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MVB Financial Corp. Reports Strong Fourth Quarter 2020 Results and Finishes 2020 with Record Earnings

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MVB Financial Corp. (NASDAQ: MVBF) ("MVB Financial," "MVB," or the "Company") today reported net income of $11.8 million, or $1.00 basic and $0.97 diluted earnings per share, for the three months ended December 31, 2020. For the year ended December 31, 2020, the Company reported net income of $37.4 million, or $3.13 basic and $3.06 diluted earnings per share.

Quarterly

Full Year

2020

2020

2019

2020

2019

Fourth Quarter

Third Quarter

Fourth Quarter

Net income

$

11,838

$

6,491

$

4,095

$

37,411

$

26,991

Earnings per share - basic

$

1.00

$

0.53

$

0.34

$

3.13

$

2.26

Earnings per share - diluted

$

0.97

$

0.53

$

0.32

$

3.06

$

2.20

FOURTH QUARTER 2020 HIGHLIGHTS

  • Deposits: Noninterest-bearing ("NIB") deposits were $715.8 million as of December 31, 2020, an increase of $73.0 million, or 11.3%, from September 30, 2020, and an increase of $437.2 million, or 157.0%, from December 31, 2019. As of December 31, 2020, NIB deposits were 36.1% of total deposits, compared to 33.9% at September 30, 2020, and 22.0% as of December 31, 2019.

  • Asset Quality: Allowance for loan losses to total loans was 1.8% as of December 31, 2020, a decrease of four basis points from September 30, 2020, and an increase of 92 basis points from December 31, 2019. Excluding Paycheck Protection Program ("PPP") loans of $82.0 million which are generally fully guaranteed by the U.S. government, allowance for loan losses to total loans was 1.9% as of December 31, 2020, a decrease of five basis points from September 30, 2020, and an increase of 102 basis points from December 31, 2019.

  • Growth in Tangible Book Value ("TBV") per Share: TBV per share, a non-GAAP measure, was $19.73 as of December 31, 2020, an increase of $1.07, or 5.7%, from September 30, 2020, and an increase of $4.53, or 29.8%, from December 31, 2019. A reconciliation of TBV is included as the last page of this release.

  • Capital: MVB Bank, Inc. ("MVB Bank" or the "Bank") finished the fourth quarter with consistently strong capital ratios. As of December 31, 2020, the Bank’s leverage ratio was 11.0%, the Tier 1 risk-based capital ratio was 14.6%, and the total risk-based capital ratio was 15.8%. The Company’s tangible common equity to tangible assets was 9.8% as of December 31, 2020. Also, during the fourth quarter of 2020, the Company repurchased 668,390 shares totaling $13.1 million through a share repurchase plan and a tender offer.

FINTECH HIGHLIGHTS

  • Financial technology related companies ("Fintech") deposits totaled $533.0 million as of December 31, 2020, an increase of $168.2 million, or 46.1%, from September 30, 2020, and an increase of $382.8 million, or 254.8%, from December 31, 2019.

  • Gaming deposits, included in total Fintech deposits, were $357.9 million as of December 31, 2020, an increase of $151.3 million, or 73.3%, from September 30, 2020, and an increase of $237.6 million, or 197.5%, from December 31, 2019.

MANAGEMENT OVERVIEW

The Company completed a very successful year and continued to further strengthen capital and maintained a significant allowance for loan losses, all while generating competitive earnings of $11.8 million in the fourth quarter to position the Company for continued success in the future.

The Bank paid off all Federal Home Loan Bank ("FHLB") and other borrowings during the fourth quarter and further reduced its reliance on brokered certificates of deposit ("CDs") and higher-cost deposits by replacing these deposits with noninterest-bearing deposits. The growth in noninterest-bearing deposits was primarily driven by MVB’s continual execution of strategic initiatives in Fintech and specialty deposits.

"Despite the challenges of the COVID-19 pandemic, 2020 ended as one of the most successful years in MVB history. MVB completed multiple strategic transactions, created growth in tangible book value and shareholder value during unprecedented times, and onboarded a number of highly talented and experienced Team Members. I could not be more grateful to Team MVB and what we have accomplished," said Larry F. Mazza, President and CEO, MVB Financial Corp. "MVB is well positioned into 2021 with an extremely strong balance sheet, strong capital and liquidity positions. Our continued execution in our Fintech and gaming verticals gives us the ability to expand our product base on the financial frontier."

