MVB Financial Corp. Announces Third Quarter 2023 Results

Rhea-AI Summary

MVB Financial Corp. reports net income of $3.9 million for Q3 2023, with balance sheet deposits increasing by $80.0M. Nonperforming loans decreased by $3.1M. Net interest margin improved by 10 bps to 3.87%. CEO expects growth and improved profitability in the long run.

Positive

• MVB Financial reports net income of $3.9 million for Q3 2023
• Balance sheet deposits increased by $80.0M
• Nonperforming loans decreased by 22.4%, or $3.1M
• Net interest margin improved by 10 bps to 3.87%

Negative

• None.

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 2023, with reported net income of $3.9 million, or $0.30 basic and $0.29 diluted earnings per share.

Third Quarter 2023 Highlights As Compared to Second Quarter 2023

Balance sheet deposits increased 2.7%, or $80.0M.

Noninterest bearing deposits increased 10.8%, or $106.3M, and represent 36% of deposits.

Balance sheet loan to deposit ratio of 74.7%, compared to 78.1%.

Nonperforming loans decreased 22.4%, or $3.1M.

Net interest margin improved by 10 bps, to 3.87%.

From Larry F. Mazza, Chief Executive Officer, MVB Financial:

“While market conditions remained volatile during the third quarter, Team MVB built upon our already strong foundation. We continued to optimize our earnings power and grew low-cost deposits and reduced higher-cost funding, further optimizing our deposit mix, improving our strong liquidity position, and with asset yields continuing to reprice higher, drove improvement in our net interest margin. Additionally, although our cost of funds continued to move higher, this quarter marked the slowest pace of increase since the second quarter of 2022. Our loan pipelines continued to build, and we believe our balance sheet is well-positioned for the road ahead. At quarter-end, MVB had no outstanding FHLB or other short-term borrowings, no held to maturity investment securities and a limited concentration of CRE loans and office exposure. Since the industry disruption in March of this year, we took additional steps to enhance our risk management and compliance infrastructure in anticipation of changing industry requirements. These elevated costs have weighed on our earnings in the short-term, but leave us well positioned to drive growth and improve profitability, while maintaining our foundational strength in the long run.”

THIRD QUARTER 2023 HIGHLIGHTS

• Strong core deposit growth and a favorable shift in deposit mix.
  • Total deposits increased 2.7%, or $80.0 million, to $3.04 billion, compared to the prior quarter-end, primarily reflecting strong growth in noninterest bearing (“NIB”) deposits, and increases due to payment relationships, gaming and seasonal considerations, partially offset by a decline in brokered deposits. Relative to the prior year, total deposits increased 12.7%, or $341.9 million.
  • Total off-balance sheet deposits were steady at $1.11 billion as compared to $1.06 billion at the prior quarter-end. Off-balance sheet deposit networks are utilized to generate fee income, enhance capital efficiency and manage liquidity and concentration risk.
  • NIB deposits increased 10.8%, or $106.3 million, to $1.09 billion, and represented 36.0% of total deposits, as compared to 33.4% of total deposits at the prior quarter-end.
  • Certificate of deposit (“CD”) balances, which include brokered deposits, declined 11.1%, or $78.1 million, to $622.5 million, reflecting the Company’s decision to reduce higher-cost deposit funding.
• Net interest margin expansion drives improvement in net interest income.
  • Net interest income on a fully tax-equivalent basis, a non-GAAP financial measure, increased 0.9%, or $0.3 million, to $30.1 million relative to the prior quarter, reflecting net interest margin expansion, partially offset by a decline in total average earning asset balances.
  • Net interest margin on a fully tax-equivalent basis, a non-GAAP financial measure, was 3.90%, up 10 basis points from the prior quarter, primarily reflecting higher loan yields and a favorable shift in the mix of earning assets and deposit funding. Total cost of funds was 2.43%, compared to 2.26% for the prior quarter, representing the slowest pace of increase in the Company’s cost of funds since the second quarter of 2022.
  • Average earning asset balances decreased 2.8% during the third quarter of 2023, reflecting lower average loan balances and a decline in investment securities, partially offset by higher interest-bearing balances with banks. Average total loan balances declined 4.0%, reflecting lower commercial, real estate and consumer balances, including the sale certain of subprime automobile loans during the third quarter of 2023.
  • The loan to deposit ratio was 74.7% as of September 30, 2023, compared to 78.1% as of June 30, 2023 and 91.6% as of September 30, 2022.
• Measures of foundational strength were generally stable.
  • The Community Bank Leverage Ratio, Tier 1 Risk-Based Capital Ratio and MVB Bank’s Total Risk-Based Capital Ratio were 10.4%, 14.0%, and 14.8%, respectively, compared to 10.0%, 13.8%, and 14.9%, respectively, at the prior quarter end.
  • Tangible book value per share, a non-U.S. GAAP measure discussed below, declined 1.1% to $21.08, relative to the prior quarter-end, and increased 8.77% from the year-ago period.
  • Nonperforming loans declined $3.1 million, or 22.4%, to $10.6 million, or 0.5% of total loans, from to $13.6 million, or 0.6% of total loans, at the prior quarter end. Criticized loans as a percentage of total loans were 6.1%, as compared to 3.1% at the prior quarter end. The increase is driven primarily by addition of one loan relationship, which is secured by a financial institution’s stock and all loan payments are current. Net charge-offs were $5.9 million, or 1.0% of total loans on an annualized basis, for the third quarter of 2023, compared to $1.2 million, or 0.2%, for the prior quarter. The increase from prior quarter is primarily related to a single charge-off related to a commercial client in the energy industry.
  • The release of allowance for credit losses totaled $0.2 million, compared to $4.2 million for the prior quarter. The net reserve release for the quarter reflected the aforementioned sale of subprime automobile loans, partially offset by the impact of increases in criticized loans and charge-offs. The allowance for credit losses was 1.1% of total loans, as compared to 1.3% as of the prior quarter-end, reflecting the changes in loan portfolio composition noted above.
• Expenses trend higher on actions taken to enhance regulatory and compliance infrastructure in response to industry events earlier this year; fees lower, primarily due to seasonal factors.
  • Noninterest expense increased 1.5% to $30.7 million relative to the prior quarter, primarily reflecting higher professional fees and other operating costs related to recent actions taken in response to the market events in March 2023 and to enhance risk management and compliance-related infrastructure. Noninterest expenses other than professional fees declined 4.9% from the prior quarter.
  • Total noninterest income was $5.8 million for the third quarter of 2023, as compared to $6.4 million for the prior quarter, primarily reflecting a decline in payment card and service charge income due mostly to seasonal considerations, as well as a decline in equity method investments income.

