MVB Financial Corp. Announces Fourth Quarter and Full Year 2022 Results

Rhea-AI Summary

MVB Financial Corp. (NASDAQ: MVBF) reported a net income of $6.5 million for Q4 2022, with earnings per share of $0.52 (basic) and $0.50 (diluted). Net interest income increased by 54.6% year-over-year to $33.7 million, driven by a tax-equivalent net interest margin of 4.57%. Noninterest income fell 56.5% to $6.3 million, largely due to cyclic headwinds in mortgage banking. The company also faced a 4.7% decline in total deposits, totaling $2.57 billion. Despite challenges, MVB remains focused on enhancing earnings per share and has received shareholder approval for its merger with Integrated Financial Holdings, expected to close in Q1 2023.

Positive

• Net income rose to $6.5 million in Q4 2022, an improvement over last year.
• Net interest income grew by 54.6% year-over-year to $33.7 million.
• Tax-equivalent net interest margin expanded to 4.57%, up 129 basis points from last year.
• Achieved positive operating leverage with a 4.6% growth in total revenues while noninterest expenses decreased by 4.1%.
• Received shareholder approval for the merger with Integrated Financial Holdings, enhancing growth prospects.

Negative

• Noninterest income dropped by 56.5% year-over-year, indicating significant challenges in fee income.
• Total deposits decreased by 4.7% from the previous quarter, reflecting liquidity management issues.
• Net charge-offs increased significantly to $5.4 million, driven by one commercial relationship charge-off.
• Tangible common equity to tangible assets ratio decreased to 8.38% from 9.62% year-over-year.

FAIRMONT, W. Va.--(BUSINESS WIRE)-- 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 fourth quarter and year ended December 31, 2022, with reported net income of $6.5 million, or $0.52 basic and $0.50 diluted earnings per share for the three months ended December 31, 2022.

		Quarterly									Year-to-Date
		2022			2022			2021			2022			2021
		Fourth Quarter			Third Quarter			Fourth Quarter
Net income		$	6,509		$	2,718		$	9,959		$	15,047		$	39,121
Earnings per share - basic		$	0.52		$	0.22		$	0.83		$	1.23		$	3.32
Earnings per share - diluted		$	0.50		$	0.21		$	0.77		$	1.17		$	3.10

“Our company made significant forward progress in 2022 on our MVB-F1: Success Loves Speed Strategic Plan, while adapting to challenging wet track conditions along the way,” said Larry F. Mazza, Chief Executive Officer, MVB Financial. “During the year, we welcomed new partners, delivered on the promise of our fast-track vehicles, and quickly adapted to setbacks brought on by market conditions.”

“Fourth quarter results reflected both notable progress and ongoing challenges. Our core earnings power improved, driven by net interest margin expansion and net interest income growth, while our actions to right-size the cost base drove expenses lower, resulting in positive operating leverage. Underlying it all, our solid foundation remained intact, as evidenced by capital strength, sound asset quality and growth in tangible book value per share.”

Mazza added, “Looking to 2023, higher interest rates, slowing economic growth and lingering market uncertainty continue to weigh on our mortgage business, fee income and certain of our Fintech initiatives. Despite these challenges, we are keenly focused on our North Star of earnings per share.”

