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 third quarter of
2023, with reported net income of $3.9 million, or $0.30 basic and
$0.29 diluted earnings per share.
Third Quarter 2023
Highlights As Compared to Second Quarter 2023
Balance sheet deposits increased 2.7%, or
$80.0M.
Noninterest bearing deposits increased
10.8%, or $106.3M, and represent 36% of deposits.
Balance sheet loan to deposit ratio of
74.7%, compared to 78.1%.
Nonperforming loans decreased 22.4%, or
$3.1M.
Net interest margin improved by 10 bps, to
3.87%.
From Larry F. Mazza, Chief Executive Officer, MVB
Financial:
“While market conditions remained volatile during the third
quarter, Team MVB built upon our already strong foundation. We
continued to optimize our earnings power and grew low-cost deposits
and reduced higher-cost funding, further optimizing our deposit
mix, improving our strong liquidity position, and with asset yields
continuing to reprice higher, drove improvement in our net interest
margin. Additionally, although our cost of funds continued to move
higher, this quarter marked the slowest pace of increase since the
second quarter of 2022. Our loan pipelines continued to build, and
we believe our balance sheet is well-positioned for the road ahead.
At quarter-end, MVB 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. Since the industry
disruption in March of this year, we took additional steps to
enhance our risk management and compliance infrastructure in
anticipation of changing industry requirements. These elevated
costs have weighed on our earnings in the short-term, but leave us
well positioned to drive growth and improve profitability, while
maintaining our foundational strength in the long run.”
THIRD QUARTER 2023 HIGHLIGHTS
- Strong core deposit growth and a favorable shift in deposit
mix.
- Total deposits increased 2.7%, or $80.0 million, to $3.04
billion, compared to the prior quarter-end, primarily reflecting
strong growth in noninterest bearing (“NIB”) deposits, and
increases due to payment relationships, gaming and seasonal
considerations, partially offset by a decline in brokered deposits.
Relative to the prior year, total deposits increased 12.7%, or
$341.9 million.
- Total off-balance sheet deposits were steady at $1.11 billion
as compared to $1.06 billion at the prior quarter-end. Off-balance
sheet deposit networks are utilized to generate fee income, enhance
capital efficiency and manage liquidity and concentration
risk.
- NIB deposits increased 10.8%, or $106.3 million, to $1.09
billion, and represented 36.0% of total deposits, as compared to
33.4% of total deposits at the prior quarter-end.
- Certificate of deposit (“CD”) balances, which include brokered
deposits, declined 11.1%, or $78.1 million, to $622.5 million,
reflecting the Company’s decision to reduce higher-cost deposit
funding.
- Net interest margin expansion drives improvement in net
interest income.
- Net interest income on a fully tax-equivalent basis, a non-GAAP
financial measure, increased 0.9%, or $0.3 million, to $30.1
million relative to the prior quarter, reflecting net interest
margin expansion, partially offset by a decline in total average
earning asset balances.
- Net interest margin on a fully tax-equivalent basis, a non-GAAP
financial measure, was 3.90%, up 10 basis points from the prior
quarter, primarily reflecting higher loan yields and a favorable
shift in the mix of earning assets and deposit funding. Total cost
of funds was 2.43%, compared to 2.26% for the prior quarter,
representing the slowest pace of increase in the Company’s cost of
funds since the second quarter of 2022.
- Average earning asset balances decreased 2.8% during the third
quarter of 2023, reflecting lower average loan balances and a
decline in investment securities, partially offset by higher
interest-bearing balances with banks. Average total loan balances
declined 4.0%, reflecting lower commercial, real estate and
consumer balances, including the sale certain of subprime
automobile loans during the third quarter of 2023.
- The loan to deposit ratio was 74.7% as of September 30, 2023,
compared to 78.1% as of June 30, 2023 and 91.6% as of September 30,
2022.
- Measures of foundational strength were generally stable.
- The Community Bank Leverage Ratio, Tier 1 Risk-Based Capital
Ratio and MVB Bank’s Total Risk-Based Capital Ratio were 10.4%,
14.0%, and 14.8%, respectively, compared to 10.0%, 13.8%, and
14.9%, respectively, at the prior quarter end.
- Tangible book value per share, a non-U.S. GAAP measure
discussed below, declined 1.1% to $21.08, relative to the prior
quarter-end, and increased 8.77% from the year-ago period.
- Nonperforming loans declined $3.1 million, or 22.4%, to $10.6
million, or 0.5% of total loans, from to $13.6 million, or 0.6% of
total loans, at the prior quarter end. Criticized loans as a
percentage of total loans were 6.1%, as compared to 3.1% at the
prior quarter end. The increase is driven primarily by addition of
one loan relationship, which is secured by a financial
institution’s stock and all loan payments are current. Net
charge-offs were $5.9 million, or 1.0% of total loans on an
annualized basis, for the third quarter of 2023, compared to $1.2
million, or 0.2%, for the prior quarter. The increase from prior
quarter is primarily related to a single charge-off related to a
commercial client in the energy industry.
