOTE 8: INTEREST-BEARING DEPOSITS
   (In thousands)2010
    
    $
    221,1322011
    
    
    32,7042012
    
    
    10,3952013
    
    
    10,7892014
    
    
    7,5432015 and thereafter
    
    
    12,144$
    294,707
 NOTE 9: OPERATING LEASES
  (In thousands)2010
    
    
    2002011
    
    
    1602012
    
    
    1122013
    
    
    14$
    486
  F-23




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 10: SHORT TERM DEBT
  2009
    
    
    2008(In thousands)Federal Home Loan Bank advance (A)
    
    $
    
    
    
    $
    Federal Reserve Bank of Kansas City line of credit (B)
    
    
    
    
    
    
    Total short-term debt
    
    $
    
    
    
    $
    
 
 (A)
    
    Payable on demand; collateralized by various assets including
mortgage-backed loans. The variable interest rate was 0.18% on December 31,
2009 and 0.65% on December 31, 2008. At December 31, 2009, approximately
$8,752,000 was available.(B)
    
    Payable on demand; collateralized by various assets, including commercial
and commercial real estate loans. The line of credit bears a variable interest
rate of federal funds rate plus 75 basis points and at December 31, 2009
approximately $36,260,000 was available. Advances are made at the discretion
of the Federal Reserve Bank of Kansas City. NOTE 11: LONG TERM DEBT
  2009
    
    
    2008(In thousands)Notes payable  Blue Valley Building Corp. (A)
    
    $
    
    
    
    $
    5,496Federal Home Loan Bank advances (B)
    
    
    82,500
    
    
    
    82,500Subordinated Debentures  BVBC Capital Trust II (C)
    
    
    7,732
    
    
    
    7,732Subordinated Debentures  BVBC Capital Trust III (D)
    
    
    11,856
    
    
    
    11,856Total long-term debt
    
    $
    102,088
    
    
    $
    107,584
 
 (A)
    
    The Company paid these notes in full, less $100,000 principal discount
received by the lender, on June 3, 2009. Previously, these two notes had a
maturity date 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 was guaranteed by the Company.(B)
    
    Due in 2011, 2012, 2013, 2015, 2016, and 2018; collateralized by various
assets including mortgage-backed loans. The interest rates on the advances
range from 2.62% to 5.03%. Federal Home Loan Bank advance availability is
determined quarterly and at December 31, 2009, approximately $8,752,000 was
available.(C)
    
    Due in 2033; interest only at three month LIBOR + 3.25% (3.53% at December
31, 2009 and 6.44% at December 31, 2008) 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.(D)
    
    Due in 2035; interest only at three month LIBOR + 1.60% (1.85% at December
31, 2009 and 5.36% at December 31, 2008) 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 (C) 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. F-24




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 11: LONG TERM DEBT (Continued)
    (In thousands)2010
    
    $
    2011
    
    
    7,5002012
    
    
    15,0002013
    
    
    20,0002014
    
    
    Thereafter
    
    
    59,588$
    102,088
 NOTE 12: INCOME TAXES
  2009
    
    
    2008
    
    
    2007(In thousands)Taxes currently (refundable) payable
    
    $
    (2,388
    )
    
    $
    (2,601
    )
    
    $
    3,409Deferred income taxes
    
    
    (6,126
    )
    
    
    (1,223
    )
    
    
    (1,134
    )$
    (8,514
    )
    
    $
    (3,824
    )
    
    $
    2,275
 F-25




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 12: INCOME TAXES (Continued)
  2009
    
    
    2008
    
    
    2007(In thousands)Computed at the statutory rate (34%)
    
    $
    (7,862
    )
    
    $
    (4,785
    )
    
    $
    2,299Increase (decrease) resulting from:Goodwill impairment
    
    
    
    
    
    
    1,541
    
    
    
    Tax-exempt interest
    
    
    (12
    )
    
    
    (20
    )
    
    
    (28
    )State income taxes
    
    
    (208
    )
    
    
    (99
    )
    
    
    200Other
    
    
    (432
    )
    
    
    (461
    )
    
    
    (196
    )Actual tax provision
    
    $
    (8,514
    )
    
    $
    (3,824
    )
    
