Growth in Noninterest-Bearing Deposits and Loans Drive Earnings Above Expectations

Rhea-AI Summary

MVB Financial Corp. (NASDAQ: MVBF) reported a net income of $9.2 million for Q2 2021, translating to $0.79 per basic share. The company's noninterest-bearing deposits surged to $932.7 million, marking a 76% increase YoY. Net interest income reached $19.1 million, a 9% rise quarter-over-quarter. The tangible book value per share also rose to $20.54. Notably, MVB completed the acquisition of Trabian Technology, enhancing its Fintech initiatives. However, the net interest margin declined to 3.24% due to excess liquidity and PPP loans.

Positive

• Net income of $9.2 million, $0.79 EPS basic.
• Noninterest-bearing deposits increased by 76% YoY to $932.7 million.
• Net interest income rose to $19.1 million, a 9% increase QoQ.
• Tangible book value per share grew to $20.54, up 23% YoY.
• Acquisition of Trabian Technology supports Fintech growth.

Negative

• Net interest margin decreased to 3.24%, down 54 basis points YoY.
• Expenses rose by 22% QoQ, totaling $23.4 million.

MVB Financial Corp. (NASDAQ: MVBF) (“MVB Financial,” “MVB” or the “Company”) today reported net income of $9.2 million, or $0.79 basic and $0.73 diluted earnings per share for the three months ended June 30, 2021.

		Quarterly												Year-to-Date
		2021				2021				2020				2021				2020
		Second Quarter				First Quarter				Second Quarter
Net income		$	9,247			$	8,085			$	18,034			$	17,332			$	19,082
Earnings per share - basic		$	0.79			$	0.70			$	1.50			$	1.49			$	1.58
Earnings per share - diluted		$	0.73			$	0.66			$	1.49			$	1.39			$	1.55

Our earnings for the second quarter were impacted by the release of allowance for loan losses of $1.5 million and costs related to acquisition and divestiture activity of $0.4 million. The after-tax impact of these items on a basic per share basis was $0.11 and $(0.03), respectively, and was $0.10 and $(0.03) on a diluted per share basis, respectively, for the three months ended June 30, 2021.

SECOND QUARTER 2021 HIGHLIGHTS

• Financial technology (“Fintech”) and gaming initiatives drive continued transformation of MVB’s core funding profile
  • Noninterest-bearing (“NIB”) deposits were $932.7 million as of June 30, 2021, an increase of $95.4 million, or 11%, from March 31, 2021, and an increase of $404.1 million, or 76%, from June 30, 2020. NIB deposits as a percentage of total deposits were 41.8% as of June 30, 2021, compared to 37.8% as of March 31, 2021 and 28.4% as of June 30, 2020.
  • With the Company’s ever-expanding Banking-as-a-Service (“BaaS”) platform, MVB became the 18th largest bank in the United States based on the number of customer accounts.
  • Fintech deposits totaled $765.9 million as of June 30, 2021, an increase of $21.3 million, or 3%, from March 31, 2021 and an increase of $539.7 million, or 239%, from June 30, 2020.
  • Gaming deposits, which are included in total Fintech deposits, totaled $595.9 million as of June 30, 2021, an increase of $17.2 million, or 3%, from March 31, 2021 and an increase of $454.0 million, or 320%, from June 30, 2020.
• Robust quarter-over-quarter revenue growth
  • Net interest income was $19.1 million for the quarter ended June 30, 2021, an increase of $1.6 million, or 9%, compared to the quarter ended March 31, 2021, and an increase of $0.6 million, or 3%, compared to the quarter ended June 30, 2020.
  • Fully tax-equivalent net interest margin was 3.24% for the quarter ended June 30, 2021, a decrease of 2 basis points compared to the quarter ended March 31, 2021, and a decrease of 54 basis points compared to the quarter ended June 30, 2020, primarily driven by Paycheck Protection Program (“PPP”) loans and excess liquidity.
  • Loans, including loans of branches held-for-sale of $54.5 million, were $1.75 billion as of June 30, 2021, an increase of $57.5 million, or 3%, from March 31, 2021, and an increase of $257.2 million, or 17%, from June 30, 2020.
  • Payment card and service charge income was $1.9 million for the quarter ended June 30, 2021, an increase of $0.4 million, or 29%, compared to the quarter ended March 31, 2021, and an increase of $1.4 million, or 265%, compared to the quarter ended June 30, 2020.
• Continued strong value creation
  • Tangible book value (“TBV”) per share, a non-U.S. GAAP measure, was $20.54 as of June 30, 2021, an increase of $0.56, or 3%, from March 31, 2021, and an increase of $3.89, or 23%, from June 30, 2020. A reconciliation of TBV to its most comparable U.S. GAAP measure is included below.
  • MVB Bank, Inc. (“MVB Bank” or the “Bank”) finished the second quarter with strong capital ratios. As of June 30, 2021, the Bank’s Community Bank Leverage Ratio was 11.0%. The Company’s tangible common equity to tangible assets was 8.9% as of June 30, 2021.
  • As a result of this strong capital position, the Company increased the second quarterly dividend in 2021 to $0.12 per share, an increase of 20% compared to the previous quarter’s dividend. This dividend was payable on June 15, 2021 to shareholders of record at the close of business on June 1, 2021.
  • In July, MVB completed the sale of four banking centers in Southern West Virginia. This transaction included deposit balances of approximately $167 million and loan balances of $55 million. MVB will record a pre-tax gain of approximately $10 million on the sale, equating to a projected increase of 3% to TBV, in the third quarter of 2021.
• Improving credit quality, recovering market conditions and growing economic confidence drive reserve release
  • The release of allowance for loan losses totaled $1.5 million for the quarter ended June 30, 2021, compared to provision for loan losses of $0.6 million and $6.6 million for the quarters ended March 31, 2021 and June 30, 2020, respectively.
  • Allowance for loan losses to total loans was 1.5% as of June 30, 2021, a decrease of 8 basis points from March 31, 2021 and an increase of 28 basis points from June 30, 2020. Excluding PPP loans of $207.3 million, allowance for loan losses to total loans was 1.7% as of June 30, 2021.
  • There were no net charge-offs for the quarter ended June 30, 2021, a decrease of $0.5 million compared to the quarter ended March 31, 2021 and a decrease of $0.3 million compared to the quarter ended June 30, 2020.
• MVB completes the acquisition of Trabian Technology, Inc. (“Trabian”) and launches MVB Edge Ventures (“Edge Ventures”)
  • In April, the Company acquired a majority interest in Trabian, a leading software development firm servicing financial institutions and Fintech companies. MVB’s investment allowed Trabian to add 21 new team members to support their continued revenue growth and increased technology contribution to MVB’s Fintech initiatives.
  • In June, the Bank announced the formation of Edge Ventures, a wholly-owned subsidiary. Edge Ventures was created as a management company providing oversight, alignment and structure for MVB’s Fintech companies and allocates resources to help incubate venture businesses and technologies acquired and developed by MVB.

