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Section 1: 8-K (FORM 8-K - FY2017 EARNINGS RELEASE - 02.22.18)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 27, 2018
MVB Financial Corp.
(Exact name of registrant as specified in its charter)
 
West Virginia
000-50567
20-0034461
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
301 Virginia Avenue, Fairmont, WV
26554-2777
(Address of principal executive offices)
(Zip Code)
(304) 363-4800
(Registrant's telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
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. ☐





Item 2.02.    Results of Operations and Financial Condition.

On February 27, 2018, MVB Financial Corp. (OTC Markets Group OTCQB: MVBF) issued a press release announcing its financial results for the year ended December 31, 2017. A copy of the release is furnished as Exhibit 99.1 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, is hereby furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, (the "Securities Act") or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d) Exhibits.

99.1Press release of MVB Financial Corp. dated February 27, 2018






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 
MVB Financial Corp.
 
By
/s/ Larry F. Mazza
 
 
Larry F. Mazza
 
 
President and Chief Executive Officer
Date: February 27, 2018






EXHIBIT INDEX


Exhibit Number
 
Description
 
Exhibit Location
 
 
 
 
 
 
Press Release of MVB Financial Corp. dated February 27, 2018
 
Filed herewith



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1 - EARNINGS RELEASE)

Exhibit


392363686_mvbfinanciallogo.jpg
 
MEDIA CONTACT
 N E W S R E L E A S E
Amy Baker
VP, Corporate Communications
 
 
844-682-2265

MVB Financial Corp. Reports Fourth Quarter 2017 Earnings

FAIRMONT, W.Va., February 27, 2018 – For the 12 months ended December 31, 2017, MVB Financial Corp. (the "Company") (NASDAQ: MVBF) reported net income of $7.6 million, or $0.69 and $0.68 basic and diluted earnings per share compared to $12.9 million, or $1.44 and $1.31 basic and diluted earnings per share respectively, for the same period in 2016.

"Three significant factors contributed to MVB's 2017 performance results compared to 2016. These were the $3.9 million after-tax gain on the asset sale of a wholly-owned subsidiary, MVB Insurance, in 2016; the $1.5 million decrease in net income within MVB Mortgage created by the continued market pressure within the mortgage industry; and a $646 thousand charge associated with the new tax law changes passed in late 2017; however, the tax law will generate a positive net income effect for us in 2018," said Larry F. Mazza, CEO and President, MVB Financial.

“To this end, we strategically added positions to reinforce our sales Team efforts and to take advantage of disruptions in our markets due to recent M&A activity, especially in Northern Virginia. We are successfully recruiting some of the best talent in our markets because people are attracted to our entrepreneurial spirit, team culture and community focus. When the pain to stay the same is equal to the pain to make a job change, people are willing to make a move. With our listing on The Nasdaq, buzz is building around Team MVB.”

Approximately 1.9 million shares of the Company’s common stock were issued from a capital raise completed in December 2016, and 434,783 shares of the Company’s common stock were issued from a rights offering completed in April 2017. These additional issued shares resulted in a $0.19 and $0.18 decrease in basic and diluted earnings per share, respectively for the 12 months ended December 31, 2017, compared to the same time period in 2016, while a $4.7 million decrease in 2017 net income available to common





shareholders versus 2016, resulted in the remaining $0.56 and $0.45 decrease in basic and dilutive earnings per share, respectively.

FOURTH QUARTER 2017 HIGHLIGHTS

MVB received approval in December 2017 to list its common stock for trading on The Nasdaq Capital Market®. The listing marked a major milestone in MVB’s growth journey.
Net interest income of $11.7 million increased $269 thousand, or 2.4% from September 30, 2017, and $858 thousand, or 7.9% from the fourth quarter ended December 31, 2016.
Total assets saw steady growth and reached $1.5 billion as of December 31, 2017, an 8.1% increase from December 31, 2016.
Loans of $1.1 billion as of December 31, 2017, increased $53.1 million, or 5.0% from December 31, 2016, and $11.5 million, or 1.0% from September 30, 2017.
Deposits of $1.2 billion as of December 31, 2017, increased $52.6 million, or 4.7% from December 31, 2016. Noninterest bearing deposit balances have grown to $126.0 million as of December 31, 2017, an increase of $10.3 million since December 31, 2016.