INCOME STATEMENT

Net interest income on a tax-equivalent basis totaled $30.1 million for the third quarter of 2023. This reflected an increase of $0.3 million, or 0.9%, from the second quarter of 2023 and was consistent as compared to the third quarter of 2022. The increase in net interest income compared to the second quarter of 2023 reflected a higher net interest margin, partially offset by a decline in total average earning asset balances.

Interest income increased $1.3 million, or 2.8%, from the second quarter of 2023 and increased $14.4 million, or 42.5%, from the third quarter of 2022. The tax-equivalent yield on loans was 7.0% for the third quarter of 2023, compared to 6.7% for the second quarter of 2023 and 5.3% for the third quarter of 2022. Higher loan yields compared to the second quarter of 2023 generally reflect the beneficial impact of higher interest rates on earning asset yields, while higher loan yields compared to the third quarter of 2022 reflect the cumulative impact of loans booked at higher yields than the prevailing portfolio yield in the prior year.

Interest expense increased $1.0 million, or 5.8%, from the second quarter of 2023 and increased $14.4 million from the third quarter of 2022. The cost of funds was 2.43% for the third quarter of 2023, up from 2.26% for the second quarter of 2023 and 0.59% for the third quarter of 2022. The increase from the prior quarter primarily reflected the impact of higher interest rates, including an increase in rates paid on money market checking deposits. The increase in cost of funds compared to the prior year period reflects the impact of increased time deposits in 2023 in response to market conditions, higher interest rates and the senior term loan, which was entered into during October 2022.

On a tax-equivalent basis, net interest margin for the third quarter of 2023 was 3.90%, an increase of 10 basis points versus the second quarter of 2023 and a decrease of 35 basis points versus the third quarter of 2022. See the table below for a reconciliation between net interest margin and net interest margin on a fully tax-equivalent basis, a non-GAAP measure. The increase in net interest margin from the second quarter of 2023 primarily reflected higher loan yields and a favorable shift in the mix of earning assets and deposit funding. Contraction in net interest margin from the third quarter of 2022 primarily reflected higher funding costs and an unfavorable shift in the mix of earning assets (loan balances declined, while lower yielding cash balances increased), partially offset by higher interest rates on loans.

Noninterest income totaled $5.8 million for the third quarter of 2023, a decrease of $0.6 million from the second quarter of 2023 and an increase of $0.3 million from the third quarter of 2022. The decrease compared to the prior quarter is primarily driven by declines of $2.6 million in equity method investment income from our mortgage companies, $0.7 million in payment card and service charge income and $0.4 million in other operating income. These decreases were partially offset by increases of $0.3 million in compliance and consulting income and $0.3 million in gain on sale of equity securities. Additionally, the second quarter of 2023 included losses of $1.0 million in acquisition and divestiture activity and $1.0 million in sale of loans, without comparable losses in the third quarter of 2023.

The $0.3 million increase in noninterest income from the third quarter of 2022 was primarily driven by increases of $0.8 million in other operating income, $0.3 million in compliance consulting income, $0.3 million in holding gain on equity securities, $0.3 million in equity method investment income and $0.2 million in gain on sale of equity securities. These increases were partially offset by declines of $1.0 million in gain on sale of loans, $0.5 million in payment and card service charge income, $0.1 million in insurance and investment services income.

Noninterest expense totaled $30.7 million for the third quarter of 2023, an increase of $0.4 million, or 1.5%, from the second quarter of 2023 and an increase of $2.5 million, or 9.0%, from the third quarter of 2022, primarily reflecting higher professional fees of $1.7 million, or 43.9%, and $1.8 million, or 45.3%, as compared to the second quarter of 2023 and the third quarter of 2022, respectively. Salaries and employee benefits expense increased $0.3 million, or 1.7%, and $0.1 million, or 0.7%, as compared to the second quarter of 2023 and the third quarter of 2022, respectively.

BALANCE SHEET

Loans totaled $2.27 billion at September 30, 2023, a decrease of $42.0 million, or 1.8%, and $201.0 million, or 8.1%, as compared to June 30, 2023 and September 30, 2022, respectively. The decline in loan balances compared to the prior quarters primarily reflects amortization of the loan portfolio and slower origination as the pipeline continues to build, in addition to the sale of $15.9 million of subprime automobile loans during the third quarter of 2023 and the sale of $20.4 million of subprime automobile loans during the second quarter of 2023. Loans held-for-sale, which represent MVB Bank’s government guaranteed lending growth vehicle, were $7.6 million as of September 30, 2023, compared to $7.0 million at June 30, 2023 and $20.0 million at September 30, 2022.

