Press Release

MVB Financial Corp. Reports First Quarter 2017 Earnings

Company Release - 5/4/2017 4:15 PM ET

FAIRMONT, W.Va., May 4, 2017 /PRNewswire/ -- MVB Financial Corp. (OTC Markets Group OTCQB: MVBF) and its subsidiaries - MVB Bank and MVB Mortgage (collectively "MVB") - reported total net income of $1.6 million or $0.14 per share basic and diluted for the three months ended March 31, 2017, compared to $1.8 million or $0.20 per share basic and diluted for the three months ended March 31, 2016. The decline in earnings was driven by flat loan growth and a decrease in net income from MVB Mortgage. The earnings per share decrease was driven by both the earnings decline and the approximate 1.9 million shares of the Company's common stock issued from a capital raise that was completed in December 2016. The earnings decline accounted for approximately $0.02 per share and the additional shares issued accounted for approximately $0.04 per share, respectively, of the $0.06 decline in basic and diluted earnings per share.

FIRST QUARTER 2017 HIGHLIGHTS

  • Total assets remain solid at $1.4 billion as of March 31, 2017
  • Strong credit quality continued with non-performing loans to total loans of 0.61% and annualized net loan charge-offs to total loans of 0.09% at March 31, 2017
  • Total deposits increased $44.9 million, or 4.1%, compared to the first quarter of 2016 and outpaced loan growth by 4.0% over the same time period
    Non-interest income increased $212 thousand, or 2.5%, compared to the first quarter of 2016
  • Mortgage fee income represented 44% of total revenue, an increase of 13.2%, compared to the first quarter of 2016

"Our first quarter 2017 proved challenging, though profitable," said Larry F. Mazza, CEO, MVB Financial Corp. "The impacts of the current lending environment, compounded by regulatory requirements, kept both commercial and mortgage lending flat since first quarter 2016. Looking ahead to the balance of the year, we are encouraged by a more robust loan pipeline as we maintain our superior credit quality standards, and continue our expense reduction focus across the company."

In 2016, management focused on limiting commercial real estate concentration levels, thus leading to slower loan growth. Loans as of March 31, 2017 totaled $1.077 billion, an increase of 0.11% or $1.2 million when compared to a loan balance of $1.076 billion at March 31, 2016. In comparison to December 31, 2016's loan balance of $1.053 billion, loans increased 2.27% or $23.9 million.

The Company's net interest income for the first quarter of 2017 was $10.3 million, a decrease of 3.64% or $389 thousand when compared to net interest income of $10.7 million for the first quarter of 2016. For the first quarter of 2017, the net interest margin was 3.19%, a decrease of 17 basis points when compared to net interest margin of 3.36% for the first quarter of 2016. The decrease in both net interest income and net interest margin was primarily the result of the recovery of non-accrual interest on one loan relationship which contributed $662 thousand to loan interest income for the three months ended March 31, 2016.

The provision for loan losses for the first quarter of 2017 was $518 thousand, a decrease of 17.12% or $107 thousand when compared to a provision of $625 thousand over the first quarter of 2016. The decrease in loan loss provision is attributable to the reduced loan volume in the first quarter of 2017 versus the same quarter in 2016, which included decreases in the highest commercial loan loss rates; and a higher level of charge-offs in the first quarter of 2017, which was more than offset by the reduced loan volume and decreased historical loan volume and historical loss rates. Due to continued collection and successful workout efforts, the Company's nonperforming loans to total loans were 0.61% as of March 31, 2017, reflecting a favorable year-over-year decrease when compared to the nonperforming loans to total loans ratio of 0.77% as of March 31, 2016. In addition, the Company's annualized net loan charge-offs to total loans were 0.09% as of March 31, 2017, compared to 0.07% as of March 31, 2016.