- The release of allowance for credit losses totaled $0.2
million, compared to $4.2 million for the prior quarter. The net
reserve release for the quarter reflected the aforementioned sale
of subprime automobile loans, partially offset by the impact of
increases in criticized loans and charge-offs. The allowance for
credit losses was 1.1% of total loans, as compared to 1.3% as of
the prior quarter-end, reflecting the changes in loan portfolio
composition noted above.
- Expenses trend higher on actions taken to enhance regulatory
and compliance infrastructure in response to industry events
earlier this year; fees lower, primarily due to seasonal
factors.
- Noninterest expense increased 1.5% to $30.7 million relative to
the prior quarter, primarily reflecting higher professional fees
and other operating costs related to recent actions taken in
response to the market events in March 2023 and to enhance risk
management and compliance-related infrastructure. Noninterest
expenses other than professional fees declined 4.9% from the prior
quarter.
- Total noninterest income was $5.8 million for the third quarter
of 2023, as compared to $6.4 million for the prior quarter,
primarily reflecting a decline in payment card and service charge
income due mostly to seasonal considerations, as well as a decline
in equity method investments income.
INCOME STATEMENT
Net interest income on a tax-equivalent basis totaled $30.1
million for the third quarter of 2023. This reflected an increase
of $0.3 million, or 0.9%, from the second quarter of 2023 and was
consistent as compared to the third quarter of 2022. The increase
in net interest income compared to the second quarter of 2023
reflected a higher net interest margin, partially offset by a
decline in total average earning asset balances.
Interest income increased $1.3 million, or 2.8%, from the second
quarter of 2023 and increased $14.4 million, or 42.5%, from the
third quarter of 2022. The tax-equivalent yield on loans was 7.0%
for the third quarter of 2023, compared to 6.7% for the second
quarter of 2023 and 5.3% for the third quarter of 2022. Higher loan
yields compared to the second quarter of 2023 generally reflect the
beneficial impact of higher interest rates on earning asset yields,
while higher loan yields compared to the third quarter of 2022
reflect the cumulative impact of loans booked at higher yields than
the prevailing portfolio yield in the prior year.
Interest expense increased $1.0 million, or 5.8%, from the
second quarter of 2023 and increased $14.4 million from the third
quarter of 2022. The cost of funds was 2.43% for the third quarter
of 2023, up from 2.26% for the second quarter of 2023 and 0.59% for
the third 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. The
increase in cost of funds compared to the prior year period
reflects the impact of increased time deposits 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 third
quarter of 2023 was 3.90%, an increase of 10 basis points versus
the second quarter of 2023 and a decrease of 35 basis points versus
the third quarter of 2022. 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 increase in net
interest margin from the second quarter of 2023 primarily reflected
higher loan yields and a favorable shift in the mix of earning
assets and deposit funding. Contraction in net interest margin from
the third quarter of 2022 primarily reflected higher funding costs
and an unfavorable shift in the mix of earning assets (loan
balances declined, while lower yielding cash balances increased),
partially offset by higher interest rates on loans.
Noninterest income totaled $5.8 million for the third quarter of
2023, a decrease of $0.6 million from the second quarter of 2023
and an increase of $0.3 million from the third quarter of 2022. The
decrease compared to the prior quarter is primarily driven by
declines of $2.6 million in equity method investment income from
our mortgage companies, $0.7 million in payment card and service
charge income and $0.4 million in other operating income. These
decreases were partially offset by increases of $0.3 million in
compliance and consulting income and $0.3 million in gain on sale
of equity securities. Additionally, the second quarter of 2023
included losses of $1.0 million in acquisition and divestiture
activity and $1.0 million in sale of loans, without comparable
losses in the third quarter of 2023.
The $0.3 million increase in noninterest income from the third
quarter of 2022 was primarily driven by increases of $0.8 million
in other operating income, $0.3 million in compliance consulting
income, $0.3 million in holding gain on equity securities, $0.3
million in equity method investment income and $0.2 million in gain
on sale of equity securities. These increases were partially offset
by declines of $1.0 million in gain on sale of loans, $0.5 million
in payment and card service charge income, $0.1 million in
insurance and investment services income.