With the passage of tax reform in December 2017, MVB expects to see benefits and to share tax savings with Team MVB and the communities in its footprint. During fourth quarter 2017, MVB approved the hiring of 31 new Team members for 2018 and the opening of additional branches in Northern Virginia.

Demonstrating its commitment to community development, MVB made a $2 million initial investment in the creation of a Community Development Corporation ("CDC"), which started full operations in the fourth quarter, including establishing its initial Board of Directors.

“Led by its President Herman DeProspero, the CDC will play an integral role in our commitment to the economic welfare of our communities,” Mazza said.






FINANCIAL DETAILS

Loans totaled $1.106 billion as of December 31, 2017, an increase of $53.1 million, or 5.0% from December 31, 2016, and $11.5 million, or 1.0% from September 30, 2017. The total loan growth was less than originally anticipated for the year caused primarily by management taking direct action to diversify lending to reduce commercial real estate concentration levels coupled with a 63% increase in commercial loan payoffs.

In comparison to the December 31, 2016, deposit balance of $1.107 billion, deposits increased $52.6 million, or 4.7%. Noninterest bearing deposit balances rose to $126.0 million, or 10.9% of the total deposit base as of December 31, 2017, an increase of $10.3 million, or 8.9% since December 31, 2016, and $4.4 million since September 30, 2017.

Net interest income for the fourth quarter of 2017 was $11.7 million, an increase of $269 thousand, or 2.4% from September 30, 2017, and $858 thousand, or 7.9% from the fourth quarter ended December 31, 2016. Net interest margin for the fourth quarter of 2017 was 3.29%, a decrease of 8 basis points from September 30, 2017, and an increase of 6 basis points versus the quarter ended December 31, 2016. For the 12 months ended December 31, 2017, net interest margin increased 5 basis points to 3.27%. The full year increase in net interest margin was the result of a 12 basis point increase in earning assets due to higher yields.

Interest expense increased 5.8% during the fourth quarter of 2017 and 10.5% for the 12 months ended December 31, 2017, compared to the same time period in 2016, due to an 11 basis point increase in the cost of interest-bearing liabilities. Increased interest rates and an emphasis on loan yields helped to increase net interest income, despite increases in interest expense. Additionally, the flattened yield curve placed pressure on net interest margin earned from our mortgage operations as the cost of short-term borrowings to fund the mortgage business increased, while the yield from loans held for sale remained flat, consistent with the 30-year Treasury bond rates.

Provision for loan loss was $2.2 million for the full year ended December 31, 2017, a $1.5 million decrease from the same time period in 2016, despite a 5.0% increase in loans. The substantial decline of average historical loss rates and a $1.1 million decline in charge-offs contributed to the decrease in provision for 2017. Specific loan loss allocations increased by $645 thousand in 2017 compared to a $470 thousand decrease in 2016. Nonperforming loans increased $3.5 million, to 0.88% of total loans as of December 31,





2017. In addition, charge-offs for 2017 decreased $1.1 million compared to 2016, resulting in an annualized net loan charge-offs to total loans ratio of 0.13% as of December 31, 2017.

Noninterest income for the fourth quarter of 2017 was $10.2 million, flat from September 30, 2017, and an increase of $91 thousand from the fourth quarter ended December 31, 2016. For the full year of 2017, noninterest income was $40.7 million, a decrease of $2.5 million from the same period in 2016. The year over year decrease was primarily the result of a $4.2 million decrease in gain on derivatives, primarily the result of a 39.0% decrease in the locked mortgage pipeline for the full year 2017 compared to a 31.6% increase in the locked mortgage pipeline for the full year 2016. In addition, mortgage production volume decreased $102.2 million or 6.2% for the full year 2017 versus the same time period in 2016. Excluding the decrease in gain on derivatives, noninterest income for the full year of 2017 increased $1.7 million, mostly due to increases in mortgage fee income, commercial swap fee income and other operating income. Gain on sale of securities and gain on sale of portfolio loans decreased $351 thousand and $504 thousand respectively, for the full year of 2017 in comparison to 2016.

Noninterest expense for the fourth quarter of 2017 was $17.7 million, a decrease of $252 thousand, or 1.4% from September 30, 2017, and an increase of $900 thousand, or 5.4% from the fourth quarter ended December 31, 2016. For the full year of 2017, noninterest expense was $70.5 million, an increase of $1.3 million, or 1.9% from the same period in 2016.

