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Section 1: 8-K (8-K - Q3 2018 EARNINGS RELEASE - 10.29.18)

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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):
October 29, 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 October 29, 2018, MVB Financial Corp. (NASDAQ: MVBF) issued a press release announcing its financial results for the quarter ended September 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 October 29, 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:  October 29, 2018






EXHIBIT INDEX


Exhibit Number
 
Description    
 
Exhibit Location
 
 
 
 
 
 
Press release of MVB Financial Corp. dated October 29, 2018
 
Filed herewith



(Back To Top)

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

Exhibit
Exhibit 99.1

395526584_mvbfinanciallogoa31.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 Third Quarter 2018 Earnings
Highlighted by 54.4% Increase in Net Income and 98.2% Increase in Noninterest-Bearing Deposits

FAIRMONT, W.Va., October 29, 2018 – MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) reported net income of $3.6 million, or $0.30 basic and $0.29 diluted earnings per share for the three months ended September 30, 2018, an increase of 54.4% compared to $2.3 million, or $0.21 basic and diluted earnings per share, for the same period in 2017.

Noninterest-bearing deposits increased $76.9 million, or 46.9%, from June 30, 2018, and increased $119.3 million, or 98.2%, from September 30, 2017, to a balance of $240.8 million as of September 30, 2018. The growth in noninterest-bearing deposits was primarily driven by MVB's strategy to focus on Fintech and specialty deposits. As of September 30, 2018, noninterest-bearing deposits were 17.46% of total deposits, compared to 13.71% as of June 30, 2018, and 10.43% as of September 30, 2017.

For the three months ended September 30, 2018, loans increased $81.4 million, or 6.7%, to $1.3 billion, from June 30, 2018, which represents an annualized increase of 26.8%. 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 9 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
“Building on MVB’s strong Second Quarter performance, our Third Quarter 2018 earnings from continuing operations are up 26 percent from last quarter, our new record high. MVB’s significant expansion in



Exhibit 99.1

noninterest bearing deposits, as well as the strong economies in West Virginia and Northern Virginia are driving our growth,” said Larry F. Mazza, CEO and President, MVB Financial.

“After a three and a half year journey, MVB’s Fintech strategy hit a tipping point this year; the results are starting to show up on our balance sheet and income statement. The robust Fintech industry is just heating up, and we expect to continue to expand that vertical.”

THIRD QUARTER 2018 HIGHLIGHTS
Loans of $1.3 billion as of September 30, 2018, increased $81.4 million, or 6.7%, from June 30, 2018, and increased $202.0 million, or 18.5%, from September 30, 2017.
Assets of $1.7 billion as of September 30, 2018, increased $37.7 million, or 2.2%, from June 30, 2018, and increased $251.5 million, or 17.1%, from September 30, 2017.
Deposits of $1.4 billion as of September 30, 2018, increased $183.3 million, or 15.3%, from June 30, 2018, and increased $214.0 million, or 18.4% from September 30, 2017. Noninterest-bearing deposits of $240.8 million increased $76.9 million, or 46.9%, from June 30, 2018, and increased $119.3 million, or 98.2%, from September 30, 2017.
Net interest income of $13.5 million for the quarter ended September 30, 2018, increased $869 thousand, or 6.9%, from the quarter ended June 30, 2018, and increased $2.1 million, or 18.5% from the quarter ended September 30, 2017. Net interest margin of 3.43% for the quarter ended September 30, 2018, increased 5 basis points versus the quarter ended June 30, 2018, and increased 6 basis points versus the quarter ended September 30, 2017.
Noninterest income of $10.5 million for the quarter ended September 30, 2018, decreased $284 thousand, or 2.6%, from the quarter ended June 30, 2018, and increased $353 thousand, or 3.5%, from the quarter ended September 30, 2017.
$2.3 million of subordinated debt converted to common stock, which caused the issuance of 142,000 new shares and will provide an annual interest expense savings of $170 thousand.