Noninterest income for the first quarter of 2017 was $8.8 million, an increase of 2.46% or $212 thousand when compared to noninterest income of $8.6 million for the first quarter of 2016. The increase was driven by an increase in mortgage fee income of $2.8 million, offset by a decrease of $2.3 million in gain on derivatives. In addition, loans held for sale decreased from $98.9 million at March 31, 2016 to $71.9 million at March 31, 2017. MVB Mortgage noninterest expense increased 5.20% in the first quarter of 2017 compared to the first quarter of 2016.

"While mortgage originations started slowly in 2017, we are optimistic regarding the future based on solid growth of approximately $58.9 million in our ending mortgage pipeline during the first quarter of 2017," said Mazza. "Based on the current interest rate environment and the seasonality of the mortgage business, management believes that earnings from the mortgage subsidiary during the first three months of 2017 were in line with expectations."

Noninterest expense for the first quarter of 2017 was $16.3 million, an increase of 2.04% or $326 thousand when compared to noninterest expense of $16.0 million for the first quarter of 2016. This increase was primarily driven by an increase in data processing, travel and meals and entertainment expenses related to an ongoing core processing system conversion at MVB Bank.

"We are excited about the implementation of a new core processing system as it will give us greater capabilities from data analysis to client service and assures scalability as we move forward and grow," added Mazza.

Other News

As previously announced, on January 5, 2017, the Company completed the redemption of 8,500 shares, or 100% of its Senior Non-Cumulative Perpetual Preferred Stock, Series A, $1,000 par value per share ("Series A Preferred Stock"), issued to the United States Department of Treasury on September 8, 2011. The total shares aggregate redemption price of the stock is approximately $8,508,500, including the dividend payment. The redemption terminates MVB's participation in the Small Business Lending Fund (SBLF) program.

As previously announced, the Company successfully completed its rights offering (the "Rights Offering"), which expired at 5:00 pm Eastern time on April 14, 2017. In the Rights Offering, all holders of the Company's common stock as of the record date of March 10, 2017 were offered non-transferable rights ("Rights") to purchase shares of the Company's common stock at the per share purchase price of $11.50. The aggregate number of shares offered for sale in connection with the Rights Offering was 434,783. All 434,783 shares offered in the Rights Offering were subscribed for, resulting in new capital of approximately $5.0 million.

Larry F. Mazza, the Company's Chief Executive Officer and a Director purchased 100,000 shares of common stock. Mazza purchased 90,999 shares under the Rights Offering and 9,001 shares under the Investment Agreement previously announced by the Company, resulting in an aggregate purchase of approximately $1,150,000.

On February 24, 2017, the Board of Directors of MVB Financial Corp. declared a quarterly cash dividend of $0.025 per share to shareholders of record at the close of business on March 1, 2017, payable March 15, 2017. This first quarterly dividend for 2017 included a one-half cent or 25 percent increase per share.

About MVB Financial Corp.

MVB is a financial holding company headquartered in Fairmont, W.Va. Through its subsidiary, MVB Bank, Inc., and the bank's subsidiary, MVB Mortgage, the company provides financial services to individuals and corporate clients in the Mid-Atlantic region.

The OTCQB is a market tier operated by the OTC Market Group Inc., for over-the-counter traded companies that are current in their reporting with a U.S. regulator.

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

Forward-looking Statements

MVB Financial Corp. 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.  These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties.  Forward-looking statements include information concerning possible or assumed future results of operations of the Company and its subsidiaries.  When words such as "believes," "expects," "anticipates," "may," or similar expressions occur in this Earnings Release, the Company is making forward-looking statements.  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 the forward-looking statements contained in this Earnings Release. Those factors include, but are not limited to: credit risk, changes in market interest rates, inability to achieve merger-related synergies, competition, economic downturn or recession, and government regulation and supervision. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov. Except as required by law, the Company undertakes no obligation to update or revise 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 Securities and Exchange Commission. Accordingly, the consolidated financial information in this announcement is subject to change.

 

MVB Financial Corp.

