MVB Financial Corp. Reports First Quarter 2020 Results with a 37.5% Increase in Noninterest-Bearing Deposits from Year End

FAIRMONT, W.Va.--()--MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) today reported net income of $1.0 million, or $0.08 basic and diluted earnings per share for the three months ended March 31, 2020.

 

 

Quarterly

 

Year-to-Date

 

 

2020

 

2019

 

2019

 

2020

 

2019

 

 

First
Quarter

 

Fourth
Quarter

 

First
Quarter

 

 

Net income

 

$

1,048

 

 

$

4,095

 

 

$

3,192

 

 

$

1,048

 

 

$

3,192

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - basic

 

$

0.08

 

 

$

0.34

 

 

$

0.26

 

 

$

0.08

 

 

$

0.26

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share - diluted

 

$

0.08

 

 

$

0.32

 

 

$

0.26

 

 

$

0.08

 

 

$

0.26

 

Due to concerns within the industry being caused by the COVID-19 pandemic, management concentrated efforts on maintaining greater liquidity in anticipation of loan deferrals and other potential cash flow disruptions. The Company is actively participating in the Paycheck Protection Program, evaluating other programs available to assist our clients and providing consumer deferrals consistent with government-sponsored enterprise (“GSE”) guidelines. The Company and management continue to focus on strengthening liquidity, asset quality and capital. As of March 31, 2020, total deposits, including deposits at branches held for sale, increased $332.7 million and borrowings decreased $192.1 million from December 31, 2019. Even with a significant increase in total deposits, total interest expense decreased $837 thousand and the cost of interest-bearing liabilities decreased 20 basis points versus the three months ended December 31, 2019.

While the Company continues to see growth in loans, improvement in deposit mix and expansion in net interest income, volatility in the mortgage market created from the COVID-19 pandemic and related Federal Reserve stimulus in the mortgage-backed security (“MBS”) market caused significant downward pressure on the derivative asset related to the Company's mortgage pipeline. After the end of the first quarter, the Federal Reserve slowed down purchases in the MBS market and recent announcements from GSE's on deferment periods are bringing stability to the market.

With the decrease in U.S. Treasury and mortgage rates, MVB Mortgage saw a significant increase in originations during the first quarter 2020. Mortgage originations increased above normal averages in the fourth quarter 2019 and remained strong with a significant rise in March 2020. However, the Federal Reserve's stimulus, which included the purchase of $525 billion of Agency MBS, the primary vehicle used to hedge the locked pipeline, caused a decrease in the valuation of the MBS market. This volatility in valuation caused a decrease in the derivative asset of $3.6 million, which resulted in a net loss of $1.1 million at MVB Mortgage for the three months ended March 31, 2020. In addition, stress to the servicing market, caused by concerns around the length and commitment of deferral periods for residential mortgages, caused numerous servicing companies to pull back from the market which drove a reduction in premiums related to mortgage servicing rights. These reduced premiums also impacted the valuation of the derivative.

MANAGEMENT OVERVIEW

“We believe the impact on the U.S. and world economy from the COVID-19 pandemic will be substantial, and MVB will continue to respond accordingly in our role as bankers and leaders. MVB is well positioned to weather the COVID-19 storm,” said Larry F. Mazza, President and CEO, MVB Financial Corp.

“One thing that I can be certain about in these uncertain times is Team MVB. As we have in the past, we will step up to face our challenges. By focusing on our purpose and by being adaptive, which is one of our core values, Team MVB – like America – will come out on the other side better than before.”

Total noninterest-bearing deposits increased $111.7 million, or 37.5%, from December 31, 2019, and increased $173.4 million, or 73.5%, from March 31, 2019, to a balance of $409.5 million as of March 31, 2020. The growth in noninterest-bearing deposits was primarily driven by MVB’s continued strategic initiatives in Fintech and specialty deposits. As of March 31, 2020, total noninterest-bearing deposits were 22.9% of total deposits, compared to 20.5% as of December 31, 2019, and 16.5% as of March 31, 2019. In addition to this increase in noninterest-bearing deposits, FHLB and other borrowings decreased $192.1 million, or 86.2%, from December 31, 2019, and decreased $84.1 million, or 73.2%, from March 31, 2019, to a balance of $30.8 million as of March 31, 2020.

FIRST QUARTER 2020 HIGHLIGHTS

  • Net interest margin continued to grow and was 3.60% for the quarter ended March 31, 2020, an increase of 8 basis points versus the quarter ended December 31, 2019, and an increase of 15 basis points versus the quarter ended March 31, 2019.
  • Loans, including loans at branches held for sale, of $1.4 billion as of March 31, 2020, increased $14.3 million, or 1.0%, from December 31, 2019, and increased $90.6 million, or 6.8%, from March 31, 2019.
  • Nonperforming loans totaled $5.9 million, or 0.42%, of total loans as of March 31, 2020, compared to 0.37% of total loans as of December 31, 2019, and compared to 0.53% of total loans as of March 31, 2019.
  • Deposits, including deposits at branches held for sale, of $1.8 billion as of March 31, 2020, increased $332.7 million, or 22.9%, from December 31, 2019, and increased $355.4 million, or 24.8% from March 31, 2019.
  • Noninterest-bearing deposits, including noninterest-bearing deposits at branches held for sale, of $409.5 million as of March 31, 2020, increased $111.7 million, or 37.5%, from December 31, 2019, and increased $173.4 million, or 73.5%, from March 31, 2019.
  • Net interest income of $16.2 million for the quarter ended March 31, 2020, increased $306 thousand, or 1.9%, from the quarter ended December 31, 2019, and increased $2.2 million, or 15.7% from the quarter ended March 31, 2019.