Deposits totaled $3.04 billion as of September 30, 2023, an increase of $80.0 million, or 2.7%, from June 30, 2023, and an increase of $341.9 million, or 12.7%, from September 30, 2022. NIB deposits totaled $1.09 billion as of September 30, 2023, an increase of $106.3 million, or 10.8%, from June 30, 2023 and a decrease of $317.9 million, or 22.5%, from September 30, 2022. The increase in total deposit balances compared to June 30, 2023 primarily reflects the increase in noninterest-bearing deposits, payment relationships, gaming and seasonal considerations, partially offset by a decrease in brokered deposits. The increase relative to September 30, 2022, reflects higher CDs and brokered deposits, partially offset by a decrease in NIB deposits driven by the highly-competitive deposit environment, higher interest rates and the utilization of off-balance sheet deposit networks to generate fee income, enhance capital efficiency and manage liquidity and concentration risk.

CAPITAL

The Community Bank Leverage Ratio was 10.4% as of September 30, 2023, compared to 10.0% as of June 30, 2023 and 11.1% as of September 30, 2022.

The tangible common equity ratio, a non-GAAP financial measure, was 7.8% of as of September 30, 2023, compared to 8.1% as of June 30, 2023 and 7.6% as of as of September 30, 2022. See the reconciliation of the tangible common equity ratio to its most directly comparable U.S. GAAP financial measure later in this release.

The Company issued a quarterly cash dividend of $0.17 per share for the third quarter of 2023, consistent with the second quarter of 2023 and the third quarter of 2022.

ASSET QUALITY

Nonperforming loans totaled $10.6 million, or 0.5% of total loans, as of September 30, 2023, as compared to $13.6 million, or 0.6% of total loans, as of June 30, 2023, and $22.4 million, or 0.9% of total loans, as of September 30, 2022. Criticized loans as a percentage of total loans were 6.1%, compared to 3.1% as of June 30, 2023 and 3.4% as of September 30, 2022.

Net charge-offs were $5.9 million, or 1.0% of total loans, for the third quarter of 2023, compared to $1.2 million, or 0.2% of total loans, for the second quarter of 2023 and $1.3 million, or 0.2% of total loans, for the third quarter of 2022.

The release of allowance for credit losses totaled $0.2 million compared to $4.2 million for the prior quarter. The Company sold $15.9 million and $20.4 million of subprime automobile loans during the quarters ended September 30, 2023 and June 30, 2023, respectively, and released the reserves associated with those loans, resulting in the net allowance releases. The allowance for credit losses was 1.1% of total loans at September 30, 2023, as compared to 1.3% at June 30, 2023 and 1.1% at September 30, 2022. The decline in the allowance ratio compared to the prior quarter largely reflects the aforementioned changes in loan portfolio composition.

About MVB Financial Corp.

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

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

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

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

Forward-looking Statements

MVB Financial has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this press release that are intended to be covered by the protections provided under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on current expectations about the future and are subject to risks and uncertainties. Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. Forward-looking statements can be identified by the use of words such as “may,” “could,” “should,” “would,” “will,” “plans,” “believes,” “estimates,” “expects,” “anticipates,” “intends,” “continues” or the negative of those terms or similar expressions. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in forward-looking statements. Therefore, undue reliance should not be placed upon any forward-looking statements. Those factors include but are not limited to: market, economic, operational, liquidity and credit risk; changes in market interest rates; impacts related to or resulting from recent turmoil in the banking industry; inability to achieve anticipated synergies and successfully integrate recent mergers and acquisitions; inability to successfully execute business plans, including strategies related to investments in Fintech companies; competition; unforeseen events, such as pandemics or natural disasters, and any governmental or societal responses thereto; changes in economic, business and political conditions; changes in demand for loan products and deposit flow; operational risks and risk management failures; and government regulation and supervision. Additional factors that may cause actual results to differ materially from those described in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, as well as its other filings with the Securities and Exchange Commission (“SEC”), which are available on the SEC’s website at www.sec.gov. Except as required by law, the Company disclaims any obligation to update, revise or correct any forward-looking statements.

Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s financial statements when filed with the SEC. Accordingly, the consolidated financial information in this announcement is subject to change.

Non-U.S. GAAP Financial Measures

This document contains supplemental financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management uses these non-U.S. GAAP measures in its analysis of the Company’s performance. These measures should not be considered a substitute for U.S. GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with U.S. GAAP. Management believes the presentation of non-U.S. GAAP financial measures that exclude the impact of specified items provide useful supplemental information that is essential to a proper understanding of the Company’s financial condition and results. Non-U.S. GAAP measures are not formally defined under U.S. GAAP, and other entities may use calculation methods that differ from those used by us. As a complement to U.S. GAAP financial measures, our management believes these non-U.S. GAAP financial measures assist investors in comparing the financial condition and results of operations of financial institutions due to the industry prevalence of such non-U.S. GAAP measures. See the tables below for a reconciliation of these non-U.S. GAAP measures to the most directly comparable U.S. GAAP financial measures.