LOANS
Loans totaled $1.3 billion as of September 30, 2018, an increase of $81.4 million, or 6.7%, from June 30, 2018, and an increase of $202.0 million, or 18.5%, from September 30, 2017. The growth in loans is attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 4.97% as of the quarter ended September 30, 2018, an increase of 9 basis points from the quarter ended June 30, 2018, and an increase of 31 basis points from the quarter ended



Exhibit 99.1

September 30, 2017. The increase in yields is driven both by Fed rate increases and a commercial focus on increasing loan yields.

DEPOSITS
Deposits totaled $1.4 billion as of September 30, 2018, and increased $183.3 million, or 15.3%, from June 30, 2018, while increasing $214.0 million, or 18.4%, from September 30, 2017. Noninterest-bearing deposits totaled $240.8 million as of September 30, 2018, or 17.5%, of the total deposit base, an increase of $76.9 million, or 46.9%, from June 30, 2018, and an increase of $119.3 million, or 98.2%, from September 30, 2017. Noninterest-bearing deposits remain a core funding source for the Company. Of the $240.8 million, noninterest-bearing balances of $100.6 million are related to Fintech and Title business opportunities.

NET INTEREST INCOME
Net interest income for the quarter ended September 30, 2018, was $13.5 million, an increase of $869 thousand, or 6.9%, from the quarter ended June 30, 2018, and an increase of $2.1 million, or 18.5% from the quarter ended September 30, 2017. Net interest margin for the quarter ended September 30, 2018 was 3.43%, an increase of 5 basis points versus the quarter ended June 30, 2018, and an increase of 6 basis points versus the quarter ended September 30, 2017.

Interest expense increased 8.5% during the quarter ended September 30, 2018, compared to the quarter ended June 30, 2018, due to an increase of 9 basis points in the cost of interest-bearing liabilities, and increased 44.7% compared to the quarter ended September 30, 2017, due to an increase of 35 basis points in the cost of interest-bearing liabilities. The increase in the cost of interest-bearing liabilities compared to the quarter ended September 30, 2017, was the result of an $53.4 million increase in the average balance and an increase in short-term borrowing rates.

In August 2018, subordinated debt in the amount of $2.3 million was converted into 142,000 shares of common stock. In addition to this conversion, 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 these conversions, the Company will save $1.1 million annually in interest expense.

ASSET QUALITY
Provision for loan loss was $1.1 million for the quarter ended September 30, 2018, a $973 thousand increase from the quarter ended September 30, 2017, due to an 18.5% increase in loans. The increase in loan loss provision is attributable to increased loan volume for the quarter ended September 30, 2018, compared to



Exhibit 99.1

the quarter ended September 30, 2017. Nonperforming loans increased $6.3 million, to 0.99%, of total loans as of September 30, 2018, compared to 0.78% of total loans as of June 30, 2018, and compared to 0.60% of total loans as of September 30, 2017. In addition, net charge-offs for the quarter ended September 30, 2018, decreased $167 thousand compared to the quarter ended September 30, 2017, resulting in an annualized net loan charge-offs to total loans ratio of 0.09% as of September 30, 2018.

NONINTEREST INCOME
Noninterest income totaled $10.5 million for the quarter ended September 30, 2018, a decrease of $284 thousand, or 2.6%, from the quarter ended June 30, 2018, and an increase of $353 thousand, or 3.5%, from the quarter ended September 30, 2017.

The $284 thousand decrease in noninterest income from the quarter ended June 30, 2018, was due to a decrease of $1.4 million in gain on derivatives related to the mortgage locked pipeline. The decrease was partially offset by an increase of $634 thousand in the holding gain on equity securities, primarily related to a $672 thousand holding gain on Fintech related investment, an increase of $165 thousand in other operating income, and an increase of $300 thousand in income on bank owned life insurance. The decrease in gain on derivatives was largely the result of a 19.6% decrease in the locked mortgage pipeline for the three months ended September 30, 2018, compared to an 8.0% increase in the locked mortgage pipeline for the three months ended June 30, 2018.

