FAIRMONT, W.Va.--(BUSINESS WIRE)--MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) reported net income of $3.6 million, or $0.30 basic and $0.29 diluted earnings per share for the three months ended September 30, 2018, an increase of 54.4% compared to $2.3 million, or $0.21 basic and diluted earnings per share, for the same period in 2017.
Noninterest-bearing deposits increased $76.9 million, or 46.9%, from June 30, 2018, and increased $119.3 million, or 98.2%, from September 30, 2017, to a balance of $240.8 million as of September 30, 2018. The growth in noninterest-bearing deposits was primarily driven by MVB's strategy to focus on Fintech and specialty deposits. As of September 30, 2018, noninterest-bearing deposits were 17.46% of total deposits, compared to 13.71% as of June 30, 2018, and 10.43% as of September 30, 2017.
For the three months ended September 30, 2018, loans increased $81.4 million, or 6.7%, to $1.3 billion, from June 30, 2018, which represents an annualized increase of 26.8%. The increase in loans has been driven by strong growth in MVB's West Virginia markets, expansion in Northern Virginia, as well as the strategic addition of commercial lenders throughout its markets. In addition to the increase in loan volume during the quarter, loan yields increased 9 basis points. The Company continues to take advantage of industry consolidation while capitalizing on disruptions in the market to expand both the lending and deposit teams. These teams have extensive experience and relationships in MVB’s selected markets.
MANAGEMENT OVERVIEW
“Building on MVB’s strong Second Quarter performance, our Third Quarter 2018 earnings from continuing operations are up 26 percent from last quarter, our new record high. MVB’s significant expansion in noninterest bearing deposits, as well as the strong economies in West Virginia and Northern Virginia are driving our growth,” said Larry F. Mazza, CEO and President, MVB Financial.
“After a three and a half year journey, MVB’s Fintech strategy hit a tipping point this year; the results are starting to show up on our balance sheet and income statement. The robust Fintech industry is just heating up, and we expect to continue to expand that vertical.”
THIRD QUARTER 2018 HIGHLIGHTS
- Loans of $1.3 billion as of September 30, 2018, increased $81.4 million, or 6.7%, from June 30, 2018, and increased $202.0 million, or 18.5%, from September 30, 2017.
- Assets of $1.7 billion as of September 30, 2018, increased $37.7 million, or 2.2%, from June 30, 2018, and increased $251.5 million, or 17.1%, from September 30, 2017.
- Deposits of $1.4 billion as of September 30, 2018, increased $183.3 million, or 15.3%, from June 30, 2018, and increased $214.0 million, or 18.4% from September 30, 2017. Noninterest-bearing deposits of $240.8 million increased $76.9 million, or 46.9%, from June 30, 2018, and increased $119.3 million, or 98.2%, from September 30, 2017.
- Net interest income of $13.5 million for the quarter ended September 30, 2018, increased $869 thousand, or 6.9%, from the quarter ended June 30, 2018, and increased $2.1 million, or 18.5% from the quarter ended September 30, 2017. Net interest margin of 3.43% for the quarter ended September 30, 2018, increased 5 basis points versus the quarter ended June 30, 2018, and increased 6 basis points versus the quarter ended September 30, 2017.
- Noninterest income of $10.5 million for the quarter ended September 30, 2018, decreased $284 thousand, or 2.6%, from the quarter ended June 30, 2018, and increased $353 thousand, or 3.5%, from the quarter ended September 30, 2017.
- $2.3 million of subordinated debt converted to common stock, which caused the issuance of 142,000 new shares and will provide an annual interest expense savings of $170 thousand.
LOANS
Loans totaled $1.3 billion as of September 30, 2018, an increase of $81.4 million, or 6.7%, from June 30, 2018, and an increase of $202.0 million, or 18.5%, from September 30, 2017. The growth in loans is attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 4.97% as of the quarter ended September 30, 2018, an increase of 9 basis points from the quarter ended June 30, 2018, and an increase of 31 basis points from the quarter ended September 30, 2017. The increase in yields is driven both by Fed rate increases and a commercial focus on increasing loan yields.
DEPOSITS
Deposits totaled $1.4 billion as of September 30, 2018, and increased $183.3 million, or 15.3%, from June 30, 2018, while increasing $214.0 million, or 18.4%, from September 30, 2017. Noninterest-bearing deposits totaled $240.8 million as of September 30, 2018, or 17.5%, of the total deposit base, an increase of $76.9 million, or 46.9%, from June 30, 2018, and an increase of $119.3 million, or 98.2%, from September 30, 2017. Noninterest-bearing deposits remain a core funding source for the Company. Of the $240.8 million, noninterest-bearing balances of $100.6 million are related to Fintech and Title business opportunities.
NET INTEREST INCOME
Net interest income for the quarter ended September 30, 2018, was $13.5 million, an increase of $869 thousand, or 6.9%, from the quarter ended June 30, 2018, and an increase of $2.1 million, or 18.5% from the quarter ended September 30, 2017. Net interest margin for the quarter ended September 30, 2018 was 3.43%, an increase of 5 basis points versus the quarter ended June 30, 2018, and an increase of 6 basis points versus the quarter ended September 30, 2017.