MVB Financial Corp. Financial Highlights Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data)
		Quarterly											Year-to-Date
		2023				2023				2022				2023			2022
		Third Quarter				Second Quarter				Third Quarter
Interest income		$	48,325			$	47,031			$	33,903		$	140,119		$	85,255
Interest expense			18,460				17,449				4,057			47,943			6,901
Net interest income			29,865				29,582				29,846			92,176			78,354
Provision (release of allowance) for credit losses			(159	)			(4,235	)			5,120			182			11,500
Net interest income after provision (release of allowance) for credit losses			30,024				33,817				24,726			91,994			66,854
Total noninterest income			5,791				6,419				5,467			15,277			24,130
Noninterest expense:
Salaries and employee benefits			16,016				15,746				15,905			48,508			48,217
Other expense			14,709				14,536				12,271			40,816			35,188
Total noninterest expenses			30,725				30,282				28,176			89,324			83,405
Income before income taxes			5,090				9,954				2,017			17,947			7,579
Income taxes			1,218				1,956				184			3,639			1,563
Net income from continuing operations before noncontrolling interest			3,872				7,998				1,833			14,308			6,016
Income from discontinued operations, before income taxes			—				—				935			11,831			2,599
Income taxes - discontinued operations			—				—				213			3,049			598
Net income from discontinued operations			—				—				722			8,782			2,001
Net (income) loss attributable to noncontrolling interest			(5	)			114				163			231			521
Net income available to common shareholders		$	3,867			$	8,112			$	2,718		$	23,321		$	8,538
Earnings per share from continuing operations - basic		$	0.30			$	0.64			$	0.16		$	1.15		$	0.54
Earnings per share from discontinued operations - basic		$	—			$	—			$	0.06		$	0.69		$	0.16
Earnings per share - basic		$	0.30			$	0.64			$	0.22		$	1.84		$	0.70
Earnings per share from continuing operations - diluted		$	0.29			$	0.63			$	0.16		$	1.12		$	0.51
Earnings per share from discontinued operations - diluted		$	—			$	—			$	0.05		$	0.67		$	0.15
Earnings per share - diluted		$	0.29			$	0.63			$	0.21		$	1.79		$	0.66

Noninterest Income (Unaudited) (Dollars in thousands)
		Quarterly												Year-to-Date
		2023				2023				2022					2023				2022
		Third Quarter				Second Quarter				Third Quarter
Card acquiring income		$	845			$	788			$	560			$	2,255			$	2,293
Service charges on deposits			490				1,060				889				2,676				2,734
Interchange income			1,517				1,655				1,864				5,034				4,943
Total payment card and service charge income			2,852				3,503				3,313				9,965				9,970
Equity method investments income (loss)			(750	)			1,873				(1,021	)			(70	)			666
Compliance and consulting income			1,314				996				966				3,326				3,380
Gain (loss) on sale of loans			330				(989	)			1,298				(1,015	)			3,786
Investment portfolio gains (losses)			244				(134	)			(217	)			(1,734	)			2,322
Loss on acquisition and divestiture activity			—				(986	)			—				(986	)			—
Other noninterest income			1,801				2,156				1,128				5,791				4,006
Total noninterest income		$	5,791			$	6,419			$	5,467			$	15,277			$	24,130

Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands)
		September 30, 2023				June 30, 2023				September 30, 2022
Cash and cash equivalents		$	587,100			$	455,835			$	79,946
Securities available-for-sale, at fair value			311,537				329,137				366,742
Equity securities			40,835				41,082				34,101
Loans held-for-sale			7,603				7,009				19,977
Loans receivable			2,270,433				2,312,387				2,471,395
Less: Allowance for credit losses			(24,276	)			(30,294	)			(26,515	)
Loans receivable, net			2,246,157				2,282,093				2,444,880
Premises and equipment, net			21,468				22,407				24,639
Assets from discontinued operations			—				—				4,818
Goodwill			2,838				2,838				2,838
Other assets			220,045				211,446				161,981
Total assets		$	3,437,583			$	3,351,847			$	3,139,922
Noninterest-bearing deposits		$	1,093,903			$	987,555			$	1,411,772
Interest-bearing deposits			1,944,986				1,971,384				1,285,186
FHLB and other borrowings			—				—				73,328
Senior term loan			8,473				8,835				—
Subordinated debt			73,478				73,414				73,222
Liabilities from discontinued operations			—				—				5,647
Other liabilities			45,374				36,362				46,407
Stockholders' equity			271,369				274,297				244,360
Total liabilities and stockholders' equity		$	3,437,583			$	3,351,847			$	3,139,922

Reportable Segments (Unaudited)
Three Months Ended September 30, 2023		CoRe Banking				Mortgage Banking				Financial Holding Company				Other				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	48,268			$	103			$	2			$	—			$	(48	)		$	48,325
Interest expense			17,454				—				1,000				54				(48	)			18,460
Net interest income (expense)			30,814				103				(998	)			(54	)			—				29,865
Release of allowance for credit losses			(159	)			—				—				—				—				(159	)
Net interest income (expense) after release of allowance for credit losses			30,973				103				(998	)			(54	)			—				30,024
Noninterest income			4,980				(742	)			2,576				3,099				(4,122	)			5,791
Noninterest Expenses:
Salaries and employee benefits			9,787				—				4,129				2,100				—				16,016
Other expenses			14,701				13				1,992				2,125				(4,122	)			14,709
Total noninterest expenses			24,488				13				6,121				4,225				(4,122	)			30,725
Income (loss) before income taxes			11,465				(652	)			(4,543	)			(1,180	)			—				5,090
Income taxes			2,628				(153	)			(978	)			(279	)			—				1,218
Net income (loss)			8,837				(499	)			(3,565	)			(901	)			—				3,872
Net income attributable to noncontrolling interest			—				—				—				(5	)			—				(5	)
Net income (loss) available to common shareholders		$	8,837			$	(499	)		$	(3,565	)		$	(906	)		$	—			$	3,867

