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 second quarter of
2023, with reported net income of $8.1 million, or $0.64 basic and
$0.63 diluted earnings per share.
Balance sheet loan to deposit ratio of
78.1%
Off-balance sheet deposits increased to $1.1
billion
CRE concentration of 217% of total risk
based capital
Total risk based capital of 14.9%
From Larry F. Mazza, Chief Executive Officer, MVB
Financial:
“Following the market events of March 2023, we took decisive
action. Out of an abundance of caution, we maintained our
already-strong balance sheet liquidity position, and in
anticipation of new regulatory and compliance requirements for the
industry, took additional steps to enhance our risk management and
compliance infrastructure. These actions increased our funding
costs and noninterest expenses during the second quarter, but
helped to strengthen our foundation during a tumultuous period for
the industry. Moreover, we further de-risked our loan portfolio
with the sale of a portion of our subprime automobile loans, and
during the quarter, we had no outstanding FHLB or other short-term
borrowings, no held-to-maturity investment securities and a limited
concentration of CRE loans and office exposure. Despite these
unexpected challenges, we generated strong earnings for the second
quarter. Looking ahead, I am encouraged by our team’s continuous
adaptability, the stability of our asset quality and our strong
liquidity, funding and capital position as we look to a pick-up in
high-quality loan growth as we move forward.”
SECOND QUARTER 2023 HIGHLIGHTS
- Anticipated industry seasonality and a shifting mix impacted
deposit growth trends.
- Total deposits declined 6.1%, or $191.9 million, to $2.96
billion, compared to the prior quarter-end, primarily reflecting
seasonal considerations in gaming and Banking-as-a-Service (“BaaS”)
deposits, primarily offset by growth in certificates of deposit
(“CDs”) and other interest-bearing deposits. Relative to the
comparable period of the prior year, total deposits increased
13.2%, or $344.0 million.
- Total off-balance sheet deposits increased to $1.1 billion as
compared to $1.0 billion at the prior quarter-end. Off-balance
sheet deposit networks are being utilized to generate fee income,
enhance capital and manage liquidity and concentration risk.
- Noninterest-bearing (“NIB”) deposits declined 12.9%, or $146.7
million, to $987.6 million, and represented 33% of total deposits,
as compared to 36% of total deposits at the prior quarter-end.
Lower NIB deposits primarily reflected the desire to build
liquidity through CDs, the highly competitive deposit environment
and rising interest rates.
- Measures of foundational strength were stable to
improved.
- The Community Bank Leverage Ratio, Tier 1 Risk-Based Capital
Ratio and MVB Bank’s Total Risk-Based Capital Ratio were 10.0%,
13.8%, and 14.9%, respectively, from 10.0%, 13.7%, and 14.9%,
respectively, at the prior quarter end.
- Tangible book value per share, a non-U.S. GAAP measure
discussed below, grew 0.7% to $21.31 from $21.17 at the prior
quarter end.
- Nonperforming loans totaled $13.6 million, or 0.6% of total
loans, compared to $13.1 million, or 0.6% of total loans at the
prior quarter end. Criticized loans as a percentage of total loans
were 3.1%, as compared to 3.6% at the prior quarter end. Net
charge-offs were $1.2 million, or 0.2% of total loans on an
annualized basis, for the second quarter of 2023, compared to $1.7
million for the prior quarter. Of the net charge-offs for the
second quarter of 2023, 92% were attributable to subprime
automobile loans.
- The release of allowance for credit losses totaled $4.2 million
compared to a provision for credit losses of $4.6 million for the
prior quarter. MVB sold $20.4 million of subprime automobile loans
and released the reserve associated with those loans, resulting in
the net reserve release for the quarter. The allowance for credit
losses was 1.3% of total loans, as compared to 1.5% as of the prior
quarter-end, largely reflecting the aforementioned changes in loan
portfolio composition.
- Net interest income and net interest margin declined
primarily due to building liquidity, rising interest rates,
seasonal and other factors.
- Net interest income on a fully tax-equivalent basis declined
9.6%, or $3.2 million, to $29.8 million relative to the prior
quarter, primarily due to contraction in net interest margin on a
fully tax-equivalent basis and a decline in average loans,
partially offset by growth in the total average earning asset
balance. As compared to the comparable period of the prior year,
net interest income increased 10.7%, or $2.9 million.
- Net interest margin on a fully tax-equivalent basis was 3.80%,
down 60 basis points during the second quarter of 2023, primarily
reflecting a higher cost of funds and a shift in the mix of earning
assets, as certain higher yielding loan balances declined modestly
while lower yielding cash balances increased significantly. A shift
in the mix of deposits due to seasonal considerations related to
the Company’s gaming deposits also contributed to the increase in
funding costs and negatively impacted net interest margin during
the second quarter of 2023.