Interest expense increased 8.5% during the quarter ended September 30, 2018, compared to the quarter ended June 30, 2018, due to an increase of 9 basis points in the cost of interest-bearing liabilities, and increased 44.7% compared to the quarter ended September 30, 2017, due to an increase of 35 basis points in the cost of interest-bearing liabilities. The increase in the cost of interest-bearing liabilities compared to the quarter ended September 30, 2017, was the result of an $53.4 million increase in the average balance and an increase in short-term borrowing rates.
In August 2018, subordinated debt in the amount of $2.3 million was converted into 142,000 shares of common stock. In addition to this conversion, in June 2018, subordinated debt in the amount of $12.7 million was converted into 795,500 shares of common stock. As a result of these conversions, the Company will save $1.1 million annually in interest expense.
ASSET QUALITY
Provision for loan loss was $1.1 million for the quarter ended September 30, 2018, a $973 thousand increase from the quarter ended September 30, 2017, due to an 18.5% increase in loans. The increase in loan loss provision is attributable to increased loan volume for the quarter ended September 30, 2018, compared to the quarter ended September 30, 2017. Nonperforming loans increased $6.3 million, to 0.99%, of total loans as of September 30, 2018, compared to 0.78% of total loans as of June 30, 2018, and compared to 0.60% of total loans as of September 30, 2017. In addition, net charge-offs for the quarter ended September 30, 2018, decreased $167 thousand compared to the quarter ended September 30, 2017, resulting in an annualized net loan charge-offs to total loans ratio of 0.09% as of September 30, 2018.
NONINTEREST INCOME
Noninterest income totaled $10.5 million for the quarter ended September 30, 2018, a decrease of $284 thousand, or 2.6%, from the quarter ended June 30, 2018, and an increase of $353 thousand, or 3.5%, from the quarter ended September 30, 2017.
The $284 thousand decrease in noninterest income from the quarter ended June 30, 2018, was due to a decrease of $1.4 million in gain on derivatives related to the mortgage locked pipeline. The decrease was partially offset by an increase of $634 thousand in the holding gain on equity securities, primarily related to a $672 thousand holding gain on Fintech related investment, an increase of $165 thousand in other operating income, and an increase of $300 thousand in income on bank owned life insurance. The decrease in gain on derivatives was largely the result of a 19.6% decrease in the locked mortgage pipeline for the three months ended September 30, 2018, compared to an 8.0% increase in the locked mortgage pipeline for the three months ended June 30, 2018.
The $353 thousand increase in noninterest income from the quarter ended September 30, 2017, was primarily due to a $578 thousand increase in gain on derivative and a $623 thousand increase in the holding gain on equity securities. These increases were partially offset by a $1.0 million decrease in mortgage fee income. The increase in gain on derivatives was largely the result of an increase of $1.3 million in the valuation of the open trades used to hedge the derivative asset. The decrease in mortgage fee income was driven by the decrease of mortgage production volume, which decreased by $26.3 million or 6.6% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.
NONINTEREST EXPENSE
Noninterest expense totaled $18.4 million for the quarter ended September 30, 2018, a decrease of $832 thousand, or 4.3%, from the quarter ended June 30, 2018, and an increase of $451 thousand, or 2.5%, from the quarter ended September 30, 2017.
The $832 thousand decrease in noninterest expense from the quarter ended June 30, 2018, was primarily due to a decrease of $974 thousand in salaries and employee benefits expense and a $125 thousand decrease in mortgage processing expense. These decreases were partially offset by an increase of $227 thousand in professional fees as a result of the Company's Fintech initiatives. The decrease in salaries and employee benefits expense was largely driven by a reduction in commission related costs due to reduced mortgage loan volume. The $451 thousand increase in noninterest expense from the quarter ended September 30, 2017, was primarily due to an increase of $271 thousand in salaries and employee benefits expense and an increase of $164 thousand in professional fees.
DIVIDEND
As previously announced on August 22, 2018, the Company declared a quarterly cash dividend of $0.03 per share to shareholders of record at the close of business on September 1, 2018, payable September 15, 2018. This was the third quarterly dividend for 2018 and includes a one-half cent, or 20% increase per share, compared to the March and June 2018 payouts of $0.025 per share.
About MVB Financial Corp.
MVB Financial Corp. (“MVB Financial” or “MVB”), the holding company of MVB Bank, is publicly traded on The Nasdaq Capital Market® under the ticker “MVBF.”
MVB is a financial holding company headquartered in Fairmont, W.Va. Through its subsidiary, MVB Bank, Inc., and the bank’s subsidiaries, MVB Mortgage and MVB Community Development Corporation, the company provides financial services to individuals and corporate clients in the Mid-Atlantic region.
Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services.
For more information about MVB, please visit ir.mvbbanking.com.
Forward-looking Statements
MVB Financial Corp. has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this Earnings Release. These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties. Forward-looking statements include information concerning possible or assumed future results of operations of the Company and its subsidiaries. When words such as “believes,” “expects,” “anticipates,” “may,” or similar expressions occur in this Earnings Release, the Company is making forward-looking statements. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained in this Earnings Release. Those factors include, but are not limited to: credit risk, changes in market interest rates, inability to achieve merger-related synergies, competition, economic downturn or recession and government regulation and supervision. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements.
Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s financial statements when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information in this announcement is subject to change.
Questions or comments concerning this Earnings Release should be directed to:
MVB Financial Corp.
Donald T. Robinson, Executive Vice
President and CFO
(304) 598-3500
drobinson@mvbbanking.com
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MVB Financial Corp. Financial Highlights |
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|
Condensed Consolidated Statements of Income
(Unaudited) (Dollars in thousands, except per share data) |
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| Quarterly | Year-to-Date | |||||||||||||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 |
Nine Months Ended September 30, 2018 |
Nine Months Ended September 30, 2017 |
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|
Third Quarter |
Second
Quarter |
First Quarter |
Fourth
Quarter |
Third Quarter |
||||||||||||||||||||||||||||||
| Interest income | $ | 18,176 | $ | 16,944 | $ | 15,054 | $ | 15,086 | $ | 14,630 | $ | 50,174 | $ | 41,512 | ||||||||||||||||||||
| Interest expense | 4,652 | 4,289 | 3,589 | 3,403 | 3,216 | 12,530 | 8,898 | |||||||||||||||||||||||||||
| Net interest income | 13,524 | 12,655 | 11,465 | 11,683 | 11,414 | 37,644 | 32,614 | |||||||||||||||||||||||||||
| Provision for loan losses | 1,069 | 605 | 474 | 1,036 | 96 | 2,148 | 1,137 | |||||||||||||||||||||||||||
| Noninterest income | 10,511 | 10,795 | 9,039 | 10,157 | 10,158 | 30,345 | 30,549 | |||||||||||||||||||||||||||
| Noninterest expense | 18,417 | 19,249 | 16,739 | 17,714 | 17,966 | 54,405 | 52,786 | |||||||||||||||||||||||||||
| Income before income taxes | 4,549 | 3,596 | 3,291 | 3,090 | 3,510 | 11,436 | 9,240 | |||||||||||||||||||||||||||
| Income tax expense | 970 | 765 | 697 | 1,667 | 1,192 | 2,432 | 3,088 | |||||||||||||||||||||||||||
| Net income | $ | 3,579 | $ | 2,831 | $ | 2,594 | $ | 1,423 | $ | 2,318 | $ | 9,004 | $ | 6,152 | ||||||||||||||||||||
| Preferred dividends | 123 | 122 | 121 | 124 | 123 | 366 | 374 | |||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 3,456 | $ | 2,709 | $ | 2,473 | $ | 1,299 | $ | 2,195 | $ | 8,638 | $ | 5,778 | ||||||||||||||||||||
| Earnings per share - basic | $ | 0.30 | $ | 0.25 | $ | 0.24 | $ | 0.12 | $ | 0.21 | $ | 0.80 | $ | 0.56 | ||||||||||||||||||||
| Earnings per share - diluted | $ | 0.29 | $ | 0.25 | $ | 0.23 | $ | 0.12 | $ | 0.21 | $ | 0.77 | $ | 0.56 | ||||||||||||||||||||
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Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in thousands) |
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| September 30, 2018 | June 30, 2018 | December 31, 2017 | September 30, 2017 | |||||||||||||||||
| Cash and cash equivalents | $ | 22,045 | $ | 23,950 | $ | 20,305 | $ | 20,272 | ||||||||||||
| Certificates of deposit with other banks | 14,778 | 14,778 | 14,778 | 14,778 | ||||||||||||||||
| Investment securities | 226,306 | 229,054 | 231,507 | 187,348 | ||||||||||||||||
| Loans held for sale | 63,706 | 98,799 | 66,794 | 69,057 | ||||||||||||||||
| Loans | 1,296,460 | 1,215,072 | 1,105,941 | 1,094,467 | ||||||||||||||||
| Allowance for loan losses | (11,439 | ) | (10,651 | ) | (9,878 | ) | (9,396 | ) | ||||||||||||
| Net loans | 1,285,021 | 1,204,421 | 1,096,063 | 1,085,071 | ||||||||||||||||
| Premises and equipment | 26,706 | 26,418 | 26,686 | 27,189 | ||||||||||||||||
| Goodwill | 18,480 | 18,480 | 18,480 | 18,480 | ||||||||||||||||
| Other assets | 66,062 | 69,519 | 59,689 | 49,395 | ||||||||||||||||
| Total assets | $ | 1,723,104 | $ | 1,685,419 | $ | 1,534,302 | $ | 1,471,590 | ||||||||||||
| Deposits | $ | 1,379,186 | $ | 1,195,868 | $ | 1,159,580 | $ | 1,165,199 | ||||||||||||
| Borrowed funds | 122,000 | 266,830 | 152,169 | 84,403 | ||||||||||||||||
| Other liabilities | 51,042 | 56,926 | 72,361 | 73,011 | ||||||||||||||||
| Shareholders' equity | 170,876 | 165,795 | 150,192 | 148,977 | ||||||||||||||||
| Total liabilities and shareholders' equity | $ | 1,723,104 | $ | 1,685,419 | $ | 1,534,302 | $ | 1,471,590 | ||||||||||||
