Press Release

MVB Financial Corp. Reports Strong Second Quarter 2019 Driven by a 72% Increase in Core Earnings

Company Release - 7/29/2019 8:45 AM ET

FAIRMONT, W.Va.--(BUSINESS WIRE)-- MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) today reported net income of $14.9 million, or $1.27 basic and $1.15 diluted earnings per share, excluding discontinued operations, for the three months ended June 30, 2019, an increase of 367.8%, compared to $3.2 million, or $0.26 basic and diluted for the three months ended March 31, 2019, and an increase of 427.4%, compared to $2.8 million, or $0.25 basic and diluted for the same time period in 2018.

 

 

Quarterly

 

Year-to-Date

 

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

Second
Quarter

 

First
Quarter

 

Second
Quarter

 

 

Net income from continuing operations

 

$

14,931

 

$

3,192

 

$

2,831

 

$

18,123

 

$

5,425

Net income from discontinued operations

 

$

446

 

$

 

$

 

$

446

 

$

Net income

 

$

15,377

 

$

3,192

 

$

2,831

 

$

18,569

 

$

5,425

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - basic

 

$

1.27

 

$

0.26

 

$

0.25

 

$

1.54

 

$

0.49

Earnings per share from discontinued operations - basic

 

$

0.04

 

$

 

$

 

$

0.04

 

$

Earnings per share - basic

 

$

1.31

 

$

0.26

 

$

0.25

 

$

1.58

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - diluted

 

$

1.15

 

$

0.26

 

$

0.25

 

$

1.41

 

$

0.47

Earnings per share from discontinued operations - diluted

 

$

0.03

 

$

 

$

 

$

0.03

 

$

Earnings per share - diluted

 

$

1.18

 

$

0.26

 

$

0.25

 

$

1.44

 

$

0.47

 

 

 

 

 

 

 

 

 

 

 

As previously announced on April 29, 2019, the Company recognized a $13.5 million pre-tax gain after a valuation on its fintech investment portfolio that was recognized in the second quarter of 2019. The after-tax gain was $10.1 million. Excluding discontinued operations and this fintech investment gain, second quarter 2019 core earnings increased 72.2% compared to the quarter ended June 30, 2018.

Noninterest-bearing deposits increased $34.5 million, or 14.6%, from March 31, 2019, and increased $106.6 million, or 65.0%, from June 30, 2018, to a balance of $270.6 million as of June 30, 2019. The growth in noninterest-bearing deposits was primarily driven by MVB’s strategy to focus on Fintech and specialty deposits. As of June 30, 2019, noninterest-bearing deposits were 19.6% of total deposits, compared to 16.5% as of March 31, 2019, and 13.7% as of June 30, 2018.

Interest income increased $847 thousand, or 4.3%, from the quarter ended March 31, 2019, and increased $3.5 million, or 20.8%, from the quarter ended June 30, 2018. The increase from the quarter ended June 30, 2018, was primarily due to a $3.4 million increase in interest and fees on loans driven by an increase in the average balances of loans of $182.9 million, coupled with a 45-basis point increase in the yield on commercial loans.

Mortgage closed loan production volume increased $185.4 million, or 66.5%, from the quarter ended March 31, 2019, and increased $17.7 million, or 4.0%, from the quarter ended June 30, 2018. As a result of this volume increase, the volume of mortgage loans sold increased $146.0 million, or 58.1%, from the quarter ended March 31, 2019, and increased $43.1 million, or 12.2%, from the quarter ended June 30, 2018. As a result of the increases in production and sold loan volume, mortgage fee income increased $3.2 million, or 47.9%, from the quarter ended March 31, 2019, and increased $801 thousand, or 8.8%, from the quarter ended June 30, 2018. Even with these increases in volume, mortgage processing expense decreased $93 thousand, or 11.5%, from the quarter ended March 31, 2019, and decreased $276 thousand, or 27.8%, from the quarter ended June 30, 2018.

MANAGEMENT OVERVIEW

“The Second Quarter and first half of the year results very much validate our adaptive MVB 3.0 strategy. All four verticals of MVB Bank – Commercial, Fintech, Mortgage and Retail – had an outstanding quarter and are firing on all cylinders. The gain realized in the Second Quarter from our forward-thinking Fintech investment portfolio was a critical boost to earnings. Our Fintech investment portfolio is yielding more than a 200% Internal Rate of Return (IRR) since inception. MVB is positioned to finish the year in a record-setting fashion across the entire company. Our strong earnings are helping us to extinguish our subordinated debt without shareholder dilution. This year's results are from building a strong foundation to be able to provide positive impact now and in the future for our shareholders, clients, communities and teammates as our trusted partners,” said Larry F. Mazza, CEO and President, MVB Financial.

