~~Table~~UNITED ofSTATES ~~Contents~~SECURITIES AND EXCHANGE COMMISSION

~~UNITED~~Washington, ~~STATES~~D.C. 20549

~~SECURITIES~~FORM ~~AND EXCHANGE COMMISSION~~ 10-K

~~Washington,~~[X] ~~D.C.~~ANNUAL ~~20549~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~FORM~~For ~~10-K~~ the fiscal year ended December 31, 2013

~~x ANNUAL REPORT PURSUANT TO SECTION 13~~ OR ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~[ ~~the~~] ~~fiscal~~TRANSITION ~~year~~REPORT ~~ended~~PURSUANT ~~December 31,~~TO ~~2011~~SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ORFor the transition period from __________________ to __________________

¨Commission ~~TRANSITION~~file ~~REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~number: 001-15933

~~For~~BLUE ~~the~~VALLEY ~~transition~~BAN ~~period from to~~ CORP.

~~Commission~~(Exact ~~file~~name ~~number:~~of ~~001-15933~~ registrant as specified in its charter)

BLUE VALLEY BAN CORP.

Kansas		48-1070996
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

(Exact name of registrant as specified in its charter)

11935 Riley Overland Park, Kansas		66225-6128
(Address of principal executive offices)		(Zip Code)

Kansas		48-1070996
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
11935 Riley Overland Park, Kansas		66225-6128
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (913) 338-1000

~~Registrant’s~~Securities ~~telephone~~registered ~~number,~~pursuant ~~including~~to ~~area~~Section ~~code:~~ 12(~~913~~b) ~~338-1000~~ of the Act:

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Name of each exchange on which registered
Guarantee with respect to the Trust Preferred Securities, $8.00 par value, of BVBC Capital Trust I (None of which are currently outstanding)			None currently

Title of each class		Name of each exchange on which registered
Guarantee with respect to the Trust Preferred Securities, $8.00 par value, of BVBC Capital Trust I (None of which are currently outstanding)		None currently

Securities registered pursuant to Section 12(g) of the Act: None

~~Securities~~Indicate ~~registered~~by ~~pursuant~~check tomark ~~Section 12(g)~~if the registrant is a well-known seasoned issuer as defined in Rule 405 of the Securities Act: Yes ~~None~~[ ] No [Ö ]

Indicate by check mark if the registrant is anot ~~well-known~~required ~~seasoned~~to ~~issuer~~file asreports ~~defined~~pursuant into ~~Rule~~Section ~~405~~13 or Section 15(d) of the ~~Securities~~ Act ~~Yes~~ ~~¨ No~~Yes x[Ö ] No [ ]

Indicate by check mark ifwhether the registrant is(1) ~~not~~has ~~required~~filed toall ~~file~~ reports ~~pursuant~~required to be filed by Section 13 or ~~Section~~ 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x [Ö] No ¨ [ ]

Indicate by check mark whether the registrant ~~(1)~~ has ~~filed~~submitted ~~all~~electronically ~~reports~~and ~~required~~posted toon beits ~~filed~~corporate byWebsite, ~~Section 13~~if orany, ~~15(d)~~every ofInteractive ~~the~~Data ~~Securities~~File ~~Exchange~~required ~~Act~~to be submitted and posted pursuant to Rule 405 of ~~1934~~Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to ~~file~~submit ~~such reports),~~ and ~~(2) has~~post ~~been subject to~~ such ~~filing requirements for the past 90 days~~files. Yes x [Ö] No ¨ [ ]

Indicate by check mark ~~whether~~if ~~the~~disclosure ~~registrant~~of ~~has~~delinquent ~~submitted~~filers ~~electronically~~pursuant ~~and~~to ~~posted~~Item on405 ~~its corporate~~of ~~Website,~~Regulation ifS-K ~~any,~~is ~~every~~not ~~Interactive~~contained ~~Data~~herein, ~~File~~and ~~required~~will tonot be ~~submitted~~contained, ~~and~~to ~~posted~~the ~~pursuant~~best toof ~~Rule~~registrant's ~~405~~knowledge, ofin ~~Regulation~~definitive ~~S-T~~proxy ~~during~~or ~~the~~information ~~preceding~~statements 12incorporated ~~months~~by ~~(or~~reference ~~for~~in ~~such~~Part ~~shorter~~III ~~period~~of ~~that~~this ~~the~~Form ~~registrant~~10-K ~~was~~or ~~required~~any amendment to ~~submit~~this ~~and~~Form ~~post such files~~10-K. ~~Yes x No ¨~~ [Ö]

Indicate by check mark ifwhether ~~disclosure~~the ofregistrant ~~delinquent~~is ~~filers~~a ~~pursuant~~large toaccelerated ~~Item 405~~filer, ofan ~~Regulation~~accelerated ~~S-K~~filer, isa ~~not~~non-accelerated ~~contained herein~~filer, ~~and~~or ~~will~~a ~~not~~smaller bereporting ~~contained,~~company. See to the ~~best~~definition of ~~registrant’s~~“large ~~knowledge~~accelerated filer,” “accelerated ~~in definitive~~filer” ~~proxy~~and or“smaller ~~information~~reporting ~~statements~~company” ~~incorporated by reference~~ in ~~Part~~Rule ~~III~~12b-2 of ~~this~~the ~~Form~~Exchange ~~10-K or any amendment to this Form 10-K~~Act. x (Check One):

~~Indicate~~Large ~~by check mark whether the registrant is a large~~ accelerated filer, an[ ] Accelerated ~~accelerated~~ filer, ~~a non~~[ ] Non-accelerated filer, or[ ] Smaller ~~a smaller~~ reporting ~~company.~~ ~~See the definition of “large accelerated filer,” “accelerated filer” and “smaller reporting~~ company” in[Ö ~~Rule 12b-2 of the Exchange Act. (Check One):~~ ]

~~Large~~Indicate ~~accelerated~~by ~~filer~~check ¨mark ~~Accelerated~~whether ~~filer~~the ¨registrant ~~Non~~is a shell company as defined in Rule 12b-~~accelerated~~2 ~~filer~~of ¨the ~~Smaller~~Securities ~~reporting~~Act Yes ~~company~~[ ] xNo [Ö ]

~~Indicate~~As byof ~~check~~February ~~mark~~28, ~~whether~~2014 ~~the~~1,807,988 ~~registrant~~shares isof athe ~~shell~~Registrant’s ~~company~~common asstock ~~defined~~were inheld ~~Rule~~by ~~12b~~non-2affiliates. The aggregate market value of these common shares, computed based on the ~~Securities Act Yes~~February 28, 2014 closing price of the stock, was approximately $17.0 million. ~~¨ No x~~As of February 28, 2012 the registrant had 4,593,690 shares of Common Stock ($1.00 par value) outstanding.

AsBLUE ofVALLEY ~~January 31,~~BAN ~~2012 1,732,844 shares of the Registrant’s common stock were held by non-affiliates~~CORP. The aggregate market value of these common shares, computed based on the June 30, 2011 closing price of the stock, was approximately $9.5 million. As of January 31, 2012 the registrant had 2,879,158 shares of Common Stock ($1.00 par value) outstanding.

~~DOCUMENTS~~FORM ~~INCORPORATED~~10-K ~~BY REFERENCE~~ INDEX

1. Part III – Proxy Statement for the 2012 Annual Meeting of Stockholders

		Page No.

PART I.

Item 1.	Business		2

Item 1A.	Risk Factors		19

Item 1B.	Unresolved Staff Comments		24

Item 2.	Properties		25

Item 3.	Legal Proceedings		25

Item 4.	Mine Safety Disclosures		25

PART II.

Item 5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		26

Item 6.	Selected Financial Data		27

Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		29

Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		54

Item 8.	Financial Statements and Supplementary Data		56

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		56

Item 9A.	Controls and Procedures		57

Item 9B.	Other Information		57

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance		58

Item 11.	Executive Compensation		58

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		58

Item 13.	Certain Relationships, Related Transactions, and Director Independence		58

Item 14.	Principal Accountant Fees and Services		59

PART IV.

Item 15.	Exhibits, Financial Statement Schedules		59

~~Table of Contents~~1

~~BLUE~~Part ~~VALLEY BAN CORP.~~ I

~~FORM 10-K INDEX~~ Item 1: Business

		Page No.
PART I.
Item 1.	Business		2
Item 1A.	Risk Factors		19
Item 1B.	Unresolved Staff Comments		24
Item 2.	Properties		25
Item 3.	Legal Proceedings		25
Item 4.	Mine Safety Disclosures		25
PART II.
Item 5.	Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		26
Item 6.	Selected Financial Data		27
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations		29
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		54
Item 8.	Financial Statements and Supplementary Data		56
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		56
Item 9A.	Controls and Procedures		57
Item 9B.	Other Information		57
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance		58
Item 11.	Executive Compensation		58
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		58
Item 13.	Certain Relationships, Related Transactions, and Director Independence		58
Item 14.	Principal Accountant Fees and Services		59
PART IV.
Item 15.	Exhibits, Financial Statement Schedules		59

The Company and Subsidiaries

1As used in this Form 10-K, references to “we,” “us,” “our,” “Company” and “Blue Valley” refer to Blue Valley Ban Corp., a Kansas corporation unless the context otherwise requires or where otherwise indicated. References to the “Bank” refer to the Company’s primary wholly-owned subsidiary, Bank of Blue Valley.

~~Table~~Blue Valley, a Kansas corporation, is a bank holding company organized in 1989. The Bank, the Company’s primary wholly-owned subsidiary, was also organized in 1989 to provide banking services to closely-held businesses and their owners, professionals and residents in Johnson County, Kansas, a high growth, demographically attractive area within the Kansas City, Missouri — Kansas Metropolitan Statistical Area (the “Kansas City MSA”). The focus of ~~Contents~~Blue Valley has been to take advantage of the current and anticipated growth in our market area as well as to serve the needs of small and mid-sized commercial customers. We believe that these customers are underserved as a result of banking consolidation in the industry generally and within our market specifically.

~~Part~~The IBank operates a total of five banking center locations in Johnson County, Kansas, including our main office, which includes a lobby banking center in Overland Park, as well as full-service offices in Leawood, Lenexa, Olathe, and Shawnee, Kansas.

~~Item~~Our 1:lending ~~Business~~activities are focused on commercial, commercial real estate, construction, home equity and residential real estate lending. In addition, the Bank infrequently engages in lease financing and provides consumer lending. We strive to identify, develop and maintain diversified lines of business that provide acceptable risk-adjusted returns.

~~The~~We ~~Company~~seek to develop lines of business that diversify the Bank’s revenue sources, increase the Bank’s non-interest income and ~~Subsidiaries~~ offer additional value-added services to the Bank’s customers. We develop these new or existing lines of business while monitoring related risk factors. In addition to fees generated in conjunction with lending activities, the Bank derives non-interest income by providing mortgage origination, deposit and cash management services, as well as trust and investment brokerage services.

AsIn ~~used~~addition into ~~this~~the ~~Form~~Bank, 10we have two wholly-Kowned subsidiaries, ~~unless~~BVBC weCapital ~~specify~~Trust ~~otherwise,~~II ~~“we,”~~and ~~“us,”~~BVBC ~~“our~~Capital Trust III,” ~~and~~which “were created to offer the Company”’s ~~refers~~trust preferred securities and to ~~Blue~~ ~~Valley~~purchase ~~Ban~~our ~~Corp.,~~junior asubordinated ~~Kansas~~debentures ~~corporation.~~(“Subordinated Debentures”).

~~Blue~~Our ~~Valley~~principal ~~Ban~~executive ~~Corp.~~offices isare alocated ~~bank~~at ~~holding~~11935 ~~company organized in 1989. The Company’s primary wholly-owned subsidiary~~Riley, ~~Bank~~Overland ~~of Blue Valley (the “Bank”)~~Park, ~~was~~Kansas ~~also organized in 1989 to provide banking services to closely-held businesses and their owners~~66213, ~~professionals~~ and ~~residents~~our intelephone ~~Johnson~~number ~~County,~~is ~~Kansas, a demographically attractive area within the Kansas City, Missouri - Kansas Metropolitan Statistical Area~~ (~~the “Kansas City MSA”~~913). ~~The focus of the Company has been to take advantage of the anticipated growth in the market area as well as to serve the needs of small and mid~~338-~~sized commercial borrowers~~1000. ~~These are customers we believe currently are underserved as a result of banking consolidations in the industry and within our market.~~

WeConsolidated ~~have~~financial ~~experienced~~information, ~~significant~~including ~~internal~~a ~~growth~~measure ~~since the Company’s inception. As~~ of ~~December 31,~~profit ~~2011,~~and weloss ~~had~~and ~~five~~total ~~full~~assets ~~service~~can ~~banking~~be ~~centers~~found in ~~Johnson~~Part ~~County,~~IV ~~Kansas,~~of ~~including~~this ~~our principal office and full-service banking centers in Leawood, Lenexa, Olathe and Shawnee, Kansas~~report.

Our lending activities are focused on commercial, commercial real estate, construction, home equity and residential real estate lending. The Company strives to identify, develop and maintain diversified lines of business which provide acceptable risk-adjusted returns. In addition, the Bank provides lease financing and consumer lending. 2

WeOur ~~seek~~Market to develop lines of business which diversify our revenue sources, increase our non-interest income and offer additional value-added services to our customers. We develop these new or existing lines of business while monitoring related risk factors. In addition to fees generated in conjunction with lending activities, the Company derives non-interest income by providing mortgage origination, deposit and cash management, and trust and investment brokerage services. Area

InThe ~~addition~~Bank tooperates ~~the~~primarily ~~Bank,~~ as ofa ~~December 31,~~community ~~2011~~bank, serving the ~~Company~~banking ~~had~~needs ~~two~~of ~~wholly~~small-~~owned~~ ~~subsidiaries:~~and ~~BVBC~~medium-sized ~~Capital~~companies ~~Trust II~~ and ~~BVBC~~individuals ~~Capital~~in ~~Trust III, which were created to offer~~ the ~~Company’s~~Kansas ~~trust preferred~~City ~~securities and to purchase our junior subordinated debentures~~MSA. ~~At December 31~~ Specifically, ~~2008,~~our ~~the~~trade ~~Company~~area ~~owned~~consists ~~100%~~ of ~~Blue~~Johnson ~~Valley~~County, ~~Building Corp~~Kansas., We ~~which~~believe ~~owns the buildings and real property~~ that ~~comprise~~coupling our ~~headquarters,~~strategy ~~operations~~of ~~facility and~~providing ~~the~~exceptional ~~Leawood~~customer ~~banking~~service ~~center.~~and Aslocal ofdecision ~~March 31,~~making ~~2009,~~with ~~the~~attractive ~~Company~~market ~~contributed~~demographics ~~100%~~has ofled to the ~~outstanding~~historical ~~shares~~growth of ~~Blue~~our ~~Valley~~total ~~Building~~assets ~~Corp.~~and ~~to the Bank~~deposits.

The ~~Company~~income ~~had~~levels aand ~~49%~~growth ~~ownership~~rate inof ~~Homeland~~Johnson ~~Title~~County, ~~LLC~~Kansas ~~through~~compare ~~March~~favorably ~~2009,~~to atnational ~~which~~averages. Johnson ~~time~~County’s population growth rate ranks in the ~~Company~~top ~~terminated~~8.85% of counties nationally, and its ~~ownership~~per ~~interest~~capita income ranks in ~~Homeland~~the ~~Title,~~top ~~LLC~~1.34% ~~Homeland~~of ~~Title,~~counties ~~LLC~~nationally. Johnson ~~was~~County ~~established~~is also a significant banking market in the State of Kansas and in the Kansas City MSA. According to available industry data, as of June ~~2005~~ 30, 2013, total deposits in Johnson County, including those of banks, thrifts and ~~provided~~credit ~~title~~unions, were approximately $15.2 billion, which represented 23.53% of total deposits in the state of Kansas and ~~settlement~~33.30% ~~services~~of total deposits in the Kansas City MSA. We ~~This~~have ~~entity~~less isthan no1% ~~longer~~share of the deposits in ~~operation~~the Kansas City MSA and approximately 3.00% of the total deposits in Johnson County, Kansas.

~~The~~As ~~Company’s~~our ~~principal~~founders ~~executive~~anticipated, ~~offices~~the ~~are located~~trade atarea ~~11935~~surrounding ~~Riley,~~our main banking facility in Overland Park, Kansas ~~66225~~has become one of the most highly developed retail areas in the Kansas City MSA. Our Olathe, Kansas facility is located approximately 10 miles southwest of our main office. We opened our Olathe branch in 1994 when we acquired the deposits of the Olathe branch of a failed savings and loan association. We made this acquisition because it was located in a contiguous market area and we believed that it represented a stable deposit base. In 2001, the operations of this branch were moved across the street into a more suitable location which the Bank acquired. The Shawnee, Kansas banking facility is approximately 20 miles northwest of our headquarters location. We opened our Shawnee grocery branch for the convenience of our existing customers in Shawnee, and to expand our market presence in Shawnee. During the first quarter of 2001, construction of our free-~~6128~~standing banking facility in Shawnee, Kansas was completed and operations commenced. The Leawood, Kansas banking facility is approximately 5 miles southeast of our ~~telephone~~headquarters ~~number~~location. We opened our Leawood grocery branch during October of 2002 to expand our market presence in Leawood. In 2002, we also acquired land for a 20,000 square foot branch and office building in Leawood. In the second quarter of 2004 we completed construction of our freestanding banking facility in Leawood and operations commenced in that facility. During 2003 we acquired an office building in Overland Park, Kansas approximately 1 mile northwest of our headquarters location. During 2010, the Company listed the office building for lease or possible sale. In addition to leasing space at this location to tenants, we have currently consolidated our bank operations at this location. The Lenexa, Kansas banking facility is ~~(913)~~approximately 7 ~~338-1000~~miles northwest of our headquarters location. The Lenexa facility was opened in February 2007 when we acquired Unison Bancorp, Inc., and its subsidiary, Western National Bank. We made this acquisition to continue our expansion in Johnson County and to establish our first presence in the Lenexa market.

~~Consolidated~~Lending ~~financial information, including a measure of profit and loss and total assets can be found in Part IV of this report.~~ Activities

2Overview. Our principal loan categories include commercial, commercial real estate, construction, home equity and residential mortgages. We also offer a variety of consumer loans and infrequently engage in lease financing. Our primary source of interest income is interest earned on our loan portfolio. As of December 31, 2013, our loans represented approximately 68.10% of our total assets, our legal lending limit to any one borrower was $19.0 million, and our largest single borrower as of that date had outstanding loans of $14.0 million.

~~Table~~From the Company’s inception, we were successful in expanding our loan portfolio because of ~~Contents~~the commitment of our staff and the economic growth in our area of operation. Our staff has significant experience in lending and has been successful in offering our products to both potential and existing customers. We believe that we have been successful in maintaining our customers because of our staff’s attentiveness to their financial needs and the development of professional relationships with them. We strive to become a strategic business partner with our customers, not just a source of funds.

~~Our~~We ~~Market~~conduct ~~Area~~our lending activities pursuant to the lending administration policies adopted by our Board of Directors. These policies currently require the approval of our loan committee of all commercial credits in excess of $1.5 million and all real estate credits in excess of $2.5 million. Commercial loans up to $1.5 million and real estate loans up to $2.5 million can generally be approved by the Bank’s President with two loan administration officers.

The Company operates primarily as a community bank, serving the banking needs of small and medium-sized companies and individuals in the Kansas City MSA. Specifically, our trade area consists of Johnson County, Kansas, Wyandotte County, KS and Jackson County, MO. We believe that coupling our strategy of providing exceptional customer service and local decision making with attractive market demographics makes us competitive in the Kansas City MSA. 3

~~The~~Our ~~income~~management ~~levels~~information systems and ~~growth~~loan ~~rate~~review ofpolicies ~~Johnson~~are ~~County,~~designed ~~Kansas compare favorably~~ to ~~national~~monitor ~~averages.~~lending ~~Johnson~~sufficiently ~~County’s~~to ~~population~~ensure ~~growth rate~~adherence ~~ranks~~to inour ~~the~~loan ~~top 8~~policies.~~85%~~ The offollowing ~~counties~~table ~~nationally,~~shows ~~and its per capita income ranks in~~ the ~~top~~composition ~~1.34%~~ of ~~counties~~our ~~nationally.~~loan ~~Johnson~~portfolio ~~County~~at isDecember ~~also a significant banking market in the State of Kansas and in the Kansas City MSA. According to available industry data~~31, ~~as of June 30, 2011, total deposits in Johnson County, including those of banks, thrifts and credit unions, were approximately $14~~2013.~~4 billion, which represented 23.63% of total deposits in the state of Kansas and 33.00% of total deposits in the Kansas City MSA.~~

AsLOAN our founders anticipated, the trade area surrounding our main banking facility in Overland Park, Kansas has become a highly developed retail area in the Kansas City MSA. Our Olathe, Kansas facility is located approximately eight miles southwest of our main office and opened in 1994. The Shawnee, Kansas banking facility is approximately 17 miles northwest of our headquarters location. We entered into the Shawnee market in 1999 and in the first quarter of 2001, construction of our freestanding banking facility in Shawnee was completed and operations commenced in that facility. The Leawood, Kansas banking facility is approximately four miles southeast of our headquarters location. We entered into the Leawood market in 2002 and in the second quarter of 2004, construction of our freestanding banking facility in Leawood was completed and operations commenced in that facility. During 2003 we acquired an office building in Overland Park, Kansas approximately one mile northwest of our headquarters location. At this location, we consolidated our mortgage operations, bank operations, and opened a banking facility. The banking facility was subsequently closed and consolidated into the main bank in November 2008. During 2010, our mortgage operation was consolidated into the main bank and the Company listed the office building for lease or possible sale. The Lenexa, Kansas banking facility is approximately seven miles northwest of our headquarters location. The Lenexa facility was opened in February 2007 when we acquired Unison Bancorp, Inc., and its subsidiary, Western National Bank. The Company made this acquisition to continue its expansion in Johnson County and to establish the Company’s first presence in the Lenexa market. PORTFOLIO

Lending Activities

	As of December 31, 2013
	Amount		Percent
	(In thousands)
Commercial	$	120,283		29.00	%
Commercial real estate		145,045		34.97
Construction		44,806		10.80
Residential real estate		44,771		10.79
Home equity		43,169		10.41
Consumer		8,885		2.14
Lease financing		7,836		1.89
Total loans and leases		414,795		100.00	%
Less allowance for loan losses		8,992
Loans, net of allowance for loan losses	$	405,803

~~Overview~~Commercial loans. As ~~Our~~of ~~principal~~December ~~loan~~31, ~~categories~~2013, ~~include~~approximately ~~commercial~~$120.3 million, ~~commercial~~ ~~real~~or ~~estate~~29.00%, ~~construction,~~of ~~home~~our ~~equity~~loan ~~and~~portfolio, ~~residential~~represented ~~real~~commercial ~~estate~~ loans. The WeBank ~~also~~has ~~offer~~developed a ~~variety~~strong ofreputation ~~equipment~~in ~~financing~~providing and ~~consumer~~servicing ~~loans.~~small ~~Our~~business ~~primary~~and ~~source~~commercial ofloans. The ~~interest~~commercial ~~income~~portfolio is ~~interest~~the ~~earned~~result onof ~~our~~the ~~loan~~business ~~portfolio.~~development Asefforts of ~~December 31,~~ ~~2011,~~the ~~our~~Bank’s ~~loans~~seasoned ~~represented~~commercial ~~approximately~~lending ~~67.06%~~staff, of our ~~total~~complementary ~~assets,~~product ~~our~~and ~~legal~~services ~~lending~~mix ~~limit~~and toour ~~any~~reputation. Commercial ~~one~~loans ~~borrower~~have ~~was~~historically ~~$19.3~~been ~~million,~~a ~~and~~significant portion of our ~~largest~~loan ~~single~~portfolio ~~borrower~~and aswe ofexpect ~~that~~to ~~date~~continue ~~had~~our ~~outstanding~~emphasis ~~loans~~on ofthis ~~$15.4~~loan ~~million~~category.

The ~~ability~~Bank’s ofcommercial ~~financial~~lending ~~institutions,~~activities ~~including~~historically ~~us,~~have been directed to ~~originate~~small ~~loans~~and ~~has~~medium-sized ~~been~~companies ~~substantially~~in ~~reduced~~or ~~due~~near toJohnson ~~current~~County, ~~economic~~Kansas, ~~conditions~~with annual sales generally between $100,000 and $20 million. ~~However~~ The Bank’s commercial customers are primarily firms engaged in manufacturing, ~~the~~service, ~~Company~~retail, ~~continues~~construction, todistribution ~~look~~and ~~for~~sales ~~lending~~with ~~opportunities~~significant ~~within~~operations in our ~~community~~market areas. The ~~Our~~Bank’s ~~staff~~commercial ~~has~~loans ~~significant~~are ~~experience~~primarily insecured ~~lending~~by real estate, accounts receivable, inventory and ~~has~~equipment, ~~been~~and ~~successful~~the inBank ~~offering~~may ~~our~~seek ~~products~~to obtain guarantees from principal parties related to ~~both~~the ~~potential~~borrower ~~and~~for ~~existing~~its ~~customers~~commercial loans. The WeBank ~~believe~~primarily ~~our~~underwrites ~~staff~~its ~~is attentive~~commercial toloans ~~our~~on ~~customers~~the basis of the borrower’s cash flow, financial ~~needs~~condition and ~~develops~~ability ~~professional~~to ~~relationships~~service ~~with~~the ~~our~~debt, ~~customers.~~as Wewell ~~strive~~as tothe ~~become~~value aof ~~strategic~~any ~~business~~underlying ~~partner,~~collateral ~~not~~and ~~just~~the afinancial ~~source~~capacity of ~~funds.~~any guarantors.

~~The~~Included ~~Bank~~in ~~conducts~~commercial ~~its~~loans ~~lending~~are ~~activities~~Small ~~pursuant~~Business toAdministration ~~the~~(SBA) ~~loan~~loans ~~policies~~which ~~adopted~~totaled byapproximately ~~its~~$3.0 million, ~~Board~~or 2.49% of ~~Directors.~~commercial ~~These~~loans, ~~policies~~at ~~currently~~December ~~require~~31, 2013. In the ~~approval~~event of ~~our~~default, ~~loan~~the ~~committee~~SBA ofguarantees ~~all~~the ~~commercial~~repayment ~~credits~~of ~~in excess~~a portion of ~~$1.5~~the ~~million~~principal on these loans, ~~all~~plus ~~real~~accrued ~~estate~~interest ~~credits~~on inthe ~~excess~~guaranteed portion of $2the loan.5 Of the $3.0 million, ~~and~~in ~~all~~SBA ~~unsecured~~ loans, in$2.2 ~~excess~~million ofwas ~~$300,000~~government guaranteed. Under ~~The~~the ~~Bank’s~~Federal ~~policies~~Small ~~delegate~~Business ~~lending~~Act, ~~authority~~the upSBA tomay ~~these~~guarantee ~~amounts~~up to an85% ~~internal~~of ~~loan~~qualified ~~discount~~loans ~~committee comprised~~ of ~~the Bank’s~~$150,000 ~~President~~or less and ~~three~~up ~~senior~~to ~~loan~~75% ~~management~~of ~~officers.~~qualified ~~Our~~loans ~~management~~in ~~information~~excess ~~systems~~of ~~and~~$150,000, ~~lending~~up ~~administration~~to ~~policies~~a ~~and~~maximum ~~procedures~~loan ~~are~~amount ~~designed~~of $5.0 million to ~~monitor~~any ~~lending~~one ~~activities~~borrower. The ~~sufficiently~~Bank is approved to ~~mitigate~~participate in the ~~risk~~SBA ofCertified ~~noncompliance~~Lender, ~~with the~~SBA ~~loan~~Express ~~policies.~~and ~~The~~Patriot ~~following~~Express ~~table~~Programs ~~shows~~and ~~the~~is ~~composition~~an ofactive ~~our~~SBA ~~loan~~lender ~~portfolio~~in atour ~~December 31,~~market ~~2011~~area.

3Commercial lending is subject to risks specific to the business of each borrower. In order to mitigate these risks, we seek to understand the business of each borrower, place appropriate value on any guarantee or collateral pledged to secure the loan, and govern the advance and repayment of principal as well as structure the loan amortization to maintain the adequacy of the value of any collateral during the term of the loan.

~~Table of Contents~~4

~~LOAN~~Commercial ~~PORTFOLIO~~real estate loans. The Bank also makes loans to provide permanent financing for commercial facilities, retail and office buildings and churches. As of December 31, 2013, approximately $145.0 million, or 34.97% of our loan portfolio, represented commercial real estate loans. Our commercial real estate loans are underwritten on the basis of the appraised value of the property securing the loan, the cash flow and financial condition of the borrowing entity and property securing the loan, and the financial condition and capacity of guarantors.

	As of December 31, 2011
	Amount		Percent
	(In thousands)
Commercial	$	130,398		29.71	%
Commercial real estate		154,109		35.12
Construction		48,438		11.04
Home equity		59,750		13.61
Residential real estate		37,882		8.63
Lease financing		2,268		0.52
Consumer		5,998		1.37
Total loans and leases		438,843		100.00	%
Less allowance for loan losses		13,189
Loans, net of allowance for loan losses	$	425,654

Risks inherent in commercial real estate lending are related to the market value of the property securing the loan, the underlying cash flows, secondary repayment sources and documentation. Commercial real estate lending generally involves more risk than residential real estate lending because loan balances may be greater and repayment is dependent on the cash flows from the property securing the loan and/or the borrower’s operations. We attempt to mitigate these risks by carefully assessing property values, analyzing the primary source(s) of cash flow servicing the loan, analyzing financial condition and capacity of guarantors and adhering to our lending and underwriting policies and procedures.

~~Commercial~~Construction loans. Our construction loans include loans to home building contractors and other companies and consumers for the construction of single-family and multi-family properties and commercial buildings, such as retail and office buildings as well as land development. As of December 31, ~~2011~~2013, approximately $~~130~~44.48 million, or 2910.7180%, of our loan portfolio , represented ~~commercial~~real estate construction loans. The ~~Bank~~builder and developer loan portfolio has ~~developed~~been a ~~strong~~consistent material component of our loan portfolio over our history. The Bank’s experience and reputation in ~~providing~~this area has enabled the Bank to focus on relationships with a smaller number of select builders. Construction loans are made to qualified developers and ~~servicing~~builders ~~small~~to ~~business~~develop land for construction of residential and commercial ~~loans~~buildings as well as to build houses to be sold following construction, pre-sold houses and model houses. These ~~The~~loans ~~commercial~~are ~~portfolio~~generally isunderwritten based on several factors, including the ~~result~~reputation, experience, financial condition and capacity of the ~~efforts~~borrowing entity, the ratio of ~~seasoned~~the ~~commercial~~loan ~~lending~~balance ~~staff~~to the appraised value of the property securing the loan, ~~their~~and ~~business development~~general ~~efforts~~conditions of the real estate market with respect to the subdivision and ~~our~~surrounding ~~reputation.~~area ~~Commercial~~obtained from an independent third party. Construction loans ~~have~~are ~~historically~~also ~~been~~made ato ~~significant~~individuals ~~portion~~for houses to be constructed by builders with whom the Bank generally has an existing relationship. Such loans are made on the basis of ~~our~~the borrower’s financial condition and capacity, the loan ~~portfolio~~to value ratio, the reputation of the builder, and wethe ~~expect~~borrower’s pre-qualification for permanent financing. During the four years ending December 31, 2012, the Bank had experienced a decline in originations of construction loans from levels experienced previous to ~~continue~~that ~~our~~period, ~~emphasis~~specifically onin ~~this~~residential ~~loan~~real ~~category~~estate construction and land development, as a result of the continued decline in the real estate industry and the continued slowdown in new housing construction. During 2013, improved economic conditions have stabilized this decline.