Financial Highlights


Condensed Consolidated Statements of Income

(Unaudited) (Dollars in thousands, except per share data)

 



 

Three Months Ended
March 31,



2017

2016

Interest income




$

13,068


$

13,382

Interest expense


2,762



2,687

     Net interest income


10,306



10,695

Provision for loan losses


518



625

Noninterest income


8,824



8,612

Noninterest expense


16,317



15,991

     Income from continuing operations, before income taxes


2,295



2,691

Income tax expense - continuing operations


721



846

     Net income from continuing operations


1,574



1,845

Loss from discontinued operations, before income taxes




(79)

Income tax benefit - discontinued operations




(30)

     Net loss from discontinued operations




(49)

     Net income


$

1,574


$

1,796

Preferred dividends


129



186

     Net income available to common shareholders


$

1,445


$

1,610

Earnings per common shareholder - basic


$

0.14


$

0.20

Earnings per common shareholder - diluted


$

0.14


$

0.20

 

 



Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)










March 31, 2017


December 31, 2016


March 31, 2016

Cash and cash equivalents


$

18,278


$

17,340


$

28,726

Certificates of deposit with other banks


14,527



14,527


13,150

Investment securities


172,754



162,368


134,825

Loans held for sale


71,921



90,174


98,876

Loans


1,076,782



1,052,865


1,075,606

Allowance for loan losses


(9,372)



(9,101)


(8,447)

Net loans


1,067,410



1,043,764


1,067,159

Premises and equipment


26,079



25,081


26,377

Goodwill


18,480



18,480


18,480

Other assets


44,502



47,070


45,047

     Total assets


$

1,433,951


$

1,418,804


$

1,432,640











Deposits


$

1,136,466


$

1,107,017


$

1,091,568

Borrowed funds



90,611



90,921


146,267

Other liabilities



68,149



75,241


77,740

Shareholders' equity



138,725



145,625


117,065

     Total liabilities and shareholders' equity


$

1,433,951


$

1,418,804


$

1,432,640

 

 

Reportable Segments

(Unaudited)


Three Months Ended March 31, 2017


Commercial
& Retail
Banking


Mortgage
Banking


Financial
Holding
Company


Intercompany
Eliminations


Consolidated

(Dollars in thousands)

Revenues:
















Interest income


$

12,312


$

781


$

1


$

(26)


$

13,068

Mortgage fee income


185


9,637



(188)


9,634

Insurance and investment services income


124





124

Other income


953


(1,831)


1,210


(1,266)


(934)

     Total operating income


13,574


8,587


1,211


(1,480)


21,892

Expenses:











Interest expense


2,119


304


551


(212)


2,762

Salaries and employee benefits


2,657


5,955


1,350



9,962

Provision for loan losses


500


18




518

Other expense


4,650


2,098


875


(1,268)


6,355

     Total operating expenses


9,926


8,375


2,776


(1,480)


19,597

Income (loss) from continuing operations, before income taxes


3,648


212


(1,565)



2,295

Income tax expense (benefit) - continuing operations


1,161


96


(536



721

Net income (loss) from continuing operations


2,487


116


(1,029



1,574

Net income (loss)


$

2,487


$

116


$

(1,029)


$


$

1,574

Preferred stock dividends




129



129

Net income (loss) available to common shareholders


2,487


116


(1,158)



1,445

 

 

Reportable Segments

(Unaudited)


Three Months Ended March 31, 2016


Commercial
& Retail
Banking


Mortgage
Banking


Financial
Holding
Company


Insurance


Intercompany
Eliminations


Consolidated

(Dollars in thousands)







Revenues:













Interest income


$

12,462



$

941



$

1



$



$

(22)



$

13,382

Mortgage fee income


(22)



7,108







(301)



6,785

Insurance and investment services income


53











53

Other income


1,072



679



1,613





(1,590)



1,774

     Total operating income


13,565



8,728



1,614





(1,913)



