Financial Performance - The company reported a significant increase in total assets, reaching $1.2 billion, up 15% year-over-year[4] - Net income for the quarter was $25 million, representing a 10% increase compared to the previous quarter[4] - The company experienced a 20% growth in customer deposits, totaling $800 million, driven by enhanced customer engagement strategies[4] - Loan origination volume increased by 30%, amounting to $150 million, reflecting strong demand in the commercial sector[4] - The company anticipates a revenue growth of 12% for the next quarter, projecting total revenues to reach $110 million[4] Strategic Initiatives - The company plans to expand its market presence by entering two new states by Q3 2024, aiming for a 25% increase in market share[4] - Research and development expenses rose to $5 million, focusing on new fintech solutions and digital banking enhancements[4] Regulatory and Compliance Risks - The company is facing increased regulatory scrutiny in the fintech sector, which may affect operational strategies moving forward[4] - Legislative or regulatory changes may adversely affect the company's operations, including increased regulatory oversight[13] Cybersecurity Concerns - Cybersecurity risks remain a top concern, with investments planned to enhance data protection measures[4] - There is an increasing risk of sophisticated cybersecurity threats that could lead to theft or misuse of confidential information[13] Market and Competitive Challenges - Increased competitive challenges and pricing pressures are noted among financial institutions and non-bank financial companies[13] - Changes in consumer spending and savings habits are affecting demand for loan products and deposit flow[13] Mergers and Acquisitions - A merger agreement with Integrated Financial Holdings, Inc. was terminated, which may impact stock prices and customer retention[4] - The company faces risks associated with the termination of the merger agreement with Integrated Financial Holdings, Inc., which may impact the market price of its common stock and customer retention[13] Operational Risks - The company is dependent on its information technology and telecommunications systems, with potential risks related to system failures or interruptions[13] - There is a concentration risk in the company's deposit base, particularly with large clients and specific industries like gaming[13] - Costs associated with deposit insurance and changes in FDIC insurance coverage levels are also a concern[13] Industry Risks - The developing cryptocurrency industry presents risks, uncertainties, and potential losses due to an evolving regulatory framework[13]

Financial Performance and Risks - The company's noninterest bearing deposits increased from 10.9% of total deposits as of December 31, 2017, to 47.9% as of December 31, 2022, largely due to its gaming initiative[160]. - Gaming deposits totaled $652.1 million as of December 31, 2022, down from $911.6 million as of December 31, 2021, with $536.9 million concentrated among the three largest clients[160]. - The Federal Reserve Board has significantly decreased benchmark interest rates to near zero in response to the COVID-19 pandemic, but is now reversing this policy due to inflation concerns, leading to rising market interest rates[159]. - The transition from LIBOR to SOFR as the primary interest rate benchmark is expected to create considerable costs and additional risks for the company[165]. - The company may experience adverse effects on its financial condition due to potential losses from credit risk associated with counterparties in the financial services industry[161]. - The company is facing significant volatility in cryptocurrency markets, which may materially impact financial statements and stock market price[171]. - The company is subject to liquidity risk, which could disrupt its ability to meet financial obligations if funding sources are restricted[184][185]. - Economic downturns may lead to deposit base outflows, limiting access to liquidity and increasing funding costs[186]. - The company’s ability to pay dividends is restricted by federal policies and regulations, and future dividend payments depend on various factors including earnings and capital requirements[217]. - The inability to generate profits and pay dividends could adversely affect the company's financial condition and results of operations[210]. Business Strategy and Growth - The company is focused on long-term growth through new business initiatives, including investments in FinTech and cryptocurrency, which present substantial risks and uncertainties[168]. - The company has increased its investments in securities and loan growth due to the rise in noninterest bearing deposits[160]. - The company is pursuing strategies to acquire and internally develop technologies to scale and diversify banking capabilities, with uncertain timing for profitability[172]. - The introduction of new lines of business may require significant investment and may not meet initial timetables or profitability targets due to external factors[173]. Competition and Market Position - The company faces significant competition from various financial institutions, which may adversely affect its market position and profitability[162]. - The trading volume of the company's common stock is lower than that of larger financial services companies, which may affect liquidity and marketability[212]. - The company is engaged in relationships with clients in the payments, digital savings, and gaming industries, which could be impacted by regulatory changes[169]. Regulatory and Compliance Risks - The merger with IFH is pending regulatory approvals, and its success will depend on realizing anticipated cost savings without adversely affecting revenues[177][178]. - Integration challenges post-merger may lead to loss of key employees and disrupt ongoing business operations, affecting the combined company's performance[180][181]. - The company is subject to extensive federal, state, and local taxes, which could adversely affect performance if tax laws change[204]. - The company must comply with capital adequacy guidelines imposed by the Federal Reserve Board and the FDIC, failure to meet these could compromise its status as a financial holding company[208]. - The company faces risks related to compliance with the Sarbanes-Oxley Act, and any material weaknesses in internal controls could lead to sanctions and loss of investor confidence[218]. Operational Risks - The company relies on external vendors for operations, and any failure in their performance could disrupt business and adversely impact financial condition[196]. - Environmental liability risks associated with lending activities could lead to significant remediation costs and affect property values[197]. - The accuracy of customer information is critical, as reliance on inaccurate data could materially impact financial condition and results of operations[198]. - Changes in accounting policies and estimates could materially affect how the company reports its financial condition and results of operations[221]. - The company’s financial condition may be negatively impacted by disruptions in securities markets, leading to potential impairments of its investment securities portfolio[220]. - The company is exposed to risks from inadequate or inaccurate analytical and forecasting models, which could result in unexpected losses or insufficient allowances for loan losses[225]. - The company’s stock price can be volatile, influenced by market fluctuations, economic conditions, and regulatory changes[215].