As previously reported, on November 21, 2019, the Company entered into a Purchase and Assumption Agreement with Summit Community Bank, Inc. (“Summit”), a subsidiary of Summit Financial Group, Inc., pursuant to which Summit will purchase certain assets and assume certain liabilities of three MVB Bank branches in Berkeley County, W.Va. and one MVB Bank branch in Jefferson County, W.Va. Summit has agreed to assume certain deposit liabilities and to acquire certain loans, as well as cash, real property, personal property, and other fixed assets associated with the branches. Refer to the “Subsequent Events” section for additional information related to the closing of this transaction.

 

 

As of March 31, 2020

(Dollars in thousands)

 

Balance to be retained by
MVB

 

Balance to be assumed by
Summit

 

Total

Commercial and non-residential real estate loans

 

$

1,094,494

 

 

 

$

11,262

 

 

$

1,105,756

 

 

Residential real estate and home equity loans

 

298,349

 

 

 

20,806

 

 

319,155

 

 

Consumer and other loans

 

3,763

 

 

 

3,138

 

 

6,901

 

 

Deferred loan origination fees and costs, net

 

(28

)

 

 

 

 

(28

)

 

Total loans

 

1,396,578

 

 

 

35,206

 

 

1,431,784

 

 

Premises and equipment, net

 

22,329

 

 

 

3,931

 

 

26,260

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

387,536

 

 

 

$

21,991

 

 

$

409,527

 

 

Interest-bearing deposits

 

1,210,703

 

 

 

165,816

 

 

1,376,519

 

 

Total deposits

 

1,598,239

 

 

 

187,807

 

 

1,786,046

 

 

LOANS

Loans, including loans at branches held for sale, totaled $1.4 billion as of March 31, 2020, an increase of $14.3 million, or 1.0%, from December 31, 2019, and an increase of $90.6 million, or 6.8%, from March 31, 2019. Commercial loans have increased $25.8 million, or 2.4%, from the quarter ended December 31, 2019, and increased $143.7 million, or 14.9%, from March 31, 2019. The year-over-year growth in loans is attributable to strong growth in MVB's Northern Virginia market and consistent performance by the commercial lending team. Residential portfolio mortgage loan sales totaled $23.4 million in the quarter ended March 31, 2020, $24.4 million during the quarter ended December 31, 2019, and $4.9 million during the quarter ended March 31, 2019. The yield on loans was 4.97% for the quarter ended March 31, 2020, a decrease of 13 basis points from the quarter ended December 31, 2019, and a decrease of 23 basis points from the quarter ended March 31, 2019.

Loans held for sale, excluding the loans at branches held for sale, totaled $186.1 million as of March 31, 2020, an increase of $76.3 million, or 69.5%, from December 31, 2019, and an increase of $120.2 million, or 182.2%, from March 31, 2019. Loans held for sale increased as a result of increases in the locked mortgage loan pipeline and increased demand as a result of U.S. Treasury and mortgage rates falling in the first quarter of 2020.

DEPOSITS

The Company continues to execute on its deposit growth strategy, including strategic initiatives in Fintech and specialty deposits. Deposits, including deposits at branches held for sale, totaled $1.8 billion as of March 31, 2020, an increase of $332.7 million, or 22.9%, from December 31, 2019, and an increase of $355.4 million, or 24.8% from March 31, 2019. Noninterest-bearing deposits, including noninterest-bearing deposits at branches held for sale, totaled $409.5 million as of March 31, 2020, or 22.9%, of the total deposit base, an increase of $111.7 million, or 37.5%, from December 31, 2019, and an increase of $173.4 million, or 73.5%, from March 31, 2019.

NET INTEREST INCOME

Net interest income for the quarter ended March 31, 2020, was $16.2 million, an increase of $306 thousand, or 1.9%, from the quarter ended December 31, 2019, and an increase of $2.2 million, or 15.7%, from the quarter ended March 31, 2019. Net interest margin for the quarter ended March 31, 2020 was 3.60%, an increase of 8 basis points versus the quarter ended December 31, 2019, and an increase of 15 basis point versus the quarter ended March 31, 2019.

Interest income decreased 2.5% during the quarter ended March 31, 2020, compared to the quarter ended December 31, 2019, as a result of a decrease of 10 basis points in the yield on earning assets, and increased 5.5% compared to the quarter ended March 31, 2019, even with a decrease of 24 basis points in the yield on earning assets. The decrease in the yield on earning assets compared to the quarter ended December 31, 2019, was the result of a 22-basis point decrease in the yield on commercial loans. The decrease in the yield on earning assets compared to the quarter ended March 31, 2019, was the result of a 26-basis point decrease in the yield on commercial loans.

