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Section 1: 8-K (8-K - Q4 2018 EARNINGS RELEASE)

Document


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 14, 2019
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 14, 2019, MVB Financial Corp. (NASDAQ: MVBF) issued a press release announcing its financial results for the quarter ended December 31, 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 February 14, 2019






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 14, 2019






EXHIBIT INDEX


Exhibit Number
 
Description    
 
Exhibit Location
 
 
 
 
 
 
Press release of MVB Financial Corp. dated February 14, 2019
 
Filed herewith



(Back To Top)

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

Exhibit


396753960_mvbfinanciallogoa33.jpg
 
MEDIA CONTACT
 N E W S R E L E A S E
Amy Baker
VP, Corporate Communications
 
abaker@mvbbanking.com
 
844-682-2265

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

FAIRMONT, W.Va., February 14, 2019 – For the year ended December 31, 2018, MVB Financial Corp. (the "Company") (NASDAQ: MVBF) reported net income of $12.0 million, or $1.04 and $1.00 basic and diluted earnings per share, respectively, compared to $7.6 million, or $0.69 and $0.68 basic and diluted earnings per share, respectively, for the same period in 2017. This represents a 58.5% increase over prior year. For the quarter ended December 31, 2018, the Company reported net income of $3.0 million, or $0.25 and $0.24 basic and diluted earnings per share, respectively, compared to $1.4 million, or $0.12 basic and diluted earnings per share, for the quarter ended December 31, 2017.

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

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

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






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

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

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





Noninterest-bearing deposits remain a core funding source for the Company. Of the $213.6 million in noninterest-bearing balances in 2018, $91.9 million are related to fintech and title business.

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

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

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

ASSET QUALITY
Asset quality remained very good in 2018. Nonperforming loans decreased $2.6 million, to 0.54% of total loans as of December 31, 2018, compared to 0.99% as of September 30, 2018, and 0.88% as of December 31, 2017. In addition, net charge-offs for 2018 decreased $17 thousand compared to 2017, resulting in a net loan charge-offs to total loans ratio of 0.11% as of December 31, 2018, and 0.13% as of December 31, 2017.
Provision for loan loss was $292 thousand for the quarter ended December 31, 2018, a decrease of $777 thousand, or 72.7%, from the quarter ended September 30, 2018, and a decrease of $744 thousand, or





71.8%, from the quarter ended December 31, 2017. Provision was $2.4 million for the full year ended December 31, 2018, a $267 thousand increase from the same time period in 2017.

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

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

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

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

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


NONINTEREST EXPENSE
Noninterest expense for the fourth quarter of 2018 was $18.5 million, an increase of $56 thousand, or 0.3%, from the quarter ended September 30, 2018, and an increase of $759 thousand, or 4.3%, from the quarter





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

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

About MVB Financial Corp.

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

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

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

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






Forward-looking Statements

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

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


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

MVB Financial Corp.

Donald T. Robinson, Executive Vice President and CFO
(304) 598-3500
drobinson@mvbbanking.com






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
 
2018
 
2017
 
2018
 
2017
 
 
Fourth Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Fourth
Quarter
 
 
Interest income
 
$
19,586

 
$
18,176

 
$
16,944

 
$
15,054

 
$
15,086

 
$
69,760

 
$
56,598

Interest expense
 
5,176

 
4,652

 
4,289

 
3,589

 
3,403

 
17,706

 
12,301

     Net interest income
 
14,410

 
13,524

 
12,655

 
11,465

 
11,683

 
52,054

 
44,297

Provision for loan losses
 
292

 
1,069

 
605

 
474

 
1,036

 
2,440

 
2,173

Noninterest income
 
8,295

 
10,511

 
10,795

 
9,039

 
10,157

 
38,640

 
40,706

Noninterest expense
 
18,473

 
18,417

 
19,249

 
16,739

 
17,714

 
72,878

 
70,500

     Income before income taxes
 
3,940

 
4,549

 
3,596

 
3,291

 
3,090

 
15,376

 
12,330

Income tax expense
 
941

 
970

 
765

 
697

 
1,667

 
3,373

 
4,755

     Net income
 
$
2,999

 
$
3,579

 
$
2,831

 
$
2,594

 
$
1,423

 
$
12,003

 
$
7,575

Preferred dividends
 
123

 
123

 
122

 
121

 
124

 
489

 
498

     Net income available to common shareholders
 
$
2,876

 
$
3,456

 
$
2,709

 
$
2,473

 
$
1,299

 
$
11,514

 
$
7,077

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.25

 
$
0.30

 
$
0.25

 
$
0.24

 
$
0.12

 
$
1.04

 
$
0.69

Earnings per share - diluted
 
$
0.24

 
$
0.29

 
$
0.25

 
$
0.23

 
$
0.12

 
$
1.00

 
$
0.68


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

 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Cash and cash equivalents
 
$
22,221

 
$
22,045

 
$
20,305

Certificates of deposit with other banks
 
14,778

 
14,778

 
14,778

Investment securities
 
231,213

 
226,306

 
231,507

Loans held for sale
 
75,807

 
63,706

 
66,794

Loans
 
1,304,366

 
1,296,460

 
1,105,941

Allowance for loan losses
 
(10,939
)
 
