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MVB Financial Corp. Announces Second Quarter 2023 Results

MVB Financial Corp. (NASDAQ: MVBF) (“MVB Financial,” “MVB” or the “Company”), the holding company for MVB Bank, Inc. ("MVB Bank"), today announced financial results for the second quarter of 2023, with reported net income of $8.1 million, or $0.64 basic and $0.63 diluted earnings per share.

Balance sheet loan to deposit ratio of 78.1%

Off-balance sheet deposits increased to $1.1 billion

CRE concentration of 217% of total risk based capital

Total risk based capital of 14.9%

From Larry F. Mazza, Chief Executive Officer, MVB Financial:

“Following the market events of March 2023, we took decisive action. Out of an abundance of caution, we maintained our already-strong balance sheet liquidity position, and in anticipation of new regulatory and compliance requirements for the industry, took additional steps to enhance our risk management and compliance infrastructure. These actions increased our funding costs and noninterest expenses during the second quarter, but helped to strengthen our foundation during a tumultuous period for the industry. Moreover, we further de-risked our loan portfolio with the sale of a portion of our subprime automobile loans, and during the quarter, we had no outstanding FHLB or other short-term borrowings, no held-to-maturity investment securities and a limited concentration of CRE loans and office exposure. Despite these unexpected challenges, we generated strong earnings for the second quarter. Looking ahead, I am encouraged by our team’s continuous adaptability, the stability of our asset quality and our strong liquidity, funding and capital position as we look to a pick-up in high-quality loan growth as we move forward.”

SECOND QUARTER 2023 HIGHLIGHTS

  • Anticipated industry seasonality and a shifting mix impacted deposit growth trends.
    • Total deposits declined 6.1%, or $191.9 million, to $2.96 billion, compared to the prior quarter-end, primarily reflecting seasonal considerations in gaming and Banking-as-a-Service (“BaaS”) deposits, primarily offset by growth in certificates of deposit (“CDs”) and other interest-bearing deposits. Relative to the comparable period of the prior year, total deposits increased 13.2%, or $344.0 million.
    • Total off-balance sheet deposits increased to $1.1 billion as compared to $1.0 billion at the prior quarter-end. Off-balance sheet deposit networks are being utilized to generate fee income, enhance capital and manage liquidity and concentration risk.
    • Noninterest-bearing (“NIB”) deposits declined 12.9%, or $146.7 million, to $987.6 million, and represented 33% of total deposits, as compared to 36% of total deposits at the prior quarter-end. Lower NIB deposits primarily reflected the desire to build liquidity through CDs, the highly competitive deposit environment and rising interest rates.
  • Measures of foundational strength were stable to improved.
    • The Community Bank Leverage Ratio, Tier 1 Risk-Based Capital Ratio and MVB Bank’s Total Risk-Based Capital Ratio were 10.0%, 13.8%, and 14.9%, respectively, from 10.0%, 13.7%, and 14.9%, respectively, at the prior quarter end.
    • Tangible book value per share, a non-U.S. GAAP measure discussed below, grew 0.7% to $21.31 from $21.17 at the prior quarter end.
    • Nonperforming loans totaled $13.6 million, or 0.6% of total loans, compared to $13.1 million, or 0.6% of total loans at the prior quarter end. Criticized loans as a percentage of total loans were 3.1%, as compared to 3.6% at the prior quarter end. Net charge-offs were $1.2 million, or 0.2% of total loans on an annualized basis, for the second quarter of 2023, compared to $1.7 million for the prior quarter. Of the net charge-offs for the second quarter of 2023, 92% were attributable to subprime automobile loans.
    • The release of allowance for credit losses totaled $4.2 million compared to a provision for credit losses of $4.6 million for the prior quarter. MVB sold $20.4 million of subprime automobile loans and released the reserve associated with those loans, resulting in the net reserve release for the quarter. The allowance for credit losses was 1.3% of total loans, as compared to 1.5% as of the prior quarter-end, largely reflecting the aforementioned changes in loan portfolio composition.
  • Net interest income and net interest margin declined primarily due to building liquidity, rising interest rates, seasonal and other factors.
    • Net interest income on a fully tax-equivalent basis declined 9.6%, or $3.2 million, to $29.8 million relative to the prior quarter, primarily due to contraction in net interest margin on a fully tax-equivalent basis and a decline in average loans, partially offset by growth in the total average earning asset balance. As compared to the comparable period of the prior year, net interest income increased 10.7%, or $2.9 million.
    • Net interest margin on a fully tax-equivalent basis was 3.80%, down 60 basis points during the second quarter of 2023, primarily reflecting a higher cost of funds and a shift in the mix of earning assets, as certain higher yielding loan balances declined modestly while lower yielding cash balances increased significantly. A shift in the mix of deposits due to seasonal considerations related to the Company’s gaming deposits also contributed to the increase in funding costs and negatively impacted net interest margin during the second quarter of 2023.
    • Average earning asset balances increased 3.5% during the second quarter of 2023 reflecting materially higher interest-bearing balances with banks, partially offset by a modest decline in average loans. Average loan balances declined 0.9%, reflecting deliberate efforts to improve balance sheet liquidity and the aforementioned sale of subprime automobile loans during the second quarter of 2023.
    • The loan to deposit ratio was 78.1% as of June 30, 2023, compared to 74.9% as of March 31, 2023 and 84.7% as of June 30, 2022.
  • Fees and expenses trended higher.
    • Noninterest income was $6.4 million for the second quarter of 2023, as compared to $3.1 million for the prior quarter. The increase reflects higher income from equity method investments of $1.9 million as compared to a loss of $1.2 million for the prior quarter, primarily due to higher income from MVB’s investment in Warp Speed Holdings LLC, and to a lesser extent, higher other operating income. Partially offsetting these increases was a loss on the divestiture of Flexia Payments, LLC (“Flexia”) of $1.1 million during the second quarter of 2023. Further, payment card and service charge income of $3.5 million declined 3.0%, or $0.1 million, from the prior quarter, due primarily to the aforementioned seasonal considerations and loss on sale of sub-prime automobile and nonperforming loans of $1.0 million increased $0.6 million from the prior quarter.
    • Noninterest expense increased 6.9% to $30.3 million from $28.3 million from the prior quarter. While we added personnel in certain areas during the current quarter, overall salary and benefit costs declined; however, higher total noninterest expenses reflect professional fees and other operating expenses, primarily attributable to recent actions taken in response to the market events in March 2023 to further enhance risk management and compliance-related infrastructure. Noninterest expenses other than professional fees and other operating expenses declined 1.3% as compared to the prior quarter, reflecting ongoing efforts to meet cost savings initiative targets.

INCOME STATEMENT

Net interest income on a tax-equivalent basis totaled $29.8 million for the second quarter of 2023, down $3.2 million, or 9.6%, from the first quarter of 2023 and up $2.9 million, or 10.7%, from the second quarter of 2022. The decline in net interest income compared to the first quarter of 2023 reflects net interest margin contraction and higher than average cash balances, partially offset by higher earning asset balances. The increase compared to the second quarter of 2022 generally reflects strong loan growth at favorable interest rates, primarily driven by MVB Bank’s strategic lending partnerships growth vehicle and broad-based growth throughout CoRe Banking business, as well as the beneficial effects of higher interest rates on earning asset yields, including loans, investment securities and interest-bearing deposits with other banks.