Interest expense decreased 15.6% during the quarter ended March 31, 2020, compared to the quarter ended December 31, 2019, as a result of a decrease of 20 basis points in the cost of interest-bearing liabilities. Interest expense decreased 19.9% compared to the quarter ended March 31, 2019, due to a decrease of 36 basis points in the cost of interest-bearing liabilities. The decrease in the cost of interest-bearing liabilities compared to the quarter ended December 31, 2019, was the result of a 23-basis point decrease in the cost of NOW accounts, a 19-basis decrease in the cost of money market checking accounts, and an 11-basis point decrease in the cost of CDs. The decrease in the cost of interest-bearing liabilities compared to the quarter ended March 31, 2019, was the result of a 25-basis point decrease in the cost of CDs and an 86-basis point decrease in the cost of FHLB and other borrowings.

An increase in the Company's average noninterest-bearing balances of $35.3 million from the quarter ended December 31, 2019, helped to maintain a 33-basis point favorable spread on net interest margin for the quarter ended March 31, 2020, compared to a 34-basis point favorable spread for the quarter ended December 31, 2019.

An increase in the Company’s average noninterest-bearing balances of $117.4 million from the quarter ended March 31, 2019, helped to grow a 33-basis point favorable spread on net interest margin in 2020 compared to a 30-basis point favorable spread in 2019.

ASSET QUALITY

Provision for loan losses totaled $1.1 million for the quarter ended March 31, 2020, an increase of $906 thousand, or 390.5%, from the quarter ended December 31, 2019, and an increase of $838 thousand, or 279.3%, from the quarter ended March 31, 2019. The increase in provision is the result of the net impact of adjustments to the portfolio segmentation, changes in the level of recognized charge offs, historical loss rates, and qualitative adjustment factors. The Company is evaluating the effects of COVID-19 as it relates to the asset quality of the loan portfolio and will continue to evaluate and assess the need for additional loan loss provision in the second quarter of 2020 and beyond.

Nonperforming loans totaled $5.9 million, or 0.42%, of total loans as of March 31, 2020, compared to 0.37% of total loans as of December 31, 2019, and compared to 0.53% of total loans as of March 31, 2019. In addition, net charge-offs for the quarter ended March 31, 2020, increased $1.4 million compared to the quarter ended December 31, 2019, and increased $1.8 million compared to the quarter ended March 31, 2019. During the first quarter of 2020, there was a charge-off of a $1.8 million government lease financing loan stemming from the non-renewal of the underlying government contract. This charge-off was not related to the COVID-19 pandemic.

NONINTEREST INCOME

Noninterest income totaled $10.9 million for the quarter ended March 31, 2020, a decrease of $3.9 million, or 26.5%, from the quarter ended December 31, 2019, and an increase of $2.1 million, or 23.8%, from the quarter ended March 31, 2019.

The $3.9 million decrease in noninterest income from the quarter ended December 31, 2019, was due to a decrease in the gain on derivatives of $2.1 million and a decrease in mortgage fee income of $1.8 million. The decrease in the gain on derivatives was the result of the volatility of rates due to the COVID-19 pandemic. Loan originations spiked during early March when Treasury yields were at an all-time low. Mortgage rates were “locked-in” near lows, offering lower yields. As previously discussed, the mark to market loss is attributable to instability in the market for MBS and mortgage servicing rights. The decrease in mortgage fee income was driven by a decrease of $76.4 million in mortgage loans sold for the three months ended March 31, 2020 compared to the three months ended December 31, 2019.

The $2.1 million increase in noninterest income from the quarter ended March 31, 2019, was due to an increase in mortgage fee income of $4.5 million, an increase in compliance consulting income of $1.0 million, an increase in gain on sale of securities of $394 thousand, and an increase in commercial swap fee income of $240 thousand. These increases were partially offset by a decrease in the gain on derivatives of $4.0 million and a decrease in income on bank owned life insurance of $302 thousand. The increase in mortgage fee income of $4.5 million was driven by an increase of $171.7 million in mortgage loans sold for the three months ended March 31, 2020 compared to the three months ended March 31, 2019. The increase in compliance consulting income of $1.0 million was due to the addition of the Chartwell Compliance team during 2019. Chartwell Compliance specializes in regulatory compliance and risk management and was acquired in the third quarter of 2019. The increase in commercial swap fee income of $240 thousand was due to swap volume of $12.3 million for the first quarter of 2020 compared to $3.0 million for the first quarter of 2019.

NONINTEREST EXPENSE

Noninterest expense totaled $24.7 million for the quarter ended March 31, 2020, a decrease of $327 thousand, or 1.3%, from the quarter ended December 31, 2019, and an increase of $6.2 million, or 33.7%, from the quarter ended March 31, 2019.

The $327 thousand decrease in noninterest expense from the quarter ended December 31, 2019, was due to a decrease in professional fees expense of $643 thousand and a decrease in travel, entertainment, dues, and subscriptions expense of $214 thousand. These decreases were partially offset by an increase in salary and employee benefits expense of $459 thousand. The decrease in professional fees expense was due to a reduction in Fintech product and technology development. The decrease in travel, entertainment, dues, and subscriptions expense was the result of decreased travel due to the COVID-19 pandemic. The increase in salary and employee benefits expense was the result of increased mortgage production.