(11,439
)
 
(9,878
)
Net loans
 
1,293,427

 
1,285,021

 
1,096,063

Premises and equipment, net
 
26,545

 
26,706

 
26,686

Goodwill
 
18,480

 
18,480

 
18,480

Other assets
 
68,498

 
66,062

 
59,689

     Total assets
 
$
1,750,969

 
$
1,723,104

 
$
1,534,302

 
 
 
 
 
 
 
Deposits
 
$
1,309,154

 
$
1,379,186

 
$
1,159,580

Borrowed funds
 
214,887

 
122,000

 
152,169

Other liabilities
 
50,155

 
51,042

 
72,361

Shareholders' equity
 
176,773

 
170,876

 
150,192

     Total liabilities and shareholders' equity
 
$
1,750,969

 
$
1,723,104

 
$
1,534,302









Reportable Segments
(Unaudited)

Twelve Months Ended December 31, 2018
 
Commercial & Retail Banking
 
Mortgage Banking
 
Financial Holding Company
 
Intercompany Eliminations
 
Consolidated
(Dollars in thousands)
 
 
 
 
 
Interest income
 
$
63,762

 
$
6,667

 
$
5

 
$
(674
)
 
$
69,760

Interest expense
 
13,667

 
4,085

 
1,756

 
(1,802
)
 
17,706

Net interest income
 
50,095

 
2,582

 
(1,751
)
 
1,128

 
52,054

Provision for loan losses
 
2,386

 
54

 

 

 
2,440

Net interest income after provision for loan losses
 
47,709

 
2,528

 
(1,751
)
 
1,128

 
49,614

 
 
 
 
 
 
 
 
 
 
 
Noninterest Income:
 
 
 
 
 
 
 
 
 
 
Mortgage fee income
 
585

 
32,880

 

 
(1,128
)
 
32,337

Other income
 
6,479

 
(243
)
 
6,411

 
(6,344
)
 
6,303

Total noninterest income
 
7,064

 
32,637

 
6,411

 
(7,472
)
 
38,640

 
 
 
 
 
 
 
 
 
 
 
Noninterest Expenses:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
14,924

 
23,927

 
7,373

 

 
46,224

Other expense
 
20,081

 
8,608

 
4,309

 
(6,344
)
 
26,654

Total noninterest expenses
 
35,005

 
32,535

 
11,682

 
(6,344
)
 
72,878

 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
19,768

 
2,630

 
(7,022
)
 

 
15,376

Income tax expense (benefit)
 
4,265

 
677

 
(1,569
)
 

 
3,373

Net income (loss)
 
$
15,503

 
$
1,953

 
$
(5,453
)
 
$

 
$
12,003

Preferred stock dividends
 

 

 
489

 

 
489

Net income (loss) available to common shareholders
 
$
15,503

 
$
1,953

 
$
(5,942
)
 
$

 
$
11,514









Reportable Segments
(Unaudited)

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

 
$
4,698

 
$
4

 
$
(527
)
 
$
56,598

Interest expense
 
9,118

 
2,317

 
2,241

 
(1,375
)
 
12,301

Net interest income
 
43,305

 
2,381

 
(2,237
)
 
848

 
44,297

Provision for loan losses
 
1,967

 
206

 

 

 
2,173

Net interest income after provision for loan losses
 
41,338

 
2,175

 
(2,237
)
 
848

 
42,124

 
 
 
 
 
 
 
 
 
 
 
Noninterest Income:
 
 
 
 
 
 
 
 
 
 
Mortgage fee income
 
736

 
37,262

 

 
(849
)
 
37,149

Other income
 
5,866

 
(2,372
)
 
5,466

 
(5,403
)
 
3,557

Total noninterest income
 
6,602

 
34,890

 
5,466

 
(6,252
)
 
40,706

 
 
 
 
 
 
 
 
 
 
 
Noninterest Expenses:
 
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
 
12,266

 
26,196

 
5,646

 