FOURTH QUARTER 2022 HIGHLIGHTS

• Net interest margin expansion drives strong growth in net interest income
  • On a tax-equivalent basis, net interest margin for the quarter ended December 31, 2022 was 4.57%, up 32 basis points versus the quarter ended September 30, 2022 and 129 basis points versus the quarter ended December 31, 2021. 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. Relative to both prior periods, net interest margin expansion primarily reflected higher loan yields, anchored by the large base of noninterest bearing Fintech, title and specialty deposits, partially offset by higher funding costs due to Fed rate increases.
  • Net interest income on a tax-equivalent basis totaled $33.7 million for the quarter ended December 31, 2022, up $3.6 million, or 12.0% from the quarter ended September 30, 2022 and $11.9 million, or 54.6%, from the quarter ended December 31, 2021.
• Expenses decline as cost-savings initiatives take effect, helping to drive positive operating leverage
  • Noninterest expense totaled $28.7 million for the quarter ended December 31, 2022, a decline of $1.2 million, or 4.1%, from the quarter ended September 30, 2022 and a decrease of $0.4 million, or 1.2%, from the quarter ended December 31, 2021. The decline relative to both prior periods was primarily attributable to lower salaries and employee benefits costs.
  • The company had previously announced that certain cost-savings initiatives were expected to drive a 12% reduction from MVB’s annualized third quarter 2022 noninterest expense base, with 75% of the projected cost savings to be achieved by the end of the first quarter of 2023, and the remainder expected to be fully captured by the end of the third quarter of 2023.
  • As compared to the prior quarter, total revenues (net interest income, plus noninterest income) grew 4.6% and total noninterest expense declined 4.1%, resulting in strong positive operating leverage.
• Measures of foundational strength remained intact
  • Nonperforming loans totaled $11.2 million, or 0.5% of total loans, as of December 31, 2022, compared to 0.9% of total loans as of both September 30, 2022 and December 31, 2021. Criticized loans as a percentage of total loans were 3.0%, down from 3.4% as of September 30, 2022 and 5.4% as of December 31, 2021.
  • Net charge-offs were $5.4 million, or 0.91% of total loans on an annualized basis, for the quarter ended December 31, 2022, compared to $1.3 million, or 0.22% of total loans on an annualized basis, for the quarter ended September 30, 2022 and $1.2 million, or 0.25% of total loans on an annualized basis, for the quarter ended December 31, 2021. The increase in net charge-offs compared to both periods was driven by a charge-off of one commercial relationship, which was previously reserved, and increased charge-offs in our consumer loan portfolio.
  • The ratio of tangible common equity to tangible assets was 8.38% as of December 31, 2022, compared to 7.60% as of September 30, 2022 and 9.62% as of December 31, 2021.
  • Tangible book value (“TBV”) per share, a non-U.S. GAAP measure, was $20.25 as of December 31, 2022, an increase of 4.5% from September 30, 2022 and a decline of 8.7% from December 31, 2021. A reconciliation of TBV to its most comparable U.S. GAAP measure is included below.
• Balance sheet management drives sequential period decline in deposit balances
  • Deposits totaled $2.57 billion as of December 31, 2022, a decrease of $126.5 million, or 4.7%, from September 30, 2022 and an increase of $192.9 million, or 8.1%, from December 31, 2021.
  • Noninterest-bearing (“NIB”) deposits totaled $1.23 billion as of December 31, 2022, down $180.2 million, or 12.8%, from September 30, 2022 and up $111.1 million, or 9.9%, from December 31, 2021.
  • The decline in total deposits and NIB deposits as compared to September 30, 2022, reflects the use of off-balance sheet deposit networks to generate fee income, enhance capital and manage liquidity and concentration risk. Further, impacting the decease was a decline in title deposits due to the seasonality and overall slowdown of the mortgage industry. Total off-balance sheet deposits, including gaming and banking as a service relationships, total $724.0 million, an increase of $156.0 million, or 27.5%, compared to September 30, 2022 and $241.8 million, or 50.1%, from December 31, 2021. Growth in NIB balances as compared to December 31, 2021, primarily reflects an increase in Fintech deposits.
• Noninterest income declines on continued cyclical headwinds, loss on loan sales
  • Noninterest income totaled $6.3 million for the quarter ended December 31, 2022, a decrease of $1.9 million, or 22.8%, from the quarter ended September 30, 2022 and a decrease of $8.2 million, or 56.5%, from the quarter ended December 31, 2021.
  • Ongoing cyclical headwinds reflected weakness in mortgage banking and Fintech-related fee income. Specifically, equity method investment loss related to our investment in Intercoastal Mortgage Company, LLC (“ICM”) was $1.2 million for the quarter ended December 31, 2022, as compared to $0.8 million for the quarter ended September 30, 2022 and income of $1.8 million for the quarter ended December 31, 2021. Total payment card and service charge income was $1.7 million for the quarter ended December 31, 2022, as compared to $3.3 million for the quarter ended September 30, 2022 and $2.4 million for the quarter ended December 31, 2021.
  • During fourth quarter 2022, the Company elected to exit its bitcoin mining portfolio including selling the remaining loans. As a result, the Company reported a loss of $3.8 million on the sale of $10.7 million of bitcoin mining loans, which represented MVB’s entire crypto-related lending exposure.
• M&A Update: Receipt of shareholder approval for acquisition of Integrated Financial Holdings, Inc.
  • In January 2023, MVB and Integrated Financial Holdings, Inc. jointly announced that each had received shareholder approval of a previously-announced merger, with MVB as the surviving company. The merger is currently expected to close in the [first] quarter of 2023, subject to satisfaction of customary closing conditions and receipt of necessary regulatory approvals.

INCOME STATEMENT

Net interest income on a tax-equivalent basis totaled $33.7 million for the quarter ended December 31, 2022, up $3.6 million, or 12.0%, from the quarter ended September 30, 2022 and $11.9 million, or 54.6%, from the quarter ended December 31, 2021. The increase in net interest income compared to the quarter ended September 30, 2022 primarily reflects higher loan yields from the Company’s commercial loan portfolio. The increase compared to the quarter ended December 31, 2021 generally reflects strong loan growth at favorable interest rates during 2022, primarily driven by the Company’s strategic lending partnerships growth vehicle and broad-based growth throughout CoRe Banking business.

Interest income increased $6.8 million, or 20.1%, compared to the quarter ended September 30, 2022 and increased $17.7 million, or 76.6%, compared to the quarter ended December 31, 2021. The tax-equivalent yield on loans was 6.1% for the quarter ended December 31, 2022, compared to 5.3% for the quarter ended September 30, 2022 and 4.6% for the quarter ended December 31, 2021. Higher loan yields generally reflect the impact of the Fed rate increases on our commercial loan portfolio. The higher loan yields compared to the quarter ended December 31, 2021 also reflect new loan production at favorable interest rates.