The $6.2 million increase in noninterest expense from the quarter ended March 31, 2019, was due to an increase in salaries and employee benefits expense of $4.4 million, an increase in travel, entertainment, dues, and subscriptions expense of $528 thousand, and an increase in professional fees expense of $503 thousand. The increase in salaries and employee benefits expense was primarily the result of increased mortgage production, the build-out of other Company personnel, the build-out of the Fintech team, increased incentive and stock-based compensation, and the additional team members acquired as a result of the Chartwell acquisition during the third quarter of 2019. The increase in travel, entertainment, dues, and subscriptions expense was mainly driven by travel for deposit acquisition and on-boarding costs, including due diligence, related to Fintech opportunities. Travel, entertainment, dues, and subscriptions for the compliance consulting team added during 2019 have also driven the increase. The increase in professional fees was primarily due to increased legal fees related to the previously announced MVB Mortgage transaction that is scheduled to close in mid-2020 and increases due to special projects, Fintech products, and technology development.

SUBSEQUENT EVENTS

On April 3, 2020, the Bank entered into a Purchase and Assumption Agreement with the Federal Deposit Insurance Corporation (“FDIC”), as receiver for The First State Bank (“First State”), Barboursville, W.Va., providing for the assumption by the Bank of certain liabilities and the purchase by the Bank of certain assets of First State. First State depositors automatically became depositors of the Bank and, subject to the insurance limitations, deposits will continue to be insured by the FDIC without interruption. In the Agreement, the Bank agreed to pay no deposit premium and to acquire the assets at a discount to book value of approximately $28.2 million. The Bank also acquired three branch locations in Barboursville, Teays Valley, and Huntington, W.Va. for aggregate consideration of approximately $1.5 million. The Bank further acquired certain other real estate owned (“OREO”) for 47.5% of the book value of such OREO. The deposits assumed by the Bank had an aggregate book balance of approximately $140.0 million. Additional assets acquired included cash and securities of $37.0 million and loans with a book value of $83.7 million. Net proceeds received from the FDIC for the transaction was $39.6 million. The Bank estimates a bargain purchase gain of approximately $6.0 million related to this transaction but is still in the process of finalizing the mark to market analysis of the portfolio.

On April 17, 2020, Paladin Fraud, LLC (“PF”), a newly formed West Virginia limited liability company and wholly owned subsidiary of MVB Bank, entered into an Asset Purchase Agreement with Paladin, LLC, (“Paladin”), James Houlihan and Jamon Whitehead (collectively "Paladin Group"). Pursuant to the Purchase Agreement, PF acquired substantially all of the assets and certain liabilities of Paladin and the purchase price of the transaction consisted of 19,278 unregistered shares of MVB common stock and an undisclosed amount of cash. The Paladin Group is a respected leader in the fraud prevention industry and has formed a specialty niche that aligns well with MVB as a preferred bank for Fintech companies.

On April 24, 2020, the Company completed the previously announced sale of certain assets and liabilities of four branch locations to Summit. Summit assumed $188.1 million in deposits and acquired $36.8 million in loans, as well as cash, real property, personal property and other fixed assets. The Company will recognize a gain of approximately $10.0 million related to this transaction.

STOCK REPURCHASE PROGRAM

As previously announced on August 12, 2019, the Board of Directors of the Company approved a stock repurchase program. Under this program, the Company is authorized to repurchase up to $5 million of its outstanding shares of common stock over the next 12 months or until the purchase is fully absorbed, whichever date comes first. During the first quarter of 2020, the Company repurchased 16,300 shares.

DIVIDEND

As previously announced on February 20, 2020, MVB issued its first quarterly dividend for 2020 including a 29% increase compared to the previous quarter dividend payout. With this increase, the Company's dividend is up 157% since the first quarter of 2019. The Company declared a quarterly cash dividend of $0.09 per share payable on March 15, 2020, to shareholders of record at the close of business on March 1, 2020.

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.” Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services.

MVB is a financial holding company headquartered in Fairmont, W.Va. Through its subsidiary, MVB Bank, Inc., and the bank’s subsidiaries, MVB Mortgage, the MVB Community Development Corporation, Chartwell Compliance and Paladin, the company provides financial services to individuals and corporate clients in the Mid-Atlantic region and beyond. Chartwell Compliance is a specialty compliance firm providing regulatory compliance and market entry facilitation for firms entering into or expanding in North America within the Fintech industry.

For more information about MVB, please visit ir.mvbbanking.com.

Forward-looking Statements

MVB Financial Corp. (the “Company”) 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, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. When words such as “may,” “plans,” “believes,” “expects,” “anticipates,” “continues,” “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 anticipated synergies; ability to successfully integrate recent mergers and acquisitions, including First State and Summit; competition; length and severity of the recent COVID-19 (coronavirus) outbreak and its impact on the Company’s business and financial condition; economic downturn or recession; and government regulation and supervision. Additional factors that may cause actual results to differ materially from those described in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, 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

 

MVB Financial Corp.