 
44,108

Other expense
 
19,523

 
8,188

 
4,085

 
(5,404
)
 
26,392

Total noninterest expenses
 
31,789

 
34,384

 
9,731

 
(5,404
)
 
70,500

 
 
 
 
 
 
 
 
 
 
 
Income (loss) before income taxes
 
16,151

 
2,681

 
(6,502
)
 

 
12,330

Income tax expense (benefit)
 
5,820

 
1,082

 
(2,147
)
 

 
4,755

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







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

 
 
Three Months Ended
December 31, 2018
 
Three Months Ended
September 30, 2018
 
Three Months Ended
December 31, 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
 
$
8,123

 
$
45

 
2.17
%
 
$
5,178

 
$
30

 
2.30
%
 
$
4,636

 
$
15

 
1.28
%
CDs with other banks
 
14,778

 
74

 
1.99

 
14,778

 
73

 
1.96

 
14,778

 
75

 
2.01

Investment securities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


     Taxable
 
146,488

 
924

 
2.50

 
148,499

 
869

 
2.32

 
147,459

 
774

 
2.08

     Tax-exempt
 
79,906

 
723

 
3.59

 
79,961

 
715

 
3.55

 
68,759

 
572

 
3.30

Loans and loans held for sale: 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


     Commercial
 
924,547

 
12,518

 
5.37

 
883,051

 
11,323

 
5.09

 
770,664

 
9,042

 
4.65

     Tax exempt
 
14,454

 
128

 
3.51

 
14,231

 
125

 
3.48

 
14,679

 
128

 
3.46

     Real estate
 
415,502

 
5,039

 
4.81

 
408,719

 
4,909

 
4.77

 
374,047

 
4,300

 
4.56

     Consumer
 
10,215

 
135

 
5.24

 
10,844

 
132

 
4.83

 
13,006

 
180

 
5.49

Total loans
 
1,364,718

 
17,820

 
5.18

 
1,316,845

 
16,489

 
4.97

 
1,172,396

 
13,650

 
4.62

Total earning assets
 
1,614,013

 
19,586

 
4.81

 
1,565,261

 
18,176

 
4.61

 
1,408,028

 
15,086

 
4.25

Less: Allowance for loan losses
 
(11,268
)
 
 
 
 
 
(10,717
)
 
 
 
 
 
(9,579
)
 
 
 
 
Cash and due from banks
 
16,515

 
 
 
 
 
18,020

 
 
 
 
 
16,969

 
 
 
 
Other assets
 
109,146

 
 
 
 
 
108,618

 
 
 
 
 
96,103

 
 
 
 
     Total assets
 
$
1,728,406

 
 
 
 
 
$
1,681,182

 
 
 
 
 
$
1,511,521

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     NOW
 
$
414,997

 
$
865

 
0.83

 
$
413,121

 
$
773

 
0.74

 
$
467,095

 
$
807

 
0.69

     Money market checking
 
261,928

 
852

 
1.29

 
246,624

 
676

 
1.09

 
238,262

 
432

 
0.72

     Savings
 
40,494

 
1

 
0.01

 
42,760

 
1

 
0.01

 
44,685

 
19

 
0.17

     IRAs
 
17,937

 
78

 
1.73

 
17,950

 
75

 
1.66

 
17,200

 
59

 
1.36

     CDs
 
384,540

 
1,902

 
1.96

 
348,467

 
1,585

 
1.80

 
278,446

 
1,025

 
1.46

Repurchase agreements and federal funds sold
 
15,573

 
6

 
0.15

 
17,911

 
10

 
0.22

 
24,727

 
19

 
0.30

FHLB and other borrowings
 
173,110

 
1,150

 
2.64

 
202,670

 
1,199

 
2.35

 
122,388

 
474

 
1.54

Subordinated debt
 
17,861

 
322

 
7.15

 
19,932

 
333

 
6.63

 
33,524

 
568

 
6.72

     Total interest-bearing liabilities
 
1,326,440

 
5,176

 
1.55

 
1,309,435

 
4,652

 
1.41

 
1,226,327

 
3,403

 
1.10

Noninterest bearing demand deposits
 
217,527

 
 
 
 
 
193,116

 
 
 
 
 
127,417

 
 
 
 
Other liabilities
 
11,903

 
 
 
 
 
10,710

 
 
 
 
 
7,419

 
 
 
 
     Total liabilities
 
1,555,870

 
 
 
 
 
1,513,261

 
 
 
 
 
1,361,163

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
7,834

 
 
 
 
 
7,834

 
 
 
 
 
7,834

 
 
 
 
