Strong First Quarter Growth in Loans, Deposits and Investments in Technology is Distancing MVB from the Pack | Financial Buzz

Strong First Quarter Growth in Loans, Deposits and Investments in Technology is Distancing MVB from the Pack

MVB Financial Corp. (NASDAQ: MVBF) (“MVB Financial,” “MVB,” or the “Company”) today reported net income of $8.1 million, or $0.70 basic and $0.66 diluted earnings per share for the three months ended March 31, 2021.

 

 

Quarterly

 

 

2021

 

2020

 

2019

 

 

First Quarter

 

Fourth Quarter

 

First Quarter

Net income

 

$

8,085

 

 

$

11,838

 

 

$

1,048

 

Earnings per share – basic

 

$

0.70

 

 

$

1.00

 

 

$

0.08

 

Earnings per share – diluted

 

$

0.66

 

 

$

0.97

 

 

$

0.08

 

FIRST QUARTER 2021 HIGHLIGHTS

  • Deposits: Noninterest-bearing (“NIB”) deposits were $837.2 million as of March 31, 2021, an increase of $121.4 million, or 17.0%, from December 31, 2020, and an increase of $449.7 million, or 116.0%, from March 31, 2020. NIB deposits as a percentage of total deposits were 37.8% as of March 31, 2021, compared to 36.1% as of December 31, 2020 and 24.2% as of March 31, 2020.
  • Tangible Book Value (“TBV”) per Share: TBV per share, a non-U.S. GAAP measure, was $19.98 as of March 31, 2021 an increase of $0.26, or 1.3%, from December 31, 2020, and an increase of $4.82, or 31.8%, from March 31, 2020. A reconciliation of TBV to its most comparable U.S. GAAP measure is included below.
  • Asset Quality: Nonperforming assets, including nonperforming loans and other real estate owned, were $16.8 million, or 0.6% of total assets, compared to $19.4 million, or 0.8%, at December 31, 2020, and $7.1 million, or 0.3%, at March 31, 2020.
  • Capital: MVB Bank, Inc. (“MVB Bank” or the “Bank”) finished the first quarter with strong capital ratios. As of March 31, 2021, the Bank’s Community Bank Leverage Ratio was 11.3%. The Company’s tangible common equity to tangible assets was 8.8% as of March 31, 2021.
  • Fee Income: Payment card and service charge income was $1.5 million for the quarter ended March 31, 2021, an increase of $0.4 million, or 35.1%, compared to the quarter ended December 31, 2020, and an increase of $0.9 million, or 171.5%, compared to the quarter ended March 31, 2020.
  • Transactions: In January, the Company acquired a majority interest in Flexia Payments, LLC (“Flexia”), a prepaid card platform for land-based casinos to facilitate the move to a totally cashless casino floor. This acquisition continues to advance the Company’s relationships within the gaming industry. In April, the Company also acquired a majority interest in Trabian Technology, Inc. (“Trabian”), a leading software development firm servicing financial institutions and financial technology (“Fintech”) companies.

FINTECH HIGHLIGHTS

  • Fintech deposits totaled $744.6 million as of March 31, 2021, an increase of $211.6 million, or 39.7%, from December 31, 2020 and an increase of $557.8 million, or 298.6%, from March 31, 2020.
  • Gaming deposits, which are included in total Fintech deposits, totaled $578.7 million as of March 31, 2021, an increase of $220.8 million, or 61.7%, from December 31, 2020 and an increase of $467.5 million, or 420.5%, from March 31, 2020.
  • With the Company’s expanding Banking as a Service (“BaaS”) platform, MVB became the 21st largest bank in the United States based on the number of customer accounts.

MANAGEMENT OVERVIEW

Team MVB came out strong in 2021 with net income of $8.1 million for the first quarter and generating notable growth in loans and deposits that are expected to drive profitability now and in the future. Loans, excluding PPP loans, grew $132.1 million, or 9.6%, since December 31, 2020 and $107.2 million since March 31, 2020. The Company continues to recognize vast improvements in its deposit mix by replacing high cost deposits with NIB deposits, which has pushed NIB deposits as a percentage of total deposits to 37.8% as of March 31, 2021. Income related to MVB’s equity method investment in Intercoastal Mortgage Company (“ICM”) generated pre-tax earnings of $6.5 million for the quarter ended March 31, 2021, which allowed significant investments in technology. These investments, including the acquisition of Grand in August 2020, Flexia in January 2021 and Trabian in April 2021, will drive and diversify the Company’s future earnings potential, along with the Company’s existing consulting subsidiaries, Chartwell Compliance and Paladin Fraud.