Noninterest expense totaled $30.7 million for the third quarter
of 2023, an increase of $0.4 million, or 1.5%, from the second
quarter of 2023 and an increase of $2.5 million, or 9.0%, from the
third quarter of 2022, primarily reflecting higher professional
fees of $1.7 million, or 43.9%, and $1.8 million, or 45.3%, as
compared to the second quarter of 2023 and the third quarter of
2022, respectively. Salaries and employee benefits expense
increased $0.3 million, or 1.7%, and $0.1 million, or 0.7%, as
compared to the second quarter of 2023 and the third quarter of
2022, respectively.
BALANCE SHEET
Loans totaled $2.27 billion at September 30, 2023, a decrease of
$42.0 million, or 1.8%, and $201.0 million, or 8.1%, as compared to
June 30, 2023 and September 30, 2022, respectively. The decline in
loan balances compared to the prior quarters primarily reflects
amortization of the loan portfolio and slower origination as the
pipeline continues to build, in addition to the sale of $15.9
million of subprime automobile loans during the third quarter of
2023 and the sale of $20.4 million of subprime automobile loans
during the second quarter of 2023. Loans held-for-sale, which
represent MVB Bank’s government guaranteed lending growth vehicle,
were $7.6 million as of September 30, 2023, compared to $7.0
million at June 30, 2023 and $20.0 million at September 30,
2022.
Deposits totaled $3.04 billion as of September 30, 2023, an
increase of $80.0 million, or 2.7%, from June 30, 2023, and an
increase of $341.9 million, or 12.7%, from September 30, 2022. NIB
deposits totaled $1.09 billion as of September 30, 2023, an
increase of $106.3 million, or 10.8%, from June 30, 2023 and a
decrease of $317.9 million, or 22.5%, from September 30, 2022. The
increase in total deposit balances compared to June 30, 2023
primarily reflects the increase in noninterest-bearing deposits,
payment relationships, gaming and seasonal considerations,
partially offset by a decrease in brokered deposits. The increase
relative to September 30, 2022, reflects higher CDs and brokered
deposits, partially offset by a decrease in NIB deposits driven by
the highly-competitive deposit environment, higher interest rates
and the utilization of off-balance sheet deposit networks to
generate fee income, enhance capital efficiency and manage
liquidity and concentration risk.
CAPITAL
The Community Bank Leverage Ratio was 10.4% as of September 30,
2023, compared to 10.0% as of June 30, 2023 and 11.1% as of
September 30, 2022.
The tangible common equity ratio, a non-GAAP financial measure,
was 7.8% of as of September 30, 2023, compared to 8.1% as of June
30, 2023 and 7.6% as of as of September 30, 2022. See the
reconciliation of the tangible common equity ratio to its most
directly comparable U.S. GAAP financial measure later in this
release.
The Company issued a quarterly cash dividend of $0.17 per share
for the third quarter of 2023, consistent with the second quarter
of 2023 and the third quarter of 2022.
ASSET QUALITY
Nonperforming loans totaled $10.6 million, or 0.5% of total
loans, as of September 30, 2023, as compared to $13.6 million, or
0.6% of total loans, as of June 30, 2023, and $22.4 million, or
0.9% of total loans, as of September 30, 2022. Criticized loans as
a percentage of total loans were 6.1%, compared to 3.1% as of June
30, 2023 and 3.4% as of September 30, 2022.
Net charge-offs were $5.9 million, or 1.0% of total loans, for
the third quarter of 2023, compared to $1.2 million, or 0.2% of
total loans, for the second quarter of 2023 and $1.3 million, or
0.2% of total loans, for the third quarter of 2022.
The release of allowance for credit losses totaled $0.2 million
compared to $4.2 million for the prior quarter. The Company sold
$15.9 million and $20.4 million of subprime automobile loans during
the quarters ended September 30, 2023 and June 30, 2023,
respectively, and released the reserves associated with those
loans, resulting in the net allowance releases. The allowance for
credit losses was 1.1% of total loans at September 30, 2023, as
compared to 1.3% at June 30, 2023 and 1.1% at September 30, 2022.
The decline in the allowance ratio compared to the prior quarter
largely reflects the aforementioned changes in loan portfolio
composition.
