##### 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, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from __________________ to __________________
 Commission file number: 001-15933
 BLUE VALLEY BAN CORP.
  Kansas
    
    48-1070996(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)11935 RileyOverland Park, Kansas
    
    66225-6128(Address of principal executive offices)
    
    (Zip Code)
 (913) 338-1000
  Title of each class
    
    Name of each exchange on which registeredGuarantee with respect to the Trust Preferred
    
    None currentlySecurities, $8.00 par value, of BVBC CapitalTrust I (None of which are currently outstanding)
  o þ
 þ o
 þ o
 o o
 þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting companyþ(Do not check if a smaller reporting company)
 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
    
    
    19Item 1B. Unresolved Staff Comments
    
    
    24Item 2. Properties
    
    
    24Item 3. Legal Proceedings
    
    
    25Item 4. (Removed and Reserved)
    
    
    25PART II.Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities
    
    
    26Item 6. Selected Financial Data
    
    
    27Item 7. Managements Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    29Item 7A. Quantitative and Qualitative Disclosures About Market Risk
    
    
    54Item 8. Financial Statements and Supplementary Data
    
    
    56Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
    
    
    56Item 9A. Controls and Procedures
    
    
    57Item 9B. Other Information
    
    
    57PART III.Item 10. Directors, Executive Officers and Corporate Governance
    
    
    58Item 11. Executive Compensation
    
    
    58Item 12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
    
    
    58Item 13. Certain Relationships, Related Transactions, and Director Independence
    
    
    58Item 14. Principal Accountant Fees and Services
    
    
    59PART IV.Item 15. Exhibits, Financial Statement Schedules
    
    
    59EX-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, 2010Amount
    
    
    Percent(In thousands)Commercial
    
    $
    144,181
    
    
    
    29.28
    %Commercial real estate
    
    
    169,253
    
    
    
    34.37Construction
    
    
    64,641
    
    
    
    13.13Home equity
    
    
    64,289
    
    
    
    13.05Residential real estate
    
    
    36,903
    
    
    
    7.49Lease financing
    
    
    5,530
    
    
    
    1.12Consumer
    
    
    7,657
    
    
    
    1.56Total loans and leases
    
    
    492,454
    
    
    
    100.00
    %Less allowance for loan losses
    
    
    14,731Loans, net of allowance for loan losses
    
    $
    477,723
 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
    
    
    62
    
    
    President, Chief Executive Officer and
Chairman of the Board of Directors of Blue
Valley Ban Corp.; President, Chief Executive
Officer and Chairman of the Board of
Directors of the BankDonald H. Alexander
    
    
    72
    
    
    Director of Blue Valley Ban Corp. and the BankMichael J. Brown
    
    
    54
    
    
    Director of Blue Valley Ban Corp.Robert D. Taylor
    
    
    63
    
    
    Director of Blue Valley Ban Corp. and
Chairman of the Audit Committee of Blue
Valley Ban Corp.Additional Directors of the BankHarvey S. Bodker
    
    
    75
    
    
    Director of the BankRichard L. Bond
    
    
    75
    
    
    Director of the BankSuzanne E. Dotson
    
    
    64
    
    
    Director of the BankCharles H. Hunter
    
    
    68
    
    
    Director of the BankExecutive Officers who are not DirectorsMark A. Fortino
    
    
    44
    
    
    Executive Vice President and Chief Financial
Officer of the Bank; Chief Financial Officer
of Blue Valley Ban Corp.Bruce A. Easterly
    
    
    51
    
    
    Executive Vice President  Chief Lending
Officer of the BankBonnie M. McConnaughy
    
    
    51
    
    
    Senior Vice President  Deposit Operations
and e-Business Solutions of the Bank
 Available Information
 http://www.bankbv.com http://www.sec.gov
 Regulation and Supervision
  9




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Applicable Legislation
  Dodd-Frank Wall Street Reform and Consumer Protection Act.
 
    
    Establishes a new oversight regulator, the Financial Stability Oversight Council, to
monitor the financial system for systemic risk and to determine which entities pose
significant risk, as well as monitor financial regulatory proposals and standards.
    
    Centralize responsibility for consumer financial protection by creating a new agency,
the Consumer Financial Protection Bureau, with broad powers to enforce consumer protection
laws and ensure that markets for consumer financial products and services are fair,
transparent and competitive.
    
    Amends Sarbanes-Oxley Act 404(b) to make permanent the temporary exemption for smaller
reporting companies (filers with less than $75 million in market cap  Blue Valley Ban
Corp. is a smaller reporting company) to comply with the independent auditor attestation
requirement on the companys evaluation of the effectiveness of internal controls over
financial reporting.
    
    Changes the assessment base for FDIC insurance assessments from the amount of total
domestic deposits to average consolidated total assets less average tangible equity (Tier 1
Capital) and sets a target size for the Deposit Insurance Fund.
    
    Permanently increases the FDIC deposit insurance per depositor from $100,000 to $250,000
and provides unlimited deposit coverage for non-interest bearing transaction accounts at
all insured depository institutions until December 31, 2012.
    
    Repeals the federal prohibitions on the payment of interest on demand deposits, thus
permitting depository institutions to pay interest on business transactions and other
accounts.
    
    Requires the Federal Reserve to issue rules to limit the amount of any debit card
interchange fee that an issuer may receive or charge with respect to electronic debit card
transactions to be reasonable and proportional to the cost incurred by the issuer with
respect to the transaction. Cards issued by banks with less than $10 billion in assets are
to be exempt from this requirement, thus Blue Valley Ban Corp. would be exempt from this
requirement.
    
    Implements corporate governance revisions for public companies, including proxy access
requirements for stockholders and stockholder non-binding vote on executive compensation
and golden parachute payments.
    
    Restricts the ability of banks to apply trust preferred securities toward regulatory
capital requirements. However, Tier 1 Capital treatment for trust preferred securities
issued before May 19, 2010 is grandfathered for bank holding companies with less than $15
billion in total assets. Blue Valley Ban Corp.s trust preferred issuances would be
grandfathered under this provision.
    
    Mortgage reform and anti-predatory lending provision places new regulations on mortgage
originators to ensure a borrowers ability to repay and imposes new disclosure requirements
and appraisal reforms.
 10




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The American Recovery and Reinvestment Act of 2009.
 
    
    Bonus, incentive compensation, and retention payments made to the Senior Executive
Officers and the next 20 most highly compensated employees are subject to recovery or
clawback by the Company if the payments were based on materially inaccurate financial
statements or any other materially inaccurate performance metric criteria;
    
    Prohibits paying any golden parachute payment to any Senior Executive Officer or any
of the next five most-highly compensated employees, generally meaning any payment in the
nature of compensation to (or for the benefit of) an executive officer made in connection
with an applicable severance from employment other than compensation earned for services
rendered or accrued benefits;
    
    Prohibits paying or accruing any bonus, retention award or incentive compensation to the
most highly compensated employee, except for awards of long-term restricted stock that have
a value equal to no greater than one-third of such executives annual compensation and do
not fully vest during the restricted period; and
    
    Review of bonuses, retention awards, and other compensation paid to the Senior Executive
Officers and the next 20 most-highly compensated employees to determine whether any such
payments were inconsistent with the purposes of the TARP or otherwise against public
interest.
  Emergency Economic Stabilization Act of 2008.
 11




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USA PATRIOT Act.
 12




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Gramm-Leach-Bliley Act
     13




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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.
 14




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Capital Requirements.
  Dividends.
  Bank Regulations
  15




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Deposit Insurance.
   16




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Capital Requirements.
   
    
    Well capitalized if the institution has a total risk-based capital ratio of 10% or
greater, a Tier 1 risk-based capital ratio of 6% or greater, and a leverage ratio of 5% or
greater, and the institution is not subject to an order, written agreement, capital
directive, or prompt corrective action directive to meet and maintain a specific capital
level for any capital measure. Although the Company is subject to a written agreement, the
written agreement does not contain any prompt corrective action directives 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%.
    
    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.
 17




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Federal Deposit Insurance Corporation Improvement Act.
 Insider Transactions.
 Community Reinvestment Act Requirements.
 State Bank Activities.
 Regulations Governing Extensions of Credit .
 Reserve Requirements.
 18




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Other Regulations
  
 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.
  19




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Current levels of market volatility.
  Our future ability to raise capital may be limited.
  The Company 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.
  20




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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.
  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 effected 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.
  21




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We may incur significant costs if we foreclose on environmentally contaminated real estate.
  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.
  22




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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 may not stabilize the U.S. financial system.
   The recent repeal of federal prohibitions on payment of interest on demand deposits could
increase our interest expense.
  Our business could be adversely affected by unfavorable actions from rating agencies.
  Our business could be adversely affected by recent legislation.
  23




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We are subject to various legal claims and litigation.
  
 Item 1B: Unresolved Staff Comments
  
 Item 2: Properties
  MortgageIndebtednessas of December 31,Location
    
    Year Occupied
    
    2010
    
    OccupancyOverland Park Banking Center
11935 Riley
Overland Park, Kansas *
    
    1994
    
    None
    
    100%Olathe Banking Center
1235 E. Santa Fe
Olathe, Kansas **
    
    2001
    
    None
    
    100%Shawnee Banking Center
5520 Hedge Lane Terrace
Shawnee, Kansas **
    
    2001
    
    None
    
    100%Operations Center
7900 College Boulevard
Overland Park, Kansas *
    
    2003
    
    None
    
    100%Leawood Banking Center13401 Mission RoadLeawood, Kansas *
    
    2004
    
    None
    
    66%, 
Four subleases occupy the remaining 34%Lenexa Banking Center
9500 Lackman Road
Lenexa, Kansas **
    
    2007
    
    None
    
    100%
 
 *
    
    The building is owned by Blue Valley Building Corp.**
    
    The building is owned by the Bank. 24




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Item 3: Legal Proceedings
  
 Item 4: (Removed and Reserved)
 25




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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
 2010
    
    
    2009Fiscal Quarter
    
    High
    
    
    Low
    
    
    High
    
    
    LowFirst
    
    $
    10.25
    
    
    $
    8.50
    
    
    $
    25.00
    
    
    $
    10.05Second
    
    
    9.75
    
    
    
    7.00
    
    
    
    12.00
    
    
    
    7.50Third
    
    
    9.40
    
    
    
    6.50
    
    
    
    10.50
    
    
    
    7.45Fourth
    
    
    8.00
    
    
    
    5.50
    
    
    
    10.50
    
    
    
    9.30
 Dividends
   26




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Item 6: Selected Financial Data
  As of and for theYear Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands, except share and per share data)Selected Statement of Income DataInterest and dividend income:Interest and fees on loans
    
    $
    28,011
    
    
    $
    33,996
    
    
    $
    41,245
    
    
    $
    47,194
    
    
    $
    44,537Federal funds sold and other short-term investments
    
    
    245
    
    
    
    144
    
    
    
    378
    
    
    
    557
    
    
    
    256Available-for-sale securities
    
    
    1,825
    
    
    
    1,943
    
    
    
    3,375
    
    
    
    4,466
    
    
    
    4,039Dividends on Federal Home Loan Bank and Federal
Reserve Bank Stock
    
    
    222
    
    
    
    211
    
    
    
    265
    
    
    
    323
    
    
    
    317Total interest and dividend income
    
    
    30,303
    
    
    
    36,294
    
    
    
    45,263
    
    
    
    52,540
    
    
    
    49,149Interest expense:Interest-bearing demand deposits
    
    
    2,343
    
    
    
    2,589
    
    
    
    1,394
    
    
    
    656
    
    
    
    97Savings and money market deposit accounts
    
    
    438
    
    
    
    490
    
    
    
    2,402
    
    
    
    6,362
    
    
    
    4,356Other time deposits
    
    
    7,746
    
    
    
    10,742
    
    
    
    12,139
    
    
    
    13,134
    
    
    
    11,254Funds borrowed
    
    
    3,836
    
    
    
    4,166
    
    
    
    5,756
    
    
    
    5,430
    
    
    
    5,255Total interest expense
    
    
    14,363
    
    
    
    17,987
    
    
    
    21,691
    
    
    
    25,582
    
    
    
    20,962Net interest income
    
    
    15,940
    
    
    
    18,307
    
    
    
    23,572
    
    
    
    26,958
    
    
    
    28,187Provision for loan losses
    
    
    3,095
    
    
    
    21,635
    
    
    
    17,025
    
    
    
    2,855
    
    
    
    1,255Net interest income (loss) after provision for
loan losses
    
    
    12,845
    
    
    
    (3,328
    )
    
    
    6,547
    
    
    
    24,103
    
    
    
    26,932Non-interest income:Loans held for sale fee income
    
    
    3,506
    
    
    
    2,785
    
    
    
    2,136
    
    
    
    3,160
    
    
    
    5,046Service fees
    
    
    3,083
    
    
    
    3,250
    
    
    
    3,299
    
    
    
    2,830
    
    
    
    2,491Realized gains on available-for-sale securities
    
    
    885
    
    
    
    346
    
    
    
    702
    
    
    
    105
    
    
    
    Gain on settlement of litigation
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    
    
    
    
    Other income
    
    
    1,145
    
    
    
    1,664
    
    
    
    1,010
    
    
    
    782
    
    
    
    1,027Total non-interest income
    
    
    8,619
    
    
    
    8,045
    
    
    
    8,147
    
    
    
    6,877
    
    
    
    8,564Non-interest expense:Salaries and employee benefits
    
    
    11,753
    
    
    
    12,272
    
    
    
    12,500
    
    
    
    13,570
    
    
    
    14,737Net occupancy expense
    
    
    2,756
    
    
    
    2,811
    
    
    
    3,144
    
    
    
    3,200
    
    
    
    3,059Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    4,821
    
    
    
    
    
    
    
    Other operating expense
    
    
    11,258
    
    
    
    12,758
    
    
    
    8,304
    
    
    
    7,447
    
    
    
    6,578Total non-interest expense
    
    
    25,767
    
    
    
    27,841
    
    
    
    28,769
    
    
    
    24,217
    
    
    
    24,374Income (loss) before income taxes
    
    
    (4,303
    )
    
    
    (23,124
    )
    
    
    (14,075
    )
    
    
    6,763
    
    
    
    11,122Provision (benefit) for income taxes
    
    
    (1,561
    )
    
    
    (8,514
    )
    
    
    (3,824
    )
    
    
    2,275
    
    
    
    4,199Net income (loss)
    
    $
    (2,742
    )
    
    $
    (14,610
    )
    
    $
    (10,251
    )
    
    $
    4,488
    
    
    $
    6,923Per Share DataBasic earnings
    
    $
    (1.38
    )
    
    $
    (5.68
    )
    
    $
    (4.20
    )
    
    $
    1.86
    
    
    $
    2.93Diluted earnings
    
    
    (1.38
    )
    
    
    (5.68
    )
    
    
    (4.20
    )
    
    
    1.84
    
    
    
    2.88Dividends
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.00
    
    
    
    0.36
    
    
    
    0.30Book value basic (at end of period)
    
    
    12.66
    
    
    
    14.09
    
    
    
    19.97
    
    
    
    24.34
    
    
    
    22.45Weighted average common shares outstanding:Basic
    
    
    2,773,039
    
    
    
    2,754,419
    
    
    
    2,438,809
    
    
    
    2,410,621
    
    
    
    2,365,932Diluted
    
    
    2,788,154
    
    
    
    2,762,603
    
    
    
    2,460,045
    
    
    
    2,438,203
    
    
    
    2,407,802Dividend payout ratio
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    0.00
    %
    
    
    19.35
    %
    
    
    10.23
    %
 27




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As of and for theYear Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Selected Financial Condition Data
(at end of period):Total available-for-sale securities
    