LOANS

Loans, excluding PPP loans of $82.0 million, totaled $1.37 billion as of December 31, 2020, an increase of $31.1 million, or 2.3%, from September 30, 2020, and a decrease of $2.8 million, or 0.2%, from December 31, 2019. The tax-equivalent yield on loans, including PPP loans, was 4.7% for the quarter ended December 31, 2020, an increase of 20 basis points from the quarter ended September 30, 2020, and a decrease of 39 basis points from the quarter ended December 31, 2019. The increase was primarily due to an increase of $0.9 million in loan fees, an increase of $0.4 million in accretion related to the loans acquired from The First State Bank ("First State"), and the mortgage combination announced during the third quarter of 2020 that caused a significant decrease in lower-yielding loans held-for-sale.

Loans held-for-sale totaled $1.1 million as of December 31, 2020, a decrease of $1.2 million, or 53.2%, from September 30, 2020, and a decrease of $108.7 million, or 99.0%, from December 31, 2019, as a result of the MVB Mortgage combination to form Intercoastal Mortgage, LLC as previously announced on July 1, 2020.

DEPOSITS

Deposits totaled $1.98 billion as of December 31, 2020, an increase of $83.4 million, or 4.4%, from September 30, 2020, and an increase of $717.3 million, or 56.7%, from December 31, 2019. Noninterest-bearing deposits were $715.8 million as of December 31, 2020, an increase of $73.0 million, or 11.3%, from September 30, 2020, and an increase of $437.2 million, or 157.0%, from December 31, 2019. As of December 31, 2020, NIB deposits were 36.1% of total deposits, compared to 33.9% at September 30, 2020, and 22.0% as of December 31, 2019.

Throughout 2020, the Company used the influx of noninterest-bearing deposits to pay off FHLB and other borrowings and decrease reliance on higher-cost funding sources. Also as a result of the increase in deposits, the Company’s loan to deposit ratio was 73.3% as of December 31, 2020.

NET INTEREST INCOME

Net interest income for the quarter ended December 31, 2020, was $17.7 million, an increase of $1.2 million, or 7.1%, compared to the quarter ended September 30, 2020, and an increase of $1.8 million, or 11.5%, compared to the quarter ended December 31, 2019. Net interest margin, on a fully tax-equivalent basis, for the quarter ended December 31, 2020, was 3.4%, a decrease of 1 basis point compared to the quarter ended September 30, 2020, and a decrease of 14 basis points compared to the quarter ended December 31, 2019. Net interest margin was primarily impacted by excess liquidity and PPP loans originated during the second quarter of 2020. For the quarter ended December 31, 2020, excess liquidity accounted for 29 basis points of the decrease and the PPP loans originated during the second quarter accounted for 10 basis points of the decrease. The tax-equivalent adjustments are added to net interest income and are $0.4 million for the quarter ended December 31, 2020, $0.3 million for the quarter ended September 30, 2020, and $0.3 million for the quarter ended December 31, 2019. Excluding the impact of the FDIC-assisted acquisition of First State, the fully-tax equivalent net interest margin for the quarter ended December 31, 2020 would have decreased 12 basis points.

Interest income for the quarter ended December 31, 2020 was $19.4 million, an increase of $0.7 million, or 3.9%, compared to the quarter ended September 30, 2020, and a decrease of $1.9 million, or 8.8%, compared to the quarter ended December 31, 2019. The 90-basis point increase in the yield on real estate loans compared to the quarter ended September 30, 2020, was partially offset by a 7-basis point decrease in the tax-equivalent yield on investment securities. The increase in the yield on real estate loans was due to the mortgage combination announced during the third quarter of 2020 that caused a significant decrease in lower-yielding loans held-for-sale. The decrease in the tax-equivalent yield on earning assets of 101-basis points compared to the quarter ended December 31, 2019 was the result of a 51-basis point decrease in the yield on commercial loans and a 25-basis point decrease in the tax-equivalent yield on investment securities.

A significant factor in the decrease in the tax-equivalent yield on earning assets has been the continuing increase in the Company’s liquidity. For the quarter ended December 31, 2020, interest-bearing deposits with banks, CDs with banks, and investment securities were 31% of average earning assets, compared to 22% for the quarter ended September 30, 2020, and compared to 15% for the quarter ended December 31, 2019.

Interest expense for the quarter ended December 31, 2020 was $1.7 million, a decrease of $0.5 million, or 21.3%, compared to the quarter ended September 30, 2020, and a decrease of $3.7 million, or 68.9%, compared to the quarter ended December 31, 2019. The decrease compared to the quarter ended September 30, 2020 was a result of a 14-basis point decrease in the cost of interest-bearing liabilities, primarily the result of a 180-basis point decrease in the cost of FHLB and other borrowings that was partially offset by a 216-basis point increase in the cost of subordinated debt. The decrease compared to the quarter ended December 31, 2019 was the result of a 104-basis point decrease in the cost of interest-bearing liabilities, primarily the result of a 153-basis point decrease in the cost of FHLB and other borrowings and a 131-basis point decrease in the cost of money market accounts.