- Average earning asset balances increased 3.5% during the second
quarter of 2023 reflecting materially higher interest-bearing
balances with banks, partially offset by a modest decline in
average loans. Average loan balances declined 0.9%, reflecting
deliberate efforts to improve balance sheet liquidity and the
aforementioned sale of subprime automobile loans during the second
quarter of 2023.
- The loan to deposit ratio was 78.1% as of June 30, 2023,
compared to 74.9% as of March 31, 2023 and 84.7% as of June 30,
2022.
- Fees and expenses trended higher.
- Noninterest income was $6.4 million for the second quarter of
2023, as compared to $3.1 million for the prior quarter. The
increase reflects higher income from equity method investments of
$1.9 million as compared to a loss of $1.2 million for the prior
quarter, primarily due to higher income from MVB’s investment in
Warp Speed Holdings LLC, and to a lesser extent, higher other
operating income. Partially offsetting these increases was a loss
on the divestiture of Flexia Payments, LLC (“Flexia”) of $1.1
million during the second quarter of 2023. Further, payment card
and service charge income of $3.5 million declined 3.0%, or $0.1
million, from the prior quarter, due primarily to the
aforementioned seasonal considerations and loss on sale of
sub-prime automobile and nonperforming loans of $1.0 million
increased $0.6 million from the prior quarter.
- Noninterest expense increased 6.9% to $30.3 million from $28.3
million from the prior quarter. While we added personnel in certain
areas during the current quarter, overall salary and benefit costs
declined; however, higher total noninterest expenses reflect
professional fees and other operating expenses, primarily
attributable to recent actions taken in response to the market
events in March 2023 to further enhance risk management and
compliance-related infrastructure. Noninterest expenses other than
professional fees and other operating expenses declined 1.3% as
compared to the prior quarter, reflecting ongoing efforts to meet
cost savings initiative targets.
INCOME STATEMENT
Net interest income on a tax-equivalent basis totaled $29.8
million for the second quarter of 2023, down $3.2 million, or 9.6%,
from the first quarter of 2023 and up $2.9 million, or 10.7%, from
the second quarter of 2022. The decline in net interest income
compared to the first quarter of 2023 reflects net interest margin
contraction and higher than average cash balances, partially offset
by higher earning asset balances. The increase compared to the
second quarter of 2022 generally reflects strong loan growth at
favorable interest rates, primarily driven by MVB Bank’s strategic
lending partnerships growth vehicle and broad-based growth
throughout CoRe Banking business, as well as the beneficial effects
of higher interest rates on earning asset yields, including loans,
investment securities and interest-bearing deposits with other
banks.
Interest income increased $2.3 million, or 5.1%, from the first
quarter of 2023 and increased $18.9 million, or 67.4%, from the
second quarter of 2022. The tax-equivalent yield on loans was 6.7%
for the second quarter of 2023, compared to 6.6% for the first
quarter of 2023 and 5.1% for the second quarter of 2022. The higher
loan yields compared to the first quarter of 2023 generally reflect
the beneficial impact of Fed rate increases, while higher loan
yields compared to the second quarter of 2022 reflect the
cumulative impact of robust loan growth booked at higher yields
than the prevailing portfolio yield in the prior year.
Interest expense increased $5.4 million, or 45.0%, from the
first quarter of 2023 and increased $16.0 million from the second
quarter of 2022. The cost of funds was 2.26% for the second quarter
of 2023, up from 1.61% for the first quarter of 2023 and 0.22% for
the second quarter of 2022. The increase from the prior quarter
primarily reflected the impact of higher interest rates, including
an increase in rates paid on money market checking deposits and
CDs, a decline in noninterest-bearing demand deposits and actions
taken to enhance liquidity in response to the market events of
March 2023. The increase in cost of funds compared to the prior
year period reflects the impact of liquidity actions taken in 2023
in response to market conditions, higher interest rates and the
senior term loan, which was entered into during October 2022.
On a tax-equivalent basis, net interest margin for the second
quarter of 2023 was 3.80%, a decrease of 60 basis points versus the
first quarter of 2023 and a decrease of 30 basis points versus the
second quarter of 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. Contraction in
net interest margin from the first quarter of 2023 to the second
quarter of 2023 primarily reflected higher funding costs 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.
Noninterest income totaled $6.4 million for the second quarter
of 2023, an increase of $3.4 million from the first quarter of 2023
and a decrease of $3.0 million from the second quarter of 2022. The
increase compared to the prior quarter is primarily driven by a
$3.1 million increase in equity method investment income, a $1.2
million decrease in loss on sale of available-for-sale investment
securities and a $0.5 million increase in holding gain on equity
securities. These gains were partially offset by a loss of $1.0
million resulting from divestiture activity and an increase $0.6
million in loss on sale of loans. The $3.0 million decrease in
noninterest income from the second quarter of 2022 was primarily
driven by decreases of $2.4 million in gain on sale of loans, a
$1.0 million loss on divestiture activity and a $0.5 million loss
in payment card and service charge income, partially offset by an
increase of $1.3 million in equity method investment income.