    $
    63,640
    
    
    $
    72,757
    
    
    $
    68,681
    
    
    $
    76,653
    
    
    $
    87,009Total mortgage loans held for sale
    
    
    8,162
    
    
    
    8,752
    
    
    
    8,157
    
    
    
    10,978
    
    
    
    21,805Total loans
    
    
    492,454
    
    
    
    554,111
    
    
    
    662,401
    
    
    
    596,646
    
    
    
    528,515Total assets
    
    
    723,101
    
    
    
    773,967
    
    
    
    815,700
    
    
    
    736,213
    
    
    
    692,219Total deposits
    
    
    541,218
    
    
    
    590,110
    
    
    
    600,868
    
    
    
    536,370
    
    
    
    535,864Funds borrowed
    
    
    118,505
    
    
    
    118,208
    
    
    
    135,129
    
    
    
    134,942
    
    
    
    96,577Total stockholders equity
    
    
    57,164
    
    
    
    60,603
    
    
    
    76,439
    
    
    
    58,934
    
    
    
    53,820Trust assets under administration
    
    
    125,702
    
    
    
    105,071
    
    
    
    112,688
    
    
    
    104,167
    
    
    
    104,445Selected Financial Ratios and Other Data:Performance Ratios:Net interest margin (1)
    
    
    2.23
    %
    
    
    2.43
    %
    
    
    3.20
    %
    
    
    3.92
    %
    
    
    4.35
    %Non-interest income to average assets
    
    
    1.09
    
    
    
    0.99
    
    
    
    1.04
    
    
    
    0.95
    
    
    
    1.24Non-interest expense to average assets
    
    
    3.26
    
    
    
    3.42
    
    
    
    3.67
    
    
    
    3.34
    
    
    
    3.54Net overhead ratio (2)
    
    
    2.14
    
    
    
    2.40
    
    
    
    2.59
    
    
    
    2.35
    
    
    
    2.25Efficiency ratio (3)
    
    
    104.92
    
    
    
    105.65
    
    
    
    90.70
    
    
    
    71.57
    
    
    
    66.32Return on average assets (4)
    
    
    (0.35
    )
    
    
    (1.79
    )
    
    
    (1.31
    )
    
    
    0.62
    
    
    
    1.00Return on average equity (5)
    
    
    (10.25
    )
    
    
    (33.07
    )
    
    
    (17.53
    )
    
    
    7.88
    
    
    
    13.81Asset Quality Ratios:Non-performing loans to total loans
    
    
    6.16
    %
    
    
    6.30
    %
    
    
    6.54
    %
    
    
    4.22
    %
    
    
    1.31
    %Allowance for possible loan losses to:Total loans
    
    
    2.99
    
    
    
    3.61
    
    
    
    1.87
    
    
    
    1.51
    
    
    
    1.16Non-performing loans
    
    
    48.53
    
    
    
    57.33
    
    
    
    28.54
    
    
    
    35.65
    
    
    
    88.16Net charge-offs to average total loans
    
    
    1.61
    
    
    
    2.30
    
    
    
    2.16
    
    
    
    0.06
    
    
    
    0.35Non-performing loans to total assets
    
    
    4.20
    
    
    
    4.51
    
    
    
    5.31
    
    
    
    3.42
    
    
    
    1.00Balance Sheet Ratios:Loans to deposits
    
    
    90.99
    %
    
    
    93.90
    %
    
    
    110.24
    %
    
    
    111.24
    %
    
    
    98.63
    %Average interest-earning assets to averageinterest-bearing liabilities
    
    
    113.18
    
    
    
    115.08
    
    
    
    116.25
    
    
    
    118.92
    
    
    
    120.31Capital Ratios:Total equity to total assets
    
    
    7.91
    %
    
    
    7.83
    %
    
    
    9.37
    %
    
    
    8.01
    %
    
    
    7.77
    %Total capital to risk-weighted assets ratio
    
    
    12.66
    
    
    
    12.54
    
    
    
    13.82
    
    
    
    11.53
    
    
    
    12.47Tier 1 capital to risk-weighted assets ratio
    
    
    11.39
    
    
    
    11.26
    
    
    
    12.57
    
    
    
    10.28
    
    
    
    11.33Tier 1 capital to average assets ratio
    
    
    9.04
    
    
    
    9.07
    
    
    
    11.50
    
    
    
    9.86
    
    
    
    10.29Average equity to average assets ratio
    
    
    7.48
    
    
    
    8.47
    
    
    
    7.66
    
    
    
    7.85
    
    
    
    7.27
 
 (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. 28




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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.
 29




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Income Taxes
 Overview
    30




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31




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Net Interest Income
  Years ended December 31, 2010 and 2009.
   32




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Years ended December 31, 2009 and 2008.
   33




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Average Balance Sheets.
 AVERAGE BALANCES, YIELDS AND RATES
 Year Ended December 31,2010
    
    
    2009
    
    
    2008Average
    
    
    Average
    
    
    
    
    
    
    Average Yield/
    
    
    
    
    
    
    
    
    
    
    Average Yield/Average Balance
    
    
    Interest
    
    
    Yield/ Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Average Balance
    
    
    Interest
    
    
    Rate(In thousands)AssetsFederal funds sold and other short-term investments
    
    $
    100,929
    
    
    $
    245
    
    
    
    0.24
    %
    
    $
    68,310
    
    
    $
    144
    
    
    
    0.21
    %
    
    $
    22,478
    
    
    $
    378
    
    
    
    1.68
    %Available-for-sale securities  taxable
    
    
    84,070
    
    
    
    1,825
    
    
    
    2.17
    
    
    
    60,441
    
    
    
    1,943
    
    
    
    3.21
    
    
    
    69,741
    
    
    
    3,369
    
    
    
    4.83Available-for-sale securities  non-taxable (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    141
    
    
    
    9
    
    
    
    6.38Mortgage loans held for sale
    
    
    6,761
    
    
    
    302
    
    
    
    4.47
    
    
    
    9,875
    
    
    
    477
    
    
    
    4.83
    
    
    
    6,157
    
    
    
    340
    
    
    
    5.52Loans, net of unearned discount and fees (2)
    
    
    518,010
    
    
    
    27,709
    
    
    
    5.35
    
    
    
    608,080
    
    
    
    33,519
    
    
    
    5.51
    
    
    
    631,673
    
    
    
    40,905
    
    
    
    6.48Federal Home Loan and Federal Reserve Bank Stock
    
    
    6,275
    
    
    
    222
    
    
    
    3.54
    
    
    
    6,742
    
    
    
    211
    
    
    
    3.13
    
    
    
    6,798
    
    
    
    265
    
    
    
    3.90Total earning assets
    
    
    716,045
    
    
    
    30,303
    
    
    
    4.23
    
    
    
    753,448
    
    
    
    36,294
    
    
    
    4.82
    
    
    
    736,988
    
    
    
    45,266
    
    
    
    6.14Cash and due from banks  non-interest bearing
    
    
    37,565
    
    
    
    
    
    
    
    
    
    
    
    36,257
    
    
    
    
    
    
    
    
    
    
    
    20,611Allowance for loan losses
    
    
    (17,991
    )
    
    
    
    
    
    
    
    
    
    
    (19,647
    )
    
    
    
    
    
    
    
    
    
    
    (10,060
    )Premises and equipment, net
    
    
    16,601
    
    
    
    
    
    
    
    
    
    
    
    18,270
    
    
    
    
    
    
    
    
    
    
    
    18,337Other assets
    
    
    38,007
    
    
    
    
    
    
    
    
    
    
    
    26,639
    
    
    
    
    
    
    
    
    
    
    
    18,906Total assets
    
    $
    790,227
    
    
    
    
    
    
    
    
    
    
    $
    814,967
    
    
    
    
    
    
    
    
    
    
    $
    784,782Liabilities and Stockholders EquityDeposits-interest bearing:Interest-bearing demand accounts
    
    $
    125,672
    
    
    $
    2,343
    
    
    
    1.86
    %
    
    $
    96,315
    
    
    $
    2,589
    
    
    
    2.69
    %
    
    $
    52,776
    
    
    $
    1,394
    
    
    
    2.64
    %Savings and money market deposits
    
    
    84,745
    
    
    
    438
    
    
    
    0.52
    
    
    
    93,672
    
    
    
    490
    
    
    
    0.52
    
    
    
    137,295
    
    
    
    2,402
    
    
    
    1.75Time deposits
    
    
    303,130
    
    
    
    7,746
    
    
    
    2.56
    
    
    
    337,363
    
    
    
    10,742
    
    
    
    3.18
    
    
    
    286,404
    
    
    
    12,139
    
    
    
    4.24Total interest-bearing deposits
    
    
    513,547
    
    
    
    10,527
    
    
    
    2.05
    
    
    
    527,350
    
    
    
    13,821
    
    
    
    2.62
    
    
    
    476,475
    
    
    
    15,935
    
    
    
    3.34Other interest-bearing liabilities
    
    
    18,477
    
    
    
    45
    
    
    
    0.24
    
    
    
    23,261
    
    
    
    58
    
    
    
    0.25
    
    
    
    46,008
    
    
    
    943
    
    
    
    2.05Long-term debt
    
    
    100,644
    
    
    
    3,791
    
    
    
    3.77
    
    
    
    104,096
    
    
    
    4,108
    
    
    
    3.95
    
    
    
    111,490
    
    
    
    4,813
    
    
    
    4.32Total interest-bearing liabilities
    
    
    632,668
    
    
    
    14,363
    
    
    
    2.27
    
    
    
    654,707
    
    
    
    17,987
    
    
    
    2.75
    
    
    
    633,973
    
    
    
    21,691
    
    
    
    3.42Non-interest bearing deposits
    
    
    91,863
    
    
    
    
    
    
    
    
    
    
    
    86,744
    
    
    
    
    
    
    
    
    
    
    
    86,811Other liabilities
    
    
    6,577
    
    
    
    
    
    
    
    
    
    
    
    4,478
    
    
    
    
    
    
    
    
    
    
    
    3,852Stockholders equity
    
    
    59,119
    
    
    
    
    
    
    
    
    
    
    
    69,038
    
    
    
    
    
    
    
    
    
    
    
    60,146Total liabilities and stockholders equity
    
    $
    790,227
    
    
    
    
    
    
    
    
    
    
    $
    814,967
    
    
    
    
    
    
    
    
    
    
    $
    784,782FTE net interest income/spread
    
    
    
    
    
    $
    15,940
    
    
    
    1.96
    %
    
    
    
    
    
    $
    18,037
    
    
    
    2.07
    %
    
    
    
    
    
    $
    23,575
    
    
    
    2.72
    %FTE net interest margin
    
    
    
    
    
    
    
    
    
    
    2.23
    %
    
    
    
    
    
    
    
    
    
    
    2.43
    %
    
    
    
    
    
    
    
    
    
    
    3.20
    %
 
 (1)
    
    Presented on a fully tax-equivalent basis assuming a tax rate of 34%. For the three years ended December 31, 2010, 2009 and 2008, the tax equivalency adjustment amounted to $0, $0, and $3,000, respectively.(2)
    
    Includes average balances and income from loans on non-accrual status. 34




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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)2010 Compared to 2009
    
    
    2009 Compared to 2008Change
    
    
    Change
    
    
    
    
    
    
    Change
    
    
    ChangeDue to
    
    
    Due to
    
    
    Total
    
    
    Due to
    
    
    Due to
    
    
    TotalRate
    
    
    Volume
    
    
    Change
    
    
    Rate
    
    
    Volume
    
    
    ChangeFederal funds sold and
other short-term
investments
    
    $
    21
    
    
    $
    80
    
    
    $
    101
    
    
    $
    (255
    )
    
    $
    21
    
    
    $
    (234
    )Available-for-sale
securities  taxable
    
    
    (631
    )
    
    
    513
    
    
    
    (118
    )
    
    
    (1,128
    )
    
    
    (298
    )
    
    
    (1,426
    )Available-for-sale
securities 
non-taxable (1)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (9
    )Mortgage loans held for
sale
    
    
    (36
    )
    
    
    (139
    )
    
    
    (175
    )
    
    
    (8
    )
    
    
    145
    
    
    
    137Loans, net of unearned
discount and fees
    
    
    (987
    )
    
    
    (4,823
    )
    
    
    (5,810
    )
    
    
    (6,088
    )
    
    
    (1,298
    )
    
    
    (7,386
    )Federal Home Loan and
Federal Reserve Bank
Stock
    
    
    28
    
    
    
    (17
    )
    
    
    11
    
    
    
    (52
    )
    
    
    (2
    )
    
    
    (54
    )Total interest income
    
    
    (1,605
    )
    
    
    (4,386
    )
    
    
    (5,991
    )
    
    
    (7,531
    )
    
    
    (1,441
    )
    
    
    (8,972
    )Interest-bearing demand
accounts
    
    
    (794
    )
    
    
    548
    
    
    
    (246
    )
    
    
    26
    
    
    
    1,169
    
    
    
    1,195Savings and money market
deposits
    
    
    (3
    )
    
    
    (49
    )
    
    
    (52
    )
    
    
    (1,686
    )
    
    
    (226
    )
    
    
    (1,912
    )Time deposits
    
    
    (2,115
    )
    
    
    (881
    )
    
    
    (2,996
    )
    
    
    (1,963
    )
    
    
    566
    
    
    
    (1,397
    )Other interest-bearing
liabilities
    
    
    (2
    )
    
    
    (11
    )
    
    
    (13
    )
    
    
    (828
    )
    
    
    (57
    )
    
    
    (885
    )Long-term debt
    
    
    (185
    )
    
    
    (132
    )
    
    
    (317
    )
    
    
    (411
    )
    
    
    (294
    )
    
    
    (705
    )Total interest expense
    
    
    (3,099
    )
    
    
    (525
    )
    
    
    (3,624
    )
    
    
    (4,862
    )
    
    
    1,158
    
    
    
    (3,704
    )Net interest income
    
    $
    1,494
    
    
    $
    (3,861
    )
    
    $
    (2,367
    )
    
    $
    (2,669
    )
    
    $
    (2,599
    )
    
    $
    (5,268
    )
 
 (1)
    
    Presented on a fully tax-equivalent basis assuming a tax rate of 34%. Provision for Loan Losses
  35




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Non-interest Income
  NON-INTEREST INCOME
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Loans held for sale fee income
    
    $
    3,506
    
    
    $
    2,785
    
    
    $
    2,136NSF charges and service fees
    
    
    1,062
    
    
    
    1,472
    
    
    
    1,641Other service charges
    
    
    2,021
    
    
    
    1,778
    
    
    
    1,658Realized gains on available-for-sale securities
    
    
    885
    
    
    
    346
    
    
    
    702Gain on settlement of litigation
    
    
    
    
    
    
    
    
    
    
    1,000Other income
    
    
    1,145
    
    
    
    1,664
    
    
    
    1,010Total non-interest income
    
    $
    8,619
    
    
    $
    8,045
    
    
    $
    8,147
  36




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37




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Non-interest Expense
  NON-INTEREST EXPENSE
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Salaries and employee benefits
    
    $
    11,753
    
    
    $
    12,272
    
    
    $
    12,500Net occupancy expense
    
    
    2,756
    
    
    
    2,811
    
    
    
    3,144Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    4,821Other operating expense
    
    
    11,258
    
    
    
    12,758
    
    
    
    8,304Total non-interest expenses
    
    $
    25,767
    
    
    $
    27,841
    
    
    $
    28,769
    Income Taxes
  38




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##### Table of Contents



Financial Condition
  Investment securities.
   INVESTMENT SECURITIES PORTFOLIO COMPOSITION
 At December 31,2010
    
    
    2009
    
    
    2008(In thousands)U.S. government sponsored agency securities
    
    $
    63,039
    
    
    $
    72,163
    
    
    $
    68,092Equity and other securities
    
    
    601
    
    
    
