MVB Financial Corp. (NASDAQ: MVBF) (“MVB Financial,” “MVB” or
the “Company”), the holding company for MVB Bank, Inc. ("MVB
Bank"), today announced financial results for the first quarter of
2023, with reported net income of $11.3 million, or $0.90 basic and
$0.87 diluted earnings per share.
Notable First Quarter
Developments
- Total deposits increased by 22.6%, or $580.3 million,
from the prior quarter end.
- Liquidity improved. The loan to deposit ratio of 74.9%
at quarter-end versus 92.3% at the prior quarter end; total cash
and cash equivalents of $575.3 million, up from $40.3 million at
the prior quarter end.
- MVB had no outstanding Federal Home Loan Bank or other
liquidity-related borrowings, including from the Federal
Reserve’s discount window or the Bank Term Funding Program.
- Recent net interest income was resilient, despite
actions to increase liquidity taken in response to recent events
impacting the banking industry, net interest income was down 2.2%
from the prior quarter and up 49.8% from the year-ago period.
- MVB has no held to maturity investment securities.
Current tangible book value (“TBV”) and tangible common equity
(“TCE”) fully reflects the impact of unrealized losses.1
- Tangible book value grew 4.5% per share to $21.17 from
the prior quarter end.
- MVB’s foundation remained stable with a bank leverage
ratio of 10.0%.
- MVB’s loan portfolio had limited CRE concentration and
office exposure. CRE loans represent 217% of total risk-based
capital; office CRE loans of $65.1 million represent 2.76% of total
loans and are geographically diverse.
- The gain on the sale of Chartwell Compliance facilitated
repositioning of MVB’s investment portfolio
(previously-announced) for $14.4 million versus the original $4.1
million purchase price, with a portion of the $11.8 million pre-tax
gain being utilized to reposition the investment portfolio.
1 TBV and TCE are non-U.S. GAAP measures. See the reconciliation
of TBV to its most directly comparable U.S. GAAP financial measure
later in this release.
From Larry F. Mazza, Chief Executive Officer, MVB
Financial:
“Despite a perfect storm of events for the banking industry,
MVB’s first quarter results reflected our adaptability, solid
foundation, the strength and stability of our balance sheet and the
resilience of our diversified business model. During the first
quarter, total deposits experienced robust growth, our liquidity
position was further improved, recent momentum driving net interest
income growth was mostly preserved, key capital ratios were
increased and asset quality indicators were stable. We created
value for our shareholders through our continued growth in tangible
book value per share. At the same time, downward pressures on fee
income and elevated provisioning related to our portfolio
composition pressured our core earnings. During the quarter, we
also completed the sale of our Chartwell subsidiary. This
transaction is a great example of MVB’s focus on generating
shareholder value while positioning Chartwell for continued growth
and success. Looking ahead, MVB remains well-positioned to navigate
what we expect will be continued challenging market conditions for
the foreseeable future.”
FIRST QUARTER 2023 HIGHLIGHTS
- Strong deposit growth amidst industry headwinds.
- Total deposits grew 22.6%, or $580.3 million, to $3.15 billion,
primarily due to growth in certificates of deposit (“CDs”) balances
and favorable seasonal considerations in MVB’s gaming and
Banking-as-a-Service (“BaaS”) units.
- Noninterest-bearing (“NIB”) deposits declined 7.9%, or $97.3
million, to $1.13 billion and represented 36% of total deposits, as
compared to 48% of total deposits at the prior quarter-end.
- Total off-balance sheet deposits totaled $1.04 billion, and
included $420.4 million of NIB deposits, as compared to $724.04
million, including $271.7 million of NIB deposits, at the prior
quarter-end.
- Recent net interest income growth momentum mostly
preserved.
- Net interest income (on a fully tax equivalent basis) declined
2.2%, or $0.7 million, to $33.0 million relative to the prior
quarter, primarily due to a decline in net interest margin (on a
fully tax equivalent basis), partially offset by growth in average
earning asset balances. Relative to the prior year-ago period, net
interest income (on a fully tax equivalent basis) increased 49.8%,
led by a higher net interest margin (on a fully tax equivalent
basis) and growth in average earning asset balances, primarily loan
growth.
- Net interest margin (on a fully tax equivalent basis) was
4.40%, down 17 basis points during Q1 2023, primarily reflecting a
higher cost of funds, and a shift in the mix of earning assets as
higher yielding loan balances declined, while lower yielding cash
balances increased. Actions to secure increased liquidity taken in
response to market events of March 2023, including borrowing on the
Company’s FHLB line of credit and increases in CDs of $351.0
million, negatively impacted net interest margin by approximately
56 basis points. Borrowings on the Company’s FHLB line were made
out of an abundance of caution and were repaid shortly
thereafter.