    $
    2,275
  2009
    
    
    2008(In thousands)Deferred tax assets:Allowance for loan losses
    
    $
    7,385
    
    
    $
    4,545Net Operating Loss from Blue Valley Ban
Corp. and subsidiary
    
    
    
    
    
    
    2,840Deferred compensation
    
    
    135
    
    
    
    136Offering costs
    
    
    210
    
    
    
    221Non-accrual loan interest
    
    
    60
    
    
    
    96Net Operating Loss carried from Unison
Bancorp Inc. and subsidiary acquisition
    
    
    77
    
    
    
    77Other
    
    
    28
    
    
    
    17810,735
    
    
    
    5,253Deferred tax liabilities:Accumulated depreciation
    
    
    (385
    )
    
    
    (428
    )FHLBank stock basis
    
    
    (433
    )
    
    
    (534
    )Accumulated appreciation on available-for-
sale securities
    
    
    (69
    )
    
    
    (434
    )Prepaid intangibles
    
    
    (177
    )
    
    
    (190
    )Core Deposit Intangible related to Unison
Bancorp Inc. and subsidiary acquisition
    
    
    (182
    )
    
    
    (255
    )Other
    
    
    (9
    )
    
    
    (147
    )(1,255
    )
    
    
    (1,988
    )Net deferred tax asset
    
    $
    9,480
    
    
    $
    3,265
  NOTE 13: REGULATORY MATTERS
  F-26




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 13: REGULATORY MATTERS (Continued)
     To Be Well CapitalizedFor Capital
    
    Under Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(In thousands)December 31, 2009:Total Capital
(to Risk Weighted Assets)Consolidated
    
    $
    78,424
    
    
    
    12.54
    %
    
    $
    50,038
    
    
    
    8.00
    %
    
    
    N/ABank Only
    
    $
    79,140
    
    
    
    12.67
    %
    
    $
    49,987
    
    
    
    8.00
    %
    
    $
    62,484
    
    
    
    10.00
    %Tier 1 Capital
(to Risk Weighted Assets)Consolidated
    
    $
    70,455
    
    
    
    11.26
    %
    
    $
    25,019
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    71,179
    
    
    
    11.39
    %
    
    $
    24,993
    
    
    
    4.00
    %
    
    $
    37,490
    
    
    
    6.00
    %Tier 1 Capital
(to Average Assets)Consolidated
    
    $
    70,455
    
    
    
    9.07
    %
    
    $
    31,083
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    71,179
    
    
    
    9.16
    %
    
    $
    31,083
    
    
    
    4.00
    %
    
    $
    38,854
    
    
    
    5.00
    %
 F-27




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 13: REGULATORY MATTERS (Continued)
 To Be Well CapitalizedFor Capital
    
    Under Prompt CorrectiveActual
    
    Adequacy Purposes
    
    Action ProvisionsAmount
    
    Ratio
    
    Amount
    
    Ratio
    
    Amount
    
    Ratio(In thousands)December 31, 2008:Total Capital
(to Risk Weighted Assets)Consolidated
    
    $
    103,337
    
    
    
    13.82
    %
    
    $
    59,800
    
    
    
    8.00
    %
    
    
    N/ABank Only
    
    $
    89,553
    
    
    
    12.22
    %
    
    $
    58,607
    
    
    
    8.00
    %
    
    $
    73,259
    
    
    
    10.00
    %Tier 1 Capital
(to Risk Weighted Assets)Consolidated
    
    $
    93,956
    
    
    
    12.57
    %
    
    $
    29,900
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    80,356
    
    
    
    10.97
    %
    
    $
    29,304
    
    
    
    4.00
    %
    
    $
    43,956
    
    
    
    6.00
    %Tier 1 Capital
(to Average Assets)Consolidated
    
    $
    93,956
    
    
    
    11.50
    %
    
    $
    32,693
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    80,356
    
    
    
    10.00
    %
    
    $
    32,128
    
    
    
    4.00
    %
    
    $
    40,161
    
    
    
    5.00
    %
  Preferred Stock and Warrants
  
    
    The Preferred Shares have a senior rank. The Company is not free to issue other
preferred stock that is senior to the Preferred Shares.
    