The $353 thousand increase in noninterest income from the quarter ended September 30, 2017, was primarily due to a $578 thousand increase in gain on derivative and a $623 thousand increase in the holding gain on equity securities. These increases were partially offset by a $1.0 million decrease in mortgage fee income. The increase in gain on derivatives was largely the result of an increase of $1.3 million in the valuation of the open trades used to hedge the derivative asset. The decrease in mortgage fee income was driven by the decrease of mortgage production volume, which decreased by $26.3 million or 6.6% for the three months ended September 30, 2018 compared to the three months ended September 30, 2017.

NONINTEREST EXPENSE
Noninterest expense totaled $18.4 million for the quarter ended September 30, 2018, a decrease of $832 thousand, or 4.3%, from the quarter ended June 30, 2018, and an increase of $451 thousand, or 2.5%, from the quarter ended September 30, 2017.

The $832 thousand decrease in noninterest expense from the quarter ended June 30, 2018, was primarily



Exhibit 99.1

due to a decrease of $974 thousand in salaries and employee benefits expense and a $125 thousand decrease in mortgage processing expense. These decreases were partially offset by an increase of $227 thousand in professional fees as a result of the Company's Fintech initiatives. The decrease in salaries and employee benefits expense was largely driven by a reduction in commission related costs due to reduced mortgage loan volume. The $451 thousand increase in noninterest expense from the quarter ended September 30, 2017, was primarily due to an increase of $271 thousand in salaries and employee benefits expense and an increase of $164 thousand in professional fees.

DIVIDEND
As previously announced on August 22, 2018, the Company declared a quarterly cash dividend of $0.03 per share to shareholders of record at the close of business on September 1, 2018, payable September 15, 2018. This was the third quarterly dividend for 2018 and includes a one-half cent, or 20% increase per share, compared to the March and June 2018 payouts 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 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.




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
 
2018
 
2017
 
2017
 
Nine Months Ended September 30, 2018
 
Nine Months Ended September 30, 2017
 
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Fourth
Quarter
 
Third
Quarter
 
 
Interest income
 
$
18,176

 
$
16,944

 
$
15,054

 
$
15,086

 
$
14,630

 
$
50,174

 
$
41,512

Interest expense
 
4,652

 
4,289

 
3,589

 
3,403

 
3,216

 
12,530

 
8,898

     Net interest income
 
13,524

 
12,655

 
11,465

 
11,683

 
11,414

 
37,644

 
32,614

Provision for loan losses
 
1,069

 
605

 
474

 
1,036

 
96

 
2,148

 
1,137

Noninterest income
 
10,511

 
10,795

 
9,039

 
10,157

 
10,158

 
30,345

 
30,549

Noninterest expense
 
18,417

 
19,249

 
16,739

 
17,714

 
17,966

 
54,405

 
52,786

     Income before income taxes
 
4,549

 
3,596

 
3,291

 
3,090

 
3,510

 
11,436

 
9,240

Income tax expense
 
970

 
765

 
697

 
1,667

 
1,192

 
2,432

 
3,088

     Net income
 
$
3,579

 
$
2,831

 
$
2,594

 
$
1,423

 
$
2,318

 
$
9,004

 
$
6,152

Preferred dividends
 
123

 
122

 
121

 
124

 
123

 
366

 
374

     Net income available to common shareholders
 
$
3,456

 
$
2,709

 
$
2,473

 
$
1,299

 
$
2,195

 
$
8,638

 
$
5,778

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.30

 
$
0.25

 
$
0.24

 
$
0.12

 
$
0.21

 
$
0.80

 
$
0.56

Earnings per share - diluted
 
$
0.29

 
$
0.25

 
$
0.23

 
$
0.12

 
$
0.21

 
$
0.77

 
$
0.56

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

 
 
September 30, 2018
 
June 30, 2018
 
December 31, 2017
 
September 30, 2017
Cash and cash equivalents
 
$
22,045

 
$
23,950

 
$
20,305

 
$
20,272

Certificates of deposit with other banks
 
14,778

 
14,778

 
14,778

 
14,778

Investment securities
 
226,306

 
229,054

 
231,507

 
187,348

Loans held for sale
 
63,706

 
98,799

 
66,794

 
69,057

Loans
 
1,296,460

 
1,215,072

 
1,105,941

 
1,094,467

Allowance for loan losses
 
(11,439
)
 