Interest expense increased $3.2 million, or 78.8%, compared to the quarter ended September 30, 2022 and decreased $5.7 million, or 369.1%, compared to the quarter ended December 31, 2021. The cost of funds was 1.00% for the quarter ended December 31, 2022, up 41 basis points compared to the quarter ended September 30, 2022 and 76 basis points compared to the quarter ended December 31, 2021. The increase from the prior quarter primarily reflected a change in deposit mix based on average balances, led by growth in average interest-bearing deposits as compared to relatively consistent average NIB deposits, as well as higher interest rates during the quarter. The increase in cost of funds compared to the prior year period mostly reflected higher interest rates and increased FHLB borrowings and subordinated debt during the quarter, partially offset by the relatively higher contribution of NIB deposits relative to the prior year.

On a fully tax-equivalent basis, net interest margin for the quarter ended December 31, 2022 was 4.57%, an increase of 32 basis points versus the quarter ended September 30, 2022 and 129 basis points versus the quarter ended December 31, 2021. The increase in net interest margin for both quarters reflected the impact of higher loan yields due to interest rate increases, partially offset by an increase in deposit costs. The average loan-to-deposit ratio during the quarter ended December 31, 2022 was 87.7%, compared to 92.5% for the quarter ended September 30, 2022 and 74.5% for the quarter ended December 31, 2021.

Noninterest income totaled $6.3 million for the quarter ended December 31, 2022, a decrease of $1.9 million, or 22.8%, from the quarter ended September 30, 2022 and a decrease of $8.2 million, or 56.5%, from the quarter ended December 31, 2021. The $1.9 million decrease in noninterest income from the quarter ended September 30, 2022 was primarily due to decreases in gain on sale of loans of $3.4 million, or 264.2%, compared to the quarter ended September 30, 2022. The $8.2 million decrease in noninterest income from the quarter ended December 31, 2021 was primarily due to decreases in equity method investment income of $4.2 million, or 148.3%, gain on sale of loans of $3.2 million, or 302.4%, and holding gain on equity securities of $3.4 million, or 169.0%. The decrease in gain on sale of loans was driven by the loss of $3.8 million on the sale of $10.7 million of bitcoin mining loans, which represented MVB’s entire crypto-related lending exposure. Included in noninterest income was a $2.0 million gain recognized as a result of the partial sale of the Company’s Interchecks investment, which also caused the investment to be reclassified from an equity method investment to an equity security in fourth quarter 2022.

Noninterest expense totaled $28.7 million for the quarter ended December 31, 2022, a decrease of $1.2 million, or 4.1%, from the quarter ended September 30, 2022 and $0.4 million, or 1.2%, from the quarter ended December 31, 2021. The $1.2 million decrease in noninterest expense from the quarter ended September 30, 2022 was due to a decrease in salaries and employee benefits of $1.4 million, as the Company began to implement the expense reduction initiatives announced in the prior quarter, partially offset by an increase in other operating expense of $0.2 million, primarily driven by increased servicing expense. The decrease compared to the quarter ended December 31, 2021 was driven by decreases of $1.2 million, or 6.7%, in salaries and employee benefits and $1.1 million, or 27.5% in professional fees, partially offset by increases of $1.0 million, or 55.5%, in other operating expense, primarily driven by increased servicing expense and $0.4 million, or 34.9%, in equipment depreciation and maintenance.

BALANCE SHEET

Loans totaled $2.36 billion at December 31, 2022, a decrease of $112.0 million, or 4.5%, and an increase of $489.6 million, or 26.2%, as compared to September 30, 2022 and December 31, 2021, respectively. Adjusted for the removal of Paycheck Protection Program (“PPP”) loans from all periods, loan balances decreased by 4.3% from the quarter ended September 30, 2022 and increased by 35.0% from the quarter ended December 31, 2021. The decrease in loan balances compared to September 30, 2022 primarily reflect the Company’s balance sheet management as it contemplates future market uncertainty. Loan growth compared to December 31, 2021 was driven primarily by the Company’s strategic lending partnerships growth vehicle. Loans held-for-sale were $23.1 million as of December 31, 2022, compared to $20.0 million at September 30, 2022 and none December 31, 2021, led by MVB Bank’s government guaranteed lending growth vehicle.

Deposits totaled $2.57 billion as of December 31, 2022, a decrease of $126.5 million, or 4.7%, from September 30, 2022 and an increase of $192.9 million, or 8.1%, from December 31, 2021. NIB deposits totaled $1.23 billion as of December 31, 2022, a decrease of $180.2 million, or 12.8%, from September 30, 2022 and an increase of $111.1 million, or 9.9%, from December 31, 2021. The decrease in both total deposits and NIB deposits in the current quarter is primarily due to the Company’s utilization of off-balance sheet deposit networks to generate fee income, enhance capital and manage liquidity and concentration risk. Growth in NIB deposit balances compared to December 31, 2021 primarily reflects higher Fintech deposits, while the increase in total deposits also reflects an increase in brokered deposits and other certificates of deposit.