“Building on momentum from the end of 2020, MVB’s first quarter growth in loans and deposits sets us apart from the pack,” said Larry F. Mazza, President, CEO, MVB Financial. “Significant investments in technology including our transactions involving Flexia and Trabian enhance our ability to scale our Gaming, Banking as a Service, Payments and Digital Asset sectors as part of our expanding Fintech vertical. These investments create new revenue streams for MVB and add technological expertise that will benefit MVB and all of our stakeholders.”

LOANS

Loans, excluding PPP loans of $190.6 million, totaled $1.50 billion as of March 31, 2021, an increase of $132.1 million, or 9.6%, from December 31, 2020 and an increase of $107.2 million, or 7.7%, from March 31, 2020. In the fourth quarter of 2020, the Company expanded its lending platform into Small Business Administration (“SBA”) 7(a) loans with the addition of three lenders. The increase in loans was driven by increased commercial lending production, including the onboarding and uptick of the SBA lending team. During the quarter ended March 31, 2021, the SBA team originated ten 7(a) loans totaling $9.7 million. Of these loans, three loans totaling $2.8 million were sold for a gain on sale of $0.4 million. The Company expects the SBA team to ramp up production to approximately $100 million in the team’s first full year.

The tax-equivalent yield on loans, including PPP loans, was 4.4% for the quarter ended March 31, 2021, a decrease of 33 basis points from the quarter ended December 31, 2020 and a decrease of 59 basis points from the quarter ended March 31, 2020. These decreases were primarily the result of a decrease in the yield on commercial loans.

DEPOSITS

Deposits totaled $2.22 billion as of March 31, 2021, an increase of $234.2 million, or 11.8%, from December 31, 2020 and an increase of $618.3 million, or 38.7%, from March 31, 2020. NIB deposits totaled $837.2 million as of March 31, 2021, an increase of $121.4 million, or 17.0%, from December 31, 2020 and an increase of $449.7 million, or 116.0%, from March 31, 2020.

NET INTEREST INCOME

Net interest income for the quarter ended March 31, 2021 was $17.5 million, a decrease of $0.2 million, or 1.0%, from the quarter ended December 31, 2020 and an increase of $1.3 million, or 8.2%, from the quarter ended March 31, 2020. Net interest margin, on a fully tax-equivalent basis, for the quarter ended March 31, 2021 was 3.26%, a decrease of 18 basis points versus the quarter ended December 31, 2020 and a decrease of 40 basis points versus the quarter ended March 31, 2020. Net interest margin was primarily impacted by excess liquidity and PPP loans. For the quarter ended March 31, 2021, the excess liquidity from increased cash balances accounted for 35 basis points of the decrease and the PPP loans accounted for 10 basis points of the decrease. The tax-equivalent adjustments are added to net interest income and were $0.4 million for the quarter ended March 31, 2021, $0.4 million for the quarter ended December 31, 2020 and $0.3 million for the quarter ended March 31, 2020. Excluding the impact from the April 2020 acquisition of The First State Bank (“First State”), the fully-tax equivalent net interest margin for the quarter ended March 31, 2021 would have decreased six basis points.

Interest income decreased $0.3 million, or 1.5%, compared to the quarter ended December 31, 2020 and $1.6 million, or 7.9%, compared to the quarter ended March 31, 2020. The 27-basis point decrease in the yield on commercial loans and the 29-basis point decrease in the yield on investments drove the 22-basis point decrease in the tax-equivalent yield on earning assets compared to the quarter ended December 31, 2020. The 56-basis point decrease in the yield on commercial loans and the 53-basis point decrease in the yield on investments drove the 113-basis point decrease in the tax-equivalent yield on earning assets compared to the quarter ended March 31, 2020.

Interest expense decreased $0.1 million, or 6.5%, compared to the quarter ended December 31, 2020 and $3.0 million, or 65.6%, compared to the quarter ended March 31, 2020. The two-basis point decrease in the cost of interest-bearing liabilities compared to the quarter ended December 31, 2020 was driven by a 11-basis point decrease in the cost of deposits and partially offset by a 27-basis point increase in the cost of subordinated debt. The 86-basis point decrease in the cost of interest-bearing liabilities compared to the quarter ended March 31, 2020 was driven by a 93-basis point decrease in the cost of deposits.