Interest income increased $2.3 million, or 5.1%, from the first quarter of 2023 and increased $18.9 million, or 67.4%, from the second quarter of 2022. The tax-equivalent yield on loans was 6.7% for the second quarter of 2023, compared to 6.6% for the first quarter of 2023 and 5.1% for the second quarter of 2022. The higher loan yields compared to the first quarter of 2023 generally reflect the beneficial impact of Fed rate increases, while higher loan yields compared to the second quarter of 2022 reflect the cumulative impact of robust loan growth booked at higher yields than the prevailing portfolio yield in the prior year.

Interest expense increased $5.4 million, or 45.0%, from the first quarter of 2023 and increased $16.0 million from the second quarter of 2022. The cost of funds was 2.26% for the second quarter of 2023, up from 1.61% for the first quarter of 2023 and 0.22% for the second quarter of 2022. The increase from the prior quarter primarily reflected the impact of higher interest rates, including an increase in rates paid on money market checking deposits and CDs, a decline in noninterest-bearing demand deposits and actions taken to enhance liquidity in response to the market events of March 2023. The increase in cost of funds compared to the prior year period reflects the impact of liquidity actions taken in 2023 in response to market conditions, higher interest rates and the senior term loan, which was entered into during October 2022.

On a tax-equivalent basis, net interest margin for the second quarter of 2023 was 3.80%, a decrease of 60 basis points versus the first quarter of 2023 and a decrease of 30 basis points versus the second quarter of 2022. Please see the table below for a reconciliation between net interest margin and net interest margin on a fully tax-equivalent basis, a non-GAAP measure. Contraction in net interest margin from the first quarter of 2023 to the second quarter of 2023 primarily reflected higher funding costs and a shift in the mix of earning assets (higher yielding loan balances declined, while lower yielding cash balances increased), partially offset by higher loan yields.

Noninterest income totaled $6.4 million for the second quarter of 2023, an increase of $3.4 million from the first quarter of 2023 and a decrease of $3.0 million from the second quarter of 2022. The increase compared to the prior quarter is primarily driven by a $3.1 million increase in equity method investment income, a $1.2 million decrease in loss on sale of available-for-sale investment securities and a $0.5 million increase in holding gain on equity securities. These gains were partially offset by a loss of $1.0 million resulting from divestiture activity and an increase $0.6 million in loss on sale of loans. The $3.0 million decrease in noninterest income from the second quarter of 2022 was primarily driven by decreases of $2.4 million in gain on sale of loans, a $1.0 million loss on divestiture activity and a $0.5 million loss in payment card and service charge income, partially offset by an increase of $1.3 million in equity method investment income.

Noninterest expense totaled $30.3 million for the second quarter of 2023, an increase of $2.0 million, or 6.9%, from the first quarter of 2023 and an increase of $2.3 million, or 8.3%, from the second quarter of 2022. The increase from the prior periods primarily reflects higher other operating expenses, specifically higher professional fees, partially offset by decreases in salaries and employee benefits expense of $1.0 million, or 6.0%, and $0.8 million, or 5.1%, as compared to the first quarter of 2023 and the second quarter of 2022, respectively.

In February 2023, the Company completed the sale of the Bank’s wholly owned subsidiary, Chartwell Compliance, for total consideration of $14.4 million. The results of Chartwell operations are included in discontinued operations on the consolidated statements of income. There was no net income from discontinued operations in the second quarter of 2023. Net income from discontinued operations totaled $8.8 million for the first quarter of 2023, which included a gain on sale of $11.8 million.

In May 2023, MVB entered into an agreement with Flexia, to facilitate the divestiture of MVB’s interests in the ongoing business of Flexia. As a result of the divestiture, MVB incurred a loss of $1.1 million during the quarter ended June 30, 2023.

BALANCE SHEET

Loans totaled $2.31 billion at June 30, 2023, a decrease of $48.8 million, or 2.1%, and an increase of $97.3 million, or 4.4%, as compared to March 31, 2023 and June 30, 2022, respectively. The decrease in loan balances compared to the prior quarter primarily reflects deliberate efforts to improve balance sheet liquidity and ensure appropriate risk adjusted pricing on loans, in addition to the sale of $20.4 million of subprime automobile loans during the second quarter of 2023. The remaining balance of subprime automobile loans totaled $27.0 million at June 30, 2023. Loan growth compared to June 30, 2022 was driven primarily by MVB Bank’s strategic lending partnerships. Loans held-for-sale, which represent MVB Bank’s government guaranteed lending growth vehicle, were $7.0 million as of June 30, 2023, compared to $19.9 million at March 31, 2023 and $11.9 million at June 30, 2022.

Deposits totaled $2.96 billion as of June 30, 2023, a decrease of $191.9 million, or 6.1%, from March 31, 2023, and an increase of $344.0 million, or 13.2%, from June 30, 2022. NIB deposits totaled $987.6 million as of June 30, 2023, a decrease of $146.7 million, or 12.9%, from March 31, 2023 and $355.4 million, or 26.5%, from June 30, 2022. The decline in total deposit balances compared to March 31, 2023 primarily reflects seasonal considerations in MVB’s gaming and BaaS deposits and an increase in off-balance sheet deposits, primarily offset by growth in CDs and other interest-bearing deposits. The increase relative to June 30, 2022, reflects higher CDs and BaaS account deposits. The decrease in NIB deposits relative to both prior periods primarily reflects the highly-competitive deposit environment, rising interest rates and MVB’s utilization of off-balance sheet deposit networks to generate fee income, enhance capital and manage liquidity and concentration risk.

CAPITAL

The Community Bank Leverage Ratio was 10.0% as of June 30, 2023, compared to 10.0% as of March 31, 2023 and 11.6% as of June 30, 2022.

The Company issued a quarterly cash dividend of $0.17 per share for the second quarter of 2023, consistent with the first quarter of 2023 and the second quarter of 2022.

ASSET QUALITY

Nonperforming loans totaled $13.6 million, or 0.6% of total loans, as of June 30, 2023, as compared to $13.1 million, or 0.6% of total loans, as of March 31, 2023, and $19.3 million, or 0.9% of total loans, as of June 30, 2022. Criticized loans as a percentage of total loans were 3.1%, compared to 3.6% as of March 31, 2023 and 4.0% as of June 30, 2022.

Net charge-offs were $1.2 million, or 0.2% of total loans, for the second quarter of 2023, compared to $1.7 million, or 0.3% of total loans, for the first quarter of 2023 and $1.2 million, or 0.2% of total loans, for the second quarter of 2022.

The release of allowance for credit losses totaled $4.2 million compared to a provision for credit losses of $4.6 million for the prior quarter. The Company sold $20.4 million of subprime automobile loans and released the reserve associated with those loans, resulting in the net reserve release for the quarter. The allowance for credit losses was 1.3% of total loans at June 30, 2023, as compared to 1.5% at March 31, 2023 and 1.0% at June 30, 2022. The decline in the allowance ratio compared to the prior quarter largely reflects the aforementioned changes in loan portfolio composition. The increase in the allowance compared to June 30, 2022 primarily reflects changes in loan portfolio composition and the implementation of the Current Expected Credit Loss allowance methodology as of January 1, 2023.

