MVB Financial Corp. Reports 58.5% Increase in Annual Earnings with Success Executing MVB 3.0 Strategy

FAIRMONT, W. Va.–(BUSINESS WIRE)–For the year ended December 31, 2018, MVB Financial Corp. (the
“Company”) (NASDAQ: MVBF) reported net income of $12.0 million, or $1.04
and $1.00 basic and diluted earnings per share, respectively, compared
to $7.6 million, or $0.69 and $0.68 basic and diluted earnings per
share, respectively, for the same period in 2017. This represents a
58.5% increase over prior year. For the quarter ended December 31, 2018,
the Company reported net income of $3.0 million, or $0.25 and $0.24
basic and diluted earnings per share, respectively, compared to $1.4
million, or $0.12 basic and diluted earnings per share, for the quarter
ended December 31, 2017.

Noninterest-bearing deposits increased $87.6 million, or 69.6%, from
December 31, 2017, to a balance of $213.6 million as of December 31,
2018. The growth in noninterest-bearing deposits was primarily driven by
MVB’s continued strategic initiatives in fintech and specialty deposits.
As of December 31, 2018, noninterest-bearing deposits were 16.3% of
total deposits, compared to 10.9% as of December 31, 2017.

Loans increased $198.4 million, or 17.9%, from December 31, 2017, to a
balance of $1.3 billion as of December 31, 2018. The increase in loans
has been driven by strong growth in MVB’s West Virginia and Northern
Virginia markets. In addition to the increase in loan volume during
2018, loan yield increased by 45 basis points. The Company continues to
leverage industry consolidation to capitalize on market disruptions to
attract talent with extensive experience and established relationships
in MVB’s markets.

MANAGEMENT OVERVIEW

“MVB’s solid performance for 2018, featured strong loan growth, higher
net income and continued success in the war for deposits, especially in
noninterest-bearing deposits,” said Larry F. Mazza, CEO and President,
MVB Financial Corp. “Our MVB 3.0 strategic focus on ‘blue ocean’
opportunities in the fintech and specialty deposits arena reached a
tipping point in 2018 and has generated great momentum for 2019.”

FOURTH QUARTER 2018 HIGHLIGHTS

• Net interest margin remains strong at 3.54% for the quarter ended
  December 31, 2018, an increase of 11 basis points versus the quarter
  ended September 30, 2018, and an increase of 25 basis points versus
  the quarter ended December 31, 2017.
• Loans of $1.3 billion as of December 31, 2018, increased $7.9 million,
  or 0.6%, from September 30, 2018, and increased $198.4 million, or
  17.9% from December 31, 2017.
• Very good asset quality as demonstrated by the 0.54% ratio of
  nonperforming loans to total loans as of December 31, 2018.
• Assets of $1.8 billion as of December 31, 2018, increased $27.9
  million, or 1.6%, from September 30, 2018, and increased $216.7
  million, or 14.1%, from December 31, 2017.
• Net interest income of $14.4 million increased $886 thousand, or 6.6%,
  from September 30, 2018, and increased $2.7 million, or 23.3%, from
  the fourth quarter ended December 31, 2017.
• $1 million of subordinated debt was converted to common stock, which
  provided an annual interest expense savings of $70 thousand, and
  resulted in issuing 62,500 new common shares.

LOANS

Loans totaled $1.3 billion as of December 31, 2018, an increase of $7.9
million, or 0.6%, from September 30, 2018, and an increase of $198.4
million, or 17.9% from December 31, 2017. Organic growth and the
addition of commercial lenders within the Company’s primary lending
areas contributed to the loan growth. The yield on loans was 4.94% for
the year ended December 31, 2018, an increase of 45 basis points from
the year ended December 31, 2017. The yield on loans was 5.18% for the
quarter ended December 31, 2018, an increase of 21 basis points, from
the quarter ended September 30, 2018, and an increase of 56 basis
points, from the quarter ended December 31, 2017. Of the 21-basis point
increase in loan yield for the quarter ended December 31, 2018, 4 basis
points were attributable to an increase in loan fees.

