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Section 1: 8-K (8-K - Q2 2018 EARNINGS RELEASE)

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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):
July 30, 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 July 30, 2018, MVB Financial Corp. (NASDAQ: MVBF) issued a press release announcing its financial results for the quarter ended June 30, 2018. 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.

 
Press release of MVB Financial Corp. dated July 30, 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:  July 30, 2018






EXHIBIT INDEX


Exhibit Number
 
Description    
 
Exhibit Location
 
 
 
 
 
 
Press release of MVB Financial Corp. dated July 30, 2018
 
Filed herewith



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

Exhibit
Exhibit 99.1

394416746_mvbfinanciallogoa26.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 Second Quarter 2018 Earnings
Highlighted by 25.3% Increase in Net Income

FAIRMONT, W.Va., July 30, 2018 – MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) reported net income of $2.8 million, or $0.25 basic and diluted earnings per share for the three months ended June 30, 2018, an increase of 25.3% compared to $2.3 million, or $0.21 basic and $0.20 diluted earnings per share, for the same period in 2017.

For the three months ended June 30, 2018, loans increased $57.9 million, or 5.0%, to $1.2 billion, from March 31, 2018, which represents an annualized increase of 20.0%. The increase in loans has been driven by strong growth in MVB's West Virginia markets, expansion in Northern Virginia, as well as the strategic addition of commercial lenders throughout its markets. In addition to the increase in loan volume during the quarter, loan yields increased 20 basis points. The Company continues to take advantage of industry consolidation while capitalizing on disruptions in the market to expand both the lending and deposit teams. These teams have extensive experience and relationships in MVB’s selected markets.

MANAGEMENT OVERVIEW
“When you look at the five phases of the banking industry’s most important measures, MVB is firing on all cylinders,” said Larry F. Mazza, CEO and President, MVB Financial. “A wise banker once told me, ‘The trend is your friend.’ The five trends from June 2017 to June 2018 are loan growth of 10%; NIB deposit growth of 35%; service charge income growth is 32%; capital is up 13%; and asset quality is excellent. When you look at all five phases, we expect the positive trend for MVB to continue throughout 2018.”

Mazza continued, “For the first half of the year, we saw an increase in borrowing to fund loan growth. In the second half of year, we are targeting deposit growth driven by our fintech and specialty deposit strategies.
“In the fintech world we see four ways to compete. One is client facing; we provide convenience through technology for our clients. The second is the efficiency vertical where we improve our clients’ banking



Exhibit 99.1

experience in areas such as loan processing or check processing, all in a more efficient way developed by financial technology. The third is to invest in fintech. An example is our investment in BillGO, a payment processor based in Fort Collins, Colo. Because of our BillGO partnership, MVB was recently a runner up in Bank Director’s 2018 Best of FinXTech Awards. Partnerships such as this also provide an important source of new business referrals. Fourth and probably most important to us is being ‘The Bank of Fintech.’ We want to be a ‘one-stop payment shop’ building out our technical expertise in the payment stack.”

SECOND QUARTER 2018 HIGHLIGHTS
Loans of $1.2 billion as of June 30, 2018, increased $57.9 million, or 5.0%, from March 31, 2018, and increased $112.7 million, or 10.2%, from June 30, 2017.
Assets of $1.7 billion as of June 30, 2018, increased $103.9 million, or 6.6%, from March 31, 2018, and increased $178.4 million, or 11.8%, from June 30, 2017.
Deposits of $1.2 billion as of June 30, 2018, increased $42.0 million, or 3.6%, from March 31, 2018, and increased $96.3 million, or 8.8% from June 30, 2017. Noninterest-bearing deposits of $164.0 million increased $21.2 million, or 14.8%, from March 31, 2018, and increased $42.6 million, or 35.1%, from June 30, 2017.
MVB reported improvements in return on average assets, return on average equity, net interest margin, and efficiency ratio.
Net interest income of $12.7 million for the quarter ended June 30, 2018, increased $1.2 million, or 10.4%, from the quarter ended March 31, 2018, and increased $1.8 million, or 16.2% from the quarter ended June 30, 2017.
Noninterest income of $10.8 million for the quarter ended June 30, 2018, increased $1.8 million, or 19.4%, from the quarter ended March 31, 2018, and decreased $772 thousand, or 6.7%, from the quarter ended June 30, 2017.
$12.7 million of subordinated debt converted to common stock, which caused the issuance of 795,500 new shares and will provide an annual interest expense savings of $905 thousand.

