MVB FINANCIAL CORP [MVBF] Filings

10-Q 1 mvbf-20240630.htm 10-Q mvbf-20240630


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2024
or
☐ TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________.

Commission File Number: 001-38314

MVB Financial Corp.
(Exact name of registrant as specified in its charter)

West Virginia						20-0034461
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

301 Virginia Avenue, Fairmont, WV						26554
(Address of principal executive offices)						(Zip Code)

(304) 363-4800
(Registrant’s telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, $1.00 par value

MVBF

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date:

As of August 6, 2024, there were 12,927,962 shares of our common stock outstanding with a par value of $1.00 per share.

TABLE OF CONTENTS


		Page
PART I	FINANCIAL INFORMATION	5

Item 1	Financial Statements	5

	Consolidated Balance Sheets	5
	Consolidated Statements of Income	6
	Consolidated Statements of Comprehensive Income	8
	Consolidated Statements of Changes in Stockholders’ Equity	9
	Consolidated Statements of Cash Flows	11
	Notes to the Consolidated Financial Statements	13

Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	53

Item 3	Quantitative and Qualitative Disclosures About Market Risk	67

Item 4	Controls and Procedures	67

PART II	OTHER INFORMATION	68

Item 1	Legal Proceedings	68

Item 1A	Risk Factors	68

Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	68

Item 3	Defaults Upon Senior Securities	68

Item 4	Mine Safety Disclosures	68

Item 5	Other Information	68

Item 6	Exhibits	68

	SIGNATURES	69

Forward-Looking Statements:

Statements in this Quarterly Report on Form 10-Q, other than statements that are based on historical data, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide current expectations or forecasts of future events and include, among others, statements with respect to the beliefs, plans, objectives, goals, guidelines, expectations, anticipations and future financial condition, results of operations and performance of the Company and its subsidiaries (collectively, “we,” “our,” or “us”), including MVB Bank, Inc. (the “Bank”), and statements preceded by, followed by or that include the words “may,” “could,” “should,” “would,” “will,” “believe,” “anticipate,” “estimate,” “target,” “expect,” “intend,” “plan,” “projects,” “outlook” or the negative of those terms or similar expressions.

These forward-looking statements are not guarantees of future performance, nor should they be relied upon as representing our view as of any subsequent date. Forward-looking statements involve significant risks and uncertainties (both known and unknown) and actual results may differ materially from those presented, either expressed or implied, including, but not limited to, those presented in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations. Factors that might cause such differences include, but are not limited to:


l			interest rate fluctuations in response to economic conditions and the policies of various governmental and regulatory agencies;
l			changes in the economy, which could materially impact credit quality trends and the ability to generate loans and gather deposits;
l			industry factors and general economic and political conditions and events, such as economic slowdowns or recessions, nationally and in the markets in which we operate;
l			changes in financial market conditions in areas in which we conduct operations, including, without limitation, changes in deposit flows, the cost of funds, reduced rates of business formation and growth, commercial and residential real estate development and real estate prices;
l			evolving legislation and heightened regulatory scrutiny in emerging financial technology ("Fintech") and banking-as-a-service sectors;
l			changes in the existing regulatory framework for brokered deposits and potential reclassification of certain banking-as-a-service deposits as brokered deposits in light of proposed rulemaking or application of the current deposit framework by the Federal Deposit Insurance Corporation (“FDIC”) to the Bank's banking-as-a-service deposits;
l			our ability to recruit, retain and train talented employees and executives with such knowledge, experience and industry expertise to understand and comply with evolving legislation and regulations and to successfully implement succession plans for such employees and executives;
l			ability to adapt to technological change, to maintain secure and reliable information and technology systems, and to successfully execute business plans, manage risks and achieve objectives, including strategies related to investments in Fintech;
l			market, economic, operational, liquidity, credit and interest rate risks associated with our business;
l			changes, volatility and disruption in local, national and international political and economic conditions, including, without limitation, major developments such as wars, climate change and natural disasters, epidemics and pandemics and any governmental or societal responses thereto, military actions, terrorist attacks and geopolitical conflict;
l			unanticipated changes in our liquidity position, including, but not limited to, changes in access to sources of liquidity and capital to address our liquidity needs;
l			changes in volume or composition of our deposit base, including certain concentrations with large clients and within certain industries, such as gaming, payments and banking-as-a-service;
l			the quality and composition of our loan and securities portfolios;
l			ability to successfully conduct acquisitions and integrate acquired businesses and potential difficulties in expanding businesses in existing and new markets;
l			ability to successfully manage credit risk and the sufficiency of allowance for credit losses;
l			increases in the levels of losses, customer bankruptcies, bank failures, claims and assessments;
l			changes in government legislation and accounting policies, including, but not limited to, Financial Accounting Standards Board (“FASB”) policies and procedures, Federal Reserve policies in connection with continued inflationary pressures, the Dodd-Frank Act and Economic Growth, Regulatory Relief and Consumer Protection Act (“EGRRCPA”), as well as the impact of the 2024 U.S. Presidential election;
l			competition and consolidation in the financial services industry;
l			new legal claims against us, including litigation, arbitration and proceedings brought by governmental or self-regulatory agencies or changes in existing legal matters;
l			success in gaining regulatory approvals, when required, including for proposed mergers or acquisitions;