- Average earning asset balances increased 4.0% during Q1 2023,
reflecting materially higher interest-bearing balances with banks,
partially offset by a modest decline in average loans. Average loan
balances declined 2.5%, reflecting deliberate efforts, beginning in
Q4 2022 and continued through Q1 2023, to improve balance sheet
liquidity and increased caution given macroeconomic
conditions.
- Measures of foundational strength remained intact.
- The Community Bank Leverage Ratio, MVB’s Tier 1 Risk-Based
Capital Ratio and the Bank’s Total Risk-Based Capital Ratio were
10.0%, 13.7%, and 14.9%, respectively, improved from 9.8%, 12.4%,
and 13.4%, respectively, at the prior quarter end.
- Tangible book value per share grew 4.54% to $21.17 from $20.25
at the prior quarter end.
- Nonperforming loans totaled $13.1 million, or 0.6% of total
loans, compared to $11.2 million, or 0.5% of total loans at the
prior quarter end. Criticized loans as a percentage of total loans
were 3.6%, as compared to 3.0% at the prior quarter end. Net
charge-offs were $1.7 million, or 0.28% of total loans on an
annualized basis during Q1 2023, compared to $5.4 million.
- Previously-announced sale of Chartwell Compliance completed;
investment portfolio repositioned.
- As previously disclosed on March 1, 2023, MVB completed the
sale of its wholly-owned subsidiary, Chartwell Compliance
("Chartwell”). The sale price of $14.4 million compares to MVB’s
purchase price of $4.1 million when it acquired Chartwell in
September 2019. In connection with the $11.8 million pre-tax gain
from the sale of Chartwell, MVB elected to sell a portion of the
available-for-sale securities to reposition the investment
portfolio, incurring a loss of $1.5 million, which was partially
offset by a gain of $0.5 million as a result of unwinding a related
hedge.
- Higher expenses, pressures on fee income and higher
provision expense weigh on core earnings.
- Noninterest expense increased 5.9%, to $28.3 million from $26.7
million, from the prior quarter, primarily reflecting increased
salaries and employee benefits costs, which were driven by higher
costs related to the annual incentive plan. The Company remains on
track to realize previously announced cost savings associated with
the expense reduction initiative announced in Q3 2022.
- Payment card and service charge income increased $1.9 million
from the prior quarter, somewhat offsetting a $3.1 million decline
in gains related to the partial sale of one of the Company’s
Fintech investments in the fourth quarter of 2022.
- The provision for credit losses totaled $4.6 million compared
to $2.7 million for the prior quarter. The allowance for credit
losses was 1.5% of total loans as of quarter-end, an increase of 50
basis points from the prior quarter-end, reflecting changes in loan
portfolio composition and the implementation of the Current
Expected Credit Loss (“CECL”) allowance methodology as of January
1, 2023. Of note, the allowance attributable to MVB’s consumer
automobile portfolio represented 55 basis points of the total
allowance for credit losses of 1.5% at March 31, 2023, and 21 basis
points of the total allowance for credit losses of 1.0% at December
31, 2022.
INCOME STATEMENT
Net interest income on a tax-equivalent basis totaled $33.0
million for Q1 2023, down $0.7 million, or 2.2%, from Q4 2022 and
up $10.9 million, or 49.4%, from Q1 2022. The decline in net
interest income compared to Q4 2022 reflects net interest margin
contraction, while earning assets and cash increased and average
loans decreased. The increase compared to Q1 2022 generally
reflects strong loan growth at favorable interest rates, primarily
driven by the Company’s strategic lending partnerships growth
vehicle and broad-based growth throughout CoRe Banking business, as
well as the effects of higher interest rates on earning assets,
including investment securities and interest-bearing deposits with
other banks.
Interest income increased $4.1 million, or 10.0%, from Q4 2022
and increased $21.5 million, or 92.4%, from Q1 2022. The
tax-equivalent yield on loans was 6.59% for Q1 2023, compared to
6.10% for Q4 2022 and 4.71% for Q1 2022. Higher loan yields
generally reflect the cumulative impact of robust loan growth
booked at higher yields than the prevailing portfolio yield in
recent prior quarters and the beneficial impact of Fed rate
increases.
Interest expense increased $4.8 million, or 65.9%, from Q4 2022
and increased $10.6 million, or 751.1%, from Q1 2022. The cost of
funds was 161 basis points for Q1 2023, up 61 basis point compared
to Q4 2022 and up 140 basis points compared to Q1 2022. The
increase from the prior quarter primarily reflected the impact of
liquidity actions taken in March 2023 in response to market
conditions and the impact of higher interest rates. These liquidity
actions had a 42 basis point impact on the cost of funds for Q1
2023. The increase in cost of funds compared to the prior year
period also reflected higher interest rates, increased FHLB
borrowings and the senior term loan, which was entered into during
October 2022.
