MVB Financial Corp. Announces Third Quarter 2022 Results

Rhea-AI Summary

MVB Financial Corp. (NASDAQ: MVBF) reported Q3 2022 net income of $2.7 million, or $0.22 EPS, down from Q2 2022. Total deposits increased to $2.70 billion, up 3.1% quarter-over-quarter. Notably, net interest income rose by 11.8% to $30.1 million, driven by strong loan production and interest margin expansion to 4.25%. However, challenges included a decrease in noninterest income, impacted by higher interest rates and loan loss provisions totaling $5.1 million. The company plans a 12% reduction in annualized noninterest expenses by Q1 2023 as part of its strategy to adapt to market conditions.

Positive

• Net interest income reached $30.1 million, up 11.8% from Q2 2022 and 55.1% from Q3 2021.
• Total deposits increased by $82 million, or 3.1%, quarter-over-quarter and by $298 million, or 12.4%, year-over-year.
• Noninterest-bearing deposits stood at $1.41 billion, a 41.3% increase from Q3 2021, making up 52% of total deposits.
• The company plans a 12% reduction in noninterest expenses, enhancing cost efficiency.

Negative

• Net income declined from $2.96 million in Q2 2022 to $2.7 million in Q3 2022.
• Noninterest income fell by 31.2% quarter-over-quarter due to reduced payment card income and equity method investment income.
• Provision for loan losses remained elevated at $5.1 million, reflecting risk related to strong loan growth.

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 third quarter of 2022, with reported net income of $2.7 million, or $0.22 basic and $0.21 diluted earnings per share.

		Quarterly									Year-to-Date
		2022			2022			2021			2022			2021
		Third Quarter			Second Quarter			Third Quarter
Net income		$	2,718		$	2,956		$	11,828		$	8,538		$	29,160
Earnings per share - basic		$	0.22		$	0.24		$	1.00		$	0.70		$	2.49
Earnings per share - diluted		$	0.21		$	0.23		$	0.92		$	0.66		$	2.32

“During the third quarter, we continued to drive strong loan production, counter-cyclical growth in low-cost deposits and net interest margin expansion, resulting in robust growth in net interest income, while maintaining strong asset quality,” said Larry F. Mazza, Chief Executive Officer, MVB Financial. “In addition, MVB’s year-to-date results evidenced significant progress in our efforts to drive growth in Fintech fee income, further diversifying our revenue base.”

Mazza added, “Amidst these favorable underlying trends, challenges also emerged. Higher interest rates and a slowing economy impacted our mortgage business and fee income and, coupled with elevated provisioning for loan losses related to our strong loan growth, impacted our earnings for the quarter.”

“As demonstrated throughout MVB’s history, and through our corporate values, we are ‘Adaptive’ as market conditions change. While we continue to successfully execute on our MVB-F1: Success Loves Speed Strategy, we are adjusting to wet track conditions by sharpening our focus. Specifically, we are implementing initiatives that are 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 2023, and the remainder expected to be fully captured by the end of the third quarter of 2023.”