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Reportable Segments
(Unaudited) |
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| Three Months Ended September 30, 2018 |
Commercial & Retail Banking |
Mortgage Banking |
Financial Holding Company |
Intercompany Eliminations |
Consolidated | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Interest income | $ | 16,506 | $ | 1,763 | $ | 1 | $ | (94 | ) | $ | 18,176 | |||||||||||||
| Mortgage fee income | 152 | 9,246 | — | (390 | ) | 9,008 | ||||||||||||||||||
| Other income | 2,203 | (738 | ) | 1,706 | (1,668 | ) | 1,503 | |||||||||||||||||
| Total operating income | 18,861 | 10,271 | 1,707 | (2,152 | ) | 28,687 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Interest expense | 3,664 | 1,138 | 333 | (483 | ) | 4,652 | ||||||||||||||||||
| Salaries and employee benefits | 3,493 | 6,047 | 1,980 | — | 11,520 | |||||||||||||||||||
| Provision for loan losses | 1,025 | 44 | — | — | 1,069 | |||||||||||||||||||
| Other expense | 5,274 | 2,147 | 1,145 | (1,669 | ) | 6,897 | ||||||||||||||||||
| Total operating expenses | 13,456 | 9,376 | 3,458 | (2,152 | ) | 24,138 | ||||||||||||||||||
| Income (loss) before income taxes | 5,405 | 895 | (1,751 | ) | — | 4,549 | ||||||||||||||||||
| Income tax expense (benefit) | 1,121 | 229 | (380 | ) | — | 970 | ||||||||||||||||||
| Net income (loss) | $ | 4,284 | $ | 666 | $ | (1,371 | ) | $ | — | $ | 3,579 | |||||||||||||
| Preferred stock dividends | — | — | 123 | — | 123 | |||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 4,284 | $ | 666 | $ | (1,494 | ) | $ | — | $ | 3,456 | |||||||||||||
| Three Months Ended June 30, 2018 |
Commercial & Retail Banking |
Mortgage Banking |
Financial Holding Company |
Intercompany Eliminations |
Consolidated | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Interest income | $ | 15,426 | $ | 1,772 | $ | 1 | $ | (255 | ) | $ | 16,944 | |||||||||||||
| Mortgage fee income | 154 | 9,152 | — | (243 | ) | 9,063 | ||||||||||||||||||
| Other income | 1,068 | 706 | 1,489 | (1,531 | ) | 1,732 | ||||||||||||||||||
| Total operating income | 16,648 | 11,630 | 1,490 | (2,029 | ) | 27,739 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Interest expense | 3,164 | 1,081 | 542 | (498 | ) | 4,289 | ||||||||||||||||||
| Salaries and employee benefits | 3,884 | 6,826 | 1,784 | — | 12,494 | |||||||||||||||||||
| Provision for loan losses | 625 | (20 | ) | — | — | 605 | ||||||||||||||||||
| Other expense | 4,968 | 2,296 | 1,022 | (1,531 | ) | 6,755 | ||||||||||||||||||
| Total operating expenses | 12,641 | 10,183 | 3,348 | (2,029 | ) | 24,143 | ||||||||||||||||||
| Income (loss) before income taxes | 4,007 | 1,447 | (1,858 | ) | — | 3,596 | ||||||||||||||||||
| Income tax expense (benefit) | 832 | 373 | (440 | ) | — | 765 | ||||||||||||||||||
| Net income (loss) | $ | 3,175 | $ | 1,074 | $ | (1,418 | ) | $ | — | $ | 2,831 | |||||||||||||
| Preferred stock dividends | — | — | 122 | — | 122 | |||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 3,175 | $ | 1,074 | $ | (1,540 | ) | $ | — | $ | 2,709 | |||||||||||||
| Three Months Ended September 30, 2017 |
Commercial & Retail Banking |
Mortgage Banking |
Financial Holding Company |
Intercompany Eliminations |
Consolidated | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Interest income | $ | 13,432 | $ | 1,352 | $ | 1 | $ | (155 | ) | $ | 14,630 | |||||||||||||
| Mortgage fee income | 200 | 10,042 | — | (224 | ) | 10,018 | ||||||||||||||||||
| Other income | 1,466 | (1,279 | ) | 1,250 | (1,297 | ) | 140 | |||||||||||||||||
| Total operating income | 15,098 | 10,115 | 1,251 | (1,676 | ) | 24,788 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Interest expense | 2,347 | 684 | 565 | (380 | ) | 3,216 | ||||||||||||||||||
| Salaries and employee benefits | 3,107 | 6,768 | 1,374 | — | 11,249 | |||||||||||||||||||
| Provision for loan losses | — | 96 | — | — | 96 | |||||||||||||||||||
| Other expense | 4,822 | 2,100 | 1,091 | (1,296 | ) | 6,717 | ||||||||||||||||||