LOANS
Loans totaled $1.2 billion as of June 30, 2018, an increase of $57.9 million, or 5.0%, from March 31, 2018, and an increase of $112.7 million, or 10.2%, from June 30, 2017. The growth in loans is primarily attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 4.88% as of the quarter ended June 30, 2018, an increase of 20 basis points from the quarter ended March 31, 2018, and an increase of 38 basis points from the quarter ended June 30, 2017. The increase in yields is driven both by Fed rate increases and a commercial focus on increasing loan yields.



Exhibit 99.1

In connection with the Company’s core conversion in 2017, the Company implemented a CRM system that has provided better insight on loan pricing.

DEPOSITS
Deposits totaled $1.2 billion as of June 30, 2018, and increased $42.0 million, or 3.6%, from March 31, 2018, while increasing $96.3 million, or 8.8%, from June 30, 2017. Noninterest-bearing deposits totaled $164.0 million as of June 30, 2018, or 13.7%, of the total deposit base, an increase of $21.2 million, or 14.8%, from March 31, 2018, and an increase of $42.6 million, or 35.1%, from June 30, 2017. Noninterest-bearing deposits remain a core funding source for the Company. Management will continue to concentrate on balancing deposit growth with adequate net interest margin to meet strategic goals.

NET INTEREST INCOME
Net interest income for the quarter ended June 30, 2018, was $12.7 million, an increase of $1.2 million, or 10.4%, from the quarter ended March 31, 2018, and an increase of $1.8 million, or 16.2% from the quarter ended June 30, 2017. Net interest margin for the quarter ended June 30, 2018 was 3.38%, an increase of 9 basis points versus the quarter ended March 31, 2018, and an increase of 7 basis points versus the quarter ended June 30, 2017.

Interest expense increased 19.5% during the quarter ended June 30, 2018, compared to the quarter ended March 31, 2018, due to an increase of 14 basis points in the cost of interest-bearing liabilities, and increased 46.9% compared to the quarter ended June 30, 2017, due to an increase of 31 basis points in the cost of interest-bearing liabilities. The increase in the cost of interest-bearing liabilities compared to the quarter ended June 30, 2017, was the result of an $85.3 million increase in the average balances of FHLB and other borrowings, as well as a $1.2 million increase in the related interest expense.

In June 2018, subordinated debt in the amount of $12.7 million was converted into 795,500 shares of common stock. As a result of the conversions, the Company will save $905 thousand annually in interest expense.

ASSET QUALITY
Provision for loan loss was $605 thousand for the quarter ended June 30, 2018, an $82 thousand increase from the quarter ended June 30, 2017, due to a 10.2% increase in loans. The increase in loan loss provision is attributable to increased loan volume for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, as well as lower historical loss rates for the period used to determine the allowance.



Exhibit 99.1

Nonperforming loans increased $4.3 million, to 0.78%, of total loans as of June 30, 2018, compared to 0.79% of total loans as of March 31, 2018, and compared to 0.46% of total loans as of June 30, 2017. In addition, net charge-offs for the quarter ended June 30, 2018, decreased $126 thousand compared to the quarter ended June 30, 2017, resulting in an annualized net loan charge-offs to total loans ratio of 0.01% as of June 30, 2018.

NONINTEREST INCOME
Noninterest income totaled $10.8 million for the quarter ended June 30, 2018, an increase of $1.8 million, or 19.4%, from the quarter ended March 31, 2018, and a decrease of $772 thousand, or 6.7%, from the quarter ended June 30, 2017.

The $1.8 million increase in noninterest income from the quarter ended March 31, 2018, was due to an increase of $2.5 million in mortgage fee income. The increase was partially offset by a decrease of $413 thousand in commercial swap fee income, a decrease of $326 thousand in gain on sale of securities and a decrease of $212 thousand in gain on sale of portfolio loans. The increase in mortgage fee income was primarily the result of a $98.2 million increase in sold loan volume.

