Blue Valley Ban Corp. Announces Strong Third Quarter 2014 Results From Reversal of Deferred Tax Valuation Allowance

OVERLAND PARK, Kan.--()--Blue Valley Ban Corp. (OTCQB: BVBC) (the “Company”) today reported that it has reversed its deferred tax asset ("DTA") valuation allowance of approximately $11.8 million, effective September 30, 2014. As a result of the reversal of the DTA valuation allowance, earnings per share for the quarter and year-to-date periods ended September 30, 2014 were increased by approximately $2.56. The reversal of the $11.8 million DTA valuation allowance resulted from the Company’s sustained profitability resulting from improved net interest income, reduced non-interest expense, and assessment of the Company’s future ability to realize its DTA. Including the impact of the reversal of the DTA valuation allowance, the Company’s consolidated earnings for the quarter and year-to-date periods ended September 30, 2014 were $12.2 million and $12.3 million, respectively, compared to $803,000 and $1.2 million, respectively, for the comparable periods ended September 30, 2013. Excluding the impact of the reversal of the DTA valuation allowance, the Company’s consolidated earnings for the quarter and year-to-date periods ended September 30, 2014 were $369,000 and $544,000, respectively.

“We remain resolute in our diligence to continue progress on reducing the balance of these assets. Our progress is an indication of the strength of our financial condition”

Robert D. Regnier, Chairman and CEO of Blue Valley Ban Corp. commented, “The Company’s recovery of the DTA Valuation Allowance is an indication of our financial strength and improvement in the profitability of our core business. From an operating perspective, we are pleased that our financial results for the quarter and year-to-date periods ending September 30, 2014 reflect an increase in net interest income and decline in non-interest expense, compared to the prior year periods.” For the quarter and year-to-date periods ending September 30, 2014, the Company’s net interest income increased $265,000 and $1.1 million, respectively compared to the prior year periods. Additionally, the Company’s non-interest expense declined by $820,000 and $1.4 million, respectively during the quarter and year-to-date periods ending September 30, 2014, compared to the prior year periods.

The Company recorded no provision to the allowance for loan losses during the quarter ending September 30, 2014 and recorded provisions of $400,000 during the year-to-date period ending September 30, 2014 to maintain a prudently conservative financial condition for the Company. The Company’s ratio of total reserves to non-accrual loans was 281% as of September 30, 2014, which exceeds the most recent Uniform Bank Performance Report peer group average of 270%.

At September 30, 2014, the Company’s ratio of non-accrual loans plus loans greater than 90 days past due to total loans for the Company’s subsidiary, Bank of Blue Valley (the “Bank”), was 0.53%, which was below and compares favorably with the most recent Uniform Bank Performance Report peer group ratio of 1.27%. In addition, the Bank’s foreclosed assets were reduced by approximately $800,000 and $7.6 million during the quarter and year-to-date periods ending September 30, 2014. “We remain resolute in our diligence to continue progress on reducing the balance of these assets. Our progress is an indication of the strength of our financial condition,” said Mr. Regnier.

About Blue Valley Ban Corp.

Blue Valley Ban Corp. is a bank holding company that, through its subsidiaries, provides banking services to closely-held businesses, their owners, professionals and individuals in Johnson County, Kansas. In addition, the Company originates residential mortgages locally and nationwide through its InternetMortgage.com and bankbv.com websites.

This release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of those safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, can generally be identified by use of the words "anticipate," "believe," "can," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," or the negative of these terms or other comparable terminology. The Company is unable to predict the actual results of its future plans or strategies with certainty. Factors which could have a material adverse effect on the operations and future prospects of the Company include, but are not limited to, fluctuations in market rates of interest and loan and deposit pricing; inability to maintain or increase deposit base and secure adequate funding; a continued deterioration of general economic conditions or the demand for housing in the Company's market areas; a deterioration in the demand for mortgage financing; legislative or regulatory changes; regulatory action; continued adverse developments in the Company's loan or investment portfolio; any inability to obtain funding on favorable terms; the Company’s non-payment on Fixed Rate Cumulative Preferred Stock or Trust Preferred Securities; the loss of key personnel; significant increases in competition; potential unfavorable actions from rating agencies; potential unfavorable results of litigation to which the Company may become a party, and the possible dilutive effect of potential acquisitions or expansions. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time, and it is not possible for us to predict all risk factors. Nor can we address the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

 

Blue Valley Ban Corp.