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 turmoil
in the banking industry; 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; unforeseen events, such as pandemics or natural
disasters, and any governmental or societal responses thereto;
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
Third Quarter
Second Quarter
Third Quarter
Interest income
$
48,325
$
47,031
$
33,903
$
140,119
$
85,255
Interest expense
18,460
17,449
4,057
47,943
6,901
Net interest income
29,865
29,582
29,846
92,176
78,354
Provision (release of allowance) for
credit losses
(159
)
(4,235
)
5,120
182
11,500
Net interest income after provision
(release of allowance) for credit losses
30,024
33,817
24,726
91,994
66,854
Total noninterest income
5,791
6,419
5,467
15,277
24,130
Noninterest expense:
Salaries and employee benefits
16,016
15,746
15,905
48,508
48,217
Other expense
14,709
14,536
12,271
40,816
35,188
Total noninterest expenses
30,725
30,282
28,176
89,324
83,405
Income before income taxes
5,090
9,954
2,017
17,947
7,579
Income taxes
1,218
1,956
184
3,639
1,563
Net income from continuing operations
before noncontrolling interest
3,872
7,998
1,833
14,308
6,016
Income from discontinued operations,
before income taxes
—
—
935
11,831
2,599
Income taxes - discontinued operations
—
—
213
3,049
598
Net income from discontinued
operations
—
—
722
8,782
2,001
Net (income) loss attributable to
noncontrolling interest
(5
)
114
163
231
521
Net income available to common
shareholders
$
3,867
$
8,112
$
2,718
$
23,321
$
8,538
Earnings per share from continuing
operations - basic
$
0.30
$
0.64
$
0.16
$
1.15
$
0.54
Earnings per share from discontinued
operations - basic
$
—
$
—
$
0.06
$
0.69
$
0.16
Earnings per share - basic
$
0.30
$
0.64
$
0.22
$
1.84
$
0.70
Earnings per share from continuing
operations - diluted
$
0.29
$
0.63
$
0.16
$
1.12
$
0.51
Earnings per share from discontinued
operations - diluted
$
—
$
—
$
0.05
$
0.67
$
0.15
Earnings per share - diluted
$
0.29
$
0.63
$
0.21
$
1.79
$
0.66
Noninterest Income
(Unaudited) (Dollars in
thousands)
Quarterly
Year-to-Date
2023
2023
2022
2023
2022
Third Quarter
Second Quarter
Third Quarter
Card acquiring income
$
845
$
788
$
560
$
2,255
$
2,293
Service charges on deposits
490
1,060
889
2,676
2,734
Interchange income
1,517
1,655
1,864
5,034
4,943
Total payment card and service charge
income
2,852
3,503
3,313
9,965
9,970
Equity method investments income
(loss)
(750
)
1,873
(1,021
)
(70
)
666
Compliance and consulting income
1,314
996
966
3,326
3,380
Gain (loss) on sale of loans
330
(989
)
1,298
(1,015
)
3,786
Investment portfolio gains (losses)
244
(134
)
(217
)
(1,734
)
2,322
Loss on acquisition and divestiture
activity
—
(986
)
—
(986
)
—
Other noninterest income
1,801
2,156
1,128
5,791
4,006
Total noninterest income
$
5,791
$
6,419
$
5,467
$
15,277
$
24,130
Condensed Consolidated Balance
Sheets
(Unaudited) (Dollars in
thousands)
September 30, 2023
June 30, 2023
September 30, 2022
Cash and cash equivalents
$
587,100
$
455,835
$
79,946
Securities available-for-sale, at fair
value
311,537
329,137
366,742
Equity securities
40,835
41,082
34,101
Loans held-for-sale
7,603
7,009
19,977
Loans receivable
2,270,433
2,312,387
2,471,395
Less: Allowance for credit losses
(24,276
)
(30,294
)
(26,515
)
Loans receivable, net
2,246,157
2,282,093
2,444,880
Premises and equipment, net
21,468
22,407
24,639
Assets from discontinued operations
—
—
4,818
Goodwill
2,838
2,838
2,838
Other assets
220,045
211,446
161,981
Total assets
$
3,437,583
$
3,351,847
$
3,139,922
Noninterest-bearing deposits
$
1,093,903
$
987,555
$
1,411,772
Interest-bearing deposits
1,944,986
1,971,384
1,285,186
FHLB and other borrowings
—
—
73,328
Senior term loan
8,473
8,835
—
Subordinated debt
73,478
73,414
73,222
Liabilities from discontinued
operations
—
—
5,647
Other liabilities
45,374
36,362
46,407
Stockholders' equity
271,369
274,297
244,360
Total liabilities and stockholders'
equity
$
3,437,583
$
3,351,847
$
3,139,922