The $772 thousand decrease in noninterest income from the quarter ended June 30, 2017, was primarily due to a $384 thousand decrease in gain on derivatives, along with decreases of $270 thousand in commercial swap fees, $203 thousand in gain on sale of portfolio loans and $167 thousand in gain on sale of securities, all of which were partially offset by an increase of $111 thousand in mortgage fee income and an increase of $116 thousand in service charges on deposit accounts. The decrease in gain on derivatives was primarily the result of a decrease of $1.4 million in the valuation of open trades used to hedge the derivative asset.

NONINTEREST EXPENSE
Noninterest expense totaled $19.2 million for the quarter ended June 30, 2018, an increase of $2.5 million, or 15.0%, from the quarter ended March 31, 2018, and an increase of $746 thousand, or 4.0%, from the quarter ended June 30, 2017.

The $2.5 million increase in noninterest expense from the quarter ended March 31, 2018, was primarily due to an increase of $2.0 million in salaries and employee benefits expense, a $127 thousand increase in data processing and communications and a $100 thousand increase in mortgage processing expense. The increase in salaries and employee benefits expense was largely driven by the addition of senior management,



Exhibit 99.1

lenders, a treasury team and the opening of two new branches in 2017. The $746 thousand increase in noninterest expense from the quarter ended June 30, 2017, was primarily due to an increase of $696 thousand in salaries and employee benefits expense.

DIVIDEND
As previously announced on May 16, 2018, the Company declared a quarterly cash dividend of $0.025 per share to shareholders of record at the close of business on June 1, 2018, payable June 15, 2018. This was the second quarterly dividend for 2018 and was equal to the March 2018 payout of $0.025 per share.

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.




Exhibit 99.1

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]



Exhibit 99.1

MVB Financial Corp.
Financial Highlights

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

 
 
Quarterly
 
Year-to-Date
 
 
2018
 
2018
 
2017
 
2017
 
2017
 
Six Months Ended June 30, 2018
 
Six Months Ended June 30, 2017
 
 
Second
Quarter
 
First
Quarter
 
Fourth
Quarter
 
Third
Quarter
 
Second
Quarter
 
 
Interest income
 
$
16,944

 
$
15,054

 
$
15,086

 
$
14,630

 
$
13,814

 
$
31,998

 
$
26,882

Interest expense
 
4,289

 
3,589

 
3,403

 
3,216

 
2,920

 
7,878

 
5,682

     Net interest income
 
12,655

 
11,465

 
11,683

 
11,414

 
10,894

 
24,120

 
21,200

Provision for loan losses
 
605

 
474

 
1,036

 
96

 
523

 
1,079

 
1,041

Noninterest income
 
10,795

 
9,039

 
10,157

 
10,158

 
11,567

 
19,834

 
20,391

Noninterest expense
 
19,249

 
16,739

 
17,714

 
17,966

 
18,503

 
35,988

 
34,820

     Income before income taxes
 
3,596

 
3,291

 
3,090

 
3,510

 
3,435

 
6,887

 
5,730

Income tax expense
 
765

 
697

 
1,667

 
1,192

 
1,175

 
1,462

 
1,896

     Net income
 
$
2,831

 
$
2,594

 
$
1,423

 
$
2,318

 
$
2,260

 
$
5,425

 
$
3,834

Preferred dividends
 
122

 
121

 
124

 
123

 
122

 
243

 
251

     Net income available to common shareholders
 
$
2,709

 
$
2,473

 
$
1,299

 
$
2,195

 
$
2,138

 
$
5,182

 
$
3,583

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.25

 
$
0.24

 
$
0.12

 
$
0.21

 
$
0.21

 
$
0.49

 
$
0.35

Earnings per share - diluted
 
$
0.25

 
$
0.23

 
$
0.12

 
$
0.21

 
$
0.20

 
$
0.47

 
$
0.35

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

 
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
June 30, 2017
Cash and cash equivalents
 
$
23,950

 
$
23,630

 
$
20,305

 
$
17,805

Certificates of deposit with other banks
 
14,778

 
14,778

 
14,778

 
14,527

Investment securities
 
229,054

 
233,483

 
231,507

 
175,110

Loans held for sale
 
98,799

 
51,280

 
66,794

 
107,825

Loans
 
1,215,072

 
1,157,173

 
1,105,941

 
1,102,378

Allowance for loan losses
 
(10,651
)
 
(10,067
)
 
(9,878
)
 