CAPITAL

The Community Bank Leverage Ratio was 9.83% as of December 31, 2022, compared to 11.1% as of September 30, 2022 and 11.6% as of December 31, 2021. MVB’s Tier 1 Risk-Based Capital Ratio was 12.4% as of December 31, 2022, compared to 13.1% as of September 30, 2022 and 15.8% as of December 31, 2021. The Bank’s Total Risk-Based Capital Ratio was 13.4% as of December 31, 2022, compared to 14.1% as of September 30, 2022 and 16.7% as of December 31, 2021.

The Company issued a quarterly cash dividend of $0.17 per share for the quarter ended December 31, 2022, consistent with the quarter ended September 30, 2022 and up $0.02, or 13.3%, from the quarter ended December 31, 2021.

ASSET QUALITY

Nonperforming loans totaled $11.2 million, or 0.5% of total loans, as of December 31, 2022, compared to 0.9% of total loans as of both September 30, 2022 and December 31, 2021. Criticized loans as a percentage of total loans were 3.0%, as compared to 3.4% as of September 30, 2022 and 5.4% as of December 31, 2021.

Net charge-offs were $5.4 million, or 0.9% of total loans on an annualized basis, for the quarter ended December 31, 2022, compared to $1.3 million, or 0.2% of total loans on an annualized basis, for the quarter ended September 30, 2022 and $1.2 million, or 0.3% of total loans on an annualized basis, for the quarter ended December 31, 2021. Charge-offs during the quarter include $2.9 million related to one commercial relationship, previously reserved, and $2.5 million related to the consumer loan portfolio.

Changes to the outstanding balances of the loan portfolios and the level of recognized charge-offs are all contributing factors in the provision for loan losses. The provision for loan losses totaled $2.7 million for the quarter ended December 31, 2022, compared to $5.1 million for the quarter ended September 30, 2022 and release of allowance of $5.7 million for the quarter ended December 31, 2021. Allowance for loan losses to total loans was 1.01% as of December 31, 2022, as compared to 1.07% as of September 30, 2022 and 0.98% as of December 31, 2021.

About MVB Financial Corp.

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

MVB is a financial holding company headquartered in Fairmont, West Virginia. Through its subsidiary, MVB Bank, and MVB Bank’s subsidiaries, MVB Financial provides financial services to individuals and corporate clients in the Mid-Atlantic region and beyond.

Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services.

For more information about MVB, please visit ir.mvbbanking.com.

Forward-looking Statements

MVB Financial has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this press release that are intended to be covered by the protections provided under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations about the future and are subject to risks and uncertainties. Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. Forward-looking statements can be identified by the use of words such as “may,” “could,” “should,” “would,” “will,” “plans,” “believes,” “estimates,” “expects,” “anticipates,” “intends,” “continues” or the negative of those terms or similar expressions. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in forward-looking statements. Therefore, undue reliance should not be placed upon any forward-looking statements. Those factors include but are not limited to: market, economic, operational, liquidity and credit risk; changes in market interest rates; inability to achieve anticipated synergies and successfully integrate recent mergers and acquisitions; inability to successfully execute business plans, including strategies related to investments in Fintech companies; competition; 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, 2021, 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.

MVB Financial Corp. Financial Highlights Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data)
		Quarterly										Year-to-Date
		2022			2022			2021				2022			2021
		Fourth Quarter			Third Quarter			Fourth Quarter
Interest income		$	40,702		$	33,903		$	23,049			$	125,957		$	83,429
Interest expense			7,253			4,057			1,546				14,154			6,270
Net interest income			33,449			29,846			21,503				111,803			77,159
Provision (release of allowance) for loan losses			2,694			5,120			(5,733	)			14,194			(6,275	)
Net interest income after provision (release of allowance) for loan losses			30,755			24,726			27,236				97,609			83,434
Noninterest income			6,324			8,191			14,542				38,294			62,596
Noninterest expense:
Salaries and employee benefits			16,902			18,316			18,110				72,162			60,210
Other expense			11,840			11,649			10,993				45,226			37,242
Total noninterest expenses			28,742			29,965			29,103				117,388			97,452
Income before income taxes			8,337			2,952			12,675				18,515			48,578
Income tax expense			1,967			397			2,876				4,128			9,882
Net income before noncontrolling interest			6,370			2,555			9,799				14,387			38,696
Net loss attributable to noncontrolling interest			139			163			160				660			425
Net income attributable to parent			6,509			2,718			9,959				15,047			39,121
Preferred dividends			—			—			—				—			35
Net income available to common shareholders		$	6,509		$	2,718		$	9,959			$	15,047		$	39,086
Earnings per share - basic		$	0.52		$	0.22		$	0.83			$	1.23		$	3.32
Earnings per share - diluted		$	0.50		$	0.21		$	0.77			$	1.17		$	3.10