On a tax-equivalent basis, net interest margin for Q1 2023 was
4.40%, a decrease of 17 basis points versus Q4 2022 and an increase
of 122 basis points versus Q1 2022. Please see the table below for
a reconciliation between net interest margin and net interest
margin on a fully tax-equivalent basis, a non-GAAP measure. The
decrease in net interest margin from Q4 2022 primarily reflected an
increase in cost of funds and a shift in the mix of earning assets
(higher yielding loan balances declined while lower yielding cash
balances increased), partially offset by higher loan yields. The
increase in net interest margin from Q1 2022 reflected strong loan
growth and the impact of higher loan yields due to interest rate
increases, partially offset by an increase in cost of funds.
Noninterest income from continuing operations totaled $3.1
million for Q1 2023, a decrease of $0.4 million, or 10.7% from Q4
2022 and a decrease of $6.2 million, or 67.0%, from Q1 2022. The
decline compared to the prior quarter is primarily driven by a $3.6
million decrease in gain on sale of assets and a $1.5 million loss
on sale of available-for-sale investment securities, partially
offset by increases in payment card and service charge income of
$1.9 million, gain on sale of loans of $1.8 million, and holding
gain on equity securities of $1.1 million. The decrease in gain on
sale of assets was due to $2.0 million gain recognized in the prior
quarter due to the partial sale of one of the Company’s Fintech
investments in fourth quarter 2022. In connection with the gain
from the sale of Chartwell, management elected to sell a portion of
the available-for-sale securities to reposition the investment
portfolio. In connection with the sale, MVB incurred losses on the
sale of available-for-sale securities of $1.5 million. A portion of
the securities sold had an offset hedge, which was also sold for a
gain of $0.5 million and was recorded in interest income. The $6.2
million decrease in noninterest income from Q1 2022 was primarily
driven by decreases of $2.3 million in equity method investment
income, $2.2 million in gain on sale of available-for-sale
investment securities and $1.8 million in equity method holding
gains.
In February 2023, the Company completed the sale of the Bank’s
wholly owned subsidiary, Chartwell Compliance, for total
consideration of $14.4 million. The results of Chartwell operations
are included in discontinued operations on the consolidated
statements of income. Net income from discontinued operations
totaled $8.8 million for Q1 2023, which included a gain on sale of
$11.8 million. Net loss from discontinued operations was $0.7
million and $0.8 million for the quarters ended December 31, 2022
and March 31, 2022, respectively.
Noninterest expense totaled $28.3 million for Q1 2023, an
increase of $1.6 million, or 5.9%, from Q4 2022 and an increase of
$1.1 million, or 3.9%, from Q1 2022. The increases from the
quarters ended December 31, 2022, and March 31, 2022 primarily
reflect higher salaries and employee benefits costs of $2.4
million, or 17.0% and $1.0 million, or 6.5%, respectively. The
increases from the prior periods reflect costs associated with the
annual incentive plan. Higher expenses relative to Q4 2022 also
reflect severance-related costs associated with the sale of
Chartwell.
BALANCE SHEET
Loans totaled $2.36 billion at March 31, 2023, a decrease of
$11.5 million, or 0.5%, and an increase of $463.3 million, or
24.4%, as compared to December 31, 2022, and March 31, 2022,
respectively. The decrease in loan balances compared to the prior
quarter primarily reflects efforts to improve balance sheet
liquidity and overall balance sheet management as the Company
contemplates future market uncertainty. Loan growth compared to the
year-ago period was driven primarily by the Company’s strategic
lending partnerships growth vehicle. Loans held-for-sale were $19.9
million as of March 31, 2023, compared to $23.1 million at December
31, 2022, and $9.2 million at March 31, 2022, led by MVB Bank’s
government guaranteed lending growth vehicle.
Deposits totaled $3.15 billion as of March 31, 2023, an increase
of $580.3 million, or 22.6%, from December 31, 2022, and $641.7
million, or 25.6%, from March 31, 2022. NIB deposits totaled $1.13
billion as of March 31, 2023, a decrease of $97.3 million, or 7.9%,
from December 31, 2022, and $174.7 million, or 13.3%, from March
31, 2022. The decrease in NIB deposits is primarily due to the
Company’s utilization of off-balance sheet deposit networks to
generate fee income, enhance capital and manage liquidity and
concentration risk. Growth in total deposits compared to December
31, 2022, primarily reflects an increase in CDs and BaaS accounts,
while the growth in deposits compared to March 31, 2022 primarily
reflects an increase in CDs.
CAPITAL
The Community Bank Leverage Ratio was 10.0% as of March 31,
2023, compared to 9.8% as of December 31, 2022 and 10.8% as of
March 31, 2022.