Condensed Consolidated Balance Sheets

September 30, 2014 and December 31, 2013

(In thousands, except share data)

 
ASSETS
    September 30, 2014     December 31, 2013
(Unaudited)
 
Cash and due from banks $ 24,469 $ 26,428
Interest-bearing deposits in other financial institutions 31,511 14,071
Cash and cash equivalents 55,980 40,499
 
Available-for-sale securities 97,392 100,657
Mortgage loans held for sale, fair value 1,430 1,438
 
Loans, net of allowance for loan losses of $6,332 and $8,992
in 2014 and 2013, respectively
416,321 405,803
 
Premises and equipment, net 16,394 15,466
Foreclosed assets held for sale, net 18,230 25,801
Interest receivable 1,801 1,736
Deferred income taxes 14,174 4,205
Prepaid expenses and other assets 7,473 6,195
Federal Home Loan Bank stock, Federal Reserve Bank stock,
and other securities
5,493 7,250
Core deposit intangible asset, at amortized cost 36
 
Total assets $ 634,688 $ 609,086
 
 

Blue Valley Ban Corp.

Condensed Consolidated Balance Sheets

September 30, 2014 and December 31, 2013

(In thousands, except share data)

 
LIABILITIES AND STOCKHOLDERS’ EQUITY
    September 30, 2014     December 31, 2013
(Unaudited)
LIABILITIES
 
Deposits
Demand $ 125,005 $ 100,965
Savings, NOW and money market 242,871 233,335
Time   99,228     114,068  
Total deposits 467,104 448,368
 
Other interest-bearing liabilities 29,068 32,335
Long-term debt 71,257 77,887
Interest payable and other liabilities   9,740     8,268  
 
Total liabilities   577,169     566,858  
 
 
STOCKHOLDERS’ EQUITY
 
Capital stock

Preferred stock, $1 par value, $1,000 liquidation preference;
authorized 15,000,000 shares; issued and outstanding
2014 – 21,750 shares; 2013 – 21,750 shares

22 22

Common stock, par value $1 per share;
authorized 15,000,000 shares; issued and outstanding
2014 – 4,625,168 shares; 2013 – 4,326,704 shares

4,625 4,327
Additional paid-in capital 45,182 44,010
Retained earnings (accumulated deficit) 9,088 (1,992 )

Accumulated other comprehensive income, net of income tax
  credit of $931 in 2014 and $2,759 in 2013

  (1,398 )   (4,139 )
 
Total stockholders’ equity   57,519     42,228  
 
Total liabilities and stockholders’ equity $ 634,688   $ 609,086  
 
Blue Valley Ban Corp.
Condensed Consolidated Statements of Operations
Three and Nine Months Ended September 30, 2014 and 2013

(In thousands, except share data)

 
    Three Months Ended September 30,     Nine Months Ended September 30,
2014     2013 2014     2013
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
INTEREST INCOME
Interest and fees on loans $ 5,024 $ 5,142 $ 15,298 $ 15,626
Federal funds sold and other short-term investments 25 33 64 112
Available-for-sale securities 522 446 1,544 1,141

Dividends on FHLBank and Federal Reserve Stock

  35     30     152     154  
Total interest income   5,606     5,651     17,058     17,033  
 
INTEREST EXPENSE
Interest-bearing demand deposits 66 77 204 237
Savings and money market deposit accounts 79 70 225 207
Other time deposits 305 405 964 1,307
Federal funds purchased and other interest-bearing liabilities 7 7 19 19
Long-term debt, net   677     885     2,018     2,711  
Total interest expense   1,134     1,444     3,430     4,481  
 
NET INTEREST INCOME 4,472 4,207 13,628 12,552
 
PROVISION FOR LOAN LOSSES       (1,200 )   400     (1,700 )
 

NET INTEREST INCOME (LOSS) AFTER PROVISION FOR LOAN LOSSES

  4,472     5,407     13,228     14,252  
 
NON-INTEREST INCOME
Loans held for sale fee income 166 553 505 1,323
Service fees 854 889 2,541 2,585
Realized gains on available-for-sale securities 16 127
Other income   346     243     1,121     1,144  
Total non-interest income   1,366     1,685     4,183     5,179  
 
NON-INTEREST EXPENSE
Salaries and employee benefits 2,737 2,639 7,986 7,962
Net occupancy expense 751 666 2,070 1,975
Foreclosed assets expense 473 786 2,187 2,985
Other operating expense   1,508     2,198     4,624     5,310  
Total non-interest expense   5,469     6,289     16,867     18,232  
 
INCOME (LOSS) BEFORE INCOME TAXES 369 803 544 1,199
 
PROVISION (BENEFIT) FOR INCOME TAXES   (11,786 )       (11,786 )    
 
NET INCOME (LOSS)   12,155     803     12,330     1,199  
 
DIVIDENDS ON PREFERRED STOCK   489     272     1,250     816  
 

NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS

 

$ 11,666   $ 531   $ 11,080   $ 383  
 
BASIC EARNINGS (LOSS) PER SHARE $ 2.54   $ 0.18   $ 2.42   $ 0.13  
DILUTED EARNINGS (LOSS) PER SHARE $ 2.53   $ 0.18   $ 2.42   $ 0.13  

Contacts

Blue Valley Ban Corp.
Mark A. Fortino, 913-338-1000
Chief Financial Officer

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