About MVB Financial Corp.

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

MVB is a financial holding company headquartered in Fairmont, West Virginia. Through its subsidiary, MVB Bank, and MVB Bank’s subsidiaries, MVB Financial provides financial services to individuals and corporate clients in the Mid-Atlantic region and beyond.

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 has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this press release 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 are 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; impacts related to or resulting from recent bank failures and volatility; inability to achieve anticipated synergies and successfully integrate recent mergers and acquisitions; inability to successfully execute business plans, including strategies related to investments in Fintech companies; competition; the pace of recovery following the continued effects 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, 2022, as well as its other filings with the Securities and Exchange Commission (“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 SEC. Accordingly, the consolidated financial information in this announcement is subject to change.

Non-U.S. GAAP Financial Measures

This document contains supplemental financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management uses these non-U.S. GAAP measures in its analysis of the Company’s performance. These measures should not be considered a substitute for U.S. GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with U.S. GAAP. Management believes the presentation of non-U.S. GAAP financial measures that exclude the impact of specified items provide useful supplemental information that is essential to a proper understanding of the Company’s financial condition and results. Non-U.S. GAAP measures are not formally defined under U.S. GAAP, and other entities may use calculation methods that differ from those used by us. As a complement to U.S. GAAP financial measures, our management believes these non-U.S. GAAP financial measures assist investors in comparing the financial condition and results of operations of financial institutions due to the industry prevalence of such non-U.S. GAAP measures. See the tables below for a reconciliation of these non-U.S. GAAP measures to the most directly comparable U.S. GAAP financial measures.

MVB Financial Corp.

Financial Highlights

Consolidated Statements of Income

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

 

 

 

Quarterly

 

Year-to-Date

 

 

2023

 

 

2023

 

2022

 

 

2023

 

 

2022

 

 

Second

Quarter

 

First Quarter

 

Second

Quarter

 

 

Interest income

 

$

47,031

 

 

$

44,763

 

$

28,090

 

$

91,794

 

$

51,352

Interest expense

 

 

17,449

 

 

 

12,034

 

 

1,430

 

 

29,483

 

 

2,844

Net interest income

 

 

29,582

 

 

 

32,729

 

 

26,660

 

 

62,311

 

 

48,508

Provision (release of allowance) for credit losses

 

 

(4,235

)

 

 

4,576

 

 

5,100

 

 

341

 

 

6,380

Net interest income after provision (release of allowance) for credit losses

 

 

33,817

 

 

 

28,153

 

 

21,560

 

 

61,970

 

 

42,128

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

 

 

6,419

 

 

 

3,067

 

 

9,384

 

 

9,486

 

 

18,663

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

15,746

 

 

 

16,746

 

 

16,585

 

 

32,492

 

 

32,312

Other expense

 

 

14,536

 

 

 

11,571

 

 

11,387

 

 

26,107

 

 

22,917

Total noninterest expenses

 

 

30,282

 

 

 

28,317

 

 

27,972

 

 

58,599

 

 

55,229

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

9,954

 

 

 

2,903

 

 

2,972

 

 

12,857

 

 

5,562

Income taxes

 

 

1,956

 

 

 

465

 

 

699

 

 

2,421

 

 

1,379

Net income from continuing operations before noncontrolling interest

 

 

7,998

 

 

 

2,438

 

 

2,273

 

 

10,436

 

 

4,183

Income from discontinued operations, before income taxes

 

 

 

 

 

11,831

 

 

678

 

 

11,831

 

 

1,664

Income taxes - discontinued operations

 

 

 

 

 

3,049

 

 

160

 

 

3,049

 

 

385

Net income from discontinued operations

 

 

 

 

 

8,782

 

 

518

 

 

8,782

 

 

1,279

Net loss attributable to noncontrolling interest

 

 

114

 

 

 

122

 

 

165

 

 

236

 

 

358

Net income available to common shareholders

 

$

8,112

 

 

$

11,342

 

$

2,956

 

$

19,454

 

$

5,820

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations - basic

 

$

0.64

 

 

$

0.20

 

$

0.20

 

$

0.84

 

$

0.37

Earnings per share from discontinued operations - basic

 

$

 

 

$

0.70

 

$

0.04

 

$

0.69

 

$

0.11

Earnings per share - basic

 

$

0.64

 

 

$

0.90

 

$

0.24

 

$

1.54

 

$

0.48

Earnings per share from continuing operations - diluted

 

$

0.63

 

 

$

0.20

 

$

0.19

 

$

0.82

 

$

0.35

Earnings per share from discontinued operations - diluted

 

$

 

 

$

0.67

 

$

0.04

 

$

0.68

 

$

0.10

Earnings per share - diluted

 

$

0.63

 

 

$

0.87

 

$

0.23

 

$

1.50

 

$

0.45

Noninterest Income

(Unaudited) (Dollars in thousands)

 

 

 

Quarterly

 

Year-to-Date

 

 

 

2023

 

 

 

2023

 

 

2022

 

 

2023

 

 

 

2022

 

 

Second Quarter

 

First Quarter

 

Second Quarter

 

 

Card acquiring income

 

$

788

 

 

$

622

 

 

$

750

 

$

1,410

 

 

$

1,733

Service charges on deposits

 

 

1,060

 

 

 

1,126

 

 

 

973

 

 

2,186

 

 

 

1,845

Interchange income

 

 

1,655

 

 

 

1,862

 

 

 

2,292

 

 

3,517

 

 

 

3,079

Total payment card and service charge income

 

 

3,503

 

 

 

3,610

 

 

 

4,015

 

 

7,113

 

 

 

6,657

 

 

 

 

 

 

 

 

 

 

 

Equity method investments income (loss)

 

 

1,873

 

 

 

(1,193

)

 

 

549

 

 

680

 

 

 

1,687

Compliance and consulting income

 

 

996

 

 

 

1,016

 

 

 

1,180

 

 

2,012

 

 

 

2,414

Gain (loss) on sale of loans

 

 

(989

)

 

 

(356

)

 

 

1,405

 

 

(1,345

)

 

 

2,488

Investment portfolio gains (losses)

 

 

(134

)

 

 

(1,844

)

 

 

145

 

 

(1,978

)

 

 

2,539

Loss on acquisition and divestiture activity

 

 

(986

)

 

 

 

 

 

 

 

(986

)

 

 

Other noninterest income

 

 

2,156

 

 

 

1,834

 

 

 

2,090

 

 

3,990

 

 

 

2,878

 

 

 

 

 

 

 

 

 

 

 

Total noninterest income

 

$

6,419

 

 

$

3,067

 

 

$

9,384

 

$

9,486

 

 

$

18,663

Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

 

 

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Cash and cash equivalents

 

$

455,835

 

 

$

575,265

 

 

$

161,761

 

Certificates of deposit with banks

 

 

 

 

 