An increase in the Company’s average NIB balances of $135.4 million from the quarter ended December 31, 2020 helped to maintain a 20-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended March 31, 2021, compared to a 18-basis point favorable spread for the quarter ended December 31, 2020. An increase in the Company’s average NIB balances of $490.0 million from the quarter ended March 31, 2020 helped to maintain a 20-basis point favorable spread on the tax-equivalent net interest margin in 2020 compared to a 33-basis point favorable spread for the same period in 2020.

ASSET QUALITY

Provision for loan losses totaled $0.6 million for the quarter ended March 31, 2021, an increase of $0.4 million, or 188.8%, from the quarter ended December 31, 2020 and a decrease of $0.5 million, or 45.7%, from the quarter ended March 31, 2020. As a result of the changes in provision, allowance for loan losses to total loans, excluding the fair value mark totaling $16.9 million on the loans acquired from First State, was 1.5% as of March 31, 2021, a decrease of 23 basis points from December 31, 2020 and an increase of 75 basis points from March 31, 2020. Excluding PPP loans of $190.6 million, allowance for loan losses to total loans was 1.7% as of March 31, 2021. The Company continues to evaluate 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 during the remainder of 2021.

Nonperforming loans totaled $11.6 million, or 0.7% of total loans, as of March 31, 2021, compared to 0.9% of total loans as of December 31, 2020 and compared to 0.4% of total loans as of March 31, 2020. In addition, net charge-offs for the quarter ended March 31, 2021 decreased $0.04 million compared to the quarter ended December 31, 2020 and decreased $1.5 million compared to the quarter ended March 31, 2020. Commercial loan modifications and mortgage loan modifications also continue to decrease and totaled $34.7 million and $9.0 million, respectively, as of March 31, 2021. These modifications include interest-only payments and payment deferrals. Of the current commercial loan modifications, $32.5 million were related to the hotel portfolio and all related payments are current. These modifications were not considered to be troubled debt restructurings.

NONINTEREST INCOME

Noninterest income totaled $12.5 million for the quarter ended March 31, 2021, a decrease of $4.1 million, or 24.8%, from the quarter ended December 31, 2020 and an increase of $1.6 million, or 14.8%, from the quarter ended March 31, 2020.

The $4.1 million decrease in noninterest income from the quarter ended December 31, 2020 was due to a decrease of $4.1 million in equity method investment income related to the Company’s investment in ICM and a decrease of $3.5 million in the gain on sale of equity securities. These decreases were partially offset by an increase of $1.1 million in the gain on sale of available-for-sale securities. Additionally in the fourth quarter of 2020, the Company recognized $1.0 million in the loss on extinguishment of debt related to the prepayment of Federal Home Loan Bank borrowings.

The $1.6 million increase in noninterest income from the quarter ended March 31, 2020 was due to increases of $6.5 million in equity method investment income related to the Company’s investment in ICM, $0.9 million in payment card and service charge income, $0.9 million in the gain on sale of available-for-sale securities and $0.5 million in the holding gain on equity securities. These increases were partially offset by a decrease of $7.6 million in mortgage-related income due to the transition to the equity method from the mortgage combination with ICM that occurred in July 2020.

The Company expects continued growth in payment card and service charge income as a result of several sponsoring agreements and new products and services as a result of recent investments in Fintech capabilities.

NONINTEREST EXPENSE

Noninterest expense totaled $19.1 million for the quarter ended March 31, 2021, a decrease of $1.8 million, or 8.5%, from the quarter ended December 31, 2020 and a decrease of $5.5 million, or 22.5%, from the quarter ended March 31, 2020.

The $1.8 million decrease in noninterest expense from the quarter ended December 31, 2020 was due to decreases of $0.8 million in professional fees, $0.4 million in salaries and employee benefits, $0.2 million in data processing and communications and $0.1 million in marketing, contributions, and sponsorships.

The $5.5 million decrease in noninterest expense from the quarter ended March 31, 2020 was due to decreases of $4.3 million in salaries and employee benefits and $0.9 million in mortgage processing expense. The mortgage transaction that occurred in July 2020 had the largest impact to the decreases noted as a result of the transition to the equity method accounting.

