Blue Valley Ban Corp. Announces Fourth Quarter 2017 Operating Results

FOURTH QUARTER 2017 NET LOSS OF $2.1 MILLION OR $0.38 PER SHARE

EXCLUDING THE ESTIMATED IMPACT OF TAX REFORM1, NET INCOME OF $1.0 MILLION OR $0.19 PER SHARE

FULL-YEAR 2017 NET INCOME OF $1.1 MILLION OR $.20 PER SHARE

EXCLUDING THE ESTIMATED IMPACT OF TAX REFORM1, NET INCOME OF $4.2 MILLION OR $0.77 PER SHARE

OVERLAND PARK, Kan.--()--Blue Valley Ban Corp. (OTCQX: BVBC) (the “Company”) today reported consolidated earnings (loss) for the quarter and year-to-date periods ended December 31, 2017 of $(2,063,000) and $1,099,000 respectively, compared to $134,000 and $1,566,000 respectively for the comparable periods ended December 31, 2016. Earnings (loss) per common share for the quarter and year-to-date periods ending December 31, 2017 were $(0.38) and $0.20, respectively, compared to net earnings per share of $0.02 and $0.29, respectively, for the prior year quarter and year-to-date periods ending December 31, 2016.

The loss for the quarter of $2,063,000, or $0.38 per share, included an estimated one-time, non-cash charge of $3,070,000, or $0.57 per share, recorded in the Provision For Income Taxes line, related to the enactment of the Tax Cuts and Jobs Act (Tax Reform)1. This charge is a result of the re-measurement of the Company’s deferred tax assets (DTA) arising from a lower U.S. Corporate tax rate. Excluding the impact of the Tax Reform, net income for the fourth quarter 2017 of $1,007,000 increased $873,000 or 651% from the prior year period and full-year 2017 net income of $4,169,000 increased $2,603,000 or 166% from the prior year period. Numerous key aspects of the operating results and financial condition for the Company reflected positive trends and results as of and during the period ended December 31, 2017.

Robert D. Regnier, Chairman and CEO of Blue Valley Ban Corp., commented, “While our fourth quarter results reflect the impact of a significant non-cash charge due to tax reform, the core operations of the Company generated improved profits over the prior year period. Loan growth, combined with a stable net interest margin resulted in a significant increase in our net interest income. The credit quality of our loan portfolio, validated by recent internal and external assessments, enabled the Company to record a negative provision for loan losses during the quarter ended December 31, 2017. In addition, we reduced the balance of foreclosed assets by $1.5 million during the quarter. Foreclosed assets have been reduced by over 61% during 2017 and the remaining balance of $2.3 million is less than 0.33% of total assets at December 31, 2017. The improvement in asset quality during 2017 has resulted in a decrease in ongoing related expenses and improved earnings.”

For the quarter ended December 31, 2017, net interest income increased $674,000, while the Company’s non-interest income declined by $1,438,000, compared to the prior year period. The decrease in non-interest income was primarily due to $953,000 of realized gains on available-for-sale securities which occurred in the fourth quarter of 2016 and did not recur in the fourth quarter of 2017. For the quarter ended December 31, 2017, the Company’s non-interest expense declined by $810,000, compared to the prior year period.

The Company recorded a $400,000 negative provision for loans losses during the quarter ended December 31, 2017, compared to a $950,000 provision during the quarter ended December 31, 2016. Management evaluates credit risk on an ongoing basis to determine an appropriate level for the allowance for loan losses (ALLL). Net recoveries to the ALLL as well as the Company’s persistently low ratio of nonperforming loans to total loans, net of the impact of loan growth during the period, were key factors for the determination of the level for the ALLL for the quarter ended December 31, 2017. The negative provision reduced the Company’s ALLL to $5,535,000 and the Company’s ratio of ALLL to total loans to 1.03% as of December 31, 2017. The Company’s ratio of total reserves to non-accrual loans was approximately 470.18% as of December 31, 2017, which exceeds the most recent Uniform Bank Performance Report (UBPR) peer group ratio of 462.00%. The Company’s ratio of nonperforming loans to total loans was 0.22% as of December 31, 2017, which was below the most recent UBPR peer group of 0.80%.

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.

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; 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 Trust Preferred Securities or other debt; 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

December 31, 2017 and December 31, 2016

(In thousands, except share data)

 
ASSETS
 
    December 31, 2017   December 31, 2016
(Unaudited)
 
Cash and due from banks $ 9,394 $ 17,766
Interest-bearing deposits in other financial institutions   4,150   8,272
Cash and cash equivalents 13,544 26,038
 
Available-for-sale securities 103,130 107,760
 
Loans, net of allowance for loan losses of $5,535 and $6,164
in 2017 and 2016, respectively
529,265 487,518
 
Premises and equipment, net 12,322 12,046
Bank-owned real estate held for sale, net 5,915 5,915
Foreclosed assets held for sale, net 2,252 5,883
Interest receivable 1,888 1,785
Deferred income taxes 7,755 14,304
Prepaid expenses and other assets 7,531 7,939
FHLBank stock, Federal Reserve Bank stock,
and other securities
  3,888   5,244
 
Total assets $ 687,490 $ 674,432
 
 

Blue Valley Ban Corp.