MANAGEMENT OVERVIEW

Throughout 2021, Team MVB continued to differentiate itself by generating growth in loans, including loans of branches held-for-sale, of $57.5 million, or 3%, from March 31, 2021, and $257.2 million, or 17%, from June 30, 2020. This loan growth will enhance future profitability and was funded by the sustained and robust growth in NIB deposits of $95.4 million, or 11%, from March 31, 2021, and $404.1 million, or 76%, from June 30, 2020. With NIB deposits as a percentage of total deposits up to 41.8% as of June 30, 2021, the Company’s strategy to evolve its deposit mix by replacing high-cost deposits with NIB deposits has proved to be successful and viable long-term. The Company generated net income of $9.2 million for the second quarter.

“MVB continues to build a best-in-class deposit funding base. In the second quarter, we achieved a huge milestone with NIB deposits now representing nearly 42% of total deposits. This bodes well for our future in a potentially rising rate environment. Our loan growth and loan quality are also exceeding expectations,” said Larry F. Mazza, President and CEO, MVB Financial. “We are seeing tangible progress in our various Fintech initiatives and continue to heavily invest in the build-out of that business, putting more ‘tech’ in our ‘fin’ by closing on the Trabian acquisition, more than doubling the size of the Trabian software development team and launching MVB Edge Ventures during the second quarter of 2021.”

LOANS

Loans, including loans of branches held-for-sale totaling $54.5 million, were $1.75 billion as of June 30, 2021, an increase of $57.5 million, or 3%, from March 31, 2021, and an increase of $257.2 million, or 17%, from June 30, 2020. Included in loans are PPP loans totaling $207.3 million at June 30, 2021, an increase of $16.7 million, or 9%, from March 31, 2021, and $117.5 million, or 131%, from June 30, 2020. The increase in loans was driven by increased commercial lending production, including the impact of the addition of a Small Business Administration (“SBA”) lending team during the fourth quarter of 2020. During the quarter ended June 30, 2021, the SBA team originated 7(a) loans totaling $12.3 million and sold 7(a) loans totaling $9.8 million for a gain on sale of $1.3 million.

The tax-equivalent yield on loans, including PPP loans, was 4.31% for the quarter ended June 30, 2021, a decrease of seven basis points from the quarter ended March 31, 2021 and a decrease of 43 basis points from the quarter ended June 30, 2020. These decreases were primarily the result of a decrease in the yield on commercial loans.