    Until the third anniversary of the sale of the Preferred Shares, unless the Preferred Shares
have been redeemed in whole or the Treasury has transferred all of the shares to a
non-affiliated third party, the Company may not declare or pay a common stock dividend in an
amount greater than the amount of the last quarterly cash dividend per share declared prior to
October 14, 2008, or repurchase common stock or other equity shares (subject to certain
limited exceptions) without the Treasurys approval.
    
    If the Company were to pay a cash dividend in the future, any such dividend would have to be
discontinued if a Preferred Share dividend were missed. Thereafter, dividends on common stock
could be resumed only if all
 F-28




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 13: REGULATORY MATTERS (Continued)
 Preferred Share dividends in arrears were paid. Similar restrictions apply to the Companys
ability to repurchase common stock if Preferred Share dividends are missed.
    
    Failure to pay the Preferred Share dividend is not an event of default. However, a failure
to pay a total of six Preferred Share dividends, whether or not consecutive, gives the holders
of the Preferred Shares the right to elect two directors to the Companys Board of Directors.
That right would continue until the Company pays all dividends in arrears.
    
    In conformity with requirements of the SPA and Section 111(b) of the Emergency Economic
Stabilization Act of 2008 (the EESA), the Company and its subsidiary, Bank of Blue Valley,
and each of its senior executive officers agreed to limit certain compensation, bonus,
incentive and other benefits plans, arrangements, and policies with respect to the senior
executive officers during the period that the Treasury owns any debt or equity securities
acquired in connection with the Transaction. The applicable senior executive officers have
entered into letter agreements with the Company consenting to the foregoing and have executed
a waiver voluntarily waiving any claim against the Treasury or the Company for any changes to
such senior executive officers compensation or benefits that are required to comply with
Section 111(b) of EESA.
     F-29




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 14: TRANSACTIONS WITH RELATED PARTIES
  2009
    
    
    2008(In thousands)Balance, beginning of year
    
    $
    28,692
    
    
    $
    20,288New loans and advances
    
    
    17,668
    
    
    
    21,350Repayments and reclassifications
    
    
    (23,973
    )
    
    
    (12,946
    )Balance, end of year
    
    $
    22,387
    
    
    $
    28,692
  NOTE 15: PROFIT SHARING AND 401(K) PLANS
  NOTE 16: EQUITY INCENTIVE COMPENSATION
    F-30




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 16: EQUITY INCENTIVE COMPENSATION (Continued)
  2009
    
    
    2008
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding, beginning of year
    
    
    51,225
    
    
    $
    20.38
    
    
    
    66,325
    
    
    $
    19.73
    
    
    
    84,300
    
    
    $
    19.11Exercised
    
    
    
    
    
    
    
    
    
    
    (15,100
    )
    
    
    17.56
    
    
    
    (15,425
    )
    
    
    15.42Forfeited
    
    
    17,350
    
    
    
    20.12
    
    
    
    
    
    
    
    
    
    
    
    (2,550
    )
    
    
    25.00Outstanding, end of year
    
    
    33,875
    
    
    $
    20.51
    
    
    
    51,225
    
    
    $
    20.38
    
    
    
    66,325
    
    
    $
    19.73Intrinsic value of shares exercised
    
    $
    
    
    
    
    
    
    
    $
    162,826
    
    
    
    
    
    
    $
    306,410Options exercisable, end of year
    
    
    33,875
    
    
    $
    20.51
    
    
    
    51,225
    
    
    $
    20.38
    
    
    
    66,325
    
    
    $
    19.73
  Options Outstanding and ExercisableExercise
    
    Number Outstanding and
    
    Weighted Average Remaining
    
    
    Weighted AveragePrice
    
    Exercisable at 12/31/09
    
    Contractual Life
    
    
    Exercise Price16.50
    

    9,500
    
    1               year
    
    
    16.5019.50
    

    13,000
    
    2              years
    
    
    19.5025.00
    

    11,375
    
    3              years
    
    
    25.0033,875
 NOTE 17: EMPLOYEE STOCK PURCHASE PLAN
  Employee Stock Purchase Plan ActivityPlan year ending January
    
    Shares purchased
    
    Purchase Price2009
    
    
    2,495
    
    
    $
    21.252008
    
    
    3,587
    
    
    $
    27.202007
    
    
    4,558
    
    
    $
    25.50
 F-31




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 18: GAIN ON SETTLEMENT OF LITIGATION
  NOTE 19: OTHER INCOME/EXPENSE
  2009
    