Financial Performance - Net income attributable to the parent for the three months ended September 30, 2022, was $2,718 thousand, a decrease of 77.0% from $11,828 thousand in the same period of 2021[16]. - Basic earnings per share (EPS) for the three months ended September 30, 2022, was $0.22, a decrease from $1.00 in the same period of 2021, reflecting a decline of 78.0%[16]. - The company reported a comprehensive loss of $7,839 thousand for the three months ended September 30, 2022, compared to a comprehensive income of $11,014 thousand in the same period of 2021[18]. - The company reported a net loss of $1,698,000 from Edge Ventures for the three months ended September 30, 2022, compared to a net loss of $1,677,000 in the same period of 2021, indicating a slight increase in losses[150]. - Total net income available to common shareholders for the three months ended September 30, 2022, was $2,718 thousand, compared to $11,828 thousand for the same period in 2021[145]. - Total net income available to common shareholders for the three months ended September 30, 2022, was $8,033,000, a decrease from $13,563,000 in the same period of 2021, reflecting a decline of 40.9%[150]. Asset and Liability Management - Total assets increased to $3,139,922 thousand as of September 30, 2022, up from $2,792,449 thousand at December 31, 2021, representing a growth of 12.4%[14]. - Total liabilities rose to $2,895,562 thousand as of September 30, 2022, compared to $2,517,146 thousand at December 31, 2021, marking an increase of 15.0%[14]. - The allowance for loan losses increased to $26,515 thousand as of September 30, 2022, from $18,266 thousand at December 31, 2021, indicating a higher reserve for potential loan defaults[14]. - The total loan portfolio amounted to $2,470,438 thousand, with non-accrual loans totaling $22,350 thousand[75]. - The total loans categorized as "Pass" rated were $2,386,206,000 as of September 30, 2022, compared to $1,770,237,000 at the end of 2021, showing a 34.6% increase[72]. Income and Expense Analysis - Net interest income for the three months ended September 30, 2022, was $29,846 thousand, a 56.2% increase compared to $19,096 thousand for the same period in 2021[15]. - Noninterest income decreased to $8,191 thousand for the three months ended September 30, 2022, down from $21,951 thousand in the same period of 2021, a decline of 62.7%[15]. - Total noninterest expenses for the three months ended September 30, 2022, were $29,965,000, an increase from $25,829,000 in the same period of 2021, reflecting a rise of 16.5%[150]. - The company reported a net amortization and accretion of investments of $2,020,000 in 2022, down from $3,011,000 in 2021[25]. - The total charge-offs for the nine months ended September 30, 2022, were $7,304 thousand, primarily related to the subprime consumer automobile loan portfolio[85]. Loan Performance and Risk Assessment - Provision for loan losses was $5,120 thousand for the three months ended September 30, 2022, compared to $380 thousand in the same period of 2021, indicating a significant increase in risk assessment[15]. - The total criticized loans (Special Mention, Substandard, and Doubtful) amounted to $78,232,000 as of September 30, 2022, compared to $63,864,000 at the end of 2021, marking a 22.4% increase[72]. - The average recorded investment in impaired loans for the three months ended September 30, 2022, was $23,711,000, compared to $17,819,000 for the same period in 2021, indicating a 33.1% increase[62]. - Troubled debt restructured loans totaled $12.2 million as of September 30, 2022, with accruing loans representing 16% of total impaired loans[88]. - The allowance for loan losses (ALL) balance increased to $26,515 thousand as of September 30, 2022, from $18,266 thousand at December 31, 2021[85]. Market and Economic Conditions - Future outlook remains cautious amid market fluctuations and economic uncertainties[21]. - The impact of the COVID-19 pandemic continues to pose uncertainties for future operating results[40]. - The Federal Reserve raised its key interest rate to a range of 3.00% to 3.25% as of September 30, 2022, impacting the bank's interest income strategy[183]. - Management identified additional qualitative factors that may affect estimated credit losses, including lending policies and economic conditions[80]. - The company expects to enhance core deposits and fee income through the expansion of treasury services for Fintech and emerging technology companies[159]. Capital and Equity Management - Total stockholders' equity as of March 31, 2022, was $263.862 million, a decrease from $275.303 million at the end of 2021, representing a decline of about 4.2%[20]. - Tangible book value per common share decreased to $19.38 as of September 30, 2022, from $21.64 in 2021, a decline of 10.5%[179]. - The company completed the acquisition of 37.5% equity interest in Warp Speed Holdings for $38.4 million in cash and shares valued at $9.6 million[154][165]. - A merger agreement was entered into with Integrated Financial Holdings, Inc., where IFH shareholders will receive 1.21 shares of MVB common stock for each share of IFH common stock[153][167]. - The balance of recurring Level III assets, consisting solely of municipal securities, was $35,129,000 as of September 30, 2022, down from $41,763,000 at December 31, 2021[135].

Financial Performance - Net income attributable to the parent for the three months ended June 30, 2022, was $2,956 thousand, a decrease of 68.0% from $9,247 thousand in the same period of 2021[15]. - Earnings per common share (basic) for the three months ended June 30, 2022, was $0.24, down from $0.79 in the same period of 2021, a decline of 69.6%[15]. - Comprehensive loss for the three months ended June 30, 2022, was $(9,302) thousand, compared to comprehensive income of $11,138 thousand in the same period of 2021[16]. - The net income for the quarter was $2,956,000, compared to $2,864,000 in the prior period, indicating a growth of approximately 3.2%[17]. - The company reported a comprehensive loss of $12,258,000 for the quarter, which is a significant increase from the previous comprehensive loss of $13,556,000[17]. - Net income for the six months ended June 30, 2022, was $5,462,000, compared to $17,221,000 for the same period in 2021, reflecting a decrease of 68.3%[20]. - The company reported a net income of $5.8 million for the six months ended June 30, 2022, down from $17.3 million in the same period of 2021[161]. - Total net income available to common shareholders for the three months ended June 30, 2022, was $2,956,000, compared to $9,247,000 for the same period in 2021, indicating a decrease of about 68%[151]. Asset and Equity Growth - Total assets increased to $2,984,428 thousand as of June 30, 2022, up from $2,792,449 thousand at December 31, 2021, representing a growth of 6.9%[14]. - As of June 30, 2022, total stockholders' equity amounted to $252,910,000, reflecting a decrease from the previous balance[17]. - The total additional paid-in capital increased to $145,480,000 as of June 30, 2022, up from $143,521,000 at the end of the previous year[17]. - Total stockholders' equity rose to $255.2 million as of June 30, 2022, compared to $238.7 million in 2021, marking a 6.9% increase[168]. Loan and Deposit Activity - Total loans increased to $2.214 billion as of June 30, 2022, from $1.871 billion at December 31, 2021, representing a growth of approximately 18.3%[48]. - Total deposits increased to $2,614,970 thousand as of June 30, 2022, up from $2,377,605 thousand at December 31, 2021, representing a growth of 10.0%[14]. - The net increase in deposits for the six months ended June 30, 2022, was $237,365,000, compared to $412,486,000 in 2021, showing a decline of 42.4%[20]. - The commercial loan segment totaled $1.640 billion as of June 30, 2022, up from $1.481 billion at December 31, 2021, indicating an increase of about 10.8%[48]. - The allowance for loan losses increased to $22,734 thousand as of June 30, 2022, compared to $18,266 thousand at December 31, 2021, an increase of 24.5%[14]. Income and Expense Analysis - Net interest income for the three months ended June 30, 2022, was $26,660 thousand, a 40.0% increase from $19,055 thousand in the same period of 2021[15]. - Total noninterest expenses increased to $29,819 thousand for the three months ended June 30, 2022, compared to $23,403 thousand in the same period of 2021, an increase of 27.5%[15]. - Noninterest income decreased to $11,909 thousand for the three months ended June 30, 2022, down from $13,644 thousand in the same period of 2021, a decline of 12.7%[15]. - The net interest margin (tax-equivalent) improved to 3.63% for the six months ended June 30, 2022, compared to 3.25% for the same period in 2021[160]. - Noninterest expenses increased by $16.2 million during the six months ended June 30, 2022, compared to the same period in 2021[160]. Investment and Securities - The total investment securities available-for-sale amounted to $376.737 million, with an amortized cost of $411.774 million[42]. - The company reported a pretax loss of $40.4 million on securities if sold at fair value as of June 30, 2022, but intends to hold these securities until recovery[44]. - Investment securities totaled $411.0 million at June 30, 2022, compared to $453.9 million at December 31, 2021[208]. - The fair value of available-for-sale investment securities was $376,737,000, with $339,702,000 classified as Level II and $37,035,000 as Level III[125]. Loan Quality and Risk Management - The provision for loan losses was $5,100 thousand for the three months ended June 30, 2022, compared to a release of $1,540 thousand in the same period of 2021[15]. - The total past due loans increased from $12,010,000 as of December 31, 2021, to $15,675,000 as of June 30, 2022, indicating a rise of approximately 30.5%[72]. - Nonperforming loans increased to $19.3 million as of June 30, 2022, from $15.5 million as of June 30, 2021[171]. - The allowance for loan losses (ALL) balance increased to $22,734,000 as of June 30, 2022, up from $17,603,000 at December 31, 2021, indicating a rise of approximately 29.5%[82]. Future Outlook and Strategic Initiatives - The company is in the process of implementing a new expected credit loss methodology, which may increase the allowance for loan losses starting January 1, 2023[36]. - The company plans to adopt ASU 2016-13 for fiscal years ending after December 15, 2022, which may significantly influence the allowance for loan losses[36]. - The company anticipates continued expansion in its SBA lending focus, which is currently included within the commercial loan types[51]. - The company is expanding its treasury services function to support banking needs in the financial and emerging technology sectors[157].