21,994

Expenses:













Interest expense


2,040



419



552





(324)



2,687

Salaries and employee benefits


2,831



5,711



1,766







10,308

Provision for loan losses


625











625

Other expense


4,473



1,944



764





(1,498)



5,683

     Total operating expenses


9,969



8,074



3,082





(1,822)



19,303

Income (loss) from continuing operations, before income taxes


3,596



654



(1,468)





(91)



2,691

Income tax expense (benefit) - continuing operations


1,137



258



(515)





(34)



846

Net income (loss) from continuing operations


2,459



396



(953)





(57)



1,845

Income (loss) from discontinued operations








(170)



91



(79)

Income tax expense (benefit) - discontinued operations


$



$



$



$

(64)



$

34



$

(30)

Net income (loss) from discontinued operations


$



$



$



$

(106)



$

57



$

(49)

Net income (loss)


$

2,459



$

396



$

(953)



$

(106)



$



$

1,796

Preferred stock dividends






186







186

Net income (loss) available to common shareholders


2,459



396



(1,139)



(106)





1,610

 

 

Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)








Three Months Ended
March 31, 2017


Three Months Ended
March 31, 2016



Average
Balance


Interest
Income/
Expense


Yield/
Cost


Average
Balance


Interest
Income/
Expense


Yield/
Cost

Assets













Interest-bearing deposits in banks


$

2,734



$

10



1.48

%


$

18,633



$

26



0.56

%

CDs with other banks


14,527



69



1.93

%


13,150



62



1.89

%

Investment securities:













     Taxable


108,862



546



2.03

%


67,965



310



1.82

%

     Tax-exempt


56,280



430



3.10

%


57,237



408



2.85

%

Loans and loans held for sale: 1













     Commercial


746,364



7,943



4.32

%


712,263



8,388



4.71

%

     Tax exempt


15,329



131



3.47

%


16,811



145



3.45

%

     Real estate


352,144



3,764



4.33

%


370,321



3,835



4.14

%

     Consumer


14,370



175



4.94

%


18,309



208



4.54

%

Total loans


1,128,207



12,013



4.32

%


1,117,704



12,576



4.50

%

Total earning assets


1,310,610



13,068



4.04

%


1,274,689



13,382



4.20

%

Less: Allowance for loan losses


(9,427)







(8,244)






Cash and due from banks


15,246







15,651






Other assets


86,215







86,149






     Total assets


$

1,402,644







$

1,368,245



















Liabilities













Deposits:













     NOW


$

415,627



$

525



0.51

%


$

480,016



$

687



0.57

%

     Money market checking


236,845



458



0.78

%


110,994



194



0.70

%

     Savings


48,092



19



0.16

%


44,864



27



0.24

%

     IRAs


16,573



50



1.22

%


15,676



50



1.28

%

     CDs


264,626



854



1.31

%


330,204



930



1.13

%

Repurchase agreements and federal funds sold


23,113



17



0.30

%


28,464



21



0.30

%

FHLB and other borrowings


103,990



288



1.12

%


114,089



226



0.79

%

Subordinated debt


33,524



551



6.67

%


33,524



552



6.59

%

     Total interest-bearing liabilities


1,142,390



2,762



0.98

%


1,157,831



2,687



0.93

%

Noninterest bearing demand deposits


113,021







86,223






Other liabilities


9,226







8,846






     Total liabilities


1,264,637







1,252,900



















Stockholders' equity













Preferred stock


8,212







16,334






Common stock


10,048







8,111






Paid-in capital


93,476







74,275






Treasury stock


(1,084)







(1,084)






Retained earnings


31,651







20,425






Accumulated other comprehensive income


(4,296)







(2,716)






     Total stockholders' equity


138,007







115,345






     Total liabilities and stockholders' equity


$

1,402,644







$

1,368,245



















Net interest spread






3.06

%






3.27

%

Net interest income-margin




$

10,306



3.19

%




$

10,695



3.36

%




















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








 