Financial Highlights

Consolidated Statements of Income

(Unaudited) (Dollars in thousands, except per share data)

 

 

Quarterly

 

 

2020

 

2019

 

2019

 

 

First
Quarter

 

Fourth
Quarter

 

First
Quarter

Interest income

 

$

20,699

 

 

$

21,230

 

 

$

19,623

 

Interest expense

 

4,528

 

 

5,365

 

 

5,651

 

Net interest income

 

16,171

 

 

15,865

 

 

13,972

 

Provision for loan losses

 

1,138

 

 

232

 

 

300

 

Net interest income after provision for loan losses

 

15,033

 

 

15,633

 

 

13,672

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

Mortgage fee income

 

11,219

 

 

13,015

 

 

6,670

 

Other income

 

(369)

 

 

1,741

 

 

2,095

 

Total noninterest income

 

10,850

 

 

14,756

 

 

8,765

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

16,182

 

 

15,723

 

 

11,734

 

Other expense

 

8,474

 

 

9,260

 

 

6,714

 

Total noninterest expenses

 

24,656

 

 

24,983

 

 

18,448

 

 

 

 

 

 

 

 

Income before income taxes

 

1,227

 

 

5,406

 

 

3,989

 

Income tax expense

 

179

 

 

1,311

 

 

797

 

Net income

 

$

1,048

 

 

$

4,095

 

 

$

3,192

 

Preferred dividends

 

114

 

 

115

 

 

121

 

Net income available to common shareholders

 

$

934

 

 

$

3,980

 

 

$

3,071

 

 

 

 

 

 

 

 

Earnings per share - basic

 

$

0.08

 

 

$

0.34

 

 

$

0.26

 

 

 

 

 

 

 

 

Earnings per share - diluted

 

$

0.08

 

 

$

0.32

 

 

$

0.26

 

Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

 

 

 

March 31, 2020

 

December 31, 2019

 

March 31, 2019

Cash and cash equivalents

 

$

88,874

 

 

$

28,002

 

 

$

17,958

 

Certificates of deposit with other banks

 

12,549

 

 

12,549

 

 

14,778

 

Securities available-for-sale, at fair value

 

223,101

 

 

235,821

 

 

224,741

 

Equity securities

 

19,026

 

 

18,514

 

 

9,841

 

Loans held for sale

 

186,128

 

 

109,788

 

 

65,955

 

Loans

 

1,396,578

 

 

1,374,541

 

 

1,341,218

 

Less: Allowance for loan losses

 

(11,161)

 

 

(11,775)

 

 

(11,242)

 

Net Loans

 

1,385,417

 

 

1,362,766

 

 

1,329,976

 

Premises and equipment

 

22,329

 

 

21,974

 

 

25,922

 

Assets of branches held for sale

 

39,137

 

 

46,554

 

 

 

Goodwill

 

19,630

 

 

19,630

 

 

18,480

 

Other assets

 

103,489

 

 

88,516

 

 

82,257

 

Total assets

 

$

2,099,680

 

 

$

1,944,114

 

 

$

1,789,908

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

387,536

 

 

$

278,547

 

 

$

236,086

 

Interest-bearing deposits

 

1,210,703

 

 

986,495

 

 

1,194,573

 

Deposits of branches held for sale

 

187,807

 

 

188,270

 

 

 

Borrowed funds

 

30,815

 

 

222,885

 

 

114,884

 

Other liabilities

 

71,666

 

 

55,981

 

 

63,493

 

Stockholders' equity

 

211,153

 

 

211,936

 

 

180,872

 

Total liabilities and stockholders' equity

 

$

2,099,680

 

 

$

1,944,114

 

 

$

1,789,908

 

Reportable Segments

(Unaudited)

 

Three Months Ended March 31, 2020

 

Commercial &
Retail Banking

 

Mortgage
Banking

 

Financial
Holding
Company

 

Intercompany
Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

18,774

 

 

$

2,418

 

 

$

1

 

 

$

(494)

 

 

$

20,699

 

Interest expense

 

3,838

 

 

1,387

 

 

35

 

 

(732)

 

 

4,528

 

Net interest income (loss)

 

14,936

 

 

1,031

 

 

(34)

 

 

238

 

 

16,171

 

Provision for loan losses

 

1,132

 

 

6

 

 

 

 

 

 

1,138

 

Net interest income (loss) after provision for loan losses

 

13,804

 

 

1,025

 

 

(34)

 

 

238

 

 

15,033

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

110

 

 

11,347

 

 

 

 

(238)

 

 

11,219

 

Other income

 

3,346

 

 

(3,562)

 

 

1,504

 

 

(1,657)

 

 

(369)

 

Total noninterest income

 

3,456

 

 

7,785

 

 

1,504

 

 

(1,895)

 

 

10,850

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,866

 

 

7,884

 

 

2,432

 

 

 

 

16,182

 

Other expense

 

6,659

 

 

2,397

 

 

1,075

 

 

(1,657)

 

 

8,474

 

Total noninterest expenses

 

12,525

 

 