Noninterest expense totaled $30.3 million for the second quarter
of 2023, an increase of $2.0 million, or 6.9%, from the first
quarter of 2023 and an increase of $2.3 million, or 8.3%, from the
second quarter of 2022. The increase from the prior periods
primarily reflects higher other operating expenses, specifically
higher professional fees, partially offset by decreases in salaries
and employee benefits expense of $1.0 million, or 6.0%, and $0.8
million, or 5.1%, as compared to the first quarter of 2023 and the
second quarter of 2022, respectively.
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. There was no net income from discontinued
operations in the second quarter of 2023. Net income from
discontinued operations totaled $8.8 million for the first quarter
of 2023, which included a gain on sale of $11.8 million.
In May 2023, MVB entered into an agreement with Flexia, to
facilitate the divestiture of MVB’s interests in the ongoing
business of Flexia. As a result of the divestiture, MVB incurred a
loss of $1.1 million during the quarter ended June 30, 2023.
BALANCE SHEET
Loans totaled $2.31 billion at June 30, 2023, a decrease of
$48.8 million, or 2.1%, and an increase of $97.3 million, or 4.4%,
as compared to March 31, 2023 and June 30, 2022, respectively. The
decrease in loan balances compared to the prior quarter primarily
reflects deliberate efforts to improve balance sheet liquidity and
ensure appropriate risk adjusted pricing on loans, in addition to
the sale of $20.4 million of subprime automobile loans during the
second quarter of 2023. The remaining balance of subprime
automobile loans totaled $27.0 million at June 30, 2023. Loan
growth compared to June 30, 2022 was driven primarily by MVB Bank’s
strategic lending partnerships. Loans held-for-sale, which
represent MVB Bank’s government guaranteed lending growth vehicle,
were $7.0 million as of June 30, 2023, compared to $19.9 million at
March 31, 2023 and $11.9 million at June 30, 2022.
Deposits totaled $2.96 billion as of June 30, 2023, a decrease
of $191.9 million, or 6.1%, from March 31, 2023, and an increase of
$344.0 million, or 13.2%, from June 30, 2022. NIB deposits totaled
$987.6 million as of June 30, 2023, a decrease of $146.7 million,
or 12.9%, from March 31, 2023 and $355.4 million, or 26.5%, from
June 30, 2022. The decline in total deposit balances compared to
March 31, 2023 primarily reflects seasonal considerations in MVB’s
gaming and BaaS deposits and an increase in off-balance sheet
deposits, primarily offset by growth in CDs and other
interest-bearing deposits. The increase relative to June 30, 2022,
reflects higher CDs and BaaS account deposits. The decrease in NIB
deposits relative to both prior periods primarily reflects the
highly-competitive deposit environment, rising interest rates and
MVB’s utilization of off-balance sheet deposit networks to generate
fee income, enhance capital and manage liquidity and concentration
risk.
CAPITAL
The Community Bank Leverage Ratio was 10.0% as of June 30, 2023,
compared to 10.0% as of March 31, 2023 and 11.6% as of June 30,
2022.
The Company issued a quarterly cash dividend of $0.17 per share
for the second quarter of 2023, consistent with the first quarter
of 2023 and the second quarter of 2022.
ASSET QUALITY
Nonperforming loans totaled $13.6 million, or 0.6% of total
loans, as of June 30, 2023, as compared to $13.1 million, or 0.6%
of total loans, as of March 31, 2023, and $19.3 million, or 0.9% of
total loans, as of June 30, 2022. Criticized loans as a percentage
of total loans were 3.1%, compared to 3.6% as of March 31, 2023 and
4.0% as of June 30, 2022.
Net charge-offs were $1.2 million, or 0.2% of total loans, for
the second quarter of 2023, compared to $1.7 million, or 0.3% of
total loans, for the first quarter of 2023 and $1.2 million, or
0.2% of total loans, for the second quarter of 2022.