(9,748
)
Net loans
 
1,204,421

 
1,147,106

 
1,096,063

 
1,092,630

Premises and equipment
 
26,418

 
26,477

 
26,686

 
27,462

Goodwill
 
18,480

 
18,480

 
18,480

 
18,480

Other assets
 
69,519

 
66,284

 
59,689

 
53,214

     Total assets
 
$
1,685,419

 
$
1,581,518

 
$
1,534,302

 
$
1,507,053

 
 
 
 
 
 
 
 
 
Deposits
 
$
1,195,868

 
$
1,153,907

 
$
1,159,580

 
$
1,099,608

Borrowed funds
 
266,830

 
207,370

 
152,169

 
189,384

Other liabilities
 
56,926

 
69,820

 
72,361

 
71,227

Shareholders' equity
 
165,795

 
150,421

 
150,192

 
146,834

     Total liabilities and shareholders' equity
 
$
1,685,419

 
$
1,581,518

 
$
1,534,302

 
$
1,507,053




Exhibit 99.1

Reportable Segments
(Unaudited)

Three Months Ended June 30, 2018

Commercial & Retail Banking

Mortgage Banking

Financial Holding Company

Intercompany Eliminations

Consolidated
(Dollars in thousands)





Revenues:










Interest income

$
15,426


$
1,772


$
1


$
(255
)

$
16,944

Mortgage fee income

154


9,152




(243
)

9,063

Other income

1,068


706


1,489


(1,531
)

1,732

     Total operating income

16,648


11,630


1,490


(2,029
)

27,739

Expenses:

 

 

 




Interest expense

3,164


1,081


542


(498
)

4,289

Salaries and employee benefits

3,884


6,826


1,784




12,494

Provision for loan losses

625


(20
)





605

Other expense

4,968


2,296


1,022


(1,531
)

6,755

     Total operating expenses

12,641


10,183


3,348


(2,029
)

24,143

Income (loss) before income taxes

4,007


1,447


(1,858
)



3,596

Income tax expense (benefit)

832


373


(440
)



765

Net income (loss)

$
3,175


$
1,074


$
(1,418
)

$


$
2,831

Preferred stock dividends





122




122

Net income (loss) available to common shareholders

$
3,175


$
1,074


$
(1,540
)

$


$
2,709


Three Months Ended March 31, 2018
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
13,838

 
$
1,335

 
$
1

 
$
(120
)
 
$
15,054

Mortgage fee income
 
140

 
6,673

 

 
(250
)
 
6,563

Other income
 
1,780

 
517

 
1,553

 
(1,374
)
 
2,476

     Total operating income
 
15,758

 
8,525

 
1,554

 
(1,744
)
 
24,093

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
2,674

 
727

 
558

 
(370
)
 
3,589

Salaries and employee benefits
 
3,569

 
5,416

 
1,488

 

 
10,473

Provision for loan losses
 
417

 
57

 

 

 
474

Other expense
 
4,559

 
2,122

 
959

 
(1,374
)
 
6,266

     Total operating expenses
 
11,219

 
8,322

 
3,005

 
(1,744
)
 
20,802

Income (loss) before income taxes
 
4,539

 
203

 
(1,451
)
 

 
3,291

Income tax expense (benefit)
 
978

 
53

 
(334
)
 

 
697

Net income (loss)
 
$
3,561

 
$
150

 
$
(1,117
)
 
$

 
$
2,594

Preferred stock dividends
 

 

 
121

 

 
121

Net income (loss) available to common shareholders
 
$
3,561

 
$
150

 
$
(1,238
)
 
$

 
$
2,473







Exhibit 99.1

Three Months Ended June 30, 2017
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
12,907

 
$
1,073

 
$
1

 
$
(167
)
 
$
13,814

Mortgage fee income
 
188

 
8,937

 

 
(173
)
 
8,952

Other income
 
1,529

 
1,137

 
1,307

 
(1,358
)
 
2,615

     Total operating income
 
14,624

 
11,147

 
1,308

 
(1,698
)
 
25,381

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
2,168

 
534

 
558

 
(340
)
 
2,920

Salaries and employee benefits
 
3,267

 
7,147

 
1,384

 

 
11,798

Provision for loan losses
 
467

 
56

 

 

 
523

Other expense
 
5,065

 
2,044

 
954

 
(1,358
)
 
6,705

     Total operating expenses
 
10,967

 
9,781

 
2,896

 
(1,698
)
 
21,946

Income (loss) before income taxes
 
3,657

 
1,366

 
(1,588
)
 