Condensed Consolidated Balance Sheets

December 31, 2017 and December 31, 2016

(In thousands, except share data)

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 
    December 31, 2017   December 31, 2016
(Unaudited)
LIABILITIES
 
Deposits
Demand $ 152,052 $ 150,274
Savings, NOW and money market 315,553 280,628
Time   101,240   81,575
Total deposits 568,845 512,477
 
Other interest-bearing liabilities 37,202 63,142
Long-term debt 32,802 53,333
Interest payable and other liabilities   2,392   2,045
 
Total liabilities   641,241   630,997
 
 
STOCKHOLDERS’ EQUITY
 
Capital stock
Preferred stock, $1 par value, convertible to common stock; pari passu with common stock upon liquidation; authorized 1,000,000 shares; issued and outstanding
2017 – 471,979 shares; 2016 – 471,979 shares
472 472
Common stock, par value $1 per share;
authorized 15,000,000 shares; issued and outstanding
2017 – 5,677,865 shares; 2016 – 5,644,553 shares
5,678 5,644
Additional paid-in capital 32,108 30,858
Retained earnings 10,941 9,842
Accumulated other comprehensive income (loss), net of income tax credit of $(1,022) in 2017 and $(2,254) in 2016   (2,950 )   (3,381 )
 
Total stockholders’ equity   46,249   43,435
 
Total liabilities and stockholders’ equity $ 687,490 $ 674,432

Blue Valley Ban Corp.
Condensed Consolidated Statements of Operations
Three and Twelve Months Ended December 31, 2017 and 2016
(In thousands, except share data)

   
 

 

Three months ended

Twelve months ended

December 31,
2017

 

December 31,
2016

 

December 31,
2017

 

December 31,
2016

(Unaudited)   (Unaudited) (Unaudited)   (Unaudited)
INTEREST INCOME
Interest and fees on loans $ 6,112 $ 5,419 $ 23,665 $ 20,949
Federal funds sold and other short-term investments 63 35 115 185
Available-for-sale securities 524 542 2,103 1,938
Dividends on FHLBank and Federal Reserve Stock   61     79   146     202
Total interest income   6,760     6,075   26,029     23,274
 
INTEREST EXPENSE
Interest-bearing demand deposits 85 73 258 239
Savings and money market deposit accounts 132 108 503 401
Other time deposits 268 130 976 609
Federal funds purchased and other interest-bearing liabilities 8 14 53 33
Long-term debt, net   380     536   1,662     2,307
Total interest expense   873     861   3,452     3,589
 
NET INTEREST INCOME 5,887 5,214 22,577 19,685
 
PROVISION FOR LOAN LOSSES   (400 )   950   (900 )   1,925
 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES   6,287     4,264   23,477     17,760
 
NON-INTEREST INCOME
Service fees 814 883 3,366 3,575
Realized gains on available-for-sale securities 953 1,879
Other income   427     843   1,303     2,059
Total non-interest income   1,241     2,679   4,669     7,513
 
NON-INTEREST EXPENSE
Salaries and employee benefits 2,841 2,887 10,860 10,734
Net occupancy expense 663 683 2,671 2,720
Foreclosed assets expense 781 1,064 2,247 3,021
Other operating expense   1,648     2,108   5,782     6,413
Total non-interest expense   5,933     6,742   21,560     22,888
 
INCOME BEFORE INCOME TAXES 1,595 201 6,586 2,385
 
PROVISION FOR INCOME TAXES1   3,658     67   5,487     819
 
NET INCOME (LOSS) $ (2,063 ) $ 134 $ 1,099   $ 1,566
 
BASIC EARNINGS (LOSS) PER SHARE $ (0.38 ) $ 0.02 $ 0.20 $ 0.29
DILUTED EARNINGS (LOSS) PER SHARE $ (0.38 ) $ 0.02 $ 0.20 $ 0.29
 
 

Reconciliation of Non-GAAP Financial Measures

 
Net income (loss) $ (2,063 ) $ 134 $ 1,099 $ 1,566
Income tax expense related to 2017 Tax Reform1   3,070       3,070    
Adjusted net income $ 1,007   $ 134 $ 4,169   $ 1,566
 

Basic and diluted earnings (loss) per share

$ (0.38 ) $ 0.02 $ 0.20 $ 0.29
Income tax expense related to 2017 Tax Reform1   0.57   -   0.57   -
Adjusted basic and diluted net income per share $ 0.19 $ 0.02 $ 0.77 $ 0.29
 

1 On December 22, 2017, the Tax Cuts & Jobs Act (Tax Reform) was signed into law. The fourth quarter of 2017 and full-year 2017 results reflects the estimated impact of the enactment of the Tax Reform, which resulted in a $3.1 million decrease in net income. Net income and earnings per share excluding the impact of Tax Reform are non-GAAP financial measures. Management believes these measures help investors understand the effect of these items on reported results.

Contacts

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

Recent Stories

RSS feed for Blue Valley Ban Corp.

Blue Valley Ban Corp.