STRATEGIC TRANSACTIONS

In January 2021, the Company acquired a majority interest in Flexia. MVB invested approximately $2.5 million for its 80% interest. Flexia’s platform allows users to access a reloadable account that combines a debit account and casino gaming accounts into one card, allowing them for non-cash transactions at participating casinos.

In April 2021, the Company announced the acquisition of a majority interest in Trabian for 17,597 shares of MVB stock and an undisclosed amount of cash. Founded in 2003, Trabian builds digital products, web and mobile applications for forward-thinking community banks, credit unions, digital banks and Fintechs.

PREFERRED STOCK REDEMPTION

As previously announced, the Company issued a notice of redemption to redeem all of the Company’s outstanding shares of Convertible Noncumulative Perpetual Preferred Stock. In January 2021, all preferred stock totaling $7.3 million was redeemed.

DIVIDEND

As previously announced on February 17, 2021, MVB issued its first quarterly dividend for 2021, including an increase of 11.1% compared to the previous quarter’s dividend. The Company declared a quarterly cash dividend of $0.10 per share payable on March 15, 2021 to shareholders of record at the close of business on March 1, 2021.

SUBSEQUENT EVENTS

In addition to the Trabian acquisition discussed earlier, the Bank entered into a Purchase and Assumption Agreement with Summit Community Bank, Inc. (“Summit”) pursuant to which Summit will purchase certain assets and assume certain liabilities of four branch locations in Cabell, Kanawha, and Putnam counties in West Virginia. Per the agreement, Summit will assume approximately $190 million in deposits and will acquire approximately $60 million in loans, as well as cash, real property, personal property and other fixed assets. The purchase price will be calculated at closing and includes a 6% premium on the deposits assumed. The Bank expects to close this purchase early in the third quarter of 2021.

About MVB Financial Corp.

MVB Financial Corp. (“MVB Financial” or “MVB”), the holding company of MVB Bank, Inc., is publicly traded on The Nasdaq Capital Market® (“Nasdaq”) under the ticker “MVBF.”

MVB is a financial holding company headquartered in Fairmont, WV. Through its subsidiary, MVB Bank, Inc., and the bank’s subsidiaries, MVB Technology, the MVB Community Development Corporation, Chartwell Compliance and Paladin Fraud, the Company 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 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 financial technology companies; competition; length and severity 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, 2020, 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.

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

 

 

2021

 

2020

 

2020

 

 

First Quarter

 

Fourth Quarter

 

First Quarter

Interest income

 

$

19,063

 

 

$

19,353

 

 

$

20,699

 

Interest expense

 

1,558

 

 

1,666

 

 

4,528

 

Net interest income

 

17,505

 

 

17,687

 

 

16,171

 

Provision for loan losses

 

618

 

 

214

 

 

1,138

 

Net interest income after provision for loan losses

 

16,887

 

 

17,473

 

 

15,033

 

 

 

 

 

 

 

 

Total noninterest income

 

12,458

 

 

16,576

 

 

10,850

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

Salaries and employee benefits

 

11,911

 

 

12,269

 

 

16,182

 

Other expense

 

7,207

 

 

8,618

 

 

8,474

 

Total noninterest expenses

 

19,118

 

 

20,887

 

 

24,656

 

 

 

 

 

 

 

 

Income before income taxes

 

10,227

 

 

13,162

 

 

1,227

 

Income tax expense

 

2,169

 

 

1,324

 

 

179

 

Net income before noncontrolling interest

 

8,058

 

 

11,838

 

 

1,048

 

Net loss attributable to noncontrolling interest

 

27

 

 

 

 

 

Net income attributable to parent

 

8,085

 

 

11,838

 

 

1,048

 

Preferred dividends

 

35

 

 

116

 

 

114

 

Net income available to common shareholders

 

$

8,050

 

 

$

11,722

 

 

$

934

 

 

 

 

 

 

 

 

Earnings per share – basic

 

$

0.70

 

 

$

1.00

 

 

$

0.08

 

Earnings per share – diluted

 

$

0.66

 

 

$

0.97

 

 

$

0.08

 

 

Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

 

 

 

March 31, 2021

 

December 31, 2020

 

March 31, 2020

Cash and cash equivalents

 

$

339,616

 

 

$

263,893

 

 

$

88,874

 

Certificates of deposit with banks

 

11,803

 

 

11,803

 

 

12,549

 

Securities available-for-sale, at fair value

 

423,122

 

 

410,624

 

 

223,101

 

Equity securities

 

28,200

 