l			changes in consumer spending and savings habits, including demand for loan products and deposit flow;
l			increased competitive challenges and expanding product and pricing pressures among financial institutions and non-bank financial companies;
l			operational risks or risk management failures by us, our customers or critical third parties, including without limitation, with respect to data processing, information systems, compliance with bank secrecy and anti-money laundering laws, technological changes, vendor problems, business interruptions and fraud risk;
l			increasing risk of continually evolving, sophisticated cybersecurity activities faced by financial institutions and others, including new developments in artificial intelligence, machine learning, and robotics, that may create new vulnerabilities and cybersecurity risks and could result in, among other things, theft, loss, misuse or disclosure of confidential client, customer or corporate information or assets and a disruption of computer, software or network systems and the potential impact from such risks, including reputational damage, regulatory penalties, loss of revenues, additional costs (including repair, remediation and other costs), exposure to litigation and other financial losses;
l			risks, uncertainties and losses involved with the developing digital assets industry, including the evolving regulatory framework;
l			failure or circumvention of internal controls;
l			legislative or regulatory changes which adversely affect our operations or business, including the possibility of increased regulatory oversight due to changes in the nature and complexity of our business model;
l			increased emphasis by regulators on federal and state consumer protection laws that extensively govern customer relationships;
l			risks and potential losses involved with uninsured deposits beyond FDIC limitations;
l			costs of deposit insurance and changes with respect to FDIC insurance coverage levels; and
l			our ability to navigate any environmental, social, governmental or sustainability concerns that may arise from our business activities.

Further, we urge you to carefully review and consider the cautionary statements and disclosures, specifically those made in Part I, Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”), filed with the Securities and Exchange Commission (“SEC”) on March 13, 2024, and from time to time, in our other filings with the SEC. Actual results may differ materially from those expressed in or implied by any forward-looking statement. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this report. Except to the extent required by law, we undertake no obligation to update any forward-looking statements in order to reflect any event or circumstance occurring after the date of this report or currently unknown facts or conditions or the occurrence of unanticipated events. All forward-looking statements are qualified in their entirety by this cautionary statement.

REFERENCES

Unless the context otherwise requires, references in this report to “MVB,” the “Company,” “we,” “us,” “our” and “ours” refer to the registrant, MVB Financial Corp., and its subsidiaries consolidated for the purposes of its financial statements.

PART I – FINANCIAL INFORMATION

Item 1 – Financial Statements

MVB Financial Corp. and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except per share data)


	June 30, 2024		December 31, 2023
	(Unaudited)		(Audited)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	3,945	$	6,564
Interest-bearing balances with banks	451,572		391,665
Total cash and cash equivalents	455,517		398,229

Investment securities available-for-sale	361,254		345,275
Equity securities	41,261		41,086
Loans held-for-sale	—		629
Loans receivable	2,206,793		2,317,594
Allowance for credit losses	(22,084)		(22,124)
Loans receivable, net	2,184,709		2,295,470
Premises and equipment, net	19,540		20,928
Bank-owned life insurance	44,856		44,287
Equity method investments	75,835		75,754
Accrued interest receivable and other assets	105,032		92,224

TOTAL ASSETS	$	3,288,004	$	3,313,882

LIABILITIES AND STOCKHOLDERS’ EQUITY
Deposits:
Noninterest-bearing	$	983,809	$	1,197,272
Interest-bearing	1,899,043		1,704,204
Total deposits	2,882,852		2,901,476
Accrued interest payable and other liabilities	32,460		37,917
Repurchase agreements	2,366		4,821

Subordinated debt	73,663		73,540
Senior term loan	—		6,786
Total liabilities	2,991,341		3,024,540