Reportable Segments
(Unaudited)
Three Months Ended September 30,
2023
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
48,268
$
103
$
2
$
—
$
(48
)
$
48,325
Interest expense
17,454
—
1,000
54
(48
)
18,460
Net interest income (expense)
30,814
103
(998
)
(54
)
—
29,865
Release of allowance for credit losses
(159
)
—
—
—
—
(159
)
Net interest income (expense) after
release of allowance for credit losses
30,973
103
(998
)
(54
)
—
30,024
Noninterest income
4,980
(742
)
2,576
3,099
(4,122
)
5,791
Noninterest Expenses:
Salaries and employee benefits
9,787
—
4,129
2,100
—
16,016
Other expenses
14,701
13
1,992
2,125
(4,122
)
14,709
Total noninterest expenses
24,488
13
6,121
4,225
(4,122
)
30,725
Income (loss) before income taxes
11,465
(652
)
(4,543
)
(1,180
)
—
5,090
Income taxes
2,628
(153
)
(978
)
(279
)
—
1,218
Net income (loss)
8,837
(499
)
(3,565
)
(901
)
—
3,872
Net income attributable to noncontrolling
interest
—
—
—
(5
)
—
(5
)
Net income (loss) available to common
shareholders
$
8,837
$
(499
)
$
(3,565
)
$
(906
)
$
—
$
3,867
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
Provision for credit losses
(4,235
)
—
—
—
—
(4,235
)
Net interest income (expense) after
provision 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 loss 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 September 30,
2022
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
33,777
$
103
$
33
$
—
$
(10
)
$
33,903
Interest expense
3,286
—
771
10
(10
)
4,057
Net interest income (expense)
30,491
103
(738
)
(10
)
—
29,846
Provision for credit losses
5,120
—
—
—
—
5,120
Net interest income (expense) after
provision for credit losses
25,371
103
(738
)
(10
)
—
24,726
Noninterest income
5,356
(817
)
2,366
1,370
(2,808
)
5,467
Noninterest Expenses:
Salaries and employee benefits
9,354
8
4,274
2,269
—
15,905
Other expenses
11,523
25
1,810
1,722
(2,808
)
12,272
Total noninterest expenses
20,877
33
6,084
3,991
(2,808
)
28,177
Income (loss) before income taxes
9,850
(747
)
(4,456
)
(2,631
)
—
2,016
Income taxes
1,817
(192
)
(840
)
(601
)
—
184
Net income (loss) from continuing
operations
8,033
(555
)
(3,616
)
(2,030
)
—
1,832
Income from discontinued operations,
before income taxes
—
—
—
936
—
936
Income tax expense - discontinued
operations
—
—
—
213
—
213
Net income from discontinued
operations
—
—
—
723
—
723
Net income (loss)
8,033
(555
)
(3,616
)
(1,307
)
—
2,555
Net loss attributable to noncontrolling
interest
—
—
—
163
—
163
Net income (loss) available to common
shareholders
$
8,033
$
(555
)
$
(3,616
)
$
(1,144
)
$
—
$
2,718
Nine Months Ended September 30,
2023
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
139,859
$
313
$
38
$
—
$
(91
)
$
140,119
Interest expense
44,934
—
2,992
108
(91
)
47,943
Net interest income (expense)
94,925
313
(2,954
)
(108
)
—
92,176
Provision for credit losses
182
—
—
—
—
182
Net interest income (expense) after
provision for credit losses
94,743
313
(2,954
)
(108
)
—
91,994
Noninterest income
12,111
(56
)
8,102
5,934
(10,814
)
15,277
Noninterest Expenses:
Salaries and employee benefits
27,891
7
13,702
6,908
—
48,508
Other expenses
39,903
65
6,072
5,590
(10,814
)
40,816
Total noninterest expenses
67,794
72
19,774
12,498
(10,814
)
89,324
Income (loss) before income taxes
39,060
185
(14,626
)
(6,672
)
—
17,947
Income taxes
8,380
(14
)
(3,127
)
(1,600
)
—
3,639
Net income (loss) from continuing
operations
30,680
199
(11,499
)
(5,072
)
—
14,308
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)
30,680
199
(11,499
)
3,710
—
23,090
Net loss attributable to noncontrolling
interest
—
—
—
231
—
231
Net income (loss) available to common
shareholders
$
30,680
$
199
$
(11,499
)
$
3,941
$
—
$
23,321
Nine Months Ended September 30,
2022
CoRe Banking
Mortgage Banking
Financial Holding
Company
Other
Intercompany
Eliminations
Consolidated
(Dollars in thousands)
Interest income
$
84,858
$
309
$
113
$
—
$
(25
)
$
85,255
Interest expense
4,617
—
2,284
25
(25
)
6,901
Net interest income (expense)
80,241
309
(2,171
