MVB Financial(MVBF) - 2021 Q4 - Annual Report

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].