SECOND QUARTER 2019 HIGHLIGHTS

  • Loans of $1.3 billion as of June 30, 2019, decreased $14.5 million, or 1.1%, from March 31, 2019, and increased $111.1 million, or 9.2%, from June 30, 2018. During the quarter ended June 30, 2019, residential mortgage loans totaling $51.6 million were sold.
  • Assets of $1.8 billion as of June 30, 2019, increased $43.1 million, or 2.4%, from March 31, 2019, and increased $147.6 million, or 8.8%, from June 30, 2018.
  • Deposits of $1.4 billion as of June 30, 2019, decreased $52.9 million, or 3.7%, from March 31, 2019, and increased $181.9 million, or 15.2% from June 30, 2018. Noninterest-bearing deposits of $270.6 million as of June 30, 2019, increased $34.5 million, or 14.6%, from March 31, 2019, and increased $106.6 million, or 65.0%, from June 30, 2018.
  • Net interest income of $14.5 million for the quarter ended June 30, 2019, increased $557 thousand, or 4.0%, from the quarter ended March 31, 2019, and increased $1.9 million, or 14.8% from the quarter ended June 30, 2018. Net interest margin of 3.46% for the quarter ended June 30, 2019, increased 1 basis point versus the quarter ended March 31, 2019, and increased 8 basis points versus the quarter ended June 30, 2018.
  • Noninterest income of $26.4 million for the quarter ended June 30, 2019, increased $17.6 million, or 201.0%, from the quarter ended March 31, 2019, and increased $15.6 million, or 144.4%, from the quarter ended June 30, 2018. During the quarter ended June 30, 2019, the Company recognized a $10.1 million after-tax gain following a valuation on its fintech investment portfolio.
  • Noninterest expense of $20.4 million for the quarter ended June 30, 2019, increased $1.9 million, or 10.5%, from the quarter ended March 31, 2019, and increased $1.1 million, or 5.9%, from the quarter ended June 30, 2018.
  • During the second quarter of 2019, the Company opened an office in Salt Lake City, Utah to house a new fintech sales team.

LOANS

Loans totaled $1.3 billion as of June 30, 2019, a decrease of $14.5 million, or 1.1%, from March 31, 2019, and an increase of $111.1 million, or 9.2%, from June 30, 2018. The linked quarter decrease in loans is attributable to residential mortgage loan sales totaling $51.6 million. Commercial loans have increased $22.8 million, or 2.4%, from the quarter ended March 31, 2019, and increased $100.8 million, or 11.4%, from June 30, 2018. The year-over-year growth in loans is attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 5.22% as of the quarter ended June 30, 2019, an increase of 2 basis points from the quarter ended March 31, 2019, and an increase of 34 basis points from the quarter ended June 30, 2018.

DEPOSITS

Deposits totaled $1.4 billion as of June 30, 2019, and decreased $52.9 million, or 3.7%, from March 31, 2019, while increasing $181.9 million, or 15.2%, from June 30, 2018. As a result of the Company's efforts to improve net interest margin, high-cost deposits have been allowed to mature. The primary driver of the decrease in deposits from March 31, 2019, was a decrease of $95.9 million in brokered certificates of deposit. Noninterest-bearing deposits totaled $270.6 million as of June 30, 2019, or 19.6%, of the total deposit base, an increase of $34.5 million, or 14.6%, from March 31, 2019, and an increase of $106.6 million, or 65.0%, from June 30, 2018. Noninterest-bearing deposits remain a core funding source for the Company. Of the $270.6 million in noninterest-bearing deposits, balances of $89.7 million are related to Fintech opportunities and balances of $37.0 million are related to Title business opportunities. Total Fintech deposits are $106.3 million and total Title business deposits are $51.9 million as of June 30, 2019.

NET INTEREST INCOME

Net interest income for the quarter ended June 30, 2019, was $14.5 million, an increase of $557 thousand, or 4.0%, from the quarter ended March 31, 2019, and an increase of $1.9 million, or 14.8%, from the quarter ended June 30, 2018. Net interest margin for the quarter ended June 30, 2019 was 3.46%, an increase of 1 basis point versus the quarter ended March 31, 2019, and an increase of 8 basis points versus the quarter ended June 30, 2018.