    594
    
    
    
    589Total
    
    $
    63,640
    
    
    $
    72,757
    
    
    $
    68,681
  MATURITY OF INVESTMENTS IN AVAILABLE-FOR-SALE SECURITIES
 Total InvestmentOne Year or Less
    
    
    One to Five Years
    
    
    Five to Ten Years
    
    
    More Than Ten Years
    
    
    SecuritiesCarrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    AverageValue
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield
    
    
    Value
    
    
    Yield(In thousands)Available-For-SaleU.S. government sponsored
agency
    
    $
    3,016
    
    
    $
    1.00
    %
    
    $
    60,023
    
    
    
    1.53
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    63,039
    
    
    
    1.51
    %Equity and other securities
with no defined maturity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    601
    
    
    
    3.52Total available-for-sale
    
    $
    3,016
    
    
    
    1.00
    %
    
    $
    60,023
    
    
    
    1.53
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    63,640
    
    
    
    1.52
    %
 39




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##### Table of Contents



Loans Held for Sale.
 Loans.
    As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent(In thousands)Commercial
    
    $
    144,181
    
    
    
    29.28
    %
    
    $
    142,528
    
    
    
    25.72
    %
    
    $
    172,647
    
    
    
    26.06
    %
    
    $
    139,120
    
    
    
    23.32
    %
    
    $
    110,849
    
    
    
    20.97
    %Commercial real estate
    
    
    169,253
    
    
    
    34.37
    
    
    
    167,581
    
    
    
    30.24
    
    
    
    170,697
    
    
    
    25.77
    
    
    
    150,655
    
    
    
    25.25
    
    
    
    126,952
    
    
    
    24.02Construction
    
    
    64,641
    
    
    
    13.13
    
    
    
    113,077
    
    
    
    20.41
    
    
    
    182,933
    
    
    
    27.62
    
    
    
    188,229
    
    
    
    31.55
    
    
    
    171,709
    
    
    
    32.49Home equity
    
    
    64,289
    
    
    
    13.05
    
    
    
    66,586
    
    
    
    12.02
    
    
    
    59,257
    
    
    
    8.94
    
    
    
    38,473
    
    
    
    6.45
    
    
    
    32,408
    
    
    
    6.13Residential real estate
    
    
    36,903
    
    
    
    7.49
    
    
    
    45,014
    
    
    
    8.12
    
    
    
    43,695
    
    
    
    6.60
    
    
    
    37,511
    
    
    
    6.29
    
    
    
    34,988
    
    
    
    6.63Lease financing
    
    
    5,530
    
    
    
    1.12
    
    
    
    11,259
    
    
    
    2.03
    
    
    
    18,927
    
    
    
    2.86
    
    
    
    19,724
    
    
    
    3.30
    
    
    
    18,512
    
    
    
    3.50Consumer
    
    
    7,657
    
    
    
    1.56
    
    
    
    8,066
    
    
    
    1.46
    
    
    
    14,245
    
    
    
    2.15
    
    
    
    22,934
    
    
    
    3.84
    
    
    
    33,097
    
    
    
    6.26Total loans and
leases
    
    
    492,454
    
    
    
    100.00
    %
    
    
    554,111
    
    
    
    100.00
    %
    
    
    662,401
    
    
    
    100.00
    %
    
    
    596,646
    
    
    
    100.00
    %
    
    
    528,515
    
    
    
    100.00
    %Less allowance for
loan losses
    
    
    14,731
    
    
    
    
    
    
    
    20,000
    
    
    
    
    
    
    
    12,368
    
    
    
    
    
    
    
    8,982
    
    
    
    
    
    
    
    6,106Loans, net
    
    $
    477,723
    
    
    
    
    
    
    $
    534,111
    
    
    
    
    
    
    $
    650,033
    
    
    
    
    
    
    $
    587,664
    
    
    
    
    
    
    $
    522,409
 Collateral and Concentration.
 40




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MATURITIES AND SENSITIVITIES OF LOANS TO
CHANGES IN INTEREST RATES
 As of December 31, 2010More than One YearLess than
    
    
    One to
    
    
    Over fiveone year
    
    
    five years
    
    
    years
    
    
    Total
    
    
    Fixed
    
    
    Variable(In thousands)Commercial
    
    $
    89,676
    
    
    $
    43,507
    
    
    $
    10,998
    
    
    $
    144,181
    
    
    $
    14,222
    
    
    $
    40,283Commercial Real Estate
    
    
    42,812
    
    
    
    116,848
    
    
    
    9,593
    
    
    
    169,253
    
    
    
    95,728
    
    
    
    30,713Construction
    
    
    46,905
    
    
    
    17,736
    
    
    
    
    
    
    
    64,641
    
    
    
    3,273
    
    
    
    14,463
  Non-performing Assets
  41




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##### Table of Contents



NON-PERFORMING ASSETS
 As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Commercial and all other loans:Past due 90 days or more
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    680
    
    
    $
    802Non-accrual
    
    
    2,896
    
    
    
    1,327
    
    
    
    2,143
    
    
    
    60
    
    
    
    381Commercial real estate loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,951Non-accrual
    
    
    10,088
    
    
    
    13,267
    
    
    
    1,951
    
    
    
    512
    
    
    
    Construction loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,699
    
    
    
    Non-accrual
    
    
    10,417
    
    
    
    11,205
    
    
    
    32,110
    
    
    
    10,115
    
    
    
    136Home equity loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    637
    
    
    
    Non-accrual
    
    
    1,211
    
    
    
    344
    
    
    
    488
    
    
    
    
    
    
    
    Residential real estate loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,194
    
    
    
    Non-accrual
    
    
    5,553
    
    
    
    8,404
    
    
    
    6,129
    
    
    
    189
    
    
    
    410Lease financing:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    186Non-accrual
    
    
    140
    
    
    
    335
    
    
    
    475
    
    
    
    1,084
    
    
    
    Consumer loans:Past due 90 days or more
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    13Non-accrual
    
    
    52
    
    
    
    6
    
    
    
    36
    
    
    
    
    
    
    
    47Debt 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
    
    
    30,357
    
    
    
    34,888
    
    
    
    43,332
    
    
    
    25,194
    
    
    
    6,926Foreclosed assets held for sale
    
    
    20,144
    
    
    
    19,434
    
    
    
    4,783
    
    
    
    2,523
    
    
    
    717Total non-performing assets
    
    $
    50,501
    
    
    $
    54,322
    
    
    $
    48,115
    
    
    $
    27,717
    
    
    $
    7,643Total non-performing loans to total loans
    
    
    6.16
    %
    
    
    6.30
    %
    
    
    6.54
    %
    
    
    4.22
    %
    
    
    1.31
    %Total non-performing loans to total assets
    
    
    4.20
    
    
    
    4.51
    
    
    
    5.31
    
    
    
    3.42
    
    
    
    1.00Allowance for loan losses to non-performing loans
    
    
    48.53
    
    
    
    57.33
    
    
    
    28.54
    
    
    
    35.65
    
    
    
    88.16Non-performing assets to loans and foreclosed
assets held for sale
    
    
    9.85
    
    
    
    9.47
    
    
    
    7.21
    
    
    
    4.63
    
    
    
    1.44
 Non-performing assets
  42




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Year EndedDecember 31, 2010(In thousands)Gross interest income (since date
of non-accrual) if the loans had been
current and accruing interest
    
    $
    1,742Interest income reversed at time loan
placed on non-accrual
    
    
    235Cash interest received during the period
    
    
    88
 Impaired Loans.
   Allowance For Loan Losses.
 43




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##### Table of Contents



SUMMARY OF LOAN LOSS EXPERIENCE
AND RELATED INFORMATION
 As of and for theYear Ended December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Balance at beginning of period
    
    $
    20,000
    
    
    $
    12,368
    
    
    $
    8,982
    
    
    $
    6,106
    
    
    $
    6,704Loans charged-off:Commercial loans
    
    
    1,364
    
    
    
    4,713
    
    
    
    6,603
    
    
    
    215
    
    
    
    1,417Commercial real estate loans
    
    
    2,985
    
    
    
    374
    
    
    
    262
    
    
    
    
    
    
    
    Construction loans
    
    
    3,662
    
    
    
    7,716
    
    
    
    6,022
    
    
    
    244
    
    
    
    100Home equity loans
    
    
    387
    
    
    
    653
    
    
    
    127
    
    
    
    
    
    
    
    8Residential real estate loans
    
    
    660
    
    
    
    1,480
    
    
    
    424
    
    
    
    49
    
    
    
    318Lease financing
    
    
    43
    
    
    
    109
    
    
    
    372
    
    
    
    139
    
    
    
    134Consumer loans
    
    
    7
    
    
    
    58
    
    
    
    112
    
    
    
    16
    
    
    
    83Total loans charged-off
    
    
    9,108
    
    
    
    15,103
    
    
    
    13,922
    
    
    
    663
    
    
    
    2,060Recoveries:Commercial loans
    
    
    390
    
    
    
    259
    
    
    
    223
    
    
    
    294
    
    
    
    117Commercial real estate loans
    
    
    171
    
    
    
    123
    
    
    
    
    
    
    
    1
    
    
    
    Construction loans
    
    
    123
    
    
    
    592
    
    
    
    24
    
    
    
    
    
    
    
    Home equity loans
    
    
    17
    
    
    
    31
    
    
    
    
    
    
    
    
    
    
    
    Residential real estate loans
    
    
    11
    
    
    
    72
    
    
    
    1
    
    
    
    6
    
    
    
    47Lease financing
    
    
    14
    
    
    
    21
    
    
    
    29
    
    
    
    9
    
    
    
    32Consumer loans
    
    
    18
    
    
    
    2
    
    
    
    6
    
    
    
    14
    
    
    
    11Total recoveries
    
    
    744
    
    
    
    1,100
    
    
    
    283
    
    
    
    324
    
    
    
    207Net loans charged-off
    
    
    8,364
    
    
    
    14,003
    
    
    
    13,639
    
    
    
    339
    
    
    
    1,853Allowance of acquired company
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    360
    
    
    
    Provision for loan losses
    
    
    3,095
    
    
    
    21,635
    
    
    
    17,025
    
    
    
    2,855
    
    
    
    1,255Balance at end of period
    
    $
    14,731
    
    
    $
    20,000
    
    
    $
    12,368
    
    
    $
    8,982
    
    
    $
    6,106Loans outstanding:Average
    
    $
    518,010
    
    
    $
    608,080
    
    
    $
    631,673
    
    
    $
    563,224
    
    
    $
    525,471End of period
    
    
    492,454
    
    
    
    554,111
    
    
    
    662,401
    
    
    
    596,646
    
    
    
    528,515Ratio of allowance for loan
losses to loans outstanding:Average
    
    
    2.84
    %
    
    
    3.29
    %
    
    
    1.96
    %
    
    
    1.59
    %
    
    
    1.16
    %End of period
    
    
    2.99
    
    
    
    3.61
    
    
    
    1.87
    
    
    
    1.51
    
    
    
    1.16Ratio of net charge-offs to:Average loans
    
    
    1.61
    
    
    
    2.30
    
    
    
    2.16
    
    
    
    0.06
    
    
    
    0.35End of period loans
    
    
    1.70
    
    
    
    2.53
    
    
    
    2.06
    
    
    
    0.06
    
    
    
    0.35
 44




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##### Table of Contents



ALLOCATION OF THE ALLOWANCE FOR LOAN LOSSES
 As of December 31,2010
    
    
    2009
    
    
    2008
    
    
    2007
    
    
    2006(In thousands)Amount
    
    
    % of Total Allowance
    
    
    Amount
    
    
    % of Total Allowance
    
    
    Amount
    
    
    % of Total Allowance
    
    
    Amount
    
    
    % of Total Allowance
    
    
    Amount
    
    
    % of Total AllowanceCommercial
    
    $
    3,339
    
    
    
    22.66
    %
    
    $
    3,630
    
    
    
    18.15
    %
    
    $
    3,040
    
    
    
    24.58
    %
    
    $
    1,790
    
    
    
    19.93
    %
    
    $
    1,386
    
    
    
    22.70
    %Commercial real estate
    
    
    3,974
    
    
    
    26.98
    
    
    
    7,253
    
    
    
    36.27
    
    
    
    2,507
    
    
    
    20.27
    
    
    
    1,597
    
    
    
    17.78
    
    
    
    1,674
    
    
    
    27.42Construction
    
    
    4,579
    
    
    
    31.08
    
    
    
    5,929
    
    
    
    29.65
    
    
    
    4,695
    
    
    
    37.96
    
    
    
    4,188
    
    
    
    46.63
    
    
    
    1,920
    
    
    
    31.44Home equity
    
    
    1,262
    
    
    
    8.57
    
    
    
    1,061
    
    
    
    5.30
    
    
    
    409
    
    
    
    3.31
    
    
    
    247
    
    
    
    2.75
    
    
    
    197
    
    
    
    3.23Residential real estate
    
    
    1,488
    
    
    
    10.10
    
    
    
    1,737
    
    
    
    8.68
    
    
    
    1,201
    
    
    
    9.71
    
    
    
    377
    
    
    
    4.20
    
    
    
    402
    
    
    
    6.58Lease financing
    
    
    38
    
    
    
    0.26
    
    
    
    238
    
    
    
    1.19
    
    
    
    449
    
    
    
    3.63
    
    
    
    664
    
    
    
    7.39
    
    
    
    355
    
    
    
    5.81Consumer
    
    
    51
    
    
    
    0.35
    
    
    
    152
    
    
    
    0.76
    
    
    
    67
    
    
    
    0.54
    
    
    
    119
    
    
    
    1.32
    
    
    
    172
    
    
    
    2.82Total
    
    $
    14,731
    
    
    
    100.00
    %
    
    $
    20,000
    
    
    
    100.00
    %
    
    $
    12,368
    
    
    
    100.00
    %
    
    $
    8,982
    
    
    
    100.00
    %
    
    $
    6,106
    
    
    
    100.00
    %
 Deposits.
 45




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##### Table of Contents



DEPOSITS
 Year Ended December 31,2010
    
    
    2009
    
    
    2008(In thousands)Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weighted
    
    
    
    
    
    
    Percent
    
    
    Weightedof
    
    
    Average
    
    
    
    
    
    
    of
    
    
    Average
    
    
    
    
    
    
    Of
    
    
    AverageBalance
    
    
    Deposits
    
    
    Rate
    
    
    Balance
    
    
    Deposits
    
    
    Rate
    
    
    Balance
    
    
    Deposits
    
    
    RateDemand
    
    $
    100,975
    
    
    
    18.65
    %
    
    
    
    %
    
    $
    91,158
    
    
    
    15.45
    %
    
    
    
    %
    
    $
    86,020
    
    
    
    14.32
    %
    
    
    
    %Savings
    
    
    11,040
    
    
    
    2.04
    
    
    
    0.24
    
    
    
    8,947
    
    
    
    1.52
    
    
    
    0.25
    
    
    
    8,030
    
    
    
    1.34
    
    
    
    0.44Interest-bearing demand
    
    
    140,697
    
    
    
    26.00
    
    
    
    1.86
    
    
    
    117,519
    
    
    
    19.91
    
    
    
    2.69
    
    
    
    72,699
    
    
    
    12.10
    
    
    
    2.64Money Market
    
    
    66,670
    
    
    
    12.32
    
    
    
    0.56
    
    
    
    77,779
    
    
    
    13.18
    
    
    
    0.55
    
    
    
    99,282
    
    
    
    16.52
    
    
    
    1.83Time Deposits
    
    
    221,836
    
    
    
    40.99
    
    
    
    2.56
    
    
    
    294,707
    
    
    
    49.94
    
    
    
    3.18
    
    
    
    334,837
    
    
    
    55.72
    
    
    