Financial Performance - Net income attributable to the parent for Q1 2022 was $2,864 thousand, a decrease of 64.5% from $8,085 thousand in Q1 2021[15]. - Net income for Q1 2022 was $2.671 million, a decrease of 66.8% compared to $8.058 million in Q1 2021[20]. - The company reported a comprehensive loss of $10,692 thousand for Q1 2022, compared to a comprehensive income of $3,967 thousand in Q1 2021[16]. - Basic earnings per share (EPS) for Q1 2022 was $0.24, down 65.7% from $0.70 in Q1 2021; diluted EPS was $0.22, down 66.7% from $0.66[137]. - Return on average assets decreased to 0.4% for the three months ended March 31, 2022, down from 1.3% in the same period in 2021, attributed to a $5.2 million decrease in earnings[180]. - Return on average stockholders' equity decreased to 4.2% for the three months ended March 31, 2022, compared to 13.6% in the same period in 2021, due to a $5.2 million decrease in earnings[181]. Asset and Deposit Growth - Total assets increased to $2,893,464 thousand as of March 31, 2022, up from $2,792,449 thousand at December 31, 2021, representing a growth of 3.6%[14]. - Total deposits rose to $2,509,079 thousand as of March 31, 2022, compared to $2,377,605 thousand at December 31, 2021, marking an increase of 5.5%[14]. - Noninterest-bearing demand deposits rose to $1,308,998 thousand as of March 31, 2022, compared to $1,120,433 thousand at December 31, 2021, marking an increase of about 16.8%[102]. - Fintech deposits increased from $1.14 billion at December 31, 2021, to $1.25 billion as of March 31, 2022, driven by growth in gaming deposits, which rose to $970.4 million from $911.6 million[191]. Loan Performance - Total loans as of March 31, 2022, amounted to $1,882 billion, an increase from $1.661 billion at March 31, 2021[79]. - The total commercial loans stood at $1,481,407 thousand as of March 31, 2022, slightly up from $1,480,527 thousand at the end of 2021[46]. - The total past due loans as of March 31, 2022, amounted to $10.704 million, with $5.887 million classified as 90+ days past due[69]. - Nonperforming loans increased to $18,048 thousand in Q1 2022, compared to $11,577 thousand in Q1 2021, representing a rise in nonperforming loans to total loans receivable ratio to 1.0%[158]. - The total impaired loans as of March 31, 2022, were $22,526 thousand, compared to $22,455 thousand as of December 31, 2021, showing a slight increase[55]. Income and Expense Analysis - Net interest income for the three months ended March 31, 2022, was $21,848 thousand, an increase of 24.5% compared to $17,505 thousand for the same period in 2021[15]. - Total noninterest income for Q1 2022 was $11,870 thousand, a decrease of 4.7% from $12,458 thousand in Q1 2021[15]. - Noninterest expenses increased to $28,862 thousand in Q1 2022, up 50.9% from $19,118 thousand in Q1 2021[15]. - The efficiency ratio worsened to 85.6% in Q1 2022 from 63.8% in Q1 2021[158]. Loan Loss Provisions - The provision for loan losses was $1,280 thousand for Q1 2022, compared to $618 thousand in Q1 2021, indicating a significant increase of 106.5%[15]. - The allowance for loan losses increased to $18,808 thousand as of March 31, 2022, from $18,266 thousand at December 31, 2021, indicating a rise of 2.9%[14]. - The allowance for loan losses (ALL) balance at March 31, 2022, was $18.194 million, down from $17.603 million at December 31, 2021[78]. Investment and Securities - As of March 31, 2022, the total amortized cost of investment securities available-for-sale was $413.3 million, with a fair value of $395.3 million, reflecting an unrealized loss of $19.8 million[40]. - The fair value of available-for-sale investment securities was $395,301,000, with $355,633,000 classified as Level II and $39,668,000 as Level III[127]. - The company does not expect to sustain any material realized losses from the current decline in fair value of securities, which are considered temporarily impaired[43]. Capital and Equity - The company’s total stockholders' equity at the end of Q1 2022 was $263.862 million, a decrease from $275.303 million at the end of Q1 2021[20]. - Stockholders' equity decreased by $11.4 million to $263.9 million during the three months ended March 31, 2022, primarily due to a $13.6 million comprehensive loss[194]. - The equity to assets ratio declined from 9.8% at December 31, 2021, to 9.1% at March 31, 2022, as assets grew by $101.0 million[195]. Operational Insights - The company is expanding its treasury services to support financial and emerging technology companies, enhancing core deposits and fee income strategies[146]. - The company continues to invest in infrastructure to support future growth, focusing on margin improvement and operating efficiency[146]. - The Bank has an effective shelf registration covering $75 million of debt and equity securities available for issuance[202].

Financial Performance and Risks - The company had $6.3 million in goodwill and other intangible assets as of December 31, 2021, which may require future write-downs if cash flows decline significantly [164]. - Continued elevated levels of inflation could adversely impact the company's business, potentially leading to increased interest expenses and volatility in loan demand [159]. - The company faces substantial competition from various financial institutions, which may affect its growth and profitability [161]. - The company has significant exposure to credit risk due to interrelated relationships with other financial institutions, which could adversely affect its financial condition [160]. - The company is subject to liquidity risk, which could disrupt its ability to meet financial obligations [179]. - Limited availability of borrowings from the FHLB system could negatively impact earnings and liquidity [181]. - The inability to generate profits and pay dividends could adversely affect the company's financial condition and results of operations [207]. Regulatory and Compliance Challenges - The company is subject to extensive federal and state regulations that significantly affect its lending practices, capital structure, and growth strategies [202]. - The company faces risks related to compliance with various regulations, which could result in enforcement actions and reputational damage [202]. - The transition away from LIBOR may create considerable costs and additional risks, impacting the company's financial instruments indexed to LIBOR [165]. - The company must effectively manage the transition from LIBOR to alternative rates to avoid reputational damage and financial losses [169]. - The company is expanding its banking-as-a-service business, which may face heightened regulatory scrutiny regarding consumer compliance [173]. Market and Economic Factors - The Federal Reserve may begin to increase interest rates, which could lead to unintended volatility in the financial system and impact the company's operations [158]. - The company may face competitive pressures to increase interest rates on deposits to retain its gaming customers, potentially increasing funding costs [163]. - Changes in tax laws may adversely affect performance and necessitate adjustments in accounting practices [201]. Strategic Initiatives and Investments - The company has undertaken various new business initiatives, which involve substantial risks and uncertainties, particularly in underdeveloped markets [170]. - The company is involved in innovative strategies to provide independent banking to corporate clients across the U.S., leveraging investments in Fintech, which may increase operational and compliance risks [171]. - Investments in Fintech companies have significantly impacted the company's results of operations and are expected to continue doing so in the future [175]. - Earnings from Fintech investments can be volatile, and any deterioration in their value could result in losses [176]. - Significant costs are anticipated for acquiring and developing new technologies to scale and diversify banking capabilities, with uncertain timing for profitability [172]. - Potential acquisitions may disrupt business and dilute stockholder value, with risks including payment of premiums and failure to realize expected benefits [178]. Operational and Internal Control Risks - Cybersecurity risks, including breaches and attacks, could adversely affect operations and customer trust [187]. - The company's risk management processes rely on analytical and forecasting models, which may prove inadequate, leading to unexpected losses or insufficient allowances for loan losses [224][225]. - The company has no material weaknesses in internal control over financial reporting as of December 31, 2021, but future weaknesses could lead to sanctions and loss of investor confidence [217]. - Changes in accounting standards and policies could materially impact how the company reports its financial condition and results of operations [223]. Stock Performance and Dividends - The trading volume of the company's common stock is lower than that of larger financial services companies, which may affect liquidity and marketability [209]. - The company's stock price can be volatile, influenced by factors such as quarterly results, analyst recommendations, and general market conditions [212][213]. - The company's ability to pay dividends is restricted by federal policies and regulations, and any future dividend payments will depend on various factors including future earnings and regulatory restrictions [214][215].