DEPOSITS

Deposits totaled $2.23 billion as of June 30, 2021, an increase of $12.6 million, or 1%, from March 31, 2021 and an increase of $365.2 million, or 20%, from June 30, 2020. NIB deposits totaled $932.7 million as of June 30, 2021, an increase of $95.4 million, or 11%, from March 31, 2021 and an increase of $404.1 million, or 76%, from June 30, 2020.

NET INTEREST INCOME

Net interest income for the quarter ended June 30, 2021 was $19.1 million, an increase of $1.6 million, or 9%, from the quarter ended March 31, 2021 and an increase of $0.6 million, or 3%, from the quarter ended June 30, 2020. On a fully tax-equivalent basis, net interest margin for the quarter ended June 30, 2021 was 3.24%, a decrease of two basis points versus the quarter ended March 31, 2021 and a decrease of 54 basis points versus the quarter ended June 30, 2020. Please see the table on page 16 for a reconciliation between net interest margin and net interest margin on a fully tax-equivalent basis, a non-GAAP measure. Net interest margin was primarily impacted by excess liquidity and PPP loans. For the quarter ended June 30, 2021, the excess liquidity from increased cash balances accounted for 11 basis points of the decrease and the PPP loans accounted for 21 basis points of the decrease. The tax-equivalent adjustments are added to net interest income and were $0.4 million for the quarter ended June 30, 2021, $0.4 million for the quarter ended March 31, 2021 and $0.3 million for the quarter ended June 30, 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 June 30, 2021 would have decreased 20 basis points.

Interest income increased $1.8 million, or 9%, compared to the quarter ended March 31, 2021 and decreased $0.9 million, or 4%, compared to the quarter ended June 30, 2020. The increase was primarily driven by growth in the interest income on commercial loans. The tax-equivalent yield on commercial loans decreased five basis points due to the average balance of commercial loans outpacing the increase in interest income compared to the quarter ended March 31, 2021. The 43-basis point decrease in the yield on commercial loans and the 118-basis point decrease in the yield on investments drove the 90-basis point decrease in the tax-equivalent yield on earning assets compared to the quarter ended June 30, 2020.

Interest expense increased $0.2 million, or 14%, compared to the quarter ended March 31, 2021 and decreased $1.5 million, or 46%, compared to the quarter ended June 30, 2020. The one-basis point decrease in the cost of interest-bearing liabilities compared to the quarter ended March 31, 2021 was driven by a 17-basis point decrease in the cost of certificates of deposit, while the overall cost of deposits remained flat. The 46-basis point decrease in the cost of interest-bearing liabilities compared to the quarter ended June 30, 2020 was driven by a 55-basis point decrease in the cost of deposits.

Despite a decrease in the Company's average NIB balances of $11.6 million from the quarter ended March 31, 2021, the Company maintained a 17-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended June 30, 2021, compared to a 20-basis point favorable spread for the quarter ended March 31, 2021. An increase in the Company’s average NIB balances of $355.8 million from the quarter ended June 30, 2020 helped to maintain a 17-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended June 30, 2021 compared to a 27-basis point favorable spread for the same period in 2020.

ASSET QUALITY

The release of allowance for loan losses totaled $1.5 million for the quarter ended June 30, 2021, as compared to provision for loan losses of $0.6 million and $6.6 million for the quarters ended March 31, 2021 and June 30, 2020, respectively. The release of allowance for loan losses was primarily the result of improvement in the qualitative adjustment factors within the allowance methodology. In addition, changes to the outstanding balances of the loan portfolios, changes to the level of recognized charge-offs and changes in the resulting historical loss rates, and adjustments to the risk grading of loans within the portfolio were all contributing factors in the ultimate change from provision for loan losses to the release of allowance for loan losses. Nonperforming loans totaled $15.5 million, or 0.9% of total loans, as of June 30, 2021, compared to 0.7% of total loans as of March 31, 2021 and compared to 0.9% of total loans as of June 30, 2020. Criticized loans as a percentage of total loans were 7.3%, a decrease of 70 basis points, or 9%, from March 31, 2021, and an increase of 46 basis points, or 7%, from June 30, 2020.

NONINTEREST INCOME

Noninterest income totaled $13.6 million for the quarter ended June 30, 2021, an increase of $1.2 million, or 10%, from the quarter ended March 31, 2021 and a decrease of $31.9 million, or 70%, from the quarter ended June 30, 2020.

The $1.2 million increase in noninterest income from the quarter ended March 31, 2021 was due to increases in the gain on sale of loans of $1.1 million, in compliance consulting income of $0.6 million, in the gain on sale of available-for-sale securities of $0.6 million, in payment card and service charge income of $0.4 million, and in the holding gain on equity securities of $0.2 million. These increases were partially offset by a decrease in equity method investment income related to the Company’s investment in Intercoastal Mortgage Company, LLC (“ICM”) of $1.9 million.