    
    2008
    
    
    2007(In thousands)Rental income
    
    $
    377
    
    
    $
    433
    
    
    $
    481Realized gain on foreclosed assets
    
    
    722
    
    
    
    146
    
    
    
    Other income
    
    
    776
    
    
    
    696
    
    
    
    624Total
    
    $
    1,875
    
    
    $
    1,275
    
    
    $
    1,105
  2009
    
    
    2008
    
    
    2007(In thousands)Data processing
    
    $
    1,318
    
    
    $
    1,178
    
    
    $
    1,077Professional fees
    
    
    1,285
    
    
    
    1,096
    
    
    
    1,271Foreclosure expenses
    
    
    3,862
    
    
    
    914
    
    
    
    339FDIC assessment
    
    
    2,267
    
    
    
    482
    
    
    
    80Advertising
    
    
    172
    
    
    
    717
    
    
    
    998Loan processing fees
    
    
    346
    
    
    
    446
    
    
    
    484Other expense
    
    
    3,508
    
    
    
    3,471
    
    
    
    3,198Total
    
    $
    12,758
    
    
    $
    8,304
    
    
    $
    7,447
 NOTE 20: FAIR VALUE OPTION
 The Fair Value Option for Financial Assets and
Financial Liabilities  including an Amendment of FASB Statement No. 115,
 F-32




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 20: FAIR VALUE OPTION (Continued)
   NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
  Level 1
    
    Quoted prices in active markets for identical assets or liabilities
 Level 2
    
    Observable inputs other than Level 1 prices, such as quoted prices for similar
assets or liabilities; quoted prices in markets that are not active; or other inputs that
are observable or can be corroborated by observable market data for substantially the full
term of the assets or liabilities.
 Level 3
    
    Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities.
  Available-for-Sale Securities
  Mortgage Loans Held for Sale
  F-33




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
 Commitments to Originate Loans and Forward Sales Commitments
   Fair Value Measurements UsingSignificantQuoted Prices in
    
    
    OtherActive Markets
    
    
    Observable
    
    
    Unobservablefor Identical
    
    
    Inputs
    
    
    InputsFair Value
    
    
    Assts (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)December 31, 2009:Assets:Available-for-sale securities:U.S. Government sponsored agencies
    
    $
    72,163
    
    
    $
    
    
    
    $
    72,163
    
    
    $
    Equity and other securities
    
    
    594
    
    
    
    594
    
    
    
    
    
    
    
    Mortgage loans held for sale
    
    
    8,752
    
    
    
    
    
    
    
    8,752
    
    
    
    Commitments to originate loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forward sales commitments
    
    
    283
    
    
    
    
    
    
    
    
    
    
    
    283Total assets
    
    $
    81,792
    
    
    $
    594
    
    
    $
    80,915
    
    
    $
    283Liabilities:Commitments to originate loans
    
    $
    47
    
    
    $
    
    
    
    $
    
    
    
    $
    47Forward sales commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    $
    47
    
    
    $
    
    
    
    $
    
    
    
    $
    47December 31, 2008:Assets:Available-for-sale securities:U.S. Government sponsored agencies
    
    $
    68,092
    
    
    $
    
    
    
    $
    68,092
    
    
    $
    Equity and other securities
    
    
    589
    
    
    
    589
    
    
    
    
    
    
    
    Total assets
    
    $
    68,681
    
    
    $
    589
    
    
    $
    68,092
    
    
    $
    
 F-34




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
  Commitments to
    
    
    Forward SalesOriginate Loans
    
    
    Commitments(In thousands)Balance as of December 31, 2008
    
    $
    
    
    
    $
    Total realized and unrealized gains (losses):Included in net income
    
    
    (47
    )
    
    
    283Included in other comprehensive income
    
    
    
    
    
    
    Transfers in and/or out due to changes in significant inputs
    
    
    
    
    
    
    Balance as of December 31, 2009
    
    $
    (47
    )
    
    $
    283
   Impaired Loans (Collateral Dependent)
   Foreclosed Assets Held for Sale
  F-35




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
  Fair Value Measurements UsingSignificantQuoted Prices in
    