~~The~~Risks ~~Bank’s~~related ~~commercial~~to construction lending ~~activities~~arise ~~traditionally~~from ~~have~~potential ~~been~~decline ~~directed~~in tothe ~~small~~market ~~and~~value ~~medium-sized~~for ~~companies~~the incompleted ~~or near Johnson County~~project, ~~Kansas,~~reasonableness ~~with~~of ~~annual~~the ~~sales~~construction ~~generally between $100~~budget,~~000~~ ~~and~~ability ~~$20 million.~~of ~~The~~the ~~Bank’s~~borrower ~~commercial~~to ~~customers~~fund ~~are~~unforeseen ~~largely~~cost ~~firms~~variances ~~engaged~~over inthe ~~manufacturing,~~construction ~~service~~budget, ~~retail, construction,~~ and ~~distribution~~the ~~with~~borrower’s ~~significant~~ability ~~operations~~to inliquidate ~~our~~and ~~market~~repay ~~areas.~~the ~~The~~loan ~~Bank’s~~at ~~commercial~~a ~~loans~~point ~~are~~when ~~generally~~the ~~secured~~loan-to-value ~~by accounts~~ratio ~~receivable,~~is ~~inventory,~~the ~~equipment,~~greatest. Among ~~and~~other ~~real estate~~factors, ~~and~~ the Bank ~~generally~~ seeks to ~~obtain~~manage ~~personal~~these ~~guarantees~~risks ~~for~~by ~~its~~ensuring, ~~commercial~~throughout ~~loans.~~the ~~The~~construction ~~Bank~~process, ~~underwrites~~that ~~its~~the ~~commercial~~loan ~~loans~~to onvalue ~~the~~ratio ~~basis~~ of the ~~borrowers’~~loan ~~cash~~does ~~flow~~not ~~and~~exceed ~~ability~~acceptable ~~to service~~levels, ~~the~~ensuring ~~debt,~~that asfunds ~~well~~disbursed asare ~~the~~within ~~value~~parameters ofset ~~any~~by ~~underlying~~the ~~collateral~~original construction budget, and ~~the~~by ~~financial~~properly ~~strength~~documenting ofand ~~any~~analyzing ~~guarantors.~~each construction draw.

~~Included~~Residential inreal ~~commercial~~ estate loans. Our ~~are~~residential ~~Small~~real ~~Business~~estate ~~Administration~~loan ~~(SBA)~~portfolio ~~loans~~consists ~~which~~primarily ~~totaled~~of ~~approximately~~first ~~$5.7~~and ~~million,~~second ormortgage ~~4.40%~~loans ofsecured ~~commercial~~by ~~loans~~residential atproperties. As of December 31, ~~2011.~~2013, ~~Of the~~ $544.78 million, inor ~~SBA loans~~10.79%, ~~$4.3~~of ~~million~~our ~~was~~loan ~~government~~portfolio ~~guaranteed.~~consisted ~~The~~of ~~SBA~~residential ~~guarantees~~mortgage ~~the repayment~~loans. inThe ~~the~~terms ~~event~~ of athese ~~default~~loans oftypically ainclude ~~portion~~monthly ofpayments ~~the~~based ~~principal~~ on ~~these~~a ~~loans,~~15 ~~plus~~to ~~accrued~~30 ~~interest~~year onamortization ~~the~~with ~~guaranteed~~3 ~~portion~~to of7 ~~the~~year ~~loan.~~balloon ~~Under~~payments ~~the~~to ~~Federal~~mitigate ~~Small~~interest ~~Business~~rate ~~Act~~risk, ~~the~~and ~~SBA~~they ~~may~~accrue ~~guarantee~~interest upat toa ~~85%~~fixed ofor ~~qualified~~variable ~~loans~~rate. These ofproducts ~~$150,000~~and ~~or less~~terms ~~and~~enable upus to ~~75%~~offer ofcredit ~~qualified~~to ~~loans~~individuals inwho ~~excess~~are ofself-employed ~~$150,000,~~or uphave tosignificant aincome ~~maximum~~from ~~loan~~S-corporations, ~~amount~~limited ofliability ~~$5.0~~companies, ~~million~~partnerships toor ~~any one borrower~~investments. These ~~The~~individuals ~~Bank~~are isoften ~~approved~~unable to ~~participate~~satisfy in the ~~SBA~~underwriting ~~Certified~~criteria ~~Lender,~~permitting ~~SBA~~the ~~Express~~sale ~~and~~of ~~Patriot~~their ~~Express~~mortgages ~~Programs~~into ~~and~~the issecondary ~~an active SBA lender in our~~ market ~~area~~.

~~Commercial~~In ~~lending~~addition, iswe ~~subject~~originate toresidential ~~risks~~mortgage ~~specific~~loans towith the ~~business~~intention of ~~each~~selling ~~borrower~~these loans in the secondary market. During Inthe ~~order~~years toending ~~address~~December ~~these risks~~31, ~~the~~2013 ~~Bank~~and ~~seeks~~2012, towe ~~understand~~originated ~~the~~approximately ~~business~~$53.3 ofmillion ~~each~~and ~~borrower~~$83.5 million, ~~place~~respectively, ~~appropriate~~of ~~value~~residential onmortgage ~~any~~loans ~~collateral~~held ~~pledged~~for tosale, ~~secure~~and ~~the~~we ~~loan~~sold orapproximately ~~personal~~$59.5 ~~guarantee,~~million and ~~structure~~$81.5 million, respectively, in the ~~loan~~secondary ~~amortization~~market. We tooriginate ~~maintain~~conventional ~~the~~first ~~value~~mortgage ofloans ~~any~~through ~~collateral~~referrals ~~during~~from ~~the term~~real ofestate ~~the~~brokers, ~~loan~~builders, developers and prior customers as well as through our Internet websites. The

Commercial real estate loans. The Bank also makes loans to provide permanent financing for retail and office buildings, hotels and churches. As of December 31, 2011, approximately $154.1 million, or 35.12%, of our loan portfolio represented commercial real estate loans. Our commercial real estate loans are underwritten on the basis of the appraised value of the property, the cash flow of the underlying property, and the financial strength of any guarantors. 5

~~Risks~~origination ~~inherent~~of ina ~~commercial real~~mortgage ~~estate~~loan ~~lending~~from ~~are related to~~ the ~~market~~date ~~value~~ of ~~the~~initial ~~property~~application ~~taken~~through asclosing ~~collateral,~~normally ~~the~~takes ~~underlying~~15 ~~cash~~to ~~flows~~60 ~~and documentation~~days. ~~Commercial~~To ~~real~~reduce ~~estate~~interest ~~lending~~rate ~~involves more~~ risk ~~than~~on ~~residential~~mortgage ~~real~~loans ~~estate~~sold ~~lending~~in ~~because~~the ~~loan~~secondary ~~balances may be greater~~market, ~~there~~we ~~are~~typically ~~fewer~~acquire ~~alternative~~forward ~~uses~~commitments ~~for~~from ~~the~~investors ~~property,~~prior ~~and repayment is dependent on the borrower’s operations. We attempt~~ to ~~mitigate these risks by carefully assessing property values, investigating the source of cash flow servicing the~~ loan ~~on the property and adhering to our lending and underwriting policies and procedures~~closing.

4Our mortgage loan credit review process is consistent with the standards set by traditional secondary market sources. The lender reviews the appraised value, credit report, debt service ratios, and other credit information gathered during the underwriting process in accordance with various laws and regulations governing real estate lending. Loans originated by the Bank are sold with servicing released to maximize per loan profits while minimizing the risks and costs associated with retaining servicing rights. Commitments are typically obtained from the purchasing investor on a loan-by-loan basis on a 30, 45 or 60-day delivery commitment. Interest rates are generally committed to the borrower when a rate commitment is obtained from the investor. Loans are funded by the Bank and purchased by the investor within 30-45 days following closing pursuant to commitments obtained from the investor. We sell conventional FHA, VA, USDA conforming and jumbo loans that are available to the Bank from the various secondary market investors for cash on a limited recourse basis. Consequently, foreclosure losses on all sold loans are primarily the responsibility of the investor and not that of the Bank. In our recent experience, the Bank has not been required to repurchase significant amounts of loans. The Bank did not repurchase any loans during the years ending December 31, 2013 or December 31, 2012, and during the year ending December 31, 2011, the Company repurchased one loan from an investor for which no losses have been recognized.

~~Table~~As with other loans to individuals, the risks related to residential mortgage loans primarily include the sufficiency of ~~Contents~~the value of collateral securing the loan and the financial condition and capacity of the borrower. The Bank attempts to manage these risks by performing a pre-funding underwriting that includes analyzing, verifying and documenting the borrower’s credit qualifications, employment stability, monthly income, identification and verification of the source and amount of down payments as well as analyzing and documenting the value of the collateral.

~~Construction~~Home equity loans. As ~~Our construction loans include loans to developers, home building contractors and other companies and consumers for the construction~~ of ~~single-family~~December ~~and multi-family properties~~31, ~~land development~~2013, ~~and~~our ~~commercial~~home ~~buildings,~~equity ~~such~~loans astotaled ~~retail and office buildings. As of December 31, 2011, approximately~~ $4843.42 million, or 1110.0441%~~, of~~ ~~our loan portfolio represented real estate construction loans. The builder and developer loan portfolio has been a consistent component~~ of our loan portfolio ~~over our history~~. Home ~~The~~equity ~~Bank’s~~loans ~~experience~~are ~~and~~generally ~~reputation~~secured inby ~~this~~second ~~area~~liens ~~has enabled the Bank to focus~~ on ~~relationships~~residential ~~with~~real ~~a smaller number of larger builders~~estate. Home ~~Construction~~equity loans are ~~made~~subject to ~~qualified~~the ~~builders~~same torisks ~~build~~as ~~houses~~other ~~to be sold following construction, pre-sold houses and model houses. These~~ loans ~~are~~to ~~generally underwritten based on several factors~~individuals, including the ~~experience and current~~ financial ~~condition~~strength ~~of the borrowing entity, amount of the loan to appraised value,~~ and ~~general~~capacity ~~conditions~~ of the ~~housing market with respect to the subdivision and surrounding area obtained from a third party reporting entity~~borrower. The ~~Construction~~Bank ~~loans~~attempts ~~are also made~~ to ~~individuals~~mitigate ~~for~~these ~~houses~~risks ~~that are being constructed~~ by ~~builders~~carefully ~~with~~analyzing, ~~whom~~verifying ~~the~~and ~~Bank~~documenting ~~generally has an existing relationship. Such loans are made on~~ the ~~basis of the individual~~borrower’s ~~financial~~credit ~~condition~~qualifications, ~~the~~employment ~~loan to value ratio~~stability, ~~the~~monthly ~~reputation of the builder~~income, and ~~whether~~understanding ~~the~~and ~~individual~~documenting ~~will be pre-qualified for permanent financing. During~~ the ~~last~~value ~~three years, the Bank has experienced a decline in construction loans originated, specifically in residential real estate construction and land development, as a result~~ of the ~~continued decline in the real estate industry and the continued slow down in new housing construction~~collateral.

~~Risks~~Consumer ~~related~~loans. As of December 31, 2013, our consumer loans totaled $8.9 million, or 2.14% of our total loan portfolio. A substantial part of this amount consisted of installment loans to ~~construction~~individuals in our market area. Installment lending ~~include~~offered ~~assessment~~directly ofby the Bank in our market ~~for~~area ~~the~~includes ~~finished~~loans ~~product~~secured by automobiles and recreational vehicles, ~~reasonableness~~as ofwell ~~the~~as ~~construction~~home ~~budget~~improvement loans, ~~ability~~unsecured lines of ~~the~~ ~~borrower~~credit toand ~~fund~~other ~~cost~~loans ~~overruns,~~to ~~and~~individuals. Consumer ~~the~~loans ~~borrower’s~~are ~~ability~~subject to ~~liquidate~~the ~~and~~same ~~repay~~risks ~~the~~as ~~loan~~other atloans ato ~~point~~individuals, ~~when~~including the ~~loan-to-value~~financial ~~ratio~~condition isand capacity of the ~~greatest~~borrower. In ~~The~~addition, ~~Bank~~some ~~seeks~~consumer loans are subject to ~~manage~~the ~~these~~additional ~~risks~~risk ~~by,~~that ~~among~~the ~~other~~loan ~~things,~~is ~~ensuring~~unsecured. For loans that are secured, the underlying collateral ~~value~~ may be rapidly depreciating and may not provide an adequate source of ~~the~~repayment ~~property~~if ~~throughout~~we are required to repossess the ~~construction~~collateral. The ~~process~~Bank ~~does~~attempts ~~not~~to ~~fall~~mitigate ~~below~~these ~~acceptable~~risks ~~levels,~~by ~~ensuring~~requiring ~~that~~a ~~funds~~down ~~disbursed~~payment ~~are~~and ~~within~~carefully ~~parameters~~analyzing, ~~set~~verifying byand documenting the ~~original~~borrower’s ~~construction~~credit ~~budget,~~qualifications and ~~properly~~monthly income as well as analyzing and documenting ~~each~~the ~~construction~~value ~~draw~~of the collateral.

~~Home~~Lease ~~equity loans~~financing. Our lease portfolio includes capital leases that we have originated and leases that we have acquired from brokers or third parties. As of December 31, ~~2011~~2013, our ~~home~~lease ~~equity~~portfolio ~~loans~~ totaled $~~59.~~7.8 million, or 131.6189%, of our total loan portfolio. ~~Home~~ We ~~equity~~provide ~~loans~~lease ~~are~~financing ~~generally~~for ~~secured~~a byvariety ~~second~~of ~~liens~~equipment onand ~~residential~~machinery, ~~real~~including ~~estate.~~office ~~Home~~equipment, ~~equity~~heavy ~~loans~~equipment, telephone systems, tractor trailers and computers. Lease terms are ~~subject~~generally from three to ~~the~~five ~~same~~years. We ~~risks~~have asprovided ~~other~~lease ~~loans~~financing in the past and will continue to ~~individuals,~~do ~~including~~so ~~the~~on ~~financial~~an ~~strength~~infrequent ~~and~~basis ~~employment~~for ~~stability~~customers ofwho maintain an ongoing relationship with the ~~borrower.~~Bank ~~The~~through participation in other Bank ~~attempts~~ toproduct ~~mitigate~~offerings. Our ~~these~~leases ~~risks~~are bygenerally ~~carefully~~underwritten ~~verifying~~based ~~and~~on ~~documenting~~several factors, including the ~~borrower’s~~overall credit ~~quality~~worthiness, ~~employment stability~~experience, ~~monthly~~current ~~income,~~financial condition and ~~understanding~~capacity ~~and~~of ~~documenting~~the lessee, the ~~value~~amount of the financing to collateral. value, and general conditions of the market.

Residential real estate loans. Our residential real estate loan portfolio consists primarily of first and second mortgage loans on residential properties. As of December 31, 2011, $37.9 million, or 8.63%, of our loan portfolio consisted of residential mortgage loans. The terms of these loans typically include 3 to 7 year balloon payments based on a 15 to 30 year amortization, and accrue interest at a fixed or variable rate. By offering these products, we can offer credit to individuals who are self-employed or have significant income from partnerships or investments. These individuals are often unable to satisfy the underwriting criteria permitting the sale of their mortgages into the secondary market. 6

InThe ~~addition,~~primary werisks ~~originate~~related ~~residential~~to ~~mortgage~~our ~~loans with~~lease portfolio are the ~~intention~~value of ~~selling~~the ~~these~~collateral ~~loans~~securing in the ~~secondary~~lease ~~market.~~and ~~During~~specific ~~2011,~~risks werelated ~~originated~~to ~~approximately~~the ~~$66.0~~business ~~million~~ of ~~residential~~each ~~mortgage~~borrower. To ~~loans~~address ~~held~~these ~~for sale~~risks, ~~and~~ we ~~sold~~attempt ~~approximately~~to ~~$68.7~~understand ~~million in~~ the ~~secondary~~business ~~market.~~of Weeach ~~originate conventional first mortgage loans through referrals from real estate brokers~~borrower, ~~builders,~~value ~~developers,~~the ~~prior~~underlying ~~customers~~collateral appropriately and ~~media~~structure ~~advertising,~~the aslease ~~well~~amortization asto ~~through~~ensure ~~our~~that ~~internet~~the ~~website,~~value ~~InternetMortgage.com. The origination~~ of athe ~~mortgage~~collateral ~~loan~~exceeds ~~from~~ the ~~date~~ oflease ~~initial~~balance ~~application~~during ~~through~~the ~~closing~~term ~~normally~~of ~~takes 15 to 60 days. To reduce interest rate risk on mortgage loans sold in~~ the ~~secondary market, we acquire forward commitments from investors prior to loan closing~~lease.

~~Our~~Investment mortgage loan credit review process is consistent with the standards set by traditional secondary market sources. The lender reviews the appraised value, credit report, debt service ratios, and gathers data during the underwriting process in accordance with various laws and regulations governing real estate lending. Loans originated by the Bank are sold with servicing released to maximize per loan profits while minimizing the risks and costs associated with retaining servicing rights. Commitments are obtained from the purchasing investor on a loan-by-loan basis on a 30, 45 or 60-day delivery commitment. Interest rates are generally committed to the borrower when a rate commitment Activities

5The objectives of our investment policies are to:

~~Table~~· secure the safety of ~~Contents~~principal;

is· provide ~~obtained~~adequate from the investor. Loans are funded by the Bank and purchased by the investor within 30-45 days following closing pursuant to commitments obtained from the investor. We sell conventional FHA, VA, USDA conforming and jumbo loans that are available to the Bank via the various secondary market investors for cash on a limited recourse basis. In our recent experience, we have not been asked to repurchase significant amounts of loans. The Bank repurchased one loan during 2011 and did not repurchase any loans in 2010. Consequently, foreclosure losses on all sold loans are primarily the responsibility of the investor and not that of the Bank. liquidity;

As· provide ~~with~~securities ~~other~~for ~~loans~~use toin ~~individuals,~~pledging ~~the~~for ~~risks~~public ~~related~~funds toor ~~residential~~repurchase ~~mortgage~~agreements; ~~loans primarily include the value of the underlying property~~ and the financial strength and employment stability of the borrower. We attempt to manage these risks by performing a pre-funding underwriting that consists of the verification of employment and utilizes a detailed checklist of loan qualification requirements, including the source and amount of down payments, bank accounts, existing debt and overall credit.

~~Lease~~· maximize ~~financing.~~after-tax ~~Our lease portfolio includes capital leases that we have originated and leases that we have acquired from brokers or third parties~~income. As of December 31, 2011, our lease portfolio totaled $2.3 million, or 0.52%, of our total loan portfolio. We provide lease financing for a variety of equipment and machinery, including office equipment, heavy equipment, telephone systems, tractor trailers and computers. Lease terms are generally from three to five years. We have provided lease financing in the past and will continue to do so for our customers. However, we do not expect to pursue lease financing unless the lessor maintains an ongoing relationship with the Bank through participation in other Bank product offerings. As a result of a reduction in force in our leasing department during 2008, we expect the lease portfolio to continue to decrease over time. Our leases are generally underwritten based on several factors, including the overall credit worthiness, experience and current financial condition of the lessee, the amount of the financing to collateral value, and general conditions of the market.

~~The~~We ~~primary risks~~conduct ~~related~~our investing activities pursuant to an Investment Policy adopted by our ~~lease~~Board of Directors. The Investment Policy establishes guidelines and objectives for permissible types of investments, liquidity management, investment maturities, and investment portfolio ~~are~~administration. ~~the~~The ~~value~~Company invests primarily in obligations of agencies of the ~~underlying~~United ~~collateral~~States and ~~specific~~bank ~~risks~~qualified ~~related~~municipal tobonds ~~the~~issued ~~business~~by ofstate ~~each~~and ~~borrower~~local political subdivisions. Although Todirect ~~address~~obligations ~~these~~of ~~risks~~the United States are permitted by our Investment Policy, we ~~attempt~~currently do not hold any in our portfolio. In order to ~~understand~~ensure the ~~business~~safety of ~~each~~principal, ~~borrower~~the Company does not invest in sub-prime mortgages and typically does not invest in corporate debt or other securities even though they are permitted by our Investment Policy. In addition, ~~value~~we ~~the~~may ~~underlying collateral~~enter ~~appropriately~~into federal funds transactions with our principal correspondent banks, and ~~structure~~depending ~~the~~on our liquidity position, may act as a net seller or purchaser of these funds. The sale of federal funds is effectively a short-term loan ~~amortization~~from us to ~~ensure~~another ~~that~~financial ~~the~~institution; ~~value~~while ofconversely, the ~~collateral~~purchase ~~exceeds~~of ~~the~~federal ~~lease~~funds ~~balance~~is ~~during~~effectively ~~the~~a short-term ofloan ~~the~~from ~~lease.~~another financial institution to us.

~~Consumer~~Deposit loans. As of December 31, 2011, our consumer loans totaled $6.0 million, or 1.37% of our total loan portfolio. A substantial part of this amount consisted of installment loans to individuals in our market area. Installment lending offered directly by the Bank in our market area includes automobile loans, recreational vehicle loans, home improvement loans, unsecured lines of credit and other loans to individuals. A portion of the Bank’s consumer loan portfolio consists of indirect automobile loans offered through automobile dealerships located primarily in our trade area. As of December 31, 2011, approximately $308,000, or 5.14%, of the Bank’s consumer loan portfolio represented indirect automobile loans. The Bank’s loans made to individuals through this program generally represent loans to purchase new or late model automobiles. The Bank’s consumer and other loans are underwritten based on the borrower’s income, current debt, past credit history, collateral, and the reputation of the originating dealership with respect to indirect automobile loans. Services

~~Consumer~~The ~~loans~~principal sources of funds for the Bank are ~~subject~~core todeposits from the ~~same~~local ~~risks~~market asareas ~~other~~surrounding ~~loans~~the toBank’s ~~individuals~~banking centers, including ~~the~~demand ~~financial~~deposits, ~~strength~~interest-bearing transaction accounts, money market accounts, savings deposits and ~~employment~~time ~~stability~~deposits. Transaction accounts include interest-bearing and non-interest-bearing accounts, which provide the Bank with a source of fee income, a low-cost source of funds and cross-marketing opportunities. Since 2001, the ~~borrower~~Bank has realized deposit growth from commercial checking accounts. InWhile ~~addition~~these accounts do not earn interest, ~~some~~many ~~consumer~~of ~~loans~~them ~~are~~receive ~~subject~~an earnings credit on their average balance to offset the ~~additional~~ ~~risk~~cost ~~that~~of ~~the~~other ~~loan~~services isprovided ~~unsecured~~by the Bank. The ~~For~~Bank ~~loans~~introduced ~~that~~its ~~are~~Performance ~~secured~~Checking product in 2007, ~~the~~which ~~underlying~~has ~~collateral~~proven ~~may~~to be ~~rapidly~~an ~~depreciating~~attractive ~~and~~product ~~may~~in ~~not~~our ~~provide~~market anarea ~~adequate~~as ~~source~~it ofpays ~~repayment~~a ifhigher werate ~~are~~than ~~required~~most tochecking ~~repossess~~accounts as long as the ~~collateral~~customer meets certain signature based debit card transactional requirements and at least one direct deposit or ACH debit within each statement qualification cycle. In ~~The~~February 2011, the Bank ~~attempts~~introduced ~~to mitigate~~the ~~these~~Ultimate ~~risks~~Checking byproduct ~~requiring~~which has also been an attractive product in our market area. The Ultimate Checking product is an interest-bearing demand product that pays a ~~down~~higher ~~payment~~tiered ~~and~~rate ~~carefully~~of ~~verifying~~interest ~~and~~based ~~documenting~~on certain signature based debit card transactional requirements, the ~~borrower~~dollar amount of signature based debit card transactions and the customer’s acceptance ~~credit~~of ~~quality,~~e-statements. The ~~employment~~Bank ~~stability,~~realizes ~~monthly~~non-interest income, ~~and~~from ~~with~~the ~~respect~~signature tobased ~~indirect~~debit ~~automobile~~card ~~loans~~transactions that, ~~understanding~~when ~~and~~netted ~~documenting~~against the ~~value~~ cost of the ~~collateral~~rate ~~and~~paid to the ~~reputation~~customer, results in a very attractive cost of funds for the ~~originating~~Bank. The ~~dealership~~Bank also offers a money market account which is a daily access account that bears a tiered rate of interest and allows for limited check-writing ability. We believe transaction and money market accounts provide a stable source of funding for the Bank and provide us with the potential to cross-sell additional services to these account holders.

6Time deposits and savings accounts also provide a relatively stable customer base and source of funding. Due to the nature and behavior of these deposit products, management reviews and analyzes our pricing strategy in comparison not only to competitor rates, but also in comparison to alternative funding sources. In setting deposit rates, management also considers profitability, the matching of term lengths of funding sources with assets, the attractiveness to customers, and rates offered by our competitors. The Bank is a member of the Certificate of Deposit Account Registry Service (“CDARS”) and Promontory Interfinancial Network Insured Cash Sweep (“ICS”) service which effectively provides depositors with Federal Deposit Insurance Corporation (“FDIC”) insurance on amounts in excess of FDIC insurance coverage limits, which is currently $250,000 per insured capacity, of

~~Table of Contents~~7

certificate of deposits through CDARS, and demand and money market deposit accounts through ICS. CDARS and ICS allows the Bank to break large deposits into smaller amounts and place them in a network of other CDARS and ICS banks to reach full FDIC insurance coverage on the entire deposit account balance.

~~Investment~~Trust ~~Activities~~ Services

The ~~objectives~~Bank began offering trust services in 1996. Until 1999, the Bank’s trust services were offered exclusively through the employees of ~~our~~an ~~investment~~unaffiliated ~~policies~~trust company. The Bank hired a full-time officer in 1999 to develop the Bank’s trust business and the trust department now has three full-time officers. Trust services are marketed to: both existing Bank customers and new customers. We believe that the ability to offer trust services as a part of our financial services to customers of the Bank presents a significant cross-marketing opportunity. The services currently offered by the Bank’s trust department include the administration of personal trusts, investment management agency accounts, self-directed individual retirement accounts, qualified retirement plans, corporate trust accounts and custodial trust accounts. As of December 31, 2013, the Bank’s trust department administered 285 accounts, with assets under administration of approximately $155.3 million. Trust services provide the Bank with a source of fee income and additional deposits. For the years ended December 31, 2013, 2012 and 2011, the amount of our gross fee income from trust services was $560,000, $543,000 and $527,000, respectively.

•Investment ~~secure~~Brokerage ~~the safety of principal;~~Services

•In 1999, the Bank began offering investment brokerage services through an unrelated broker-dealer. These services are currently offered at all of our locations. Currently, four individuals responsible for providing these services are joint employees of the Bank and the registered broker-dealer. As of December 31, 2013, the Bank’s investment brokerage services had assets under administration of approximately $104.0 million. Investment brokerage services provide ~~adequate~~a ~~liquidity;~~source of fee income for the Bank. For the years ended December 31, 2013, 2012 and 2011, the amount of our fee income generated from investment brokerage services was $500,000, $434,000 and $387,000, respectively.

~~• provide securities for use in pledging for public funds or repurchase agreements; and~~Competition

•The ~~maximize~~Bank ~~after-tax~~encounters ~~income~~competition primarily in seeking deposits and in obtaining loan customers. The level of competition for deposits in our market area is high. Our principal competitors for deposits are other financial institutions within a few miles of our locations including other banks, savings institutions and credit unions. Competition among these institutions is based primarily on interest rates offered, the quality of service provided, and the convenience and accessibility of products, services and delivery channels. Additional competition for depositors’ funds comes from U.S. government securities, private issuers of debt obligations and other providers of investment alternatives for depositors.

The ~~Company~~Bank ~~invests~~competes ~~primarily~~ in ~~obligations~~our oflending, ~~agencies~~investment ofbrokerage ~~the~~and ~~United~~trust ~~States.~~activities ~~Although~~with ~~direct~~other ~~obligations~~financial ~~of the United States~~institutions, ~~obligations~~such ~~guaranteed~~ as tobanks ~~principal~~ and ~~interest~~thrift byinstitutions, ~~the~~credit ~~United~~unions, ~~States~~automobile financing companies, mortgage~~-backed~~ companies, securities ~~and~~firms, ~~bank-qualified~~investment ~~obligations~~companies ~~of state~~ and ~~local~~other ~~political~~finance ~~subdivisions~~companies. Many ~~are~~of ~~permitted by~~ our ~~investment~~competitors ~~policy,~~are ~~we currently do~~ not ~~hold~~subject ~~any in our portfolio. In order~~ to ~~ensure~~ the ~~safety~~same ofextensive ~~principal,~~federal ~~the~~regulations ~~Company~~that ~~does~~govern ~~not~~bank ~~invest~~holding incompanies ~~sub~~and federally-~~prime~~insured ~~mortgages~~banks and ~~typically~~state ~~does~~regulations ~~not~~governing ~~invest~~state-chartered ~~in corporate debt or other securities even though they are permitted by our investment policy~~banks. As Ina ~~addition~~result, wethese ~~enter~~non-bank ~~into~~competitors ~~federal~~have ~~funds transactions~~some ~~with~~advantages ~~our~~over ~~principal~~the ~~correspondent~~Bank ~~banks,~~in ~~and~~providing ~~depending~~certain onproducts ~~our~~and ~~liquidity position, act as a net seller or purchaser of these funds~~services. Many ~~The sale~~ of ~~federal~~the ~~funds~~financial isinstitutions ~~effectively~~with awhich ~~short-term~~we ~~loan~~compete ~~from~~are uslarger toand ~~another~~possess ~~bank;~~greater ~~while~~financial ~~conversely~~resources, ~~the purchase~~name ofrecognition ~~federal~~and ~~funds~~market ~~is effectively a short-term loan from another bank to us~~presence.