The Company issued a quarterly cash dividend of $0.17 per share
for Q1 2023, consistent with Q4 2022 and Q1 2022.
ASSET QUALITY
Nonperforming loans totaled $13.1 million, or 0.6% of total
loans, as of March 31, 2023, as compared to $11.2 million, or 0.5%
of total loans, as of December 31, 2022, and $18.0 million, or 1.0%
of total loans, as of March 31, 2022. Criticized loans as a
percentage of total loans were 3.6%, as compared to 3.0% as of
December 31, 2022, and 5.2% as of March 31, 2022.
Net charge-offs were $1.7 million for Q1 2023, compared to $5.4
million for the prior quarter. Net charge-offs for Q1 2022 were
$0.7 million, or 0.16% of total loans.
Changes to the outstanding balances of the loan portfolios and
the implementation of the allowance methodology as of January 1,
2023, contributed to the increase in the allowance for credit
losses. Adoption of the CECL allowance methodology resulted in a
$10.0 million increase in the allowance for credit losses,
comprised of increases in the allowance for credit losses for loans
of $8.9 million and the allowance for credit losses for unfunded
commitments of $1.1 million, with $1.2 million of the increase
reclassified from the amortized cost basis of purchase credit
deteriorated financial assets. This increase was offset by a $2.1
million tax effect, resulting in a cumulative adjustment to
retained earnings of $6.6 million.
The provision for credit losses totaled $4.6 million for Q1
2023, compared to $2.7 million for Q4 2022, and $1.3 million for Q1
2022. Allowance for credit losses to total loans was 1.50% as of
March 31, 2023, as compared to 1.00% as of December 31, 2022, and
0.99% as of March 31, 2022. The largest portion of the allowance
for credit losses is attributable to the consumer automobile
portfolio, which accounts for 0.55% of the total allowance of 1.50%
as of March 31, 2023.
About MVB Financial Corp.
MVB Financial, the holding company of MVB Bank, is publicly
traded on The Nasdaq Capital Market® (“Nasdaq”) under the ticker
“MVBF.”
MVB is a financial holding company headquartered in Fairmont,
West Virginia. Through its subsidiary, MVB Bank, and MVB Bank’s
subsidiaries, MVB Financial provides financial services to
individuals and corporate clients in the Mid-Atlantic region and
beyond.
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 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 press release that are intended to be covered by the
protections provided under the Private Securities Litigation Reform
Act of 1995. These forward-looking statements are based on current
expectations about the future and are 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.
Forward-looking statements can be identified by the use of words
such as “may,” “could,” “should,” “would,” “will,” “plans,”
“believes,” “estimates,” “expects,” “anticipates,” “intends,”
“continues” or the negative of those terms or similar expressions.
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 forward-looking statements. Therefore,
undue reliance should not be placed upon any forward-looking
statements. Those factors include but are not limited to: market,
economic, operational, liquidity and credit risk; changes in market
interest rates; inability to achieve anticipated synergies and
successfully integrate recent mergers and acquisitions; inability
to successfully execute business plans, including strategies
related to investments in Fintech companies; competition; the pace
of recovery following the continued effects of the COVID-19
pandemic and its impact on the Company’s business and financial
condition; changes in economic, business and political conditions;
changes in demand for loan products and deposit flow; operational
risks and risk management failures; 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, 2022, as well as its other filings
with the Securities and Exchange Commission (“SEC”), which are
available on the SEC’s website at www.sec.gov. Except as required
by law, the Company disclaims any obligation to update, revise or
correct 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 SEC. Accordingly, the consolidated
financial information in this announcement is subject to
change.
Non-U.S. GAAP Financial Measures
This document contains supplemental financial information
determined by methods other than in accordance with accounting
principles generally accepted in the United States of America
(“U.S. GAAP”). Management uses these non-U.S. GAAP measures in its
analysis of the Company’s performance. These measures should not be
considered a substitute for U.S. GAAP basis measures nor should
they be viewed as a substitute for operating results determined in
accordance with U.S. GAAP. Management believes the presentation of
non-U.S. GAAP financial measures that exclude the impact of
specified items provide useful supplemental information that is
essential to a proper understanding of the Company’s financial
condition and results. Non-U.S. GAAP measures are not formally
defined under U.S. GAAP, and other entities may use calculation
methods that differ from those used by us. As a complement to U.S.
GAAP financial measures, our management believes these non-U.S.
GAAP financial measures assist investors in comparing the financial
condition and results of operations of financial institutions due
to the industry prevalence of such non-U.S. GAAP measures. See the
tables below for a reconciliation of these non-U.S. GAAP measures
to the most directly comparable U.S. GAAP financial measures.
MVB Financial Corp.