The $31.9 million decrease in noninterest income from the quarter ended June 30, 2020 was due to decreases in mortgage-related income of $28.4 million from the transition to the equity method from the mortgage combination with ICM that occurred in July 2020 and the gains on acquisition and divestiture activity of $14.3 million from the Company’s strategic transactions in the second quarter of 2020, including $9.6 million from the sale of Eastern Panhandle, WV banking centers and $4.7 million from the bargain purchase gain from the acquisition of First State. These decreases were partially offset by increases in equity method investment income related to the Company’s investment in ICM of $4.5 million, payment card and service charge income of $1.4 million, gain on sale of loans of $1.4 million, gain on sale of available-for-sale securities of $1.2 million, compliance consulting income of $0.9 million and holding gain on equity securities of $0.7 million.

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 $23.4 million for the quarter ended June 30, 2021, an increase of $4.3 million, or 22%, from the quarter ended March 31, 2021 and a decrease of $9.9 million, or 30%, from the quarter ended June 30, 2020.

The $4.3 million increase in noninterest expense from the quarter ended March 31, 2021 was due to increases in salaries and employee benefits of $1.8 million, in professional fees of $0.7 million, in data processing and communications expense of $0.5 million, and in travel, entertainment, dues and subscriptions of $0.3 million. The increase in salaries and employee benefits was driven by increases of $0.8 million at Chartwell Compliance, $0.5 million at Trabian, $0.2 million at the Bank, and $0.2 million at the Holding Company. These increases were due to 53 net new hires to further build-out the Fintech vertical at the Bank, Chartwell Compliance and the shared services at the Holding Company, as well as annual salary increases for existing employees during the second quarter of 2020.

The $9.9 million decrease in noninterest expense from the quarter ended June 30, 2020 was due to decreases in salaries and employee benefits of $9.0 million, in mortgage processing expense of $0.9 million and in professional fees of $0.5 million. The decrease in salaries and employee benefits was primarily due to the mortgage combination with ICM in July 2020.

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, 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 are subject to risks and uncertainties. Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. Forward-looking statements can be identified by the use of words such as “may,” “could,” “should,” “would,” “will,” “plans,” “believes,” “estimates,” “expects,” “anticipates,” “intends,” “continues” or the negative of those terms or similar expressions. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in forward-looking statements. Therefore, undue reliance should not be placed upon any forward-looking statements. Those factors include but are not limited to: market, economic, operational, liquidity and credit risk; changes in market interest rates; inability to achieve anticipated synergies and successfully integrate recent mergers and acquisitions; inability to successfully execute business plans, including strategies related to investments in 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												Year-to-Date
		2021				2021				2020				2021				2020
		Second Quarter				First Quarter				Second Quarter
Interest income		$	20,833			$	19,063			$	21,774			$	39,896			$	42,473
Interest expense		1,778				1,558				3,316				3,336				7,844
Net interest income		19,055				17,505				18,458				36,560				34,629
Provision (release of allowance) for loan losses		(1,540)				618				6,596				(922)				7,734
Net interest income after provision (release of allowance) for loan losses		20,595				16,887				11,862				37,482				26,895
Total noninterest income		13,644				12,458				45,513				26,102				56,363
Noninterest expense:
Salaries and employee benefits		13,661				11,911				22,659				25,572				38,841
Other expense		9,742				7,207				10,674				16,949				19,148
Total noninterest expenses		23,403				19,118				33,333				42,521				57,989
Income before income taxes		10,836				10,227				24,042				21,063				25,269
Income tax expense		1,673				2,169				6,008				3,842				6,187
Net income before noncontrolling interest		9,163				8,058				18,034				17,221				19,082
Net loss attributable to noncontrolling interest		84				27				—				111				—
Net income attributable to parent		9,247				8,085				18,034				17,332				19,082
Preferred dividends		—				35				115				35				229
Net income available to common shareholders		$	9,247			$	8,050			$	17,919			$	17,297			$	18,853
Earnings per share - basic		$	0.79			$	0.70			$	1.50			$	1.49			$	1.58
Earnings per share - diluted		$	0.73			$	0.66			$	1.49			$	1.39			$	1.55

Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in thousands)
		June 30, 2021				March 31, 2021				June 30, 2020
Cash and cash equivalents		$	332,771			$	339,616			$	78,854
Certificates of deposit with banks		11,803				11,803				13,046
Securities available-for-sale, at fair value		450,772				423,122				220,699
Equity securities		32,215				28,200				19,464
Loans held-for-sale		—				—				242,089
Loans receivable		1,697,326				1,694,385				1,494,672
Less: Allowance for loan losses		(24,882)				(26,214)				(17,742)
Loans receivable, net		1,672,444				1,668,171				1,476,930
Premises and equipment, net		21,033				24,665				24,586
Goodwill		4,119				2,350				19,232
Assets of branches held-for-sale		59,488				—				—
Other assets		149,895				148,162				120,257
Total assets		$	2,734,540			$	2,646,089			$	2,215,157
Noninterest-bearing deposits		$	932,660			$	837,221			$	528,527
Interest-bearing deposits		1,296,515				1,379,332				1,335,436
Liabilities of branches held-for-sale		165,750				—				—
Borrowed funds		100				102,185				36,610
Other liabilities		90,115				90,668				86,084
Stockholders' equity, including noncontrolling interest		249,400				236,683				228,500
Total liabilities and stockholders' equity		$	2,734,540			$	2,646,089			$	2,215,157

Reportable Segments
(Unaudited)
Three Months Ended June 30, 2021		CoRe Banking				Mortgage Banking				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	20,736			$	98			$	—			$	(1)			$	20,833
Interest expense		1,290				—				490				(2)				1,778
Net interest income (loss)		19,446				98				(490)				1				19,055
Release of allowance for loan losses		(1,540)				—				—				—				(1,540)
Net interest income (loss) after release of allowance for loan losses		20,986				98				(490)				1				20,595
Total noninterest income		9,986				4,546				2,309				(3,197)				13,644
Noninterest Expenses:
Salaries and employee benefits		10,384				—				3,277				—				13,661
Other expense		11,578				23				1,337				(3,196)				9,742
Total noninterest expenses		21,962				23				4,614				(3,196)				23,403
Income (loss) before income taxes		9,010				4,621				(2,795)				—				10,836
Income tax expense (benefit)		1,168				1,120				(615)				—				1,673
Net income (loss) before noncontrolling interest		7,842				3,501				(2,180)				—				9,163
Net loss attributable to noncontrolling interest		84				—				—				—				84
Net income (loss) attributable to parent		7,926				3,501				(2,180)				—				9,247
Preferred stock dividends		—				—				—				—				—
Net income (loss) available to common shareholders		$	7,926			$	3,501			$	(2,180)			$	—			$	9,247

Three Months Ended March 31, 2021		CoRe Banking				Mortgage Banking				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
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 (release of allowance) for loan losses		620				(2)				—				—				618
Net interest income (loss) after provision (release of allowance) 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 loss 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 June 30, 2020		CoRe Banking				Mortgage Banking				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	19,182			$	3,538			$	1			$	(947)			$	21,774
Interest expense		3,027				1,517				23				(1,251)				3,316
Net interest income (loss)		16,155				2,021				(22)				304				18,458
Provision (release of allowance) for loan losses		6,598				(2)				—				—				6,596
Net interest income (loss) after provision (release of allowance) for loan losses		9,557				2,023				(22)				304				11,862
Total noninterest income		17,832				28,562				1,679				(2,560)				45,513
Noninterest Expenses:
Salaries and employee benefits		6,170				13,584				2,905				—				22,659
Other expense		9,124				2,315				1,491				(2,256)				10,674
Total noninterest expenses		15,294				15,899				4,396				(2,256)				33,333
Income (loss) before income taxes		12,095				14,686				(2,739)				—				24,042
Income tax expense (benefit)		2,880				3,800				(672)				—				6,008
Net income (loss)		9,215				10,886				(2,067)				—				18,034
Preferred stock dividends		—				—				115				—				115
Net income (loss) available to common shareholders		$	9,215			$	10,886			$	(2,182)			$	—			$	17,919

Six Months Ended June 30, 2021		CoRe Banking				Mortgage Banking				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	39,695			$	202			$	1			$	(2)			$	39,896
Interest expense		2,382				—				956				(2)				3,336
Net interest income (loss)		37,313				202				(955)				—				36,560
Release of allowance for loan losses		(920)				(2)				—				—				(922)
Net interest income (loss) after release of allowance for loan losses		38,233				204				(955)				—				37,482
Total noninterest income		16,423				10,953				3,890				(5,164)				26,102
Noninterest Expenses:
Salaries and employee benefits		19,226				—				6,346				—				25,572
Other expense		19,607				86				2,420				(5,164)				16,949
Total noninterest expenses		38,833				86				8,766				(5,164)				42,521
Income (loss) before income taxes		15,823				11,071				(5,831)				—				21,063
Income tax expense (benefit)		2,317				2,684				(1,159)				—				3,842
Net income (loss) before noncontrolling interest		13,506				8,387				(4,672)				—				17,221
Net loss attributable to noncontrolling interest		111								—				—				111
Net income (loss) attributable to parent		13,617				8,387				(4,672)				—				17,332
Preferred stock dividends		—								35				—				35
Net income (loss) available to common shareholders		$	13,617			$	8,387			$	(4,707)			$	—			$	17,297