The release of allowance for credit losses totaled $4.2 million
compared to a provision for credit losses of $4.6 million for the
prior quarter. The Company sold $20.4 million of subprime
automobile loans and released the reserve associated with those
loans, resulting in the net reserve release for the quarter. The
allowance for credit losses was 1.3% of total loans at June 30,
2023, as compared to 1.5% at March 31, 2023 and 1.0% at June 30,
2022. The decline in the allowance ratio compared to the prior
quarter largely reflects the aforementioned changes in loan
portfolio composition. The increase in the allowance compared to
June 30, 2022 primarily reflects changes in loan portfolio
composition and the implementation of the Current Expected Credit
Loss allowance methodology as of January 1, 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; impacts related to or resulting from recent bank
failures and volatility; 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
Year-to-Date
2023
2023
2022
2023
2022
Second Quarter
First Quarter
Second Quarter
Interest income
$
47,031
$
44,763
$
28,090
$
91,794
$
51,352
Interest expense
17,449
12,034
1,430
29,483
2,844
Net interest income
29,582
32,729
26,660
62,311
48,508
Provision (release of allowance) for
credit losses
(4,235
)
4,576
5,100
341
6,380
Net interest income after provision
(release of allowance) for credit losses
33,817
28,153
21,560
61,970
42,128
Total noninterest income
6,419
3,067
9,384
9,486
18,663
Noninterest expense:
Salaries and employee benefits
15,746
16,746
16,585
32,492
32,312
Other expense
14,536
11,571
11,387
26,107
22,917
Total noninterest expenses
30,282
28,317
27,972
58,599
55,229
Income before income taxes
9,954
2,903
2,972
12,857
5,562
Income taxes
1,956
465
699
2,421
1,379
Net income from continuing operations
before noncontrolling interest
7,998
2,438
2,273
10,436
4,183
Income from discontinued operations,
before income taxes
—
11,831
678
11,831
1,664
Income taxes - discontinued operations
—
3,049
160
3,049
385
Net income from discontinued
operations
—
8,782
518
8,782
1,279
Net loss attributable to noncontrolling
interest
114
122
165
236
358
Net income available to common
shareholders
$
8,112
$
11,342
$
2,956
$
19,454
$
5,820
Earnings per share from continuing
operations - basic
$
0.64
$
0.20
$
0.20
$
0.84
$
0.37
Earnings per share from discontinued
operations - basic
$
—
$
0.70
$
0.04
$
0.69
$
0.11
Earnings per share - basic
$
0.64
$
0.90
$
0.24
$
1.54
$
0.48
Earnings per share from continuing
operations - diluted
$
0.63
$
0.20
$
0.19
$
0.82
$
0.35
Earnings per share from discontinued
operations - diluted
$
—
$
0.67
$
0.04
$
0.68
$
0.10
Earnings per share - diluted
$
0.63
$
0.87
$
0.23
$
1.50
$
0.45
Noninterest Income
(Unaudited) (Dollars in
thousands)
Quarterly
Year-to-Date
2023
2023
2022
2023
2022
Second Quarter
First Quarter
Second Quarter
Card acquiring income
$
788
$
622
$
750
$
1,410
$
1,733
Service charges on deposits
1,060
1,126
973
2,186
1,845
Interchange income
1,655
1,862
2,292
3,517
3,079
Total payment card and service charge
income
3,503
3,610
4,015
7,113
6,657
Equity method investments income
(loss)
1,873
(1,193
)
549
680
1,687
Compliance and consulting income
996
1,016
1,180
2,012
2,414
Gain (loss) on sale of loans
(989
)
(356
)
1,405
(1,345
)
2,488
Investment portfolio gains (losses)
(134
)
(1,844
)
145
(1,978
)
2,539
Loss on acquisition and divestiture
activity
(986
)
—
—
(986
)
—
Other noninterest income
2,156
1,834
2,090
3,990
2,878
Total noninterest income
$
6,419
$
3,067
$
9,384
$
9,486
$
18,663
Condensed Consolidated Balance
Sheets
(Unaudited) (Dollars in
thousands)
June 30, 2023
March 31, 2023
June 30, 2022
Cash and cash equivalents
$
455,835
$
575,265
$
161,761
Certificates of deposit with banks
—
—
496
Securities available-for-sale, at fair
value
329,137
339,578
376,737
Equity securities
41,082
38,576
34,250
Loans held-for-sale
7,009
19,893
11,856
Loans receivable
2,312,387
2,361,153
2,215,114
Less: Allowance for credit losses
(30,294
)
(35,513
)
(22,734
)
Loans receivable, net
2,282,093
2,325,640
2,192,380
Premises and equipment, net
22,407
22,869
25,235
Assets from discontinued operations
—
—
4,719
Goodwill
2,838
2,838
2,838
Other assets
211,446
227,217
174,156
Total assets
$
3,351,847
$
3,551,876
$