Financial Highlights
Consolidated Statements of
Income
(Unaudited) (Dollars in
thousands, except per share data)
Quarterly
2023
2022
2022
First Quarter
Fourth Quarter
First Quarter
Interest income
$
44,763
$
40,702
$
23,262
Interest expense
12,034
7,253
1,414
Net interest income
32,729
33,449
21,848
Provision for credit losses
4,576
2,694
1,280
Net interest income after provision for
credit losses
28,153
30,755
20,568
Total noninterest income
3,067
3,435
9,280
Noninterest expense:
Salaries and employee benefits
16,746
14,317
15,727
Other expense
11,571
12,424
11,531
Total noninterest expenses
28,317
26,741
27,258
Income before income taxes
2,903
7,449
2,590
Income taxes
465
1,731
680
Net income from continuing operations
before noncontrolling interest
2,438
5,718
1,910
Income (loss) from discontinued
operations, before income taxes
11,831
888
986
Income taxes - discontinued operations
3,049
236
225
Net income (loss) from discontinued
operations
8,782
652
761
Net loss attributable to noncontrolling
interest
122
139
193
Net income available to common
shareholders
$
11,342
$
6,509
$
2,864
Earnings per share from continuing
operations - basic
$
0.20
$
0.46
$
0.17
Earnings (loss) per share from
discontinued operations - basic
$
0.70
$
0.05
$
0.73
Earnings per share - basic
$
0.90
$
0.52
$
0.90
Earnings per share from continuing
operations - diluted
$
0.20
$
0.45
$
0.16
Earnings (loss) per share from
discontinued operations - diluted
$
0.67
$
0.05
$
0.68
Earnings per share - diluted
$
0.87
$
0.50
$
0.84
Noninterest Income
(Unaudited) (Dollars in
thousands)
Quarterly
2023
2022
2022
First Quarter
Fourth Quarter
First Quarter
Card acquiring income
$
622
$
497
$
983
Service charges on deposits
1,126
684
872
Interchange income
1,862
497
787
Total payment card and service charge
income
3,610
1,678
2,642
Equity method investments income
(loss)
(1,193
)
(1,379
)
1,138
Compliance and consulting income
1,016
1,217
1,234
Gain (loss) on sale of loans
(356
)
(2,131
)
1,083
Investment portfolio gains (losses)
(1,844
)
(1,397
)
2,394
Other noninterest income
1,834
5,447
789
Total noninterest income
$
3,067
$
3,435
$
9,280
Condensed Consolidated Balance
Sheets
(Unaudited) (Dollars in
thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Cash and cash equivalents
$
575,265
$
40,280
$
353,972
Certificates of deposit with banks
—
—
2,229
Securities available-for-sale, at fair
value
339,578
379,814
395,301
Equity securities
38,576
38,744
34,447
Loans held-for-sale
19,893
23,126
9,161
Loans receivable
2,361,153
2,372,645
1,897,853
Less: Allowance for credit losses
(35,513
)
(23,837
)
(18,808
)
Loans receivable, net
2,325,640
2,348,808
1,879,045
Premises and equipment, net
22,869
23,630
25,313
Assets from discontinued operations
—
4,315
4,345
Goodwill
2,838
2,838
2,838
Other assets
227,217
207,295
186,813
Total assets
$
3,551,876
$
3,068,850
$
2,893,464
Noninterest-bearing deposits
$
1,134,257
$
1,231,544
$
1,308,998
Interest-bearing deposits
2,016,558
1,338,938
1,200,081
FHLB and other borrowings
—
102,333
—
Senior term loan
9,647
9,765
—
Subordinated debt
73,350
73,286
73,094
Liabilities from discontinued
operations
—
5,444
4,053
Other liabilities
46,748
61,358
47,429
Stockholders' equity, including
noncontrolling interest
271,316
261,391
263,862
Total liabilities and stockholders'
equity
$
3,551,876
$
3,068,850
$
2,893,464
Reportable Segments
(Unaudited)
Three Months Ended March 31,
2023
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
44,662
$
105
$
33
$
(6
)
$
(31
)
$
44,763
Interest expense
11,041
—
993
31
(31
)
12,034
Net interest income (expense)
33,621
105
(960
)
(37
)
—
32,729
Provision for credit losses