Noninterest Income (Unaudited) (Dollars in thousands)
		Quarterly											Year-to-Date
		2022				2022				2021			2022				2021
		Fourth Quarter				Third Quarter				Fourth Quarter
Card acquiring income		$	497			$	560			$	1,713		$	2,790			$	3,817
Service charges on deposits			684				889				135			3,418				634
Interchange income			497				1,864				572			5,440				3,073
Total payment card and service charge income			1,678				3,313				2,420			11,648				7,524
Income (loss) from ICM equity method investment			(1,174	)			(831	)			1,813			(23	)			16,383
Income (loss) from other equity method investments			(205	)			(190	)			1,045			(690	)			1,045
Total equity method investment income (loss)			(1,379	)			(1,021	)			2,858			(713	)			17,428
Compliance and consulting income			4,149				3,736				3,463			15,504				9,625
Gain (loss) on sale of loans			(2,131	)			1,298				1,053			1,655				4,178
Investment portfolio gains (losses)			(1,397	)			(217	)			2,521			925				7,656
Gains on acquisition and divestiture activity			—				—				—			—				10,783
Other noninterest income			5,404				1,082				2,227			9,275				5,402
Total noninterest income		$	6,324			$	8,191			$	14,542		$	38,294			$	62,596

Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands)
		December 31, 2022				September 30, 2022				December 31, 2021
Cash and cash equivalents		$	40,280			$	79,946			$	307,437
Certificates of deposit with banks			—				—				2,719
Securities available-for-sale, at fair value			379,814				366,742				421,466
Equity securities			38,744				34,101				32,402
Loans held-for-sale			23,126				19,977				—
Loans receivable			2,359,416				2,471,395				1,869,838
Less: Allowance for loan losses			(23,837	)			(26,515	)			(18,266	)
Loans receivable, net			2,335,579				2,444,880				1,851,572
Premises and equipment, net			23,653				24,668				25,052
Goodwill			3,988				3,988				3,988
Other assets			210,437				165,620				147,813
Total assets		$	3,055,621			$	3,139,922			$	2,792,449
Noninterest-bearing deposits		$	1,231,544			$	1,411,772			$	1,120,433
Interest-bearing deposits			1,338,938				1,285,186				1,257,172
FHLB and other borrowings			102,333				73,328				—
Secured borrowings			9,765				—				—
Subordinated debt			73,286				73,222				73,030
Other liabilities			48,129				52,054				66,511
Stockholders' equity, including noncontrolling interest			261,391				244,360				275,303
Total liabilities and stockholders' equity		$	3,055,621			$	3,139,922			$	2,792,449

Reportable Segments (Unaudited)
Twelve Months Ended December 31, 2022		CoRe Banking		Mortgage Banking		Professional Services			Edge Ventures			Financial Holding Company			Intercompany Eliminations			Consolidated
(Dollars in thousands)
Interest income		$	125,426	$	429	$	—		$	—		$	146		$	(44	)	$	125,957
Interest expense			10,919		—		39			5			3,234			(44	)		14,153
Net interest income			114,507		429		(39	)		(5	)		(3,088	)		—			111,804
Provision for loan losses			14,194		—		—			—			—			—			14,194
Net interest income after provision for loan losses			100,313		429		(39	)		(5	)		(3,088	)		—			97,610
Noninterest income			22,673		37		22,812			459			10,576			(18,263	)		38,294
Noninterest Expenses:
Salaries and employee benefits			36,960		8		15,276			3,336			16,582			—			72,162
Other expense			44,873		142		5,233			5,192			8,049			(18,263	)		45,226
Total noninterest expenses			81,833		150		20,509			8,528			24,631			(18,263	)		117,388
Income (loss) before income taxes			41,153		316		2,264			(8,074	)		(17,143	)		—			18,516
Income tax expense (benefit)			8,882		77		567			(1,926	)		(3,472	)		—			4,128
Net income (loss)			32,271		239		1,697			(6,148	)		(13,671	)		—			14,388
Net loss attributable to noncontrolling interest			—		—		207			453			—			—			660
Net income (loss) available to common shareholders		$	32,271	$	239	$	1,904		$	(5,695	)	$	(13,671	)	$	—		$	15,048