Six Months Ended June 30, 2020		CoRe Banking				Mortgage Banking				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	37,956			$	5,956			$	2			$	(1,441)			$	42,473
Interest expense		6,865				2,904				58				(1,983)				7,844
Net interest income (loss)		31,091				3,052				(56)				542				34,629
Provision for loan losses		7,730				4				—				—				7,734
Net interest income (loss) after provision for loan losses		23,361				3,048				(56)				542				26,895
Total noninterest income		21,288				36,347				3,183				(4,455)				56,363
Noninterest Expenses:
Salaries and employee benefits		12,036				21,468				5,337				—				38,841
Other expense		15,783				4,712				2,566				(3,913)				19,148
Total noninterest expenses		27,819				26,180				7,903				(3,913)				57,989
Income (loss) before income taxes		16,830				13,215				(4,776)				—				25,269
Income tax expense (benefit)		3,892				3,451				(1,156)				—				6,187
Net income (loss)		12,938				9,764				(3,620)				—				19,082
Preferred stock dividends		—				—				229				—				229
Net income (loss) available to common shareholders		$	12,938			$	9,764			$	(3,849)			$	—			$	18,853

Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)
		Three Months Ended											Three Months Ended											Three Months Ended
		June 30, 2021											March 31, 2021											June 30, 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 balances with banks		$	178,792			$	40			0.09	%		$	259,491			$	65			0.10	%		$	44,095			$	16			0.15	%
CDs with banks		11,803				58				1.97			11,803				57				1.96			12,811				64				2.00
Investment securities:
Taxable		254,536				625				0.98			172,902				631				1.48			96,760				477				1.98
Tax-exempt 2		207,830				1,640				3.17			212,488				1,714				3.27			123,806				1,248				4.04
Loans and loans held-for-sale: 1
Commercial 3		1,416,669				15,884				4.50			1,262,444				14,171				4.55			1,165,649				14,319				4.93
Tax-exempt 2		6,905				78				4.53			7,205				81				4.56			8,879				104				4.69
Real estate		320,528				2,747				3.44			293,076				2,684				3.71			532,386				5,701				4.30
Consumer		6,550				122				7.47			7,696				37				1.95			6,332				129				8.17
Total loans		1,750,652				18,831				4.31			1,570,421				16,973				4.38			1,713,246				20,253				4.74
Total earning assets		2,403,613				21,194				3.54			2,227,105				19,440				3.54			1,990,718				22,058				4.44
Less: Allowance for loan losses		(26,625)											(26,170)											(14,253)
Cash and due from banks		22,141											20,951											34,449
Other assets		193,165											209,995											179,806
Total assets		$	2,592,294										$	2,431,881										$	2,190,720
Liabilities
Deposits:
NOW		$	716,924			$	643			0.36	%		$	518,937			$	344			0.27	%		$	367,448			$	775			0.85	%
Money market checking		466,091				221				0.19			487,281				231				0.19			429,708				564				0.53
Savings		52,992				—				—			39,668				6				—			41,485				8				0.08
IRAs		12,358				40				1.30			12,693				42				1.34			12,408				47				1.52
CDs		156,507				332				0.85			168,951				425				1.02			495,519				1,642				1.33
Repurchase agreements and federal funds sold		10,833				3				0.11			10,249				3				0.12			9,682				5				0.21
FHLB and other borrowings		55,402				49				0.35			46,349				41				0.36			76,739				252				1.32
Subordinated debt		43,462				490				4.52			43,425				466				4.35			4,124				23				2.24
Total interest-bearing liabilities		1,514,569				1,778				0.47			1,327,553				1,558				0.48			1,437,113				3,316				0.93
Noninterest-bearing demand deposits		810,298											821,923											454,486
Other liabilities		28,688											45,311											79,826
Total liabilities		2,353,555											2,194,787											1,971,425
Stockholders’ equity
Preferred stock		—											2,349											7,334
Common stock		12,487											12,378											12,030
Paid-in capital		141,782											136,864											123,351
Treasury stock		(16,741)											(16,741)											(1,437)
Retained earnings		98,413											100,268											79,820
Accumulated other comprehensive income		2,194											1,971											(1,803)
Total stockholders’ equity attributable to parent		238,135											237,089											219,295
Noncontrolling interest		604											5											—
Total stockholders’ equity		238,739											237,094											219,295
Total liabilities and stockholders’ equity		$	2,592,294										$	2,431,881										$	2,190,720
Net interest spread (tax-equivalent)										3.07											3.06											3.51
Net interest income and margin (tax-equivalent) 2						$	19,416			3.24	%						$	17,882			3.26	%						$	18,742			3.78	%
Less: Tax-equivalent adjustments						$	(361)										$	(377)										$	(284)
Net interest spread										3.01	%										3.00	%										3.46	%
Net interest income and margin						$	19,055			3.18	%						$	17,505			3.19	%						$	18,458			3.72	%

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 $207.3 million, $190.6 million, and $89.8 million are included in this amount for the three months ended June 30, 2021, March 31, 2021, and June 30, 2020, respectively.