 

27,585

 

 

19,026

 

Loans held-for-sale

 

 

 

1,062

 

 

186,128

 

Loans receivable

 

1,694,385

 

 

1,453,744

 

 

1,396,578

 

Less: Allowance for loan losses

 

(26,214

)

 

(25,844

)

 

(11,161

)

Loans receivable, net

 

1,668,171

 

 

1,427,900

 

 

1,385,417

 

Premises and equipment, net

 

27,290

 

 

26,203

 

 

22,329

 

Goodwill

 

2,350

 

 

2,350

 

 

19,630

 

Assets of branches held for sale

 

 

 

 

 

39,137

 

Other assets

 

145,537

 

 

160,056

 

 

103,489

 

Total assets

 

$

2,646,089

 

 

$

2,331,476

 

 

$

2,099,680

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

837,221

 

 

$

715,791

 

 

$

387,536

 

Interest-bearing deposits

 

1,379,332

 

 

1,266,598

 

 

1,210,703

 

Deposits of branches held for sale

 

 

 

 

 

187,807

 

Borrowed funds

 

102,185

 

 

 

 

30,815

 

Other liabilities

 

90,668

 

 

109,604

 

 

71,666

 

Stockholders’ equity, including noncontrolling interest

 

236,683

 

 

239,483

 

 

211,153

 

Total liabilities and stockholders’ equity

 

$

2,646,089

 

 

$

2,331,476

 

 

$

2,099,680

 

 

Reportable Segments

(Unaudited)

 

Three Months Ended March 31, 2021

(Dollars in thousands)

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

Interest income

 

$

18,959

 

$

104

 

 

$

1

 

 

$

(1

)

 

$

19,063

Interest expense

 

 

1,092

 

 

 

 

 

466

 

 

 

 

 

 

1,558

Net interest income (loss)

 

 

17,867

 

 

104

 

 

 

(465

)

 

 

(1

)

 

 

17,505

Provision for loan losses

 

 

620

 

 

(2

)

 

 

 

 

 

 

 

 

618

Net interest income (loss) after provision for loan losses

 

 

17,247

 

 

106

 

 

 

(465

)

 

 

(1

)

 

 

16,887

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

 

 

6,437

 

 

6,407

 

 

 

1,581

 

 

 

(1,967

)

 

 

12,458

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

8,842

 

 

 

 

 

3,069

 

 

 

 

 

 

11,911

Other expense

 

 

8,029

 

 

63

 

 

 

1,083

 

 

 

(1,968

)

 

 

7,207

Total noninterest expenses

 

 

16,871

 

 

63

 

 

 

4,152

 

 

 

(1,968

)

 

 

19,118

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

6,813

 

 

6,450

 

 

 

(3,036

)

 

 

 

 

 

10,227

Income tax expense (benefit)

 

 

1,149

 

 

1,564

 

 

 

(544

)

 

 

 

 

 

2,169

Net income (loss) before noncontrolling interest

 

 

5,664

 

 

4,886

 

 

 

(2,492

)

 

 

 

 

 

8,058

Net income attributable to noncontrolling interest

 

 

27

 

 

 

 

 

 

 

 

 

 

 

27

Net income (loss) attributable to parent

 

 

5,691

 

 

4,886

 

 

 

(2,492

)

 

 

 

 

 

8,085

Preferred stock dividends

 

 

 

 

 

 

 

35

 

 

 

 

 

 

35

Net income (loss) available to common shareholders

 

$

5,691

 

$

4,886

 

 

$

(2,527

)

 

$

 

 

$

8,050

Three Months Ended December 31, 2020

(Dollars in thousands)

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

Interest income

 

$

19,119

 

 

$

235

 

 

$

1

 

 

$

(2

)

 

$

19,353

 

Interest expense

 

982

 

 

3

 

 

183

 

 

(2

)

 

1,166

 

Net interest income (loss)

 

18,137

 

 

232

 

 

(182

)

 

 

 

18,187

 

Provision for loan losses

 

288

 

 

(74

)

 

 

 

 

 

214

 

Net interest income (loss) after provision for loan losses

 

17,849

 

 

306

 

 

(182

)

 

 

 

17,973

 

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

 

5,935

 

 

10,350

 

 

2,021

 

 

(2,230

)

 

16,076

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

9,239

 

 

 

 

3,030

 

 

 

 

12,269

 

Other expense

 

9,126

 

 

294

 