Twelve Months Ended December 31, 2021		CoRe Banking			Mortgage Banking			Professional Services			Edge Ventures			Financial Holding Company			Intercompany Eliminations			Consolidated
(Dollars in thousands)
Interest income		$	83,023		$	411		$	(8	)	$	—		$	15		$	(12	)	$	83,429
Interest expense			4,078			—			16			—			2,188			(12	)		6,270
Net interest income			78,945			411			(24	)		—			(2,173	)		—			77,159
Release of allowance for loan losses			(6,274	)		(1	)		—			—			—			—			(6,275	)
Net interest income after release of allowance for loan losses			85,219			412			(24	)		—			(2,173	)		—			83,434
Noninterest income			33,179			16,342			14,931			71			11,103			(13,030	)		62,596
Noninterest Expenses:
Salaries and employee benefits			33,595			—			10,949			1,962			13,704			—			60,210
Other expense			37,033			16			4,095			2,555			6,573			(13,030	)		37,242
Total noninterest expenses			70,628			16			15,044			4,517			20,277			(13,030	)		97,452
Income (loss) before income taxes			47,770			16,738			(137	)		(4,446	)		(11,347	)		—			48,578
Income tax expense (benefit)			9,154			4,068			(105	)		(1,144	)		(2,091	)		—			9,882
Net income (loss)			38,616			12,670			(32	)		(3,302	)		(9,256	)		—			38,696
Net loss attributable to noncontrolling interest			—			—			210			215			—			—			425
Net income (loss) attributable to parent			38,616			12,670			178			(3,087	)		(9,256	)		—			39,121
Preferred stock dividends			—			—			—			—			35			—			35
Net income (loss) available to common shareholders		$	38,616		$	12,670		$	178		$	(3,087	)	$	(9,291	)	$	—		$	39,086

Average Balances and Interest Rates (Unaudited) (Dollars in thousands)
		Three Months Ended											Three Months Ended											Three Months Ended
		December 31, 2022											September 30, 2022											December 31, 2021
		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		$	113,500			$	982			3.43	%		$	32,552			$	111			1.35	%		$	376,667			$	141			0.15	%
CDs with banks			—				—			—				232				2			3.42				6,998				33			1.87
Investment securities:
Taxable			233,839				1,114			1.89				231,953				897			1.53				258,534				573			0.88
Tax-exempt 2			136,313				1,343			3.91				144,719				1,346			3.69				183,736				1,447			3.12
Loans and loans held-for-sale: 1
Commercial 3			1,667,981				27,947			6.65				1,687,383				22,898			5.38				1,451,347				17,653			4.83
Tax-exempt 2			4,161				47			4.48				4,498				51			4.50				5,811				65			4.41
Real estate			631,450				6,000			3.77				579,685				4,707			3.22				320,078				2,153			2.67
Consumer			139,705				3,563			10.12				129,464				4,183			12.82				32,903				1,306			15.75
Total loans			2,443,297				37,557			6.10				2,401,030				31,839			5.26				1,810,139				21,177			4.64
Total earning assets			2,926,949				40,996			5.56				2,810,486				34,195			4.83				2,636,074				23,370			3.52
Less: Allowance for loan losses			(27,530	)										(23,083	)										(24,977	)
Cash and due from banks			5,643											5,399											6,751
Other assets			266,292											227,337											204,001
Total assets		$	3,171,354										$	3,020,139										$	2,821,849
Liabilities
Deposits:
NOW		$	791,227			$	2,880			1.44	%		$	734,271			$	1,393			0.75	%		$	711,805			$	289			0.16	%
Money market checking			219,334				643			1.16				258,527				422			0.65				489,818				221			0.18
Savings			77,416				263			1.35				71,370				153			0.85				36,455				1			0.01
IRAs			6,053				20			1.31				6,132				17			1.10				6,439				18			1.11
CDs			314,723				2,380			3.00				202,299				988			1.94				91,059				263			1.15
Repurchase agreements and federal funds sold			9,958				1			0.04				10,627				1			0.04				11,249				3			0.11
FHLB and other borrowings			11,128				115			4.10				48,058				311			2.57				79				—			—
Secured borrowings			9,235				163			7.00				—				—			—				—				—			—
Subordinated debt			73,254				787			4.26				73,190				771			4.18				72,995				751			4.08
Total interest-bearing liabilities			1,512,328				7,252			1.90				1,404,474				4,056			1.15				1,419,899				1,546			0.43
Noninterest-bearing demand deposits			1,377,880											1,321,982											1,092,520
Other liabilities			40,264											37,019											42,318
Total liabilities			2,930,472											2,763,475											2,554,737
Stockholders’ equity
Preferred stock			—											—											597
Common stock			13,452											13,086											12,878
Paid-in capital			156,111											145,877											142,479
Treasury stock			(16,741	)										(16,741	)										(16,741	)
Retained earnings			129,853											144,816											129,896
Accumulated other comprehensive loss			(41,793	)										(30,915	)										(3,188	)
Total stockholders’ equity attributable to parent			240,882											256,123											265,921
Noncontrolling interest			399											541											1,147
Total stockholders’ equity			240,483											256,664											267,068
Total liabilities and stockholders’ equity		$	3,171,354										$	3,020,139										$	2,821,805
Net interest spread (tax-equivalent)										3.66											3.68											3.09
Net interest income and margin (tax-equivalent) 2						$	33,744			4.57	%						$	30,139			4.25	%						$	21,824			3.28	%
Less: Tax-equivalent adjustments						$	(295	)									$	(293	)									$	(320	)
Net interest spread										3.62											3.64											3.04
Net interest income and margin						$	33,449			4.53	%						$	29,846			4.21	%						$	21,503			3.24	%

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 $13.6 million, $20.1 million and $131.7 million are included in this amount for the three months ended December 31, 2022, September 30, 2022 and December 31, 2021, respectively.

