Press Release

MVB Financial Corp. Reports First Quarter 2018 Earnings

Company Release - 5/7/2018 1:10 PM ET

Strongest Quarter from Continuing Operations in MVB's History

FAIRMONT, W.Va.--(BUSINESS WIRE)-- For the three months ended March 31, 2018, MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) reported net income of $2.6 million, or $0.24 basic and $0.23 diluted earnings per share compared to $1.6 million, or $0.14 basic and diluted earnings per share for the same period in 2017.

For the three months ended March 31, 2018, loans increased $51.2 million or 4.6% from December 31, 2017, which represents an annualized increase of 18.4%. The increase in loans has been driven by our expansion in northern Virginia, as well as, the addition of commercial lenders throughout our markets. In addition to the increase in loan volume during the quarter, loan yields increased 6 basis points. The Company continues to capitalize on disruptions in the market to expand both the lending and deposit teams. The locked Mortgage pipeline increased $61.8 million from December 31, 2017, while over the same period noninterest expense decreased by $975 thousand. The Company continues to monitor expense control and evaluate opportunities for efficiencies.

“If you heard my comments as part of MVB Financial’s Closing Bell Ceremony on March 28, 2018, you know one thing for certain: I’m excited! First quarter 2018 was our strongest quarter of earnings from continuing operations in MVB history. I’m also excited about our trading volume. MVB’s daily trading volume was 1,000 shares not too long ago, and now we’re trading nearly 20,000 shares a day,” said Larry F. Mazza, CEO and President, MVB Financial.

“I’m excited because the Mortgage pipeline exceeded budget expectations for the first quarter, and the pipeline is strong looking ahead to the next quarter. I’m also excited about our robust loan performance in the first quarter, which is due to organic growth and the strategic addition of commercial lenders in our key lending areas. I believe that we have a long runway to grow, and we will through excellent execution, hard work, organic growth and M&A. Our team is ready for the challenge. We are focused, motivated and grateful for our families, teammates, Board of Directors, shareholders, communities and especially for our clients.”

FIRST QUARTER 2018 HIGHLIGHTS

  • Loans of $1.2 billion as of March 31, 2018, increased $51.2 million, or 4.6%, from December 31, 2017, and increased $80.4 million, or 7.5%, from March 31, 2017.
  • Assets of $1.6 billion as of March 31, 2018, increased $47.2 million, or 3.1%, from December 31, 2017, and increased $147.6 million, or 10.3%, from March 31, 2017.
  • Deposits of $1.2 billion as of March 31, 2018, remained flat from December 31, 2017, and increased $17.4 million, or 1.5% from March 31, 2017. Noninterest-bearing deposits of $142.8 million increased $16.9 million, or 13.4%, from December 31, 2017, and increased $23.6 million, or 19.7%, from March 31, 2017.
  • Net interest income of $11.5 million for the quarter ended March 31, 2018, decreased $218 thousand, or 1.9%, from the quarter ended December 31, 2017, and increased $1.2 million, or 11.2% from the quarter ended March 31, 2017.
  • Noninterest income of $9.0 million for the quarter ended March 31, 2018, decreased $1.1 million, or 11.0%, from the quarter ended December 31, 2017, and increased $215 thousand, or 2.4%, from the quarter ended March 31, 2017.
  • Noninterest expense of $16.7 million for the quarter ended March 31, 2018, decreased $975 thousand, or 5.5%, from the quarter ended December 31, 2017, and increased $422 thousand, or 2.6%, from the quarter ended March 31, 2017.

FINANCIAL DETAILS

Loans totaled $1.2 billion as of March 31, 2018, an increase of $51.2 million, or 4.6%, from December 31, 2017, and an increase of $80.4 million, or 7.5%, from March 31, 2017. The growth in loans is primarily attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 4.68% as of March 31, 2018, an increase of 6 basis points from December 31, 2017, and an increase of 36 basis points from March 31, 2017. The increase in yields is driven both by Fed rate increases and a commercial focus on increasing loan yields. In connection with the Company’s core conversion in 2017, the Company implemented a CRM system that has provided better insight on loan pricing.