)
(25
)
—
78,354
Provision for credit losses
11,500
—
—
—
—
11,500
Net interest income (expense) after
provision for credit losses
68,741
309
(2,171
)
(25
)
—
66,854
Noninterest income
19,347
1,193
8,265
4,490
(9,165
)
24,130
Noninterest Expenses:
Salaries and employee benefits
28,810
8
12,769
6,630
—
48,217
Other expenses
33,484
119
6,262
4,489
(9,165
)
35,189
Total noninterest expenses
62,294
127
19,031
11,119
(9,165
)
83,406
Income (loss) before income taxes
25,794
1,375
(12,937
)
(6,654
)
—
7,578
Income taxes
5,219
356
(2,524
)
(1,488
)
—
1,563
Net income (loss) from continuing
operations
20,575
1,019
(10,413
)
(5,166
)
—
6,015
Income from discontinued operations,
before income taxes
—
—
—
2,600
—
2,600
Income tax expense - discontinued
operations
—
—
—
598
—
598
Net income from discontinued
operations
—
—
—
2,002
—
2,002
Net income (loss)
20,575
1,019
(10,413
)
(3,164
)
—
8,017
Net loss attributable to noncontrolling
interest
—
—
—
521
—
521
Net income (loss) available to common
shareholders
$
20,575
$
1,019
$
(10,413
)
$
(2,643
)
$
—
$
8,538
Average Balances and Interest
Rates
(Unaudited) (Dollars in
thousands)
Three Months Ended
Three Months Ended
Three Months Ended
September 30, 2023
June 30, 2023
September 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
$
483,158
$
6,404
5.26
%
$
444,600
$
5,542
5.00
%
$
32,552
$
111
1.35
%
CDs with banks
—
—
—
—
—
—
232
2
3.42
Investment securities:
Taxable
206,340
1,056
2.03
220,687
1,229
2.23
231,953
897
1.53
Tax-exempt 1
107,490
1,016
3.75
123,497
1,147
3.73
144,719
1,346
3.69
Loans and loans held-for-sale: 2
Commercial 3
1,593,875
31,348
7.80
1,635,438
30,534
7.49
1,687,383
22,898
5.38
Tax-exempt 1
3,678
40
4.31
3,822
42
4.41
4,498
51
4.50
Real estate
573,579
6,351
4.39
593,767
5,691
3.84
579,685
4,707
3.22
Consumer
95,032
2,331
9.73
128,113
3,096
9.69
129,464
4,183
12.82
Total loans
2,266,164
40,070
7.02
2,361,140
39,363
6.69
2,401,030
31,839
5.26
Total earning assets
3,063,152
48,546
6.29
3,149,924
47,281
6.02
2,810,486
34,195
4.83
Less: Allowance for credit losses
(29,693
)
(35,143
)
(23,083
)
Cash and due from banks
6,686
5,756
5,399
Other assets
281,504
289,161
227,337
Total assets
$
3,321,649
$
3,409,698
$
3,020,139
Liabilities
Deposits:
NOW
$
674,745
$
4,970
2.92
%
$
682,277
$
4,816
2.83
%
$
734,271
$
1,394
0.75
%
Money market checking
537,592
3,294
2.43
615,962
2,439
1.59
258,527
422
0.65
Savings
72,206
438
2.41
72,289
351
1.95
71,370
153
0.85
IRAs
6,788
56
3.27
6,401
45
2.82
6,132
17
1.10
CDs
664,281
8,702
5.20
662,753
8,799
5.33
202,299
988
1.94
Repurchase agreements and federal funds
sold
4,911
—
—
5,428
—
—
10,627
1
0.04
FHLB and other borrowings
278
—
—
158
—
—
48,058
311
2.57
Senior term loan
8,751
191
8.66
9,351
198
8.49
—
—
—
Subordinated debt
73,446
809
4.37
73,382
801
4.38
73,190
771
4.18
Total interest-bearing liabilities
2,042,998
18,460
3.58
2,128,001
17,449
3.29
1,404,474
4,057
1.15
Noninterest-bearing demand deposits
975,164
971,436
1,321,982
Other liabilities
38,021
38,842
37,019
Total liabilities
3,056,183
3,138,279
2,763,475
Stockholders’ equity
Common stock
13,570
13,533
13,086
Paid-in capital
159,050
158,601
145,877
Treasury stock
(16,741
)
(16,741
)
(16,741
)
Retained earnings
146,504
148,600
144,816
Accumulated other comprehensive loss
(36,865
)
(32,714
)
(30,915
)
Total stockholders’ equity attributable to
parent
265,518
271,279
256,123
Noncontrolling interest
(52
)
140
541
Total stockholders’ equity
265,466
271,419
256,664
Total liabilities and stockholders’
equity
$
3,321,649
$
3,409,698
$
3,020,139
Net interest spread (tax-equivalent)
2.71
%
2.73
%
3.68
%
Net interest income and margin
(tax-equivalent)1
$
30,086
3.90
%
$
29,832
3.80
%
$
30,138
4.25
%
Less: Tax-equivalent adjustments
$
(221
)
$
(250
)
$
(292
)
Net interest spread
2.68
%
2.70
%
3.64
%
Net interest income and margin
$
29,865
3.87
%
$
29,582
3.77
%
$
29,846
4.21
%
1 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 included in the tables on page 19.