STOCKHOLDERS’ EQUITY
Common stock - par value $1; 40,000,000 shares authorized as of June 30, 2024 and December 31, 2023; 13,775,978 and 12,927,962 shares issued and outstanding, respectively, as of June 30, 2024 and 13,606,399 and 12,758,383 shares issued and outstanding, respectively, as of December 31, 2023	13,776		13,606
Additional paid-in capital	162,880		160,488
Retained earnings	165,096		160,862
Accumulated other comprehensive loss	(28,386)		(28,831)
Treasury stock - 848,016 shares as of June 30, 2024 and December 31, 2023, at cost	(16,741)		(16,741)
Total equity attributable to parent	296,625		289,384
Noncontrolling interest	38		(42)
Total stockholders' equity	296,663		289,342
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	3,288,004	$	3,313,882

See accompanying notes to unaudited consolidated financial statements.

MVB Financial Corp. and Subsidiaries

Consolidated Statements of Income

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
INTEREST INCOME
Interest and fees on loans	$	38,590	$	39,321	$	78,806	$	78,016
Interest on deposits with banks	5,065		5,542		12,406		8,695
Interest on investment securities	1,905		1,229		3,648		3,077
Interest on tax-exempt loans and securities	567		939		1,297		2,006
Total interest income	46,127		47,031		96,157		91,794

INTEREST EXPENSE
Interest on deposits	17,630		16,450		36,561		26,603
Interest on short-term borrowings and repurchase agreements	5		—		6		888
Interest on subordinated debt	808		801		1,617		1,600
Interest on senior term loan	114		198		264		392
Total interest expense	18,557		17,449		38,448		29,483

NET INTEREST INCOME	27,570		29,582		57,709		62,311
Provision (release of allowance) for credit losses	254		(4,235)		2,251		341
Net interest income after provision (release of allowance) for credit losses	27,316		33,817		55,458		61,970

NONINTEREST INCOME
Payment card and service charge income	3,817		3,503		8,630		7,113

Insurance income	64		78		130		170
Gain (loss) on sale of available-for-sale securities, net	—		—		658		(1,536)
Gain (loss) on sale of equity securities, net	103		(294)		103		(294)

Loss on sale of loans, net	—		(989)		—		(1,345)
Holding gain (loss) on equity securities	14		160		(35)		(148)
Compliance and consulting income	1,274		996		2,274		2,012
Equity method investments income (loss)	484		1,873		(644)		680
Loss on divestiture activity	—		(986)		—		(986)

Other operating income	1,386		2,078		3,860		3,820
Total noninterest income	7,142		6,419		14,976		9,486

NONINTEREST EXPENSES
Salaries and employee benefits	15,949		15,746		32,438		32,492
Occupancy expense	949		1,090		1,813		1,882
Equipment depreciation and maintenance	1,218		1,451		2,434		2,908
Data processing and communications	1,313		1,118		2,772		2,266


Professional fees	5,192		3,948		10,929		6,899
Insurance, tax and assessment expense	1,085		1,131		1,977		2,035
Travel, entertainment, dues and subscriptions	1,433		2,137		2,984		4,059
Other operating expenses	1,791		3,661		3,774		6,058
Total noninterest expense	28,930		30,282		59,121		58,599
Income from continuing operations, before income taxes	5,528		9,954		11,313		12,857
Income taxes	1,379		1,956		2,662		2,421
Net income from continuing operations	4,149		7,998		8,651		10,436


Income from discontinued operations, before income taxes	—		—		—		11,831
Income taxes from discontinued operations	—		—		—		3,049
Net income from discontinued operations	—		—		—		8,782
Net income, before noncontrolling interest	4,149		7,998		8,651		19,218
Net (income) loss attributable to noncontrolling interest	(60)		114		(80)		236


Net income attributable to parent	$	4,089	$	8,112	$	8,571	$	19,454

Earnings per share from continuing operations - basic	$	0.32	$	0.64	$	0.67	$	0.84
Earnings per share from discontinued operations - basic	$	—	$	—	$	—	$	0.69
Earnings per common shareholder - basic	$	0.32	$	0.64	$	0.67	$	1.54
Earnings per share from continuing operations - diluted	$	0.31	$	0.63	$	0.66	$	0.82
Earnings per share from discontinued operations - diluted	$	—	$	—	$	—	$	0.68
Earnings per common shareholder - diluted	$	0.31	$	0.63	$	0.66	$	1.50
Weighted-average shares outstanding - basic	12,883,426		12,689,669		12,847,191		12,656,698
Weighted-average shares outstanding - diluted	13,045,660		12,915,294		13,058,791		12,959,725

See accompanying notes to unaudited consolidated financial statements.