THIRD QUARTER 2022 HIGHLIGHTS

• Strong growth in low-cost deposits amidst cyclical industry headwinds
  • Total deposits were $2.70 billion as of September 30, 2022, an increase of $82.0 million, or 3.1%, from June 30, 2022 and $298.0 million, or 12.4%, from September 30, 2021.
  • Noninterest-bearing (“NIB”) deposits were $1.41 billion as of September 30, 2022, an increase of $68.9 million, or 5.1%, from June 30, 2022 and $412.4 million, or 41.3%, from September 30, 2021. NIB deposits represented 52% of total deposits as of September 30, 2022, as compared to 51% and 42% as of June 30, 2022 and September 30, 2021, respectively.
  • The cost of funds was 59 basis points for the quarter ended September 30, 2022 up 37 basis points compared to the quarter ended June 30, 2022 and 35 basis points compared to the quarter ended September 30, 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 and increased Federal Home Loan Banks borrowings during the quarter. The increase in cost of funds compared to the prior year period mostly reflected higher interest rates, partially offset by the relatively higher contribution of NIB deposits relative to the prior year.
• Loan growth and margin expansion drive our strong growth in net interest income
  • Net interest income on a tax-equivalent basis totaled $30.1 million for the quarter ended September 30, 2022, up $3.2 million, or 11.8%, and $10.7 million, or 55.1%, from the quarters ended June 30, 2022 and September 30, 2021, respectively.
  • Total loan balances of $2.47 billion as of September 30, 2022 increased by $256.3 million, or 11.6%, compared to June 30, 2022 and $707.2 million, or 40.1%, compared to September 30, 2021.
  • Loans held-for-sale were $20.0 million as of September 30, 2022, compared to $11.9 million as of June 30, 2022 and none as of September 30, 2021, led by MVB Bank’s Small Business Administration (“SBA”) lending growth vehicle.
  • On a tax-equivalent basis, net interest margin for the quarter ended September 30, 2022 was 4.25%, an increase of 15 basis points versus the quarter ended June 30, 2022 and an increase of 100 basis points versus the quarter ended September 30, 2021. The quarter over quarter increase in net interest margin was due primarily to strong loan growth, higher loan yields, and significantly lower cash balances, partially offset by an increase in funding costs.
• Asset quality indicators remained stable
  • Nonperforming loans totaled $22.4 million, or 0.9% of total loans, as of September 30, 2022, as compared to $19.3 million, or 0.9% of total loans, as of June 30, 2022, and $17.5 million, or 1.0% of total loans, as of September 30, 2021. Criticized loans as a percentage of total loans were 3.4%, as compared to 4.0% as of June 30, 2022, and 6.5% as of September 30, 2021.
  • Net charge-offs were $1.3 million, or 0.22% of total loans on an annualized basis, for the quarter ended September 30, 2022, compared to $1.2 million, or 0.21% of total loans on an annualized basis, for the quarter ended June 30, 2022. Net charge-offs on an annualized basis, for the quarter ended September 30, 2021, were not significant.
  • The provision for loan losses totaled $5.1 million for the quarter ended September 30, 2022, compared to $5.1 million for the quarter ended June 30, 2022, and $0.4 million for the quarter ended September 30, 2021. Allowance for loan losses was 1.07% of total loans as of September 30, 2022, an increase of four basis points from June 30, 2022 and a decline of 36 basis points from September 30, 2021. Approximately 84% of the increase in the allowance for loan losses for the quarter ended September 30, 2022 is attributable to strong growth in our loan balances during the quarter.
• Quarter over quarter expense growth largely held in check
  • Noninterest expense totaled $30.0 million for the quarter ended September 30, 2022, an increase of $0.1 million, or 0.5%, from the quarter ended June 30, 2022 and an increase of $4.1 million, or 16.0%, from the quarter ended September 30, 2021. The increase from the quarter ended June 30, 2022 primarily reflects an increase in other operating expenses of $0.5 million, or 24.1%, and an increase in equipment depreciation and maintenance of $0.3 million, or 19.9%, mostly offset by a decrease in salaries and employee benefits of $0.7 million, or 3.5%. The increase relative to the prior year period primarily reflects higher salaries and employee benefits costs of $1.8 million, or 10.8%, and higher other operating expenses of $1.3 million, or 116.1%.

INCOME STATEMENT

Net interest income on a tax-equivalent basis totaled $30.1 million for the quarter ended September 30, 2022, up $3.2 million, or 11.8%, from the quarter ended June 30, 2022 and $10.7 million, or 55.1%, from the quarter ended September 30, 2021. The increase in net interest income compared to both periods generally reflects strong loan growth, primarily driven by the Company’s strategic lending partnerships growth vehicle and broad-based growth throughout CoRe Banking business.

Interest income increased $5.8 million, or 20.7%, to $33.9 million from the quarter ended June 30, 2022 and $13.4 million, or 65.5%, from the quarter ended September 30, 2021. The tax-equivalent yield on loans was 5.26% for the quarter ended September 30, 2022, compared to 5.06% for the quarter ended June 30, 2022 and 4.25% for the quarter ended September 30, 2021. Higher loan yields generally reflect new loan production at favorable interest rates and the impact of the Fed rate increases on our commercial loan portfolio.

Interest expense increased $2.6 million, or 183.7%, from the quarter ended June 30, 2022 and increased $2.7 million, or 192.3%, from the quarter ended September 30, 2021. The cost of funds was 59 basis points for the quarter ended September 30, 2022, up 37 basis point compared to the quarter ended June 30, 2022 and 35 basis points compared to the quarter ended September 30, 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 and increased FHLB borrowings during the quarter. The increase in cost of funds compared to the prior year period mostly reflected higher interest rates, partially offset by the relatively higher contribution of NIB deposits relative to the prior year.

On a tax-equivalent basis, net interest margin for the quarter ended September 30, 2022 was 4.25%, an increase of 15 basis points versus the quarter ended June 30, 2022 and 100 basis points versus the quarter ended September 30, 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. The increase in net interest margin from the quarter ended June 30, 2022 reflected the impact of strong loan growth, partially offset by an increase in deposit costs. The increase in net interest margin from the quarter ended September 30, 2021 also reflected strong loan growth and an increase in deposit costs, to a greater extent. The average loan-to-deposit ratio during the quarter ended September 30, 2022 was 92.5%, compared to 82.9% for the quarter ended June 30, 2022, and 78.9% for the quarter ended September 30, 2021.

Noninterest income totaled $8.2 million for the quarter ended September 30, 2022, a decrease of $3.7 million, or 31.2% from the quarter ended June 30, 2022 and a decrease of $13.8 million, or 62.7%, from the quarter ended September 30, 2021.