A $951 thousand increase in occupancy and equipment costs for the full year of 2017 relates to the two new, high technology MVB branches opened during the third quarter of 2017 and a continued focus and investment in client-friendly technology. To control expenses, two branches in Martinsburg, W.Va., were consolidated in December 2017 due to their proximity.

The Company continues to tightly manage expenses and maximize resources to expand revenues and invest in the future. Data processing and communications for the full year of 2017 increased only $152 thousand compared to the same period in 2016, despite $520 thousand in additional expense related to a core system conversion in the second quarter of 2017. Additionally, salary and employee benefits decreased $1.1 million, or 2.5% for the full year of 2017 in comparison to 2016, primarily due to a decrease in mortgage production volume of 6.2% over the same period.

As previously announced, on November 22, 2017, the Company declared a quarterly cash dividend of $0.025 per share to shareholders of record at the close of business on December 2, 2017, payable December 15,





2017. This was the fourth quarterly dividend for 2017 and was equal to the March, June and September 2017 payouts of $0.025 per share. The cash dividend of $0.10 for the full year 2017, increased $0.025, or 25% compared to the same time period in 2016.

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 subsidiary, MVB Mortgage, 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, 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.


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]






MVB Financial Corp.
Financial Highlights

Condensed Consolidated Statements of Income
(Unaudited) (Dollars in thousands, except per share data)

 
 
Quarterly
 
Year-to-Date
 
 
2017
 
2017
 
2017
 
2017
 
2016
 
2017
 
2016
 
 
Fourth Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Fourth
Quarter
 
 
Interest income
 
$
15,086

 
$
14,630

 
$
13,814

 
$
13,068

 
$
13,638

 
$
56,598

 
$
54,123

Interest expense
 
3,403

 
3,216

 
2,920

 
2,762

 
2,813

 
12,301

 
11,132

     Net interest income
 
11,683

 
11,414

 
10,894

 
10,306

 
10,825

 
44,297

 
42,991

Provision for loan losses
 
1,036

 
96

 
523

 
518

 
657

 
2,173

 
3,632

Noninterest income
 
10,157

 
10,158

 
11,567

 
8,824

 
10,066

 
40,706

 
43,205

Noninterest expense
 
17,714

 
17,966

 
18,503

 
16,317

 
16,814

 
70,500

 
69,209

     Income from continuing operations, before income taxes
 
3,090

 
3,510

 
3,435

 
2,295

 
3,420

 
12,330

 
13,355

Income tax expense - continuing operations
 
1,667

 
1,192

 
1,175

 
721

 
1,113

 
4,755

 
4,378

     Net income from continuing operations
 
1,423

 
2,318

 
2,260

 
1,574

 
2,307

 
7,575

 
8,977

Income from discontinued operations, before income taxes
 

 

 

 

 

 

 
6,346

Income tax benefit - discontinued operations
 

 

 

 

 

 

 
2,411

     Net income from discontinued operations
 

 

 

 

 

 

 
3,935

     Net income
 
$
1,423

 
$
2,318

 
$
2,260

 
$
1,574

 
$
2,307

 
$
7,575

 
$
12,912

Preferred dividends
 
124

 
123

 
122

 
129

 
314

 
498

 
1,128

     Net income available to common shareholders
 
$
1,299

 
$
2,195

 
$
2,138

 
$
1,445

 
$
1,993

 
$
7,077

 
$
11,784

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations - basic
 
$
0.12

 
$
0.21

 
$
0.21

 
$
0.14

 
$
0.23

 
$
0.69

 
$
0.96

Earnings per share from discontinued operations - basic
 
$

 
$

 
$

 
$

 
$

 
$

 
$
0.48

Earnings per common shareholder - basic
 
$
0.12

 
$
0.21

 
$
0.21

 
$
0.14

 
$
0.23

 
$
0.69

 
$
1.44

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share from continuing operations - diluted
 
$
0.12

 
$
0.21

 
$
0.20

 
$
0.14

 
$
0.22

 
$
0.68

 
$
0.92

Earnings per share from discontinued operations - diluted
 
$

 
$

 
$

 
$

 
$

 
$

 
$
0.39

Earnings per common shareholder - diluted
 
$
0.12

 
$
0.21

 
$
0.20

 
$
0.14

 
$
0.22

 
$
0.68

 
$
1.31






Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in thousands)

 
 