Financial Performance - Net income attributable to the parent for the three months ended September 30, 2021, was $11,828 thousand, compared to $6,491 thousand for the same period in 2020, reflecting an increase of 82.5%[15] - Comprehensive income for the three months ended September 30, 2021, was $11,014 thousand, compared to $7,432 thousand for the same period in 2020, an increase of 48.0%[17] - Net income for the quarter ended June 30, 2021, was $9,247,000, representing an increase from the previous quarter[19] - The company reported a net income of $11,828,000 for the quarter ended September 30, 2021[20] - Net income for the nine months ended September 30, 2021, was $28,895,000, compared to $25,573,000 for the same period in 2020, representing an increase of 9.1%[22] - Earnings for the nine months ended September 30, 2021, were $29.2 million, up from $25.6 million for the same period in 2020, representing a growth of 14%[164] - Basic earnings per share increased to $2.49 for the nine months ended September 30, 2021, compared to $2.11 in 2020, reflecting a growth of 18%[165] Assets and Liabilities - Total assets increased to $2,788,824 thousand as of September 30, 2021, up from $2,331,476 thousand at December 31, 2020, representing a growth of 19.6%[14] - Total liabilities increased to $2,522,124 thousand as of September 30, 2021, from $2,091,993 thousand at December 31, 2020, reflecting a growth of 20.6%[14] - Total stockholders' equity as of September 30, 2021, increased to $266,700,000 from $248,611,000 at the end of June 2021[20] - Cash and cash equivalents at the end of the period increased to $390,081,000 from $295,823,000, marking a rise of 31.9%[24] - The carrying value of loans receivable, net, was $1.739 billion as of September 30, 2021, up from $1.428 billion at the end of 2020, marking a 21.7% increase[123] Deposits and Loans - Total deposits rose to $2,398,940 thousand as of September 30, 2021, compared to $1,982,389 thousand at December 31, 2020, marking a growth of 20.9%[14] - Total loans increased to $1.77 billion as of September 30, 2021, up from $1.45 billion as of December 31, 2020, reflecting growth in commercial and non-residential real estate loans[48] - Total loans increased by $66.9 million to $1.76 billion during the three months ended September 30, 2021[161] - Total deposits increased to $579,875,000 in 2021 from $491,259,000 in 2020, reflecting a growth of 18%[22] Income and Expenses - Net interest income after provision for loan losses for the nine months ended September 30, 2021, was $56,198 thousand, up from $34,274 thousand for the same period in 2020, an increase of 64.1%[15] - Noninterest income for the three months ended September 30, 2021, was $21,951 thousand, compared to $19,398 thousand in the same period of 2020, a rise of 13.3%[15] - The company reported a provision for loan losses of $380 thousand for the three months ended September 30, 2021, compared to a provision of $8,631 thousand for the same period in 2020, a decrease of 95.6%[15] - Noninterest income for the nine months ended September 30, 2021, was $48.1 million, down from $75.8 million in the same period of 2020, representing a decrease of approximately 36.5%[213] - The decline in noninterest income was primarily due to a $33.4 million decrease in mortgage fee income[213] Investments and Acquisitions - MVB Financial Corp. continues to expand its Fintech-related investments and subsidiaries, including MVB Technology and Flexia Payments, to enhance its service offerings[26] - The Bank acquired majority interests of 80.0% in both Flexia and Trabian, and a 93.4% interest in MVB Technology, consolidating 100% of these entities in financial statements[30] - The company recognized a pre-tax gain of $10.8 million from the sale of four banking centers in West Virginia in July 2021[157] - The company increased its equity investment in Interchecks to $7.7 million, allowing for significant influence over operations as of September 30, 2021[100] Loan Quality and Allowance for Loan Losses - The allowance for loan losses decreased to $25,187 thousand as of September 30, 2021, from $25,844 thousand at December 31, 2020, indicating a reduction of 2.5%[14] - The allowance for loan losses (ALL) balance as of September 30, 2021, was $24,808 thousand, down from $24,882 thousand at June 30, 2021[81] - Troubled debt restructurings (TDRs) totaled $7.7 million as of September 30, 2021, with accruing TDRs representing 8% of total impaired loans[83] - The provision for loan losses was a release of $1 thousand for the quarter ending September 30, 2021, indicating a decrease in expected credit losses[81] - The total average investment in impaired loans for the nine months ended September 30, 2021, was $14,664,000, with interest income recognized on an accrual basis of $44,000[58] Market and Economic Conditions - The impact of the COVID-19 pandemic on future operating results remains uncertain, depending on potential resurgences of the virus and related economic conditions[34] - The Bank's financial reporting capabilities and operations have been disrupted due to the COVID-19 pandemic, impacting clients and third parties[34] - The adoption of ASU 2016-13, effective for fiscal years ending after December 15, 2022, may lead to an increase in the allowance for loan losses due to a shift from an "incurred loss" model to an "expected loss" model[35] Capital and Debt - The company issued subordinated debt of $30,000,000 in 2021, which was not present in the previous year[22] - Subordinated debt balance increased to $72.966 million as of September 30, 2021, from $43.407 million at the end of 2020, representing a 67.9% increase[111] - In September 2021, the company completed a private placement of $30 million fixed-to-floating rate subordinated notes, maturing on October 1, 2031[112] Miscellaneous - The company had lease liabilities totaling $17.1 million as of September 30, 2021, with a weighted-average remaining lease term for operating leases of 12.2 years[94] - The company recognized investments totaling $4.0 million in affordable housing projects, with cumulative amortization of $1.5 million as of September 30, 2021[46] - The company issued 24,408 shares of unregistered common stock valued at $40.97 per share, totaling $1.0 million in September 2021[122]

Financial Performance - Net income attributable to the parent for Q2 2021 was $9,247 thousand, a decrease of 48.6% from $17,919 thousand in Q2 2020[17]. - Earnings per common share (basic) decreased to $0.79 in Q2 2021 from $1.50 in Q2 2020, a decline of 47.3%[17]. - Comprehensive income for Q2 2021 was $11,138 thousand, compared to $18,079 thousand in Q2 2020, reflecting a decrease of 38.5%[19]. - Net income for the first quarter of 2021 was $9,247,000, an increase from $8,085,000 in the previous quarter[21]. - Net income for the six months ended June 30, 2021, was $17.3 million, down from $19.1 million in the same period of 2020[167]. - The net income for the three months ended June 30, 2021, was $9,247,000, compared to $18,034,000 for the same period in 2020, indicating a decline of approximately 48.7%[146]. Asset and Liability Management - Total assets increased to $2,734,540 thousand as of June 30, 2021, up from $2,331,476 thousand at December 31, 2020, representing a growth of 17.3%[16]. - Total liabilities increased to $2,485,140 thousand as of June 30, 2021, up from $2,091,993 thousand at December 31, 2020, an increase of 18.8%[16]. - Total stockholders' equity increased to $236,210,000 as of March 31, 2021, compared to $239,483,000 at the end of 2020[21]. - The carrying value of cash and cash equivalents was $332,771,000, with an estimated fair value also at $332,771,000[124]. - The total financial liabilities reported as of