An increase in the Company's average noninterest-bearing balances of $144.1 million from the quarter ended September 30, 2020 helped to maintain a 18-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended December 31, 2020, compared to a 21-basis point favorable spread for the quarter ended September 30, 2020.

An increase in the Company’s average noninterest-bearing balances of $389.9 million from the quarter ended December 31, 2019 helped to maintain a 18-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended December 31, 2020 compared to a 35-basis point favorable spread for the quarter ended December 31, 2019.

ASSET QUALITY

Provision for loan losses for the quarter ended December 31, 2020 was $0.2 million, a decrease of $8.4 million, or 97.5%, from the quarter ended September 30, 2020, and remained consistent with the comparable period of 2019. As a result of the changes in provision, allowance for loan losses to total loans, excluding the fair value mark totaling $16.9 million on the loans acquired from First State was 1.8% as of December 31, 2020, a decrease of four basis points from September 30, 2020, and an increase of 92 basis points from December 31, 2019. Excluding PPP loans of $82.0 million, allowance for loan losses to total loans was 1.9% as of December 31, 2020, a decrease of five basis points from September 30, 2020, and an increase of 102 basis points from December 31, 2019. The Company continues to evaluate the effects of COVID-19 as it relates to the asset quality of the loan portfolio and will continue to evaluate and assess the need for additional loan loss provision in 2021.

Nonperforming loans decreased $1.2 million to $13.7 million, or 0.9%, of total loans as of December 31, 2020, compared to September 30, 2020. In addition, net charge-offs were $0.3 million, or 0.1% of total loans for the quarter ended December 31, 2020. Commercial loan modifications continue to decrease and totaled $34.7 million as of December 31, 2020, down from $41.1 million as of September 30, 2020. Mortgage loan modifications also continue to decrease and totaled $13.5 million as of December 31, 2020, down from $15.5 million as of September 30, 2020. These modifications include interest-only payments and payment deferrals. Of the current commercial loan modifications, $32.5 million were related to the hotel portfolio and all related payments are current. These modifications were not considered to be troubled debt restructurings.

NONINTEREST INCOME

Noninterest income for the quarter ended December 31, 2020 was $16.6 million, a decrease of $2.3 million, or 12.3%, compared to the quarter ended September 30, 2020, and an increase of $1.8 million, or 12.3%, compared to the quarter ended December 31, 2019.

The $2.3 million decrease in noninterest income from the quarter ended September 30, 2020, was due to decreases of $3.3 million in gain on mortgage combination transaction recognized during the third quarter of 2020, and $3.1 million in equity method investment income from the MVB Mortgage combination to form Intercoastal Mortgage that occurred during the third quarter of 2020. These decreases were partially offset by a $3.4 million gain the Company recognized from a sale of a portion of one of its Fintech investments.

The $1.8 million increase in noninterest income from the quarter ended December 31, 2019, was due to increases of $10.6 million in equity method investment income from Intercoastal Mortgage and a $3.4 million gain on the sale of equity securities from the sale of a portion of one of the Company’s Fintech investments, and $1.4 million in gain on derivatives. These increases were partially offset by a decrease of $13.0 million in mortgage fee income.

NONINTEREST EXPENSE

Noninterest expense for the quarter ended December 31, 2020 was $20.9 million, an increase of $2.6 million, or 14.4%, compared to the quarter ended September 30, 2020, and a decrease of $4.1 million, or 16.4%, compared to the quarter ended December 31, 2019.

The $2.6 million increase in noninterest expense from the quarter ended September 30, 2020, was due to an increase of $1.8 million in salaries and employee benefits and an increase of $0.9 million in professional fees. The increase in salaries and employee benefits was primarily the result of a $1.0 million increase in incentive compensation and a $0.6 million increase in salaries.

The $4.1 million decrease in noninterest expense from the quarter ended December 31, 2019, was due to a decrease of $3.5 million in salaries and employee benefits and a decrease of $0.7 million in travel, entertainment, dues, and subscriptions expense. Of the decrease in salaries and employee benefits, $7.9 million was related to the MVB Mortgage combination to form Intercoastal Mortgage and was partially offset by a $2.2 million increase in salaries primarily at the Bank and a $1.1 million increase in incentive compensation.

TENDER OFFER AND STOCK REPURCHASE PROGRAM

As previously announced on December 23, 2020, the Company announced the final results of its modified Dutch Auction tender offer to purchase, for cash, up to $45.0 million of its common stock at a price per share not less than $18 and not greater than $20.25. A total of 536,490 shares of the Company’s common stock were repurchased for an aggregate cost of approximately $10.9 million, excluding fees and expenses related to the tender offer.