~~Deposit Services~~ 8

The principal sources of funds for the Bank are core deposits from the local market areas surrounding the Bank’s banking centers, including demand deposits, interest-bearing transaction accounts, money market accounts, savings deposits and time deposits. Transaction accounts include interest-bearing and non-interest-bearing accounts, which provide the Bank with a source of fee income, a low-cost source of funds and cross-marketing opportunities. Since 2001, the Bank has realized deposit growth from commercial checking accounts. While these accounts do not earn interest, many of them receive an earnings credit on their average balance to offset the cost of other services provided by the Bank. The Bank’s Performance Checking product has proven to be an attractive product in our market area as it pays a higher rate than most checking accounts as long as the customer meets the requirements of at least 12 signature based debit card transactions and at least one direct deposit or ACH debit each statement qualification cycle. In February 2011, the Bank introduced the Ultimate Checking product which has also been an attractive product in our market area. The Ultimate Checking product is an interest-bearing demand product that pays a higher tiered rate of interest based on the dollar amount of signature based debit card transactions and the customer must have at least one direct deposit or ACH debit each statement qualification and be enrolled in e-statements. The Bank realizes non-interest income from the signature based debit card transactions that, when netted against the high rate paid to the customer, results in a very attractive cost of funds for the Bank. The Bank also offers a money market account which is a daily access account that bears a tiered rate of interest and allows for limited check-writing ability. We believe transaction and money market accounts to be a stable source of funding for the Bank and provide us with the potential to cross-sell additional services to these account holders. Trademarks

Time deposits and savings accounts also provide a relatively stable customer base and source of funding. Due to the nature and behavior of these deposit products, management reviews and analyzes our pricing strategy in comparison not only to competitor rates, but also as compared to other alternative funding sources. In setting deposit rates, management also considers profitability, the matching of term lengths with assets, the attractiveness to customers, and rates offered by our competitors. The Bank is a member of the Certificate of Deposit Account Registry Service (“CDARS”) which effectively gives depositors Federal Deposit Insurance Corporation (FDIC) insurance on amounts of certificate of deposits greater than FDIC insurance coverage, which is currently $250,000. CDARS allows the Bank to break large deposits into smaller amounts and place them in a network of other CDARS banks to ensure that full FDIC insurance coverage is gained on the entire deposit. The Bank’s Funds Management policy allows for acceptance of brokered deposits excluding CDARS, up to 20% of total deposits, which can be utilized to support the growth of the Bank. As of December 31, ~~2011,~~2013 the Bank had ~~$10.1 million in brokered deposits excluding deposits in~~ the ~~CDARS~~following ~~program,~~registered ~~or 2.07% of total deposits. The Bank had $24.4 million of customer funds placed into the CDARS program at December 31, 2011.~~ trademarks:

7BANK OF BLUE VALLEY

~~Table~~DEPOSIT ~~of Contents~~I.T.

~~Trust Services~~ INTERNETMORTGAGE.COM

The Bank began offering trust services in 1996. Until 1999, the Bank’s trust services were offered exclusively through the employees of an unaffiliated trust company. The Bank hired a full-time officer in 1999 to develop the Bank’s trust business and the trust department now has three full-time officers. Trust services are marketed to both existing Bank customers and new customers. We believe that the ability to offer trust services as a part of our financial services to customers of the Bank presents a significant cross-marketing opportunity. The services currently offered by the Bank’s trust department include the administration of personal trusts, investment management agency accounts, self-directed individual retirement accounts, qualified retirement plans, corporate trust accounts and custodial trust accounts. As of December 31, 2011, the Bank’s trust department administered 258 accounts, with assets under administration of approximately $129.6 million. Trust services provide the Bank with a source of fee income and additional deposits. In 2011, the amount of our gross fee income from trust services was $527,000. Employees

~~Investment~~At ~~Brokerage~~December ~~Services~~31, 2013, the Bank had approximately 173 total employees, with 162 full-time employees. The Company and its other subsidiaries do not have any employees. None of the Bank’s employees are subject to a collective bargaining agreement. We consider the Bank’s relationship with its employees to be excellent.

In 1999, the Bank began offering investment brokerage services through an unrelated broker-dealer. These services are currently offered at all of our locations. Four individuals responsible for providing these services are joint employees of the Bank and the registered broker-dealer. As of December 31, 2011, the Bank’s investment brokerage services had assets under administration of approximately $80.5 million. Investment brokerage services provide a source of fee income for the Bank. In 2011, the amount of our fee income generated from investment brokerage services was $387,000. 9

~~Competition~~Directors and Executive Officers of the Registrant

~~The~~For ~~Bank~~each ~~encounters competition primarily in seeking deposits and in obtaining loan customers. The level~~ of ~~competition for deposits in~~ our ~~market~~directors ~~area~~and ~~is high. Our principal competitors for deposits are other financial institutions within a few miles of~~ our ~~locations~~executive ~~including other banks~~officers, ~~savings~~we ~~institutions~~have ~~and~~set ~~credit~~forth ~~unions.~~below ~~Competition~~their ~~among~~ages ~~these~~as ~~institutions is based primarily on interest rates offered, the quality~~ of ~~service~~December ~~provided~~31, ~~and the convenience of banking facilities. Additional competition for depositors’ funds comes from U.S. government securities~~2013, ~~private issuers of debt obligations~~ and ~~other~~their ~~providers~~principal ~~of investment alternatives for depositors~~positions.

The Bank competes in our lending, investment brokerage and trust activities with other financial institutions, such as banks and thrift institutions, credit unions, automobile financing companies, mortgage companies, securities firms, investment companies and other finance companies. Many of our competitors are not subject to the same extensive federal regulations that govern bank holding companies and federally-insured banks and state regulations governing state-chartered banks. As a result, these non-bank competitors have some advantages over the Bank in providing certain products and services. Many of the financial institutions with which we compete are larger and possess greater financial resources, name recognition and market presence.

Name	Age	Positions

Directors

Robert D. Regnier	65	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 Bank
Donald H. Alexander	75	Director of Blue Valley Ban Corp. and the Bank
James Gegg	62	Director of Blue Valley Ban Corp.
Robert D. Taylor	66	Director of Blue Valley Ban Corp. and Chairman of the Audit Committee of Blue Valley Ban Corp.

Additional Directors of the Bank

Harvey S. Bodker	78	Director of the Bank
Richard L. Bond	78	Director of the Bank
Suzanne E. Dotson	66	Director of the Bank
Charles H. Hunter	71	Director of the Bank

Executive Officers who are not Directors

Mark A. Fortino	47	Executive Vice President and Chief Financial Officer of the Bank; Chief Financial Officer of Blue Valley Ban Corp.
Bruce A. Easterly	54	Executive Vice President – Chief Lending Officer of the Bank
Bonnie M. McConnaughy	54	Senior Vice President – Deposit Operations and e-Business Solutions of the Bank

~~Trademarks~~Available Information

AsOur website address is http://www.bankbv.com. Information included to or referred to on our website is not incorporated by reference in or otherwise a part of ~~December 31~~this report. Financial information, ~~2011~~including ~~the~~our ~~Bank~~annual ~~had~~reports ~~the~~can ~~following~~be ~~registered~~obtained ~~trademarks:~~ free of charge from our website.

~~Bank~~Regulation ofand ~~Blue Valley~~ Supervision

~~DEPOSIT~~The ICompany and its subsidiaries are extensively regulated under both federal and state laws.T Laws and regulations to which the Company and the Bank are subject govern, among other things, the scope of business, investments, reserve levels, capital levels relative to operations, the nature and amount of collateral for loans, the establishment of branches, mergers and consolidations and the payment of dividends. These laws and regulations are intended primarily to protect depositors, not stockholders. Any change in applicable laws or regulations may have a material effect on the Company’s business and prospects, and legislative and policy changes may affect the Company’s operations. The Company cannot predict the nature or the extent of the effects on its business and earnings that fiscal or monetary policies, economic controls or new federal or state legislation may have in the future.

~~INTERNETMORTGAGE.COM~~The following references to statutes and regulations affecting the Company and the Bank are brief summaries only and do not purport to be complete and are qualified in their entirety by reference to the actual statutes and regulations.

~~Employees~~ 10

AtApplicable December 31, 2011, the Bank had approximately 173 total employees, with 162 full-time employees. The Company and its other subsidiaries do not have any employees. None of the Bank’s employees are subject to a collective bargaining agreement. We consider the Bank’s relationship with its employees to be excellent. Legislation

8The enactment of the legislation described below has affected the banking industry generally and will have an on-going effect on Blue Valley Ban Corp. and its subsidiaries.

~~Table~~Dodd-Frank Wall Street Reform and Consumer Protection Act. The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law on July 21, 2010. The Dodd-Frank Act resulted in sweeping changes in the regulation of ~~Contents~~financial institutions aimed at strengthening the sound operation of the financial services sector. The Dodd-Frank Act provides for the following, among other provisions:

~~Directors~~· ~~and~~Establishes ~~Executive~~a ~~Officers~~new ofoversight regulator, the ~~Registrant~~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.

~~For~~· ~~each~~Centralizes ofresponsibility ~~our~~for ~~directors~~consumer ~~and~~financial ~~our~~protection ~~executive~~by ~~officers~~creating a new agency, wethe ~~have~~Consumer ~~set~~Financial ~~forth~~Protection ~~below~~Bureau, ~~their~~with ~~ages~~broad aspowers ofto ~~December 31,~~enforce ~~2011,~~consumer protection laws and ~~their~~ensure ~~principal~~that ~~positions~~markets for consumer financial products and services are fair, transparent and competitive.

Name	Age	Positions
Directors
Robert D. Regnier	63	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 Bank
Donald H. Alexander	73	Director of Blue Valley Ban Corp. and the Bank
Michael J. Brown	55	Director of Blue Valley Ban Corp.
Robert D. Taylor	64	Director of Blue Valley Ban Corp. and Chairman of the Audit Committee of Blue Valley Ban Corp.
Additional Directors of the Bank
Harvey S. Bodker	76	Director of the Bank
Richard L. Bond	76	Director of the Bank
Suzanne E. Dotson	65	Director of the Bank
Charles H. Hunter	69	Director of the Bank
Executive Officers who are not Directors
Mark A. Fortino	45	Executive Vice President and Chief Financial Officer of the Bank; Chief Financial Officer of Blue Valley Ban Corp.
Bruce A. Easterly	52	Executive Vice President – Chief Lending Officer of the Bank
Bonnie M. McConnaughy	52	Senior Vice President – Deposit Operations and e-Business Solutions of the Bank

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.

~~Available~~· ~~Information~~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.

~~Our~~· ~~website~~Permanently ~~address~~increases isthe ~~http://www.bankbv.com.~~FDIC ~~Information~~deposit ~~included~~insurance orper ~~referred~~depositor tofrom ~~on our website is not incorporated by reference in or otherwise a part of this report. Financial information~~$100, ~~including~~000 ~~our~~to ~~annual reports on Form 10-K~~$250,000 ~~quarterly reports on Form 10-Q,~~ and ~~amendments~~provides tounlimited ~~those~~deposit ~~reports~~coverage ~~can~~for benon-interest ~~obtained~~bearing ~~free~~transaction ofaccounts ~~charge~~at ~~from~~all ~~our~~insured ~~website.~~depository ~~These~~institutions ~~reports~~until ~~are~~December ~~available~~31, ~~on our website as soon as reasonably practicable after they are electronically filed with or furnished to the Securities Exchange Commission (“SEC”)~~2012. ~~These reports are also available on the SEC’s website at http://www.sec.gov.~~

~~Regulation~~· Repeals the federal prohibitions on the payment of interest on demand deposits, thus permitting depository institutions to pay interest on business transactions and ~~Supervision~~other accounts.

~~The~~· ~~Company~~Requires ~~and~~the ~~its~~Federal ~~subsidiaries~~Reserve ~~are extensively regulated under both federal and state laws. Laws and regulations~~ to ~~which~~issue ~~the~~rules ~~Company and the Bank are subject govern, among other things, the scope of business, investments, reserve levels, capital levels relative~~ to ~~operations,~~limit the ~~nature and~~ amount of ~~collateral~~ ~~for~~any ~~loans,~~debit ~~the~~card ~~establishment~~interchange offee ~~branches,~~that ~~mergers~~an ~~and~~issuer ~~consolidations~~may ~~and~~receive ~~the~~or ~~payment~~charge ofwith ~~dividends.~~respect ~~These~~to ~~laws~~electronic ~~and~~debit ~~regulations~~card ~~are~~transactions ~~intended primarily~~ to ~~protect~~be ~~depositors,~~reasonable ~~not~~and ~~stockholders.~~proportional ~~Any~~to ~~change~~the incost ~~applicable~~incurred ~~laws~~by ~~or regulations may have a material effect on~~ the ~~Company’s~~issuer ~~business~~with ~~and~~respect ~~prospects,~~to ~~and legislative and policy changes may affect~~ the ~~Company’s operations~~transaction. ~~The~~Cards ~~Company~~issued ~~cannot~~by ~~predict~~banks ~~the~~with ~~nature~~less orthan ~~the~~$10 ~~extent~~billion ofin ~~the~~assets ~~effects~~are onto ~~its~~be ~~business~~exempt ~~and~~from ~~earnings~~this ~~that fiscal or monetary policies~~requirement, ~~economic~~thus ~~controls~~Blue orValley ~~new~~Ban ~~federal~~Corp. orwould ~~state~~be ~~legislation~~exempt ~~may~~from ~~have~~this ~~in the future~~requirement.

9· 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.

~~Table~~· Restricts the ability of ~~Contents~~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 are grandfathered under this provision.

~~The~~· ~~following~~Mortgage ~~references~~reform ~~to statutes~~ and ~~regulations~~anti-predatory ~~affecting~~lending ~~the~~provision ~~Company~~places ~~and~~new ~~the~~regulations ~~Bank~~on ~~are~~mortgage ~~brief~~originators ~~summaries only~~to ~~and~~ensure doa ~~not~~borrower’s ~~purport~~ability to berepay ~~complete~~ and ~~are~~imposes ~~qualified~~new indisclosure ~~their~~requirements ~~entirety by reference to the actual statutes~~ and ~~regulations.~~appraisal reforms.

~~Applicable Legislation~~The specific impact of the Dodd-Frank Act on our current activities and our financial performance will depend on the manner in which the relevant agencies develop and implement required rules and the reaction of market participants to these regulatory developments. Many provisions of the Dodd-Frank Act are subject to rulemaking

~~The enactment of the legislation described below has affected the banking industry generally and will have an on-going effect on Blue Valley Ban Corp. and its subsidiaries.~~ 11

~~Dodd-Frank Wall Street Reform~~ and ~~Consumer~~will ~~Protection~~take ~~Act.~~effect ~~The~~over ~~Dodd-Frank Wall~~several ~~Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) was signed into law on July 21~~years, ~~2010.~~thus ~~The~~making ~~Dodd-Frank~~it ~~Act~~difficult ~~resulted~~to inassess ~~sweeping changes in~~ the ~~regulation~~overall of financial ~~institutions~~impact ~~aimed~~on atus, ~~strengthening~~our ~~the~~customers ~~sound operation~~or of the financial ~~services sector~~industry. ~~The Dodd-Frank Act provides for the following, among other provisions:~~

•Emergency ~~Establishes~~Economic aStabilization ~~new~~Act ~~oversight~~of ~~regulator~~2008. The Emergency Economic Stabilization Act of 2008 (the “EESA”) was signed into law on October 3, 2008. This legislation was principally designed to allow the ~~Financial~~Treasury ~~Stability~~and ~~Oversight~~other ~~Council~~government agencies to take action to restore liquidity and stability to the U.S. financial system. This legislation authorized the Treasury through the Troubled Asset Relief Program to purchase from financial institutions and their holding companies up to $700 billion in mortgage loans and certain other financial assets, including debt and equity securities issued by financial institutions and their holding companies. The Treasury allocated $250 billion to ~~monitor~~the Troubled Asset Relief Program (“TARP”) Capital Purchase Program (“CPP”). The CPP was designed to attract broad participation by healthy institutions, to stabilize the financial system, and to increase lending for ~~systemic~~the ~~risk~~benefit of the U.S. economy. As part of the CPP, the Treasury purchased debt and equity securities from participating institutions. Qualified participants could sell an equity interest to ~~determine~~the ~~which~~Treasury ~~entities~~up ~~pose~~to ~~significant~~3% of its risk-weighted assets. These equity instruments constitute Tier 1 Capital for eligible institutions. The Company’s Board of Directors approved the Company’s participation in the program, asand ~~well~~the asCompany ~~monitor~~entered ~~financial~~into ~~regulatory~~a ~~proposals~~Securities Purchase Agreement – Standard Terms on December 5, 2008. Pursuant to the agreement, the Company issued and ~~standards~~sold to the Treasury 21,750 shares of Fixed Rate Cumulative Perpetual Preferred Stock, along with a ten year warrant to purchase 111,083 shares of the Company’s common stock, for a total cash price of $21.75 million. On October 21, 2013, the Fixed Rate Cumulative Preferred Stock was auctioned by the Treasury for $21.26 million. As a result, the Fixed Rate Cumulative Preferred Stock is now held by third party investors unaffiliated with the U.S. government and except for certain certification and disclosure requirements we are no longer subject to the rules and regulations that were established with the CPP.

•USA ~~Centralizes~~PATRIOT ~~responsibility~~Act. The ~~for~~Uniting ~~consumer~~and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) was signed into law on October 26, 2001. This legislation enhances the powers of domestic law enforcement organizations and makes numerous other changes aimed at countering the international terrorist threat to the security of the United States. Title III of the legislation most directly affects the financial ~~protection~~services industry. It is intended to enhance the federal government’s ability to fight money laundering by ~~creating~~monitoring currency transactions and suspicious financial activities. The USA PATRIOT Act has significant implications for depository institutions involved in the transfer of money. Under the USA PATRIOT Act, a ~~new~~financial ~~agency~~institution must establish due diligence policies, ~~the~~procedures, ~~Consumer~~and controls reasonably designed to detect and report money laundering through correspondent accounts and private banking accounts. Financial ~~Protection~~institutions ~~Bureau~~must follow regulations adopted by the Treasury to encourage financial institutions, ~~with~~their ~~broad~~regulatory ~~powers~~authorities, and law enforcement authorities to ~~enforce~~share ~~consumer~~information ~~protection~~about ~~laws~~individuals, entities, and ~~ensure~~organizations ~~that~~engaged ~~markets~~in or suspected of engaging in terrorist acts or money laundering activities. Financial institutions must follow regulations setting forth minimum standards regarding customer identification. These regulations require financial institutions to implement reasonable procedures for ~~consumer~~verifying the identity of any person seeking to open an account, maintain records of the information used to verify the person’s identity, and consult lists of known or suspected terrorists and terrorist organizations provided to the financial ~~products~~institution by government agencies. Every financial institution must establish anti-money laundering programs, including the development of internal policies and ~~services~~procedures, ~~are~~designation ~~fair~~of a compliance officer, ~~transparent~~employee training, and ~~competitive~~an independent audit function.

•Gramm-Leach-Bliley ~~Amends~~Act. The ~~Sarbanes~~Gramm-~~Oxley~~Leach-Bliley Act ~~404(b)~~was tosigned ~~make~~into ~~permanent~~law on November 12, 1999. This major banking legislation expands the ~~temporary~~permissible ~~exemption~~activities ~~for~~of ~~smaller~~bank ~~reporting~~holding companies ~~(filers~~by permitting them to engage in activities, or affiliate with ~~less~~entities ~~than~~that ~~$75~~engage ~~million~~in activities, that are “financial in ~~market~~nature.” Activities ~~cap~~that –the ~~Blue~~Gramm-Leach-Bliley ~~Valley~~Act ~~Ban~~expressly ~~Corp~~deems to be financial in nature include, among other things, securities and insurance underwriting and agency, investment management and merchant banking. isThe aFederal ~~smaller~~Reserve ~~reporting~~and ~~company)~~the toTreasury, ~~comply~~in cooperation with ~~the~~one ~~independent~~another, ~~auditor~~determine ~~attestation~~what ~~requirement~~additional onactivities are “financial in nature.” With certain exceptions, the ~~company’s~~Gramm-Leach-Bliley ~~evaluation~~Act ofsimilarly expands the ~~effectiveness~~authorized activities of ~~internal~~subsidiaries ~~controls~~of ~~over~~national ~~financial~~banks. The ~~reporting~~provisions of the Gramm-Leach-Bliley Act authorizing the expanded powers became effective March 11, 2000.

•Bank ~~Changes~~holding ~~the~~companies ~~assessment~~that ~~base~~intend ~~for~~to ~~FDIC~~engage ~~insurance~~in ~~assessments~~activities ~~from~~that ~~the~~are ~~amount~~“financial ofin ~~total~~nature” ~~domestic~~must ~~deposits~~elect to ~~average~~become ~~consolidated~~“financial ~~total~~holding ~~assets~~companies.” Financial ~~less~~holding ~~average~~company ~~tangible~~status ~~equity~~is ~~(Tier~~only 1available ~~Capital)~~to a bank holding company if all of its affiliated depository institutions are “well capitalized” and ~~sets~~“well managed,” based on applicable banking regulations, and have a ~~target~~Community ~~size~~Reinvestment ~~for~~Act ~~the~~rating ~~Deposit~~of ~~Insurance~~at ~~Fund.~~least “a satisfactory record of meeting community

• 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, 2012.12

credit needs.” Financial holding companies and banks may continue to engage in activities that are financial in nature only if they continue to satisfy the well capitalized and well managed requirements. Bank holding companies that do not elect to be financial holding companies or that do not qualify for financial holding company status may engage only in non-banking activities deemed “closely related to banking” prior to adoption of the Gramm-Leach-Bliley Act. The Company voluntarily terminated its status as a financial holding company in June 2008 as the Company was no longer engaged in activities pursuant to the Bank Holding Company Act.

•The ~~Repeals~~Gramm-Leach-Bliley Act also calls for “functional regulation” of financial services businesses in which functionally regulated subsidiaries of bank holding companies will continue to be regulated by the ~~federal~~regulator ~~prohibitions~~that onordinarily has supervised their activities. As a result, state insurance regulators will continue to oversee the ~~payment~~activities of ~~interest~~insurance oncompanies ~~demand~~and ~~deposits~~agencies, ~~thus~~and ~~permitting~~the ~~depository~~Securities ~~institutions~~and Exchange Commission will continue to ~~pay~~regulate ~~interest~~the onactivities ~~business~~of ~~transactions~~broker-dealers and ~~other~~investment ~~accounts~~advisers, even where the companies or agencies are affiliated with a bank holding company. Federal Reserve authority to examine and adopt rules regarding functionally regulated subsidiaries is limited.

•The ~~Requires~~Gramm-Leach-Bliley ~~the~~Act ~~Federal~~imposed ~~Reserve~~an to“affirmative ~~issue~~and ~~rules~~continuing” toobligation ~~limit~~on ~~the~~all ~~amount~~financial ofservice ~~any~~providers ~~debit~~(not ~~card~~just ~~interchange~~banks ~~fee~~and ~~that~~their anaffiliates) ~~issuer~~to ~~may~~safeguard ~~receive~~consumer orprivacy ~~charge~~and ~~with~~requires ~~respect~~federal toand ~~electronic~~state ~~debit~~regulators, ~~card~~including ~~transactions~~the toFederal beReserve ~~reasonable~~ and ~~proportional~~the FDIC, to ~~the~~establish ~~cost~~standards ~~incurred~~to byimplement this privacy obligation. With certain exceptions, the ~~issuer~~Gramm-Leach-Bliley ~~with~~Act ~~respect~~prohibits banks from disclosing to non-affiliated parties any non-public personal information about customers unless the ~~transaction.~~bank ~~Cards~~has ~~issued~~provided bythe ~~banks~~customer with ~~less~~certain ~~than~~information ~~$10~~and ~~billion~~the incustomer ~~assets~~has ~~are~~had the opportunity to beprohibit ~~exempt~~the bank from ~~this~~sharing ~~requirement,~~the ~~thus~~information ~~Blue~~with ~~Valley~~non-affiliates. The ~~Ban~~new ~~Corp.~~privacy ~~would~~obligations bebecame ~~exempt~~effective ~~from~~July ~~this~~1, ~~requirement~~2001.

•The ~~Implements~~Gramm-Leach-Bliley ~~corporate~~Act ~~governance~~has ~~revisions~~been ~~for~~and ~~public~~may ~~companies,~~continue ~~including~~to ~~proxy~~be ~~access~~the ~~requirements~~subject ~~for~~of ~~stockholders~~extensive ~~and~~rule ~~stockholder~~making ~~non-binding~~by ~~vote~~federal onbanking ~~executive~~regulators ~~compensation~~ and ~~“golden parachute’ payments~~others.

•Basel ~~Restricts~~III Capital Requirements. On July 2, 2013, the ~~ability~~Board of ~~banks~~Governors toof ~~apply~~the ~~trust~~Federal ~~preferred~~Reserve ~~securities~~System ~~toward~~(“Board”) approved a final rule to establish a new comprehensive regulatory capital ~~requirements~~framework for all US banking organizations. On ~~However~~July 9, ~~Tier~~2013, 1the final rule was approved (as an interim final rule) by the Federal Deposit Insurance Corporation (“FDIC”). The Regulatory Capital ~~treatment~~Framework ~~for~~(Basel ~~trust~~III) ~~preferred~~implements ~~securities~~several ~~issued~~changes ~~before~~to ~~May~~the 19US regulatory capital framework required by the Dodd-Frank Act. The new US capital framework imposes higher minimum capital requirements, ~~2010~~additional iscapital ~~grandfathered~~buffers ~~for~~above ~~bank~~those ~~holding~~minimum ~~companies~~requirements, ~~with~~a ~~less~~more ~~than~~restrictive ~~$15~~definition ~~billion~~of incapital, ~~total~~and higher risk weights for various enumerated classifications of assets., ~~Blue~~the ~~Valley~~combined ~~Ban~~impact ~~Corp.’s~~of ~~trust~~which ~~preferred~~effectively ~~issuances~~results ~~are~~in ~~grandfathered~~substantially ~~under~~more ~~this~~demanding ~~provision~~capital standards for US banking organizations.

•The ~~Mortgage~~Basel ~~reform~~III final rule establishes a new common equity tier 1 capital (“CET1”) requirement, an increase in the tier 1 capital requirement from 4.0% to 6.0% and ~~anti-predatory~~maintains ~~lending~~the ~~provision~~current ~~places~~8.0% total capital requirement. The new ~~regulations~~CET1 onand ~~mortgage~~minimum ~~originators~~tier 1 capital requirements are effective January 1, 2015. In addition to ~~ensure~~these minimal capital ratios, the Basel final rule requires that all banking organizations maintain a ~~borrower’s~~“capital conservation buffer” consisting of common equity tier 1 capital (“CET1”) in an amount equal to 2.5% of risk-weighted assets in order to avoid restrictions on their ability to ~~repay~~make capital distributions and ~~imposes~~to ~~new~~pay ~~disclosure~~certain discretionary bonus payments to executive officers. Consequently, the capital conservation buffer effectively increases the minimum CET1 capital, tier 1 capital, and total capital requirements for US banking organizations to 7.0%, 8.5%, and ~~appraisal~~10.5%, ~~reforms~~respectively. Banking organizations with capital levels that fall within the buffer will be required to limit dividends, share repurchases or redemptions (unless replaced within the same calendar quarter by capital instruments of equal or higher quality), and discretionary bonus payments. The capital conservation buffer is phased in over a 5-year period beginning January 1, 2016.

10As required by Dodd-Frank, the Basel III final rule requires that capital instruments such as trust preferred securities and cumulative preferred shares be phased-out of tier 1 capital by January 1, 2016, for banking organizations that had $15 billion or more in total consolidated assets as of December 31, 2009 and permanently grandfathers as tier 1 capital such instruments issued by these smaller entities prior to May 19, 2010 (provided they do not exceed 25 percent of tier 1 capital). Our Subordinated Debentures are grandfathered under this provision.

~~Table of Contents~~13

The ~~specific~~Basel ~~impact~~III offinal ~~the~~rule ~~Dodd-Frank~~provides ~~Act~~banking onorganizations ~~our~~under ~~current~~$250 ~~activities~~billion ~~and~~in ~~our~~total ~~financial~~consolidated ~~performance~~assets ~~will depend~~or onunder ~~the~~$10 ~~manner~~billion in ~~which~~foreign ~~the~~exposures ~~relevant~~with ~~agencies~~a ~~develop~~one-time ~~and~~“opt-out” ~~implement~~right ~~required~~to ~~rules~~continue ~~and~~excluding ~~the~~Accumulated ~~reaction~~Other ofComprehensive ~~market~~Income ~~participants~~from toCET1 ~~these regulatory developments~~capital. The ~~Many~~election ~~provisions of the Dodd-Frank Act are subject~~ to ~~rulemaking~~opt ~~and~~out ~~will~~must ~~take~~be ~~effect over~~made ~~several~~on ~~years,~~the ~~thus~~banking ~~making~~organization’s itfirst ~~difficult~~Call toReport ~~assess~~filed ~~the~~after ~~overall~~January ~~financial impact on us~~1, ~~our customers or the financial industry~~2015.

The ~~American~~ ~~Recovery~~Basel ~~and~~III ~~Reinvestment~~final ~~Act~~rule ofrequires ~~2009.~~that ~~The~~goodwill ~~American~~and ~~Recovery~~other ~~and~~intangible ~~Reinvestment~~assets ~~Act~~(other than mortgage servicing assets), net of ~~2009~~associated ~~(the~~deferred tax liabilities (“~~ARRA~~DTLs”), ~~was~~be ~~signed~~deducted ~~into~~from ~~law~~CET1 ~~on February 19~~capital. Additionally, ~~2009.~~deferred ~~The~~tax ~~ARRA~~assets ~~includes~~(“DTAs”) athat ~~wide~~arise ~~variety~~from ofnet ~~programs~~operating ~~intended~~loss toand ~~create~~tax ~~jobs~~credit ~~and promote~~carryforwards, ~~investment~~net of associated DTLs and ~~consumer~~valuation ~~spending~~allowances, ~~during~~are ~~the~~fully ~~recession.~~deducted Infrom ~~addition~~CET1 capital. However, ~~the~~DTAs ~~ARRA~~arising ~~imposes~~from ~~certain~~temporary ~~executive~~differences ~~compensation~~that ~~and~~could ~~corporate~~not ~~expenditure~~be ~~limits~~realized onthrough ~~all~~net ~~Troubled~~operating ~~Asset~~loss ~~Relief~~carrybacks, ~~Program~~along ~~(the~~with mortgage servicing assets and “~~TARP~~significant”) ~~participants~~(defined ~~for~~as ~~the~~greater ~~duration~~than 10% of the ~~period~~issued ~~that~~and ~~the~~outstanding ~~U.S.~~common ~~Treasury~~stock ~~Department~~of ~~holds~~the ~~any~~unconsolidated ~~equity~~financial orinstitution) ~~debt~~investments ~~position~~ in the ~~company~~common ~~under~~stock ~~the~~of ~~Capital~~unconsolidated ~~Purchase~~“financial ~~Plan~~institutions” ~~Program.~~are ~~The~~partially ~~ARRA~~includible ~~requires~~in CET1 capital, subject to deductions defined in the ~~following:~~final rule.

•Based ~~Bonus,~~on ~~incentive~~a ~~compensation,~~preliminary ~~and~~assessment ~~retention~~of ~~payments made to~~ the ~~Senior~~impact ~~Executive~~of ~~Officers~~Basel III and ~~the~~in ~~next~~consideration 20of ~~most~~the ~~highly~~capital ~~compensated~~plan ~~employees~~for ~~are~~the ~~subject~~Company, tomanagement ~~recovery~~of ~~or “clawback” by~~ the Company ifanticipates that the ~~payments~~Company ~~were~~and ~~based~~Bank onwill ~~materially~~be ~~inaccurate~~in ~~financial~~compliance ~~statements~~with orthe ~~any~~Basel ~~other~~III ~~materially~~guidelines ~~inaccurate~~within ~~performance~~the ~~metric~~implementation ~~criteria;~~periods.

•Bank ~~Prohibits~~Holding ~~paying~~Company 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;Regulation

•The ~~Prohibits~~Company ~~paying~~is ora ~~accruing~~registered ~~any~~bank ~~bonus,~~holding ~~retention~~company ~~award~~subject orto ~~incentive~~periodic ~~compensation~~examination toby the ~~most~~Federal ~~highly~~Reserve ~~compensated~~and ~~employee,~~required ~~except for awards of long-term restricted stock that have a value equal~~ to nofile ~~greater~~periodic ~~than~~reports ~~one-third~~ of ~~such~~its ~~executive’s~~operations ~~annual compensation~~ and dosuch ~~not~~additional ~~fully~~information ~~vest~~as ~~during~~ the ~~restricted~~Federal ~~period;~~Reserve ~~and~~may require.