December 31, 2017
 
September 30, 2017
 
December 31, 2016
Cash and cash equivalents
 
$
20,305

 
$
20,272

 
$
17,340

Certificates of deposit with other banks
 
14,778

 
14,778

 
14,527

Investment securities
 
231,507

 
187,348

 
162,368

Loans held for sale
 
66,794

 
69,057

 
90,174

Loans
 
1,105,941

 
1,094,467

 
1,052,865

Allowance for loan losses
 
(9,878
)
 
(9,396
)
 
(9,101
)
Net loans
 
1,096,063

 
1,085,071

 
1,043,764

Premises and equipment
 
26,686

 
27,189

 
25,081

Goodwill
 
18,480

 
18,480

 
18,480

Other assets
 
59,689

 
49,395

 
47,070

     Total assets
 
$
1,534,302

 
$
1,471,590

 
$
1,418,804

 
 
 
 
 
 
 
Deposits
 
$
1,159,580

 
$
1,165,199

 
$
1,107,017

Borrowed funds
 
152,169

 
84,403

 
90,921

Other liabilities
 
72,361

 
73,011

 
75,241

Shareholders' equity
 
150,192

 
148,977

 
145,625

     Total liabilities and shareholders' equity
 
$
1,534,302

 
$
1,471,590

 
$
1,418,804




Reportable Segments
(Unaudited)

Twelve Months Ended December 31, 2017
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
52,423

 
$
4,698

 
$
4

 
$
(527
)
 
$
56,598

Mortgage fee income
 
736

 
37,262

 

 
(849
)
 
37,149

Insurance and investment services income
 
563

 

 

 

 
563

Other income
 
5,303

 
(2,372
)
 
5,466

 
(5,403
)
 
2,994

     Total operating income
 
59,025

 
39,588

 
5,470

 
(6,779
)
 
97,304

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
9,118

 
2,317

 
2,241

 
(1,375
)
 
12,301

Salaries and employee benefits
 
12,266

 
26,196

 
5,646

 

 
44,108

Provision for loan losses
 
1,967

 
206

 

 

 
2,173

Other expense
 
19,523

 
8,188

 
4,085

 
(5,404
)
 
26,392

     Total operating expenses
 
42,874

 
36,907

 
11,972

 
(6,779
)
 
84,974

Income (loss) from continuing operations, before income taxes
 
16,151

 
2,681

 
(6,502
)
 

 
12,330

Income tax expense (benefit) - continuing operations
 
5,820

 
1,082

 
(2,147
)
 

 
4,755

Net income (loss) from continuing operations
 
10,331

 
1,599

 
(4,355
)
 

 
7,575

Net income (loss)
 
$
10,331

 
$
1,599

 
$
(4,355
)
 
$

 
$
7,575

Preferred stock dividends
 

 

 
498

 

 
498

Net income (loss) available to common shareholders
 
$
10,331

 
$
1,599

 
$
(4,853
)
 
$

 
$
7,077









Reportable Segments
(Unaudited)

Twelve Months Ended December 31, 2016
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Insurance
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
50,413

 
$
4,285

 
$
3

 
$

 
$
(578
)
 
$
54,123

Mortgage fee income
 
(252
)
 
36,960

 

 

 
(1,035
)
 
35,673

Insurance and investment services income
 
420

 

 

 

 

 
420

Other income
 
5,485

 
1,674

 
5,247

 

 
(5,294
)
 
7,112

     Total operating income
 
56,066

 
42,919

 
5,250

 

 
(6,907
)
 
97,328

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
8,437

 
2,082

 
2,226

 

 
(1,613
)
 
11,132

Salaries and employee benefits
 
11,592

 
27,696

 
5,937

 

 

 
45,225

Provision for loan losses
 
3,632

 

 

 

 

 
3,632

Other expense
 
18,009

 
8,125

 
3,144

 

 
(5,294
)
 
23,984

     Total operating expenses
 
41,670

 
37,903

 
11,307

 

 
(6,907
)
 
83,973

Income (loss) from continuing operations, before income taxes
 
14,396

 
5,016

 
(6,057
)
 

 

 
13,355

Income tax expense (benefit) - continuing operations
 
4,496

 
1,954

 
(2,072
)
 

 

 
4,378

Net income (loss) from continuing operations
 
9,900

 
3,062

 
(3,985
)
 

 

 
8,977

Income (loss) from discontinued operations
 

 