Interest income increased 4.3% during the quarter ended June 30, 2019, compared to the quarter ended March 31, 2019, a result of an increase of 3 basis points in the yield on earning assets, and increased 20.8% compared to the quarter ended June 30, 2018, due to an increase of 36 basis points in the yield on earning assets. The increase in the yield on earning assets compared to the quarter ended March 31, 2019, was the result of a 6-basis point increase in commercial loans. The increase in the yield on earning assets compared to the quarter ended June 30, 2018, was the result of a 45-basis point increase in commercial loans.

Interest expense increased 5.1% during the quarter ended June 30, 2019, compared to the quarter ended March 31, 2019, due to an increase of 7 basis points in the cost of interest-bearing liabilities, and increased 38.5% compared to the quarter ended June 30, 2018, due to an increase of 45 basis points in the cost of interest-bearing liabilities. The increase in the cost of interest-bearing liabilities compared to the quarter ended March 31, 2019, was the result of a 15-basis point increase in money market checking, a 11-basis point increase in CDs, a 9-basis point increase in NOW accounts, and an 8-basis point increase in IRAs. The increase in the cost of interest-bearing liabilities compared to the quarter ended June 30, 2018, was the result of a 73-basis point increase in FHLB and other borrowings, a 72-basis point increase in money market checking, a 62-basis point increase in CDs, a 34-basis point increase in IRAs, and an 18-basis point increase in NOW accounts.

An increase in the Company's average noninterest-bearing balances of $36.1 million from the quarter ended March 31, 2019, helped to grow a 35-basis point favorable spread on net interest margin for the quarter ended June 30, 2019, compared to a 30-basis point favorable spread for the quarter ended March 31, 2019.

An increase in the Company’s average noninterest-bearing balances of $104.5 million from the quarter ended June 30, 2018, helped to grow a 35-basis point favorable spread on net interest margin in 2019 compared to an 18-basis point favorable spread in 2018.

ASSET QUALITY

Provision for loan losses totaled $600 thousand for the quarter ended June 30, 2019, an increase of $300 thousand, or 100.0%, increase from the quarter ended March 31, 2019, and a decrease of $5 thousand, or 0.8%, from the quarter ended June 30, 2018.

The $300 thousand increase from the quarter ended March 31, 2019 was primarily the result of an increase in net charge-offs of $677 thousand and an increase in certain average historical loss rates.

The $5 thousand decrease from the quarter ended June 30, 2018 was the result of the net impact of decreased loan volume in the second quarter of 2019 versus the same time period in 2018, a decrease in the specific loan loss allocations in the second quarter of 2019 versus the second quarter of 2018, and a decrease in the commercial historical loss rates in the second quarter of 2019 versus the same time period in 2018.

Nonperforming loans decreased $307 thousand, to 0.51%, of total loans as of June 30, 2019, compared to 0.53% of total loans as of March 31, 2019, and compared to 0.78% of total loans as of June 30, 2018. In addition, net charge-offs for the quarter ended June 30, 2019, increased $677 thousand compared to the quarter ended March 31, 2019, and increased $653 thousand compared to the quarter ended June 30, 2018.

NONINTEREST INCOME

Noninterest income totaled $26.4 million for the quarter ended June 30, 2019, an increase of $17.6 million, or 201.0%, from the quarter ended March 31, 2019, and an increase of $15.6 million, or 144.4%, from the quarter ended June 30, 2018.

The $17.6 million increase in noninterest income from the quarter ended March 31, 2019, was due to an increase of $13.4 million in the holding gain on equity securities, an increase of $3.2 million in mortgage fee income, an increase of $681 thousand in the gain on derivatives, and an increase of $358 thousand in commercial swap fee income. The increase in mortgage fee income of $3.2 million was the result of an increase of $146.0 million, or 58.1%, in the volume of mortgage loans sold which was driven by an increase of $185.4 million, or 66.5%, in mortgage closed production volume. The increase in the gain on derivatives of $681 thousand was the result of an increase of $40 thousand in the valuation of the open trades used to hedge the locked pipeline, as well as a 37.5% increase in the locked mortgage pipeline during the quarter ended June 30, 2019.

The $15.6 million increase in noninterest income from the quarter ended June 30, 2018, was primarily due to an increase of $13.6 million in the holding gain on equity securities, an increase of $801 thousand in mortgage fee income, an increase of $478 thousand in the gain on derivative, an increase of $438 thousand in commercial swap fee income, and an increase of $123 thousand in the gain on sale of portfolio loans. The increase in mortgage fee income was largely the result of an increase of $43.1 million, or 12.2%, in the volume of mortgage loans sold which was driven by an increase of $17.7 million, or 4.0%, in mortgage closed production volume. The increase in gain on derivatives of $478 thousand was largely the result of an increase of 37.5% in the locked mortgage pipeline during the three months ended June 30, 2019, compared to a decrease of 0.5% in the locked mortgage pipeline during the three months ended June 30, 2018.