4,576
—
—
—
—
4,576
Net interest income (expense) after
provision for credit losses
29,045
105
(960
)
(37
)
—
28,153
Noninterest income
3,018
(1,186
)
2,410
1,784
(2,959
)
3,067
Noninterest Expenses:
Salaries and employee benefits
9,051
—
4,950
2,745
—
16,746
Other expenses
11,054
34
1,917
1,525
(2,959
)
11,571
Total noninterest expenses
20,105
34
6,867
4,270
(2,959
)
28,317
Income (loss) before income taxes
11,958
(1,115
)
(5,417
)
(2,523
)
—
2,903
Income taxes
2,515
(504
)
(942
)
(604
)
—
465
Net income (loss) from continuing
operations
9,443
(1,617
)
(3,469
)
(1,919
)
—
2,438
Income from discontinued operations,
before income taxes
—
—
—
11,831
—
11,831
Income taxes - discontinued operations
—
—
—
3,049
—
3,049
Net income (loss) from discontinued
operations
—
—
—
8,782
—
8,782
Net income (loss)
9,443
(611
)
(4,475
)
6,863
—
11,220
Net loss attributable to noncontrolling
interest
—
—
—
122
—
122
Net income (loss) available to common
shareholders
$
9,443
$
(611
)
$
(4,475
)
$
6,985
$
—
$
11,342
Three Months Ended March 31,
2022
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
23,171
$
103
$
(7
)
$
—
$
(5
)
$
23,262
Interest expense
659
—
753
7
(5
)
1,414
Net interest income (expense)
22,512
103
(760
)
(7
)
—
21,848
Release of allowance for credit losses
1,280
—
—
—
—
1,280
Net interest income (expense) after
release of allowance for credit losses
21,232
103
(760
)
(7
)
—
20,568
Noninterest income
6,898
1,223
2,671
1,537
(3,049
)
9,280
Noninterest Expenses:
Salaries and employee benefits
9,508
—
4,056
2,163
—
15,727
Other expenses
11,048
—
2,205
1,327
(3,049
)
11,531
Total noninterest expenses
20,556
—
6,261
3,490
(3,049
)
27,258
Income (loss) before income taxes
7,574
1,326
(4,350
)
(1,960
)
—
2,590
Income taxes
1,631
341
(869
)
(423
)
—
680
Net income (loss) from continuing
operations
5,943
985
(3,481
)
(1,537
)
—
1,910
Income from discontinued operations,
before income taxes
—
—
—
986
—
986
Income tax expense - discontinued
operations
—
—
—
225
—
225
Net income (loss) from discontinued
operations
—
—
—
761
—
761
Net income (loss)
5,943
985
(3,481
)
(776
)
—
2,671
Net loss attributable to noncontrolling
interest
—
—
—
193
—
193
Net income (loss) available to common
shareholders
$
5,943
$
985
$
(3,481
)
$
(583
)
$
—
$
2,864
Three Months Ended December
31, 2022
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
40,568
$
120
$
33
$
—
$
(19
)
$
40,702
Interest expense
6,303
—
950
19
(19
)
7,253
Net interest income (expense)
34,265
120
(917
)
(19
)
—
33,449
Provision for credit losses
2,694
—
—
—
—
2,694
Net interest income (expense) after
provision for credit losses
31,571
120
(917
)
(19
)
—
30,755
Noninterest income
3,326
(1,156
)
2,311
1,629
(2,676
)
3,434
Noninterest Expenses:
Salaries and employee benefits
8,150
—
3,813
2,370
—
14,333
Other expenses
11,389
23
1,787
1,900
(2,676
)
12,423
Total noninterest expenses
19,539
23
5,600
4,270
(2,676
)
26,756
Income (loss) before income taxes
15,358
(1,059
)
(4,206
)
(2,660
)
—
7,433
Income taxes
3,663
(279
)
(948
)
(705
)
—
1,731
Net income (loss) from continuing
operations
11,695
(780
)
(3,258
)
(1,955
)
—
4,415
Income from discontinued operations,
before income taxes
—
—
—
904
—
904
Income tax expense - discontinued
operations
—
—
—
236
—
236
Net income (loss) from discontinued
operations
—
—
—
668
—
668
Net income (loss)
11,695
(780
)
(3,258
)
(1,287
)
—
6,370
Net loss attributable to noncontrolling
interest
—
—
—
139
—
139
Net income (loss) available to common
shareholders
$
11,695
$
(780
)
$
(3,258
)
$
(1,148
)
$
—
$
6,509
Average Balances and Interest
Rates
(Unaudited) (Dollars in
thousands)
Three Months Ended