 
6,926

 
(580
)
 

 
6,346

Income tax expense (benefit) - discontinued operations
 
$

 
$

 
$
2,629

 
$
(218
)
 
$

 
$
2,411

Net income (loss) from discontinued operations
 
$

 
$

 
$
4,297

 
$
(362
)
 
$

 
$
3,935

Net income (loss)
 
$
9,900

 
$
3,062

 
$
312

 
$
(362
)
 
$

 
$
12,912

Preferred stock dividends
 

 

 
1,128

 

 

 
1,128

Net income (loss) available to common shareholders
 
$
9,900

 
$
3,062

 
$
(816
)
 
$
(362
)
 
$

 
$
11,784







Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)

 
 
Three Months Ended
December 31, 2017
 
Three Months Ended
September 30, 2017
 
Three Months Ended
December 31, 2016
 
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in banks
 
$
4,636

 
$
15

 
1.28
%
 
$
4,484

 
$
15

 
1.33
%
 
$
11,843

 
$
21

 
0.71
%
CDs with other banks
 
14,778

 
75

 
2.01

 
14,711

 
74

 
2.00

 
9,614

 
50

 
2.08

Investment securities:
 
 
 
 
 
 
 
 

 
 

 
 

 
 
 
 
 


     Taxable
 
147,459

 
774

 
2.08

 
126,880

 
693

 
2.17

 
84,082

 
382

 
1.82

     Tax-exempt
 
68,759

 
572

 
3.30

 
56,264

 
443

 
3.12

 
71,333

 
532

 
2.98

Loans and loans held for sale: 1
 
 
 
 
 
 
 
 

 
 

 
 

 
 
 
 
 


     Commercial
 
770,664

 
9,042

 
4.65

 
762,650

 
8,742

 
4.55

 
734,548

 
8,225

 
4.48

     Tax exempt
 
14,679

 
128

 
3.46

 
14,991

 
130

 
3.44

 
15,836

 
137

 
3.46

     Real estate
 
374,047

 
4,300

 
4.56

 
349,459

 
4,346

 
4.93

 
400,411

 
4,106

 
4.10

     Consumer
 
13,006

 
180

 
5.49

 
13,462

 
187

 
5.51

 
14,740

 
185

 
5.02

Total loans
 
1,172,396

 
13,650

 
4.62

 
1,140,562

 
13,405

 
4.66

 
1,165,535

 
12,653

 
4.34

Total earning assets
 
1,408,028

 
15,086

 
4.25

 
1,342,901

 
14,630

 
4.32

 
1,342,407

 
13,638

 
4.06

Less: Allowance for loan losses
 
(9,579
)
 
 
 
 
 
(9,760
)
 
 

 
 

 
(9,479
)
 
 
 
 
Cash and due from banks
 
16,969

 
 
 
 
 
17,501

 
 

 
 
 
15,428

 
 
 
 
Other assets
 
96,103

 
 
 
 
 
123,898

 
 

 
 
 
86,949

 
 
 
 
     Total assets
 
$
1,511,521

 
 
 
 
 
$
1,474,540

 
 
 
 
 
$
1,435,305

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 

 
 

 
 

 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 

 
 

 
 

 
 
 
 
 
 
     NOW
 
$
467,095

 
$
807

 
0.69

 
$
436,493

 
$
675

 
0.61

 
$
443,524

 
$
548

 
0.49

     Money market checking
 
238,262

 
432

 
0.72

 
246,160

 
458

 
0.74

 
214,746

 
449

 
0.84

     Savings
 
44,685

 
19

 
0.17

 
46,807

 
20

 
0.17

 
43,870

 
19

 
0.17

     IRAs
 
17,200

 
59

 
1.36

 
16,649

 
56

 
1.33

 
16,516

 
52

 
1.26

     CDs
 
278,446

 
1,025

 
1.46

 
249,698

 
874

 
1.39

 
302,037

 
941

 
1.25

Repurchase agreements and federal funds sold
 
24,727

 
19

 
0.30

 
25,093

 
20

 
0.32

 
26,758

 
17

 
0.25

FHLB and other borrowings
 
122,388

 
474

 
1.54

 
149,313

 
548

 
1.46

 
98,187

 
225

 
0.92

Subordinated debt
 
33,524

 
568

 
6.72

 
33,524

 
565

 
6.69

 
33,524

 
562

 
6.71

     Total interest-bearing liabilities
 
1,226,327

 
3,403

 
1.10

 
1,203,737

 
3,216

 
1.06

 
1,179,162

 
2,813

 
0.95

Noninterest bearing demand deposits
 
127,417

 
 