The decrease in noninterest income compared to the prior quarter is driven by decreases in equity method investment income of $1.6 million, or 286.0%, in other operating income of $0.9 million, or 51.5%, and in payment card and service charge income of $0.7 million, or 17.5%. The sale of mortgaging servicing rights in June 2022 resulted in $1.2 million of the decrease in other operating income. The decrease in payment card and service charge income is driven by decreased interchange income. The decline in equity method investment income was primarily due to lower mortgage banking revenue reflecting the continued sharp increase in market interest rates during the third quarter of 2022. Further disaggregation of the Company’s noninterest income is available below.

The decrease in noninterest income compared to the comparable quarter in the prior year is driven by a one-time gain on acquisition and divestiture activity in the quarter ended September 30, 2021 totaling $10.8 million.

Noninterest expense totaled $30.0 million for the quarter ended September 30, 2022, an increase of $0.1 million, or 0.5%, from the quarter ended June 30, 2022 and an increase of $4.1 million, or 16.0%, from the quarter ended September 30, 2021. The increase from the quarter ended June 30, 2022 in expenses primarily reflects a decrease in salaries and employee benefits of $0.7 million, or 3.5%, partially offset by an increase in other operating expenses of $0.5 million, or 24.1%. The increase relative to the prior year period primarily reflects higher salaries and employee benefits costs of $1.8 million, or 10.8% and higher other operating expenses of $1.3 million, or 116.1%. The increases in salaries and employee benefits were due to continued hiring during 2022 that resulted in a 30% increase in average full time equivalent employees for the nine months’ ended September 30, 2022 as compared to the nine months’ ended September 30, 2021. This hiring was strategic to front-line revenue producers and enhanced risk management infrastructure.

The Company continues to make Fintech investments to transform its business model and adapt to changing market conditions and opportunities. For the quarter ended September 30, 2022, earnings were impacted by approximately $1.6 million of net loss from its MVB Edge Ventures segment, as compared to net losses of $1.3 million and $1.6 million for the quarters ended June 30, 2022 and September 30, 2021, respectively.

BALANCE SHEET

Loans totaled $2.47 billion at September 30, 2022, an increase of $256.3 million, or 11.6%, and $707.2 million, or 40.1%, as compared to June 30, 2022 and September 30, 2021, respectively. Adjusted for the removal of PPP loans from all periods, loan balances increased by 11.8% from the quarter ended June 30, 2022 and by 51.6% from the quarter ended September 30, 2021. Loan growth for both periods was driven primarily by the Company’s strategic lending partnerships growth vehicle. Loans held-for-sale were $20.0 million as of September 30, 2022, compared to $11.9 million at June 30, 2022 and none at September 30, 2021, led by MVB Bank’s SBA lending growth vehicle.

Deposits totaled $2.70 billion as of September 30, 2022, an increase of $82.0 million, or 3.1%, from June 30, 2022 and $298.0 million, or 12.4%, from September 30, 2021. NIB deposits totaled $1.41 billion as of September 30, 2022, an increase $68.9 million, or 5.1%, from June 30, 2022 and $412.4 million, or 41.3%, from September 30, 2021. Growth in NIB deposit balances primarily reflects Fintech business, while the increase in total deposits also reflects an increase in brokered deposits and other certificates of deposit. At 52% of total deposits, NIB deposits continue to exceed all other deposits combined.

CAPITAL

The Community Bank Leverage Ratio was 11.1% as of September 30, 2022, compared to 11.6% as of June 30, 2022 and 12.0% as of September 30, 2021. MVB’s Tier 1 Risk-Based Capital Ratio was 13.1% as of September 30, 2022, compared to 13.7% as of June 30, 2022 and 15.7% as of September 30, 2021. The Bank’s Total Risk-Based Capital Ratio was 14.1% as of September 30, 2022, compared to 14.7% as of June 30, 2022 and 17.0% as of September 30, 2021.

The Company issued a quarterly cash dividend of $0.17 per share for the quarter ended September 30, 2022, consistent with the quarter ended June 30, 2022 and up $0.03, or 21%, from the quarter ended September 30, 2021.

ASSET QUALITY

Nonperforming loans totaled $22.4 million, or 0.9% of total loans, as of September 30, 2022, as compared to $19.3 million, or 0.9% of total loans, as of June 30, 2022, and $17.5 million, or 1.0% of total loans, as of September 30, 2021. Criticized loans as a percentage of total loans were 3.4%, as compared to 4.0% as of June 30, 2022, and 6.5% as of September 30, 2021.

Net charge-offs were $1.3 million, or 0.22% of total loans on an annualized basis, for the quarter ended September 30, 2022, compared to $1.2 million, or 0.21% of total loans on an annualized basis, for the quarter ended June 30, 2022. Net charge-offs on an annualized basis, for the quarter ended September 30, 2021, were not significant.