    
    OtherActive Markets
    
    
    Observable
    
    
    Unobservablefor Identical
    
    
    Inputs
    
    
    InputsFair Value
    
    
    Assts (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)December 31, 2009:Impaired loans, net of reserves
    
    $
    28,393
    
    
    $
    
    
    
    $
    
    
    
    $
    28,393Foreclosed assets held for sale, net
    
    
    8,231
    
    
    
    
    
    
    
    
    
    
    
    8,231$
    36,624
    
    
    $
    
    
    
    $
    
    
    
    $
    36,624December 31, 2008:Impaired loans, net of reserves
    
    $
    52,539
    
    
    $
    
    
    
    $
    
    
    
    $
    52,539
  Cash and Cash Equivalents
  Loans
  Federal Home Loan Bank Stock, Federal Reserve Bank Stock, and other securities
  Deposits
  Securities Sold Under Agreement to Repurchase and Other Interest-Bearing Liabilities
  Long-Term Debt
  F-36




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
 Commitments to Extend Credit, Letters of Credit and Lines of Credit
   2009
    
    2008Carrying
    
    Fair
    
    Carrying
    
    FairAmount
    
    Value
    
    Amount
    
    Value(In thousands)Financial assets:Cash and cash equivalents
    
    $
    96,984
    
    
    $
    96,984
    
    
    $
    44,973
    
    
    $
    44,973Mortgage loans held for sale
    
    
    8,752
    
    
    
    8,752
    
    
    
    8,157
    
    
    
    8,157Loans, net of allowance for loan losses
    
    
    534,111
    
    
    
    536,973
    
    
    
    650,033
    
    
    
    651,868Federal Home Loan Bank stock, Federal
Reserve Bank stock, and other
securities
    
    
    7,059
    
    
    
    7,059
    
    
    
    7,888
    
    
    
    7,888Interest receivable
    
    
    2,303
    
    
    
    2,303
    
    
    
    3,273
    
    
    
    3,273Financial liabilities:Deposits
    
    
    590,110
    
    
    
    593,345
    
    
    
    600,868
    
    
    
    611,538Securities Sold Under Agreement to
Repurchase and Other 
Interest-Bearing Liabilities
    
    
    16,120
    
    
    
    16,120
    
    
    
    27,545
    
    
    
    27,545Long-term debt
    
    
    102,088
    
    
    
    95,762
    
    
    
    107,584
    
    
    
    116,987Interest payable
    
    
    2,698
    
    
    
    2,698
    
    
    
    2,768
    
    
    
    2,768Unrecognized financial instruments
(net of amortization):Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 F-37




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 22: BUSINESS ACQUISITION
   (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
  NOTE 23: COMMITMENTS, CREDIT RISKS AND CURRENT ECONOMIC CONDITIONS
  F-38




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 23: COMMITMENTS, CREDIT RISKS AND CURRENT ECONOMIC CONDITIONS (Continued)
        F-39




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 24: LEGAL CONTINGENCIES
  NOTE 25: SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
  2009
    
    
    2008Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(In thousands, except per share data)Interest income
    
    $
    8,385
    
    
    $
    8,804
    
    
    $
    9,197
    
    
    $
    9,697
    
    
    $
    10,770
    
    
    $
    11,121
    
    
    $
    11,466
    
    
    $
    11,641Interest expense
    
    
    4,125
    
    
    
    4,438
    
    
    
    4,716
    
    
    
    4,708
    
    
    
    5,302
    
    
    
    5,452
    
    
    
    5,235
    
    
    
    5,702Net interest income
    
    
    4,260
    
    
    
    4,366
    
    
    
    4,481
    
    
    
    4,989
    
    
    
    5,468
    
    
    
    5,669
    
    
    
    6,231
    
    
    
    5,939Provision for loan losses
    
    
    2,500
    
    
    
    6,210
    
    
    
    
    
    
    
    12,925
    
    
    
    1,625
    
    
    
    12,090
    
    
    
    2,410
    
    
    
    900Net interest income (loss) after
provision for loan losses
    
    
    1,760
    
    
    
    (1,844
    )
    
    
    4,481
    
    
    
    (7,936
    )
    
    
    3,843
    
    
    
    (6,421
    )
    
    
    3,821
    
    
    
    5,039Non-interest income
    
    
    1,711
    
    
    
    1,845
    
    
    
    2,530
    
    
    
    1,824
    
    
    