DEPOSITS

Deposits totaled $1.3 billion as of December 31, 2018, a decrease $70.0
million, or 5.1%, from September 30, 2018, and an increase of $149.6
million, or 12.9%, from December 31, 2017. Noninterest-bearing deposits
totaled $213.6 million as of December 31, 2018, or 16.3%, of the total
deposit base, a decrease of $27.3 million, or 11.3%, from September 30,
2018, and an increase of $87.6 million, or 69.6%, from December 31,
2017. The fourth quarter decline was due, in part, to the seasonality in
public funds, which decreased $43.4 million, and the cyclical nature of
fintech and title deposits, which decreased $8.7 million.
Noninterest-bearing deposits remain a core funding source for the
Company. Of the $213.6 million in noninterest-bearing balances in 2018,
$91.9 million are related to fintech and title business.

NET INTEREST INCOME

Net interest income for the fourth quarter of 2018 was $14.4 million, an
increase of $886 thousand, or 6.6%, from September 30, 2018, and an
increase of $2.7 million, or 23.3%, from the fourth quarter ended
December 31, 2017. Net interest income of $52.1 million for the full
year 2018 increased $7.8 million, or 17.5%, from the year ended
December 31, 2017. Net interest margin of 3.54% for the quarter ended
December 31, 2018, increased 11 basis points versus the quarter ended
September 30, 2018, and increased 25 basis points versus the quarter
ended December 31, 2017. Net interest margin of 3.41% for the year ended
December 31, 2018, increased 14 basis points from the year ended
December 31, 2017.

Interest expense increased 11.3% during the fourth quarter of 2018,
compared to the quarter ended September 30, 2018, due to an increase of
14 basis points in the cost of interest-bearing liabilities, and
increased 52.1% for the quarter ended December 31, 2018, compared to the
quarter ended December 31, 2017, due to an increase of 45 basis points
in the cost of interest-bearing liabilities. Interest expense increased
43.9% for the year ended December 31, 2018, compared to the same time
period in 2017, based on a 33-basis point increase in the cost of
interest-bearing liabilities. The increased cost of interest-bearing
liabilities is the result of an increase in borrowings due to loan
growth. Increased interest rates and an emphasis on loan yields more
than offset the increase in cost of interest-bearing liabilities,
driving the net interest margin expansion.

In November 2018, $1 million of subordinated debt was converted to
common stock, which caused the issuance of 62,500 new shares and will
provide an annual interest expense savings of $70 thousand. Including
this conversion, in 2018, $16 million of subordinated debt was converted
into common stock, which caused the issuance of 1,000,000 new shares and
will provide an annual interest expense savings of $1.1 million.

ASSET QUALITY

Asset quality remained very good in 2018. Nonperforming loans decreased
$2.6 million, to 0.54% of total loans as of December 31, 2018, compared
to 0.99% as of September 30, 2018, and 0.88% as of December 31, 2017. In
addition, net charge-offs for 2018 decreased $17 thousand compared to
2017, resulting in a net loan charge-offs to total loans ratio of 0.11%
as of December 31, 2018, and 0.13% as of December 31, 2017.

Provision for loan loss was $292 thousand for the quarter ended
December 31, 2018, a decrease of $777 thousand, or 72.7%, from the
quarter ended September 30, 2018, and a decrease of $744 thousand, or
71.8%, from the quarter ended December 31, 2017. Provision was $2.4
million for the full year ended December 31, 2018, a $267 thousand
increase from the same time period in 2017.

NONINTEREST INCOME

Noninterest income for the fourth quarter of 2018 was $8.3 million, a
decrease of $2.2 million, or 21.1%, from the quarter ended September 30,
2018, and a decrease of $1.9 million, or 18.3%, from the quarter ended
December 31, 2017. Noninterest income of $38.6 million for the full year
2018 decreased $2.1 million, or 5.1%, from the year ended December 31,
2017.

The decrease from the quarter ended September 30, 2018, was the result
of a $1.3 million decrease in mortgage fee income, a $616 thousand
decrease in the holding gain on equity securities, and a $296 thousand
decrease in income on bank owned life insurance. The decrease in
mortgage fee income was the result of a decrease in mortgage production
volume of $32.3 million, or 8.7%, from the quarter ended September 30,
2018, to the quarter ended December 31, 2018.