NONINTEREST EXPENSE

Noninterest expense totaled $20.4 million for the quarter ended June 30, 2019, an increase of $1.9 million, or 10.5%, from the quarter ended March 31, 2019, and an increase of $1.1 million, or 5.9%, from the quarter ended June 30, 2018.

The $1.9 million increase in noninterest expense from the quarter ended March 31, 2019, was primarily due to an increase of $1.5 million in salaries and employee benefits and an increase of $214 thousand in travel, entertainment, dues, and subscriptions. The increase in salaries and employee benefits was primarily driven by increased mortgage closed production volume.

The $1.1 million increase in noninterest expense from the quarter ended June 30, 2018, was primarily due to an increase of $786 thousand in salaries and employee benefits, an increase of $273 thousand in travel, entertainment, dues, and subscriptions, and an increase of $169 thousand in occupancy and equipment expense. These increases were partially offset by a decrease of $276 thousand in mortgage processing expense.

DISCONTINUED OPERATIONS

On June 30, 2016, the Company entered into an Asset Purchase Agreement with USI Insurance Services, in which USI purchased substantially all of the assets and assumed certain liabilities of MVB Insurance. Based on a measurement period that ended June 30, 2019, the Company has earned and is reasonably assured to receive an earn-out payment related to the Asset Purchase Agreement with USI Services. The Company expects to receive the earn-out payment during the third quarter 2019 and as of June 30, 2019, have estimated and recorded the earn-out payment as contingent consideration from discontinued operations. The estimate of the earn-out payment is $446 thousand, net of income taxes.

SUBSEQUENT EVENT

On June 30, 2014, the Company issued its Convertible Subordinated Promissory Notes Due 2024 (the “Notes”) to various investors, of which as of June 30, 2019, $12.4 million remained outstanding. The proceeds from the Notes constitute Tier 2 capital for bank regulatory capital purposes. The Notes are redeemable by the Company at least five years after the original issuance date upon prior approval from the Federal Reserve Board.

On July 10, 2019, the Company received a notice of non-objection from the Federal Reserve for the Company to redeem all of the outstanding Notes. The Company intends to provide notice to the holders of the outstanding Notes and redeem the outstanding Notes.

DIVIDEND

As previously announced on May 20, 2019, the Company declared a quarterly cash dividend of $0.04 per share to shareholders of record at the close of business on June 1, 2019, payable June 15, 2019. This was the second quarterly dividend for 2019 and includes a one-half cent, or 14.3% increase per share, compared to the previous quarter dividend of $0.035 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 subsidiaries, MVB Mortgage and MVB Community Development Corporation, 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, 2018, 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

Consolidated Statements of Income

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

 

 

 

Quarterly

Year-to-Date

 

 

2019

 

2019

 

2018

 

2019

 

2018

 

 

Second
Quarter

 

First
Quarter

 

Second
Quarter

 

 

Interest income

 

$

20,470

 

$

19,623

 

$

16,944

 

$

40,093

 

$

31,998

Interest expense

 

5,941

 

5,651

 

4,289

 

11,592

 

7,878

Net interest income

 

14,529

 

13,972

 

12,655

 

28,501

 

24,120

Provision for loan losses

 

600

 

300

 

605

 

900

 

1,079

Net interest income after provision for loan losses

 

13,929

 

13,672

 

12,050

 

27,601

 

23,041

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

9,864

 

6,670

 

9,063

 

16,534

 

15,626

Other income

 

16,523

 

2,095

 

1,732

 

18,618

 

4,208

Total noninterest income

 

26,387

 

8,765

 

10,795

 

35,152

 

19,834

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

13,280

 

11,734

 

12,494

 

25,014

 

22,967

Other expense

 

7,110

 

6,714

 

6,755

 

13,824

 

13,021

Total noninterest expenses

 

20,390

 

18,448

 

19,249

 

38,838

 

35,988

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, before income taxes

 

19,926

 

3,989

 

3,596

 

23,915

 

6,887

Income tax expense - continuing operations

 

4,995

 

797

 

765

 

5,792

 

1,462

Net income from continuing operations

 

14,931

 

3,192

 

2,831

 

18,123

 

5,425

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations, before income taxes

 

600

 

 

 

600

 

Income tax expense - discontinued operations

 

154

 

 

 

154

 