In connection with the announcement of the final results of the tender offer, the Company also announced that on or before December 31, 2021, the Company may repurchase up to $31.9 million of additional shares of its common stock, including shares that were not otherwise purchased in the aforementioned tender offer, under the Company’s previously announced stock repurchase program. Such repurchases may occur from time to time, on the open market or otherwise, at such prices and upon such terms as the Company may determine and otherwise in accordance with applicable law.

During the fourth quarter of 2020, the Company repurchased 668,390 shares totaling $13.1 million and a total of 796,414 shares totaling $15.0 million were repurchased in 2020. These figures include common stock repurchased through the tender offer.

SUBORDINATED DEBT

As previously announced on November 30, 2020, MVB completed a private placement of $40 million of 4.25% fixed-to-floating rate subordinated notes to certain qualified institutional buyers. The notes are unsecured and have a ten-year term maturing on December 1, 2030.

DIVIDEND

As previously announced on November 18, 2020, MVB issued its fourth quarterly dividend for 2020, totaling a $0.36 per share payout year-to-date. The Company declared a quarterly cash dividend of $0.09 per share payable on December 15, 2020, to shareholders of record at the close of business on December 1, 2020.

SUBSEQUENT EVENT

As previously announced on December 28, 2020, the Company issued a notice of redemption to redeem all of its outstanding shares of Convertible Noncumulative Perpetual Preferred Stock, Series B and Series C. On January 28, 2021, preferred stock in the amount of $7.3 million was redeemed.

About MVB Financial Corp.

MVB Financial Corp., the holding company of MVB Bank, Inc., is publicly traded on The Nasdaq Capital Market® under the ticker "MVBF." Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its subsidiary, MVB Bank, Inc., and the Bank’s subsidiaries, MVB Community Development Corporation, Chartwell Compliance, Paladin Fraud and MVB Technology, the Company provides financial services to individuals and corporate clients in the Mid-Atlantic region and beyond. For more information about MVB, please visit http://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 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 subject to risks and uncertainties. Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. Forward-looking statements can be identified by the use of words such as "may," "could," "should,", "would," "will," "plans," "believes," "estimates," "expects," "anticipates," "intends," "continues," or the negative of those terms or similar expressions. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in forward-looking statements. Therefore, undue reliance should not be placed upon any forward-looking statements. Those factors include but are not limited to: market, economic, operational, liquidity, and credit risk; changes in market interest rates; inability to achieve anticipated synergies and successfully integrate recent mergers and acquisitions; inability to successfully execute business plans, including strategies related to investments in financial technology companies; competition; length and severity of the COVID-19 pandemic and its impact on the Company’s business and financial condition; changes in economic, business, and political conditions; changes in demand for loan products and deposit flow; operational risks and risk management failures; and government regulation and supervision. Additional factors that may cause actual results to differ materially from those described in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as its other filings with the 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 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.

Financial Highlights

Condensed Consolidated Statements of Income

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

Quarterly

Full Year

2020

2020

2019

2020

2019

Fourth Quarter

Third Quarter

Fourth Quarter

Interest income

$

19,353

$

18,627

$

21,230

$

80,453

$

82,361

Interest expense

1,666

2,117

5,365

11,627

22,961

Net interest income

17,687

16,510

15,865

68,826

59,400

Provision for loan losses

214

8,631

232

16,579

1,789

Net interest income after provision for loan losses

17,473

7,879

15,633

52,247

57,611

Noninterest income:

Mortgage fee income

7,264

13,015

33,427

41,045

Other income

16,576

11,634

1,741

58,410

23,559

Total noninterest income

16,576

18,898

14,756

91,837

64,604

Noninterest expense:

Salaries and employee benefits

12,269

10,519

15,723

61,629

56,175

Other expense

8,618

7,746

9,260

35,512

31,026

Total noninterest expenses

20,887

18,265

24,983

97,141

87,201

Income from continuing operations, before income taxes

13,162

8,512

5,406

46,943

35,014

Income tax expense - continuing operations

1,324

2,021

1,311

9,532

8,450

Net income from continuing operations

11,838

6,491

4,095

37,411

26,564

Income from discontinued operations, before income taxes

575

Income tax expense - discontinued operations

148

Net income from discontinued operations

427

Net income

$

11,838

$

6,491

$

4,095

$

37,411

$

26,991

Preferred dividends

116

116

115

461

479

Net income available to common stockholders

$

11,722

$

6,375

$

3,980

$

36,950

$

26,512

Earnings per share from continuing operations - basic

$

1.00

$

0.53

$

0.34

$

3.13

$

2.22

Earnings per share from discontinued operations - basic

0.04

Earnings per share - basic

$

1.00

$

0.53

$

0.34

$

3.13

$

2.26

Earnings per share from continuing operations - diluted

$

0.97

$

0.53

$

0.32

$

3.06

$

2.16

Earnings per share from discontinued operations - diluted

0.04

Earnings per share - diluted

$

0.97

$

0.53

$

0.32

$

3.06

$

2.20

Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

December 31, 2020

September 30, 2020

December 31, 2019

Cash and cash equivalents

$

263,893

$

295,823

$

28,002

Certificates of deposit with banks

11,803

12,301

12,549

Investment securities available-for-sale

410,624

297,964

235,821

Equity securities

27,585

24,164

18,514

Loans held-for-sale

1,062

2,271

109,788

Loans receivable

1,453,744

1,428,593

1,374,541

Allowance for loan losses

(25,844)

(25,913)

(11,775)

Loans receivable, net

1,427,900

1,402,680

1,362,766

Premises and equipment, net

26,203

26,176

21,974

Assets of branches held-for-sale

46,554

Goodwill

2,350

2,350

19,630

Other assets

160,056

150,730

88,516

Total assets

$

2,331,476

$

2,214,459

$

1,944,114

Noninterest-bearing deposits

$

715,791

$

642,835

$

278,547

Interest-bearing deposits

1,266,598

1,256,122

986,495

Deposits of branches held-for-sale

188,270

FHLB and other borrowings

25,800

222,885

Subordinated debt

43,407

4,124

4,124

Other liabilities

66,197

51,462

51,857

Stockholders' equity

239,483

234,116

211,936

Total liabilities and stockholders' equity

$

2,331,476

$

2,214,459

$

1,944,114

Reportable Segments

(Unaudited)

Twelve Months Ended December 31, 2020

Commercial &

Retail Banking

Mortgage

Banking

Financial

Holding

Company

Intercompany

Eliminations

Consolidated

(Dollars in thousands)

Interest income

$

75,812

$

6,269

$

3

$

(1,631)

$

80,453

Interest expense

10,400

3,139

261

(2,173)

11,627

Net interest income (loss)

65,412

3,130

(258)

542

68,826

Provision for (recovery of) loan losses

16,649

(70)

16,579

Net interest income (loss) after provision for loan losses

48,763

3,200

(258)

542

52,247

Noninterest Income:

Mortgage fee income

247

33,722

(542)

33,427

Other income

30,082

29,768

6,685

(8,125)

58,410

Total noninterest income

30,329

63,490

6,685

(8,667)

91,837

Noninterest Expenses:

Salaries and employee benefits

28,801

21,550

11,278

61,629

Other expenses

33,298

5,074

5,265

(8,125)

35,512

Total noninterest expenses

62,099

26,624

16,543

(8,125)

97,141

Income (loss) before income taxes

16,993

40,066

(10,116)

46,943

Income tax expense (benefit)

1,752

9,862

(2,082)

9,532

Net income (loss)

$

15,241

$

30,204

$

(8,034)

...

$

$

37,411

Preferred stock dividends

461

461

Net income (loss) available to common shareholders

$

15,241

$

30,204

$

(8,495)

$

$

36,950

Twelve Months Ended December 31, 2019

Commercial &

Retail Banking

Mortgage

Banking

Financial

Holding

Company

Intercompany

Eliminations

Consolidated

(Dollars in thousands)

Interest income

$

75,874

$

8,342

$

13

$

(1,868)

$

82,361

Interest expense

18,698

6,014

769

(2,520)

22,961

Net interest income (loss)

57,176

2,328

(756)

652

59,400

Provision for loan losses

1,622

167

1,789

Net interest income (loss) after provision for loan losses

55,554

2,161

(756)

652

57,611

Noninterest Income:

Mortgage fee income

657

41,040

(652)

41,045

Other income

23,033

1,289

6,268

(7,031)

23,559

Total noninterest income

23,690

42,329

6,268

(7,683)

64,604

Noninterest Expenses:

Salaries and employee benefits

19,067

28,432

8,676

56,175

Other expenses

25,070

8,136

4,851

(7,031)

31,026

Total noninterest expenses

44,137

36,568

13,527

(7,031)

87,201

Income (loss) from continuing operations, before income taxes

35,107

7,922

(8,015)

35,014

Income tax expense (benefit) - continuing operations

8,175

2,155

(1,880)

8,450

Net income (loss) from continuing operations

$

26,932

$

5,767

$

(6,135)

$

$

26,564

Income from discontinued operations, before income taxes

$

$

$

575

$

$

575

Income tax expense - discontinued operations

$

$

$

148

$

$

148

Net income from discontinued operations

$

$

$

427

$

$

427

Net income (loss)

$

26,932

$

5,767

$

(5,708)

$

$

26,991

Preferred stock dividends

479

479

Net income (loss) available to common shareholders

$

26,932

$

5,767

$

(6,187)

