MVB Financial Corp. Reports Second Quarter 2018 Earnings Highlighted by 25.3% Increase in Net Income

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

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

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

Mazza continued, “For the first half of the year, we saw an increase in borrowing to fund loan growth. In the second half of year, we are targeting deposit growth driven by our fintech and specialty deposit strategies.

“In the fintech world we see four ways to compete. One is client facing; we provide convenience through technology for our clients. The second is the efficiency vertical where we improve our clients’ banking experience in areas such as loan processing or check processing, all in a more efficient way developed by financial technology. The third is to invest in fintech. An example is our investment in BillGO, a payment processor based in Fort Collins, Colo. Because of our BillGO partnership, MVB was recently a runner up in Bank Director’s 2018 Best of FinXTech Awards. Partnerships such as this also provide an important source of new business referrals. Fourth and probably most important to us is being ‘The Bank of Fintech.’ We want to be a ‘one-stop payment shop’ building out our technical expertise in the payment stack.”

SECOND QUARTER 2018 HIGHLIGHTS

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

LOANSLoans totaled $1.2 billion as of June 30, 2018, an increase of $57.9 million, or 5.0%, from March 31, 2018, and an increase of $112.7 million, or 10.2%, from June 30, 2017. The growth in loans is primarily attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 4.88% as of the quarter ended June 30, 2018, an increase of 20 basis points from the quarter ended March 31, 2018, and an increase of 38 basis points from the quarter ended June 30, 2017. The increase in yields is driven both by Fed rate increases and a commercial focus on increasing loan yields. In connection with the Company’s core conversion in 2017, the Company implemented a CRM system that has provided better insight on loan pricing.

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

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

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

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

ASSET QUALITYProvision for loan loss was $605 thousand for the quarter ended June 30, 2018, an $82 thousand increase from the quarter ended June 30, 2017, due to a 10.2% increase in loans. The increase in loan loss provision is attributable to increased loan volume for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, as well as lower historical loss rates for the period used to determine the allowance. Nonperforming loans increased $4.3 million, to 0.78%, of total loans as of June 30, 2018, compared to 0.79% of total loans as of March 31, 2018, and compared to 0.46% of total loans as of June 30, 2017. In addition, net charge-offs for the quarter ended June 30, 2018, decreased $126 thousand compared to the quarter ended June 30, 2017, resulting in an annualized net loan charge-offs to total loans ratio of 0.01% as of June 30, 2018.

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

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

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

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

The $2.5 million increase in noninterest expense from the quarter ended March 31, 2018, was primarily due to an increase of $2.0 million in salaries and employee benefits expense, a $127 thousand increase in data processing and communications and a $100 thousand increase in mortgage processing expense. The increase in salaries and employee benefits expense was largely driven by the addition of senior management, lenders, a treasury team and the opening of two new branches in 2017. The $746 thousand increase in noninterest expense from the quarter ended June 30, 2017, was primarily due to an increase of $696 thousand in salaries and employee benefits expense.

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

About MVB Financial Corp.

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

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

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

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

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) 598-3500drobinson@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 2017 2017 2017

Six MonthsEndedJune 30,2018

Six MonthsEndedJune 30,2017

SecondQuarter

FirstQuarter

FourthQuarter

ThirdQuarter

SecondQuarter

Interest income $ 16,944 $ 15,054 $ 15,086 $ 14,630 $ 13,814 $ 31,998 $ 26,882 Interest expense 4,289 3,589 3,403 3,216 2,920 7,878 5,682 Net interest income 12,655 11,465 11,683 11,414 10,894 24,120 21,200 Provision for loan losses 605 474 1,036 96 523 1,079 1,041 Noninterest income 10,795 9,039 10,157 10,158 11,567 19,834 20,391 Noninterest expense 19,249 16,739 17,714 17,966 18,503 35,988 34,820 Income before income taxes 3,596 3,291 3,090 3,510 3,435 6,887 5,730 Income tax expense 765 697 1,667 1,192 1,175 1,462 1,896 Net income $ 2,831 $ 2,594 $ 1,423 $ 2,318 $ 2,260 $ 5,425 $ 3,834 Preferred dividends 122 121 124 123 122 243 251 Net income available to common shareholders $ 2,709 $ 2,473 $ 1,299 $ 2,195 $ 2,138 $ 5,182 $ 3,583 Earnings per share - basic $ 0.25 $ 0.24 $ 0.12 $ 0.21 $ 0.21 $ 0.49 $ 0.35 Earnings per share - diluted $ 0.25 $ 0.23 $ 0.12 $ 0.21 $ 0.20 $ 0.47 $ 0.35 Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

June 30, 2018 March 31, 2018 December 31, 2017 June 30, 2017 Cash and cash equivalents $ 23,950 $ 23,630 $ 20,305 $ 17,805 Certificates of deposit with other banks 14,778 14,778 14,778 14,527 Investment securities 229,054 233,483 231,507 175,110 Loans held for sale 98,799 51,280 66,794 107,825 Loans 1,215,072 1,157,173 1,105,941 1,102,378 Allowance for loan losses (10,651 ) (10,067 ) (9,878 ) (9,748 ) Net loans 1,204,421 1,147,106 1,096,063 1,092,630 Premises and equipment 26,418 26,477 26,686 27,462 Goodwill 18,480 18,480 18,480 18,480 Other assets 69,519 66,284 59,689 53,214 Total assets $ 1,685,419 $ 1,581,518 $ 1,534,302 $ 1,507,053 Deposits $ 1,195,868 $ 1,153,907 $ 1,159,580 $ 1,099,608 Borrowed funds 266,830 207,370 152,169 189,384 Other liabilities 56,926 69,820 72,361 71,227

Shareholders’ equity

165,795 150,421 150,192 146,834

Total liabilities and shareholders’ equity

$ 1,685,419 $ 1,581,518 $ 1,534,302 $ 1,507,053 Reportable Segments

(Unaudited)

Three Months Ended June 30, 2018