Deposits totaled $1.2 billion as of March 31, 2018, and remained flat from December 31, 2017, while increasing $17.4 million, or 1.5% from March 31, 2017. Noninterest-bearing deposits totaled $142.8 million as of March 31, 2018, or 12.4% of the total deposit base, an increase of $16.9 million, or 13.4%, from December 31, 2017, and an increase of $23.6 million, or 19.7%, from March 31, 2017. Noninterest-bearing deposits remain a core funding source for the Company. Management will continue to concentrate on balancing deposit growth with adequate net interest margin to meet strategic goals.

Net interest income for the quarter ended March 31, 2018, was $11.5 million, a decrease of $218 thousand, or 1.9%, from the quarter ended December 31, 2017, and an increase of $1.2 million, or 11.2% from the quarter ended March 31, 2017. The decrease from the quarter ended December 31, 2017, was due to fewer days in the quarter ended March 31, 2018, as well as loan growth occurring late in first quarter of 2018. Net interest margin for the quarter ended March 31, 2018 was 3.29%, flat versus the quarter ended December 31, 2017, and an increase of 10 basis points versus the quarter ended March 31, 2017.

Interest expense increased 5.5% during the quarter ended March 31, 2018, compared to the quarter ended December 31, 2017, due to an increase of 8 basis points in the cost of interest-bearing liabilities, and increased 29.9% compared to the quarter ended March 31, 2017, due to an increase of 20 basis points in the cost of interest-bearing liabilities. The rising cost of borrowings placed pressure on net interest margin earned from our mortgage operations as the cost of short-term borrowings to fund the mortgage business increased, while the yield from loans held for sale remained relatively flat.

Provision for loan loss was $474 thousand for the quarter ended March 31, 2018, a $44 thousand decrease from the quarter ended March 31, 2017, despite a 7.5% increase in loans. The slight decrease in loan loss provision is attributable to lower historical loss rates for the period used to determine the allowance. Nonperforming loans increased $2.5 million, to 0.79%, of total loans as of March 31, 2018, compared to 0.61% of total loans as of March 31, 2017. In addition, net charge-offs for the quarter ended March 31, 2018, increased $38 thousand compared to the quarter ended March 31, 2017, resulting in an annualized net loan charge-offs to total loans ratio of 0.10% as of March 31, 2018.

Noninterest income totaled $9.0 million for the quarter ended March 31, 2018, a decrease of $1.1 million, or 11.0%, from the quarter ended December 31, 2017, and an increase of $215 thousand, or 2.4%, from the quarter ended March 31, 2017.

The $1.1 million decrease in noninterest income from the quarter ended December 31, 2017, was due to a decrease of $2.0 million in mortgage fee income, which was partially offset by an increase of $1.1 million in gain on derivatives. The decrease in mortgage fee income was primarily the result of a $94.0 million decrease in sold loan volume. The increase in gain on derivatives was primarily the result of an increase in the locked mortgage pipeline from $91.4 million as of December 31, 2017, to $153.2 million as of March 31, 2018.

The $215 thousand increase in noninterest income from the quarter ended March 31, 2017, was primarily due to a $2.5 million increase in gain on derivatives, along with increases of $413 thousand in commercial swap fees, $203 thousand in gain on sale of portfolio loans, and $143 thousand in gain on sale of securities all of which were partially offset by a decrease of $3.1 million in mortgage fee income. The increase in gain on derivatives was primarily the result of an increase in the locked mortgage pipeline from 67.6% for the quarter ended March 31, 2018, compared to a 12.8% increase in the locked mortgage pipeline for the quarter ended March 31, 2017.

Noninterest expense totaled $16.7 million for the quarter ended March 31, 2018, a decrease of $975 thousand, or 5.5%, from the quarter ended December 31, 2017, and an increase of $422 thousand, or 2.6%, from the quarter ended March 31, 2017.