		Six Months Ended										Six Months Ended
		June 30, 2021										June 30, 2020
		Average Balance				Interest Income/ Expense				Yield/ Cost		Average Balance				Interest Income/ Expense				Yield/ Cost
Assets
Interest-bearing balances with banks		$	218,919			$	105			0.10	%	$	28,869			$	65			0.45	%
CDs with banks		11,803				115				1.96		12,680				126				1.99
Investment securities:
Taxable		213,944				1,256				1.18		104,932				1,143				2.18
Tax-exempt 2		210,146				3,354				3.22		116,997				2,358				4.04
Loans and loans held-for-sale: 1
Commercial 3		1,339,983				30,055				4.52		1,127,430				28,182				5.01
Tax-exempt 2		7,055				159				4.54		10,319				238				4.63
Real estate		306,878				5,430				3.57		481,053				10,655				4.44
Consumer		7,120				160				4.53		6,903				251				7.29
Total loans		1,661,036				35,804				4.35		1,625,705				39,326				4.85
Total earning assets		2,315,848				40,634				3.54		1,889,183				43,018				4.57
Less: Allowance for loan losses		(26,399)										(12,809)
Cash and due from banks		21,549										27,608
Other assets		201,533										165,387
Total assets		$	2,512,531									$	2,069,369
Liabilities
Deposits:
NOW		$	618,478			$	987			0.32	%	$	387,455			$	1,573			0.81	%
Money market checking		476,628				452				0.19		430,942				2,017				0.94
Savings		46,366				5				0.02		40,527				9				0.04
IRAs		12,525				82				1.32		14,490				125				1.73
CDs		162,694				758				0.94		415,165				3,222				1.56
Repurchase agreements and federal funds sold		10,542				8				0.15		9,601				15				0.31
FHLB and other borrowings		50,901				88				0.35		96,335				825				1.72
Subordinated debt		43,444				956				4.44		4,124				58				2.82
Total interest-bearing liabilities		1,421,578				3,336				0.47		1,398,639				7,844				1.12
Noninterest-bearing demand deposits		816,078										391,872
Other liabilities		36,960										61,644
Total liabilities		2,274,616										1,852,155
Stockholders’ equity
Preferred stock		1,168										7,334
Common stock		12,433										12,014
Paid-in capital		139,330										123,007
Treasury stock		(16,741)										(1,286)
Retained earnings		99,336										77,111
Accumulated other comprehensive income (loss)		2,083										(966)
Total stockholders’ equity attributable to parent		237,609										217,214
Noncontrolling interest		306										—
Total stockholders’ equity		237,915										217,214
Total liabilities and stockholders’ equity		$	2,512,531									$	2,069,369
Net interest spread (tax-equivalent)										3.07										3.45
Net interest income and margin (tax-equivalent) 2						$	37,298			3.25	%					$	35,174			3.73	%
Less: Tax-equivalent adjustments						$	(738)									$	(545)
Net interest spread										3.00	%									3.38	%
Net interest income and margin						$	36,560			3.18	%					$	34,629			3.68	%

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 $207.3 million and $89.8 million are included in this amount for the six months ended June 30, 2021 and June 30, 2020, respectively.

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, 2021				March 31, 2021				June 30, 2020				June 30, 2021				June 30, 2020
Net interest margin - U.S. GAAP basis
Net interest income		$	19,055			$	17,505			$	18,458			$	36,560			$	34,629
Average interest-earning assets		2,403,613				2,227,105				1,990,718				2,315,848				1,889,183
Net interest margin		3.18		%		3.19		%		3.72		%		3.18		%		3.68		%
Net interest margin - non-U.S. GAAP basis
Net interest income		$	19,055			$	17,505			$	18,458			$	36,560			$	34,629
Plus: Impact of fully tax-equivalent adjustment		361				377				284				738				545
Net interest income on a fully tax-equivalent basis		19,416				17,882				18,742				37,298				35,174
Average interest-earning assets		2,403,613				2,227,105				1,990,718				2,315,848				1,889,183
Net interest margin on a fully tax-equivalent basis		3.24		%		3.26		%		3.78		%		3.25		%		3.73		%