    1,512
    
    
    
    2,576
    
    
    
    1,934
    
    
    
    1,688Realized gains on available-for
sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    346
    
    
    
    
    
    
    
    
    
    
    
    224
    
    
    
    478Non-interest expense
    
    
    7,494
    
    
    
    6,601
    
    
    
    6,687
    
    
    
    7,059
    
    
    
    10,650
    
    
    
    5,982
    
    
    
    5,927
    
    
    
    6,210Income (loss) before income taxes
    
    
    (4,023
    )
    
    
    (6,600
    )
    
    
    324
    
    
    
    (12,825
    )
    
    
    (5,295
    )
    
    
    (9,827
    )
    
    
    52
    
    
    
    995Provision (benefit) for income taxes
    
    
    (1,481
    )
    
    
    (2,431
    )
    
    
    118
    
    
    
    (4,720
    )
    
    
    (600
    )
    
    
    (3,617
    )
    
    
    28
    
    
    
    365Net income (loss)
    
    
    (2,542
    )
    
    
    (4,169
    )
    
    
    206
    
    
    
    (8,105
    )
    
    
    (4,695
    )
    
    
    (6,210
    )
    
    
    24
    
    
    
    630Dividends on preferred shares
    
    
    290
    
    
    
    272
    
    
    
    271
    
    
    
    212
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) available to
common shareholders
    
    $
    (2,832
    )
    
    $
    (4,441
    )
    
    $
    (65
    )
    
    $
    (8,317
    )
    
    $
    (4,695
    )
    
    $
    (6,210
    )
    
    $
    24
    
    
    $
    630Net Income (loss) per Share DataBasic
    
    $
    (1.03
    )
    
    $
    (1.61
    )
    
    $
    (0.02
    )
    
    $
    (3.02
    )
    
    $
    (1.92
    )
    
    $
    (2.55
    )
    
    $
    0.01
    
    
    $
    0.26Diluted
    
    $
    (1.03
    )
    
    $
    (1.61
    )
    
    $
    (0.02
    )
    
    $
    (3.02
    )
    
    $
    (1.92
    )
    
    $
    (2.55
    )
    
    $
    0.01
    
    
    $
    0.26Balance SheetTotal assets
    
    $
    773,967
    
    
    $
    825,857
    
    
    $
    811,333
    
    
    $
    843,559
    
    
    $
    815,700
    
    
    $
    788,261
    
    
    $
    805,123
    
    
    $
    768,085Total loans, net
    
    
    534,111
    
    
    
    560,880
    
    
    
    585,474
    
    
    
    610,404
    
    
    
    650,033
    
    
    
    631,090
    
    
    
    628,067
    
    
    
    613,304Stockholders equity
    
    
    60,603
    
    
    
    63,519
    
    
    
    67,858
    
    
    
    67,908
    
    
    
    76,439
    
    
    
    53,701
    
    
    
    59,623
    
    
    
    60,062
  F-40




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 26: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
 Condensed Balance Sheets
December 31, 2009 and 2008
 2009
    
    
    2008(In thousands)ASSETSCash and cash equivalents
    
    $
    899
    
    
    $
    4,480Investments in subsidiaries:Bank of Blue Valley
    
    
    79,573
    
    
    
    81,838Blue Valley Building Corp.
    
    
    
    
    
    
    8,751BVBC Capital Trust II
    
    
    232
    
    
    
    232BVBC Capital Trust III
    
    
    356
    
    
    
    356Other assets
    
    
    797
    
    
    
    525Total Assets
    
    $
    81,857
    
    
    $
    96,182LIABILITIESSubordinated debentures
    
    $
    19,588
    
    
    $
    19,588Other liabilities
    
    
    1,666
    
    
    
    155Total Liabilities
    
    
    21,254
    
    
    
    19,743STOCKHOLDERS EQUITYPreferred Stock
    
    
    22
    
    
    
    22Common stock
    
    
    2,818
    
    
    
    2,760Additional paid-in capital
    
    
    37,975
    
    
    
    37,666Retained earnings
    
    
    19,685
    
    
    
    35,340Accumulated other comprehensive loss, net of income
tax of $69 and $434 at 2009 and 2008, respectively
    
    
    103
    
    
    
    651Total Stockholders Equity
    
    
    60,603
    
    
    