Changes to the outstanding balances of the loan portfolios, the level of recognized charge-offs and the resulting historical loss rates and adjustments to the risk grading of loans within the portfolio are all contributing factors in the provision for loan losses. The provision for loan losses totaled $5.1 million for the quarter ended September 30, 2022, compared to $5.1 million for the quarter ended June 30, 2022, and $0.4 million for the quarter ended September 30, 2021. Allowance for loan losses to total loans was 1.07% as September 30, 2022, as compared to 1.03% as of June 30, 2022 and 1.43% as of September 30, 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 Financial is a financial holding company headquartered in Fairmont, WV. Through its wholly-owned 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
		Third Quarter				Second Quarter				Third Quarter
Interest income		$	33,903			$	28,090			$	20,484			$	85,255			$	60,380
Interest expense			4,057				1,430				1,388				6,901				4,724
Net interest income			29,846				26,660				19,096				78,354				55,656
Provision (release of allowance) for loan losses			5,120				5,100				380				11,500				(542	)
Net interest income after provision (release of allowance) for loan losses			24,726				21,560				18,716				66,854				56,198
Total noninterest income			8,191				11,909				21,951				31,970				48,053
Noninterest expense:
Salaries and employee benefits			18,316				18,983				16,528				55,260				42,100
Other expense			11,649				10,836				9,301				33,386				26,250
Total noninterest expenses			29,965				29,819				25,829				88,646				68,350
Income before income taxes			2,952				3,650				14,838				10,178				35,901
Income tax expense			397				859				3,164				2,161				7,006
Net income before noncontrolling interest			2,555				2,791				11,674				8,017				28,895
Net loss attributable to noncontrolling interest			163				165				154				521				265
Net income attributable to parent			2,718				2,956				11,828				8,538				29,160
Preferred dividends			—				—				—				—				35
Net income available to common shareholders		$	2,718			$	2,956			$	11,828			$	8,538			$	29,125
Earnings per share - basic		$	0.22			$	0.24			$	1.00			$	0.70			$	2.49
Earnings per share - diluted		$	0.21			$	0.23			$	0.92			$	0.66			$	2.32

Noninterest Income (Unaudited) (Dollars in thousands)
		Quarterly												Year-to-Date
		2022				2022				2021				2022				2021
		Third Quarter				Second Quarter				Third Quarter
Card acquiring income		$	560			$	750			$	692			$	2,293			$	2,104
Service charges on deposits			889				973				138				2,734				499
Interchange income			1,864				2,292				855				4,943				2,501
Total payment card and service charge income			3,313				4,015				1,685				9,970				5,104
Income (loss) from ICM equity method investment 1			(831	)			732				3,573				1,151				14,570
Loss from other equity method investments			(190	)			(183	)			—				(485	)			—
Total equity method investment income (loss)			(1,021	)			549				3,573				666				14,570
Compliance and consulting income			3,736				3,750				3,013				11,355				6,162
Gain on sale of loans			1,298				1,405				908				3,786				3,125
Investment portfolio gains (losses)			(217	)			145				1,065				2,322				5,135
Gains on acquisition and divestiture activity			—				—				10,783				—				10,783
Other noninterest income			1,082				2,045				924				3,871				3,174
Total noninterest income		$	8,191			$	11,909			$	21,951			$	31,970			$	48,053
1 Intercoastal Mortgage Company, LLC (“ICM”)

Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands)
		September 30, 2022				June 30, 2022				September 30, 2021
Cash and cash equivalents		$	79,946			$	161,761			$	390,081
Certificates of deposit with banks			—				496				9,582
Securities available-for-sale, at fair value			366,742				376,737				439,023
Equity securities			34,101				34,250				29,809
Loans held-for-sale			19,977				11,856				—
Loans receivable			2,471,395				2,215,114				1,764,186
Less: Allowance for loan losses			(26,515	)			(22,734	)			(25,187	)
Loans receivable, net			2,444,880				2,192,380				1,738,999
Premises and equipment, net			24,668				25,272				25,043
Goodwill			3,988				3,988				3,988
Other assets			165,620				177,688				152,299
Total assets		$	3,139,922			$	2,984,428			$	2,788,824
Noninterest-bearing deposits		$	1,411,772			$	1,342,916			$	999,328
Interest-bearing deposits			1,285,186				1,272,054				1,399,612
FHLB and other borrowings			73,328				—				—
Subordinated debt			73,222				73,158				72,966
Other liabilities			52,054				43,390				50,218
Stockholders' equity, including noncontrolling interest			244,360				252,910				266,700
Total liabilities and stockholders' equity		$	3,139,922			$	2,984,428			$	2,788,824