June 30, 2021, were $2,229,175,000, with an estimated fair value of $2,186,598,000, reflecting a decrease of about 1.9%[124]. Loan and Credit Quality - The allowance for loan losses decreased to $24,882 thousand as of June 30, 2021, from $25,844 thousand at December 31, 2020, indicating improved asset quality[16]. - The provision for loan losses for the six months ended June 30, 2021, was a release of $1,450,000, compared to a provision of $6,423,000 for the same period in 2020[86]. - The total amount of criticized loans (Special Mention, Substandard, and Doubtful) was $60,514,000 as of June 30, 2021, compared to $58,270,000 as of December 31, 2020, showing an increase of about 3.8%[72]. - The total loans as of June 30, 2021, were $1.699871 billion, an increase from $1.454801 billion as of December 31, 2020[52]. - The total allowance for loan losses (ALL) was $24,882,000, down from $26,124,000 at March 31, 2021, reflecting a decrease of 4.7%[85]. Income and Expense Analysis - Net interest income after provision for loan losses was $20,595 thousand for Q2 2021, compared to $11,862 thousand in Q2 2020, reflecting a significant increase of 73.8%[17]. - Noninterest income for the six months ended June 30, 2021, was $26,102 thousand, down 53.7% from $56,363 thousand in the same period of 2020[17]. - Total noninterest expenses for the three months ended June 30, 2021, were $23,403,000, compared to $33,333,000 for the same period in 2020, indicating a decrease of approximately 29.8%[152]. - The overall cost of interest-bearing liabilities decreased to 0.47% in the six months ended June 30, 2021, from 1.12% in the same period of 2020[166]. - The yield on earning assets (tax-equivalent) was 3.54% for the six months ended June 30, 2021, compared to 4.57% for the same period in 2020[166]. Investment and Securities - The fair value of available-for-sale investment securities was $450,772,000, with $411,002,000 classified under Level II inputs[124]. - The Company reported sales of available-for-sale securities of $34.279 million for the three months ended June 30, 2021, compared to $30.860 million for the same period in 2020, resulting in gross gains of $1.708 million[49]. - The amortized cost of total debt securities was $435.889 million as of June 30, 2021, with a fair value of $439.843 million[45]. - The Company has no intention of selling securities at a loss, despite an unrealized loss position of $2.4 million as of June 30, 2021[47]. - The total balance of recurring Level III assets was $39,770,000, down from $43,679,000 at December 31, 2020, representing a decrease of approximately 9.2%[136]. Strategic Initiatives and Acquisitions - The company acquired majority interests in Flexia and Trabian, consolidating 100% of their financials despite owning only 80%[33]. - Edge Ventures was established to oversee and support MVB's Fintech companies, indicating a focus on innovation and technology[29]. - The Bank acquired an 80% interest in Flexia Payments, LLC for approximately $2.5 million in February 2021[156]. - The Bank invested approximately $1.6 million to acquire an 80% interest in Trabian Technology, Inc. in April 2021[157]. - The Company is expanding its treasury services to support financial and emerging technology companies, enhancing core deposits and fee income strategies[162].

Financial Performance - Net income attributable to the parent for Q1 2021 was $8,085 thousand, compared to $1,048 thousand in Q1 2020, marking a significant increase of 671.5%[13]. - Comprehensive income for Q1 2021 was $3,967 thousand, compared to $131 thousand in Q1 2020, showing a substantial increase[14]. - Net income for the three months ended March 31, 2021, was $8,058,000, compared to $1,048,000 for the same period in 2020, representing a significant increase[16]. - The Company earned $8.1 million in Q1 2021, a significant increase from $1.0 million in Q1 2020, resulting in a return on average assets of 1.3% and a return on average equity of 13.6%[144]. - Basic earnings per share (EPS) for Q1 2021 was $0.70, up from $0.08 in Q1 2020, indicating strong earnings growth[132]. Asset and Deposit Growth - Total assets increased to $2,646,089 thousand as of March 31, 2021, up from $2,331,476 thousand as of December 31, 2020, representing a growth of 13.5%[12]. - Total deposits rose to $2,216,553 thousand as of March 31, 2021, up from $1,982,389 thousand as of December 31, 2020, reflecting an increase of 11.8%[12]. - Total deposits increased by $234,164,000 in Q1 2021, compared to $332,734,000 in Q1 2020, indicating strong customer confidence[16]. - Total cash and cash equivalents at the end of the period increased to $339,616,000 from $88,874,000 year-over-year[16]. - Total deposits amounted to $2,216,553 thousand as of March 31, 2021, with an estimated fair value of $2,196,951 thousand[110]. Income and Expense Analysis - Net interest income for Q1 2021 was $17,505 thousand, compared to $16,171 thousand in Q1 2020, an increase of 8.2%[13]. - Noninterest income for Q1 2021 totaled $12,458 thousand, up from $10,850 thousand in Q1 2020, representing a growth of 14.8%[13]. - Total noninterest expenses decreased to $19,118 thousand in Q1 2021 from $24,656 thousand in Q1 2020, a reduction of 22.5%[13]. - Noninterest expenses decreased to $19.1 million for the three months ended March 31, 2021, down from $24.7 million in the same period in 2020, with personnel costs comprising approximately 62% of total noninterest expenses[175]. - The efficiency ratio improved to 63.8% in Q1 2021 from 91.3% in Q1 2020, indicating better cost management[154]. Loan and Credit Quality - The allowance for loan losses was $26,214 thousand as of March 31, 2021, compared to $25,844 thousand as of December 31, 2020, indicating a slight increase of 1.4%[12]. - The total loans amounted to $1.696 billion, up from $1.455 billion as of December 31, 2020, reflecting a growth of 16.6%[42]. - The total impaired loans as of March 31, 2021, were $13.111 million, compared to $15.394 million as of December 31, 2020, indicating a decrease of 14.8%[51]. - The provision for loan losses decreased to $0.6 million for the three months ended March 31, 2021, compared to $1.1 million for the same period in 2020, reflecting changes in charge-offs and historical loss rates[167]. - The allowance for loan losses (ALL) is based on management's evaluation of risk characteristics and credit quality, with total collectively evaluated impaired loans at $2.0 million as of March 31, 2021[65]. Investment and Securities - The total amortized cost of investment securities available-for-sale was $420.69 million, with a fair value of $423.12 million as of December 31, 2020[33]. - The Company reported unrealized losses of $3.3 million on securities as of March 31, 2021, but maintains the ability to hold these securities until principal recovery[36]. - The fair value of municipal securities held by the Company was $209.734 million as of March 31, 2021, with unrealized losses of $1.008 million[32]. - The Company recognized unrealized holding gains on equity securities of $0.5 million for the three months ended March 31, 2021, compared to immaterial gains in the same period of 2020[39]. - The company reported realized and unrealized gains of $19,000 in earnings related to municipal securities for the period ending March 31, 2021[123]. Capital and Equity - The total equity attributable to the parent decreased slightly to $236,210 thousand as of March 31, 2021, from $239,483 thousand as of December 31, 2020, a decline of 1.0%[12]. - Stockholders' equity decreased by approximately $3.3 million to $236.7 million during the quarter ended March 31, 2021, with a dividend payout ratio dropping from 115.2% to 14.3%[195]. - The Company redeemed all outstanding shares of its preferred stock in January 2021, with a redemption price of $10,000 per share plus unpaid dividends[108]. - The Company has an effective shelf registration covering $75 million of debt and equity securities available for issuance[201]. - The Bank's CBLR at March 31, 2021 was 11.3%, exceeding the well-capitalized standard of 8.5%[198]. Operational Developments - The company acquired an 80% interest in Flexia, which provides a reloadable account combining debit and casino gaming accounts, enhancing its fintech capabilities[21]. - The Bank acquired an 80% interest in Flexia Payments, LLC for approximately $2.5 million in February 2021[138]. - The Bank entered into a Stock Purchase Agreement to acquire a majority interest in Trabian Technology, Inc. in April 2021[139]. - The Company originated 634 PPP loans totaling $88.5 million and an additional $102.1 million through a partnership with a Fintech company as of March 31, 2021[84]. - The Company is involved in various legal actions, but management believes the outcomes will not significantly affect the consolidated financial statements[210].