		Twelve Months Ended											Twelve Months Ended
		December 31, 2022											December 31, 2021
		Average Balance				Interest Income/ Expense				Yield/ Cost			Average Balance				Interest Income/ Expense				Yield/ Cost
Assets
Interest-bearing balances with banks		$	232,935			$	1,613			0.69	%		$	249,801			$	305			0.12	%
CDs with banks			1,033				24			2.32				10,406				201			1.93
Investment securities:
Taxable			236,344				3,496			1.48				231,450				2,405			1.04
Tax-exempt 2			139,353				5,166			3.71				201,532				6,328			3.14
Loans and loans held-for-sale: 1
Commercial 3			1,594,069				87,845			5.51				1,387,273				63,551			4.58
Tax-exempt 2			4,661				203			4.36				6,646				300			4.51
Real estate			487,044				15,721			3.23				307,829				9,662			3.14
Consumer			103,345				13,017			12.60				15,890				2,069			13.02
Total loans			2,189,119				116,786			5.33				1,717,638				75,582			4.40
Total earning assets			2,798,784				127,085			4.54				2,410,827				84,821			3.52
Less: Allowance for loan losses			(22,248	)										(25,682	)
Cash and due from banks			5,670											13,874
Other assets			244,861											201,904
Total assets		$	3,027,067										$	2,600,923
Liabilities
Deposits:
NOW		$	707,282			$	4,724			0.67	%		$	673,547			$	1,612			0.24	%
Money market checking			330,208				1,449			0.44				469,010				883			0.19
Savings			56,697				418			0.74				42,800				5			0.01
IRAs			6,216				71			1.14				9,674				121			1.25
CDs			170,648				3,814			2.24				134,250				1,355			1.01
Repurchase agreements and federal funds sold			10,987				6			0.05				10,821				13			0.12
FHLB and other borrowings			15,494				437			2.82				25,275				93			0.37
Secured borrowings			2,328				163			7.00				—				—			—
Subordinated debt			73,159				3,072			4.20				51,149				2,188			4.28
Total interest-bearing liabilities			1,373,019				14,154			1.03				1,416,526				6,270			0.44
Noninterest-bearing demand deposits			1,357,426											895,024
Other liabilities			41,098											38,100
Total liabilities			2,771,543											2,349,650
Stockholders’ equity
Preferred stock			—											730
Common stock			13,320											12,614
Paid-in capital			147,728											140,610
Treasury stock			(16,741	)										(16,741	)
Retained earnings			138,135											112,842
Accumulated other comprehensive income (loss)			(26,918	)										534
Total stockholders’ equity attributable to parent			255,524											250,589
Noncontrolling interest			637											683
Total stockholders’ equity			256,161											251,272
Total liabilities and stockholders’ equity		$	3,027,067										$	2,600,912
Net interest spread (tax-equivalent)										3.51											3.08
Net interest income and margin (tax-equivalent) 2						$	112,931			4.04	%						$	78,551			3.26	%
Less: Tax-equivalent adjustments						$	(1,128	)									$	(1,392	)
Net interest spread										3.47											3.02
Net interest income and margin						$	111,803			3.99	%						$	77,159			3.20	%

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 $13.6 million and $131.7 million are included in this amount for the years ended December 31, 2022 and December 31, 2021, respectively.

The following table reconciles, for the periods shown below, net interest margin on a fully tax-equivalent basis:
		Three Months Ended												Twelve Months Ended
(Dollars in thousands)		December 31, 2022				September 30, 2022				December 31, 2021				December 31, 2022				December 31, 2021
Net interest margin - U.S. GAAP basis
Net interest income		$	33,449			$	29,846			$	21,503			$	111,803			$	77,159
Average interest-earning assets			2,926,949				2,810,486				2,636,074				2,798,784				2,410,827
Net interest margin			4.53	%			4.21	%			3.24	%			3.99	%			3.20	%
Net interest margin - non-U.S. GAAP basis
Net interest income		$	33,449			$	29,846			$	21,503			$	111,803			$	77,159
Impact of fully tax-equivalent adjustment			295				293				320				1,128				1,392
Net interest income on a fully tax-equivalent basis			33,744				30,139				21,824				112,931				78,551
Average interest-earning assets			2,926,949				2,810,486				2,636,074				2,798,784				2,410,827
Net interest margin on a fully tax-equivalent basis			4.57	%			4.25	%			3.28	%			4.04	%			3.26	%