| Total operating expenses | 10,276 | 9,648 | 3,030 | (1,676 | ) | 21,278 | ||||||||||||||||||
| Income (loss) before income taxes | 4,822 | 467 | (1,779 | ) | — | 3,510 | ||||||||||||||||||
| Income tax expense (benefit) | 1,605 | 191 | (604 | ) | — | 1,192 | ||||||||||||||||||
| Net income (loss) | $ | 3,217 | $ | 276 | $ | (1,175 | ) | $ | — | $ | 2,318 | |||||||||||||
| Preferred stock dividends | — | — | 123 | — | 123 | |||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 3,217 | $ | 276 | $ | (1,298 | ) | $ | — | $ | 2,195 | |||||||||||||
| Nine Months Ended September 30, 2018 |
Commercial & Retail Banking |
Mortgage Banking |
Financial Holding Company |
Intercompany Eliminations |
Consolidated | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Interest income | $ | 45,772 | $ | 4,870 | $ | 3 | $ | (471 | ) | $ | 50,174 | |||||||||||||
| Mortgage fee income | 444 | 25,071 | — | (881 | ) | 24,634 | ||||||||||||||||||
| Other income | 5,052 | 485 | 4,748 | (4,574 | ) | 5,711 | ||||||||||||||||||
| Total operating income | 51,268 | 30,426 | 4,751 | (5,926 | ) | 80,519 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Interest expense | 9,503 | 2,945 | 1,433 | (1,351 | ) | 12,530 | ||||||||||||||||||
| Salaries and employee benefits | 10,946 | 18,289 | 5,252 | — | 34,487 | |||||||||||||||||||
| Provision for loan losses | 2,067 | 81 | — | — | 2,148 | |||||||||||||||||||
| Other expense | 14,803 | 6,566 | 3,124 | (4,575 | ) | 19,918 | ||||||||||||||||||
| Total operating expenses | 37,319 | 27,881 | 9,809 | (5,926 | ) | 69,083 | ||||||||||||||||||
| Income (loss) before income taxes | 13,949 | 2,545 | (5,058 | ) | — | 11,436 | ||||||||||||||||||
| Income tax expense (benefit) | 2,932 | 654 | (1,154 | ) | — | 2,432 | ||||||||||||||||||
| Net income (loss) | $ | 11,017 | $ | 1,891 | $ | (3,904 | ) | $ | — | $ | 9,004 | |||||||||||||
| Preferred stock dividends | — | — | 366 | — | 366 | |||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 11,017 | $ | 1,891 | $ | (4,270 | ) | $ | — | $ | 8,638 | |||||||||||||
| Nine Months Ended September 30, 2017 |
Commercial & Retail Banking |
Mortgage Banking |
Financial Holding Company |
Intercompany Eliminations |
Consolidated | |||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||
| Interest income | $ | 38,651 | $ | 3,206 | $ | 3 | $ | (348 | ) | $ | 41,512 | |||||||||||||
| Mortgage fee income | 573 | 28,616 | — | (585 | ) | 28,604 | ||||||||||||||||||
| Other income | 4,074 | (1,973 | ) | 3,768 | (3,924 | ) | 1,945 | |||||||||||||||||
| Total operating income | 43,298 | 29,849 | 3,771 | (4,857 | ) | 72,061 | ||||||||||||||||||
| Expenses: | ||||||||||||||||||||||||
| Interest expense | 6,635 | 1,521 | 1,674 | (932 | ) | 8,898 | ||||||||||||||||||
| Salaries and employee benefits | 9,030 | 19,870 | 4,109 | — | 33,009 | |||||||||||||||||||
| Provision for loan losses | 966 | 171 | — | — | 1,137 | |||||||||||||||||||
| Other expense | 14,539 | 6,244 | 2,919 | (3,925 | ) | 19,777 | ||||||||||||||||||
| Total operating expenses | 31,170 | 27,806 | 8,702 | (4,857 | ) | 62,821 | ||||||||||||||||||
| Income (loss) before income taxes | 12,128 | 2,043 | (4,931 | ) | — | 9,240 | ||||||||||||||||||
| Income tax expense (benefit) | 3,931 | 827 | (1,670 | ) | — | 3,088 | ||||||||||||||||||
| Net income (loss) | $ | 8,197 | $ | 1,216 | $ | (3,261 | ) | $ | — | $ | 6,152 | |||||||||||||
| Preferred stock dividends | — | — | 374 | — | 374 | |||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 8,197 | $ | 1,216 | $ | (3,635 | ) | $ | — | $ | 5,778 | |||||||||||||
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Average Balances and Interest Rates
(Unaudited) (Dollars in thousands) |
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Three Months Ended
September 30, 2018 |
Three Months Ended
June 30, 2018 |
Three Months Ended
September 30, 2017 |
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Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits in banks | $ | 5,178 | $ | 30 | 2.30 | % | $ | 3,473 | $ | 17 | 1.96 | % | $ | 4,484 | $ | 15 | 1.33 | % | ||||||||||||||||||||||||