Reportable Segments (Unaudited)
Three Months Ended September 30, 2022		CoRe Banking				Mortgage Banking				Professional Services				Edge Ventures				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	33,777			$	103			$	—			$	—			$	33			$	(10	)		$	33,903
Interest expense			3,286				—				10				—				771				(10	)			4,057
Net interest income (expense)			30,491				103				(10	)			—				(738	)			—				29,846
Provision for loan losses			5,120				—				—				—				—				—				5,120
Net interest income (expense) after provision for loan losses			25,371				103				(10	)			—				(738	)			—				24,726
Noninterest income			5,356				(817	)			5,666				115				2,366				(4,495	)			8,191
Noninterest Expenses:
Salaries and employee benefits			9,354				8				3,755				925				4,274				—				18,316
Other expenses			11,523				25				1,394				1,392				1,810				(4,495	)			11,649
Total noninterest expenses			20,877				33				5,149				2,317				6,084				(4,495	)			29,965
Income (loss) before income taxes			9,850				(747	)			507				(2,202	)			(4,456	)			—				2,952
Income taxes			1,817				(192	)			116				(504	)			(840	)			—				397
Net income (loss)			8,033				(555	)			391				(1,698	)			(3,616	)			—				2,555
Net loss attributable to noncontrolling interest			—				—				36				127				—				—				163
Net income (loss) available to common shareholders		$	8,033			$	(555	)		$	427			$	(1,571	)		$	(3,616	)		$	—			$	2,718

Three Months Ended June 30, 2022		CoRe Banking				Mortgage Banking				Professional Services				Edge Ventures				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	27,910			$	103			$	—			$	—			$	87			$	(10	)		$	28,090
Interest expense			672				—				8				—				760				(10	)			1,430
Net interest income (expense)			27,238				103				(8	)			—				(673	)			—				26,660
Provision for loan losses			5,100				—				—		—		—				—				—				5,100
Net interest income (expense) after provision for loan losses			22,138				103				(8	)			—				(673	)			—				21,560
Noninterest income			7,093				787				5,686				110				3,228				(4,995	)			11,909
Noninterest Expenses:
Salaries and employee benefits			9,948				—				3,872				724				4,439				—				18,983
Other expenses			10,913				94				1,407				1,170				2,247				(4,995	)			10,836
Total noninterest expenses			20,861				94				5,279				1,894				6,686				(4,995	)			29,819
Income (loss) before income taxes			8,370				796				399				(1,784	)			(4,131	)			—				3,650
Income taxes			1,771				207				95				(399	)			(815	)			—				859
Net income (loss)			6,599				589				304				(1,385	)			(3,316	)			—				2,791
Net loss attributable to noncontrolling interest			—				—				63				102				—				—				165
Net income (loss) available to common shareholders		$	6,599			$	589			$	367			$	(1,283	)		$	(3,316	)		$	—			$	2,956

Three Months Ended September 30, 2021		CoRe Banking				Mortgage Banking				Professional Services				Edge Ventures				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	20,383			$	105			$	—			$	—			$	1			$	(5	)		$	20,484
Interest expense			902				—				10				—				481				(5	)			1,388
Net interest income (expense)			19,481				105				(10	)			—				(480	)			—				19,096
Release of allowance for loan losses			379				1				—				—				—				—				380
Net interest income (expense) after release of allowance for loan losses			19,102				104				(10	)			—				(480	)			—				18,716
Noninterest income			15,387				3,546				4,806				18				2,002				(3,808	)			21,951
Noninterest Expenses:
Salaries and employee benefits			8,296				47				3,993				808				3,384				—				16,528
Other expenses			8,973				(198	)			1,213				1,468				1,653				(3,808	)			9,301
Total noninterest expenses			17,269				(151	)			5,206				2,276				5,037				(3,808	)			25,829
Income (loss) before income taxes			17,220				3,801				(410	)			(2,258	)			(3,515	)			—				14,838
Income taxes			3,657				922				(103	)			(581	)			(731	)			—				3,164
Net income (loss)			13,563				2,879				(307	)			(1,677	)			(2,784	)			—				11,674
Net loss attributable to noncontrolling interest			—				—				90				64				—				—				154
Net income (loss) available to common shareholders		$	13,563			$	2,879			$	(217	)		$	(1,613	)		$	(2,784	)		$	—			$	11,828

Nine Months Ended September 30, 2022		CoRe Banking				Mortgage Banking				Professional Services				Edge Ventures				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	84,858			$	309			$	—			$	—			$	113			$	(25	)		$	85,255
Interest expense			4,617				—				25				—				2,284				(25	)			6,901
Net interest income (expense)			80,241				309				(25	)			—				(2,171	)			—				78,354
Provision for loan losses			11,500				—				—				—				—				—				11,500
Net interest income (expense) after provision for loan losses			68,741				309				(25	)			—				(2,171	)			—				66,854
Noninterest income			19,347				1,193				16,909				300				8,265				(14,044	)			31,970
Noninterest Expenses:
Salaries and employee benefits			28,810				8				11,425				2,248				12,769				—				55,260
Other expenses			33,484				119				3,956				3,609				6,262				(14,044	)			33,386
Total noninterest expenses			62,294				127				15,381				5,857				19,031				(14,044	)			88,646
Income (loss) before income taxes			25,794				1,375				1,503				(5,557	)			(12,937	)			—				10,178
Income taxes			5,219				356				375				(1,265	)			(2,524	)			—				2,161
Net income (loss)			20,575				1,019				1,128				(4,292	)			(10,413	)			—				8,017
Net loss attributable to noncontrolling interest			—				—				194				327				—				—				521
Net income (loss) available to common shareholders		$	20,575			$	1,019			$	1,322			$	(3,965	)		$	(10,413	)		$	—			$	8,538