 
 
 
115,343

 
 

 
 

 
109,769

 
 
 
 
Other liabilities
 
7,419

 
 
 
 
 
7,703

 
 

 
 

 
14,836

 
 
 
 
     Total liabilities
 
1,361,163

 
 
 
 
 
1,326,783

 
 

 
 

 
1,303,767

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 
 
 
 
 
 
 

 
 

 
 

 
 
 
 
 
 
Preferred stock
 
7,834

 
 
 
 
 
7,834

 
 

 
 

 
16,334

 
 
 
 
Common stock
 
10,496

 
 
 
 
 
10,495

 
 

 
 

 
8,675

 
 
 
 
Paid-in capital
 
99,123

 
 
 
 
 
98,289

 
 

 
 

 
80,101

 
 
 
 
Treasury stock
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 

 
 

 
(1,084
)
 
 
 
 
Retained earnings
 
36,982

 
 
 
 
 
35,152

 
 

 
 

 
30,551

 
 
 
 
Accumulated other comprehensive income
 
(2,993
)
 
 
 
 
 
(2,929
)
 
 

 
 

 
(3,039
)
 
 
 
 
     Total stockholders’ equity
 
150,358

 
 
 
 
 
147,757

 
 

 
 

 
131,538

 
 
 
 
     Total liabilities and stockholders’ equity
 
$
1,511,521

 
 
 
 
 
$
1,474,540

 
 

 
 

 
$
1,435,305

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
 
 
3.15

 
 

 
 

 
3.26

 
 
 
 
 
3.11

Net interest income-margin
 
 
 
$
11,683

 
3.29
%
 


 
$
11,414

 
3.37
%
 
 
 
$
10,825

 
3.23
%
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.





Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)

 
 
Twelve Months Ended
December 31, 2017
 
Twelve Months Ended
December 31, 2016
 
Twelve Months Ended
December 31, 2015
(Dollars in thousands)
 
Average Balance
 
Interest Income/Expense
 
Yield/Cost
 
Average Balance
 
Interest Income/Expense
 
Yield/Cost
 
Average Balance
 
Interest Income/Expense
 
Yield/Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in banks
 
$
3,790

 
$
52

 
1.37
%
 
$
16,347

 
$
94

 
0.58
%
 
$
16,040

 
$
43

 
0.27
%
CDs with other banks
 
14,619

 
288

 
1.97

 
11,694

 
228

 
1.95

 
12,267

 
231

 
1.88

Investment securities:
 
 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

     Taxable
 
125,797

 
2,658

 
2.11

 
76,525

 
1,366

 
1.79

 
66,110

 
958

 
1.45

     Tax-exempt
 
58,786

 
1,863

 
3.17

 
64,108

 
1,853

 
2.89

 
53,376

 
1,537

 
2.88

Loans and loans held for sale: 1
 
 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

     Commercial
 
751,444

 
33,896

 
4.51

 
734,829

 
32,620

 
4.44

 
616,057

 
26,264

 
4.26

     Tax exempt
 
15,064

 
520

 
3.45

 
16,326

 
564

 
3.45

 
19,678

 
689

 
3.50

     Real estate
 
373,360

 
16,612

 
4.45

 
398,766

 
16,594

 
4.16

 
334,538

 
13,586

 
4.06

     Consumer
 
13,660

 
709

 
5.19

 
16,762

 
804

 
4.80

 
17,383

 
792

 
4.56

Total loans
 
1,153,528

 
51,737

 
4.49

 
1,166,683

 
50,582

 
4.34

 
987,656

 
41,331

 
4.18

Total earning assets
 
1,356,520

 
56,598

 
4.17

 
1,335,357

 
54,123

 
4.05

 
1,135,449

 
44,100

 
3.88

Less: Allowance for loan losses
 
(9,626
)
 
 

 
 

 
(8,939
)
 
 

 
 

 
(7,016
)
 
 

 
 

Cash and due from banks
 
16,287

 
 

 
 
 
13,765

 
 

 
 
 
14,465

 
 

 
 

Other assets
 
90,585

 
 

 
 
 
87,815

 
 