 
3,435

Income tax expense (benefit)
 
1,165

 
540

 
(530
)
 

 
1,175

Net income (loss)
 
$
2,492

 
$
826

 
$
(1,058
)
 
$

 
$
2,260

Preferred stock dividends
 

 

 
122

 

 
122

Net income (loss) available to common shareholders
 
$
2,492

 
$
826

 
$
(1,180
)
 
$

 
$
2,138


Six Months Ended June 30, 2018
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
29,265

 
$
3,107

 
$
2

 
$
(376
)
 
$
31,998

Mortgage fee income
 
292

 
15,825

 

 
(491
)
 
15,626

Other income
 
2,848

 
1,223

 
3,043

 
(2,906
)
 
4,208

     Total operating income
 
32,405

 
20,155

 
3,045

 
(3,773
)
 
51,832

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
5,838

 
1,808

 
1,100

 
(868
)
 
7,878

Salaries and employee benefits
 
7,453

 
12,242

 
3,272

 

 
22,967

Provision for loan losses
 
1,042

 
37

 

 

 
1,079

Other expense
 
9,527

 
4,418

 
1,981

 
(2,905
)
 
13,021

     Total operating expenses
 
23,860

 
18,505

 
6,353

 
(3,773
)
 
44,945

Income (loss) before income taxes
 
8,545

 
1,650

 
(3,308
)
 

 
6,887

Income tax expense (benefit)
 
1,810

 
426

 
(774
)
 

 
1,462

Net income (loss)
 
$
6,735

 
$
1,224

 
$
(2,534
)
 
$

 
$
5,425

Preferred stock dividends
 

 

 
243

 

 
243

Net income (loss) available to common shareholders
 
$
6,735

 
$
1,224

 
$
(2,777
)
 
$

 
$
5,182




Exhibit 99.1

Six Months Ended June 30, 2017
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
25,218

 
$
1,854

 
$
2

 
$
(192
)
 
$
26,882

Mortgage fee income
 
373

 
18,574

 

 
(361
)
 
18,586

Other income
 
2,609

 
(694
)
 
2,518

 
(2,628
)
 
1,805

     Total operating income
 
28,200

 
19,734

 
2,520

 
(3,181
)
 
47,273

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
4,288

 
838

 
1,109

 
(553
)
 
5,682

Salaries and employee benefits
 
5,924

 
13,101

 
2,735

 

 
21,760

Provision for loan losses
 
967

 
74

 

 

 
1,041

Other expense
 
9,716

 
4,143

 
1,829

 
(2,628
)
 
13,060

     Total operating expenses
 
20,895

 
18,156

 
5,673

 
(3,181
)
 
41,543

Income (loss) before income taxes
 
7,305

 
1,578

 
(3,153
)
 

 
5,730

Income tax expense (benefit)
 
2,326

 
636

 
(1,066
)
 

 
1,896

Net income (loss)
 
$
4,979

 
$
942

 
$
(2,087
)
 
$

 
$
3,834

Preferred stock dividends
 

 

 
251

 

 
251

Net income (loss) available to common shareholders
 
$
4,979

 
$
942

 
$
(2,338
)
 
$

 
$
3,583






Exhibit 99.1

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

 
 
Three Months Ended
June 30, 2018
 
Three Months Ended
March 31, 2018
 
Three Months Ended
June 30, 2017
 
 
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
 
$
3,473

 
$
17

 
1.96
%
 
$
3,883

 
$
18

 
1.83
%
 
$
3,277

 
$
12

 
1.47
%
CDs with other banks
 
14,778

 
74

 
2.02

 
14,778

 
72

 
1.97

 
14,456

 
70

 
1.94

Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Taxable
 
151,224

 
891

 
2.36

 
154,430

 
895

 
2.35

 
119,553

 
645

 
2.16

     Tax-exempt
 
81,164

 
717

 
3.54

 
75,556

 
655

 
3.51

 
53,733

 
418

 
3.12

Loans and loans held for sale: 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Commercial
 