$

$

26,512

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

Three Months Ended

Three Months Ended

Three Months Ended

December 31, 2020

September 30, 2020

December 31, 2019

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

$

266,999

$

82

0.12

%

$

174,203

$

45

0.10

%

$

10,332

$

46

1.77

%

CDs with banks

11,938

58

1.93

12,641

61

1.91

12,908

64

1.97

Investment securities:

Taxable

167,968

894

2.12

103,497

411

1.58

134,990

719

2.11

Tax-exempt 2

200,666

1,659

3.29

142,301

1,344

3.75

111,262

1,152

4.11

Loans and loans held-for-sale: 1

Commercial 3

1,136,899

13,763

4.82

1,160,214

14,108

4.82

1,029,592

13,830

5.33

Tax-exempt 2

7,501

92

4.87

7,752

91

4.66

11,709

134

4.54

Real estate

287,547

3,073

4.25

325,992

2,749

3.35

467,633

5,425

4.60

Consumer

6,053

99

6.51

6,613

119

7.14

8,148

130

6.33

Total loans

1,438,000

17,027

4.71

1,500,571

17,067

4.51

1,517,082

19,519

5.10

Total earning assets

2,085,571

19,720

3.76

1,933,213

18,928

3.88

1,786,574

21,500

4.77

Allowance for loan losses

(26,568)

(18,906)

(11,747)

Cash and due from banks

22,642

28,299

20,014

Other assets

215,716

205,038

136,650

Total assets

$

2,297,361

$

2,147,644

$

1,931,491

Liabilities

Deposits:

NOW

$

475,707

$

446

0.37

%

$

381,375

$

496

0.52

%

$

417,838

$

1,076

1.02

%

Money market checking

492,519

282

0.23

479,418

380

0.31

366,402

1,424

1.54

Savings

50,821

(2)

(0.02)

49,698

7

0.06

36,120

1

0.01

IRAs

13,410

49

1.45

12,389

44

1.41

16,786

81

1.91

CDs

235,412

679

1.15

334,828

967

1.15

341,270

1,733

2.01

Repurchase agreements and federal funds sold

10,070

4

0.16

10,145

4

0.16

9,733

11

0.45

FHLB and other borrowings

19,589

25

0.51

34,138

199

2.31

193,487

997

2.04

Subordinated debt

17,835

183

4.08

4,124

20

1.92

4,124

42

4.04

Total interest-bearing liabilities

1,315,363

1,666

0.50

1,306,115

2,117

0.64

1,385,760

5,365

1.54

Noninterest-bearing demand deposits

686,537

542,467

296,651

Other liabilities

59,841

68,223

41,244

Total liabilities

2,061,741

1,916,805

1,723,655

Stockholders’ equity

Preferred stock

7,334

7,334

7,334

Common stock

12,095

12,066

11,920

Additional paid-in capital

124,970

124,003

121,549

Treasury stock

(5,922)

(2,022)

(1,084)

Retained earnings

98,046

90,113

70,570

Accumulated other comprehensive loss

(903)

(655)

(2,453)

Total stockholders’ equity

235,620

230,839

207,836

Total liabilities and stockholders’ equity

$

2,297,361

$

2,147,644

$

1,931,491

Net interest spread (tax-equivalent)

3.26

3.24

3.23

Net interest income and margin (tax-equivalent) 2

$

18,054

3.44

%

$

16,811

3.45

%

$

16,135

3.58

%

Less: Tax-equivalent adjustments

$

(367)

$

(301)

$

(270)

Net interest spread

3.19

3.18

3.17

Net interest income and margin

$

17,687

3.37

%

$

16,510

3.39

%

$

15,865

3.52

%

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

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

3 The Company’s PPP loans, totaling $82.0 million at December 31, 2020, are included in this amount for the three months ended December 31, 2020.

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

Twelve Months Ended

Twelve Months Ended

Twelve Months Ended

December 31, 2020

December 31, 2019

December 31, 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

$

125,259

$

191

0.15

%

$

9,264

$

209

2.26

%

$

5,176

$

108

2.09

%

CDs with banks

12,484

246

1.97

14,097

280

1.99

14,778

295

2.00

Investment securities:

Taxable

121,607

2,448

2.01

129,486

3,055

2.36

150,134

3,580

2.38

Tax-exempt 2

144,389

5,361

3.71

103,235

4,456

4.32

79,161

3,557

4.49

Loans and loans held-for-sale: 1

Commercial 3

1,136,858

54,434

4.79

987,674

53,087

5.37

854,108

43,099

5.05

Tax-exempt 2

8,966

422

4.70

12,549

561

4.47

14,352

632

4.40

Real estate

403,166

18,100

4.49

447,891

21,220

4.74

395,302

18,794

4.75

Consumer

6,973

465

6.67

8,948

547

6.11

11,349

575

5.07

Total loans

1,555,963

73,421

4.72

1,457,062

75,415

5.18

1,275,111

63,100

4.95

Total earning assets

1,959,702

81,667

4.17

1,713,144

83,414

4.87

1,524,360

70,640

4.63

Allowance for loan losses

(18,079)