The $975 thousand decrease in noninterest expense from the quarter ended December 31, 2017, was primarily due to a decrease of $626 thousand in salaries and employee benefits expense and a $448 thousand decrease in data processing and communications. The decrease in salaries and employee benefits expense was primarily the result of lower commissions paid due to a decrease in mortgage closed loan volume of 22.4% versus the quarter ended December 31, 2017. The Company is also experiencing lower data processing and communications expenses related to a new core system that was implemented in the second quarter of 2017.

The $422 thousand increase in noninterest expense from the quarter ended March 31, 2017, was primarily due to an increase of $511 thousand in salaries and employee benefits expense, due to the addition of lenders, treasury team members and the opening of two new branches in 2017. The Company continues to capitalize on disruptions in the market to build out the sales team.

As previously announced on February 20, 2018, the Company declared a quarterly cash dividend of $0.025 per share to shareholders of record at the close of business on March 2, 2018, payable March 15, 2018. This was the first quarterly dividend for 2018 and was equal to the quarterly payouts in 2017 of $0.025 per share.

About MVB Financial Corp.

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

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.

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 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 Earnings 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, 2017, 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.

Questions or comments concerning this Earnings Release should be directed to:

MVB Financial Corp.

Donald T. Robinson, Executive Vice President and CFO
(304) 598-3500
drobinson@mvbbanking.com

 
MVB Financial Corp.

Financial Highlights

 
Condensed Consolidated Statements of Income

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

    Quarterly
2018   2017   2017   2017   2017
  First

Quarter

Fourth

Quarter

Third
Quarter
Second
Quarter
First
Quarter
Interest income $ 15,054 $ 15,086 $ 14,630 $ 13,814 $ 13,068
Interest expense 3,589   3,403   3,216   2,920   2,762
Net interest income 11,465 11,683 11,414 10,894 10,306
Provision for loan losses 474 1,036 96 523 518
Noninterest income 9,039 10,157 10,158 11,567 8,824
Noninterest expense 16,739   17,714   17,966   18,503   16,317
Income before income taxes 3,291 3,090 3,510 3,435 2,295
Income tax expense 697   1,667   1,192   1,175   721
Net income $ 2,594   $ 1,423   $ 2,318   $ 2,260   $ 1,574
Preferred dividends 121 124 123 122 129
Net income available to common shareholders $ 2,473   $ 1,299   $ 2,195   $ 2,138   $ 1,445
 
Earnings per share - basic $ 0.24 $ 0.12 $ 0.21 $ 0.21 $ 0.14
Earnings per share - diluted $ 0.23 $ 0.12 $ 0.21 $ 0.20 $ 0.14
 
Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

 
      March 31, 2018   December 31, 2017   March 31, 2017
Cash and cash equivalents   $ 23,630 $ 20,305   $ 18,278
Certificates of deposit with other banks 14,778 14,778 14,527
Investment securities 233,483 231,507 172,754
Loans held for sale 51,280 66,794 71,921
Loans 1,157,173 1,105,941 1,076,782
Allowance for loan losses (10,067 ) (9,878 )   (9,372 )
Net loans 1,147,106 1,096,063 1,067,410
Premises and equipment 26,477 26,686 26,079
Goodwill 18,480 18,480 18,480
Other assets 66,284   59,689     44,502  
Total assets $ 1,581,518   $ 1,534,302     $ 1,433,951  
 
Deposits $ 1,153,907 $ 1,159,580 $ 1,136,466
Borrowed funds 207,370 152,169 90,611
Other liabilities 69,820 72,361 68,149
Shareholders' equity 150,421   150,192     138,725  
Total liabilities and shareholders' equity $ 1,581,518   $ 1,534,302     $ 1,433,951  
 
Reportable Segments

(Unaudited)

 
Three Months Ended March 31, 2018    

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding Company

 