 

 

 

496

 

Securities available-for-sale, at fair value

 

 

329,137

 

 

 

339,578

 

 

 

376,737

 

Equity securities

 

 

41,082

 

 

 

38,576

 

 

 

34,250

 

Loans held-for-sale

 

 

7,009

 

 

 

19,893

 

 

 

11,856

 

Loans receivable

 

 

2,312,387

 

 

 

2,361,153

 

 

 

2,215,114

 

Less: Allowance for credit losses

 

 

(30,294

)

 

 

(35,513

)

 

 

(22,734

)

Loans receivable, net

 

 

2,282,093

 

 

 

2,325,640

 

 

 

2,192,380

 

Premises and equipment, net

 

 

22,407

 

 

 

22,869

 

 

 

25,235

 

Assets from discontinued operations

 

 

 

 

 

 

 

 

4,719

 

Goodwill

 

 

2,838

 

 

 

2,838

 

 

 

2,838

 

Other assets

 

 

211,446

 

 

 

227,217

 

 

 

174,156

 

Total assets

 

$

3,351,847

 

 

$

3,551,876

 

 

$

2,984,428

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

987,555

 

 

$

1,134,257

 

 

$

1,342,916

 

Interest-bearing deposits

 

 

1,971,384

 

 

 

2,016,558

 

 

 

1,272,054

 

FHLB and other borrowings

 

 

 

 

 

 

 

 

 

Senior term loan

 

 

8,835

 

 

 

9,647

 

 

 

 

Subordinated debt

 

 

73,414

 

 

 

73,350

 

 

 

73,158

 

Liabilities from discontinued operations

 

 

 

 

 

 

 

 

4,994

 

Other liabilities

 

 

36,362

 

 

 

46,748

 

 

 

38,396

 

Stockholders' equity, including noncontrolling interest

 

 

274,297

 

 

 

271,316

 

 

 

252,910

 

Total liabilities and stockholders' equity

 

$

3,351,847

 

 

$

3,551,876

 

 

$

2,984,428

 

Reportable Segments

(Unaudited)

 

Three Months Ended June 30, 2023

 

CoRe

Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Other

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

 

Interest income

 

$

46,929

 

 

$

105

 

$

3

 

 

$

6

 

 

$

(12

)

 

$

47,031

 

Interest expense

 

 

16,439

 

 

 

 

 

999

 

 

 

23

 

 

 

(12

)

 

 

17,449

 

Net interest income (expense)

 

 

30,490

 

 

 

105

 

 

(996

)

 

 

(17

)

 

 

 

 

 

29,582

 

Release of allowance for credit losses

 

 

(4,235

)

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,235

)

Net interest income (expense) after release of allowance for credit losses

 

 

34,725

 

 

 

105

 

 

(996

)

 

 

(17

)

 

 

 

 

 

33,817

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

4,113

 

 

 

1,872

 

 

3,116

 

 

 

1,051

 

 

 

(3,733

)

 

 

6,419

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

9,053

 

 

 

7

 

 

4,623

 

 

 

2,063

 

 

 

 

 

 

15,746

 

Other expenses

 

 

14,148

 

 

 

18

 

 

2,163

 

 

 

1,940

 

 

 

(3,733

)

 

 

14,536

 

Total noninterest expenses

 

 

23,201

 

 

 

25

 

 

6,786

 

 

 

4,003

 

 

 

(3,733

)

 

 

30,282

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

15,637

 

 

 

1,952

 

 

(4,666

)

 

 

(2,969

)

 

 

 

 

 

9,954

 

Income taxes

 

 

3,237

 

 

 

643

 

 

(1,207

)

 

 

(717

)

 

 

 

 

 

1,956

 

Net income (loss)

 

 

12,400

 

 

 

1,309

 

 

(3,459

)

 

 

(2,252

)

 

 

 

 

 

7,998

 

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

114

 

 

 

 

 

 

114

 

Net income (loss) available to common shareholders

 

$

12,400

 

 

$

1,309

 

$

(3,459

)

 

$

(2,138

)

 

$

 

 

$

8,112

 

Three Months Ended March 31, 2023

 

CoRe

Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Other

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

 

Interest income

 

$

44,662

 

$

105

 

 

$

33

 

 

$

(6

)

 

$

(31

)

 

$

44,763

Interest expense

 

 

11,041

 

 

 

 

 

993

 

 

 

31

 

 

 

(31

)

 

 

12,034

Net interest income (expense)

 

 

33,621

 

 

105

 

 

 

(960

)

 

 

(37

)

 

 

 

 

 

32,729

Provision for credit losses

 

 

4,576

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,576

Net interest income (expense) after provision for credit losses

 

 

29,045

 

 

105

 

 

 

(960

)

 

 

(37

)

 

 

 

 

 

28,153

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

3,018

 

 

(1,186

)

 

 

2,410

 

 

 

1,784

 

 

 

(2,959

)

 

 

3,067

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

9,051

 

 

 

 

 

4,950

 

 

 

2,745

 

 

 

 

 

 

16,746

Other expenses

 

 

11,054

 

 

34

 

 

 

1,917

 

 

 

1,525

 

 

 

(2,959

)

 

 

11,571

Total noninterest expenses

 

 

20,105

 

 

34

 

 

 

6,867

 

 

 

4,270

 

 

 

(2,959

)

 

 

28,317

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

11,958

 

 

(1,115

)

 

 

(5,417

)

 

 

(2,523

)

 

 

 

 

 

2,903

Income taxes

 

 

2,515

 

 

(504

)

 

 

(942

)

 

 

(604

)

 

 

 

 

 

465

Net income (loss) from continuing operations

 

 

9,443

 

 

(611

)

 

 

(4,475

)

 

 

(1,919

)

 

 

 

 

 

2,438

Income from discontinued operations, before income taxes

 

 

 

 

 

 

 

 

 

 

11,831

 

 

 

 

 

 

11,831

Income tax expense - discontinued operations

 

 

 

 

 

 

 

 

 

 

3,049

 

 

 

 

 

 

3,049

Net income from discontinued operations

 

 

 

 

 

 

 

 

 

 

8,782

 

 

 

 

 

 

8,782

Net income (loss)

 

 

9,443

 

 

(611

)

 

 

(4,475

)

 

 

6,863

 

 

 

 

 

 

11,220

Net loss attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

122

 

 

 

 

 

 

122

Net income (loss) available to common shareholders

 

$

9,443

 

$

(611

)

 

$

(4,475

)

 

$

6,985

 

 

$

 

 

$

11,342

Three Months Ended June 30, 2022

 

CoRe

Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Other

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

 

Interest income

 

$

27,910

 

$

103

 

$

87

 

 

$

 

 

$

(10

)

 

$

28,090

Interest expense

 

 

672

 

 

 

 

760

 

 

 

8

 

 

 

(10

)

 

 

1,430

Net interest income (expense)

 

 

27,238

 

 

103

 

 

(673

)

 

 

(8

)

 

 

 

 

 

26,660

Provision for credit losses

 

 

5,100

 

 

 

 

 

 

 

 

 

 

 

 

 

5,100

Net interest income (expense) after provision for credit losses

 