•Investments ~~Review of bonuses, retention awards,~~ and ~~other~~Activities. A ~~compensation~~bank ~~paid~~holding tocompany ~~the~~must ~~Senior~~obtain ~~Executive~~approval ~~Officers~~from ~~and~~ the ~~next~~Federal 20Reserve ~~most-highly compensated employees to determine whether any such payments were inconsistent with the purposes of the TARP or otherwise against public interest.~~before:

~~The~~· ~~ARRA~~Acquiring, ~~also~~directly ~~sets~~or ~~forth~~indirectly, ~~additional~~ownership ~~corporate~~or ~~governance~~control ~~obligations for TARP recipients. These additional obligations include: (i) semi-annual meetings~~ of ~~the~~any ~~Compensation~~voting ~~Committee~~shares of ~~the~~another ~~Board~~bank ofor ~~Directors~~bank ~~(comprised~~holding ~~entirely of independent directors) to discuss and evaluate employee compensation plans in light of an assessment of any risk posed from such compensation plans; (ii)~~ company~~-wide~~ ~~policies~~if, ~~regarding~~after ~~excessive or luxury expenditures; (iii) non-binding stockholder say on pay proposals to be included in proxy materials; and (iv) written certifications by~~ the ~~chief~~acquisition, ~~executive~~it ~~officer~~would ~~and~~own ~~chief financial~~or ~~officer~~control ~~with~~more ~~respect~~than to5% ~~compliance~~of ~~with~~ the ~~compensation~~shares ~~requirements~~ of the ~~ARRA.~~bank ~~The~~or ~~ARRA~~bank ~~amends~~holding ~~the~~company ~~Emergency~~(unless ~~Economic~~it ~~Stabilization~~already ~~Act~~owns toor ~~require~~controls ~~a financial institution’s chief executive officer and chief financial officer to annually certify that~~ the ~~financial~~majority ~~institution is in compliance with the compensation requirements~~ of the ~~ARRA.~~ shares);

~~Emergency~~· ~~Economic Stabilization~~Acquiring ~~Act~~all ofor ~~2008.~~substantially ~~The~~all ~~Emergency Economic Stabilization Act~~ of ~~2008 (~~the “EESA”) was signed into law on October 3, 2008. This legislation was principally designed to allow the U.S. Treasury Department (the “Treasury”) and other government agencies to take action to restore liquidity and stability to the U.S. financial system. This legislation authorized the Treasury through the Troubled Asset Relief Program (the “TARP”) to purchase from financial institutions and their holding companies up to $700 billion in mortgage loans and certain other financial assets, ~~including~~of ~~debt~~another ~~and~~bank ~~equity~~or ~~securities~~bank ~~issued by financial institutions and their~~ holding ~~companies.~~company; The Treasury allocated $250 billion to the TARP Capital Purchase Plan program (the “CPP”). The CPP was designed to attract broad participation by healthy institutions, to stabilize the financial system, and to increase lending for the benefit of the U.S. economy. As part of the CPP, the Treasury purchased debt and equity securities from participating institutions. Qualified participants could sell an equity interest to the Treasury up to 3% of its risk-weighted assets. These equity instruments constitute Tier 1 Capital for eligible institutions. The Company’s Board of Directors approved the Company’s participation in the program, and the Company entered into a Securities Purchase Agreement – Standard Terms on December 5, 2008. Pursuant to the agreement, the Company or

11· Merging or consolidating with another bank holding company.

~~Table~~The Federal Reserve will not approve any acquisition, merger or consolidation that would have a substantially anticompetitive result unless the anticompetitive effects of ~~Contents~~the proposed transaction are clearly outweighed by a greater public interest in meeting the convenience and needs of the community to be served. The Federal Reserve also considers capital adequacy and other financial and managerial factors in reviewing acquisitions or mergers.

~~issued~~With ~~and~~certain ~~sold to the Treasury 21~~exceptions,~~750~~ ~~shares of Fixed Rate Cumulative Perpetual Preferred Stock, along with~~ a ~~ten~~bank ~~year~~holding ~~warrant~~company ~~to purchase 111,083 shares of the Company’s common stock, for a total cash price of $21.75 million. Under the terms of the CPP, the Company~~ is ~~prohibited,~~also without the consent of the Treasury, from declaring or paying 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. Furthermore, as long as the preferred stock issued to the Treasury is outstanding, dividend payments and repurchases or redemptions relating to certain equity securities are prohibited ~~until~~ all accrued and unpaid dividends are paid on preferred stock, subject to certain limited exceptions. For additional information, see the liquidity and capital resources section under Managements Discussion and Analysis of Financial Condition and Results of Operation. from:

As· ~~part~~Acquiring ofor ~~the~~retaining ~~EESA,~~direct ~~the~~or ~~FDIC~~indirect ~~established~~ownership ~~the~~or ~~Temporary~~control ~~Liquidity~~of ~~Guarantee~~more ~~Program~~than ~~which~~5% ~~was~~of ~~designed to encourage confidence and liquidity in~~ the ~~banking~~voting ~~system.~~shares ~~The~~of ~~program~~any ~~has~~company ~~two~~that ~~primary~~is ~~components,~~not ~~the~~a ~~Debt~~bank ~~Guarantee~~or ~~Program~~bank ~~and~~holding ~~Transaction~~company; ~~Account Guarantee Program. Eligible entities generally are participants unless they exercise an opt-out right in a timely manner.~~ and

~~Under~~· ~~the Debt Guarantee Program~~Engaging, ~~the~~directly ~~FDIC guaranteed certain senior unsecured debt of eligible banks, thrifts and certain holding companies issued on~~ or ~~after October 14~~indirectly, ~~2008~~in ~~through~~any ~~June 30,~~business ~~2009.~~other ~~The~~than ~~debt~~that ~~guarantee coverage limit was generally 125%~~ of ~~an eligible entity’s eligible debt as of September 30~~banking, ~~2008,~~managing with a nonrefundable fee of 75 basis points (annualized) for covered debt outstanding. The guarantee was originally effective through the earlier of the maturity date or on June 30, 2012. Under a four month extension of the program approved May 2009, participating entities that issued debt on or before April 1, 2009 were permitted to participate in the extended program without application to the FDIC and ~~participating~~controlling ~~entities~~banks that had not issued such debt before April 1, 2009 could upon approval from the FDIC. As a result, all such participating entities were permitted to issue FDIC-guaranteed debt until October 31, 2009, which would be guaranteed through the earlier of mandatory conversion date, maturity date, or ~~December 31,~~furnishing ~~2012.~~services ~~The FDIC has also established a limited six-month emergency facility. Under this facility, participating entities could apply~~ to ~~issue~~banks FDIC guaranteed senior unsecured debt during the period October 31, 2009 through April 30, 2010 to be guaranteed through December 31, 2012. For approved applicants, fees of at least 300 basis points would be assigned on case-by-case basis. The Company and ~~the~~their ~~Bank opted to not participate in the Debt Guarantee Program~~subsidiaries.

~~The~~Bank ~~Transaction~~holding ~~Account~~companies ~~Guarantee~~may, ~~Program~~however, ~~provided~~engage ~~full~~in ~~coverage~~businesses offound ~~non-interest~~by ~~bearing~~the ~~transaction~~Federal ~~accounts~~Reserve atto ~~participating~~be ~~insured~~“financial ~~depository institutions~~in nature,” ~~regardless~~as ofdescribed ~~the dollar amount~~above. Finally, ~~The~~subject ~~Transaction~~to ~~Account~~certain ~~Guarantee~~exceptions, ~~Program~~the ~~originally~~Bank ~~was~~Holding ~~effective~~Company ~~through December 31~~Act, ~~2009.~~the ~~This~~Change ~~program~~in ~~was~~Bank ~~extended~~Control ~~through December 31~~Act, ~~2010~~and ~~if opted by~~ the ~~participating~~Federal ~~entity. Financial~~Reserve’s ~~institutions~~implementing ~~participating~~regulations, inrequire ~~the~~Federal ~~Transaction~~Reserve ~~Account~~approval ~~Guarantee~~prior ~~Program~~to ~~were~~any ~~assessed~~acquisition aof ~~fee~~“control” of ~~ten~~a ~~basis~~bank ~~points~~holding ~~(annualized)~~company, onsuch ~~the~~as ~~balance~~Blue ofValley ~~each~~Ban ~~covered~~Corp. In ~~account in excess of $250~~general,~~000~~ ~~through~~a ~~December 31,~~person ~~2009~~or ~~and~~company ~~fees~~is ofpresumed 15 to ~~25 basis~~have ~~points~~acquired ~~(annualized)~~control onif ~~the~~it ~~balance~~acquires 10% of ~~each~~the ~~covered~~outstanding ~~account~~shares ~~in excess~~ of ~~$250,000~~a ~~through~~bank ~~December 31,~~or ~~2010~~bank ~~depending~~holding oncompany ~~the~~and ~~risk~~is ~~category~~conclusively ~~assigned~~determined to ~~the~~have ~~institution.~~acquired ~~The~~control ~~Bank~~if ~~was~~it aacquires ~~participant~~25% inor ~~the~~more ~~Transaction Account Guarantee Program. As a result~~ of the ~~Dodd-Frank~~outstanding ~~Act,~~shares ~~unlimited~~of ~~deposit~~a ~~coverage~~bank ~~for~~or ~~non-interest~~bank ~~bearing~~holding ~~accounts will be provided at all insured depository institutions starting January 1, 2011 until December 31, 2012~~company.

USA PATRIOT Act. The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “USA PATRIOT Act”) was signed into law on October 26, 2001. This legislation enhances the powers of domestic law enforcement organizations and makes numerous other changes aimed at countering the international terrorist threat to the security of the United States. Title III of the legislation most directly affects the financial services industry. It is intended to enhance the federal government’s ability to fight money laundering by monitoring currency transactions and suspicious financial activities. The USA PATRIOT Act has significant implications for depository institutions involved in the transfer of money. Under the USA PATRIOT Act, a financial institution must establish due diligence policies, procedures, and controls reasonably designed to detect and report money laundering through correspondent accounts and private banking accounts. Financial institutions must follow regulations adopted by the Treasury to encourage financial institutions, their regulatory authorities, and law enforcement authorities to share information about individuals, entities, and organizations engaged in or suspected of engaging in terrorist acts or money laundering activities. Financial institutions must follow regulations setting forth minimum standards regarding customer identification. These regulations require financial institutions to implement reasonable procedures for verifying the identity of any person seeking to open an account, maintain records of the information used to verify the person’s identity, and consult lists 14

12Source of Strength. The Federal Reserve expects the Company to act as a source of financial strength and support for the Bank and to take measures to preserve and protect the Bank in situations where additional investments in the Bank may not otherwise be warranted. The Federal Reserve may require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank) upon the Federal Reserve’s determination that the activity or control constitutes a serious risk to the financial soundness or stability of any subsidiary depository institution of the bank holding company. Further, federal bank regulatory authorities have additional discretion to require a bank holding company to divest itself of any bank or non-bank subsidiary if the agency determines that divestiture may aid the depository institution’s financial condition. As of December 31, 2013, BVBC Capital Trust II and BVBC Capital Trust III are the Company’s only active direct subsidiaries that are not banks.

~~Table~~Capital Requirements. The Federal Reserve uses capital adequacy guidelines in its examination and regulation of ~~Contents~~bank holding companies and banks. If the capital falls below minimum guideline levels, a bank holding company, among other things, may be denied approval to acquire or establish additional banks or non-bank businesses. The Federal Reserve’s capital guidelines establish a risk-based requirement expressed as a percentage of total risk-weighted assets and a leverage requirement expressed as a percentage of total average assets. The risk-based requirement consists of a minimum ratio of total capital to total risk-weighted assets of 8%, of which at least one-half must be Tier 1 capital (which consists principally of stockholders’ equity with adjustments for disallowed deferred tax assets). The leverage requirement consists of a minimum ratio of Tier 1 capital to total average assets of 4%.

ofThe ~~known~~risk-based orand ~~suspected~~leverage ~~terrorists~~standards presently used by the Federal Reserve are minimum requirements, and ~~terrorist~~higher ~~organizations~~capital ~~provided~~levels tomay ~~the~~be ~~financial~~required ~~institution~~if warranted by ~~government~~the ~~agencies.~~particular ~~Every~~circumstances ~~financial~~or ~~institution~~risk ~~must~~profiles ~~establish~~of ~~anti-money~~individual ~~laundering programs~~banking organizations. Further, ~~including~~any ~~the~~banking ~~development~~organization ofexperiencing ~~internal~~or ~~policies~~anticipating ~~and~~significant ~~procedures,~~growth ~~designation~~would ofbe aexpected ~~compliance~~to ~~officer~~maintain capital ratios, ~~employee~~including ~~training~~tangible capital positions, ~~and~~which anis ~~independent~~Tier 1 ~~audit~~capital ~~function.~~less all intangible assets, well above the minimum levels.

~~Sarbanes-Oxley Act~~Dividends. The ~~Sarbanes-Oxley~~Federal ~~Act,~~Reserve ~~signed~~has ~~into~~issued ~~law~~a inpolicy ~~2001,~~statement ~~addresses~~concerning ~~issues~~the ~~related~~payment toof ~~corporate~~cash ~~governance~~dividends ofby ~~publicly~~bank ~~traded~~holding companies. The ~~Sarbanes-Oxley Act~~policy ~~requires,~~statement ~~among~~provides ~~other~~that ~~items,~~a ~~certification~~bank ofholding ~~the~~company ~~quality~~experiencing ofearnings ~~financial~~weaknesses ~~reporting~~should bynot ~~the~~pay ~~Chief~~cash ~~Executive~~dividends ~~Officer~~exceeding ~~and~~its ~~Chief~~net ~~Financial~~income ~~Officer,~~or ~~enhanced~~which ~~and~~could ~~timely~~only ~~disclosure~~be offunded ~~financial~~in ~~reporting~~ways ~~and~~that itweakened ~~strengthens~~ the ~~rules~~bank ~~regarding~~holding ~~auditor~~company’s ~~and audit~~financial ~~committee~~health, ~~independence~~such as by borrowing. ~~Certain~~The ~~provisions~~Federal ofReserve ~~the~~also ~~Sarbanes-Oxley~~possesses ~~Act~~enforcement ~~were~~powers ~~effective~~over ~~immediately~~bank holding companies and ~~others~~their ~~became~~non-bank ~~effective~~subsidiaries to prevent or ~~are~~remedy inactions ~~process~~that ofrepresent ~~becoming~~unsafe ~~effective~~or ~~through~~unsound ~~Securities~~practices ~~and~~or ~~Exchange~~violations ~~Commission~~of ~~rules.~~applicable ~~The~~statutes ~~Company~~and ~~was~~regulations. Among ~~subject~~these ~~to all~~powers ~~provisions~~is ~~during~~the ~~2009~~ability ~~with~~to proscribe the ~~exception~~payment of ~~the~~dividends ~~auditor’s~~by ~~attestation~~banks onand ~~internal~~bank ~~control~~holding ~~over~~companies. As ~~financial~~a ~~reporting.~~result ~~Under~~of ~~the~~an ~~Dodd-Frank~~agreement ~~Act,~~with the ~~Company~~Federal isReserve ~~now~~Bank ~~exempt~~and ~~from~~ the ~~auditor’s~~Office ~~attestation~~of onthe ~~internal~~State ~~control~~Banking ~~over~~Commissioner ~~financial reporting.~~of ~~The~~Kansas, ~~Company~~prior ~~anticipates~~regulatory ~~continued~~approval ~~future~~is ~~expenditures~~currently inrequired ~~order~~prior to ~~comply with~~ the ~~provisions~~payment of any dividends by the ~~Sarbanes-Oxley~~Company ~~Act.~~or Bank.

~~Gramm-Leach-Bliley~~As ~~Act.~~long ~~The~~as ~~Gramm-Leach-Bliley~~the ~~Act~~Fixed ~~was~~Rate ~~signed~~Cumulative ~~into~~Preferred ~~law~~Stock is outstanding, dividend payments and repurchases or redemptions relating to certain equity securities are prohibited until all accrued and unpaid dividends are paid on ~~November 12~~preferred stock, ~~1999~~subject to certain limited exceptions. At ~~This~~the ~~major~~request ~~banking legislation~~of ~~expands~~the Federal Reserve Bank of Kansas City, the ~~permissible~~Company ~~activities~~has deferred the payment of ~~bank~~quarterly ~~holding~~dividends ~~companies~~on bythe ~~permitting~~Fixed ~~them~~Rate toCumulative ~~engage~~Preferred inStock ~~activities~~since May 15, or2009. The ~~affiliate~~Fixed ~~with~~Rate ~~entities~~Cumulative ~~that~~Preferred ~~engage~~Stock incarries ~~activities,~~a ~~that~~5% ~~are~~per ~~“financial~~year incumulative ~~nature.”~~preferred ~~Activities~~dividend ~~that~~rate, ~~the Gramm-Leach-Bliley~~payable ~~Act~~quarterly. The ~~expressly~~dividend ~~deems~~rate increases to be9% ~~financial~~beginning inwith ~~nature~~the ~~include~~May 15, ~~among~~2014 ~~other~~quarterly ~~things~~payment, ~~securities~~which ~~and~~will ~~insurance~~cause ~~underwriting~~our ~~and~~quarterly ~~agency~~dividend to increase from $271,875 ~~investment~~to ~~management~~$493,375. Dividends compound if they accrue and ~~merchant~~are ~~banking~~not paid. Failure ~~The~~by ~~Federal~~the ~~Reserve~~Company ~~and~~to pay dividends on the UFixed Rate Cumulative Preferred Stock is not an event of default.S. However, ~~Treasury~~a ~~Department~~failure to pay a total of six preferred share dividends, ~~in cooperation~~whether ~~with~~or ~~one~~not ~~another~~consecutive, ~~determine~~gives ~~what~~the ~~additional~~holders ~~activities~~of ~~are~~the ~~“financial~~Fixed Rate Cumulative Preferred Stock the right to elect two directors to the Company’s Board of Directors. That right continues until the Company pays all dividends in ~~nature~~arrears.” As ~~With~~of ~~certain~~December ~~exceptions~~31, 2013, the ~~Gramm-Leach-Bliley~~Company ~~Act~~has ~~similarly~~deferred ~~expands~~19 ~~the~~dividend ~~authorized~~payments. In ~~activities~~2012, ofthe ~~subsidiaries~~holder of ~~national~~the ~~banks~~Fixed Rate Cumulative Preferred Stock, elected James L. ~~The~~Gegg ~~provisions~~ to serve on the Company’s Board of Directors. This board seat was terminated in 2013 upon completion of the ~~Gramm-Leach-Bliley~~auction ~~Act~~of ~~authorizing~~our Fixed Rate Cumulative Preferred Stock by the ~~expanded~~Treasury ~~powers~~to ~~became~~private ~~effective~~investors, ~~March 11~~almost all of whom have waived their right to elect directors. In recognition of Mr. Gegg’s valuable contributions, ~~2000~~the Board of Directors subsequently appointed Mr. Gegg to the Board on a full-time basis.

Bank holding companies that intend to engage in activities that are “financial in nature” must elect to become “financial holding companies.” Financial holding company status is only available to a bank holding company if all of its affiliated depository institutions are “well capitalized” and “well managed,” based on applicable banking regulations, and have a Community Reinvestment Act rating of at least “a satisfactory record of meeting community credit needs.” Financial holding companies and banks may continue to engage in activities that are financial in nature only if they continue to satisfy the well capitalized and well managed requirements. Bank holding companies that do not elect to be financial holding companies or that do not qualify for financial holding company status may engage only in non-banking activities deemed “closely related to banking” prior to adoption of the Gramm-Leach-Bliley Act. The Company voluntarily terminated its status as a financial holding company in June 2008 as the Company was no longer engaged in activities pursuant to the Bank Holding Company Act. 15

~~The Gramm-Leach-Bliley~~Bank Act also calls for “functional regulation” of financial services businesses in which functionally regulated subsidiaries of bank holding companies will continue to be regulated by the regulator that ordinarily has supervised their activities. As a result, state insurance regulators will continue to oversee the activities of insurance companies and agencies, and the Securities and Exchange Commission will continue to regulate the activities of broker-dealers and investment advisers, even where the companies or agencies are affiliated with a bank holding company. Federal Reserve authority to examine and adopt rules regarding functionally regulated subsidiaries is limited. Regulations

The ~~Gramm-Leach-Bliley~~Bank ~~Act~~operates ~~imposed~~under ana ~~“affirmative~~Kansas state bank charter and ~~continuing”~~is ~~obligation~~subject onto ~~all~~regulation ~~financial~~by ~~service~~the ~~providers~~Office ~~(not~~of ~~just~~the ~~banks~~State ~~and~~Bank ~~their affiliates)~~Commissioner toand ~~safeguard~~the ~~consumer~~Federal ~~privacy~~Reserve ~~and~~Bank. The ~~requires~~Office ~~federal~~of ~~and~~the ~~state~~State ~~regulators,~~Bank ~~including~~Commissioner and the Federal Reserve ~~and~~Bank regulate or monitor all areas of the ~~FDIC~~Bank’s operations, toincluding ~~establish~~capital ~~standards~~requirements, toissuance ~~implement~~of ~~this~~stock, ~~privacy~~declaration ~~obligation.~~of ~~With~~dividends, ~~certain~~interest ~~exceptions~~rates, ~~the~~deposits, ~~Gramm-Leach-Bliley~~loans, ~~Act prohibits~~investments, ~~banks~~borrowings, ~~from~~record ~~disclosing~~keeping, toestablishment ~~non-affiliated~~of ~~parties~~branches, ~~any~~acquisitions, ~~non-public~~mergers, ~~personal~~ information ~~about~~technology ~~customers~~and ~~unless~~employee responsibility and conduct. The Office of the ~~bank~~State ~~has~~Bank ~~provided~~Commissioner places limitations on activities of the ~~customer~~Bank, ~~with~~including ~~certain~~the ~~information~~issuance of capital notes or debentures and the ~~customer~~holding ~~has~~of ~~had~~real estate and personal property, and requires the ~~opportunity~~Bank to ~~prohibit~~maintain ~~the~~a ~~bank~~certain ~~from sharing~~ratio ~~the~~of ~~information~~reserves ~~with~~against ~~non-affiliates~~deposits. The ~~new~~Office ~~privacy~~of ~~obligations~~the ~~became~~State ~~effective~~Bank ~~July 1~~Commissioner requires the Bank to file a report annually, ~~2001.~~in addition to any periodic report requested.

The ~~Gramm-Leach-Bliley~~Board ~~Act~~of ~~has been~~Directors of the Company and ~~may~~the ~~continue~~Bank toentered beinto a written agreement with the ~~subject~~Federal Reserve Bank of ~~extensive~~Kansas ~~rule~~City ~~making~~as byof ~~federal~~November ~~banking~~4, 2009. This agreement was a result of an examination that was completed by the regulators in May 2009, and ~~others~~related primarily to the Bank’s asset quality. Under the terms of the agreement, the Company and the Bank agreed, among other things, to submit an enhanced written plan to strengthen credit risk management practices and improve the Bank’s position on past due loans, classified loans, and other real estate owned; review and revise its allowance for loan and lease loss methodology and maintain an adequate allowance for loan loss; maintain sufficient capital at the Company and Bank level; and improve the Bank’s earnings and overall condition. The Company and Bank also agreed not to increase or guarantee any debt, purchase or redeem any shares of stock or declare or pay any dividends without prior written approval from the Federal Reserve Bank. The Company and the Bank substantially complied with all terms of the written agreement.

13As a result of a November 12, 2012 regulatory examination, which noted the improved financial condition of the Company and the Bank, satisfactory risk management processes, and senior management oversight, as well as full compliance with all actionable provisions of the Written Agreement, the Federal Reserve Bank of Kansas City terminated the November 4, 2009 Written Agreement and, effective January 11, 2013, replaced it with a Memorandum of Understanding. The MOU’s purpose is to maintain the financial soundness of the Company and the Bank, and provides among other things, the Company and the Bank will continue to work on improvement of asset quality, maintain an adequate allowance for loan losses, maintain adequate capital, improve earnings, and not declare or pay any dividends or increase or guarantee any debt without prior written approval from the Federal Reserve Bank and the OSBC.

~~Table~~Deposit Insurance. The FDIC, through its Deposit Insurance Fund, insures the Bank’s deposit accounts up to the applicable limits of ~~Contents~~the FDIC. The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act permanently raised the current standard maximum deposit insurance amount to $250,000. The FDIC bases deposit insurance premiums on each FDIC-insured institution based on the perceived risk each bank presents to its Deposit Insurance Fund. Each institution is assigned to one of the four risk categories based on its capital, supervisory ratings and other factors. In October 2010, the FDIC adopted a new deposit insurance fund restoration plan to ensure the fund reaches 1.35% by September 30, 2020, as required by the Dodd-Frank Act. Under the new restoration plan, the FDIC at least semi-annually will update its loss and income projections for the deposit insurance fund, and, if needed, will increase or decrease assessment rates, following notice, and recommend rulemaking if required.

~~Bank~~In ~~Holding~~addition ~~Company~~to ~~Regulation~~deposit insurance premiums, institutions also pay an assessment based on insured deposits to service debt issued by the Financing Corporation (FICO assessment), a federal agency established to finance the recapitalization of the former Federal Savings and Loan Insurance Corporation. FICO assessment rate is adjusted quarterly to reflect changes in the assessment bases of the fund. The FDIC may terminate the deposit insurance of any insured depository institution if the FDIC determines, after a hearing, that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, order, or any condition imposed in writing by, or written agreement with, the FDIC. The FDIC may also suspend deposit insurance temporarily during the hearing process for a permanent termination of insurance if the institution has no tangible capital. Management is not aware of any activity or condition that could result in termination of the deposit insurance of the Bank.

The Company is a registered bank holding company subject to periodic examination by the Federal Reserve and required to file periodic reports of its operations and such additional information as the Federal Reserve may require. 16

~~Investments~~Capital Requirements. The FDIC has established the following minimum capital standards for state-chartered, insured non-member banks, such as the Bank: (1) a leverage requirement consisting of a minimum ratio of Tier 1 capital to total average assets of 4%; and ~~Activities.~~(2) a Arisk-based ~~bank~~capital ~~holding~~requirement ~~company~~consisting of a minimum ratio of total capital to total risk-weighted assets of 8%, at least one-half of which must ~~obtain~~be ~~approval~~Tier 1 ~~from~~capital. These capital requirements are minimum requirements, and higher capital levels may be required if warranted by the ~~Federal~~particular ~~Reserve before:~~circumstances or risk profiles of individual institutions.

•Tier ~~Acquiring,~~1 ~~directly~~capital orgenerally ~~indirectly,~~consists ~~ownership~~of orequity ~~control~~capital ofand ~~any~~non ~~voting~~cumulative ~~shares~~perpetual ofpreferred ~~another~~stock, ~~bank~~adjusted orfor ~~bank~~such ~~holding~~items ~~company~~as ~~if,~~net ~~after~~unrealized ~~the~~gains ~~acquisition~~(losses) on available-for-sale securities, itdisallowed ~~would~~deferred ~~own~~tax orassets ~~control~~and ~~more~~disallowed ~~than~~servicing 5%assets. Total ofrisk-based ~~the~~capital ~~shares~~consists of ~~the~~Tier ~~bank~~1 orcapital ~~bank~~(as ~~holding~~defined ~~company~~above) ~~(unless~~plus itallowance ~~already~~and ~~owns~~loan orlosses ~~controls~~up ~~the~~to ~~majority~~a maximum of ~~the~~1.25% ~~shares);~~of risk-weighted assets and certain permanent and maturing capital instruments that do not qualify as Tier 1 capital.

•The ~~Acquiring~~federal ~~all~~banking orregulators ~~substantially~~also ~~all~~have ofbroad power to take “prompt corrective action” to resolve the ~~assets~~problems of ~~another~~undercapitalized ~~bank~~institutions. The orextent ~~bank~~of ~~holding~~the ~~company;~~regulators’ powers depends upon whether the institution in question is “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Under the prompt corrective action rules, an institution is:

•· ~~Merging~~“Well capitalized” if the institution has a total risk-based capital ratio of 10% or ~~consolidating~~greater, ~~with~~a ~~another~~Tier ~~bank~~1 ~~holding~~risk-based ~~company~~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.

~~The~~· ~~Federal~~“Adequately ~~Reserve~~capitalized” ~~will~~if ~~not~~the ~~approve~~institution ~~any~~has ~~acquisition, merger or consolidation that would have~~ a ~~substantially~~total ~~anticompetitive~~risk-based ~~result~~capital ~~unless~~ratio ~~the anticompetitive effects~~ of ~~the~~8% ~~proposed~~or ~~transaction~~greater, ~~are clearly outweighed by~~ a ~~greater~~Tier ~~public~~1 ~~interest~~risk-based incapital ~~meeting~~ratio ~~the convenience and needs~~ of ~~the~~4% ~~community~~or togreater, ~~be served. The Federal Reserve also considers capital adequacy~~ and ~~other~~a ~~financial~~leverage ~~and~~ratio ~~managerial~~of ~~factors~~4% ~~in reviewing acquisitions~~ or ~~mergers~~greater.

~~With~~· ~~certain~~“Undercapitalized” ~~exceptions~~if the institution has a total risk-based capital ratio that is less than 8%, a ~~bank~~Tier ~~holding~~1 ~~company~~risk-based capital ratio that is ~~also~~less ~~prohibited~~than ~~from:~~4%, or a leverage ratio that is less than 4%.

•· ~~Acquiring~~“Significantly orundercapitalized” ~~retaining~~if ~~direct~~the orinstitution ~~indirect~~has ~~ownership~~a ortotal ~~control~~risk-based ofcapital ~~more~~ratio that is less than 56%, ofa ~~the~~Tier ~~voting~~1 ~~shares~~risk-based ofcapital ~~any~~ratio ~~company~~ that is ~~not~~less athan ~~bank~~3%, or ~~bank~~a ~~holding~~leverage ~~company;~~ratio ~~and~~that is less than 3%.

•· ~~Engaging,~~“Critically ~~directly~~undercapitalized” orif ~~indirectly,~~the ininstitution ~~any~~has ~~business~~a ~~other~~ratio ~~than that~~ of ~~banking,~~tangible ~~managing~~equity ~~and~~to ~~controlling~~total ~~banks~~assets orthat ~~furnishing~~is ~~services~~equal to ~~banks~~or ~~and~~less ~~their~~than ~~subsidiaries~~2%.

~~Bank~~As ~~holding~~of ~~companies~~December ~~may~~31, ~~however~~2013, ~~engage in businesses found by~~ the ~~Federal Reserve to be “financial in nature,” as described above. Finally, subject to certain exceptions, the~~ Bank ~~Holding~~had ~~Company~~capital ~~Act, the Change~~ in ~~Bank~~excess ~~Control Act, and the Federal Reserve’s implementing regulations, require Federal Reserve approval prior to any acquisition~~ of ~~“control” of a bank holding company, such as Blue Valley Ban Corp. In general, a person or company is presumed to have acquired control if it acquires 10% of~~ the ~~outstanding~~regulatory ~~shares~~requirements offor a ~~bank~~“well orcapitalized” ~~bank holding company and is conclusively determined to have acquired control if it acquires 25% or more of the outstanding shares of a bank or bank holding company~~institution.