    76,439Total Liabilities and Stockholders Equity
    
    $
    81,857
    
    
    $
    96,182
 F-41




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 26: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (Continued)
 Condensed Statements of Income
Years Ended December 31, 2009, 2008 and 2007
 2009
    
    
    2008
    
    
    2007(In thousands)IncomeDividends from subsidiaries
    
    $
    700
    
    
    $
    654
    
    
    $
    12,495Other income
    
    
    20
    
    
    
    
    
    
    
    15720
    
    
    
    654
    
    
    
    12,510Expenses
    
    
    1,336
    
    
    
    2,541
    
    
    
    2,174Income (loss) before income taxes
and equity in undistributed net
income of subsidiaries
    
    
    (616
    )
    
    
    (1,887
    )
    
    
    10,336Credit for income taxes
    
    
    (474
    )
    
    
    (1,117
    )
    
    
    (818
    )Income (loss) before equity in
undistributed net income of
subsidiaries
    
    
    (142
    )
    
    
    (770
    )
    
    
    11,154Equity in undistributed
(distributions in excess of) net
income of subsidiaries
    
    
    (14,468
    )
    
    
    (9,481
    )
    
    
    (6,666
    )Net income (loss)
    
    $
    (14,610
    )
    
    $
    (10,251
    )
    
    $
    4,488
 F-42




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2009, 2008 AND 2007
 NOTE 26: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (Continued)
 Condensed Statements of Cash Flows
Years Ended December 31, 2009, 2008 and 2007
 2009
    
    
    2008
    
    
    2007(In thousands)CASH FLOWS FROM OPERATING ACTIVITIESNet income (loss)
    
    $
    (14,610
    )
    
    $
    (10,251
    )
    
    $
    4,488Items not requiring (providing) cash:Deferred income taxes
    
    
    (29
    )
    
    
    46
    
    
    
    (42
    )Equity in undistributed (distributions in
excess of) net income of subsidiaries
    
    
    14,468
    
    
    
    9,481
    
    
    
    6,666Restricted stock earned
    
    
    287
    
    
    
    309
    
    
    
    316Changes in:Other assets
    
    
    (243
    )
    
    
    (207
    )
    
    
    255Other liabilities
    
    
    696
    
    
    
    (308
    )
    
    
    52Net cash provided by (used in)
operating activities
    
    
    569
    
    
    
    (930
    )
    
    
    11,735CASH FLOW FROM INVESTING ACTIVITIESCapital contributed to subsidiary
    
    
    (4,000
    )
    
    
    (19,578
    )
    
    
    (5,764
    )Purchase of Unison Bancorp, Inc. and subsidiary
    
    
    
    
    
    
    
    
    
    
    (10,284
    )Proceeds from sale of assets and liabilities of
Western National Bank
    
    
    
    
    
    
    
    
    
    
    5,834Sale of Western National Bank charter
    
    
    
    
    
    
    
    
    
    
    325Net cash used in investing activities
    
    
    (4,000
    )
    
    
    (19,578
    )
    
    
    (9,889
    )CASH FLOWS FROM FINANCING ACTIVITIESRepayments of long-term debt
    
    
    
    
    
    
    (17,781
    )
    
    
    (1,250
    )Proceeds from short-term debt
    
    
    
    
    
    
    15,000
    
    
    
    Dividends paid on common stock
    
    
    
    
    
    
    (878
    )
    
    
    (723
    )Dividends paid on preferred stock
    
    
    (212
    )
    
    
    
    
    
    
    Proceeds from sale of preferred stock
    
    
    
    
    
    
    21,750
    
    
    
    Proceeds from sale of common stock through the
rights offering
    
    
    
    
    
    
    5,201
    
    
    
    Proceeds from sale of common stock through ESPP
and stock options exercised
    
    
    62
    
    
    
    435
    
    
    
    466Net cash provided by (used in) financing activities
    
    
    (150
    )
    
    
    23,727
    
    
    
    (1,507
    )INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (3,581
    )
    
    
    3,219
    
    
    
    339CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR
    
    
    4,480
    
    
    
    1,261
    
    
    
    922CASH AND CASH EQUIVALENTS,
END OF YEAR
    
    $
    899
    
    
    $
    4,480
    
    
    $
    1,261
 F-43