Nine Months Ended September 30, 2021		CoRe Banking				Mortgage Banking				Professional Services				Edge Ventures				Financial Holding Company				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	60,078			$	307			$	—			$	—			$	2			$	(7	)		$	60,380
Interest expense			3,281				—				13				—				1,437				(7	)			4,724
Net interest income (expense)			56,797				307				(13	)			—				(1,435	)			—				55,656
Release of allowance for loan losses			(541	)			(1	)			—				—				—				—				(542	)
Net interest income (expense) after release of allowance for loan losses			57,338				308				(13	)			—				(1,435	)			—				56,198
Noninterest income			26,832				14,499				9,784				18				5,892				(8,972	)			48,053
Noninterest Expenses:
Salaries and employee benefits			24,170				47				7,099				1,054				9,730				—				42,100
Other expenses			26,702				(112	)			2,898				1,661				4,073				(8,972	)			26,250
Total noninterest expenses			50,872				(65	)			9,997				2,715				13,803				(8,972	)			68,350
Income (loss) before income taxes			33,298				14,872				(226	)			(2,697	)			(9,346	)			—				35,901
Income taxes			6,060				3,606				(76	)			(694	)			(1,890	)			—				7,006
Net income (loss)			27,238				11,266				(150	)			(2,003	)			(7,456	)			—				28,895
Net loss attributable to noncontrolling interest			—				—				136				129				—				—				265
Net income (loss) attributable to parent			27,238				11,266				(14	)			(1,874	)			(7,456	)			—				29,160
Preferred stock dividends			—				—				—				—				35				—				35
Net income (loss) available to common shareholders		$	27,238			$	11,266			$	(14	)		$	(1,874	)		$	(7,491	)		$	—			$	29,125

Average Balances and Interest Rates (Unaudited) (Dollars in thousands)
		Three Months Ended											Three Months Ended											Three Months Ended
		September 30, 2022											June 30, 2022											September 30, 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		$	32,552			$	111			1.35	%		$	197,613			$	304			0.62	%		$	184,131			$	60			0.13	%
CDs with banks			232				2			3.42				1,582				9			2.28				11,065				52			1.86
Investment securities:
Taxable			231,953				897			1.53				237,745				838			1.41				238,807				575			0.96
Tax-exempt 2			144,719				1,346			3.69				147,646				1,342			3.65				202,380				1,528			3.00
Loans and loans held-for-sale: 1
Commercial 3			1,687,383				22,898			5.38				1,564,266				20,021			5.13				1,416,236				15,646			4.38
Tax-exempt 2			4,498				51			4.50				4,930				52			4.23				6,678				77			4.57
Real estate			579,685				4,707			3.22				393,983				2,674			2.72				297,450				2,282			3.04
Consumer			129,464				4,183			12.82				88,366				3,142			14.26				16,133				602			14.80
Total loans			2,401,030				31,839			5.26				2,051,545				25,889			5.06				1,736,497				18,607			4.25
Total earning assets			2,810,486				34,195			4.83				2,636,131				28,382			4.32				2,372,880				20,822			3.48
Less: Allowance for loan losses			(23,083	)										(19,927	)										(24,978	)
Cash and due from banks			5,399											5,579											5,922
Other assets			227,337											237,016											200,536
Total assets		$	3,020,139										$	2,858,799										$	2,554,360
Liabilities
Deposits:
NOW		$	734,271			$	1,393			0.75	%		$	654,781			$	256			0.16	%		$	743,632			$	333			0.18	%
Money market checking			258,527				422			0.65				380,295				184			0.19				433,216				211			0.19
Savings			71,370				153			0.85				27,496				1			0.01				42,126				—			—
IRAs			6,132				17			1.10				6,314				17			1.08				7,302				21			1.14
CDs			202,299				988			1.94				75,487				203			1.08				121,482				333			1.09
Repurchase agreements and federal funds sold			10,627				1			0.04				11,566				1			0.03				10,941				3			0.11
FHLB and other borrowings			48,058				311			2.57				2,312				8			1.39				494				6			4.82
Subordinated debt			73,190				772			4.18				73,126				760			4.17				44,460				481			4.29
Total interest-bearing liabilities			1,404,474				4,057			1.15				1,231,377				1,430			0.47				1,403,653				1,388			0.39
Noninterest-bearing demand deposits			1,321,982											1,331,357											852,872
Other liabilities			37,019											40,900											36,097
Total liabilities			2,763,475											2,603,634											2,292,622
Stockholders’ equity
Common stock			13,086											13,289											12,704
Paid-in capital			145,877											145,014											141,246
Treasury stock			(16,741	)										(16,741	)										(16,741	)
Retained earnings			144,816											137,989											122,361
Accumulated other comprehensive income (loss)			(30,915	)										(25,097	)										1,207
Total stockholders’ equity attributable to parent			256,123											254,454											260,777
Noncontrolling interest			541											711											961
Total stockholders’ equity			256,664											255,165											261,738
Total liabilities and stockholders’ equity		$	3,020,139										$	2,858,799										$	2,554,360
Net interest spread (tax-equivalent)										3.68	%										3.85	%										3.09	%
Net interest income and margin (tax-equivalent)2						$	30,138			4.25	%						$	26,952			4.10	%						$	19,434			3.25	%
Less: Tax-equivalent adjustments						$	(292	)									$	(292	)									$	(338	)
Net interest spread										3.64	%										3.80	%										3.03	%
Net interest income and margin						$	29,846			4.21	%						$	26,660			4.06	%						$	19,096			3.19	%