831,118

 
10,318

 
4.98

 
775,764

 
8,943

 
4.68

 
725,707

 
8,170

 
4.52

     Tax exempt
 
14,260

 
123

 
3.46

 
14,464

 
123

 
3.46

 
15,263

 
131

 
3.44

     Real estate
 
394,814

 
4,656

 
4.73

 
360,744

 
4,190

 
4.71

 
373,353

 
4,201

 
4.51

     Consumer
 
11,850

 
148

 
5.00

 
12,517

 
158

 
5.11

 
13,817

 
167

 
4.85

Total loans
 
1,252,042

 
15,245

 
4.88

 
1,163,489

 
13,414

 
4.68

 
1,128,140

 
12,669

 
4.50

Total earning assets
 
1,502,681

 
16,944

 
4.52

 
1,412,136

 
15,054

 
4.32

 
1,319,159

 
13,814

 
4.20

Less: Allowance for loan losses
 
(10,132
)
 
 
 
 
 
(9,987
)
 
 
 
 
 
(9,734
)
 
 
 
 
Cash and due from banks
 
16,792

 
 
 
 
 
15,966

 
 
 
 
 
15,407

 
 
 
 
Other assets
 
107,421

 
 
 
 
 
102,645

 
 
 
 
 
100,205

 
 
 
 
     Total assets
 
$
1,616,762

 
 
 
 
 
$
1,520,760

 
 
 
 
 
$
1,425,037

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     NOW
 
$
459,784

 
$
846

 
0.74

 
$
443,784

 
$
762

 
0.70

 
$
432,729

 
$
603

 
0.56

     Money market checking
 
229,763

 
484

 
0.85

 
241,472

 
443

 
0.74

 
237,173

 
432

 
0.73

     Savings
 
46,478

 
7

 
0.06

 
46,544

 
20

 
0.17

 
48,590

 
20

 
0.17

     IRAs
 
17,997

 
69

 
1.54

 
17,691

 
62

 
1.43

 
16,282

 
53

 
1.31

     CDs
 
275,004

 
1,124

 
1.64

 
269,286

 
1,011

 
1.52

 
256,887

 
855

 
1.33

Repurchase agreements and federal funds sold
 
20,118

 
20

 
0.39

 
20,605

 
19

 
0.37

 
21,268

 
19

 
0.36

FHLB and other borrowings
 
226,487

 
1,197

 
2.12

 
160,205

 
714

 
1.81

 
112,385

 
380

 
1.36

Subordinated debt
 
32,015

 
542

 
6.79

 
33,524

 
558

 
6.75

 
33,524

 
558

 
6.68

     Total interest-bearing liabilities
 
1,307,646

 
4,289

 
1.32

 
1,233,111

 
3,589

 
1.18

 
1,158,838

 
2,920

 
1.01

Noninterest bearing demand deposits
 
146,135

 
 
 
 
 
129,385

 
 
 
 
 
114,974

 
 
 
 
Other liabilities
 
9,890

 
 
 
 
 
8,673

 
 
 
 
 
7,698

 
 
 
 
     Total liabilities
 
1,463,671

 
 
 
 
 
1,371,169

 
 
 
 
 
1,281,510

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
7,834

 
 
 
 
 
7,834

 
 
 
 
 
7,834

 
 
 
 
Common stock
 
10,686

 
 
 
 
 
10,525

 
 
 
 
 
10,375

 
 
 
 
Paid-in capital
 
101,577

 
 
 
 
 
99,110

 
 
 
 
 
96,986

 
 
 
 
Treasury stock
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
Retained earnings
 
41,277

 
 
 
 
 
38,004

 
 
 
 
 
32,764

 
 
 
 
Accumulated other comprehensive income
 
(7,199
)
 
 
 
 
 
(4,798
)
 
 
 
 
 
(3,348
)
 
 
 
 
     Total stockholders’ equity
 
153,091

 
 
 
 
 
149,591

 
 
 
 
 
143,527

 
 
 
 
     Total liabilities and stockholders’ equity
 
$
1,616,762

 
 
 
 
 
$
1,520,760

 
 
 
 
 
$
1,425,037

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
 
 
3.20

 
 
 
 
 
3.14

 
 
 
 
 
3.19

Net interest income-margin
 
 
 
$
12,655

 
3.38
%
 
 
 
$
11,465

 
3.29
%
 
 
 
$
10,894

 
3.31
%
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.