MVB Financial Corp. and Subsidiaries

Consolidated Statements of Comprehensive Income

(Unaudited) (Dollars in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income, before noncontrolling interest	$	4,149	$	7,998	$	8,651	$	19,218

Other comprehensive income (loss):
Unrealized holding gains (losses) on securities available-for-sale	2,833		(5,087)		257		2,617
Reclassification adjustment for (gain) loss recognized in income	—		—		(658)		1,536
Change in defined benefit pension plan	301		371		902		343
Reclassification adjustment for amortization of net actuarial loss recognized in income	43		29		86		58
Reclassification adjustment for investment hedge carrying value adjustment recognized in income	—		45		—		(289)
Other comprehensive income (loss), before tax	3,177		(4,642)		587		4,265

Income taxes related to items of other comprehensive loss:
Unrealized holding gains (losses) on securities available-for-sale	(681)		1,223		(62)		(629)
Reclassification adjustment for (gain) loss recognized in income	—		—		158		(369)
Change in defined benefit pension plan	(73)		(89)		(218)		(82)
Reclassification adjustment for amortization of net actuarial loss recognized in income	(10)		(7)		(20)		(14)
Reclassification adjustment for investment hedge carrying value adjustment recognized in income	—		(11)		—		69
Income taxes related to items of other comprehensive loss:	(764)		1,116		(142)		(1,025)

Total other comprehensive income (loss), net of tax	2,413		(3,526)		445		3,240

Comprehensive (income) loss attributable to noncontrolling interest	(60)		114		(80)		236

Comprehensive income	$	6,502	$	4,586	$	9,016	$	22,694

See accompanying notes to unaudited consolidated financial statements.

MVB Financial Corp. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

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


	Common stock			Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock				Total stockholders' equity attributable to parent		Noncontrolling interest		Total stockholders' equity
		Shares								Amount		Shares								Amount
Balance at December 31, 2023			13,606,399	$	13,606	$	160,488	$	160,862	$	(28,831)		848,016	$	(16,741)	$	289,384	$	(42)		$	289,342

Net income			—	—		—		4,482		—			—	—		4,482		20			4,502
Other comprehensive loss			—	—		—		—		(1,968)			—	—		(1,968)		—			(1,968)
Dividends on common stock ($0.17 per share)			—	—		—		(2,145)		—			—	—		(2,145)		—			(2,145)
Stock-based compensation			—	—		780		—		—			—	—		780		—			780
Stock-based compensation related to equity method investments			—	—		104		—		—			—	—		104		—			104
Common stock options exercised			82,500	83		1,130		—		—			—	—		1,213		—			1,213

Balance at March 31, 2024			13,688,899	$	13,689	$	162,502	$	163,199	$	(30,799)		848,016	$	(16,741)	$	291,850	$	(22)		$	291,828

Net income (loss)			—	—		—		4,089		—			—	—		4,089		60			4,149
Other comprehensive income			—	—		—				2,413			—	—		2,413		—			2,413
Dividends on common stock ($0.17 per share)			—	—		—		(2,192)		—			—	—		(2,192)		—			(2,192)
Stock-based compensation			—	—		814		—		—			—	—		814		—			814
Stock-based compensation related to equity method investments			—	—		104		—		—			—	—		104		—			104
Common stock options exercised			1,650	2		26		—		—			—	—		28		—			28
Restricted stock units vested			111,500	111		(111)		—		—			—	—		—		—			—
Minimum tax withholding on restricted stock units issued			(26,071)	(26)		(455)		—		—			—	—		(481)		—			(481)

Balance at June 30, 2024			13,775,978	$	13,776	$	162,880	$	165,096	$	(28,386)		848,016	$	(16,741)	$	296,625	$	38		$	296,663


	Common stock			Additional paid-in capital		Retained earnings		Accumulated other comprehensive income (loss)		Treasury stock				Total stockholders' equity attributable to parent		Noncontrolling interest		Total stockholders' equity
		Shares								Amount		Shares								Amount
Balance at December 31, 2022			13,466,281	$	13,466	$	157,152	$	144,911	$	(37,704)		848,016	$	(16,741)	$	261,084	$	307		$	261,391

Net income (loss)			—	—		—		11,342		—			—	—		11,342		(122)			11,220
Other comprehensive income			—	—		—		—		6,766			—	—		6,766		—			6,766
Dividends on common stock ($0.17 per s