Three Months Ended
Three Months Ended
March 31, 2023
December 31, 2022
March 31, 2022
Average Balance
Interest Income/
Expense
Yield/ Cost
Average Balance
Interest Income/
Expense
Yield/ Cost
Average Balance
Interest Income/
Expense
Yield/ Cost
Assets
Interest-bearing balances with banks
$
285,102
$
3,153
4.49
%
$
113,500
$
982
3.43
%
$
595,574
$
214
0.15
%
CDs with banks
—
—
—
—
—
—
2,352
13
2.24
Investment securities:
Taxable
236,574
1,848
3.17
233,839
1,114
1.89
241,974
648
1.09
Tax-exempt 2
137,799
1,308
3.85
136,313
1,343
3.91
128,588
1,137
3.59
Loans and loans held-for-sale: 1
Commercial 3
1,620,509
28,538
7.14
1,667,981
27,947
6.65
1,453,262
16,979
4.74
Tax-exempt 2
3,944
43
4.42
4,161
47
4.48
5,066
52
4.16
Real estate
621,388
6,295
4.11
631,450
6,000
3.77
338,826
2,340
2.80
Consumer
137,547
3,862
11.39
139,705
3,563
10.12
54,623
2,128
15.80
Total loans
2,383,388
38,738
6.59
2,443,297
37,557
6.10
1,851,777
21,499
4.71
Total earning assets
3,042,863
45,047
6.00
2,926,949
40,996
5.56
2,820,265
23,511
3.38
Less: Allowance for credit losses
(30,135
)
(27,530
)
(18,343
)
Cash and due from banks
243
5,643
6,067
Other assets
339,676
266,292
248,803
Total assets
$
3,352,647
$
3,171,354
$
3,056,792
Liabilities
Deposits:
NOW
$
796,901
$
4,661
2.37
%
$
791,227
$
2,880
1.44
%
$
785,108
$
193
0.10
%
Money market checking
209,227
928
1.80
219,334
643
1.16
466,287
202
0.18
Savings
93,297
641
2.79
77,416
263
1.35
50,041
1
0.01
IRAs
6,151
27
1.78
6,053
20
1.31
6,370
17
1.08
CDs
386,144
3,896
4.09
314,723
2,380
3.00
87,237
243
1.13
Repurchase agreements and federal funds
sold
7,612
1
0.05
9,958
1
0.04
11,823
5
0.17
FHLB and other borrowings
71,166
888
5.06
11,128
115
4.10
—
—
—
Senior term loan
9,765
194
8.06
9,235
163
7.00
—
—
—
Subordinated debt
73,318
798
4.41
73,254
787
4.26
73,062
753
4.18
Total interest-bearing liabilities
1,653,581
12,034
2.95
1,512,328
7,252
1.90
1,479,928
1,414
0.39
Noninterest-bearing demand deposits
1,380,516
1,377,880
1,260,965
Other liabilities
37,087
40,264
46,318
Total liabilities
3,071,184
2,930,472
2,787,211
Stockholders’ equity
Common stock
13,471
13,452
13,458
Paid-in capital
153,389
156,111
143,795
Treasury stock
(16,741
)
(16,741
)
(16,741
)
Retained earnings
166,426
129,853
137,633
Accumulated other comprehensive income
(loss)
(35,345
)
(41,793
)
(9,466
)
Total stockholders’ equity attributable to
parent
281,200
240,882
268,679
Noncontrolling interest
263
399
902
Total stockholders’ equity
281,463
240,483
269,581
Total liabilities and stockholders’
equity
$
3,352,647
$
3,171,354
$
3,056,792
Net interest spread (tax-equivalent)
3.05
%
3.66
%
2.99
%
Net interest income and margin
(tax-equivalent)2
$
33,013
4.40
%
$
33,744
4.57
%
$
22,097
3.18
%
Less: Tax-equivalent adjustments
$
(284
)
$
(295
)
$
(249
)
Net interest spread
3.02
%
3.62
%
2.96
%
Net interest income and margin
$
32,729
4.36
%
$
33,449
4.53
%
$
21,848
3.14
%
1 Non-accrual loans are included in total
loan balances, lowering the effective yield for the portfolio in
the aggregate.
2 In order to make pre-tax income and
resultant yields on tax-exempt loans and investment securities
comparable to those on taxable loans and investment securities, a
tax-equivalent adjustment has been computed using a Federal tax
rate of 21% for the periods presented, which is a non-GAAP
financial measure. See the reconciliation of this non-GAAP
financial measure to its most directly comparable GAAP financial
measure following this table.
3 MVB Bank’s PPP loans totaling $4.9
million, $13.6 million and $41.7 million are included in this
amount as of March 31, 2023, December 31, 2022 and March 31, 2022,
respectively.