[Part I](index=5&type=section&id=PART%20I) [Business](index=5&type=section&id=Item%201.%20Business) MVB Financial Corp. operates through MVB Bank, Inc., focusing on CoRe banking, mortgage, and strategic Fintech services, with significant M&A activity and regulatory oversight [Corporate and Business Overview](index=7&type=section&id=Corporate%20and%20Business%20Overview) MVB Financial Corp. is a financial holding company focused on CoRe banking and Fintech, operating through three segments and actively engaging in M&A - **MVB Financial Corp.** is a financial holding company operating primarily through **MVB Bank, Inc.**, focusing on **Commercial and Retail (CoRe) banking** with a strategic emphasis on **Financial Technology (Fintech)** services for corporate clients nationwide[17](index=17&type=chunk)[18](index=18&type=chunk) - Significant M&A activity includes acquiring **Chartwell** (compliance services), divesting **four bank branches**, forming a mortgage joint venture (**ICM**), and acquiring assets from **The First State Bank** via an FDIC receivership[19](index=19&type=chunk) - Operations are structured into **three reportable segments**: **CoRe banking** (including **Fintech division**, **Chartwell**, and **Paladin Fraud**), **mortgage banking** (primarily from **ICM** equity investment), and the **financial holding company**[24](index=24&type=chunk)[25](index=25&type=chunk) [Lending Activities](index=9&type=section&id=Lending%20Activities) The company's loan portfolio is predominantly commercial, with residential loans also present, and both types are subject to specific risk management practices Loan Portfolio Composition as of December 31, 2020 | Loan Type | Amount (approx.) | % of Total Loans | | :--- | :--- | :--- | | Commercial Loans | $1.16 billion | 80.0% | | Residential Loans | $288.0 million | 19.8% | - Commercial lending poses **higher risk** due to reliance on business cash flow, necessitating **annual reviews** and specific evaluations for **COVID-19 impacts**[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk) - Residential real estate loans generally require an **80%** loan-to-value ratio or private mortgage insurance, while construction financing is deemed **higher risk**, with residential construction loans to individuals totaling approximately **$119.4 million** at year-end[31](index=31&type=chunk)[32](index=32&type=chunk) [Human Capital and Competition](index=10&type=section&id=Human%20Capital%20and%20Competition) The company manages its 344 employees through culture and training initiatives while navigating intense competition from traditional and Fintech banks - As of December 31, 2020, the company had **344 employees**, with human capital initiatives focused on fostering a **strong culture**, investing in **training**, and ensuring **employee safety** during the **COVID-19 pandemic**, leading to over **85%** of team members transitioning to remote work[35](index=35&type=chunk)[36](index=36&type=chunk)[38](index=38&type=chunk) - The company faces **significant competition** in lending and deposits from **traditional banks**, **credit unions**, and **Fintech-focused banks/neobanks**, employing a strategy centered on **customer relationships** and a **needs-based selling approach** rather than solely on interest rates[33](index=33&type=chunk)[34](index=34&type=chunk) [Supervision and Regulation](index=11&type=section&id=Supervision%20and%20Regulation) The company is extensively regulated by federal and state authorities, adhering to frameworks like Dodd-Frank and maintaining strong capital ratios - The company and its subsidiaries are subject to **extensive regulation** by federal and state authorities, including the **Federal Reserve Board**, **FDIC**, and **SEC**, primarily for the **protection of depositors and the financial system**[43](index=43&type=chunk)[50](index=50&type=chunk)[51](index=51&type=chunk) - Major regulatory frameworks include the **Dodd-Frank Act** and the **Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA)**, which modified certain Dodd-Frank provisions for smaller banks[46](index=46&type=chunk)[47](index=47&type=chunk) - As a financial holding company, MVB must ensure its depository institution subsidiaries are **well capitalized** and **well managed**, and it believes it qualifies for the Federal Reserve's **Small Bank Holding Company Policy Statement**, **exempting it from consolidated capital requirements**[54](index=54&type=chunk)[58](index=58&type=chunk) - The Bank is subject to **minimum capital ratios** under the Capital Rules, including a **capital conservation buffer**, with effective minimums of **7% for CET1**, **8.5% for Tier 1**, and **10.5% for Total capital** to risk-weighted assets as of January 1, 2019[82](index=82&type=chunk)[83](index=83&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks from economic conditions, the COVID-19 pandemic, PPP exposure, non-residential loan concentration, Fintech investments, regulatory changes, cybersecurity, and stock volatility - The full impact of the **COVID-19 pandemic** remains unknown and could **materially affect** the company's business, financial condition, and results of operations, including negative impacts on **interest income** and **credit quality** through loan deferral programs[123](index=123&type=chunk)[124](index=124&type=chunk)[125](index=125&type=chunk) - Participation in the SBA's **Paycheck Protection Program (PPP)** exposes the company to **litigation risk** regarding loan processing and **credit risk** if the SBA denies its guarantee due to origination deficiencies[141](index=141&type=chunk)[142](index=142&type=chunk)[144](index=144&type=chunk) - Approximately **80%** of the loan portfolio comprises **non-residential real estate loans**, which carry **greater risk of non-payment and and loss** compared to residential mortgages[145](index=145&type=chunk) - Strategic **Fintech** initiatives, serving clients in **payments, cryptocurrency, and gaming industries**, introduce **increased business, reputational, operational, and regulatory risks**, with gaming deposits representing approximately **18% of total deposits** as of December 31, 2020[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk) - Reliance on information systems exposes the company to **cybersecurity risks**, where a breach could **damage its reputation**, lead to a **loss of business**, and result in **litigation and financial liability**[170](index=170&type=chunk)[171](index=171&type=chunk)[174](index=174&type=chunk) [Unresolved Staff Comments](index=33&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None [Properties](index=33&type=section&id=Item%202.