| CDs with other banks | 14,778 | 73 | 1.96 | 14,778 | 74 | 2.02 | 14,711 | 74 | 2.00 | |||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||||||||||||
| Taxable | 148,499 | 869 | 2.32 | 151,224 | 891 | 2.36 | 126,880 | 693 | 2.17 | |||||||||||||||||||||||||||||||||
| Tax-exempt | 79,961 | 715 | 3.55 | 81,164 | 717 | 3.54 | 56,264 | 443 | 3.12 | |||||||||||||||||||||||||||||||||
| Loans and loans held for sale: 1 | ||||||||||||||||||||||||||||||||||||||||||
| Commercial | 883,051 | 11,323 | 5.09 | 831,118 | 10,318 | 4.98 | 762,650 | 8,742 | 4.55 | |||||||||||||||||||||||||||||||||
| Tax exempt | 14,231 | 125 | 3.48 | 14,260 | 123 | 3.46 | 14,991 | 130 | 3.44 | |||||||||||||||||||||||||||||||||
| Real estate | 408,719 | 4,909 | 4.77 | 394,814 | 4,656 | 4.73 | 349,459 | 4,346 | 4.93 | |||||||||||||||||||||||||||||||||
| Consumer | 10,844 | 132 | 4.83 | 11,850 | 148 | 5.00 | 13,462 | 187 | 5.51 | |||||||||||||||||||||||||||||||||
| Total loans | 1,316,845 | 16,489 | 4.97 | 1,252,042 | 15,245 | 4.88 | 1,140,562 | 13,405 | 4.66 | |||||||||||||||||||||||||||||||||
| Total earning assets | 1,565,261 | 18,176 | 4.61 | 1,502,681 | 16,944 | 4.52 | 1,342,901 | 14,630 | 4.32 | |||||||||||||||||||||||||||||||||
| Less: Allowance for loan losses | (10,717 | ) | (10,132 | ) | (9,760 | ) | ||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 18,020 | 16,792 | 17,501 | |||||||||||||||||||||||||||||||||||||||
| Other assets | 108,618 | 107,421 | 123,898 | |||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 1,681,182 | $ | 1,616,762 | $ | 1,474,540 | ||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||||||
| NOW | $ | 413,121 | $ | 773 | 0.74 | $ | 459,784 | $ | 846 | 0.74 | $ | 436,493 | $ | 675 | 0.61 | |||||||||||||||||||||||||||
| Money market checking | 246,624 | 676 | 1.09 | 229,763 | 484 | 0.85 | 246,160 | 458 | 0.74 | |||||||||||||||||||||||||||||||||
| Savings | 42,760 | 1 | 0.01 | 46,478 | 7 | 0.06 | 46,807 | 20 | 0.17 | |||||||||||||||||||||||||||||||||
| IRAs | 17,950 | 75 | 1.66 | 17,997 | 69 | 1.54 | 16,649 | 56 | 1.33 | |||||||||||||||||||||||||||||||||
| CDs | 348,467 | 1,585 | 1.80 | 275,004 | 1,124 | 1.64 | 249,698 | 874 | 1.39 | |||||||||||||||||||||||||||||||||
| Repurchase agreements and federal funds sold | 17,911 | 10 | 0.22 | 20,118 | 20 | 0.39 | 25,093 | 20 | 0.32 | |||||||||||||||||||||||||||||||||
| FHLB and other borrowings | 202,670 | 1,199 | 2.35 | 226,487 | 1,197 | 2.12 | 149,313 | 548 | 1.46 | |||||||||||||||||||||||||||||||||
| Subordinated debt | 19,932 | 333 | 6.63 | 32,015 | 542 | 6.79 | 33,524 | 565 | 6.69 | |||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,309,435 | 4,652 | 1.41 | 1,307,646 | 4,289 | 1.32 | 1,203,737 | 3,216 | 1.06 | |||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | 193,116 | 146,135 | 115,343 | |||||||||||||||||||||||||||||||||||||||
| Other liabilities | 10,710 | 9,890 | 7,703 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities | 1,513,261 | 1,463,671 | 1,326,783 | |||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | ||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | 7,834 | 7,834 | 7,834 | |||||||||||||||||||||||||||||||||||||||
| Common stock | 11,467 | 10,686 | 10,495 | |||||||||||||||||||||||||||||||||||||||
| Paid-in capital | 113,482 | 101,577 | 98,289 | |||||||||||||||||||||||||||||||||||||||
| Treasury stock | (1,084 | ) | (1,084 | ) | (1,084 | ) | ||||||||||||||||||||||||||||||||||||
| Retained earnings | 43,793 | 41,277 | 35,152 | |||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive income | (7,571 | ) | (7,199 | ) | (2,929 | ) | ||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | 167,921 | 153,091 | 147,757 | |||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,681,182 | $ | 1,616,762 | $ | 1,474,540 | ||||||||||||||||||||||||||||||||||||
| Net interest spread | 3.20 | 3.20 | 3.26 | |||||||||||||||||||||||||||||||||||||||
| Net interest income-margin | $ | 13,524 | 3.43 | % | $ | 12,655 | 3.38 | % | $ | 11,414 | 3.37 | % | ||||||||||||||||||||||||||||||
|
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate. |
||||||||||||||||||||||||||||||||||||||||||
