MVB FINANCIAL CORP SEC 10-K Report

MVB Financial Corp, operating primarily through its subsidiary MVB Bank, Inc., has released its 2024 10-K report, detailing the company's financial performance, business operations, strategic initiatives, and the challenges it faces. The report provides a comprehensive overview of the company's activities in commercial and retail banking, as well as its specialized Fintech banking services.

Financial Highlights

• Total Interest Income: $185.8 million, reflecting a slight decrease from the previous year due to lower loan balances and a challenging interest rate environment.
• Net Interest Income: $109.2 million, decreased by $14.1 million compared to 2023, primarily due to a decline in average total loans and an increase in the cost of funds.
• Net Income Available to Common Shareholders: $20.1 million, a decrease of $11.1 million from 2023, impacted by lower net interest income and higher noninterest expenses.
• Earnings Per Common Share - Basic: $1.56, down from $2.46 in 2023, reflecting the decrease in net income.
• Earnings Per Common Share - Diluted: $1.53, compared to $2.40 in 2023, indicating a reduction in earnings per share due to lower net income.

Business Highlights

• Corporate Structure: MVB Financial Corp. operates primarily through its subsidiary, MVB Bank, Inc., which includes consolidated subsidiaries such as MVB Edge Ventures, Paladin Fraud, and MVB Insurance. The Bank also holds a controlling interest in Trabian Technology, Inc., and has equity investments in Intercoastal Mortgage Company, LLC, Warp Speed Holdings, LLC, and Ayers Socure II, LLC.
• Business Segments: The company operates in three reportable segments: CoRe Banking, Mortgage Banking, and Financial Holding Company. The CoRe Banking segment includes both traditional banking products and services and the Fintech division, which focuses on providing banking services to corporate Fintech clients.
• Geographical Performance: The primary market area for CoRe banking services is North Central West Virginia and Northern Virginia, with additional lending activities in North Carolina and South Carolina. The Fintech banking market is nationwide, serving clients across the United States.
• Fintech Banking: The company provides specialized banking services to Fintech clients, focusing on operational risk management and compliance. This segment targets industries such as payments, banking-as-a-service, and gaming, which are complex and underserved by traditional banks.
• Edge Ventures and Victor Technologies: Edge Ventures acts as a holding company for Victor Technologies, which develops technology solutions for the gaming, payments, and banking-as-a-service sectors. Victor integrates with legacy bank systems to facilitate secure money management and movement.
• Paladin Fraud and Trabian: Paladin Fraud offers fraud prevention services, while Trabian builds digital products for community banks and Fintech companies. Trabian was classified as held-for-sale as of December 31, 2024, and a stock repurchase agreement was executed in January 2025.
• Human Capital Resources: As of December 31, 2024, the company employed 453 team members, focusing on attracting and retaining talent through a strong culture, competitive compensation, and development opportunities.
• Regulatory Environment: The company is subject to extensive federal and state banking regulations, including the Dodd-Frank Act and the EGRRCPA, which impact its operations and compliance requirements.
• Future Outlook: The company remains committed to the gaming, payments, and banking-as-a-service industries, with plans to expand treasury services to support financial and emerging technology companies. The focus is on enhancing core deposits and fee income strategies through the Fintech division.

Strategic Initiatives

• Strategic Initiatives: The company initiated the process of winding down its digital asset program account relationships due to changing market conditions and profitability challenges. It remains committed to the gaming, payments, and banking-as-a-service industries, with a focus on expanding the Bank's treasury services function to support financial and emerging technology companies. This expansion is expected to enhance core deposits through the Fintech division.
• Capital Management: During the year ended December 31, 2024, stockholders’ equity increased by $16.4 million to $305.8 million, primarily due to net income, stock-based compensation, and common stock options exercised. The company paid dividends totaling $8.8 million in 2024, resulting in a dividend payout ratio increase to 43.7% from 27.7% in 2023. The equity to assets ratio increased from 8.7% to 9.8% due to the increase in stockholders’ equity and a decline in assets. The Bank's Community Bank Leverage Ratio (CBLR) was 11.2%, above the well-capitalized standard of 9%.
• Future Outlook: The company plans to continue focusing on enhancing and growing the commercial loan portfolio while maintaining appropriate underwriting standards. It also aims to optimize the funding of the balance sheet by balancing the stability and cost factors of various funding sources. Management believes that the current capital levels provide a strong base for profitable growth and intends to maintain a sufficient level of liquidity to meet anticipated operating cash needs, loan demand, and deposit withdrawals.

Challenges and Risks

• Economic and Market Conditions: Elevated levels of inflation and fluctuations in interest rates could adversely impact the business. The Federal Reserve's actions to manage inflation may affect the value of the company's securities portfolio and interest revenue.
• Banking Industry Challenges: Financial challenges at other banking institutions could lead to depositor concerns and destabilizing deposit outflows. Regulatory changes following bank failures in 2023 could increase noninterest expenses.
• Geographic Concentration: The company's business is highly dependent on the economic conditions in West Virginia and Virginia. A downturn in these local economies could adversely affect loan demand and the ability of customers to repay loans.
• Climate Change and Natural Disasters: Severe weather and climate change pose risks to the stability of the deposit base and the value of collateral securing loans.
• Interest Rate Risk: The company's net interest income is subject to interest rate risk, with potential adverse effects from changes in the yield curve and re-pricing frequencies of assets and liabilities.
• Regulatory Risks: The company is subject to extensive government regulation and supervision, which could affect its operations and financial condition. Changes in tax law and regulatory requirements could also impact performance.
• Technological Risks: The company must continually adapt to technological changes to remain competitive. Failure to do so could materially impact financial condition and results of operations.

SEC Filing: MVB FINANCIAL CORP [ MVBF ] - 10-K - Mar. 12, 2025