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 $20.1 million, $22.3 million and $147.3 million are included in this amount as of September 30, 2022, June 30, 2022 and September 30, 2021, respectively.

		Nine Months Ended											Nine Months Ended
		September 30, 2022											September 30, 2021
		Average Balance				Interest Income/ Expense				Yield/ Cost			Average Balance				Interest Income/ Expense				Yield/ Cost
Assets
Interest-bearing balances with banks		$	273,184			$	630			0.31	%		$	207,195			$	164			0.11	%
CDs with banks			1,381				24			2.32				11,554				168			1.94
Investment securities:
Taxable			237,188				2,383			1.34				222,323				1,831			1.10
Tax-exempt 2			140,377				3,824			3.64				207,529				4,881			3.14
Loans and loans held-for-sale: 1
Commercial 3			1,569,161				59,899			5.10				1,365,680				45,905			4.49
Tax-exempt 2			4,829				156			4.32				6,928				237			4.57
Real estate			438,380				9,722			2.97				303,701				7,509			3.31
Consumer			91,092				9,454			13.88				10,157				762			10.03
Total loans			2,103,462				79,231			5.04				1,686,466				54,413			4.31
Total earning assets			2,755,592				86,092			4.18				2,335,067				61,457			3.52
Less: Allowance for loan losses			(20,468	)										(25,920	)
Cash and due from banks			5,680											16,274
Other assets			237,637											201,198
Total assets		$	2,978,441										$	2,526,619
Liabilities
Deposits:
NOW		$	678,991			$	1,844			0.36	%		$	660,655			$	1,323			0.27	%
Money market checking			367,608				807			0.29				461,998				662			0.19
Savings			49,714				155			0.42				44,938				4			0.01
IRAs			6,271				52			1.11				10,764				102			1.27
CDs			122,095				1,433			1.57				148,807				1,091			0.98
Repurchase agreements and federal funds sold			11,334				4			0.05				10,677				10			0.13
FHLB and other borrowings			16,966				322			2.54				33,914				95			0.37
Subordinated debt			73,126				2,284			4.18				43,786				1,437			4.39
Total interest-bearing liabilities			1,326,105				6,901			0.70				1,415,539				4,724			0.45
Noninterest-bearing demand deposits			1,350,533											828,469
Other liabilities			41,379											36,665
Total liabilities			2,718,017											2,280,673
Stockholders’ equity
Preferred stock			—											774
Common stock			13,276											12,524
Paid-in capital			144,903											139,980
Treasury stock			(16,741	)										(16,741	)
Retained earnings			140,174											107,094
Accumulated other comprehensive income (loss)			(21,905	)										1,788
Total stockholders’ equity attributable to parent			259,707											245,419
Noncontrolling interest			717											527
Total stockholders’ equity			260,424											245,946
Total liabilities and stockholders’ equity		$	2,978,441										$	2,526,619
Net interest spread (tax-equivalent)										3.48	%										3.07	%
Net interest income and margin (tax-equivalent)2						$	79,191			3.84	%						$	56,733			3.25	%
Less: Tax-equivalent adjustments						$	(837	)									$	(1,077	)
Net interest spread										3.44	%										3.01	%
Net interest income and margin						$	78,354			3.80	%						$	55,656			3.19	%

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 $20.1 million and $147.3 million are included in this amount as of September 30, 2022 and September 30, 2021, respectively.