Net income from discontinued operations

 

446

 

 

 

446

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

15,377

 

$

3,192

 

$

2,831

 

$

18,569

 

$

5,425

Preferred dividends

 

122

 

121

 

122

 

243

 

243

Net income available to common shareholders

 

$

15,255

 

$

3,071

 

$

2,709

 

$

18,326

 

$

5,182

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - basic

 

$

1.27

 

$

0.26

 

$

0.25

 

$

1.54

 

$

0.49

Earnings per share from discontinued operations - basic

 

0.04

 

 

 

0.04

 

Earnings per share - basic

 

$

1.31

 

$

0.26

 

$

0.25

 

$

1.58

 

$

0.49

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - diluted

 

$

1.15

 

$

0.26

 

$

0.25

 

$

1.41

 

$

0.47

Earnings per share from discontinued operations - diluted

 

0.03

 

 

 

0.03

 

Earnings per share - diluted

 

$

1.18

 

$

0.26

 

$

0.25

 

$

1.44

 

$

0.47

 

 Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

 

 

 

June 30, 2019

 

March 31, 2019

 

December 31, 2018

 

June 30, 2018

Cash and cash equivalents

 

$

 

 

 

 

21,209

 

 

$

 

 

 

 

17,958

 

 

$

 

 

 

 

22,221

 

 

$

 

 

 

 

23,950

 

Certificates of deposit with other banks

 

 

14,530

 

 

 

14,778

 

 

 

14,778

 

 

 

14,778

 

Securities available-for-sale, at fair value

 

 

215,587

 

 

 

224,741

 

 

 

221,614

 

 

 

222,085

 

Equity securities

 

 

18,364

 

 

 

9,841

 

 

 

9,599

 

 

 

6,969

 

Loans held for sale

 

 

119,906

 

 

 

65,955

 

 

 

75,807

 

 

 

98,799

 

Loans

 

 

1,326,682

 

 

 

1,341,218

 

 

 

1,304,366

 

 

 

1,215,072

 

Less: Allowance for loan losses

 

 

(11,168

)

 

 

(11,242

)

 

 

(10,939

)

 

 

(10,651

)

Net Loans

 

 

1,315,514

 

 

 

1,329,976

 

 

 

1,293,427

 

 

 

1,204,421

 

Premises and equipment

 

 

25,691

 

 

 

25,922

 

 

 

26,545

 

 

 

26,418

 

Goodwill

 

 

18,480

 

 

 

18,480

 

 

 

18,480

 

 

 

18,480

 

Other assets

 

 

83,737

 

 

 

82,257

 

 

 

68,498

 

 

 

69,519

 

Total assets

 

$

 

 

 

 

1,833,018

 

 

$

 

 

 

 

1,789,908

 

 

$

 

 

 

 

1,750,969

 

 

$

 

 

 

 

1,685,419

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

 

 

 

 

270,592

 

 

$

 

 

 

 

236,086

 

 

$

 

 

 

 

213,597

 

 

$

 

 

 

 

163,986

 

Interest-bearing deposits

 

 

1,107,145

 

 

 

1,194,573

 

 

 

1,095,557

 

 

 

1,031,882

 

Borrowed funds

 

 

186,900

 

 

 

114,884

 

 

 

214,887

 

 

 

266,830

 

Other liabilities

 

 

67,705

 

 

 

63,493

 

 

 

50,155

 

 

 

56,926

 

Stockholders' equity

 

 

200,676

 

 

 

180,872

 

 

 

176,773

 

 

 

165,795

 

Total liabilities and stockholders' equity

 

$

 

 

 

 

1,833,018

 

 

$

 

 

 

 

1,789,908

 

 

$

 

 

 

 

1,750,969

 

 

$

 

 

 

 

1,685,419

 

 

Reportable Segments

(Unaudited)

 

Three Months Ended June 30, 2019

 

Commercial & Retail Banking

 

Mortgage Banking

 

Financial Holding Company

 

Intercompany Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

18,820

 

$

2,032

 

$

1

 

$

(383)

 

$

20,470

Interest expense

 

4,743

 

1,499

 

287

 

(588)

 

5,941

Net interest income

 

14,077

 

533

 

(286)

 

205

 

14,529

Provision for loan losses

 

625

 

(25)

 

 

 

600

Net interest income after provision for loan losses

 

13,452

 

558

 

(286)

 

205

 

13,929

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

277

 

9,792

 

 

(205)

 

9,864

Other income

 

15,464

 

1,135

 

1,495

 

(1,571)

 

16,523

Total noninterest income

 

15,741

 