2,984,428
Noninterest-bearing deposits
$
987,555
$
1,134,257
$
1,342,916
Interest-bearing deposits
1,971,384
2,016,558
1,272,054
FHLB and other borrowings
—
—
—
Senior term loan
8,835
9,647
—
Subordinated debt
73,414
73,350
73,158
Liabilities from discontinued
operations
—
—
4,994
Other liabilities
36,362
46,748
38,396
Stockholders' equity, including
noncontrolling interest
274,297
271,316
252,910
Total liabilities and stockholders'
equity
$
3,351,847
$
3,551,876
$
2,984,428
Reportable Segments
(Unaudited)
Three Months Ended June 30,
2023
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
46,929
$
105
$
3
$
6
$
(12
)
$
47,031
Interest expense
16,439
—
999
23
(12
)
17,449
Net interest income (expense)
30,490
105
(996
)
(17
)
—
29,582
Release of allowance for credit losses
(4,235
)
—
—
—
—
(4,235
)
Net interest income (expense) after
release of allowance for credit losses
34,725
105
(996
)
(17
)
—
33,817
Noninterest income
4,113
1,872
3,116
1,051
(3,733
)
6,419
Noninterest Expenses:
Salaries and employee benefits
9,053
7
4,623
2,063
—
15,746
Other expenses
14,148
18
2,163
1,940
(3,733
)
14,536
Total noninterest expenses
23,201
25
6,786
4,003
(3,733
)
30,282
Income (loss) before income taxes
15,637
1,952
(4,666
)
(2,969
)
—
9,954
Income taxes
3,237
643
(1,207
)
(717
)
—
1,956
Net income (loss)
12,400
1,309
(3,459
)
(2,252
)
—
7,998
Net income attributable to noncontrolling
interest
—
—
—
114
—
114
Net income (loss) available to common
shareholders
$
12,400
$
1,309
$
(3,459
)
$
(2,138
)
$
—
$
8,112
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
(611
)
(4,475
)
(1,919
)
—
2,438
Income from discontinued operations,
before income taxes
—
—
—
11,831
—
11,831
Income tax expense - discontinued
operations
—
—
—
3,049
—
3,049
Net income 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 June 30,
2022
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
27,910
$
103
$
87
$
—
$
(10
)
$
28,090
Interest expense
672
—
760
8
(10
)
1,430
Net interest income (expense)
27,238
103
(673
)
(8
)
—
26,660
Provision for credit losses
5,100
—
—
—
—
5,100
Net interest income (expense) after
provision for credit losses
22,138
103
(673
)
(8
)
—
21,560
Noninterest income
7,093
787
3,228
1,584
(3,308
)
9,384
Noninterest Expenses:
Salaries and employee benefits
9,948
—
4,439
2,198
—
16,585
Other expenses
10,913
94
2,247
1,441
(3,308
)
11,387
Total noninterest expenses
20,861
94
6,686
3,639
(3,308
)
27,972
Income (loss) before income taxes
8,370
796
(4,131
)
(2,063
)
—
2,972
Income taxes
1,771
207
(815
)
(464
)
—
699
Net income (loss) from continuing
operations
6,599
589
(3,316
)
(1,599
)
—
2,273
Income from discontinued operations,
before income taxes
—
—
—
678
—
678
Income tax expense - discontinued
operations
—
—
—
160
—
160
Net income from discontinued
operations
—
—
—
518
—
518
Net income (loss)
6,599
589
(3,316
)
(1,081
)
—
2,791
Net income attributable to noncontrolling
interest
—
—
—
165
—
165
Net income (loss) available to common
shareholders
$
6,599
$
589
$
(3,316
)
$
(916
)
$
—
$
2,956
Six Months Ended June 30, 2023
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
91,591
$
210
$
36
$
—
$
(43
)
$
91,794
Interest expense
27,480
—
1,992
54
(43
)
29,483
Net interest income (expense)
64,111
210
(1,956
)
(54
)
—
62,311
Provision for credit losses
341
—
—
—
—
341
Net interest income (expense) after
provision for credit losses
63,770
210
(1,956
)
(54
)
—
61,970
Noninterest income
7,131
686
5,526
2,835
(6,692
)
9,486
Noninterest Expenses:
Salaries and employee benefits
18,104
7
9,573
4,808
—
32,492
Other expenses
25,202
52
4,080
3,465
(6,692
)
26,107
Total noninterest expenses
43,306
59
13,653
8,273
(6,692
)
58,599
Income (loss) before income taxes
27,595
837
(10,083
)
(5,492
)
—
12,857
Income taxes
5,752
139
(2,149
)
(1,321
)
—
2,421
Net income (loss) from continuing
operations
21,843
698
(7,934
)
(4,171
)
—
10,436
Income from discontinued operations,
before income taxes
—
—
—
11,831
—
11,831
Income taxes - discontinued operations
—
—
—
3,049
—
3,049
Net income from discontinued
operations
—
—
—
8,782
—
8,782
Net income (loss)
21,843
698
(7,934
)
4,611
—
19,218
Net income attributable to noncontrolling
interest
—
—
—
236
—
236
Net income (loss) available to common
shareholders
$
21,843
$
698
$
(7,934
)
$
4,847
$
—
$
19,454