Non-GAAP Reconciliation: Net
Interest Margin on a Full Tax-Equivalent Basis
The following table reconciles, for the
periods shown below, net interest margin on a fully tax-equivalent
basis:
Three Months Ended
(Dollars in thousands)
March 31, 2023
December 31, 2022
March 31, 2022
Net interest margin - U.S. GAAP
basis
Net interest income
$
32,729
$
33,449
$
21,848
Average interest-earning assets
$
3,042,863
$
2,926,949
$
2,820,265
Net interest margin
4.36
%
4.53
%
3.14
%
Net interest margin - non-U.S. GAAP
basis
Net interest income
$
32,729
$
33,449
$
21,848
Impact of fully tax-equivalent
adjustment
284
295
249
Net interest income on a fully
tax-equivalent basis
$
33,013
$
33,744
$
22,097
Average interest-earning assets
$
3,042,863
$
2,926,949
$
2,820,265
Net interest margin on a fully
tax-equivalent basis
4.40
%
4.57
%
3.18
%
Selected Financial
Data
(Unaudited) (Dollars in
thousands, except per share data)
Quarterly
2023
2022
2022
First Quarter
Fourth Quarter
First Quarter
Earnings and Per Share Data:
Net income
$
11,342
$
6,509
$
2,864
Earnings per share from continuing
operations - basic
$
0.20
$
0.46
$
0.17
Earnings per share from discontinued
operations - basic
$
0.70
$
0.05
$
0.73
Earnings per share - basic
$
0.90
$
0.52
$
0.90
Earnings per share from continuing
operations - diluted
$
0.20
$
0.45
$
0.16
Earnings per share from discontinued
operations - diluted
$
0.67
$
0.05
$
0.68
Earnings per share - diluted
$
0.87
$
0.50
$
0.84
Cash dividends paid per common share
$
0.17
$
0.17
$
0.17
Book value per common share
$
21.43
$
20.69
$
21.66
Tangible book value per common share 1
$
21.17
$
20.25
$
21.16
Weighted-average shares outstanding -
basic
12,623,361
12,604,193
12,093,179
Weighted-average shares outstanding -
diluted
13,016,082
13,012,460
12,927,811
Performance Ratios:
Return on average assets 2
1.4
%
0.8
%
0.4
%
Return on average equity 2
16.1
%
10.8
%
4.2
%
Net interest margin 3 4
4.40
%
4.57
%
3.18
%
Efficiency ratio 5 10
61.4
%
72.3
%
85.6
%
Overhead ratio 2 6
3.4
%
3.6
%
3.8
%
Equity to assets
7.6
%
8.5
%
9.1
%
Asset Quality Data and Ratios:
Charge-offs
$
4,847
$
7,878
$
1,124
Recoveries
$
3,169
$
2,507
$
386
Net loan charge-offs to total loans 2
7
0.3
%
0.9
%
0.2
%
Allowance for credit losses
$
35,513
$
23,837
$
18,808
Allowance for credit losses to total loans
8
1.50
%
1.00
%
1.0
%
Nonperforming loans
$
13,085
$
11,165
$
18,048
Nonperforming loans to total loans
0.6
%
0.5
%
1.0
%
Intercoastal Mortgage Company, LLC
Production Data9:
Mortgage pipeline
$
714,258
$
678,345
$
1,092,006
Loans originated
$
232,660
$
407,070
$
1,130,698
Loans closed
$
385,011
$
388,417
$
780,842
Loans sold
$
302,782
$
326,003
$
688,094
1 Common equity less total goodwill and
intangibles per common share, a non-U.S. GAAP measure. See the
reconciliation of this non-GAAP financial measure to its most
directly comparable GAAP financial measure following this
table.
2 Annualized for the quarterly periods
presented.
3 Net interest income as a percentage of
average interest-earning assets.
4 Presented on a fully tax-equivalent
basis.
5 Noninterest expense as a percentage of
net interest income and noninterest income, a non-U.S. GAAP
measure. See the reconciliation of this non-GAAP financial measure
to its most directly comparable GAAP financial measure following
this table.
6 Noninterest expense as a percentage of
average assets, a non-U.S. GAAP measure. See the reconciliation of
this non-GAAP financial measure to its most directly comparable
GAAP financial measure following this table.
7 Charge-offs less recoveries.
8 Excludes loans held-for-sale.
9 Information is related to ICM, an entity
in which we have a 40% ownership interest that we account for as an
equity method investment.
10 Includes net income from discontinued
operations
Non-U.S. GAAP Reconciliation:
Tangible Book Value per Common Share
(Unaudited) (Dollars in
thousands, except per share data)
March 31, 2023
December 31, 2022
March 31, 2022
Goodwill
$
2,838
$
3,988
$
3,988
Intangibles
420
1,631
2,155
Total intangibles
3,258
5,619
6,143
Total equity attributable to parent
271,131
261,084
263,080
Less: Total intangibles
(3,258
)
(5,619
)
(6,143
)
Tangible common equity
$
267,873
$
255,465
$
256,937
Tangible common equity
$
267,873
$
255,465
$
256,937
Common shares outstanding (000s)
12,653
12,618
12,143
Tangible book value per common share
$
21.17
$
20.25
$
21.16
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230427005958/en/
Questions or comments concerning this Earnings Release should be
directed to: MVB Financial Corp. Donald T. Robinson,
President and Chief Financial Officer (304) 598-3500
drobinson@mvbbanking.com Amy Baker, VP, Corporate Communications
and Marketing (844) 682-2265 abaker@mvbbanking.com
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