Exhibit 99.1

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

 
 
Six Months Ended
June 30, 2018
 
Six Months Ended
June 30, 2017
 
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in banks
 
$
3,677

 
$
35

 
1.94
%
 
$
3,007

 
$
21

 
1.41
%
CDs with other banks
 
14,778

 
146

 
1.99

 
14,491

 
140

 
1.95

Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
     Taxable
 
152,818

 
1,786

 
2.36

 
114,237

 
1,191

 
2.10

     Tax-exempt
 
78,375

 
1,372

 
3.53

 
54,999

 
848

 
3.11

Loans and loans held for sale: 1
 
 
 
 
 
 
 
 
 
 
 
 
     Commercial
 
803,593

 
19,261

 
4.83

 
735,979

 
16,113

 
4.41

     Tax exempt
 
14,362

 
246

 
3.46

 
15,296

 
262

 
3.45

     Real estate
 
378,095

 
8,846

 
4.72

 
362,807

 
7,965

 
4.43

     Consumer
 
12,182

 
306

 
5.07

 
14,092

 
342

 
4.89

Total loans
 
1,208,232

 
28,659

 
4.78

 
1,128,174

 
24,682

 
4.41

Total earning assets
 
1,457,880

 
31,998

 
4.43

 
1,314,908

 
26,882

 
4.12

Less: Allowance for loan losses
 
(10,059
)
 
 
 
 
 
(9,581
)
 
 
 
 
Cash and due from banks
 
16,381

 
 
 
 
 
15,327

 
 
 
 
Other assets
 
104,401

 
 
 
 
 
93,248

 
 
 
 
     Total assets
 
$
1,568,603

 
 
 
 
 
$
1,413,902

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
     NOW
 
$
451,828

 
$
1,608

 
0.72

 
$
424,225

 
$
1,126

 
0.54

     Money market checking
 
235,586

 
927

 
0.79

 
237,010

 
891

 
0.76

     Savings
 
46,511

 
27

 
0.12

 
48,342

 
40

 
0.17

     IRAs
 
17,845

 
131

 
1.48

 
16,426

 
103

 
1.26

     CDs
 
272,160

 
2,135

 
1.58

 
260,735

 
1,709

 
1.32

Repurchase agreements and federal funds sold
 
20,360

 
39

 
0.38

 
22,186

 
36

 
0.33

FHLB and other borrowings
 
193,529

 
1,911

 
1.99

 
108,210

 
668

 
1.24

Subordinated debt
 
32,766

 
1,100

 
6.77

 
33,524

 
1,109

 
6.67

     Total interest-bearing liabilities
 
1,270,585

 
7,878

 
1.25

 
1,150,658

 
5,682

 
1.00

Noninterest bearing demand deposits
 
137,383

 
 
 
 
 
114,003

 
 
 
 
Other liabilities
 
9,284

 
 
 
 
 
8,459

 
 
 
 
     Total liabilities
 
1,417,252

 
 
 
 
 
1,273,120

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
7,834

 
 
 
 
 
8,022

 
 
 
 
Common stock
 
10,606

 
 
 
 
 
10,212

 
 
 
 
Paid-in capital
 
100,350

 
 
 
 
 
95,240

 
 
 
 
Treasury stock
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
Retained earnings
 
39,650

 
 
 
 
 
32,211

 
 
 
 
Accumulated other comprehensive income
 
(6,005
)
 
 
 
 
 
(3,819
)
 
 
 
 
     Total stockholders’ equity
 
151,351

 
 
 
 
 
140,782

 
 
 
 
     Total liabilities and stockholders’ equity
 
$
1,568,603

 
 
 
 
 
$
1,413,902

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
 
 
3.18

 
 
 
 
 
3.13

Net interest income-margin
 
 
 
$
24,120

 
3.34
%
 
 
 
$
21,200

 
3.25
%
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.



Exhibit 99.1

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


 
 
Quarterly
 
Year-to-Date
 
 
2018
 
2018
 
2017
 
2017
 
2017
 
2018
 
2017
 
 
Second
Quarter
 
First
Quarter
 
Fourth Quarter
 
Third
Quarter
 
Second
Quarter
 
 
Earnings and Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Net income
 
$
2,831

 
$
2,594

 
$
1,423

 
$
2,318

 
$
2,260

 
$
5,425

 
$
3,834

     Net income available to common shareholders
 
2,709

 
2,473

 
1,299

 
2,195

 
2,138

 
5,182

 
3,583

     Earnings per share - basic
 
0.25

 
0.24

 
0.12

 
0.21

 
0.21

 
0.49