Common stock
 
11,633

 
 
 
 
 
11,467

 
 
 
 
 
10,496

 
 
 
 
Paid-in capital
 
116,254

 
 
 
 
 
113,482

 
 
 
 
 
99,123

 
 
 
 
Treasury stock
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
 
(1,084
)
 
 
 
 
Retained earnings
 
46,852

 
 
 
 
 
43,793

 
 
 
 
 
36,982

 
 
 
 
Accumulated other comprehensive income
 
(8,953
)
 
 
 
 
 
(7,571
)
 
 
 
 
 
(2,993
)
 
 
 
 
     Total stockholders’ equity
 
172,536

 
 
 
 
 
167,921

 
 
 
 
 
150,358

 
 
 
 
     Total liabilities and stockholders’ equity
 
$
1,728,406

 
 
 
 
 
$
1,681,182

 
 
 
 
 
$
1,511,521

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 
 
 
 
3.26

 
 
 
 
 
3.20

 
 
 
 
 
3.15

Net interest income-margin
 
 
 
$
14,410

 
3.54
%
 


 
$
13,524

 
3.43
%
 
 
 
$
11,683

 
3.29
%
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, 2018
 
Twelve Months Ended
December 31, 2017
 
Twelve Months Ended
December 31, 2016
(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
 
$
5,176

 
$
108

 
2.09
%
 
$
3,790

 
$
52

 
1.37
%
 
$
16,347

 
$
94

 
0.58
%
CDs with other banks
 
14,778

 
295

 
2.00

 
14,619

 
288

 
1.97

 
11,694

 
228

 
1.95

Investment securities:
 
 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

     Taxable
 
150,134

 
3,580

 
2.38

 
125,797

 
2,658

 
2.11

 
76,525

 
1,366

 
1.79

     Tax-exempt
 
79,161

 
2,810

 
3.55

 
58,786

 
1,863

 
3.17

 
64,108

 
1,853

 
2.89

Loans and loans held for sale: 1
 
 
 
 
 
 

 
 

 
 

 
 

 
 

 
 

 
 

     Commercial
 
854,108

 
43,099

 
5.05

 
751,444

 
33,896

 
4.51

 
734,829

 
32,620

 
4.44

     Tax exempt
 
14,352

 
499

 
3.48

 
15,064

 
520

 
3.45

 
16,326

 
564

 
3.45

     Real estate
 
395,302

 
18,794

 
4.75

 
373,360

 
16,612

 
4.45

 
398,766

 
16,594

 
4.16

     Consumer
 
11,349

 
575

 
5.07

 
13,660

 
709

 
5.19

 
16,762

 
804

 
4.80

Total loans
 
1,275,111

 
62,967

 
4.94

 
1,153,528

 
51,737

 
4.49

 
1,166,683

 
50,582

 
4.34

Total earning assets
 
1,524,360

 
69,760

 
4.58

 
1,356,520

 
56,598

 
4.17

 
1,335,357

 
54,123

 
4.05

Less: Allowance for loan losses
 
(10,530
)
 
 

 
 

 
(9,626
)
 
 

 
 

 
(8,939
)
 
 

 
 

Cash and due from banks
 
16,828

 
 

 
 
 
16,287

 
 

 
 
 
13,765

 
 

 
 

Other assets
 
106,600

 
 

 
 
 
90,585

 
 

 
 
 
87,815

 
 

 
 

     Total assets
 
$
1,637,258

 
 
 
 
 
$
1,453,766

 
 
 
 
 
$
1,427,998

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Deposits:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

     NOW
 
$
432,789

 
$
3,246

 
0.75

 
$
438,123

 
$
2,608

 
0.60
%
 
$
454,320

 
$
2,413

 
0.53
%
     Money market checking
 
245,008

 
2,455

 
1.00

 
239,632

 
1,781

 
0.74

 
163,630

 
1,282

 
0.78

     Savings
 
44,049

 
29

 
0.07

 
47,034

 
78

 
0.17

 
43,870

 
88

 
0.20

     IRAs
 
17,894

 
285

 
1.59

 
16,678

 
217

 
1.30

 
16,319

 
208

 
1.27

     CDs
 
319,720

 
5,620

 
1.76

 
262,417

 
3,610

 
1.38

 
314,542

 
3,757

 
1.19

Repurchase agreements and federal funds sold
 
18,536

 
56

 
0.30

 
23,559

 
75

 
0.32

 
27,066

 
72

 
0.27

FHLB and other borrowings
 
190,686

 
4,259

 
2.23

 
122,144

 
1,690

 
1.38

 
139,736

 
1,086

 
0.78

Subordinated debt
 
25,774

 
1,756

 
6.81

 
33,524

 
2,242

 
6.69

 
33,524

 
2,226

 
6.64

     Total interest-bearing liabilities
 
1,294,456

 
17,706

 
1.37

 
1,183,111

 
12,301

 
1.04

 
1,193,007

 
11,132

 
0.93

Noninterest bearing demand deposits
 
171,631

 
 