10,281

 

 

3,507

 

 

(1,657)

 

 

24,656

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

4,735

 

 

(1,471)

 

 

(2,037)

 

 

 

 

1,227

 

Income tax expense (benefit)

 

1,012

 

 

(349)

 

 

(484)

 

 

 

 

179

 

Net income (loss)

 

$

3,723

 

 

$

(1,122)

 

 

$

(1,553)

 

 

$

 

 

$

1,048

 

Preferred stock dividends

 

 

 

 

 

114

 

 

 

 

114

 

Net income (loss) available to common shareholders

 

$

3,723

 

 

$

(1,122)

 

 

$

(1,667)

 

 

$

 

 

$

934

 

 

Three Months Ended December 31, 2019

 

Commercial &
Retail Banking

 

Mortgage
Banking

 

Financial
Holding
Company

 

Intercompany
Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

19,428

 

 

$

2,484

 

 

$

1

 

 

$

(683)

 

 

$

21,230

 

Interest expense

 

4,395

 

 

1,711

 

 

41

 

 

(782)

 

 

5,365

 

Net interest income (loss)

 

15,033

 

 

773

 

 

(40)

 

 

99

 

 

15,865

 

Provision for loan losses

 

125

 

 

107

 

 

 

 

 

 

232

 

Net interest income (loss) after provision for loan losses

 

14,908

 

 

666

 

 

(40)

 

 

99

 

 

15,633

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

150

 

 

12,964

 

 

 

 

(99)

 

 

13,015

 

Other income

 

3,865

 

 

(1,434)

 

 

1,478

 

 

(2,168)

 

 

1,741

 

Total noninterest income

 

4,015

 

 

11,530

 

 

1,478

 

 

(2,267)

 

 

14,756

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,632

 

 

7,917

 

 

2,174

 

 

 

 

15,723

 

Other expense

 

8,112

 

 

2,127

 

 

1,189

 

 

(2,168)

 

 

9,260

 

Total noninterest expenses

 

13,744

 

 

10,044

 

 

3,363

 

 

(2,168)

 

 

24,983

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

5,179

 

 

2,152

 

 

(1,925)

 

 

 

 

5,406

 

Income tax expense (benefit)

 

1,206

 

 

581

 

 

(476)

 

 

 

 

1,311

 

Net income (loss)

 

$

3,973

 

 

$

1,571

 

 

$

(1,449)

 

 

$

 

 

$

4,095

 

Preferred stock dividends

 

 

 

 

 

115

 

 

 

 

115

 

Net income (loss) available to common shareholders

 

$

3,973

 

 

$

1,571

 

 

$

(1,564)

 

 

$

 

 

$

3,980

 

 

Three Months Ended March 31, 2019

 

Commercial &
Retail Banking

 

Mortgage
Banking

 

Financial
Holding
Company

 

Intercompany
Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

18,327

 

 

$

1,538

 

 

$

1

 

 

$

(243)

 

 

$

19,623

 

Interest expense

 

4,754

 

 

993

 

 

285

 

 

(381)

 

 

5,651

 

Net interest income (loss)

 

13,573

 

 

545

 

 

(284)

 

 

138

 

 

13,972

 

Provision for loan losses

 

247

 

 

53

 

 

 

 

 

 

300

 

Net interest income (loss) after provision for loan losses

 

13,326

 

 

492

 

 

(284)

 

 

138

 

 

13,672

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

109

 

 

6,697

 

 

 

 

(136)

 

 

6,670

 

Other income

 

1,566

 

 

476

 

 

1,779

 

 

(1,726)

 

 

2,095

 

Total noninterest income

 

1,675

 

 

7,173

 

 

1,779

 

 

(1,862)

 

 

8,765

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

4,395

 

 

5,159

 

 

2,180

 

 

 

 

11,734

 

Other expense

 

5,352

 

 

2,025

 

 

1,061

 

 

(1,724)

 

 

6,714

 

Total noninterest expenses

 

9,747

 

 

7,184

 

 

3,241

 

 

(1,724)

 

 

18,448

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

5,254

 

 

481

 

 

(1,746)

 

 

 

 

3,989

 

Income tax expense (benefit)

 

1,054

 

 

146

 

 

(403)

 

 

 

 

797

 

Net income (loss)

 

$

4,200

 

 

$

335

 

 

$

(1,343)

 

 

$

 

 

$

3,192

 

Preferred stock dividends

 

 

 

 

 

121

 

 

 

 

121

 

Net income (loss) available to common shareholders

 

$

4,200

 

 

$

335

 

 

$

(1,464)

 

 

$

 

 

$

3,071

 

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

 

 

Three Months Ended
March 31, 2020

 

Three Months Ended
December 31 2019

 

Three Months Ended
March 31, 2019

 

 

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

 

$

13,643

 

 

$

49

 

 

1.44

%

 

$

10,332

 

 

$

46

 

 

1.77

%

 

$

7,546

 

 

$

49

 

 

2.63

%

CDs with other banks

 

12,549

 

 

62

 

 

1.98

 

 

12,908

 

 

64

 

 

1.97

 

 

14,778

 

 

73

 

 