Three Months Ended June 30, 2023		CoRe Banking				Mortgage Banking			Financial Holding Company				Other				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	46,929			$	105		$	3			$	6			$	(12	)		$	47,031
Interest expense			16,439				—			999				23				(12	)			17,449
Net interest income (expense)			30,490				105			(996	)			(17	)			—				29,582
Provision for credit losses			(4,235	)			—			—				—				—				(4,235	)
Net interest income (expense) after provision for credit losses			34,725				105			(996	)			(17	)			—				33,817
Noninterest income			4,113				1,872			3,116				1,051				(3,733	)			6,419
Noninterest Expenses:
Salaries and employee benefits			9,053				7			4,623				2,063				—				15,746
Other expenses			14,148				18			2,163				1,940				(3,733	)			14,536
Total noninterest expenses			23,201				25			6,786				4,003				(3,733	)			30,282
Income (loss) before income taxes			15,637				1,952			(4,666	)			(2,969	)			—				9,954
Income taxes			3,237				643			(1,207	)			(717	)			—				1,956
Net income (loss)			12,400				1,309			(3,459	)			(2,252	)			—				7,998
Net loss attributable to noncontrolling interest			—				—			—				114				—				114
Net income (loss) available to common shareholders		$	12,400			$	1,309		$	(3,459	)		$	(2,138	)		$	—			$	8,112

Three Months Ended September 30, 2022		CoRe Banking			Mortgage Banking				Financial Holding Company				Other				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	33,777		$	103			$	33			$	—			$	(10	)		$	33,903
Interest expense			3,286			—				771				10				(10	)			4,057
Net interest income (expense)			30,491			103				(738	)			(10	)			—				29,846
Provision for credit losses			5,120			—				—				—				—				5,120
Net interest income (expense) after provision for credit losses			25,371			103				(738	)			(10	)			—				24,726
Noninterest income			5,356			(817	)			2,366				1,370				(2,808	)			5,467
Noninterest Expenses:
Salaries and employee benefits			9,354			8				4,274				2,269				—				15,905
Other expenses			11,523			25				1,810				1,722				(2,808	)			12,272
Total noninterest expenses			20,877			33				6,084				3,991				(2,808	)			28,177
Income (loss) before income taxes			9,850			(747	)			(4,456	)			(2,631	)			—				2,016
Income taxes			1,817			(192	)			(840	)			(601	)			—				184
Net income (loss) from continuing operations			8,033			(555	)			(3,616	)			(2,030	)			—				1,832
Income from discontinued operations, before income taxes			—			—				—				936				—				936
Income tax expense - discontinued operations			—			—				—				213				—				213
Net income from discontinued operations			—			—				—				723				—				723
Net income (loss)			8,033			(555	)			(3,616	)			(1,307	)			—				2,555
Net loss attributable to noncontrolling interest			—			—				—				163				—				163
Net income (loss) available to common shareholders		$	8,033		$	(555	)		$	(3,616	)		$	(1,144	)		$	—			$	2,718

Nine Months Ended September 30, 2023		CoRe Banking			Mortgage Banking				Financial Holding Company				Other				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	139,859		$	313			$	38			$	—			$	(91	)		$	140,119
Interest expense			44,934			—				2,992				108				(91	)			47,943
Net interest income (expense)			94,925			313				(2,954	)			(108	)			—				92,176
Provision for credit losses			182			—				—				—				—				182
Net interest income (expense) after provision for credit losses			94,743			313				(2,954	)			(108	)			—				91,994
Noninterest income			12,111			(56	)			8,102				5,934				(10,814	)			15,277
Noninterest Expenses:
Salaries and employee benefits			27,891			7				13,702				6,908				—				48,508
Other expenses			39,903			65				6,072				5,590				(10,814	)			40,816
Total noninterest expenses			67,794			72				19,774				12,498				(10,814	)			89,324
Income (loss) before income taxes			39,060			185				(14,626	)			(6,672	)			—				17,947
Income taxes			8,380			(14	)			(3,127	)			(1,600	)			—				3,639
Net income (loss) from continuing operations			30,680			199				(11,499	)			(5,072	)			—				14,308
Income from discontinued operations, before income taxes			—			—				—				11,831				—				11,831
Income taxes - discontinued operations			—			—				—				3,049				—				3,049
Net income from discontinued operations			—			—				—				8,782				—				8,782
Net income (loss)			30,680			199				(11,499	)			3,710				—				23,090
Net loss attributable to noncontrolling interest			—			—				—				231				—				231
Net income (loss) available to common shareholders		$	30,680		$	199			$	(11,499	)		$	3,941			$	—			$	23,321