 

22,138

 

 

103

 

 

(673

)

 

 

(8

)

 

 

 

 

 

21,560

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

7,093

 

 

787

 

 

3,228

 

 

 

1,584

 

 

 

(3,308

)

 

 

9,384

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

9,948

 

 

 

 

4,439

 

 

 

2,198

 

 

 

 

 

 

16,585

Other expenses

 

 

10,913

 

 

94

 

 

2,247

 

 

 

1,441

 

 

 

(3,308

)

 

 

11,387

Total noninterest expenses

 

 

20,861

 

 

94

 

 

6,686

 

 

 

3,639

 

 

 

(3,308

)

 

 

27,972

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

8,370

 

 

796

 

 

(4,131

)

 

 

(2,063

)

 

 

 

 

 

2,972

Income taxes

 

 

1,771

 

 

207

 

 

(815

)

 

 

(464

)

 

 

 

 

 

699

Net income (loss) from continuing operations

 

 

6,599

 

 

589

 

 

(3,316

)

 

 

(1,599

)

 

 

 

 

 

2,273

Income from discontinued operations, before income taxes

 

 

 

 

 

 

 

 

 

678

 

 

 

 

 

 

678

Income tax expense - discontinued operations

 

 

 

 

 

 

 

 

 

160

 

 

 

 

 

 

160

Net income from discontinued operations

 

 

 

 

 

 

 

 

 

518

 

 

 

 

 

 

518

Net income (loss)

 

 

6,599

 

 

589

 

 

(3,316

)

 

 

(1,081

)

 

 

 

 

 

2,791

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

165

 

 

 

 

 

 

165

Net income (loss) available to common shareholders

 

$

6,599

 

$

589

 

$

(3,316

)

 

$

(916

)

 

$

 

 

$

2,956

Six Months Ended June 30, 2023

 

CoRe

Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Other

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

 

Interest income

 

$

91,591

 

$

210

 

$

36

 

 

$

 

 

$

(43

)

 

$

91,794

Interest expense

 

 

27,480

 

 

 

 

1,992

 

 

 

54

 

 

 

(43

)

 

 

29,483

Net interest income (expense)

 

 

64,111

 

 

210

 

 

(1,956

)

 

 

(54

)

 

 

 

 

 

62,311

Provision for credit losses

 

 

341

 

 

 

 

 

 

 

 

 

 

 

 

 

341

Net interest income (expense) after provision for credit losses

 

 

63,770

 

 

210

 

 

(1,956

)

 

 

(54

)

 

 

 

 

 

61,970

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

7,131

 

 

686

 

 

5,526

 

 

 

2,835

 

 

 

(6,692

)

 

 

9,486

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

18,104

 

 

7

 

 

9,573

 

 

 

4,808

 

 

 

 

 

 

32,492

Other expenses

 

 

25,202

 

 

52

 

 

4,080

 

 

 

3,465

 

 

 

(6,692

)

 

 

26,107

Total noninterest expenses

 

 

43,306

 

 

59

 

 

13,653

 

 

 

8,273

 

 

 

(6,692

)

 

 

58,599

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

27,595

 

 

837

 

 

(10,083

)

 

 

(5,492

)

 

 

 

 

 

12,857

Income taxes

 

 

5,752

 

 

139

 

 

(2,149

)

 

 

(1,321

)

 

 

 

 

 

2,421

Net income (loss) from continuing operations

 

 

21,843

 

 

698

 

 

(7,934

)

 

 

(4,171

)

 

 

 

 

 

10,436

Income from discontinued operations, before income taxes

 

 

 

 

 

 

 

 

 

11,831

 

 

 

 

 

 

11,831

Income taxes - discontinued operations

 

 

 

 

 

 

 

 

 

3,049

 

 

 

 

 

 

3,049

Net income from discontinued operations

 

 

 

 

 

 

 

 

 

8,782

 

 

 

 

 

 

8,782

Net income (loss)

 

 

21,843

 

 

698

 

 

(7,934

)

 

 

4,611

 

 

 

 

 

 

19,218

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

236

 

 

 

 

 

 

236

Net income (loss) available to common shareholders

 

$

21,843

 

$

698

 

$

(7,934

)

 

$

4,847

 

 

$

 

 

$

19,454

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022

 

CoRe

Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Other

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

 

Interest income

 

$

51,081

 

$

206

 

$

80

 

 

$

 

 

$

(15

)

 

$

51,352

Interest expense

 

 

1,331

 

 

 

 

1,513

 

 

 

15

 

 

 

(15

)

 

 

2,844

Net interest income (expense)

 

 

49,750

 

 

206

 

 

(1,433

)

 

 

(15

)

 

 

 

 

 

48,508

Provision for credit losses

 

 

6,380

 

 

 

 

 

 

 

 

 

 

 

 

 

6,380

Net interest income (expense) after provision for credit losses

 

 

43,370

 

 

206

 

 

(1,433

)

 

 

(15

)

 

 

 

 

 

42,128

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

 

13,991

 

 

2,010

 

 

5,899

 

 

 

3,120

 

 

 

(6,357

)

 

 

18,663

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

19,456

 

 

 

 

8,495

 

 

 

4,361

 

 

 

 

 

 

32,312

Other expenses

 

 

21,961

 

 

94

 

 

4,452

 

 

 

2,767

 

 

 

(6,357

)

 

 

22,917

Total noninterest expenses

 

 

41,417

 

 

94

 

 

12,947

 

 

 

7,128

 

 

 

(6,357

)

 

 

55,229

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

 

15,944

 

 

2,122

 

 

(8,481

)

 

 

(4,023

)

 

 

 

 

 

5,562

Income taxes

 

 

3,402

 

 

548

 

 

(1,684

)

 

 

(887

)

 

 

 

 

 

1,379

Net income (loss) from continuing operations

 

 

12,542

 

 

1,574

 

 

(6,797

)

 

 

(3,136

)

 

 

 

 

 

4,183

Income from discontinued operations, before income taxes

 

 

 

 

 

 

 

 

 

1,664

 

 

 

 

 

 

1,664

Income tax expense - discontinued operations

 

 

 

 

 

 

 

 

 

385

 

 

 

 

 

 

385

Net income from discontinued operations

 

 

 

 

 

 

 

 

 

1,279

 

 

 

 

 

 

1,279

Net income (loss)

 

 

12,542

 

 

1,574

 

 

(6,797

)

 

 

(1,857

)

 

 

 

 

 

5,462

Net income attributable to noncontrolling interest

 

 

 

 

 

 

 

 

 

358

 

 

 

 

 

 

358

Net income (loss) available to common shareholders

 

$

12,542

 

$

1,574

 

$

(6,797

)

 

$

(1,499

)

 

$

 

 

$

5,820

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing balances with banks

 

$

444,600

 

 

$

5,542

 

 

5.00

%

 

$

285,102

 

 

$

3,153

 

 

4.49

%

 

$

197,613

 

 

$

304

 

 

0.62

%

CDs with banks

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,582

 

 

 

9

 

 

2.28

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

220,687

 

 

 

1,229

 

 

2.23

 

 

 

236,574

 

 

 