    4.24Total deposits
    
    $
    541,218
    
    
    
    100.00
    %
    
    
    
    
    
    $
    590,110
    
    
    
    100.00
    %
    
    
    
    
    
    $
    600,868
    
    
    
    100.00
    %
  AMOUNTS AND MATURITIES OF
TIME DEPOSITS OF $100,000 OR MORE
 As of December 31, 2010Weighted 
AverageAmount
    
    
    Rate(In thousands)Three months or less
    
    $
    24,699
    
    
    
    1.29
    %Over three months through six months
    
    
    7,923
    
    
    
    1.35Over six months through twelve months
    
    
    27,249
    
    
    
    2.01Over twelve months
    
    
    44,221
    
    
    
    2.41Total
    
    $
    104,092
    
    
    
    1.96
    %
 Liquidity and Capital Resources
 Liquidity
 46




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47




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##### Table of Contents



SHORT-TERM DEBT
 AverageAmount
    
    
    amount
    
    
    Maximum
    
    
    
    
    
    
    Weightedoutstanding
    
    
    outstanding
    
    
    Outstanding
    
    
    Weighted
    
    
    Averageat
    
    
    during the
    
    
    At any
    
    
    average interest rate
    
    
    interest rateperiod end
    
    
    period (1)
    
    
    Month end
    
    
    during the period
    
    
    at period end(In thousands)At or for the year ended December 31, 2010:Federal Home Loan Bank borrowings
    
    $
    
    
    
    $
    3
    
    
    $
    
    
    
    
    0.26
    %
    
    
    
    %Federal Funds purchased
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    0.98
    
    
    
    Federal Reserve Bank line of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repurchase agreements and other interest bearing liabilities
    
    
    18,748
    
    
    
    18,472
    
    
    
    22,071
    
    
    
    0.24
    
    
    
    0.24Total
    
    $
    18,748
    
    
    $
    18,477
    
    
    
    
    
    
    
    0.24
    
    
    
    0.24At 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
    
    
    
    0.31
 
 (1)
    
    Calculations are based on daily averages where available and monthly averages otherwise. Capital Resources.
  48




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##### Table of Contents



RISK-BASED CAPITAL
 December 31,2010
    
    
    2009
    
    
    2008(In thousands)Tier 1 capitalStockholders equity
    
    $
    57,164
    
    
    $
    60,603
    
    
    $
    76,439Intangible assets
    
    
    (464
    )
    
    
    (607
    )
    
    
    (826
    )Unrealized (appreciation) depreciation on
available-for-sale securities and
derivative instruments
    
    
    (30
    )
    
    
    (106
    )
    
    
    (657
    )Disallowed deferred tax asset
    
    
    (9,684
    )
    
    
    (8,435
    )
    
    
    Trust preferred securities (1)
    
    
    19,000
    
    
    
    19,000
    
    
    
    19,000Total Tier 1 capital
    
    
    65,986
    
    
    
    70,455
    
    
    
    93,956Tier 2 capitalQualifying allowance for loan losses
    
    
    7,334
    
    
    
    7,969
    
    
    
    9,381Trust preferred securities (1)
    
    
    
    
    
    
    
    
    
    
    Total Tier 2 capital
    
    
    7,334
    
    
    
    7,969
    
    
    
    9,381Total risk-based capital
    
    $
    73,320
    
    
    $
    78,424
    
    
    $
    103,337Risk weighted assets
    
    $
    579,334
    
    
    $
    625,475
    
    
    
    747,504Ratios at end of periodTotal capital to risk-weighted assets ratio
    
    
    12.66
    %
    
    
    12.54
    %
    
    
    13.82
    %Tier 1 capital to average assets ratio
(leverage ratio)
    
    
    9.04
    %
    
    
    9.07
    %
    
    
    11.50
    %Tier 1 capital to risk-weighted assets
ratio
    
    
    11.39
    %
    
    
    11.26
    %
    
    
    12.57
    %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, 2010, 2009 and 2008.  49




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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. The dividend
payment due on August 15, 2010 was the sixth dividend payment deferred by the Company.
    
    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.
   50




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##### Table of Contents



Contractual Obligations
  Payments due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    
    Amortization
    
    
    1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 years(In thousands)Time deposit obligations
    
    $
    221,836
    
    
    $
    
    
    
    $
    129,844
    
    
    $
    61,724
    
    
    $
    22,815
    
    
    $
    7,453Long-term debt obligations
    
    
    102,088
    
    
    
    
    
    
    
    
    
    
    
    20,000
    
    
    
    27,500
    
    
    
    54,588Less: Deferred prepayment
penalty on modification of
Federal Home Loan Bank
advances
    
    
    (2,331
    )
    
    
    (2,331
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total obligations
    
    $
    321,593
    
    
    $
    (2,331
    )
    
    $
    129,844
    
    
    $
    81,724
    
    
    $
    50,315
    
    
    $
    62,041
 Inflation
  Off-Balance Sheet Arrangements
    51




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##### Table of Contents



Future Accounting Requirements
 Disclosures about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses Receivables
    Receivables (Topic 310) Deferral of the
Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.
 52




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##### Table of Contents



Regulatory Matters
  53




---



##### 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
    
    
    9.13
    %
    
    
    (4.62
    )%100 basis point rise
    
    
    3.10
    %
    
    
    (2.74
    )%Base Rate Scenario
    
    
    
    
    
    
    25 basis point decline
    
    
    (1.11
    )%
    
    
    0.50
    %
  54




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##### Table of Contents



55




---



##### 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
    
    $
    54,007
    
    
    $
    36,662
    
    
    $
    90,669
    
    
    $
    35,589
    
    
    $
    82,778
    
    
    $
    14,485
    
    
    $
    223,521Average Interest Rate
    
    
    5.66
    %
    
    
    6.76
    %
    
    
    6.10
    %
    
    
    7.11
    %
    
    
    6.27
    %
    
    
    6.18
    %
    
    
    6.33
    %Variable Rate Loans
    
    
    255,476
    
    
    
    18,562
    
    
    
    274,038
    
    
    
    1,454
    
    
    
    1,603
    
    
    
    
    
    
    
    277,095Average Interest Rate
    
    
    4.76
    %
    
    
    5.36
    %
    
    
    4.80
    %
    
    
    5.31
    %
    
    
    6.55
    %
    
    
    
    %
    
    
    4.82
    %Fixed Rate Investments
    
    
    
    
    
    
    3,016
    
    
    
    3,016
    
    
    
    33,028
    
    
    
    26,995
    
    
    
    
    
    
    
    63,039Average Interest Rate
    
    
    
    %
    
    
    1.00
    %
    
    
    1.00
    %
    
    
    1.32
    %
    
    
    1.79
    %
    
    
    
    %
    
    
    1.51
    %Variable Rate Investments
    
    
    601
    
    
    
    
    
    
    
    601
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    601Average Interest Rate
    
    
    3.52
    %
    
    
    
    %
    
    
    3.52
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    3.52
    %Interest Bearing Deposits
    
    
    67,526
    
    
    
    
    
    
    
    67,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67,526Average Interest Rate
    
    
    0.19
    %
    
    
    
    %
    
    
    0.19
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    0.19
    %Funds borrowed
    
    
    10,000
    
    
    
    
    
    
    
    10,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,000Average Interest Rate
    
    
    0.15
    %
    
    
    
    %
    
    
    0.15
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    0.15
    %Total interest-earning assets
    
    $
    387,610
    
    
    $
    58,240
    
    
    $
    445,850
    
    
    $
    70,071
    
    
    $
    111,376
    
    
    $
    14,485
    
    
    $
    641,782Interest-Bearing Liabilities:Interest-bearing demand
    
    $
    140,741
    
    
    $
    
    
    
    $
    140,741
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    140,741Average Interest Rate
    
    
    1.81
    %
    
    
    
    %
    
    
    1.81
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    1.81
    %Savings and money market
    
    
    77,666
    
    
    
    
    
    
    
    77,666
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77,666Average Interest Rate
    
    
    0.50
    %
    
    
    
    %
    
    
    0.50
    %
    
    
    
    %
    
    
    
    %
    
    
    
    %
    
    
    0.50
    %Time deposits
    
    
    56,471
    
    
    
    73,390
    
    
    
    129,861
    
    
    
    41,905
    
    
    
    42,626
    
    
    
    7,444
    
    
    
    221,836Average Interest Rate
    
    
    1.98
    %
    
    
    1.91
    %
    
    
    1.94
    %
    
    
    2.19
    %
    
    
    2.90
    %
    
    
    3.57
    %
    
    
    2.23
    %Funds borrowed
    
    
    82,372
    
    
    
    
    
    
    
    82,372
    
    
    
    
    
    
    
    36,133
    
    
    
    
    
    
    
    118,505Average Interest Rate
    
    
    2.12
    %
    
    
    
    %
    
    
    2.12
    %
    
    
    
    %
    
    
    3.44
    %
    
    
    
    %
    
    
    2.53
    %Total interest-bearing liabilities
    
    $
    357,250
    
    
    $
    73,390
    
    
    $
    430,640
    
    
    $
    41,905
    
    
    $
    78,759
    
    
    $
    7,444
    
    
    $
    558,748Cumulative:Rate sensitive assets (RSA)
    
    $
    387,610
    
    
    $
    445,850
    
    
    $
    445,850
    
    
    $
    515,921
    
    
    $
    627,297
    
    
    $
    641,782
    
    
    $
    641,782Rate sensitive liabilities (RSL)
    
    
    357,250
    
    
    
    430,640
    
    
    
    430,640
    
    
    
    472,545
    
    
    
    551,304
    
    
    
    558,748
    
    
    
    558,748GAP (GAP = RSA  RSL)
    
    
    30,360
    
    
    
    15,210
    
    
    
    15,210
    
    
    
    43,376
    
    
    
    75,993
    
    
    
    83,034
    
    
    
    83,034RSA/RSL
    
    
    108.50
    %
    
    
    103.53
    %
    
    
    103.53
    %
    
    
    109.18
    %
    
    
    113.78
    %
    
    
    114.86
    %RSA/Total assets
    
    
    53.60
    
    
    
    61.66
    
    
    
    61.66
    
    
    
    71.35
    
    
    
    86.75
    
    
    
    88.75RSL/Total assets
    
    
    49.41
    
    
    
    59.55
    
    
    
    59.55
    
    
    
    65.35
    
    
    
    76.24
    
    
    
    77.27GAP/Total assets
    
    
    4.20
    
    
    
    2.10
    
    
    
    2.10
    
    
    
    6.00
    
    
    
    10.51
    
    
    
    11.48GAP/RSA
    
    
    7.83
    
    
    
    3.41
    
    
    
    3.41
    
    
    
    8.41
    
    
    
    12.11
    
    
    
    12.94
   
 Item 8:
    
    Financial Statements and Supplementary Data
  
 Item 9:
    
    Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
  56




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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
  57




---



##### Table of Contents



Part III
 
 Item 10:

    Directors, Executive Officers and Corporate Governance
    ir@bankbv.com
  
 Item 11:

    Executive Compensation
  
 Item 12:

    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13:

    Certain Relationships, Related Transactions, and Director Independence
  
    
    were made in the ordinary course of business;
    
    were made on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with other persons not related to the
Bank;
    
    did not involve more than the normal risk of collectibility or present other unfavorable
features; and
    
    were being paid as agreed.
 58




---



##### 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
 59




---



##### Table of Contents



SIGNATURES
  Date:  March 21, 2011
    By:
    /s/ Robert D. RegnierRobert D. Regnier, President,Chief Executive Officer and Director  Date:  March 21, 2011
    By:
    /s/ Robert D. RegnierRobert D. Regnier, President,Chief Executive Officer and Director

(Principal Executive Officer) Date:  March 21, 2011
    By:
    /s/ Mark A. FortinoMark A. Fortino, Chief Financial Officer(Principal Financial and Accounting Officer) Date:  March 21, 2011
    By:
    /s/ Donald H. AlexanderDonald H. Alexander, Director Date:  March 21, 2011
    By:
    /s/ Michael J. BrownMichael J. Brown, Director Date:  March 21, 2011
    By:
    /s/ Robert D. TaylorRobert D. Taylor, Director 60




---



##### Table of Contents



2.1
    
    Agreement and Plan of Merger between Unison Bancorp, Inc., BVBC Acquisition I,
Inc. and Blue Valley Ban Corp., dated as of November 2, 2006.*****2.2
    
    Acquisition Agreement and Plan of Merger among Northland National Bank, Blue
Valley Ban Corp. and Western National Bank, dated as of March 2, 2007.*****2.3
    
    Purchase and Assumption Agreement among Northland National Bank, Bank of Blue
Valley and Blue Valley Ban Corp., dated as of March 2, 2007.*****3.1
    
    Amended and Restated Articles of Incorporation of Blue Valley Ban Corp. *3.2
    
    Bylaws, as amended, of Blue Valley Ban Corp. *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 ****
 61




---



##### Table of Contents



10.6
    
    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 Ban Corp.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 Ban Corp.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 Ban Corp.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 Ban Corp.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 Ban Corp.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 Ban Corp.s
Current Report on Form 8-K. Exhibit incorporated herein by reference.
 62




---



##### 



BLUE VALLEY BAN CORP.
 DECEMBER 31, 2010, 2009 AND 2008
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
 PageREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    F-2CONSOLIDATED FINANCIAL STATEMENTSBalance Sheets
    
    F-3Statements of Operations
    
    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
 
    /s/ BKD, LLP 
 F-2




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2010 AND 2009  (In thousands, except share data)
 ASSETS
 2010
    
    
    2009Cash and due from banks
    
    $
    37,255
    
    
    $
    32,126Interest bearing deposits in other financial institutions
    
    
    67,526
    
    
    
    64,858Federal funds sold
    
    
    10,000
    
    
    
    Cash and cash equivalents
    
    
    114,781
    
    
    
    96,984Available-for-sale securities
    
    
    63,640
    
    
    
    72,757Mortgage loans held for sale, fair value
    
    
    8,162
    
    
    
    8,752Loans, net of allowance for loan losses of $14,731 and
$20,000 in 2010 and 2009, respectively
    
    
    477,723
    
    
    
    534,111Premises and equipment, net
    
    
    16,239
    
    
    
    16,930Foreclosed assets held for sale, net
    
    
    20,144
    
    
    
    19,435Interest receivable
    
    
    1,783
    
    
    
    2,303Deferred income taxes
    
    
    10,976
    
    
    
    9,480Income taxes receivable
    
    
    
    
    
    
    2,746Prepaid expenses and other assets
    
    
    2,026
    
    
    
    2,803Federal Home Loan Bank stock, Federal Reserve Bank stock, and
other securities
    
    
    7,163
    
    
    
    7,059Core deposit intangible asset, at amortized cost
    
    
    464
    
    
    
    607Total assets
    
    $
    723,101
    
    
    $
    773,967
  F-3




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 CONSOLIDATED BALANCE SHEETS
 DECEMBER 31, 2010 AND 2009  (In thousands, except share data)
 LIABILITIES AND STOCKHOLDERS EQUITY
 2010
    
    
    2009LIABILITIESDepositsDemand
    
    $
    100,975
    
    
    $
    91,158Savings, NOW and money market
    
    
    218,407
    
    
    
    204,245Time
    
    
    221,836
    
    
    
    294,707Total deposits
    
    
    541,218
    
    
    
    590,110Other interest-bearing liabilities
    
    
    18,748
    
    
    
    16,120Long-term debt
    
    
    99,757
    
    
    
    102,088Interest payable and other liabilities
    
    
    6,214
    
    
    
    5,046Total liabilities
    
    
    665,937
    
    
    
    713,364STOCKHOLDERS EQUITYCapital stockPreferred stock, $1 par value, $1,000 liquidation preference
Authorized 15,000,000 shares; issued and outstanding
2010  21,750 shares; 2009  21,750 shares
    