|
Average Balances and Interest Rates
(Unaudited) (Dollars in thousands) |
||||||||||||||||||||||||||||
|
Nine Months Ended
September 30, 2018 |
Nine Months Ended
September 30, 2017 |
|||||||||||||||||||||||||||
|
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
Average Balance |
Interest Income/ Expense |
Yield/ Cost |
|||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||
| Interest-bearing deposits in banks | $ | 4,183 | $ | 64 | 2.05 | % | $ | 3,504 | $ | 37 | 1.41 | % | ||||||||||||||||
| CDs with other banks | 14,778 | 220 | 1.99 | 14,566 | 213 | 1.96 | ||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||
| Taxable | 151,362 | 2,655 | 2.35 | 118,497 | 1,884 | 2.13 | ||||||||||||||||||||||
| Tax-exempt | 78,910 | 2,087 | 3.54 | 55,426 | 1,291 | 3.11 | ||||||||||||||||||||||
| Loans and loans held for sale: 1 | ||||||||||||||||||||||||||||
| Commercial | 830,371 | 30,582 | 4.92 | 744,967 | 24,854 | 4.46 | ||||||||||||||||||||||
| Tax exempt | 14,318 | 371 | 3.46 | 15,193 | 392 | 3.45 | ||||||||||||||||||||||
| Real estate | 388,494 | 13,755 | 4.73 | 358,309 | 12,312 | 4.59 | ||||||||||||||||||||||
| Consumer | 11,731 | 440 | 5.01 | 13,880 | 529 | 5.10 | ||||||||||||||||||||||
| Total loans | 1,244,914 | 45,148 | 4.85 | 1,132,349 | 38,087 | 4.50 | ||||||||||||||||||||||
| Total earning assets | 1,494,147 | 50,174 | 4.49 | 1,324,342 | 41,512 | 4.19 | ||||||||||||||||||||||
| Less: Allowance for loan losses | (10,281 | ) | (9,641 | ) | ||||||||||||||||||||||||
| Cash and due from banks | 16,933 | 16,060 | ||||||||||||||||||||||||||
| Other assets | 105,743 | 103,576 | ||||||||||||||||||||||||||
| Total assets | $ | 1,606,542 | $ | 1,434,337 | ||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||
| NOW | $ | 438,784 | $ | 2,382 | 0.73 | $ | 428,359 | $ | 1,802 | 0.56 | ||||||||||||||||||
| Money market checking | 239,305 | 1,604 | 0.90 | 240,094 | 1,349 | 0.75 | ||||||||||||||||||||||
| Savings | 45,247 | 27 | 0.08 | 47,825 | 59 | 0.16 | ||||||||||||||||||||||
| IRAs | 17,880 | 207 | 1.55 | 16,501 | 159 | 1.29 | ||||||||||||||||||||||
| CDs | 297,876 | 3,718 | 1.67 | 257,015 | 2,583 | 1.34 | ||||||||||||||||||||||
| Repurchase agreements and federal funds sold | 19,535 | 49 | 0.34 | 23,165 | 56 | 0.32 | ||||||||||||||||||||||
| FHLB and other borrowings | 196,610 | 3,110 | 2.11 | 122,062 | 1,216 | 1.33 | ||||||||||||||||||||||
| Subordinated debt | 28,441 | 1,433 | 6.74 | 33,524 | 1,674 | 6.68 | ||||||||||||||||||||||
| Total interest-bearing liabilities | 1,283,678 | 12,530 | 1.31 | 1,168,545 | 8,898 | 1.02 | ||||||||||||||||||||||
| Noninterest bearing demand deposits | 156,165 | 114,455 | ||||||||||||||||||||||||||
| Other liabilities | 9,764 | 8,204 | ||||||||||||||||||||||||||
| Total liabilities | 1,449,607 | 1,291,204 | ||||||||||||||||||||||||||
| Stockholders’ equity | ||||||||||||||||||||||||||||
| Preferred stock | 7,834 | 7,959 | ||||||||||||||||||||||||||
| Common stock | 10,896 | 10,307 | ||||||||||||||||||||||||||
| Paid-in capital | 104,776 | 96,268 | ||||||||||||||||||||||||||
| Treasury stock | (1,084 | ) | (1,084 | ) | ||||||||||||||||||||||||
| Retained earnings | 41,046 | 33,202 | ||||||||||||||||||||||||||
| Accumulated other comprehensive income | (6,533 | ) | (3,519 | ) | ||||||||||||||||||||||||
| Total stockholders’ equity | 156,935 | 143,133 | ||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 1,606,542 | $ | 1,434,337 | ||||||||||||||||||||||||
| Net interest spread | 3.18 | 3.17 | ||||||||||||||||||||||||||
| Net interest income-margin | $ | 37,644 | 3.37 | % | $ | 32,614 | 3.29 | % | ||||||||||||||||||||
|
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate. |
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|
Selected Financial Data
(Unaudited) (Dollars in thousands, except per share data) |
|||||||||||||||||||||||||||||||||||
| Quarterly | Year-to-Date | ||||||||||||||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | 2018 | 2017 | |||||||||||||||||||||||||||||
|
Third
Quarter |
Second
Quarter |
First
Quarter |
Fourth Quarter |
Third Quarter |
|||||||||||||||||||||||||||||||