Selected Financial Data
(Unaudited) (Dollars in thousands, except per share data)
		Quarterly												Year-to-Date
		2021				2021				2020				2021				2020
		Second Quarter				First Quarter				Second Quarter
Earnings and Per Share Data:
Net income		$	9,247			$	8,085			$	18,034			17,332				19,082
Net income available to common shareholders		$	9,247			$	8,050			$	17,919			17,297				18,853
Earnings per share - basic		$	0.79			$	0.70			$	1.50			$	1.49			$	1.58
Earnings per share - diluted		$	0.73			$	0.66			$	1.49			$	1.39			$	1.55
Cash dividends paid per common share		$	0.12			$	0.10			$	0.09			$	0.22			$	0.18
Book value per common share		$	21.12			$	20.38			$	18.48			$	21.12			$	18.48
Tangible book value per common share		$	20.54			$	19.98			$	16.65			$	20.54			$	16.65
Weighted-average shares outstanding - basic		11,639,237				11,530,279				11,954,813				11,585,059				11,948,790
Weighted-average shares outstanding - diluted		12,612,030				12,218,899				12,011,845				12,449,973				12,156,214
Performance Ratios:
Return on average assets 1		1.4		%		1.3		%		3.3		%		1.4		%		1.8		%
Return on average equity 1		15.5		%		13.6		%		32.9		%		14.6		%		17.6		%
Net interest margin 2 3		3.24		%		3.26		%		3.78		%		3.25		%		3.73		%
Efficiency ratio 4		71.6		%		63.8		%		52.1		%		67.9		%		63.7		%
Overhead ratio 1 5		3.6		%		3.1		%		6.1		%		3.4		%		5.6		%
Equity to assets		9.1		%		8.9		%		10.3		%		9.1		%		10.3		%
Asset Quality Data and Ratios:
Charge-offs		$	—			$	265			$	23			$	265			$	1,779
Recoveries		$	208			$	17			$	8			$	225			$	12
Net loan charge-offs to total loans 1 6		(0.1)		%		0.1		%		—		%		—		%		0.2		%
Allowance for loan losses		$	24,882			$	26,214			$	17,742			$	24,882			$	17,742
Allowance for loan losses to total loans 7		1.5		%		1.5		%		1.2		%		1.5		%		1.2		%
Nonperforming loans		$	15,501			$	11,577			$	14,061			$	15,501			$	14,061
Nonperforming loans to total loans		0.9		%		0.7		%		0.9		%		0.9		%		0.9		%
ICM Production Data:
Mortgage pipeline		$	1,238,935			$	1,428,808			N/A				$	1,238,935			N/A
Loans originated		$	1,677,431			$	2,088,375			N/A				$	3,765,806			N/A
Loans closed		$	1,490,965			$	1,906,026			N/A				$	3,396,991			N/A
Loans sold		$	1,493,198			$	1,778,090			N/A				$	3,271,288			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, a non-U.S. GAAP measure
5		noninterest expense as a percentage of average assets, a non-U.S. GAAP measure
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												Year-to-Date
		2021				2021				2020				2021				2020
		Second Quarter				First Quarter				Second Quarter
Goodwill		$	4,119			$	2,350			$	19,232			$	4,119			$	19,232
Intangibles		2,692				2,246				2,708				2,692				$	2,708
Total intangibles		6,811				4,596				21,940				6,811				21,940
Total equity attributable to parent		248,611				236,210				228,500				248,611				228,500
Less: Preferred equity		—				—				(7,334)				—				(7,334)
Less: Total intangibles		(6,811)				(4,596)				(21,940)				(6,811)				(21,940)
Tangible common equity		241,800				231,614				199,226				241,800				199,226
Tangible common equity		241,800				231,614				199,226				241,800				199,226
Common shares outstanding (000s)		11,774				11,590				11,968				11,774				11,968
Tangible book value per common share		$	20.54			$	19.98			$	16.65			$	20.54			$	16.65

 

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FAQ

What is MVB Financial's net income for Q2 2021?

MVB Financial reported a net income of $9.2 million for Q2 2021.

How did MVB Financial's deposits change in Q2 2021?

MVB Financial's noninterest-bearing deposits increased by 76% year-over-year to $932.7 million.

What was MVB Financial's earnings per share for Q2 2021?

The earnings per share for MVB Financial were $0.79 basic and $0.73 diluted.

What is the significance of MVB Financial's acquisition of Trabian Technology?

The acquisition of Trabian Technology supports MVB's Fintech initiatives and may enhance its revenue growth.

What challenges did MVB Financial face in its Q2 2021 performance?

MVB Financial experienced a decline in net interest margin to 3.24% and a 22% increase in noninterest expenses.