Nine Months Ended September 30, 2022		CoRe Banking			Mortgage Banking			Financial Holding Company				Other				Intercompany Eliminations				Consolidated
(Dollars in thousands)
Interest income		$	84,858		$	309		$	113			$	—			$	(25	)		$	85,255
Interest expense			4,617			—			2,284				25				(25	)			6,901
Net interest income (expense)			80,241			309			(2,171	)			(25	)			—				78,354
Provision for credit losses			11,500			—			—				—				—				11,500
Net interest income (expense) after provision for credit losses			68,741			309			(2,171	)			(25	)			—				66,854
Noninterest income			19,347			1,193			8,265				4,490				(9,165	)			24,130
Noninterest Expenses:
Salaries and employee benefits			28,810			8			12,769				6,630				—				48,217
Other expenses			33,484			119			6,262				4,489				(9,165	)			35,189
Total noninterest expenses			62,294			127			19,031				11,119				(9,165	)			83,406
Income (loss) before income taxes			25,794			1,375			(12,937	)			(6,654	)			—				7,578
Income taxes			5,219			356			(2,524	)			(1,488	)			—				1,563
Net income (loss) from continuing operations			20,575			1,019			(10,413	)			(5,166	)			—				6,015
Income from discontinued operations, before income taxes			—			—			—				2,600				—				2,600
Income tax expense - discontinued operations			—			—			—				598				—				598
Net income from discontinued operations			—			—			—				2,002				—				2,002
Net income (loss)			20,575			1,019			(10,413	)			(3,164	)			—				8,017
Net loss attributable to noncontrolling interest			—			—			—				521				—				521
Net income (loss) available to common shareholders		$	20,575		$	1,019		$	(10,413	)		$	(2,643	)		$	—			$	8,538

Average Balances and Interest Rates (Unaudited) (Dollars in thousands)
		Three Months Ended											Three Months Ended											Three Months Ended
		September 30, 2023											June 30, 2023											September 30, 2022
		Average Balance				Interest Income/ Expense				Yield/ Cost			Average Balance				Interest Income/ Expense				Yield/ Cost			Average Balance				Interest Income/ Expense				Yield/ Cost
Assets
Interest-bearing balances with banks		$	483,158			$	6,404			5.26	%		$	444,600			$	5,542			5.00	%		$	32,552			$	111			1.35	%
CDs with banks			—				—			—				—				—			—				232				2			3.42
Investment securities:
Taxable			206,340				1,056			2.03				220,687				1,229			2.23				231,953				897			1.53
Tax-exempt 1			107,490				1,016			3.75				123,497				1,147			3.73				144,719				1,346			3.69
Loans and loans held-for-sale: 2
Commercial 3			1,593,875				31,348			7.80				1,635,438				30,534			7.49				1,687,383				22,898			5.38
Tax-exempt 1			3,678				40			4.31				3,822				42			4.41				4,498				51			4.50
Real estate			573,579				6,351			4.39				593,767				5,691			3.84				579,685				4,707			3.22
Consumer			95,032				2,331			9.73				128,113				3,096			9.69				129,464				4,183			12.82
Total loans			2,266,164				40,070			7.02				2,361,140				39,363			6.69				2,401,030				31,839			5.26
Total earning assets			3,063,152				48,546			6.29				3,149,924				47,281			6.02				2,810,486				34,195			4.83
Less: Allowance for credit losses			(29,693	)										(35,143	)										(23,083	)
Cash and due from banks			6,686											5,756											5,399
Other assets			281,504											289,161											227,337
Total assets		$	3,321,649										$	3,409,698										$	3,020,139
Liabilities
Deposits:
NOW		$	674,745			$	4,970			2.92	%		$	682,277			$	4,816			2.83	%		$	734,271			$	1,394			0.75	%
Money market checking			537,592				3,294			2.43				615,962				2,439			1.59				258,527				422			0.65
Savings			72,206				438			2.41				72,289				351			1.95				71,370				153			0.85
IRAs			6,788				56			3.27				6,401				45			2.82				6,132				17			1.10
CDs			664,281				8,702			5.20				662,753				8,799			5.33				202,299				988			1.94
Repurchase agreements and federal funds sold			4,911				—			—				5,428				—			—				10,627				1			0.04
FHLB and other borrowings			278				—			—				158				—			—				48,058				311			2.57
Senior term loan			8,751				191			8.66				9,351				198			8.49				—				—			—
Subordinated debt			73,446				809			4.37				73,382				801			4.38				73,190				771			4.18
Total interest-bearing liabilities			2,042,998				18,460			3.58				2,128,001				17,449			3.29				1,404,474				4,057			1.15
Noninterest-bearing demand deposits			975,164											971,436											1,321,982
Other liabilities			38,021											38,842											37,019
Total liabilities			3,056,183											3,138,279											2,763,475
Stockholders’ equity
Common stock			13,570											13,533											13,086
Paid-in capital			159,050											158,601											145,877
Treasury stock			(16,741	)										(16,741	)										(16,741	)
Retained earnings			146,504											148,600											144,816
Accumulated other comprehensive loss			(36,865	)										(32,714	)										(30,915	)
Total stockholders’ equity attributable to parent			265,518											271,279											256,123
Noncontrolling interest			(52	)										140											541
Total stockholders’ equity			265,466											271,419											256,664
Total liabilities and stockholders’ equity		$	3,321,649										$	3,409,698										$	3,020,139
Net interest spread (tax-equivalent)										2.71	%										2.73	%										3.68	%
Net interest income and margin (tax-equivalent)1						$	30,086			3.90	%						$	29,832			3.80	%						$	30,138			4.25	%
Less: Tax-equivalent adjustments						$	(221	)									$	(250	)									$	(292	)
Net interest spread										2.68	%										2.70	%										3.64	%
Net interest income and margin						$	29,865			3.87	%						$	29,582			3.77	%						$	29,846			4.21	%

1 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure included in the tables on page 19.