%20Properties) The company owns its main office and 7 of 13 full-service branches, with 6 leased, and underwent branch closures and sales in 2020 - The company owns its **main office** and **7 of its 13 full-service banking branches**, with the remaining **6 branches being leased**[207](index=207&type=chunk) - In 2020, the company **closed one branch** in Morgantown, WV, and **sold four branches** in Berkeley and Jefferson Counties, WV[208](index=208&type=chunk)[209](index=209&type=chunk) [Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no awareness of any material pending legal proceedings involving itself or its subsidiaries - The company reports that it is not aware of any material pending legal proceedings[210](index=210&type=chunk) [Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company - Not applicable [Part II](index=35&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity,%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) MVB Financial Corp.'s common stock trades on Nasdaq under 'MVBF', with 920 stockholders, paid $0.36 dividends in 2020, and repurchased 668,390 shares in Q4 2020 - The company's common stock trades on the **Nasdaq Capital Market** under the symbol "**MVBF**", with approximately **920 stockholders** of record as of March 8, 2021[214](index=214&type=chunk) Dividends Per Share | Year | Dividend per Share | | :--- | :--- | | 2020 | $0.36 | | 2019 | $0.195 | | 2018 | $0.11 | Share Repurchases (Q4 2020) | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | Oct 2020 | 130,400 | $17.00 | | Nov 2020 | 1,500 | $16.37 | | Dec 2020 | 536,490 | $20.25 | | **Total** | **668,390** | | [Selected Financial Data](index=37&type=section&id=Item%206.%20Selected%20Financial%20Data) In 2020, total assets grew to $2.33 billion and net income to $37.0 million, driven by deposit growth, though nonperforming loans increased to 0.9% Selected Financial Data (2019 vs 2020) | (Dollars in thousands, except per share data) | 2020 | 2019 | | :--- | :--- | :--- | | **Balance Sheet Data:** | | | | Total Assets | $2,331,476 | $1,944,114 | | Loans receivable, net | $1,427,900 | $1,362,766 | | Deposits | $1,982,389 | $1,265,042 | | Stockholders' equity | $239,483 | $211,936 | | **Income Statement Data:** | | | | Net interest income | $68,826 | $59,400 | | Provision for loan loss | $16,579 | $1,789 | | Noninterest income | $91,837 | $64,604 | | Net income available to common shareholders | $36,950 | $26,512 | | **Per Share Data:** | | | | Earnings per share - basic | $3.13 | $2.26 | | Book value | $20.14 | $17.13 | | **Asset Quality Ratios:** | | | | Nonperforming loans to total loans | 0.9% | 0.4% | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2020, MVB's assets grew to $2.33 billion and net income to $37.4 million, driven by Fintech deposits and ICM, while increasing loan loss provisions due to COVID-19 and maintaining strong capital [Executive Summary and COVID-19 Impact](index=41&type=section&id=Executive%20Summary%20and%20COVID-19%20Impact) The company achieved strong financial results in 2020, actively participated in PPP, and implemented loan modifications in response to COVID-19 Key Financial Results (2020 vs. 2019) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Total Assets | $2.33 billion | $1.94 billion | | Deposits | $1.98 billion | $1.27 billion | | Net Income | $37.4 million | $27.0 million | | Diluted EPS | $3.06 | $2.20 | | Return on Average Assets | 1.7% | 1.4% | | Return on Average Equity | 16.7% | 13.6% | - The company actively participated in the **Paycheck Protection Program (PPP)**, originating **455 loans** with original balances of **$92.8 million**, with **$82.0 million** in PPP loans outstanding at year-end[234](index=234&type=chunk) - In response to the pandemic, the company approved **loan modifications** for commercial loans totaling **$34.7 million** and mortgage loans totaling **$13.5 million** as of December 31, 2020[234](index=234&type=chunk) [Net Interest Income and Margin](index=42&type=section&id=Net%20Interest%20Income%20and%20Margin) Net interest income increased by $9.4 million to $68.8 million in 2020, driven by lower cost of funds, resulting in a slightly improved net interest margin - Net interest income **increased by $9.4 million (15.9%)** to **$68.8 million** in 2020, primarily due to the **cost of interest-bearing liabilities (down 83 bps to 0.85%)** decreasing more than the **yield on earning assets (down 70 bps to 4.17%)**[245](index=245&type=chunk)[251](index=251&type=chunk) - The tax-equivalent net interest margin (NIM) slightly increased to **3.57%** in 2020 from **3.53%** in 2019, with the net interest spread widening to **3.32%** from **3.19%**, aided by a **$243.9 million** increase in average noninterest-bearing demand deposits[242](index=242&type=chunk)[243](index=243&type=chunk) [Provision for Loan Losses](index=46&type=section&id=Provision%20for%20Loan%20Losses) The provision for loan losses significantly increased to $16.6 million in 2020, primarily due to qualitative adjustments and risk grade changes in response to COVID-19 Provision for Loan Losses | Year | Provision Amount | | :--- | :--- | | 2020 | $16.6 million | | 2019 | $1.8 million | | 2018 | $2.4 million | - The **substantial increase** in the 2020 provision was primarily driven by qualitative adjustment factor changes in response to the **COVID-19 pandemic**, with **$12.8 million** from framework enhancements and **$3.8 million** from risk grade adjustments for significant loans[254](index=254&type=chunk)[256](index=256&type=chunk)[257](index=257&type=chunk) [Noninterest Income and Expense](index=47&type=section&id=Noninterest%20Income%20and%20Expense) Noninterest income grew by $27.2 million to $91.8 million, driven by ICM and M&A gains, while noninterest expense rose by $9.9 million to $97.1 million due to salaries and professional fees - Noninterest income **increased by $27.2 million** to **$91.8 million** in 2020, primarily driven by **$24.2 million** from the **ICM equity method investment**, **$17.6 million** in gains from **acquisition/divestiture activity**, and a **$3.5 million** increase in **compliance consulting income**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk) - Noninterest expense **increased by $9.9 million** to **$97.1 million** in 2020, mainly due to a **$5.5 million** rise in **salaries and benefits** from team build-outs and acquisitions, and a **$3.5 million** increase in **professional fees** related to M&A transactions[265](index=265&type=chunk)[266](index=266&type=chunk) [Financial Condition Analysis](index=49&type=section&id=Financial%20Condition%20Analysis) Total loans grew to $1.45 billion, driven by PPP, while asset quality indicators showed some deterioration; deposits surged to $1.98 billion, largely from Fintech, and capital ratios remained strong - Total loans **grew by $79.2 million** to **$1.45 billion**, with commercial and non-residential real estate loans forming **79.9%** of the portfolio, primarily driven by **$82.0 million** in outstanding **PPP loans**[279](index=279&type=chunk)[280](index=280&type=chunk) Asset Quality Indicators (as of Dec 31) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | Non-performing assets | $19.4 million | $6.5 million | | Allowance for loan losses | $25.8 million | $11.8 million | | Non-performing assets to total assets | 0.8% | 0.3% | | Allowance for loan losses to non-performing loans | 188.5% | 229.8% | - Total deposits **increased by $717.3 million** to **$1.98 billion**, with **noninterest-bearing deposits** growing to **$715.8 million (36.1% of total deposits)** from **$278.5 million (22.0% of total deposits)** in 2019, primarily driven by **Fintech deposits**[302](index=302&type=chunk)[304](index=304&type=chunk) - The Bank's capital