(10,651
)
 
(9,878
)
 
(9,396
)
Net loans
 
1,285,021

 
1,204,421

 
1,096,063

 
1,085,071

Premises and equipment
 
26,706

 
26,418

 
26,686

 
27,189

Goodwill
 
18,480

 
18,480

 
18,480

 
18,480

Other assets
 
66,062

 
69,519

 
59,689

 
49,395

     Total assets
 
$
1,723,104

 
$
1,685,419

 
$
1,534,302

 
$
1,471,590

 
 
 
 
 
 
 
 
 
Deposits
 
$
1,379,186

 
$
1,195,868

 
$
1,159,580

 
$
1,165,199

Borrowed funds
 
122,000

 
266,830

 
152,169

 
84,403

Other liabilities
 
51,042

 
56,926

 
72,361

 
73,011

Shareholders' equity
 
170,876

 
165,795

 
150,192

 
148,977

     Total liabilities and shareholders' equity
 
$
1,723,104

 
$
1,685,419

 
$
1,534,302

 
$
1,471,590




Exhibit 99.1

Reportable Segments
(Unaudited)

Three Months Ended September 30, 2018

Commercial & Retail Banking

Mortgage Banking

Financial Holding Company

Intercompany Eliminations

Consolidated
(Dollars in thousands)





Revenues:










Interest income

$
16,506


$
1,763


$
1


$
(94
)

$
18,176

Mortgage fee income

152


9,246




(390
)

9,008

Other income

2,203


(738
)

1,706


(1,668
)

1,503

     Total operating income

18,861


10,271


1,707


(2,152
)

28,687

Expenses:

 

 

 




Interest expense

3,664


1,138


333


(483
)

4,652

Salaries and employee benefits

3,493


6,047


1,980




11,520

Provision for loan losses

1,025


44






1,069

Other expense

5,274


2,147


1,145


(1,669
)

6,897

     Total operating expenses

13,456


9,376


3,458


(2,152
)

24,138

Income (loss) before income taxes

5,405


895


(1,751
)



4,549

Income tax expense (benefit)

1,121


229


(380
)



970

Net income (loss)

$
4,284


$
666


$
(1,371
)

$


$
3,579

Preferred stock dividends





123




123

Net income (loss) available to common shareholders

$
4,284


$
666


$
(1,494
)

$


$
3,456


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







Exhibit 99.1

Three Months Ended September 30, 2017
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
13,432

 
$
1,352

 
$
1

 
$
(155
)
 
$
14,630

Mortgage fee income
 
200

 
10,042

 

 
(224
)
 
10,018

Other income
 
1,466

 
(1,279
)
 
1,250

 
(1,297
)
 
140

     Total operating income
 
15,098

 
10,115

 
1,251

 
(1,676
)
 
24,788

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
2,347

 
684

 
565

 
(380
)
 
3,216

Salaries and employee benefits
 
3,107

 
6,768

 
1,374

 

 
11,249

Provision for loan losses
 

 
96

 

 

 
96

Other expense
 
4,822

 
2,100

 
1,091

 
(1,296
)
 
6,717

     Total operating expenses
 
10,276

 
9,648

 
3,030

 
(1,676
)
 
21,278

Income (loss) before income taxes
 
4,822

 
467

 
(1,779
)
 

 
3,510

Income tax expense (benefit)
 
1,605

 
191

 
(604
)
 

 
1,192

Net income (loss)
 
$
3,217

 
$
276

 
$
(1,175
)
 
$

 
$
2,318

Preferred stock dividends
 

 

 
123

 

 
123

Net income (loss) available to common shareholders
 
$
3,217

 
$
276

 
$
(1,298
)
 
$

 
$
2,195


Nine Months Ended September 30, 2018
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
45,772

 
$
4,870

 
$
3

 
$
(471
)
 
$
50,174

Mortgage fee income
 
444

 
25,071

 

 
(881
)
 