Six Months Ended June 30, 2022
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
51,081
$
206
$
80
$
—
$
(15
)
$
51,352
Interest expense
1,331
—
1,513
15
(15
)
2,844
Net interest income (expense)
49,750
206
(1,433
)
(15
)
—
48,508
Provision for credit losses
6,380
—
—
—
—
6,380
Net interest income (expense) after
provision for credit losses
43,370
206
(1,433
)
(15
)
—
42,128
Noninterest income
13,991
2,010
5,899
3,120
(6,357
)
18,663
Noninterest Expenses:
Salaries and employee benefits
19,456
—
8,495
4,361
—
32,312
Other expenses
21,961
94
4,452
2,767
(6,357
)
22,917
Total noninterest expenses
41,417
94
12,947
7,128
(6,357
)
55,229
Income (loss) before income taxes
15,944
2,122
(8,481
)
(4,023
)
—
5,562
Income taxes
3,402
548
(1,684
)
(887
)
—
1,379
Net income (loss) from continuing
operations
12,542
1,574
(6,797
)
(3,136
)
—
4,183
Income from discontinued operations,
before income taxes
—
—
—
1,664
—
1,664
Income tax expense - discontinued
operations
—
—
—
385
—
385
Net income from discontinued
operations
—
—
—
1,279
—
1,279
Net income (loss)
12,542
1,574
(6,797
)
(1,857
)
—
5,462
Net income attributable to noncontrolling
interest
—
—
—
358
—
358
Net income (loss) available to common
shareholders
$
12,542
$
1,574
$
(6,797
)
$
(1,499
)
$
—
$
5,820
Average Balances and Interest
Rates
(Unaudited) (Dollars in
thousands)
Three Months Ended
Three Months Ended
Three Months Ended
June 30, 2023
March 31, 2023
June 30, 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
$
444,600
$
5,542
5.00
%
$
285,102
$
3,153
4.49
%
$
197,613
$
304
0.62
%
CDs with banks
—
—
—
—
—
—
1,582
9
2.28
Investment securities:
Taxable
220,687
1,229
2.23
236,574
1,848
3.17
237,745
838
1.41
Tax-exempt 2
123,497
1,147
3.73
137,799
1,308
3.85
147,646
1,342
3.65
Loans and loans held-for-sale: 1
Commercial 3
1,635,438
30,534
7.49
1,620,509
28,538
7.14
1,564,266
20,021
5.13
Tax-exempt 2
3,822
42
4.41
3,944
43
4.42
4,930
52
4.23
Real estate
593,767
5,691
3.84
621,388
6,295
4.11
393,983
2,674
2.72
Consumer
128,113
3,096
9.69
137,547
3,862
11.39
88,366
3,142
14.26
Total loans
2,361,140
39,363
6.69
2,383,388
38,738
6.59
2,051,545
25,889
5.06
Total earning assets
3,149,924
47,281
6.02
3,042,863
45,047
6.00
2,636,131
28,382
4.32
Less: Allowance for credit losses
(35,143
)
(30,135
)
(19,927
)
Cash and due from banks
5,756
243
5,579
Other assets
289,161
339,676
237,016
Total assets
$
3,409,698
$
3,352,647
$
2,858,799
Liabilities
Deposits:
NOW
$
682,277
$
4,816
2.83
%
$
796,901
$
4,661
2.37
%
$
654,781
$
256
0.16
%
Money market checking
615,962
2,439
1.59
209,227
928
1.80
380,295
184
0.19
Savings
72,289
351
1.95
93,297
641
2.79
27,496
1
0.01
IRAs
6,401
45
2.82
6,151
27
1.78
6,314
17
1.08
CDs
662,753
8,799
5.33
386,144
3,896
4.09
75,487
203
1.08
Repurchase agreements and federal funds
sold
5,428
—
—
7,612
1
0.05
11,566
1
0.03
FHLB and other borrowings
158
—
—
71,166
888
5.06
2,312
8
1.39
Senior term loan
9,351
198
8.49
9,765
194
8.06
—
—
—
Subordinated debt
73,382
801
4.38
73,318
798
4.41
73,126
760
4.17
Total interest-bearing liabilities
2,128,001
17,449
3.29
1,653,581
12,034
2.95
1,231,377
1,430
0.47
Noninterest-bearing demand deposits
971,436
1,380,516
1,331,357
Other liabilities
38,842
37,087
40,900
Total liabilities
3,138,279
3,071,184
2,603,634
Stockholders’ equity
Common stock
13,533
13,471
13,289
Paid-in capital
158,601
153,389
145,014
Treasury stock
(16,741
)
(16,741
)
(16,741
)
Retained earnings
148,600
166,426
137,989
Accumulated other comprehensive loss
(32,714
)
(35,345
)
(25,097
)
Total stockholders’ equity attributable to
parent
271,279
281,200
254,454
Noncontrolling interest
140
263
711
Total stockholders’ equity
271,419
281,463
255,165
Total liabilities and stockholders’
equity
$
3,409,698
$
3,352,647
$
2,858,799
Net interest spread (tax-equivalent)
2.73
%
3.05
%
3.85
%
Net interest income and margin
(tax-equivalent)2
$
29,832
3.80
%
$
33,013
4.40
%
$
26,952
4.10
%
Less: Tax-equivalent adjustments
$
(250
)
$
(284
)
$
(292
)
Net interest spread
2.70
%
3.02
%
3.80
%
Net interest income and margin
$
29,582
3.77
%
$
32,729
4.36
%
$
26,660
4.06
%
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 $4.5
million, $4.9 million and $22.3 million are included in this amount
as of June 30, 2023, March 31, 2023 and June 30, 2022,
respectively.
