MVB Financial Corp. Reports First Quarter 2017 Earnings

FAIRMONT, W.Va., May 4, 2017 /PRNewswire/ -- MVB Financial Corp. (OTC Markets GroupOTCQB: MVBF) and its subsidiaries - MVB Bank and MVB Mortgage (collectively "MVB") - reported total net income of $1.6 million or $0.14 per share basic and diluted for the three months ended March 31, 2017, compared to $1.8 million or $0.20 per share basic and diluted for the three months ended March 31, 2016. The decline in earnings was driven by flat loan growth and a decrease in net income from MVB Mortgage. The earnings per share decrease was driven by both the earnings decline and the approximate 1.9 million shares of the Company's common stock issued from a capital raise that was completed in December 2016. The earnings decline accounted for approximately $0.02 per share and the additional shares issued accounted for approximately $0.04 per share, respectively, of the $0.06 decline in basic and diluted earnings per share.

FIRST QUARTER 2017 HIGHLIGHTS

• Total assets remain solid at $1.4 billion as of March 31, 2017
• Strong credit quality continued with non-performing loans to total loans of 0.61% and annualized net loan charge-offs to total loans of 0.09% at March 31, 2017
• Total deposits increased $44.9 million, or 4.1%, compared to the first quarter of 2016 and outpaced loan growth by 4.0% over the same time period
• Non-interest income increased $212 thousand, or 2.5%, compared to the first quarter of 2016
• Mortgage fee income represented 44% of total revenue, an increase of 13.2%, compared to the first quarter of 2016

"Our first quarter 2017 proved challenging, though profitable," said Larry F. Mazza, CEO, MVB Financial Corp. "The impacts of the current lending environment, compounded by regulatory requirements, kept both commercial and mortgage lending flat since first quarter 2016. Looking ahead to the balance of the year, we are encouraged by a more robust loan pipeline as we maintain our superior credit quality standards, and continue our expense reduction focus across the company."

In 2016, management focused on limiting commercial real estate concentration levels, thus leading to slower loan growth. Loans as of March 31, 2017 totaled $1.077 billion, an increase of 0.11% or $1.2 million when compared to a loan balance of $1.076 billion at March 31, 2016. In comparison to December 31, 2016's loan balance of $1.053 billion, loans increased 2.27% or $23.9 million.

The Company's net interest income for the first quarter of 2017 was $10.3 million, a decrease of 3.64% or $389 thousand when compared to net interest income of $10.7 million for the first quarter of 2016. For the first quarter of 2017, the net interest margin was 3.19%, a decrease of 17 basis points when compared to net interest margin of 3.36% for the first quarter of 2016. The decrease in both net interest income and net interest margin was primarily the result of the recovery of non-accrual interest on one loan relationship which contributed $662 thousand to loan interest income for the three months ended March 31, 2016.

The provision for loan losses for the first quarter of 2017 was $518 thousand, a decrease of 17.12% or $107 thousand when compared to a provision of $625 thousand over the first quarter of 2016. The decrease in loan loss provision is attributable to the reduced loan volume in the first quarter of 2017 versus the same quarter in 2016, which included decreases in the highest commercial loan loss rates; and a higher level of charge-offs in the first quarter of 2017, which was more than offset by the reduced loan volume and decreased historical loan volume and historical loss rates. Due to continued collection and successful workout efforts, the Company's nonperforming loans to total loans were 0.61% as of March 31, 2017, reflecting a favorable year-over-year decrease when compared to the nonperforming loans to total loans ratio of 0.77% as of March 31, 2016. In addition, the Company's annualized net loan charge-offs to total loans were 0.09% as of March 31, 2017, compared to 0.07% as of March 31, 2016.

Noninterest income for the first quarter of 2017 was $8.8 million, an increase of 2.46% or $212 thousand when compared to noninterest income of $8.6 million for the first quarter of 2016. The increase was driven by an increase in mortgage fee income of $2.8 million, offset by a decrease of $2.3 million in gain on derivatives. In addition, loans held for sale decreased from $98.9 million at March 31, 2016 to $71.9 million at March 31, 2017. MVB Mortgage noninterest expense increased 5.20% in the first quarter of 2017 compared to the first quarter of 2016.

"While mortgage originations started slowly in 2017, we are optimistic regarding the future based on solid growth of approximately $58.9 million in our ending mortgage pipeline during the first quarter of 2017," said Mazza. "Based on the current interest rate environment and the seasonality of the mortgage business, management believes that earnings from the mortgage subsidiary during the first three months of 2017 were in line with expectations."

Noninterest expense for the first quarter of 2017 was $16.3 million, an increase of 2.04% or $326 thousand when compared to noninterest expense of $16.0 million for the first quarter of 2016. This increase was primarily driven by an increase in data processing, travel and meals and entertainment expenses related to an ongoing core processing system conversion at MVB Bank.

"We are excited about the implementation of a new core processing system as it will give us greater capabilities from data analysis to client service and assures scalability as we move forward and grow," added Mazza.

Other News

As previously announced, on January 5, 2017, the Company completed the redemption of 8,500 shares, or 100% of its Senior Non-Cumulative Perpetual Preferred Stock, Series A, $1,000 par value per share ("Series A Preferred Stock"), issued to the United States Department of Treasury on September 8, 2011. The total shares aggregate redemption price of the stock is approximately $8,508,500, including the dividend payment. The redemption terminates MVB's participation in the Small Business Lending Fund (SBLF) program.

As previously announced, the Company successfully completed its rights offering (the "Rights Offering"), which expired at 5:00 pm Eastern time on April 14, 2017. In the Rights Offering, all holders of the Company's common stock as of the record date of March 10, 2017 were offered non-transferable rights ("Rights") to purchase shares of the Company's common stock at the per share purchase price of $11.50. The aggregate number of shares offered for sale in connection with the Rights Offering was 434,783. All 434,783 shares offered in the Rights Offering were subscribed for, resulting in new capital of approximately $5.0 million.

Larry F. Mazza, the Company's Chief Executive Officer and a Director purchased 100,000 shares of common stock. Mazza purchased 90,999 shares under the Rights Offering and 9,001 shares under the Investment Agreement previously announced by the Company, resulting in an aggregate purchase of approximately $1,150,000.

On February 24, 2017, the Board of Directors of MVB Financial Corp. declared a quarterly cash dividend of $0.025 per share to shareholders of record at the close of business on March 1, 2017, payable March 15, 2017. This first quarterly dividend for 2017 included a one-half cent or 25 percent increase per share.

About MVB Financial Corp.

MVB is a financial holding company headquartered in Fairmont, W.Va. Through its subsidiary, MVB Bank, Inc., and the bank's subsidiary, MVB Mortgage, the company provides financial services to individuals and corporate clients in the Mid-Atlantic region.

The OTCQB is a market tier operated by the OTC Market Group Inc., for over-the-counter traded companies that are current in their reporting with a U.S. regulator.

For more information, please visit ir.mvbbanking.com.

Forward-looking Statements

MVB Financial Corp. has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this Press Release.  These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties.  Forward-looking statements include information concerning possible or assumed future results of operations of the Company and its subsidiaries.  When words such as "believes," "expects," "anticipates," "may," or similar expressions occur in this Earnings Release, the Company is making forward-looking statements.  Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained in this Earnings Release. Those factors include, but are not limited to: credit risk, changes in market interest rates, inability to achieve merger-related synergies, competition, economic downturn or recession, and government regulation and supervision. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2016, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements.

Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company's financial statements when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information in this announcement is subject to change.

SOURCE MVB Financial Corp.