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, 2022				June 30, 2022				September 30, 2021				September 30, 2022				September 30, 2021
Net interest margin - U.S. GAAP basis
Net interest income		$	29,846			$	26,660			$	19,096			$	78,354			$	55,656
Average interest-earning assets		$	2,810,486			$	2,636,131			$	2,372,880				2,755,592				2,335,067
Net interest margin			4.21	%			4.06	%			3.19	%			3.80	%			3.19	%
Net interest margin - non-U.S. GAAP basis
Net interest income		$	29,846			$	26,660			$	19,096			$	78,354			$	55,656
Impact of fully tax-equivalent adjustment			292				292				338				837				1,077
Net interest income on a fully tax-equivalent basis		$	30,138			$	26,952			$	19,434				79,191				56,733
Average interest-earning assets		$	2,810,486			$	2,636,131			$	2,372,880			$	2,755,592			$	2,335,067
Net interest margin on a fully tax-equivalent basis			4.25	%			4.10	%			3.25	%			3.84	%			3.25	%

Selected Financial Data (Unaudited) (Dollars in thousands, except per share data)
		Quarterly												Year-to-Date
		2022				2022				2021					2022				2021
		Third Quarter				Second Quarter				Third Quarter
Earnings and Per Share Data:
Net income		$	2,718			$	2,956			$	11,828			$	8,538			$	29,160
Net income available to common shareholders		$	2,718			$	2,956			$	11,828			$	8,538			$	29,125
Earnings per share - basic		$	0.22			$	0.24			$	1.00			$	0.70			$	2.49
Earnings per share - diluted		$	0.21			$	0.23			$	0.92			$	0.66			$	2.32
Cash dividends paid per common share		$	0.17			$	0.17			$	0.14			$	0.51			$	0.36
Book value per common share		$	19.85			$	20.63			$	22.18			$	19.85			$	22.18
Tangible book value per common share 1		$	19.38			$	20.14			$	21.64			$	19.38			$	21.64
Weighted-average shares outstanding - basic			12,238,505				12,176,805				11,880,348				12,170,028				11,684,570
Weighted-average shares outstanding - diluted			12,854,951				12,895,581				12,824,309				12,852,574				12,565,809
Performance Ratios:
Return on average assets 2			0.4	%			0.4	%			1.9	%			0.4	%			1.5	%
Return on average equity 2			4.2	%			4.6	%			18.1	%			4.4	%			15.8	%
Net interest margin 3 4			4.25	%			4.10	%			3.25	%			3.84	%			3.25	%
Efficiency ratio 5			78.8	%			77.3	%			62.9	%			80.4	%			65.9	%
Overhead ratio 2 6			4.0	%			4.2	%			4.0	%			4.0	%			3.6	%
Equity to assets			7.8	%			8.5	%			9.5	%			7.8	%			9.5	%
Asset Quality Data and Ratios:
Charge-offs		$	3,653			$	2,529			$	98			$	7,305			$	363
Recoveries		$	2,313			$	1,355			$	23			$	4,054			$	248
Net loan charge-offs to total loans 2 7			0.2	%			0.2	%			—	%			0.2	%			—	%
Allowance for loan losses		$	26,515			$	22,734			$	25,187			$	26,515			$	25,187
Allowance for loan losses to total loans 8			1.07	%			1.03	%			1.43	%			1.07	%			1.43	%
Nonperforming loans		$	22,350			$	19,295			$	17,453			$	22,350			$	17,453
Nonperforming loans to total loans			0.9	%			0.9	%			1.0	%			0.9	%			1.0	%
Intercoastal Mortgage Company, LLC Production Data9:
Mortgage pipeline		$	792,388			$	1,114,061			$	1,150,116			$	792,388			$	1,150,116
Loans originated		$	606,805			$	976,004			$	1,456,588			$	2,713,508			$	5,222,394
Loans closed		$	615,585			$	843,305			$	1,233,605			$	2,239,732			$	4,630,597
Loans sold		$	619,059			$	692,553			$	1,098,475			$	1,999,706			$	4,368,875

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 ICM, 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)
		September 30, 2022				June 30, 2022				September 30, 2021
Goodwill		$	3,988			$	3,988			$	3,988
Intangibles			1,806				1,981				2,518
Total intangibles			5,794				5,969				6,506
Total equity attributable to parent			243,913				252,300				265,565
Less: Total intangibles			(5,794	)			(5,969	)			(6,506	)
Tangible common equity		$	238,119			$	246,331			$	259,059
Tangible common equity		$	238,119			$	246,331			$	259,059
Common shares outstanding (000s)			12,287				12,229				11,972
Tangible book value per common share		$	19.38			$	20.14			$	21.64

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005268/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 Q3 2022 earnings?

MVB Financial reported net income of $2.7 million or $0.22 EPS for Q3 2022.

How much did deposits increase for MVB Financial in Q3 2022?

Total deposits increased by $82 million, or 3.1%, quarter-over-quarter to $2.70 billion.

What challenges did MVB Financial face in Q3 2022?

MVB Financial faced challenges including a decline in noninterest income and elevated provisions for loan losses.

What is the net interest margin for MVB Financial in Q3 2022?

The net interest margin for Q3 2022 was 4.25%, an increase of 15 basis points from Q2 2022.

How does MVB Financial plan to manage expenses going forward?

MVB Financial plans to implement a 12% reduction in annualized noninterest expenses by the end of Q1 2023.