10,927

 

1,495

 

(1,776)

 

26,387

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

4,220

 

7,038

 

2,022

 

 

13,280

Other expense

 

5,493

 

1,842

 

1,346

 

(1,571)

 

7,110

Total noninterest expenses

 

9,713

 

8,880

 

3,368

 

(1,571)

 

20,390

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

19,480

 

2,605

 

(2,159)

 

 

19,926

Income tax expense (benefit) - continuing operations

 

4,785

 

703

 

(493)

 

 

4,995

Net income (loss) from continuing operations

 

$

14,695

 

$

1,902

 

$

(1,666)

 

$

 

$

14,931

Income from discontinued operations, before income taxes

 

$

 

$

 

$

600

 

$

 

$

600

Income tax expense - discontinued operations

 

$

 

$

 

$

154

 

$

 

$

154

Net income from discontinued operations

 

$

 

$

 

$

446

 

$

 

$

446

Net income (loss)

 

$

14,695

 

$

1,902

 

$

(1,220)

 

$

 

$

15,377

Preferred stock dividends

 

 

 

122

 

 

122

Net income (loss) available to common shareholders

 

$

14,695

 

$

1,902

 

$

(1,342)

 

$

 

$

15,255

Three Months Ended March 31, 2019

 

Commercial & Retail Banking

 

Mortgage Banking

 

Financial Holding Company

 

Intercompany Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

18,327

 

$

1,538

 

$

1

 

$

(243)

 

$

19,623

Interest expense

 

4,754

 

993

 

285

 

(381)

 

5,651

Net interest income

 

13,573

 

545

 

(284)

 

138

 

13,972

Provision for loan losses

 

247

 

53

 

 

 

300

Net interest income after provision for loan losses

 

13,326

 

492

 

(284)

 

138

 

13,672

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

109

 

6,697

 

 

(136)

 

6,670

Other income

 

1,566

 

476

 

1,779

 

(1,726)

 

2,095

Total noninterest income

 

1,675

 

7,173

 

1,779

 

(1,862)

 

8,765

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

4,395

 

5,159

 

2,180

 

 

11,734

Other expense

 

5,352

 

2,025

 

1,061

 

(1,724)

 

6,714

Total noninterest expenses

 

9,747

 

7,184

 

3,241

 

(1,724)

 

18,448

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

5,254

 

481

 

(1,746)

 

 

3,989

Income tax expense (benefit) - continuing operations

 

1,054

 

146

 

(403)

 

 

797

Net income (loss) from continuing operations

 

$

4,200

 

$

335

 

$

(1,343)

 

$

 

$

3,192

Net income (loss)

 

$

4,200

 

$

335

 

$

(1,343)

 

$

 

$

3,192

Preferred stock dividends

 

 

 

121

 

 

121

Net income (loss) available to common shareholders

 

$

4,200

 

$

335

 

$

(1,464)

 

$

 

$

3,071

Three Months Ended June 30, 2018

 

Commercial & Retail Banking

 

Mortgage Banking

 

Financial Holding Company

 

Intercompany Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

15,426

 

$

1,772

 

$

1

 

$

(255)

 

$

16,944

Interest expense

 

3,164

 

1,081

 

542

 

(498)

 

4,289

Net interest income

 

12,262

 

691

 

(541)

 

243

 

12,655

Provision for loan losses

 

625

 

(20)

 

 

 

605

Net interest income after provision for loan losses

 

11,637

 

711

 

(541)

 

243

 

12,050

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

154

 

9,152

 

 

(243)

 

9,063

Other income

 

1,068

 

706

 

1,489

 

(1,531)

 

1,732

Total noninterest income

 

1,222

 

9,858

 

1,489

 

(1,774)

 

10,795

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

3,884

 

6,826

 

1,784

 

 

12,494

Other expense

 

4,968

 

2,296

 

1,022

 

(1,531)

 

6,755

Total noninterest expenses

 

8,852

 

9,122

 

2,806

 

(1,531)

 

19,249

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

4,007

 

1,447

 

(1,858)

 

 

3,596

Income tax expense (benefit) - continuing operations

 

832

 

373

 

(440)

 

 

765

Net income (loss) from continuing operations

 

$

3,175

 

$

1,074

 

$

(1,418)

 

$

 

$

2,831

Net income (loss)

 

$

3,175

 

$

1,074

 

$

(1,418)

 

$

 

$

2,831

Preferred stock dividends

 

 

 

122

 

 

122

Net income (loss) available to common shareholders

 

$

3,175

 

$

1,074

 

$

(1,540)

 