1,848

 

 

3.17

 

 

 

237,745

 

 

 

838

 

 

1.41

 

Tax-exempt 2

 

 

123,497

 

 

 

1,147

 

 

3.73

 

 

 

137,799

 

 

 

1,308

 

 

3.85

 

 

 

147,646

 

 

 

1,342

 

 

3.65

 

Loans and loans held-for-sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial 3

 

 

1,635,438

 

 

 

30,534

 

 

7.49

 

 

 

1,620,509

 

 

 

28,538

 

 

7.14

 

 

 

1,564,266

 

 

 

20,021

 

 

5.13

 

Tax-exempt 2

 

 

3,822

 

 

 

42

 

 

4.41

 

 

 

3,944

 

 

 

43

 

 

4.42

 

 

 

4,930

 

 

 

52

 

 

4.23

 

Real estate

 

 

593,767

 

 

 

5,691

 

 

3.84

 

 

 

621,388

 

 

 

6,295

 

 

4.11

 

 

 

393,983

 

 

 

2,674

 

 

2.72

 

Consumer

 

 

128,113

 

 

 

3,096

 

 

9.69

 

 

 

137,547

 

 

 

3,862

 

 

11.39

 

 

 

88,366

 

 

 

3,142

 

 

14.26

 

Total loans

 

 

2,361,140

 

 

 

39,363

 

 

6.69

 

 

 

2,383,388

 

 

 

38,738

 

 

6.59

 

 

 

2,051,545

 

 

 

25,889

 

 

5.06

 

Total earning assets

 

 

3,149,924

 

 

 

47,281

 

 

6.02

 

 

 

3,042,863

 

 

 

45,047

 

 

6.00

 

 

 

2,636,131

 

 

 

28,382

 

 

4.32

 

Less: Allowance for credit losses

 

 

(35,143

)

 

 

 

 

 

 

(30,135

)

 

 

 

 

 

 

(19,927

)

 

 

 

 

Cash and due from banks

 

 

5,756

 

 

 

 

 

 

 

243

 

 

 

 

 

 

 

5,579

 

 

 

 

 

Other assets

 

 

289,161

 

 

 

 

 

 

 

339,676

 

 

 

 

 

 

 

237,016

 

 

 

 

 

Total assets

 

$

3,409,698

 

 

 

 

 

 

$

3,352,647

 

 

 

 

 

 

$

2,858,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

682,277

 

 

$

4,816

 

 

2.83

%

 

$

796,901

 

 

$

4,661

 

 

2.37

%

 

$

654,781

 

 

$

256

 

 

0.16

%

Money market checking

 

 

615,962

 

 

 

2,439

 

 

1.59

 

 

 

209,227

 

 

 

928

 

 

1.80

 

 

 

380,295

 

 

 

184

 

 

0.19

 

Savings

 

 

72,289

 

 

 

351

 

 

1.95

 

 

 

93,297

 

 

 

641

 

 

2.79

 

 

 

27,496

 

 

 

1

 

 

0.01

 

IRAs

 

 

6,401

 

 

 

45

 

 

2.82

 

 

 

6,151

 

 

 

27

 

 

1.78

 

 

 

6,314

 

 

 

17

 

 

1.08

 

CDs

 

 

662,753

 

 

 

8,799

 

 

5.33

 

 

 

386,144

 

 

 

3,896

 

 

4.09

 

 

 

75,487

 

 

 

203

 

 

1.08

 

Repurchase agreements and federal funds sold

 

 

5,428

 

 

 

 

 

 

 

 

7,612

 

 

 

1

 

 

0.05

 

 

 

11,566

 

 

 

1

 

 

0.03

 

FHLB and other borrowings

 

 

158

 

 

 

 

 

 

 

 

71,166

 

 

 

888

 

 

5.06

 

 

 

2,312

 

 

 

8

 

 

1.39

 

Senior term loan

 

 

9,351

 

 

 

198

 

 

8.49

 

 

 

9,765

 

 

 

194

 

 

8.06

 

 

 

 

 

 

 

 

 

Subordinated debt

 

 

73,382

 

 

 

801

 

 

4.38

 

 

 

73,318

 

 

 

798

 

 

4.41

 

 

 

73,126

 

 

 

760

 

 

4.17

 

Total interest-bearing liabilities

 

 

2,128,001

 

 

 

17,449

 

 

3.29

 

 

 

1,653,581

 

 

 

12,034

 

 

2.95

 

 

 

1,231,377

 

 

 

1,430

 

 

0.47

 

Noninterest-bearing demand deposits

 

 

971,436

 

 

 

 

 

 

 

1,380,516

 

 

 

 

 

 

 

1,331,357

 

 

 

 

 

Other liabilities

 

 

38,842

 

 

 

 

 

 

 

37,087

 

 

 

 

 

 

 

40,900

 

 

 

 

 

Total liabilities

 

 

3,138,279

 

 

 

 

 

 

 

3,071,184

 

 

 

 

 

 

 

2,603,634

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

13,533

 

 

 

 

 

 

 

13,471

 

 

 

 

 

 

 

13,289

 

 

 

 

 

Paid-in capital

 

 

158,601

 

 

 

 

 

 

 

153,389

 

 

 

 

 

 

 

145,014

 

 

 

 

 

Treasury stock

 

 

(16,741

)

 

 

 

 

 

 

(16,741

)

 

 

 

 

 

 

(16,741

)

 

 

 

 

Retained earnings

 

 

148,600

 

 

 

 

 

 

 

166,426

 

 

 

 

 

 

 

137,989

 

 

 

 

 

Accumulated other comprehensive loss

 

 

(32,714

)

 

 

 

 

 

 

(35,345

)

 

 

 

 

 

 

(25,097

)

 

 

 

 

Total stockholders’ equity attributable to parent

 

 

271,279

 

 

 

 

 

 

 

281,200

 

 

 

 

 

 

 

254,454

 

 

 

 

 

Noncontrolling interest

 

 

140

 

 

 

 

 

 

 

263

 

 

 

 

 

 

 

711

 

 

 

 

 

Total stockholders’ equity

 

 

271,419

 

 

 

 

 

 

 

281,463

 

 

 

 

 

 

 

255,165

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

3,409,698

 

 

 

 

 

 

$

3,352,647

 

 

 

 

 

 

$

2,858,799

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (tax-equivalent)

 

 

 

 

 

2.73

%

 

 

 

 

 

3.05

%

 

 

 

 

 

3.85

%

Net interest income and margin (tax-equivalent)2

 

 

 

$

29,832

 

 

3.80

%

 

 

 

$

33,013

 

 

4.40

%

 

 

 

$

26,952

 

 

4.10

%

Less: Tax-equivalent adjustments

 

 

 

$

(250

)

 

 

 

 

 

$

(284

)

 

 

 

 

 

$

(292

)

 

 

Net interest spread

 

 

 

 

 

2.70

%

 

 

 

 

 

3.02

%

 

 

 

 

 

3.80

%

Net interest income and margin

 

 

 

$

29,582

 

 

3.77

%

 

 

 

$

32,729

 

 

4.36

%

 

 

 

$

26,660

 

 

4.06

%

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

 

MVB Bank’s PPP loans totaling $4.5 million, $4.9 million and $22.3 million are included in this amount as of June 30, 2023, March 31, 2023 and June 30, 2022, respectively.