24,634

Other income
 
5,052

 
485

 
4,748

 
(4,574
)
 
5,711

     Total operating income
 
51,268

 
30,426

 
4,751

 
(5,926
)
 
80,519

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
9,503

 
2,945

 
1,433

 
(1,351
)
 
12,530

Salaries and employee benefits
 
10,946

 
18,289

 
5,252

 

 
34,487

Provision for loan losses
 
2,067

 
81

 

 

 
2,148

Other expense
 
14,803

 
6,566

 
3,124

 
(4,575
)
 
19,918

     Total operating expenses
 
37,319

 
27,881

 
9,809

 
(5,926
)
 
69,083

Income (loss) before income taxes
 
13,949

 
2,545

 
(5,058
)
 

 
11,436

Income tax expense (benefit)
 
2,932

 
654

 
(1,154
)
 

 
2,432

Net income (loss)
 
$
11,017

 
$
1,891

 
$
(3,904
)
 
$

 
$
9,004

Preferred stock dividends
 

 

 
366

 

 
366

Net income (loss) available to common shareholders
 
$
11,017

 
$
1,891

 
$
(4,270
)
 
$

 
$
8,638




Exhibit 99.1

Nine Months Ended September 30, 2017
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
38,651

 
$
3,206

 
$
3

 
$
(348
)
 
$
41,512

Mortgage fee income
 
573

 
28,616

 

 
(585
)
 
28,604

Other income
 
4,074

 
(1,973
)
 
3,768

 
(3,924
)
 
1,945

     Total operating income
 
43,298

 
29,849

 
3,771

 
(4,857
)
 
72,061

Expenses:
 
 
 
 
 
 
 
 
 
 
Interest expense
 
6,635

 
1,521

 
1,674

 
(932
)
 
8,898

Salaries and employee benefits
 
9,030

 
19,870

 
4,109

 

 
33,009

Provision for loan losses
 
966

 
171

 

 

 
1,137

Other expense
 
14,539

 
6,244

 
2,919

 
(3,925
)
 
19,777

     Total operating expenses
 
31,170

 
27,806

 
8,702

 
(4,857
)
 
62,821

Income (loss) before income taxes
 
12,128

 
2,043

 
(4,931
)
 

 
9,240

Income tax expense (benefit)
 
3,931

 
827

 
(1,670
)
 

 
3,088

Net income (loss)
 
$
8,197

 
$
1,216

 
$
(3,261
)
 
$

 
$
6,152

Preferred stock dividends
 

 

 
374

 

 
374

Net income (loss) available to common shareholders
 
$
8,197

 
$
1,216

 
$
(3,635
)
 
$

 
$
5,778






Exhibit 99.1

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

 
 
Three Months Ended
September 30, 2018
 
Three Months Ended
June 30, 2018
 
Three Months Ended
September 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
 
$
5,178

 
$
30

 
2.30
%
 
$
3,473

 
$
17

 
1.96
%
 
$
4,484

 
$
15

 
1.33
%
CDs with other banks
 
14,778

 
73

 
1.96

 
14,778

 
74

 
2.02

 
14,711

 
74

 
2.00

Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Taxable
 
148,499

 
869

 
2.32

 
151,224

 
891

 
2.36

 
126,880

 
693

 
2.17

     Tax-exempt
 
79,961

 
715

 
3.55

 
81,164

 
717

 
3.54

 
56,264

 
443

 
3.12

Loans and loans held for sale: 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Commercial
 
883,051

 
11,323

 
5.09

 
831,118

 
10,318

 
4.98

 
762,650

 
8,742

 
4.55

     Tax exempt
 
14,231

 
125

 
3.48

 
14,260

 
123

 
3.46

 
14,991

 
130

 
3.44

     Real estate
 
408,719

 
4,909

 
4.77

 
394,814

 
4,656

 
4.73

 
349,459

 
4,346

 
4.93

     Consumer
 
10,844

 
132

 
4.83

 
11,850

 
148

 
5.00

 
13,462

 
187

 
5.51

Total loans
 
1,316,845

 
16,489

 
4.97

 
1,252,042

 
15,245

 
4.88

 
1,140,562

 
13,405

 
4.66

Total earning assets
 
1,565,261

 
18,176

 
4.61

 
1,502,681

 
16,944

 
4.52

 
1,342,901

 
14,630

 
4.32

Less: Allowance for loan losses
 
(10,717
)
 