2 Non-accrual loans are included in total
loan balances, lowering the effective yield for the portfolio in
the aggregate.
3 MVB Bank’s PPP loans totaling $3.0
million, $4.5 million and $20.1 million are included in this amount
as of September 30, 2023, June 30, 2023 and September 30, 2022,
respectively.
Nine Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
Average
Balance
Interest
Income/
Expense
Yield/
Cost
Average
Balance
Interest
Income/
Expense
Yield/
Cost
Assets
Interest-bearing balances with banks
$
405,012
$
15,099
4.98
%
$
273,184
$
630
0.31
%
CDs with banks
—
—
—
1,381
24
2.32
Investment securities:
Taxable
221,089
4,133
2.50
237,188
2,383
1.34
Tax-exempt 1
122,818
3,471
3.78
140,377
3,824
3.64
Loans and loans held-for-sale: 2
Commercial 3
1,616,510
90,413
7.48
1,569,161
59,899
5.10
Tax-exempt 1
3,813
125
4.38
4,829
156
4.32
Real estate
596,070
18,343
4.11
438,380
9,722
2.97
Consumer
120,075
9,290
10.34
91,092
9,454
13.88
Total loans
2,336,468
118,171
6.76
2,103,462
79,231
5.04
Total earning assets
3,085,387
140,874
6.10
2,755,592
86,092
4.18
Less: Allowance for credit losses
(31,656
)
(20,468
)
Cash and due from banks
4,252
5,680
Other assets
303,233
237,637
Total assets
$
3,361,216
$
2,978,441
Liabilities
Deposits:
NOW
$
717,527
$
14,448
2.69
%
$
678,991
$
1,844
0.36
%
Money market checking
455,463
6,661
1.96
367,608
807
0.29
Savings
79,187
1,430
2.41
49,714
155
0.42
IRAs
6,448
128
2.65
6,271
52
1.11
CDs
572,078
21,396
5.00
122,095
1,433
1.57
Repurchase agreements and federal funds
sold
5,974
—
—
11,334
4
0.05
FHLB and other borrowings
23,449
888
5.06
16,966
322
2.54
Senior term loan
9,285
583
8.39
—
—
—
Subordinated debt
73,383
2,409
4.39
73,126
2,284
4.18
Total interest-bearing liabilities
1,942,794
47,943
3.30
1,326,105
6,901
0.70
Noninterest-bearing demand deposits
1,107,712
1,350,533
Other liabilities
37,987
41,379
Total liabilities
3,088,493
2,718,017
Stockholders’ equity
Common stock
13,525
13,276
Paid-in capital
157,034
144,903
Treasury stock
(16,741
)
(16,741
)
Retained earnings
153,769
140,174
Accumulated other comprehensive income
loss
(34,980
)
(21,905
)
Total stockholders’ equity attributable to
parent
272,607
259,707
Noncontrolling interest
116
717
Total stockholders’ equity
272,723
260,424
Total liabilities and stockholders’
equity
$
3,361,216
$
2,978,441
Net interest spread (tax-equivalent)
2.80
%
3.48
%
Net interest income and margin
(tax-equivalent)1
$
92,931
4.03
%
$
79,191
3.84
%
Less: Tax-equivalent adjustments
$
(755
)
$
(837
)
Net interest spread
2.77
%
3.44
%
Net interest income and margin
$
92,176
3.99
%
$
78,354
3.80
%
1 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 included in the tables on page 19.
2 Non-accrual loans are included in total
loan balances, lowering the effective yield for the portfolio in
the aggregate.
3 MVB Bank’s PPP loans totaling $3.0
million and $20.1 million are included in this amount as of
September 30, 2023 and September 30, 2022, respectively.