Intercompany

Eliminations

  Consolidated
(Dollars in thousands)
Revenues:
Interest income $ 13,838 $ 1,335 $ 1 $ (120 ) $ 15,054
Mortgage fee income 140 6,673 (250 ) 6,563
Other income 1,780   517   1,553   (1,374 ) 2,476
Total operating income 15,758   8,525   1,554   (1,744 ) 24,093
Expenses:
Interest expense 2,674 727 558 (370 ) 3,589
Salaries and employee benefits 3,569 5,416 1,488 10,473
Provision for loan losses 417 57 474
Other expense 4,559   2,122   959   (1,374 ) 6,266
Total operating expenses 11,219   8,322   3,005   (1,744 ) 20,802
Income (loss) before income taxes 4,539 203 (1,451 ) 3,291
Income tax expense (benefit) 978   53   (334 )   697
Net income (loss) $ 3,561   $ 150   $ (1,117 ) $   $ 2,594
Preferred stock dividends 121 121
Net income (loss) available to common shareholders $ 3,561   $ 150   $ (1,238 ) $   $ 2,473
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
Other income 1,077   (1,831 ) 1,210   (1,266 ) (810 )
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) before income taxes 3,648 212 (1,565 ) 2,295
Income tax expense (benefit) 1,161   96   (536 )   721  
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  
 
Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

       
Three Months Ended

March 31, 2018

Three Months Ended

December 31, 2017

Three Months Ended

March 31, 2017

  Average
Balance
  Interest
Income/
Expense
  Yield/
Cost
Average
Balance
  Interest
Income/
Expense
  Yield/
Cost
Average
Balance
  Interest
Income/
Expense
  Yield/
Cost
Assets
Interest-bearing deposits in banks $ 3,883 $ 18 1.83 % $ 4,636 $ 15 1.28 % $ 2,734 $ 10 1.48 %
CDs with other banks 14,778 72 1.97 14,778 75 2.01 14,527 69 1.93
Investment securities:
Taxable 154,430 895 2.35 147,459 774 2.08 108,862 546 2.03
Tax-exempt 75,556 655 3.51 68,759 572 3.30 56,280 430 3.10
Loans and loans held for sale: 1
Commercial 775,764 8,943 4.68 770,664 9,042 4.65 746,364 7,943 4.32
Tax exempt 14,464 123 3.46 14,679 128 3.46 15,329 131 3.47
Real estate 360,744 4,190 4.71 374,047 4,300 4.56 352,144 3,764 4.33
Consumer 12,517   158   5.11   13,006   180   5.49   14,370   175   4.94  
Total loans 1,163,489   13,414   4.68   1,172,396   13,650   4.62   1,128,207   12,013   4.32  
Total earning assets 1,412,136   15,054   4.32   1,408,028   15,086   4.25   1,310,610   13,068   4.04  
Less: Allowance for loan losses (9,987 ) (9,579 ) (9,427 )
Cash and due from banks 15,966 16,969 15,246
Other assets 102,645   96,103   86,215  
Total assets $ 1,520,760   $ 1,511,521   $ 1,402,644  
 
Liabilities
Deposits:
NOW $ 443,784 $ 762 0.70 $ 467,095 $ 807 0.69 $ 415,627 $ 525 0.51
Money market checking 241,472 443 0.74 238,262 432 0.72 236,845 458 0.78
Savings 46,544 20 0.17 44,685 19 0.17 48,092 19 0.16
IRAs 17,691 62 1.43 17,200 59 1.36 16,573 50 1.22
CDs 269,286 1,011 1.52 278,446 1,025 1.46 264,626 854 1.31
Repurchase agreements and federal funds sold 20,605 19 0.37 24,727 19 0.30 23,113 17 0.30
FHLB and other borrowings 160,205 714 1.81 122,388 474 1.54 103,990 288 1.12
Subordinated debt 33,524   558   6.75   33,524   568   6.72   33,524   551   6.67  
Total interest-bearing liabilities 1,233,111   3,589   1.18   1,226,327   3,403   1.10   1,142,390   2,762   0.98  
Noninterest bearing demand deposits 129,385 127,417 113,021
Other liabilities 8,673   7,419   9,226  
Total liabilities 1,371,169   1,361,163   1,264,637  
 