 

1,428

 

 

(2,230

)

 

8,618

 

Total noninterest expenses

 

18,365

 

 

294

 

 

4,458

 

 

(2,230

)

 

20,887

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

5,419

 

 

10,362

 

 

(2,619

)

 

 

 

13,162

 

Income tax expense (benefit)

 

(584

)

 

2,166

 

 

(258

)

 

 

 

1,324

 

Net income (loss)

 

6,003

 

 

8,196

 

 

(2,361

)

 

 

 

11,838

 

Preferred stock dividends

 

 

 

 

 

116

 

 

 

 

116

 

Net income (loss) available to common shareholders

 

$

6,003

 

 

$

8,196

 

 

$

(2,477

)

 

$

 

 

$

11,722

 

Three Months Ended March 31, 2020

(Dollars in thousands)

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

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

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

March 31, 2021

 

December 31, 2020

 

March 31, 2020

 

 

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

 

$

259,491

 

 

$

65

 

 

0.10

%

 

$

266,999

 

 

$

82

 

 

0.12

%

 

$

13,643

 

 

$

49

 

 

1.44

%

CDs with other banks

 

11,803

 

 

57

 

 

1.96

 

 

11,938

 

 

58

 

 

1.93

 

 

12,549

 

 

62

 

 

1.98

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

172,902

 

 

631

 

 

1.48

 

 

167,968

 

 

894

 

 

2.12

 

 

127,327

 

 

666

 

 

2.10

 

Tax-exempt 2

 

212,488

 

 

1,714

 

 

3.27

 

 

200,666

 

 

1,659

 

 

3.29

 

 

110,188

 

 

1,110

 

 

4.04

 

Loans and loans held for sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial 3

 

1,262,444

 

 

14,171

 

 

4.55

 

 

1,136,899

 

 

13,763

 

 

4.82

 

 

1,089,212

 

 

13,863

 

 

5.11

 

Tax exempt 2

 

7,205

 

 

81

 

 

4.56

 

 

7,501

 

 

92

 

 

4.87

 

 

11,760

 

 

134

 

 

4.58

 

Real estate

 

293,076

 

 

2,684

 

 

3.71

 

 

287,547

 

 

3,073

 

 

4.25

 

 

429,720

 

 

4,953

 

 

4.62

 

Consumer

 

7,696

 

 

37

 

 

1.95

 

 

6,053

 

 

99

 

 

6.51

 

 

7,473

 

 

123

 

 

6.60

 

Total loans

 

1,570,421

 

 

16,973

 

 

4.38

 

 

1,438,000

 

 

17,027

 

 

4.71

 

 

1,538,165

 

 

19,073

 

 

4.97

 

Total earning assets

 

2,227,105

 

 

19,440

 

 

3.54

 

 

2,085,571

 

 

19,720

 

 

3.76

 

 

1,801,872

 

 

20,960

 

 

4.67

 

Less: Allowance for loan losses

 

(26,170

)

 

 

 

 

 

(26,568

)

 

 

 

 

 

(11,366

)

 

 

 

 

Cash and due from banks

 

20,951

 

 

 

 

 

 

22,642

 

 

 

 

 

 

20,766

 

 

 

 

 

Other assets

 

209,995

 

 

 

 

 

 

215,716

 

 

 

 

 

 

136,744

 

 

 

 

 

Total assets

 

$

2,431,881

 

 

 

 

 

 

$

2,297,361

 

 

 

 

 

 

$

1,948,016

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

518,937

 

 

$

344

 

 

0.27

%

 

$

475,707

 

 

$

446

 

 

0.37

%

 

$

407,462

 

 

$

798

 

 

0.79

%

Money market checking

 

487,281

 

 

231

 

 

0.19

 

 

492,519

 

 

282

 

 

0.23

 

 

432,175

 

 

1,451

 

 

1.35

 

Savings

 

39,668

 

 

6

 

 

0.06

 

 

50,821

 

 

(2

)

 

(0.02

)

 

36,867

 

 

1

 

 

0.01

 

IRAs

 

12,693

 

 

42

 

 

1.34

 

 

13,410

 

 

49

 

 

1.45

 

 

16,573

 

 

78

 

 

1.89

 

CDs

 

168,951

 

 

425

 

 

1.02

 

 

235,412

 

 

679

 

 

1.15

 

 

334,810

 

 

1,582

 

 

1.90

 