(11,318)

(10,530)

Cash and due from banks

26,460

17,625

16,828

Other assets

181,439

131,370

106,600

Total assets

$

2,149,522

$

1,850,821

$

1,637,258

Liabilities

Deposits:

NOW

$

408,110

$

2,521

0.62

%

$

381,092

$

3,586

0.94

%

$

432,789

$

3,246

0.75

%

Money market checking

458,606

2,680

0.58

331,636

5,144

1.55

245,008

2,455

1.00

Savings

45,420

6

0.01

38,324

4

0.01

44,049

29

0.07

IRAs

13,691

218

1.59

17,415

329

1.89

17,894

285

1.59

CDs

349,787

4,869

1.39

387,660

8,376

2.16

319,720

5,620

1.76

Repurchase agreements and federal funds sold

9,856

23

0.23

11,252

48

0.43

18,536

56

0.30

FHLB and other borrowings

68,407

1,049

1.53

183,812

4,704

2.56

190,686

4,259

2.23

Subordinated debt

7,568

261

3.45

12,124

770

6.35

25,774

1,756

6.81

Total interest-bearing liabilities

1,361,445

11,627

0.85

1,363,315

22,961

1.68

1,294,456

17,706

1.37

Noninterest-bearing demand deposits

502,457

258,546

171,631

Other liabilities

61,169

33,810

10,304

Total liabilities

1,925,071

1,655,671

1,476,391

Stockholders’ equity

Preferred stock

7,334

7,660

7,834

Common stock

12,047

11,762

11,082

Additional paid-in capital

130,312

118,837

107,669

Treasury stock

(2,637)

(1,084)

(1,084)

Retained earnings

77,044

61,712

42,509

Accumulated other comprehensive income (loss)

351

(3,737)

(7,143)

Total stockholders’ equity

224,451

195,150

160,867

Total liabilities and stockholders’ equity

$

2,149,522

$

1,850,821

$

1,637,258

Net interest spread (tax-equivalent)

3.32

3.19

3.26

Net interest income and margin (tax-equivalent) 2

$

70,040

3.57

%

$

60,453

3.53

%

$

52,934

3.47

%

Less: Tax-equivalent adjustments

$

(1,214)

$

(1,053)

$

(880)

Net interest spread

3.25

3.13

3.21

Net interest income and margin

$

68,826

3.51

%

$

59,400

3.47

%

$

52,054

3.41

%

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

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

3 The Company’s PPP loans, totaling $82.0 million at December 31, 2020, are included in this amount for the twelve months ended December 31, 2020.

The following table reconciles, as of the dates set forth below, net interest margin on a fully tax-equivalent basis:

Three Months Ended

Twelve Months Ended

(Dollars in thousands)

December 31,

2020

September 30,

2020

December 31,

2019

December 31,

2020

December 31,

2019

December 31,

2018

Net interest margin - U.S. GAAP basis

Net interest income

$

17,687

$

16,510

$

15,865

$

68,826

$

59,400

$

52,054

Average interest-earning assets

2,085,571

1,933,213

1,786,574

1,959,702

1,713,144

1,524,360

Net interest margin

3.37

%

3.39

%

3.52

%

3.51

%

3.47

%

3.41

%

Net interest margin - non-U.S. GAAP basis

Net interest income

$

17,687

$

16,510

$

15,865

$

68,826

$

59,400

$

52,054

Plus: Impact of fully tax-equivalent adjustment

367

301

270

1,214

1,053

880

Net interest income on a fully tax-

equivalent basis

18,054

16,811

16,135

70,040

60,453

52,934

Average interest-earning assets

2,085,571

1,933,213

1,786,574

1,959,702

1,713,144

1,524,360

Net interest margin on a fully tax-

equivalent basis

3.44

%

3.45

%

3.58

%

3.57

%

3.53

%

3.47

%

Selected Financial Data

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

Quarterly

Full Year

2020

2020

2019

2020

2019

Fourth Quarter

Third Quarter

Fourth Quarter

Earnings and Per Share Data:

Net income from continuing operations

$

11,838

$

6,491

$

4,095

$

37,411

$

26,564

Net income from discontinued operations

$

$

$

$

$

427

Net income

$

11,838

$

6,491

$

4,095

37,411

26,991

Net income available to common shareholders

$

11,722

$

6,375

$

3,980

36,950

26,512

Earnings per share from continuing operations - basic

$

1.00

$

0.53

$

0.34

$

3.13

$

2.22

Earnings per share from discontinued operations - basic

$

$

$

$

$

0.04

Earnings per share - basic

$

1.00

$

0.53

$

0.34

$

3.13

$

2.26

Earnings per share from continuing operations - diluted

$

0.97

$

0.53

$

0.32

$

3.06

$

2.16

Earnings per share from discontinued operations - diluted

$

$

$

$

$

0.04

Earnings per share - diluted

$

0.97

$

0.53

$

0.32

$

3.06

$

2.20

Cash dividends paid per common share

$

0.09

$

0.09

$

0.07

$

0.36

$

0.195

Book value per common share

$

20.14

$

19.07

$

17.13

$

20.14

$

17.13

Tangible book value per common share 8

$

19.73

$

18.66

$

15.20

$

19.73

$

15.20

Weighted-average shares outstanding - basic

11,752,841

11,948,989

11,869,091

11,821,574

11,713,885

Weighted-average shares outstanding - diluted

12,144,471

12,116,418

12,334,423

12,088,106

12,044,667

Performance Ratios:

Return on average assets - continuing operations 1

2.1

%

1.2

%

0.8

%

1.7

%

1.4

%

Return on average assets - discontinued operations 1

%

%

%

%

%

Return on average assets 1

2.1

%

1.2

%

0.8

%

1.7

%

1.5

%

Return on average equity - continuing operations 1

20.1

%

11.3

%

7.9

%

16.7

%

13.6

%

Return on average equity - discontinued operations 1

%

%

%

%

0.2

%

Return on average equity 1

20.1

%

11.3

%

7.9

%

16.7

%

13.8

%

Net interest margin 2 3

3.44

%

3.45

%

3.58

%

3.57

%

3.53

%

Efficiency 4

61.0

%

51.6

%

81.6

%

60.5

%

70.3

%

Overhead 1 5

3.6

%

3.4

%

5.2

%

4.5

%

4.7

%

Equity to assets

10.3

%

10.6

%

10.9

%

10.3

%

10.9

%

Asset Quality Data and Ratios:

Charge-offs

$

300

$

111

$

332

$

2,190

$

1,009

Recoveries

$

16

$

5

$

1

$

33

$

55

Net loan charge-offs to total loans 1 6

0.1

%

%

0.1

%

0.1

%

0.1

%

Allowance for loan losses

$

25,844

$

25,913

$

11,775

$

25,844

$

11,775

Allowance for loan losses to total loans 7

1.8

%

1.8

%

0.9

%

1.8

%

0.9

%

Nonperforming loans

$

13,713

$

14,893

$

5,123

$

13,713

$

5,123

Nonperforming loans to total loans

0.9

%

1.0

%

0.4

%

0.9

%

0.4

%

1 annualized for the quarterly periods presented
2 net interest income as a percentage of average interest earning assets
3 presented on a fully tax-equivalent basis
4 noninterest expense as a percentage of net interest income and noninterest income
5 noninterest expense as a percentage of average assets
6 charge-offs less recoveries
7 excludes loans held-for-sale
8 This is a non-U.S. GAAP measure that the Company believes is helpful to interpreting financial results. For a reconciliation to the most directly comparable U.S. GAAP financial measure, please see "Non-U.S. GAAP Reconciliation" on the next page.

Non-GAAP Reconciliation: Tangible Book Value per Common Share

(Unaudited) (Dollars in thousands)

Quarterly

Full Year

2020

2020

2019

2020

2019

Fourth Quarter

Third Quarter

Fourth Quarter

Goodwill

$

2,350

$

2,350

$

19,630

$

2,350

$

19,630

Other intangibles

2,400

2,554

3,473

2,400

3,473

Total intangibles

4,750

4,904

23,103

4,750

23,103

Total equity

239,483

234,116

211,936

239,483

211,936

Less: Preferred equity

(7,334)

(7,334)

(7,334)

(7,334)

(7,334)

Less: Total intangibles

(4,750)

(4,904)

(23,103)

(4,750)

(23,103)

Tangible common equity

227,399

221,878

181,499

227,399

181,499

Tangible common equity

227,399

221,878

181,499

227,399

181,499

Common shares outstanding (000s)

11,526

11,889

11,944

11,526

11,944

Tangible book value per common share

$

19.73

$

18.66

$

15.20

$

19.73

$

15.20

View source version on businesswire.com: https://www.businesswire.com/news/home/20210218005955/en/

Contacts

Amy Baker
VP, Corporate Communications and Marketing
MVB Bank
abaker@mvbbanking.com
(844) 682-2265

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