    
    22
    
    
    
    22Common stock, par value $1 per share;
Authorized 15,000,000 shares; issued and outstanding
2010  2,843,301 shares; 2009  2,817,650 shares
    
    
    2,843
    
    
    
    2,818Additional paid-in capital
    
    
    38,431
    
    
    
    37,975Retained earnings
    
    
    15,838
    
    
    
    19,685Accumulated other comprehensive income, net of income tax of
$20 in 2010 and $69 in 2009
    
    
    30
    
    
    
    103Total stockholders equity
    
    
    57,164
    
    
    
    60,603Total liabilities and stockholders equity
    
    $
    723,101
    
    
    $
    773,967
  F-4




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008  (In thousands, except per share data)
 2010
    
    
    2009
    
    
    2008INTEREST AND DIVIDEND INCOMEInterest and fees on loans
    
    $
    28,011
    
    
    $
    33,996
    
    
    $
    41,245Federal funds sold and other short-term investments
    
    
    245
    
    
    
    144
    
    
    
    378Available-for-sale securities
    
    
    1,825
    
    
    
    1,943
    
    
    
    3,375Dividends on Federal Home Loan Bank and
Federal Reserve Bank stock
    
    
    222
    
    
    
    211
    
    
    
    265Total interest income
    
    
    30,303
    
    
    
    36,294
    
    
    
    45,263INTEREST EXPENSEInterest-bearing demand deposits
    
    
    2,343
    
    
    
    2,589
    
    
    
    1,394Savings and money market deposit accounts
    
    
    438
    
    
    
    490
    
    
    
    2,402Other time deposits
    
    
    7,746
    
    
    
    10,742
    
    
    
    12,139Federal funds purchased and other interest-bearing liabilities
    
    
    45
    
    
    
    58
    
    
    
    375Short-term debt
    
    
    
    
    
    
    
    
    
    
    568Long-term debt, net
    
    
    3,791
    
    
    
    4,108
    
    
    
    4,813Total interest expense
    
    
    14,363
    
    
    
    17,987
    
    
    
    21,691NET INTEREST INCOME
    
    
    15,940
    
    
    
    18,307
    
    
    
    23,572PROVISION FOR LOAN LOSSES
    
    
    3,095
    
    
    
    21,635
    
    
    
    17,025NET INTEREST INCOME (LOSS) AFTER PROVISION FOR LOAN LOSSES
    
    
    12,845
    
    
    
    (3,328
    )
    
    
    6,547NON-INTEREST INCOMELoans held for sale fee income
    
    
    3,506
    
    
    
    2,785
    
    
    
    2,136Service fees
    
    
    3,083
    
    
    
    3,250
    
    
    
    3,299Realized gains on available-for-sale securities
    
    
    885
    
    
    
    346
    
    
    
    702Gain on settlement of litigation
    
    
    
    
    
    
    
    
    
    
    1,000Other income
    
    
    1,145
    
    
    
    1,664
    
    
    
    1,010Total non-interest income
    
    
    8,619
    
    
    
    8,045
    
    
    
    8,147NON-INTEREST EXPENSESalaries and employee benefits
    
    
    11,753
    
    
    
    12,272
    
    
    
    12,500Net occupancy expense
    
    
    2,756
    
    
    
    2,811
    
    
    
    3,144Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    4,821Other operating expense
    
    
    11,258
    
    
    
    12,758
    
    
    
    8,304Total non-interest expense
    
    
    25,767
    
    
    
    27,841
    
    
    
    28,769LOSS BEFORE INCOME TAXES
    
    
    (4,303
    )
    
    
    (23,124
    )
    
    
    (14,075
    )BENEFIT FOR INCOME TAXES
    
    
    (1,561
    )
    
    
    (8,514
    )
    
    
    (3,824
    )NET LOSS
    
    
    (2,742
    )
    
    
    (14,610
    )
    
    
    (10,251
    )DIVIDENDS AND ACCRETION ON PREFERRED STOCK
    
    
    1,105
    
    
    
    1,045
    
    
    
    NET LOSS AVAILABLE TO COMMON SHAREHOLDERS
    
    $
    (3,847
    )
    
    $
    (15,655
    )
    
    $
    (10,251
    )BASIC LOSS PER SHARE
    
    $
    (1.38
    )
    
    $
    (5.68
    )
    
    $
    (4.20
    )DILUTED LOSS PER SHARE
    
    $
    (1.38
    )
    
    $
    (5.68
    )
    
    $
    (4.20
    )
  F-5




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##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008  (In thousands, except share data)
 AccumulatedAdditional
    
    
    
    
    
    
    OtherComprehensive
    
    
    Preferred
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    ComprehensiveIncome (Loss)
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    TotalBALANCE, 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 loss
    
    $
    (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 loss
    
    
    (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
    
    
    $
    60,603Issuance of 22,186 shares of restricted
stock, net of forfeitures
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    406
    
    
    
    
    
    
    
    
    
    
    
    428Issuance of 3,465 shares of common stock
for the employee stock purchase plan
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    32
    
    
    
    
    
    
    
    
    
    
    
    35Net loss
    
    
    (2,742
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,742
    )
    
    
    
    
    
    
    (2,742
    )Accretion of discount on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18
    
    
    
    (18
    )
    
    
    
    
    
    
    Dividend on preferred shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,087
    )
    
    
    
    
    
    
    (1,087
    )Change in unrealized appreciation on
available-for-sale securities, net of
income taxes (credit) of $(49)
    
    
    (73
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73
    )
    
    
    (73
    )$
    (2,815
    )BALANCE, DECEMBER 31, 2010
    
    
    
    
    
    $
    22
    
    
    $
    2,843
    
    
    $
    38,431
    
    
    $
    15,838
    
    
    $
    30
    
    
    $
    57,164
  F-6




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##### Table of Contents



BLUE VALLEY BAN CORP.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008  (In thousands)
 2010
    
    
    2009
    
    
    2008OPERATING ACTIVITIESNet loss
    
    $
    (2,742
    )
    
    $
    (14,610
    )
    
    $
    (10,251
    )Adjustments to reconcile net loss to net cash flow
From operating activities:Depreciation and amortization
    
    
    1,298
    
    
    
    1,417
    
    
    
    1,552Amortization (accretion) of premiums and discounts on
available-for-sale securities
    
    
    (73
    )
    
    
    10
    
    
    
    (26
    )Provision for loan losses
    
    
    3,095
    
    
    
    21,635
    
    
    
    17,025Provision for losses on foreclosed assets held for sale
    
    
    734
    
    
    
    1,363
    
    
    
    Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    4,821Deferred income taxes
    
    
    (1,561
    )
    
    
    (6,126
    )
    
    
    (1,223
    )Stock dividends on Federal Home Loan Bank (FHLB) stock
    
    
    (104
    )
    
    
    (101
    )
    
    
    (188
    )Net realized gains on available-for-sale securities
    
    
    (885
    )
    
    
    (346
    )
    
    
    (702
    )Net (gain) loss on sale of foreclosed assets
    
    
    (168
    )
    
    
    (212
    )
    
    
    46Restricted stock earned and forfeited
    
    
    428
    
    
    
    287
    
    
    
    309Compensation expense related to the Employee Stock Purchase Plan
    
    
    3
    
    
    
    7
    
    
    
    10Originations of loans held for sale
    
    
    (135,930
    )
    
    
    (196,374
    )
    
    
    (136,798
    )Proceeds from the sale of loans held for sale
    
    
    136,487
    
    
    
    195,668
    
    
    
    139,619Realized loss on loans held for sale fair value adjustment
    
    
    33
    
    
    
    111
    
    
    
    Proceeds from settlement of litigation
    
    
    
    
    
    
    
    
    
    
    200Gain on settlement of litigation
    
    
    
    
    
    
    
    
    
    
    (1,000
    )Changes in:Interest receivable
    
    
    520
    
    
    
    970
    
    
    
    1,348Net fair value of loan related commitments
    
    
    (128
    )
    
    
    (236
    )
    
    
    Income taxes receivable
    
    
    2,746
    
    
    
    
    
    
    
    Prepaid expenses and other assets
    
    
    981
    
    
    
    839
    
    
    
    (3,591
    )Interest payable and other liabilities
    
    
    116
    
    
    
    913
    
    
    
    (1,835
    )Net cash provided by operating activities
    
    
    4,850
    
    
    
    5,215
    
    
    
    9,316INVESTING ACTIVITIESNet change in loans
    
    
    42,909
    
    
    
    57,854
    
    
    
    (86,958
    )Proceeds from sales of loan participations
    
    
    32
    
    
    
    4,199
    
    
    
    1,514Purchase of premises and equipment
    
    
    (226
    )
    
    
    (136
    )
    
    
    (364
    )Proceeds from sale of premises and equipment
    
    
    
    
    
    
    
    
    
    
    16Proceeds from the sale of foreclosed assets, net of expenses
    
    
    9,077
    
    
    
    16,431
    
    
    
    3,744Purchases of available-for-sale securities
    
    
    (134,932
    )
    
    
    (85,749
    )
    
    
    (48,100
    )Proceeds from maturities of available-for-sale securities
    
    
    115,000
    
    
    
    69,750
    
    
    
    33,210Proceeds from sales of available-for-sale securities
    
    
    29,885
    
    
    
    11,346
    
    
    
    23,702Purchases of Federal Home Loan Bank and Federal Reserve Bank stock
    
    
    
    
    
    
    (521
    )
    
    
    (439
    )Proceeds from the redemption of Federal Home Loan Bank stock,
Federal Reserve Bank stock, and other securities
    
    
    
    
    
    
    1,451
    
    
    
    Net cash provided by (used in) investing activities
    
    
    61,745
    
    
    
    74,625
    
    
    
    (73,675
    )FINANCING ACTIVITIESNet increase (decrease) in demand deposits, money market, NOW and
savings accounts
    
    
    23,979
    
    
    
    29,372
    
    
    
    (19,882
    )Net increase (decrease) in time deposits
    
    
    (72,871
    )
    
    
    (40,130
    )
    
    
    84,380Net increase (decrease) in federal funds purchased and other
interest-bearing liabilities
    
    
    2,628
    
    
    
    (11,425
    )
    
    
    (1,491
    )Net decrease in short-term debt
    
    
    
    
    
    
    
    
    
    
    (25,000
    )Repayments of long-term debt
    
    
    (42,500
    )
    
    
    (5,396
    )
    
    
    (13,322
    )Proceeds from long-term debt
    
    
    42,500
    
    
    
    
    
    
    
    40,000Prepayment penalty on modification of FHLB advances
    
    
    (2,569
    )
    
    
    
    
    
    
    Discount on repayment of long-term debt
    
    
    
    
    
    
    (100
    )
    
    
    Proceeds from sale of preferred stock and warrants through the Capital Purchase Plan
    
    
    
    
    
    
    
    
    
    
    21,750Proceeds from sale of common stock through rights offering
    
    
    
    
    
    
    
    
    
    
    5,201Dividends paid on preferred stock
    
    
    
    
    
    
    (212
    )
    
    
    Dividends paid on common stock
    
    
    
    
    
    
    
    
    
    
    (878
    )Net proceeds from the sale of additional stock through Employee
Stock Purchase Plan (ESPP) and stock options exercised
    
    
    35
    
    
    
    62
    
    
    
    435Net cash provided by (used in) financing activities
    
    
    (48,798
    )
    
    
    (27,829
    )
    
    
    91,193
   F-7




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##### Table of Contents



BLUE VALLEY BAN CORP.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 YEARS ENDED DECEMBER 31, 2010, 2009 AND 2008  (In thousands)
 2010
    
    
    2009
    
    
    2008Increase in cash and cash equivalents
    
    
    17,797
    
    
    
    52,011
    
    
    
    26,834Cash and cash equivalents, beginning of year
    
    
    96,984
    
    
    
    44,973
    
    
    
    18,139CASH AND CASH EQUIVALENTS, END OF YEAR
    
    $
    114,781
    
    
    $
    96,984
    
    
    $
    44,973SUPPLEMENTAL CASH FLOWS INFORMATIONCash paid during the year for:Interest
    
    $
    14,372
    
    
    $
    18,057
    
    
    $
    21,382Income taxes, net of refunds
    
    $
    (2,750
    )
    
    $
    (3,496
    )
    
    $
    1,667Noncash investing and financing activities:Transfer of loans to foreclosed property
    
    $
    10,352
    
    
    $
    32,234
    
    
    $
    6,050Restricted stock issued
    
    $
    22
    
    
    $
    55
    
    
    $
    13Preferred dividends accrued but not paid
    
    $
    1,087
    
    
    $
    815
    
    
    $
    
  F-8




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##### Table of Contents



BLUE VALLEY BAN CORP.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 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, 2010, 2009 AND 2008
 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, 2010, 2009 AND 2008
 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, 2010, 2009 AND 2008
 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
    
    3-10 years
 F-12




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Foreclosed Assets Held for Sale
  Federal Home Loan Bank Stock, Federal Reserve Bank Stock and Other Securities
  Derivatives
 Derivative Loan Commitments
 ASC 815, Derivatives and Hedging
 Forward Loan Sale Commitments
 ASC 815
 Goodwill
  F-13




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Core Deposit Intangible Assets
  Fee Income
  Transfers of Financial Assets
  Transfers between Fair Value Hierarchy Levels
  Income Taxes
 Income Taxes
  F-14




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 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, 2010, 2009 AND 2008
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Earnings (Loss) Per Share
  2010
    
    
    2009
    
    
    2008(In thousands, except share and per share data)Net loss
    
    $
    (2,742
    )
    
    $
    (14,610
    )
    
    $
    (10,251
    )Dividends and accretion on preferred stock
    
    
    (1,105
    )
    
    
    (1,045
    )
    
    
    Net loss available to common shareholders
    
    $
    (3,847
    )
    
    $
    (15,655
    )
    
    $
    (10,251
    )Average common shares outstanding
    
    
    2,773,039
    
    
    
    2,754,419
    
    
    
    2,438,809Average common share stock options
outstanding and restricted stock (B)
    
    
    15,115
    
    
    
    8,184
    
    
    
    21,236Average diluted common shares (B)
    
    
    2,788,154
    
    
    
    2,762,603
    
    
    
    2,460,045Basic loss per share
    
    $
    (1.38
    )
    
    $
    (5.68
    )
    
    $
    (4.20
    )Diluted loss per share (A)
    
    $
    (1.38
    )
    
    $
    (5.68
    )
    
    $
    (4.20
    )
 
 (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, 2010, 2009 and 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 24,375 and 33,875 shares of common stock were outstanding at December 31, 2010
and 2009, respectively, but were not included in the computation of diluted earnings per share because the options
exercise price was greater than the average market price of the common shares, thus making the options anti-dilutive.  F-16




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
 Future Accounting Requirements
 Disclosures about the Credit Quality of Financing Receivables and the
Allowance for Credit Losses Receivables
    Receivables (Topic 310) Deferral of the
Effective Date of Disclosures about Troubled Debt Restructurings in Update No. 2010-20.
 F-17




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES
  December 31, 2010Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)U.S. Government sponsored agencies
    
    $
    62,990
    
    
    $
    228
    
    
    $
    (179
    )
    
    $
    63,039Equity and other securities
    
    
    600
    
    
    
    1
    
    
    
    
    
    
    
    601$
    63,590
    
    
    $
    229
    
    
    $
    (179
    )
    
    $
    63,640
 December 31, 2009Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value(In thousands)U.S. Government sponsored agencies
    
    $
    71,984
    
    
    $
    338
    
    
    $
    (159
    )
    
    $
    72,163Equity and other securities
    
    
    600
    
    
    
    
    
    
    
    (6
    )
    
    
    594$
    72,584
    
    
    $
    338
    
    
    $
    (165
    )
    