~~Source of Strength.~~ The ~~Federal~~federal ~~Reserve~~banking ~~expects~~regulators ~~the~~must ~~Company~~take toprompt ~~act~~corrective asaction awith ~~source~~respect ~~of financial strength and support for the Bank and~~ to ~~take measures~~capital todeficient ~~preserve and protect the Bank in situations where additional investments in the Bank may not otherwise be warranted~~institutions. Depending ~~The Federal Reserve may require a bank holding company to terminate any activity or relinquish control of a non-bank subsidiary (other than a non-bank subsidiary of a bank)~~ upon the ~~Federal~~capital ~~Reserve’s~~category ~~determination that the activity or control constitutes a serious risk~~ to ~~the~~which ~~financial~~an ~~soundness or stability of any subsidiary depository~~ institution ofis ~~the bank holding company. Further~~assigned, ~~federal bank regulatory authorities have additional discretion to require a bank holding company to divest itself of any bank or non-bank subsidiary if~~ the ~~agency determines that divestiture may aid the depository institution~~regulators’s ~~financial~~corrective ~~condition.~~powers ~~As of December 31, 2011, BVBC Capital Trust II and BVBC Capital Trust III are the Company’s only active direct subsidiaries that are not banks.~~ include:

~~Capital~~· ~~Requirements.~~Placing ~~The~~limits ~~Federal~~on ~~Reserve~~asset ~~uses~~growth ~~capital adequacy guidelines in its examination~~ and ~~regulation~~restrictions ofon ~~bank~~activities, ~~holding~~including ~~companies and banks. If~~ the ~~capital~~establishment falls below minimum guideline levels, a bank holding company, among other things, may be denied approval to acquire or establish additional banks or non-bank businesses. The Federal Reserve’s capital guidelines establish a risk-based requirement expressed as a percentage of ~~total~~new risk-weighted assets and a leverage requirement expressed as a percentage of total average assets. The risk-based requirement consists of a minimum ratio of total capital to total risk-weighted assets of 8%, of which at least one-half must be Tier 1 capital (which consists principally of stockholders’ equity with adjustments for disallowed deferred tax assets). The leverage requirement consists of a minimum ratio of Tier 1 capital to total average assets of 4%. branches;

14· Requiring the institution to issue additional capital stock (including additional voting stock) or to be acquired;

~~Table~~· ofRestricting ~~Contents~~transactions with affiliates;

~~The~~· ~~risk-based~~Restricting ~~and~~the ~~leverage~~interest ~~standards~~rate ~~presently used by~~ the ~~Federal~~institution ~~Reserve are minimum requirements, and higher capital levels~~ may bepay ~~required~~on if warranted by the particular circumstances or risk profiles of individual banking organizations. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions, which is Tier 1 capital less all intangible assets, well above the minimum levels. deposits;

~~Dividends.~~· ~~The~~Requiring ~~Federal Reserve has issued a policy statement concerning the payment of cash dividends by bank holding companies. The policy statement provides~~ that asenior ~~bank~~executive ~~holding~~officers ~~company experiencing earnings weaknesses should not pay cash dividends exceeding its net income~~ or ~~which~~directors ~~could only~~ be funded in ways that weakened the bank holding company’s financial health, such as by borrowing. The Federal Reserve also possesses enforcement powers over bank holding companies and their non-bank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. As a result of an agreement with the Federal Reserve Bank and the Office of the State Banking Commissioner of Kansas, prior regulatory approval is currently required prior to the payment of any dividends by the Company or Bank. dismissed;

~~Under~~· ~~the~~Requiring ~~terms of~~ the ~~Capital Purchase~~institution Plan, for so long as any preferred stock issued under the CPP remains outstanding, the Company is prohibited from declaring or paying a common stock dividend in an amount greater than the amount of the last quarterly cash dividend per share declared prior to ~~October 14,~~divest 2008 without the Treasury’s consent. Furthermore, as long as the preferred stock issued to the Treasury is outstanding, dividend payments and repurchases or redemptions relating to certain equity securities are prohibited until all accrued and unpaid dividends are paid on preferred stock, subject to certain limited exceptions. At the request of the Federal Reserve Bank of Kansas City, the Company notified the Treasury of its intention to defer the quarterly payment on the preferred shares due to the Treasury since May 15, 2009. 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 August 15, 2010 was the sixth dividend payment deferred by the Company. At this time, the Treasury has not elected a director to serve on the Company’s Board of Directorssubsidiaries; however, they have assigned an observer to attend the Company’s board meetings. The Company has accrued $3.2 million for the dividends and accrued interest and has every intention to bring the obligation current as soon as permitted. For additional information, see the liquidity and capital resources section under Management’s Discussion and Analysis of Financial Condition and Results of Operation.

~~Bank~~· ~~Regulations~~Prohibiting the payment of principal or interest on subordinated debt; and

~~The~~· ~~Bank~~Appointing ~~operates under~~ a ~~Kansas~~receiver ~~state~~for ~~bank charter and is subject to regulation by~~ the ~~Office of the State Bank Commissioner and the Federal Reserve Bank~~institution. The Office of the State Bank Commissioner and the Federal Reserve Bank regulate or monitor all areas of the Bank’s operations, including capital requirements, issuance of stock, declaration of dividends, interest rates, deposits, loans, investments, borrowings, record keeping, establishment of branches, acquisitions, mergers, information technology and employee responsibility and conduct. The Office of the State Bank Commissioner places limitations on activities of the Bank, including the issuance of capital notes or debentures and the holding of real estate and personal property, and requires the Bank to maintain a certain ratio of reserves against deposits. The Office of the State Bank Commissioner requires the Bank to file a report annually, in addition to any periodic report requested.

The Board of Directors of the Company and the Bank entered into a written agreement with the Federal Reserve Bank of Kansas City as of November 4, 2009. This agreement was a result of an examination that was completed by the regulators in May 2009, and relates primarily to the Bank’s asset quality. Under the terms of the agreement, the Company and the Bank agreed, among other things, to submit an enhanced written plan to strengthen credit risk management practices and improve the Bank’s position on past due loans, classified loans, and other real estate owned; review and revise its allowance for loan and lease loss methodology and maintain an adequate allowance for loan loss; maintain sufficient capital at the Company and Bank level; and improve the Bank’s earnings and overall condition. The Company and Bank have also agreed not to increase or guarantee any debt, purchase or redeem any shares of stock, or declare or pay any dividends without prior written approval from the Federal Reserve Bank. The Company and the Bank have substantially complied with all terms of the written agreement. 17

15Companies controlling an undercapitalized institution are also required to guarantee the subsidiary institution’s compliance with the capital restoration plan subject to an aggregate limitation of the lesser of 5% of the institution's assets at the time it received notice that it was undercapitalized or the amount of the capital deficiency when the institution first failed to meet the plan. The Federal Deposit Insurance Act generally requires the appointment of a conservator or receiver within 90 days after an institution becomes critically undercapitalized.

~~Table~~Federal Deposit Insurance Corporation Improvement Act. The Bank, having over $500 million in total assets, is subject to requirements of ~~Contents~~Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA 112). The primary purpose of FDICIA 112 is to provide a framework for early risk identification in financial management through an effective system of internal controls. Annual reporting requirements under FDICIA are as follows: (1) Annual audited financial statements; (2) Management report stating management’s responsibility for preparing the institution’s annual financial statements, establishing and maintaining an adequate internal control structure and procedures for financial reporting and for complying with laws and regulations, and assessment by management of the institution’s compliance with such laws and regulations; and (3) For insured depository institutions with consolidated total assets over $1.0 billion or more, the independent public accountant who audits the institution’s financial statements shall examine, attest to, and report separately on the assertion of management concerning the effectiveness of the institution’s internal control structure and procedures for financial reporting.

~~Deposit~~Insider ~~Insurance~~Transactions. The ~~FDIC, through its Deposit Insurance Fund, insures the~~ Bank~~’s deposit~~ ~~accounts~~is upsubject to ~~the~~restrictions ~~applicable~~on ~~limits~~extensions of ~~the~~credit ~~FDIC.~~to ~~The~~executive ~~2010~~officers, ~~Dodd-Frank Wall Street Reform and Consumer Protection Act permanently raised the current standard maximum deposit insurance amount to $250~~directors,~~000.~~ ~~The~~principal ~~FDIC~~stockholders ~~bases~~or ~~deposit~~any ~~insurance premiums~~related oninterest ~~each~~of ~~FDIC-insured~~these ~~institution based on the perceived risk each bank presents to its Deposit Insurance Fund~~persons. Extensions ~~Each institution is assigned to one~~ of ~~the~~credit ~~four~~must ~~risk~~be ~~categories~~made ~~based~~ on ~~its~~substantially ~~capital,~~the ~~supervisory~~same ~~ratings and other factors. In October 2010~~terms, ~~the~~including ~~FDIC~~interest ~~adopted~~rates aand ~~new~~collateral ~~deposit insurance fund restoration plan to ensure the fund reaches 1.35% by September 30, 2020,~~ as ~~required by~~ the ~~Dodd-Frank~~terms ~~Act.~~available ~~Under the new restoration plan, the FDIC at least semi-annually will update its loss and income projections~~ for ~~the~~third ~~deposit~~parties ~~insurance fund,~~ and, ifmust ~~needed,~~not ~~will~~involve ~~increase~~more orthan ~~decrease assessment rates, following notice-and commend rulemaking if required. In February 2011,~~ the ~~initial~~normal ~~assessment rates along with the assessment base were adjusted effective April 1, 2011. This change effectively lowered the assessment rate ranges for each~~ risk ~~category.~~of ~~Under~~repayment ~~the~~or ~~FDIC’s~~present ~~risk-based~~other ~~assessment~~unfavorable ~~rules, assessment rates range from 2~~features.5 The toBank 9is ~~basis~~also ~~points~~subject ~~for Risk Category I, 9~~ to 24lending ~~basis~~limits ~~points~~and ~~for~~restrictions ~~Risk~~on ~~Category~~overdrafts ~~II, 18~~ to 33these ~~basis points for Risk Category III, and 30 to 45 basis points for Risk Category IV~~persons.

InCommunity ~~addition~~Reinvestment toAct ~~deposit~~Requirements. The ~~insurance~~Community ~~premiums,~~Reinvestment ~~institutions~~Act ~~also~~(CRA) ~~pay~~of an1977 ~~assessment~~requires ~~based~~that, onin ~~insured~~connection ~~deposits~~with toexaminations ~~service~~of ~~debt~~financial ~~issued~~institutions bywithin ~~the~~their ~~Financing Corporation (FICO assessment)~~jurisdiction, athe federal ~~agency~~banking ~~established to~~regulators ~~finance~~must evaluate the ~~recapitalization~~record of the ~~former~~financial ~~Federal~~institutions ~~Savings~~in ~~and~~meeting ~~Loan Insurance Corporation. For~~ the ~~fourth~~credit ~~quarter~~needs of ~~fiscal~~their ~~year~~local ~~2011~~communities, ~~the~~including ~~annual~~low ~~rate~~and ~~for~~moderate ~~this~~income ~~assessment~~neighborhoods, ~~was~~consistent ~~0.68~~with ~~basis~~the ~~points~~safe ~~for~~and ~~each~~sound ~~$100~~operation inof ~~domestic~~those ~~deposits~~banks. These ~~FICO~~factors ~~assessment rate~~are isalso ~~adjusted~~considered ~~quarterly to reflect changes~~ in ~~the~~evaluating ~~assessment~~mergers, ~~bases~~acquisitions ~~of the fund~~ and ~~the~~applications ~~rate adjusted~~ to ~~0.66~~open ~~basis points for the first quarter 2012. The FDIC may terminate the deposit insurance of any insured depository institution if the FDIC determines, after~~ a ~~hearing,~~branch ~~that the institution has engaged~~ or isfacility. In ~~engaging~~its inmost ~~unsafe~~recent orCRA ~~unsound~~examination ~~practices,~~dated isAugust ~~in an unsafe or unsound condition to continue operations or has violated any applicable law~~13, ~~regulation~~2012, ~~order, or any condition imposed in writing by, or written agreement with,~~ the ~~FDIC.~~Bank ~~The~~received ~~FDIC may also suspend deposit insurance temporarily during the hearing process for~~ a ~~permanent~~rating ~~termination~~ of ~~insurance if the institution has no tangible capital~~“Satisfactory. ~~Management is not aware of any activity or condition that could result in termination of the deposit insurance of the Bank.~~ ”

~~Capital~~State ~~Requirements~~Bank Activities. With ~~The~~limited ~~FDIC has established the following minimum capital standards for state-chartered~~exceptions, FDIC-insured ~~non-member~~state banks, ~~such~~like as the Bank:, ~~(1) a~~may ~~leverage~~not ~~requirement~~make ~~consisting~~or retain equity investments of a ~~minimum~~rate ~~ratio~~or ofin ~~Tier 1~~an ~~capital~~amount tothat ~~total~~are ~~average~~not ~~assets~~permissible offor ~~4%;~~national banks and ~~(2) a~~ ~~risk-based~~also ~~capital~~may ~~requirement~~not ~~consisting~~engage ofas a ~~minimum~~principal ~~ratio~~in ofany ~~total~~activity ~~capital~~that tois ~~total~~not ~~risk-weighted~~permitted ~~assets~~for ofa ~~8%,~~national atbank ~~least~~or ~~one-half~~its ofsubsidiary, ~~which~~respectively, ~~must~~unless bethe ~~Tier 1~~bank ~~capital.~~meets, ~~These~~and ~~capital~~continues ~~requirements~~to ~~are~~meet, its minimum regulatory capital requirements, and ~~higher capital~~the ~~levels~~FDIC ~~may~~determines bethat ~~required~~the ifactivity ~~warranted~~would bynot ~~the~~pose ~~particular~~a ~~circumstances~~significant or risk ~~profiles~~to the deposit insurance fund of ~~individual~~which ~~institutions.~~the bank is a member.

~~Tier~~Regulations 1Governing ~~capital generally~~Extensions ~~consists~~of Credit. The Bank is subject to restrictions on extensions of ~~equity~~credit ~~capital~~to the Company and ~~non~~on ~~cumulative~~investments ~~perpetual~~in ~~preferred~~the ~~stock,~~Company’s ~~adjusted~~securities ~~for~~and ~~such~~using ~~items~~those securities as ~~net~~collateral ~~unrealized~~for ~~gains~~loans. These ~~(losses)~~regulations onand ~~available-for-sale~~restrictions ~~securities,~~may ~~disallowed~~limit ~~deferred~~the ~~tax~~Company’s ~~assets~~ability ~~and~~to ~~disallowed~~obtain ~~servicing~~funds ~~assets.~~from ~~Total risk-based~~the ~~capital~~Bank ~~consists~~for its cash needs, including funds for acquisitions and for payment of ~~Tier~~dividends, 1interest ~~capital~~and ~~(as~~operating ~~defined~~expenses. Further, ~~above)~~the ~~plus~~Bank ~~allowance~~Holding Company Act and ~~loan~~Federal ~~losses~~Reserve upregulations toprohibit a ~~maximum~~bank ofholding ~~1.25%~~company ofand ~~risk~~its subsidiaries from engaging in various tie-~~weighted~~in ~~assets~~arrangements ~~and~~in ~~certain~~connection ~~permanent~~with ~~and~~extensions ~~maturing~~of ~~capital~~credit, ~~instruments~~leases ~~that~~or dosales ~~not~~of ~~qualify~~property asor ~~Tier~~furnishing 1of ~~capital~~services.

16Reserve Requirements. Effective December 27, 2012, the Federal Reserve requires all depository institutions to maintain reserves against their transaction accounts. For net transaction accounts, the first $12.4 million is exempt from reserve requirements. A three percent reserve ratio will be assessed on net transaction accounts over $12.4 million up to and including $79.5 million. A ten percent reserve ratio is assessed on net transaction accounts in excess of $79.5 million (subject to adjustment by the Federal Reserve). The balances maintained to meet the reserve requirements imposed by the Federal Reserve may be used to satisfy liquidity requirements

~~Table of Contents~~18

~~The~~Other federal banking regulators also have broad power to take “prompt corrective action” to resolve the problems of undercapitalized institutions. The extent of the regulators’ powers depends upon whether the institution in question is “well capitalized,” “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized.” Under the prompt corrective action rules, an institution is: Regulations

•Interest ~~“Well~~and ~~capitalized”~~various ifother charges collected or contracted for by the ~~institution~~Bank ~~has~~are asubject ~~total~~to ~~risk-based~~state ~~capital~~usury ~~ratio~~laws ofand ~~10%~~other orfederal ~~greater,~~laws aconcerning ~~Tier~~interest 1rates. The ~~risk-based~~Bank’s ~~capital~~loan ~~ratio~~operations are also subject to federal laws applicable to credit transactions. The Federal Truth in Lending Act governs disclosures of 6%credit orterms ~~greater,~~to ~~and~~consumer aborrowers. The ~~leverage~~Home ~~ratio~~Mortgage Disclosure Act of 5%1975 orrequires ~~greater,~~financial ~~and~~institutions to provide information to enable the public and public officials to determine whether a financial institution is ~~not~~fulfilling ~~subject~~its obligation to anhelp ~~order,~~meet ~~written~~the ~~agreement,~~housing ~~capital~~needs ~~directive~~of the community it serves. The Equal Credit Opportunity Act prohibits discrimination on the basis of race, creed or ~~prompt~~other ~~corrective~~prohibited ~~action~~factors ~~directive~~in toextending ~~meet~~credit. The Fair and ~~maintain~~Accurate aCredit ~~specific~~Transactions ~~capital~~Act ~~level~~of ~~for~~2003 ~~any~~governs ~~capital~~the ~~measure~~use and provision of information to credit reporting agencies. This ~~Although~~act also requires financial institutions to establish reasonable procedures of identifying identity theft. The Fair Debt Collection Act governs the ~~Company~~manner isin which consumer debts may be collected by collection agencies. The various federal agencies charged with the responsibility of implementing these federal laws have adopted various rules and regulations. The deposit operations of the Bank are also subject to the Right to Financial Privacy Act, which imposes a ~~written~~duty ~~agreement~~to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records, the ~~written~~Electronic ~~agreement~~Funds ~~does~~Transfer ~~not~~Act, ~~contain~~and ~~any~~Regulation ~~prompt~~E ~~corrective~~issued ~~action~~by ~~directives~~the Federal Reserve to ~~meet~~implement that Act, which govern automatic deposits to and ~~maintain~~withdrawals afrom ~~specific~~the ~~capital~~use ~~level~~of ~~for~~ATMs ~~any~~and ~~capital~~other ~~measure~~electronic banking services.

•Item 1A: Risk ~~“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.~~Factors

•The ~~“Undercapitalized”~~risks ifand uncertainties described below are not the ~~institution~~only ~~has~~risks that may have a ~~total~~material ~~risk-based~~adverse ~~capital~~effect ~~ratio~~on ~~that~~the isCompany ~~less~~and ~~than~~they ~~8%,~~are not necessarily presented in order of significance. Additional risks and uncertainties could also adversely affect the Company’s business and financial results. If any or a ~~Tier~~combination 1of ~~risk-based~~these ~~capital~~risks ~~ratio~~occurs, our business, financial condition or results of operations could be adversely affected and the market price of the Company’s stock could decline. Further, to the extent that isany ~~less~~of ~~than~~the 4%information contained in this Annual Report on Form 10-K constitute forward-looking statements, orthe arisk ~~leverage~~factors ~~ratio~~set forth below are cautionary statements identifying important factors that iscould ~~less~~cause ~~than~~the 4%Company’s actual results to differ from those expressed in any forward-looking statements.

•Our ~~“Significantly~~operations ~~undercapitalized”~~may ifbe ~~the~~adversely ~~institution~~affected ~~has~~if awe ~~total~~are ~~risk-based~~unable ~~capital~~to ~~ratio~~maintain ~~that~~and isincrease ~~less~~our ~~than~~deposit ~~6%,~~base aand ~~Tier~~secure 1adequate ~~risk-based capital ratio that is less than 3%, or a leverage ratio that is less than 3%~~funding.

•We ~~“Critically~~fund ~~undercapitalized”~~our ifbanking ~~the~~and ~~institution~~lending ~~has~~activities primarily through demand, savings and time deposits and, to a ~~ratio~~lesser extent, lines of ~~tangible~~credit, ~~equity~~sale/repurchase facilities from various financial institutions, securities sold under agreement to ~~total~~repurchase ~~assets~~and ~~that~~FHLBank isborrowings. ~~equal~~The success of our business depends in part on our ability to maintain and increase our deposit base and our ability to maintain access to other funding sources. Our inability to obtain funding on favorable terms, on a timely basis, or ~~less~~at ~~than~~all, 2%would adversely affect our operations and financial condition.

AsThe ofloss ~~December 31, 2011, the Bank had capital in excess~~ of ~~the~~our ~~regulatory~~key ~~requirements~~personnel ~~for~~could aadversely ~~“well capitalized”~~affect ~~institution.~~our operations.

~~The~~We ~~federal~~are ~~banking~~a ~~regulators~~relatively ~~must~~small ~~take~~organization ~~prompt~~and ~~corrective~~depend ~~action~~on ~~with~~the ~~respect~~services of all of our employees. Our growth and development to ~~capital~~date ~~deficient institutions~~has depended in a large part on a few key employees who have primary responsibility for maintaining personal relationships with our largest customers. ~~Depending~~The ~~upon~~unexpected ~~the~~loss ~~capital~~of ~~category~~services toof ~~which~~one anor ~~institution~~more isof ~~assigned~~these key employees could have a material adverse effect on our operations. Our key employees are Robert D. Regnier, Mark A. Fortino, Bruce A. Easterly, and Bonnie M. McConnaughy. Each of these persons is an officer of the ~~regulators’~~Bank. ~~corrective~~We ~~powers~~do ~~include:~~not have written employment or non-compete agreements with any of these key employees; however, if employment was terminated, Mr. Regnier would lose 8,930 Blue Valley Ban Corp. Restricted Stock Awards and Mr. Fortino, Mr. Easterly, and Ms. McConnaughy would each lose 1,000 of Blue Valley Ban Corp. Restricted Stock Awards. We carry bank owned life insurance policies on each of these executive officers.

~~• Placing limits on asset growth and restrictions on activities, including the establishment of new branches;~~19

•Changes ~~Requiring~~in ~~the~~interest ~~institution~~rates tomay ~~issue~~adversely ~~additional~~affect ~~capital~~our ~~stock~~earnings ~~(including~~and ~~additional~~cost ~~voting~~of ~~stock) or to be acquired;~~funds.

•Changes ~~Restricting~~in ~~transactions~~interest ~~with~~rates ~~affiliates;~~affect our operating performance and financial condition in diverse ways. A substantial part of our profitability depends on the difference between the rates we receive on loans and investments and the rates we pay for deposits and other sources of funds. Our net interest spread will depend on many factors that are partly or entirely outside our control, including competition, federal monetary and fiscal policies, and economic conditions generally. Historically, net interest spreads for many financial institutions have widened and narrowed in response to these and other factors, which are often collectively referred to as “interest rate risk.” We try to minimize our exposure to interest rate risk, but are unable to eliminate it. As discussed on page [52], we use an asset/liability modeling system to analyze our current sensitivity to instantaneous and permanent changes in interest rates. The system simulates our asset and liability base and projects future net interest income results under several interest rate assumptions. This allows management to view how changes in interest rates will affect the spread between the yield received on assets and the cost of deposits and borrowed funds. Among other strategies, we attempt to mitigate the risk from increases in interest rates by maintaining a significant level of adjustable rate loans in our portfolio, and attempt to mitigate the risk from declines in interest rates by implementing rate floors for our adjustable rate loan portfolio and managing our level of fixed rate liabilities. As illustrated in the Interest-Rate Sensitivity Analysis on page [54], as of December 31, 2013, approximately 55% of our loan portfolio has variable rates, and approximately 50% of our loan portfolio matures or reprices in 90 days or less. As a result of the number of adjustable rate loans in our portfolio, increases in interest rates will expose us to greater risk of delinquencies and defaults on such loans, which could lead to decreased earnings. In addition, increased interest rates may decrease the number of loans that we originate, which could also lead to decreased earnings.

•Because ~~Restricting~~our business is concentrated in the ~~interest~~Kansas ~~rate~~City MSA, a downturn in the ~~institution~~economy of the Kansas City MSA may ~~pay~~adversely onaffect ~~deposits;~~our business.

•Our ~~Requiring~~success is dependent to a significant extent upon the general economic conditions in the Kansas City MSA, including Johnson County, Kansas, and, in particular, the conditions for the medium- and small-sized businesses that ~~senior~~are ~~executive~~the ~~officers~~focus orof ~~directors~~our becustomer ~~dismissed;~~base. Adverse changes in economic conditions in the Kansas City MSA, including Johnson County, Kansas, could impair our ability to collect loans, reduce our growth rate and have a negative effect on our overall financial condition.

•If ~~Requiring~~our ~~the~~allowance ~~institution~~for loan losses is insufficient to ~~divest~~absorb ~~subsidiaries;~~losses in our loan portfolio, it will adversely affect our financial condition and results of operations.

•Some ~~Prohibiting~~borrowers may not repay loans that we make to them. This risk is inherent in the ~~payment~~banking business. Like all financial institutions, the Company maintains an allowance for loan losses to absorb probable loan losses in our loan portfolio. The level of ~~principal~~the orallowance ~~interest~~reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss experience, current loan portfolio credit quality, economic and regulatory conditions and unidentified losses inherent in the current loan portfolio. However, we cannot predict loan losses with certainty, and we cannot assure you that our allowance will be sufficient to cover our future loan losses. Loan losses in excess of our reserves would have a material adverse effect on ~~subordinated~~our ~~debt;~~financial condition and results of operations.

•In ~~Appointing~~addition, avarious ~~receiver~~regulatory agencies, as an integral part of the examination process, periodically review our loan portfolio. These agencies may require us to add to the allowance for loan losses based on their judgments and interpretations of information available to them at the ~~institution~~time of their examinations. If these agencies require us to increase our allowance for loan losses, our earnings will be adversely affected in the period in which the increase occurs.

Companies controlling an undercapitalized institution are also required to guarantee the subsidiary institution’s compliance with the capital restoration plan subject to an aggregate limitation of the lesser of 5% of the institution’s assets at the time it received notice that it was undercapitalized or the amount of the capital deficiency when the institution first failed to meet the plan. The Federal Deposit Insurance Act generally requires the appointment of a conservator or receiver within 90 days after an institution becomes critically undercapitalized. 20

17Our concentration of loans secured by real estate may continue to adversely affect our financial condition and results of operations.

~~Table~~As of ~~Contents~~December 31, 2013, approximately $145.0 million, or 34.97% of our loan portfolio, represented commercial real estate loans, approximately $44.8 million, or 10.80% represented construction loans, approximately $44.8 million, or 10.79%, of our loan portfolio consisted of residential mortgage loans and approximately $43.2 million, or 10.41% represented home equity loans. A downturn in the real estate market, the deterioration in the value of collateral, and the local and national economic recessions would adversely affect our customers’ ability to sell or refinance real estate and repay their loans. In the event we are required to foreclose on a property securing one of our mortgage loans, or otherwise pursue remedies in order to protect our investment, we may be unable to recover enough value from the collateral to prevent a loss.

~~Federal~~We ~~Deposit~~may ~~Insurance~~incur ~~Corporation~~significant ~~Improvement~~costs ~~Act.~~if ~~The~~we ~~Bank,~~foreclose having over $500 million in total assets, is subject to requirements of Section 112 of the Federal Deposit Insurance Corporation Improvement Act (FDICIA 112). The primary purpose of FDICIA 112 is to provide a framework for early risk identification in financial management through an effective system of internal controls. Annual reporting requirements under FDICIA are as follows: (1) Annual audited financial statements; (2) Management report stating management’s responsibility for preparing the institution’s annual financial statements, establishing and maintaining an adequate internal control structure and procedures for financial reporting and for complying with laws and regulations, and assessment by management of the institution’s compliance with such laws and regulations; and (3) For insured depository institutions with consolidated total assets over $1.0 billion or more, the independent public accountant who audits the institution’s financial statements shall examine, attest to, and report separately on ~~the~~environmentally ~~assertion~~contaminated ofreal ~~management concerning the effectiveness of the institution’s internal control structure and procedures for financial reporting~~estate.

~~Insider~~If ~~Transactions.~~we ~~The~~foreclose ~~Bank~~on isa ~~subject~~defaulted real estate loan to ~~restrictions~~recover onour ~~extensions~~investment, ofwe ~~credit~~may be subject to ~~executive~~environmental ~~officers,~~liabilities ~~directors,~~in ~~principal~~connection ~~stockholders~~ with the underlying real property. It is also possible that hazardous substances or ~~any~~wastes ~~related~~may ~~interest~~be ofdiscovered on these ~~persons.~~properties ~~Extensions~~during ofour ~~credit~~ownership ~~must~~or beafter ~~made~~they are sold to a third party. If they are discovered on ~~substantially~~a ~~the~~property ~~same~~that ~~terms~~we have acquired through foreclosure or otherwise, ~~including~~we ~~interest~~may ~~rates~~be required to remove those substances and ~~collateral~~clean asup the ~~terms~~property. ~~available~~We may have to pay for the entire cost of any removal and clean-up without the contribution of any other third parties. ~~and~~We ~~must~~may ~~not~~also ~~involve~~be ~~more~~liable ~~than~~to ~~the~~tenants ~~normal~~and ~~risk~~other users of ~~repayment~~ neighboring properties. These costs or ~~present~~liabilities ~~other~~may ~~unfavorable~~exceed ~~features~~the fair value of the property. ~~The~~In ~~Bank~~addition, iswe ~~also~~may ~~subject~~find toit ~~lending~~difficult ~~limits~~or ~~and~~impossible ~~restrictions~~to onsell ~~overdrafts~~the property prior to ~~these~~or ~~persons.~~following any environmental clean-up.

~~Community Reinvestment Act Requirements.~~ The ~~Community~~Bank ~~Reinvestment~~is ~~Act~~subject ~~(CRA)~~to ofpossible ~~1977~~future ~~requires~~repurchase that, in connection with examinations of financial institutions within their jurisdiction, the federal banking regulators must evaluate the record of the financial institutions in meeting the credit needs of their local communities, including low and ~~moderate~~indemnification ~~income~~demands ~~neighborhoods, consistent~~on ~~with~~mortgage ~~the~~loans ~~safe~~previously ~~and~~sold ~~sound operation of those banks. These factors are also considered in evaluating mergers, acquisitions and applications~~ to ~~open a branch or facility~~investors. ~~In its most recent CRA examination dated July 26, 2010, the Bank received a rating of “Satisfactory.”~~

~~State~~The Bank ~~Activities.~~is ~~With~~subject ~~limited~~to ~~exceptions,~~possible ~~FDIC-insured~~future ~~state~~repurchase ~~banks,~~and ~~like the~~indemnification ~~Bank,~~demands ~~may~~for ~~not~~future ~~make~~losses orrealized ~~retain~~by ~~equity~~investors ~~investments~~for alleged breaches of arepresentations ~~rate~~and orwarranties inon anmortgage ~~amount~~loans ~~that~~previously ~~are~~sold ~~not~~to ~~permissible~~investors. The ~~for~~financial ~~national~~services ~~banks~~industry has been materially and ~~also~~adversely ~~may~~impacted by a prolonged period of negative economic conditions, including, but not ~~engage~~limited asto, ahigh ~~principal~~levels of unemployment, declines in ~~any~~asset ~~activity~~values, ~~that~~as iswell ~~not~~as ~~permitted~~delinquencies ~~for~~and adefaults ~~national~~on ~~bank~~loans. These ordefaults ~~its~~on ~~subsidiary~~loans include, ~~respectively,~~ ~~unless~~but ~~the~~are ~~bank~~not ~~meets~~limited to, ~~and~~possible ~~continues~~“strategic defaults” which are characterized by borrowers that appear to have the financial means to meet the debt service requirements of their loans, ~~its~~however, ~~minimum~~elect ~~regulatory~~not ~~capital~~to ~~requirements~~do ~~and~~so because the ~~FDIC~~value ~~determines~~of ~~that~~the assets securing their debts may have declined below the ~~activity~~amount ~~would~~of ~~not~~the ~~pose~~debt or in consideration of statutory restrictions which impede a ~~significant~~lender’s ~~risk~~ability to exercise prudent collection efforts or foreclose in an efficient manner. The Company’s consolidated financial statements have been prepared using values and information currently available to the ~~deposit~~Company; ~~insurance~~however, ~~fund~~there ofcan ~~which~~be no assurance that the ~~bank~~impact isof athese ~~member~~conditions will cease or reverse to mitigate possible risk of future potential losses by the Bank.