 

 

Six Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing balances with banks

 

$

365,291

 

 

$

8,695

 

 

4.80

%

 

$

395,494

 

 

$

518

 

 

0.26

%

CDs with banks

 

 

 

 

 

 

 

 

 

 

1,964

 

 

 

22

 

 

2.26

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

228,587

 

 

 

3,077

 

 

2.71

 

 

 

239,849

 

 

 

1,486

 

 

1.25

 

Tax-exempt 2

 

 

130,609

 

 

 

2,456

 

 

3.79

 

 

 

138,170

 

 

 

2,478

 

 

3.62

 

Loans and loans held-for-sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

Commercial 3

 

 

1,628,015

 

 

 

59,065

 

 

7.32

 

 

 

1,509,071

 

 

 

37,000

 

 

4.94

 

Tax-exempt 2

 

 

3,882

 

 

 

85

 

 

4.42

 

 

 

4,998

 

 

 

105

 

 

4.24

 

Real estate

 

 

607,501

 

 

 

11,992

 

 

3.98

 

 

 

366,557

 

 

 

5,014

 

 

2.76

 

Consumer

 

 

132,804

 

 

 

6,959

 

 

10.57

 

 

 

71,588

 

 

 

5,271

 

 

14.85

 

Total loans

 

 

2,372,202

 

 

 

78,101

 

 

6.64

 

 

 

1,952,214

 

 

 

47,390

 

 

4.90

 

Total earning assets

 

 

3,096,689

 

 

 

92,329

 

 

6.01

 

 

 

2,727,691

 

 

 

51,894

 

 

3.84

 

Less: Allowance for credit losses

 

 

(32,653

)

 

 

 

 

 

 

(19,139

)

 

 

 

 

Cash and due from banks

 

 

3,015

 

 

 

 

 

 

 

5,822

 

 

 

 

 

Other assets

 

 

314,279

 

 

 

 

 

 

 

242,875

 

 

 

 

 

Total assets

 

$

3,381,330

 

 

 

 

 

 

$

2,957,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

739,273

 

 

$

9,478

 

 

2.59

%

 

$

650,903

 

 

$

449

 

 

0.14

%

Money market checking

 

 

413,718

 

 

 

3,367

 

 

1.64

 

 

 

423,053

 

 

 

386

 

 

0.18

 

Savings

 

 

82,735

 

 

 

991

 

 

2.42

 

 

 

38,706

 

 

 

2

 

 

0.01

 

IRAs

 

 

6,276

 

 

 

72

 

 

2.31

 

 

 

6,341

 

 

 

34

 

 

1.08

 

CDs

 

 

525,213

 

 

 

12,695

 

 

4.87

 

 

 

81,329

 

 

 

446

 

 

1.11

 

Repurchase agreements and federal funds sold

 

 

6,514

 

 

 

 

 

 

 

 

11,693

 

 

 

3

 

 

0.05

 

FHLB and other borrowings

 

 

35,347

 

 

 

888

 

 

5.07

 

 

 

1,163

 

 

 

11

 

 

1.91

 

Senior term loan

 

 

9,557

 

 

 

392

 

 

8.27

 

 

 

 

 

 

 

 

 

Subordinated debt

 

 

73,350

 

 

 

1,600

 

 

4.40

 

 

 

73,094

 

 

 

1,513

 

 

4.17

 

Total interest-bearing liabilities

 

 

1,891,983

 

 

 

29,483

 

 

3.14

 

 

 

1,286,282

 

 

 

2,844

 

 

0.45

 

Noninterest-bearing demand deposits

 

 

1,174,965

 

 

 

 

 

 

 

1,365,037

 

 

 

 

 

Other liabilities

 

 

37,969

 

 

 

 

 

 

 

43,594

 

 

 

 

 

Total liabilities

 

 

3,104,917

 

 

 

 

 

 

 

2,694,913

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

13,502

 

 

 

 

 

 

 

13,373

 

 

 

 

 

Paid-in capital

 

 

156,009

 

 

 

 

 

 

 

144,408

 

 

 

 

 

Treasury stock

 

 

(16,741

)

 

 

 

 

 

 

(16,741

)

 

 

 

 

Retained earnings

 

 

157,464

 

 

 

 

 

 

 

137,815

 

 

 

 

 

Accumulated other comprehensive income loss

 

 

(34,022

)

 

 

 

 

 

 

(17,325

)

 

 

 

 

Total stockholders’ equity attributable to parent

 

 

276,212

 

 

 

 

 

 

 

261,530

 

 

 

 

 

Noncontrolling interest

 

 

201

 

 

 

 

 

 

 

806

 

 

 

 

 

Total stockholders’ equity

 

 

276,413

 

 

 

 

 

 

 

262,336

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

3,381,330

 

 

 

 

 

 

$

2,957,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (tax-equivalent)

 

 

 

 

 

2.87

%

 

 

 

 

 

3.39

%

Net interest income and margin (tax-equivalent)2

 

 

 

$

62,846

 

 

4.09

%

 

 

 

$

49,050

 

 

3.63

%

Less: Tax-equivalent adjustments

 

 

 

$

(535

)

 

 

 

 

 

$

(542

)

 

 

Net interest spread

 

 

 

 

 

2.84

%

 

 

 

 

 

3.35

%

Net interest income and margin

 

 

 

$

62,311

 

 

4.06

%

 

 

 

$

48,508

 

 

3.59

%

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

 

MVB Bank’s PPP loans totaling $4.5 million and $22.3 million are included in this amount as of June 30, 2023 and June 30, 2022, respectively.

Non-GAAP Reconciliation: Net Interest Margin on a Full Tax-Equivalent Basis

The following table reconciles, for the periods shown below, net interest margin on a fully tax-equivalent basis:

 

 

 

Three Months Ended

 

Six Months Ended

(Dollars in thousands)

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

Net interest margin - U.S. GAAP basis

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

29,582

 

 

$

32,729

 

 

$

26,660

 

 

$

62,311

 

 

$

48,508

 

Average interest-earning assets

 

$

3,149,924

 

 

$

3,042,863

 

 

$

2,636,131

 

 

 

3,096,689

 

 

 

2,727,691

 

Net interest margin

 

 

3.77

%

 

 

4.36

%

 

 

4.06

%

 

 

4.06

%

 

 

3.59

%

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

29,582

 

 

$

32,729

 

 

$

26,660

 

 

$

62,311

 

 

$

48,508

 

Impact of fully tax-equivalent adjustment

 

 

250

 

 

 

284

 

 

 

292

 

 

 

535

 

 

 

542

 

Net interest income on a fully tax-equivalent basis

 

$

29,832

 

 

$

33,013

 

 

$

26,952

 

 

 

62,846

 

 

 

49,050

 

Average interest-earning assets

 

$

3,149,924

 

 

$

3,042,863

 

 

$

2,636,131

 

 

$

3,096,689

 

 

$

2,727,691

 