2 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.

3 MVB Bank’s PPP loans totaling $3.0 million, $4.5 million and $20.1 million are included in this amount as of September 30, 2023, June 30, 2023 and September 30, 2022, respectively.

		Nine Months Ended											Nine Months Ended
		September 30, 2023											September 30, 2022
		Average Balance				Interest Income/ Expense				Yield/ Cost			Average Balance				Interest Income/ Expense				Yield/ Cost
Assets
Interest-bearing balances with banks		$	405,012			$	15,099			4.98	%		$	273,184			$	630			0.31	%
CDs with banks			—				—			—				1,381				24			2.32
Investment securities:
Taxable			221,089				4,133			2.50				237,188				2,383			1.34
Tax-exempt 1			122,818				3,471			3.78				140,377				3,824			3.64
Loans and loans held-for-sale: 2
Commercial 3			1,616,510				90,413			7.48				1,569,161				59,899			5.10
Tax-exempt 1			3,813				125			4.38				4,829				156			4.32
Real estate			596,070				18,343			4.11				438,380				9,722			2.97
Consumer			120,075				9,290			10.34				91,092				9,454			13.88
Total loans			2,336,468				118,171			6.76				2,103,462				79,231			5.04
Total earning assets			3,085,387				140,874			6.10				2,755,592				86,092			4.18
Less: Allowance for credit losses			(31,656	)										(20,468	)
Cash and due from banks			4,252											5,680
Other assets			303,233											237,637
Total assets		$	3,361,216										$	2,978,441
Liabilities
Deposits:
NOW		$	717,527			$	14,448			2.69	%		$	678,991			$	1,844			0.36	%
Money market checking			455,463				6,661			1.96				367,608				807			0.29
Savings			79,187				1,430			2.41				49,714				155			0.42
IRAs			6,448				128			2.65				6,271				52			1.11
CDs			572,078				21,396			5.00				122,095				1,433			1.57
Repurchase agreements and federal funds sold			5,974				—			—				11,334				4			0.05
FHLB and other borrowings			23,449				888			5.06				16,966				322			2.54
Senior term loan			9,285				583			8.39				—				—			—
Subordinated debt			73,383				2,409			4.39				73,126				2,284			4.18
Total interest-bearing liabilities			1,942,794				47,943			3.30				1,326,105				6,901			0.70
Noninterest-bearing demand deposits			1,107,712											1,350,533
Other liabilities			37,987											41,379
Total liabilities			3,088,493											2,718,017
Stockholders’ equity
Common stock			13,525											13,276
Paid-in capital			157,034											144,903
Treasury stock			(16,741	)										(16,741	)
Retained earnings			153,769											140,174
Accumulated other comprehensive income loss			(34,980	)										(21,905	)
Total stockholders’ equity attributable to parent			272,607											259,707
Noncontrolling interest			116											717
Total stockholders’ equity			272,723											260,424
Total liabilities and stockholders’ equity		$	3,361,216										$	2,978,441
Net interest spread (tax-equivalent)										2.80	%										3.48	%
Net interest income and margin (tax-equivalent)1						$	92,931			4.03	%						$	79,191			3.84	%
Less: Tax-equivalent adjustments						$	(755	)									$	(837	)
Net interest spread										2.77	%										3.44	%
Net interest income and margin						$	92,176			3.99	%						$	78,354			3.80	%

1 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure included in the tables on page 19.

2 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.

3 MVB Bank’s PPP loans totaling $3.0 million and $20.1 million are included in this amount as of September 30, 2023 and September 30, 2022, respectively.

Selected Financial Data (Unaudited) (Dollars in thousands, except per share data)
		Quarterly													Year-to-Date
		2023				2023				2022						2023				2022
		Third Quarter				Second Quarter				Third Quarter
Earnings and Per Share Data:
Net income		$	3,867			$	8,112			$	2,718				$	23,321			$	8,538
Earnings per share from continuing operations - basic		$	0.30			$	0.64			$	0.16				$	1.15			$	0.54
Earnings per share from discontinued operations - basic		$	—			$	—			$	0.06				$	0.69			$	0.16
Earnings per share - basic		$	0.30			$	0.64			$	0.22				$	1.84			$	0.70
Earnings per share from continuing operations - diluted		$	0.29			$	0.63			$	0.16				$	1.12			$	0.51
Earnings per share from discontinued operations - diluted		$	—			$	—			$	0.05				$	0.67			$	0.15
Earnings per share - diluted		$	0.29			$	0.63			$	0.21				$	1.79			$	0.66
Cash dividends paid per common share		$	0.17			$	0.17			$	0.17				$	0.51			$	0.51
Book value per common share		$	21.33			$	21.57			$	19.85				$	21.33			$	19.85
Tangible book value per common share 1		$	21.08			$	21.31			$	19.38				$	21.08			$	19.38
Weighted-average shares outstanding - basic			12,722,010				12,689,669				12,238,505					12,678,708				12,170,028
Weighted-average shares outstanding - diluted			13,116,629				12,915,294				12,854,951					13,012,834				12,852,574
Performance Ratios:
Return on average assets 2			0.5	%			1.0	%			0.4	%				0.9	%			0.4	%
Return on average equity 2			5.8	%			12.0	%			4.2	%				11.4	%			4.4	%
Net interest margin 3 4			3.90	%			3.80	%			4.25	%				4.03	%			3.84	%
Efficiency ratio 5 10			86.2	%			84.1	%			78.8	%				75.4	%			80.4	%
Overhead ratio 2 6			3.7	%			3.6	%			4.0	%				3.5	%			4.0	%
Equity to assets			7.9	%			8.2	%			7.8	%				7.9	%			7.8	%
Asset Quality Data and Ratios:
Charge-offs		$	8,064			$	3,700			$	3,653				$	16,611			$	7,305
Recoveries		$	2,205			$	2,468			$	2,313				$	7,842			$	4,054
Net loan charge-offs to total loans 2 7			1.0	%			0.2	%			0.2	%				0.5	%			0.2	%
Allowance for credit losses		$	24,276			$	30,294			$	26,515				$	24,276			$	26,515
Allowance for credit losses to total loans 8			1.07	%			1.31	%			1.07	%				1.07	%			1.07	%
Nonperforming loans		$	10,593			$	13,646			$	22,350				$	10,593			$	22,350
Nonperforming loans to total loans			0.5	%			0.6	%			0.9	%				0.5	%			0.9	%
Mortgage Company Equity Method Investees Production Data9:
Mortgage pipeline		$	643,578			$	748,756			$	792,388				$	643,578			$	792,388
Loans originated		$	1,131,963			$	1,167,596			$	606,805				$	3,299,253			$	2,713,508
Loans closed		$	786,885			$	820,665			$	615,585				$	2,282,768			$	2,239,732
Loans sold		$	605,296			$	786,469			$	619,059				$	1,827,019			$	1,999,706