    $
    72,757
  AmortizedCost
    
    
    Fair Value(In thousands)Due in one year or less
    
    $
    3,000
    
    
    $
    3,016Due after one year through five years
    
    
    59,990
    
    
    
    60,023Due after five years through ten years
    
    
    
    
    
    
    Due after ten years
    
    
    
    
    
    
    Total
    
    
    62,990
    
    
    
    63,039Equity and other securities
    
    
    600
    
    
    
    601$
    63,590
    
    
    $
    63,640
   F-18




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
  2010
    
    
    2009(In thousands)Balance as of December 31
    
    $
    17,674
    
    
    $
    15,417Carrying value of securities pledged to secure agreements to repurchases
at December 31
    
    $
    27,031
    
    
    $
    29,182Average balance during the year of securities sold under agreements to repurchase
    
    $
    17,922
    
    
    $
    22,546Maximum amount outstanding at any month-end during the year
    
    $
    21,935
    
    
    $
    25,189
    December 31, 2010(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
    
    $
    29,813
    
    
    $
    179
    
    
    $
    
    
    
    $
    
    
    
    $
    29,813
    
    
    $
    179Equity and other securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total temporarily impaired
securities
    
    $
    29,813
    
    
    $
    179
    
    
    $
    
    
    
    $
    
    
    
    $
    29,813
    
    
    $
    179
 F-19




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 2: AVAILABLE-FOR-SALE SECURITIES (Continued)
 December 31, 2009(In thousands)Less than 12 Months
    
    
    12 Months or More
    
    
    
    
    
    
    TotalDescription of
    
    
    
    
    
    Unrealized
    
    
    
    
    
    
    Unrealized
    
    
    Total
    
    
    UnrealizedSecurities
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    Losses
    
    
    Fair Value
    
    
    LossesU.S. Government sponsored agencies
    
    $
    19,832
    
    
    $
    159
    
    
    $
    
    
    
    $
    
    
    
    $
    19,832
    
    
    $
    159Equity and other securities
    
    
    594
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    594
    
    
    
    6Total temporarily impaired securities
    
    $
    20,426
    
    
    $
    165
    
    
    $
    
    
    
    $
    
    
    
    $
    20,426
    
    
    $
    165
  NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES
  2010
    
    
    2009(In thousands)Commercial loans
    
    $
    144,181
    
    
    $
    142,528Commercial real estate loans
    
    
    169,253
    
    
    
    167,581Construction loans
    
    
    64,641
    
    
    
    113,077Home equity loans
    
    
    64,289
    
    
    
    66,586Residential real estate loans
    
    
    36,903
    
    
    
    45,014Lease financing
    
    
    5,530
    
    
    
    11,259Consumer loans
    
    
    7,657
    
    
    
    8,066Total loans
    
    
    492,454
    
    
    
    554,111Less: Allowance for loan losses
    
    
    14,731
    
    
    
    20,000Net loans
    
    $
    477,723
    
    
    $
    534,111
 F-20




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
  December 31, 2010Commercial Real
    
    
    
    
    
    
    
    
    
    
    Residential Real(In thousands)
    
    Commercial
    
    
    Estate
    
    
    Construction
    
    
    Home Equity
    
    
    Estate
    
    
    Lease Financing
    
    
    Consumer
    
    
    TotalAllowance for loan losses:Balance, beginning of year
    
    $
    3,630
    
    
    $
    7,253
    
    
    $
    5,929
    
    
    $
    1,061
    
    
    $
    1,737
    
    
    $
    238
    
    
    $
    152
    
    
    $
    20,000Provision charged to expense
    
    
    683
    
    
    
    (465
    )
    
    
    2,189
    
    
    
    571
    
    
    
    400
    
    
    
    (171
    )
    
    
    (112
    )
    
    
    3,095Losses charged off
    
    
    (1,364
    )
    
    
    (2,985
    )
    
    
    (3,662
    )
    
    
    (387
    )
    
    
    (660
    )
    
    
    (43
    )
    
    
    (7
    )
    
    
    (9,108
    )Recoveries
    
    
    390
    
    
    
    171
    
    
    
    123
    
    
    
    17
    
    
    
    11
    
    
    
    14
    
    
    
    18
    
    
    
    744Balance, end of year
    
    $
    3,339
    
    
    $
    3,974
    
    
    $
    4,579
    
    
    $
    1,262
    
    
    $
    1,488
    
    
    $
    38
    
    
    $
    51
    
    
    $
    14,731Ending balance: individually evaluated for impairment
    
    $
    1,832
    
    
    $
    2,617
    
    
    $
    3,647
    
    
    $
    576
    
    
    $
    912
    
    
    $
    5
    
    
    $
    2
    
    
    $
    9,591Ending balance: collectively evaluated for impairment
    
    $
    1,507
    
    
    $
    1,357
    
    
    $
    932
    
    
    $
    686
    
    
    $
    576
    
    
    $
    33
    
    
    $
    49
    
    
    $
    5,140Loans:Ending balance
    
    $
    144,181
    
    
    $
    169,253
    
    
    $
    64,641
    
    
    $
    64,289
    
    
    $
    36,903
    
    
    $
    5,530
    
    
    $
    7,657
    
    
    $
    492,454Ending balance: individually evaluated for impairment
    
    $
    26,444
    
    
    $
    26,704
    
    
    $
    35,521
    
    
    $
    3,544
    
    
    $
    8,691
    
    
    $
    983
    
    
    $
    64
    
    
    $
    101,951Ending balance: collectively evaluated for impairment
    
    $
    117,737
    
    
    $
    142,549
    
    
    $
    29,120
    
    
    $
    60,745
    
    
    $
    28,212
    
    
    $
    4,547
    
    
    $
    7,593
    
    
    $
    390,503
 December 31, 2009Commercial Real
    
    
    
    
    
    
    
    
    
    
    Residential RealCommercial
    
    
    Estate
    
    
    Construction
    
    
    Home Equity
    
    
    Estate
    
    
    Lease Financing
    
    
    Consumer
    
    
    TotalAllowance for loan losses:Balance, beginning of year
    
    $
    3,040
    
    
    $
    2,507
    
    
    $
    4,695
    
    
    $
    409
    
    
    $
    1,201
    
    
    $
    449
    
    
    $
    67
    
    
    $
    12,368Provision charged to expense
    
    
    5,044
    
    
    
    4,997
    
    
    
    8,358
    
    
    
    1,274
    
    
    
    1,944
    
    
    
    (123
    )
    
    
    141
    
    
    
    21,635Losses charged off
    
    
    (4,713
    )
    
    
    (374
    )
    
    
    (7,716
    )
    
    
    (653
    )
    
    
    (1,480
    )
    
    
    (109
    )
    
    
    (58
    )
    
    
    (15,103
    )Recoveries
    
    
    259
    
    
    
    123
    
    
    
    592
    
    
    
    31
    
    
    
    72
    
    
    
    21
    
    
    
    2
    
    
    
    1,100Balance, end of year
    
    $
    3,630
    
    
    $
    7,253
    
    
    $
    5,929
    
    
    $
    1,061
    
    
    $
    1,737
    
    
    $
    238
    
    
    $
    152
    
    
    $
    20,000Ending balance: individually evaluated for impairment
    
    $
    1,468
    
    
    $
    5,773
    
    
    $
    3,254
    
    
    $
    209
    
    
    $
    1,249
    
    
    $
    16
    
    
    $
    21
    
    
    $
    11,990Ending balance: collectively evaluated for impairment
    
    $
    2,162
    
    
    $
    1,480
    
    
    $
    2,675
    
    
    $
    852
    
    
    $
    488
    
    
    $
    222
    
    
    $
    131
    
    
    $
    8,010Loans:Ending balance
    
    $
    142,528
    
    
    $
    167,581
    
    
    $
    113,077
    
    
    $
    66,586
    
    
    $
    45,014
    
    
    $
    11,259
    
    
    $
    8,066
    
    
    $
    554,111Ending balance: individually evaluated for impairment
    
    $
    18,260
    
    
    $
    28,464
    
    
    $
    53,934
    
    
    $
    2,860
    
    
    $
    14,660
    
    
    $
    1,331
    
    
    $
    160
    
    
    $
    119,669Ending balance: collectively evaluated for impairment
    
    $
    124,268
    
    
    $
    139,117
    
    
    $
    59,143
    
    
    $
    63,726
    
    
    $
    30,354
    
    
    $
    9,928
    
    
    $
    7,906
    
    
    $
    434,442
 F-21




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
  2010
    
    
    2009(In thousands)
    
    Pass
    
    
    Classified
    
    
    Total
    
    
    Pass
    
    
    Classified
    
    
    TotalCommercial
    
    $
    133,603
    
    
    $
    10,578
    
    
    $
    144,181
    
    
    $
    129,596
    
    
    $
    12,932
    
    
    $
    142,528Commercial real estate
    
    
    148,892
    
    
    
    20,361
    
    
    
    169,253
    
    
    
    143,050
    
    
    
    24,531
    
    
    
    167,581Construction
    
    
    35,896
    
    
    
    28,745
    
    
    
    64,641
    
    
    
    65,962
    
    
    
    47,115
    
    
    
    113,077Home equity
    
    
    61,442
    
    
    
    2,847
    
    
    
    64,289
    
    
    
    64,496
    
    
    
    2,090
    
    
    
    66,586Residential real estate
    
    
    30,115
    
    
    
    6,788
    
    
    
    36,903
    
    
    
    32,293
    
    
    
    12,721
    
    
    
    45,014Lease financing
    
    
    5,048
    
    
    
    482
    
    
    
    5,530
    
    
    
    10,918
    
    
    
    341
    
    
    
    11,259Consumer
    
    
    7,605
    
    
    
    52
    
    
    
    7,657
    
    
    
    7,958
    
    
    
    108
    
    
    
    8,066Total
    
    $
    422,601
    
    
    $
    69,853
    
    
    $
    492,454
    
    
    $
    454,273
    
    
    $
    99,838
    
    
    $
    554,111
  December 31, 2010Greater than 90
    
    
    
    
    
    
    
    
    
    
    Total Loans
    
    
    Total Loans > 90(In thousands)
    
    30-59 Days Past Due
    
    
    60-89 Days Past Due
    
    
    Days Past Due
    
    
    Total Past Due
    
    
    Current
    
    
    Receivable
    
    
    Days & AccruingCommercial
    
    $
    241
    
    
    $
    307
    
    
    $
    2,648
    
    
    $
    3,196
    
    
    $
    140,985
    
    
    $
    144,181
    
    
    $
    Commercial real estate
    
    
    
    
    
    
    
    
    
    
    1,247
    
    
    
    1,247
    
    
    
    168,006
    
    
    
    169,253
    
    
    
    Construction
    
    
    46
    
    
    
    
    
    
    
    7,936
    
    
    
    7,982
    
    
    
    56,659
    
    
    
    64,641
    
    
    
    Home equity
    
    
    200
    
    
    
    
    
    
    
    964
    
    
    
    1,164
    
    
    
    63,125
    
    
    
    64,289
    
    
    
    Residential real estate
    
    
    265
    
    
    
    322
    
    
    
    3,741
    
    
    
    4,328
    
    
    
    32,575
    
    
    
    36,903
    
    
    
    Lease financing
    
    
    20
    
    
    
    51
    
    
    
    114
    
    
    
    185
    
    
    
    5,345
    
    
    
    5,530
    
    
    
    Consumer
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    7,653
    
    
    
    7,657
    
    
    
    Total
    
    $
    776
    
    
    $
    680
    
    
    $
    16,650
    
    
    $
    18,106
    
    
    $
    474,348
    
    
    $
    492,454
    
    
    $
    
 December 31, 2009Greater than 90
    
    
    
    
    
    
    
    
    
    
    Total Loans
    
    
    Total Loans > 9030-59 Days Past Due
    
    
    60-89 Days Past Due
    
    
    Days Past Due
    
    
    Total Past Due
    
    
    Current
    
    
    Receivable
    
    
    Days & AccruingCommercial
    
    $
    1,308
    
    
    $
    25
    
    
    $
    1,223
    
    
    $
    2,556
    
    
    $
    139,972
    
    
    $
    142,528
    
    
    $
    Commercial real estate
    
    
    968
    
    
    
    
    
    
    
    9,684
    
    
    
    10,652
    
    
    
    156,929
    
    
    
    167,581
    
    
    
    Construction
    
    
    10,702
    
    
    
    918
    
    
    
    7,007
    
    
    
    18,627
    
    
    
    94,450
    
    
    
    113,077
    
    
    
    Home equity
    
    
    45
    
    
    
    
    
    
    
    318
    
    
    
    363
    
    
    
    66,223
    
    
    
    66,586
    
    
    
    Residential real estate
    
    
    1,164
    
    
    
    684
    
    
    
    6,688
    
    
    
    8,536
    
    
    
    36,478
    
    
    
    45,014
    
    
    
    Lease financing
    
    
    55
    
    
    
    
    
    
    
    254
    
    
    
    309
    
    
    
    10,950
    
    
    
    11,259
    
    
    
    Consumer
    
    
    27
    
    
    
    59
    
    
    
    6
    
    
    
    92
    
    
    
    7,974
    
    
    
    8,066
    
    
    
    Total
    
    $
    14,269
    
    
    $
    1,686
    
    
    $
    25,180
    
    
    $
    41,135
    
    
    $
    512,976
    
    
    $
    554,111
    
    
    $
    
  F-22




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
  December 31, 2010Unpaid Principal
    
    
    
    
    
    
    Average Investment
    
    
    Interest Income(In thousands)
    
    Recorded Balance
    
    
    Balance
    
    
    Specific Allowance
    
    
    in Impaired Loans
    
    
    RecognizedLoans without a specific valuation allowance:Commercial
    
    $
    186
    
    
    $
    281
    
    
    $
    
    
    
    $
    536
    
    
    $
    24Commercial real estate
    
    
    2,066
    
    
    
    2,686
    
    
    
    
    
    
    
    1,802
    
    
    
    37Construction
    
    
    2,423
    
    
    
    2,423
    
    
    
    
    
    
    
    2,601
    
    
    
    Home equity
    
    
    585
    
    
    
    587
    
    
    
    
    
    
    
    102
    
    
    
    Residential real estate
    
    
    1,279
    
    
    
    1,924
    
    
    
    
    
    
    
    1,391
    
    
    
    Lease financing
    
    
    140
    
    
    
    256
    
    
    
    
    
    
    
    254
    
    
    
    2Consumer
    
    
    52
    
    
    
    54
    
    
    
    
    
    
    
    50
    
    
    
    3Loans with a specific valuation allowanceCommercial
    
    $
    2,710
    
    
    $
    2,754
    
    
    $
    709
    
    
    $
    1,039
    
    
    $
    7Commercial real estate
    
    
    8,022
    
    
    
    8,092
    
    
    
    1,110
    
    
    
    10,760
    
    
    
    Construction
    
    
    7,994
    
    
    
    8,106
    
    
    
    1,599
    
    
    
    10,246
    
    
    
    20Home equity
    
    
    626
    
    
    
    648
    
    
    
    299
    
    
    
    411
    
    
    
    Residential real estate
    
    
    4,274
    
    
    
    5,136
    
    
    
    534
    
    
    
    5,283
    
    
    
    Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    Total:Commercial
    
    $
    2,896
    
    
    $
    3,035
    
    
    $
    709
    
    
    $
    1,575
    
    
    $
    31Commercial real estate
    
    $
    10,088
    
    
    $
    10,778
    
    
    $
    1,110
    
    
    $
    12,562
    
    
    $
    37Construction
    
    $
    10,417
    
    
    $
    10,529
    
    
    $
    1,599
    
    
    $
    12,847
    
    
    $
    20Home equity
    
    $
    1,211
    
    
    $
    1,235
    
    
    $
    299
    
    
    $
    513
    
    
    $
    Residential real estate
    
    $
    5,553
    
    
    $
    7,060
    
    
    $
    534
    
    
    $
    6,674
    
    
    $
    Lease financing
    
    $
    140
    
    
    $
    256
    
    
    $
    
    
    