Stockholders’ equity
Preferred stock 7,834 7,834 8,212
Common stock 10,525 10,496 10,048
Paid-in capital 99,110 99,123 93,476
Treasury stock (1,084 ) (1,084 ) (1,084 )
Retained earnings 38,004 36,982 31,651
Accumulated other comprehensive income (4,798 ) (2,993 ) (4,296 )
Total stockholders’ equity 149,591   150,358   138,007  
Total liabilities and stockholders’ equity $ 1,520,760   $ 1,511,521   $ 1,402,644  
 
Net interest spread 3.14 3.15 3.06
Net interest income-margin $ 11,465   3.29 % $ 11,683   3.29 % $ 10,306   3.19 %

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
2018   2017   2017   2017   2017
 

First

Quarter

Fourth

Quarter

Third
Quarter

Second
Quarter

First
Quarter

Earnings and Per Share Data:
Net income $ 2,594 $ 1,423 $ 2,318 $ 2,260 $ 1,574
Net income available to common shareholders 2,473 1,299 2,195 2,138 1,445
Earnings per share - basic 0.24 0.12 0.21 0.21 0.14
Earnings per share - diluted 0.23 0.12 0.21 0.20 0.14
Cash dividends paid per common share 0.025 0.025 0.025 0.025 0.025
Book value per common share 13.53 13.63 13.51 13.31 13.09
Weighted average shares outstanding - basic 10,474,138 10,444,627 10,443,443 10,343,933 9,996,544
Weighted average shares outstanding - diluted 12,714,353 10,823,994 12,410,070 12,181,433 10,009,341
 
Performance Ratios:
Return on average assets 1 0.68 % 0.38 % 0.63 % 0.63 % 0.45 %
Return on average equity 1 6.94 % 3.79 % 6.28 % 6.30 % 4.56 %
Net interest margin 2 3.29 % 3.29 % 3.37 % 3.31 % 3.19 %
Efficiency ratio 3 81.64 % 81.11 % 83.28 % 82.38 % 85.30 %
Overhead ratio 1 4 4.40 % 4.69 % 4.87 % 5.19 % 4.65 %
 
Asset Quality Data and Ratios:
Charge-offs $ 356 $ 572 $ 472 $ 163 $ 290
Recoveries 71 18 24 16 43
Net loan charge-offs to total loans 1 5 0.10 % 0.20 % 0.16 % 0.05 % 0.09 %
Allowance for loan losses 10,067 9,878 9,396 9,748 9,372
Allowance for loan losses to total loans 6 0.87 % 0.89 % 0.86 % 0.88 % 0.87 %
Nonperforming loans 9,102 9,699 6,559 5,103 6,575
Nonperforming loans to total loans 0.79 % 0.88 % 0.60 % 0.46 % 0.61 %
 
Capital Ratios:
Equity to assets 9.51 % 9.79 % 10.12 % 9.74 % 9.67 %
Leverage ratio 9.50 % 9.27 % 9.41 % 9.59 % 9.24 %
Common equity Tier 1 capital ratio 10.60 % 10.55 % 10.76 % 10.32 % 10.15 %
Tier 1 risk-based capital ratio 11.57 % 11.54 % 11.79 % 11.33 % 11.19 %
Total risk-based capital ratio 14.80 % 14.87 % 15.18 % 14.66 % 14.63 %

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

MVB Financial Corp.
Amy Baker, 844-682-2265
VP, Corporate Communications
abaker@mvbbanking.com

Source: MVB Financial Corp.

Copyright 2018, © S&P Global Market Intelligence  Terms of Use