Selected Financial
Data
(Unaudited) (Dollars in
thousands, except per share data)
Quarterly
Year-to-Date
2023
2023
2022
2023
2022
Third Quarter
Second Quarter
Third Quarter
Earnings and Per Share Data:
Net income
$
3,867
$
8,112
$
2,718
$
23,321
$
8,538
Earnings per share from continuing
operations - basic
$
0.30
$
0.64
$
0.16
$
1.15
$
0.54
Earnings per share from discontinued
operations - basic
$
—
$
—
$
0.06
$
0.69
$
0.16
Earnings per share - basic
$
0.30
$
0.64
$
0.22
$
1.84
$
0.70
Earnings per share from continuing
operations - diluted
$
0.29
$
0.63
$
0.16
$
1.12
$
0.51
Earnings per share from discontinued
operations - diluted
$
—
$
—
$
0.05
$
0.67
$
0.15
Earnings per share - diluted
$
0.29
$
0.63
$
0.21
$
1.79
$
0.66
Cash dividends paid per common share
$
0.17
$
0.17
$
0.17
$
0.51
$
0.51
Book value per common share
$
21.33
$
21.57
$
19.85
$
21.33
$
19.85
Tangible book value per common share 1
$
21.08
$
21.31
$
19.38
$
21.08
$
19.38
Weighted-average shares outstanding -
basic
12,722,010
12,689,669
12,238,505
12,678,708
12,170,028
Weighted-average shares outstanding -
diluted
13,116,629
12,915,294
12,854,951
13,012,834
12,852,574
Performance Ratios:
Return on average assets 2
0.5
%
1.0
%
0.4
%
0.9
%
0.4
%
Return on average equity 2
5.8
%
12.0
%
4.2
%
11.4
%
4.4
%
Net interest margin 3 4
3.90
%
3.80
%
4.25
%
4.03
%
3.84
%
Efficiency ratio 5 10
86.2
%
84.1
%
78.8
%
75.4
%
80.4
%
Overhead ratio 2 6
3.7
%
3.6
%
4.0
%
3.5
%
4.0
%
Equity to assets
7.9
%
8.2
%
7.8
%
7.9
%
7.8
%
Asset Quality Data and Ratios:
Charge-offs
$
8,064
$
3,700
$
3,653
$
16,611
$
7,305
Recoveries
$
2,205
$
2,468
$
2,313
$
7,842
$
4,054
Net loan charge-offs to total loans 2
7
1.0
%
0.2
%
0.2
%
0.5
%
0.2
%
Allowance for credit losses
$
24,276
$
30,294
$
26,515
$
24,276
$
26,515
Allowance for credit losses to total loans
8
1.07
%
1.31
%
1.07
%
1.07
%
1.07
%
Nonperforming loans
$
10,593
$
13,646
$
22,350
$
10,593
$
22,350
Nonperforming loans to total loans
0.5
%
0.6
%
0.9
%
0.5
%
0.9
%
Mortgage Company Equity Method
Investees Production Data9:
Mortgage pipeline
$
643,578
$
748,756
$
792,388
$
643,578
$
792,388
Loans originated
$
1,131,963
$
1,167,596
$
606,805
$
3,299,253
$
2,713,508
Loans closed
$
786,885
$
820,665
$
615,585
$
2,282,768
$
2,239,732
Loans sold
$
605,296
$
786,469
$
619,059
$
1,827,019
$
1,999,706
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 included in the tables
on page 19.
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-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
Nine Months Ended
(Dollars in thousands)
September 30, 2023
June 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Net interest margin - U.S. GAAP
basis
Net interest income
$
29,865
$
29,582
$
29,846
$
92,176
$
78,354
Average interest-earning assets
$
3,063,152
$
3,149,924
$
2,810,486
3,085,387
2,755,592
Net interest margin
3.87
%
3.77
%
4.21
%
3.99
%
3.80
%
Net interest margin - non-U.S. GAAP
basis
Net interest income
$
29,865
$
29,582
$
29,846
$
92,176
$
78,354
Impact of fully tax-equivalent
adjustment
221
250
292
755
837
Net interest income on a fully
tax-equivalent basis
$
30,086
$
29,832
$
30,138
92,931
79,191
Average interest-earning assets
$
3,063,152
$
3,149,924
$
2,810,486
$
3,085,387
$
2,755,592
Net interest margin on a fully
tax-equivalent basis
3.90
%
3.80
%
4.25
%
4.03
%
3.84
%
Non-U.S. GAAP Reconciliation:
Tangible Book Value per Common Share and Tangible Common Equity
Ratio
(Unaudited) (Dollars in
thousands, except per share data)
September 30, 2023
June 30, 2023
September 30, 2022
Tangible Book Value per Common
Share
Goodwill
$
2,838
$
2,838
$
3,988
Intangibles
375
397
1,806
Total intangibles
$
3,213
3,235
5,794
Total equity attributable to parent
$
271,416
274,349
243,913
Less: Total intangibles
(3,213
)
(3,235
)
(5,794
)
Tangible common equity
$
268,203
$
271,114
$
238,119
Tangible common equity
$
268,203
$
271,114
$
238,119
Common shares outstanding (000s)
12,726
12,720
12,287
Tangible book value per common share
$
21.08
$
21.31
$
19.38
Tangible Common Equity Ratio
Total assets
$
3,437,583
$
3,351,847
$
3,139,922
Less: Total intangibles
(3,213
)
(3,235
)
(5,794
)
Tangible assets
$
3,434,370
$
3,348,612
$
3,134,128
Tangible assets
$
3,434,370
$
3,348,612
$
3,134,128
Tangible common equity
$
268,203
$
271,114
$
238,119
Tangible common equity ratio
7.8
%
8.1
%
7.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231026268056/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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