~~Regulations~~If ~~Governing~~we ~~Extensions~~are ofnot ~~Credit.~~able ~~The Bank is subject~~ to ~~restrictions~~compete oneffectively ~~extensions of credit to the Company and on investments~~ in the ~~Company’s~~highly ~~securities~~competitive ~~and~~banking ~~using those securities as collateral for loans. These regulations and restrictions may limit the Company’s ability to obtain funds from the Bank for its cash needs~~industry, ~~including~~our ~~funds~~business ~~for acquisitions~~will ~~and~~be ~~for~~adversely ~~payment of dividends, interest and operating expenses~~affected. Further, the Bank Holding Company Act and Federal Reserve regulations prohibit a bank holding company and its subsidiaries from engaging in various tie-in arrangements in connection with extensions of credit, leases or sales of property or furnishing of services.

~~Reserve~~Our ~~Requirements.~~business ~~The~~is ~~Federal Reserve~~extremely ~~requires all depository institutions to maintain reserves against their transaction accounts~~competitive. ~~For~~Many ~~net~~of ~~transaction~~our ~~accounts~~competitors ~~in 2012~~are, ~~the~~or ~~first~~are ~~$11.5~~affiliates ~~million~~of, upenterprises ~~from~~that ~~$10.7~~have ~~million~~greater ~~in 2011~~resources, isname ~~exempt~~recognition ~~from~~and ~~reserve~~market ~~requirements.~~presence Athan ~~three~~we ~~percent reserve~~do. ~~ratio~~Some ~~will~~of beour ~~assessed~~competitors onare ~~net~~not ~~transaction~~regulated ~~accounts~~as ~~over~~extensively ~~$11.5~~as ~~million~~we upare to and, ~~including $71.0 million~~therefore, upmay ~~from~~have ~~$58.8~~greater ~~million~~flexibility in ~~2011~~competing for business. ASome ~~ten~~of ~~percent~~these ~~reserve~~competitors ~~ratio~~are issubject ~~assessed~~to onsimilar ~~net~~regulation ~~transaction~~but ~~accounts~~have inthe ~~excess~~advantages of ~~$71.0~~established ~~million~~customer ~~(subject to~~bases, ~~adjustment~~higher bylending ~~the~~limits, ~~Federal~~extensive ~~Reserve).~~branch ~~The~~networks, ~~balances~~numerous ~~maintained~~ATMs, toand ~~meet~~more ~~the~~ability ~~reserve~~to ~~requirements~~absorb ~~imposed by~~ the ~~Federal~~costs ~~Reserve~~of ~~may~~maintaining betechnology ~~used~~or toother ~~satisfy liquidity requirements~~factors.

~~Other Regulations~~ 21

~~Interest~~Blue Valley and ~~various other charges collected or contracted for by~~ the Bank are subject to ~~state~~extensive ~~usury~~governmental ~~laws and other federal laws concerning interest rates~~regulation. The Bank’s loan operations are also subject to federal laws applicable to credit transactions. The Federal Truth in Lending Act governs disclosures of credit terms to consumer borrowers. The Home Mortgage Disclosure Act of 1975 requires financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves. The Equal Credit Opportunity Act prohibits discrimination on the basis of race, creed or other prohibited factors in extending credit. The Fair and Accurate Credit Transactions Act of 2003 governs the use and provision of information to credit reporting agencies. This act also requires financial

18Blue Valley and the Bank are subject to extensive governmental regulation. Blue Valley, as a bank holding company, is regulated primarily by the Federal Reserve Bank. The Bank is a commercial bank chartered by the State of Kansas and regulated by the Federal Reserve, the Federal Deposit Insurance Corporation, and the OSBC. These federal and state bank regulators have the ability, should the situation require, to impose significant regulatory and operational restrictions as well as levy monetary fines and/or penalties upon us and the Bank. Any such restrictions imposed by federal and state bank regulators could affect the profitability of the Blue Valley and the Bank.

~~Table~~The Company and Bank have entered into an agreement with the Federal Reserve Bank of ~~Contents~~Kansas City, which requires us to dedicate a significant amount of resources to complying with the agreement and may have a material adverse effect on our operations and the value of our securities.

~~institutions~~The toBoard ~~establish~~of ~~reasonable~~Directors ~~procedures~~ of ~~identifying~~the ~~identity~~Company ~~theft.~~and ~~The~~the ~~Fair~~Bank ~~Debt~~entered ~~Collection~~into ~~Act~~a ~~governs~~written agreement with the ~~manner~~Federal inReserve ~~which~~Bank ~~consumer~~of ~~debts~~Kansas ~~may~~City beas ~~collected~~of byNovember ~~collection~~4, ~~agencies~~2009. This ~~The various~~agreement ~~federal~~was ~~agencies~~a ~~charged~~result ~~with~~of ~~the~~an ~~responsibility~~examination ofthat ~~implementing~~was ~~these~~completed ~~federal~~by ~~laws~~the ~~have~~regulators ~~adopted~~in ~~various~~May ~~rules~~2009, and ~~regulations.~~related ~~The~~primarily ~~deposit~~to ~~operations~~the Bank’s asset quality. Under the terms of the agreement, the Company and the Bank ~~are~~agreed, ~~also~~among ~~subject~~other things, to ~~the~~submit ~~Right~~an enhanced written plan to ~~Financial~~strengthen ~~Privacy~~credit ~~Act,~~risk ~~which~~management ~~imposes~~practices aand ~~duty to~~improve ~~maintain~~the ~~confidentiality~~Bank’s ofposition ~~consumer~~on ~~financial~~past ~~records~~due loans, classified loans, and ~~prescribes~~other ~~procedures~~real estate owned; review and revise its allowance for ~~complying~~loan ~~with~~and ~~administrative~~lease ~~subpoenas~~loss ofmethodology ~~financial~~and ~~records,~~maintain ~~the~~an ~~Electronic~~adequate ~~Funds~~allowance ~~Transfer~~for ~~Act,~~loan loss; maintain sufficient capital at the Company and ~~Regulation~~Bank Elevel; ~~issued~~and byimprove the ~~Federal~~Bank’s ~~Reserve~~earnings and overall condition. The Company and Bank also agreed not to ~~implement~~increase ~~that Act~~or guarantee any debt, ~~which~~purchase ~~govern~~or ~~automatic~~redeem ~~deposits~~any toshares ~~and~~of ~~withdrawals~~stock or declare or pay any dividends without prior written approval from the ~~use~~Federal ofReserve ~~ATMs~~Bank. The Company and ~~other~~the ~~electronic~~Bank ~~banking~~substantially ~~services.~~complied with all terms of the written agreement.

~~Item~~As ~~1A:~~a ~~Risk~~result ~~Factors~~of a November 12, 2012 regulatory examination, which noted the improved financial condition of the Company and the Bank, satisfactory risk management processes, and senior management oversight, as well as full compliance with all actionable provisions of the Written Agreement, the Federal Reserve Bank of Kansas City terminated the November 4, 2009 Written Agreement and, effective January 11, 2013, replaced it with the MOU. The MOU’s purpose is to maintain the financial soundness of the Company and the Bank, and provides among other things, the Company and the Bank will continue to work on improvement of asset quality, maintain an adequate allowance for loan losses, maintain adequate capital, improve earnings, and not declare or pay any dividends or increase or guarantee any debt without prior written approval from the Federal Reserve Bank and the OSBC.

AnIf ~~investment in securities issued by~~ the Company ~~is subject to risks inherent to our business. The risks~~ and ~~uncertainties~~Bank ~~described~~do ~~below are~~ not ~~the~~comply ~~only~~with ~~risks that may have a material adverse effect on~~ the Company and they are not necessarily presented in order of significance. Additional risks and uncertainties could also adversely affect the Company’s business and financial results. If any one or a combination of these risks occursMOU, ~~our~~we ~~business, financial condition or results of operations~~ could be ~~adversely~~ ~~affected~~subject ~~and~~to the ~~market~~assessment ~~price~~ of ~~the~~civil ~~Company’s~~money ~~stock could decline. Further~~penalties, tofurther ~~the~~regulatory ~~extent that any of the information contained in this Annual Report on Form 10-K constitute forward-looking statements~~sanctions, ~~the~~or ~~risk~~other ~~factors~~regulatory ~~set~~enforcement ~~forth below also are cautionary statements identifying important factors that could cause the Company’s actual results to differ from those expressed in any forward-looking statements~~actions.

~~Difficult~~We ~~market~~are ~~conditions~~not ~~have~~paying ~~adversely~~dividends ~~affected~~on ~~the~~our ~~Company’s~~common ~~industry~~stock and ~~may~~are ~~continue~~deferring todistributions ~~affect~~on ~~the~~our ~~industry~~preferred stock, had previously deferred distributions on our subordinated debentures, and are otherwise restricted from paying cash dividends on our common stock. The failure to resume paying dividends and distributions may adversely affect us.

WeUnder ~~are~~the ~~particularly~~terms ~~exposed~~of tothe ~~downturns~~MOU, inprior regulatory approval is currently required before the ~~U.S.~~payment ~~real~~of ~~estate~~any ~~market~~dividends. The ~~Dramatic~~Company ~~declines~~relies ~~over~~on dividends from the ~~past~~Bank ~~three~~to ~~years~~assist in making debt service and dividend payments. There is no assurance that the ~~housing~~Company ~~market,~~will ~~with~~resume ~~falling~~paying ~~home~~dividends ~~prices~~on its common stock. Even if the Company resumes paying dividends, ~~increasing~~future ~~foreclosures~~payment of cash dividends on its common stock, ~~unemployment and~~if ~~under-employment~~any, ~~have~~will ~~negatively~~be ~~impacted~~subject to the ~~credit~~prior ~~performance~~payment of ~~real~~any ~~estate~~unpaid ~~loans~~dividends and ~~resulted~~deferred indistributions ~~significant~~on ~~write-downs~~the ofSubordinated ~~asset~~Debentures ~~values~~and bythe ~~financial~~Fixed ~~institutions,~~Rate ~~including~~Cumulative ~~government-sponsored~~Preferred ~~entities,~~Stock. Under ~~major~~the ~~commercial~~governing ~~and~~documents ~~investment banks,~~of ~~and~~our ~~regional~~Subordinated ~~financial~~Debentures ~~institutions~~issued ~~such~~by asBVBC ~~our~~Capital ~~Company.~~Trust ~~Many~~II ~~lenders~~ and ~~institutional~~III, ~~investors~~the ~~have~~quarterly ~~reduced~~payments orsince ~~ceased~~April ~~providing~~24, ~~funding~~2009 tofor ~~borrowers,~~BVBC ~~including~~Capital toTrust ~~other~~II ~~financial~~and ~~institutions~~since March 31, as2009 afor ~~result~~BVBC ofCapital ~~the~~Trust ~~concern~~III ~~regarding~~had ~~the stability~~been ofdeferred ~~the~~through ~~financial~~December ~~markets~~30, 2013. We had received regulatory approval and utilized the ~~strength~~proceeds offrom ~~counterparties.~~the ~~This~~December ~~market~~23, ~~turmoil~~2013 ~~and~~initial ~~tightening~~close of ~~credit~~our ~~have~~December ~~led~~2013 Offering to anbring ~~increased~~current ~~level~~all ofpreviously ~~commercial~~accrued and ~~consumer~~unpaid ~~delinquencies,~~dividends ~~lack~~and ofinterest ~~consumer~~on ~~confidence,~~our ~~increased~~Subordinated ~~market~~Debentures ~~volatility~~issued by BVBC Capital Trust II and ~~widespread~~ ~~reduction~~III ofprior ~~business~~to ~~activity~~December ~~generally~~31, 2013. Subsequent Ato ~~continuation~~December or31, ~~worsening~~2013, ofwe ~~these~~received ~~conditions~~approval ~~would~~for ~~likely~~the ~~exacerbate~~Bank ~~the~~to ~~adverse~~pay ~~effects~~dividends ofto ~~these~~the ~~difficult~~Company ~~market~~to ~~conditions~~pay onamounts usneeded ~~and~~to ~~others~~pay inquarterly ~~the~~dividends ~~financial~~due ~~institutions~~in ~~industry,~~March and ~~could further~~April, ~~negatively~~2014 ~~affect~~for ~~the~~our ~~Company’s~~Subordinated ~~financial results~~Debentures.

~~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.~~ 22

~~The~~In ~~new~~addition, ~~home~~at ~~real~~the ~~estate~~request ~~market~~of ~~in our~~the ~~geographic~~Federal ~~market~~Reserve ~~area~~Bank ~~has~~of ~~declined.~~Kansas ~~Our~~City, ~~loan~~we ~~portfolio~~have ~~has~~deferred athe ~~concentration~~quarterly individend ~~real~~payment ~~estate~~on ~~construction,~~the ~~land~~Fixed ~~development~~Rate ~~loans,~~Cumulative ~~and~~Preferred ~~commercial~~Stock ~~real~~since ~~estate~~May ~~loans~~15, ~~most~~2009. The ofFixed ~~which~~Rate ~~are~~Cumulative ~~located~~Preferred inStock ~~our~~carries ~~market~~a ~~area.~~5% Weper ~~have~~year acumulative ~~heightened~~preferred ~~exposure~~dividend ~~to credit~~rate, ~~losses~~payable ~~that~~quarterly. The ~~may~~dividend ~~arise~~rate ~~from~~increases ~~this~~to ~~concentration~~9% asbeginning awith ~~result~~the ofMay ~~the~~15, ~~downturn~~2014 inquarterly ~~the~~payment, ~~real~~which ~~estate~~will ~~market~~cause ~~and~~our ~~general~~quarterly ~~economy.~~dividend Asto aincrease ~~result~~from $271,875 ~~our~~to ~~non-performing~~$493,375. Dividends ~~assets~~compound if they accrue and ~~allowance~~are ~~for~~not ~~loan~~paid. Failure ~~losses~~by ~~remained~~us ~~high~~to ~~during~~pay ~~2010~~the ~~and~~preferred ~~2011.~~share Ifdividend ~~the~~is ~~current economic~~not ~~environment~~an ~~continues~~event of default and we have accrued for aall ~~prolonged~~deferred ~~period~~dividends ofand ~~time~~compounded orinterest ~~deteriorates~~through ~~further~~December 31, ~~collateral~~2013. As ~~values~~of ~~may~~December ~~further~~31, ~~decline~~2013 and ~~may~~December ~~result~~31, in2012, ~~increased~~we ~~credit~~had ~~losses~~accrued in$5.8 ~~these~~million ~~loans~~and $4.5 million, respectively, for dividends and ~~additional~~interest ~~loan~~on ~~foreclosures.~~the Fixed Rate Cumulative Preferred Stock.

~~Current~~Confidential ~~levels~~customer ofinformation ~~market~~transmitted ~~volatility.~~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.

The ~~capital~~Bank ~~and~~provides ~~credit~~its ~~markets~~customers ~~have~~with ~~been~~the ~~experiencing~~ability ~~significant~~to ~~volatility~~bank ~~and~~online. ~~disruption~~The secure transmission of confidential information over the ~~last~~Internet ~~few~~is ~~years~~a critical element of online banking. InThe ~~certain~~Bank’s ~~cases,~~network ~~this~~could ~~volatility has~~be ~~resulted~~vulnerable into ~~downward~~unauthorized ~~pressure~~access, oncomputer ~~stock~~viruses, ~~prices~~phishing schemes and ~~credit~~other ~~availability~~security ~~for~~problems. ~~certain~~The ~~issuers~~Bank ~~without~~may ~~regard~~be required to ~~those~~spend ~~issuers’~~significant ~~underlying~~capital ~~financial~~and ~~strength.~~other Ifresources ~~current~~to ~~levels~~protect against the threat of ~~market~~security ~~volatility~~breaches and ~~disruption~~computer ~~continue~~viruses, or ~~worsen,~~to ~~there~~mitigate ~~can~~damage ~~be no~~caused ~~assurance~~by security breaches or viruses. To the extent that wethe ~~will~~Bank’s ~~not~~activities ~~experience~~or anthe ~~adverse~~activities ~~effect~~of onits ~~our~~customers ~~ability~~involve tothe ~~access~~storage ~~capital,~~and iftransmission ~~needed~~of orconfidential ~~desired~~information, security breaches and onviruses ~~our~~could ~~business,~~expose ~~financial~~the ~~condition~~Bank to claims, litigation and ~~results~~other ofpossible ~~operation~~liabilities. Any inability to prevent security breaches or computer viruses could also cause existing and potential customers to lose confidence in the Bank’s systems and could adversely affect its reputation and its ability to retain and/or grow deposits

19Item 1B: Unresolved Staff Comments

~~Table~~No ofitems ~~Contents~~are reportable.

~~Our future ability to raise capital may be limited.~~ 23

~~Our ability to raise capital in the current economic and regulatory environment may be limited. During fiscal year 2008, we completed a rights offering in which we sold $5.~~Item 2 million worth of our common stock to certain existing stockholders at a price of $18 per share. In addition to the rights offering in 2008, we participated in the U.S. Treasury’s CPP program. Through that program, Treasury purchased 21,750 shares of the Company’s Fixed Rate Cumulative Perpetual Preferred Stock, Series A. This raised $21.75 million in additional capital. Should it become necessary to raise capital, opportunities to do so will not be as readily identifiable, and will likely be on less favorable terms than those previously available. : Properties

The ~~Company~~Bank currently operates five full service banking centers, which includes our principal office located at 11935 Riley in Overland Park, Kansas, and an operations center location. In January 2009, the ~~Bank~~Company placed the 7900 College Boulevard location up for lease or possible sale. The portions of these premises listed below as subleased are ~~subject~~leased to ~~extensive~~ ~~governmental~~third ~~regulation~~parties. The following table sets forth the locations of the banking and operations centers, dates opened, mortgage indebtedness, and occupancy:

The Company and the Bank are subject to extensive governmental regulation. The Company, as a bank holding company, is regulated primarily by the Federal Reserve Bank. The Bank is a commercial bank chartered by the State of Kansas and regulated by the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the State Banking Commissioner of Kansas (OSBC). These federal and state bank regulators have the ability, to place significant regulatory and operational restrictions upon the Company and the Bank. Any such restrictions imposed by federal and state bank regulators could affect the profitability of the Company and the Bank. The Company and the Bank entered into a written agreement in November 2009 with the Federal Reserve Bank of Kansas City. This agreement was a result of an examination that was completed by the regulators in May 2009, and relates primarily to asset quality. Under the terms of the agreement, the Company and the Bank agreed, among other things, to submit an enhanced written plan to strengthen credit risk management practice and improve the Bank’s position on past due loans, classified loans, and other real estate owned; review and revise its allowance for loan and lease loss methodology and maintain an adequate allowance for loan loss; maintain sufficient capital at the Company and Bank level; and improve the Bank’s earnings and overall condition. The Company and Bank have also agreed not to increase or guarantee any debt, purchase or redeem any shares or stock, or declare or pay any dividends without prior written approval from the Federal Reserve Bank. The Company and the Bank have substantially complied with all terms of the written agreement. If the Company and Bank are not able to continue to comply with the agreement, they could be subject to further regulatory enforcement action.

Location	Year Occupied	Mortgage Indebtedness as of December 31, 2013	Occupancy
Overland Park Banking Center 11935 Riley Overland Park, KS *	1994	None	100%
Olathe Banking Center 1235 E. Santa Fe Olathe, KS **	2001	None	100%
Shawnee Banking Center 5520 Hedge Lane Terrace Shawnee, KS **	2001	None	100%
College Boulevard Office 7900 College Boulevard Overland Park, KS *	2003	None	24% by Bank and common area 65% by Sublessor 11% Marketed for Sublease
Leawood Banking Center 13401 Mission Road Leawood, KS *	2004	None	47% by Bank and common area 50% by Sublessor 3% Marketed for Sublease
Lenexa Banking Center 9500 Lackman Road Lenexa, KS **	2007	None	100%

If* weThe ~~are~~building ~~unable~~is toowned ~~pay~~by ~~our~~Blue ~~Preferred~~Valley ~~Shares~~Building ~~dividend, the holder of the Preferred Shares may have additional rights~~Corp.

~~Under~~** ~~the~~The ~~Capital~~building ~~Purchase Plan, failure to pay the Preferred Shares dividend~~ is ~~not~~owned considered an event of default. However, a failure to pay a total of six Preferred Share dividends, whether or not consecutive, gives the holder 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 Company has deferred quarterly Preferred Share dividends since May 15, 2009. The dividend payment due on August 15, 2010 was the sixth dividend payment deferred by the ~~Company~~Bank. At this time, the Treasury has not elected any directors to serve on the Company’s board; however, they have assigned an observer to attend the Company’s board meetings. The Company has accrued for these dividends and it intends to bring the obligation current as soon as permitted.

~~Our~~Item 3: Legal ~~operations may be adversely affected if we are unable to maintain and increase our deposit base and secure adequate funding.~~ Proceedings

~~The~~We ~~Company~~are ~~funds~~periodically ~~its~~involved ~~banking~~in ~~and~~routine ~~lending~~litigation ~~activities~~incidental ~~primarily through demand, savings and time deposits and,~~ to a ~~lesser extent, lines of credit, sale/repurchase facilities from various financial institutions, and Federal Home Loan Bank borrowings. The success of~~ our business. We ~~depends~~are innot ~~part~~a onparty ~~our ability~~ to ~~maintain~~any ~~and~~pending ~~increase~~litigation ~~our~~that ~~deposit~~we ~~base~~believe ~~and~~is ~~our ability~~likely to ~~maintain~~have ~~access~~a tomaterial ~~other~~adverse ~~funding~~effect ~~sources. Our inability to obtain funding~~ on ~~favorable~~our ~~terms,~~consolidated ~~timely~~financial ~~basis~~condition, orresults atof ~~all, would adversely affect our~~ operations ~~and~~or ~~financial~~cash ~~condition~~flows.

20Item 4: Mine Safety Disclosures

~~Table~~No ofitems ~~Contents~~are reportable.

~~Changes in interest rates may adversely affect our earnings and cost of funds.~~ 24

~~Changes~~Part in interest rates affect our operating performance and financial condition in diverse ways. A substantial part of our profitability depends on the difference between the rates we receive on loans and investments and the rates we pay for deposits and other sources of funds. Our net interest spread will depend on many factors that are partly or entirely outside our control, including competition, federal monetary and fiscal policies, and economic conditions generally. Historically, net interest spreads for many financial institutions have widened and narrowed in response to these and other factors, which are often collectively referred to as “interest rate risk.” We try to minimize our exposure to interest rate risk, but are unable to eliminate it. II

~~Because~~Item 5: Market ~~our~~for ~~business~~Registrant’s isCommon ~~concentrated in the Kansas City MSA~~Equity, aRelated ~~downturn~~Stockholder inMatters ~~the~~and ~~economy~~Issuer Purchases of ~~the~~Equity ~~Kansas City MSA may adversely affect our business~~Securities.

~~Our~~Market ~~success is dependent to a significant extent upon the general economic conditions in the Kansas City MSA, including Johnson County, Kansas, and, in particular, the conditions~~ for ~~the~~Common small and medium-sized businesses that are the focus of our customer base. Further adverse changes in economic conditions in the Kansas City MSA, including Johnson County, Kansas, would impair our ability to collect loans, reduce our growth rate and have a negative impact on our overall financial condition. Adverse changes in the Kansas City MSA have already occurred and a continued downturn in the general economic conditions in the Kansas City MSA will continue to have an adverse effect on our overall financial condition. Stock

~~The~~We ~~continued~~are ~~slowdown~~a inreporting ~~real~~company ~~estate~~under ~~sales~~the ~~and~~Securities Exchange Act of 1934 (the “1934 Act”), as amended, as a ~~decrease~~ result of a registration statement filed with the Securities and Exchange Commission in ~~residential~~December, ~~real~~2013 ~~estate~~for ~~values~~a ~~within~~common ~~our~~stock ~~market~~rights ~~areas~~offering ~~have~~that ~~affected~~we completed during January 2014. On January 16, 2014, we filed a Form 15 with the Securities and ~~may~~Exchange ~~continue~~Commission tosuspending ~~affect~~our reporting obligations under the 1934 Act. Shares of our ~~financial~~common ~~condition~~stock are quoted on the OTCQB under the trading symbol “BVBC.” As of January 31, 2014, there were approximately 174 stockholders of record of our common stock. The following table sets forth the high and low bid prices of the Company’s common stock since the first quarter of 2012 based on closing stock price quotations provided by Yahoo.com. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.

Non-performing assets and our provision for loan losses and other real estate owned have increased as a result of the downturn in economic conditions in the real estate market, continued slow down in home sales, and decline in median home prices and newly constructed homes. The housing industry in the Midwest has experienced a downturn since the last quarter of 2007 reflecting, in part, decreased availability of mortgage financing for residential home buyers, reduced demand for new home construction resulting in over-supply of housing inventory and increased foreclosure rates. As these market conditions continue, or deteriorate further, or as the slow economy continues to negatively impact the commercial non-residential real estate market, our results of operations will continue to be adversely impacted because a significant portion of our loans are secured by real estate in our market areas.

	2013				2012
Fiscal Quarter	High		Low		High		Low
First	$	9.50	$	4.50	$	5.50	$	3.85
Second		7.90		7.25		3.55		3.55
Third		7.55		6.26		4.49		4.00
Fourth		8.00		6.00		4.50		4.50

~~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.~~ Dividends

~~Some~~The ~~borrowers~~Company’s ~~may~~consolidated ~~not~~net ~~have~~income consists largely of the operations of the Bank; therefore, our ability to ~~repay~~pay ~~credit~~dividends ~~that~~on weour ~~have~~common ~~extended~~stock is subject to ~~them. This~~the ~~risk~~receipt isof ~~inherent~~dividends infrom the ~~banking business~~Bank. The ~~Like~~ability ~~all~~of ~~financial~~the ~~institutions,~~Bank ~~the~~to ~~Company~~pay ~~maintains~~dividends anto ~~allowance~~us, ~~for~~and ~~loan~~thus ~~losses~~our ability to ~~absorb~~pay ~~probable~~dividends ~~loan~~to ~~losses~~our instockholders, ~~our~~is ~~loan~~regulated ~~portfolio~~by federal banking laws. In ~~The~~addition, ~~level~~as ofwe ~~the~~elect ~~allowance~~to ~~reflects~~defer ~~management’s~~dividends ~~continuing evaluation~~on ofour ~~industry~~Preferred ~~concentrations,~~Shares ~~specific~~or ~~credit~~if ~~risks,~~we ~~loan~~elect ~~loss~~to ~~experience,~~defer ~~current~~interest ~~loan~~payments ~~portfolio~~on ~~credit~~our ~~quality,~~outstanding ~~economic~~junior ~~and~~subordinated ~~regulatory~~debentures, ~~conditions~~we ~~and~~are ~~unidentified~~prohibited ~~losses~~from ~~inherent~~paying individends ~~the~~on ~~current~~our ~~loan~~common ~~portfolio.~~stock ~~However,~~during wesuch ~~cannot~~deferral. As ~~predict loan~~a ~~losses~~result ~~with~~of ~~certainty,~~a ~~and~~Memoranda weof ~~cannot~~Understanding ~~assure~~(MOU) ~~you~~with ~~that~~the ~~our~~Federal ~~allowance~~Reserve Bank (for ~~loan~~more ~~losses~~information ~~will~~see beRegulatory ~~sufficient~~Matters tosection ~~cover~~in ~~our~~Management’s ~~future~~Discussion ~~loan~~and ~~losses.~~Analysis ~~Loan~~of ~~losses~~Financial inCondition ~~excess~~and Results of ~~our~~Operations), ~~reserves~~the ~~would~~Company and Bank have anagreed ~~adverse~~not ~~effect~~to onincrease ~~our~~or ~~financial~~guarantee ~~condition~~any ~~and~~debt, ~~results~~purchase or redeem any shares of ~~operations.~~ ~~The~~stock ~~loan~~or ~~loss~~declare ~~provision~~or ~~related~~pay toany ~~loans~~dividends ~~secured~~without byprior ~~real~~written ~~estate~~approval ~~has~~from ~~increased~~the Federal Reserve Bank. After ~~This~~that ~~increase~~agreement is aterminated, ~~result~~our Board of Directors anticipates restoration of the ~~continued~~ability ~~industry~~to ~~wide~~declare ~~decline~~future individends, ~~the~~subject ~~real~~to ~~estate~~limitations ~~market~~imposed by regulatory capital guidelines and ~~general~~approval, ~~economy.~~as Ifpermitted by the ~~trend~~Company’s isprofitability ~~prolonged~~ and ~~losses~~liquidity. We ~~continue~~ have not declared or paid a cash dividend to ~~increase~~our common stockholders since 2007, ~~our~~and ~~results~~we ofdo ~~operations~~not ~~would~~know ~~continue~~when towe will be ~~negatively~~able ~~impacted~~to byresume ~~higher~~paying ~~loan~~cash ~~losses~~dividends.

In addition, various regulatory agencies, as an integral part of the examination process, periodically review our loan portfolio. These agencies may require us to add to the allowance for loan losses based on their judgments and interpretations of information available to them at the time of their examinations. If these agencies require us to increase our allowance for loan losses, our earnings will be adversely affected in the period in which the increase occurs. 25

21Item 6: Selected Financial Data

~~Table~~The following table presents our consolidated financial data as of ~~Contents~~and for the five years ended December 31, 2013, and should be read in conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” each of which is included elsewhere in this Form 10-K. The selected balance sheet and statements of operations data, insofar as they relate to the five years in the five-year period ended December 31, 2013, have been derived from our audited consolidated financial statements.