2.00

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

127,327

 

 

666

 

 

2.10

 

 

134,990

 

 

719

 

 

2.11

 

 

139,692

 

 

879

 

 

2.55

 

Tax-exempt

 

110,188

 

 

877

 

 

3.19

 

 

111,262

 

 

910

 

 

3.24

 

 

92,417

 

 

837

 

 

3.67

 

Loans and loans held for sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial

 

1,089,212

 

 

13,863

 

 

5.11

 

 

1,029,592

 

 

13,830

 

 

5.33

 

 

951,836

 

 

12,594

 

 

5.37

 

Tax exempt

 

11,760

 

 

106

 

 

3.62

 

 

11,709

 

 

106

 

 

3.59

 

 

14,251

 

 

123

 

 

3.50

 

Real estate

 

429,720

 

 

4,953

 

 

4.62

 

 

467,633

 

 

5,425

 

 

4.60

 

 

411,639

 

 

4,941

 

 

4.87

 

Consumer

 

7,473

 

 

123

 

 

6.60

 

 

8,148

 

 

130

 

 

6.33

 

 

9,654

 

 

127

 

 

5.34

 

Total loans

 

1,538,165

 

 

19,045

 

 

4.97

 

 

1,517,082

 

 

19,491

 

 

5.10

 

 

1,387,380

 

 

17,785

 

 

5.20

 

Total earning assets

 

1,801,872

 

 

20,699

 

 

4.61

 

 

1,786,574

 

 

21,230

 

 

4.71

 

 

1,641,813

 

 

19,623

 

 

4.85

 

Less: Allowance for loan losses

 

(11,366)

 

 

 

 

 

 

(11,747)

 

 

 

 

 

 

(11,071)

 

 

 

 

 

Cash and due from banks

 

20,766

 

 

 

 

 

 

20,014

 

 

 

 

 

 

16,088

 

 

 

 

 

Other assets

 

136,744

 

 

 

 

 

 

136,650

 

 

 

 

 

 

112,301

 

 

 

 

 

Total assets

 

$

1,948,016

 

 

 

 

 

 

$

1,931,491

 

 

 

 

 

 

$

1,759,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

407,462

 

 

$

798

 

 

0.79

 

 

$

417,838

 

 

$

1,076

 

 

1.02

 

 

$

357,005

 

 

$

729

 

 

0.83

 

Money market checking

 

432,175

 

 

1,451

 

 

1.35

 

 

366,402

 

 

1,424

 

 

1.54

 

 

297,607

 

 

1,044

 

 

1.42

 

Savings

 

36,867

 

 

1

 

 

0.01

 

 

36,120

 

 

1

 

 

0.01

 

 

40,235

 

 

1

 

 

0.01

 

IRAs

 

16,573

 

 

78

 

 

1.89

 

 

16,786

 

 

81

 

 

1.91

 

 

17,826

 

 

79

 

 

1.80

 

CDs

 

334,810

 

 

1,582

 

 

1.90

 

 

341,270

 

 

1,733

 

 

2.01

 

 

428,610

 

 

2,270

 

 

2.15

 

Repurchase agreements and federal funds sold

 

9,520

 

 

10

 

 

0.42

 

 

9,733

 

 

11

 

 

0.45

 

 

14,206

 

 

14

 

 

0.40

 

FHLB and other borrowings

 

115,930

 

 

573

 

 

1.98

 

 

193,487

 

 

997

 

 

2.04

 

 

175,222

 

 

1,229

 

 

2.84

 

Subordinated debt

 

4,124

 

 

35

 

 

3.40

 

 

4,124

 

 

42

 

 

4.04

 

 

17,524

 

 

285

 

 

6.60

 

Total interest-bearing liabilities

 

1,357,461

 

 

4,528

 

 

1.34

 

 

1,385,760

 

 

5,365

 

 

1.54

 

 

1,348,235

 

 

5,651

 

 

1.70

 

Noninterest bearing demand deposits

 

331,962

 

 

 

 

 

 

296,651

 

 

 

 

 

 

214,541

 

 

 

 

 

Other liabilities

 

43,463

 

 

 

 

 

 

41,244

 

 

 

 

 

 

18,450

 

 

 

 

 

Total liabilities

 

1,732,886

 

 

 

 

 

 

1,723,655

 

 

 

 

 

 

1,581,226

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

7,334

 

 

 

 

 

 

7,334

 

 

 

 

 

 

7,834

 

 

 

 

 

Common stock

 

11,997

 

 

 

 

 

 

11,920

 

 

 

 

 

 

11,659

 

 

 

 

 

Paid-in capital

 

122,663

 

 

 

 

 

 

121,549

 

 

 

 

 

 

116,925

 

 

 

 

 

Treasury stock

 

(1,135)

 

 

 

 

 

 

(1,084)

 

 

 

 

 

 

(1,084)

 

 

 

 

 

Retained earnings

 

74,401

 

 

 

 

 

 

70,570

 

 

 

 

 

 

49,161

 

 

 

 

 

Accumulated other comprehensive loss

 

(130)

 

 

 

 

 

 

(2,453)

 

 

 

 

 

 

(6,590)

 

 

 

 

 

Total stockholders’ equity

 

215,130

 

 

 

 

 

 

207,836

 

 

 

 

 

 

177,905

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

1,948,016

 

 

 

 

 

 

$

1,931,491

 

 

 

 

 

 

$

1,759,131

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread

 

 

 

 

 

3.27

 

 

 

 

 

 

3.17

 

 

 

 

 

 

3.15

 

Net interest income-margin

 

 

 

$

16,171

 

 

3.60

%

 

 

 

$

15,865

 

 

3.52

%

 

 

 

$

13,972

 

 

3.45

%

1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.