1 Common equity less total goodwill and intangibles per common share, a non-U.S. GAAP measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure included in the tables on page 19.

2 Annualized for the quarterly periods presented.

3 Net interest income as a percentage of average interest-earning assets.

4 Presented on a fully tax-equivalent basis, a non-GAAP financial measure.

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

6 Noninterest expense as a percentage of average assets, a non-U.S. GAAP measure.

7 Charge-offs, less recoveries.

8 Excludes loans held-for-sale.

9 Information is related to Intercoastal Mortgage Company, LLC and Warp Speed Holdings LLC, entities in which MVB has an ownership interest that are accounted for as equity method investments.

10 Includes net income from discontinued operations.

Non-GAAP Reconciliation: Net Interest Margin on a Full Tax-Equivalent Basis The following table reconciles, for the periods shown below, net interest margin on a fully tax-equivalent basis:
		Three Months Ended												Nine Months Ended
(Dollars in thousands)		September 30, 2023				June 30, 2023				September 30, 2022				September 30, 2023				September 30, 2022
Net interest margin - U.S. GAAP basis
Net interest income		$	29,865			$	29,582			$	29,846			$	92,176			$	78,354
Average interest-earning assets		$	3,063,152			$	3,149,924			$	2,810,486				3,085,387				2,755,592
Net interest margin			3.87	%			3.77	%			4.21	%			3.99	%			3.80	%
Net interest margin - non-U.S. GAAP basis
Net interest income		$	29,865			$	29,582			$	29,846			$	92,176			$	78,354
Impact of fully tax-equivalent adjustment			221				250				292				755				837
Net interest income on a fully tax-equivalent basis		$	30,086			$	29,832			$	30,138				92,931				79,191
Average interest-earning assets		$	3,063,152			$	3,149,924			$	2,810,486			$	3,085,387			$	2,755,592
Net interest margin on a fully tax-equivalent basis			3.90	%			3.80	%			4.25	%			4.03	%			3.84	%

Non-U.S. GAAP Reconciliation: Tangible Book Value per Common Share and Tangible Common Equity Ratio (Unaudited) (Dollars in thousands, except per share data)
		September 30, 2023				June 30, 2023				September 30, 2022
Tangible Book Value per Common Share
Goodwill		$	2,838			$	2,838			$	3,988
Intangibles			375				397				1,806
Total intangibles		$	3,213				3,235				5,794
Total equity attributable to parent		$	271,416				274,349				243,913
Less: Total intangibles			(3,213	)			(3,235	)			(5,794	)
Tangible common equity		$	268,203			$	271,114			$	238,119
Tangible common equity		$	268,203			$	271,114			$	238,119
Common shares outstanding (000s)			12,726				12,720				12,287
Tangible book value per common share		$	21.08			$	21.31			$	19.38
Tangible Common Equity Ratio
Total assets		$	3,437,583			$	3,351,847			$	3,139,922
Less: Total intangibles			(3,213	)			(3,235	)			(5,794	)
Tangible assets		$	3,434,370			$	3,348,612			$	3,134,128
Tangible assets		$	3,434,370			$	3,348,612			$	3,134,128
Tangible common equity		$	268,203			$	271,114			$	238,119
Tangible common equity ratio			7.8	%			8.1	%			7.6	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20231026268056/en/

Questions or comments concerning this earnings release should be directed to:

MVB Financial Corp.

Donald T. Robinson, President and Chief Financial Officer

(304) 598-3500

drobinson@mvbbanking.com

Amy Baker, VP, Corporate Communications and Marketing

(844) 682-2265

abaker@mvbbanking.com

Source: MVB Financial Corp.

FAQ

What was MVB Financial's net income for Q3 2023?

MVB Financial reported net income of $3.9 million for Q3 2023.

How much did balance sheet deposits increase by?

Balance sheet deposits increased by $80.0 million.

Did nonperforming loans decrease or increase?

Nonperforming loans decreased by 22.4%, or $3.1 million.

What was the net interest margin for Q3 2023?

The net interest margin improved by 10 basis points to 3.87%.