| Earnings and Per Share Data: | |||||||||||||||||||||||||||||||||||
| Net income | $ | 3,579 | $ | 2,831 | $ | 2,594 | $ | 1,423 | $ | 2,318 | $ | 9,004 | $ | 6,152 | |||||||||||||||||||||
| Net income available to common shareholders | 3,456 | 2,709 | 2,473 | 1,299 | 2,195 | 8,638 | 5,778 | ||||||||||||||||||||||||||||
| Earnings per share - basic | 0.30 | 0.25 | 0.24 | 0.12 | 0.21 | 0.80 | 0.56 | ||||||||||||||||||||||||||||
| Earnings per share - diluted | 0.29 | 0.25 | 0.23 | 0.12 | 0.21 | 0.77 | 0.56 | ||||||||||||||||||||||||||||
| Cash dividends paid per common share | 0.030 | 0.025 | 0.025 | 0.025 | 0.025 | 0.08 | 0.075 | ||||||||||||||||||||||||||||
| Book value per common share | 14.13 | 13.93 | 13.53 | 13.63 | 13.51 | 14.13 | 13.51 | ||||||||||||||||||||||||||||
| Weighted average shares outstanding - basic | 11,416,202 | 10,634,805 | 10,474,138 | 10,444,627 | 10,443,443 | 10,845,166 | 10,262,944 | ||||||||||||||||||||||||||||
| Weighted average shares outstanding - diluted | 13,113,259 | 11,502,148 | 12,714,353 | 10,823,994 | 12,410,070 | 11,690,314 | 10,288,534 | ||||||||||||||||||||||||||||
| Performance Ratios: | |||||||||||||||||||||||||||||||||||
| Return on average assets 1 | 0.85 | % | 0.70 | % | 0.68 | % | 0.38 | % | 0.63 | % | 0.75 | % | 0.57 | % | |||||||||||||||||||||
| Return on average equity 1 | 8.53 | % | 7.40 | % | 6.94 | % | 3.79 | % | 6.28 | % | 7.65 | % | 5.73 | % | |||||||||||||||||||||
| Net interest margin 2 | 3.43 | % | 3.38 | % | 3.29 | % | 3.29 | % | 3.37 | % | 3.37 | % | 3.29 | % | |||||||||||||||||||||
| Efficiency ratio 3 | 76.63 | % | 82.09 | % | 81.64 | % | 81.11 | % | 83.28 | % | 80.02 | % | 83.57 | % | |||||||||||||||||||||
| Overhead ratio 1 4 | 4.38 | % | 4.76 | % | 4.40 | % | 4.69 | % | 4.87 | % | 4.52 | % | 4.91 | % | |||||||||||||||||||||
| Asset Quality Data and Ratios: | |||||||||||||||||||||||||||||||||||
| Charge-offs | $ | 294 | $ | 29 | $ | 356 | $ | 572 | $ | 472 | $ | 679 | $ | 925 | |||||||||||||||||||||
| Recoveries | 13 | 8 | 71 | 18 | 24 | 92 | 83 | ||||||||||||||||||||||||||||
| Net loan charge-offs to total loans 1 5 | 0.09 | % | 0.01 | % | 0.10 | % | 0.20 | % | 0.16 | % | 0.06 | % | 0.10 | % | |||||||||||||||||||||
| Allowance for loan losses | 11,439 | 10,651 | 10,067 | 9,878 | 9,396 | 11,439 | 9,396 | ||||||||||||||||||||||||||||
| Allowance for loan losses to total loans 6 | 0.88 | % | 0.88 | % | 0.87 | % | 0.89 | % | 0.86 | % | 0.88 | % | 0.86 | % | |||||||||||||||||||||
| Nonperforming loans | 12,846 | 9,419 | 9,102 | 9,699 | 6,559 | 12,846 | 6,559 | ||||||||||||||||||||||||||||
| Nonperforming loans to total loans | 0.99 | % | 0.78 | % | 0.79 | % | 0.88 | % | 0.60 | % | 0.99 | % | 0.60 | % | |||||||||||||||||||||
| Capital Ratios: | |||||||||||||||||||||||||||||||||||
| Equity to assets | 9.92 | % | 9.84 | % | 9.51 | % | 9.79 | % | 10.12 | % | 9.92 | % | 10.12 | % | |||||||||||||||||||||
| Leverage ratio | 9.91 | % | 9.90 | % | 9.50 | % | 9.27 | % | 9.41 | % | 9.91 | % | 9.41 | % | |||||||||||||||||||||
| Common equity Tier 1 capital ratio | 11.27 | % | 11.28 | % | 10.60 | % | 10.55 | % | 10.76 | % | 11.27 | % | 10.76 | % | |||||||||||||||||||||
| Tier 1 risk-based capital ratio | 12.15 | % | 12.20 | % | 11.57 | % | 11.54 | % | 11.79 | % | 12.15 | % | 11.79 | % | |||||||||||||||||||||
| Total risk-based capital ratio | 14.10 | % | 14.34 | % |
14.80 |
% | 14.87 | % | 15.18 | % | 14.10 | % | 15.18 | % | |||||||||||||||||||||
|
1 annualized for the quarterly periods presented |
|||||||||||||||||||||||||||||||||||
|
2 net interest income as a percentage of average interest earning assets |
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|
3 noninterest expense as a percentage of net interest income and noninterest income |
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|
4 noninterest expense as a percentage of average assets |
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|
5 charge-offs less recoveries |
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|
6 excludes loans held for sale |
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