Selected Financial Data

(Unaudited) (Dollars in thousands, except per share data)

 

Quarterly

 

 

2020

 

2019

 

2019

 

 

First
Quarter

 

Fourth
Quarter

 

First
Quarter

Earnings and Per Share Data:

 

 

 

 

 

 

Net income

 

$

1,048

 

 

$

4,095

 

 

$

3,192

 

Net income available to common shareholders

 

$

934

 

 

$

3,980

 

 

$

3,071

 

Earnings per share - basic

 

$

0.08

 

 

$

0.34

 

 

$

0.26

 

Earnings per share - diluted

 

$

0.08

 

 

$

0.32

 

 

$

0.26

 

Cash dividends paid per common share

 

$

0.090

 

 

$

0.070

 

 

$

0.035

 

Book value per common share

 

$

17.08

 

 

$

17.13

 

 

$

14.90

 

Tangible book value per common share

 

$

15.16

 

 

$

15.20

 

 

$

13.26

 

Weighted average shares outstanding - basic

 

11,942,767

 

 

11,869,091

 

 

11,607,543

 

Weighted average shares outstanding - diluted

 

12,298,092

 

 

12,334,423

 

 

13,177,281

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

Return on average assets 1

 

0.22

%

 

0.85

%

 

0.73

%

Return on average equity 1

 

1.95

%

 

7.88

%

 

7.18

%

Net interest margin 2

 

3.60

%

 

3.52

%

 

3.45

%

Efficiency ratio 3

 

91.25

%

 

81.59

%

 

81.14

%

Overhead ratio 1 4

 

5.06

%

 

5.17

%

 

4.19

%

Equity to assets

 

10.06

%

 

10.90

%

 

10.11

%

 

 

 

 

 

 

 

Asset Quality Data and Ratios:

 

 

 

 

 

 

Charge-offs

 

$

1,756

 

 

$

332

 

 

$

 

Recoveries

 

$

4

 

 

$

 

 

$

3

 

Net loan charge-offs to total loans 1 5

 

0.50

%

 

0.10

%

 

%

Allowance for loan losses

 

$

11,161

 

 

$

11,775

 

 

$

11,242

 

Allowance for loan losses to total loans 6

 

0.80

%

 

0.86

%

 

0.84

%

Nonperforming loans

 

$

5,909

 

 

$

5,123

 

 

$

7,075

 

Nonperforming loans to total loans

 

0.42

%

 

0.37

%

 

0.53

%

 

 

 

 

 

 

 

Mortgage Data:

 

 

 

 

 

 

Locked pipeline

 

$

494,110

 

 

$

150,960

 

 

$

186,747

 

Sold loan volume

 

$

423,224

 

 

$

499,577

 

 

$

251,563

 

Sold loan refinance volume

 

$

209,817

 

 

$

297,391

 

 

$

81,661

 

1 annualized for the quarterly periods presented

2 net interest income as a percentage of average interest earning assets

3 noninterest expense as a percentage of net interest income and noninterest income

4 noninterest expense as a percentage of average assets

5 charge-offs less recoveries

6 excludes loans held for sale

Non-GAAP Reconciliation: Tangible Book Value per Common Share

(Unaudited) (Dollars in thousands)

 

Quarterly

 

 

2020

 

 

2019

 

 

2019

 

 

 

First
Quarter

 

 

Fourth
Quarter

 

 

First
Quarter

 

Goodwill

 

$

19,630

 

 

$

19,630

 

 

$

18,480

 

Intangibles

 

3,288

 

 

3,473

 

 

527

 

Total intangibles

 

22,918

 

 

23,103

 

 

19,007

 

 

 

 

 

 

 

 

Total equity

 

211,153

 

 

211,936

 

 

180,872

 

Less: Preferred equity

 

(7,334)

 

 

(7,334)

 

 

(7,834)

 

Less: Total intangibles

 

(22,918)

 

 

(23,103)

 

 

(19,007)

 

Tangible common equity

 

180,901

 

 

181,499

 

 

154,031

 

 

 

 

 

 

 

 

Tangible common equity

 

180,901

 

 

181,499

 

 

154,031

 

Common shares outstanding (000s)

 

11,930

 

11,944

 

11,615

Tangible book value per common share

 

$

15.16

 

 

$

15.20

 

 

$

13.26

 

 

Contacts

Amy Baker
VP, Corporate Communications & Marketing
abaker@mvbbanking.com
844-682-2265

Contacts

Amy Baker
VP, Corporate Communications & Marketing
abaker@mvbbanking.com
844-682-2265