Six Months Ended
Six Months Ended
June 30, 2023
June 30, 2022
Average Balance
Interest Income/
Expense
Yield/ Cost
Average Balance
Interest Income/
Expense
Yield/ Cost
Assets
Interest-bearing balances with banks
$
365,291
$
8,695
4.80
%
$
395,494
$
518
0.26
%
CDs with banks
—
—
—
1,964
22
2.26
Investment securities:
Taxable
228,587
3,077
2.71
239,849
1,486
1.25
Tax-exempt 2
130,609
2,456
3.79
138,170
2,478
3.62
Loans and loans held-for-sale: 1
Commercial 3
1,628,015
59,065
7.32
1,509,071
37,000
4.94
Tax-exempt 2
3,882
85
4.42
4,998
105
4.24
Real estate
607,501
11,992
3.98
366,557
5,014
2.76
Consumer
132,804
6,959
10.57
71,588
5,271
14.85
Total loans
2,372,202
78,101
6.64
1,952,214
47,390
4.90
Total earning assets
3,096,689
92,329
6.01
2,727,691
51,894
3.84
Less: Allowance for credit losses
(32,653
)
(19,139
)
Cash and due from banks
3,015
5,822
Other assets
314,279
242,875
Total assets
$
3,381,330
$
2,957,249
Liabilities
Deposits:
NOW
$
739,273
$
9,478
2.59
%
$
650,903
$
449
0.14
%
Money market checking
413,718
3,367
1.64
423,053
386
0.18
Savings
82,735
991
2.42
38,706
2
0.01
IRAs
6,276
72
2.31
6,341
34
1.08
CDs
525,213
12,695
4.87
81,329
446
1.11
Repurchase agreements and federal funds
sold
6,514
—
—
11,693
3
0.05
FHLB and other borrowings
35,347
888
5.07
1,163
11
1.91
Senior term loan
9,557
392
8.27
—
—
—
Subordinated debt
73,350
1,600
4.40
73,094
1,513
4.17
Total interest-bearing liabilities
1,891,983
29,483
3.14
1,286,282
2,844
0.45
Noninterest-bearing demand deposits
1,174,965
1,365,037
Other liabilities
37,969
43,594
Total liabilities
3,104,917
2,694,913
Stockholders’ equity
Common stock
13,502
13,373
Paid-in capital
156,009
144,408
Treasury stock
(16,741
)
(16,741
)
Retained earnings
157,464
137,815
Accumulated other comprehensive income
loss
(34,022
)
(17,325
)
Total stockholders’ equity attributable to
parent
276,212
261,530
Noncontrolling interest
201
806
Total stockholders’ equity
276,413
262,336
Total liabilities and stockholders’
equity
$
3,381,330
$
2,957,249
Net interest spread (tax-equivalent)
2.87
%
3.39
%
Net interest income and margin
(tax-equivalent)2
$
62,846
4.09
%
$
49,050
3.63
%
Less: Tax-equivalent adjustments
$
(535
)
$
(542
)
Net interest spread
2.84
%
3.35
%
Net interest income and margin
$
62,311
4.06
%
$
48,508
3.59
%
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 $4.5 million
and $22.3 million are included in this amount as of June 30, 2023
and June 30, 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
Six Months Ended
(Dollars in thousands)
June 30, 2023
March 31, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Net interest margin - U.S. GAAP
basis
Net interest income
$
29,582
$
32,729
$
26,660
$
62,311
$
48,508
Average interest-earning assets
$
3,149,924
$
3,042,863
$
2,636,131
3,096,689
2,727,691
Net interest margin
3.77
%
4.36
%
4.06
%
4.06
%
3.59
%
Net interest margin - non-U.S. GAAP
basis
Net interest income
$
29,582
$
32,729
$
26,660
$
62,311
$
48,508
Impact of fully tax-equivalent
adjustment
250
284
292
535
542
Net interest income on a fully
tax-equivalent basis
$
29,832
$
33,013
$
26,952
62,846
49,050
Average interest-earning assets
$
3,149,924
$
3,042,863
$
2,636,131
$
3,096,689
$
2,727,691
Net interest margin on a fully
tax-equivalent basis
3.80
%
4.40
%
4.10
%
4.09
%
3.63
%
Selected Financial
Data
(Unaudited) (Dollars in
thousands, except per share data)
Quarterly
Year-to-Date