 
 
 
 
(10,132
)
 
 
 
 
 
(9,760
)
 
 
 
 
Cash and due from banks
 
18,020

 
 
 
 
 
16,792

 
 
 
 
 
17,501

 
 
 
 
Other assets
 
108,618

 
 
 
 
 
107,421

 
 
 
 
 
123,898

 
 
 
 
     Total assets
 
$
1,681,182

 
 
 
 
 
$
1,616,762

 
 
 
 
 
$
1,474,540

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     NOW
 
$
413,121

 
$
773

 
0.74

 
$
459,784

 
$
846

 
0.74

 
$
436,493

 
$
675

 
0.61

     Money market checking
 
246,624

 
676

 
1.09

 
229,763

 
484

 
0.85

 
246,160

 
458

 
0.74

     Savings
 
42,760

 
1

 
0.01

 
46,478

 
7

 
0.06

 
46,807

 
20

 
0.17

     IRAs
 
17,950

 
75

 
1.66

 
17,997

 
69

 
1.54

 
16,649

 
56

 
1.33

     CDs
 
348,467

 
1,585

 
1.80

 
275,004

 
1,124

 
1.64

 
249,698

 
874

 
1.39

Repurchase agreements and federal funds sold
 
17,911

 
10

 
0.22

 
20,118

 
20

 
0.39

 
25,093

 
20

 
0.32

FHLB and other borrowings
 
202,670

 
1,199

 
2.35

 
226,487

 
1,197

 
2.12

 
149,313

 
548

 
1.46

Subordinated debt
 
19,932

 
333

 
6.63

 
32,015

 
542

 
6.79

 
33,524

 
565

 
6.69

     Total interest-bearing liabilities
 
1,309,435

 
4,652

 
1.41

 
1,307,646

 
4,289

 
1.32

 
1,203,737

 
3,216

 
1.06

Noninterest bearing demand deposits
 
193,116

 
 
 
 
 
146,135

 
 
 
 
 
115,343

 
 
 
 
Other liabilities
 
10,710

 
 
 
 
 
9,890

 
 
 
 
 
7,703

 
 
 
 
     Total liabilities
 
1,513,261

 
 
 
 
 
1,463,671

 
 
 
 
 
1,326,783

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
7,834

 
 
 
 
 
7,834

 
 
 
 
 
7,834

 
 
 
 
Common stock
 
11,467

 
 
 
 
 
10,686

 
 
 
 
 
10,495

 
 
 
 
Paid-in capital
 
113,482

 
 
 
 
 
101,577

 
 
 
 
 
98,289

 
 
 
 
Treasury stock
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
Retained earnings
 
43,793

 
 
 
 
 
41,277

 
 
 
 
 
35,152

 
 
 
 
Accumulated other comprehensive income
 
(7,571
)
 
 
 
 
 
(7,199
)
 
 
 
 
 
(2,929
)
 
 
 
 
     Total stockholders’ equity
 
167,921

 
 
 
 
 
153,091

 
 
 
 
 
147,757

 
 
 
 
     Total liabilities and stockholders’ equity
 
$
1,681,182

 
 
 
 
 
$
1,616,762

 
 
 
 
 
$
1,474,540

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
 
 
3.20

 
 
 
 
 
3.20

 
 
 
 
 
3.26

Net interest income-margin
 
 
 
$
13,524

 
3.43
%
 
 
 
$
12,655

 
3.38
%
 
 
 
$
11,414

 
3.37
%
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)

 
 