 

Selected Financial Data

(Unaudited) (Dollars in thousands, except per share data)




Quarterly



2017


2016


2016


2016


2016



First
Quarter


Fourth
Quarter


Third
Quarter


Second
Quarter


First
Quarter

Earnings and Per Share Data:











     Net income from continuing operations


$

1,574



$

2,307



$

2,310



$

2,458



$

1,845


     Net income (loss) from discontinued operations








4,041



(49)


     Net income


1,574



2,307



2,310



6,499



1,796


     Net income available to common shareholders


1,445



1,993



1,996



6,185



1,610


     Earnings per share from continuing operations - basic


0.14



0.23



0.25



0.27



0.21


     Earnings per share from discontinued operations - basic








0.50



(0.01)


     Earnings per common shareholder - basic


0.14



0.23



0.25



0.77



0.20


     Earnings per share from continuing operations - diluted


0.14



0.22



0.24



0.25



0.20


     Earnings per share from discontinued operations - diluted








0.38




     Earnings per common shareholder - diluted


0.14



0.22



0.24



0.63



0.20


     Cash dividends paid per common share


0.025



0.02



0.02



0.02



0.02


     Book value per common share


13.09



12.93



13.49



13.33



12.47


     Weighted average shares outstanding - basic


9,996,544



8,212,021



8,080,690



8,078,000



8,061,998


     Weighted average shares outstanding - diluted


10,009,341



10,068,733



10,434,344



10,433,120



9,901,250













Performance Ratios:











     Return on average assets - continuing operations 1


0.45

%


0.64

%


0.64

%


0.67

%


0.54

%

     Return on average assets - discontinued operations 1


%


%


%


1.11

%


(0.01)%


     Return on average equity - continuing operations 1


4.56

%


7.02

%


7.32

%


8.34

%


6.40

%

     Return on average equity - discontinued operations 1


%


%


%


13.71

%


(0.17)%


     Net interest margin 2


3.19

%


3.23

%


3.17

%


3.14

%


3.36

%

     Efficiency ratio 3


85.30

%


80.48

%


80.58

%


78.07

%


82.82

%

     Overhead ratio 1 4


4.65

%


4.69

%


5.18

%


4.86

%


4.67

%












Asset Quality Data and Ratios:











     Charge-offs


$

290



$

713



$

1,018



$

635



$

191


     Recoveries


43



8



2



4



7


     Net loan charge-offs to total loans 1 5


0.09

%


0.27

%


0.38

%


0.23

%


0.07

%

     Allowance for loan losses


9,372



9,101



9,150



9,091



8,447


     Allowance for loan losses to total loans 6


0.87

%


0.86

%


0.85

%


0.84

%


0.79

%

     Nonperforming loans


6,575



6,229



10,201



8,201



8,282


     Nonperforming loans to total loans


0.61

%


0.59

%


0.95

%


0.75

%


0.77

%












Capital Ratios:











     Equity to assets


9.67

%


10.26

%


8.54

%


8.35

%


8.17

%

     Leverage ratio


9.24

%


9.54

%


7.88

%


7.67

%


7.33

%

     Common equity Tier 1 capital ratio


10.15

%


10.11

%


7.78

%


7.69

%


7.16

%

     Tier 1 risk-based capital ratio


11.19

%


11.92

%


9.51

%


9.44

%


8.91

%

     Total risk-based capital ratio


14.63

%


15.36

%


12.76

%


12.73

%


12.14

%


1 annualized for the quarterly periods presented

2 net interest income as a percentage of average interest earning assets

3 noninterest expense as a percentage of net interest income and noninterest income

4 noninterest expense as a percentage of average assets

5 charge-offs less recoveries

6 excludes loans held for sale

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/mvb-financial-corp-reports-first-quarter-2017-earnings-300451923.html

SOURCE MVB Financial Corp.

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