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

	As of and for the
	Year Ended December 31,
	2013			2012			2011			2010			2009
	(In thousands, except share and per share data)
Selected Statements of Operations Data
Interest and dividend income:
Interest and fees on loans.	$	20,800		$	22,852		$	25,277		$	28,011		$	33,996
Federal funds sold and other short-term investments		135			193			151			245			144
Available-for-sale securities		1,683			1,097			1,202			1,825			1,943
Dividends on Federal Home Loan Bank and Federal Reserve Bank Stock		239			241			225			222			211
Total interest and dividend income		22,857			24,383			26,855			30,303			36,294

Interest expense:
Interest-bearing demand deposits		313			700			1,611			2,343			2,589
Savings and money market deposit accounts		275			291			346			438			490
Other time deposits		1,661			2,487			3,755			7,746			10,742
Funds borrowed		3,222			3,714			3,543			3,836			4,166
Total interest expense		5,471			7,192			9,255			14,363			17,987
Net interest income		17,386			17,191			17,600			15,940			18,307
Provision for loan losses		950			1,200			3,300			3,095			21,635
Net interest income (loss) after provision for loan losses		16,436			15,991			14,300			12,845			(3,328	)

Non-interest income:
Loans held for sale fee income		1,456			2,447			2,120			3,506			2,785
NSF charges and service fees		968			980			944			1,062			1,472
Other service charges		2,478			2,472			2,276			2,021			1,778
Realized gains on available-for-sale securities		127			–			–			885			346
Other income		3,443			1,535			984			1,145			1,664
Total non-interest income		8,472			7,434			6,324			8,619			8,045

Non-interest expense:
Salaries and employee benefits		11,079			10,587			10,955			11,753			12,272
Net occupancy expense		2,620			2,568			2,599			2,756			2,811
Foreclosed assets expense		3,612			2,647			5,219			2,708			3,862
Other operating expense		6,855			7,506			7,851			8,550			8,896
Total non-interest expense		24,166			23,308			26,624			25,767			27,841
Income (loss) before income taxes		742			117			(6,000	)		(4,303	)		(23,124	)
Provision (benefit) for income taxes		(300	)		(150	)		9,823			(1,561	)		(8,514	)
Net Income (loss)		1,042			267			15,823			(2,742	)		(14,610	)
Dividends and accretion on preferred stock		1,104			1,106			1,106			1,105			1,045
Net loss available to common stockholders	$	(62	)	$	(839	)	$	(16,929	)	$	(3,847	)	$	(15,655	)

Per Share Data
Basic earnings	$	(0.02	)	$	(0.29	)	$	(6.03	)	$	(1.38	)	$	(5.68	)
Diluted earnings		(0.02	)		(0.29	)		(6.03	)		(1.38	)		(5.68	)
Dividends		0.00			0.00			0.00			0.00			0.00
Book value basic (at end of period)		4.73			6.18			6.60			12.66			14.09
Weighted average common shares outstanding:
Basic		2,930,115			2,855,566			2,806,299			2,773,039			2,754,419
Diluted		2,951,376			2,867,563			2,827,888			2,788,154			2,762,603
Dividend payout ratio		0.00	%		0.00	%		0.00	%		0.00	%		0.00	%

If we foreclose on a defaulted real estate loan to recover our investment, we may be subject to environmental liabilities in connection with the underlying real property. It is also possible that hazardous substances or wastes may be discovered on these properties during our ownership or after they are sold to a third party. If they are discovered on a property that we have acquired through foreclosure or otherwise, we may be required to remove those substances and clean up the property. We may have to pay for the entire cost of any removal and clean-up without the contribution of any other third parties. We may also be liable to tenants and other users of neighboring properties. These costs or liabilities may exceed the fair value of the property. In addition, we may find it difficult or impossible to sell the property prior to or following any environmental clean-up. 26

The Company uses valuation methodologies, estimates and assumptions for certain assets measured at fair value and loan collateral which could be subject to differing interpretations and could result in changes to asset or collateral valuations that could have an impact on the Company’s financial condition or operating results.

	As of and for the
	Year Ended December 31,
	2013			2012			2011			2010			2009
Selected Balance Sheet Data
(at end of period):
Total available-for-sale securities	$	100,657		$	77,845		$	61,790		$	63,640		$	72,757
Total mortgage loans held for sale, fair value		1,438			7,621			5,686			8,162			8,752
Total loans		414,795			415,671			438,843			492,454			554,111
Total assets		609,086			657,005			654,452			723,101			773,967
Total deposits		448,368			484,466			490,413			541,218			590,110
Funds borrowed		110,222			122,779			115,806			118,505			118,208
Total stockholders’ equity		42,228			39,815			40,455			57,164			60,603
Trust assets under administration		155,315			140,976			129,580			125,702			105,071

Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (1)		3.13	%		2.92	%		2.91	%		2.23	%		2.43	%
Non-interest income to average assets		1.36			1.14			0.93			1.09			0.99
Non-interest expense to average assets		3.87			3.57			3.90			3.26			3.42
Net overhead ratio (2)		2.52			2.43			2.97			2.14			2.40
Efficiency ratio (3)		93.45			94.65			111.29			104.92			105.65
Return on average assets (4)		0.17			0.04			(2.32	)		(0.35	)		(1.79	)
Return on average equity (5)		(0.37	)		(4.97	)		(51.84	)		(10.25	)		(33.07	)

Asset Quality Ratios:
Non-performing loans to total loans		1.71	%		1.16	%		2.58	%		6.16	%		6.30	%
Allowance for possible loan losses to:
Total loans		2.17			2.18			3.01			2.99			3.61
Non-performing loans		126.55			187.23			116.46			48.53			57.33
Net charge-offs to average total loans		0.25			1.24			1.04			1.61			2.30
Non-performing loans to total assets		1.17			0.74			1.73			4.20			4.51
Non-performing assets to total assets		5.40			5.60			6.20			6.98			7.02
Foreclosed assets held for sale to non-performing assets		78.41			86.85			72.09			39.89			35.77
Texas Ratio (6)		45.81			49.16			52.59			54.91			54.90
Classified asset ratio (7)		64.61			73.69			96.68			107.84			129.10

Balance Sheet Ratios:
Loans to deposits		92.51	%		85.80	%		89.48	%		90.99	%		93.90	%
Average interest-earning assets to average interest-bearing liabilities		116.53			118.52			116.17			113.18			115.08

Capital Ratios:
Total equity to total assets		6.93	%		6.06	%		6.18	%		7.91	%		7.83	%
Total capital to risk-weighted assets ratio		13.90			12.01			12.08			12.66			12.54
Tier 1 capital to risk-weighted assets ratio		11.96			9.70			9.80			11.39			11.26
Tier 1 capital to average assets ratio		10.07			8.17			8.04			9.04			9.07
Average equity to average assets ratio		6.07			6.07			7.97			7.48			8.47

~~The~~(1) ~~Company~~Net ~~uses~~interest ~~various valuation methodologies~~income, estimates and assumptions when measuring the fair value of financial assets, liabilities, loan collateral and other real estate owned. Fair values and the information used to record valuation adjustments are based on ~~quoted~~a ~~market~~full ~~prices, third~~tax-~~party~~equivalent ~~appraisals~~basis, ~~and~~divided ~~/or other observable inputs provided~~ by ~~third~~average interest-~~party~~earning ~~sources~~assets. ~~Any changes in underlying factors, assumptions or estimates in any of these areas could impact the Company’s financial results.~~

It(2) ~~may~~Non-interest beexpense ~~difficult to value certain assets if comparable sales become~~ less ~~frequent~~non-interest ~~and/or~~income ~~market~~divided ~~data~~by ~~becomes~~average ~~less~~total observable. Assets or loan collateral that were in active markets with significant observable data may become illiquid due to the current financial environment. In such cases, asset valuations may require more subjective judgment and estimates. The changing real estate market conditions could materially impact the valuation of assets ~~and loan collateral as reported within the Company’s financial statements and changes in estimated values could vary significantly from one period to the next~~. ~~Decreases in value may have a negative impact on the Company’s financial results.~~

~~The~~(3) ~~loss~~Non-interest ofexpense ~~our~~divided ~~key~~by ~~personnel~~the ~~could~~sum ~~adversely~~of ~~affect~~net ~~our~~interest ~~operations.~~income plus non-interest income.

We(4) ~~are~~Net aincome ~~relatively~~divided ~~small~~by ~~organization~~average ~~and~~total ~~depend on the services of all of our employees~~assets. Our growth and development to date has depended in a large part on a few key employees who have primary responsibility for maintaining personal relationships with our largest customers. The unexpected loss of services of one or more of these key employees could have a material adverse effect on our operations. Our key employees are Robert D. Regnier, Mark A. Fortino, Bruce A. Easterly, and Bonnie M. McConnaughy. Each of these persons is an officer of the Bank. We do not have written employment or non-compete agreements with any of these key employees; however, the Company has change in control agreements in place with Mr. Fortino, Mr. Easterly and Ms. McConnaughy. The change in control agreements include provisions regarding maintenance of the Company’s confidential information, non-solicitation and non-competition that would extend for a period of twelve months. If their employment were terminated, Mr. Fortino, Mr. Easterly, and Ms. McConnaughy would all lose unvested shares of Blue Valley Ban Corp. restricted stock awarded over the past three years as well as amounts awarded in their Long-Term Retention Bonus Pools. Mr. Regnier would lose unvested shares of Blue Valley Ban Corp. restricted stock awarded over the last three years. The Company has $1.0 million of bank owned life insurance on each employee named above with the Bank of Blue Valley as beneficiary of the policies. The Company has a $1 million “key person” life insurance policy on the life of Mr. Regnier.

If(5) weNet ~~are~~loss ~~not~~available ~~able~~ to ~~compete~~common ~~effectively~~stockholders individed ~~the~~by ~~highly~~average ~~competitive~~common ~~banking industry, our business will be adversely affected~~equity.

~~Our~~(6) ~~business~~The issum ~~extremely competitive. Many~~ of ~~our~~non-performing ~~competitors~~assets ~~are, or are affiliates of, enterprises that have greater resources, name recognition~~ and ~~market~~ ~~presence~~loans ~~than~~past wedue ~~do.~~> ~~Some~~90 ofdays ~~our~~divided ~~competitors~~by ~~are~~tangible ~~not~~equity ~~regulated~~capital asplus ~~extensively~~the asallowance ~~we are and, therefore, may have greater flexibility in competing~~ for ~~business.~~loan ~~Some~~losses of(Bank these competitors are subject to similar regulation but have the advantages of established customer bases, higher lending limits, extensive branch networks, numerous ATMs, and more ability to absorb the costs of maintaining technology or other factorsratio).

22(7) Classified assets divided by the sum of Tier 1 Capital plus the allowance for loan losses (Bank ratio)

~~Table of Contents~~27

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

~~Continued~~The ~~losses~~following ~~could~~presents ~~erode~~management’s discussion and analysis of our ~~capital~~financial ~~levels~~condition and results of operations as of the dates and for the periods indicated. You should read this discussion in conjunction with our “Selected Consolidated Financial Data,” our consolidated financial statements and the accompanying notes, and other financial data contained elsewhere in this report.

~~Our~~This ~~capital~~report ~~level~~contains atforward-looking ~~December 31~~statements within the meaning of Section 21E of the Securities Exchange Act of 1934, ~~2011~~as ~~was~~amended. The ~~above~~Company intends such forward-looking statements to be covered by the ~~“well~~safe ~~capitalized”~~harbor ~~level~~provisions ~~under~~for ~~regulatory~~forward-looking ~~definitions~~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 ~~However~~statements, ~~continued~~which ~~losses~~ 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," ~~cause~~"estimate," ~~our~~"expect," ~~capital~~"intend," ~~level~~"may," to"plan," ~~fall~~"potential," to"predict," a"project," ~~level~~"should," ~~that~~or the negative of these terms or other comparable terminology. The Company is ~~below~~unable to predict the ~~“well~~actual ~~capitalized”~~results ~~level~~of ~~under~~its ~~regulatory~~future ~~definitions~~plans or strategies with certainty. Factors ~~Failure~~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 ~~well~~or ~~capitalized~~increase ~~status~~deposit ~~could~~base ~~result~~and secure adequate funding; a continued deterioration of general economic conditions or the demand for housing in ~~adverse~~the Company's market areas; 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 TARP funds or Trust Preferred Securities; the loss of key personnel; significant increases in competition; potential unfavorable actions ~~against~~from ~~us,~~rating asagencies; ~~well~~potential ~~as jeopardize~~unfavorable ~~our~~results ~~ability~~of litigation to ~~acquire~~which ~~needed~~the ~~funding~~Company ~~through~~may ~~sources~~become ~~such~~a asparty; ~~brokered~~and ~~deposits,~~the ~~Federal~~possible ~~Home~~dilutive ~~Loan~~effect ~~advances,~~of potential acquisitions or ~~unsecured~~expansions. These ~~Federal~~risks ~~funds~~and ~~credit~~uncertainties ~~lines,~~should be considered in evaluating forward-looking statements and ~~could~~undue ~~damage~~reliance ~~our~~should ~~reputation~~not be placed on such statements. We operate in ~~our~~a ~~deposit~~very ~~markets~~competitive and rapidly changing environment. New risks emerge from time to time, ~~possibly~~and ~~resulting~~it inis ~~deposit declines~~not ~~that~~possible ~~could~~for ~~decrease~~us ~~our~~to ~~liquidity~~predict all risk factors. Nor ~~Additional~~can ~~significant~~we ~~increases~~address inthe impact of all factors on our ~~allowance~~business ~~for~~or ~~loan~~the ~~losses~~extent to which any factor, ~~significant~~or ~~write-downs~~combination of ~~assets~~factors, ormay ~~other~~cause ~~operating~~actual ~~losses~~results ~~would~~to ~~decrease~~differ ~~our~~materially ~~capital~~from ~~levels~~those ~~further.~~contained in any forward-looking statements.

~~Confidential~~Critical ~~customer~~Accounting 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. Policies

~~The~~Please ~~Bank~~refer ~~provides its clients with the ability~~ to ~~bank~~Note ~~online.~~1 ~~The secure transmission~~ of ~~confidential~~our ~~information~~consolidated ~~over~~financial ~~the~~statements ~~Internet~~where iswe present a ~~critical~~listing ~~element~~and discussion of ~~online~~our ~~banking.~~most ~~The~~significant ~~Bank’s~~accounting ~~network~~policies. After ~~could~~a bereview ~~vulnerable~~of tothese ~~unauthorized access~~policies, ~~computer~~we ~~viruses,~~determined ~~phishing schemes~~that ~~and~~accounting ~~other~~for ~~security problems. The Bank may be required to spend significant capital and other resources to protect against~~ the ~~threat~~allowance offor ~~security~~loan ~~breaches~~losses and ~~computer~~income ~~viruses,~~taxes orare todeemed ~~alleviate~~critical ~~problems~~accounting ~~caused~~policies bybecause ~~security~~of ~~breaches or viruses. To~~ the ~~extent~~valuation ~~that~~techniques ~~the~~used, ~~Bank’s~~and ~~activities or~~ the ~~activities~~sensitivity of ~~its~~certain ~~clients~~financial ~~involve~~statement ~~the~~amounts ~~storage~~to ~~and~~the ~~transmission of confidential information~~methods, ~~security~~as ~~breaches~~well ~~and~~as ~~viruses could expose~~ the ~~Bank~~assumptions toand ~~claims~~estimates, ~~litigation~~underlying ~~and~~these ~~other possible liabilities~~policies. Accounting ~~Any~~for ~~inability~~these tocritical ~~prevent~~areas ~~security~~requires ~~breaches~~subjective orand ~~computer~~complex ~~viruses~~judgments that could ~~also~~be ~~cause~~subject ~~existing clients~~ to ~~lose~~revision ~~confidence~~as innew ~~the~~information ~~Bank’s~~becomes ~~systems and could adversely affect its reputation and its ability to generate deposits~~available.

~~Legislative~~As presented in Note 1 and ~~regulatory~~Note ~~initiatives~~3 to ~~address~~the ~~these~~consolidated ~~difficult~~financial ~~market~~statements, ~~and~~the ~~economic~~allowance ~~conditions~~for ~~may~~loan ~~not~~losses ~~stabilize~~represents management’s estimate of probable credit losses inherent in the Uloan portfolio as of the balance sheet date.S This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The ~~financial~~adequacy ~~system~~of the allowance for loan losses is analyzed monthly based on internal loan reviews and qualitative measurements of our loan portfolio. Management assesses the adequacy of the allowance for loan losses based upon a number of factors including, among others:

On· ~~October 3,~~analytical ~~2008,~~reviews ~~the Emergency Economic Stabilization Act~~ of ~~2008~~loan ~~(“EESA”)~~loss ~~was~~experience ~~signed~~in ~~into~~relationship ~~law. The EESA authorizes the U.S. Treasury Department through the Troubled Asset Relief Program (“TARP”)~~ to ~~purchase~~outstanding ~~from financial institutions and their holding companies up to $700 billion in mortgage~~ loans and certain other financial assets, including debt and equity securities used by financial institutions and their holding companies. The Treasury allocated $250 billion to the TARP Capital Purchase Plan Program. The program was designed to attract broad participation by healthy institutions, to stabilize the financial system and to increase lending for the benefit of the U.S. economy. As part of the Capital Purchase Plan, the U.S. Treasury purchased debt and equity securities from participating institutions. The Company became a participant in the Capital Purchase Program in December 2008. commitments;

~~The~~· ~~EESA~~problem ~~followed,~~ and ~~has~~non-performing ~~been~~loans ~~followed, by numerous actions by the Federal Reserve, Congress, U.S. Treasury, the Securities Exchange Commission~~ and ~~others~~other toloans ~~address~~presenting ~~the liquidity and~~ credit crisis. These measures include, but are not limited to, the homeowner liquidity relief program which encourages loan restructuring and modification, action against short selling practices and the Temporary Liquidity Guarantee Program. There can be no assurance as to the actual impact these initiatives may have on the financial markets. The failure of these initiatives to help stabilize the financial markets and if the economy continues or worsens, our business, financial condition, results of operations, and market price of our common stock could be adversely impacted. concerns;

~~Our~~· ~~business~~trends ~~could~~in beloan ~~adversely~~growth, ~~affected~~portfolio bycomposition ~~unfavorable~~and ~~actions from rating agencies.~~ quality;

~~Ratings~~· ~~assigned~~appraisals byof ~~bank rating agencies to~~ the ~~Company~~value ~~and its subsidiaries may impact the decision~~ of ~~certain~~collateral; ~~customers, in particular, institutions to do business with us. A rating downgrade or a negative rating could adversely affect our deposits~~ and ~~our business relationships.~~

23· management’s judgment with respect to current economic conditions and their impact on the existing loan portfolio.

~~Table of Contents~~28

~~Our~~The ~~business~~Bank ~~could~~computes beits ~~adversely~~allowance ~~affected~~for loan losses by ~~recent~~assigning ~~legislation~~specific reserves to impaired loans, plus a general reserve based on loss factors applied to the rest of the loan portfolio. The specific reserve on impaired loans is computed as the amount of the loan in excess of the present value of the estimated future cash flows discounted at the loan’s effective interest rate, or based on the loan’s observable market value or the fair value of the collateral if the loan is collateral dependent. The general reserve loss factors are determined based on such items as management's evaluation of risk in the portfolio, local economic conditions, and historical loss experience. The Bank has further refined its risk grading system by developing associated reserve factors for each risk grade.

~~Various~~As ~~new~~discussed ~~regulations~~in ~~have~~Notes ~~been~~1 ~~imposed~~and ~~over~~12 of the ~~past~~consolidated ~~year~~financial statements, the Company accounts for income taxes in accordance with ~~additional~~income ~~regulations~~tax ~~being~~accounting ~~proposed~~guidance (ASC 740, Income Taxes). Current ~~Changing~~income ~~regulation~~tax expense reflects taxes to be paid or refunded for the current period by applying the provisions of the enacted tax law to the taxable income or excess of deductions over revenues. Deferred income taxes represent the expected future tax consequences of events that have been recognized in the financial statements or income tax returns. The Company determines deferred income taxes using the liability (or balance sheet) method. Under this method, ~~along~~the ~~with~~net ~~possible~~ deferred tax asset or liability is based on the tax effects of the differences between the book and tax bases of assets and liabilities, and enacted changes in tax ~~laws~~rates and ~~accounting~~laws ~~rules,~~are ~~may~~recognized ~~have~~in athe ~~significant~~period ~~impact~~in which they occur. Deferred tax assets are recognized if it is more likely than not, based on the ~~way~~technical merits, that ~~financial~~the ~~institutions~~tax ~~conduct~~position ~~their~~will ~~business~~be realized or sustained upon examination. The ~~Complying~~determination ~~with~~of ~~increased~~whether ~~regulations~~or ~~may~~not ~~increase~~a ~~our~~tax ~~costs~~position has met the more-likely-than-not recognition threshold considers the facts, circumstances and ~~limit~~information available at the ~~availability~~reporting date and is subject to the management’s judgment. Deferred tax assets are reduced by a valuation allowance if, based on the weight of ~~our~~evidence ~~business opportunities~~available, it is more likely than not that some portion or all of a deferred tax asset will not be realized. The Company regularly monitors taxing authorities for changes in laws and regulations and their interpretations of the judicial system.

On July 21, 2010 The Dodd-Frank Wall Street Reform and Consumer Protection Act was signed into law. Some of the provisions may have consequences of increasing our expenses, decreasing our revenues, and changing the activities in which we choose to engage. The specific impact of the Dodd-Frank Act on our current activities and our financial performance will depend on the manner in which relevant agencies develop and implement the required rules. Overview

2012 was a pivotal year for us in terms of operating results and asset quality improvement, and these trends have continued through 2013. We ~~are~~recorded ~~subject~~net income of $1.0 million (net loss available to ~~various~~common ~~legal~~stockholders ~~claims~~of $62,000 after dividends and ~~litigation~~ accretion on preferred stock) compared to net income of $267,000 (net loss available to common stockholders of $839,000 after dividends and accretion on preferred stock) during the prior year period. Our net interest income increased $200,000, or 1.13%, to $17.4 million compared to $17.2 million in the prior year. Additionally, our asset quality has continued to improve, which was a contributing factor for our improved performance in 2013. Non-performing assets (non-accrual loans plus foreclosed assets held for sale) of $32.9 million as of December 31, 2013 were reduced by 10.51% from $36.8 million as of December 31, 2012 as a result of write-downs and sales of foreclosed assets held for sale, improving economic conditions and continued prudent credit administration by management. The improvements in the credit quality of our loan portfolio, in addition to reduction in the amount of loan losses charged off to the allowance for loan losses, precipitated a reduction in the recorded loan loss provision in 2013 to $950,000 compared to a provision of $1.2 million during the previous year. As a result of the improvement in our credit quality during 2013, we recorded negative provisions for loan losses of $1.7 million during the year, however, near the end of January, 2014, based on a review of updated financial information from the borrower and discussions with the borrower, we determined that the credit quality of a $5.0 million commercial loan relationship had deteriorated substantially in the previous period. This precipitated a downgrade to the loans in the relationship and necessitated that we record a $2.65 million provision as of December 31, 2013, resulting in a provision for loan losses of $950,000 for the year ending December 31, 2013. The recorded balance of foreclosed assets for sale declined to $25.8 million at December 31, 2013 from $31.9 million at December 31, 2012. We continue to actively market and manage these properties. For the year ended December 31, 2013, non-interest income increased 13.96% to $8.5 million from $7.4 million for the year ended December 31, 2012, and for the year ended December 31, 2013 non-interest expense increased 3.68% to $24.2 million from $23.3 million for the year ended December 31, 2012. Our loss per share on a diluted basis was $0.02 for the year ending December 31, 2013, an improvement compared to diluted loss per share of $0.29 for the year ended December 31, 2012. Our year to date returns on average assets and average common stockholders’ equity for 2013 were 0.17% and negative 0.37%, compared to 0.04% and negative 4.97%, respectively, for the year ended December 31, 2012.

WeNet ~~are~~interest ~~periodically~~income ~~involved~~for inthe ~~routine~~year ~~litigation~~ending ~~incidental~~December to31, ~~our~~2013 ~~business~~was $17.4 ~~Regardless of whether these claims and legal actions are founded or unfounded~~million, ~~if such legal actions are not resolved in~~ a ~~manner~~slight ~~favorable~~increase toof us$195,000 ~~they may result in significant financial liability and/~~or ~~adversely affect the Company’s reputation~~1. ~~Any financial liability or reputational damage could have a material adverse impact on our business~~13%, ~~financial~~compared ~~condition~~to ~~and~~$17.2 ~~results~~million offor ~~operations~~2012. Despite ~~Even if these claims and legal actions do not result in~~ a ~~financial~~decline ~~liability, defending these claims and actions result~~ in ~~increased~~total ~~legal and~~average ~~professional~~earning ~~services~~assets ~~costs,~~of ~~which~~approximately ~~adds to our non-interest expense and negatively impacts our operating results.~~

~~Item 1B: Unresolved Staff Comments~~29

No$30.5 ~~items~~million or 5.16%, this relative stability of our net interest income resulted from the reduction in average balance of time deposits, our reduction in rates on deposits and investment of available liquidity to increase and diversify our investment portfolio. Total interest income declined by approximately $1.5 million or 6.26%. Our yield on interest earning assets, on a fully tax equivalent (FTE) basis, declined slightly, to 4.11% in 2013 compared to 4.14% in 2012. The $30.5 million decline in average earning assets in 2013 compared to 2012 was principally in our loan portfolio and other short-term investments, though some of the decline in these categories was offset by increases in our investment securities portfolio. Total interest expense declined by approximately $1.7 million or 23.61%. Average interest bearing liabilities declined by approximately $17.7 million or 3.55%. The decline in interest expense was a result of the decrease in average interest bearing liabilities plus a decrease in rates paid on deposits and securities sold under agreement to repurchase (“repo accounts”), included in other interest-bearing liabilities, in 2013 compared to 2012. As market rates have declined, we have continued to lower rates on deposit accounts and repo accounts to match the current deposit and repo account rates in our market. In addition, we had account balances from various previous time deposit promotions which, upon maturity, were either redeemed and the funds were withdrawn or were renewed at lower market rates. Recent increases in longer-term market interest rates have not had a material impact on our net interest income due to the repricing characteristics of our interest earning assets and interest-bearing liabilities, and the indices upon which their rates are ~~reportable~~ derived. Future changes in interest rates can impact our operating performance and financial condition in diverse ways. Our net interest spread will depend on many factors that are partly or entirely outside our control, including competition, federal monetary and fiscal policies, and economic conditions generally. Our analysis of the impact of changes in interest rates on page [52] indicates that, at December 31, 2013, in the event of a sudden and sustained increase in prevailing market rates, our net interest income would be expected to increase. This is a result of the Bank’s asset sensitive position and loans repricing at a faster rate in a rising rate environment than our interest-bearing liabilities. In the decreasing rate scenarios, the adjustable rate assets (loans) reprice to lower rates faster than our liabilities, but our fixed-rate liabilities – long-term FHLBank advances and existing time deposits – would not decrease in rate as much as market rates. In addition, fixed rate loans might experience an increase in prepayments, further decreasing yields on earning assets and causing net income to decrease. The Bank has placed floors on its loans over the last several years which would limit the decline in yield earned on the loan portfolio in a declining rate environment.

24Analysis of the credit quality of our loan portfolio and other factors used to determine the level of the Allowance for Loan Losses precipitated a provision for loan loss of $950,000 for 2013 compared to a provision for loan losses of $1.2 million in 2012. During 2013, we experienced a decline in the balance of the total loan portfolio as well as a relatively high ratio of net recoveries to loans charged off during the year compared to recent periods. The provision for loan losses recorded in 2012 was primarily related to declines in collateral values of commercial and commercial real estate loans.

~~Table~~Non-interest income increased 13.96% to $8.5 million in 2013 compared to $7.4 million in 2012. The increase in non-interest income resulted from our realization of ~~Contents~~approximately $1.0 million of income upon payment of the deferred interest due for BVBC Capital Trust III due to a change in assumptions in the calculation for interest due on the securities, an increase of $770,000 in gains realized on the sale of foreclosed assets held for sale and $127,000 of gains realized from the sale of available for sale investment securities, which were offset by a decline of approximately $990,000 or 41.50% in fee income from loans held for sale. Fluctuations in mortgage interest rates during 2013 resulted in a decline in mortgage refinance volume across our industry, which negatively impacted our mortgage operations and resulted in a decline in our loans held for sale fee income in 2013.

~~Item~~Non-interest expense increased 3.68% to $24.1 million in 2013 from $23.3 million in 2012. The increase in non-interest expense was primarily attributed to increases of $965,000 or 36.46%, in foreclosed assets expense, $492,000, or 4.65%, in salaries and employee benefits expenses, partially offset by a decrease of $651,000 in other operating expense. We recorded a provision for losses on foreclosed assets held for sale of $2:.1 ~~Properties~~million in 2013, compared to a provision of $866,000 in 2012. This increase is principally the result of the write-down of the recorded value of a single unique foreclosed asset held for sale. Other expenses related to foreclosed assets held for sale declined $316,000, or 17.75% in 2013. The decline in other operating expense in 2013 was primarily the result of a decline in FDIC premiums and regulatory fees expense, which have primarily resulted from improvements in our asset quality, as well as a decline in professional fees resulting from our decision to discontinue filing reports with the Securities and Exchange Commission as well as improvements in asset quality.

The Bank currently operates five full service banking centers, which includes our principal office located at 11935 Riley in Overland Park, Kansas, and an operations center location. In January 2009, the Company placed the 7900 College Boulevard location up for lease or possible sale. The portions of these premises listed below as subleased are leased to third parties. The following table sets forth the locations of the banking and operations centers, dates opened, mortgage indebtedness, and occupancy: 30

Location	YearOccupied	Mortgage Indebtednessas of December 31, 2011	Occupancy
Overland 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	27% occupied by the Bank; 15% occupied by one sublease; 58% is being marketed for sublease
Leawood Banking Center 13401 Mission Road Leawood, Kansas *	2004	None	45% occupied by the Bank, 49% occupied by five subleases; 6% is being marketed for sublease
Lenexa Banking Center 9500 Lackman Road Lenexa, Kansas **	2007	None	100%

Total assets at December 31, 2013 were $609.1 million, a decrease of $47.9 million, or 7.29%, from $657.0 million at December 31, 2012. Deposits at December 31, 2013 were $448.4 million compared with $484.5 million at December 31, 2012, a decrease of $36.1 million, or 7.45%. Stockholders’ equity at December 31, 2013 was $42.2 million compared with $39.8 million at December 31, 2012, an increase of $2.4 million, or 6.06%.

*Loans at December 31, 2013 totaled $414.8 million, a decrease of $876,000, or 0.21%, compared to December 31, 2012. The ~~building~~loan isto ~~owned~~deposit byratio ~~Blue~~at ~~Valley~~December ~~Building~~31, ~~Corp~~2013 was 92.51% compared to 85.80% at December 31, ~~which~~2012. Our funding philosophy for loans not held for sale is ~~owned~~to ~~100%~~primarily byincrease deposits from retail and commercial deposit sources and secondarily use other borrowing sources as necessary to fund loans within the limits of the Bank's capital base.

**Net ~~The~~Interest ~~building is owned by the Bank.~~Income

~~Item~~A 3:primary ~~Legal~~component ~~Proceedings~~of our net income is our net interest income. Net interest income is determined by the spread between the fully tax equivalent (FTE) yields we earn on our interest-earning assets and the rates we pay on our interest-bearing liabilities, as well as the relative amounts of such assets and liabilities. FTE net interest margin is determined by dividing FTE net interest income by average interest-earning assets. The following discussion should be read along with analysis of the “Average Balances, Yields and Rates” table on page 32.