 
 

 
117,696

 
 

 
 

 
99,826

 
 

 
 

Other liabilities
 
10,304

 
 

 
 

 
8,006

 
 

 
 

 
12,220

 
 

 
 

     Total liabilities
 
1,476,391

 
 

 
 

 
1,308,813

 
 

 
 

 
1,305,053

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Preferred stock
 
7,834

 
 

 
 

 
7,927

 
 

 
 

 
16,334

 
 

 
 

Common stock
 
11,082

 
 

 
 

 
10,355

 
 

 
 

 
8,263

 
 

 
 

Paid-in capital
 
107,669

 
 

 
 

 
96,987

 
 

 
 

 
75,799

 
 

 
 

Treasury stock
 
(1,084
)
 
 

 
 

 
(1,084
)
 
 

 
 

 
(1,084
)
 
 

 
 

Retained earnings
 
42,509

 
 

 
 

 
34,155

 
 

 
 

 
25,943

 
 

 
 

Accumulated other comprehensive income
 
(7,143
)
 
 

 
 

 
(3,387
)
 
 

 
 

 
(2,310
)
 
 

 
 

     Total stockholders’ equity
 
160,867

 
 

 
 

 
144,953

 
 

 
 

 
122,945

 
 

 
 

     Total liabilities and stockholders’ equity
 
$
1,637,258

 
 

 
 

 
$
1,453,766

 
 

 
 

 
$
1,427,998

 
 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest spread
 
 

 
 

 
3.21

 
 

 
 

 
3.13

 
 

 
 

 
3.12

Net interest income-margin
 
 

 
$
52,054

 
3.41
%
 
 

 
$
44,297

 
3.27
%
 
 

 
$
42,991

 
3.22
%
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
 
 
2018
 
2018
 
2018
 
2018
 
2017
 
2018
 
2017
 
 
Fourth Quarter
 
Third
Quarter
 
Second
Quarter
 
First
Quarter
 
Fourth Quarter
 
 
Earnings and Per Share Data:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Net income
 
$
2,999

 
$
3,579

 
$
2,831

 
$
2,594

 
$
1,423

 
$
12,003

 
$
7,575

     Net income available to common shareholders
 
2,876

 
3,456

 
2,709

 
2,473

 
1,299

 
11,514

 
7,077

     Earnings per share - basic
 
0.25

 
0.30

 
0.25

 
0.24

 
0.12

 
1.04

 
0.69

     Earnings per share - diluted
 
0.24

 
0.29

 
0.25

 
0.23

 
0.12

 
1.00

 
0.68

     Cash dividends paid per common share
 
0.03

 
0.03

 
0.025

 
0.025

 
0.025

 
0.11

 
0.10

     Book value per common share
 
14.55

 
14.13

 
13.93

 
13.53

 
13.63

 
14.55

 
13.63

     Tangible book value per common share
 
12.92

 
12.48

 
12.25

 
11.72

 
11.80

 
12.92

 
11.80

     Weighted average shares outstanding - basic
 
11,582,378

 
11,416,202

 
10,634,805

 
10,474,138

 
10,444,627

 
11,030,984

 
10,308,738

     Weighted average shares outstanding - diluted
 
12,772,222

 
13,113,259

 
11,502,148

 
12,714,353

 
10,823,994

 
12,722,003

 
10,440,228

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Performance Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     Return on average assets 1
 
0.69
%
 
0.85
%
 
0.70
%
 
0.68
%
 
0.38
%
 
0.73
%
 
0.52
%
     Return on average equity 1
 
6.95
%
 
8.53
%
 
7.40
%
 
6.94
%
 
3.79
%
 
7.46
%
 
5.23
%
     Net interest margin 2
 
3.54
%
 
3.43
%
 
3.38
%
 
3.29
%
 
3.29
%
 
3.41
%
 
3.27
%
     Efficiency ratio 3
 
81.36
%
 
76.63
%
 
82.09
%
 
81.64
%
 
81.11
%
 
80.36
%
 
82.94
%
     Overhead ratio 1 4
 
4.28
%
 
4.38
%
 
4.76
%
 
4.40
%
 
4.69
%
 
4.45
%
 
4.85
%