The decrease from the quarter ended December 31, 2017, was the result of
an $842 thousand decrease in mortgage fee income, a $303 thousand
decrease in other operating income, a $281 thousand decrease in the gain
on derivative, a $276 thousand decrease in the gain on sale of
securities and a $164 thousand decrease in interchange income. The
decrease in mortgage fee income was the result of a decrease in mortgage
production volume of $32.8 million, or 8.8%, from the quarter ended
December 31, 2017, to the quarter ended December 31, 2018.

The year over year decrease was primarily the result of a $4.8 million
decrease in mortgage fee income, due to mortgage production volume
decreasing by $93.8 million or 6.1% in 2018. This decrease was partially
offset by a gain on derivative of $2.4 million. Excluding the decrease
in mortgage fee income and increase in the gain on derivative,
noninterest income for 2018 increased $302 thousand and was primarily
due to increases in the holding gain on equity securities, and income on
bank-owned life insurance.

With the challenge of lower mortgage fee income and production volumes,
the Company’s mortgage subsidiary did remain profitable during each
quarter of 2018.

NONINTEREST EXPENSE

Noninterest expense for the fourth quarter of 2018 was $18.5 million, an
increase of $56 thousand, or 0.3%, from the quarter ended September 30,
2018, and an increase of $759 thousand, or 4.3%, from the quarter ended
December 31, 2017. Noninterest expense for the full year 2018 was $72.9
million, an increase of$2.4 million, or 3.4%, from the year ended
December 31, 2017. The increase from the quarter ended September 30,
2018 was the result of an increase in salaries and employee benefits of
$217 thousand, which was partially offset by a decrease in other
operating expense of $133 thousand. The increase from the quarter ended
December 31, 2017 was a result of an increase in salaries and employee
benefits of $638 thousand and an increase in travel, entertainment,
dues, and subscriptions of $217 thousand. An increase in salaries and
employee benefits of $2.1 million and an increase in equipment and
occupancy expense of $384 thousand attributed to the year over year
increase.

DIVIDEND

As previously announced, on November 21, 2018, the Company declared a
quarterly cash dividend of $0.03 per share to shareholders of record at
the close of business on December 1, 2018, payable December 15, 2018.
This was the fourth quarterly dividend for 2018 and was equal to the
September 2018 payout of $0.03 per share. The cash dividend of $0.11 for
the full year 2018, increased $0.01, or 10%, compared to the same time
period in 2017.

About MVB Financial Corp.

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

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

Nasdaq is a leading global provider of trading, clearing, exchange
technology, listing, information and public company services.

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

Forward-looking Statements

MVB Financial Corp. has made forward-looking statements, within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
in this Earnings Release. These forward-looking statements are based on
current expectations about the future and subject to risks and
uncertainties. Forward-looking statements include information concerning
possible or assumed future results of operations of the Company and its
subsidiaries. When words such as “believes,” “expects,” “anticipates,”
“may,” or similar expressions occur in this Earnings Release, the
Company is making forward-looking statements. Note that many factors
could affect the future financial results of the Company and its
subsidiaries, both individually and collectively, and could cause those
results to differ materially from those expressed in the forward-looking
statements contained in this Earnings Release. Those factors include,
but are not limited to credit risk, changes in market interest rates,
inability to achieve merger-related synergies, competition, economic
downturn or recession, and government regulation and
supervision. Additional factors that may cause our actual results to
differ materially from those described in our forward-looking statements
can be found in the Company’s Annual Report on Form 10-K for the year
ended December 31, 2017, as well as its other filings with the SEC,
which are available on the SEC website at www.sec.gov.
Except as required by law, the Company undertakes no obligation to
update or revise any forward-looking statements.

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

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

MVB Financial Corp.

Donald T. Robinson, Executive Vice President and CFO
(304) 598-3500
[email protected]

Contacts

Amy Baker
VP, Corporate Communications
[email protected]
844-682-2265

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