$

 

$

2,709

Six Months Ended June 30, 2019

 

Commercial & Retail Banking

 

Mortgage Banking

 

Financial Holding Company

 

Intercompany Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

37,147

 

$

3,570

 

$

3

 

$

(627)

 

$

40,093

Interest expense

 

9,497

 

2,492

 

572

 

(969)

 

11,592

Net interest income

 

27,650

 

1,078

 

(569)

 

342

 

28,501

Provision for loan losses

 

872

 

28

 

 

 

900

Net interest income after provision for loan losses

 

26,778

 

1,050

 

(569)

 

342

 

27,601

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

386

 

16,489

 

 

(341)

 

16,534

Other income

 

17,030

 

1,611

 

3,274

 

(3,297)

 

18,618

Total noninterest income

 

17,416

 

18,100

 

3,274

 

(3,638)

 

35,152

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

8,615

 

12,197

 

4,202

 

 

25,014

Other expense

 

10,845

 

3,867

 

2,408

 

(3,296)

 

13,824

Total noninterest expenses

 

19,460

 

16,064

 

6,610

 

(3,296)

 

38,838

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

24,734

 

3,086

 

(3,905)

 

 

23,915

Income tax expense (benefit) - continuing operations

 

5,839

 

849

 

(896)

 

 

5,792

Net income (loss) from continuing operations

 

18,895

 

2,237

 

(3,009)

 

 

18,123

Income from discontinued operations, before income taxes

 

 

 

600

 

 

600

Income tax expense - discontinued operations

 

 

 

154

 

 

154

Net income from discontinued operations

 

 

 

446

 

 

446

Net income (loss)

 

$

18,895

 

$

2,237

 

$

(2,563)

 

$

 

$

18,569

Preferred stock dividends

 

 

 

243

 

 

243

Net income (loss) available to common shareholders

 

$

18,895

 

$

2,237

 

$

(2,806)

 

$

 

$

18,326

Six Months Ended June 30, 2018

 

Commercial & Retail Banking

 

Mortgage Banking

 

Financial Holding Company

 

Intercompany Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

29,265

 

$

3,107

 

$

2

 

$

(376)

 

$

31,998

Interest expense

 

5,838

 

1,808

 

1,100

 

(868)

 

7,878

Net interest income

 

23,427

 

1,299

 

(1,098)

 

492

 

24,120

Provision for loan losses

 

1,042

 

37

 

 

 

1,079

Net interest income after provision for loan losses

 

22,385

 

1,262

 

(1,098)

 

492

 

23,041

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

292

 

15,825

 

 

(491)

 

15,626

Other income

 

2,848

 

1,223

 

3,043

 

(2,906)

 

4,208

Total noninterest income

 

3,140

 

17,048

 

3,043

 

(3,397)

 

19,834

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

7,453

 

12,242

 

3,272

 

 

22,967

Other expense

 

9,527

 

4,418

 

1,981

 

(2,905)

 

13,021

Total noninterest expenses

 

16,980

 

16,660

 

5,253

 

(2,905)

 

35,988

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

8,545

 

1,650

 

(3,308)

 

 

6,887

Income tax expense (benefit) - continuing operations

 

1,810

 

426

 

(774)

 

 

1,462

Net income (loss) from continuing operations

 

6,735

 

1,224

 

(2,534)

 

 

5,425

Net income (loss)

 

$

6,735

 

$

1,224

 

$

(2,534)

 

$

 

$

5,425

Preferred stock dividends

 

 

 

243

 

 

243

Net income (loss) available to common shareholders

 

$

6,735

 

$

1,224

 

$

(2,777)

 

$

 

$

5,182

 

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

 

 

 

Three Months Ended
June 30, 2019

 

Three Months Ended
March 31, 2019

 

Three Months Ended
June 30, 2018

 

 

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

 

$

9,582

 

$

52

 

2.18

%

 

$

7,546

 

$

49

 

2.63

%

 

$

3,473

 

$

17

 

1.96

%

CDs with other banks

 

14,579

 

73

 

2.01

 

 

14,778

 

73

 

2.00

 

 

14,778

 

74

 

2.02

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Taxable

 

123,803

 

768

 

2.49

 

 

139,692

 

879

 

2.55

 

 

151,224

 

891

 

2.36

 

     Tax-exempt

 

99,664

 

894

 

3.60

 

 

92,417

 

837

 

3.67

 

 

81,164

 

717

 

3.54

 

Loans and loans held for sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Commercial

 

965,652

 

13,065

 

5.43

 

 

951,836

 

12,594

 

5.37

 