Nine Months Ended
September 30, 2018
 
Nine Months Ended
September 30, 2017
 
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
 
Average
Balance
 
Interest
Income/
Expense
 
Yield/
Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits in banks
 
$
4,183

 
$
64

 
2.05
%
 
$
3,504

 
$
37

 
1.41
%
CDs with other banks
 
14,778

 
220

 
1.99

 
14,566

 
213

 
1.96

Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
     Taxable
 
151,362

 
2,655

 
2.35

 
118,497

 
1,884

 
2.13

     Tax-exempt
 
78,910

 
2,087

 
3.54

 
55,426

 
1,291

 
3.11

Loans and loans held for sale: 1
 
 
 
 
 
 
 
 
 
 
 
 
     Commercial
 
830,371

 
30,582

 
4.92

 
744,967

 
24,854

 
4.46

     Tax exempt
 
14,318

 
371

 
3.46

 
15,193

 
392

 
3.45

     Real estate
 
388,494

 
13,755

 
4.73

 
358,309

 
12,312

 
4.59

     Consumer
 
11,731

 
440

 
5.01

 
13,880

 
529

 
5.10

Total loans
 
1,244,914

 
45,148

 
4.85

 
1,132,349

 
38,087

 
4.50

Total earning assets
 
1,494,147

 
50,174

 
4.49

 
1,324,342

 
41,512

 
4.19

Less: Allowance for loan losses
 
(10,281
)
 
 
 
 
 
(9,641
)
 
 
 
 
Cash and due from banks
 
16,933

 
 
 
 
 
16,060

 
 
 
 
Other assets
 
105,743

 
 
 
 
 
103,576

 
 
 
 
     Total assets
 
$
1,606,542

 
 
 
 
 
$
1,434,337

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
     NOW
 
$
438,784

 
$
2,382

 
0.73

 
$
428,359

 
$
1,802

 
0.56

     Money market checking
 
239,305

 
1,604

 
0.90

 
240,094

 
1,349

 
0.75

     Savings
 
45,247

 
27

 
0.08

 
47,825

 
59

 
0.16

     IRAs
 
17,880

 
207

 
1.55

 
16,501

 
159

 
1.29

     CDs
 
297,876

 
3,718

 
1.67

 
257,015

 
2,583

 
1.34

Repurchase agreements and federal funds sold
 
19,535

 
49

 
0.34

 
23,165

 
56

 
0.32

FHLB and other borrowings
 
196,610

 
3,110

 
2.11

 
122,062

 
1,216

 
1.33

Subordinated debt
 
28,441

 
1,433

 
6.74

 
33,524

 
1,674

 
6.68

     Total interest-bearing liabilities
 
1,283,678

 
12,530

 
1.31

 
1,168,545

 
8,898

 
1.02

Noninterest bearing demand deposits
 
156,165

 
 
 
 
 
114,455

 
 
 
 
Other liabilities
 
9,764

 
 
 
 
 
8,204

 
 
 
 
     Total liabilities
 
1,449,607

 
 
 
 
 
1,291,204

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
7,834

 
 
 
 
 
7,959

 
 
 
 
Common stock
 
10,896

 
 
 
 
 
10,307

 
 
 
 
Paid-in capital
 
104,776

 
 
 
 
 
96,268

 
 
 
 
Treasury stock
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
Retained earnings
 
41,046

 
 
 
 
 
33,202

 
 
 
 
Accumulated other comprehensive income
 
(6,533
)
 
 
 
 
 
(3,519
)
 
 
 
 
     Total stockholders’ equity
 
156,935

 
 
 
 
 
143,133

 
 
 
 
     Total liabilities and stockholders’ equity
 
$
1,606,542

 
 
 
 
 
$
1,434,337

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
 
 
3.18

 
 
 
 
 
3.17

Net interest income-margin
 
 
 
$
37,644

 
3.37
%
 
 
 
$
32,614

 
3.29
%
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
 
2018
 
2017
 
2017
 
2018
 
2017
 
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Fourth Quarter
 
Third
Quarter
 
 
Earnings and Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Net income
 
$
3,579

 
$
2,831

 
$
2,594

 
$
1,423

 
$
2,318

 
$
9,004

 
$
6,152

     Net income available to common shareholders
 
3,456

 
2,709

 
2,473

 
1,299

 
2,195

 
8,638