 
 
 
83,520

 
 

 
 

     Total assets
 
$
1,453,766

 
 
 
 
 
$
1,427,998

 
 
 
 
 
$
1,226,418

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Deposits:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

     NOW
 
$
438,123

 
$
2,608

 
0.60

 
$
454,320

 
$
2,413

 
0.53
%
 
$
446,704

 
$
2,713

 
0.61
%
     Money market checking
 
239,632

 
1,781

 
0.74

 
163,630

 
1,282

 
0.78

 
65,306

 
396

 
0.61

     Savings
 
47,034

 
78

 
0.17

 
43,870

 
88

 
0.20

 
39,766

 
111

 
0.28

     IRAs
 
16,678

 
217

 
1.30

 
16,319

 
208

 
1.27

 
12,038

 
146

 
1.21

     CDs
 
262,417

 
3,610

 
1.38

 
314,542

 
3,757

 
1.19

 
278,499

 
2,880

 
1.03

Repurchase agreements and federal funds sold
 
23,559

 
75

 
0.32

 
27,066

 
72

 
0.27

 
26,884

 
83

 
0.31

FHLB and other borrowings
 
122,144

 
1,690

 
1.38

 
139,736

 
1,086

 
0.78

 
124,475

 
692

 
0.56

Subordinated debt
 
33,524

 
2,242

 
6.69

 
33,524

 
2,226

 
6.64

 
33,524

 
2,204

 
6.57

     Total interest-bearing liabilities
 
1,183,111

 
12,301

 
1.04

 
1,193,007

 
11,132

 
0.93

 
1,027,196

 
9,225

 
0.90

Noninterest bearing demand deposits
 
117,696

 
 

 
 

 
99,826

 
 

 
 

 
79,611

 
 

 
 

Other liabilities
 
8,006

 
 

 
 

 
12,220

 
 

 
 

 
7,486

 
 

 
 

     Total liabilities
 
1,308,813

 
 

 
 

 
1,305,053

 
 

 
 

 
1,114,293

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Preferred stock
 
7,927

 
 

 
 

 
16,334

 
 

 
 

 
16,334

 
 

 
 

Common stock
 
10,355

 
 

 
 

 
8,263

 
 

 
 

 
8,065

 
 

 
 

Paid-in capital
 
96,987

 
 

 
 

 
75,799

 
 

 
 

 
74,331

 
 

 
 

Treasury stock
 
(1,084
)
 
 

 
 

 
(1,084
)
 
 

 
 

 
(1,084
)
 
 

 
 

Retained earnings
 
34,155

 
 

 
 

 
25,943

 
 

 
 

 
16,941

 
 

 
 

Accumulated other comprehensive income
 
(3,387
)
 
 

 
 

 
(2,310
)
 
 

 
 

 
(2,462
)
 
 

 
 

     Total stockholders’ equity
 
144,953

 
 

 
 

 
122,945

 
 

 
 

 
112,125

 
 

 
 

     Total liabilities and stockholders’ equity
 
$
1,453,766

 
 

 
 

 
$
1,427,998

 
 

 
 

 
$
1,226,418

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 

 
 

 
3.13

 
 

 
 

 
3.12

 
 

 
 

 
2.98

Net interest income-margin
 
 

 
$
44,297

 
3.27
%
 
 

 
$
42,991

 
3.22
%
 
 

 
$
34,875

 
3.07
%
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.





Selected Financial Data
(Unaudited) (Dollars in thousands, except per share data)


 
 
Quarterly
 
Year-to-Date
 
 
2017
 
2017
 
2017
 
2017
 
2016
 
2017
 
2016
 
 
Fourth Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Fourth
Quarter
 
 
Earnings and Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Net income from continuing operations
 
$
1,423

 
$
2,318

 
$
2,260

 
$
1,574

 
$
2,307

 
$
7,575

 
$
8,977

     Net income from discontinued operations
 

 

 

 

 

 

 
3,935

     Net income
 
1,423

 
2,318

 
2,260

 
1,574

 
2,307

 
7,575

 
12,912

     Net income available to common shareholders
 
1,299

 
2,195

 
2,138

 
1,445

 
1,993

 
7,077

 
11,784

     Earnings per share from continuing operations - basic
 
0.12

 
0.21

 
0.21

 
0.14

 
0.23

 
0.69

 
0.96

     Earnings per share from discontinued operations - basic