Selected Financial Data (Unaudited) (Dollars in thousands, except per share data)
		Quarterly												Year-to-Date
		2022				2022				2021				2022				2021
		Fourth Quarter				Third Quarter				Fourth Quarter
Earnings and Per Share Data:
Net income		$	6,509			$	2,718			$	9,959				15,047				39,121
Net income available to common shareholders		$	6,509			$	2,718			$	9,959				15,047				39,086
Earnings per share - basic		$	0.52			$	0.22			$	0.83			$	1.23			$	3.32
Earnings per share - diluted		$	0.50			$	0.21			$	0.77			$	1.17			$	3.10
Cash dividends paid per common share		$	0.17			$	0.17			$	0.15			$	0.68			$	0.51
Book value per common share		$	20.69			$	19.85			$	22.70			$	20.69			$	22.70
Tangible book value per common share 1		$	20.25			$	19.38			$	22.17			$	20.25			$	22.17
Weighted-average shares outstanding - basic			12,279,462				12,238,505				12,057,451				12,279,462				11,778,557
Weighted-average shares outstanding - diluted			12,870,734				12,854,951				12,944,919				12,870,734				12,613,620
Performance Ratios:
Return on average assets 2			0.8	%			0.4	%			1.4	%			0.5	%			1.5	%
Return on average equity 2			10.8	%			4.2	%			15.0	%			5.9	%			15.6	%
Net interest margin 3 4			4.57	%			4.25	%			3.28	%			4.04	%			3.26	%
Efficiency ratio 5			72.3	%			78.8	%			80.7	%			78.2	%			69.7	%
Overhead ratio 2 6			3.6	%			4.0	%			4.1	%			3.9	%			3.7	%
Equity to assets			8.5	%			7.8	%			9.8	%			8.5	%			9.8	%
Asset Quality Data and Ratios:
Charge-offs		$	7,878			$	3,653			$	1,619			$	15,183			$	1,619
Recoveries		$	2,507			$	2,313			$	316			$	6,560			$	316
Net loan charge-offs to total loans 2 7			0.9	%			0.2	%			0.1	%			0.4	%			0.1	%
Allowance for loan losses		$	23,837			$	26,515			$	18,266			$	23,837			$	18,266
Allowance for loan losses to total loans 8			1.01	%			1.07	%			0.98	%			1.01	%			0.98	%
Nonperforming loans		$	11,165			$	22,350			$	17,713			$	11,165			$	17,713
Nonperforming loans to total loans			0.5	%			0.9	%			0.9	%			0.5	%			0.9	%
Intercoastal Mortgage Company, LLC Production Data9:
Mortgage pipeline		$	678,345			$	792,388			$	1,007,990			$	678,345			$	1,007,990
Loans originated		$	407,070			$	606,805			$	1,046,977			$	3,120,577			$	6,269,371
Loans closed		$	388,417			$	615,585			$	977,354			$	2,628,149			$	5,607,951
Loans sold		$	326,003			$	619,059			$	957,153			$	2,325,709			$	5,326,029

1 common equity less total goodwill and intangibles per common share, a non-U.S. GAAP measure

2 annualized for the quarterly periods presented

3 net interest income as a percentage of average interest-earning assets

4 presented on a fully tax-equivalent basis

5 noninterest expense as a percentage of net interest income and noninterest income, a non-U.S. GAAP measure

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, an entity in which we have a 40% ownership interest that we account for as an equity method investment

Non-GAAP Reconciliation: Tangible Book Value per Common Share (Unaudited) (Dollars in thousands, except per share data)
		December 31, 2022				September 30, 2022				December 31, 2021
Goodwill		$	3,988			$	3,988			$	3,988
Intangibles			1,631				1,806				2,316
Total intangibles			5,619				5,794				6,304
Total equity attributable to parent			261,084				243,913				274,328
Less: Total intangibles			(5,619	)			(5,794	)			(6,304	)
Tangible common equity			255,465				238,119				268,024
Tangible common equity			255,465				238,119				268,024
Common shares outstanding (000s)			12,618				12,287				12,087
Tangible book value per common share		$	20.25			$	19.38			$	22.17

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20230217005089/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

Source: MVB Financial Corp.

FAQ

What were MVB Financial's earnings for Q4 2022?

MVB Financial reported a net income of $6.5 million for the fourth quarter of 2022.

How did MVB Financial's net interest income change in Q4 2022?

Net interest income increased by 54.6% year-over-year to $33.7 million.

What is the net interest margin reported by MVB Financial for Q4 2022?

The tax-equivalent net interest margin for Q4 2022 was 4.57%.

Did MVB Financial experience any changes in total deposits in Q4 2022?

Yes, total deposits decreased by 4.7% to $2.57 billion.

What challenges did MVB Financial face in Q4 2022?

MVB Financial faced a 56.5% decline in noninterest income and an increase in net charge-offs.

What merger did MVB Financial receive approval for?

MVB Financial received shareholder approval for its merger with Integrated Financial Holdings, expected to close in Q1 2023.