WeYears ~~are~~ended ~~periodically involved~~December in31, ~~routine~~2013 ~~litigation~~and ~~incidental to our business~~2012. FTE Wenet ~~are~~interest ~~not~~income aincreased ~~party~~ to ~~any~~$17.6 ~~pending~~million ~~litigation~~for ~~that~~2013 wefrom ~~believe~~$17.2 ismillion ~~likely~~in to2012, ~~have~~an aincrease ~~material~~of ~~adverse effect on our consolidated financial condition~~$308,000, ~~results of operations~~ or ~~cash flows~~1. 79%.

~~Item~~FTE interest income for 2013 was $23.0 million, a decrease of $1.4: ~~Mine~~million, ~~Safety~~or ~~Disclosures~~5.78%, from $24.4 million in 2012. The decrease was a result of a slight overall decline in yields on average earning assets, a decline in the average earning asset volume and a change in the earning asset mix. The overall yield on average earning assets declined slightly by 3 basis points to 4.11% in 2013 compared to 4.14% in 2012. This decline was realized primarily in the yield on loans, which declined 23 basis points. In addition, the average outstanding balance of loans decreased $20.1 million in 2013, or 4.68%, compared to 2012. The average balance of federal funds sold and other short-term investments also decreased $30.0 million, or 36.09% in 2013 compared to 2012. The declines in these earning asset categories were partially offset by an increase in the combined average balance of taxable and non-taxable available for sale investment securities of $19.7 million, or 29.52% in 2013 compared to 2012, as we deployed excess liquidity and diversified our investment portfolio. The decline in the average balance of higher yielding loans in 2013 was a result of loan payoffs, suppressed loan demand due to current economic conditions and competitive factors. The change in the mix of the available for sale securities portfolio enabled the average FTE yield on available-for-sale securities to increase by approximately 40 basis points in 2013 to 2.13% from 1.73%.

NoInterest ~~items~~expense ~~are reportable~~for 2013 was $5.5 million, a decrease of $1.7 million, or 23.93%, from $7.2 million in 2012. The decline in interest expense resulted from a decrease in the average balance of time deposits and the average rate paid on interest-bearing deposits and repo agreements, included in other interest-bearing liabilities. The average rate on interest bearing deposits declined to 0.64% in 2013 from 0.92% in 2012 and the average rate paid on repo agreements declined to 0.08% in 2013 from 0.23% in 2012. As market rates have declined, we continued to lower our rates on deposit accounts and repo agreements to match the current deposit and repo agreement rates in our market. Further, as a result, we continued to have time deposit account balances from various previous time deposit promotions which, upon maturity, either redeemed and the funds were withdrawn or renewed at lower market rates. Additionally, we restructured $40.0 million of our $62.5 million of FHLBank advances during the fourth quarter of 2013, further reducing overall interest expense on these borrowings.

25Years ended December 31, 2012 and 2011. FTE net interest income for 2012 decreased to $17.2 million from $17.6 million in 2011, a decrease of $351,000, or 1.99%.

~~Table~~FTE interest income for 2012 was $24.4 million, a decrease of ~~Contents~~$2.4 million, or 8.99%, from $26.9 million in 2011. The decrease was a result of an overall decline in yields on average earning assets, a decline in the average earning asset volume and a change in the earning asset mix. The overall yield on average earning assets decreased 29 basis points to 4.14% compared to 4.43% in 201l. This decline was realized primarily in yields on loans and loans held

~~Part II~~ 31

~~Item~~for sale, with respective declines of 12 basis points and 51 basis points. In addition, the average outstanding balance of loans declined $35.0 million, or 7.54% in 2012 compared to 2011. Partially offsetting the decline in the average balance of loans, the average balance of federal funds sold and other short-term investments increased by $19.5: ~~Market~~million, ~~for~~or ~~Registrant’s~~30.72% ~~Common~~in ~~Equity~~2012 compared to 2011. The decline in the average balance of higher yielding loans in 2013 was a result of loan payoffs, ~~Related~~suppressed ~~Stockholder~~loan ~~Matters~~demand due to current economic conditions and ~~Issuer~~competitive ~~Purchases~~factors. The average balance for available-for-sale securities was materially unchanged at $66.8 million in 2012 compared to 2011. The yields on taxable available-for-sale securities continued to decline, to an average rate of ~~Equity~~1.55% ~~Securities~~in 2012 from an average rate of 1.80% in 2011. As higher yielding securities matured or were called, the funds from the maturities were reinvested in a lower-yielding interest rate environment. However, we diversified its investment portfolio in 2012 with the purchase of non-taxable investment securities available for sale which earned an average FTE yield of 3.88%. Consequently, the average FTE yield for total investment securities available for sale was 1.73% in 2012, compared to 1.80% in 2011.

~~Market~~Interest expense for ~~Common~~2012 ~~Stock~~was $7.2 million, a decrease of $2.1 million, or 22.29%, from $9.3 million in 2011. The decline in interest expense resulted from a decrease in the average rate paid on average interest-bearing deposits and a decrease in the average balance of time deposits. The average rate paid on total average interest-bearing deposits decreased to 0.92% for the year ended December 31, 2012, compared to 1.41% in 2011, a decrease of 49 basis points. As market rates declined, we lowered its rates on deposit accounts to match the current deposit rates in our market. Further, as a result, we continued to have time deposit account balances from various previous time deposit promotions which, upon maturity, either redeemed and the funds were withdrawn or renewed at lower market rates.

We are a reporting company under the Securities Exchange Act of 1934, as amended, as a result of a trust preferred securities offering we completed during July 2000. Shares of our common stock have traded on the Over-The-Counter Bulletin Board (“OTCBB”) since July 2002 under the symbol “BVBC.” As of January 31, 2012, there were approximately 179 stockholders of record of our common stock. The following table sets forth the high and low bid prices of the Company’s common stock since the first quarter of 2010 based on closing stock price quotations provided by Yahoo.com. These prices reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions. 32

	2011				2010
	High		Low		High		Low
Fiscal Quarter
First	$	8.00	$	6.50	$	10.25	$	8.50
Second		8.00		5.50		9.75		7.00
Third		8.00		4.80		9.40		6.50
Fourth		6.00		4.10		8.00		5.50

Average Balance Sheets. The following table sets forth for the periods and as of the dates indicated, information regarding our average balances of assets and liabilities as well as the dollar amounts of interest income from interest-earning assets and interest expense on interest-bearing liabilities and the resultant rates or costs. Ratio, yield and rate information are based on average daily balances where available; otherwise, average monthly balances have been used. Non-accrual loans are included in the calculation of average balances for loans for the periods indicated.

~~Dividends~~AVERAGE BALANCES, YIELDS AND RATES

The Company did not declare a common stock dividend in 2009, 2010 or 2011.

	Year Ended December 31,
	2013								2012								2011
	Average Balance			Interest		Average Yield/ Rate			Average Balance			Interest		Average Yield/ Rate			Average Balance			Interest		Average Yield/ Rate
(In thousands)
Assets
Federal funds sold and other short-term investments	$	53,167		$	135		0.25	%	$	83,186		$	193		0.23	%	$	63,635		$	151		0.24	%
Available-for-sale securities – taxable		71,339			1,267		1.78			61,710			958		1.55			66,913			1,202		1.80
Available-for-sale securities –non- taxable		15,170			587		3.87			5,084			197		3.88
Mortgage loans held for sale		3,957			119		3.01			4,107			142		3.47			3,820			152		3.98
Loans, net of unearned discount and fees (1)		409,882			20,681		5.05			430,008			22,710		5.28			465,053			25,125		5.40
Federal Home Loan and Federal Reserve Bank Stock		6,556			239		3.64			6,473			241		3.71			6,377			225		3.53
Total earning assets		560,071			23,028		4.11			590,568			24,441		4.14			605,798			26,855		4.43
Cash and due from banks – non-interest bearing		17,244								17,366								33,724
Allowance for loan losses		(8,611	)							(10,544	)							(13,708	)
Premises and equipment, net		15,580								15,742								16,048
Other assets		39,544								39,832								41,104
Total assets	$	623,828							$	652,965							$	682,966

Liabilities and Stockholders’ Equity
Deposits-interest bearing:
Interest-bearing demand accounts	$	121,214		$	313		0.26	%	$	126,500		$	700		0.55	%	$	133,531		$	1,611		1.21	%
Savings and money market deposits		108,062			275		0.25			96,176			291		0.30			82,462			346		0.42
Time deposits		123,457			1,661		1.35			156,739			2,487		1.59			188,906			3,755		1.99
Total interest-bearing deposits		352,733			2,249		0.64			379,415			3,478		0.92			404,899			5,712		1.41
Other interest-bearing liabilities		31,661			26		0.08			18,674			44		0.23			17,045			41		0.24
Long-term debt		96,218			3,196		3.32			100,213			3,670		3.66			99,537			3,502		3.52
Total interest-bearing liabilities		480,612			5,471		1.14			498,302			7,192		1.44			521,481			9,255		1.77
Non-interest bearing deposits		98,295								105,226								98,927
Other liabilities		11,571								9,779								8,151
Stockholders’ equity		38,150								39,657								54,407
Total liabilities and stockholders’ equity	$	628,628							$	652,965							$	682,966
FTE net interest income/spread				$	17,557		2.97	%				$	17,249		2.70	%				$	17,600		2.66	%
FTE net interest margin							3.13	%							2.92	%							2.91	%

The Company’s consolidated net income consists largely of the operations of the Bank; therefore, our ability to pay dividends on our common stock is subject to the receipt of dividends from the Bank. The ability of the Bank to pay dividends to us, and thus our ability to pay dividends to our stockholders, is regulated by federal banking laws. In addition, as we elect to defer interest payments on our outstanding junior subordinated debentures and dividends on our Preferred Shares, we are prohibited from paying dividends on our common stock during such deferral. As a result of an agreement with the Federal Reserve Bank (~~for more information see Regulatory Matters section in Management’s Discussion and Analysis of Financial Condition and Results of Operations~~1), ~~prior~~Includes ~~regulatory~~average ~~approval~~balances is currently required prior to the payment of any dividends by the Company or the Bank. After that agreement is terminated, our Board of Directors anticipates the ability to declare future dividends, subject to limitations imposed by regulatory capital guidelines and ~~approval,~~income as permitted by the Company’s profitability and liquidity. The date for termination of that agreement is not known. In addition, the Company is subject to dividend limitations as part of the Capital Purchase Plan. As long as any preferred stock issued under the CPP remains outstanding, the Company is prohibited, without the consent of the Treasury, from ~~declaring~~loans oron ~~paying~~non-accrual ~~a common stock dividend~~status. ~~The Company did not pay a cash dividend to our common stockholders in the fiscal years ended 2009, 2010 or 2011, and we do not know when we will be able to resume paying cash dividends.~~

26 33

~~Table~~Analysis of ~~Contents~~Changes in Net Interest Income Due to Changes in Interest Rates and Volumes. The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the increase or decrease related to changes in balances and changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to:

~~Item~~· 6:changes ~~Selected~~in ~~Financial~~rate, ~~Data~~reflecting changes in rate multiplied by the prior period volume; and

~~The~~· ~~following table~~changes ~~presents our consolidated financial data as of and for the five years ended December 31, 2011, and should be read~~ in ~~conjunction with the consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations~~volume,” ~~each~~reflecting ofchanges ~~which is included elsewhere~~ in ~~this~~volume ~~Form~~multiplied ~~10-K.~~by ~~The selected balance sheet and statements of operations data, insofar as they relate to~~ the ~~five~~current ~~years in the five-year~~ period ~~ended~~ ~~December 31, 2011, have been derived from our audited consolidated financial statements~~rate.

	As of and for the Year Ended December 31,
	2011			2010			2009			2008			2007
	(In thousands, except share and per share data)
Selected Statements of Operations Data
Interest and dividend income:
Interest and fees on loans .	$	25,277		$	28,011		$	33,996		$	41,245		$	47,194
Federal funds sold and other short-term investments		151			245			144			378			557
Available-for-sale securities		1,202			1,825			1,943			3,375			4,466
Dividends on Federal Home Loan Bank and Federal Reserve Bank Stock		225			222			211			265			323
Total interest and dividend income		26,855			30,303			36,294			45,263			52,540
Interest expense:
Interest-bearing demand deposits		1,611			2,343			2,589			1,394			656
Savings and money market deposit accounts		346			438			490			2,402			6,362
Other time deposits		3,755			7,746			10,742			12,139			13,134
Funds borrowed		3,543			3,836			4,166			5,756			5,430
Total interest expense		9,255			14,363			17,987			21,691			25,582
Net interest income		17,600			15,940			18,307			23,572			26,958
Provision for loan losses		3,300			3,095			21,635			17,025			2,855
Net interest income (loss) after provision for loan losses		14,300			12,845			(3,328	)		6,547			24,103
Non-interest income:
Loans held for sale fee income		2,120			3,506			2,785			2,136			3,160
NSF charges and service fees		944			1,062			1,472			1,641			1,418
Other service charges		2,276			2,021			1,778			1,658			1,412
Realized gains on available-for-sale securities		–			885			346			702			105
Gain on settlement of litigation		–			–			–			1,000			–
Other income		984			1,145			1,664			1,010			782
Total non-interest income		6,324			8,619			8,045			8,147			6,877
Non-interest expense:
Salaries and employee benefits		10,955			11,753			12,272			12,500			13,570
Net occupancy expense		2,599			2,756			2,811			3,144			3,200
Goodwill impairment		–			–			–			4,821			–
Foreclosed assets expense		5,219			2,708			3,862			944			339
Other operating expense		7,851			8,550			8,896			7,360			7,108
Total non-interest expense		26,624			25,767			27,841			28,769			24,217
Income (loss) before income taxes		(6,000	)		(4,303	)		(23,124	)		(14,075	)		6,763
Provision (benefit) for income taxes		9,823			(1,561	)		(8,514	)		(3,824	)		2,275
Net income (loss)	$	(15,823	)	$	(2,742	)	$	(14,610	)	$	(10,251	)	$	4,488
Per Share Data
Basic earnings	$	(6.03	)	$	(1.38	)	$	(5.68	)	$	(4.20	)	$	1.86
Diluted earnings		(6.03	)		(1.38	)		(5.68	)		(4.20	)		1.84
Dividends		0.00			0.00			0.00			0.00			0.36
Book value basic (at end of period)		6.60			12.66			14.09			19.97			24.34
Weighted average common shares outstanding:
Basic		2,806,299			2,773,039			2,754,419			2,438,809			2,410,621
Diluted		2,827,888			2,788,154			2,762,603			2,460,045			2,438,203
Dividend payout ratio		0.00	%		0.00	%		0.00	%		0.00	%		19.35	%

CHANGES IN INTEREST INCOME AND EXPENSE VOLUME AND RATE VARIANCES

	Year Ended December 31,
	(In thousands)
	2013 Compared to 2012									2012 Compared to 2011
	Change Due to Rate			Change Due to Volume			Total Change			Change Due to Rate			Change Due to Volume			Total Change
Federal funds sold and other short-term investments	$	19		$	(77	)	$	(58	)	$	(3	)	$	45		$	42
Available-for-sale securities – taxable		138			171			309			(163	)		(81	)		(244	)
Available-for-sale securities – nontaxable		-			390			390			-			197			197
Mortgage loans held for sale		(19	)		(5	)		(24	)		(19	)		10			(10	)
Loans, net of unearned discount and fees		(1,014	)		(1,015	)		(2,029	)		(564	)		(1,851	)		(2,415	)
Federal Home Loan and Federal Reserve Bank Stock		(5	)		4			(1	)		11			4			16
Total interest income		(881	)		(532	)		(1,413	)		(738	)		(1,676	)		(2,414	)
Interest-bearing demand accounts		(373	)		(14	)		(387	)		(873	)		(38	)		(911	)
Savings and money market deposits		(46	)		30			(16	)		(97	)		42			(55	)
Time deposits		(378	)		(448	)		(826	)		(754	)		(514	)		(1,268	)
Other interest-bearing liabilities		(28	)		10			(18	)		(1	)		4			3
Long-term debt		(342	)		(132	)		(474	)		143			25			168
Total interest expense		(1,167	)		(554	)		(1,721	)		(1,582	)		(481	)		(2,063	)
Net interest income	$	286		$	22		$	308		$	845		$	(1,196	)	$	(351	)

~~Table~~Provision offor ~~Contents~~Loan Losses

	As of and for the Year Ended December 31,
	2011			2010			2009			2008			2007
	(In thousands)
Selected Balance Sheet Data (at end of period):
Total available-for-sale securities	$	61,790		$	63,640		$	72,757		$	68,681		$	76,653
Total mortgage loans held for sale, fair value		5,686			8,162			8,752			8,157			10,978
Total loans		438,843			492,454			554,111			662,401			596,646
Total assets		654,452			723,101			773,967			815,700			736,213
Total deposits		490,413			541,218			590,110			600,868			536,370
Funds borrowed		115,806			118,505			118,208			135,129			134,942
Total stockholders’ equity		40,455			57,164			60,603			76,439			58,934
Trust assets under administration		129,580			125,702			105,071			112,688			104,167
Selected Financial Ratios and Other Data:
Performance Ratios:
Net interest margin (1)		2.91	%		2.23	%		2.43	%		3.20	%		3.92	%
Non-interest income to average assets		0.93			1.09			0.99			1.04			0.95
Non-interest expense to average assets		3.90			3.26			3.42			3.67			3.34
Net overhead ratio (2)		2.97			2.14			2.40			2.59			2.35
Efficiency ratio (3)		111.29			104.92			105.65			90.70			71.57
Return on average assets (4)		(2.32	)		(0.35	)		(1.79	)		(1.31	)		0.62
Return on average equity (5)		(51.84	)		(10.25	)		(33.07	)		(17.53	)		7.88
Asset Quality Ratios:
Non-performing loans to total loans		2.58	%		6.16	%		6.30	%		6.54	%		4.22	%
Allowance for possible loan losses to:
Total loans		3.01			2.99			3.61			1.87			1.51
Non-performing loans		116.46			48.53			57.33			28.54			35.65
Net charge-offs to average total loans		1.04			1.61			2.30			2.16			0.06
Non-performing loans to total assets		1.73			4.20			4.51			5.31			3.42
Balance Sheet Ratios:
Loans to deposits		89.48	%		90.99	%		93.90	%		110.24	%		111.24	%
Average interest-earning assets to average interest-bearing liabilities		116.17			113.18			115.08			116.25			118.92
Capital Ratios:
Total equity to total assets		6.18	%		7.91	%		7.83	%		9.37	%		8.01	%
Total capital to risk-weighted assets ratio		12.08			12.66			12.54			13.82			11.53
Tier 1 capital to risk-weighted assets ratio		9.80			11.39			11.26			12.57			10.28
Tier 1 capital to average assets ratio		8.04			9.04			9.07			11.50			9.86
Average equity to average assets ratio		7.97			7.48			8.47			7.66			7.85

We make provisions for loan losses in amounts management deems necessary to maintain the allowance for loan losses at an appropriate level. The allowance for loan losses is based upon the analysis of numerous factors, including general economic conditions, analysis of impaired and classified loans, general reserve factors, changes in loan mix, and current and historical charge-offs by loan type. The historical charge off information currently utilized is based on a three year weighted average of net charge offs by loan type with greater weight given to more current data due to the assessed relevance. Our credit administration function performs monthly analyses on the loan portfolio to assess and report on risk levels, delinquencies, internal ranking system and overall credit exposure. Management and the Bank’s Board of Directors review the allowance for loan losses monthly, including assessment of the factors listed above. Economic conditions monitored include, but are not limited to: Johnson County, KS and U.S. unemployment rates; trends in home sales; consumer confidence; trends in U.S. Gross Domestic Product and

~~(1) Net interest income, on a full tax-equivalent basis, divided by average interest-earning assets.~~34

~~(2)~~leading ~~Non-interest~~economic ~~expense~~indicators; ~~less~~foreclosure ~~non-~~rates; commercial real estate vacancy rates; stock market performance; inflation; and interest ~~income~~rates. ~~divided~~The byallowance ~~average~~for ~~total~~loan ~~assets~~losses represents our best estimate of probable losses that have been incurred as of the respective balance sheet dates.

~~(3)~~Years ~~Non-interest~~ended ~~expense~~December ~~divided~~31, by2013 and 2012. Analysis of the ~~sum~~credit quality of our loan portfolio and other factors used to determine the level of the Allowance for Loan Losses precipitated a provision for loan loss of $950,000 for 2013 compared to a provision for loan losses of $1.2 million in 2012. During 2013, we experienced a decline in the balance of the total loan portfolio as well as a relatively high ratio of net ~~interest~~recoveries ~~income~~to ~~plus~~loans charged off during the year compared to recent periods. We charged off loans totaling $1.6 million to the allowance for loan losses and received recoveries totaling $590,000 in 2013, compared to 2012, when we charged off loans totaling $6.1 million to the allowance for loan losses and received recoveries totaling $785,000. The improvements in the credit quality of our loan portfolio, in addition to reduction in the amount of loan losses charged off to the allowance for loan losses, precipitated a reduction in the recorded loan loss provision in 2013 to $950,000 compared to a provision of $1.2 million during the previous year. As a result of the improvement in our credit quality during 2013, we had recorded negative provisions for loan losses of $1.7 million during the year, however, near the end of January, 2014, we determined that the credit quality of a $5.0 million commercial loan relationship had deteriorated substantially in the previous period, which precipitated a downgrade to the loans and necessitated that we record a $2.65 million provision as of December 31, 2013. The provision for loan losses recorded during the year ending December 31, 2012 was primarily related to declines in collateral values of commercial loans. The allowance for loan losses as a percentage of loans was 2.17% at December 31, 2013, compared to 2.18% at December 31, 2012. Management believes they have identified the significant classified and non-~~interest~~performing ~~income~~loans and will continue to exercise prudent efforts to pursue collection of these loans. If real estate and general economic conditions are more adverse than management anticipates and losses increase, we could experience higher than anticipated loan losses in the future.

~~(4)~~Years ~~Net~~ended ~~income~~December ~~divided~~31, 2012 and 2011. During the year ended December 31, 2012, we recorded a $1.2 million provision for loan losses compared to $3.3 million for the year ended December 31, 2011, a decrease of $2.1 million, or 63.64%. In 2012, we experienced a reduction in non-performing loans by ~~average~~$6.5 ~~total~~million, ~~assets~~or 57.29%. During the year ending December 31, 2012, we charged off loans totaling $6.1 million to the allowance for loan losses and received recoveries totaling $785,000, compared to the previous year, when we charged off loans totaling $5.5 million to the allowance for loan losses and received recoveries totaling $672,000. The provision for loan losses recorded in 2012 was primarily related to declines in collateral values of commercial and commercial real estate loans. The allowance for loan losses as a percentage of loans was 2.18% at December 31, 2012, compared to 3.01% in 2011.

~~(5)~~Non-interest ~~Net income divided by average common equity.~~Income

28The following table describes the items of our non-interest income for the periods indicated:

~~Table~~NON-INTEREST ~~of Contents~~INCOME

Item 7: Management’s Discussion and Analysis of Financial Condition and Results of Operations

	Year Ended December 31,
	2013		2012		2011
(In thousands)
Loans held for sale fee income	$	1,456	$	2,447	$	2,120
NSF charges and service fees		968		980		944
Other service charges		2,478		2,472		2,276
Realized gains on available-for-sale securities		127		-		-
Other income		3,443		1,535		984
Total non-interest income	$	8,472	$	7,434	$	6,324

~~The~~Years ~~following~~ended ~~presents~~December ~~management’s~~31, ~~discussion~~2013 and ~~analysis~~2012. Non-interest ofincome ~~our~~increased ~~financial~~13.96% ~~condition~~to ~~and~~$8.5 ~~results~~million in 2013 compared to $7.4 million in 2012. The increase in non-interest income resulted from our realization of ~~operations~~approximately as$1.0 million of ~~the~~income ~~dates~~upon ~~and~~payment ~~for~~of the ~~periods~~deferred ~~indicated.~~interest ~~You~~due ~~should~~for ~~read~~BVBC ~~this~~Capital ~~discussion~~Trust ~~in conjunction~~III ~~with~~due ~~our~~to ~~“Selected~~a ~~Consolidated~~change ~~Financial~~in ~~Data,”~~assumptions ~~our~~in ~~consolidated~~the ~~financial~~calculation ~~statements~~for ~~and~~interest ~~the~~due ~~accompanying~~on ~~notes,~~the securities and ~~other~~an ~~financial~~increase ~~data~~of ~~contained~~$770,000 ~~elsewhere~~ in ~~this~~gains ~~report.~~

This report 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; 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 TARP funds 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. 35

~~Critical~~realized ~~Accounting~~on ~~Policies~~the sale of foreclosed assets held for sale, included in other income, and $127,000 of gains realized from the sale of available for sale investment securities, which were offset by a decline of approximately $990,000, or 41.50%, in loans held for sale fee income. Fluctuations in mortgage interest rates during 2013 resulted in a decline in mortgage refinance volume across our industry, which negatively impacted our mortgage operations and resulted in a decline in our loans held for sale fee income in 2013. Sustainability of the level of loans held for sale fee income is primarily dependent upon economic factors, the interest rate environment and the efficiency and functionality of the secondary market, and secondarily dependent on our ability to adapt to regulatory changes, introduction of new products into the market and alternative delivery channels. NSF charges and service fees income and other service charges income, which includes income from trust services, investment brokerage, merchant bankcard processing and debit card processing, were not materially changed during the year ended December 31, 2013 compared to the prior year period. Future growth of NSF charges and service fee income and other service charge income is primarily dependent on new product development and growth in our customer base and is also subject to the impact of regulatory changes. Securities were sold at a gain during 2013 to better position the available-for-sale securities portfolio in consideration of the current interest rate environment. No securities were sold in 2012.

~~Please refer~~Years toended ~~Note~~December 31, 2012 and 2011. Non-interest income increased $1.1 ofmillion ~~our~~from ~~consolidated~~the ~~financial~~prior ~~statements~~year ~~where~~to we$7.4 ~~present~~million afor ~~listing~~2012 ~~and~~compared ~~discussion~~with $6.3 million for 2011, an increase of ~~our~~17.55%. Loans ~~most~~held ~~significant~~for ~~accounting~~sale ~~policies~~fee income increased $327,000, or 15.42%, ~~After~~in a2012 ~~review~~compared to 2011. The volume of ~~these~~closed ~~policies~~residential mortgage loans held for sale increased in 2012 to $83.5 million, wefrom ~~determined~~$66.0 ~~that~~million ~~accounting~~in ~~for~~2011 as a result of the ~~allowance~~a ~~for~~favorable ~~loan~~interest ~~losses~~rate environment and ~~income~~ ~~taxes~~stabilizing ~~are~~to ~~deemed~~slightly ~~critical~~improving ~~accounting~~economic ~~policies~~factors. NSF ~~because~~charges ofand ~~the~~service ~~valuation~~fees ~~techniques~~were ~~used~~materially unchanged in 2012 compared to 2011. Other service charge income, which includes income from trust services, investment brokerage, merchant bankcard processing and ~~the~~debit ~~sensitivity~~card processing, increased by $196,000, or 8.61% in 2012 compared to 2011. This increase was primarily a result of ~~certain~~increased ~~financial~~debit ~~statement~~& ~~amounts~~ATM card fee income, due to ~~the~~increased ~~methods~~usage, asand ~~well~~investment asservice ~~the~~fee ~~assumptions~~income. Other ~~and~~income ~~estimates~~increased $551,000, ~~underlying~~or ~~these~~56.00%, ~~policies~~primarily due to mark to market adjustments on commitments to sell loans and an increase in rental income on foreclosed assets held for sale. The ~~Accounting~~ net change in fair value of mortgage loan-related commitments for 2012 was $76,000 compared to a loss of $257,000 in 2011, an increase of $333,000. The fair value on these ~~critical~~commitments ~~areas~~fluctuates ~~requires~~based ~~subjective~~on ~~and~~the ~~complex~~market ~~judgments~~rates ~~that~~for ~~could~~mortgage beloans. Rental ~~subject~~income on foreclosed assets held for sale increased $131,000 in 2012 compared to ~~revision~~2011 as ~~new~~a ~~information~~result ~~becomes~~of ~~available.~~the transfer of a loan, secured by a leased property, to foreclosed assets held for sale in 2012.

~~As presented~~Non-interest in Note 1 and Note 3 to the consolidated financial statements, the allowance for loan losses represents management’s estimate of probable credit losses inherent in the loan portfolio as of the balance sheet date. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. The adequacy of the allowance for loan losses is analyzed monthly based on internal loan reviews and qualitative measurements of our loan portfolio. Management assesses the adequacy of the allowance for loan losses based upon a number of factors including, among others: Expense

•The ~~analytical~~following ~~reviews~~table ofdescribes ~~loan~~the ~~loss~~items ~~experience~~of inour ~~relationship~~non-interest toexpense ~~outstanding~~for ~~loans~~the ~~and~~periods ~~commitments;~~indicated.

~~• problem and non~~NON-~~performing~~INTEREST ~~loans and other loans presenting credit concerns;~~EXPENSE

• trends in loan growth, portfolio composition and quality;

	Year Ended December 31,
	2013		2012		2011
(In thousands)
Salaries and employee benefits	$	11,079	$	10,587	$	10,955
Net occupancy expense		2,620		2,568		2,599
Foreclosed asset expense		3,612		2,647		5,219
Other operating expense		6,855		7,506		7,851
Total non-interest expenses	$	24,166	$	23,308	$	26,624

•Years ~~appraisals~~ended December 31, 2013 and 2012. Non-interest expense increased 3.68% to $24.2 million in 2013 from $23.3 million in 2012. The increase in non-interest expense was primarily attributed to increases of $965,000 or 36.46%, in foreclosed assets expense, $492,000, or 4.65%, in salaries and employee benefits expenses due to merit increases and personnel changes, partially offset by a decrease of $651,000 in other operating expense. We recorded a provision for losses on foreclosed assets held for sale of $2.1 million in 2013, compared to a provision of $866,000 in 2012. This increase is principally the result of the write-down of the recorded value of ~~collateral;~~a single unique foreclosed asset held for sale. Other expenses related to foreclosed assets held for sale, including insurance, appraisals, utilities, real estate property taxes, legal, repairs and maintenance, and associated loss on sale, declined $258,000, or

~~• management’s judgment with respect to current economic conditions and their impact on the existing loan portfolio.~~36

2916.05% in 2013. The decline in other operating expense in 2013 was primarily the result of a decline in FDIC premiums and regulatory fees expense, which have primarily resulted from improvements in our asset quality, as well as a decline in professional fees resulting from our decision to discontinue filing reports with the Securities and Exchange Commission as well as improvements in asset quality.

~~Table~~Years ended December 31, 2012 and 2011. Non-interest expense decreased $3.3 million, or 12.45% to $23.3 million during 2012, compared to $26.6 million in the prior year. The decrease in non-interest expense was attributable to a reduction in foreclosed assets expense by $2.6 million, or 49.28%, compared to 2011. We recorded a provision for losses on foreclosed assets held for sale of ~~Contents~~$867,000 in 2012, compared to a provision of $3.2 million in 2011, a reduction of $2.3 million or 72.55% in 2012. Other expenses related to foreclosed assets held for sale, including insurance, appraisals, utilities, real estate property taxes, legal, repairs and maintenance, and associated loss on sale, declined $280,000, or 13.59% in 2012. We continue to actively maintain, manage and market these foreclosed properties with the intent to prudently facilitate their sale.

~~The~~Other ~~Bank~~factors ~~computes~~contributing ~~its~~to ~~allowance~~the ~~for~~change ~~loan~~in ~~losses~~non-interest byexpense ~~assigning~~

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