Net interest margin on a fully tax-equivalent basis

 

 

3.80

%

 

 

4.40

%

 

 

4.10

%

 

 

4.09

%

 

 

3.63

%

Selected Financial Data

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

 

 

 

Quarterly

 

Year-to-Date

 

 

 

2023

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

Second Quarter

 

First Quarter

 

Second Quarter

 

 

Earnings and Per Share Data:

 

 

 

 

 

 

 

 

 

 

Net income

 

$

8,112

 

 

$

11,342

 

 

$

2,956

 

 

$

19,454

 

 

$

5,820

 

Earnings per share from continuing operations - basic

 

$

0.64

 

 

$

0.20

 

 

$

0.20

 

 

$

0.84

 

 

$

0.37

 

Earnings per share from discontinued operations - basic

 

$

 

 

$

0.70

 

 

$

0.04

 

 

$

0.69

 

 

$

0.11

 

Earnings per share - basic

 

$

0.64

 

 

$

0.90

 

 

$

0.24

 

 

$

1.54

 

 

$

0.48

 

Earnings per share from continuing operations - diluted

 

$

0.63

 

 

$

0.20

 

 

$

0.19

 

 

$

0.82

 

 

$

0.35

 

Earnings per share from discontinued operations - diluted

 

$

 

 

$

0.67

 

 

$

0.04

 

 

$

0.68

 

 

$

0.10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash dividends paid per common share

 

$

0.17

 

 

$

0.17

 

 

$

0.17

 

 

$

0.34

 

 

$

0.34

 

Book value per common share

 

$

21.57

 

 

$

21.43

 

 

$

20.63

 

 

$

21.57

 

 

$

20.63

 

Tangible book value per common share 1

 

$

21.31

 

 

$

21.17

 

 

$

20.14

 

 

$

21.31

 

 

$

20.14

 

Weighted-average shares outstanding - basic

 

 

12,689,669

 

 

 

12,623,361

 

 

 

12,176,805

 

 

 

12,656,698

 

 

 

12,135,223

 

Weighted-average shares outstanding - diluted

 

 

12,915,294

 

 

 

13,016,082

 

 

 

12,895,581

 

 

 

12,959,725

 

 

 

12,870,892

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets 2

 

 

1.0

%

 

 

1.4

%

 

 

0.4

%

 

 

1.2

%

 

 

0.4

%

Return on average equity 2

 

 

12.0

%

 

 

16.1

%

 

 

4.6

%

 

 

14.1

%

 

 

4.4

%

Net interest margin 3 4

 

 

3.80

%

 

 

4.40

%

 

 

4.10

%

 

 

4.09

%

 

 

3.63

%

Efficiency ratio 5 10

 

 

84.1

%

 

 

61.4

%

 

 

77.3

%

 

 

70.9

%

 

 

81.2

%

Overhead ratio 2 6

 

 

3.6

%

 

 

3.4

%

 

 

4.2

%

 

 

3.5

%

 

 

4.0

%

Equity to assets

 

 

8.2

%

 

 

7.6

%

 

 

8.5

%

 

 

8.2

%

 

 

8.5

%

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Data and Ratios:

 

 

 

 

 

 

 

 

 

 

Charge-offs

 

$

3,700

 

 

$

4,847

 

 

$

2,529

 

 

$

8,547

 

 

$

3,652

 

Recoveries

 

$

2,468

 

 

$

3,169

 

 

$

1,355

 

 

$

5,637

 

 

$

1,741

 

Net loan charge-offs to total loans 2 7

 

 

0.2

%

 

 

0.3

%

 

 

0.2

%

 

 

0.3

%

 

 

0.2

%

Allowance for credit losses

 

$

30,294

 

 

$

35,513

 

 

$

22,734

 

 

$

30,294

 

 

$

22,734

 

Allowance for credit losses to total loans 8

 

 

1.31

%

 

 

1.50

%

 

 

1.03

%

 

1.31

%

 

 

1.03

%

Nonperforming loans

 

$

13,646

 

 

$

13,085

 

 

$

19,295

 

 

$

13,646

 

 

$

19,295

 

Nonperforming loans to total loans

 

 

0.6

%

 

 

0.6

%

 

 

0.9

%

 

 

0.6

%

 

 

0.9

%

 

 

 

 

 

 

 

 

 

 

 

Mortgage Company Equity Method Investees Production Data9:

 

 

 

 

 

 

 

 

 

 

Mortgage pipeline

 

$

748,756

 

 

$

714,258

 

 

$

1,114,061

 

 

$

748,756

 

 

$

1,114,061

 

Loans originated

 

$

1,167,596

 

 

$

232,660

 

 

$

976,004

 

 

$

2,167,711

 

 

$

2,106,702

 

Loans closed

 

$

820,665

 

 

$

385,011

 

 

$

843,305

 

 

$

1,495,882

 

 

$

1,624,147

 

Loans sold

 

$

786,469

 

 

$

302,782

 

 

$

692,553

 

 

$

1,221,723

 

 

$

1,380,646

 

1 

 

Common equity less total goodwill and intangibles per common share, a non-U.S. GAAP measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure following this table.

 

Annualized for the quarterly periods presented.

 

Net interest income as a percentage of average interest-earning assets.

 

Presented on a fully tax-equivalent basis, a non-GAAP financial measure.

 

Noninterest expense as a percentage of net interest income and noninterest income, a non-U.S. GAAP measure.

 

Noninterest expense as a percentage of average assets, a non-U.S. GAAP measure.

 

Charge-offs, less recoveries.

 

Excludes loans held-for-sale.

 

Information is related to Intercoastal Mortgage Company, LLC and Warp Speed Holdings LLC, entities in which MVB has an ownership interest that are accounted for as equity method investments.

10 

 

Includes net income from discontinued operations.

 

Non-U.S. GAAP Reconciliation: Tangible Book Value per Common Share

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

 

 

 

June 30, 2023

 

March 31, 2023

 

June 30, 2022

Goodwill

 

$

2,838

 

 

$

2,838

 

 

$

3,988

 

Intangibles

 

 

397

 

 

 

420

 

 

 

1,981

 

Total intangibles

 

 

3,235

 

 

 

3,258

 

 

 

5,969

 

 

 

 

 

 

 

 

Total equity attributable to parent

 

 

274,349

 

 

 

271,131

 

 

 

252,300

 

Less: Total intangibles

 

 

(3,235

)

 

 

(3,258

)

 

 

(5,969

)

Tangible common equity

 

$

271,114

 

 

$

267,873

 

 

$

246,331

 

 

 

 

 

 

 

 

Tangible common equity

 

$

271,114

 

 

$

267,873

 

 

$

246,331

 

Common shares outstanding (000s)

 

 

12,720

 

 

 

12,653

 

 

 

12,229

 

Tangible book value per common share

 

$

21.31

 

 

$

21.17

 

 

$

20.14

 

 

Contacts

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

MVB Financial Corp.

Donald T. Robinson, President and Chief Financial Officer

(304) 598-3500

drobinson@mvbbanking.com

Amy Baker, VP, Corporate Communications and Marketing

(844) 682-2265

abaker@mvbbanking.com

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