Repurchase agreements and federal funds sold

 

10,249

 

 

3

 

 

0.12

 

 

10,070

 

 

4

 

 

0.16

 

 

9,520

 

 

10

 

 

0.42

 

FHLB and other borrowings

 

46,349

 

 

41

 

 

0.36

 

 

19,589

 

 

25

 

 

0.51

 

 

115,930

 

 

573

 

 

1.98

 

Subordinated debt

 

43,425

 

 

466

 

 

4.35

 

 

17,835

 

 

183

 

 

4.08

 

 

4,124

 

 

35

 

 

3.40

 

Total interest-bearing liabilities

 

1,327,553

 

 

1,558

 

 

0.48

 

 

1,315,368

 

 

1,666

 

 

0.50

 

 

1,385,760

 

 

4,528

 

 

1.34

 

Noninterest bearing demand deposits

 

821,923

 

 

 

 

 

 

686,537

 

 

 

 

 

 

296,651

 

 

 

 

 

Other liabilities

 

45,311

 

 

 

 

 

 

59,841

 

 

 

 

 

 

41,244

 

 

 

 

 

Total liabilities

 

2,194,787

 

 

 

 

 

 

2,061,741

 

 

 

 

 

 

1,723,655

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

2,349

 

 

 

 

 

 

7,334

 

 

 

 

 

 

7,334

 

 

 

 

 

Common stock

 

12,378

 

 

 

 

 

 

12,095

 

 

 

 

 

 

11,920

 

 

 

 

 

Paid-in capital

 

136,864

 

 

 

 

 

 

124,977

 

 

 

 

 

 

121,549

 

 

 

 

 

Treasury stock

 

(16,741

)

 

 

 

 

 

(5,928

)

 

 

 

 

 

(1,084

)

 

 

 

 

Retained earnings

 

100,273

 

 

 

 

 

 

98,045

 

 

 

 

 

 

70,570

 

 

 

 

 

Accumulated other comprehensive (loss)

 

1,971

 

 

 

 

 

 

(903

)

 

 

 

 

 

(2,453

)

 

 

 

 

Total stockholders’ equity

 

237,094

 

 

 

 

 

 

235,620

 

 

 

 

 

 

207,836

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,431,881

 

 

 

 

 

 

$

2,297,361

 

 

 

 

 

 

$

1,931,491

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (tax-equivalent)

 

 

 

 

 

3.06

 

 

 

 

 

 

3.26

 

 

 

 

 

 

3.33

 

Net interest income and margin (tax-equivalent) 2

 

$

17,882

 

 

3.26

%

 

 

 

$

18,054

 

 

3.44

%

 

 

 

$

16,432

 

 

3.66

%

Less: Tax-equivalent adjustments

 

 

 

$

(377

)

 

 

 

 

 

$

(367

)

 

 

 

 

 

$

(261

)

 

 

Net interest spread

 

 

 

 

 

3.00

%

 

 

 

 

 

3.19

%

 

 

 

 

 

3.27

%

Net interest income and margin

 

 

 

$

17,505

 

 

3.19

%

 

 

 

$

17,687

 

 

3.37

%

 

 

 

$

16,171

 

 

3.60

%

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 The Company’s PPP loans totaling $190.6 million and $82.0 million are included in this amount for the three months ended March 31, 2021 and December 31, 2020, respectively.

 

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, 2021

 

December 31, 2020

 

March 31, 2020

Net interest margin – U.S. GAAP basis

 

 

 

 

 

 

Net interest income

 

$

17,505

 

 

$

17,687

 

 

$

16,171

 

Average interest-earning assets

 

2,227,105

 

 

2,085,571

 

 

1,801,872

 

Net interest margin

 

3.19

%

 

3.37

%

 

3.60

%

 

 

 

 

 

 

 

Net interest margin – non-U.S. GAAP basis

 

 

 

 

 

 

Net interest income

 

$

17,505

 

 

$

17,687

 

 

$

16,171

 

Plus: Impact of fully tax-equivalent adjustment

 

377

 

 

367

 

 

261

 

Net interest income on a fully tax-equivalent basis

 

17,882

 

 

18,054

 

 

16,432

 

Average interest-earning assets

 

2,227,105

 

 

2,085,571

 

 

1,801,872

 

Net interest margin on a fully tax-equivalent basis

 

3.26

%

 

3.44

%

 

3.66

%

 

Selected Financial Data

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

 