    $
    256
    
    
    $
    2Consumer
    
    $
    52
    
    
    $
    54
    
    
    $
    
    
    
    $
    62
    
    
    $
    3
 F-23




---



##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
 December 31, 2009Unpaid Principal
    
    
    
    
    
    
    Average Investment
    
    
    Interest Income(In thousands)
    
    Recorded Balance
    
    
    Balance
    
    
    Specific Allowance
    
    
    in Impaired Loans
    
    
    RecognizedLoans without a specific valuation allowance:Commercial
    
    $
    616
    
    
    $
    679
    
    
    $
    
    
    
    $
    406
    
    
    $
    8Commercial real estate
    
    
    2,331
    
    
    
    2,369
    
    
    
    
    
    
    
    1,088
    
    
    
    Construction
    
    
    5,398
    
    
    
    6,636
    
    
    
    
    
    
    
    6,554
    
    
    
    70Home equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32
    
    
    
    3Residential real estate
    
    
    2,651
    
    
    
    2,779
    
    
    
    
    
    
    
    1,085
    
    
    
    2Lease financing
    
    
    335
    
    
    
    383
    
    
    
    
    
    
    
    244
    
    
    
    Consumer
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9
    
    
    
    Loans with a specific valuation allowanceCommercial
    
    $
    740
    
    
    $
    790
    
    
    $
    512
    
    
    $
    3,199
    
    
    $
    36Commercial real estate
    
    
    10,936
    
    
    
    11,076
    
    
    
    4,309
    
    
    
    9,952
    
    
    
    186Construction
    
    
    5,807
    
    
    
    7,409
    
    
    
    839
    
    
    
    13,576
    
    
    
    146Home equity
    
    
    412
    
    
    
    425
    
    
    
    170
    
    
    
    423
    
    
    
    Residential real estate
    
    
    5,753
    
    
    
    7,172
    
    
    
    761
    
    
    
    5,048
    
    
    
    41Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    3Consumer
    
    
    6
    
    
    
    7
    
    
    
    1
    
    
    
    34
    
    
    
    2Total:Commercial
    
    $
    1,356
    
    
    $
    1,469
    
    
    $
    512
    
    
    $
    3,605
    
    
    $
    44Commercial real estate
    
    $
    13,267
    
    
    $
    13,445
    
    
    $
    4,309
    
    
    $
    11,040
    
    
    $
    186Construction
    
    $
    11,205
    
    
    $
    14,045
    
    
    $
    839
    
    
    $
    20,130
    
    
    $
    216Home equity
    
    $
    412
    
    
    $
    425
    
    
    $
    170
    
    
    $
    455
    
    
    $
    3Residential real estate
    
    $
    8,404
    
    
    $
    9,951
    
    
    $
    761
    
    
    $
    6,133
    
    
    $
    43Lease financing
    
    $
    335
    
    
    $
    383
    
    
    $
    
    
    
    $
    324
    
    
    $
    3Consumer
    
    $
    6
    
    
    $
    7
    
    
    $
    1
    
    
    $
    43
    
    
    $
    2
  (In thousands)Commercial
    
    $
    107Commercial real estate
    
    
    7,204Construction
    
    
    9,823Home equity
    
    
    Residential real estate
    
    
    180Lease financing
    
    
    110Consumer
    
    
    $
    17,424
 F-24




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 3: LOANS AND ALLOWANCE FOR LOAN LOSSES (Continued)
  (In thousands)Commercial
    
    $
    2,865Commercial real estate
    
    
    2,013Construction
    
    
    15,104Home equity
    
    
    Residential real estate
    
    
    344Lease financing
    
    
    402Consumer
    
    
    $
    20,728
   2010
    
    
    2009(In thousands)Commercial
    
    $
    2,896
    
    
    $
    1,327Commercial real estate
    
    
    10,088
    
    
    
    13,267Construction
    
    
    10,417
    
    
    
    11,205Home equity
    
    
    1,211
    
    
    
    344Residential real estate
    
    
    5,553
    
    
    
    8,404Lease financing
    
    
    140
    
    
    
    335Consumer
    
    
    52
    
    
    
    6$
    30,357
    
    
    $
    34,888
 NOTE 4: PREMISES AND EQUIPMENT
  2010
    
    
    2009(In thousands)Land
    
    $
    5,154
    
    
    $
    5,154Buildings and improvements
    
    
    15,795
    
    
    
    15,697Furniture and equipment
    
    
    7,717
    
    
    
    7,59028,667
    
    
    
    28,441Less accumulated depreciation
    
    
    12,427
    
    
    
    11,511Total premises and equipment
    
    $
    16,239
    
    
    $
    16,930
 F-25




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 5: FORECLOSED ASSETS HELD FOR SALE
  2010
    
    
    2009(In thousands)Balance, beginning of year
    
    $
    166
    
    
    $
    Provision charged to expense
    
    
    734
    
    
    
    1,363Charge offs, net of recoveries
    
    
    (419
    )
    
    
    (1,197
    )Balance, end of year
    
    $
    481
    
    
    $
    166
  2010
    
    
    2009(In thousands)Net loss (gain) on sales of foreclosed assets
    
    $
    (168
    )
    
    $
    (212
    )Provision for losses
    
    
    734
    
    
    
    1,363Operating expenses, net of rental income
    
    
    1,656
    
    
    
    1,902$
    2,222
    
    
    $
    3,053
 NOTE 6: CORE DEPOSIT INTANGIBLE ASSETS
  2010
    
    2009Gross
    
    
    
    
    
    
    GrossCarrying
    
    
    Accumulated
    
    
    Carrying
    
    
    AccumulatedAmount
    
    
    Amortization
    
    
    Amount
    
    
    Amortization(In thousands)Core Deposit Intangible
    
    $
    3,286
    
    
    $
    (2,822
    )
    
    $
    3,286
    
    
    $
    (2,679
    )
  (In thousands)2011
    
    $
    1432012
    
    
    1432013
    
    
    1432014
    
    
    35
 F-26




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 7: DERIVATIVE INSTRUMENTS
     NOTE 8: INTEREST-BEARING DEPOSITS
   (In thousands)2011
    
    $
    129,8442012
    
    
    41,9072013
    
    
    19,8172014
    
    
    8,0942015
    
    
    14,721Thereafter
    
    
    7,453$
    221,836
 F-27




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 9: OPERATING LEASES
  (In thousands)2011
    
    $
    1622012
    
    
    1162013
    
    
    182014
    
    
    182015
    
    
    7$
    321
  NOTE 10: SHORT TERM DEBT
   F-28




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 11: LONG TERM DEBT
  2010
    
    
    2009(In thousands)Federal Home Loan Bank advances (A)
    
    $
    82,500
    
    
    $
    82,500Less: Deferred prepayment penalty on
modification of FHLB advances
    
    
    (2,331
    )
    
    
    Net Federal Home Loan Bank advances
    
    
    80,169
    
    
    
    82,500Subordinated Debentures  BVBC Capital Trust II (B)
    
    
    7,732
    
    
    
    7,732Subordinated Debentures  BVBC Capital Trust III (C)
    
    
    11,856
    
    
    
    11,856Total long-term debt
    
    $
    99,757
    
    
    $
    102,088
 
 (A)
    
    Due in 2013, 2014, 2015, 2016 and 2018; collateralized by various assets
including mortgage-backed loans, available-for-sale securities and cash
equivalents totaling $172,452,000 at December 31, 2010. The interest rates on
the advances range from 0.37% to 4.26%. Federal Home Loan Bank advance
availability is determined quarterly and at December 31, 2010, approximately
$25,187,000 was available. Advances are made at the discretion of the Federal
Home Loan Bank of Topeka.In the third quarter of 2010, the Company repaid $42,500,000 of
FHLB advances by rolling the net present value of the advances
being repaid into the funding cost of $42,500,000 of new advances.
A $2,569,000 penalty was associated with paying off the original
FHLB advances which is amortized as an adjustment of interest
expense over the remaining term of the new FHLB advances using the
straight line method. This transaction reduced the effective
interest rate, as well as modified the maturity date on these
borrowings.(B)
    
    Due in 2033; interest only at three month LIBOR + 3.25% (3.54% at December
31, 2010 and 3.53% at December 31, 2009) due quarterly; fully and
unconditionally guaranteed by the Company on a subordinated basis to the extent
that the funds are held by the Trust. BVBC Capital Trust II issued and sold
$7,500,000 in Capital Securities to third parties and $232,000 of Common
Securities to the Company. The Company may prepay the subordinated debentures
beginning in 2008, in whole or in part, at their face value plus accrued
interest.(C)
    
    Due in 2035; interest only at three month LIBOR + 1.60% (1.90% at December
31, 2010 and 1.85% at December 31, 2009) due quarterly; fully and
unconditionally guaranteed by the Company on a subordinated basis to the extent
that the funds are held by the Trust. BVBC Capital Trust III issued and sold
$11,500,000 in Preferred Securities to third parties and $356,000 in Common
Securities to the Company. Subordinated to the trust preferred securities (B)
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-29




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 11: LONG TERM DEBT (Continued)
   (In thousands)2011
    
    $
    2012
    
    
    2013
    
    
    20,0002014
    
    
    7,5002015
    
    
    20,000Thereafter
    
    
    54,588102,088Less: Deferred prepayment penalty on modification of
FHLB advances
    
    
    (2,331
    )$
    99,757
 NOTE 12: INCOME TAXES
  2010
    
    
    2009
    
    
    2008(In thousands)Taxes currently (refundable) payable
    
    $
    
    
    
    $
    (2,388
    )
    
    $
    (2,601
    )Deferred income taxes
    
    
    (1,561
    )
    
    
    (6,126
    )
    
    
    (1,223
    )$
    (1,561
    )
    
    $
    (8,514
    )
    
    $
    (3,824
    )
  2010
    
    
    2009
    
    
    2008(In thousands)Computed at the statutory rate (34%)
    
    $
    (1,463
    )
    
    $
    (7,862
    )
    
    $
    (4,785
    )Increase (decrease) resulting from:Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    1,541Tax-exempt interest
    
    
    (5
    )
    
    
    (12
    )
    
    
    (20
    )State income taxes
    
    
    124
    
    
    
    (208
    )
    
    
    (99
    )Other
    
    
    (217
    )
    
    
    (432
    )
    
    
    (461
    )Actual tax provision
    
    $
    (1,561
    )
    
    $
    (8,514
    )
    
    $
    (3,824
    )
 F-30




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 12: INCOME TAXES (Continued)
  2010
    
    
    2009(In thousands)Deferred tax assets:Allowance for loan losses
    
    $
    5,451
    
    
    $
    7,385Net Operating Loss from Blue Valley Ban
Corp. and subsidiary
    
    
    6,169
    
    
    
    2,840Deferred compensation
    
    
    174
    
    
    
    135Offering costs
    
    
    200
    
    
    
    210Non-accrual loan interest
    
    
    75
    
    
    
    60Net Operating Loss carried from Unison
Bancorp Inc. and subsidiary acquisition
    
    
    
    
    
    
    77Other
    
    
    88
    
    
    
    2812,157
    
    
    
    10,735Deferred tax liabilities:Accumulated depreciation
    
    
    (346
    )
    
    
    (385
    )FHLBank stock basis
    
    
    (472
    )
    
    
    (433
    )Accumulated appreciation on available-for-
sale securities
    
    
    (20
    )
    
    
    (69
    )Prepaid intangibles
    
    
    (198
    )
    
    
    (177
    )Core Deposit Intangible related to Unison
Bancorp Inc. and subsidiary acquisition
    
    
    (136
    )
    
    
    (182
    )Other
    
    
    (9
    )
    
    
    (9
    )(1,181
    )
    
    
    (1,255
    )Net deferred tax asset
    
    $
    10,976
    
    
    $
    9,480
  NOTE 13: REGULATORY MATTERS
    F-31




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 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, 2010:Total Capital
(to Risk Weighted Assets)Consolidated
    
    $
    73,320
    
    
    
    12.66
    %
    
    $
    46,347
    
    
    
    8.00
    %
    
    
    N/ABank Only
    
    $
    76,034
    
    
    
    13.15
    %
    
    $
    46,260
    
    
    
    8.00
    %
    
    $
    57,825
    
    
    
    10.00
    %Tier 1 Capital
(to Risk Weighted Assets)Consolidated
    
    $
    65,986
    
    
    
    11.39
    %
    
    $
    23,173
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    68,722
    
    
    
    11.88
    %
    
    $
    23,130
    
    
    
    4.00
    %
    
    $
    34,695
    
    
    
    6.00
    %Tier 1 Capital
(to Average Assets)Consolidated
    
    $
    65,986
    
    
    
    9.04
    %
    
    $
    29,213
    
    
    
    4.00
    %
    
    
    N/ABank Only
    
    $
    68,722
    
    
    
    9.41
    %
    
    $
    29,215
    
    
    
    4.00
    %
    
    $
    36,519
    
    
    
    5.00
    %
 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-32




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 13: REGULATORY MATTERS (Continued)
 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 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-33




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 13: REGULATORY MATTERS (Continued)
    F-34




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 14: TRANSACTIONS WITH RELATED PARTIES
  2010
    
    
    2009(In thousands)Balance, beginning of year
    
    $
    22,387
    
    
    $
    28,692New loans and advances
    
    
    9,450
    
    
    
    17,668Repayments and reclassifications
    
    
    (11,288
    )
    
    
    (23,973
    )Balance, end of year
    
    $
    20,549
    
    
    $
    22,387
   NOTE 15: PROFIT SHARING AND 401(K) PLANS
  NOTE 16: EQUITY INCENTIVE COMPENSATION
    F-35




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 16: EQUITY INCENTIVE COMPENSATION (Continued)
   2010
    
    
    2009
    
    
    2008Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    Exercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    Price
    
    
    Shares
    
    
    PriceOutstanding, beginning of year
    
    
    33,875
    
    
    $
    20.51
    
    
    
    51,225
    
    
    $
    20.38
    
    
    
    66,325
    
    
    $
    19.73Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,100
    )
    
    
    17.56Forfeited
    
    
    9,500
    
    
    
    16.50
    
    
    
    17,350
    
    
    
    20.12
    
    
    
    
    
    
    
    Outstanding, end of year
    
    
    24,375
    
    
    $
    22.07
    
    
    
    33,875
    
    
    $
    20.51
    
    
    
    51,225
    
    
    $
    20.38Intrinsic value of shares exercised
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    162,826Options exercisable, end of year
    
    
    24,375
    
    
    $
    22.07
    
    
    
    33,875
    
    
    $
    20.51
    
    
    
    51,225
    
    
    $
    20.38
  Options Outstanding and ExercisableNumber Outstanding
    
    Weighted Averageand Exercisable at
    
    Remaining Contractual
    
    Weighted AverageExercise Price
    
    12/31/10
    
    Life
    
    Exercise Price$19.50
    
    
    13,000
    
    
    1            year
    
    $
    19.50$25.00
    
    
    11,375
    
    
    2           years
    
    $
    25.0024,375
 NOTE 17: EMPLOYEE STOCK PURCHASE PLAN
  Employee Stock Purchase Plan ActivityPlan year ending January
    
    Shares purchased
    
    Purchase Price2010
    
    
    3,465
    
    
    $
    8.712009
    
    
    2,495
    
    
    $
    21.252008
    
    
    3,587
    
    
    $
    27.20
 F-36




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 18: GAIN ON SETTLEMENT OF LITIGATION
  NOTE 19: OTHER INCOME/EXPENSE
  2010
    