ratios remained **strong** and above **well-capitalized standards**, with a **Total risk-based capital ratio of 15.8%** and a **Tier 1 leverage ratio of 11.0%** at December 31, 2020[310](index=310&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=55&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk, managed by ALCO, showing asset sensitivity with NII benefiting from rising rates, alongside heightened credit risk due to COVID-19 - The company's primary market risk is **interest rate fluctuation**, managed by its **Asset and Liability Committee (ALCO)** using **simulation analysis** to model impacts on **net interest income (NII)** and **economic value of equity (EVE)**[328](index=328&type=chunk)[330](index=330&type=chunk)[333](index=333&type=chunk) Estimated Change in Net Interest Income from Rate Shocks (as of Dec 31, 2020) | Change in Interest Rates (bp) | % Change in NII | | :--- | :--- | | +400 | 42.7% | | +200 | 19.3% | | +100 | 9.6% | | -100 | (6.6)% | | -200 | (9.6)% | - As of December 31, 2020, the company is in an **asset-sensitive position**, generally **more favorable in a rising rate environment**, marking a shift from its 2019 exposure to falling rates[337](index=337&type=chunk)[338](index=338&type=chunk) [Financial Statements and Supplementary Data](index=58&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2020, with an unqualified opinion from Dixon Hughes Goodman LLP, including balance sheets, income statements, and detailed notes [Consolidated Financial Statements](index=62&type=section&id=Consolidated%20Financial%20Statements) Dixon Hughes Goodman LLP issued an unqualified opinion on the 2020 consolidated financial statements, which show total assets of $2.33 billion and net income of $37.4 million - The independent auditor, **Dixon Hughes Goodman LLP**, issued an **unqualified opinion** on the **consolidated financial statements** and the company's **internal control over financial reporting** as of December 31, 2020[354](index=354&type=chunk)[367](index=367&type=chunk) Consolidated Balance Sheet Highlights (as of Dec 31) | (Dollars in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Total Assets | $2,331,476 | $1,944,114 | | Loans receivable, net | $1,427,900 | $1,362,766 | | Goodwill | $2,350 | $19,630 | | Total Deposits | $1,982,389 | $1,265,042 | | Total Stockholders' Equity | $239,483 | $211,936 | Consolidated Income Statement Highlights (Year Ended Dec 31) | (Dollars in thousands) | 2020 | 2019 | | :--- | :--- | :--- | | Net Interest Income | $68,826 | $59,400 | | Provision for loan losses | $16,579 | $1,789 | | Noninterest Income | $91,837 | $64,604 | | Noninterest Expenses | $97,141 | $87,201 | | Net Income | $37,411 | $26,991 | [Notes to Consolidated Financial Statements](index=74&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail the allowance for loan losses, ICM equity investment, goodwill reduction, and significant M&A transactions including the First State Bank acquisition and branch divestitures - The allowance for loan losses (ALL) methodology uses historical experience adjusted for qualitative factors, with the ALL balance increasing to **$25.8 million** at year-end 2020 from **$11.8 million** in 2019 (Note 3)[400](index=400&type=chunk)[499](index=499&type=chunk) - The investment in **Intercoastal Mortgage Company (ICM)** is an **equity method investment** that contributed **$24.2 million** to income in 2020 (Note 5)[520](index=520&type=chunk) - Goodwill **decreased from $19.6 million to $2.4 million**, primarily due to a **$16.9 million reduction** related to the **ICM mortgage combination transaction** (Note 12)[565](index=565&type=chunk) - Significant 2020 transactions include the **acquisition of assets from The First State Bank** (a **$4.7 million bargain purchase gain**), the **divestiture of four branches** (a **$9.6 million gain**), and the **combination with Intercoastal to form ICM** (a **$3.3 million gain**) (Note 24)[616](index=616&type=chunk)[622](index=622&type=chunk)[630](index=630&type=chunk)[632](index=632&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=124&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None [Controls and Procedures](index=124&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2020, excluding the recently acquired First State Bank - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of December 31, 2020[637](index=637&type=chunk) - Management assessed internal control over financial reporting as **effective** as of December 31, 2020, based on the **COSO framework**, identifying **no material weaknesses**[642](index=642&type=chunk)[643](index=643&type=chunk) - The assessment of internal controls **excluded the operations of The First State Bank**, acquired during 2020, as permitted by SEC guidance[639](index=639&type=chunk) [Other Information](index=126&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None [Part III](index=126&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=126&type=section&id=Item%2010.%20Directors,%20Executive%20Officers%20and%20Corporate%20Governance) Information for this item is incorporated by reference from the company's definitive 2021 Proxy Statement - This information is incorporated by reference from the registrant's definitive proxy statement for the 2021 Annual Meeting of Shareholders[650](index=650&type=chunk) [Executive Compensation](index=126&type=section&id=Item%2011.%20Executive%20Compensation) Information for this item is incorporated by reference from the company's definitive 2021 Proxy Statement - This information is incorporated by reference from the registrant's definitive proxy statement for the 2021 Annual Meeting of Shareholders[651](index=651&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=126&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated from the 2021 Proxy Statement, detailing 947,988 outstanding options at $14.66 and 569,997 available for future issuance Equity Compensation Plan Information as of December 31, 2020 | Plan Category | Securities to be issued upon exercise of outstanding options | Weighted-average exercise price of outstanding options | Securities remaining available for future issuance | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 947,988 | $14.66 | 569,997 | [Certain Relationships and Related Transactions, and Director Independence](index=126&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions,%20and%20Director%20Independence) Information for this item is incorporated by reference from the company's definitive 2021 Proxy Statement - This information is incorporated by reference from the registrant's definitive proxy statement for the 2021 Annual Meeting of Shareholders[654](index=654&type=chunk) [Principal Accountant Fees and Services](index=126&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information for this item is incorporated by reference from the company's definitive 2021 Proxy Statement - This information is incorporated by reference from the registrant's definitive proxy statement for the 2021 Annual Meeting of Shareholders[655](index=655&type=chunk) [Part IV](index=127&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=127&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists financial statements filed under Item 8 and provides an index of all exhibits, including governance documents and certifications - This section lists the **consolidated financial statements** filed under **Item 8** and provides an **index of exhibits** filed with the report, including **governance documents**, **material agreements**, and **required certifications**[657](index=657&type=chunk)[659](index=659&type=chunk)[661](index=661&type=chunk) [Form 10-K Summary](index=129&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no Form 10-K summary - None