 

 

Quarterly

 

 

2021

 

2020

 

2020

 

 

First Quarter

 

Fourth Quarter

 

First Quarter

Earnings and Per Share Data:

 

 

 

 

 

 

Net income

 

$

8,085

 

 

$

11,838

 

 

$

1,048

 

Net income available to common shareholders

 

$

8,050

 

 

$

11,722

 

 

$

934

 

Earnings per share – basic

 

$

0.70

 

 

$

1.00

 

 

$

0.08

 

Earnings per share – diluted

 

$

0.66

 

 

$

0.97

 

 

$

0.08

 

Cash dividends paid per common share

 

$

0.10

 

 

$

0.09

 

 

$

0.09

 

Book value per common share

 

$

20.38

 

 

$

20.14

 

 

$

17.08

 

Tangible book value per common share

 

$

19.98

 

 

$

19.73

 

 

$

15.16

 

Weighted-average shares outstanding – basic

 

11,530,279

 

 

11,752,841

 

 

11,942,767

 

Weighted-average shares outstanding – diluted

 

12,218,899

 

 

12,144,471

 

 

12,298,092

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

Return on average assets 1

 

1.3

%

 

2.1

%

 

0.2

%

Return on average equity 1

 

13.6

%

 

20.1

%

 

2.0

%

Net interest margin 2 3

 

3.26

%

 

3.44

%

 

3.66

%

Efficiency ratio 4

 

63.8

%

 

61.0

%

 

91.3

%

Overhead ratio 1 5

 

3.1

%

 

3.6

%

 

5.1

%

Equity to assets

 

8.9

%

 

10.3

%

 

10.1

%

 

 

 

 

 

 

 

Asset Quality Data and Ratios:

 

 

 

 

 

 

Charge-offs

 

$

265

 

 

$

300

 

 

$

1,756

 

Recoveries

 

$

17

 

 

$

16

 

 

$

4

 

Net loan charge-offs to total loans 1 6

 

0.1

%

 

0.1

%

 

0.5

%

Allowance for loan losses

 

$

26,214

 

 

$

25,844

 

 

$

11,161

 

Allowance for loan losses to total loans 7

 

1.5

%

 

1.8

%

 

0.8

%

Nonperforming loans

 

$

11,577

 

 

$

13,713

 

 

$

5,909

 

Nonperforming loans to total loans

 

0.7

%

 

0.9

%

 

0.4

%

 

 

 

 

 

 

 

ICM Production Data:

 

 

 

 

 

 

Locked pipeline

 

$

1,428,808

 

 

$

1,536,826

 

 

N/A

Loans originated

 

$

2,088,375

 

 

$

2,170,856

 

 

N/A

Loans closed

 

$

1,906,026

 

 

$

1,848,845

 

 

N/A

Loans sold

 

$

1,778,090

 

 

$

1,733,212

 

 

N/A

1 annualized for the quarterly periods presented

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

3 presented on a fully tax-equivalent basis

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

5 noninterest expense as a percentage of average assets

6 charge-offs less recoveries

7 excludes loans held for sale

 

Non-GAAP Reconciliation: Tangible Book Value per Common Share

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

 

 

 

Quarterly

 

 

2021

 

2020

 

2020

 

 

First Quarter

 

Fourth Quarter

 

First Quarter

Goodwill

 

$

2,350

 

 

$

2,350

 

 

$

19,630

 

Intangibles

 

2,246

 

 

2,400

 

 

3,288

 

Total intangibles

 

4,596

 

 

4,750

 

 

22,918

 

 

 

 

 

 

 

 

Total equity attributable to parent

 

236,210

 

 

239,483

 

 

211,153

 

Less: Preferred equity

 

 

 

(7,334

)

 

(7,334

)

Less: Total intangibles

 

(4,596

)

 

(4,750

)

 

(22,918

)

Tangible common equity

 

231,614

 

 

227,399

 

 

180,901

 

 

 

 

 

 

 

 

Tangible common equity

 

231,614

 

 

227,399

 

 

180,901

 

Common shares outstanding (000s)

 

11,590

 

 

11,526

 

 

11,930

 

Tangible book value per common share

 

$

19.98

 

 

$

19.73

 

 

$

15.16

 

 

Contacts

MEDIA CONTACT

Amy Baker

VP, Corporate Communications and Marketing

MVB Bank

abaker@mvbbanking.com

(844) 682-2265