 

831,118

 

10,318

 

4.98

 

     Tax exempt

 

13,047

 

114

 

3.50

 

 

14,251

 

123

 

3.50

 

 

14,260

 

123

 

3.46

 

     Real estate

 

446,825

 

5,363

 

4.81

 

 

411,639

 

4,941

 

4.87

 

 

394,814

 

4,656

 

4.73

 

     Consumer

 

9,396

 

141

 

6.02

 

 

9,654

 

127

 

5.34

 

 

11,850

 

148

 

5.00

 

Total loans

 

1,434,920

 

18,683

 

5.22

 

 

1,387,380

 

17,785

 

5.20

 

 

1,252,042

 

15,245

 

4.88

 

Total earning assets

 

1,682,548

 

20,470

 

4.88

 

 

1,641,813

 

19,623

 

4.85

 

 

1,502,681

 

16,944

 

4.52

 

Less: Allowance for loan losses

 

(11,216)

 

 

 

 

 

(11,071)

 

 

 

 

 

(10,132)

 

 

 

 

Cash and due from banks

 

15,982

 

 

 

 

 

16,088

 

 

 

 

 

16,792

 

 

 

 

Other assets

 

138,299

 

 

 

 

 

112,301

 

 

 

 

 

107,421

 

 

 

 

     Total assets

 

$

1,825,613

 

 

 

 

 

$

1,759,131

 

 

 

 

 

$

1,616,762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     NOW

 

$

363,837

 

$

839

 

0.92

 

 

$

357,005

 

$

729

 

0.83

 

 

$

459,784

 

$

846

 

0.74

 

     Money market checking

 

327,904

 

1,287

 

1.57

 

 

297,607

 

1,044

 

1.42

 

 

229,763

 

484

 

0.85

 

     Savings

 

39,661

 

1

 

0.01

 

 

40,235

 

1

 

0.01

 

 

46,478

 

7

 

0.06

 

     IRAs

 

17,718

 

83

 

1.88

 

 

17,826

 

79

 

1.80

 

 

17,997

 

69

 

1.54

 

     CDs

 

415,201

 

2,338

 

2.26

 

 

428,610

 

2,270

 

2.15

 

 

275,004

 

1,124

 

1.64

 

Repurchase agreements and federal funds sold

 

11,644

 

11

 

0.38

 

 

14,206

 

14

 

0.40

 

 

20,118

 

20

 

0.39

 

FHLB and other borrowings

 

153,926

 

1,095

 

2.85

 

 

175,222

 

1,229

 

2.84

 

 

226,487

 

1,197

 

2.12

 

Subordinated debt

 

17,491

 

287

 

6.58

 

 

17,524

 

285

 

6.60

 

 

32,015

 

542

 

6.79

 

     Total interest-bearing liabilities

 

1,347,382

 

5,941

 

1.77

 

 

1,348,235

 

5,651

 

1.70

 

 

1,307,646

 

4,289

 

1.32

 

Noninterest bearing demand deposits

 

250,658

 

 

 

 

 

214,541

 

 

 

 

 

146,135

 

 

 

 

Other liabilities

 

36,729

 

 

 

 

 

18,450

 

 

 

 

 

9,890

 

 

 

 

     Total liabilities

 

1,634,769

 

 

 

 

 

1,581,226

 

 

 

 

 

1,463,671

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

7,834

 

 

 

 

 

7,834

 

 

 

 

 

7,834

 

 

 

 

Common stock

 

11,695

 

 

 

 

 

11,659

 

 

 

 

 

10,686

 

 

 

 

Paid-in capital

 

117,648

 

 

 

 

 

116,925

 

 

 

 

 

101,577

 

 

 

 

Treasury stock

 

(1,084)

 

 

 

 

 

(1,084)

 

 

 

 

 

(1,084)

 

 

 

 

Retained earnings

 

59,512

 

 

 

 

 

49,161

 

 

 

 

 

41,277

 

 

 

 

Accumulated other comprehensive income

 

(4,761)

 

 

 

 

 

(6,590)

 

 

 

 

 

(7,199)

 

 

 

 

     Total stockholders’ equity

 

190,844

 

 

 

 

 

177,905

 

 

 

 

 

153,091

 

 

 

 

     Total liabilities and stockholders’ equity

 

$

1,825,613

 

 

 

 

 

$

1,759,131

 

 

 

 

 

$

1,616,762

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread

 

 

 

 

 

3.11

 

 

 

 

 

 

3.15

 

 

 

 

 

 

3.20

 

Net interest income-margin

 

 

 

$