    
    2009
    
    
    2008(In thousands)Rental income
    
    $
    264
    
    
    $
    377
    
    
    $
    433Realized gain on foreclosed assets
    
    
    434
    
    
    
    730
    
    
    
    149Other income
    
    
    447
    
    
    
    557
    
    
    
    428Total
    
    $
    1,145
    
    
    $
    1,664
    
    
    $
    1,010
  2010
    
    
    2009
    
    
    2008(In thousands)Foreclosure expenses
    
    $
    2,708
    
    
    $
    3,862
    
    
    $
    944FDIC assessments
    
    
    2,076
    
    
    
    2,267
    
    
    
    482Professional fees
    
    
    1,520
    
    
    
    1,297
    
    
    
    1,096Data processing
    
    
    1,278
    
    
    
    1,318
    
    
    
    1,178ATM and network fees
    
    
    603
    
    
    
    550
    
    
    
    414Loan processing fees
    
    
    308
    
    
    
    346
    
    
    
    446Advertising
    
    
    190
    
    
    
    172
    
    
    
    717Other expense
    
    
    2,575
    
    
    
    2,946
    
    
    
    3,027Total
    
    $
    11,258
    
    
    $
    12,758
    
    
    $
    8,304
 F-37




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 20: FAIR VALUE OPTION
 The Fair Value Option for Financial Assets and Financial
Liabilities  including an Amendment of FASB Statement No. 115,
   NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES
 Fair Value Measurements
 Level 1
    
    Quoted prices in active markets for identical assets or liabilitiesLevel 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
  F-38




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
 Mortgage Loans Held for Sale
  Commitments to Originate Loans and Forward Sales Commitments
  F-39




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
  Fair Value Measurements UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assts
    
    
    Observable Inputs
    
    
    InputsFair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)December 31, 2010:Assets:Available-for-sale securities:U.S. Government sponsored agencies
    
    $
    63,039
    
    
    $
    
    
    
    $
    63,039
    
    
    $
    Equity and other securities
    
    
    601
    
    
    
    601
    
    
    
    
    
    
    
    Mortgage loans held for sale
    
    
    8,162
    
    
    
    
    
    
    
    8,162
    
    
    
    Commitments to originate loans
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    1Forward sales commitments
    
    
    372
    
    
    
    
    
    
    
    
    
    
    
    372Total assets
    
    $
    72,175
    
    
    $
    601
    
    
    $
    71,201
    
    
    $
    373Liabilities:Commitments to originate loans
    
    $
    9
    
    
    $
    
    
    
    $
    
    
    
    $
    9Forward sales commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total liabilities
    
    $
    9
    
    
    $
    
    
    
    $
    
    
    
    $
    9December 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
    
    
    $
    
    
    
    $
    
    
    
    $
    47
 F-40




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 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 changes in fair value:Included in net income (loss)
    
    
    (47
    )
    
    
    283Balance as of December 31, 2009
    
    $
    (47
    )
    
    $
    283Balance as of December 31, 2009
    
    $
    (47
    )
    
    $
    283Total changes in fair value:Included in net income (loss)
    
    
    39
    
    
    
    89Balance as of December 31, 2010
    
    $
    (8
    )
    
    $
    372
  Impaired Loans (Collateral Dependent)
   Foreclosed Assets Held for Sale
  F-41




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
  Fair Value Measurements UsingQuoted Prices inActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assts
    
    
    Observable Inputs
    
    
    InputsFair Value
    
    
    (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(In thousands)December 31, 2010:Impaired loans, net of reserves
    
    $
    26,106
    
    
    $
    
    
    
    $
    
    
    
    $
    26,106Foreclosed assets held for sale, net
    
    
    3,360
    
    
    
    
    
    
    
    
    
    
    
    3,360$
    29,466
    
    
    $
    
    
    
    $
    
    
    
    $
    29,466December 31, 2009:Impaired loans, net of reserves
    
    $
    28,393
    
    
    $
    
    
    
    $
    
    
    
    $
    28,393Foreclosed assets held for sale, net
    
    
    8,231
    
    
    
    
    
    
    
    
    
    
    
    8,231$
    36,624
    
    
    $
    
    
    
    $
    
    
    
    $
    36,624
  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-42




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 21: DISCLOSURES ABOUT FAIR VALUE OF ASSETS AND LIABILITIES (Continued)
 Commitments to Extend Credit, Letters of Credit and Lines of Credit
   2010
    
    
    2009Carrying
    
    
    Fair
    
    
    Carrying
    
    
    FairAmount
    
    
    Value
    
    
    Amount
    
    
    Value(In thousands)Financial assets:Cash and cash equivalents
    
    $
    114,781
    
    
    $
    114,781
    
    
    $
    96,984
    
    
    $
    96,984Loans, net of allowance for loan losses
    
    
    477,723
    
    
    
    478,926
    
    
    
    534,111
    
    
    
    536,973Federal Home Loan Bank stock, Federal
Reserve Bank stock, and other
securities
    
    
    7,163
    
    
    
    7,163
    
    
    
    7,059
    
    
    
    7,059Interest receivable
    
    
    1,783
    
    
    
    1,783
    
    
    
    2,303
    
    
    
    2,303Financial liabilities:Deposits
    
    
    541,218
    
    
    
    543,832
    
    
    
    590,110
    
    
    
    593,345Securities sold under agreement to
repurchase and other interest-bearing
liabilities
    
    
    18,748
    
    
    
    18,748
    
    
    
    16,120
    
    
    
    16,120Long-term debt
    
    
    99,757
    
    
    
    90,880
    
    
    
    102,088
    
    
    
    95,762Interest payable
    
    
    2,689
    
    
    
    2,689
    
    
    
    2,698
    
    
    
    2,698Unrecognized financial instruments
(net of amortization):Commitments to extend credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
 F-43




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 22: COMMITMENTS, CREDIT RISKS AND CURRENT ECONOMIC CONDITIONS
        F-44




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 22: COMMITMENTS, CREDIT RISKS AND CURRENT ECONOMIC CONDITIONS (Continued)
  NOTE 23: LEGAL CONTINGENCIES
  NOTE 24: SELECTED QUARTERLY FINANCIAL DATA (Unaudited)
  2010
    
    
    2009Fourth
    
    
    Third
    
    
    Second
    
    
    First
    
    
    Fourth
    
    
    Third
    
    
    Second
    
    
    FirstQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter
    
    
    Quarter(In thousands, except per share data)Interest income
    
    $
    7,277
    
    
    $
    7,653
    
    
    $
    7,717
    
    
    $
    7,656
    
    
    $
    8,470
    
    
    $
    8,830
    
    
    $
    9,274
    
    
    $
    9,720Interest expense
    
    
    2,966
    
    
    
    3,473
    
    
    
    3,909
    
    
    
    4,015
    
    
    
    4,125
    
    
    
    4,438
    
    
    
    4,716
    
    
    
    4,708Net interest income
    
    
    4,311
    
    
    
    4,180
    
    
    
    3,808
    
    
    
    3,641
    
    
    
    4,345
    
    
    
    4,392
    
    
    
    4,558
    
    
    
    5,012Provision for loan losses
    
    
    1,645
    
    
    
    
    
    
    
    1,200
    
    
    
    250
    
    
    
    2,500
    
    
    
    6,210
    
    
    
    
    
    
    
    12,925Net interest income (loss) after
provision for loan losses
    
    
    2,666
    
    
    
    4,180
    
    
    
    2,608
    
    
    
    3,391
    
    
    
    1,845
    
    
    
    (1,818
    )
    
    
    4,558
    
    
    
    (7,913
    )Non-interest income
    
    
    2,299
    
    
    
    2,231
    
    
    
    1,631
    
    
    
    1,573
    
    
    
    1,626
    
    
    
    1,819
    
    
    
    2,453
    
    
    
    1,801Realized gains on available-for
sale securities
    
    
    448
    
    
    
    342
    
    
    
    95
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    346Non-interest expense
    
    
    7,047
    
    
    
    6,141
    
    
    
    6,226
    
    
    
    6,353
    
    
    
    7,494
    
    
    
    6,601
    
    
    
    6,687
    
    
    
    7,059Income (loss) before income taxes
    
    
    (1,634
    )
    
    
    612
    
    
    
    (1,892
    )
    
    
    (1,389
    )
    
    
    (4,023
    )
    
    
    (6,600
    )
    
    
    324
    
    
    
    (12,825
    )Provision (benefit) for income taxes
    
    
    (595
    )
    
    
    230
    
    
    
    (680
    )
    
    
    (516
    )
    
    
    (1,481
    )
    
    
    (2,431
    )
    
    
    118
    
    
    
    (4,720
    )Net income (loss)
    
    
    (1,039
    )
    
    
    382
    
    
    
    (1,212
    )
    
    
    (873
    )
    
    
    (2,542
    )
    
    
    (4,169
    )
    
    
    206
    
    
    
    (8,105
    )Dividends on preferred shares
    
    
    289
    
    
    
    272
    
    
    
    272
    
    
    
    272
    
    
    
    290
    
    
    
    272
    
    
    
    271
    
    
    
    212Net income (loss) available tocommon shareholders
    
    $
    (1,328
    )
    
    $
    110
    
    
    $
    (1,484
    )
    
    $
    (1,145
    )
    
    $
    (2,832
    )
    
    $
    (4,441
    )
    
    $
    (65
    )
    
    $
    (8,317
    )Net Income (loss) per Share DataBasic
    
    $
    (0.47
    )
    
    $
    0.04
    
    
    $
    (0.54
    )
    
    $
    (0.41
    )
    
    $
    (1.03
    )
    
    $
    (1.61
    )
    
    $
    (0.02
    )
    
    $
    (3.02
    )Diluted
    
    $
    (0.47
    )
    
    $
    0.04
    
    
    $
    (0.54
    )
    
    $
    (0.41
    )
    
    $
    (1.03
    )
    
    $
    (1.61
    )
    
    $
    (0.02
    )
    
    $
    (3.02
    )Balance SheetTotal assets
    
    $
    723,101
    
    
    $
    755,362
    
    
    $
    818,275
    
    
    $
    844,228
    
    
    $
    773,967
    
    
    $
    825,857
    
    
    $
    811,333
    
    
    $
    843,559Total loans, net
    
    
    477,723
    
    
    
    483,165
    
    
    
    498,238
    
    
    
    507,910
    
    
    
    534,111
    
    
    
    560,880
    
    
    
    585,474
    
    
    
    610,404Stockholders equity
    
    
    57,164
    
    
    
    58,786
    
    
    
    58,786
    
    
    
    59,583
    
    
    
    60,603
    
    
    
    63,519
    
    
    
    67,858
    
    
    
    67,908
  F-45




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 25: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY)
 Condensed Balance Sheets
December 31, 2010 and 2009
 2010
    
    
    2009(In thousands)ASSETSCash and cash equivalents
    
    $
    842
    
    
    $
    899Investments in subsidiaries:Bank of Blue Valley
    
    
    77,703
    
    
    
    79,573BVBC Capital Trust II
    
    
    232
    
    
    
    232BVBC Capital Trust III
    
    
    356
    
    
    
    356Other assets
    
    
    1,214
    
    
    
    797Total Assets
    
    $
    80,347
    
    
    $
    81,857LIABILITIESSubordinated debentures
    
    $
    19,588
    
    
    $
    19,588Other liabilities
    
    
    3,595
    
    
    
    1,666Total Liabilities
    
    
    23,183
    
    
    
    21,254STOCKHOLDERS EQUITYPreferred Stock
    
    
    22
    
    
    
    22Common stock
    
    
    2,843
    
    
    
    2,818Additional paid-in capital
    
    
    38,431
    
    
    
    37,975Retained earnings
    
    
    15,838
    
    
    
    19,685Accumulated other comprehensive income, net of income
tax of $20 and $69 at 2010 and 2009, respectively
    
    
    30
    
    
    
    103Total Stockholders Equity
    
    
    57,164
    
    
    
    60,603Total Liabilities and Stockholders Equity
    
    $
    80,347
    
    
    $
    81,857
 F-46




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 25: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (Continued)
 Condensed Statements of Income

Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008(In thousands)IncomeDividends from subsidiaries
    
    $
    
    
    
    $
    700
    
    
    $
    654Other income
    
    
    20
    
    
    
    20
    
    
    
    20
    
    
    
    720
    
    
    
    654Expenses
    
    
    1,496
    
    
    
    1,336
    
    
    
    2,541Loss before income taxes and equity in undistributed net
loss of subsidiaries
    
    
    (1,476
    )
    
    
    (616
    )
    
    
    (1,887
    )Income tax (benefit)
    
    
    (531
    )
    
    
    (474
    )
    
    
    (1,117
    )Loss before equity in undistributed net loss of subsidiaries
    
    
    (945
    )
    
    
    (142
    )
    
    
    (770
    )Equity in undistributed net loss of subsidiaries
    
    
    (1,797
    )
    
    
    (14,468
    )
    
    
    (9,481
    )Net loss
    
    $
    (2,742
    )
    
    $
    (14,610
    )
    
    $
    (10,251
    )
 F-47




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##### Table of Contents



BLUE VALLEY BAN CORP.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 DECEMBER 31, 2010, 2009 AND 2008
 NOTE 25: CONDENSED FINANCIAL INFORMATION (PARENT COMPANY ONLY) (Continued)
 Condensed Statements of Cash Flows

Years Ended December 31, 2010, 2009 and 2008
 2010
    
    
    2009
    
    
    2008(In thousands)OPERATING ACTIVITIESNet loss
    
    $
    (2,742
    )
    
    $
    (14,610
    )
    
    $
    (10,251
    )Items not requiring (providing) cash:Deferred income taxes
    
    
    (417
    )
    
    
    (29
    )
    
    
    46Equity in undistributed net loss of subsidiaries
    
    
    1,797
    
    
    
    14,468
    
    
    
    9,481Restricted stock earned
    
    
    428
    
    
    
    287
    
    
    
    309Changes in:Other assets
    
    
    
    
    
    
    (243
    )
    
    
    (207
    )Other liabilities
    
    
    842
    
    
    
    696
    
    
    
    (308
    )Net cash provided by (used in) operating
activities
    
    
    (92
    )
    
    
    569
    
    
    
    (930
    )INVESTING ACTIVITIESCapital contributed to subsidiary
    
    
    
    
    
    
    (4,000
    )
    
    
    (19,578
    )Net cash used in investing activities
    
    
    
    
    
    
    (4,000
    )
    
    
    (19,578
    )FINANCING ACTIVITIESRepayments of long-term debt
    
    
    
    
    
    
    
    
    
    
    (17,781
    )Proceeds from short-term debt
    
    
    
    
    
    
    
    
    
    
    15,000Dividends paid on common stock
    
    
    
    
    
    
    
    
    
    
    (878
    )Dividends paid on preferred stock
    
    
    
    
    
    
    (212
    )
    
    
    Proceeds from sale of preferred stock
    
    
    
    
    
    
    
    
    
    
    21,750Proceeds from sale of common stock through the rights
offering
    
    
    
    
    
    
    
    
    
    
    5,201Proceeds from sale of common stock through Employee
Stock Purchase Plan (ESPP) and stock options
exercised
    
    
    35
    
    
    
    62
    
    
    
    435Net cash provided by (used in) financing
activities
    
    
    35
    
    
    
    (150
    )
    
    
    23,727INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
    
    
    (57
    )
    
    
    (3,581
    )
    
    
    3,219CASH AND CASH EQUIVALENTS,
BEGINNING OF YEAR
    
    
    899
    
    
    
    4,480
    
    
    
    1,261CASH AND CASH EQUIVALENTS,
END OF YEAR
    
    $
    842
    
    
    $
    899
    
    
    $
    4,480
 F-48