2023
2023
2022
2023
2022
Second Quarter
First Quarter
Second Quarter
Earnings and Per Share Data:
Net income
$
8,112
$
11,342
$
2,956
$
19,454
$
5,820
Earnings per share from continuing
operations - basic
$
0.64
$
0.20
$
0.20
$
0.84
$
0.37
Earnings per share from discontinued
operations - basic
$
—
$
0.70
$
0.04
$
0.69
$
0.11
Earnings per share - basic
$
0.64
$
0.90
$
0.24
$
1.54
$
0.48
Earnings per share from continuing
operations - diluted
$
0.63
$
0.20
$
0.19
$
0.82
$
0.35
Earnings per share from discontinued
operations - diluted
$
—
$
0.67
$
0.04
$
0.68
$
0.10
Cash dividends paid per common share
$
0.17
$
0.17
$
0.17
$
0.34
$
0.34
Book value per common share
$
21.57
$
21.43
$
20.63
$
21.57
$
20.63
Tangible book value per common share 1
$
21.31
$
21.17
$
20.14
$
21.31
$
20.14
Weighted-average shares outstanding -
basic
12,689,669
12,623,361
12,176,805
12,656,698
12,135,223
Weighted-average shares outstanding -
diluted
12,915,294
13,016,082
12,895,581
12,959,725
12,870,892
Performance Ratios:
Return on average assets 2
1.0
%
1.4
%
0.4
%
1.2
%
0.4
%
Return on average equity 2
12.0
%
16.1
%
4.6
%
14.1
%
4.4
%
Net interest margin 3 4
3.80
%
4.40
%
4.10
%
4.09
%
3.63
%
Efficiency ratio 5 10
84.1
%
61.4
%
77.3
%
70.9
%
81.2
%
Overhead ratio 2 6
3.6
%
3.4
%
4.2
%
3.5
%
4.0
%
Equity to assets
8.2
%
7.6
%
8.5
%
8.2
%
8.5
%
Asset Quality Data and Ratios:
Charge-offs
$
3,700
$
4,847
$
2,529
$
8,547
$
3,652
Recoveries
$
2,468
$
3,169
$
1,355
$
5,637
$
1,741
Net loan charge-offs to total loans 2
7
0.2
%
0.3
%
0.2
%
0.3
%
0.2
%
Allowance for credit losses
$
30,294
$
35,513
$
22,734
$
30,294
$
22,734
Allowance for credit losses to total loans
8
1.31
%
1.50
%
1.03
%
1.31
%
1.03
%
Nonperforming loans
$
13,646
$
13,085
$
19,295
$
13,646
$
19,295
Nonperforming loans to total loans
0.6
%
0.6
%
0.9
%
0.6
%
0.9
%
Mortgage Company Equity Method
Investees Production Data9:
Mortgage pipeline
$
748,756
$
714,258
$
1,114,061
$
748,756
$
1,114,061
Loans originated
$
1,167,596
$
232,660
$
976,004
$
2,167,711
$
2,106,702
Loans closed
$
820,665
$
385,011
$
843,305
$
1,495,882
$
1,624,147
Loans sold
$
786,469
$
302,782
$
692,553
$
1,221,723
$
1,380,646
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,
a non-GAAP financial measure.
5
Noninterest expense as a percentage of net
interest income and noninterest income, a non-U.S. GAAP
measure.
6
Noninterest expense as a percentage of
average assets, a non-U.S. GAAP measure.
7
Charge-offs, less recoveries.
8
Excludes loans held-for-sale.
9
Information is related to Intercoastal
Mortgage Company, LLC and Warp Speed Holdings LLC, entities in
which MVB has an ownership interest that are accounted for as
equity method investments.
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)
June 30, 2023
March 31, 2023
June 30, 2022
Goodwill
$
2,838
$
2,838
$
3,988
Intangibles
397
420
1,981
Total intangibles
3,235
3,258
5,969
Total equity attributable to parent
274,349
271,131
252,300
Less: Total intangibles
(3,235
)
(3,258
)
(5,969
)
Tangible common equity
$
271,114
$
267,873
$
246,331
Tangible common equity
$
271,114
$
267,873
$
246,331
Common shares outstanding (000s)
12,720
12,653
12,229
Tangible book value per common share
$
21.31
$
21.17
$
20.14
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230727904304/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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